0001493152-22-023018.txt : 20220815 0001493152-22-023018.hdr.sgml : 20220815 20220815175742 ACCESSION NUMBER: 0001493152-22-023018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 71 CONFORMED PERIOD OF REPORT: 20220630 FILED AS OF DATE: 20220815 DATE AS OF CHANGE: 20220815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Investview, Inc. CENTRAL INDEX KEY: 0000862651 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 870369205 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27019 FILM NUMBER: 221167286 BUSINESS ADDRESS: STREET 1: 234 INDUSTRIAL WAY WEST STREET 2: STE A202 CITY: EATONTOWN STATE: NJ ZIP: 07724 BUSINESS PHONE: 732-889-4300 MAIL ADDRESS: STREET 1: 234 INDUSTRIAL WAY WEST STREET 2: STE A202 CITY: EATONTOWN STATE: NJ ZIP: 07724 FORMER COMPANY: FORMER CONFORMED NAME: Global Investor Services, Inc. DATE OF NAME CHANGE: 20081001 FORMER COMPANY: FORMER CONFORMED NAME: TheRetirementSolution.com, Inc. DATE OF NAME CHANGE: 20060918 FORMER COMPANY: FORMER CONFORMED NAME: Voxpath Holdings, Inc. DATE OF NAME CHANGE: 20060619 10-Q 1 form10-q.htm
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U.S. Securities and Exchange Commission

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED

 

June 30, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from__________________ to _______________________.

 

Commission File Number 000-27019

 

Investview, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada   87-0369205
(State or other jurisdiction of incorporation)   (I.R.S. Employer Identification No.)

 

234 Industrial Way West, Ste A202

Eatontown, New Jersey 07724

(Address of principal executive offices)

 

Issuer’s telephone number: 732-889-4300

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
         

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

 

Yes No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 15, 2022, there were 2,641,275,489 shares of common stock, $0.001 par value, outstanding.

 

 

 

 
 

 

INVESTVIEW, INC.

 

Form 10-Q for the Six Months Ended June 30, 2022

 

Table of Contents

 

PART I – FINANCIAL INFORMATION 3
ITEM 1 – FINANCIAL STATEMENTS 3
Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021 3
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited) 4
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (Unaudited) 6
Notes to Condensed Consolidated Financial Statements as of June 30, 2022 (Unaudited) 7
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 29
ITEM 4 – CONTROLS AND PROCEDURES 29
PART II – OTHER INFORMATION 29
ITEM 1 – LEGAL PROCEEDINGS 29
ITEM 1.A – RISK FACTORS 29
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 30
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES 30
ITEM 4 – MINE SAFETY DISCLOSURES 30
ITEM 5 – OTHER INFORMATION 30
ITEM 6 – EXHIBITS 30
SIGNATURE PAGE 32

 

2

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1 – FINANCIAL STATEMENTS

 

INVESTVIEW, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30   December 31, 
   2022   2021 
   (unaudited)     
ASSETS          
Current assets:          
Cash and cash equivalents  $20,345,462   $30,995,283 
Restricted cash, current   819,338    819,338 
Prepaid assets   75,511    164,254 
Receivables   2,299,638    1,920,069 
Inventory   299,826    - 
Income tax paid in advance   611,584    - 
Other current assets   4,080,240    2,018,324 
Total current assets   28,531,599    35,917,268 
           
Fixed assets, net   15,182,262    6,682,877 
           
Other assets:          
Restricted cash, long term   392,616    802,285 
Other restricted assets, long term   135,694    122,769 
Operating lease right-of-use asset   152,722    264,846 
Intangible asset, net   7,240,000    7,240,000 
Deposits   473,598    473,598 
Total other assets   8,394,630    8,903,498 
           
Total assets  $52,108,491   $51,503,643 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
Current liabilities:          
Accounts payable and accrued liabilities  $5,268,380   $3,904,681 
Payroll liabilities   249,208    176,604 
Income tax payable   -    807,827 
Customer advance   301,399    75,702 
Deferred revenue   2,659,069    3,288,443 
Derivative liability   31,535    69,371 
Dividend liability   230,877    219,705 
Operating lease liability, current   170,961    255,894 
Related party payables, net of discounts, current   1,201,267    1,832,642 
Debt, net of discounts, current   2,909,513    2,947,013 
Total current liabilities   13,022,209    13,577,882 
           
Deferred tax liability, long term   

631,745

    

-

 
Operating lease liability, long term   262    43,460 
Related party payables, net of discounts, long term   654,310    486,814 
Debt, net of discounts, long term   7,031,691    8,455,646 
Total long term liabilities   8,318,008    8,985,920 
           
Total liabilities   21,340,217    22,563,802 
           
Commitments and contingencies   -    - 
           
Stockholders’ equity (deficit):          
Preferred stock, par value: $0.001; 50,000,000 shares authorized, 252,192 and 252,192 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively   252    252 
Common stock, par value $0.001; 10,000,000,000 shares authorized; 2,641,275,489 and 2,904,210,762 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively   2,641,275    2,904,211 
Additional paid in capital   102,105,509    101,883,573 
Accumulated other comprehensive income (loss)   (23,218)   (23,000)
Accumulated deficit   (73,955,544)   (75,825,195)
Total stockholders’ equity (deficit)   30,768,274    28,939,841 
           
Total liabilities and stockholders’ equity (deficit)  $52,108,491   $51,503,643 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3

 

 

INVESTVIEW, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND OTHER COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

   2022   2021   2022   2021 
   Three Months Ended June 30,   Six Months Ended June 30, 
   2022   2021   2022   2021 
                 
Revenue:                    
Subscription revenue, net of refunds, incentives, credits, and chargebacks  $11,104,539   $10,849,697   $24,835,209   $18,799,414 
Mining revenue   3,058,144    8,371,562    6,635,117    16,708,921 
Cryptocurrency revenue   516,960    6,405,306    957,376    7,170,168 
Miner repair revenue   80,110    -    80,110    - 
Digital wallet revenue   5,868    -    5,868    - 
Fee revenue   -    -    -    2,032 
Total revenue, net   14,765,621    25,626,565    32,513,680    42,680,535 
                     
Operating costs and expenses:                    
Cost of sales and service   1,898,140    2,186,152    3,728,481    5,084,659 
Commissions   6,445,793    8,782,421    13,829,481    13,867,300 
Selling and marketing   23,511    39,849    35,265    67,500 
Salary and related   1,641,345    1,372,325    2,856,608    2,562,466 
Professional fees   770,345    661,884    1,749,320    1,312,365 
Impairment expense   6,383    -    6,383    534,438 
Loss (gain) on disposal of assets   (247,209)   -    (271,509)   - 
General and administrative   2,627,884    2,046,484    4,695,700    3,863,881 
Total operating costs and expenses   13,166,192    15,089,115    26,629,729    27,292,609 
                     
Net income (loss) from operations   1,599,429    10,537,450    5,883,951    15,387,926 
                     
Other income (expense):                    
Gain (loss) on debt extinguishment   455    4,001    455    411,803 
Gain (loss) on fair value of derivative liability   61,679    236,648    37,836    51,911 
Realized gain (loss) on cryptocurrency   (837,808)   (1,282,970)   (1,020,597)   (758,758)
Interest expense   (4,675)   (5,934)   (9,298)   (11,803)
Interest expense, related parties   (309,669)   (759,686)   (2,029,134)   (1,133,766)
Other income (expense)   26,626    46,338    57,853    (86,902)
Total other income (expense)   (1,063,392)   (1,761,603)   (2,962,885)   (1,527,515)
                     
Income (loss) before income taxes   536,037    8,775,847    2,921,066    13,860,411 
Income tax expense   (635,745)   (3,189)   (641,745)   (146,192)
                     
Net income (loss)   (99,708)   8,772,658    2,279,321    13,714,219 
                     
Dividends on Preferred Stock   (204,835)   (204,835)   (409,670)   (329,341)
                     
Net income (loss) applicable to common shareholders  $(304,543)  $8,567,823   $1,869,651   $13,384,878 
                     
Other comprehensive income (loss), net of tax:                    
Foreign currency translation adjustments  $(598)   (808)  $(218)  $(535)
Total other comprehensive income (loss)   (598)   (808)   (218)   (535)
Comprehensive income (loss)  $(100,306)  $8,771,850   $2,279,103   $13,713,684 
                     
Basic income (loss) per common share  $0.00   $0.00   $0.00   $0.00 
Diluted income (loss) per common share  $0.00   $0.00   $0.00   $0.00 
                     
Basic weighted average number of common shares outstanding   2,706,090,141    2,987,735,892    2,714,986,787    3,111,918,706 
Diluted weighted average number of common shares outstanding   2,706,090,141    3,539,658,831    3,751,415,358    3,625,938,815 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

 

INVESTVIEW, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Unaudited)

 

                       Accumulated         
                   Additional   Other         
   Preferred stock   Common stock   Paid in   Comprehensive   Accumulated     
   Shares   Amount   Shares   Amount   Capital   Income (Loss)   Deficit   Total 
Balance, December 31, 2020   55,554   $56    3,237,481,329   $3,237,481   $34,615,895   $(19,330)  $(50,855,326)  $(13,021,224)
Preferred stock issued for cash   47,953    48    -    -    1,198,777    -    -    1,198,825 
Preferred stock issued for cryptocurrency   392    -    -    -    9,800    -    -    9,800 
Preferred stock issued for debt   49,418    49    -    -    1,235,401    -    -    1,235,450 
Derivative liability recorded for warrants issued with preferred stock   -    -    -    -    (80,940)   -    -    (80,940)
Common stock cancelled   -    -    (255,000,000)   (255,000)   255,000    -    -    - 
Common stock issued for services   -    -    -    -    592,978    -    -    592,978 
Beneficial conversion feature   -    -    -    -    1,550,000    -    -    1,550,000 
Dividends   -    -    -    -    -    -    (124,506)   (124,506)
Foreign currency translation adjustment   -    -    -    -    -    273    -    273 
Net income (loss)   -    -    -    -    -    -    4,941,561    4,941,561 
Balance, March 31, 2021   153,317    153    2,982,481,329    2,982,481    39,376,911    (19,057)   (46,038,271)   (3,697,783)
Preferred stock issued for cash   97,669    98    -    -    2,441,627    -    -    2,441,725 
Preferred stock issued for cryptocurrency   1,206    1    -    -    30,149    -    -    30,150 
Common stock issued for services and compensation   -    -    11,500,000    11,500    977,891    -    -    989,391 
Common stock issued for warrant exercise   -    -    64,340    64    6,370    -    -    6,434 
Derivative liability recorded for warrants issued with preferred stock   -    -    -    -    (127,520)   -    -    (127,520)
Derivative liability extinguished for warrants exercised   -    -    -    -    10,156    -    -    10,156 
Dividends   -    -    -    -    -    -    (204,835)   (204,835)
Foreign currency translation adjustment   -    -    -    -    -    (808)   -    (808)
Net income (loss)   -    -    -    -    -    -    8,772,658    8,772,658 
Balance, June 30, 2021   252,192   $252    2,994,045,669   $2,994,045   $42,715,584   $(19,865)  $(37,470,448)  $8,219,568 
                                         
Balance, December 31, 2021   252,192   $252    2,904,210,762   $2,904,211   $101,883,573   $(23,000)  $(75,825,195)  $28,939,841 
Common stock issued for services and compensation   -    -    -    -    255,163    -    -    255,163 
Common stock repurchased from related parties   -    -    (43,101,939)   (43,102)   (1,680,906)   -    -    (1,724,008)
Common stock cancelled   -    -    (150,000,000)   (150,000)   150,000    -    -    - 
Dividends   -    -    -    -    -    -    (204,835)   (204,835)
Foreign currency translation adjustment   -    -    -    -    -    380    -    380 
Net income (loss)   -    -    -    -    -    -    2,379,029    2,379,029 
Balance, March 31, 2022   252,192    252    2,711,108,823    2,711,109    100,607,830    (22,620)   (73,651,001)   29,645,570 
Common stock issued for services and compensation   -    -    -    -    242,024    -    -    242,024 
Common stock cancelled   -    -    (69,833,334)   (69,834)   69,834   -    -    -
Contribution of crypto currency from related party   -    -    -    -    1,185,821    -    -    1,185,821 
Dividends   -    -    -    -    -    -    (204,835)   (204,835)
Foreign currency translation adjustment   -    -    -    -    -    (598)   -    (598)
Net income (loss)   -    -    -    -    -    -    (99,708)   (99,708)
Balance, June 30, 2022   252,192   $252    2,641,275,489   $2,641,275   $102,105,509   $(23,218)  $(73,955,544)  $30,768,274 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5

 

 

INVESTVIEW INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   2022   2021 
   Six Months Ended June 30, 
   2022   2021 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income (loss)  $2,279,321   $13,714,219 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:          
Depreciation   2,442,711    1,353,223 
Amortization of debt discount   1,558,590    646,696 
Amortization of intangible assets   -    27,989 
Stock issued for services and compensation   497,187    1,582,369 
Lease cost, net of repayment   (16,007)   13,324 
(Gain) loss on debt extinguishment   (455)   (411,803)
(Gain) loss on disposal of fixed assets   (271,509)   - 
(Gain) loss on fair value of derivative liability   (37,836)   (51,911)
Realized (gain) loss on cryptocurrency   1,020,597    758,758 
Impairment expense   6,383    534,438 
Changes in operating assets and liabilities:          
Receivables   (379,569)   (985,557)
Inventory   (176,335)   - 
Prepaid assets   88,743    679,082 
Short-term advances   -    145,000 
Short-term advances from related parties   -    500 
Income tax paid in advance   (611,584)   - 
Other current assets   (3,245,438)   (8,183,179)
Deposits   -    (449,640)
Accounts payable and accrued liabilities   1,436,758    526,642 
Income tax payable   (807,827)   - 
Customer advance   225,697    430,097 
Deferred revenue   (629,374)   1,266,254 
Deferred tax liability   

631,745

    - 
Accrued interest   9,298    11,803 
Accrued interest, related parties   470,544    487,070 
Net cash provided by (used in) operating activities   4,491,640    12,095,374 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Cash received for the disposal of fixed assets   646,508    - 
Cash paid for fixed assets   (11,187,053)   (689,075)
Net cash provided by (used in) investing activities   (10,540,545)   (689,075)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from related party payables   -    700,000 
Repayments for related party payables   (2,493,013)   (877,733)
Repayments for debt   (479,703)   (677,519)
Payments for share repurchase   (1,724,008)   - 
Dividends paid   (313,643)   (98,351)
Proceeds from the sale of preferred stock   -    3,640,550 
Proceeds from the exercise of warrants   -    6,434 
Net cash provided by (used in) financing activities   (5,010,367)   2,693,381 
           
Effect of exchange rate translation on cash   (218)   (535)
           
Net increase (decrease) in cash, cash equivalents, and restricted cash   (11,059,490)   14,099,145 
Cash, cash equivalents, and restricted cash - beginning of period   32,616,906    1,554,449 
Cash, cash equivalents, and restricted cash - end of period  $21,557,416   $15,653,594 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest  $603,013   $523,732 
Income taxes  $1,429,411   $146,192 
Non-cash investing and financing activities:          
Cancellation of shares  $219,834   $255,000 
Beneficial conversion feature  $-   $1,550,000 
Derivative liability recorded for warrants issued  $-   $208,460 
Derivative liability extinguished with warrant exercise  $-   $10,156 
Preferred shares issued in exchange for cryptocurrency  $-   $39,950 
Preferred shares issued in exchange for debt  $-   $1,235,450 
Dividends declared  $409,670   $329,341 
Dividends paid with cryptocurrency  $84,855   $82,216 
Debt and related party debt extinguished in exchange for cryptocurrency  $991,050   $984,439 
Related party debt extinguished in exchange for cryptocurrency  $-   $113,000 
Initial right of use asset and lease liability  $-   $174,574 
Purchase of fixed assets with cryptocurrency  $259,916   $- 
Transfer of fixed assets to inventory  $123,491   $- 
Contribution of crypto currency from related party  $1,185,821   $- 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

Organization

 

Investview, Inc. was incorporated on January 30, 1946, under the laws of the state of Utah as the Uintah Mountain Copper Mining Company. In January 2005, we changed domicile to Nevada and changed our name to Voxpath Holding, Inc. In September of 2006, we merged with The Retirement Solution Inc. and then changed our name to TheRetirementSolution.Com, Inc. Subsequently, in October 2008 we changed our name to Global Investor Services, Inc., before changing our name to Investview, Inc., on March 27, 2012.

 

Effective April 1, 2017, we closed on a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company (“Wealth Generators”), pursuant to which the Wealth Generators members contributed 100% of the outstanding securities of Wealth Generators in exchange for an aggregate of 1,358,670,942 shares of our common stock. Following this transaction, Wealth Generators became our wholly owned subsidiary, and the former members of Wealth Generators became our stockholders and controlled the majority of our outstanding common stock.

 

On June 6, 2017, we entered into an Acquisition Agreement with Market Trend Strategies, LLC, a company whose members are also former members of our management. Under the Acquisition Agreement, we spun-off our operations that existed prior to the merger with Wealth Generators and sold the intangible assets used in those pre-merger operations in exchange for Market Trend Strategies’ assumption of $419,139 in pre-merger liabilities.

 

On February 28, 2018, we filed a name change for Wealth Generators, LLC to Kuvera, LLC (“Kuvera”).

 

On January 17, 2019, we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SAFETek, LLC, a Utah limited liability company.

 

On January 11, 2021, we filed a name change for Kuvera, LLC to iGenius, LLC (“iGenius”) and on February 2, 2021, we filed a name change for Kuvera (N.I.) Limited to iGenius Global LTD.

 

On September 20, 2021, the Board of Directors approved a change in our fiscal year from March 31 to December 31.

 

Nature of Business

 

We operate a financial technology (FinTech) services company in several different businesses. We deliver multiple products and services through a direct selling network, also known as multi-level marketing, of independent distributors that offer our products and services through a subscription-based revenue model to our distributors, as well as by our distributors to a large base of customers that we refer to as “members”. Through this business, we provide research, education, and investment tools designed to assist the self-directed investor in successfully navigating the financial markets. These services include research and education regarding equities, options, FOREX, ETFs, binary options, and cryptocurrency. In addition to research and education, we also offer full education and software applications to assist the individual in debt reduction, increased savings, budgeting, and proper tax management. Each product subscription includes a core set of trading tools and research along with the personal finance management suite to provide an individual with complete access to the information necessary to cultivate and manage his or her financial situation. In addition to our education subscriptions, through a distribution arrangement we have with a third party, we have provided our members with an opportunity to purchase through such third party, a specialty form of adaptive digital currency called “ndau”. Through our direct selling model, we compensate our distributors with commissions under a standard bonus plan that allows for discretionary bonuses based on performance.

 

We also operate a blockchain technology business that provides leading-edge research, development, and FinTech services involving the management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. As well, in order to, among other things, commercialize on the proprietary trading platform we recently acquired from MPower Trading Systems, LLC, take advantage of the market’s increasing acceptance and expansion of the ownership and use of digital currencies as an investable asset class, subject to applicable regulatory limitations, and to proactively respond to increasing regulatory scrutiny relative to cryptocurrency products, we have adopted a growth plan that contemplates the establishment of a suite of financial service companies that will include self-directed brokerage services, institutional trade execution services, innovative advisory services (RIA, CTA), and codeless algorithmic trading technologies, which will operate under our recently formed subsidiary, Investview Financial Group Holdings, LLC (“IFGH”). Towards that end, in March 2021 we entered into an agreement to acquire a brokerage firm from an affiliate of the former Chief Executive Officer of the Company. However, having been unable to secure the requisite FINRA approval by the expiration date within the agreement, we terminated the transaction on June 14, 2022, and commenced a search for alternative acquisitions within the brokerage industry. Further, we have also recently withdrawn our state and NFA registrations associated with our wholly owned subsidiary, SAFE Management, LLC (“SAFE Management”), as we concluded there to be no material benefit to retaining an interest in a dormant investment advisor and commodity trading advisor. We plan to relaunch these services under the IFGH umbrella in the future to primarily focus on commodities and FOREX, however, most likely in conjunction with an acquisition within the brokerage industry.

 

7

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

Our policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Prior to September 20, 2021, we operated the Company on a March 31, fiscal year end. Effective September 30, 2021 we changed our fiscal year to December 31.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the six months ended June 30, 2022, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2022 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited December 31, 2021 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Kuvera France S.A.S (through its closure date in June of 2021), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC (formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, and Investview MTS, LLC. All intercompany transactions and balances have been eliminated in consolidation.

 

8

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

Financial Statement Reclassification

 

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.

 

Use of Estimates

 

The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Foreign Exchange

 

We have consolidated the accounts of Kuvera France S.A.S. into our consolidated financial statements. The operations of Kuvera France S.A.S. were conducted in France through its closure date in June of 2021 and its functional currency is the Euro. Subsequent to June 2021 we maintained a Euro bank account in France that had minimal transactions. The Euro bank account was closed in April 2022.

 

Prior to June 2021, the financial statements of Kuvera France S.A.S. were prepared using their functional currency and were translated into U.S. dollars (“USD”). Assets and liabilities were translated into USD at the applicable exchange rates at period-end. Stockholders’ equity was translated using historical exchange rates. Revenue and expenses were translated at the average exchange rates for the period. Any translation adjustments were included as foreign currency translation adjustments in accumulated other comprehensive income in our stockholders’ equity (deficit).

 

Subsequent to June 2021 and prior to the closure of the Euro bank account, we translated all transactions in our Euro bank account into USD and translated the ending bank balance into USD at the applicable exchange rate at period-end.

 

The following rates were used to translate our Euro bank account into USD at the following balance sheet dates.

 

   December 31, 2021 
Euro to USD   1.1371 

 

The following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.

 

   2022   2021 
   Six Months Ended June 30, 
   2022   2021 
Euro to USD   1.1118    1.2052 

 

Concentration of Credit Risk

 

Financial instruments that potentially expose us to concentration of credit risk include cash, accounts receivable, and advances. We place our cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit of $250,000. As of June 30, 2022 and December 31, 2021, cash balances that exceeded FDIC limits were $19,093,199 and $19,336,350, respectively. We have not experienced significant losses relating to these concentrations in the past.

 

Cash Equivalents and Restricted Cash

 

For purposes of reporting cash flows, we consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. As of June 30, 2022 and December 31, 2021, we had no highly liquid debt instruments.

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same such amounts shown in the statement of cash flows.

 

9

 

 

   June 30, 2022   December 31, 2021 
Cash and cash equivalents  $20,345,462   $30,995,283 
Restricted cash, current   819,338    819,338 
Restricted cash, long term   392,616    802,285 
Total cash, cash equivalents, and restricted cash shown on the statement of cash flows  $21,557,416   $32,616,906 

 

 

Amount included in restricted cash represent funds required to be held in an escrow account by a contractual agreement and will be used for paying dividends to our Series B Preferred Stockholders.

 

Receivables

 

Receivables are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables and receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. We had an allowance for doubtful accounts of $719,342 as of June 30, 2022 and December 31, 2021, respectively.

 

Fixed Assets

 

Fixed assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net difference less any amount realized from disposition is reflected in earnings. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred.

 

Fixed assets were made up of the following at each balance sheet date:

 

   Estimated Useful Life
(years)
   June 30, 2022   December 31, 2021 
Furniture, fixtures, and equipment   10   $72,407   $82,942 
Computer equipment   3    11,739    15,241 
Leasehold improvements   Remaining Lease Term    40,528    40,528 
Data processing equipment   3    21,441,088    10,638,619 
Construction in progress   N/A    273,296    391,583 
Mining repair tools and equipment   1    13,627    - 
         21,852,685    11,168,913 
Accumulated depreciation        (6,670,423)   (4,486,036)
Net book value       $15,182,262   $6,682,877 

 

Total depreciation expense for the six months ended June 30, 2022 and 2021, was $2,442,711 and $1,353,223, respectively. During the six months ended June 30, 2022 we sold assets with a total net book value of $374,999 for cash of $646,508, therefore recognized a gain on disposal of assets of $271,509. During the six months ended June 30, 2022 we disposed assets with a total net book value of $6,383, therefore recognized impairment expense of $6,383.

 

Long-Lived Assets – Intangible Assets & License Agreement

 

We account for our cryptocurrencies, intangible assets and long-term license agreement in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30 requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.

 

10

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

We hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies as of June 30, 2022 and December 31, 2021 were $4,215,934 ($4,080,240 current and $135,694 restricted long term) and $2,141,093 ($2,018,324 current and $122,769 restricted long term), respectively. Cryptocurrencies purchased or received for payment from customers are recorded in accordance with ASC 350-30 and cryptocurrencies awarded to the Company through its mining activities ($6,635,117 and $16,708,921 for the six months ended June 30, 2022 and 2021, respectively) are accounted for in connection with the Company’s revenue recognition policy. The use of cryptocurrencies is accounted for in accordance with the first in first out method of accounting. For the six months ended June 30, 2022 and 2021 we recorded realized gains (losses) on our cryptocurrency transactions of ($1,020,597) and ($758,758), respectively.

 

In June of 2018 we purchased United Games, LLC and United League, LLC and recorded the transaction as a business combination. Intangible assets acquired in the business combination were recorded at fair value on the date of acquisition and were being amortized on a straight-line method over their estimated useful lives. The intangible assets were impaired during the year ended March 31, 2021 due to a lack of recoverability.

 

On March 22, 2021, we entered into Securities Purchase Agreement to acquire the operating assets and intellectual property rights of MPower Trading Systems LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members (see NOTE 12). On September 3, 2021, we closed on the Securities Purchase Agreement and acquired the operating assets and intellectual property rights of MPower Trading Systems LLC. As a result, we obtained Prodigio, a proprietary software-based trading platform with applications within the brokerage industry, which was valued at $7,240,000 and recorded on our balance sheet as an intangible asset. The intangible asset will have a definite life, however, as of the date of this filing the software has not yet been placed in service, therefore a useful life had not yet been determined and no amortization was recorded during the six months ended June 30, 2022.

 

Impairment of Long-Lived Assets

 

We have adopted ASC Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.

 

We evaluate the recoverability of long-lived assets based upon future net cash flows expected to result from the asset, including eventual disposition. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted and an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

 

During the six months ended June 30, 2022 we impaired our fixed assets with a cost basis of $14,875 due to the lack of use. We had recorded accumulated depreciation and accumulated amortization of $8,492 for the impaired assets through the date of impairment, therefore we recorded impairment expense of $6,383 during the six months ended June 30, 2022.

 

During the six months ended June 30,2021 we impaired our intangible assets with a cost basis of $991,000 due to the lack of recoverability. We had recorded accumulated depreciation and accumulated amortization of $456,562 for the impaired assets through the date of impairment, therefore we recorded impairment expense of $534,438 during the six months ended June 30, 2021.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on our principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

 

11

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

U.S. generally accepted accounting principles provide for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:

 

Level 1: Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.
   
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

 

  - quoted prices for similar assets or liabilities in active markets;
  - quoted prices for identical or similar assets or liabilities in markets that are not active;
  - inputs other than quoted prices that are observable for the asset or liability; and
  - inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3: Inputs that are unobservable and reflect management’s own assumptions about the inputs market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows).

 

Our financial instruments consist of cash, accounts receivable, accounts payable, and debt. We have determined that the book value of our outstanding financial instruments as of June 30, 2022 and December 31, 2021, approximates the fair value due to their short-term nature or interest rates that approximate prevailing market rates.

 

Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of June 30, 2022:

 

   Level 1   Level 2   Level 3   Total 
Total Assets  $-   $-   $-   $- 
                     
Derivative liability  $-   $-   $31,535   $31,535 
Total Liabilities  $-   $-   $31,535   $31,535 

 

Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31, 2021:

 

   Level 1   Level 2   Level 3   Total 
Total Assets  $-   $-   $-   $- 
                     
Derivative liability  $-   $-   $69,371   $69,371 
Total Liabilities  $-   $-   $69,371   $69,371 

 

Revenue Recognition

 

Subscription Revenue

 

Most of our revenue is generated by subscription sales and payment is received at the time of purchase. We recognize subscription revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first time subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds, sales incentives, credits, and known and estimated credit card chargebacks. As of June 30, 2022 and December 31, 2021 our deferred revenues were $2,659,069 and $3,288,443, respectively.

 

12

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

Mining Revenue

 

Through our wholly owned subsidiary, SAFETek, LLC, we leased equipment under a sales-type lease through June of 2020. In June of 2020 we cancelled all leases and purchased all of the rights and obligations under the leases, which included obtaining ownership of all equipment. We use the equipment on blockchain networks to validate and add blocks of transactions to blockchain ledgers (commonly referred to as “mining”). As compensation for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted to us. Our mining activities constitute our ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of our mining activities.

 

Cryptocurrency Revenue

 

We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party suppliers. The various packages include different amounts of coin with differing rates of returns and terms and, in some cases prior to January 2022, include a product protection option that allows the purchaser to protect their initial purchase price. The protection allows the purchaser to obtain 50% of their purchase price at five years or 100% of their purchase price at ten years. Both the coin and the protection option are delivered by third-party suppliers.

 

We recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party suppliers to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our suppliers on our books. As of June 30, 2022 and December 31, 2021 our customer advances related to cryptocurrency revenue were $301,399 and $75,702, respectively.

 

Fee Revenue

 

We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.

 

Miner Repair Revenue

 

Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. We recognize miner repair revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver the promised goods to our customers.

 

Digital Wallet Revenue

 

We generate revenue from the sale of digital wallets to our customers through an arrangement with a third-party supplier. We offer three tiers of wallets which include different features. The digital wallets are delivered by a third-party supplier.

 

We recognize digital wallet revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third-parties to provide the wallet to our customers and payment is received from our customers at the time of order placement.

 

13

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

Revenue generated for the six months ended June 30, 2022 is as follows:

 

   Subscription
Revenue
   Cryptocurrency Revenue   Mining Revenue   Miner Repair Revenue   Digital Wallet Revenue   Total 
Gross billings/receipts  $26,448,766   $1,874,382   $6,635,117   $80,110   $7,157   $35,045,532 
Refunds, incentives, credits, and chargebacks   (1,613,557)   -    -    -    -    (1,613,557)
Amounts paid to providers   -    (917,006)   -    -    (1,289)   (918,295)
Net revenue  $24,835,209   $957,376   $6,635,117   $80,110   $5,868   $32,513,680 

 

For the six months ended June 30, 2022 foreign and domestic revenues were approximately $21.9 million and $10.6 million, respectively.

 

Revenue generated for the six months ended June 30, 2021 is as follows:

 

   Subscription
Revenue
   Cryptocurrency Revenue   Mining Revenue   Fee Revenue   Total 
Gross billings/receipts  $19,939,584   $17,752,763   $16,708,921   $2,032   $54,403,300 
Refunds, incentives, credits, and chargebacks   (1,140,170)   -    -    -    (1,140,170)
Amounts paid to providers   -    (10,582,595)   -    -    (10,582,595)
Net revenue  $18,799,414   $7,170,168   $16,708,921   $2,032   $42,680,535 

 

For the six months ended June 30, 2021 foreign and domestic revenues were approximately $19.4 million and $23.3 million, respectively.

 

Revenue generated for the three months ended June 30, 2022 is as follows:

 

   Subscription
Revenue
   Cryptocurrency Revenue   Mining Revenue   Miner Repair Revenue   Digital Wallet Revenue   Total 
Gross billings/receipts  $11,754,793   $1,035,960   $3,058,144   $80,110   $7,157   $15,936,164 
Refunds, incentives, credits, and chargebacks   (650,254)   -    -    -    -    (650,254)
Amounts paid to providers   -    (519,000)   -    -    (1,289)   (520,289)
Net revenue  $11,104,539   $516,960   $3,058,144   $80,110   $5,868   $14,765,621 

 

For the three months ended June 30, 2022 foreign and domestic revenues were approximately $9.9 million and $4.9 million, respectively.

 

Revenue generated for the three months ended June 30, 2021 is as follows:

 

   Subscription
Revenue
   Cryptocurrency Revenue   Mining Revenue   Fee Revenue   Total 
Gross billings/receipts  $11,532,061   $15,875,577   $8,371,562   $-   $35,779,200 
Refunds, incentives, credits, and chargebacks   (682,364)   -    -    -    (682,364)
Amounts paid to providers   -    (9,470,271)   -    -    (9,470,271)
Net revenue  $10,849,697   $6,405,306   $8,371,562   $-   $25,626,565 

 

For the three months ended June 30, 2021 foreign and domestic revenues were approximately $11.8 million and $13.8 million, respectively.

 

Advertising, Selling, and Marketing Costs

 

We expense advertising, selling, and marketing costs as incurred. Advertising, selling, and marketing costs include costs of promoting our product worldwide, including promotional events. Advertising, selling, and marketing expenses for the six months ended June 30, 2022 and 2021, totaled $35,265 and $67,500, respectively.

 

14

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

Cost of Sales and Service

 

Included in our costs of sales and services are amounts paid to our trading and market experts that provide financial education content and tools to our subscription customers, hosting fees that we pay to vendors to set up our mining equipment at third-party sites in order to generate mining revenue, and the costs associated with our miner repair revenue. Costs of sales and services for the six months ended June 30, 2022 and 2021, totaled $3,728,481 and $5,084,659, respectively.

 

Inventory

 

Inventory consists of raw materials and work in process to be sold as part of our miner repair revenue. Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method and is inclusive of any shipping and tax costs.

 

Inventory was made up of the following at each balance sheet date:

 

   June 30, 2022   December 31, 2021 
Raw materials  $226,503   $         - 
Work in process   73,323    - 
Finished goods   -    - 
Total inventory  $299,826   $- 

 

Income Taxes

 

Income taxes are recorded in accordance with ASC Topic 740, Income Taxes, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities, including operating losses and credit carryforwards, using enacted tax rates in effect for the year in which the differences are expected to reverse.

 

Management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the consideration of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Changes in assumptions in future periods may require we adjust our valuation allowance, which could materially impact our financial position and results of operations. The company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return, if such a position is more likely than not to be sustained.

 

Net Income (Loss) per Share

 

We follow ASC subtopic 260-10, Earnings per Share (“ASC 260-10”), which specifies the computation, presentation, and disclosure requirements of earnings per share information. Basic income (loss) per share has been calculated based upon the weighted average number of common shares outstanding. Diluted income (loss) per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.

 

The following table illustrates the computation of diluted earnings per share for the three months ended June 30, 2021. Due to the net loss for the three months ended June 30, 2022 there were 1,036,428,571 potentially dilutive securities that were excluded from the diluted income per common share computation, as the effect of including these shares would be antidilutive.

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED

    June 30, 2021 
Net income (loss)   $8,772,658 
Less: preferred dividends    (204,835)
Add: interest expense on convertible debt    244,451 
Net income available to common shareholders (numerator)   $8,812,274 
       
Basic weighted average number of common shares outstanding    2,987,735,892 
Dilutive impact of warrants    552,618 
Dilutive impact of convertible notes    551,370,321 
Dilutive impact of non-voting membership interest    - 
Diluted weighted average number of common shares outstanding (denominator)    3,539,658,831 
       
Diluted income per common share   $0.00 

 

15

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

The following table illustrates the computation of diluted earnings per share for the six months ended June 30, 2022 and 2021, where no potentially dilutive securities were excluded from the computation:

 

   June 30, 2022   June 30, 2021 
Net income (loss)  $2,279,321   $13,714,219 
Less: preferred dividends   (409,670)   (329,341)
Add: interest expense on convertible debt   469,884    470,591 
Net income available to common shareholders (numerator)  $2,339,535   $13,855,469 
           
Basic weighted average number of common shares outstanding   2,714,986,787    3,111,918,706 
Dilutive impact of warrants   -    329,346 
Dilutive impact of convertible notes   471,428,571    513,690,763 
Dilutive impact of non-voting membership interest   565,000,000    - 
Diluted weighted average number of common shares outstanding (denominator)   3,751,415,358    3,625,938,815 
           
Diluted income per common share  $0.00   $0.00 

 

Lease Obligation

 

We determine if an arrangement is a lease at inception. Operating leases are included in the operating lease right-of-use asset account, the operating lease liability, current account, and the operating lease liability, long term account in our balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

 

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have elected to not apply the recognition requirements of ASC 842 to short-term leases (leases with terms of twelve months or less). Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term. We have elected the practical expedient and will not separate non-lease components from lease components and will instead account for each separate lease component and non-lease component associated with the lease components as a single lease component.

 

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

 

We have noted no recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements.

 

NOTE 4 – LIQUIDITY

 

Our financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

 

During the six months ended June 30, 2022 we reported $4,491,640 in cash provided by operating activities, $5,883,951 of income from operations, and net income of $2,279,321. As of June 30, 2022 we have cash and cash equivalents of $20,345,462 and a working capital balance of $15,509,390. As of June 30, 2022 our unrestricted cryptocurrency balance was reported at a cost basis of $4,080,240. Management does not believe there are any liquidity issues as of June 30, 2022.

 

16

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

NOTE 5 – RELATED-PARTY TRANSACTIONS

 

Our related-party payables consisted of the following:

   June 30, 2022   December 31, 2021 
Convertible Promissory Note entered into on 4/27/20, net of debt discount of $1,017,716 as of June 30, 2022 [1][1] $282,284   $239,521 
Convertible Promissory Note entered into on 5/27/20, net of debt discount of $552,540 as of June 30, 2022 [2][2]  147,465    124,149 
Convertible Promissory Note entered into on 11/9/20, net of debt discount of $1,075,434 as of June 30, 2022 [3][3]  224,561    198,187 
Promissory note entered into on 12/15/20 [4][4]  -    80,322 
Convertible Promissory Note entered into on 3/30/21 [5][5]  -    476,670 
Working Capital Promissory Note entered into on 3/22/21 [6][6]  1,201,267    1,200,607 
Total related-party debt   1,855,578    2,319,456 
Less: Current portion   (1,201,267)   (1,832,642)
Related-party debt, long term  $654,310   $486,814 

 

 

 

[1] On April 27, 2020, we received proceeds of $1,300,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors, and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company. The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. Per the original terms of the agreement the note was convertible into common stock at a conversion price of $0.01257 per share, which was amended on November 9, 2020 to reduce the conversion price to $0.007 per share. At inception we recorded a beneficial conversion feature and debt discount of $1,300,000. During the three months ended June 30, 2022, we recognized $64,430 of the debt discount into interest expense, as well as expensed an additional $130,008 of interest expense on the note, all of which was repaid during the period.
   
[2] On May 27, 2020, we received proceeds of $700,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors, and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company. The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. Per the original terms of the agreement the note was convertible into common stock at a conversion price of $0.01257 per share, which was amended on November 9, 2020 to reduce the conversion price to $0.007 per share. At inception we recorded a beneficial conversion feature and debt discount of $700,000. During the six months ended June 30, 2022, we recognized $34,981 of the debt discount into interest expense as well as expensed an additional $70,002 of interest expense on the note, all of which was repaid during the period.
   
[3] On November 9, 2020, we received proceeds of $1,300,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors, and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company. The note bears interest at 38.5% per annum, made up of a 25% interest rate per annum and a facility fee of 13.5% per annum, payable monthly beginning February 1, 2021, and the principal is due and payable on April 27, 2030. Per the terms of the agreement the note is convertible into common stock at a conversion price of $0.007 per share. At inception we recorded a beneficial conversion feature and debt discount of $1,300,000. During the six months ended June 30, 2022, we recognized $68,084 of the debt discount into interest expense as well as expensed an additional $150,248 of interest expense on the note, all of which was repaid during the period.
   
[4] On December 15, 2020, we received proceeds of $154,000 from Wealth Engineering, an entity controlled by members of our management team and Board of Directors, and entered into a promissory note for $600,000. The term of the note requires monthly repayments of $20,000 per month for 30 months. At inception we recorded a debt discount of $446,000 representing the difference between the cash received and the total amount to be repaid. During the six months ended June 30, 2022, we recognized the remaining $259,678 of the debt discount into interest expense and repaid the remaining $340,000 of the debt.
   
[5] Effective March 30, 2021, we restructured a $1,000,000 promissory note with $200,000 of accrued interest, along with a $350,000 short-term advance, with Joseph Cammarata, our then Chief Executive Officer. The new note had a principal balance of $1,550,000, had a 5% interest rate, and was convertible at $0.02 per share. As a result of the fixed conversion price we recorded a beneficial conversion feature and debt discount of $1,550,000 on March 30, 2021, which was equal to the face value of the note. Effective September 21, 2021, we entered into an amendment to the note to extend the due date to September 30, 2022, allow for partial conversions, and change the conversion price to $0.008 per share. As the terms of the note changed substantially, we accounted for the amendment as an extinguishment and new note. Through September 21, 2021 we recognized $738,904 of the initial debt discount into interest expense, removed $806,849 of the remaining debt discount from the books, recorded a beneficial conversion feature due to the fixed conversion price and a debt discount of $1,550,000, which was equal to the face value of the amended note, and recorded a net $743,151 into additional paid in capital as a gain due to the extinguishment transaction being between related parties and thus a capital transaction. During the six months ended June 30, 2022, we recognized the remaining $1,131,417 of the $1,550,000 debt discount into interest expense. Also, during the six months ended June 30, 2022, we expensed $19,626 of interest expense on the debt. During February 2022, we provided 30 days’ notice of our intent to retire and repay the Cammarata Note in cash. Having not timely received a properly executed conversion notice within the proscribed period, and citing certain other damages incurred by us arising from Mr. Cammarata’s legal proceedings, on March 30, 2022, we tendered to Mr. Cammarata cash payment in full for the Cammarata Note. As of the date of this filing, Mr. Cammarata has not yet accepted our tender of the cash payment, and instead has asserted his entitlement to exercise his right to convert the Cammarata Note into our common shares. At June 30, 2022, we canceled the $1.6 million check issued to Mr. Cammarata and recorded the amount due in accrued liabilities.

 

17

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

[6] On March 22, 2021, we entered into Securities Purchase Agreements to purchase 100% of the operating assets of SSA Technologies LLC, an entity that owns and operates a FINRA-registered broker-dealer. SSA is controlled and partially owned by Joseph Cammarata, our former Chief Executive Officer. Commencing upon execution of the agreements and through the closing of the transactions, we agreed to provide certain transition service arrangements to SSA. In connection with the transactions, we entered into a Working Capital Promissory Note with SSA under which SSA was to have advanced to us up to $1,500,000 before the end of 2021; however, SSA has only provided advances of $1,200,000 to date. The note bears interest at the rate of 0.11% per annum therefore we recognized $660 worth of interest expense on the loan during the six months ended June 30, 2022. The note was due and payable by January 31, 2022; however, has not yet been repaid as we consider our legal options in light of SSA’s failure to complete its funding obligations. The note was to have been secured by the pledge of 12,000,000 shares of our common stock; however, it remains unsecured as the pledge of shares was not implemented at the closing of the loan.

 

In addition to the above-mentioned related-party lending arrangements, during the six months ended June 30, 2022, we entered into a Separation and Release Agreement (the “Separation Agreements”) with Mario Romano and Annette Raynor, two of the Company’s founders and former members of management and the Board of Directors, and Wealth Engineering, LLC, an affiliate of Mr. Romano and Ms. Raynor. Under the Separation Agreements, Mr. Romano and Ms. Raynor resigned their positions as officers and directors of the Company effective immediately upon execution of the Separation Agreements as they each transitioned to the roles of strategic advisors to the Company. In conjunction with the Separation Agreements Mr. Romano and Ms. Raynor forfeited 75,000,000 shares each, which were returned to the Company and cancelled, and we repurchased a total of 43,101,939 shares from Mr. Romano and Ms. Raynor in exchange for cash of $1,724,008, which was paid to federal and state taxing authorities on behalf of Wealth Engineering, LLC as payment for the estimated federal and state taxes that Wealth Engineering, LLC may be subject to in connection with the vesting of 63,333,333 Company restricted shares that vested on July 22, 2021 (see NOTE 9).

 

In addition to the above-mentioned related-party lending arrangements, during the six months ended June 30, 2021, we recorded 69,833,334 shares as forfeited as a result of 1) our Chief Financial Officer returning 1,300,000 shares to the Company prior to their vesting date and 2) our senior management team and board of directors unanimously agreeing to surrender and terminate an aggregate of 68,533,334 outstanding unvested restricted shares and 218,500,000 ungranted shares in exchange for the issuance of options to purchase 360,416,665 shares (see NOTE 9).

 

In addition to the above-mentioned related-party lending arrangements, during the six months ended June 30, 2021 DBR Capital LLC elected to contribute 77,000 ndau coins to us. These coins were valued as of the day of receipt at $1,185,792 and are recorded as an addition to Additional Paid in Capital. The contribution of these coins to the Company by DBR Capital, LLC was in recognition of the recent reorganization of the executive management team and Board of Directors of Investview, and to avoid the appearance of any potential conflicts of interest associated with a worldwide marketing and distribution arrangement between Oneiro and DBR Capital LLC in which DBR Capital is entitled to certain performance fees from Oneiro for worldwide sales of ndau introduced by DBR Capital, including purchases by Investview or any affiliates of Investview. The performance fee is determined as a commission on sales, with a floating range between 5% to 10% of sales, on aggregate sales ranging from $1 million to over $40 million. The performance fee is to be paid in ndau coins. During the most recent year ended December 31, 2021, DBR Capital earned a performance fee in connection with sales by Oneiro to Investview of approximately 77,000 ndau coins, which it elected to contribute to the Company effective as of April 1, 2022. DBR Capital has agreed to continue to renounce and assign to the Company for its discretionary use, its rights in and to any further performance fees related to ndau sales by Oneiro for so long as Mr. Rothrock remains either an executive officer or director of the Company.

 

NOTE 6 – DEBT

 

Our debt consisted of the following:

   June 30, 2022   December 31, 2021 
Loan with the U.S. Small Business Administration dated 4/19/20 [1][1] $541,096   $531,798 
Long term notes for APEX lease buyback [2][2]  9,400,108    10,870,861 
Total debt   9,941,204    11,402,659 
Less: Current portion   (2,909,513)   (2,947,013)
Debt, long term portion  $7,031,691   $8,455,646 

 

 

[1] In April 2020 we received proceeds of $500,000 from a loan entered into with the U.S. Small Business Administration. Under the terms of the loan interest is to accrue at a rate of 3.75% per annum and installment payments of $2,437 monthly will begin twelve months from the date of the loan, with all interest and principal due and payable thirty years from the date of the loan. During the six months ended June 30, 2022 we recorded $9,298 worth of interest on the loan.
   
[2] During the year ended March 31, 2021 we entered into notes with third parties for $19,089,500 in exchange for the cancellation of APEX leases previously entered into, which resulted in our purchase of all rights and obligations under the leases. We agreed to settle a portion of the debt during the year ended March 31, 2021, at a discount to the original note terms offered, by making lump sum payments, issuing shares of our common stock, issuing shares of our preferred stock, and issuing cryptocurrency. The remaining notes are all due December 31, 2024 and have a fixed monthly payment that is equal to 75% of the face value of the note, divided by 48 months. The monthly payments began the last day of January 2021 and continue until December 31, 2024 when the last monthly payment will be made, along with a balloon payment equal to 25% of the face value of the note, to extinguish the debt. During the six months ended June 30, 2022 we repaid a portion of the debt with cash payments of $479,703 and issuances of cryptocurrency valued at $991,050.

 

18

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

NOTE 7 – DERIVATIVE LIABILITY

 

During the six months ended June 30, 2022, we had the following activity in our derivative liability account relating to our warrants:

 

Derivative liability at December 31, 2021  $69,371 
Derivative liability recorded on new instruments   - 
Derivative liability reduced by warrant exercise (see NOTE 7)   - 
(Gain) loss on fair value   (37,836)
Derivative liability at June 30, 2022  $31,535 

 

We use the binomial option pricing model to estimate fair value for those instruments at inception, at warrant exercise, and at each reporting date. During the six months ended June 30, 2022, the assumptions used in our binomial option pricing model were in the following range:

 

Risk free interest rate   2.99 - 2.99% 
Expected life in years   3.09 - 4.00 
Expected volatility   183% - 205% 

 

NOTE 8 – OPERATING LEASE

 

In August 2019 we entered an operating lease for office space in Eatontown, New Jersey (the “Eatontown Lease”), in September 2019 we entered an operating lease for office space in Kaysville, Utah (the “Kaysville Lease”), in May 2021 we entered an operating lease for office space in Conroe, Texas (the “Conroe Lease”), in July 2021 we entered an operating lease for office space in Wyckoff, New Jersey (the “Wyckoff Lease”), and in September 2021 we acquired an operating lease for office space in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition (See NOTE 12).

 

At commencement of the Eatontown Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $110,097. We have the option to extend the three-year lease term of the Eatontown Lease for a period of one year. In addition, we are obligated to pay twelve monthly installments to cover an annual utility charge of $1.75 per rentable square foot for electric usage within the demised premises. As the lessor has the right to digitally meter and charge us accordingly, these payments were deemed variable and will be expensed as incurred. During the six months ended June 30, 2022 the variable lease costs amounted to $1,662.

 

At commencement of the Kaysville Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $21,147. On September 30, 2020, the Kaysville Lease expired and as of October 1, 2020, the Company began leasing the property located in Kaysville on a month-to-month basis.

 

At commencement of the Conroe Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $174,574. We have the option to extend the 24-month term of the Conroe Lease for three additional terms of 24 months.

 

At commencement of the Wyckoff Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $22,034. The term of the Wyckoff Lease is 24.5 months.

 

19

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

At date of acquisition of the Haverford lease, right-of-use assets and lease liabilities obtained amounted to $125,522 and $152,961, respectively. The term of the Haverford lease expires on December 31, 2022.

 

Operating lease expense was $125,507 for the six months ended June 30, 2022. Operating cash flows used for the operating leases during the six months ended June 30, 2022 was $141,510. As of June 30, 2022, the weighted average remaining lease term was 0.90 years and the weighted average discount rate was 12%.

 

Future minimum lease payments under non-cancellable leases as of June 30, 2022 were as follows:

 

      
Remainder of 2022  $121,710 
2023   57,045 
Total   178,755 
Less: Interest   (7,532)
Present value of lease liability   171,223 
Operating lease liability, current [1]   (170,961)
Operating lease liability, long term  $262 

 

 

[1]Represents lease payments to be made in the next 12 months.

 

NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

Preferred Stock

 

We are authorized to issue up to 50,000,000 shares of preferred stock with a par value of $0.001 and our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges, and preferences of that preferred stock.

 

Our Board of Directors approved the designation of 2,000,000 of the Company’s shares of preferred stock as Series B Cumulative Redeemable Perpetual Preferred Stock (“Series B Preferred Stock”), each with a stated value of $25 per share. Our Series B Preferred Stockholders are entitled to 500 votes per share and are entitled to receive cumulative dividends at the annual rate of 13% per annum of the stated value, equal to $3.25 per annum per share. The Series B Preferred Stock is redeemable at our option or upon certain change of control events.

 

During the year ended March 31, 2021 we commenced a security offering to sell a total of 2,000,000 units at $25 per unit (“Unit Offering”), such that each unit consisted of: (i) one share of our newly authorized Series B Preferred Stock and (ii) five warrants each exercisable to purchase one share of common stock at an exercise price of $0.10 per warrant share. Each Warrant offered is immediately exercisable on the date of issuance, will expire 5 years from the date of issuance, and its value has been classified as a fair value liability due to the terms of the instrument (see NOTE 7).

 

During the six months ended June 30, 2021 we sold 196,638 units for a total of $4,915,950: 78,413 units for cash proceeds of $3,640,550, 1,598 units for bitcoin proceeds of $39,950, and 49,418 units for debt of $1,235,450. In conjunction with the sale of the units we issued 196,638 shares of Series B Preferred Stock and granted 983,190 warrants during the period.

 

As of June 30, 2022 and December 31, 2021, we had 252,192 shares of preferred stock issued and outstanding.

 

Preferred Stock Dividends

 

During the six months ended June 30, 2022, we recorded $409,670 for the cumulative cash dividends due to the shareholders of our Series B Preferred Stock. We made payments of $313,643 in cash and issued $84,855 worth of cryptocurrency to reduce the amounts owed. As a result, we recorded $230,877 as a dividend liability on our balance sheet as of June 30, 2022.

 

Common Stock

 

During the six months ended June 30, 2022, we cancelled 219,833,334 shares that had been issued but were forfeited by choice or as a result of certain forfeiture conditions (see NOTE 5). As a result, we decreased common stock by $219,834 and increased additional paid in capital by the same. As of the date of this filing, 33,333,333 shares of common stock forfeited during the nine months ended December 31, 2021 had not yet been physically cancelled due to administrative delays. All forfeited shares have been deemed cancelled as of June 30, 2022. Also, during the six months ended June 30, 2022, we repurchased 43,101,939 shares from members of our then Board of Directors in exchange for cash of $1,724,008 to pay for tax withholdings (see NOTE 5).

 

20

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

During the six months ended June 30, 2021, we cancelled 255,000,000 shares that had been issued but were subject to certain forfeiture conditions. As a result of the forfeiture, we decreased common stock by $255,000 and increased additional paid in capital by the same. Also, during the six months ended June 30, 2021, we issued 11,500,000 shares of common stock for services and compensation and recognized a total of $989,391 in stock-based compensation based on grant date fair values and vesting terms of the awards granted in the current and prior periods. We also issued 64,340 shares of common stock as a result of warrants exercised, resulting in proceeds of $6,434.

 

As of June 30, 2022 and December 31, 2021, we had 2,641,275,489 and 2,904,210,762 shares of common stock issued and outstanding, respectively.

 

Options

 

During the six months ended June 30, 2022, we undertook to restructure unvested incentive equity awards previously granted to our senior leadership team. The Company’s senior management team and board of directors unanimously agreed to surrender and terminate an aggregate of 68,533,334 outstanding unvested restricted shares and 218,500,000 ungranted shares in exchange for the issuance of options to purchase 360,416,665 shares, vesting in equal amounts over a five-year period, at an exercise price of $0.05 per share. The third-party valuation firm we engaged to value these options utilized the Black Scholes Model to value these options and the expense related to these options is being recognized over their vesting terms. Total stock compensation expense for the six months ended June 30, 2022, was $113,281.

 

Warrants

 

Transactions involving our warrants are summarized as follows:

 

       Weighted 
   Number of   Average 
   Shares   Exercise Price 
Warrants outstanding at December 31, 2021   1,178,320   $0.10 
Granted   -   $- 
Canceled/Expired   -   $- 
Exercised   -   $- 
Warrants outstanding at June 30, 2022   1,178,320   $0.10 

 

Details of our warrants outstanding as of June 30, 2022 is as follows:

 

Exercise Price   Warrants Outstanding   Warrants Exercisable  

Weighted Average

Contractual Life (Years)

 
$0.10    1,178,320    1,178,320    3.90 

 

Class B Units of Investview Financial Group Holdings, LLC

 

As of June 30, 2022 and December 31, 2021 there were 565,000,000 Units of Class B Investview Financial Group Holdings, LLC issued and outstanding. These units were issued as consideration for the purchase of operating assets and intellectual property rights of MPower Trading Systems, LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members (see NOTE 12). The Class B Redeemable Units have no voting rights but can be exchanged at any time, within 5 years from the date of issuance, for 565,000,000 shares of our common stock on a one-for-one basis and are subject to significant restrictions upon resale through 2025 under the terms of a lock up agreement. The fair value of the consideration at the if-converted market value of the common shares was $58.9 million based on the closing market price of $0.1532 on the closing date of September 3, 2021, as discounted from $86.6 million by 32% (or $27.7 million) to reflect the significant lock up period.

 

21

 

 

INVESTVIEW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

(Unaudited)

 

NOTE 10 – COMMITMENTS AND CONTINGENCIES

 

Legal Proceedings

 

In the ordinary course of business, we may be, or have been, involved in legal proceedings. During the six months ended June 30, 2022 we were not involved in any material legal proceedings, however, during November 2021 we received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. We have reason to believe that the focus of the SEC’s inquiry involves whether certain federal securities laws were violated in connection with, among other things, the offer and sale of cryptocurrency products and the operation of our subscription-based multi-level marketing business now known as iGenius. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. We believe that we have complied at all times with the federal securities laws. However, we are aware of the evolving SEC commentary and rulemaking process relative to the characterization of cryptocurrency products under federal securities laws that is sweeping through a large number of businesses that operate within the cryptocurrency sector. We intend to cooperate fully with the SEC’s investigation and will continue to work with outside counsel to review the matter.

 

We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party suppliers, certain of which, until January 2022, included a product protection option provided by a third-party provider. According to marketing and legal documents provided by such third-party provider, the product protection would allow the purchaser to protect its initial purchase price by obtaining 50% of its purchase price at five years or 100% of its purchase price at ten years. In January 2022, we suspended any further offering of the product protection option in the cryptocurrency packages after the third-party provider was unable to comply with our standard vendor compliance protocols, citing certain offshore confidentiality entitlements. That suspension will remain in place until we are able to further validate the continued integrity of the product protection and the vendor’s ability to honor its commitments to our members. See Part II, Item 1A. “Risk Factors” beginning on page 29 of this report.

 

NOTE 11 – INCOME TAXES

 

For the periods ended June 30, 2022, and June 30, 2021, the Company used a discrete effective tax rate method for recording income taxes, as compared to an estimated full year annual effective tax rate method, as an estimate of the annual effective tax rate cannot be made.

 

Provision for income taxes for the three and six months ended June 30, 2022 was $635,745 and $641,745, respectively, resulting in an effective tax rate of 118.60% and 21.97%, respectively. Provision for income taxes for the three and six months ended June 30, 2021 was $3,189 and $146,192, respectively, resulting in an effective tax rate of 0.1% and 1.1%, respectively. The provision for income taxes was primarily impacted by pretax book income, permanent differences, and by the change in valuation allowance on deferred tax assets.

 

NOTE 12 – ACQUISITION & NONCONTROLLING INTEREST IN SUBSIDIARY

 

On March 22, 2021, we entered into a Securities Purchase Agreement to purchase the operating assets and intellectual property rights of MPower Trading Systems, LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members, in exchange for 565,000,000 nonvoting Class B Units of Investview Financial Group Holdings, LLC (“Units”). This acquisition closed on September 3, 2021, and we acquired an office lease, furniture and fixtures, and Prodigio, a proprietary software-based trading platform with applications in the brokerage industry. The Units can be exchanged at any time, within 5 years from the date of issuance, for 565,000,000 shares of our common stock on a one-for-one basis and are subject to a 44 month lock up period. The fair value of the consideration at the if-converted market value of the common shares was $58.9 million based on the closing market price of $0.1532 on the closing date of September 3, 2021, as discounted from $86.6 million by 32% (or $27.7 million) to reflect the significant lock up period.

 

The Company determined that as of the date of the acquisition, the fair value of the Prodigio Trading Platform software was $7.2 million. The difference between the value of the software asset and the consideration issued was driven by an increase in the valuation of the Class B Units between the execution of the original Securities Purchase Agreement in March 2021 which set the number of units to be issued as consideration and the closing of the transaction in September 2021, as well as the software’s lack of revenue generation and a readily available path to monetization through synergies with a broker-dealer partner. Accordingly, the Company recorded a non-cash loss on acquisition of $51.6 million as illustrated below.

 

      
Purchase price (fair value of Units)  $58,859,440 
Intangible asset (Prodigio software)   7,240,000 
Loss on asset acquisition  $51,619,440 

 

NOTE 13 – SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have determined that there are no subsequent events that require disclosure other than the following:

 

Effective August 12, 2022 we entered into a Fourth Amendment to the Amended and Restated Securities Purchase Agreement dated as of November 9, 2020. The new amendment changes the deadlines for the fourth and fifth closings under the Agreement from December 31, 2022, to December 31, 2024.

 

22

 

 

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

The following discussion should be read in conjunction with our consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. When the words “believe,” “expect,” “plan,” “project,” “estimate,” and similar expressions are used, they identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management, and involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission (“SEC”). The forward-looking statements included in this report are made only as of the date of this report. We disclaim any obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.

 

Business Overview

 

We operate a financial technology (FinTech) services company in several different businesses. We deliver multiple products and services through a direct selling network, also known as multi-level marketing, of independent distributors that offer our products and services through a subscription-based revenue model to our distributors, as well as by our distributors to a large base of customers that we refer to as “members”. Through this business, we provide research, education, and investment tools designed to assist the self-directed investor in successfully navigating the financial markets. These services include research and education regarding equities, options, FOREX, ETFs, binary options, and cryptocurrency. In addition to research and education, we also offer full education and software applications to assist the individual in debt reduction, increased savings, budgeting, and proper tax management. Each product subscription includes a core set of trading tools and research along with the personal finance management suite to provide an individual with complete access to the information necessary to cultivate and manage his or her financial situation. In addition to our education subscriptions, through a distribution arrangement we have with a third party, we have provided our members with an opportunity to purchase through such third party, a specialty form of adaptive digital currency called “ndau”. Through our direct selling model, we compensate our distributors with commissions under a standard bonus plan that allows for discretionary bonuses based on performance.

 

We also operate a blockchain technology business that provides leading-edge research, development, and FinTech services involving the management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. As well, in order to, among other things, commercialize on the proprietary trading platform we recently acquired from MPower Trading Systems, LLC, take advantage of the market’s increasing acceptance and expansion of the ownership and use of digital currencies as an investable asset class, subject to applicable regulatory limitations, and to proactively respond to increasing regulatory scrutiny relative to cryptocurrency products, we have adopted a growth plan that contemplates the establishment of a suite of financial service companies that will include self-directed brokerage services, institutional trade execution services, innovative advisory services (RIA, CTA), and codeless algorithmic trading technologies, which will operate under our recently formed subsidiary, Investview Financial Group Holdings, LLC (“IFGH”). Towards that end, in March 2021 we entered into an agreement to acquire a brokerage firm from an affiliate of the former Chief Executive Officer of the Company. However, having been unable to secure the requisite FINRA approval by the expiration date within the agreement, we terminated the transaction on June 14, 2022, and commenced a search for alternative acquisitions within the brokerage industry. Further, we have also recently withdrawn our state and NFA registrations associated with our wholly owned subsidiary, SAFE Management, LLC (“SAFE Management”), as we concluded there to be no material benefit to retaining an interest in a dormant investment advisor and commodity trading advisor. We plan to relaunch these services under the IFGH umbrella in the future to primarily focus on commodities and FOREX, however, most likely in conjunction with an acquisition within the brokerage industry.

 

23

 

 

Results of Operations

 

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

 

Revenues

 

   Three Months Ended June 30,   Increase 
   2022   2021   (Decrease) 
   (unaudited)   (unaudited)     
Subscription revenue, net of refunds, incentives, credits, and chargebacks  $11,104,539   $10,849,697   $254,842 
Mining revenue   3,058,144    8,371,562    (5,313,418)
Cryptocurrency revenue   516,960    6,405,306    (5,888,346)
Miner repair revenue   80,110    -    80,110 
Digital wallet revenue   5,868    -    5,868 
Total revenue, net  $14,765,621   $25,626,565   $(10,860,944)

 

Revenue, net, decreased $10,860,944, or 42%, from $25,626,565 for the three months ended June 30, 2021, to $14,765,621 for the three months ended June 30, 2022. The decrease can be explained by $5.3 million and $5.8 million decreases in our mining revenue and cryptocurrency revenue, respectively, offset by a $255 thousand increase in our net subscription revenue. The $255 thousand (2%) increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $5.3 million (63%) decrease in mining revenue was a result of the decrease in the value of Bitcoin and an increase in the Bitcoin mining difficulty levels, as well as, older and less efficient Bitcoin mining equipment taken offline for repairs during the period; and the $5.8 million decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU.

 

Operating Costs and Expenses

 

   Three Months Ended June 30,   Increase 
   2022   2021   (Decrease) 
   (unaudited)   (unaudited)     
Cost of sales and service  $1,898,140   $2,186,152   $(288,012)
Commissions   6,445,793    8,782,421    (2,336,628)
Selling and marketing   23,511    39,849    (16,338)
Salary and related   1,641,345    1,372,325    269,020
Professional fees   770,345    661,884    108,461 
Impairment expense   6,383    -    6,383 
Loss (gain) on disposal of assets   (247,209)   -    (247,209)
General and administrative   2,627,884    2,046,484    581,400 
Total operating costs and expenses  $13,166,192   $15,089,115   $(1,922,923)

 

Operating costs decreased $1,922,923, or 13%, from $15,089,115 for the three months ended June 30, 2021, to $13,166,192 for the three months ended June 30, 2022. We experienced a decrease in commissions of $2.3 million, which was a result of decreases in our cryptocurrency revenue, a decrease in our cost of sales and services of $288 thousand due to the relocation of our miners and a related decrease in our mining costs that included hosting, electrical and power costs, and a $247 thousand increase in gain on disposal of assets, where in the current period we sold assets with a total net book value of $371 thousand for cash of $618 thousand, with no similar sales occurring in the prior period. These decreases were offset by an increase in salary and related of $269 thousand as a result of general growth in the company, an increase in professional fees of $108 thousand due to higher legal fees, and an increase in general and administrative costs of $581 thousand which was mainly driven by depreciation, as we purchased and deployed additional mining equipment during the current period, partially offset by lower banking fees.

 

Other Income and Expenses

 

   Three Months Ended June 30,     
   2022   2021   Change 
   (unaudited)   (unaudited)     
Gain (loss) on debt extinguishment  $455   $4,001   $(3,546)
Gain (loss) on fair value of derivative liability   61,679    236,648    (174,969)
Realized gain (loss) on cryptocurrency   (837,808)   (1,282,970)   445,162 
Interest expense   (4,675)   (5,934)   1,246 
Interest expense, related parties   (309,669)   (759,686)   450,017 
Other income (expense)   26,626    46,338    (19,712)
Total other income (expense)  $(1,063,392)  $(1,761,603)  $698,211 

 

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We recorded other expense of $1,063,392 for the three months ended June 30, 2022, which was a difference of $698,211, or 40%, from the prior period other expense of $1,761,603. The change is due to a realized loss recorded on cryptocurrency in the current period of $837 thousand compared to a realized loss of $1.3 million in the prior period, plus related party interest expense recorded in current period versus the prior period ($310 thousand for the three months ended June 30, 2022 compared to $760 thousand for the three months ended June 30, 2021), offset by a gain on fair value of derivative liability in the current period of $62 thousand compared to a gain of $237 thousand in the prior period.

 

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

 

Revenues

 

   Six Months Ended June 30,   Increase 
   2022   2021   (Decrease) 
   (unaudited)   (unaudited)     
Subscription revenue, net of refunds, incentives, credits, and chargebacks  $24,835,209   $18,799,414   $6,035,795 
Mining revenue   6,635,117    16,708,921    (10,073,804)
Cryptocurrency revenue   957,376    7,170,168    (6,212,792)
Miner repair revenue   80,110    -    80,110 
Digital wallet revenue   5,868    -    5,868 
Fee revenue   -    2,032    (2,032)
Total revenue, net  $32,513,680   $42,680,535   $(10,166,855)

 

Revenue, net, decreased $10,166,855, or 24%, from $42,680,535 for the six months ended June 30, 2021, to $32,513,680 for the six months ended June 30, 2022. The decrease can be explained by $10.1 million and $6.2 million decreases in our mining revenue and cryptocurrency revenue, respectively, offset by a $6.0 million increase in our net subscription revenue. The $6.0 million (32%) increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $10.1 million (60%) decrease in mining revenue was a result of the decrease in the value of Bitcoin and an increase in the Bitcoin mining difficulty levels, as well as, older and less efficient Bitcoin mining equipment taken offline for repairs during the period; and the $6.2 million decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU.

 

Operating Costs and Expenses

 

   Six Months Ended June 30,   Increase 
   2022   2021   (Decrease) 
   (unaudited)   (unaudited)     
Cost of sales and service  $3,728,481   $5,084,659   $(1,356,178)
Commissions   13,829,481    13,867,300    (37,819)
Selling and marketing   35,265    67,500    (32,235)
Salary and related   2,856,608    2,562,466    294,142
Professional fees   1,749,320    1,312,365    436,955 
Impairment expense   6,383    534,438    (528,055)
Loss (gain) on disposal of assets   (271,509)   -    (271,509)
General and administrative   4,695,700    3,863,881    831,819 
Total operating costs and expenses  $26,629,729   $27,292,609   $(662,880)

 

Operating costs decreased $662,880, or 2%, from $26,929,729 for the six months ended June 30, 2021, to $26,078,383 for the six months ended June 30, 2022. We experienced a decrease in our cost of sales and services of $1.4 million due to the relocation of our miners and a related decrease in our mining costs that included hosting, electrical and power costs, a decrease in impairment expense of $528 thousand where in the prior period we wrote-off $534 thousand of intangible assets as a result of recoverability issues, with only a $6 thousand write-off of fixed assets occurring in the current period, and a $272 thousand increase in gain on disposal of assets, where in the current period we sold assets with a total net book value of $375 thousand for cash of $647 thousand, with no similar sales occurring in the prior period. These decreases were offset by an increase in salary and related of $294 thousand as a result of general growth in the company, an increase in professional fees of $437 thousand due to higher legal fees, and an increase in general and administrative costs of $832 thousand which was mainly driven by depreciation, as we purchased and deployed additional mining equipment during the current period, partially offset by lower banking fees.

 

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Other Income and Expenses

 

   Six Months Ended June 30,     
   2022   2021   Change 
   (unaudited)   (unaudited)     
Gain (loss) on debt extinguishment  $455   $411,803   $(411,348)
Gain (loss) on fair value of derivative liability   37,836    51,911    (14,075)
Realized gain (loss) on cryptocurrency   (1,020,597)   (758,758)   (261,839)
Interest expense   (9,298)   (11,803)   2,505 
Interest expense, related parties   (2,029,134)   (1,133,766)   (895,368)
Other income (expense)   57,853    (86,902)   144,755)
Total other income (expense)  $(2,962,885)  $(1,527,515)  $(1,435,370)

 

We recorded other expense of $2,962,885 for the six months ended June 30, 2022, which was a difference of $1,435,370, or 94%, from the prior period other expense of $1,527,515. The change is due to a minimal gain on debt extinguishment recorded in the current period compared to a gain of $412 thousand recorded in the prior period, a realized loss recorded on cryptocurrency in the current period of $1.0 million compared to a realized loss of $759 thousand in the prior period, and more related party interest expense recorded in current period versus the prior period ($2.0 million for the six months ended June 30, 2022 compared to $1.1 million for the six months ended June 30, 2021). Amounts recorded in related party interest expense included the amortization of debt discounts, which was being recognized over the term of the debt, however, during the six months ended June 30, 2022 we repaid two of our related party notes early, which resulted in the recognition of $1.2 million of the amortization of the related debt discount amounts into interest.

 

Liquidity and Capital Resources

 

During the six months ended June 30, 2022, we recorded net income of $2,279,321 and generated $4,491,640 in cash through our operating activities. We used this cash to fund operations, fund the purchase of $11,187,053 worth of fixed assets, to repay $2,493,013 worth of related party payable, and to repurchase shares for $1,724,008. As a result, our cash, cash equivalents, and restricted cash decreased by $11,059,490 to $21,557,416 as compared to $32,616,906 at the beginning of the fiscal year. As of June 30, 2022, our current assets exceeded our current liabilities to result in working capital of $15,509,390.

 

Critical Accounting Policies

 

Basis of Presentation

 

Our policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Prior to September 20, 2021 we operated the Company on a March 31, fiscal year end. Effective September 30, 2021 we changed our fiscal year to December 31.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the six months ended June 30, 2022, are not necessarily indicative of the operating results that may be expected for the filing of our December 31, 2022 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2021 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Kuvera France S.A.S (through its closure date in June of 2021), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC (formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, and Investview MTS, LLC. All intercompany transactions and balances have been eliminated in consolidation.

 

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Use of Estimates

 

The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

 

Subscription Revenue

 

Most of our revenue is generated by subscription sales and payment is received at the time of purchase. We recognize subscription revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first time subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds, sales incentives, credits, and known and estimated credit card chargebacks. As of June 30, 2022 and December 31, 2021 our deferred revenues were $2,659,069 and $3,288,443, respectively.

 

Mining Revenue

 

Through our wholly owned subsidiary, SAFETek, LLC, we leased equipment under a sales-type lease through June of 2020. In June of 2020 we cancelled all leases and purchased all of the rights and obligations under the leases, which included obtaining ownership of all equipment. We use the equipment on blockchain networks to validate and add blocks of transactions to blockchain ledgers (commonly referred to as “mining”). As compensation for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted to us. Our mining activities constitute our ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of our mining activities.

 

Cryptocurrency Revenue

 

We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party suppliers. The various packages include different amounts of coin with differing rates of returns and terms and, in some cases prior to January 2022, include a product protection option that allows the purchaser to protect their initial purchase price. The protection allows the purchaser to obtain 50% of their purchase price at five years or 100% of their purchase price at ten years. Both the coin and protection option are delivered by third-party suppliers.

 

We recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party suppliers to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our suppliers on our books. As of June 30, 2022 and December 31, 2021 our customer advances related to cryptocurrency revenue were $301,399 and $75,702, respectively.

 

Fee Revenue

 

We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.

 

Miner Repair Revenue

 

Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. We recognize miner repair revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver the promised goods to our customers.

 

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Digital Wallet Revenue

 

We generate revenue from the sale of digital wallets to our customers through an arrangement with a third-party supplier. We offer three tiers of wallets which include different features. The digital wallets are delivered by a third-party supplier.

 

We recognize digital wallet revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third-parties to provide the wallet to our customers and payment is received from our customers at the time of order placement.

 

Revenue generated for the six months ended June 30, 2022 is as follows:

 

   Subscription
Revenue
   Cryptocurrency
Revenue
   Mining
Revenue
   Miner Repair
Revenue
   Digital Wallet
Revenue
   Total 
Gross billings/receipts  $26,448,766   $1,874,382   $6,635,117   $80,110   $7,157   $35,045,532 
Refunds, incentives, credits, and chargebacks   (1,613,557)   -    -    -    -    (1,613,557)
Amounts paid to providers   -    (917,006)   -    -    (1,289)   (918,295)
Net revenue  $24,835,209   $957,376   $6,635,117   $80,110   $5,868   $32,513,680 

 

For the six months ended June 30, 2022 foreign and domestic revenues were approximately $21.9 million and $10.6 million, respectively.