U.S. Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
December 31, 2019September 30, 2020
[ ] 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 | [X] | 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 | [X] | 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 [X] | ||
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 | [X] |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of February 12,November 2, 2020, there were 3,013,490,4082,929,481,329 shares of common stock, $0.001 par value, outstanding.
INVESTVIEW, INC.
Form 10-Q for the Three and NineSix Months Ended December 31, 2019September 30, 2020
Table of Contents
2 |
PART I – FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, | March 31, | September 30, | March 31, | |||||||||||||
2019 | 2019 | 2020 | 2020 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 263,600 | $ | 133,644 | $ | 583,955 | $ | 137,177 | ||||||||
Restricted cash, current | 151,489 | - | ||||||||||||||
Prepaid assets | 3,619,317 | 6,685,970 | 818,749 | 5,309,512 | ||||||||||||
Receivables | 623,203 | 724,995 | 964,613 | 910,646 | ||||||||||||
Short-term advances | 145,000 | 10,000 | 145,000 | 145,000 | ||||||||||||
Short-term advances - related party | 7,500 | 500 | 500 | 500 | ||||||||||||
Other current assets | 156,448 | 142,061 | 155,628 | 96,022 | ||||||||||||
Total current assets | 4,815,068 | 7,697,170 | 2,819,934 | 6,598,857 | ||||||||||||
Fixed assets, net | 3,864,341 | 13,528 | 5,918,004 | 2,997,611 | ||||||||||||
Other assets: | ||||||||||||||||
Intangible assets, net | 736,051 | 1,576,685 | 606,070 | 692,882 | ||||||||||||
Long term license agreement, net | 1,869,905 | 1,983,220 | ||||||||||||||
Restricted cash, long term | 288,411 | - | ||||||||||||||
Operating lease right-of-use asset | 112,564 | - | 72,093 | 99,465 | ||||||||||||
Deposits | 8,488 | 4,500 | 8,488 | 11,173 | ||||||||||||
Total other assets | 2,727,008 | 3,564,405 | 975,062 | 803,520 | ||||||||||||
Total assets | $ | 11,406,417 | $ | 11,275,103 | $ | 9,713,000 | $ | 10,399,988 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable and accrued liabilities | $ | 2,543,328 | $ | 3,008,836 | $ | 2,271,583 | $ | 2,896,012 | ||||||||
Payroll liabilities | 23,575 | 888,177 | 171,412 | 880,349 | ||||||||||||
Customer advance | 607,205 | 265,000 | 474,155 | 392,310 | ||||||||||||
Deferred revenue | 731,578 | 1,876,727 | 780,396 | 612,500 | ||||||||||||
Derivative liability | 383,670 | 1,358,901 | 4,265 | 793,495 | ||||||||||||
Dividend liability | 37,775 | - | ||||||||||||||
Operating lease liability, current | 59,064 | - | 48,000 | 56,530 | ||||||||||||
Other current liabilities | 7,576,800 | - | 14,077,200 | 11,407,200 | ||||||||||||
Related party payables, net of discounts | 1,646,893 | 545,489 | 1,766,400 | 1,964,760 | ||||||||||||
Debt, net of discounts | 2,181,578 | 1,977,030 | 1,571,921 | 1,719,326 | ||||||||||||
Total current liabilities | 15,753,691 | 9,920,160 | 21,203,107 | 20,722,482 | ||||||||||||
Operating lease liability, long term | 59,333 | - | 31,428 | 50,268 | ||||||||||||
Other long term liabilities, net | 1,652,593 | - | ||||||||||||||
Other long term liabilities, net of deferred interest | 8,087,700 | 3,885,464 | ||||||||||||||
Total long term liabilities | 1,711,926 | - | 8,119,128 | 3,935,732 | ||||||||||||
Total liabilities | 17,465,617 | 9,920,160 | 29,322,235 | 24,658,214 | ||||||||||||
Commitments and contingencies | - | - | - | - | ||||||||||||
Stockholders’ equity (deficit): | ||||||||||||||||
Preferred stock, par value: $0.001; 10,000,000 shares authorized, none issued and outstanding as of December 31, 2019 and March 31, 2019 | - | - | ||||||||||||||
Common stock, par value $0.001; 10,000,000,000 shares authorized; 3,003,490,408 and 2,640,161,318 shares issued and outstanding as of December 31, 2019 and March 31, 2019, respectively | 3,003,490 | 2,640,161 | ||||||||||||||
Preferred stock, par value: $0.001; 50,000,000 shares authorized, 46,612 and none issued and outstanding as of September 30, 2020 and March 31, 2020, respectively | 47 | - | ||||||||||||||
Common stock, par value $0.001; 10,000,000,000 shares authorized; 2,929,481,329 and 3,214,490,408 shares issued and outstanding as of September 30, 2020 and March 31, 2020, respectively | 2,929,481 | 3,214,490 | ||||||||||||||
Additional paid in capital | 24,618,312 | 23,758,917 | 30,021,081 | 28,929,516 | ||||||||||||
Accumulated other comprehensive income (loss) | 3,430 | 1,363 | (23,781 | ) | (20,058 | ) | ||||||||||
Accumulated deficit | (33,684,432 | ) | (25,096,983 | ) | (52,536,063 | ) | (46,382,174 | ) | ||||||||
Total Investview stockholders’ equity (deficit) | (6,059,200 | ) | 1,303,458 | |||||||||||||
Noncontrolling interest | - | 51,485 | ||||||||||||||
Total stockholders’ equity (deficit) | (6,059,200 | ) | 1,354,943 | (19,609,235 | ) | (14,258,226 | ) | |||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 11,406,417 | $ | 11,275,103 | $ | 9,713,000 | $ | 10,399,988 |
The accompanying notes are an integral part of these condensed consolidated financial statements
3 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended December 31, | Nine Months Ended December 31, | Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||
Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 4,578,623 | $ | 7,003,802 | $ | 19,327,091 | $ | 20,835,048 | $ | 5,255,888 | $ | 7,236,755 | $ | 9,499,145 | $ | 14,748,468 | ||||||||||||||||
Equipment sales, net of refunds | - | 694,954 | - | 694,954 | ||||||||||||||||||||||||||||
Cryptocurrency mining service revenue, net of refunds and amounts paid to supplier | - | 34,278 | - | 1,812,601 | ||||||||||||||||||||||||||||
Mining revenue | 380,871 | - | 380,871 | - | 2,493,739 | - | 3,836,285 | - | ||||||||||||||||||||||||
Fee revenue | 4,117 | - | 9,486 | - | 3,710 | 5,369 | 7,723 | 5,369 | ||||||||||||||||||||||||
Total revenue, net | 4,963,611 | 7,733,034 | 19,717,448 | 23,342,603 | 7,753,337 | 7,242,124 | 13,343,153 | 14,753,837 | ||||||||||||||||||||||||
Operating costs and expenses: | ||||||||||||||||||||||||||||||||
Cost of sales and service | 560,145 | 493,591 | 1,092,643 | 924,588 | 1,724,809 | 289,045 | 2,637,133 | 532,498 | ||||||||||||||||||||||||
Commissions | 1,605,925 | 5,087,053 | 10,822,072 | 17,316,319 | 3,416,713 | 4,347,177 | 6,790,544 | 9,216,147 | ||||||||||||||||||||||||
Selling and marketing | 575,199 | 109,265 | 1,389,666 | 634,671 | 627,356 | 401,979 | 844,940 | 814,467 | ||||||||||||||||||||||||
Salary and related | 1,721,970 | 1,059,660 | 5,433,416 | 3,075,862 | 816,554 | 2,567,592 | 2,037,389 | 3,711,446 | ||||||||||||||||||||||||
Professional fees | 474,287 | 284,586 | 1,130,070 | 1,355,182 | 232,062 | 346,337 | 659,310 | 655,783 | ||||||||||||||||||||||||
General and administrative | 1,765,381 | 940,767 | 4,487,137 | 2,921,073 | 364,826 | 1,363,113 | 2,809,618 | 2,721,756 | ||||||||||||||||||||||||
Total operating costs and expenses | 6,702,907 | 7,974,922 | 24,355,004 | 26,227,695 | 7,182,320 | 9,315,243 | 15,778,934 | 17,652,097 | ||||||||||||||||||||||||
Net loss from operations | (1,739,296 | ) | (241,888 | ) | (4,637,556 | ) | (2,885,092 | ) | 571,017 | (2,073,119 | ) | (2,435,781 | ) | (2,898,260 | ) | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||||
Gain (loss) on debt extinguishment | 443,907 | - | 1,725,384 | 19,387 | 812,111 | 1,281,477 | 829,937 | 1,281,477 | ||||||||||||||||||||||||
Gain (loss) on fair value of derivative liability | (94,622 | ) | - | 504,635 | - | (20,847 | ) | 2,358,447 | 326,788 | 599,257 | ||||||||||||||||||||||
Gain (loss) on bargain purchase | - | - | - | 2,005,282 | ||||||||||||||||||||||||||||
Gain (loss) on deconsolidation | - | - | 53,739 | - | ||||||||||||||||||||||||||||
Gain on deconsolidation | - | - | - | 53,739 | ||||||||||||||||||||||||||||
Impairment expense | (66,645 | ) | - | (66,645 | ) | - | ||||||||||||||||||||||||||
Realized gain (loss) on cryptocurrency | 10 | (1,091 | ) | (657 | ) | 16,363 | 1,096 | (1,077 | ) | 1,096 | (667 | ) | ||||||||||||||||||||
Unrealized gain (loss) on cryptocurrency | (16,885 | ) | (116 | ) | 8,445 | 95,810 | 85,331 | (122,080 | ) | 176,817 | 25,330 | |||||||||||||||||||||
Impairment expense | (627,452 | ) | - | (627,452 | ) | - | ||||||||||||||||||||||||||
Interest expense | (1,427,433 | ) | (206,007 | ) | (3,918,070 | ) | (210,154 | ) | (2,480,067 | ) | (1,944,640 | ) | (4,727,165 | ) | (2,490,637 | ) | ||||||||||||||||
Interest expense, related parties | (367,190 | ) | - | (1,618,284 | ) | (5,000 | ) | (210,805 | ) | (1,251,094 | ) | (389,720 | ) | (1,251,094 | ) | |||||||||||||||||
Other income (expense) | 3,231 | (606 | ) | (68,053 | ) | (2,449 | ) | 123,346 | 358 | 186,408 | (71,284 | ) | ||||||||||||||||||||
Total other income (expense) | (2,086,434 | ) | (207,820 | ) | (3,940,313 | ) | 1,919,239 | (1,756,480 | ) | 321,391 | (3,662,484 | ) | (1,853,879 | ) | ||||||||||||||||||
Income (loss) before income taxes | (3,825,730 | ) | (449,708 | ) | (8,577,869 | ) | (965,853 | ) | (1,185,463 | ) | (1,751,728 | ) | (6,098,265 | ) | (4,752,139 | ) | ||||||||||||||||
Income tax expense | (2,198 | ) | (2,655 | ) | (9,580 | ) | (44,844 | ) | (2,297 | ) | (1,838 | ) | (3,282 | ) | (7,382 | ) | ||||||||||||||||
Net income (loss) | (3,827,928 | ) | (452,363 | ) | (8,587,449 | ) | (1,010,697 | ) | (1,187,760 | ) | (1,753,566 | ) | (6,101,547 | ) | (4,759,521 | ) | ||||||||||||||||
Less: net income (loss) attributable to the noncontrolling interest | - | 27,613 | - | (5,399 | ) | |||||||||||||||||||||||||||
Net income (loss) attributable to Investview stockholders | $ | (3,827,928 | ) | $ | (479,976 | ) | $ | (8,587,449 | ) | $ | (1,005,298 | ) | ||||||||||||||||||||
Dividends on Preferred Stock | (52,342 | ) | - | (52,342 | ) | - | ||||||||||||||||||||||||||
Net income applicable to common shareholders | $ | (1,240,102 | ) | $ | (1,753,566 | ) | $ | (6,153,889 | ) | $ | (4,759,521 | ) | ||||||||||||||||||||
Income (loss) per common share, basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
Weighted average number of common shares outstanding, basic and diluted | 2,840,281,449 | 2,213,661,318 | 2,748,911,300 | 2,197,588,591 | 2,985,916,112 | 2,840,281,449 | 3,109,673,727 | 2,234,117,482 | ||||||||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | $ | 22,627 | $ | 3,470 | $ | 2,067 | $ | 7,211 | $ | (4,359 | ) | $ | (1,585 | ) | $ | (3,723 | ) | $ | (20,560 | ) | ||||||||||||
Total other comprehensive income | 22,627 | 3,470 | 2,067 | 7,211 | (4,359 | ) | (1,585 | ) | (3,723 | ) | (20,560 | ) | ||||||||||||||||||||
Comprehensive income (loss) | (3,805,301 | ) | (448,893 | ) | (8,585,382 | ) | (1,003,486 | ) | $ | (1,192,119 | ) | $ | (1,755,151 | ) | $ | (6,105,270 | ) | $ | (4,780,081 | ) | ||||||||||||
Less: comprehensive income attributable to the noncontrolling interest | (22,627 | ) | (3,470 | ) | - | (7,211 | ) | |||||||||||||||||||||||||
Comprehensive income (loss) attributable to Investview shareholders | $ | (3,827,928 | ) | $ | (452,363 | ) | $ | (8,585,382 | ) | $ | (1,010,697 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements
4 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Unaudited)
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||||
Common stock | Paid in | Comprehensive | Accumulated | Noncontrolling | ||||||||||||||||||||||||
Shares | Amount | Capital | Income | Deficit | Interest | Total | ||||||||||||||||||||||
Balance, March 31, 2018 | 2,169,661,318 | $ | 2,169,661 | $ | 16,137,945 | $ | (2,483 | ) | $ | (20,085,947 | ) | $ | 18,544 | $ | (1,762,280 | ) | ||||||||||||
Foreign currency translation adjustment | - | - | - | 3,618 | - | - | 3,618 | |||||||||||||||||||||
Net income (loss) | - | - | - | - | (1,375,113 | ) | (16,224 | ) | (1,391,337 | ) | ||||||||||||||||||
Balance, June 30, 2018 | 2,169,661,318 | 2,169,661 | 16,137,945 | 1,135 | (21,461,060 | ) | 2,320 | (3,149,999 | ) | |||||||||||||||||||
Common stock issued for acquisition | 50,000,000 | 50,000 | 1,050,000 | - | - | - | 1,100,000 | |||||||||||||||||||||
Common stock issued for services and compensation | 1,000,000 | 1,000 | 9,000 | - | - | - | 10,000 | |||||||||||||||||||||
Common stock repurchase | (7,000,000 | ) | (7,000 | ) | (84,000 | ) | - | - | - | (91,000 | ) | |||||||||||||||||
Foreign currency translation adjustment | - | - | - | 123 | - | - | 123 | |||||||||||||||||||||
Net income (loss) | - | - | - | - | 849,791 | (16,788 | ) | 833,003 | ||||||||||||||||||||
Balance, September 30, 2018 | 2,213,661,318 | 2,213,661 | 17,112,945 | 1,258 | (20,611,269 | ) | (14,468 | ) | (1,297,873 | ) | ||||||||||||||||||
Foreign currency translation adjustment | - | - | - | 3,470 | - | - | 3,470 | |||||||||||||||||||||
Net income (loss) | - | - | - | - | (479,976 | ) | 27,613 | (452,363 | ) | |||||||||||||||||||
Balance, December 31, 2018 | 2,213,661,318 | $ | 2,213,661 | $ | 17,112,945 | $ | 4,728 | $ | (21,091,245 | ) | $ | 13,145 | $ | (1,746,766 | ) | |||||||||||||
Balance, March 31, 2019 | 2,640,161,318 | $ | 2,640,161 | $ | 23,758,917 | $ | 1,363 | $ | (25,096,983 | ) | $ | 51,485 | $ | 1,354,943 | ||||||||||||||
Common stock issued for cash | 39,215,648 | 39,216 | 285,784 | - | - | - | 325,000 | |||||||||||||||||||||
Offering costs | - | - | 101,387 | - | - | - | 101,387 | |||||||||||||||||||||
Deconsolidation of Kuvera LATAM | - | - | - | - | - | (51,485 | ) | (51,485 | ) | |||||||||||||||||||
Foreign currency translation adjustment | - | - | - | (18,975 | ) | - | - | (18,975 | ) | |||||||||||||||||||
Net income (loss) | - | - | - | - | (3,005,955 | ) | - | (3,005,955 | ) | |||||||||||||||||||
Balance, June 30, 2019 | 2,679,376,966 | 2,679,377 | 24,146,088 | (17,612 | ) | (28,102,938 | ) | - | (1,295,085 | ) | ||||||||||||||||||
Common stock issued for cash | 13,000,000 | 13,000 | 312,000 | - | - | - | 325,000 | |||||||||||||||||||||
Common stock issued for services and compensation | 241,000,000 | 241,000 | 1,274,915 | - | - | - | 1,515,915 | |||||||||||||||||||||
Common stock repurchase | (5,150 | ) | (5 | ) | (97 | ) | - | - | - | (102 | ) | |||||||||||||||||
Common stock cancelled | (222,500,000 | ) | (222,500 | ) | (3,157,500 | ) | - | - | - | (3,380,000 | ) | |||||||||||||||||
Beneficial conversion feature | - | - | 1,000,000 | - | - | - | 1,000,000 | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | (1,585 | ) | - | - | (1,585 | ) | |||||||||||||||||||
Net income (loss) | - | - | - | - | (1,753,566 | ) | - | (1,753,566 | ) | |||||||||||||||||||
Balance, September 30, 2019 | 2,710,871,816 | 2,710,872 | 23,575,406 | (19,197 | ) | (29,856,504 | ) | - | (3,589,423 | ) | ||||||||||||||||||
Common stock issued for cash | 7,000,000 | 7,000 | 168,000 | - | - | - | 175,000 | |||||||||||||||||||||
Common stock issued for services and compensation | 285,618,592 | 285,618 | 874,906 | - | - | - | 1,160,524 | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | 22,627 | - | - | 22,627 | |||||||||||||||||||||
Net income (loss) | - | - | - | - | (3,827,928 | ) | - | (3,827,928 | ) | |||||||||||||||||||
Balance, December 31, 2019 | 3,003,490,408 | $ | 3,003,490 | $ | 24,618,312 | $ | 3,430 | $ | (33,684,432 | ) | $ | - | $ | (6,059,200 | ) |
Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||||||||||||
Preferred stock | Common stock | Paid in | Comprehensive | Accumulated | Noncontrolling | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Income | Deficit | Interest | Total | ||||||||||||||||||||||||||||
Balance, March 31, 2019 | - | $ | - | 2,640,161,318 | $ | 2,640,161 | $ | 23,758,917 | $ | 1,363 | $ | (25,096,983 | ) | $ | 51,485 | $ | 1,354,943 | |||||||||||||||||||
Common stock issued for cash | - | - | 39,215,648 | 39,216 | 285,784 | - | - | - | 325,000 | |||||||||||||||||||||||||||
Offering costs | - | - | - | - | 101,387 | - | - | - | 101,387 | |||||||||||||||||||||||||||
Deconsolidation of Kuvera LATAM | - | - | - | - | - | - | - | (51,485 | ) | (51,485 | ) | |||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | (18,975 | ) | - | - | (18,975 | ) | |||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | - | (3,005,955 | ) | - | (3,005,955 | ) | |||||||||||||||||||||||||
Balance, June 30, 2019 | - | - | 2,679,376,966 | 2,679,377 | 24,146,088 | (17,612 | ) | (28,102,938 | ) | - | (1,295,085 | ) | ||||||||||||||||||||||||
Common stock issued for cash | - | - | 13,000,000 | 13,000 | 312,000 | - | - | - | 325,000 | |||||||||||||||||||||||||||
Common stock issued for services and compensation | - | - | 241,000,000 | 241,000 | 1,274,915 | - | - | - | 1,515,915 | |||||||||||||||||||||||||||
Common stock repurchase | - | - | (5,150 | ) | (5 | ) | (97 | ) | - | - | - | (102 | ) | |||||||||||||||||||||||
Common stock cancelled | - | - | (222,500,000 | ) | (222,500 | ) | (3,157,500 | ) | - | - | - | (3,380,000 | ) | |||||||||||||||||||||||
Beneficial conversion feature | - | - | - | - | 1,000,000 | - | - | - | 1,000,000 | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | (1,585 | ) | - | - | (1,585 | ) | |||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | - | (1,753,566 | ) | - | (1,753,566 | ) | |||||||||||||||||||||||||
Balance, September 30, 2019 | - | $ | - | 2,710,871,816 | $ | 2,710,872 | $ | 23,575,406 | $ | (19,197 | ) | $ | (29,856,504 | ) | $ | - | $ | (3,589,423 | ) | |||||||||||||||||
Balance, March 31, 2020 | - | $ | - | 3,214,490,408 | $ | 3,214,490 | $ | 28,929,516 | $ | (20,058 | ) | $ | (46,382,174 | ) | $ | - | $ | (14,258,226 | ) | |||||||||||||||||
Common stock issued for services and compensation | - | - | 21,000,000 | 21,000 | 397,954 | - | - | - | 418,954 | |||||||||||||||||||||||||||
Share repurchase | - | - | (9,079 | ) | (9 | ) | (263 | ) | - | - | - | (272 | ) | |||||||||||||||||||||||
Beneficial conversion feature | - | - | - | - | 2,000,000 | - | - | - | 2,000,000 | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | 636 | - | - | 636 | |||||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | - | (4,913,787 | ) | - | (4,913,787 | ) | |||||||||||||||||||||||||
Balance, June 30, 2020 | - | - | 3,235,481,329 | 3,235,481 | 31,327,207 | (19,422 | ) | (51,295,961 | ) | - | (16,752,695 | ) | ||||||||||||||||||||||||
Preferred stock issued for cash | 46,612 | 47 | - | - | 1,158,754 | - | - | - | 1,158,801 | |||||||||||||||||||||||||||
Offering costs | - | - | - | - | (20,994 | ) | - | - | - | (20,994 | ) | |||||||||||||||||||||||||
Common stock issued for services and compensation | - | - | - | - | 376,282 | - | - | - | 376,282 | |||||||||||||||||||||||||||
Common stock forfeited | - | - | (200,000,000 | ) | (200,000 | ) | (3,180,000 | ) | - | - | - | (3,380,000 | ) | |||||||||||||||||||||||
Common stock repurchase | - | - | (106,000,000 | ) | (106,000 | ) | (14,000 | ) | - | - | - | (120,000 | ) | |||||||||||||||||||||||
Forgiveness of accrued payroll | - | - | - | - | 373,832 | - | - | - | 373,832 | |||||||||||||||||||||||||||
Dividends | - | - | - | - | - | - | (52,342 | ) | - | (52,342 | ) | |||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | (4,359 | ) | - | - | (4,359 | ) | |||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | - | (1,187,760 | ) | - | (1,187,760 | ) | |||||||||||||||||||||||||
Balance, September 30, 2020 | 46,612 | $ | 47 | 2,929,481,329 | $ | 2,929,481 | $ | 30,021,081 | $ | (23,781 | ) | $ | (52,536,063 | ) | $ | - | $ | (19,609,235 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements
5 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended December 31, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net loss | $ | (8,587,449 | ) | $ | (1,010,697 | ) | $ | (6,101,547 | ) | $ | (4,759,521 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation | 320,528 | 4,126 | 982,819 | 36,007 | ||||||||||||
Amortization of debt discount | 2,916,917 | 161,154 | 703,511 | 1,892,791 | ||||||||||||
Amortization of long-term license agreement | 113,315 | 113,315 | - | 75,406 | ||||||||||||
Amortization of intangible assets | 213,182 | 256,509 | 86,812 | 169,539 | ||||||||||||
Stock issued for services and compensation | 2,676,439 | 8,333 | 795,236 | 1,515,915 | ||||||||||||
Loan fees on new borrowings | 841,139 | - | - | 841,140 | ||||||||||||
Offering costs | 6 | - | ||||||||||||||
Lease cost, net of repayment | 5,833 | - | 2 | - | ||||||||||||
Impairment | 627,452 | - | ||||||||||||||
(Gain) loss on bargain purchase | - | (2,005,282 | ) | |||||||||||||
(Gain) loss on deconsolidation | (53,739 | ) | - | |||||||||||||
(Gain) on deconsolidation | - | (53,739 | ) | |||||||||||||
(Gain) loss on debt extinguishment | (1,725,384 | ) | (19,387 | ) | (829,937 | ) | (1,281,477 | ) | ||||||||
(Gain) loss on fair value of derivative liability | (504,635 | ) | - | |||||||||||||
Loss on fair value of derivative liability | (326,788 | ) | (599,257 | ) | ||||||||||||
Realized (gain) loss on cryptocurrency | 657 | (16,363 | ) | (1,096 | ) | 667 | ||||||||||
Unrealized (gain) loss on cryptocurrency | (8,445 | ) | (95,810 | ) | (176,817 | ) | (25,330 | ) | ||||||||
Impairment expense | 66,645 | - | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Receivables | 101,792 | 316,455 | (53,967 | ) | (18,538 | ) | ||||||||||
Prepaid assets | (313,347 | ) | (4,762 | ) | (1,141,805 | ) | (1,283,764 | ) | ||||||||
Short-term advances | (135,000 | ) | - | - | (100,000 | ) | ||||||||||
Short-term advances from related parties | (7,000 | ) | 36,010 | - | (10,000 | ) | ||||||||||
Other current assets | 40,170 | 585,158 | 118,307 | (517,051 | ) | |||||||||||
Deposits | (3,988 | ) | (11,603 | ) | 2,685 | (3,130 | ) | |||||||||
Accounts payable and accrued liabilities | (284,836 | ) | (1,375,229 | ) | (1,001,276 | ) | (19,420 | ) | ||||||||
Payroll liabilities | (864,602 | ) | - | |||||||||||||
Customer advance | 342,205 | 265,000 | 81,845 | 3,448,476 | ||||||||||||
Deferred revenue | (1,145,149 | ) | 181,255 | 167,896 | (94,985 | ) | ||||||||||
Other liabilities | 9,229,393 | - | 6,872,236 | 3,529,296 | ||||||||||||
Accrued interest | 180,026 | 26,000 | 107,025 | 131,799 | ||||||||||||
Accrued interest, related parties | 714,999 | 5,000 | 309,837 | 649,999 | ||||||||||||
Net cash provided by (used in) operating activities | 4,690,473 | (2,580,818 | ) | 661,629 | 3,524,823 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Cash received in acquisition | - | 3,740 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
Cash paid for fixed assets | (4,171,341 | ) | - | (1,717,289 | ) | (1,720,116 | ) | |||||||||
Net cash provided by (used in) investing activities | (4,171,341 | ) | 3,740 | (1,717,289 | ) | (1,720,116 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
Proceeds from related parties | 2,164,500 | 1,480,777 | 4,474,137 | 1,459,500 | ||||||||||||
Repayments for related party payables | (1,754,500 | ) | (996,169 | ) | (3,036,216 | ) | (1,369,500 | ) | ||||||||
Proceeds from debt | 2,177,452 | 1,955,000 | 1,405,300 | 1,322,651 | ||||||||||||
Repayments for debt | (3,801,562 | ) | (1,164,396 | ) | (2,030,344 | ) | (2,745,024 | ) | ||||||||
Payments for share repurchase | (102 | ) | (91,000 | ) | (272 | ) | (102 | ) | ||||||||
Dividends paid | (14,567 | ) | - | |||||||||||||
Proceeds from the sale of stock | 825,000 | - | 1,165,300 | 650,000 | ||||||||||||
Payments for financing costs | (21,000 | ) | - | |||||||||||||
Net cash provided by (used in) financing activities | (389,212 | ) | 1,184,212 | 1,942,338 | (682,475 | ) | ||||||||||
Effect of exchange rate translation on cash | 36 | (4,251 | ) | - | 2,297 | |||||||||||
Net increase (decrease) in cash and cash equivalents | 129,956 | (1,397,117 | ) | |||||||||||||
Cash and cash equivalents-beginning of period | 133,644 | 1,490,686 | ||||||||||||||
Cash and cash equivalents-end of period | $ | 263,600 | $ | 93,569 | ||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 886,678 | 1,124,529 | ||||||||||||||
Cash, cash equivalents, and restricted cash - beginning of period | 137,177 | 133,644 | ||||||||||||||
Cash, cash equivalents, and restricted cash - end of period | $ | 1,023,855 | $ | 1,258,173 | ||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||||||||||
Cash paid during the period for: | ||||||||||||||||
Interest | $ | 51,000 | $ | - | $ | 275,192 | $ | 51,000 | ||||||||
Income taxes | $ | 9,580 | $ | 44,844 | $ | 3,282 | $ | 5,544 | ||||||||
Non cash investing and financing activities: | ||||||||||||||||
Common stock issued for acquisition | $ | - | $ | 1,100,000 | ||||||||||||
Prepaid assets reclassified to fixed assets | $ | 2,252,568 | $ | - | ||||||||||||
Beneficial conversion feature | $ | 1,000,000 | $ | - | $ | 2,000,000 | $ | 1,000,000 | ||||||||
Stock issued for prepaid services | $ | - | $ | 1,667 | ||||||||||||
Cancellation of shares | $ | 3,380,000 | $ | - | $ | - | $ | 3,380,000 | ||||||||
Changes in equity for offering costs accrued | $ | 101,387 | $ | - | $ | - | $ | 101,387 | ||||||||
Accounts payable reclassified to related party debt | $ | 75,000 | $ | - | ||||||||||||
Derivative liability recorded as a debt discount | $ | 365,000 | $ | - | $ | - | $ | 365,000 | ||||||||
Recognition of lease liability and ROU asset at lease commencement | $ | 131,244 | $ | - | $ | - | $ | 131,244 | ||||||||
Shares forfeited | $ | 3,380,000 | $ | - | ||||||||||||
Share repurchase | $ | 120,000 | $ | - | ||||||||||||
Reclassification of related party debt | $ | 26,000 | $ | - | ||||||||||||
Dividends declared but not yet paid | $ | 37,775 | $ | - | ||||||||||||
Forgiveness of accrued payroll | $ | 373,832 | $ | - |
The accompanying notes are an integral part of these condensed consolidated financial statements
6 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019SEPTEMBER 30, 2020
(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 the Company changed domicile to Nevada, and changed its name to Voxpath Holding, Inc. In September of 2006 the Company merged The Retirement Solution Inc. through a Share Purchase Agreement into Voxpath Holdings, Inc. and then changed its name to TheRetirementSolution.Com, Inc. In October 2008 the Company changed its name to Global Investor Services, Inc., before changing its name to Investview, Inc., on March 27, 2012.
On March 31, 2017, we entered into a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company (“Wealth Generators”), pursuant to which the Wealth Generators members agreed to contribute 100% of the outstanding securities of Wealth Generators in exchange for an aggregate of 1,358,670,942 shares of our common stock. The closing of the Contribution Agreement was effective April 1, 2017, and Wealth Generators became our wholly owned subsidiary and the former members of Wealth Generators became our stockholders and control 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”) and on May 7, 2018 we established WealthGen Global, LLC as a Utah limited liability company and a wholly owned subsidiary of Investview, Inc.
On May 7, 2018, we established WealthGen Global, LLC as a Utah limited liability company and our wholly owned subsidiary.
On July 20, 2018, we entered into a Purchase Agreement with United Games Marketing LLC, a Utah limited liability company, to purchase its wholly owned subsidiaries United Games, LLC and United League, LLC for 50,000,000 shares of our common stock.
On November 12, 2018, we established Kuvera France, S.A.S. to handle sales of our financial education and research in the European Union.
On December 30, 2018, our wholly owned subsidiary S.A.F.E. Management, LLC received its registration and disclosure approval from the National Futures Association. S.A.F.E. Management, LLC is now a New Jersey State Registered Investment Adviser, Commodities Trading Advisor, Commodity Pool Operator, and approved for over the counter FOREX advisory services.
On January 17, 2019 we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SafeTek, LLC, a Utah Limited Liability Company.
Effective July 22, 2019 we renamed our non-operating wholly owned subsidiary Razor Data, LLC to APEX Tek, LLC, a Utah Limited Liability Company.
Nature of Business
Investview ownsWe own a number of companies that each operate independently, but are accretive to one another. Investview isWe are establishing a portfolio of wholly owned subsidiaries delivering leading edgeleading-edge technologies, services, and research, dedicated primarily to the individual consumer. Following is a description of each of our companies.
Kuvera, LLC provides research, education, and investment tools designed to assist the self-directed investor in successfully navigating the financial markets. These services include research, trade alerts, and live trading rooms that include instruction in equities, options, FOREX, ETFs, binary options, crowdfunding and cryptocurrency sector education. In addition to trading tools and research, 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/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.
7 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
Different packages are available through a monthly subscription that can be cancelled at any time at the discretion of the customer. A unique component of the product marketing plan is the distribution method whereby all subscriptions are sold via current participating customers who choose to distribute and sell the services by participating in the bonus plan. The bonus plan participation is purely optional but enables individuals to create an additional income stream to further support their personal financial goals and objectives.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
Kuvera France S.A.S. is our entity in France that will distribute Kuvera products and services throughout the European Union.
S.A.F.E. Management, LLC is a Registered Investment Adviser and Commodity Trading Adviser that has been established to deliver automated trading strategies to individuals who find they lack the time to trade for themselves.
United League, LLC owns a number of proprietary technologies including FIREFAN a social app for sports enthusiasts. Technologies created to support any of the Investview companies are held under the United League structure.
United Games, LLC is the distribution network for United League technologies. Since the acquisition of United Games in July of 2018, we are working to combine the distributors of Kuvera and United Games. This is an on-going processThe operations of United Games and United League are currently being assessed now that is not yet complete.we have completed our integration of their software and personnel. These entities may be eliminated or re-structured in the future as we are currently assessing the potential future for social gaming app known as FIREFAN.
SAFETek, LLC (formerly WealthGen Global, LLC) is a new addition that we are currently establishing for expansion plans in the high-speed processing and cloud computing environment.
Apex Tek, LLC (formerly Razor Data, LLC) isdelivers the sales and distribution company for APEX packages and technology. It offersprogram which permits individuals to purchase assets that will generate monthly cash flow. As of September 30, 2020 we have ceased selling the APEX package. We may re-introduce APEX at a unique passive income model for those interested in earning throughlater date after further evaluation of the purchase and leaseback of high-speed specialized data processing equipment. This model has drawn considerable institutional interest.model.
Investment Tools & Training, LLCcurrently has no operations or activities.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
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 ninesix months ended December 31, 2019,September 30, 2020, are not necessarily indicative of the operating results that may be expected for the year ending March 31, 2020.2021. These unaudited condensed consolidated financial statements should be read in conjunction with the March 31, 20192020 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2019.2020.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries, Kuvera, LLC, Investment Tools & Training, LLC, Apex Tek, LLC (formerly Razor Data, LLC), S.A.F.E. Management, LLC, SafeTek, LLC (formerly WealthGen Global, LLC), United Games, LLC, United League, LLC, and Kuvera France S.A.S. Through March 31, 2019 we had determined that one affiliated entity, Kuvera LATAM S.A.S., which we previously conducted business with, was a variable interest entity and we were the primary beneficiary of the entity’s activities, which are similar to those of Kuvera, LLC. As a result, through March 31, 2019 we had consolidated the accounts of this variable interest entity into the accompanying consolidated financial statements. Further, because the Company did not have any ownership interest in this variable interest entity, the Company had allocated the contributed capital in the variable interest entity as a component of noncontrolling interest. As of April 1, 2019 Kuvera LATAM S.A.S. had no operations and ceased to exist, therefore, as of that date, no consolidation of the entity iswas necessary and we recorded a gain on deconsolidation of $53,739 to eliminate the intercompany account with Kuvera LATAM S.A.S. All intercompany transactions and balances have been eliminated in consolidation.
8 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
Financial Statement Reclassification
Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
Use of Estimates
The preparation of these unaudited condensed consolidated 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 and have consolidated the accounts of Kuvera LATAM S.A.S. through March 31, 2019.statements. The operations of Kuvera France S.A.S. are conducted in France and its functional currency is the Euro. The operations of Kuvera LATAM S.A.S. were conducted in Colombia and its functional currency is the Colombian Peso.
The financial statements of Kuvera France S.A.S. and Kuvera LATAM S.A.S. are prepared using their respective functional currency and have been translated into U.S. dollars (“USD”). Assets and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders’ equity is translated using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the period. Any translation adjustments are included as foreign currency translation adjustments in accumulated other comprehensive income in our stockholders’ equity (deficit).
The following rates were used to translate the accounts of Kuvera France S.A.S. and Kuvera LATAM S.A.S. into USD at the following balance sheet dates.
December 31, 2019 | March 31, 2019 | |||||||
Euro to USD | 1.12165 | 1.12200 | ||||||
Colombian Peso to USD | n/a | 0.00031 |
September 30, 2020 | March 31, 2020 | |||||||
Euro to USD | 1.17300 | 1.10314 |
The following rates were used to translate the accounts of Kuvera France S.A.S. and Kuvera LATAM S.A.S. into USD for the following operating periods.
Nine Months Ended December 31, | ||||||||
2019 | 2018 | |||||||
Euro to USD | 1.11443 | n/a | ||||||
Colombian Peso to USD | n/a | 0.00034 |
Six Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Euro to USD | 1.135711 | 1.11795 |
Restricted Cash
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.
September 30, 2020 | March 31, 2020 | |||||||
Cash and cash equivalents | $ | 583,955 | $ | 137,177 | ||||
Restricted cash, current | 151,489 | - | ||||||
Restricted cash, long term | 288,411 | - | ||||||
Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | $ | 1,023,855 | $ | 137,177 |
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 Stock holders.
9 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
Cryptocurrencies
We hold cryptocurrency-denominated assets (“cryptocurrencies”) and include them in our consolidated balance sheet as other current assets. We record cryptocurrencies at fair market value and recognize the change in the fair value of our cryptocurrencies as an unrealized gain or loss in the consolidated statement of operations. As of December 31, 2019September 30, 2020 and March 31, 20192020 the fair value of our cryptocurrencies was $156,448$155,628 and $142,061,$96,022, respectively. During the ninesix months ended December 31, 2019September 30, 2020 we recorded $(657)$1,096 and $8,445$176,817 as a total realized and unrealized gain (loss) on cryptocurrency, respectively. During the ninesix months ended December 31, 2018September 30, 2019 we recorded $16,363$(667) and $95,810$25,330 as a total realized and unrealized gain (loss) on cryptocurrency, respectively. During the three months ended December 31, 2019September 30, 2020 we recorded $10$1,096 and $(16,885)$85,331 as a total realized and unrealized gain (loss) on cryptocurrency, respectively. During the three months ended December 31, 2018September 30, 2019 we recorded $10$(1,077) and $(16,885)$(122,080) as a total realized and unrealized gain (loss) on cryptocurrency, 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.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
As of December 31, 2019September 30, 2020 fixed assets were made up of the following:
Estimated | Estimated | |||||||||||||||
Useful | Useful | |||||||||||||||
Life | Life | |||||||||||||||
(years) | Value | (years) | Value | |||||||||||||
Furniture, fixtures, and equipment | 10 | $ | 11,372 | 10 | $ | 12,792 | ||||||||||
Computer equipment | 3 | 19,533 | 3 | 21,143 | ||||||||||||
Data processing equipment | 3 | 4,166,470 | 3 | 7,095,515 | ||||||||||||
4,197,375 | 7,129,450 | |||||||||||||||
Accumulated amortization as of December 31, 2019 | (333,034 | ) | ||||||||||||||
Net book value, December 31, 2019 | $ | 3,864,341 | ||||||||||||||
Accumulated depreciation as of September 30, 2020 | (1,211,446 | ) | ||||||||||||||
Net book value, September 30, 2020 | $ | 5,918,004 |
Total depreciation expense for the ninesix months ended December 31,September 30, 2020 and 2019, was $982,819 and 2018, was $320,528 and $4,126,$36,007, respectively.
Long-Lived Assets – Intangible Assets & License Agreement
We account for our intangible assets and long-term license agreement in accordance with 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. Further, ASC Subtopic 350-30 requires an intangible asset to be amortized over its useful life and for the useful life 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.
In June of 2017 we issued 80,000,000 shares of common stock with a value of $2,256,000 for a 15-year license agreement. Annual amortization over the 15-year life is expected to be $150,400 per year. Amortization recognized for the ninesix months ended December 31,September 30, 2020 and 2019 was $0 and 2018 was $113,315 and $113,315,$75,406, respectively, and the long-term license agreement was recorded at a net value of $1,869,905 and $1,983,220$0 as of December 31, 2019September 30, 2020 and March 31, 2019, respectively.2020 due to the asset being impaired as of March 31, 2020.
10 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
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 are being amortized on a straight-line method over their estimated useful lives. DuringAs of September 30, 2020 intangible assets were made up of the ninefollowing:
Estimated | ||||||||
Useful | ||||||||
Life | ||||||||
(years) | Value | |||||||
FireFan mobile application | 4 | $ | 331,000 | |||||
Back office software | 10 | 408,000 | ||||||
Tradename/trademark - FireFan | 5 | 248,000 | ||||||
Tradename/trademark - United Games | 0.45 | 4,000 | ||||||
991,000 | ||||||||
Accumulated amortization as of September 30, 2020 | (384,930 | ) | ||||||
Net book value, September 30, 2020 | $ | 606,070 |
Amortization expense for the six months ended December 31,September 30, 2020 and 2019 we impaired the value of the customer contracts/relationships originally acquired.
Estimated | ||||||||
Useful | ||||||||
Life | ||||||||
(years) | Value | |||||||
FireFan mobile application | 4 | $ | 331,000 | |||||
Back office software | 10 | 408,000 | ||||||
Tradename/trademark - FireFan | 5 | 248,000 | ||||||
Tradename/trademark - United Games | 0.45 | 4,000 | ||||||
Customer contracts/relationships | n/a | - | ||||||
991,000 | ||||||||
Accumulated amortization as of December 31, 2019 | (254,949 | ) | ||||||
Net book value, December 31, 2019 | $ | 736,051 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
was $86,812 and $169,539, respectively. Amortization expense is expected to be as follows:
Remainder of 2020 | $ | 43,169 | ||||||
Fiscal year ending March 31, 2021 | 173,150 | |||||||
Remainder of 2021 | $ | 86,338 | ||||||
Fiscal year ending March 31, 2022 | 173,150 | 173,150 | ||||||
Fiscal year ending March 31, 2023 | 115,338 | 173,150 | ||||||
Fiscal year ending March 31, 2024 | 55,748 | 32,589 | ||||||
Fiscal year ending March 31, 2025 and beyond | 175,496 | |||||||
Fiscal year ending March 31, 2025 | 6,148 | |||||||
Fiscal year ending March 31, 2026 and beyond | 134,695 | |||||||
$ | 736,051 | $ | 606,070 |
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.
The Company evaluatesWe 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 ninesix months ended December 31, 2019September 30, 2020 we fully impaired data processing equipment that had a cost basis of $84,939 and 2018we fully impaired a computer that had a cost basis of $1,609 because the assets were no longer in use. The accumulated depreciation of the assets at the time they were written off was $19,903, therefore we recognized impairment expense of $627,452 and $0$66,645 for the six months ended September 30, 2020. No impairment expense was recognized respectively.during the six months ended September 30, 2019.
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.
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). |
11 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
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 December 31, 2019September 30, 2020 and March 31, 2019,2020, approximates the fair value due to their short-term nature.
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, 2019:September 30, 2020:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cryptocurrencies | $ | 156,448 | $ | - | $ | - | $ | 156,448 | ||||||||
Total Assets | $ | 156,448 | $ | - | $ | - | $ | 156,448 | ||||||||
Derivative liability | $ | - | $ | - | $ | 383,670 | $ | 383,670 | ||||||||
Total Liabilities | $ | - | $ | - | $ | 383,670 | $ | 383,670 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cryptocurrencies | $ | 155,628 | $ | - | $ | - | $ | 155,628 | ||||||||
Total Assets | $ | 155,628 | $ | - | $ | - | $ | 155,628 | ||||||||
Derivative liability | $ | - | $ | - | $ | 4,265 | $ | 4,265 | ||||||||
Total Liabilities | $ | - | $ | - | $ | 4,265 | $ | 4,265 |
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of March 31, 2019:2020:
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Cryptocurrencies | $ | 142,061 | $ | - | $ | - | $ | 142,061 | $ | 96,022 | $ | - | $ | - | $ | 96,022 | ||||||||||||||||
Total Assets | $ | 142,061 | $ | - | $ | - | $ | 142,061 | $ | 96,022 | $ | - | $ | - | $ | 96,022 | ||||||||||||||||
Derivative liability | $ | - | $ | - | $ | 1,358,901 | $ | 1,358,901 | $ | - | $ | - | $ | 793,495 | $ | 793,495 | ||||||||||||||||
Total Liabilities | $ | - | $ | - | $ | 1,358,901 | $ | 1,358,901 | $ | - | $ | - | $ | 793,495 | $ | 793,495 |
Sale and Leaseback
Through our wholly-owned subsidiary, APEX Tex, LLC, we sellsold high powered data processing equipment (“APEX”) to our customers and they leaseleased the equipment back to SAFETek, LLC, another of our wholly-owned subsidiaries. We account for these transactions under ASC 842-40 where the leaseback has been deemed a sales-type lease due to the lease term generally covering the entire economic life of the equipment and our likelihood to purchase the asset at the end of the lease term. In accordance with ASC 842-40 we have recorded the data processing equipment as a fixed asset on our balance sheet and we have accounted for the amounts received for the equipment as a financial liability, in other liabilities on our balance sheet. Further, we will recognize interest on the financial liability over the term of the lease to ensure the financial liability equates to the total amounts to be paid over the life of the lease.
During the ninesix months ended December 31, 2019September 30, 2020 we had the following activity related to our sale and leaseback transactions:
Proceeds from sales of APEX | $ | 9,693,141 | ||
Interest recognized on financial liability | 877,352 | |||
Payments made for leased equipment | (1,341,100 | ) | ||
Total financial liability | 9,229,393 | |||
Other current liabilities [1] | (7,576,800 | ) | ||
Other long-term liabilities | $ | 1,652,593 |
Total Financial Liability | Contra-Liability | Net Financial Liability | Current [1] | Long Term | ||||||||||||||||
Balance as of March 31, 2020 | $ | 53,828,000 | $ | (38,535,336 | ) | $ | 15,292,664 | $ | 11,407,200 | $ | 3,885,464 | |||||||||
Proceeds from sales of APEX | 5,001,622 | - | 5,001,622 | |||||||||||||||||
Interest recorded on financial liability | 8,348,378 | (8,348,378 | ) | - | ||||||||||||||||
Payments made for leased equipment | (2,125,300 | ) | - | (2,125,300 | ) | |||||||||||||||
Interest expense | - | 3,995,914 | 3,995,914 | |||||||||||||||||
Balance as of September 30, 2020 | $ | 65,052,700 | $ | (42,887,800 | ) | $ | 22,164,900 | $ | 14,077,200 | $ | 8,087,700 |
[1] Represents lease payments to be made in the next 12 months
12 |
As of December 31, 2019
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
The $42,887,800 is expected to be recognized into interest as follows:
Remainder of 2021 | $ | 4,782,861 | ||
Fiscal year ending March 31, 2022 | 9,565,721 | |||
Fiscal year ending March 31, 2023 | 9,565,721 | |||
Fiscal year ending March 31, 2024 | 9,565,721 | |||
Fiscal year ending March 31, 2025 and beyond | 9,407,776 | |||
$ | 42,887,800 |
During the six months ended September 30, 2020 we have received proceeds of $607,205 in additional depositsproceeds for APEX sales which has beenwere recorded in the customer advance amount shown on our balance sheet.sheet, resulting in a net increase in the account of $81,845 since March 31, 2020. As of September 30, 2020 we have ceased selling the APEX package. We may re-introduce APEX at a later date after further evaluation of the model.
Revenue Recognition
Subscription Revenue
The majority 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,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 10-day trial period to first time subscription customers, during which a full refund can be requested if a customer does not like the product. 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.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
Equipment Sales
We generate revenue from the sale of high-speed computer processing equipment that is used for any of the following intense processing activities: protein folding, CGI rendering, Game Streaming, Machine & Deep Learning, Mining, Independent Financial Verification, and general high-speed computing. We recognize equipment sales 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 an equipment package to our customers which includes hardware, software, and firmware and is drop-shipped to a hosting data center. We receive payment at the time of purchase and recognize revenue when the equipment package is delivered and ready for maintenance and hosting, which our customers arrange for, and obtain, from a separate third party that provides such services.
Cryptocurrency Mining Service Revenue
We generate revenue from the sale of cryptocurrency mining services to our customers through an arrangement with a third-party supplier. We recognize cryptocurrency mining service 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-party to provide mining services to our customers and payment is received at the time of purchase, therefore revenue is recognized upon receipt of payment. We recognize revenue in the amount of the fee to which we are entitled to as an agent, or the amount of consideration that we retain after paying the third-party the consideration received in exchange for the services the third-party is to provide.
Mining Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we lease equipment under a sales-type lease and 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.
Fee Revenue
We generate fee revenue from our customers throughSAFE 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.
Revenue generated for the six months ended September 30, 2020 is as follows:
Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
Gross billings/receipts | $ | 10,159,115 | $ | 3,836,285 | $ | 7,723 | $ | 14,003,123 | ||||||||
Refunds, incentives, credits, and chargebacks | (659,970 | ) | - | - | (659,970 | ) | ||||||||||
Net revenue | $ | 9,499,145 | $ | 3,836,285 | $ | 7,723 | $ | 13,343,153 |
For the six months ended September 30, 2020 foreign and domestic revenues were approximately $9 million and $4.4 million, respectively.
13 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
Revenue generated for the ninesix months ended December 31,September 30, 2019 is as follows:
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||||||||||||||
Gross billings/receipts | $ | 21,214,747 | $ | - | $ | - | $ | 380,871 | $ | 9,486 | $ | 21,605,104 | $ | 16,117,861 | $ | - | $ | 5,369 | $ | 16,123,230 | ||||||||||||||||||||
Refunds, incentives, credits, and chargebacks | (1,887,656 | ) | - | - | - | - | (1,887,656 | ) | (1,369,393 | ) | - | - | (1,369,393 | ) | ||||||||||||||||||||||||||
Amounts paid to supplier | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Net revenue | $ | 19,327,091 | $ | - | $ | - | $ | 380,871 | $ | 9,486 | $ | 19,717,448 | $ | 14,748,468 | $ | - | $ | 5,369 | $ | 14,753,837 |
Revenue generated forFor the ninesix months ended December 31, 2018 is as follows:
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||
Gross billings/receipts | $ | 21,882,005 | $ | 698,954 | $ | 5,690,380 | $ | - | $ | - | $ | 28,271,389 | ||||||||||||
Refunds, incentives, credits, and chargebacks | (1,047,007 | ) | (4,000 | ) | (6,501 | ) | - | - | (1,057,508 | ) | ||||||||||||||
Amounts paid to supplier | - | - | (3,871,278 | ) | - | - | (3,871,278 | |||||||||||||||||
Net revenue | $ | 20,835,048 | $ | 694,954 | $ | 1,812,601 | $ | - | $ | - | $ | 23,342,603 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31,September 30, 2019
(Unaudited) foreign and domestic revenues were approximately $13.9 million and $800,000, respectively.
Revenue generated for the three months ended December 31, 2019September 30, 2020 is as follows:
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||||||||||||||
Gross billings/receipts | $ | 5,096,886 | $ | - | $ | - | $ | 380,871 | $ | 4,117 | $ | 5,481,874 | $ | 5,599,155 | $ | 2,493,739 | $ | 3,710 | $ | 8,096,604 | ||||||||||||||||||||
Refunds, incentives, credits, and chargebacks | (518,263 | ) | - | - | - | - | (518,263 | ) | (343,267 | ) | - | - | (343,267 | ) | ||||||||||||||||||||||||||
Amounts paid to supplier | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Net revenue | $ | 4,578,623 | $ | - | $ | - | $ | 380,871 | $ | 4,117 | $ | 4,963,611 | $ | 5,255,888 | $ | 2,493,739 | $ | 3,710 | $ | 7,753,337 |
For the three months ended September 30, 2020 foreign and domestic revenues were approximately $7.3 million and $426,000, respectively.
Revenue generated for the three months ended December 31, 2018September 30, 2019 is as follows:
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||||||||||||||
Gross billings/receipts | $ | 7,204,415 | $ | 698,954 | $ | 40,779 | $ | - | $ | - | $ | 7,944,148 | $ | 7,825,160 | $ | - | $ | 5,369 | $ | 7,830,529 | ||||||||||||||||||||
Refunds, incentives, credits, and chargebacks | (200,613 | ) | (4,000 | ) | (6,501 | ) | - | - | (211,114 | ) | (588,405 | ) | - | - | (588,405 | ) | ||||||||||||||||||||||||
Amounts paid to supplier | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Net revenue | $ | 7,003,802 | $ | 694,954 | $ | 34,278 | $ | - | $ | - | $ | 7,773,034 | $ | 7,236,755 | $ | - | $ | 5,369 | $ | 7,242,124 |
For the three months ended September 30, 2019 foreign and domestic revenues were approximately $6.8 million and $403,000, respectively.
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 loss per share has been calculated based upon the weighted average number of common shares outstanding. Convertible debt, stock options, and warrants have been excluded as common stock equivalents in the diluted loss per share because their effect is anti-dilutive on the computation.
Potentially dilutive securities excluded from the computation of basic and diluted net loss per share are as follows:
December 31, 2019 | December 31, 2018 | September 30, 2020 | September 30, 2019 | |||||||||||||
Options to purchase common stock | - | 35,000 | - | 35,000 | ||||||||||||
Warrants to purchase common stock | 125,000 | 6,052,497 | 233,060 | 599,800 | ||||||||||||
Notes convertible into common stock | 11,080,447 | - | 161,742,478 | 58,416,067 | ||||||||||||
Totals | 11,205,447 | 6,087,497 | 161,975,538 | 59,050,867 |
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.
14 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
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.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
There are no recently issued accounting pronouncements that the Company has not yet adopted that they believe are applicable or would have a material impact on the financial statements of the Company.
NOTE 4 – GOING CONCERN AND 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. We have incurred significant recurring losses, which have resulted in an accumulated deficit of $33,684,432$52,536,063 as of December 31, 2019,September 30, 2020, along with a net loss of $8,587,449$6,101,547 for the ninesix months ended December 31, 2019.September 30, 2020. Additionally, as of December 31, 2019,September 30, 2020, we had cash of $263,600$583,955 and a working capital deficit of $10,938,623.$18,383,173. These factors raise substantial doubt about our ability to continue as a going concern.
Historically we have relied on increasing revenues and new debt and equity financing to pay for operational expenses and debt as it came due. During the ninesix months ended December 31, 2019,September 30, 2020, we raised $2,177,452$1,405,300 in cash proceeds from new debt arrangements and raised $2,164,500$4,474,137 in cash proceeds from related parties, and received $825,000 from the sale of our common stock.parties. Additionally, net cash provided by operations was $4,690,473$661,629 for the ninesix months ended DecemberSeptember 30, 2020. Subsequent to September 30, 2020, we received gross proceeds of $93,300 in connection with our Unit Offering (see NOTE 11). Additionally, subject to a Securities Purchase agreement entered into in April 2020 we have a commitment from an investor to purchase a $9 million promissory note on or before October 31, 2019.2020, subject to certain conditions.
SinceOn January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 11, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate the spread of it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted to amongst other provisions, provide emergency assistance for individuals, families and businesses affected by the coronavirus pandemic. It is unknown how long the adverse conditions associated with the coronavirus will last and what the complete financial effect will be to the company. To date, the Company is experiencing challenges in multiple areas of the organization and the full economic impact is yet to be established.
During the year ended March 31, 2020 we made significant strides and wide sweeping changes. While we believe they will be beneficial to our acquisitionbottom line, there is no assurance of Wealth Generators in Aprilthis. Some of 2017the concerns we have implemented a number of initiatives and we are beginning to see the positive impact of these actions. First, our largest subsidiary, Kuvera, has a bonus plan structure for distributors of our services which consistently paid out beyond our maximum threshold. Adjustments to this bonus plan have been made over the last 12 months. This resulted in a gradual reduction in bonus payouts which reduced our losses. Second, we expanded the objectives of Investview through the acquisition and creation of additional subsidiaries to increase our sources of income and creating business activities in new sectors which includes:face going forward will continue, including but not limited to:
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15 |
These companies
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
Apex Tek, LLC and SAFETek, LLC carry additional risk and generated recent losses, however, they also provide Investview a stake in 4IR, HPC, app development, fintech, blockchain and personal money management sectors. Each of these are areas that are targeted for significant growth spurred by innovations through technology.technology which solidify our position in the fintech space.
While our liabilities are larger than our assets it is important to note that we seek to keepfurther reduce our operating expenses low.expense. The assets we have acquired and will continue to seek out are those of technology, mobile apps, and human resources. These assets are not easily defined on our balance sheet but represent our ability to carry out our objectives which we believe will ultimately generatinglead to positive cash flow, reduced debt and then profitability.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
Further, while we have reported reoccurring losses and have an operating capital deficiency, we have been able to establish multiple companies to create various revenue streams as we move forward. Our largest challenge is operational cash flow as lending arrangements continue to be expensive causing us to deploy incoming cash to prior debt. We continue to seek short term capital in arrangements that are partnership-based with elements of debt and equity combined. Additionally, our immediate focus is the continued reduction in losses by controlling expenses, increasing revenue, and generating additional revenue streams.
Accordingly, the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 5 – RELATED-PARTY TRANSACTIONS
Our related-party payables consisted of the following:
December 31, 2019 | March 31, 2019 | |||||||
Short-term advances [1] | $ | 668,608 | $ | 440,489 | ||||
Short-term Promissory Note entered into on 8/17/18 [2] | - | 105,000 | ||||||
Convertible Promissory Note entered into on 7/23/19 [3] | 903,285 | - | ||||||
Accounts payable – related party [4] | 75,000 | - | ||||||
$ | 1,646,893 | $ | 545,489 |
September 30, 2020 | March 31, 2020 | |||||||
Short-term advances [1] | $ | 489,850 | $ | 876,427 | ||||
Promissory note entered into on 1/30/20 [2] | 1,133,333 | 1,033,333 | ||||||
Convertible Promissory Note entered into on 4/27/20 [3] | 77,198 | - | ||||||
Convertible Promissory Note entered into on 5/27/20 [4] | 36,019 | - | ||||||
Accounts payable – related party [5] | 30,000 | 55,000 | ||||||
$ | 1,766,400 | $ | 1,964,760 |
[1] | We periodically receive advances for operating funds from our current majority shareholders and other related parties, including entities that are owned, controlled, or influenced by our owners or management. These advances are due on demand and are unsecured. During the |
[2] | |
[3] | |
[4] | On May 27, 2020 we received proceeds of $700,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors. The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. The note is convertible into common stock at a conversion price of $0.01257 per share therefore during the six months ended September 30, 2020 we recorded a beneficial conversion feature and debt discount of $700,000 (see NOTE 8). During the |
[5] | During the six months ended September 30, 2020 we paid $25,000 to an accounting firm owned by our Chief Financial |
16 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019SEPTEMBER 30, 2020
(Unaudited)
NOTE 6 – DEBT
Our debt consisted of the following:
December 31, 2019 | March 31, 2019 | |||||||
Short-term advance received on 8/31/18 [1] | $ | 65,000 | $ | 75,000 | ||||
Secured merchant agreement for future receivables entered into on 2/14/19 [2] | - | 641,687 | ||||||
Secured merchant agreement for future receivables entered into on 2/14/19 [3] | - | 468,790 | ||||||
Secured merchant agreements for future receivables entered into on 2/14/19 [4] | - | 597,060 | ||||||
Promissory note entered into on 1/16/19 [5] | - | 60,000 | ||||||
Secured merchant agreements for future receivables entered into on 3/28/19 [6] | - | 25,650 | ||||||
Convertible promissory note entered into on 1/11/19 [7] | - | 26,600 | ||||||
Convertible promissory note entered into on 2/6/19 [8] | - | 76,686 | ||||||
Convertible promissory note entered into on 3/14/19 [9] | - | 5,557 | ||||||
Secured merchant agreement for future receivables entered into on 8/16/19 and refinanced on 12/10/19 [10] | 1,594,423 | - | ||||||
Secured merchant agreement for future receivables entered into on 8/16/19 [11] | 454,378 | - | ||||||
Convertible promissory note entered into on 8/30/19 [12] | 31,948 | - | ||||||
Convertible promissory note entered into on 9/11/19 [13] | 35,829 | - | ||||||
$ | 2,181,578 | $ | 1,977,030 |
September 30, 2020 | March 31, 2020 | |||||||
Short-term advance received on 8/31/18 [1] | $ | 35,000 | $ | 65,000 | ||||
Secured merchant agreement for future receivables entered into on 8/16/19 and refinanced on 12/10/19 [2] | - | 1,223,615 | ||||||
Secured merchant agreement for future receivables entered into on 8/16/19 [3] | - | 260,090 | ||||||
Convertible promissory note entered into on 3/5/20 [4] | - | 13,072 | ||||||
Convertible promissory note entered into on 3/11/20 [5] | - | 7,549 | ||||||
Short-term advance received on 3/25/20 [6] | 95,000 | 150,000 | ||||||
Promissory note entered into on 4/10/20 [7] | 400,000 | - | ||||||
Note issued under the Paycheck Protection Program on 4/17/20 [8] | 507,598 | - | ||||||
Loan with the U.S. Small Business Administration dated 4/19/20 [9] | 508,322 | - | ||||||
Short-term advance received from a former member of senior management [10] | 26,001 | - | ||||||
$ | 1,571,921 | $ | 1,719,326 |
[1] | In August 2018, we received a $75,000 short-term advance. The advance is due on demand, has no interest rate, and is unsecured. During the |
During January 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to working capital. On January 11, 2019, we received proceeds from this arrangement of $349,851. In accordance with the terms of the agreement, we were required to repay $489,650 by making daily ACH payments of $1,000 for the first 30 days following the date of the agreement and daily ACH payments of $2,999 thereafter. Accordingly, we recorded $139,799 as a debt discount at the inception of the agreement, which was the difference between the funds received and the amount that was to be repaid. In February 2019 we replaced this agreement with a new Secured Merchant Agreement (see below), therefore transferring $449,657 of amounts owed to a new agreement. However, prior to the terminating the January agreement, we made payments of $39,993 and amortized $139,799 into interest expense.
During February 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to working capital. On February 15, 2019, we received proceeds from this arrangement of $73,801 after paying off $233,501 from a September 2018 agreement (see above) and $449,657 from a January 2019 agreement (see above). In accordance with the terms of the agreement, we were required to repay $909,350 by making daily ACH payments of $5,049. Accordingly, we recorded $152,391 as a debt discount at the inception of the agreement, which was the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. During the year ended March 31, 2019, we repaid $141,372 and amortized $26,100 into interest expense.
Effective August 16, 2019 this debt was refinanced and the outstanding balance of $316,093 was rolled into a new debt arrangement, see notation [10] below. During the nine months ended December 31, 2019, prior to the refinance, we repaid $451,886 and amortized $126,292 into interest expense.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
During February 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to working capital. On February 15, 2019, we received proceeds from this arrangement of $126,932 after paying off $421,600 from a December 2018 agreement (see above). In accordance with the terms of the agreement, we are required to repay $840,000 by making daily ACH payments of $4,649. Accordingly, we recorded $291,468 as a debt discount at the inception of the agreement, which was the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. During the year ended March 31, 2019, we repaid $129,388 and amortized $49,646 into interest expense.
Effective August 16, 2019 this debt was refinanced and the outstanding balance of $297,033 was rolled into a new debt arrangement, see notation [10] below. During the nine months ended December 31, 2019, prior to the refinance, we repaid $413,580 and amortized $241,823 into interest expense.
During February 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to working capital. On February 15, 2019, we received proceeds from this arrangement of $126,932 after paying off $327,880 from an October 2018 agreement (see above). In accordance with the terms of the agreement, we are required to repay $629,550 by making daily ACH payments of $3,498. Accordingly, we recorded $224,410 as a debt discount at the inception of the agreement, which was the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. Also during February 2019, we entered into a second Secured Merchant Agreement with this same entity, receiving proceeds of $288,000. In accordance with the terms of the agreement, we are required to repay $419,700 by making daily ACH payments of $2,332. Accordingly, we recorded $131,700 as a debt discount at the inception of the agreement, which was the difference between the funds received and the amount that was to be repaid. During the year ended March 31, 2019, we repaid $157,410 on these two agreements and amortized $61,330 into interest expense.
Effective August 16, 2019 this debt was refinanced and the outstanding balance of $382,000 was rolled into a new debt arrangement, see notation [11] below. During the nine months ended December 31, 2019, prior to the refinance, we repaid $509,840 and amortized $294,780 into interest expense.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
[ |
During August 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to working capital. On August 15, 2019, we received proceeds from this arrangement of $339,270 after paying off $316,093 |
Effective December 10, 2019 this debt was refinanced and the outstanding balance of $839,514 was rolled into a new Secured Merchant Agreement for future receivables. During the nine months ended December 31, 2019, prior to the refinance, we repaid $559,486 and amortized $446,605 into interest expense related to the August 2019 arrangement. As a result of the refinancing arrangement we received proceeds of $854,801. In accordance with the terms of the agreement, we were required to repay $2,448,250 by making daily ACH payments of $10,999. Accordingly, we recorded $753,935 as a debt discount at the inception of the agreement, which was the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. During the nine months ended December 31, 2019, after the refinance, we repaid $153,986 and amortized $54,094 into interest expense related to the new December 2019 arrangement.
Effective December 10, 2019 this debt was refinanced and the outstanding balance of $839,514 was rolled into a new Secured Merchant Agreement for future receivables. Prior to the refinance, we repaid $559,486 and amortized $446,605 into interest expense related to the August 2019 arrangement. As a result of the refinancing arrangement we received proceeds of $854,801. In accordance with the terms of the agreement, we were required to repay $2,448,250 by making daily ACH payments of $10,999. Accordingly, we recorded $753,935 as a debt discount at the inception of the agreement, which was the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. During the year ended March 31, 2020, after the refinance, we repaid $747,932 and amortized $277,232 into interest expense related to the new December 2019 agreement. During the six months ended September 30, 2020 we amortized $442,894 into interest expense and repaid $1,071,996 to pay the debt off in full, which resulted in a gain on settlement of debt being recorded for $594,513. | |
[ | During August 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to working capital. In August 2019, we received proceeds from this arrangement of $418,381 after paying off $382,000 from |
[ | In |
[ | In |
17 |
In addition to the above debt transactions that were outstanding as of September 30, 2019 and March 31, 2019, during the nine months ended December 31, 2019, we also received proceeds of $200,000 from two additional short-term notes ($100,000 each) and received proceeds of $140,000 from a convertible promissory note. During the nine months ended December 31, 2019, we recorded interest expense of $30,000 for fixed interest and extension fees on the short-term notes and made total cash payments of $230,000 to extinguish the interest and principal amounts due on the short-term notes. During the nine months ended December 31, 2019, we accounted for the conversion feature in the convertible note as a derivative instrument, therefore at inception recorded a debt discount of $143,000 and captured loan fees, recorded as interest expense, of $718,518. By the time we repaid the convertible note in December of 2019 we had amortized the full $143,000 into interest expense, recorded additional interest expense on the note of $45,094 (inclusive of a prepayment penalty), and paid off the note, accrued interest, and prepayment penalties for $188,094.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019SEPTEMBER 30, 2020
(Unaudited)
[6] | In March 2020, we received a $150,000 short-term advance. The advance is due on demand, has no interest rate, and is unsecured. During the six months ended September 30, 2020 we made repayments of $55,000 on the debt. |
[7] | In April 2020, we received proceeds of $400,000 after entering into a promissory note that is due six months from the funding date. Under the note six interest only payments of $16,667 are to be made on the 20th of each month beginning in May 2020. Collateral for the note is, in priority order, is: the reserve and current balance in one of our merchant accounts, the reserve account in a second separate merchant accounts, shares of our common stock, and high-speed computer processing equipment. During the six months ended September 30, 2020 we recorded and paid $83,335 worth of interest expense. |
[8] | In April 2020 we received $505,300 in proceeds from the Paycheck Protection Program as established by the CARES Act as a result of a Note entered into with the U.S. Small Business Administration. The note has an interest rate of 1% and matures on April 1, 2022. Under the Note we are required to make monthly payments beginning November 1, 2020, however, under the terms of the CARES Act the loan may be forgiven if funds are used for qualifying expenses. During the six months ended September 30, 2020 we recorded $2,298 worth of interest expense on the Note. |
[9] | 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 September 30, 2020 we recorded $8,322 worth of interest on the loan. |
[10] | During the six months ended September 30, 2020 there was a change in senior management therefore $26,001 due to a former member of the senior management team was reclassified on our balance sheet from a related party payable to debt (see NOTE 5). |
NOTE 7 – DERIVATIVE LIABILITY
During the ninesix months ended December 31, 2019,September 30, 2020, we had the following activity in our derivative liability account:
Derivative liability at March 31, 2019 | $ | 1,358,901 | ||
Derivative liability recorded on new instruments | 1,206,139 | |||
Derivative liability reduced by debt settlement | (1,676,735 | ) | ||
Change in fair value | (504,635 | ) | ||
Derivative liability at December 31, 2019 | $ | 383,670 |
Debt | Warrants | Total | ||||||||||
Derivative liability at March 31, 2020 | $ | 793,495 | $ | - | $ | 793,495 | ||||||
Derivative liability recorded on new instruments | - | 6,499 | 6,499 | |||||||||
Derivative liability reduced by debt settlement (see NOTE 6) | (468,941 | ) | - | (468,941 | ) | |||||||
Change in fair value | (324,554 | ) | (2,234 | ) | (326,788 | ) | ||||||
Derivative liability at September 30, 2020 | $ | - | $ | 4,265 | $ | 4,265 |
We use the binomial option pricing model to estimate fair value for those instruments convertible into common stock, at inception, at conversion or settlement date, and at each reporting date. During the ninesix months ended December 31, 2019,September 30, 2020, the assumptions used in our binomial option pricing model were in the following range:
Debt | Warrants | ||||
Risk free interest rate | 0.11 - 0.17% | 0.21 - | |||
Expected life in years | 0.80 - 1.11 | 4.84 - | |||
Expected volatility | 128% - 239% | 265% - |
NOTE 8 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
We are authorized to issue up to 10,000,00050,000,000 shares of preferred stock with a par value of $0.001 and our Boardboard of Directorsdirectors 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.
As of December 31, 2019 and March 31, 20192020, we had no preferred stock issued or outstanding.
18 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
(Unaudited)
During the year ended March 31, 2020 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 Stock holders are entitled to 500 votes per share, 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.
During the six months ended September 30, 2020 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 September 30, 2020 we sold 46,612 units for gross proceeds of $1,165,300, therefore recorded the issuance of 46,612 shares of Series B Preferred Stock and the grant of 233,060 warrants during the period. Of the gross proceeds, $6,499 was allocated to the warrants and recorded as a derivative liability and $1,158,801 was allocated to the preferred stock ($47 recorded as the par value and $1,158,754 allocated to additional paid in capital). Also in conjunction with the Unit Offering we paid $21,000 of offering costs which was allocated between the preferred stock and warrants. The $20,994 allocated to the preferred stock decreased additional paid in capital due to the underlying instrument being classified as equity and the $6 allocated to the warrants was immediately expensed as offering costs due to the underlying instrument being classified as a fair value liability.
Preferred Stock Dividends
During the six months ended September 30, 2020 we recorded $52,342 for the cumulative cash dividends due to the shareholders of our Series B Preferred Stock and paid $14,567 of these amounts owing. As a result we recorded $37,775 as a dividend liability on our balance sheet as of September 30, 2020.
Common Stock
During the ninesix months ended December 31, 2019,September 30, 2020, we issued 59,215,648 shares of common stock in exchange for net proceeds of $825,000.
In conjunction with the sale of common stock during the year ended March 31, 2018, we provided a guarantee to certain individuals such that we would issue additional shares of our common stock if the average closing price of our common stock fell below $0.02 per share on the 20 days preceding the 18-month anniversary of the date the shares were originally sold. As a result of this guarantee, we had recorded $626,388 in accounts payable and accrued liabilities on our balance sheet as of March 31, 2018. During the year ended March 31, 2019, the 18-month anniversary passed without the common stock falling below the set threshold, therefore, we were released from the guarantee, and we increased additional paid-in capital by $525,000 to remove the previously recorded offering costs. During the nine months ended December 31, 2019, the 18-month anniversary passed without the common stock falling below the set threshold, therefore, we were released from the guarantee, and we increased additional paid-in capital by $101,387 to remove the previously recorded offering costs.
Also during the nine months ended December 31, 2019, we issued 241,000,00021,000,000 shares of common stock, valued at $3,865,500$399,000 based on the market value on the day of issuance, to multiple employees for services and compensation, which is subject to forfeiture if the employee or contractor is not in good standing at the time the shares are fully vested. Of the $3,865,500$399,000 value we recognized $1,844,639$128,497 as an expense during the ninesix months ending December 31, 2019September 30, 2020 and the remaining $2,020,861$270,503 will be recognized ratably over the vesting term. In addition, during the six months ended September 30, 2020, we recognized $666,738 as expense due to the shares issued to employees, we also issued an additional 285,618,592vesting of shares of common stock valued at $831,800 based on the market value on the day of issuance, for services.previously issued.
During the ninesix months ended December 31, 2019September 30, 2020, we repurchased 5,1509,079 shares of our common stock from a third party for $102$272 and repurchased 106,000,000 shares of our common stock from former members of our senior management team and founders for $120,000, all of which was recorded in Accounts Payable on our balance sheet at September 30, 2020. These shares repurchased were immediately canceled. Also, during the six months ended September 30, 2020 we cancelled 22,500,000 shares that were returnedrecorded an increase in accordanceAdditional Paid in Capital of $2,000,000 related to beneficial conversion features on our related party debt (see NOTE 5) and recorded an increase in Additional Paid in Capital of $373,832 for accrued payroll forgiven by a member of our senior management team at the time his employment with the terms of a Convertible Promissory Note (see Note 6), reducing common stock by $22,500 and increasing additional paid in capital byCompany ended.
During the same. We alsosix months ended September 30, 2020 we cancelled 200,000,000 shares returned in conjunction with the termination of a Joint Venture Agreement entered into in March of 2019, reducing common stock by $200,000, reducing additional paid in capital by $3,180,000, offset with a reduction in our prepaid asset of $3,380,000. During the nine months ended December 31, 2019 we$2,428,044 and a reversal of previously recorded a beneficial conversion featureexpense of $1,000,000 related to a convertible promissory note entered into with a related party (see Note 5).
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)$951,956.
As of December 31, 2019September 30, 2020 and March 31, 2019, the Company2020, we had 3,003,490,4082,929,481,329 and 2,640,161,3183,214,490,408 shares of common stock issued and outstanding, respectively.
Employee Stock Options
The nonqualified plan adopted in 2007 authorized 65,000 shares, of which 47,500 had been granted as of March 31, 2018. The qualified plan adopted in October of 2008 authorizes 125,000 shares and was approved by a majority of our shareholders on September 16, 2009. As of March 31, 2018, 42,500 shares had been granted under the 2008 plan. Effective April 1, 2018 we cancelled both the 2007 and 2008 plans, as well as any shares that were allocated under the plans and were not yet issued.
The following table summarizes the changes in employee stock options outstanding and the related prices for the shares of our common stock issued to employees under two employee stock option plans:
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Number of | Exercise | Contractual | Intrinsic | |||||||||||||
Shares | Price | Life (years) | Value | |||||||||||||
Options outstanding at March 31, 2018 | 35,000 | $ | 10.00 | 1.51 | $ | - | ||||||||||
Granted | - | $ | - | |||||||||||||
Exercised | - | $ | - | |||||||||||||
Canceled / expired | - | $ | - | |||||||||||||
Options outstanding at March 31, 2019 | 35,000 | $ | 10.00 | 0.51 | $ | - | ||||||||||
Granted | - | $ | - | |||||||||||||
Exercised | - | $ | - | |||||||||||||
Canceled / expired | (35,000 | ) | $ | 10.00 | ||||||||||||
Options outstanding at December 31, 2019 | - | $ | - | - | $ | - | ||||||||||
Options exercisable at December 31, 2019 | - | $ | - | - | $ | - |
Stock-based compensation expense in connection with options granted to employees for the three months ended December 31, 2019 and 2018, was $0.
Warrants
During the six months ended September 30, 2020 we granted 233,060 warrants in conjunction with our Unit Offering. The following table summarizeswarrants are classified as a derivative liability on our balance sheet in accordance with ASC 480, Distinguishing Liabilities from Equity, based on the warrants outstanding and the related pricesterms that indicate a fundamental transaction could give rise to an obligation for the shares ofus to pay cash to our common stock as of December 31, 2019:warrant holders (see NOTE 7).
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||||
Exercise | Number | Contractual | Exercise | Number | Exercise | |||||||||||||||||
Price | Outstanding | Life (Years) | Price | Exercisable | Price | |||||||||||||||||
$ | 1.50 | 125,000 | 0.46 | $ | 1.50 | 125,000 | $ | 1.50 |
19 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019SEPTEMBER 30, 2020
(Unaudited)
Transactions involvingDetails of our warrant issuance are summarizedwarrants outstanding as of September 30, 2020 is as follows:
Weighted | ||||||||
Number of | Average | |||||||
Shares | Exercise Price | |||||||
Warrants outstanding at March 31, 2018 | 6,169,497 | $ | 1.50 | |||||
Granted / restated | - | $ | - | |||||
Canceled | - | $ | - | |||||
Expired | (1,117,000 | ) | $ | 1.48 | ||||
Warrants outstanding at March 31, 2019 | 5,052,497 | $ | 1.50 | |||||
Granted | - | $ | - | |||||
Canceled | - | $ | - | |||||
Expired | (4,927,497 | ) | $ | 1.50 | ||||
Warrants outstanding at December 31, 2019 | 125,000 | $ | 1.50 |
Exercise Price | Warrants Outstanding | Warrants Exercisable | Weighted Average Contractual Life (Years) | |||||
$ | 0.10 | 233,060 | 233,060 | 4.79 |
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of business, we may be, or have been, involved in legal proceedings from time to time. Below is a description of all legal proceedingsDuring the six months ended September 30, 2020 we were not involved in during the nine months ended December 31, 2019.any material legal proceedings.
NOTE 10 – OPERATING LEASE
In February 2016, the FASB issued ASU No. 2016-02,Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases. Leases are classified as either finance or operating with classification affecting the pattern of expense recognition in the statement of operations. We adopted ASU No. 2016-02 on April 1, 2019. We did not record a lease asset and lease liability as of the adoption date as we had no lease arrangements or lease obligation at that time.
During the nine months ended December 31,In August 2019 we entered twoan operating leaseslease for office space in Eatontown, New Jersey (the “Eatontown Lease”) and in September 2019 we entered an operating lease for office space in Kaysville, Utah (the “Kaysville Lease”). 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 three and ninesix months ended December 31, 2019September 30, 2020 the variable lease costs amounted to $831 and $1,385,$1,662, respectively. 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 twelve-and-a-half-month lease term of the Kaysville Lease for a period of one year. At commencement of the Kaysville Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $21,147. As of October 1, 2020, the Company began leasing the property located in Kaysville on a month to month basis.
Operating lease expense was $16,397 and $24,630$32,794 for the three and ninesix months ended December 31, 2019, respectively.September 30, 2020. Operating cash flows used for the operating leases during the three and ninesix months ended December 31, 2019September 30, 2020 were $12,897$16,897 and $18,797, respectively.$32,794. As of December 31, 2019,September 30, 2020, the weighted average remaining lease term was 2.341.83 years and the weighted average discount rate was 12%.
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019
(Unaudited)
Future minimum lease payments under non-cancellable leases as of December 31,September 30, 2019 were as follows:
Remainder of 2020 | $ | 14,897 | ||||||
2021 | 56,794 | |||||||
Remainder of 2021 | $ | 24,000 | ||||||
2022 | 48,000 | 48,000 | ||||||
2023 | 16,000 | 16,000 | ||||||
Total | 135,691 | 88,000 | ||||||
Less: Interest | (17,294 | ) | (8,572 | ) | ||||
Present value of lease liability | 118,397 | 79,428 | ||||||
Operating lease liability, current [1] | (59,064 | ) | (48,000 | ) | ||||
Operating lease liability, long term | $ | 59,333 | $ | 31,428 |
[1] Represents lease payments to be made in the next 12 months
NOTE 11 – SUBSEQUENT EVENTS
Subsequent to December 31, 2019September 30, 2020, we paid $7,601 of dividends that were accrued as of September 30, 2020. Also, subsequent to September 30, 2020, we received $1,070,000gross proceeds of $93,300 in proceeds from related party advances and issued 10,000,000 shares ofconnection with our common stock for services.Unit Offering.
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 additional subsequent events that require disclosure.
20 |
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 are an emerging leader in the financial technology (FINTECH) sector, leveraging the latest innovations in technology for financial education, services and interactive tools. Our family of subsidiaries focus on delivering products that serve individuals around the world. From personal money management, to advancements in blockchain technologies, our companies are forging a path for individuals to take advantage of financial and technical innovations.
Under our parent company, Investview, Inc., our significant operating subsidiaries include:
Kuvera, LLC and Kuvera France S.A.S. – provides financial education and cost savings tools for individuals worldwide.
S.A.F.E. Management, LLC – trade advisory services for those who lack the time to trade for themselves.
SAFETek, LLC – deploying next generation processing technologies for artificial intelligence, data mining and blockchain technologies.
APEX Tek, LLC – sells and distributesdelivers the APEX program which is a passive income model for those who seekpermits individuals to purchase assets that will generate monthly cash flow. This model has drawn considerable institutional interest.As of September 30, 2020 we have ceased selling the APEX package. We may re-introduce APEX at a later date after further evaluation of the model.
Results of Operations
Three Months Ended December 31, 2019September 30, 2020 Compared to Three Months Ended December 31, 2018September 30, 2019
Revenues
We recorded net revenue of $4,963,611$7,753,337 for the three months ended December 31, 2019,September 30, 2020, which was a decreasean increase of $2,769,423$511,213 or 36%7%, from the prior period revenue of $7,733,034. This decrease was due to a minor loss of repeat subscription customers coupled with our lack of cryptocurrency service revenue.$7,242,124. The lack of cryptocurrency revenueincrease can be explained by our termination$2,493,739 increase in mining revenues earned in the current year as a result of our cryptocurrency mining operations versus no such revenue in the prior year. This was offset by a decrease in subscription sales of $1,980,867, which was mostly due to the impact of the agent arrangement with a third-party supplier of crypotocurrency mining services.Covid-19 pandemic and its overall impact to the economy. Our gross billings increased by 3%, or $266,075, to $8,096,604 in the three months ended September 30, 2020, versus $7,830,529 in the three months ended September 30, 2019; however, this was offset by refunds, incentives, credits, chargebacks, and amounts paid to suppliers.
Operating Costs and Expenses
We recorded operating costs and expenses of $6,702,907$7,182,320 for the three months ended December 31, 2019,September 30, 2020, which was a decrease of $1,272,015,$2,132,923, or 16%23%, from the prior period’s operating costs and expenses of $7,974,922.$9,315,243. The decrease can be fully explained by the decrease in our salary and related expenses of $1,751,038, or 68%, from $2,567,592 for the three months ended September 30, 2019, to $816,554 for the three months ended September 30, 2020, the decrease in commissions whichof $930,464, or 21%, from $4,347,177 for the three months ended September 30, 2019, to $3,416,713 for the three months ended September 30, 2020, and the decrease in our general and administrative expenses of $998,287, or 73%, from $1,363,113 for the three months ended September 30, 2019, to $364,826. These decreases were offset by the increase in cost of sales and service of $1,435,764 or 497% from $289,045 for the three months ended September 30, 2019 to $1,724,809 for the three months ended September 30, 2020. The increase in cost of sales and service was a result of mining costs incurred in the current period as it related to the increase in mining revenue. The decrease in commissions was a result of our bonus plans paying out beyond our maximum threshold in the prior period due to certain bonus programs in place, which has since been adjusted to reduce such payouts. For the three months ended December 31, 2019September 30, 2020 commissions as a percent of total net revenue was 32%44%, versus 66%60% in the prior period. Lastly, decreases in salary and general and administrative expenses was due to the Company terminating the sales program related to the APEX package and being able to cut back on operating costs that existed in the prior period, along with our cancellation of 200,000,000 shares that were returned in conjunction with the termination of a Joint Venture Agreement which resulted in the reversal of previously recorded expense of $951,956.
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Other Income and Expenses
We recorded other expense of $2,086,434$1,756,480 for the three months ended December 31, 2019,September 30, 2020, which was a difference of $1,878,614,$2,077,871, or 904%647%, from the prior period other expenseincome of $207,820.$321,391. The change is due to the interest expense incurreda loss on fair value of derivative liability of $20,847 recognized in the three months ended December 31, 2019September 30, 2020 compared to a gain of $1,794,623 versus only $206,007 incurred in$2,358,447 for the prior period.three months ended September 30, 2019.
NineSix Months Ended December 31, 2019September 30, 2020 Compared to NineSix Months Ended December 31, 2018September 30, 2019
Revenues
We recorded net revenue of $19,717,448$13,343,153 for the ninesix months ended December 31, 2019,September 30, 2020, which was a decrease of $3,625,155$1,410,684 or 16%10%, from the prior period revenue of $23,342,603. This$14,753,837. The decrease can be explained by our $5,249,323 decrease in subscription sales offset by our $3,836,285 increase in mining revenues earned in the current year as a result of our cryptocurrency mining operations versus no such revenue in the prior year. The decrease in subscription sales was due to attrition and an overhaul in the compensation plan of Kuvera during the third quarter of fiscal year 2019, resulting in a minor loss of repeat subscription customers, coupled with our lack of cryptocurrency service revenue. The lack of cryptocurrency revenue can be explained by our terminationthe impact of the agent arrangement with a third-party supplier of crypotocurrency mining services.Covid-19 pandemic and its overall impact to the economy. Our gross billings decreased by 13%, or $2,120,107, to $14,003,123 in the six months ended September 30, 2020, versus $16,123,230 in the six months ended September 30, 2019; however, this was offset by refunds, incentives, credits, chargebacks, and amounts paid to suppliers.
Operating Costs and Expenses
We recorded operating costs and expenses of $24,355,004$15,778,934 for the ninesix months ended December 31, 2019,September 30, 2020, which was a decrease of $1,872,691,$1,873,163, or 7%11%, from the prior period’s operating costs and expenses of $26,227,695. This change is principally$17,652,097. The decrease can be explained by the decrease in our salary and related expenses of $1,674,057, or 45%, from $3,711,446 for the six months ended September 30, 2019, to $2,037,389 for the six months ended September 30, 2020, the decrease in commissions of $2,425,603, or 26%, from $9,216,147 for the six months ended September 30, 2019, to $6,790,544 for the six months ended September 30, 2020. These decreases were offset by the increase in cost of sales and service of $2,104,635 or 395% from $532,498 for the six months ended September 30, 2019 to $2,637,133 for the six months ended September 30, 2020. The increase in cost of sales and service was a result of amining costs incurred in the current period as it related to the increase in mining revenue. The decrease of $6,494,247, or 38%, in commissions which was a result of our bonus plans paying out beyond our maximum threshold in the prior period due to certain bonus programs in place, which has since been adjusted to reduce such payouts. The decreaseFor the six months ended September 30, 2020 commissions as a percent of total net revenue was offset by an increase51%, versus 62% in the prior period. Lastly, decreases in salary and related costs whichexpenses was due to the Company recording $2,676,439 worth of stock for servicesterminating the sales program related to the APEX package and compensation.being able to cut back on operating costs that existed in the prior period.
Other Income and Expenses
We recorded other expense of $3,940,313$3,662,484 for the ninesix months ended December 31, 2019,September 30, 2020, which was a difference of $5,859,552,$1,808,605, or 305%98%, from the prior period other incomeexpense of $1,919,239.$1,853,879. The change is due to the gain on bargain purchase recorded as a result of the United Games, LLC and United League, LLC acquisition that took place during the nine months ended December 31, 2018, as compared to no such gainan increase in the prior period. Additionally, in the current period there was interest expense recorded of $5,536,354 offset by a gain on debt extinguishment of $1,725,384, whereas in the prior periodsix months ended September 30, 2020 as it relates to the interest expense was only $215,154required to be recognized on the financial liability recorded for our APEX sale and there was a gain on debt extinguishment of $19,387.leaseback transactions.
Liquidity and Capital Resources
During the ninesix months ended December 31, 2019,September 30, 2020, we incurred a net loss of $8,587,449. This loss was funded by$6,101,547. However, we were able to generate $661,629 in cash provided bythrough our operating activitiesactivities. We used this cash, along with $1,942,338 of $4,690,473 offset by cash used in investing activities of $4,171,341 and cash used ingenerated from financing activities to fund operations and fund the purchase of $389,212.$1,717,289 worth of fixed assets. As a result, our cash, and cash equivalents, and restricted cash increased by $129,956$886,678 to $263,600$1,023,855 as compared to $133,644$137,177 at the beginning of the fiscal year.
OurAs of September 30, 2020, our current liabilities exceeded our current assets (workingequal to a working capital deficit) by $10,938,623 asdeficit of December 31, 2019, as compared to $2,222,990 at$18,383,173. As of March 31, 2019. The increase in2020, the working capital deficit is due to an increase in our other current liabilities of $7,576,800 which is due to cash received for our APEX program, which results in the Company recording financial liabilities for amounts to be repaid under the program.was $14,123,625.
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During the nine months ended December 31, 2019, we raised $2,177,452 in cash proceeds from new debt arrangements, raised $2,164,500 in cash proceeds from related parties, and received $825,000 from the sale of our common stock. Additionally, net cash provided by operations was $4,690,473 for the nine months ended December 31, 2019 due mostly do the receipt of $9,693,141 of cash received in from our APEX program.
Going Concern
These interim unaudited financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the interim unaudited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we not be unable to continue as a going concern.
Our audited consolidated financial statements for the year ended March 31, 2019,2020, state that our historical losses, accumulated deficit, cash balance, and working capital deficit raise substantial doubts about our ability to continue as a going concern. Historically we have relied on increasing revenues and new debt and equity financing to pay for operational expenses and debt as it came due. Going forward, we plan to reduce obligations with cash flow provided by operational growth as we have been, and plan to continue, reducing bonus payouts, increasing sources of income and business activities in new sectors, and utilizing our acquired assets to generate positive cash flow and reduce debt. Additionally, we plan to pursue additional debt and equity financing and to find short term capital in arrangements that are partnership based with elements of debt and equity combined.
Critical Accounting Policies
Basis of Presentation
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 three and ninesix months ended December 31, 2019,September 30, 2020 are not necessarily indicative of the operating results that may be expected for the year ending March 31, 2020.2021. These unaudited condensed consolidated financial statements should be read in conjunction with the March 31, 20192020 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2019.2020.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries, Kuvera, LLC, Investment Tools & Training, LLC, Apex Tek, LLC (formerly Razor Data, LLC), S.A.F.E. Management, LLC, SafeTek, LLC (formerly WealthGen Global, LLC), United Games, LLC, United League, LLC, and Kuvera France S.A.S. Through March 31, 2019 we had determined that one affiliated entity, Kuvera LATAM S.A.S., which we previously conducted business with, was a variable interest entity and we were the primary beneficiary of the entity’s activities, which are similar to those of Kuvera, LLC. As a result, through March 31, 2019 we had consolidated the accounts of this variable interest entity into the accompanying consolidated financial statements. Further, because the Company did not have any ownership interest in this variable interest entity, the Company had allocated the contributed capital in the variable interest entity as a component of noncontrolling interest. As of April 1, 2019 Kuvera LATAM S.A.S. had no operations and ceased to exist, therefore, as of that date, no consolidation of the entity is necessary and we recorded a gain on deconsolidation of $53,739 to eliminate the intercompany account with Kuvera LATAM S.A.S. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of these unaudited condensed consolidated 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.
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Sale and Leaseback
Through our wholly-owned subsidiary, APEX Tex, LLC, we sellsold high powered data processing equipment (“APEX”) to our customers and they leaseleased the equipment back to SAFETek, LLC, another of our wholly-owned subsidiaries. We account for these transactions under ASC 842-40 where the leaseback has been deemed a sales-type lease due to the lease term generally covering the entire economic life of the equipment and our likelihood to purchase the asset at the end of the lease term. In accordance with ASC 842-40 we have recorded the data processing equipment as a fixed asset on our balance sheet and we have accounted for the amounts received for the equipment as a financial liability, in other liabilities on our balance sheet. Further, we will recognize interest on the financial liability over the term of the lease to ensure the financial liability equates to the total amounts to be paid over the life of the lease.
During the ninesix months ended December 31, 2019September 30, 2020 we had the following activity related to our sale and leaseback transactions:
Proceeds from sales of APEX | $ | 9,693,141 | ||
Interest recognized on financial liability | 877,352 | |||
Payments made for leased equipment | (1,341,100 | ) | ||
Total financial liability | 9,229,393 | |||
Other current liabilities [1] | (7,576,800 | ) | ||
Other long-term liabilities | $ | 1,652,593 |
Total Financial Liability | Contra-Liability | Net Financial Liability | Current [1] | Long Term | ||||||||||||||||
Balance as of March 31, 2020 | $ | 53,828,000 | $ | (38,535,336 | ) | $ | 15,292,664 | $ | 11,407,200 | $ | 3,885,464 | |||||||||
Proceeds from sales of APEX | 5,001,622 | - | 5,001,622 | |||||||||||||||||
Interest recorded on financial liability | 8,348,378 | (8,348,378 | ) | - | ||||||||||||||||
Payments made for leased equipment | (2,125,300 | ) | - | (2,125,300 | ) | |||||||||||||||
Interest expense | - | 3,995,914 | 3,995,914 | |||||||||||||||||
Balance as of September 30, 2020 | $ | 65,052,700 | $ | (42,887,800 | ) | $ | 22,164,900 | $ | 14,077,200 | $ | 8,087,700 |
[1] Represents lease payments to be made in the next 12 months
As of December 31, 2019The $42,887,800 is expected to be recognized into interest as follows:
Remainder of 2021 | $ | 4,782,861 | ||
Fiscal year ending March 31, 2022 | 9,565,721 | |||
Fiscal year ending March 31, 2023 | 9,565,721 | |||
Fiscal year ending March 31, 2024 | 9,565,721 | |||
Fiscal year ending March 31, 2025 and beyond | 9,407,776 | |||
$ | 42,887,800 |
During the six months ended September 30, 2020 we have received proceeds of $607,205 in additional depositsproceeds for APEX sales which has beenwere recorded in the customer advance amount shown on our balance sheet.sheet, resulting in a net increase in the account of $81,845 since March 31, 2020. As of September 30, 2020 we have ceased selling the APEX package. We may re-introduce APEX at a later date after further evaluation of the model.
Revenue Recognition
Revenue Recognition
Subscription Revenue
The majority 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,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 10-day trial period to first time subscription customers, during which a full refund can be requested if a customer does not like the product. 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.
Equipment Sales
We generate revenue from the sale of high-speed computer processing equipment that is used for any of the following intense processing activities: protein folding, CGI rendering, Game Streaming, Machine & Deep Learning, Mining, Independent Financial Verification, and general high-speed computing. We recognize equipment sales 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 an equipment package to our customers which includes hardware, software, and firmware and is drop-shipped to a hosting data center. We receive payment at the time of purchase and recognize revenue when the equipment package is delivered and ready for maintenance and hosting, which our customers arrange for, and obtain, from a separate third party that provides such services.
Cryptocurrency Mining Service Revenue
We generate revenue from the sale of cryptocurrency mining services to our customers through an arrangement with a third-party supplier. We recognize cryptocurrency mining service 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-party to provide mining services to our customers and payment is received at the time of purchase, therefore revenue is recognized upon receipt of payment. We recognize revenue in the amount of the fee to which we are entitled to as an agent, or the amount of consideration that we retain after paying the third-party the consideration received in exchange for the services the third-party is to provide.
Mining Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we lease equipment under a sales-type lease and 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.
Fee Revenue
We generate fee revenue from our customers throughSAFE 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.
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Revenue generated for the six months ended September 30, 2020 is as follows:
Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
Gross billings/receipts | $ | 10,159,115 | $ | 3,836,285 | $ | 7,723 | $ | 14,003,123 | ||||||||
Refunds, incentives, credits, and chargebacks | (659,970 | ) | - | - | (659,970 | ) | ||||||||||
Net revenue | $ | 9,499,145 | $ | 3,836,285 | $ | 7,723 | $ | 13,343,153 |
For the six months ended September 30, 2020 foreign and domestic revenues were approximately $9 million and $4.4 million, respectively.
Revenue generated for the ninesix months ended December 31,September 30, 2019 is as follows:
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||||||||||||||
Gross billings/receipts | $ | 21,214,747 | $ | - | $ | - | $ | 380,871 | $ | 9,486 | $ | 21,605,104 | $ | 16,117,861 | $ | - | $ | 5,369 | $ | 16,123,230 | ||||||||||||||||||||
Refunds, incentives, credits, and chargebacks | (1,887,656 | ) | - | - | - | - | (1,887,656 | ) | (1,369,393 | ) | - | - | (1,369,393 | ) | ||||||||||||||||||||||||||
Amounts paid to supplier | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Net revenue | $ | 19,327,091 | $ | - | $ | - | $ | 380,871 | $ | 9,486 | $ | 19,717,448 | $ | 14,748,468 | $ | - | $ | 5,369 | $ | 14,753,837 |
Revenue generated for
For the ninesix months ended December 31, 2018 is as follows:September 30, 2019 foreign and domestic revenues were approximately $13.9 million and $800,000, respectively.
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||
Gross billings/receipts | $ | 21,882,005 | $ | 698,954 | $ | 5,690,380 | $ | - | $ | - | $ | 28,271,389 | ||||||||||||
Refunds, incentives, credits, and chargebacks | (1,047,007 | ) | (4,000 | ) | (6,501 | ) | - | - | (1,057,508 | ) | ||||||||||||||
Amounts paid to supplier | - | - | (3,871,278 | ) | - | - | (3,871,278 | |||||||||||||||||
Net revenue | $ | 20,835,048 | $ | 694,954 | $ | 1,812,601 | $ | - | $ | - | $ | 23,342,603 |
Revenue generated for the three months ended December 31, 2019September 30, 2020 is as follows:
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||||||||||||||
Gross billings/receipts | $ | 5,096,886 | $ | - | $ | - | $ | 380,871 | $ | 4,117 | $ | 5,481,874 | $ | 5,599,155 | $ | 2,493,739 | $ | 3,710 | $ | 8,096,604 | ||||||||||||||||||||
Refunds, incentives, credits, and chargebacks | (518,263 | ) | - | - | - | - | (518,263 | ) | (343,267 | ) | - | - | (343,267 | ) | ||||||||||||||||||||||||||
Amounts paid to supplier | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Net revenue | $ | 4,578,623 | $ | - | $ | - | $ | 380,871 | $ | 4,117 | $ | 4,963,611 | $ | 5,255,888 | $ | 2,493,739 | $ | 3,710 | $ | 7,753,337 |
For the three months ended September 30, 2020 foreign and domestic revenues were approximately $7.3 million and $426,000, respectively.
Revenue generated for the three months ended December 31, 2018September 30, 2019 is as follows:
Subscription Revenue | Equipment Sales | Cryptocurrency Mining Service Revenue | Mining Revenue | Fee Revenue | Total | Subscription Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||||||||||||||||||||
Gross billings/receipts | $ | 7,204,415 | $ | 698,954 | $ | 40,779 | $ | - | $ | - | $ | 7,944,148 | $ | 7,825,160 | $ | - | $ | 5,369 | $ | 7,830,529 | ||||||||||||||||||||
Refunds, incentives, credits, and chargebacks | (200,613 | ) | (4,000 | ) | (6,501 | ) | - | - | (211,114 | ) | (588,405 | ) | - | - | (588,405 | ) | ||||||||||||||||||||||||
Amounts paid to supplier | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Net revenue | $ | 7,003,802 | $ | 694,954 | $ | 34,278 | $ | - | $ | - | $ | 7,773,034 | $ | 7,236,755 | $ | - | $ | 5,369 | $ | 7,242,124 |
For the three months ended September 30, 2019 foreign and domestic revenues were approximately $6.8 million and $403,000, respectively.
Recently Issued Accounting Pronouncements
There are no recently issued accounting pronouncements that the Company has not yet adopted that they believe are applicable or would have a material impact on the financial statements of the Company.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity, or capital expenditures.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.
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ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Acting Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Our Chief Executive Officer and Acting Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were not effective.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting during the fiscal quarter ended December 31, 2019,September 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In the ordinary course of business, we may be or have been involved in legal proceedings from time to time. Belowtime; however we do not anticipate that the outcome of such matters and disputes will materially affect our financial statements.
None of our directors, officers, or affiliates is a description of all legal proceedings we were involved in during the nine months ended December 31, 2019.a proceeding adverse to our business or has a material interest adverse to our business.
N/A
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In October 2019 we received $175,000 in proceeds from the sale of 7,000,000 shares of our common stock and issued 12,400,000 shares of our common stock for services.None.
In December 2019 we issued 3,218,592 shares of our common stock for services that has not been previously reported in any of our SEC filings.
In January and February 2020 we issued 10,000,000 shares of our common stock for services.
The securities represented by each of the transactions described above were issued in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions not involving any public offering. Each of the investors is either an “accredited investor” as defined in Rule 501(a) of Regulation D or a sophisticated investor able to bear the risks of the investment. Each investor confirmed the foregoing and acknowledged that the securities must be acquired and held for investment. All certificates evidencing the shares of common stock issued or issuable upon conversion of the notes, issuances under the restricted stock grants, or upon the exercise of the warrants will bear a restrictive legend. No underwriter participated in the offer and sale of these securities, and no commission or other remuneration was paid or given directly or indirectly in connection therewith.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
None.
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The following exhibits are filed as a part of this report:
Exhibit Number* | Title of Document | Location | ||
Item 10 | Material Contracts | |||
Item 31 | Rule 13a-14(a)/15d-14(a) Certifications | |||
31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | This filing. | ||
31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | This filing. | ||
Item 32 | Section 1350 Certifications | |||
32.01 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
32.02 | Certification of Acting Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This filing. | ||
Item 101*** | Interactive Data File | |||
101.INS | XBRL Instance Document | This filing. | ||
101.SCH | XBRL Taxonomy Extension Schema | This filing. | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | This filing. | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | This filing. | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase | This filing. | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | This filing. |
* | All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. Omitted numbers in the sequence refer to documents previously filed as an exhibit. |
** | Identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit as required by Item 15(a)(3) of Form 10-K. |
*** | Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
INVESTVIEW, INC. | ||
Dated: | By: | /s/ Joseph Cammarata |
Joseph Cammarata | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
Dated: | By: | /s/ Jayme L. McWidener |
Jayme L. McWidener | ||
Chief Financial Officer | ||
(Principal Financial Officer and Accounting Officer) |
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