Investview, Inc. - Quarter Report: 2020 December (Form 10-Q)
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, 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 [X] | 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 8, 2021, there were 3,237,481,329 shares of common stock, $0.001 par value, outstanding.
INVESTVIEW, INC.
Form 10-Q for the Nine Months Ended December 31, 2020
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets
as of December 31, 2020 (Unaudited) and March 31, 2020
| December 31, | March 31, | |||||||
| 2020 | 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,110,960 | $ | 137,177 | ||||
| Restricted cash, current | 180,550 | - | ||||||
| Prepaid assets | 814,695 | 5,309,512 | ||||||
| Receivables | 1,076,583 | 910,646 | ||||||
| Short-term advances | 145,000 | 145,000 | ||||||
| Short-term advances - related party | 500 | 500 | ||||||
| Other current assets | 655,059 | 96,022 | ||||||
| Total current assets | 3,983,347 | 6,598,857 | ||||||
| Fixed assets, net | 5,892,472 | 2,997,611 | ||||||
| Other assets: | ||||||||
| Intangible assets, net | 562,427 | 692,882 | ||||||
| Restricted cash, long term | 262,939 | - | ||||||
| Operating lease right-of-use asset | 63,258 | 99,465 | ||||||
| Deposits | 8,488 | 11,173 | ||||||
| Total other assets | 897,112 | 803,520 | ||||||
| Total assets | $ | 10,772,931 | $ | 10,399,988 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 2,109,143 | $ | 2,896,012 | ||||
| Payroll liabilities | 82,765 | 880,349 | ||||||
| Customer advance | - | 392,310 | ||||||
| Deferred revenue | 969,726 | 612,500 | ||||||
| Derivative liability | 41,390 | 793,495 | ||||||
| Dividend liability | 70,516 | - | ||||||
| Operating lease liability, current | 48,000 | 56,530 | ||||||
| Other current liabilities | - | 11,407,200 | ||||||
| Related party payables, net of discounts, current | 2,025,106 | 1,964,760 | ||||||
| Debt, net of discounts, current | 3,349,987 | 1,719,326 | ||||||
| Total current liabilities | 8,696,633 | 20,722,482 | ||||||
| Operating lease liability, long term | 21,593 | 50,268 | ||||||
| Related party payables, net of discounts, long term | 149,972 | - | ||||||
| Debt, net of discounts, long term | 14,925,957 | - | ||||||
| Other long term liabilities, net of deferred interest | - | 3,885,464 | ||||||
| Total long term liabilities | 15,097,522 | 3,935,732 | ||||||
| Total liabilities | 23,794,155 | 24,658,214 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, par value: $0.001; 50,000,000 shares authorized, 55,554 and none issued and outstanding as of December 31, 2020 and March 31, 2020, respectively | 56 | - | ||||||
| Common stock, par value $0.001; 10,000,000,000 shares authorized; 3,237,481,329 and 3,214,490,408 shares issued and outstanding as of December 31, 2020 and March 31, 2020, respectively | 3,237,481 | 3,214,490 | ||||||
| Additional paid in capital | 34,615,895 | 28,929,516 | ||||||
| Accumulated other comprehensive income (loss) | (19,330 | ) | (20,058 | ) | ||||
| Accumulated deficit | (50,855,326 | ) | (46,382,174 | ) | ||||
| Total stockholders’ equity (deficit) | (13,021,224 | ) | (14,258,226 | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | 10,772,931 | $ | 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
for the Three and Nine Months Ended December 31, 2020 and 2019
(Unaudited)
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 3,844,722 | $ | 4,578,623 | $ | 13,343,867 | $ | 19,327,091 | ||||||||
| Mining revenue | 4,027,364 | 380,871 | 7,863,649 | 380,871 | ||||||||||||
| Fee revenue | 2,952 | 4,117 | 10,675 | 9,486 | ||||||||||||
| Total revenue, net | 7,875,038 | 4,963,611 | 21,218,191 | 19,717,448 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of sales and service | 2,055,379 | 560,145 | 4,692,512 | 1,092,643 | ||||||||||||
| Commissions | 2,575,002 | 1,605,925 | 9,365,546 | 10,822,072 | ||||||||||||
| Selling and marketing | 18,607 | 575,199 | 863,547 | 1,389,666 | ||||||||||||
| Salary and related | 1,138,948 | 1,721,970 | 3,176,337 | 5,433,416 | ||||||||||||
| Professional fees | 1,846,338 | 474,287 | 2,505,648 | 1,130,070 | ||||||||||||
| General and administrative | 1,814,425 | 1,765,381 | 4,624,043 | 4,487,137 | ||||||||||||
| Total operating costs and expenses | 9,448,699 | 6,702,907 | 25,227,633 | 24,355,004 | ||||||||||||
| Net income (loss) from operations | (1,573,661 | ) | (1,739,296 | ) | (4,009,442 | ) | (4,637,556 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Gain (loss) on debt extinguishment | 4,238,810 | 443,907 | 5,068,747 | 1,725,384 | ||||||||||||
| Gain (loss) on fair value of derivative liability | (35,489 | ) | (94,622 | ) | 291,299 | 504,635 | ||||||||||
| Gain on deconsolidation | - | - | - | 53,739 | ||||||||||||
| Impairment expense | - | (627,452 | ) | (66,645 | ) | (627,452 | ) | |||||||||
| Realized gain (loss) on cryptocurrency | (28,678 | ) | 10 | (27,582 | ) | (657 | ) | |||||||||
| Unrealized gain (loss) on cryptocurrency | 281,220 | (16,885 | ) | 458,037 | 8,445 | |||||||||||
| Interest expense | (822,870 | ) | (1,427,433 | ) | (5,550,035 | ) | (3,918,070 | ) | ||||||||
| Interest expense, related parties | (327,513 | ) | (367,190 | ) | (717,233 | ) | (1,618,284 | ) | ||||||||
| Other income (expense) | (2,752 | ) | 3,231 | 183,656 | (68,053 | ) | ||||||||||
| Total other income (expense) | 3,302,728 | (2,086,434 | ) | (359,756 | ) | (3,940,313 | ) | |||||||||
| Income (loss) before income taxes | 1,729,067 | (3,825,730 | ) | (4,369,198 | ) | (8,577,869 | ) | |||||||||
| Income tax expense | (3,288 | ) | (2,198 | ) | (6,570 | ) | (9,580 | ) | ||||||||
| Net income (loss) | 1,725,779 | (3,827,928 | ) | (4,375,768 | ) | (8,587,449 | ) | |||||||||
| Dividends on Preferred Stock | (45,042 | ) | - | (97,384 | ) | - | ||||||||||
| Net income applicable to common shareholders | $ | 1,680,737 | $ | (3,827,928 | ) | $ | (4,473,152 | ) | $ | (8,587,449 | ) | |||||
| Income (loss) per common share, basic and diluted | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
| Weighted average number of common shares outstanding, basic and diluted | 3,098,416,112 | 2,840,281,449 | 3,105,907,543 | 2,748,911,300 | ||||||||||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Foreign currency translation adjustments | $ | 4,451 | $ | 22,627 | $ | 728 | $ | 2,067 | ||||||||
| Total other comprehensive income | 4,451 | 22,627 | 728 | 2,067 | ||||||||||||
| Comprehensive income (loss) | $ | 1,730,230 | $ | (3,805,301 | ) | $ | (4,375,040 | ) | $ | (8,585,382 | ) | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 4 |
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
for the Three and Nine Months Ended December 31, 2020 and 2019
(Unaudited)
| 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 | ) | ||||||||||||||||||||||||
| 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 | ) | ||||||||||||||||||
| 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 | ) | ||||||||||||||||||||||||
| Preferred stock issued for cash | 8,942 | 9 | - | - | 221,905 | - | - | - | 221,914 | |||||||||||||||||||||||||||
| Offering costs | - | - | - | - | (1,394 | ) | - | - | - | (1,394 | ) | |||||||||||||||||||||||||
| Common stock issued for services and compensation | - | - | 257,000,000 | 257,000 | 1,941,598 | - | - | - | 2,198,598 | |||||||||||||||||||||||||||
| Common stock issued for debt | - | - | 51,000,000 | 51,000 | 1,014,900 | - | - | - | 1,065,900 | |||||||||||||||||||||||||||
| Contributed capital | - | - | - | - | 117,805 | - | - | 117,805 | ||||||||||||||||||||||||||||
| Beneficial conversion feature | - | - | - | - | 1,300,000 | - | - | - | 1,300,000 | |||||||||||||||||||||||||||
| Dividends | - | - | - | - | - | - | (45,042 | ) | - | (45,042 | ) | |||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 4,451 | - | - | 4,451 | |||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | 1,725,779 | - | 1,725,779 | |||||||||||||||||||||||||||
| Balance, December 31, 2020 | 55,554 | $ | 56 | 3,237,481,329 | $ | 3,237,481 | $ | 34,615,895 | $ | (19,330 | ) | $ | (50,855,326 | ) | $ | - | $ | (13,021,224 | ) | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 5 |
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended December 31, 2020 and 2019
(Unaudited)
| Nine Months Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (4,375,768 | ) | $ | (8,587,449 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 1,597,464 | 320,528 | ||||||
| Amortization of debt discount | 781,425 | 2,916,917 | ||||||
| Amortization of long-term license agreement | - | 113,315 | ||||||
| Amortization of intangible assets | 130,455 | 213,182 | ||||||
| Stock issued for services and compensation | 2,993,835 | 2,676,439 | ||||||
| Loan fees on new borrowings | - | 841,139 | ||||||
| Offering costs | 112 | - | ||||||
| Lease cost, net of repayment | (998 | ) | 5,833 | |||||
| (Gain) on deconsolidation | - | (53,739 | ) | |||||
| (Gain) loss on debt extinguishment | (5,068,747 | ) | (1,725,384 | ) | ||||
| (Gain) loss on fair value of derivative liability | (291,299 | ) | (504,635 | ) | ||||
| Realized (gain) loss on cryptocurrency | 27,582 | 657 | ||||||
| Unrealized (gain) loss on cryptocurrency | (458,037 | ) | (8,445 | ) | ||||
| Impairment expense | 66,645 | 627,452 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (165,937 | ) | 101,792 | |||||
| Prepaid assets | (1,137,751 | ) | (313,347 | ) | ||||
| Short-term advances | - | (135,000 | ) | |||||
| Short-term advances from related parties | - | (7,000 | ) | |||||
| Other current assets | (99,912 | ) | 40,170 | |||||
| Deposits | 2,685 | (3,988 | ) | |||||
| Accounts payable and accrued liabilities | (1,057,400 | ) | (1,149,438 | ) | ||||
| Customer advance | 81,845 | 342,205 | ||||||
| Deferred revenue | 357,226 | (1,145,149 | ) | |||||
| Other liabilities | 7,596,667 | 9,229,393 | ||||||
| Accrued interest | 129,691 | 180,026 | ||||||
| Accrued interest, related parties | 559,436 | 714,999 | ||||||
| Net cash provided by (used in) operating activities | 1,669,219 | 4,690,473 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for fixed assets | (2,306,402 | ) | (4,171,341 | ) | ||||
| Net cash provided by (used in) investing activities | (2,306,402 | ) | (4,171,341 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from related party payables | 5,928,137 | 2,164,500 | ||||||
| Repayments for related party payables | (3,521,441 | ) | (1,754,500 | ) | ||||
| Proceeds from debt | 1,405,300 | 2,177,452 | ||||||
| Repayments for debt | (3,096,750 | ) | (3,801,562 | ) | ||||
| Payments for share repurchase | (272 | ) | (102 | ) | ||||
| Dividends paid | (26,868 | ) | - | |||||
| Proceeds from the sale of stock | 1,388,849 | 825,000 | ||||||
| Payments for financing costs | (22,500 | ) | - | |||||
| Net cash provided by (used in) financing activities | 2,054,455 | (389,212 | ) | |||||
| Effect of exchange rate translation on cash | - | 36 | ||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 1,417,272 | 129,956 | ||||||
| Cash, cash equivalents, and restricted cash - beginning of period | 137,177 | 133,644 | ||||||
| Cash, cash equivalents, and restricted cash - end of period | $ | 1,554,449 | $ | 263,600 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 451,844 | $ | 51,000 | ||||
| Income taxes | $ | 6,570 | $ | 9,580 | ||||
| Non cash investing and financing activities: | ||||||||
| Prepaid assets reclassified to fixed assets | $ | 2,252,568 | $ | - | ||||
| Beneficial conversion feature | $ | 3,300,000 | $ | 1,000,000 | ||||
| Cancellation of shares | $ | - | $ | 3,380,000 | ||||
| Changes in equity for offering costs accrued | $ | - | $ | 101,387 | ||||
| Accounts payable reclassified as related party debt | $ | - | $ | 75,000 | ||||
| Derivative liability recorded as a debt discount | $ | - | $ | 365,000 | ||||
| Recognition of lease liability and ROU asset at lease commencement | $ | - | $ | 131,244 | ||||
| Shares forfeited | $ | 3,380,000 | $ | - | ||||
| Share repurchase | $ | 120,000 | $ | - | ||||
| Shares issued for debt | $ | 1,065,900 | $ | - | ||||
| Dividends declared but not yet paid | $ | 70,516 | $ | - | ||||
| Forgiveness of accrued payroll | $ | 373,832 | $ | - | ||||
| APEX Lease Liability reclassed to debt | $ | 19,505,025 | $ | - | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 6 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Organization
Investview, Inc. (“we”, “our”, the “Company”) 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 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.
On March 26, 2019, we established Kuvera (N.I.) LTD, a Northern Ireland entity as a wholly owned subsidiary of Kuvera, LLC, however, to date the subsidiary has had no operations.
Effective July 22, 2019, we renamed our non-operating wholly owned subsidiary Razor Data, LLC to APEX Tek, LLC, a Utah Limited Liability Company.
On January 11, 2021, we filed a name change for Kuvera, LLC to iGenius, LLC (“iGenius”) and on February 2, 2021, we filed a name change for Kuvera (N.I.) Limited to iGenius Global LTD.
Nature of Business
Our portfolio of wholly owned subsidiaries operates in the financial technology (FINTECH) sector, leveraging the latest innovations in technology for financial education, services and interactive tools. Our 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. Each of our subsidiaries are designed to work in tandem with one another generating a worldwide presence.
| 7 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
Our largest subsidiary is iGenius, LLC (formerly Kuvera LLC), which delivers financial education, technology and research to individuals through a subscription-based model. iGenius, 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.
Kuvera France S.A.S. is our entity in France that distributes our 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. SAFE is committed to bringing innovative trade methodologies, strategies and algorithms for all worldwide financial markets.
SAFETek, LLC operates in the high-speed processing computing space and utilizes net generation processing technologies to focus on artificial intelligence, data mining and blockchain technologies. SAFETek, LLC’s processing operation can be 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. Key trending markets for Data Computation include Internet of Things, Smart Homes, smart cities, smart devices, Artificial Intelligence, blockchain technology, Virtual Reality, 3D animation, and health technology data to name a few.
Apex Tek, LLC was the entity responsible for sales of the APEX program. Launched in September 2019, the APEX product pack included hardware, firmware, software and insurance that was purchased and then leased to SAFETek LLC. We have currently ceased selling the APEX package and bought back all leases associated with the business.
United Games, LLC, United League, LLC, Investment Tools & Training, LLC, and iGenius Global LTD have had no operations and will be restructured or eliminated completely as we continue to streamline operations.
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 nine months ended December 31, 2020, are not necessarily indicative of the operating results that may be expected for the year ending March 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the March 31, 2020 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2020.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Kuvera France S.A.S., Apex Tek, LLC (formerly Razor Data, LLC), SafeTek, LLC (formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, and iGenius Global LTD (formerly Kuvera (N.I.) LTD). 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, at the time, were similar to those of Kuvera, LLC (now iGenius, LLC). As a result, through March 31, 2019 we had consolidated the accounts of this variable interest entity into the 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 was 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 DECEMBER 31, 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.
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.
Further, it should be noted that because there is currently no specific definitive guidance under GAAP, or any alternative accounting framework, for the accounting for cryptocurrencies recognized as revenue or held, we have exercised significant judgment in determining the appropriate accounting treatment for our cryptocurrency transactions. In the event authoritative guidance is enacted by the FASB, we may be required to change our policies, which could have an effect on our consolidated financial position and results from operations.
Foreign Exchange
We have consolidated the accounts of Kuvera France S.A.S. into our consolidated financial statements. The operations of Kuvera France S.A.S. are conducted in France and its functional currency is the Euro.
The financial statements of Kuvera France S.A.S. are prepared using their 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. into USD at the following balance sheet dates.
| December 31, 2020 | March 31, 2020 | |||||||
| Euro to USD | 1.22160 | 1.10314 | ||||||
The following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.
| Nine Months Ended December 30, | ||||||||
| 2020 | 2019 | |||||||
| Euro to USD | 1.15480 | 1.11443 | ||||||
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.
| December 31, 2020 | March 31, 2020 | |||||||
| Cash and cash equivalents | $ | 1,110,960 | $ | 137,177 | ||||
| Restricted cash, current | 180,550 | - | ||||||
| Restricted cash, long term | 262,939 | - | ||||||
| Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | $ | 1,554,449 | $ | 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 DECEMBER 31, 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 statements of operations. As of December 31, 2020 and March 31, 2020 the fair value of our cryptocurrencies was $655,059 and $96,022, respectively. During the nine months ended December 31, 2020 we recorded $(27,582) and $458,037 as a total realized and unrealized gain (loss) on cryptocurrency, respectively. During the nine months ended December 31, 2019 we recorded $(657) and $8,445 as a total realized and unrealized gain (loss) on cryptocurrency, respectively. During the three months ended December 31, 2020 we recorded $(28,678) and $281,220 as a total realized and unrealized gain (loss) on cryptocurrency, respectively. During the three months ended December 31, 2019 we recorded $10 and $(16,885) 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.
As of December 31, 2020 fixed assets were made up of the following:
| Estimated | ||||||||
| Useful | ||||||||
| Life | ||||||||
| (years) | Value | |||||||
| Furniture, fixtures, and equipment | 10 | $ | 12,792 | |||||
| Computer equipment | 3 | 21,143 | ||||||
| Data processing equipment | 3 | 7,684,627 | ||||||
| 7,718,562 | ||||||||
| Accumulated depreciation as of December 31, 2020 | (1,826,090 | ) | ||||||
| Net book value, December 31, 2020 | $ | 5,892,472 | ||||||
Total depreciation expense for the nine months ended December 31, 2020 and 2019, was $1,597,464 and $320,528, 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. Amortization recognized for the nine months ended December 31, 2020 and 2019 was $0 and $113,315, respectively, and the long-term license agreement was recorded at a net value of $0 as of December 31, 2020 and March 31, 2020 due to the asset being impaired as of March 31, 2020.
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. As of December 31, 2020 intangible assets were made up of the following:
| 10 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
| 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 December 31, 2020 | (428,573 | ) | ||||||
| Net book value, December 31, 2020 | $ | 562,427 | ||||||
Amortization expense for the nine months ended December 31, 2020 and 2019 was $130,455 and $213,182, respectively. Amortization expense is expected to be as follows:
| Remainder of 2021 | $ | 42,694 | ||
| Fiscal year ending March 31, 2022 | 173,150 | |||
| Fiscal year ending March 31, 2023 | 173,150 | |||
| Fiscal year ending March 31, 2024 | 32,589 | |||
| Fiscal year ending March 31, 2025 | 6,148 | |||
| Fiscal year ending March 31, 2026 and beyond | 134,696 | |||
| $ | 562,427 |
Impairment of Long-Lived Assets
We have adopted ASC Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
We evaluate the recoverability of long-lived assets based upon future net cash flows expected to result from the asset, including eventual disposition. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted and an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
During the nine months ended December 31, 2020 we fully impaired data processing equipment that had a cost basis of $84,939 and we 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 $66,645 for the nine months ended December 31, 2020. During the nine months ended December 31, 2019 we impaired the value of the customer contracts/relationships originally acquired in our purchase of United Games, LLC and United League, LLC, therefore recognizing impairment expense of $627,452.
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:
| 11 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
| Level 1: | Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access. | |
| Level 2: | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: |
| - | quoted prices for similar assets or liabilities in active markets; | |
| - | quoted prices for identical or similar assets or liabilities in markets that are not active; | |
| - | inputs other than quoted prices that are observable for the asset or liability; and | |
| - | inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| Level 3: | Inputs that are unobservable and reflect management’s own assumptions about the inputs market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). |
Our financial instruments consist of cash, accounts receivable, accounts payable, and debt. We have determined that the book value of our outstanding financial instruments as of December 31, 2020 and March 31, 2020, approximates the fair value due to their short-term nature or interest rates that approximate prevailing market rates.
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31, 2020:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Cryptocurrencies | $ | 655,059 | $ | - | $ | - | $ | 655,059 | ||||||||
| Total Assets | $ | 655,059 | $ | - | $ | - | $ | 655,059 | ||||||||
| Derivative liability | $ | - | $ | - | $ | 41,390 | $ | 41,390 | ||||||||
| Total Liabilities | $ | - | $ | - | $ | 41,390 | $ | 41,390 | ||||||||
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, 2020:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Cryptocurrencies | $ | 96,022 | $ | - | $ | - | $ | 96,022 | ||||||||
| Total Assets | $ | 96,022 | $ | - | $ | - | $ | 96,022 | ||||||||
| Derivative liability | $ | - | $ | - | $ | 793,495 | $ | 793,495 | ||||||||
| Total Liabilities | $ | - | $ | - | $ | 793,495 | $ | 793,495 | ||||||||
Sale and Leaseback
Through our wholly-owned subsidiary, APEX Tex, LLC, we sold high powered data processing equipment (“APEX”) to our customers and they leased the equipment back to SAFETek, LLC, another of our wholly-owned subsidiaries. We accounted 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 recorded the data processing equipment as a fixed asset on our balance sheet and we accounted for the amounts received for the equipment as a financial liability, in other liabilities on our balance sheet. Further, we recognized 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.
On June 30, 2020, we temporarily discontinued the APEX program to assess the delays, audit the transaction and determine our ability to meet the lease commitments. The assessment took place in July and August and indicated we would not be able to meet the APEX lease obligations and would be in default to the lease holders. In September, our board of directors voted to approve a buyback program wherein all APEX purchasers were offered a 48-month promissory note to ensure a 125% return of their purchase price in exchange for cancellation of the lease and our purchase of all rights and obligations under the lease. The buyback program also ensured all APEX purchasers were able to purchase a protection plan from a third-party provider, wherein each purchaser could protect their initial purchase price and obtain 50% of their APEX purchase price at five years or 100% of the APEX purchase price at ten years. As a result of the buyback program we were able to enter into notes with third parties totaling $19,149,500 (see NOTE 6) and notes with related parties of $237,720 (see NOTE 5) in exchange for $474,155 worth of customer advances on the APEX leases and $22,889,331 of the net APEX lease liability (see table below). The exchange resulted in a gain on settlement of debt of $117,805 with related parties, recorded as contributed capital (see NOTE 8) and a gain on settlement of debt of $3,858,461 with third parties, recorded on our income statement.
| 12 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
During the nine months ended December 31, 2020 we had the following activity related to our sale and leaseback transactions:
| 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 | 5,001,623 | - | 5,001,623 | |||||||||||||||||
| Interest recorded on financial liability | 8,348,378 | (8,348,378 | ) | - | ||||||||||||||||
| Payments made for leased equipment | (2,145,900 | ) | - | (2,145,900 | ) | |||||||||||||||
| Interest expense | - | 4,740,944 | 4,740,944 | |||||||||||||||||
| Lease buyback and cancellation | (65,032,101 | ) | 42,142,770 | (22,889,331 | ) | |||||||||||||||
| Balance as of December 31, 2020 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
[1] Represented lease payments that were to be made in the subsequent 12 months
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; 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.
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 through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.
| 13 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
Revenue generated for the nine months ended December 31, 2020 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 14,205,328 | $ | 7,863,649 | $ | 10,675 | $ | 22,079,652 | ||||||||
| Refunds, incentives, credits, and chargebacks | (861,461 | ) | - | - | (861,461 | ) | ||||||||||
| Net revenue | $ | 13,343,867 | $ | 7,863,649 | $ | 10,675 | $ | 21,218,191 | ||||||||
For the nine months ended December 31, 2020 foreign and domestic revenues were approximately $12.6 million and $8.6 million, respectively.
Revenue generated for the nine months ended December 31, 2019 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 21,214,747 | $ | 380,871 | $ | 9,486 | $ | 21,605,104 | ||||||||
| Refunds, incentives, credits, and chargebacks | (1,887,656 | ) | - | - | (1,887,656 | ) | ||||||||||
| Net revenue | $ | 19,327,091 | $ | 380,871 | $ | 9,486 | $ | 19,717,448 | ||||||||
For the nine months ended December 31, 2019 foreign and domestic revenues were approximately $18.3 million and $1.5 million, respectively.
Revenue generated for the three months ended December 31, 2020 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 4,046,213 | $ | 4,027,364 | $ | 2,952 | $ | 8,076,529 | ||||||||
| Refunds, incentives, credits, and chargebacks | (201,491 | ) | - | - | (201,491 | ) | ||||||||||
| Net revenue | $ | 3,844,722 | $ | 4,027,364 | $ | 2,952 | $ | 7,875,038 | ||||||||
For the three months ended December 31, 2020 foreign and domestic revenues were approximately $7.4 million and $433,000, respectively.
Revenue generated for the three months ended December 31, 2019 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 5,096,886 | $ | 380,871 | $ | 4,117 | $ | 5,481,874 | ||||||||
| Refunds, incentives, credits, and chargebacks | (518,263 | ) | - | - | (518,263 | ) | ||||||||||
| Net revenue | $ | 4,578,623 | $ | 380,871 | $ | 4,117 | $ | 4,963,611 | ||||||||
For the three months ended December 31, 2019 foreign and domestic revenues were approximately $4.3 million and $637,000, 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, 2020 | December
31, 2019 | |||||||
| Options to purchase common stock | - | - | ||||||
| Warrants to purchase common stock | 277,770 | 125,000 | ||||||
| Notes convertible into common stock | 481,810,758 | 11,080,447 | ||||||
| Totals | 482,088,528 | 11,205,447 | ||||||
| 14 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
Lease Obligation
We determine if an arrangement is a lease at inception. Operating leases are included in the operating lease right-of-use asset account, the operating lease liability, current account, and the operating lease liability, long term account in our balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have elected to not apply the recognition requirements of ASC 842 to short-term leases (leases with terms of twelve months or less). Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term. We have elected the practical expedient and will not separate non-lease components from lease components and will instead account for each separate lease component and non-lease component associated with the lease components as a single lease component.
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
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 $50,855,326 as of December 31, 2020, along with a net loss of $4,375,768 for the nine months ended December 31, 2020. Additionally, as of December 31, 2020, we had a working capital deficit of $4,713,286. 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 nine months ended December 31, 2020, we raised $1,405,300 in cash proceeds from new debt arrangements and raised $5,928,137 in cash proceeds from related parties. Additionally, net cash provided by operations was $1,669,219 for the nine months ended December 31, 2020. Subsequent to December 31, 2020, we received gross proceeds of $432,475 in connection with our Unit Offering (see NOTE 11). Additionally, subject to a Securities Purchase agreement entered into in April 2020 and amended in November 2020, we have a commitment from a related party investor to purchase an additional $7.7 million in promissory notes on or before August 31, 2021, subject to certain conditions.
On 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.
During the nine months ended December 31, 2020 COVID negatively impacted our distribution channel as all of our distributors were unable to conduct in person meetings, trainings, or events. The distributors did hold on-line events, virtual meetings and ultimately stabilized our subscription sales. Further, our APEX program, administered by APEX Tek, LLC, could not sustain operations nor withstand the worldwide supply issues experienced by COVID. As a result, the Company was forced to permanently cancel the APEX program. While SAFETek, LLC will continue to operate our digital mining operations, we have entered buy back agreements for each of the APEX leases.
| 15 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
During the year ended March 31, 2020 we made significant strides and wide sweeping changes. While we believe they will be beneficial to our bottom line, there is no assurance of this. Some of the concerns we face going forward will continue, including but not limited to:
| ● | Supply chain issues for Apex Tek, LLC and the sourcing of miners due to the worldwide COVID pandemic and manufacturing slow downs caused us to permanently discontinue the APEX program and may leas to the closure of APEX Tek, LLC | |
| ● | SAFETek, LLC operations not scaling according to projections with decreased output due to mining difficulty and operational cost | |
| ● | Regulatory reform that could adversely impact the use and demand of digital currencies | |
| ● | The recent Bitcoin (BTC) halving event that further reduced mining output in addition to the supply chain issues |
While our liabilities are larger than our assets it is important to note that we seek to further reduce our operating 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 lead to positive cash flow, reduced debt and then profitability.
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, 2020 | March
31, 2020 | |||||||
| Short-term advances [1] | $ | 350,000 | $ | 876,427 | ||||
| Promissory Note entered into on 1/30/20 [2] | 1,183,606 | 1,033,333 | ||||||
| Convertible Promissory Note entered into on 4/27/20, net of debt discount of $1,211,720 as of December 31, 2020 [3] | 88,280 | - | ||||||
| Convertible Promissory Note entered into on 5/27/20, net of debt discount of $657,869 as of December 31, 2020 [4] | 42,131 | - | ||||||
| Convertible Promissory Note entered into on 11/9/20, net of debt discount of $1,280,440 and including $72,675 of accrued interest as of December 31, 2020 [5] | 92,236 | - | ||||||
| Accounts payable – related party [6] | 105,000 | 55,000 | ||||||
| Notes for APEX lease buyback [7] | 172,000 | - | ||||||
| Promissory note entered into on 12/15/20, net of debt discount of $438,175 [8] | 141,825 | - | ||||||
| Total related-party debt | 2,175,078 | 1,964,760 | ||||||
| Less: Current portion [9] | (2,025,106 | ) | - | |||||
| Related-party debt, long term | $ | 149,972 | $ | 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 nine months ended December 31, 2020, we received $2,406,137 in cash proceeds from advances, incurred $76,649 in interest expense on the advances, and repaid related parties $3,037,883. |
| [2] | We entered into a $1,000,000 promissory note with Joseph Cammarata, our Chief Executive Officer, on January 30, 2020. The note is collateralized by 62.5 million of our common shares. The term of the note was one year, which was amended on January 30, 2021 to have a due date of February 28, 2021, at which time the principal and interest of 20%, or $200,000 will be due. During the nine months ended December 31, 2020 we recognized $150,273 of interest expense on the note. |
| 16 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
| [3] | On April 27, 2020 we received proceeds of $1,300,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors, and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company. The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. Per the original terms of the agreement the note was convertible into common stock at a conversion price of $0.01257 per share, which was amended on November 9, 2020 to reduce the conversion price to $0.007 per share. At inception we recorded a beneficial conversion feature and debt discount of $1,300,000 (see NOTE 8). During the nine months ended December 31, 2020 we recognized $88,280 of the debt discount into interest expense as well as expensed an additional $176,224 of interest expense on the note, all of which was repaid during the period. |
| [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, and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company. The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. Per the original terms of the agreement the note was convertible into common stock at a conversion price of $0.01257 per share, which was amended on November 9, 2020 to reduce the conversion price to $0.007 per share. At inception we recorded a beneficial conversion feature and debt discount of $700,000 (see NOTE 8). During the nine months ended December 31, 2020 we recognized $42,131 of the debt discount into interest expense as well as expensed an additional $83,615 of interest expense on the note, all of which was repaid during the period. |
| [5] | On November 9, 2020 we received proceeds of $1,300,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors, and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company. The note bears interest at 38.5% per annum, made up of a 25% interest rate per annum and a facility fee of 13.5% per annum, payable monthly beginning February 1, 2021, and the principal is due and payable on April 27, 2030. Per the terms of the agreement the note is convertible into common stock at a conversion price of $0.007 per share. At inception we recorded a beneficial conversion feature and debt discount of $1,300,000 (see NOTE 8). During the nine months ended December 31, 2020 we recognized $19,560 of the debt discount into interest expense as well as expensed an additional $72,675 of interest expense on the note, none of which was repaid during the period. |
| [6] | During the nine months ended December 31, 2020 we paid $40,000 to an accounting firm owned by our Chief Financial Officer to reduce amounts previously owed ($55,000 as of March 31, 2020). We also incurred $68,000 to reimburse DBR Capital, LLC, for amounts paid on our behalf. The entire amount was repaid during the nine months ended December 31, 2020. Also during the nine months ended December 31, 2020 we repurchased 106,000,000 shares of our common stock from CR Capital Holdings, LLC, a shareholder that owns over 10% of our outstanding stock, for $120,000 (see NOTE 8). We agreed to pay $10,000 per month for the repurchase, therefore during the nine months ended December 31, 2020 we repaid $30,000 of the debt. |
| [7] | During the year ended March 31, 2020 we sold 83 APEX units to related parties for proceeds of $182,720, $100,000 of which was offset against short term advances that has been provided to us. Under the same terms of all other APEX unit sales, the 83 units were to pay out $500 per month for 60 months, resulting in a total amount to be repaid of $2,490,000. During the year ended March 31, 2020 we made 238 lease payments to these related parties, or $119,000, reducing the total amount to be repaid to $2,371,000 as of March 31, 2020. The liability, net of discounts, was presented as part of the total APEX financial liability on the balance sheet at March 31, 2020. During the nine months ended December 31, 2020 we made $126,100 worth of lease payments to related parties. In September of 2020 we initiated the APEX buyback program and agreed to pay our related parties $237,720 in exchange for all rights and obligations under the APEX lease (see NOTE 2). At the time of the buyback the liability owed to related parties was $355,525, which was equal to a total liability of $2,244,900 offset by a contra-liability of $1,889,375, thus we recorded a gain on the extinguishment of debt of $117,805 as contributed capital (see NOTE 8). After the buyback we repaid our related parties $65,720 of the $237,720 owed. |
| [8] | On December 15, 2020 we received proceeds of $154,000 from Wealth Engineering, an entity controlled by members of our management team and Board of Directors, and entered into a promissory note for $600,000. The term of the note requires monthly repayments of $20,000 per month for 30 months. At inception we recorded a debt discount of $446,000 representing the difference between the cash received and the total amount to be repaid. During the nine months ended December 31, 2020 we recognized $7,825 of the debt discount into interest expense and made one monthly repayment of $20,000. |
| [9] | Represents payments that are to be made in the subsequent 12 months |
| 17 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
NOTE 6 – DEBT
Our debt consisted of the following:
| December
31, 2020 | March
31, 2020 | |||||||
| Short-term advance received on 8/31/18 [1] | $ | 5,000 | $ | 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] | 81,250 | 150,000 | ||||||
| Promissory note entered into on 4/10/20 [7] | - | - | ||||||
| Note issued under the Paycheck Protection Program on 4/17/20 [8] | 508,872 | - | ||||||
| Loan with the U.S. Small Business Administration dated 4/19/20 [9] | 513,048 | - | ||||||
| Long term notes for APEX lease buyback [10] | 17,137,774 | - | ||||||
| Short-term note for APEX lease buyback [11] | 30,000 | - | ||||||
| Total debt | 18,275,944 | 1,719,326 | ||||||
| Less: Current portion [12] | (3,349,987 | ) | - | |||||
| Debt, long term portion | $ | 14,925,957 | $ | 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 nine months ended December 31, 2020 we made repayments of $60,000 on the debt. |
| [2] | 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 and $297,033 from two separate February 2018 agreements. In accordance with the terms of the new agreement, we were required to repay $1,399,000 by making daily ACH payments of $6,823. Accordingly, we recorded $446,604 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. |
| 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 nine months ended December 31, 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. | |
| [3] | 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 an October 2018 agreement. In accordance with the terms of the agreement, we were required to repay $1,189,150 by making daily ACH payments of $5,801. Accordingly, we recorded $388,769 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, we repaid $853,203 and amortized $312,912 into interest expense. During the nine months ended December 31, 2020 we repaid $330,013, recorded a $5,934 gain on settlement of debt, and amortized $75,857 into interest expense |
| [4] | In March 2020, we entered into a Convertible Promissory Note and received proceeds of $200,000 after incurring loan fees of $3,000. The note incurred interest at 10% per annum and had a maturity date of June 2, 2021. The Convertible Promissory Note had a variable conversion rate that was 65% of the average of the two lowest trading prices during the previous 15-trading-day period, subject to adjustment. Therefore, the conversion feature was accounted for as a derivative instrument (see NOTE 7). At inception, we recorded a debt discount of $203,000 and captured loan fees, recorded as interest expense, of $116,077. During the year ended March 31, 2020, we amortized $11,626 into interest expense, and recorded additional interest expense on the note of $1,446. During the nine months ended December 31, 2020, we amortized $59,916 into interest expense, and recorded additional interest expense on the note of $7,453 before we repaid the note in full for $262,649 and wrote off the derivative liability associated with the debt of $265,584 (see NOTE 7), resulting in a net gain on settlement of debt being recorded for $83,376. |
| [5] | In March 2020, we entered into a Convertible Promissory Note and received proceeds of $150,000 after incurring loan fees of $3,000. The note incurred interest at 10% per annum and had a maturity date of June 10, 2021. The Convertible Promissory Note had a variable conversion rate that was 65% of the average of the two lowest trading prices during the previous 15-trading-day period, subject to adjustment. Therefore, the conversion feature was accounted for as a derivative instrument (see NOTE 7). At inception, we recorded a debt discount of $153,000 and captured loan fees, recorded as interest expense, of $148,432. During the year ended March 31, 2020, we amortized $6,711 into interest expense, and recorded additional interest expense on the note of $838. During the nine months ended December 31, 2020, we amortized $44,960 into interest expense and recorded additional interest expense on the note of $5,617 before we repaid the note in full for $197,351 and wrote off the derivative liability associated with the debt of $203,357 (see NOTE 7), resulting in a net gain on settlement of debt being recorded for $64,132. |
| 18 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 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 nine months ended December 31, 2020 we made repayments of $68,750 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, 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 nine months ended December 31, 2020 we recorded $100,002 worth of interest expense and made repayments of $500,002. |
| [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 (“SBA”). The note has an interest rate of 1% and matures on April 1, 2022. Under the Note we were required to make monthly payments beginning November 1, 2020, however, the SBA extended the deferral period to 10 months therefore the first payment would not be due until March 2, 2021. Further, under the terms of the CARES Act the loan may be forgiven if funds are used for qualifying expenses. During the nine months ended December 31, 2020 we recorded $3,572 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 nine months ended December 31, 2020 we recorded $13,048 worth of interest on the loan. |
| [10] | During the nine months ended December 31, 2020 we entered into notes with third parties for $19,089,500 in exchange for the cancellation of APEX leases previously entered into, which resulted in our purchase of all rights and obligations under the leases (see NOTE 2). We agreed to settle approximately $1,952,000 of the debt during the nine months ended December 31, 2020, at a discount to the original note terms offered, by making payments of approximately $576,000 and issuing 48,000,000 shares of our common stock (see NOTE 8). The remaining notes are all due December 31, 2024 and have a fixed monthly payment that is equal to 75% of the face value of the note, divided by 48 months. The monthly payments are to begin the last day of January 2021 and continue until December 31, 2024 when the last monthly payment will be made, along with a balloon payment equal to 25% of the face value of the note, to extinguish the debt. |
| [11] | During the nine months ended December 31, 2020 we entered into a note dated November 30, 2020 with a third party for $60,000 in exchange for the cancellation of APEX leases previously entered into, which resulted in our purchase of all rights and obligations under the leases (see NOTE 2). The note is to be repaid with two equal payments of $30,000 each. We made one $30,000 payment during December 2020 and the second $30,000 payment is due by January 30, 2021. |
NOTE 7 – DERIVATIVE LIABILITY
During the nine months ended December 31, 2020, we had the following activity in our derivative liability account:
| Debt | Warrants | Total | ||||||||||
| Derivative liability at March 31, 2020 | $ | 793,495 | $ | - | $ | 793,495 | ||||||
| Derivative liability recorded on new instruments | - | 8,135 | 8,135 | |||||||||
| Derivative liability reduced by debt settlement (see NOTE 6) | (468,941 | ) | - | (468,941 | ) | |||||||
| (Gain) loss on fair value | (324,554 | ) | 33,255 | (291,299 | ) | |||||||
| Derivative liability at December 31, 2020 | $ | - | $ | 41,390 | $ | 41,390 | ||||||
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 nine months ended December 31, 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 - 0.38 | % | ||||
| Expected life in years | 0.80 - 1.11 | 4.84 - 5.00 | ||||||
| Expected volatility | 128% - 239 | % | 259% - 306 | % |
| 19 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
NOTE 8 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
We are authorized to issue up to 50,000,000 shares of preferred stock with a par value of $0.001 and our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges, and preferences of that preferred stock.
As of March 31, 2020, we had no preferred stock issued or outstanding.
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 and are entitled to receive cumulative dividends at the annual rate of 13% per annum of the stated value, equal to $3.25 per annum per share.
During the nine months ended December 31, 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 nine months ended December 31, 2020 we sold 55,554 units for gross proceeds of $1,388,850, therefore recorded the issuance of 55,554 shares of Series B Preferred Stock and the grant of 277,770 warrants during the period. Of the gross proceeds, $8,135 was allocated to the warrants and recorded as a derivative liability and $1,380,715 was allocated to the preferred stock ($56 recorded as the par value and $1,380,659 allocated to additional paid in capital). Also in conjunction with the Unit Offering we paid $22,500 of offering costs which was allocated between the preferred stock and warrants. The $22,388 allocated to the preferred stock decreased additional paid in capital due to the underlying instrument being classified as equity and the $112 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 nine months ended December 31, 2020 we recorded $97,384 for the cumulative cash dividends due to the shareholders of our Series B Preferred Stock and paid $26,868 of these amounts owing. As a result we recorded $70,516 as a dividend liability on our balance sheet as of December 31, 2020.
Common Stock
During the nine months ended December 31, 2020, we issued 82,000,000 shares of common stock and recognized professional fees of $1,640,000 based on the market value on the day of issuance. We also issued 196,000,000 shares of common stock, valued at $3,794,000 based on the market value on the day of issuance, 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 $3,794,000 value we recognized $363,120 as an expense during the nine months ended December 31, 2020 and the remaining $3,430,880 will be recognized rateably over the vesting term. In addition, during the nine months ended December 31, 2020, we recognized $990,714 as expense due to the vesting of shares of common stock issued prior to March 31, 2020 and we expect to recognize an additional $733,943 subsequent to December 31, 2020 as we expense the value of the stock over the remaining vesting term.
During the nine months ended December 31, 2020, we repurchased 9,079 shares of our common stock from a third party for $272 and repurchased 106,000,000 shares of our common stock from an entity that owns over 10% of our common stock for $120,000 (see NOTE 5). These shares repurchased were immediately cancelled. Also, during the nine months ended December 31, 2020 we recorded an increase in Additional Paid in Capital of $3,300,000 related to beneficial conversion features on our related party debt (see NOTE 5), 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 Company ended, and recorded an increase in Additional Paid in Capital of $117,805 for contributed capital (see NOTE 5).
During the nine months ended December 31, 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 $2,428,044 and a reversal of previously recorded expense of $951,956. Also during the nine months ended December 31, 2020 we issued 51,000,000 shares of our common stock to settle $1,375,238 worth of debt and $56,977 worth of accounts payable. The shares were valued at $1,065,900 based on the market value at the time of issuance, therefore we recorded a gain on settlement of debt of $366,315.
| 20 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
As of December 31, 2020 and March 31, 2020, we had 3,237,481,329 and 3,214,490,408 shares of common stock issued and outstanding, respectively.
Warrants
During the nine months ended December 31, 2020 we granted 277,770 warrants in conjunction with our Unit Offering. The warrants are classified as a derivative liability on our balance sheet in accordance with ASC 480, Distinguishing Liabilities from Equity, based on the warrants terms that indicate a fundamental transaction could give rise to an obligation for us to pay cash to our warrant holders (see NOTE 7).
Details of our warrants outstanding as of December 31, 2020 is as follows:
| Exercise Price | Warrants Outstanding | Warrants Exercisable | Weighted Average Contractual Life (Years) | |||||||||||
| $ | 0.10 | 277,770 | 277,770 | 4.59 | ||||||||||
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. During the nine months ended December 31, 2020 we were not involved in 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.
In August 2019 we entered an operating lease 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 nine months ended December 31, 2020 the variable lease costs amounted to $831 and $2,494, respectively. At commencement of the Eatontown Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $110,097. At commencement of the Kaysville Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $21,147. On September 30, 2020, the Kaysville Lease expired and as of October 1, 2020, the Company began leasing the property located in Kaysville on a month to month basis.
Operating lease expense was $11,000 and $43,794 for the three and nine months ended December 31, 2020. Operating cash flows used for the operating leases during the three and nine months ended December 31, 2020 were $12,000 and $44,794. As of December 31, 2020, the weighted average remaining lease term was 1.58 years and the weighted average discount rate was 12%.
| 21 |
INVESTVIEW, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(Unaudited)
Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows:
| Remainder of 2021 | $ | 12,000 | ||
| 2022 | 48,000 | |||
| 2023 | 16,000 | |||
| Total | 76,000 | |||
| Less: Interest | (6,407 | ) | ||
| Present value of lease liability | 69,593 | |||
| Operating lease liability, current [1] | (48,000 | ) | ||
| Operating lease liability, long term | $ | 21,593 |
[1] Represents lease payments to be made in the next 12 months
NOTE 11 – SUBSEQUENT EVENTS
Subsequent to December 31, 2020, we paid $58,421 of dividends that were accrued as of December 31, 2020. Also, subsequent to December 31, 2020, we received gross proceeds of $432,475 in connection with our 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.
| 22 |
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following discussion should be read in conjunction with our consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. When the words “believe,” “expect,” “plan,” “project,” “estimate,” and similar expressions are used, they identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management, and involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission (“SEC”). The forward-looking statements included in this report are made only as of the date of this report. We disclaim any obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.
Business Overview
We 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. Following is a description of each of our subsidiaries and their operations, if any.
iGenius, LLC (formerly Kuvera, LLC) and Kuvera France S.A.S. distribute our financial education platform and services that are dedicated to the individual consumer. iGenius and Kuvera France are managed by Chad Garner, President of iGenius, and utilize an affiliate or network marketing model for distribution. In late 2019, early 2020, as COVID 19 was beginning to spread worldwide, the iGenius/Kuvera companies completed a product and bonus plan rebuild and was able to launch these services and create stabilized monthly revenue.
Apex Tek, LLC and SAFETek, LLC, our subsidiaries that sold the APEX package, saw rapid growth during fiscal 2020. Under the program we sold high powered data processing equipment to our customers and they leased the equipment back to us. We began to experience difficulties in sourcing equipment for the program which later revealed itself to be early supply chain issues related to COVID 19. The supply chain, delivery, customs, and lack of human resources caused by global and U.S. lockdowns further caused issues in deploying the equipment. On June 30, 2020, we temporarily discontinued the APEX program to assess the delays, audit the transaction and determine our ability to meet the lease commitments. The assessment took place in July and August and indicated we would not be able to meet the APEX lease obligations and would be in default to the lease holders. In September, our board of directors voted to approve a buyback program wherein all APEX purchasers were offered a 48-month promissory note to ensure a 125% return of their purchase price in exchange for cancellation of the lease and our purchase of all rights and obligations under the lease. The buyback program also ensured all APEX purchasers were able to purchase a protection plan from a third-party provider, wherein each purchaser could protect their initial purchase price and obtain 50% of their APEX purchase price at five years or 100% of the APEX purchase price at ten years. Apex Tek, LLC will discontinue operations while SAFETek LLC will continue to operate and expand its high-speed processing operations.
S.A.F.E. Management, LLC, a Registered Investment Advisor and Commodity Trading Advisor, did not receive the necessary marketing and management required for growth and is currently being reviewed for restructuring and alignment to our future goals.
United Games, LLC, United League, LLC, Investment Tools & Training, LLC, and iGenius Global LTD (formerly Kuvera (N.I.) LTD), have had no operations and will be restructured or eliminated completely as we continue to streamline operations.
Results of Operations
Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019
Revenues
We recorded net revenue of $7,875,038 for the three months ended December 31, 2020, which was an increase of $2,911,427 or 59%, from the prior period net revenue of $4,963,611. The increase can be explained by our $3,646,493 increase in mining revenues earned in the current year as a result of the growth of our cryptocurrency mining operations. This was offset by a decrease in subscription sales of $733,901, which was mostly due to the impact of the Covid-19 pandemic and its overall impact to the economy. Our gross billings increased by 47%, or $2,594,655, to $8,076,529 in the three months ended December 31, 2020, versus $5,481,874 in the three months ended December 31, 2019, also due to the increase in mining operations; however, this was offset by refunds, incentives, credits, chargebacks, and amounts paid to suppliers.
| 23 |
Operating Costs and Expenses
We recorded operating costs and expenses of $9,448,699 for the three months ended December 31, 2020, which was an increase of $2,745,792, or 41%, from the prior period’s operating costs and expenses of $6,702,907. The increase can be explained by the increase in our cost of sales and service of $1,495,234, or 267%, from $560,145 for the three months ended December 31, 2019, to $2,055,379 for the three months ended December 31, 2020 and the increase in our professional fees of $1,372,051, or 289%, from $474,287 for the three months ended December 31, 2019, to $1,846,338. 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 increase in professional fees was a result of our issuance of 82,000,000 shares of common stock for professional services valued at $1,640,000 based on the market value on the day of issuance.
Other Income and Expenses
We recorded other income of $3,302,728 for the three months ended December 31, 2020, which was a difference of $5,389,162, or 258%, from the prior period other expense of $2,086,434. The change is due to a gain on debt extinguishment of $4,238,810 recognized in the three months ended December 31, 2020 compared to a gain of $443,907 for the three months ended December 31, 2019, along with a decrease in interest expense from $822,870 in the three months ended December 31, 2020 compared to interest expense of $1,427,433 in the three months ended December 31, 2019. Both were a result of the APEX lease buyback program where all APEX leases were cancelled in exchange for notes.
Nine Months Ended December 31, 2020 Compared to Nine Months Ended December 31, 2019
Revenues
We recorded net revenue of $21,218,191 for the nine months ended December 31, 2020, which was an increase of $1,500,743 or 8%, from the prior period revenue of $19,717,448. The increase can be explained by the $7,482,778 increase in mining revenues offset by the $5,983,224 decrease in subscription sales. We earned $7,863,649 in the current year as a result of our cryptocurrency mining operations versus $380,871 in the prior year. The decrease in subscription sales was due to attrition and an overhaul in the compensation plan of Kuvera (now iGenius) during the third quarter of fiscal year 2019, resulting in a loss of repeat subscription customers at the beginning of the period, coupled with the impact of the Covid-19 pandemic and its overall impact to the economy. Our gross billings increased by 2%, or $474,548, to $22,079,652 in the nine months ended December 31, 2020, versus $21,605,104 in the nine months ended December 31, 2019, mostly due to the increase in mining operations; 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 $25,227,633 for the nine months ended December 31, 2020, which was an increase of $872,629, or 4%, from the prior period’s operating costs and expenses of $24,355,004. The increase can be explained by the increase in our cost of sales and services of $3,599,869, or 329%, from $1,092,643 for the nine months ended December 31, 2019, to $4,692,512 for the nine months ended December 31, 2020, and the increase in professional fees of $1,375,578, or 122%, from $1,130,070 for the nine months ended December 31, 2019, to $2,505,648 for the nine months ended December 31, 2020. These increases were offset by the decrease in commissions of $1,456,526, or 13%, from $10,822,072 for the nine months ended December 31, 2019 to $9,365,546 for the nine months ended December 31, 2020 and the decrease in salary and related costs of $2,257,079, or 42%, from $5,433,416 for the nine months ended December 31, 2019 to $3,176,337 for the nine months ended December 31, 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 increase in professional fees was a result of our issuance of 82,000,000 shares of common stock for professional services valued at $1,640,000 based on the market value on the day of issuance. 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 nine months ended December 31, 2020 commissions as a percent of total net revenue was 44%, versus 55% in the prior period. Lastly, decreases in salary expenses was due to the Company terminating employment agreements during the period.
Other Income and Expenses
We recorded other expense of $359,759 for the nine months ended December 31, 2020, which was a difference of $3,580,557, or 91%, from the prior period other expense of $3,940,313. The change is due to a gain on debt extinguishment of $5,068,747 recognized in the nine months ended December 31, 2020 compared to a gain of $1,725,384 for the nine months ended December 31, 2019. The gain recorded in the current period was a result of the APEX lease buyback program where all APEX leases were cancelled in exchange for notes.
| 24 |
Liquidity and Capital Resources
During the nine months ended December 31, 2020, we incurred a net loss of $4,375,768. However, we were able to generate $1,669,219 in cash through our operating activities. We used this cash, along with $2,054,455 of cash generated from financing activities to fund operations and fund the purchase of $2,306,402 worth of fixed assets. As a result, our cash, cash equivalents, and restricted cash increased by $1,417,272 to $1,554,449 as compared to $137,177 at the beginning of the fiscal year.
As of December 31, 2020, our current liabilities exceeded our current assets equal to a working capital deficit of $4,713,286, which was a decrease from the working capital deficit of $14,123,625 as of March 31, 2020.
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, 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 nine months ended December 31, 2020 are not necessarily indicative of the operating results that may be expected for the year ending March 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the March 31, 2020 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2020.
Principles of Consolidation
The consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly Kuvera, LLC), Kuvera France S.A.S., Apex Tek, LLC (formerly Razor Data, LLC), SafeTek, LLC (formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC, and iGenius Global LTD (formerly Kuvera (N.I) LTD). 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, at the time, were similar to those of Kuvera, LLC (now iGenius, LLC). As a result, through March 31, 2019 we had consolidated the accounts of this variable interest entity into the 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 was 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.
Further, it should be noted that because there is currently no specific definitive guidance under GAAP, or any alternative accounting framework, for the accounting for cryptocurrencies recognized as revenue or held, we have exercised significant judgment in determining the appropriate accounting treatment for our cryptocurrency transactions. In the event authoritative guidance is enacted by the FASB, we may be required to change our policies, which could have an effect on our consolidated financial position and results from operations.
| 25 |
Sale and Leaseback
Through our wholly-owned subsidiary, APEX Tex, LLC, we sold high powered data processing equipment (“APEX”) to our customers and they leased the equipment back to SAFETek, LLC, another of our wholly-owned subsidiaries. We accounted 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 recorded the data processing equipment as a fixed asset on our balance sheet and we accounted for the amounts received for the equipment as a financial liability, in other liabilities on our balance sheet. Further, we recognized 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.
On June 30, 2020, we temporarily discontinued the APEX program to assess the delays, audit the transaction and determine our ability to meet the lease commitments. The assessment took place in July and August and indicated we would not be able to meet the APEX lease obligations and would be in default to the lease holders. In September, our board of directors voted to approve a buyback program wherein all APEX purchasers were offered a 48-month promissory note to ensure a 125% return of their purchase price in exchange for cancellation of the lease and our purchase of all rights and obligations under the lease. The buyback program also ensured all APEX purchasers were able to purchase a protection plan from a third-party provider, wherein each purchaser could protect their initial purchase price and obtain 50% of their APEX purchase price at five years or 100% of the APEX purchase price at ten years. As a result of the buyback program we were able to enter into notes with third parties totaling $19,149,500 (see NOTE 6) and notes with related parties of $237,720 (see NOTE 5) in exchange for $474,155 worth of customer advances on the APEX leases and $22,889,331 of the net APEX lease liability (see table below). The exchange resulted in a gain on settlement of debt of $117,805 with related parties, recorded as contributed capital (see NOTE 8) and a gain on settlement of debt of $3,858,461 with third parties, recorded on our income statement.
During the nine months ended December 31, 2020 we had the following activity related to our sale and leaseback transactions:
| 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 | (2,145,900 | ) | - | (2,145,900 | ) | |||||||||||||||
| Interest expense | - | 4,740,944 | 4,740,944 | |||||||||||||||||
| Lease buyback and cancellation | (65,032,101 | ) | 42,142,770 | (22,889,331 | ) | |||||||||||||||
| Balance as of December 31, 2020 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
[1] Represented lease payments that were to be made in the subsequent 12 months
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; 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.
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.
| 26 |
Fee Revenue
We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory fees in the month following recognition.
Revenue generated for the nine months ended December 31, 2020 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 14,205,328 | $ | 7,863,649 | $ | 10,675 | $ | 22,079,652 | ||||||||
| Refunds, incentives, credits, and chargebacks | (861,461 | ) | - | - | (861,461 | ) | ||||||||||
| Net revenue | $ | 13,343,867 | $ | 7,863,649 | $ | 10,675 | $ | 21,218,191 | ||||||||
For the nine months ended December 31, 2020 foreign and domestic revenues were approximately $12.6 million and $8.6 million, respectively.
Revenue generated for the nine months ended December 31, 2019 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 21,214,747 | $ | 380,871 | $ | 9,486 | $ | 21,605,104 | ||||||||
| Refunds, incentives, credits, and chargebacks | (1,887,656 | ) | - | - | (1,887,656 | ) | ||||||||||
| Net revenue | $ | 19,327,091 | $ | 380,871 | $ | 9,486 | $ | 19,717,448 | ||||||||
For the nine months ended December 31, 2019 foreign and domestic revenues were approximately $18.2 million and $1.5 million, respectively.
Revenue generated for the three months ended December 31, 2020 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 4,046,213 | $ | 4,027,364 | $ | 2,952 | $ | 8,076,529 | ||||||||
| Refunds, incentives, credits, and chargebacks | (201,491 | ) | - | - | (201,491 | ) | ||||||||||
| Net revenue | $ | 3,844,722 | $ | 4,027,364 | $ | 2,952 | $ | 7,875,038 | ||||||||
For the three months ended December 31, 2020 foreign and domestic revenues were approximately $7.4 million and $433,000, respectively.
Revenue generated for the three months ended December 31, 2019 is as follows:
| Subscription
Revenue | Mining Revenue | Fee Revenue | Total | |||||||||||||
| Gross billings/receipts | $ | 5,096,886 | $ | 380,871 | $ | 4,117 | $ | 5,481,874 | ||||||||
| Refunds, incentives, credits, and chargebacks | (518,263 | ) | - | - | (518,263 | ) | ||||||||||
| Net revenue | $ | 4,578,623 | $ | 380,871 | $ | 4,117 | $ | 4,963,611 | ||||||||
For the three months ended December 31, 2019 foreign and domestic revenues were approximately $4.3 million and $637,000, respectively.
| 27 |
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.
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 effective.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting during the fiscal quarter ended December 31, 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; 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 involved in 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
On November 12, 2020 we issued an aggregate of 82,000,000 shares to three individuals for services and an aggregate of 48,000,000 shares to two individuals for cancelation of $1,375,238 of outstanding debt. On December 4, 2020 we issued 3,000,000 shares as a portion of the settlement of a dispute with a vendor.
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 on 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.
| 28 |
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
None.
The following exhibits are filed as a part of this report:
| Exhibit Number* |
Title of Document | Location | ||
| Item 10 | Material Contracts | |||
| 10.66 | Amended and Restated Securities Purchase Agreement dated November 9, 2020
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.67 | Convertible Promissory Note dated November 9, 2020
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020
| ||
| 10.68 |
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.69 |
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.70 | First Amendment to Investor Rights Agreement of April 27, 2020, dated November 9, 2020
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.71 | First Amendment to Voting Agreement of April 27, 2020, dated November 9, 2020
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.72 | Guaranty and Collateral Agreement dated May 15, 2020
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020
| ||
| 10.73 | Cover Letter and Restricted Shares Award Agreement for Joseph Cammarata
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.74 | Cover Letter and Restricted Shares Award Agreement for David Rothrock
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.75 | Cover Letter and Restricted Shares Award Agreement for James Bell
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 |
| 29 |
| Exhibit Number |
Title of Document | Location | ||
| 10.76 | Cover Letter and Restricted Shares Award Agreement Annette Raynor
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.77 | Cover Letter and Restricted Shares Award Agreement for Mario Romano
|
Incorporated by reference to the Current Report on form 8K filed on November 13, 2020 | ||
| 10.78 | Joinder Agreement dated December 23, 2020 | Incorporated by reference to the Current Report on form 8K filed on December 31, 2020 | ||
| 10.79 | Promissory Note in the amount of $1,000,000 with Joe Cammarata, dated January 30, 2020, First Amendment to the $1,000,000 Promissory Note dated January 31, 2020 and Second Amendment to the $1,000,000 Promissory Note dated January 30, 2021 | This filing. | ||
| 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. |
| 30 |
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: February 16, 2021 | By: | /s/ Joseph Cammarata |
| Joseph Cammarata | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: February 16, 2021 | By: | /s/ Jayme L. McWidener |
| Jayme L. McWidener | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
| 31 |