NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS
Organization
Investview,
Inc. was incorporated on January 30, 1946, under the laws of the state of Utah as the Uintah Mountain Copper Mining Company. In January
2005, we changed domicile to Nevada and changed our name to Voxpath Holding, Inc. In September of 2006, we merged with The Retirement
Solution Inc. and then changed our name to TheRetirementSolution.Com, Inc. Subsequently, in October 2008 we changed our name to Global
Investor Services, Inc., before changing our name to Investview, Inc., on March 27, 2012.
Effective
April 1, 2017, we closed on a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company (“Wealth
Generators”), pursuant to which the Wealth Generators members contributed 100% of the outstanding securities of Wealth Generators
in exchange for an aggregate of 1,358,670,942 shares of our common stock. Following this transaction, Wealth Generators became our wholly
owned subsidiary, and the former members of Wealth Generators became our stockholders and controlled the majority of our outstanding
common stock.
On
June 6, 2017, we entered into an Acquisition Agreement with Market Trend Strategies, LLC, a company whose members are also former members
of our management. Under the Acquisition Agreement, we spun-off our operations that existed prior to the merger with Wealth Generators
and sold the intangible assets used in those pre-merger operations in exchange for Market Trend Strategies’ assumption of $419,139
in pre-merger liabilities.
On
February 28, 2018, we filed a name change for Wealth Generators, LLC to Kuvera, LLC (“Kuvera”).
On
January 17, 2019, we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SAFETek, LLC, a Utah limited liability
company.
On
January 11, 2021, we filed a name change for Kuvera, LLC to iGenius, LLC (“iGenius”) and on February 2, 2021, we filed a
name change for Kuvera (N.I.) Limited to iGenius Global LTD.
On
September 20, 2021, the Board of Directors approved a change in our fiscal year from March 31 to December 31.
Nature
of Business
We
operate a financial technology (FinTech) services company in several different businesses. We deliver multiple products and services
through a direct selling network, also known as multi-level marketing, of independent distributors that offer our products and services
through a subscription-based revenue model to our distributors, as well as by our distributors to a large base of customers that we refer
to as “members”. Through this business, we provide research, education, and investment tools designed to assist the self-directed
investor in successfully navigating the financial markets. These services include research and education regarding equities, options,
FOREX, ETFs, binary options, and cryptocurrency. In addition to trading research and education, we also offer software applications to
assist the individual in debt reduction, increased savings, budgeting, and proper tax management. Each product subscription includes
a core set of trading tools and research along with the personal finance management suite to provide an individual with complete access
to the information necessary to cultivate and manage his or her financial situation. In addition to our education subscriptions, through
a distribution arrangement we have with a third party, we have provided our members with an opportunity to purchase through such third
party, a specialty form of adaptive digital currency called “ndau”. Through our direct selling model, we compensate our distributors
with commissions under a standard bonus plan that allows for discretionary bonuses based on performance.
We
also operate a blockchain technology business that provides leading-edge research, development, and FinTech services involving the
management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. As well, in order
to, among other things, commercialize on the proprietary trading platform we recently acquired from MPower Trading Systems, LLC (“MPower”),
take advantage of the market’s increasing acceptance and expansion of the ownership and use of digital currencies as an
investable asset class, subject to applicable regulatory limitations, and to proactively respond to increasing regulatory scrutiny
relative to cryptocurrency products, we have adopted a growth plan that contemplates the establishment of a suite of financial
service business that would offer, among others, self-directed brokerage services, institutional trade execution services,
innovative advisory services (RIA, CTA), and codeless algorithmic trading technologies. It was our expectation to develop these
businesses over time, starting with the acquisition of a broker-dealer that could serve as a platform for growth. Towards that end,
in March 2021 we entered into an agreement to acquire a brokerage firm from an affiliate of the former Chief Executive Officer of
the Company. However, having been unable to secure the requisite FINRA approval by the expiration of that agreement, we terminated
the transaction on June 14, 2022, and commenced a search for alternative acquisitions within the brokerage industry. Further, until
we are able to start this business, we recently elected to winddown the registration of a dormant investment advisor and commodity
trading advisor we own, as we concluded there to be no material benefit to retaining an interest in these regulated businesses until
we are able to launch our broader-based financial services model.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
Our
policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted
in the United States of America. Prior to September 20, 2021, we operated the Company on a March 31 fiscal year end. Effective September
30, 2021, we changed our fiscal year to December 31.
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation
S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. The results of operations for the nine months ended September 30, 2022, are not necessarily indicative of the operating
results that may be expected for the filing of our December 31, 2022 Form 10-K. These unaudited condensed consolidated financial statements
should be read in conjunction with the audited December 31, 2021 consolidated financial statements and notes thereto included in our
Annual Report on Form 10-KT for the nine months ended December 31, 2021.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly
Kuvera, LLC), Kuvera France S.A.S (through its closure date in June of 2021), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC
(formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC,
iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, and Investview MTS, LLC. All intercompany
transactions and balances have been eliminated in consolidation.
Financial
Statement Reclassification
Certain
account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.
Use
of Estimates
The
preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
Foreign
Exchange
We
have consolidated the accounts of Kuvera France S.A.S. into our consolidated financial statements. The operations of Kuvera France S.A.S.
were conducted in France through its closure date in June of 2021 and its functional currency is the Euro. Subsequent to June 2021 we
maintained a Euro bank account in France that had minimal transactions. The Euro bank account was closed in April 2022.
Prior
to June 2021, the financial statements of Kuvera France S.A.S. were prepared using their functional currency and were translated into
U.S. dollars (“USD”). Assets and liabilities were translated into USD at the applicable exchange rates at period-end. Stockholders’
equity was translated using historical exchange rates. Revenue and expenses were translated at the average exchange rates for the period.
Any translation adjustments were included as foreign currency translation adjustments in accumulated other comprehensive income in our
stockholders’ equity (deficit).
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
Subsequent
to June 2021 and prior to the closure of the Euro bank account, we translated all transactions in our Euro bank account into USD and
translated the ending bank balance into USD at the applicable exchange rate at period-end.
The
following rates were used to translate our Euro bank account into USD at the following balance sheet dates.
SCHEDULE OF EXCHANGE RATES
| | |
December
31,
2021 | |
| Euro
to USD | |
| 1.1371 | |
The
following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.
| | |
| | | |
| | |
| | |
Nine
Months Ended September 30, | |
| | |
2022 | | |
2021 | |
| Euro
to USD | |
| 1.1118 | | |
| 1.1963 | |
Concentration
of Credit Risk
Financial
instruments that potentially expose us to concentration of credit risk include cash, accounts receivable, and advances. We place our
cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of the FDIC insurance
limit of $250,000. As of September 30, 2022 and December 31, 2021, cash balances that exceeded FDIC limits were $17,850,503 and $19,336,350,
respectively. We have not experienced significant losses relating to these concentrations in the past.
Cash
Equivalents and Restricted Cash
For
purposes of reporting cash flows, we consider all highly liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents. As of September 30, 2022 and December 31, 2021, we had no highly liquid debt instruments.
The
following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that sum to
the total of the same such amounts shown in the statement of cash flows.
SCHEDULE OF RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
| | |
September
30,
2022 | | |
December
31,
2021 | |
| Cash
and cash equivalents | |
$ | 19,081,445 | | |
$ | 30,995,283 | |
| Restricted
cash, current | |
| 819,338 | | |
| 819,338 | |
| Restricted
cash, long term | |
| 187,782 | | |
| 802,285 | |
| Total
cash, cash equivalents, and restricted cash shown on the statement of cash flows | |
$ | 20,088,565 | | |
$ | 32,616,906 | |
Amount
included in restricted cash represent funds required to be held in an escrow account by a contractual agreement and will be used for
paying dividends to our Series B Preferred Stockholders.
Receivables
Receivables
are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of
all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables and
receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. We
had an allowance for doubtful accounts of $719,342 as of September 30, 2022 and December 31, 2021, respectively.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
Fixed
Assets
Fixed
assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise
disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net difference
less any amount realized from disposition is reflected in earnings. Expenditures for maintenance and repairs which do not extend the
useful lives of the related assets are expensed as incurred.
Fixed
assets were made up of the following at each balance sheet date:
SCHEDULE OF FIXED ASSETS
| | |
Estimated
Useful Life
(years) | |
September
30,
2022 | | |
December
31,
2021 | |
| Furniture,
fixtures, and equipment | |
10 | |
$ | 76,717 | | |
$ | 82,942 | |
| Computer
equipment | |
3 | |
| 13,560 | | |
| 15,241 | |
| Leasehold
improvements | |
Remaining
Lease Term | |
| 40,528 | | |
| 40,528 | |
| Data
processing equipment | |
3 | |
| 23,658,549 | | |
| 10,638,619 | |
| Construction
in progress | |
N/A | |
| - | | |
| 391,583 | |
| Mining
repair tools and equipment | |
1 | |
| 13,627 | | |
| - | |
| Property, plant and equipment, gross | |
| |
| 23,802,981 | | |
| 11,168,913 | |
| Accumulated
depreciation | |
| |
| (7,075,422 | ) | |
| (4,486,036 | ) |
| Net
book value | |
| |
$ | 16,727,559 | | |
$ | 6,682,877 | |
Total
depreciation expense for the nine months ended September 30, 2022 and 2021, was $4,251,122 and $2,111,333, respectively. During the nine
months ended September 30, 2022 we sold assets with a total net book value of $654,942 for cash of $1,044,492, therefore recognized a
gain on disposal of assets of $389,550. During the nine months ended September 30, 2022 we disposed assets with a total net book value
of $7,008, therefore recognized impairment expense of $7,008.
Long-Lived
Assets – Intangible Assets & License Agreement
We
account for our cryptocurrencies, intangible assets and long-term license agreement in accordance with Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill,
and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30 requires assets to be
measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more
clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts
are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any
intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting
period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful
life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life.
Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
We
hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies
as of September 30, 2022 and December 31, 2021 were $3,018,759 ($2,872,589 current and $146,170 restricted long term) and $2,141,093
($2,018,324 current and $122,769 restricted long term), respectively. Cryptocurrencies purchased or received for payment from customers
are recorded in accordance with ASC 350-30 and cryptocurrencies awarded to the Company through its mining activities ($9,412,751 and
$25,047,680 for the nine months ended September 30, 2022 and 2021, respectively) are accounted for in connection with the Company’s
revenue recognition policy. The use of cryptocurrencies is accounted for in accordance with the first in first out method of accounting.
For the nine months ended September 30, 2022 and 2021 we recorded realized gains (losses) on our cryptocurrency transactions of $(1,338,597)
and $892,266, respectively.
In
June of 2018 we purchased United Games, LLC and United League, LLC and recorded the transaction as a business combination. Intangible
assets acquired in the business combination were recorded at fair value on the date of acquisition and were being amortized on a straight-line
method over their estimated useful lives. The intangible assets were impaired during the year ended March 31, 2021, due to a lack of recoverability.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
On
March 22, 2021, we entered into a Securities Purchase Agreement to acquire the operating assets and intellectual property rights of
MPower, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board
members (see NOTE 12). On September 3, 2021, we closed on the Securities Purchase Agreement and acquired the operating assets and
intellectual property rights of MPower. As a result, we obtained Prodigio, a proprietary software-based trading
platform with applications within the brokerage industry, which was valued at $7,240,000
and recorded on our balance sheet as an intangible asset. The intangible asset will have a definite life, however, as of the date of
this filing the software has not yet been placed in service, therefore a useful life had not yet been determined and no amortization
was recorded during the nine months ended September 30, 2022.
Impairment
of Long-Lived Assets
We
have adopted ASC Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets
and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value of an asset may no longer
be appropriate. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses,
or a forecasted inability to achieve break-even operating results over an extended period.
We
evaluate the recoverability of long-lived assets based upon future net cash flows expected to result from the asset, including eventual
disposition. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted and an impairment loss
is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
During
the nine months ended September 30, 2022 we impaired our fixed assets with a cost basis of $15,772 due to the lack of use. We had recorded
accumulated depreciation and accumulated amortization of $8,764 for the impaired assets through the date of impairment, therefore we
recorded impairment expense of $7,008 during the nine months ended September 30, 2022.
During
the nine months ended September 30, 2021 we impaired our intangible assets with a cost basis of $991,000 due to the lack of recoverability.
In addition, we impaired computer equipment with a cost basis of $14,661 and we impaired data processing equipment with a cost basis
of $392,500 due to disposals. We had recorded accumulated depreciation and accumulated amortization of $723,490 for the impaired assets
through the date of impairment, therefore we recorded impairment expense of $674,671 during the nine months ended September 30, 2021.
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, based on our principal or, in the absence of a principal, most advantageous market for the
specific asset or liability.
U.S.
generally accepted accounting principles provide for a three-level hierarchy of inputs to valuation techniques used to measure fair value,
defined as follows:
| |
Level
1: | Inputs
that are quoted prices (unadjusted) for identical assets or liabilities in active markets
that the entity can access. |
| |
Level
2: | Inputs
other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the asset or liability,
including: |
| - | quoted
prices for similar assets or liabilities in active markets; |
| - | quoted
prices for identical or similar assets or liabilities in markets that are not active; |
| - | inputs
other than quoted prices that are observable for the asset or liability; and |
| - | inputs
that are derived principally from or corroborated by observable market data by correlation
or other means. |
| |
Level
3: | Inputs
that are unobservable and reflect management’s own assumptions about the inputs market
participants would use in pricing the asset or liability based on the best information available
in the circumstances (e.g., internally derived assumptions surrounding the timing and amount
of expected cash flows). |
Our
financial instruments consist of cash, accounts receivable, accounts payable, and debt. We have determined that the book value of our
outstanding financial instruments as of September 30, 2022 and December 31, 2021, approximates the fair value due to their short-term
nature or interest rates that approximate prevailing market rates.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
Items
recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following
items as of September 30, 2022:
SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS
| | |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| Total
Assets | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Derivative
liability | |
$ | - | | |
$ | - | | |
$ | 29,216 | | |
$ | 29,216 | |
| Total
Liabilities | |
$ | - | | |
$ | - | | |
$ | 29,216 | | |
$ | 29,216 | |
Items
recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following
items as of December 31, 2021:
| | |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| Total
Assets | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Derivative
liability | |
$ | - | | |
$ | - | | |
$ | 69,371 | | |
$ | 69,371 | |
| Total
Liabilities | |
$ | - | | |
$ | - | | |
$ | 69,371 | | |
$ | 69,371 | |
Revenue
Recognition
Subscription
Revenue
Most
of our revenue is generated by subscription sales and payment is received at the time of purchase. We recognize subscription revenue
in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized
when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over a fixed
subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for the portion
of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first time subscription
customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues are deferred
during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds, sales incentives,
credits, and known and estimated credit card chargebacks. As of September 30, 2022 and December 31, 2021 our deferred revenues were $2,046,443
and $3,288,443, respectively.
Mining
Revenue
Through
our wholly owned subsidiary, SAFETek, LLC, we leased equipment under a sale-leaseback arrangement. However, in June of 2020, we
cancelled all leases and purchased all of the rights and obligations under these leases, which included obtaining ownership of all
equipment. We use the equipment on blockchain networks to validate and add blocks of transactions to blockchain ledgers (commonly
referred to as “mining”). As compensation for our mining activities, we are issued fees from processors and/or block
rewards that are newly created cryptocurrency units granted to us. Our mining activities constitute the principal
operations of SAFETek, LLC. Because we do not have contracts, nor do we have customers associated with our mining revenue, we
recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of our mining activities.
Cryptocurrency
Revenue
We
generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier with
whom our Chairman is affiliated (see Note 5-Related Party Transactions). The various packages include different amounts of coin with
differing rates of returns and terms and, in some cases prior to January 2022, included a product protection option that allows the
purchaser to protect their initial purchase price. Both
the coin and the protection options are delivered by third-party suppliers. In January 2022, we suspended any further offering of the product protection
option after the third-party provider of that protection package was unable to comply with our standard vendor compliance protocols, citing
certain offshore confidentiality entitlements. That suspension will remain in place until we are able to further validate the continued
integrity of the product protection and the vendor’s ability to honor its commitments to our members.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
We
recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract
with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to
arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers
at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our
balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party supplier to
deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our supplier on our books. As
of September 30, 2022 and December 31, 2021 our customer advances related to cryptocurrency revenue were $142,070 and $75,702, respectively.
Fee
Revenue
We
generate minimal 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. However, since these businesses were largely dormant, during 2022, we elected to winddown and withdraw the SAFE Management
state and NFA registrations, as we concluded there to be no material benefit to retaining an interest in these regulated businesses until
we are able to launch our broader-based financial services model.
Miner
Repair Revenue
Through
our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. We recognize miner repair
revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and
recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver the promised
goods to our customers.
Digital
Wallet Revenue
We
generate revenue from the sale of digital wallets to our customers through an arrangement with a third-party supplier. We offer three
tiers of wallets which include different features. The digital wallets are delivered by a third-party supplier.
We
recognize digital wallet revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract
with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to
arrange for the third-parties to provide the wallet to our customers and payment is received from our customers at the time of order
placement.
Revenue
generated for the nine months ended September 30, 2022, is as follows:
SCHEDULE OF REVENUE GENERATED
| | |
Subscription
Revenue | | |
Cryptocurrency
Revenue | | |
Mining
Revenue | | |
Miner
Repair
Revenue | | |
Digital
Wallet
Revenue | | |
Total | |
| Gross
billings/receipts | |
$ | 39,087,141 | | |
$ | 2,548,316 | | |
$ | 9,412,751 | | |
$ | 123,621 | | |
$ | 7,157 | | |
$ | 51,178,986 | |
| Refunds,
incentives, credits, and chargebacks | |
| (2,428,351 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,428,351 | ) |
| Amounts
paid to providers | |
| - | | |
| (1,239,507 | ) | |
| - | | |
| - | | |
| (1,289 | ) | |
| (1,240,796 | ) |
| Net
revenue | |
$ | 36,658,790 | | |
$ | 1,308,809 | | |
$ | 9,412,751 | | |
$ | 123,621 | | |
$ | 5,868 | | |
$ | 47,509,839 | |
For
the nine months ended September 30, 2022, foreign and domestic revenues were approximately $32.2 million and $15.3 million, respectively.
Revenue
generated for the nine months ended September 30, 2021, is as follows:
| | |
Subscription
Revenue | | |
Cryptocurrency
Revenue | | |
Mining
Revenue | | |
Fee
Revenue | | |
Total | |
| Gross
billings/receipts | |
$ | 34,843,588 | | |
$ | 20,082,329 | | |
$ | 25,047,680 | | |
$ | 2,032 | | |
$ | 79,975,629 | |
| Refunds,
incentives, credits, and chargebacks | |
| (2,009,960 | ) | |
| - | | |
| - | | |
| - | | |
| (2,009,960 | ) |
| Amounts
paid to providers | |
| - | | |
| (11,914,034 | ) | |
| - | | |
| - | | |
| (11,914,034 | ) |
| Net
revenue | |
$ | 32,833,628 | | |
$ | 8,168,295 | | |
$ | 25,047,680 | | |
$ | 2,032 | | |
$ | 66,051,635 | |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
For
the nine months ended September 30, 2021 foreign and domestic revenues were approximately $33.1 million and $33.0 million, respectively.
Revenue
generated for the three months ended September 30, 2022, is as follows:
| | |
Subscription
Revenue | | |
Cryptocurrency
Revenue | | |
Mining
Revenue | | |
Miner
Repair
Revenue | | |
Digital
Wallet
Revenue | | |
Total | |
| Gross
billings/receipts | |
$ | 12,638,375 | | |
$ | 673,933 | | |
$ | 2,777,634 | | |
$ | 43,511 | | |
$ | - | | |
$ | 16,133,453 | |
| Refunds,
incentives, credits, and chargebacks | |
| (814,794 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (814,794 | ) |
| Amounts
paid to providers | |
| - | | |
| (322,500 | ) | |
| - | | |
| - | | |
| - | | |
| (322,500 | ) |
| Net
revenue | |
$ | 11,823,581 | | |
$ | 351,433 | | |
$ | 2,777,634 | | |
$ | 43,511 | | |
$ | - | | |
$ | 14,996,159 | |
For
the three months ended September 30, 2022, foreign and domestic revenues were approximately $10.3 million and $4.7 million, respectively.
Revenue
generated for the three months ended September 30, 2021, is as follows:
| | |
Subscription
Revenue | | |
Cryptocurrency
Revenue | | |
Mining
Revenue | | |
Fee
Revenue | | |
Total | |
| Gross
billings/receipts | |
$ | 14,904,004 | | |
$ | 2,329,566 | | |
$ | 8,338,759 | | |
$ | - | | |
$ | 25,572,329 | |
| Refunds,
incentives, credits, and chargebacks | |
| (869,790 | ) | |
| - | | |
| - | | |
| - | | |
| (869,790 | ) |
| Amounts
paid to providers | |
| - | | |
| (1,331,439 | ) | |
| - | | |
| - | | |
| (1,331,439 | ) |
| Net
revenue | |
$ | 14,034,214 | | |
$ | 998,127 | | |
$ | 8,338,759 | | |
$ | - | | |
$ | 23,371,100 | |
For
the three months ended September 30, 2021 foreign and domestic revenues were approximately $13.6 million and $9.8 million, respectively.
Advertising,
Selling, and Marketing Costs
We
expense advertising, selling, and marketing costs as incurred. Advertising, selling, and marketing costs include costs of promoting our
product worldwide, including promotional events. Advertising, selling, and marketing expenses for the nine months ended September 30,
2022 and 2021, totaled $53,139 and $93,984, respectively.
Cost
of Sales and Service
Included
in our costs of sales and services are amounts paid to our trading and market experts that provide financial education content and tools
to our subscription customers, hosting fees that we pay to vendors to set up our mining equipment at third-party sites in order to generate
mining revenue, and the costs associated with our miner repair revenue. Costs of sales and services for the nine months ended September
30, 2022 and 2021, totaled $5,873,214 and $7,186,149, respectively.
Inventory
Inventory
consists of raw materials and work in process to be sold as part of our miner repair revenue. Inventory is valued at the lower of cost
or net realizable value using the first-in, first-out (FIFO) method and is inclusive of any shipping and tax costs.
Inventory
was made up of the following at each balance sheet date:
SCHEDULE
OF INVENTORY
| | |
September
30,
2022 | | |
December
31,
2021 | |
| Raw
materials | |
$ | 448,056 | | |
$ | - | |
| Work
in process | |
| 83,222 | | |
| - | |
| Finished
goods | |
| 408,040 | | |
| - | |
| Total
inventory | |
$ | 939,318 | | |
$ | - | |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
Income
Taxes
Income
taxes are recorded in accordance with ASC Topic 740, Income Taxes, which requires the recognition of deferred tax liabilities and assets
for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method,
deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities,
including operating losses and credit carryforwards, using enacted tax rates in effect for the year in which the differences are expected
to reverse.
Management
judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance
recorded against our deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the consideration of
all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Changes in assumptions
in future periods may require we adjust our valuation allowance, which could materially impact our financial position and results of
operations. The company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return,
if such a position is more likely than not to be sustained.
Net
Income (Loss) per Share
We
follow ASC subtopic 260-10, Earnings per Share (“ASC 260-10”), which specifies the computation, presentation, and disclosure
requirements of earnings per share information. Basic income (loss) per share has been calculated based upon the weighted average number
of common shares outstanding. Diluted income (loss) per share reflects the potential dilution that could occur if stock options or other
contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on
diluted earnings per share are excluded from the calculation.
Due
to the net loss for the three months ended September 30, 2022, and the three and nine months ended September 30, 2021, potentially dilutive
securities excluded from the computation of diluted net loss per share are as follows:
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE
| | |
Three
months ended | | |
Three
months ended | | |
Nine
months ended | |
| | |
September
30, 2022 | | |
September
30, 2021 | | |
September
30, 2021 | |
| Warrants
to purchase common stock | |
| - | | |
| 439,266 | | |
| 177,567 | |
| Notes
convertible into common stock | |
| 471,428,571 | | |
| 577,162,620 | | |
| 543,803,307 | |
| Class
B Redeemable Units of Investview Financial Group Holdings, LLC | |
| 565,000,000 | | |
| 171,956,522 | | |
| 57,948,718 | |
| Totals | |
| 1,036,428,571 | | |
| 749,558,408 | | |
| 601,929,592 | |
The
following table illustrates the computation of diluted earnings per share for the nine months ended September 30, 2022.
SCHEDULE
OF EARNINGS PER SHARE BASIC AND DILUTED
| | |
September
30, 2022 | |
| Net
income | |
$ | 1,858,642 | |
| Less:
preferred dividends | |
| (614,505 | ) |
| Add:
interest expense on convertible debt | |
| 469,884 | |
| Net
income available to common shareholders (numerator) | |
$ | 1,714,021 | |
| | |
| | |
| Basic
weighted average number of common shares outstanding | |
| 2,690,146,350 | |
| Dilutive
impact of convertible notes | |
| 471,428,571 | |
| Dilutive
impact of non-voting membership interest | |
| 565,000,000 | |
| Diluted
weighted average number of common shares outstanding (denominator) | |
| 3,726,574,921 | |
| | |
| | |
| Diluted
income per common share | |
$ | 0.00 | |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(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
We
have noted no recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material
impact on our financial statements.
NOTE
4 – LIQUIDITY
Our
financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the
realization of assets and liquidation of liabilities in the normal course of business.
During
the nine months ended September 30, 2022 we reported $7,334,474 in cash provided by operating activities, $6,406,965 of income from operations,
and net income of $1,858,642. As of September 30, 2022 we have cash and cash equivalents of $19,081,445 and a working capital balance
of $14,565,190. As of September 30, 2022 our unrestricted cryptocurrency balance was reported at a cost basis of $2,872,589. Management
does not believe there are any liquidity issues as of September 30, 2022.
NOTE
5 – RELATED-PARTY TRANSACTIONS
Our
related-party payables consisted of the following:
SCHEDULE OF RELATED PARTY PAYABLES
| | |
September
30,
2022 | | |
December
31,
2021 | |
| Convertible
Promissory Note entered into on 4/27/20, net of debt discount of $984,967
as of September 30, 2022 [1] | |
$ | 315,033 | | |
$ | 239,521 | |
| Convertible
Promissory Note entered into on 5/27/20, net of debt discount of $534,560
as of September 30, 2022 [2] | |
| 165,240 | | |
| 124,149 | |
| Convertible
Promissory Note entered into on 11/9/20, net of debt discount of $1,040,828
as of September 30, 2022 [3] | |
| 259,172 | | |
| 198,187 | |
| Promissory
note entered into on 12/15/20 [4] | |
| - | | |
| 80,322 | |
| Convertible
Promissory Note entered into on 3/30/21 [5] | |
| - | | |
| 476,670 | |
| Working
Capital Promissory Note entered into on 3/22/21 [6] | |
| 1,201,597 | | |
| 1,200,607 | |
| Total
related-party debt | |
| 1,941,042 | | |
| 2,319,456 | |
| Less:
Current portion | |
| (1,201,597 | ) | |
| (1,832,642 | ) |
| Related-party
debt, long term | |
$ | 739,445 | | |
$ | 486,814 | |
| [1] | On
April 27, 2020, we received proceeds of $1,300,000
from DBR Capital, LLC, an entity controlled by our Chairman, and entered into a convertible promissory note. The note is secured by
collateral of the Company and its subsidiaries. The note bears interest at 20%
per annum, payable monthly, and the principal is due and payable on April
27, 2030. Per the original terms of the agreement the note was convertible into common stock at a conversion price of $0.01257
per share, which was amended on November 9, 2020 to reduce the conversion price to $0.007
per share. At inception we recorded a beneficial conversion feature and debt discount of $1,300,000.
During the nine months ended September 30, 2022, we recognized $97,180
of the debt discount into interest expense, as well as expensed an additional $195,012
of interest expense on the note, all of which was repaid during the period. |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
| [2] | On
May 27, 2020, we received proceeds of $700,000
from DBR Capital, LLC, and entered into a convertible promissory note. The note is secured by collateral of the Company and its
subsidiaries. The note bears interest
at 20%
per annum, payable monthly, and the principal is due and payable on April
27, 2030. Per the original terms of the agreement the note was convertible into common stock at a conversion price of $0.01257
per share, which was amended on November 9, 2020 to reduce the conversion price to $0.007
per share. At inception we recorded a beneficial conversion feature and debt discount of $700,000.
During the nine months ended September 30, 2022, we recognized $52,761
of the debt discount into interest expense as well as expensed an additional $105,003
of interest expense on the note, all of which was repaid during the period. |
| [3] | On
November 9, 2020, we received proceeds of $1,300,000
from DBR Capital, LLC, and entered into a convertible promissory note. The note is secured by collateral of the Company and its
subsidiaries. The note bears interest
at 38.5%
per annum, made up of a 25%
interest rate per annum and a facility fee of 13.5%
per annum, payable monthly beginning February 1, 2021, and the principal is due and payable on April 27, 2030. Per the terms of the
agreement the note is convertible into common stock at a conversion price of $0.007
per share. At inception we recorded a beneficial conversion feature and debt discount of $1,300,000.
During the nine months ended September 30, 2022, we recognized $102,691
of the debt discount into interest expense as well as expensed an additional $375,372
of interest expense on the note, all of which was repaid during the period. |
| [4] | On
December 15, 2020, we received proceeds of $154,000 from Wealth Engineering, an entity controlled
by former 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
September 30, 2022, we recognized the remaining $259,678 of the debt discount into interest
expense and repaid the remaining $340,000 of the debt. |
| [5] | Effective
March 30, 2021, we restructured a $1,000,000 promissory note with $200,000 of accrued interest,
along with a $350,000 short-term advance, with Joseph Cammarata, our then Chief Executive
Officer. The new note had a principal balance of $1,550,000, had a 5% interest rate, and
was convertible at $0.02 per share. As a result of the fixed conversion price we recorded
a beneficial conversion feature and debt discount of $1,550,000 on March 30, 2021, which
was equal to the face value of the note. Effective September 21, 2021, we entered into an
amendment to the note to extend the due date to September 30, 2022, allow for partial conversions,
and change the conversion price to $0.008 per share. As the terms of the note changed substantially,
we accounted for the amendment as an extinguishment and new note. Through September 21, 2021
we recognized $738,904 of the initial debt discount into interest expense, removed $806,849
of the remaining debt discount from the books, recorded a beneficial conversion feature due
to the fixed conversion price and a debt discount of $1,550,000, which was equal to the face
value of the amended note, and recorded a net $743,151 into additional paid in capital as
a gain due to the extinguishment transaction being between related parties and thus a capital
transaction. During the nine months ended September 30, 2022, we recognized the remaining
$1,131,417 of the $1,550,000 debt discount into interest expense. Also, during the nine months
ended September 30, 2022, we expensed $19,626 of interest expense on the debt. During February
2022, we provided 30 days’ notice of our intent to retire and repay the Cammarata Note
in cash. Having not timely received a properly executed conversion notice within the proscribed
period, and citing certain breaches of Mr. Cammarata’s fiduciary duty to us, as well as damages incurred by us arising from Mr. Cammarata’s
legal proceedings, on March 30, 2022, we tendered to Mr. Cammarata cash payment in full for
the Cammarata Note. As of the date of this filing, Mr. Cammarata has not yet accepted our
tender of the cash payment, and instead has asserted his entitlement to exercise his right
to convert the Cammarata Note into our common shares. At September 30, 2022, we canceled
the $1.6 million check issued to Mr. Cammarata and recorded the amount due in accrued liabilities.
|
| [6] | On
March 22, 2021, we entered into Securities Purchase Agreements to purchase 100% of the operating
assets of SSA Technologies LLC, an entity that owns and operates a FINRA-registered broker-dealer.
SSA is controlled and partially owned by Joseph Cammarata, our former Chief Executive Officer.
Commencing upon execution of the agreements and through the closing of the transactions,
we agreed to provide certain transition service arrangements to SSA. In connection with the
transactions, we entered into a Working Capital Promissory Note with SSA under which SSA
was to have advanced to us up to $1,500,000 before the end of 2021; however, SSA has only
provided advances of $1,200,000 to date. The note bears interest at the rate of 0.11% per
annum therefore we recognized $990 worth of interest expense on the loan during the nine
months ended September 30, 2022. The note was due and payable by January 31, 2022; however,
has not yet been repaid as we consider our legal options in light of SSA’s failure
to complete its funding obligations. The note was to have been secured by the pledge of 12,000,000
shares of our common stock; however, it remains unsecured as the pledge of shares was not
implemented at the closing of the loan. |
We expensed interest related to our related-party payables, as
follows:
SCHEDULE OF INTEREST EXPENSES RELATED PARTY
| | |
| | | |
| | |
| | |
Three Months Ended September 30, 2022 | | |
Nine Months Ended September 30, 2022 | |
| Wealth Engineering (Mario Romano and Annette Raynor) [1] | |
$ | - | | |
$ | 259,678 | |
| DBR Capital (David Rothrock) [2] | |
| 310,265 | | |
| 928,019 | |
| Joseph Cammarata (former executive officer) [3] | |
| - | | |
| 1,151,042 | |
| SSA Technologies LLC (Joseph Cammarata, former executive officer) [4] | |
| 330 | | |
| 990 | |
| Interest expenses related
parties | |
$ | 310,595 | | |
$ | 2,339,729 | |
| [1] |
During
the nine months ended September 30, 2022, all expense was from the amortization of debt discount. |
| |
|
| [2] |
During
the three and nine months ended September 30, 2022, $85,136 and $252,632 of the expense was from the amortization of debt discount and
$225,129 and $675,387 of the expense was from the accrual of interest, respectively. During the three and nine months ended September
30, 2022, we made payments of $225,129 and $750,430 for interest expense, respectively. |
| |
|
| [3] |
During
the three and nine months ended September 30, 2022, $0 and $1,131,417 of the expense was from the amortization of debt discount and $0
and $19,626 of the expense was from the accrual of interest, respectively. During the three and nine months ended September 30, 2022,
we made payments of $0 and $77,712 for interest expense, respectively. |
| |
|
| [4] |
During
the three and nine months ended September 30, 2022, all expense was from the accrual of interest. |
Description
of other Related Party Arrangements
During the nine months ended September 30, 2022, we entered into
a Separation and Release Agreement (the “Separation Agreements”) with Mario Romano and Annette Raynor, two of the Company’s
founders and former members of management and the Board of Directors, and Wealth Engineering, LLC, an affiliate of Mr. Romano and Ms.
Raynor. Under the Separation Agreements, Mr. Romano and Ms. Raynor resigned their positions as officers and directors of the Company
effective immediately upon execution of the Separation Agreements as they each transitioned to the roles of strategic advisors to the
Company. In conjunction with the Separation Agreements Mr. Romano and Ms. Raynor forfeited 75,000,000 shares each, which were returned
to the Company and cancelled, and we repurchased a total of 43,101,939 shares from Mr. Romano and Ms. Raynor in exchange for cash of
$1,724,008, which was paid to federal and state taxing authorities on behalf of Wealth Engineering, LLC as payment for the estimated
federal and state taxes that Wealth Engineering, LLC may be subject to in connection with the vesting of 63,333,333 Company restricted
shares that vested on July 22, 2021 (see NOTE 9).
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
During the nine months ended September 30, 2022, we recorded 69,833,334
shares as forfeited as a result of 1) our Chief Financial Officer returning 1,300,000 shares to the Company prior to their vesting date
and 2) our senior management team and board of directors unanimously agreeing to surrender and terminate an aggregate of 68,533,334 outstanding
unvested restricted shares and 218,500,000 ungranted shares in exchange for the issuance of options to purchase 360,416,665 shares (see
NOTE 9).
DBR
Capital LLC, an affiliate of our Chairman (“DBR Capital”), has been an investor in Oneiro NA, Inc.
(“Oneiro”) since 2016, and currently serves as a worldwide marketing and distribution agent for Oneiro. Oneiro has been our third-party supplier of ndau coins. In connection with its affiliation with
Oneiro, DBR Capital is entitled to certain performance fees from Oneiro for worldwide sales of ndau introduced by DBR
Capital, including purchases by Investview or any affiliates of Investview. The
performance fee is determined as a commission on sales, with a floating range between 5% to 10% of sales, on aggregate sales ranging
from $1 million to over $40 million. The performance fee is to be paid in ndau coins. During the most recent year ended December 31,
2021, DBR Capital earned a performance fee in connection with sales by Oneiro to Investview of approximately 77,000 ndau coins.
During
the nine months ended September 30, 2022, DBR Capital elected to contribute 77,000 ndau coins to us. These coins were valued as of
the day of receipt at $1,185,821 and are recorded as an addition to Additional Paid in Capital. The contribution of these coins to
the Company by DBR Capital was in recognition of the recent reorganization of the executive management team and Board of Directors
of Investview, and to avoid the appearance of any potential conflicts of interest associated with the marketing and distribution
arrangement DBR Capital has with Oneiro. DBR Capital further renounced and assigned to the Company for its discretionary use, its
rights in and to any further performance fees related to ndau sales by Oneiro to the Company for so long as Mr. Rothrock remains
either an executive officer or director of the Company.
The
loans referenced in footnotes 1-3 above, were advanced under a Securities Purchase Agreement we entered into on April 27, 2020, with
DBR Capital. Under the Securities Purchase Agreement (which was subsequently amended and restated), DBR Capital agreed to advance up
to $11 million to us in a series of up to five closings through December 31, 2022, of which the amounts advanced covered in footnotes
1-3 above constituted the first three closings. On August 12, 2022, we and DBR Capital, entered into a Fourth Amendment to the now Amended
and Restated Securities Purchase Agreement that extends the deadlines for the fourth and fifth closings under that Agreement from December
31, 2022, to December 31, 2024. The fourth and fifth closings remain at the sole discretion of DBR Capital and we cannot provide any
assurance that they will occur when contemplated or ever.
NOTE
6 – DEBT
Our
debt consisted of the following:
SCHEDULE OF DEBT
| | |
September
30,
2022 | | |
December
31,
2021 | |
| Loan
with the U.S. Small Business Administration dated 4/19/20 [1] | |
$ | 545,822 | | |
$ | 531,798 | |
| Long
term notes for APEX lease buyback [2] | |
| 8,654,048 | | |
| 10,870,861 | |
| Total
debt | |
| 9,199,870 | | |
| 11,402,659 | |
| Less:
Current portion | |
| (2,909,513 | ) | |
| (2,947,013 | ) |
| Debt,
long term portion | |
$ | 6,290,357 | | |
$ | 8,455,646 | |
| [1] | In
April 2020 we received proceeds of $500,000 from a loan entered into with the U.S. Small
Business Administration. Under the terms of the loan interest is to accrue at a rate of 3.75%
per annum and installment payments of $2,437 monthly will begin twelve months from the date
of the loan, with all interest and principal due and payable thirty years from the date of
the loan. During the nine months ended September 30, 2022 we recorded $14,024 worth of interest
on the loan. |
| [2] | During
the year ended March 31, 2021 we entered into notes with third parties for $19,089,500 in
exchange for the cancellation of APEX leases previously entered into, which resulted in our
purchase of all rights and obligations under the leases. We agreed to settle a portion of
the debt during the year ended March 31, 2021, at a discount to the original note terms offered,
by making lump sum payments, issuing shares of our common stock, issuing shares of our preferred
stock, and issuing cryptocurrency. The remaining notes are all due December 31, 2024 and
have a fixed monthly payment that is equal to 75% of the face value of the note, divided
by 48 months. The monthly payments began the last day of January 2021 and continue until
December 31, 2024 when the last monthly payment will be made, along with a balloon payment
equal to 25% of the face value of the note, to extinguish the debt. During the nine months
ended September 30, 2022 we repaid a portion of the debt with cash payments of $729,016 and
issuances of cryptocurrency valued at $1,487,797. |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
NOTE
7 – DERIVATIVE LIABILITY
During
the nine months ended September 30, 2022, we had the following activity in our derivative liability account relating to our warrants:
SCHEDULE OF DERIVATIVE LIABILITY
| Derivative
liability at December 31, 2021 | |
$ | 69,371 | |
| Derivative
liability recorded on new instruments | |
| - | |
| Derivative
liability reduced by warrant exercise (see NOTE 7) | |
| - | |
| (Gain)
loss on fair value | |
| (40,155 | ) |
| Derivative
liability at September 30, 2022 | |
$ | 29,216 | |
We
use the binomial option pricing model to estimate fair value for those instruments at inception, at warrant exercise, and at each reporting
date. During the nine months ended September 30, 2022, the assumptions used in our binomial option pricing model were in the following
range:
SCHEDULE OF ASSUMPTIONS USED IN BINOMINAL OPTION PRICING MODE
| Risk
free interest rate | |
| 2.99
- 2.99 | % |
| Expected
life in years | |
| 2.84
- 3.75 | |
| Expected
volatility | |
| 150%
- 183 | % |
NOTE
8 – OPERATING LEASE
In
August 2019 we entered an operating lease for office space in Eatontown, New Jersey (the “Eatontown Lease”), in September
2019 we entered an operating lease for office space in Kaysville, Utah (the “Kaysville Lease”), in May 2021 we entered an
operating lease for office space in Conroe, Texas (the “Conroe Lease”), in July 2021 we entered an operating lease for office
space in Wyckoff, New Jersey (the “Wyckoff Lease”), and in September 2021 we acquired an operating lease for office space
in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition (See NOTE 12).
At
commencement of the Eatontown Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $110,097.
We have the option to extend the three-year lease term of the Eatontown Lease for a period of one year. In addition, we are obligated
to pay twelve monthly installments to cover an annual utility charge of $1.75 per rentable square foot for electric usage within the
demised premises. As the lessor has the right to digitally meter and charge us accordingly, these payments were deemed variable and will
be expensed as incurred. During the nine months ended September 30, 2022 the variable lease costs amounted to $1,940.
At
commencement of the Kaysville Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $21,147.
On September 30, 2020, the Kaysville Lease expired and as of October 1, 2020, the Company began leasing the property located in Kaysville
on a month-to-month basis.
At
commencement of the Conroe Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $174,574.
We have the option to extend the 24-month term of the Conroe Lease for three additional terms of 24 months.
At
commencement of the Wyckoff Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $22,034.
The term of the Wyckoff Lease is 24.5 months.
At
date of acquisition of the Haverford lease, right-of-use assets and lease liabilities obtained amounted to $125,522 and $152,961, respectively.
The term of the Haverford lease expires on December 31, 2022.
Operating
lease expense was $180,927 for the nine months ended September 30, 2022. Operating cash flows used for the operating leases during the
nine months ended September 30, 2022 was $204,345. As of September 30, 2022, the weighted average remaining lease term was 0.62 years
and the weighted average discount rate was 12%.
Future
minimum lease payments under non-cancellable leases as of September 30, 2022 were as follows:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER NON-CANCELLABLE LEASES
| | |
| | |
| Remainder
of 2022 | |
$ | 58,875 | |
| 2023 | |
| 57,045 | |
| Total | |
| 115,920 | |
| Less:
Interest | |
| (3,645 | ) |
| Present
value of lease liability | |
| 112,275 | |
| Operating
lease liability, current [1] | |
| (112,275 | ) |
| Operating
lease liability, long term | |
$ | - | |
| [1] |
Represents lease payments to be made in the next 12 months. |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
NOTE
9 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred
Stock
We
are authorized to issue up to 50,000,000 shares of preferred stock with a par value of $0.001 and our board of directors has the authority
to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges,
and preferences of that preferred stock.
Our
Board of Directors approved the designation of 2,000,000 of the Company’s shares of preferred stock as Series B Cumulative Redeemable
Perpetual Preferred Stock (“Series B Preferred Stock”), each with a stated value of $25 per share. Our Series B Preferred
Stockholders are entitled to 500 votes per share and are entitled to receive cumulative dividends at the annual rate of 13% per annum
of the stated value, equal to $3.25 per annum per share. The Series B Preferred Stock is redeemable at our option or upon certain change
of control events.
During
the year ended March 31, 2021, we commenced a security offering to sell a total of 2,000,000 units at $25 per unit (“Unit Offering”),
such that each unit consisted of: (i) one share of our newly authorized Series B Preferred Stock and (ii) five warrants each exercisable
to purchase one share of common stock at an exercise price of $0.10 per warrant share. Each Warrant offered is immediately exercisable
on the date of issuance, will expire 5 years from the date of issuance, and its value has been classified as a fair value liability due
to the terms of the instrument (see NOTE 7).
During
the nine months ended September 30, 2021, we sold 196,638 units for a total of $4,915,950: 145,622 units for cash proceeds of $3,640,550,
1,598 units for bitcoin proceeds of $39,950, and 49,418 units for debt of $1,235,450. In conjunction with the sale of the units we issued
196,638 shares of Series B Preferred Stock and granted 983,190 warrants during the period.
As
of September 30, 2022 and December 31, 2021, we had 252,192 shares of preferred stock issued and outstanding.
Preferred
Stock Dividends
During
the nine months ended September 30, 2022, we recorded $614,505 for the cumulative cash dividends due to the shareholders of our Series
B Preferred Stock. We made payments of $470,563 in cash and issued $129,817 worth of cryptocurrency to reduce the amounts owed. As a
result, we recorded $233,830 as a dividend liability on our balance sheet as of September 30, 2022.
Common
Stock
During
the nine months ended September 30, 2022, we cancelled 219,833,334 shares that had been issued but were forfeited by choice or as a result
of certain forfeiture conditions (see NOTE 5). As a result, we decreased common stock by $219,834, and increased additional paid in capital
by the same. As of the date of this filing, 33,333,333 shares of common stock forfeited during the nine-month period ended December 31,
2021 had not yet been physically cancelled due to administrative delays. All forfeited shares have been deemed cancelled as of June 30,
2022. Also, during the nine months ended September 30, 2022, we repurchased 43,101,939 shares from members of our then Board of Directors
in exchange for cash of $1,724,008 to pay for tax withholdings (see NOTE 5).
During
the nine months ended September 30, 2021, we cancelled 255,000,000 shares that had been issued but were subject to certain forfeiture
conditions. As a result of the forfeiture, we decreased common stock by $255,000 and increased additional paid in capital by the same.
Also, during the nine months ended September 30, 2021, we issued 11,500,000 shares of common stock for services and compensation and
recognized a total of $989,391 in stock-based compensation based on grant date fair values and vesting terms of the awards granted in
the current and prior periods. We also issued 82,640 shares of common stock as a result of warrants exercised, resulting in proceeds
of $8,264, and we recorded 6,666,666 shares as forfeited as a result of our CAO returning the shares to the Company prior to their vesting
date.
As
of September 30, 2022 and December 31, 2021, we had 2,641,275,489 and 2,904,210,762 shares of common stock issued and outstanding, respectively.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
Options
During
the nine months ended September 30, 2022, we undertook to restructure unvested incentive equity awards previously granted to our senior
leadership team. The Company’s senior management team and board of directors unanimously agreed to surrender and terminate an aggregate
of 68,533,334 outstanding unvested restricted shares and 218,500,000 ungranted shares in exchange for the issuance of options to purchase
360,416,665 shares, vesting in equal amounts over a five-year period, at an exercise price of $0.05 per share. The third-party valuation
firm we engaged to value these options utilized the Black Scholes Model to value these options and the expense related to these options
is being recognized over their vesting terms. Total stock compensation expense related to the options for the nine months ended September
30, 2022, was $1,384,210.
Warrants
Transactions
involving our warrants are summarized as follows:
SUMMARY OF WARRANTS ISSUED
| | |
| | |
Weighted | |
| | |
Number
of | | |
Average | |
| | |
Shares | | |
Exercise
Price | |
| Warrants
outstanding at December 31, 2021 | |
| 1,178,320 | | |
$ | 0.10 | |
| Granted | |
| - | | |
$ | - | |
| Canceled/Expired | |
| - | | |
$ | - | |
| Exercised | |
| - | | |
$ | - | |
| Warrants
outstanding at September 30, 2022 | |
| 1,178,320 | | |
$ | 0.10 | |
Details
of our warrants outstanding as of September 30, 2022, is as follows:
SUMMARY OF WARRANTS OUTSTANDING
| Exercise
Price | | |
Warrants
Outstanding | | |
Warrants
Exercisable | | |
Weighted
Average
Contractual Life (Years) | |
| $ | 0.10 | | |
| 1,178,320 | | |
| 1,178,320 | | |
| 3.40 | |
Class
B Units of Investview Financial Group Holdings, LLC
As
of September 30, 2022, and December 31, 2021, there were 565,000,000
Units of Class B Investview Financial Group Holdings,
LLC issued and outstanding. These units were issued as consideration for the purchase of operating assets and intellectual property rights
of MPower, a company controlled and partially owned by David B. Rothrock and James R. Bell,
two of our board members (see NOTE 12). The Class
B Redeemable Units have no voting rights but can be exchanged at any time, within 5 years from the date of issuance, for 565,000,000
shares of our common stock on a one-for-one basis and are subject to significant restrictions upon resale through 2025 under the terms
of a lock up agreement entered into as part of the purchase agreement. In
order to properly account for the purchase transaction on the Company’s financial statements, we were required by applicable financial
reporting standards to value the Class B Units issued to MPower in the transaction as of the closing date of the MPower sale transaction
(September 3, 2021). For these accounting purposes, we concluded that the “fair value” of the consideration for financial
accounting purposes, at the if-converted market value of the underlying common shares was $58.9
million, based on the closing market price of
$0.1532 on the closing date of September 3, 2021, as discounted from $86.6 million by 32% (or $27.7 million) to reflect the significant
lock up period. The “fair value” valuation of the Class B Units, however, was completed relying on a certain set of methodologies
that are accepted for accounting purposes, and is not necessarily indicative of the “fair market value” that may be implied
relative to such Units in a commercial transaction not governed by financial reporting standards. In particular, the methodology used
to value the Class B Units at their “fair value” did not take into account any blockage discounts that may otherwise apply
after the expiration of the lock-up period in 2025; while other valuation methodologies, not bound by financial reporting codifications,
would possibly determine that the blockage discount associated with the resale of 565 million shares after the expiration of the lock-up
period, into a marketplace that has limited market liquidity, could possibly have a material downward influence on the valuation.
NOTE
10 – COMMITMENTS AND CONTINGENCIES
In
the ordinary course of business, we may be, or have been, involved in legal proceedings. During the nine months ended September 30, 2022,
we were not involved in any material legal proceedings, however, during November 2021 we received a subpoena from the United States Securities
and Exchange Commission (“SEC”) for the production of documents. We have reason to believe that the focus of the SEC’s
inquiry involves whether certain federal securities laws were violated in connection with, among other things, the offer and sale of
cryptocurrency products and the operation of our subscription-based multi-level marketing business now known as iGenius. In the subpoena,
the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities
laws and or any other law. We believe that we have complied at all times with the federal securities laws. However, we are aware of the
evolving SEC commentary and rulemaking process relative to the characterization of cryptocurrency products under federal securities laws
that is sweeping through a large number of businesses that operate within the cryptocurrency sector. We intend to cooperate fully with
the SEC’s investigation and will continue to work with outside counsel to review the matter.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2022
(Unaudited)
We
generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier,
certain of which, until January 2022, included a product protection option provided by a third-party provider. According
to marketing and legal documents provided by such third-party provider, the product protection would allow the purchaser to protect
its initial purchase price by obtaining 50% of its purchase price at five years or 100% of its purchase price at ten years.
In January 2022, we suspended any further offering of the product protection option in the
cryptocurrency packages after the third-party provider was unable to comply with our standard vendor compliance protocols, citing
certain offshore confidentiality entitlements. That suspension will remain in place until we are able to further validate the
continued integrity of the product protection and the vendor’s ability to honor its commitments to our members.
We
issued a promissory note to our former Chief Executive Officer, Joseph Cammarata, which, following certain modifications, on or about
March 30, 2021, was restated in the principal amount of $1,550,000 (the “Cammarata Note”). Although not originally convertible,
as per the March 30, 2021, amendment, the Cammarata Note became convertible at $0.02 per share, Thereafter, effective September 21, 2021,
and following another modification, the conversion price under the Cammarata Note was reduced to $0.008 per share. During February 2022,
we provided 30 days’ notice of our intent to retire and repay the Cammarata Note in cash. Having not timely received a properly
executed conversion notice within the proscribed period, and citing certain breaches of Mr. Cammarata’s
fiduciary duty to us, as well as damages incurred by us arising from Mr. Cammarata’s
ongoing legal proceedings, on or about March 31, 2022, we tendered to Mr. Cammarata cash payment in full for the Cammarata Note. As of
the date of this Report, Mr. Cammarata has not accepted our tender of the cash payment, and instead has asserted his entitlement to exercise
his right to convert the Cammarata Note into our common shares. Although we believe that our cash tender was appropriate under the terms
of the Cammarata Note and our claims for damages by Mr. Cammarata have marit, if Mr. Cammarata elects to challenge our cash tender in a court proceeding, and if we are
unable to sustain our legal position on the matter, Mr. Cammarata could receive up to approximately 203 million shares of our common
stock upon conversion of the Cammarata Note.
On
March 22, 2021, we entered into Securities Purchase Agreements to purchase 100% of the operating assets of SSA Technologies LLC, an entity
that owns and operates a FINRA-registered broker-dealer. SSA is controlled and partially owned by Joseph Cammarata, our former Chief
Executive Officer. Commencing upon execution of the agreements and through the closing of the transactions, we agreed to provide certain
transition service arrangements to SSA. In connection with the transactions, we entered into a Working Capital Promissory Note with SSA
under which SSA was to have advanced to us up to $1,500,000 before the end of 2021; however, SSA has only provided advances of $1,200,000
to date. The note bears interest at the rate of 0.11% per annum therefore we recognized $990 worth of interest expense on the loan during
the nine months ended September 30, 2022. The note was due and payable by January 31, 2022; however, has not yet been repaid as we consider
our legal options in light of SSA’s failure to complete its funding obligations. The note was to have been secured by the pledge
of 12,000,000 shares of our common stock; however, it remains unsecured as the pledge of shares was not implemented at the closing of
the loan.
NOTE
11 – INCOME TAXES
For
the periods ended September 30, 2022, and September 30, 2021, the Company used a discrete effective tax rate method for recording income
taxes, as compared to an estimated full year annual effective tax rate method, as an estimate of the annual effective tax rate cannot
be made.
Provision
for income taxes for the three and nine months ended September 30, 2022, was $362,563 and $1,004,308, respectively, resulting in an effective
tax rate of (623.9%) and 35.1%, respectively. Provision for income taxes for the three and nine months ended September 30, 2021, was $758
and $146,950, respectively, resulting in an effective tax rate of (0.002%) and (0.50%), respectively. The provision for income taxes
was primarily impacted by pretax book income, permanent differences, and by the change in valuation allowance on deferred tax assets.
NOTE
12 – ACQUISITION & NONCONTROLLING INTEREST IN SUBSIDIARY
On
March 22, 2021, we entered into a Securities Purchase Agreement to purchase the operating assets and intellectual property rights of
MPower, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members,
in exchange for 565,000,000 nonvoting Class B Units of Investview Financial Group Holdings, LLC (“Units”). This acquisition
closed on September 3, 2021, and we acquired an office lease, furniture and fixtures, and Prodigio, a proprietary software-based trading
platform with applications in the brokerage industry. The Units can be exchanged at any time, within 5 years from the date of issuance,
for 565,000,000 shares of our common stock on a one-for-one basis and are subject to a 44 month lock up period. The “fair value” of the
consideration, as determined for our accounting purposes, at the if-converted market value of the common shares was $58.9 million based on the closing market price of $0.1532 on
the closing date of September 3, 2021, as discounted from $86.6 million by 32% (or $27.7 million) to reflect the significant lock up
period.
The
Company determined that as of the date of the acquisition, the fair value of the Prodigio Trading Platform software was $7.2 million.
The difference between the value of the software asset and the consideration issued was driven by an increase in the valuation of the
Class B Units between the execution of the original Securities Purchase Agreement in March 2021 which set the number of units to be issued
as consideration and the closing of the transaction in September 2021, as well as the software’s lack of revenue generation and
a readily available path to monetization through synergies with a broker-dealer partner. Accordingly, the Company recorded a non-cash
loss on acquisition of $51.6 million as illustrated below.
SCHEDULE
OF ASSETS ACQUISITION
| | |
| | |
| Purchase
price (fair value of Units) | |
$ | 58,859,440 | |
| Intangible
asset (Prodigio software) | |
| 7,240,000 | |
| Loss
on asset acquisition | |
$ | 51,619,440 | |
NOTE
13 – SUBSEQUENT EVENTS
In
accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have determined
that there are no subsequent events that require disclosure.