INVESTVIEW, INC. 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 theSecurities and Exchange Commission ("SEC"). The forward-looking statements included in this report are made only as of the date of this report. We disclaim any obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.
Business Overview
We operate a financial technology (FinTech) services company in several different businesses. We deliver multiple products and services through a direct selling network, also known as multi-level marketing, of independent distributors that offer our products and services through a subscription-based revenue model to our distributors, as well as by our distributors to a large base of customers that we refer to as "members". Through this business, we provide research, education, and investment tools designed to assist the self-directed investor in successfully navigating the financial markets. These services include research and trade alerts regarding equities, options, FOREX, ETFs, binary options, 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 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 reward 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 fromMPower Trading Systems, LLC , take advantage of the market's increasing acceptance and expansion of the ownership and use of digital currencies as an investable asset class, subject to applicable regulatory limitations, and to proactively respond to increasing regulatory scrutiny relative to cryptocurrency products, we have adopted a growth plan that contemplates the establishment of a suite of financial service companies that will include self-directed brokerage services, institutional trade execution services, innovative advisory services (RIA, CTA), and codeless algorithmic trading technologies, which will operate under our recently formed subsidiary,Investview Financial Group Holdings, LLC ("IFGH"). Towards that end, we have entered into an agreement to acquire the LevelX brokerage firm from an affiliate of the former Chief Executive Officer of the Company. However, the closing of that transaction is contingent upon securingFINRA approval which has not yet been obtained. IfFINRA approval is not shortly forthcoming, we are likely to abandon the LevelX acquisition and search for alternative acquisitions within the brokerage industry. Further, our wholly owned subsidiary,SAFE Management, LLC ("SAFE Management"), owns a currently dormant registered investment advisor and a commodity trading advisor registered with theNational Futures Association (NFA). However, we plan to relaunch its services under the IFGH umbrella in 2022 to primarily focus on commodities and FOREX. 21 Results of Operations Three Months EndedMarch 31, 2022 Compared to Three Months EndedMarch 31, 2021 Revenues Three Months Ended March 31, Increase 2022 2021 (Decrease) (unaudited) (unaudited) Subscription revenue, net of refunds, incentives, credits, and chargebacks$ 13,730,670 $ 7,949,717 $ 5,780,953 Mining revenue 3,576,973 8,337,359 (4,760,386 ) Cryptocurrency revenue 440,416 764,862 (324,446 ) Fee revenue - 2,032 (2,032 ) Total revenue, net$ 17,748,059 $ 17,053,970 $ 694,089 Revenue, net, increased$694,089 , or 4%, from$17,053,970 for the three months endedMarch 31, 2021 , to$17,748,059 for the three months endedMarch 31, 2022 . The increase can be explained by a$5.8 million increase in our net subscription revenue, offset by a$4.8 million decrease in our mining revenue, and a$324 thousand decrease in our cryptocurrency revenue. The$5.8 million (73%) increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the$4.8 million (57%) decrease in mining revenue was a result of a 27% increase in the average global Bitcoin mining difficulty rate, scheduled equipment maintenance and upgrades and over a 9% decrease in the average value of Bitcoin; and the$324 thousand decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU, the world's first adaptive digital currency. Operating Costs and Expenses Three Months Ended March 31, Increase 2022 2021 (Decrease) (unaudited) (unaudited) Cost of sales and service$ 1,830,341 $ 2,898,507 $ (1,068,166 ) Commissions 7,383,688 5,084,879 2,298,809 Selling and marketing 11,754 27,651 (15,897 ) Salary and related 1,215,263 1,190,141 25,122 Professional fees 978,975 650,481 328,494 Impairment expense - 534,438 (534,438 )
Loss (gain) on disposal of assets (24,300 ) - (24,300 ) General and administrative 2,067,816 1,817,397
250,419
Total operating costs and expenses
Operating costs increased$1,260,043 , or 10%, from$12,203,494 for the three months endedMarch 31, 2021 , to$13,463,537 for the three months endedMarch 31, 2022 . We experienced an increase in commissions of$2.3 million , which was a result of increases in our subscription revenue. This was offset by a decrease in our cost of sales and services of$1.1 million due to the relocation of our miners and a related decrease in our mining costs that included hosting, electrical, and power costs. We also recorded an increase in professional fees of$329 thousand due to higher legal fees. We recorded an increase in general and administrative costs of$250 thousand that could be fully explained by our increase in depreciation expense, as we had more miners that were placed in service during the current period when compared to the prior period. These increases were offset by a decrease in impairment expense of$534 thousand , where in the prior period we wrote-off intangible assets as a result of recoverability issues, with no similar write-offs occurring in the current
period.
Other Income and Expenses
Three Months Ended March 31,
2022 2021 Change
(unaudited) (unaudited)
Gain (loss) on debt extinguishment $ - $ 407,802 $ (407,802 )
Gain (loss) on fair value of
derivative liability (23,843 ) (184,737 ) 160,894
Realized gain (loss) on
cryptocurrency (182,789 ) 524,212 (707,001 )
Interest expense (4,623 ) (5,869 ) 1,246
Interest expense, related parties (1,719,465 ) (374,080 ) (1,345,385 )
Other income (expense) 31,227 (133,240 ) 164,467
Total other income (expense) $ (1,899,493 ) $ 234,088 $ (2,133,581 )
22
We recorded other expense of $1,899,493 for the three months ended March 31,
2022 , which was a difference of $2,133,581 , or 911%, from the prior period other
income of $234,088 . The change is due to no gain on debt extinguishment recorded
in the current period compared to a gain of $408 thousand recorded in the prior
period, a realized loss recorded on cryptocurrency in the current period of $183
thousand compared to a realized gain of $524 thousand in the prior period, and
more related party interest expense recorded in current period versus the prior
period ($1.7 million for the three months ended March 31, 2022 compared to $374
thousand for the three months ended March 31, 2021 ). Amounts recorded in related
party interest expense included the amortization of debt discounts, which was
being recognized over the term of the debt, however, during the three months
ended March 31, 2022 we repaid two of our related party notes early, which
resulted in the recognition of $1.2 million of the amortization of the related
debt discount amounts into interest.
Liquidity and Capital Resources
During the three months endedMarch 31, 2022 , we recorded net income of$2,379,029 and generated$4,071,715 in cash through our operating activities. We used this cash to fund operations, fund the purchase of$6,016,210 worth of fixed assets, to repay$2,267,885 worth of related party payable, and to repurchase shares for$1,724,008 . As a result, our cash, cash equivalents, and restricted cash decreased by$6,333,886 to$26,283,020 as compared to$32,616,906 at the beginning of the fiscal year. As ofMarch 31, 2022 , our current assets exceeded our current liabilities to result in working capital of$17,532,592 . Critical Accounting Policies Basis of Presentation Our policy is to prepare our financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted inthe United States of America . Prior toSeptember 20, 2021 we operated the Company on aMarch 31 , fiscal year end. EffectiveSeptember 30, 2021 we changed our fiscal year toDecember 31 . The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of theSecurities and Exchange Commission (the "SEC") and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three months endedMarch 31, 2022 , are not necessarily indicative of the operating results that may be expected for the filing of ourDecember 31, 2022 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with theDecember 31, 2021 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
Principles of Consolidation
The consolidated financial statements include the accounts ofInvestview, Inc. , and our wholly owned subsidiaries: iGenius, LLC (formerlyKuvera, LLC ), Kuvera France S.A.S (through its closure date in June of 2021),Apex Tek, LLC (formerlyRazor Data, LLC ),SAFETek, LLC (formerlyWealthGen 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 , andInvestview MTS, LLC . All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Subscription Revenue
Most of our revenue is generated by subscription sales and payment is received at the time of purchase. We recognize subscription revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first time subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds, sales incentives, credits, and known and estimated credit card chargebacks. As ofMarch 31, 2022 andDecember 31, 2021 our deferred revenues were$3,293,498 and$3,288,443 , respectively. 23 Mining Revenue Through our wholly owned subsidiary,SAFETek, LLC , we leased equipment under a sales-type lease through June of 2020. In June of 2020 we cancelled all leases and purchased all of the rights and obligations under the leases, which included obtaining ownership of all equipment. We use the equipment on blockchain networks to validate and add blocks of transactions to blockchain ledgers (commonly referred to as "mining"). As compensation for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted to us. Our mining activities constitute our ongoing major and central operations ofSAFETek, LLC . Because we do not have contracts, nor do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted to us as a result of
our mining activities. Cryptocurrency Revenue We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party suppliers. The various packages include different amounts of coin with differing rates of returns and terms and, in some cases, include a product protection option that allows the purchaser to protect their initial purchase price. The protection allows the purchaser to obtain 50% of their purchase price at five years or 100% of their purchase price at ten years. Both the coin and the protection option are delivered by third-party suppliers. We recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party suppliers to deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our suppliers on our books. As ofMarch 31, 2022 andDecember 31, 2021 our customer advances related to cryptocurrency revenue were$249,433 and$75,702 , respectively.
Fee Revenue
We generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements ofQualified 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 three months endedMarch 31, 2022 is as follows: Subscription Cryptocurrency Revenue Revenue Mining Revenue Fee Revenue Total
Gross billings/receipts
- $ 19,109,367
Refunds, incentives,
credits, and chargebacks (963,302 ) - - - (963,302 )
Amounts paid to providers - (398,006 )
- - (398,006 )
Net revenue $ 13,730,670 $ 440,416 $ 3,576,973 $ - $ 17,748,059 For the three months ended
Revenue generated for the three months ended
Subscription Cryptocurrency Mining
Revenue Revenue Revenue Fee Revenue Total
Gross billings/receipts $ 8,407,522 $ 1,877,186 $ 8,337,359 $ 2,032 $ 18,624,099
Refunds, incentives,
credits, and chargebacks (457,805 ) - - - (457,805 )
Amounts paid to
providers - (1,112,324 ) - - (1,112,324 )
Net revenue $ 7,949,717 $ 764,862 $8,337,359$ 2,032 $ 17,053,970 24
For the three months ended
Recently Issued 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.
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.
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