NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 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
July 20, 2018, we entered into a Purchase Agreement with United Games Marketing LLC, a Utah limited liability company, to purchase its
wholly owned subsidiaries United Games, LLC and United League, LLC for 50,000,000 shares of our common stock (see Note 5).
On
December 30, 2018, our wholly owned subsidiary S.A.F.E. Management, LLC received its registration and disclosure approval from the National
Futures Association. S.A.F.E. Management, LLC is now a New Jersey State Registered Investment Adviser, Commodities Trading Advisor, Commodity
Pool Operator, and approved for over-the-counter FOREX advisory services.
On
January 17, 2019, we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SAFETek, LLC, a Utah limited liability
company.
On
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 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.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
We
also operate a blockchain technology business that provides leading-edge research, development, and FinTech services involving the management
of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. As well, in order to, among other
things, commercialize on the proprietary trading platform we recently acquired from MPower Trading Systems, LLC, take advantage of the
market’s increasing acceptance and expansion of the ownership and use of digital currencies as an investable asset class, subject
to applicable regulatory limitations, and to proactively respond to increasing regulatory scrutiny relative to cryptocurrency products,
we have adopted a growth plan that contemplates the establishment of a suite of financial service companies that will include self-directed
brokerage services, institutional trade execution services, innovative advisory services (RIA, CTA), and codeless algorithmic trading
technologies, which will operate under our recently formed subsidiary, Investview Financial Group Holdings, LLC (“IFGH”).
Towards that end, 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 securing FINRA approval which has not yet been obtained.
If FINRA 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 the National Futures Association (NFA). However,
we plan to relaunch its services under the IFGH umbrella in 2022 to primarily focus on commodities and FOREX.
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 three months ended March 31, 2022, are not necessarily indicative of the operating
results that may be expected for the filing of our December 31, 2022 Form 10-K. These unaudited condensed consolidated financial statements
should be read in conjunction with the December 31, 2021 consolidated financial statements and notes thereto included in our Annual Report
on Form 10-K for the year ended December 31, 2021.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries: iGenius, LLC (formerly
Kuvera, LLC), Kuvera France S.A.S (through its closure date in June of 2021), Apex Tek, LLC (formerly Razor Data, LLC), SAFETek, LLC
(formerly WealthGen Global, LLC), S.A.F.E. Management, LLC, United Games, LLC, United League, LLC, Investment Tools & Training, LLC,
iGenius Global LTD (formerly Kuvera (N.I.) LTD), Investview Financial Group Holdings, LLC, and Investview MTS, LLC. All intercompany
transactions and balances have been eliminated in consolidation.
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.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
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.
Prior
to June 2021, the financial statements of Kuvera France S.A.S. were prepared using their functional currency and were translated into
U.S. dollars (“USD”). Assets and liabilities were translated into USD at the applicable exchange rates at period-end. Stockholders’
equity was translated using historical exchange rates. Revenue and expenses were translated at the average exchange rates for the period.
Any translation adjustments were included as foreign currency translation adjustments in accumulated other comprehensive income in our
stockholders’ equity (deficit).
Subsequent
to June 2021, 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
| | |
March 31,
2022 | | |
December 31,
2021 | |
| Euro to USD | |
| 1.1074 | | |
| 1.1371 | |
The
following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.
| | |
2022 | | |
2021 | |
| | |
Three Months Ended March 31, | |
| | |
2022 | | |
2021 | |
| Euro to USD | |
| 1.1219 | | |
| 1.2052 | |
Concentration
of Credit Risk
Financial
instruments that potentially expose us to concentration of credit risk include cash, accounts receivable, and advances. We place our
cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of the FDIC insurance
limit of $250,000. As of March 31, 2022 and December 31, 2021, cash balances that exceeded FDIC limits were $23,637,360 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 March 31, 2022 and December 31, 2021, we had no cash equivalents.
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
| | |
March 31,
2022 | | |
December 31,
2021 | |
| Cash and cash equivalents | |
$ | 24,866,231 | | |
$ | 30,995,283 | |
| Restricted cash, current | |
| 819,338 | | |
| 819,338 | |
| Restricted cash, long term | |
| 597,451 | | |
| 802,285 | |
| Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | |
$ | 26,283,020 | | |
$ | 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.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
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 March 31, 2022 and December 31, 2021, respectively.
Fixed
Assets
Fixed
assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise
disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net difference
less any amount realized from disposition is reflected in earnings. Expenditures for maintenance and repairs which do not extend the
useful lives of the related assets are expensed as incurred.
Fixed
assets were made up of the following at each balance sheet date:
SCHEDULE OF FIXED ASSETS
| | |
Estimated Useful Life
(years) | |
March 31,
2022 | | |
December 31,
2021 | |
| Furniture, fixtures, and equipment | |
10 | |
$ | 82,942 | | |
$ | 82,942 | |
| Computer equipment | |
3 | |
| 15,241 | | |
| 15,241 | |
| Leasehold improvements | |
Remaining Lease Term | |
| 40,528 | | |
| 40,528 | |
| Data processing equipment | |
3 | |
| 16,506,939 | | |
| 10,638,619 | |
| Construction in progress | |
N/A | |
| 529,806 | | |
| 391,583 | |
| | |
| |
| 17,175,456 | | |
| 11,168,913 | |
| Accumulated depreciation | |
| |
| (5,390,329 | ) | |
| (4,486,036 | ) |
| Net book value | |
| |
$ | 11,785,127 | | |
$ | 6,682,877 | |
Total
depreciation expense for the three months ended March 31, 2022 and 2021, was $909,955
and $659,179,
respectively. During the quarter ended March 31, 2022 we sold assets with a total net book value of $4,008 for cash of $28,308, therefore
recognized a gain on disposal of assets of $24,300.
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 March 31, 2022 and December 31, 2021 were $2,359,591
($2,229,943
current and $129,648
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 ($3,576,973
and $8,337,359
for the three months ended March 31, 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 three months ended March 31, 2022 and 2021 we
recorded realized gains (losses) on our cryptocurrency transactions of $(182,789)
and $524,212,
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 MARCH 31, 2022
(Unaudited)
On
March 22, 2021, we entered into Securities Purchase Agreement to acquire the operating assets and intellectual property rights of MPower
Trading Systems LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members (see NOTE
12). 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 three months ended March 31, 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 quarter ended March 31, 2022 no impairment was recorded. During
the quarter ended March 31, 2021 we impaired our intangible assets with a cost basis of $991,000
due to the lack of recoverability. We had recorded
accumulated depreciation and accumulated amortization of $456,562
for the impaired assets through the date of impairment,
therefore we recorded impairment expense of $534,438
for the quarter ended March 31, 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 March 31, 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 MARCH 31, 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 March 31, 2022:
SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Total Assets | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Derivative liability | |
$ | - | | |
$ | - | | |
$ | 93,214 | | |
$ | 93,214 | |
| Total Liabilities | |
$ | - | | |
$ | - | | |
$ | 93,214 | | |
$ | 93,214 | |
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 March 31, 2022 and December 31, 2021 our deferred revenues were $3,293,498
and $3,288,443,
respectively.
Mining
Revenue
Through
our wholly owned subsidiary, SAFETek, LLC, we leased equipment under a sales-type lease through June of 2020. In June of 2020 we cancelled
all leases and purchased all of the rights and obligations under the leases, which included obtaining ownership of all equipment. We
use the equipment on blockchain networks to validate and add blocks of transactions to blockchain ledgers (commonly referred to as “mining”).
As compensation for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted
to us. Our mining activities constitute our ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor
do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately granted
to us as a result of our mining activities.
Cryptocurrency
Revenue
We
generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with third-party suppliers. The various
packages include different amounts of coin with differing rates of returns and terms and, in some cases, include a product protection
option that allows the purchaser to protect their initial purchase price. The protection allows the purchaser to obtain 50% of their
purchase price at five years or 100% of their purchase price at ten years. Both the coin and the protection option are delivered by third-party
suppliers.
We
recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract
with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to
arrange for the third-parties to provide coin and protection (if applicable) to our customers and payment is received from our customers
at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our
balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party suppliers to
deliver coin and protection (if applicable), at which time we recognize revenue and the amounts due to our suppliers on our books. As
of March 31, 2022 and December 31, 2021 our customer advances related to cryptocurrency revenue were $249,433 and $75,702, respectively.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
Fee
Revenue
We
generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and Commodities
Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified
in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation
is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified Investors and who lack the
time to trade for themselves. We recognize fee revenue as our performance obligation is met and we receive payment for such advisory
fees in the month following recognition.
Revenue
generated for the three months ended March 31, 2022 is as follows:
SCHEDULE OF REVENUE GENERATED
For
the three months ended March 31, 2022 foreign and domestic revenues were approximately $12.0
million and $5.7
million, respectively.
Revenue
generated for the three months ended March 31, 2021 is as follows:
For
the three months ended March 31, 2021 foreign and domestic revenues were approximately $7.6 million and $9.4 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 three months ended March 31, 2022
and 2021, totaled $11,754 and $27,651, respectively.
Cost
of Sales and Service
Included
in our costs of sales and services is amounts paid to our trading and market experts that provide financial education content and tools
to our subscription customers and hosting fees that we pay to vendors to set up our mining equipment at third-party sites in order to
generate mining revenue. Costs of sales and services for the three months ended March 31, 2022 and 2021, totaled $1,830,341 and $2,898,507,
respectively.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 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.
The
following table illustrates the computation of diluted earnings per share for the three months ended March 31, 2022 and 2021, where no
potentially dilutive securities were excluded from the computation:
SCHEDULE
OF DILUTED EARNINGS PER SHARE
| | |
March 31,
2022 | | |
March 31,
2021 | |
| Net income (loss) | |
$ | 2,379,029 | | |
$ | 4,941,561 | |
| Less: preferred dividends | |
| (204,835 | ) | |
| (124,506 | ) |
| Add: interest expense on convertible debt | |
| 244,755 | | |
| 226,140 | |
| Net income available to common shareholders for dilution purposes | |
$ | 2,418,949 | | |
$ | 5,043,195 | |
| | |
| | | |
| | |
| Basic weighted average number of common shares outstanding | |
| 2,723,982,285 | | |
| 3,237,481,329 | |
| Dilutive impact of warrants | |
| - | | |
| 128,532 | |
| Dilutive impact of convertible notes | |
| 471,428,571 | | |
| 473,177,294 | |
| Dilutive impact of non-voting membership interest | |
| 565,000,000 | | |
| - | |
| Diluted weighted average number of common shares outstanding (denominator) | |
| 3,760,410,856 | | |
| 3,710,787,154 | |
| | |
| | | |
| | |
| Diluted income per common share | |
$ | 0.00 | | |
$ | 0.00 | |
Lease
Obligation
We
determine if an arrangement is a lease at inception. Operating leases are included in the operating
lease right-of-use asset account, the operating lease liability, current account, and the operating lease liability, long term account
in our balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent
our obligation to make lease payments arising from the lease.
Operating
lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease
term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on
the information available at commencement date in determining the present value of lease payments. We
have elected to not apply the recognition requirements of ASC 842 to short-term leases (leases with terms of twelve months or less).
Lease terms include options to extend or terminate the lease when it is reasonably certain that
we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term.
We have elected the practical expedient and will not separate non-lease components from lease components and will instead account for
each separate lease component and non-lease component associated with the lease components as a single lease component.
Inventory
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 CURRENT TABLE
| | |
| | | |
| | |
| | |
March 31,
2022 | | |
December 31,
2021 | |
| Raw materials | |
$ | 55,570 | | |
$ | - | |
| Finished goods | |
| - | | |
| - | |
| Inventory Net | |
$ | 55,570 | | |
$ | - | |
During the quarter ended March 31, 2022 we acquired
raw materials to be used for future operations.
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.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
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 three months ended March 31, 2022 we reported $4,071,715
in cash provided by operating activities,
$4,284,522 of
income from operations, and net income of $2,379,029.
As of March 31, 2022 we have cash and cash equivalents
of $24,866,231 and
a working capital balance of $17,532,592.
As of March 31, 2022 our unrestricted cryptocurrency
balance was reported at a cost basis of $2,229,943.
Management does not believe there are any liquidity issues as of March 31, 2022.
NOTE
5 – RELATED-PARTY TRANSACTIONS
Our
related-party payables consisted of the following:
SCHEDULE OF RELATED PARTY PAYABLES
| | |
|
March 31,
2022 | | |
|
December 31,
2021 | |
| Convertible Promissory
Note entered into on 4/27/20, net of debt discount of $1,050,110
as of March 31, 2022 [1] | |
$ | 249,890 | | |
$ | 239,521 | |
| Convertible Promissory Note entered
into on 5/27/20, net of debt discount of $570,127
as of March 31, 2022 [2] | |
| 129,877 | | |
| 124,149 | |
| Convertible Promissory Note entered
into on 11/9/20, net of debt discount of $1,109,664
as of March 31, 2022 [3] | |
| 190,332 | | |
| 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] | |
| 1,200,937 | | |
| 1,200,607 | |
| Total related-party debt | |
| 1,771,036 | | |
| 2,319,456 | |
| Less: Current portion | |
| (1,200,937 | ) | |
| (1,832,642 | ) |
| Related-party debt, long term | |
$ | 570,099 | | |
$ | 486,814 | |
| [1] |
On
April 27, 2020 we received proceeds of $1,300,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors,
and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company.
The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. Per the original
terms of the agreement the note was convertible into common stock at a conversion price of $0.01257 per share, which was amended
on November 9, 2020 to reduce the conversion price to $0.007 per share. At inception we recorded a beneficial conversion feature
and debt discount of $1,300,000. During the three months ended March 31, 2022 we recognized $32,037 of the debt discount into interest
expense, as well as expensed an additional $65,004 of interest expense on the note, all of which was repaid during the period. |
| |
|
| [2] |
On
May 27, 2020 we received proceeds of $700,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors, and
entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company.
The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. Per the original
terms of the agreement the note was convertible into common stock at a conversion price of $0.01257 per share, which was amended
on November 9, 2020 to reduce the conversion price to $0.007 per share. At inception we recorded a beneficial conversion feature
and debt discount of $700,000. During the three months ended March 31, 2022 we recognized $17,394 of the debt discount into interest
expense as well as expensed an additional $35,001 of interest expense on the note, all of which was repaid during the period. |
| |
|
| [3] |
On
November 9, 2020 we received proceeds of $1,300,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors,
and entered into a convertible promissory note. The note is secured by shares held by officers and majority shareholders of the Company.
The note bears interest at 38.5% per annum, made up of a 25% interest rate per annum and a facility fee of 13.5% per annum, payable
monthly beginning February 1, 2021, and the principal is due and payable on April 27, 2030. Per the terms of the agreement the note
is convertible into common stock at a conversion price of $0.007 per share. At inception we recorded a beneficial conversion feature
and debt discount of $1,300,000. During the three months ended March 31, 2022 we recognized $33,854 of the debt discount into interest
expense as well as expensed an additional $125,124 of interest expense on the note, all of which was repaid during the period. |
| |
|
| [4] |
On
December 15, 2020 we received proceeds of $154,000 from Wealth Engineering, an entity controlled by members of our management team
and Board of Directors, and entered into a promissory note for $600,000. The term of the note requires monthly repayments of $20,000
per month for 30 months. At inception we recorded a debt discount of $446,000 representing the difference between the cash received
and the total amount to be repaid. During the three months ended March 31, 2022 we recognized the remaining $259,678 of the debt discount
into interest expense and repaid the remaining $340,000 of the debt. |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
| [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
three months ended March 31, 2022 we recognized the remaining $1,131,417 of the $1,550,000 debt discount into interest expense. Also,
during the three months ended March 31, 2022 we expensed $19,626 of interest expense on the debt. During February 2022, we provided
30 days’ notice of our intent to retire and repay the Cammarata Note in cash. Having not timely received a properly executed
conversion notice within the proscribed period, and citing certain other damages incurred by us arising from Mr. Cammarata’s
legal proceedings, on March 30, 2022, we tendered to Mr. Cammarata cash payment in full for the Cammarata Note. As of the date of
this filing, Mr. Cammarata has not yet accepted our tender of the cash payment, and instead has asserted his entitlement to exercise
his right to convert the Cammarata Note into our common shares (see NOTE 13). |
| |
|
| [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 $330 worth
of interest expense on the loan during the three months ended March 31, 2022. The note was due and payable by January 31, 2022; however,
has not yet been repaid as we consider our legal options in light of SSA’s failure to complete its funding obligations. The
note was to have been secured by the pledge of 12,000,000 shares of our common stock; however, it remains unsecured as the pledge
of shares was not implemented at the closing of the loan. |
In addition
to the above-mentioned related-party lending arrangements, during the three months ended March 31, 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 agreed to resign their positions as officers and directors of the Company
effective immediately as they each transition 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).
NOTE
6 – DEBT
Our
debt consisted of the following:
SCHEDULE OF DEBT
| | |
March 31,
2022 | | |
December 31,
2021 | |
| Loan with the U.S. Small Business Administration dated 4/19/20 [1] | |
$ | 536,421 | | |
$ | 531,798 | |
| Long term notes for APEX lease buyback [2] | |
| 10,105,981 | | |
| 10,870,861 | |
| Total debt | |
| 10,642,402 | | |
| 11,402,659 | |
| Less: Current portion [12] | |
| (2,909,513 | ) | |
| (2,947,013 | ) |
| Debt, long term portion | |
$ | 7,732,889 | | |
$ | 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 three
months ended March 31, 2022 we recorded $4,623 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 three months ended
March 31, 2022 we repaid a portion of the debt with cash payments of $269,362 and issuances of cryptocurrency valued at $495,518. |
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
NOTE
7 – DERIVATIVE LIABILITY
During
the three months ended March 31, 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 | |
| 23,843 | |
| Derivative liability at March 31, 2022 | |
$ | 93,214 | |
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 three months ended March 31, 2022, the assumptions used in our binomial option pricing model were in the following range:
SCHEDULE OF ASSUMPTIONS USED IN BINOMINAL OPTION PRICING MODEL
| Risk free interest rate | |
| 0.97 - 1.26 | % |
| Expected life in years | |
| 3.34 - 4.25 | |
| Expected volatility | |
| 199% - 207 | % |
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 three months ended March 31, 2022 the variable lease costs amounted to $831.
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 $62,753 for the three months ended March 31, 2022. Operating cash flows used for the operating leases during the three
months ended March 31, 2022 was $70,755. As of March 31, 2022, the weighted average remaining lease term was 1.01 years and the weighted
average discount rate was 12%.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
Future
minimum lease payments under non-cancellable leases as of March 31, 2022 were as follows:
SCHEDULE
OF FUTURE MINIMUM LEASE PAYMENTS UNDER NON-CANCELLABLE LEASES
| | |
| | |
| Remainder of 2022 | |
$ | 182,175 | |
| 2023 | |
| 57,045 | |
| Total | |
| 239,220 | |
| Less: Interest | |
| (2,974 | ) |
| Present value of lease liability | |
| 236,246 | |
| Operating lease liability, current [1] | |
| (216,649 | ) |
| Operating lease liability, long term | |
$ | 19,597 | |
| [1] | | Represents lease
payments to be made in the next 12 months. |
NOTE
9 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred
Stock
We
are authorized to issue up to 50,000,000 shares of preferred stock with a par value of $0.001 and our board of directors has the authority
to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges,
and preferences of that preferred stock.
Our
Board of Directors approved the designation of 2,000,000 of the Company’s shares of preferred stock as Series B Cumulative Redeemable
Perpetual Preferred Stock (“Series B Preferred Stock”), each with a stated value of $25 per share. Our Series B Preferred
Stockholders are entitled to 500 votes per share and are entitled to receive cumulative dividends at the annual rate of 13% per annum
of the stated value, equal to $3.25 per annum per share. The Series B Preferred Stock is redeemable at our option or upon certain change
of control events.
During
the year ended March 31, 2021 we commenced a security offering to sell a total of 2,000,000 units at $25 per unit (“Unit Offering”),
such that each unit consisted of: (i) one share of our newly authorized Series B Preferred Stock and (ii) five warrants each exercisable
to purchase one share of common stock at an exercise price of $0.10 per warrant share. Each Warrant offered is immediately exercisable
on the date of issuance, will expire 5 years from the date of issuance, and its value has been classified as a fair value liability due
to the terms of the instrument (see NOTE 7).
During the three months ended March 31, 2021 we
sold 97,763 units for a total of $2,444,075: 47,953 units for cash proceeds of $1,198,825, 392 units for bitcoin proceeds of $9,800, and
49,418 units for debt of $1,235,450. In conjunction with the sale of the units we issued 97,763 shares of Series B Preferred Stock and
granted 488,815 warrants during the period.
As
of March 31, 2022 and December 31, 2021, we had 252,192 shares of preferred stock issued and outstanding.
Preferred
Stock Dividends
During
the three months ended March 31, 2022 we recorded $204,835
for the cumulative cash dividends due to the
shareholders of our Series B Preferred Stock. We made payments of $156,821
in cash and issued $36,735
worth of cryptocurrency to reduce the amounts
owed. As a result, we recorded $230,984
as a dividend liability on our balance sheet as of March 31,
2022.
Common
Stock
During
the three months ended March 31, 2022 we cancelled 150,000,000
shares that had been issued but were forfeited
(see NOTE 5). As a result, we decreased common stock by $150,000
and increased additional paid in capital by the
same. As of the date of this filing, 33,333,333
shares of common stock forfeited as of
December 31, 2021 had not yet been physically cancelled due to administrative delays. All forfeited shares have been deemed cancelled
as of March 31, 2022. Also during the three months ended March 31, 2022, we repurchased 43,101,939
shares from members of our then management
team and Board of Directors in exchange for cash of $1,724,008
to pay for tax withholdings (see NOTE 5).
During
the three months ended March 31, 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.
As
of March 31, 2022 and December 31, 2021, we had 2,711,108,823
and 2,904,210,762 shares
of common stock issued and outstanding, respectively.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
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 March 31, 2022 | |
| 1,178,320 | | |
$ | 0.10 | |
Details
of our warrants outstanding as of March 31, 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 | | |
| 3.90 | |
Class
B Redeemable Units of Investview Financial Group Holdings, LLC
As
of March 31, 2022 and December 31, 2021 there were 565,000,000
Units of Class B Investview Financial Group Holdings,
LLC issued and outstanding. These units were issued as consideration for the purchase of operating assets and intellectual property rights
of MPower Trading Systems, LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members
(see NOTE 12). The Class B Redeemable Units have no voting rights but can be exchanged at any time, within 5
years from the date of issuance, for 565,000,000
shares of our common stock on a one-for-one basis,
and are subject to significant restrictions upon resale through 2025 under the terms of a lock up agreement. The fair value of the consideration
at the if-converted market value of the common shares was $58.9 million based on the closing market price of $0.1532 on the closing date
of September 3, 2021 as discounted from $86.6 million by 32% (or $27.7 million) to reflect the significant lock up period.
NOTE
10 – COMMITMENTS AND CONTINGENCIES
Legal
Proceedings
In
the ordinary course of business, we may be, or have been, involved in legal proceedings. During the three months ended
March 31, 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.
NOTE
11 – INCOME TAXES
For the periods ended March 31 2022, and
March 31, 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 months ended March 31, 2022 was $6,000, resulting
in an effective tax rate of 0.3%. Provision for income taxes for the three months ended March 31, 2021 was $143,003, resulting in an effective
tax rate of 2.8%. The provision for income taxes was primarily impacted by the change in valuation allowance on deferred tax assets.
NOTE
12 – ACQUISITION & NONCONTROLLING INTEREST IN SUBSIDIARY
On
March 22, 2021, we entered into a Securities Purchase Agreement to purchase the operating assets and intellectual property rights of
MPower Trading Systems, LLC, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members,
in exchange for 565,000,000
nonvoting Class B Units of Investview Financial
Group Holdings, LLC (“Units”). This acquisition closed on September 3, 2021 and we acquired an office lease, furniture and
fixtures, and Prodigio, a proprietary software-based trading platform with applications in the brokerage industry. The Units can be exchanged
at any time, within 5
years from the date of issuance, for 565,000,000
shares of our common stock on a one-for-one basis
and are subject to a lock up period through 2025. The fair value of the consideration at the if-converted market value of the
common shares was $58.9
million based on the closing market price of
$0.1532
on the closing date of September 3, 2021 as discounted
from $86.6
million by 32%
(or $27.7
million) to reflect the significant lock up period.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2022
(Unaudited)
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 except as noted below.