NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2020 AND 2019
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 The
Retirement Solution Inc. through a Share Purchase Agreement into Voxpath Holdings, Inc. and then changed our name to TheRetirementSolution.Com,
Inc. and in October 2008 changed our name to Global Investor Services, Inc., before changing our name to Investview, Inc., on
March 27, 2012.
On
March 31, 2017, we entered into a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company
(“Wealth Generators”), pursuant to which the Wealth Generators members agreed to contribute 100% of the outstanding
securities of Wealth Generators in exchange for an aggregate of 1,358,670,942 shares of our common stock. The closing of the Contribution
Agreement was effective April 1, 2017, and Wealth Generators became our wholly owned subsidiary and the former members of Wealth
Generators became our stockholders and control the majority of our outstanding common stock.
On
June 6, 2017, we entered into an Acquisition Agreement with Market Trend Strategies, LLC, a company whose members are also former
members of our management. Under the Acquisition Agreement, we spun-off our operations that existed prior to the merger with Wealth
Generators and sold the intangible assets used in those pre-merger operations in exchange for Market Trend Strategies’ assumption
of $419,139 in pre-merger liabilities.
On
February 28, 2018, we filed a name change for Wealth Generators, LLC to Kuvera, LLC (“Kuvera”). This did not affect
the company’s tax and federal identification.
On
May 7, 2018, we established WealthGen Global, LLC as a Utah limited liability company and our wholly owned subsidiary.
On
July 20, 2018, we entered into a Purchase Agreement with United Games Marketing LLC, a Utah limited liability company, to purchase
its wholly owned subsidiaries United Games, LLC and United League, LLC for 50,000,000 shares of our common stock (see Note 5).
On
November 12, 2018, we established Kuvera France, S.A.S. to handle sales of our financial education and research in the European
Union.
On
December 30, 2018, our wholly owned subsidiary S.A.F.E. Management, LLC received its registration and disclosure approval from
the National Futures Association. S.A.F.E. Management, LLC is now a New Jersey State Registered Investment Adviser, Commodities
Trading Advisor, Commodity Pool Operator, and approved for over the counter FOREX advisory services.
On
January 17, 2019, we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SAFETek, LLC, a Utah limited liability
company.
Effective
July 22, 2019 we renamed our non-operating wholly owned subsidiary Razor Data, LLC to Apex Tek, LLC, a Utah Limited Liability
Company.
Nature
of Business
We
own a number of companies that each operate independently, but are accretive to one another. We are establishing a portfolio of
wholly owned subsidiaries delivering leading-edge technologies, services, and research, dedicated primarily to the individual
consumer. Following is a description of each of our companies.
Kuvera,
LLC provides research, education, and investment tools designed to assist the self-directed investor in successfully navigating
the financial markets. These services include research, trade alerts, and live trading rooms that include instruction in equities,
options, FOREX, ETFs, binary options, crowdfunding and cryptocurrency sector education. In addition to trading tools and research,
we also offer full education and software applications to assist the individual in debt reduction, increased savings, budgeting,
and proper tax management. Each product subscription includes a core set of trading tools/research along with the personal finance
management suite to provide an individual with complete access to the information necessary to cultivate and manage his or her
financial situation. Different packages are available through a monthly subscription that can be cancelled at any time at the
discretion of the customer. A unique component of the product marketing plan is the distribution method whereby all subscriptions
are sold via current participating customers who choose to distribute and sell the services by participating in the bonus plan.
The bonus plan participation is purely optional but enables individuals to create an additional income stream to further support
their personal financial goals and objectives.
Kuvera
France S.A.S. is our entity in France that will distribute Kuvera products and services throughout the European Union.
S.A.F.E.
Management, LLC is a Registered Investment Adviser and Commodity Trading Adviser that has been established to deliver automated
trading strategies to individuals who find they lack the time to trade for themselves.
United
League, LLC owns a number of proprietary technologies including FIREFAN a social app for sports enthusiasts. Technologies
created to support any of the Investview companies are held under the United League structure.
United
Games, LLC is the distribution network for United League technologies. Since the acquisition of United Games in July of 2018,
we are working to combine the distributors of Kuvera and United Games. The operations of United Games and United League are currently
being assessed now that we have completed our integration of their software and personnel. These entities may be eliminated or
re-structured in the future as we are currently assessing the potential future for social gaming app known as FIREFAN.
SAFETek,
LLC (formerly WealthGen Global, LLC) is a new addition that we are currently establishing for expansion plans in the high-speed
processing and cloud computing environment.
Apex
Tek, LLC (formerly Razor Data, LLC) is the sales and distribution company for APEX packages and technology. It offers a unique
passive income model for those interested in earning through the purchase and leaseback of high-speed specialized data processing
equipment. This model has drawn considerable institutional interest.
Investment
Tools & Training, LLC currently has no operations or activities.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Accounting
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.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries, Kuvera, LLC, Investment
Tools & Training, LLC, Apex Tek, LLC (formerly Razor Data, LLC), S.A.F.E. Management, LLC, SAFETek, LLC (formerly WealthGen
Global, LLC), United Games, LLC, United League, LLC, and Kuvera France S.A.S. Through March 31, 2019 we had determined that one
affiliated entity, Kuvera LATAM S.A.S., which we previously conducted business with, was a variable interest entity and we were
the primary beneficiary of the entity’s activities, which are similar to those of Kuvera, LLC. As a result, through March
31, 2019 we had consolidated the accounts of this variable interest entity into the accompanying consolidated financial statements.
Further, because the Company did not have any ownership interest in this variable interest entity, the Company had allocated the
contributed capital in the variable interest entity as a component of noncontrolling interest. As of April 1, 2019 Kuvera LATAM
S.A.S. had no operations and ceased to exist, therefore, as of that date, no consolidation of the entity is necessary and we recorded
a gain on deconsolidation of $53,739 to eliminate the intercompany account with Kuvera LATAM S.A.S. All intercompany transactions
and balances have been eliminated in consolidation.
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 and have consolidated the accounts
of Kuvera LATAM S.A.S. through March 31, 2019. The operations of Kuvera France S.A.S. are conducted in France and its functional
currency is the Euro. The operations of Kuvera LATAM S.A.S. were conducted in Colombia and its functional currency is the Colombian
Peso.
The
financial statements of Kuvera France S.A.S. and Kuvera LATAM S.A.S. are prepared using their respective functional currency and
have been translated into U.S. dollars (“USD”). Assets and liabilities are translated into USD at the applicable exchange
rates at period-end. Stockholders’ equity is translated using historical exchange rates. Revenue and expenses are translated
at the average exchange rates for the period. Any translation adjustments are included as foreign currency translation adjustments
in accumulated other comprehensive income in our stockholders’ equity (deficit).
The
following rates were used to translate the accounts of Kuvera France S.A.S. and Kuvera LATAM S.A.S. into USD at the following
balance sheet dates.
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Euro to USD
|
|
|
1.10314
|
|
|
|
1.12200
|
|
Colombian Peso to USD
|
|
|
n/a
|
|
|
|
0.00031
|
|
The
following rates were used to translate the accounts of Kuvera France S.A.S. and Kuvera LATAM S.A.S. into USD for the following
operating periods:
|
|
Year
ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Euro
to USD
|
|
|
1.11122
|
|
|
|
1.13580
|
|
Colombian
Peso to USD
|
|
|
n/a
|
|
|
|
0.00033
|
|
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, 2020 and 2019, cash balances that exceeded FDIC limits were $0, and we have not experienced
significant losses relating to these concentrations in the past.
Cash
and Cash Equivalents
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, 2020 and 2019, we had no cash equivalents.
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 no allowance for doubtful accounts as of March 31, 2020 and 2019.
Cryptocurrencies
We
hold cryptocurrency-denominated assets (“cryptocurrencies”) and include them in our consolidated balance sheet as
other current assets. We record cryptocurrencies at fair market value and recognize the change in the fair value of our cryptocurrencies
as an unrealized gain or loss in the consolidated statement of operations. As of March 31, 2020 and March 31, 2019, the fair value
of our cryptocurrencies was $101,610 and $142,061, respectively. During the year ended March 31, 2020, we recorded $(815) and
$113,369 as realized and unrealized gain (loss) on cryptocurrency, respectively. During the year ended March 31, 2019, we recorded
$16,241 and $106,488 as realized and unrealized gain (loss) on cryptocurrency, respectively.
Fixed
Assets
Fixed
assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise
disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net
difference less any amount realized from disposition, is reflected in earnings. Expenditures for maintenance and repairs which
do not extend the useful lives of the related assets are expensed as incurred.
As
of March 31, 2020 and 2019 fixed assets were made up of the following:
|
|
Estimated
|
|
|
|
|
|
|
|
|
Useful
|
|
|
|
|
|
|
|
|
Life
|
|
March 31,
|
|
|
March 31,
|
|
|
|
(years)
|
|
2020
|
|
|
2019
|
|
Furniture, fixtures, and equipment
|
|
10
|
|
$
|
12,792
|
|
|
$
|
11,372
|
|
Computer equipment
|
|
3
|
|
|
19,533
|
|
|
|
14,661
|
|
Data processing equipment
|
|
3
|
|
|
3,213,815
|
|
|
|
-
|
|
|
|
|
|
|
3,246,140
|
|
|
|
26,033
|
|
Accumulated amortization
|
|
|
|
|
(248,529
|
)
|
|
|
(12,505
|
)
|
Net book value
|
|
|
|
$
|
2,997,611
|
|
|
$
|
13,528
|
|
Total
depreciation expense for the years ended March 31, 2020 and 2019, was $490,642 and $5,332, respectively.
Long-Lived
Assets – Intangible Assets & License Agreement
We
account for our 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. Further, ASC Subtopic 350-30 requires an intangible asset to be amortized
over its useful life and for the useful life to be evaluated every reporting period to determine whether events or circumstances
warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount
of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining,
or restoring intangible assets are recognized as an expense when incurred.
In
June of 2017 we issued 80,000,000 shares of common stock with a value of $2,256,000 for a 15-year license agreement. Annual amortization
over the 15-year life is expected to be approximately $150,400 per year. Amortization recognized for the year ended March 31,
2020 and 2019, was $150,812 and $150,400, respectively, and the long-term license agreement was recorded at a net value of $0
and $1,983,220 as of March 31, 2020 and 2019, respectively.
In
June of 2018 we purchased United Games, LLC and United League, LLC and recorded the transaction as a business combination (see
Note 5). Intangible assets acquired in the business combination were recorded at fair value on the date of acquisition and are
being amortized on a straight-line method over their estimated useful lives. As of March 31, 2020 and 2019 intangible assets were
made up of the following:
|
|
Estimated
|
|
|
|
|
|
|
|
|
Useful
|
|
|
|
|
|
|
|
|
Life
|
|
March 31,
|
|
|
March 31,
|
|
|
|
(years)
|
|
2020
|
|
|
2019
|
|
FireFan mobile application
|
|
4
|
|
$
|
331,000
|
|
|
$
|
331,000
|
|
Back office software
|
|
10
|
|
|
408,000
|
|
|
|
408,000
|
|
Tradename/trademark - FireFan
|
|
5
|
|
|
248,000
|
|
|
|
248,000
|
|
Tradename/trademark - United Games
|
|
0.45
|
|
|
4,000
|
|
|
|
4,000
|
|
Customer contracts/relationships
|
|
5
|
|
|
-
|
|
|
|
825,000
|
|
|
|
|
|
|
991,000
|
|
|
|
1,816,000
|
|
Accumulated amortization
|
|
|
|
|
(298,118
|
)
|
|
|
(239,315
|
)
|
Net book value
|
|
|
|
$
|
692,882
|
|
|
$
|
1,576,685
|
|
Amortization
expense is expected to be as follows:
Fiscal year ending March 31, 2021
|
|
$
|
173,150
|
|
Fiscal year ending March 31, 2022
|
|
|
173,150
|
|
Fiscal year ending March 31, 2023
|
|
|
115,338
|
|
Fiscal year ending March 31, 2024
|
|
|
55,748
|
|
Fiscal year ending March 31, 2025 and beyond
|
|
|
175,496
|
|
|
|
$
|
692,882
|
|
Impairment
of Long-Lived Assets
We
have adopted ASC Subtopic 360-10, Property, Plant and Equipment. ASC 360-10 requires that long-lived assets and certain identifiable
intangibles held and used by us 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.
Effective
March 31, 2020 we fully impaired data processing equipment that had a cost basis of $2,025,500 and we fully impaired our long-term
license agreement that had a cost basis of $2,256,000 because we deemed the assets carrying amount was not recoverable as of that
date. As a result, impairment expense of $1,770,881 and $1,832,408 for the equipment and the license agreement, respectively,
was recorded for the year ended March 31, 2020. During the year ended March 31, 2020 we impaired the value of the customer contracts/relationships
originally acquired in our purchase of United Games, LLC and United League, LLC, therefore recognizing impairment expense of $627,452.
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, based on our principal or, in the absence of a principal, most advantageous
market for the specific asset or liability.
U.S.
generally accepted accounting principles provide for a three-level hierarchy of inputs to valuation techniques used to measure
fair value, defined as follows:
|
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, and accounts payable. We have determined that the book value of our
outstanding financial instruments as of March 31, 2020 and March 31, 2019, approximates the fair value due to their short-term
nature.
Items
recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the
following items as of March 31, 2020:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Cryptocurrencies
|
|
$
|
101,610
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
101,610
|
|
Total Assets
|
|
$
|
101,610
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
101,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
793,495
|
|
|
$
|
793,495
|
|
Total Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
793,495
|
|
|
$
|
793,495
|
|
Items
recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the
following items as of March 31, 2019:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Cryptocurrencies
|
|
$
|
142,061
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
142,061
|
|
Total Assets
|
|
$
|
142,061
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
142,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,358,901
|
|
|
$
|
1,358,901
|
|
Total Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,358,901
|
|
|
$
|
1,358,901
|
|
Sale
and Leaseback
Through
our wholly-owned subsidiary, APEX Tex, LLC, we sell high powered data processing equipment (“APEX”) to our customers
and they lease the equipment back to SAFETek, LLC, another of our wholly-owned subsidiaries. We account for these transactions
under ASC 842-40 where the leaseback has been deemed a sales-type lease due to the lease term generally covering the entire economic
life of the equipment and our likelihood to purchase the asset at the end of the lease term. In accordance with ASC 842-40 we
have recorded the data processing equipment as a fixed asset on our balance sheet and we have accounted for the amounts received
for the equipment as a financial liability, in other liabilities on our balance sheet. Further, we will recognize interest on
the financial liability over the term of the lease to ensure the financial liability equates to the total amounts to be paid over
the life of the lease. During the year ended March 31, 2020 we recorded deferred interest of $40,792,735 as a contra-liability,
of which $2,257,399 was recognized into interest, resulting in $38,535,336 expected to be recognized into interest as follows:
Fiscal year ending March 31, 2021
|
|
$
|
8,081,463
|
|
Fiscal year ending March 31, 2022
|
|
|
8,158,547
|
|
Fiscal year ending March 31, 2023
|
|
|
8,158,547
|
|
Fiscal year ending March 31, 2024
|
|
|
8,158,547
|
|
Fiscal year ending March 31, 2025 and beyond
|
|
|
5,978,232
|
|
|
|
$
|
38,535,336
|
|
During
the year ended March 31, 2020 we had the following activity related to our sale and leaseback transactions:
Proceeds from sales of APEX
|
|
$
|
16,143,265
|
|
Debt extinguished with the issuance of APEX
|
|
|
100,000
|
|
Interest recognized on financial liability
|
|
|
2,257,399
|
|
Payments made for leased equipment
|
|
|
(3,208,000
|
)
|
Total financial liability
|
|
|
15,292,664
|
|
Other current liabilities [1]
|
|
|
(11,407,200
|
)
|
Other long-term liabilities, net of deferred interest
|
|
$
|
3,885,464
|
|
[1]
Represents lease payments to be made in the next 12 months
As
of March 31, 2020 we have received proceeds of $392,310 in additional deposits for APEX sales, which has been recorded in the
customer advance amount shown on our balance sheet.
Revenue
Recognition
Subscription
Revenue
The
majority of our revenue is generated by subscription sales and payment is received at the time of purchase. We recognize subscription
revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer
and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide
services over a fixed subscription period, therefore we recognize revenue ratably over the subscription period and deferred revenue
is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a 10-day trial
period to first time subscription customers, during which a full refund can be requested if a customer does not like the product.
Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented
net of refunds, sales incentives, credits, and known and estimated credit card chargebacks.
Equipment
Sales
We
generate revenue from the sale of high-speed computer processing equipment that is used for any of the following intense processing
activities: protein folding, CGI rendering, Game Streaming, Machine & Deep Learning, Mining, Independent Financial Verification,
and general high-speed computing. We recognize equipment sales revenue in accordance with ASC 606-10 where revenue is measured
based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified
in each contract. Our performance obligation is to deliver an equipment package to our customers which includes hardware, software,
and firmware and is drop-shipped to a hosting data center. We receive payment at the time of purchase and recognize revenue when
the equipment package is delivered and ready for maintenance and hosting, which our customers arrange for, and obtain, from a
separate third party that provides such services.
Cryptocurrency
Mining Service Revenue
In
the past we generated revenue from the sale of cryptocurrency mining services to our customers through an arrangement with a third-party
supplier. We recognized cryptocurrency mining service revenue in accordance with ASC 606-10 where revenue is measured based on
a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in
each contract. Our performance obligation was to arrange for the third-party to provide mining services to our customers and payment
is received at the time of purchase, therefore revenue was recognized upon receipt of payment. We recognized revenue in the amount
of the fee to which we are entitled to as an agent, or the amount of consideration that we retained after paying the third-party
the consideration received in exchange for the services the third-party was to provide.
Mining
Revenue
Through
our wholly owned subsidiary, SAFETek, LLC, we lease equipment under a sales-type lease and use the equipment on blockchain networks
to validate and add blocks of transactions to blockchain ledgers (commonly referred to as “mining”). As compensation
for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted to us.
Our mining activities constitute our ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor
do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately
granted to us as a result of our mining activities.
Fee
Revenue
We
generate fee revenue from our customers 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 year ended March 31, 2020, was as follows:
|
|
Subscription Revenue
|
|
|
Equipment
Sales
|
|
|
Cryptocurrency Mining Service Revenue
|
|
|
Mining Revenue
|
|
|
Fee Revenue
|
|
|
Total
|
|
Gross billings/receipts
|
|
$
|
24,471,532
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,745,138
|
|
|
$
|
13,279
|
|
|
$
|
26,229,949
|
|
Refunds, incentives, credits, and chargebacks
|
|
|
(2,046,359
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,046,359
|
)
|
Amounts paid to supplier
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net revenue
|
|
$
|
22,425,173
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,745,138
|
|
|
$
|
13,279
|
|
|
$
|
24,183,590
|
|
Foreign
revenues for the year ended March 31, 2020 were $21,191,788 while domestic revenue for the year ended March 31, 2020 was $2,991,802.
Revenue
generated for the year ended March 31, 2019 was as follows:
|
|
Subscription Revenue
|
|
|
Equipment
Sales
|
|
|
Cryptocurrency Mining Service Revenue
|
|
|
Mining Revenue
|
|
|
Fee Revenue
|
|
|
Total
|
|
Gross billings/receipts
|
|
$
|
28,518,660
|
|
|
$
|
698,954
|
|
|
$
|
5,775,269
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
34,992,883
|
|
Refunds, incentives, credits, and chargebacks
|
|
|
(1,495,458
|
)
|
|
|
(4,000
|
)
|
|
|
(6,501
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,505,959
|
)
|
Amounts paid to supplier
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,827,843
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,827,843
|
)
|
Net revenue
|
|
$
|
27,023,202
|
|
|
$
|
694,954
|
|
|
$
|
1,940,925
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
29,659,081
|
|
Foreign
revenues for the year ended March 31, 2019 were approximately $27.3 million while domestic revenue for the year ended March 31,
2019 was approximately $2.3 million.
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 years ended March 31,
2020 and 2019, totaled $1,696,133 and $878,936, respectively.
Income
Taxes
We
have adopted ASC Subtopic 740-10, 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 using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences
between taxable income reported for financial reporting purposes and income tax purposes consist primarily of derivative liability
and stock compensation accounting versus basis differences.
Net
Income (Loss) per Share
We
follow ASC Subtopic 260-10, Earnings per Share, which specifies the computation, presentation, and disclosure requirements of
earnings per share information. Basic loss per share has been calculated based upon the weighted average number of common shares
outstanding. Convertible debt, stock options, and warrants have been excluded as common stock equivalents in the diluted loss
per share because their effect is anti-dilutive on the computation.
Potentially
dilutive securities excluded from the computation of basic and diluted net loss per share are as follows:
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Options to purchase common stock
|
|
|
-
|
|
|
|
35,000
|
|
Warrants to purchase common stock
|
|
|
-
|
|
|
|
5,052,497
|
|
Notes convertible into common stock
|
|
|
45,743,298
|
|
|
|
52,162,055
|
|
Total
|
|
|
45,743,298
|
|
|
|
57,249,552
|
|
Lease
Obligation
We
determine if an arrangement is a lease at inception. Operating leases are included in the operating lease right-of-use asset account,
the operating lease liability, current account, and the operating lease liability, long term account in our balance sheet. Right-of-use
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make
lease payments arising from the lease.
Operating
lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over
the lease term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing
rate based on the information available at commencement date in determining the present value of lease payments. We have elected
to not apply the recognition requirements of ASC 842 to short-term leases (leases with terms of twelve months or less). Lease
terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease
expense for operating lease arrangements is recognized on a straight-line basis over the lease term. We have elected the practical
expedient and will not separate non-lease components from lease components and will instead account for each separate lease component
and non-lease component associated with the lease components as a single lease component.
NOTE
3 – RECENT ACCOUNTING PRONOUNCEMENTS
There
are no recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material
impact on our financial statements.
NOTE
4 – GOING CONCERN AND LIQUIDITY
Our
financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates
the realization of assets and liquidation of liabilities in the normal course of business. We have incurred significant recurring
losses, which have resulted in an accumulated deficit of $46,382,174 as of March 31, 2020, along with a net loss of $21,285,191
for the year ended March 31, 2020. Additionally, as of March 31, 2020, we had a working capital deficit of $14,123,625. These
factors raise substantial doubt about our ability to continue as a going concern.
During
the year ended March 31, 2020, we raised $4,484,979 in cash proceeds from related parties, $2,527,452 in cash proceeds from new
lending arrangements, and $825,000 from the sale of common stock. Subsequent to March 31, 2020, we obtained $10,049,435 in cash
proceeds from new lending arrangements (see Note 13). Additionally, subject to a Securities Purchase agreement entered into in
April 2020 we have a commitment from an investor to purchase a $9 million promissory note on or before October 31, 2020, subject
to certain conditions.
On
January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International
Concern” and on March 11, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread
of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of
public places and businesses. The coronavirus and actions taken to mitigate the spread of it have had and are expected to continue
to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the
Company operates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted to amongst
other provisions, provide emergency assistance for individuals, families and businesses affected by the coronavirus pandemic.
It is unknown how long the adverse conditions associated with the coronavirus will last and what the complete financial effect
will be to the company. To date, the Company is experiencing challenges in multiple areas of the organization and the full economic
impact is yet to be established.
During
the year ended March 31, 2020 we made significant strides and wide sweeping changes. While we believe they will be beneficial
to our bottom line, there is no assurance of this. Some of the concerns we face going forward will continue, including but not
limited to:
|
●
|
Supply
chain issues for Apex Tek, LLC and the sourcing of miners due to the worldwide COVID pandemic and manufacturing slow downs
|
|
|
|
|
●
|
SAFETek,
LLC operations not scaling according to projections with decreased output due to mining difficulty and operational cost
|
|
|
|
|
●
|
Regulatory
reform that could adversely impact the use and demand of digital currencies
|
|
|
|
|
●
|
The
recent Bitcoin (BTC) halving event that further reduced mining output in addition to the supply chain issues
|
Apex
Tek, LLC and SAFETek, LLC carry additional risk and generated recent losses, however, they also provide Investview a stake in
4IR, HPC, app development, fintech, blockchain and personal money management sectors. Each of these are areas that are targeted
for significant growth spurred by innovations through technology which solidify our position in the fintech space.
While
our liabilities are larger than our assets it is important to note that we seek to further reduce our operating expense. The assets
we have acquired and will continue to seek out are those of technology, mobile apps, and human resources. These assets are not
easily defined on our balance sheet but represent our ability to carry out our objectives which we believe will ultimately lead
to positive cash flow, reduced debt and then profitability.
Accordingly,
the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities
in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not
necessarily purport to represent realizable or settlement values. The financial statements do not include any adjustment that
might result from the outcome of this uncertainty.
NOTE
5 – ACQUISITIONS
Acquisition
of United Games, LLC and United League, LLC
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. United Games,
LLC and United League, LLC provide distributor marketing back-office and commission tools and online sports gaming experience
for users of their applications distributed through their networks of affiliates therefore we expect significant synergies to
exist as a result of combining operations.
The
transaction was accounted for as a business combination using the acquisition method of accounting in accordance with the FASB
(ASC Topic 805). The following table summarizes the purchase accounting for the fair value of the assets acquired and liabilities
assumed at the date of the acquisition and the gain on bargain purchase which resulted from the fair value of the intangible assets
acquired exceeding the fair value of our common stock given as consideration:
Cash
|
|
$
|
3,740
|
|
Receivables
|
|
|
361,345
|
|
Intangible assets (see Note 2)
|
|
|
1,816,000
|
|
Total assets acquired
|
|
|
2,181,085
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
409,803
|
|
Total liabilities assumed
|
|
|
409,803
|
|
|
|
|
|
|
Net assets acquired
|
|
|
1,771,282
|
|
|
|
|
|
|
Consideration [1]
|
|
|
800,000
|
|
|
|
|
|
|
Gain on bargain purchase
|
|
$
|
971,282
|
|
|
[1]
|
The
50,000,000 shares of our common stock transferred as consideration in accordance with the Purchase Agreement was valued on
July 20, 2018, the date of acquisition, based on the weighted equity fair value of $0.016 per share as determined by a third-party
valuation firm.
|
United
Games, LLC and United League, LLC recorded combined revenue of $1,331,542 and a combined net income of $26,059 since the July
20, 2018 acquisition date, which were included in our consolidated statement of operations for the year ended March 31, 2019.
The
table below represents the pro forma revenue and net income (loss) for the years ended March 31, 2020 and 2019, assuming the acquisition
had occurred on April 1, 2017, pursuant to ASC Subtopic 805-10-50. This pro forma information does not purport to represent what
the actual results of our operations would have been had the acquisition occurred on this date nor does it purport to predict
the results of operations for future periods:
|
|
Year Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Revenues
|
|
$
|
24,225,208
|
|
|
$
|
27,961,351
|
|
Net (loss)
|
|
$
|
(19,429,574
|
)
|
|
$
|
(5,288,735
|
)
|
Loss per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
NOTE
6 – RELATED PARTY TRANSACTIONS
Our
related party payables consisted of the following:
|
|
Year Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Short-term advances [1]
|
|
$
|
1,526,427
|
|
|
$
|
440,489
|
|
Short-term promissory note entered into on 8/17/18 [2]
|
|
|
-
|
|
|
|
105,000
|
|
Promissory note entered into on 1/30/20 [3]
|
|
|
1,033,333
|
|
|
|
-
|
|
Accounts payable – related party [4]
|
|
|
55,000
|
|
|
|
-
|
|
|
|
$
|
2,114,760
|
|
|
$
|
545,489
|
|
[1]
|
We
periodically receive advances for operating funds from our current majority shareholders, officers, directors and other related
parties, including entities that are owned, controlled, or influenced by our owners or management. These advances are due
on demand, generally have no set interest rates associated with them, and are unsecured. During the year ended March 31, 2020,
we received $2,484,979 in cash proceeds from advances, incurred $769,999 in interest, and repaid related parties a total of
$1,292,160. Also during the year ended March 31, 2020 we settled $1,880 of amounts that were recorded as due prior to March
31, 2018, settled $100,000 by issuing APEX units, and settled $500,000 with the issuance of common stock.
|
[2]
|
A
member of the senior management team advanced funds of $100,000 on August 17, 2018, under a short-term promissory note due
to be repaid on August 31, 2018. On August 31, 2018 the note was amended to be due on demand or, in absence of a demand, due
on August 31, 2019. The note had a fixed interest payment of $5,000, which was recorded as interest expense in the statement
of operations during the year ended March 31, 2019. During the year ended March 31, 2020 we made repayments of $105,000 on
the note.
|
|
|
[3]
|
We
entered into a $1,000,000 promissory note with Joeseph Cammarata, our Chief Executive Officer, on January 30, 2020. The term
of the note is one year, at which time the principal and interest of 20%, or $200,000 will be due. During the year ended March
31, 2020 we recognized $33,333 of interest expense on the note.
|
|
|
[4]
|
During
the year ended March 31, 2020 we entered into an employment agreement with Jayme McWidener as our Chief Financial Officer.
At the date we entered into the employment agreement we owed her firm, Mac Accounting Group, LLP, $75,000, which was reclassified
as a related party accounts payable balance on our balance sheet. We made repayments on the liability of $20,000 since the
date we entered into the employment agreement.
|
In
addition to the above related party debt transactions that were outstanding as of March 31, 2020 and 2019 we entered into a $3,600,000
convertible promissory note with a member of the senior management team on July 23, 2019. We received proceeds of $1,000,000 from
the note, including $900,000 in cash and $100,000 which offset amounts owing to the lender. In accordance with the terms of the
note we were required to repay a monthly minimum payment of $50,000 beginning January of 2020 through June of 2020 and a monthly
minimum payment of $100,000 beginning July of 2020 until the total principal amount has been repaid. The lender had the right
to convert up to $2,600,000 of the outstanding and unpaid principal amount into shares of our common stock at a conversion price
of $0.005 per share, subject to adjustment. At inception we recorded a beneficial conversion feature of $1,000,000 as a debt discount
(see Note 10) and we recorded $2,600,000 as a debt discount, representing the difference between the face value of the note and
the proceeds received. Effective March 31, 2020 we entered into a settlement agreement to issue 200,000,000 shares of our common
stock (see Note 10) to repay the $3,600,000 convertible promissory note and $500,000 worth of short-term advances (see [1] above),
for a total of $4,100,000 worth of related party debt settled. In conjunction with the settlement the full debt discount of $3,600,000
was recognized into interest expense during the year ended March 31, 2020.
In
addition to the above-mentioned related-party lending arrangements, during the year ended March 31, 2020 we sold 57 APEX units
to related parties for proceeds of $122,720, $100,000 of which was offset against short term advances (see [1] above). We made
233 lease payments to these related parties during the year ended March 31, 2020, equating to $116,500. During the year ended
March 31, 2019, we sold $41,500 worth of high-speed computer processing equipment to our then chief executive officer. This revenue
was included in the equipment sales reported on our statement of operations.
NOTE
7 – DEBT
Our
debt consisted of the following:
|
|
Year Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Short-term advance received on 8/31/18 [1]
|
|
$
|
65,000
|
|
|
$
|
75,000
|
|
|
|
|
|
|
|
|
|
|
Secured merchant agreement for future receivables entered into on 2/14/19 [2]
|
|
|
-
|
|
|
|
641,687
|
|
Secured merchant agreement for future receivables entered into on 2/14/19 [3]
|
|
|
-
|
|
|
|
468,790
|
|
Secured merchant agreements for future receivables entered into on 2/14/19 [4]
|
|
|
-
|
|
|
|
597,060
|
|
Promissory note entered into on 1/16/19 [5]
|
|
|
-
|
|
|
|
60,000
|
|
Secured merchant agreements for future receivables entered into on 3/28/19 [6]
|
|
|
-
|
|
|
|
25,650
|
|
Convertible promissory note entered into on 1/11/19 [7]
|
|
|
-
|
|
|
|
26,600
|
|
Convertible promissory note entered into on 2/6/19 [8]
|
|
|
-
|
|
|
|
76,686
|
|
Convertible promissory note entered into on 3/14/19 [9]
|
|
|
-
|
|
|
|
5,557
|
|
Secured merchant agreement for future receivables entered into on 8/16/19 and refinanced on 12/10/19 [10]
|
|
|
1,223,615
|
|
|
|
-
|
|
Secured merchant agreement for future receivables entered into on 8/16/19 [11]
|
|
|
260,090
|
|
|
|
-
|
|
Convertible promissory note entered into on 3/5/20 [12]
|
|
|
13,072
|
|
|
|
-
|
|
Convertible promissory note entered into on 3/11/20 [13]
|
|
|
7,549
|
|
|
|
-
|
|
|
|
$
|
1,569,326
|
|
|
$
|
1,977,030
|
|
[1]
|
In
August 2018, we received a $75,000 short-term advance. The advance is due on demand, has no interest rate, and is unsecured.
During the year ended March 31, 2020 we made repayments of $10,000.
|
|
|
[2]
|
During
September 2018, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. On September 28, 2018, we received proceeds from this arrangement of $570,000. In accordance with the
terms of the agreement, we were required to repay $839,400 by making ACH payments in the amount of 10% of our daily cash receipts.
Accordingly, we recorded $269,400 as a debt discount at the inception of the agreement, which was the difference between the
funds received and the amount that was to be repaid. In February 2019 we replaced this agreement with a new Secured Merchant
Agreement (see below), therefore transferring $233,501 of amounts owed to a new agreement. However, prior to the terminating
the September agreement, we made payments of $605,899 and amortized $269,400 into interest expense.
|
During
January 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to
working capital. On January 11, 2019, we received proceeds from this arrangement of $349,851. In accordance with the terms of
the agreement, we were required to repay $489,650 by making daily ACH payments of $1,000 for the first 30 days following the date
of the agreement and daily ACH payments of $2,999 thereafter. Accordingly, we recorded $139,799 as a debt discount at the inception
of the agreement, which was the difference between the funds received and the amount that was to be repaid. In February 2019 we
replaced this agreement with a new Secured Merchant Agreement (see below), therefore transferring $449,657 of amounts owed to
a new agreement. However, prior to the terminating the January agreement, we made payments of $39,993 and amortized $139,799 into
interest expense.
During
February 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to
working capital. On February 15, 2019, we received proceeds from this arrangement of $73,801 after paying off $233,501 from a
September 2018 agreement (see above) and $449,657 from a January 2019 agreement (see above). In accordance with the terms of the
agreement, we were required to repay $909,350 by making daily ACH payments of $5,049. Accordingly, we recorded $152,391 as a debt
discount at the inception of the agreement, which was the difference between the funds received plus the earlier debt paid off,
and the amount that was to be repaid. During the year ended March 31, 2019, we repaid $141,372 and amortized $26,100 into interest
expense.
Effective
August 16, 2019 this debt was refinanced and the outstanding balance of $316,093 was rolled into a new debt arrangement, see notation
[10] below. During the year ended March 31, 2020, prior to the refinance, we repaid $451,886 and amortized $126,291 into interest
expense.
[3]
|
During
December 2018, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. On December 17, 2018, we received proceeds from this arrangement of $380,000. In accordance with the terms
of the agreement, we were required to repay $559,600 by making daily ACH payments of $3,000. Accordingly, we recorded $179,600
as a debt discount at the inception of the agreement, which was the difference between the funds received and the amount that
was to be repaid. In February 2019 we replaced this agreement with a new Secured Merchant Agreement (see below), therefore
transferring $421,600 of amounts owed to a new agreement. However, prior to the terminating the December agreement, we made
payments of $138,000 and amortized $179,600 into interest expense.
|
During
February 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to
working capital. On February 15, 2019, we received proceeds from this arrangement of $126,932 after paying off $421,600 from a
December 2018 agreement (see above). In accordance with the terms of the agreement, we are required to repay $840,000 by making
daily ACH payments of $4,649. Accordingly, we recorded $291,468 as a debt discount at the inception of the agreement, which was
the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. During the year
ended March 31, 2019, we repaid $129,388 and amortized $49,646 into interest expense.
Effective
August 16, 2019 this debt was refinanced and the outstanding balance of $297,033 was rolled into a new debt arrangement, see notation
[10] below. During the year ended March 31, 2020, prior to the refinance, we repaid $413,580 and amortized $241,822 into interest
expense.
[4]
|
During
October 2018, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. During October 2018, we received proceeds from this arrangement of $77,260. In accordance with the terms
of the agreement, we were required to repay $699,500 by making daily ACH payments of $4,372. Accordingly, we recorded $224,500
as a debt discount at the inception of the agreement, which was the difference between the funds received and the amount that
was to be repaid. In February 2019 we replaced this agreement with a new Secured Merchant Agreement (see below), therefore
transferring $327,880 of amounts owed to a new agreement. However, prior to the terminating the October agreement, we made
payments of $371,620 and amortized $224,500 into interest expense.
|
During
February 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access to
working capital. On February 15, 2019, we received proceeds from this arrangement of $126,932 after paying off $327,880 from an
October 2018 agreement (see above). In accordance with the terms of the agreement, we were required to repay $629,550 by making
daily ACH payments of $3,498. Accordingly, we recorded $224,410 as a debt discount at the inception of the agreement, which was
the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. Also during February
2019, we entered into a second Secured Merchant Agreement with this same entity, receiving proceeds of $288,000. In accordance
with the terms of the agreement, we were required to repay $419,700 by making daily ACH payments of $2,332. Accordingly, we recorded
$131,700 as a debt discount at the inception of the agreement, which was the difference between the funds received and the amount
that was to be repaid. During the year ended March 31, 2019, we repaid $157,410 on these two agreements and amortized $61,330
into interest expense.
Effective
August 16, 2019 this debt was refinanced and the outstanding balance of $382,000 was rolled into a new debt arrangement, see notation
[11] below. During the year ended March 31, 2020, prior to the refinance, we repaid $509,840 and amortized $294,780 into interest
expense.
[5]
|
In
January 2019, we received funds of $631,617 and repaid $511,617 in a series of transactions representing short-term advances.
On January 16, 2019, we entered into a short-term promissory note for the resulting $120,000 owed as a result of the transactions.
The note had a zero percent interest rate and was due within the shorter of three months or the receipt of cash from a $1
million financing arrangement. During the year ended March 31, 2020, we repaid $60,000 of the amount due under the note.
|
|
|
[6]
|
During
March 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. On March 29, 2019, we received proceeds from this arrangement of $28,500. In accordance with the terms
of the agreement, we were required to repay $45,000 by making daily ACH payments of $4,500. Accordingly, we recorded $16,500
as a debt discount at the inception of the agreement, which was the difference between the funds received and the amount that
was to be repaid. During the year ended March 31, 2019, we repaid $4,500 and amortized $1,650 into interest expense. During
the year ended March 31, 2020, we repaid $40,500 and amortized $14,850 into interest expense.
|
|
|
[7]
|
In
January 2019, we entered into a Convertible Promissory Note and received proceeds of $135,000 after incurring loan fees of
$3,000. The note incurs interest at 12% per annum and has a maturity date of April 11, 2020. The Convertible Promissory Note
has a variable conversion rate that is 65% of the lowest closing price during the previous 15-trading-day period, subject
to adjustment. Therefore, the conversion feature is accounted for as a derivative instrument (see Note 8). At inception, we
recorded a debt discount of $138,000 and captured loan fees, recorded as interest expense, of $450,005. During the year ended
March 31, 2019, we recorded amortization of the debt discount of $23,152 into interest expense and recorded additional interest
expense on the note of $3,448. During the year ended March 31, 2020, we amortized $114,848 into interest expense, recorded
additional interest expense on the note of $40,977 (inclusive of a prepayment penalty), and paid off the note, accrued interest,
and prepayment penalties for $182,425.
|
[8]
|
In
February 2019, we entered into a Convertible Promissory Note and received proceeds of $240,000. The note was issued with a
$30,000 original issue discount and loan fees of $3,000, incurred interest at 12% per annum, and had a maturity date of August
6, 2019. In accordance with the terms of the note, we issued 22,500,000 shares of common stock (the “Returnable Shares”)
to the note holder as a commitment fee (see Note 10), provided, however, the Returnable Shares must be returned to us if the
note is fully repaid and satisfied prior to the date which is 180 days following the issue date. The Convertible Promissory
Note had a variable conversion rate that was 65% of the lowest trading price during the previous 20-trading-day period, subject
to adjustment. Therefore, the conversion feature was accounted for as a derivative instrument (see Note 8). We allocated the
proceeds of the note to the common stock issued and to the fair value of the note, taking into consideration the fair value
of the conversion feature. As a result, the common stock was valued at $69,871, we recorded a debt discount of $270,000, and
captured loan fees, recorded as interest expense, of $120,128. During the year ended March 31, 2019, we recorded amortization
of the debt discount of $72,514 into interest expense and recorded additional interest expense on the note of $4,172. During
the year ended March 31, 2020, we amortized $197,486 into interest expense, recorded additional interest expense on the note
of $11,136, and paid off the note and accrued interest for $285,308. In accordance with the terms of the agreement the 22,500,000
Returnable Shares were returned and cancelled (see Note 10).
|
|
|
[9]
|
In
March 2019, we entered into a Convertible Promissory Note and received proceeds of $135,000 after incurring loan fees of $3,000.
The note incurred interest at 12% per annum and had a maturity date of June 14, 2020. The Convertible Promissory Note had
a variable conversion rate that was 65% of the average of the two lowest closing prices during the previous 15-trading-day
period, subject to adjustment. Therefore, the conversion feature was accounted for as a derivative instrument (see Note 8).
At inception, we recorded a debt discount of $138,000 and captured loan fees, recorded as interest expense, of $64,492. During
the year ended March 31, 2019, we recorded amortization of the debt discount of $4,831 into interest expense and recorded
additional interest expense on the note of $726. During the year ended March 31, 2020, we amortized $133,168 into interest
expense, recorded additional interest expense on the note of $43,983 (inclusive of a prepayment penalty), and paid off the
note, accrued interest, and prepayment penalties for $182,708.
|
|
|
[10]
|
During
August 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. On August 15, 2019, we received proceeds from this arrangement of $339,270 after paying off $316,093 from
a February 2018 agreement (see notation [2] above) and $297,033 from a second February 2019 agreement (see notation [3] above).
In accordance with the terms of the agreement, we were required to repay $1,399,000 by making daily ACH payments of $6,823.
Accordingly, we recorded $446,604 as a debt discount at the inception of the agreement, which was the difference between the
funds received plus the earlier debt paid off, and the amount that was to be repaid.
|
Effective
December 10, 2019 this debt was refinanced and the outstanding balance of $839,514 was rolled into a new Secured Merchant Agreement
for future receivables. During the year ended March 31, 2020, prior to the refinance, we repaid $559,486 and amortized $446,605
into interest expense related to the August 2019 arrangement. As a result of the refinancing arrangement we received proceeds
of $854,801. In accordance with the terms of the agreement, we were required to repay $2,448,250 by making daily ACH payments
of $10,999. Accordingly, we recorded $753,935 as a debt discount at the inception of the agreement, which was the difference between
the funds received plus the earlier debt paid off, and the amount that was to be repaid. During the year ended March 31, 2020,
after the refinance, we repaid $747,932 and amortized $277,232 into interest expense related to the new December 2019 arrangement.
[11]
|
During
August 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. In August 2019, we received proceeds from this arrangement of $418,381 after paying off $382,000 from
an October 2018 agreement (see notation [4] above). In accordance with the terms of the agreement, we were required to repay
$1,189,150 by making daily ACH payments of $5,801. Accordingly, we recorded $388,769 as a debt discount at the inception of
the agreement, which was the difference between the funds received plus the earlier debt paid off, and the amount that was
to be repaid. During the year ended March 31, 2020, we repaid $853,203 and amortized $312,912 into interest expense.
|
|
|
[12]
|
In
March 2020, we entered into a Convertible Promissory Note and received proceeds of $200,000 after incurring loan fees of $3,000.
The note incurs interest at 10% per annum and has a maturity date of June 2, 2021. The Convertible Promissory Note has a variable
conversion rate that is 65% of the average of the two lowest trading prices during the previous 15-trading-day period, subject
to adjustment. Therefore, the conversion feature is accounted for as a derivative instrument (see Note 8). At inception, we
recorded a debt discount of $203,000 and captured loan fees, recorded as interest expense, of $116,077. During the year ended
March 31, 2020, we amortized $11,626 into interest expense, and recorded additional interest expense on the note of $1,446.
|
[13]
|
In
March 2020, we entered into a Convertible Promissory Note and received proceeds of $150,000 after incurring loan fees of $3,000.
The note incurs interest at 10% per annum and has a maturity date of June 10, 2021. The Convertible Promissory Note has a
variable conversion rate that is 65% of the average of the two lowest trading prices during the previous 15-trading-day period,
subject to adjustment. Therefore, the conversion feature is accounted for as a derivative instrument (see Note 8). At inception,
we recorded a debt discount of $153,000 and captured loan fees, recorded as interest expense, of $148,432. During the year
ended March 31, 2020, we amortized $6,711 into interest expense, and recorded additional interest expense on the note of $838.
|
In
addition to the above debt transactions that were outstanding as of March 31, 2020 and 2019, during the year ended March 31, 2020,
we also received proceeds of $200,000 from two additional short-term notes ($100,000 each) and received proceeds of $140,000,
$100,000, and $125,000 from three separate convertible promissory notes. During the year ended March 31, 2020, we recorded interest
expense of $30,000 for fixed interest and extension fees on the short-term notes and made total cash payments of $230,000 to extinguish
the interest and principal amounts due on the short-term notes. During the year ended March 31, 2020, we accounted for the conversion
features in the convertible notes as a derivative instrument, therefore at inception recorded a debt discounts of $374,000 and
captured loan fees, recorded as interest expense, of $945,060. By the time we repaid the convertible notes we had amortized the
full debt discount of $374,000 into interest expense, recorded additional interest expense on the notes of $119,931 (inclusive
of prepayment penalties), and paid off the notes, accrued interest, and prepayment penalties for $493,931.
NOTE
8 – DERIVATIVE LIABILITY
During
the years ended March 31, 2020 and 2019, we had the following activity in our derivative liability account:
Derivative liability at March 31, 2018
|
|
$
|
-
|
|
Derivative liability recorded on new instruments
|
|
|
1,144,525
|
|
Change in fair value
|
|
|
214,376
|
|
Derivative liability at March 31, 2019
|
|
|
1,358,901
|
|
Derivative liability recorded on new instruments
|
|
|
1,924,569
|
|
Derivative liability extinguished with notes settled
|
|
|
(1,918,744
|
)
|
Change in fair value
|
|
|
(571,231
|
)
|
Derivative liability at March 31, 2020
|
|
$
|
793,495
|
|
We
use the binomial option pricing model to estimate fair value for those instruments convertible into common stock, at inception,
at conversion or settlement date, and at each reporting date. During the year ended March 31, 2020 and 2019, the assumptions used
in our binomial option pricing model were in the following range:
|
|
|
Year Ended March 31,
|
|
|
|
|
2020
|
|
|
|
2019
|
|
Risk free interest rate
|
|
|
0.17% - 2.13
|
%
|
|
|
2.40% - 2.58
|
%
|
Expected life in years
|
|
|
0.03 - 1.25
|
|
|
|
0.35 - 1.25
|
|
Expected volatility
|
|
|
224%
- 381
|
%
|
|
|
222% - 268
|
%
|
NOTE
9 – OPERATING LEASE
In
February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”)
model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases. Leases are classified
as either finance or operating with classification affecting the pattern of expense recognition in the statement of operations.
We adopted ASU No. 2016-02 on April 1, 2019. We did not record a lease asset and lease liability as of the adoption date as we
had no lease arrangements or lease obligation at that time.
During
the year ended March 31, 2020 we entered two operating leases for office space in Eatontown, New Jersey (the “Eatontown
Lease”) and Kaysville, Utah (the “Kaysville Lease”). We have the option to extend the three-year lease term
of the Eatontown Lease for a period of one year. In addition, we are obligated to pay twelve monthly installments to cover an
annual utility charge of $1.75 per rentable square foot for electric usage within the demised premises. As the lessor has the
right to digitally meter and charge us, these payments were deemed variable and will be expensed as incurred. During the year
ended March 31, 2020 the variable lease costs amounted to $2,217. At commencement of the Eatontown Lease, right-of-use assets
obtained in exchange for new operating lease liabilities amounted to $110,097. We have the option to extend the twelve-and-a-half-month
lease term of the Kaysville Lease for a period of one year. At commencement of the Kaysville Lease, right-of-use assets obtained
in exchange for new operating lease liabilities amounted to $21,147.
Operating
lease expense was $41,027 for the year ended March 31, 2020. Operating cash flows used for the operating leases during the year
ended March 31, 2020 was $33,694. As of March 31, 2020, the weighted average remaining lease term was 2.15 years and the weighted
average discount rate was 12%.
Future
minimum lease payments under non-cancellable leases as of March 31, 2020 were as follows:
2021
|
|
$
|
56,794
|
|
2022
|
|
|
48,000
|
|
2023
|
|
|
16,000
|
|
Total
|
|
|
120,794
|
|
Less: Interest
|
|
|
(13,996
|
)
|
Present value of lease liability
|
|
|
106,798
|
|
Operating lease liability, current [1]
|
|
|
(56,530
|
)
|
Operating lease liability, long term
|
|
$
|
50,268
|
|
[1]
Represents lease payments to be made in the next 12 months
NOTE
10 – STOCKHOLDERS’ EQUITY
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.
During
the year ended March 31, 2020 our Board of Directors approved the designation of 2,000,000 of the Company’s shares of preferred
stock as Series B Convertible Preferred Stock. Our Series B Convertible Preferred Stock holders are entitled to 500 votes per
share, are entitled to receive cumulative dividends at the annual rate of 12% per annum of the liquidation price, equal to $1.20
per share, and can convert one Series B Preferred Stock share into 500 shares of our common stock. As of March 31, 2020 and 2019,
we had no preferred stock issued or outstanding.
Common
Stock Transactions
During
the year ended March 31, 2020, we issued 59,215,648 shares of common stock in exchange for net proceeds of $825,000. Effective
March 31, 2020 we entered into a settlement agreement to issue 200,000,000 shares of our common stock to repay a $3,600,000 convertible
promissory note and $500,000 worth of short-term advances, for a total of $4,100,000 worth of related party debt settled (see
Note 6).
During
the year ended March 31, 2020 we issued 522,000,000 shares of common stock, valued at $4,561,500 based on the market value on
the day of issuance, to multiple employees for services and compensation, which is subject to forfeiture if the employee is not
in good standing at the time the shares are fully vested, or in some cases, if certain milestones are not met. Of the $4,561,500
value we recognized $2,836,843 as an expense during the year ending March 31, 2020 and the remaining $1,724,657 will be recognized
ratably over the vesting term. In addition to the shares issued to employees, we also issued an additional 15,618,592 shares of
common stock, valued at $261,800 based on the market value on the day of issuance, for services.
During
the year ended March 31, 2020 we repurchased 5,150 shares of common stock for $102 and we cancelled 22,500,000 shares that were
returned in accordance with the terms of a Convertible Promissory Note (see Note 6), reducing common stock by $22,500 and increasing
additional paid in capital by the same. We also cancelled 200,000,000 shares returned in conjunction with the termination of a
Joint Venture Agreement entered into in March of 2019, reducing common stock by $200,000, reducing additional paid in capital
by $3,180,000, offset with a reduction in our prepaid asset of $3,380,000. During the year ended March 31, 2020 we recorded a
beneficial conversion feature of $1,000,000 related to a convertible promissory note entered into with a related party (see Note
6).
In
conjunction with the sale of common stock during the year ended March 31, 2018, we provided a guarantee to certain individuals
such that we would issue additional shares of our common stock if the average closing price of our common stock fell below $0.02
per share on the 20 days preceding the 18-month anniversary of the date the shares were originally sold. As a result of this guarantee,
we had recorded $626,388 in accounts payable and accrued liabilities on our balance sheet as of March 31, 2018. During the year
ended March 31, 2019, the 18-month anniversary passed without the common stock falling below the set threshold, therefore, we
were released from the guarantee, and we increased additional paid-in capital by $525,000 to remove the previously recorded offering
costs. During the year ended March 31, 2020, the 18-month anniversary passed without the common stock falling below the set threshold,
therefore, we were released from the guarantee, and we increased additional paid-in capital by $101,387 to remove the previously
recorded offering costs.
During
the year ended March 31, 2019, we issued 50,000,000 shares of common stock for the acquisition of United Games, LLC and United
League, LLC (see Note 5). We also issued 1,000,000 shares of common stock in August and 1,000,000 shares of common stock in March,
valued at $10,000 and $17,600, respectively, based on the market price on the day of issuance, to an employee for compensation.
The shares are subject to forfeiture if the employee is not in good standing six months after the date of issuance. During the
year ended March 31, 2019, the $10,000 was recognized as expense and of the $17,600 we recognized $2,933 as an expense and $14,667
was recorded as a prepaid asset. Also during the year ended March 31, 2019, we issued 400,000,000 shares of common stock with
a value of $6,760,000 based on the market price on the date of issuance, for an agreement to partner with a third party to generate
future revenues. The 400,000,000 shares are subject to forfeiture for five years from the date of issuance, such that shares will
be deemed earned upon meeting certain milestones. We are recognizing the expense ratably over the five-year term and recorded
$96,307 in expense during the year ended March 31, 2019, while recording $6,663,693 as a prepaid asset as of March 31, 2019. During
the year ended March 31, 2019, we entered into a common stock purchase agreement that provides cash of $1,000,000 in exchange
for shares of our common stock. In conjunction with that agreement, we issued 3,000,000 shares of common stock that was accounted
for as offering costs, increasing common stock by $3,000 and decreasing additional paid-in capital by $3,000, to offset any proceeds
from the future equity transactions resulting from the agreement. During the year ended March 31, 2019, we issued 22,500,000 shares
as a commitment fee in conjunction with a debt arrangement, whereby the shares were valued at $69,871 based on the allocation
of debt proceeds (see Note 7). Also during the year ended March 31, 2019, we repurchased 7,000,000 shares of common stock for
$91,000.
As
of March 31, 2020 and 2019, we had 3,214,490,408 and 2,640,161,318 shares of common stock issued and outstanding, respectively.
Employee
Stock Options
The
nonqualified plan adopted in 2007 authorizes 65,000 shares, of which 47,500 have been granted as of March 31, 2020. The qualified
plan adopted in October of 2008 authorizes 125,000 shares and was approved by a majority of our shareholders on September 16,
2009. As of March 31, 2020, 42,500 shares have been granted under the 2008 plan. During the year ended March 31, 2020 all previously
outstanding options expired and no new options were granted.
The
following table summarizes the changes in employee stock options outstanding and the related prices for the shares of our common
stock issued to employees under two employee stock option plans:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
|
Life (years)
|
|
|
Value
|
|
Options outstanding at March 31, 2018
|
|
|
35,000
|
|
|
$
|
10.00
|
|
|
|
1.51
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Canceled / expired
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2019
|
|
|
35,000
|
|
|
$
|
10.00
|
|
|
|
0.51
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Canceled / expired
|
|
|
(35,000
|
)
|
|
$
|
10.00
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Options exercisable at March 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Stock-based
compensation expense in connection with options granted to employees for the year ended March 31, 2020 and 2019, was $0.
Warrants
During
the year ended March 31, 2020 all previously outstanding warrants expired and no new warrants were granted. Transactions involving
our warrants are summarized as follows:
|
|
|
|
|
Weighted
|
|
|
|
Number of
|
|
|
Average
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
Warrants outstanding at March 31, 2018
|
|
|
6,169,497
|
|
|
$
|
1.50
|
|
Granted / restated
|
|
|
-
|
|
|
$
|
-
|
|
Canceled
|
|
|
-
|
|
|
$
|
-
|
|
Expired
|
|
|
(1,117,000
|
)
|
|
$
|
(1.48
|
)
|
Warrants outstanding at March 31, 2019
|
|
|
5,052,497
|
|
|
$
|
1.50
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
Canceled
|
|
|
-
|
|
|
$
|
-
|
|
Expired
|
|
|
(5,052,497
|
)
|
|
$
|
(1.50
|
)
|
Warrants outstanding at March 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
NOTE
11 – COMMITMENTS AND CONTINGENCIES
Litigation
In
the ordinary course of business, we may be or have been involved in legal proceedings from time to time. Below is a description
of all legal proceedings we were involved in during the year ended March 31, 2020 and 2019:
|
●
|
In
February 2018, we received a subpoena from the United States Commodity Futures Trading Commission (“CFTC”). We
complied with the terms of the subpoena, negotiated a resolution of this matter with the CFTC staff, and a final order was
issued on September 14, 2018. Under the order, we did not admit or deny any of the allegations, agreed to pay a fine of $150,000,
and agreed not to act as an unregistered Commodities Trading Advisor in the future. As of March 31, 2020, we have paid all
amounts owed to CFTC and no unpaid balance remains.
|
|
|
|
|
●
|
In
April of 2019, we received a Summons and Complaint from Fibernet Corp making claims of unpaid invoices and breach of contracts
entered into in February 2012 and January 2015 as RazorData Corp. Without admitting fault or liability, in June of 2019, we
entered into an agreement with Fibernet Corp to settle all claims and release us from any future claims in exchange for a
payment of $35,160 to avoid ongoing litigation related to this matter.
|
NOTE
12 – INCOME TAXES
Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment. The Company used an effective tax rate of 30% when calculating the deferred tax assets and liabilities
and income tax provision below.
Net
deferred tax assets consist of the following components as of March 31, 2020 and 2019:
|
|
2020
|
|
|
2019
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
NOL carryover
|
|
$
|
7,215,400
|
|
|
$
|
2,363,900
|
|
Accrued Payroll
|
|
|
207,100
|
|
|
|
209,100
|
|
Amortization
|
|
|
275,700
|
|
|
|
49,100
|
|
Related party accruals
|
|
|
10,000
|
|
|
|
1,500
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(899,300
|
)
|
|
|
(1,200
|
)
|
Valuation allowance
|
|
|
(6,808,900
|
)
|
|
|
(2,622,400
|
)
|
Total long-term deferred income tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
The
income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income
from continuing operations for the years ended March 31, 2020 and 2019, due to the following:
|
|
2020
|
|
|
2019
|
|
Book income (loss)
|
|
$
|
(6,385,600
|
)
|
|
$
|
(1,493,400
|
)
|
Stock for services
|
|
|
929,600
|
|
|
|
32,800
|
|
Amortization
|
|
|
38,400
|
|
|
|
(33,100
|
)
|
Contingent liability
|
|
|
-
|
|
|
|
(45,000
|
)
|
Unrealized gain on cryptocurrency
|
|
|
(34,000
|
)
|
|
|
(31,900
|
)
|
Meals and entertainment
|
|
|
15,900
|
|
|
|
12,400
|
|
Non-cash interest expense
|
|
|
765,700
|
|
|
|
315,800
|
|
Depreciation
|
|
|
(821,700
|
)
|
|
|
(7,200
|
)
|
Related party accruals
|
|
|
8,500
|
|
|
|
1,500
|
)
|
Related party accrued payroll
|
|
|
(2,000
|
)
|
|
|
174,600
|
|
Gain on deconsolidation of WG LATAM
|
|
|
(16,100
|
)
|
|
|
-
|
|
Gain on bargain purchase
|
|
|
-
|
|
|
|
(291,400
|
)
|
(Gain)/Loss on value of derivative liabilities
|
|
|
(171,400
|
)
|
|
|
64,300
|
|
Stock issued for loan fees
|
|
|
-
|
|
|
|
21,000
|
|
Impairment of prepaid paid for with equity
|
|
|
549,700
|
|
|
|
-
|
|
Amortization of prepaid paid for with equity
|
|
|
248,600
|
|
|
|
45,100
|
|
Valuation allowance
|
|
|
4,874,400
|
|
|
|
1,234,500
|
|
Total long-term deferred income tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
At
March 31, 2020, we had net operating loss carryforwards of approximately $24,051,000 that may be offset against future taxable
income for the year 2021 through 2040. However, due to the change in ownership provisions of the Tax Reform Act of 1986, the NOL
accumulated prior to the April 1, 2017, acquisition can only offset future income of up to $13,837 per year until expired. Should
additional changes in ownership occur, net operating loss carryforwards in future years may be further limited.
No
tax benefit from continuing or discontinued operations have been reported in the March 31, 2020, consolidated financial statements
since the potential tax benefit is offset by a valuation allowance of the same amount.
We
comply with the provisions of FASB ASC 740 in accounting for our uncertain tax positions. ASC 740 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under
ASC 740, we may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. We have determined
that we have no significant uncertain tax positions requiring recognition under ASC 740.
We
recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. We had
no accruals for interest and tax penalties at March 31, 2020 and 2019.
We
do not expect the amount of unrecognized tax benefits to materially change within the next 12 months.
We
are required to file income tax returns in the U.S. Federal jurisdiction, in New York State, New Jersey, and in Utah. We are no
longer subject to income tax examinations by tax authorities for tax years ending before March 31, 2016. During the year ended
March 31, 2020 and 2019 we paid income taxes of $7,383 and $70,768, respectively.
NOTE
13 – SUBSEQUENT EVENTS
Subsequent
to March 31, 2020, we received proceeds of $2,091,135 in short-term advances from related parties, $2,000,000 from a short-term
promissory note with a related party, and $400,000 from a short-term promissory note with a non-related party. Additionally, we
received $505,300 in proceeds from the Paycheck Protection Program as established by the CARES Act, along with an additional $500,000
in proceeds from a loan with the U.S. Small Business Administration.
Subsequent
to March 31, 2020, we repurchased 9,079 shares of our common stock from a third party. These shares were immediately canceled.
Also subsequent to March 31, 2020 we issued 21,000,000 shares of our common stock for services and compensation.
In
accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have
determined that there are no additional subsequent events that require disclosure.
INVESTVIEW,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
583,955
|
|
|
$
|
137,177
|
|
Restricted cash, current
|
|
|
151,489
|
|
|
|
-
|
|
Prepaid assets
|
|
|
818,749
|
|
|
|
5,309,512
|
|
Receivables
|
|
|
964,613
|
|
|
|
910,646
|
|
Short-term advances
|
|
|
145,000
|
|
|
|
145,000
|
|
Short-term advances - related party
|
|
|
500
|
|
|
|
500
|
|
Other current assets
|
|
|
155,628
|
|
|
|
96,022
|
|
Total current assets
|
|
|
2,819,934
|
|
|
|
6,598,857
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
5,918,004
|
|
|
|
2,997,611
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
|
606,070
|
|
|
|
692,882
|
|
Restricted cash, long term
|
|
|
288,411
|
|
|
|
-
|
|
Operating lease right-of-use asset
|
|
|
72,093
|
|
|
|
99,465
|
|
Deposits
|
|
|
8,488
|
|
|
|
11,173
|
|
Total other assets
|
|
|
975,062
|
|
|
|
803,520
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
9,713,000
|
|
|
$
|
10,399,988
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
2,271,583
|
|
|
$
|
2,896,012
|
|
Payroll liabilities
|
|
|
171,412
|
|
|
|
880,349
|
|
Customer advance
|
|
|
474,155
|
|
|
|
392,310
|
|
Deferred revenue
|
|
|
780,396
|
|
|
|
612,500
|
|
Derivative liability
|
|
|
4,265
|
|
|
|
793,495
|
|
Dividend liability
|
|
|
37,775
|
|
|
|
-
|
|
Operating lease liability, current
|
|
|
48,000
|
|
|
|
56,530
|
|
Other current liabilities
|
|
|
14,077,200
|
|
|
|
11,407,200
|
|
Related party payables, net of discounts
|
|
|
1,766,400
|
|
|
|
1,964,760
|
|
Debt, net of discounts
|
|
|
1,571,921
|
|
|
|
1,719,326
|
|
Total current liabilities
|
|
|
21,203,107
|
|
|
|
20,722,482
|
|
|
|
|
|
|
|
|
|
|
Operating lease liability, long term
|
|
|
31,428
|
|
|
|
50,268
|
|
Other long term liabilities, net of deferred interest
|
|
|
8,087,700
|
|
|
|
3,885,464
|
|
Total long term liabilities
|
|
|
8,119,128
|
|
|
|
3,935,732
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
29,322,235
|
|
|
|
24,658,214
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
Preferred stock, par value: $0.001; 50,000,000 shares authorized, 46,612 and none issued and outstanding as of September 30, 2020 and March 31, 2020, respectively
|
|
|
47
|
|
|
|
-
|
|
Common stock, par value $0.001; 10,000,000,000 shares authorized; 2,929,481,329 and 3,214,490,408 shares issued and outstanding as of September 30, 2020 and March 31, 2020, respectively
|
|
|
2,929,481
|
|
|
|
3,214,490
|
|
Additional paid in capital
|
|
|
30,021,081
|
|
|
|
28,929,516
|
|
Accumulated other comprehensive income (loss)
|
|
|
(23,781
|
)
|
|
|
(20,058
|
)
|
Accumulated deficit
|
|
|
(52,536,063
|
)
|
|
|
(46,382,174
|
)
|
Total stockholders’ equity (deficit)
|
|
|
(19,609,235
|
)
|
|
|
(14,258,226
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity (deficit)
|
|
$
|
9,713,000
|
|
|
$
|
10,399,988
|
|
The
accompanying notes are an integral part of these condensed consolidated financial statements
INVESTVIEW,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended September 30,
|
|
|
Six Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription revenue, net of refunds, incentives, credits, and chargebacks
|
|
$
|
5,255,888
|
|
|
$
|
7,236,755
|
|
|
$
|
9,499,145
|
|
|
$
|
14,748,468
|
|
Mining revenue
|
|
|
2,493,739
|
|
|
|
-
|
|
|
|
3,836,285
|
|
|
|
-
|
|
Fee revenue
|
|
|
3,710
|
|
|
|
5,369
|
|
|
|
7,723
|
|
|
|
5,369
|
|
Total revenue, net
|
|
|
7,753,337
|
|
|
|
7,242,124
|
|
|
|
13,343,153
|
|
|
|
14,753,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and service
|
|
|
1,724,809
|
|
|
|
289,045
|
|
|
|
2,637,133
|
|
|
|
532,498
|
|
Commissions
|
|
|
3,416,713
|
|
|
|
4,347,177
|
|
|
|
6,790,544
|
|
|
|
9,216,147
|
|
Selling and marketing
|
|
|
627,356
|
|
|
|
401,979
|
|
|
|
844,940
|
|
|
|
814,467
|
|
Salary and related
|
|
|
816,554
|
|
|
|
2,567,592
|
|
|
|
2,037,389
|
|
|
|
3,711,446
|
|
Professional fees
|
|
|
232,062
|
|
|
|
346,337
|
|
|
|
659,310
|
|
|
|
655,783
|
|
General and administrative
|
|
|
364,826
|
|
|
|
1,363,113
|
|
|
|
2,809,618
|
|
|
|
2,721,756
|
|
Total operating costs and expenses
|
|
|
7,182,320
|
|
|
|
9,315,243
|
|
|
|
15,778,934
|
|
|
|
17,652,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
|
571,017
|
|
|
|
(2,073,119
|
)
|
|
|
(2,435,781
|
)
|
|
|
(2,898,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on debt extinguishment
|
|
|
812,111
|
|
|
|
1,281,477
|
|
|
|
829,937
|
|
|
|
1,281,477
|
|
Gain (loss) on fair value of derivative liability
|
|
|
(20,847
|
)
|
|
|
2,358,447
|
|
|
|
326,788
|
|
|
|
599,257
|
|
Gain on deconsolidation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,739
|
|
Impairment expense
|
|
|
(66,645
|
)
|
|
|
-
|
|
|
|
(66,645
|
)
|
|
|
-
|
|
Realized gain (loss) on cryptocurrency
|
|
|
1,096
|
|
|
|
(1,077
|
)
|
|
|
1,096
|
|
|
|
(667
|
)
|
Unrealized gain (loss) on cryptocurrency
|
|
|
85,331
|
|
|
|
(122,080
|
)
|
|
|
176,817
|
|
|
|
25,330
|
|
Interest expense
|
|
|
(2,480,067
|
)
|
|
|
(1,944,640
|
)
|
|
|
(4,727,165
|
)
|
|
|
(2,490,637
|
)
|
Interest expense, related parties
|
|
|
(210,805
|
)
|
|
|
(1,251,094
|
)
|
|
|
(389,720
|
)
|
|
|
(1,251,094
|
)
|
Other income (expense)
|
|
|
123,346
|
|
|
|
358
|
|
|
|
186,408
|
|
|
|
(71,284
|
)
|
Total other income (expense)
|
|
|
(1,756,480
|
)
|
|
|
321,391
|
|
|
|
(3,662,484
|
)
|
|
|
(1,853,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(1,185,463
|
)
|
|
|
(1,751,728
|
)
|
|
|
(6,098,265
|
)
|
|
|
(4,752,139
|
)
|
Income tax expense
|
|
|
(2,297
|
)
|
|
|
(1,838
|
)
|
|
|
(3,282
|
)
|
|
|
(7,382
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(1,187,760
|
)
|
|
|
(1,753,566
|
)
|
|
|
(6,101,547
|
)
|
|
|
(4,759,521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Preferred Stock
|
|
|
(52,342
|
)
|
|
|
-
|
|
|
|
(52,342
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to common shareholders
|
|
$
|
(1,240,102
|
)
|
|
$
|
(1,753,566
|
)
|
|
$
|
(6,153,889
|
)
|
|
$
|
(4,759,521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share, basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and diluted
|
|
|
2,985,916,112
|
|
|
|
2,840,281,449
|
|
|
|
3,109,673,727
|
|
|
|
2,234,117,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
$
|
(4,359
|
)
|
|
$
|
(1,585
|
)
|
|
$
|
(3,723
|
)
|
|
$
|
(20,560
|
)
|
Total other comprehensive income
|
|
|
(4,359
|
)
|
|
|
(1,585
|
)
|
|
|
(3,723
|
)
|
|
|
(20,560
|
)
|
Comprehensive income (loss)
|
|
$
|
(1,192,119
|
)
|
|
$
|
(1,755,151
|
)
|
|
$
|
(6,105,270
|
)
|
|
$
|
(4,780,081
|
)
|
The
accompanying notes are an integral part of these condensed consolidated financial statements
INVESTVIEW,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
THREE
AND SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Unaudited)
|
|
Preferred stock
|
|
|
Common stock
|
|
|
Additional
Paid in
|
|
|
Accumulated Other Comprehensive
|
|
|
Accumulated
|
|
|
Noncontrolling
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
Deficit
|
|
|
Interest
|
|
|
Total
|
|
Balance, March 31, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
2,640,161,318
|
|
|
$
|
2,640,161
|
|
|
$
|
23,758,917
|
|
|
$
|
1,363
|
|
|
$
|
(25,096,983
|
)
|
|
$
|
51,485
|
|
|
$
|
1,354,943
|
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
39,215,648
|
|
|
|
39,216
|
|
|
|
285,784
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
325,000
|
|
Offering costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
101,387
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
101,387
|
|
Deconsolidation of Kuvera LATAM
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(51,485
|
)
|
|
|
(51,485
|
)
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,975
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,975
|
)
|
Net income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,005,955
|
)
|
|
|
-
|
|
|
|
(3,005,955
|
)
|
Balance, June 30, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
2,679,376,966
|
|
|
|
2,679,377
|
|
|
|
24,146,088
|
|
|
|
(17,612
|
)
|
|
|
(28,102,938
|
)
|
|
|
-
|
|
|
|
(1,295,085
|
)
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
13,000,000
|
|
|
|
13,000
|
|
|
|
312,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
325,000
|
|
Common stock issued for services and compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
241,000,000
|
|
|
|
241,000
|
|
|
|
1,274,915
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,515,915
|
|
Common stock repurchase
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,150
|
)
|
|
|
(5
|
)
|
|
|
(97
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(102
|
)
|
Common stock cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
(222,500,000
|
)
|
|
|
(222,500
|
)
|
|
|
(3,157,500
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,380,000
|
)
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,585
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,585
|
)
|
Net income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,753,566
|
)
|
|
|
-
|
|
|
|
(1,753,566
|
)
|
Balance, September 30, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
2,710,871,816
|
|
|
$
|
2,710,872
|
|
|
$
|
23,575,406
|
|
|
$
|
(19,197
|
)
|
|
$
|
(29,856,504
|
)
|
|
$
|
-
|
|
|
$
|
(3,589,423
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
3,214,490,408
|
|
|
$
|
3,214,490
|
|
|
$
|
28,929,516
|
|
|
$
|
(20,058
|
)
|
|
$
|
(46,382,174
|
)
|
|
$
|
-
|
|
|
$
|
(14,258,226
|
)
|
Common stock issued for services and compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
21,000,000
|
|
|
|
21,000
|
|
|
|
397,954
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
418,954
|
|
Share repurchase
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,079
|
)
|
|
|
(9
|
)
|
|
|
(263
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(272
|
)
|
Beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000,000
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
636
|
|
|
|
-
|
|
|
|
-
|
|
|
|
636
|
|
Net income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,913,787
|
)
|
|
|
-
|
|
|
|
(4,913,787
|
)
|
Balance, June 30, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
3,235,481,329
|
|
|
|
3,235,481
|
|
|
|
31,327,207
|
|
|
|
(19,422
|
)
|
|
|
(51,295,961
|
)
|
|
|
-
|
|
|
|
(16,752,695
|
)
|
Preferred stock issued for cash
|
|
|
46,612
|
|
|
|
47
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,158,754
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,158,801
|
|
Offering costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,994
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,994
|
)
|
Common stock issued for services and compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
376,282
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
376,282
|
|
Common stock forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
(200,000,000
|
)
|
|
|
(200,000
|
)
|
|
|
(3,180,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,380,000
|
)
|
Common stock repurchase
|
|
|
-
|
|
|
|
-
|
|
|
|
(106,000,000
|
)
|
|
|
(106,000
|
)
|
|
|
(14,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(120,000
|
)
|
Forgiveness of accrued payroll
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
373,832
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
373,832
|
|
Dividends
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(52,342
|
)
|
|
|
-
|
|
|
|
(52,342
|
)
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,359
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,359
|
)
|
Net income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,187,760
|
)
|
|
|
-
|
|
|
|
(1,187,760
|
)
|
Balance, September 30, 2020
|
|
|
46,612
|
|
|
$
|
47
|
|
|
|
2,929,481,329
|
|
|
$
|
2,929,481
|
|
|
$
|
30,021,081
|
|
|
$
|
(23,781
|
)
|
|
$
|
(52,536,063
|
)
|
|
$
|
-
|
|
|
$
|
(19,609,235
|
)
|
The
accompanying notes are an integral part of these condensed consolidated financial statements
INVESTVIEW
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Six Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,101,547
|
)
|
|
$
|
(4,759,521
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
982,819
|
|
|
|
36,007
|
|
Amortization of debt discount
|
|
|
703,511
|
|
|
|
1,892,791
|
|
Amortization of long-term license agreement
|
|
|
-
|
|
|
|
75,406
|
|
Amortization of intangible assets
|
|
|
86,812
|
|
|
|
169,539
|
|
Stock issued for services and compensation
|
|
|
795,236
|
|
|
|
1,515,915
|
|
Loan fees on new borrowings
|
|
|
-
|
|
|
|
841,140
|
|
Offering costs
|
|
|
6
|
|
|
|
-
|
|
Lease cost, net of repayment
|
|
|
2
|
|
|
|
-
|
|
(Gain) on deconsolidation
|
|
|
-
|
|
|
|
(53,739
|
)
|
(Gain) loss on debt extinguishment
|
|
|
(829,937
|
)
|
|
|
(1,281,477
|
)
|
Loss on fair value of derivative liability
|
|
|
(326,788
|
)
|
|
|
(599,257
|
)
|
Realized (gain) loss on cryptocurrency
|
|
|
(1,096
|
)
|
|
|
667
|
|
Unrealized (gain) loss on cryptocurrency
|
|
|
(176,817
|
)
|
|
|
(25,330
|
)
|
Impairment expense
|
|
|
66,645
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(53,967
|
)
|
|
|
(18,538
|
)
|
Prepaid assets
|
|
|
(1,141,805
|
)
|
|
|
(1,283,764
|
)
|
Short-term advances
|
|
|
-
|
|
|
|
(100,000
|
)
|
Short-term advances from related parties
|
|
|
-
|
|
|
|
(10,000
|
)
|
Other current assets
|
|
|
118,307
|
|
|
|
(517,051
|
)
|
Deposits
|
|
|
2,685
|
|
|
|
(3,130
|
)
|
Accounts payable and accrued liabilities
|
|
|
(1,001,276
|
)
|
|
|
(19,420
|
)
|
Customer advance
|
|
|
81,845
|
|
|
|
3,448,476
|
|
Deferred revenue
|
|
|
167,896
|
|
|
|
(94,985
|
)
|
Other liabilities
|
|
|
6,872,236
|
|
|
|
3,529,296
|
|
Accrued interest
|
|
|
107,025
|
|
|
|
131,799
|
|
Accrued interest, related parties
|
|
|
309,837
|
|
|
|
649,999
|
|
Net cash provided by (used in) operating activities
|
|
|
661,629
|
|
|
|
3,524,823
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Cash paid for fixed assets
|
|
|
(1,717,289
|
)
|
|
|
(1,720,116
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(1,717,289
|
)
|
|
|
(1,720,116
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from related parties
|
|
|
4,474,137
|
|
|
|
1,459,500
|
|
Repayments for related party payables
|
|
|
(3,036,216
|
)
|
|
|
(1,369,500
|
)
|
Proceeds from debt
|
|
|
1,405,300
|
|
|
|
1,322,651
|
|
Repayments for debt
|
|
|
(2,030,344
|
)
|
|
|
(2,745,024
|
)
|
Payments for share repurchase
|
|
|
(272
|
)
|
|
|
(102
|
)
|
Dividends paid
|
|
|
(14,567
|
)
|
|
|
-
|
|
Proceeds from the sale of stock
|
|
|
1,165,300
|
|
|
|
650,000
|
|
Payments for financing costs
|
|
|
(21,000
|
)
|
|
|
-
|
|
Net cash provided by (used in) financing activities
|
|
|
1,942,338
|
|
|
|
(682,475
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate translation on cash
|
|
|
-
|
|
|
|
2,297
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
|
886,678
|
|
|
|
1,124,529
|
|
Cash, cash equivalents, and restricted cash - beginning of period
|
|
|
137,177
|
|
|
|
133,644
|
|
Cash, cash equivalents, and restricted cash - end of period
|
|
$
|
1,023,855
|
|
|
$
|
1,258,173
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
275,192
|
|
|
$
|
51,000
|
|
Income taxes
|
|
$
|
3,282
|
|
|
$
|
5,544
|
|
Non cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Prepaid assets reclassified to fixed assets
|
|
$
|
2,252,568
|
|
|
$
|
-
|
|
Beneficial conversion feature
|
|
$
|
2,000,000
|
|
|
$
|
1,000,000
|
|
Cancellation of shares
|
|
$
|
-
|
|
|
$
|
3,380,000
|
|
Changes in equity for offering costs accrued
|
|
$
|
-
|
|
|
$
|
101,387
|
|
Derivative liability recorded as a debt discount
|
|
$
|
-
|
|
|
$
|
365,000
|
|
Recognition of lease liability and ROU asset at lease commencement
|
|
$
|
-
|
|
|
$
|
131,244
|
|
Shares forfeited
|
|
$
|
3,380,000
|
|
|
$
|
-
|
|
Share repurchase
|
|
$
|
120,000
|
|
|
$
|
-
|
|
Reclassification of related party debt
|
|
$
|
26,000
|
|
|
$
|
-
|
|
Dividends declared but not yet paid
|
|
$
|
37,775
|
|
|
$
|
-
|
|
Forgiveness of accrued payroll
|
|
$
|
373,832
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these condensed consolidated financial statements
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS
Organization
Investview,
Inc. was incorporated on January 30, 1946, under the laws of the state of Utah as the Uintah Mountain Copper Mining Company. In
January 2005 the Company changed domicile to Nevada, and changed its name to Voxpath Holding, Inc. In September of 2006 the Company
merged The Retirement Solution Inc. through a Share Purchase Agreement into Voxpath Holdings, Inc. and then changed its name to
TheRetirementSolution.Com, Inc. In October 2008 the Company changed its name to Global Investor Services, Inc., before changing
its name to Investview, Inc., on March 27, 2012.
On
March 31, 2017, we entered into a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company
(“Wealth Generators”), pursuant to which the Wealth Generators members agreed to contribute 100% of the outstanding
securities of Wealth Generators in exchange for an aggregate of 1,358,670,942 shares of our common stock. The closing of the Contribution
Agreement was effective April 1, 2017, and Wealth Generators became our wholly owned subsidiary and the former members of Wealth
Generators became our stockholders and control the majority of our outstanding common stock.
On
June 6, 2017, we entered into an Acquisition Agreement with Market Trend Strategies, LLC, a company whose members are also former
members of our management. Under the Acquisition Agreement, we spun-off our operations that existed prior to the merger with Wealth
Generators and sold the intangible assets used in those pre-merger operations in exchange for Market Trend Strategies’ assumption
of $419,139 in pre-merger liabilities.
On
February 28, 2018, we filed a name change for Wealth Generators, LLC to Kuvera, LLC (“Kuvera”) and on May 7, 2018
we established WealthGen Global, LLC as a Utah limited liability company and a wholly owned subsidiary of Investview, Inc.
On
May 7, 2018, we established WealthGen Global, LLC as a Utah limited liability company and our wholly owned subsidiary.
On
July 20, 2018, we entered into a Purchase Agreement with United Games Marketing LLC, a Utah limited liability company, to purchase
its wholly owned subsidiaries United Games, LLC and United League, LLC for 50,000,000 shares of our common stock.
On
November 12, 2018, we established Kuvera France, S.A.S. to handle sales of our financial education and research in the European
Union.
On
December 30, 2018, our wholly owned subsidiary S.A.F.E. Management, LLC received its registration and disclosure approval from
the National Futures Association. S.A.F.E. Management, LLC is now a New Jersey State Registered Investment Adviser, Commodities
Trading Advisor, Commodity Pool Operator, and approved for over the counter FOREX advisory services.
On
January 17, 2019 we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SafeTek, LLC, a Utah Limited Liability
Company.
Effective
July 22, 2019 we renamed our non-operating wholly owned subsidiary Razor Data, LLC to APEX Tek, LLC, a Utah Limited Liability
Company.
Nature
of Business
We
own a number of companies that each operate independently, but are accretive to one another. We are establishing a portfolio of
wholly owned subsidiaries delivering leading-edge technologies, services, and research, dedicated primarily to the individual
consumer. Following is a description of each of our companies.
Kuvera,
LLC provides research, education, and investment tools designed to assist the self-directed investor in successfully navigating
the financial markets. These services include research, trade alerts, and live trading rooms that include instruction in equities,
options, FOREX, ETFs, binary options, crowdfunding and cryptocurrency sector education. In addition to trading tools and research,
we also offer full education and software applications to assist the individual in debt reduction, increased savings, budgeting,
and proper tax management. Each product subscription includes a core set of trading tools/research along with the personal finance
management suite to provide an individual with complete access to the information necessary to cultivate and manage his or her
financial situation.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Different
packages are available through a monthly subscription that can be cancelled at any time at the discretion of the customer. A unique
component of the product marketing plan is the distribution method whereby all subscriptions are sold via current participating
customers who choose to distribute and sell the services by participating in the bonus plan. The bonus plan participation is purely
optional but enables individuals to create an additional income stream to further support their personal financial goals and objectives.
Kuvera
France S.A.S. is our entity in France that will distribute Kuvera products and services throughout the European Union.
S.A.F.E.
Management, LLC is a Registered Investment Adviser and Commodity Trading Adviser that has been established to deliver automated
trading strategies to individuals who find they lack the time to trade for themselves.
United
League, LLC owns a number of proprietary technologies including FIREFAN a social app for sports enthusiasts. Technologies
created to support any of the Investview companies are held under the United League structure.
United
Games, LLC is the distribution network for United League technologies. Since the acquisition of United Games in July of 2018,
we are working to combine the distributors of Kuvera and United Games. The operations of United Games and United League are currently
being assessed now that we have completed our integration of their software and personnel. These entities may be eliminated or
re-structured in the future as we are currently assessing the potential future for social gaming app known as FIREFAN.
SAFETek,
LLC (formerly WealthGen Global, LLC) is a new addition that we are currently establishing for expansion plans in the high-speed
processing and cloud computing environment.
Apex
Tek, LLC (formerly Razor Data, LLC) delivers the APEX program which permits individuals to purchase assets that will generate
monthly cash flow. As of September 30, 2020 we have ceased selling the APEX package. We may re-introduce APEX at a later date
after further evaluation of the model.
Investment
Tools & Training, LLC currently has no operations or activities.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations
(Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly,
they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The results of operations for the six months ended September 30, 2020, are not necessarily
indicative of the operating results that may be expected for the year ending March 31, 2021. These unaudited condensed consolidated
financial statements should be read in conjunction with the March 31, 2020 consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended March 31, 2020.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Investview, Inc., and our wholly owned subsidiaries, Kuvera, LLC, Investment
Tools & Training, LLC, Apex Tek, LLC (formerly Razor Data, LLC), S.A.F.E. Management, LLC, SafeTek, LLC (formerly WealthGen
Global, LLC), United Games, LLC, United League, LLC, and Kuvera France S.A.S. Through March 31, 2019 we had determined that one
affiliated entity, Kuvera LATAM S.A.S., which we previously conducted business with, was a variable interest entity and we were
the primary beneficiary of the entity’s activities, which are similar to those of Kuvera, LLC. As a result, through March
31, 2019 we had consolidated the accounts of this variable interest entity into the consolidated financial statements. Further,
because the Company did not have any ownership interest in this variable interest entity, the Company had allocated the contributed
capital in the variable interest entity as a component of noncontrolling interest. As of April 1, 2019 Kuvera LATAM S.A.S. had
no operations and ceased to exist, therefore, as of that date, no consolidation of the entity was necessary and we recorded a
gain on deconsolidation of $53,739 to eliminate the intercompany account with Kuvera LATAM S.A.S. All intercompany transactions
and balances have been eliminated in consolidation.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Financial
Statement Reclassification
Certain
account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period
classifications.
Use
of Estimates
The
preparation of these unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Foreign
Exchange
We
have consolidated the accounts of Kuvera France S.A.S. into our consolidated financial statements. The operations of Kuvera France
S.A.S. are conducted in France and its functional currency is the Euro.
The
financial statements of Kuvera France S.A.S. are prepared using their functional currency and have been translated into U.S. dollars
(“USD”). Assets and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders’
equity is translated using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the
period. Any translation adjustments are included as foreign currency translation adjustments in accumulated other comprehensive
income in our stockholders’ equity (deficit).
The
following rates were used to translate the accounts of Kuvera France S.A.S. and Kuvera LATAM S.A.S. into USD at the following
balance sheet dates.
|
|
September 30, 2020
|
|
|
March 31, 2020
|
|
Euro to USD
|
|
|
1.17300
|
|
|
|
1.10314
|
|
The
following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.
|
|
Six Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Euro to USD
|
|
|
1.135711
|
|
|
|
1.11795
|
|
Restricted
Cash
The
following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that
sum to the total of the same such amounts shown in the statement of cash flows.
|
|
September 30, 2020
|
|
|
March 31, 2020
|
|
Cash and cash equivalents
|
|
$
|
583,955
|
|
|
$
|
137,177
|
|
Restricted cash, current
|
|
|
151,489
|
|
|
|
-
|
|
Restricted cash, long term
|
|
|
288,411
|
|
|
|
-
|
|
Total cash, cash equivalents, and restricted cash shown on the statement of cash flows
|
|
$
|
1,023,855
|
|
|
$
|
137,177
|
|
Amount
included in restricted cash represent funds required to be held in an escrow account by a contractual agreement and will be used
for paying dividends to our Series B Preferred Stock holders.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Cryptocurrencies
We
hold cryptocurrency-denominated assets (“cryptocurrencies”) and include them in our consolidated balance sheet as
other current assets. We record cryptocurrencies at fair market value and recognize the change in the fair value of our cryptocurrencies
as an unrealized gain or loss in the consolidated statement of operations. As of September 30, 2020 and March 31, 2020 the fair
value of our cryptocurrencies was $155,628 and $96,022, respectively. During the six months ended September 30, 2020 we recorded
$1,096 and $176,817 as a total realized and unrealized gain (loss) on cryptocurrency, respectively. During the six months ended
September 30, 2019 we recorded $(667) and $25,330 as a total realized and unrealized gain (loss) on cryptocurrency, respectively.
During the three months ended September 30, 2020 we recorded $1,096 and $85,331 as a total realized and unrealized gain (loss)
on cryptocurrency, respectively. During the three months ended September 30, 2019 we recorded $(1,077) and $(122,080) as a total
realized and unrealized gain (loss) on cryptocurrency, respectively.
Fixed
Assets
Fixed
assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise
disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net
difference less any amount realized from disposition is reflected in earnings. Expenditures for maintenance and repairs which
do not extend the useful lives of the related assets are expensed as incurred.
As
of September 30, 2020 fixed assets were made up of the following:
|
|
Estimated
|
|
|
|
|
|
|
Useful
|
|
|
|
|
|
|
Life
|
|
|
|
|
|
|
(years)
|
|
|
Value
|
|
Furniture, fixtures, and equipment
|
|
|
10
|
|
|
$
|
12,792
|
|
Computer equipment
|
|
|
3
|
|
|
|
21,143
|
|
Data processing equipment
|
|
|
3
|
|
|
|
7,095,515
|
|
|
|
|
|
|
|
|
7,129,450
|
|
Accumulated depreciation as of September 30, 2020
|
|
|
|
|
|
|
(1,211,446
|
)
|
Net book value, September 30, 2020
|
|
|
|
|
|
$
|
5,918,004
|
|
Total
depreciation expense for the six months ended September 30, 2020 and 2019, was $982,819 and $36,007, respectively.
Long-Lived
Assets – Intangible Assets & License Agreement
We
account for our intangible assets and long-term license agreement in accordance with ASC Subtopic 350-30, General Intangibles
Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic
350-30 requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net
assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Further, ASC Subtopic 350-30 requires
an intangible asset to be amortized over its useful life and for the useful life to be evaluated every reporting period to determine
whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is
changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life.
Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
In
June of 2017 we issued 80,000,000 shares of common stock with a value of $2,256,000 for a 15-year license agreement. Amortization
recognized for the six months ended September 30, 2020 and 2019 was $0 and $75,406, respectively, and the long-term license agreement
was recorded at a net value of $0 as of September 30, 2020 and March 31, 2020 due to the asset being impaired as of March 31,
2020.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
In
June of 2018 we purchased United Games, LLC and United League, LLC and recorded the transaction as a business combination. Intangible
assets acquired in the business combination were recorded at fair value on the date of acquisition and are being amortized on
a straight-line method over their estimated useful lives. As of September 30, 2020 intangible assets were made up of the following:
|
|
Estimated
|
|
|
|
|
|
|
Useful
|
|
|
|
|
|
|
Life
|
|
|
|
|
|
|
(years)
|
|
|
Value
|
|
FireFan mobile application
|
|
|
4
|
|
|
$
|
331,000
|
|
Back office software
|
|
|
10
|
|
|
|
408,000
|
|
Tradename/trademark - FireFan
|
|
|
5
|
|
|
|
248,000
|
|
Tradename/trademark - United Games
|
|
|
0.45
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
991,000
|
|
Accumulated amortization as of September 30, 2020
|
|
|
|
|
|
|
(384,930
|
)
|
Net book value, September 30, 2020
|
|
|
|
|
|
$
|
606,070
|
|
Amortization
expense for the six months ended September 30, 2020 and 2019 was $86,812 and $169,539, respectively. Amortization expense is expected
to be as follows:
Remainder of 2021
|
|
$
|
86,338
|
|
Fiscal year ending March 31, 2022
|
|
|
173,150
|
|
Fiscal year ending March 31, 2023
|
|
|
173,150
|
|
Fiscal year ending March 31, 2024
|
|
|
32,589
|
|
Fiscal year ending March 31, 2025
|
|
|
6,148
|
|
Fiscal year ending March 31, 2026 and beyond
|
|
|
134,695
|
|
|
|
$
|
606,070
|
|
Impairment
of Long-Lived Assets
We
have adopted ASC Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived
assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable or when the historical cost carrying value
of an asset may no longer be appropriate. Events relating to recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
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 six months ended September 30, 2020 we fully impaired data processing equipment that had a cost basis of $84,939 and we fully
impaired a computer that had a cost basis of $1,609 because the assets were no longer in use. The accumulated depreciation of
the assets at the time they were written off was $19,903, therefore we recognized impairment expense of $66,645 for the six months
ended September 30, 2020. No impairment expense was recognized during the six months ended September 30, 2019.
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, based on our principal or, in the absence of a principal, most advantageous
market for the specific asset or liability.
U.S.
generally accepted accounting principles provide for a three-level hierarchy of inputs to valuation techniques used to measure
fair value, defined as follows:
|
Level
1:
|
Inputs
that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.
|
|
|
|
|
Level
2:
|
Inputs
other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the asset or liability, including:
|
|
-
|
quoted
prices for similar assets or liabilities in active markets;
|
|
-
|
quoted
prices for identical or similar assets or liabilities in markets that are not active;
|
|
-
|
inputs
other than quoted prices that are observable for the asset or liability; and
|
|
-
|
inputs
that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
Level
3:
|
Inputs
that are unobservable and reflect management’s own assumptions about the inputs market participants would use in pricing
the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions
surrounding the timing and amount of expected cash flows).
|
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Our
financial instruments consist of cash, accounts receivable, accounts payable, and debt. We have determined that the book value
of our outstanding financial instruments as of September 30, 2020 and March 31, 2020, approximates the fair value due to their
short-term nature.
Items
recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the
following items as of September 30, 2020:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Cryptocurrencies
|
|
$
|
155,628
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
155,628
|
|
Total Assets
|
|
$
|
155,628
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
155,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,265
|
|
|
$
|
4,265
|
|
Total Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,265
|
|
|
$
|
4,265
|
|
Items
recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the
following items as of March 31, 2020:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Cryptocurrencies
|
|
$
|
96,022
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
96,022
|
|
Total Assets
|
|
$
|
96,022
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
96,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
793,495
|
|
|
$
|
793,495
|
|
Total Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
793,495
|
|
|
$
|
793,495
|
|
Sale
and Leaseback
Through
our wholly-owned subsidiary, APEX Tex, LLC, we sold high powered data processing equipment (“APEX”) to our customers
and they leased the equipment back to SAFETek, LLC, another of our wholly-owned subsidiaries. We account for these transactions
under ASC 842-40 where the leaseback has been deemed a sales-type lease due to the lease term generally covering the entire economic
life of the equipment and our likelihood to purchase the asset at the end of the lease term. In accordance with ASC 842-40 we
have recorded the data processing equipment as a fixed asset on our balance sheet and we have accounted for the amounts received
for the equipment as a financial liability, in other liabilities on our balance sheet. Further, we will recognize interest on
the financial liability over the term of the lease to ensure the financial liability equates to the total amounts to be paid over
the life of the lease. During the six months ended September 30, 2020 we had the following activity related to our sale and leaseback
transactions:
|
|
Total Financial Liability
|
|
|
Contra-
Liability
|
|
|
Net
Financial
Liability
|
|
|
Current [1]
|
|
|
Long Term
|
|
Balance as of March 31, 2020
|
|
$
|
53,828,000
|
|
|
$
|
(38,535,336
|
)
|
|
$
|
15,292,664
|
|
|
$
|
11,407,200
|
|
|
$
|
3,885,464
|
|
Proceeds from sales of APEX
|
|
|
5,001,622
|
|
|
|
-
|
|
|
|
5,001,622
|
|
|
|
|
|
|
|
|
|
Interest recorded on financial liability
|
|
|
8,348,378
|
|
|
|
(8,348,378
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Payments made for leased equipment
|
|
|
(2,125,300
|
)
|
|
|
-
|
|
|
|
(2,125,300
|
)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
-
|
|
|
|
3,995,914
|
|
|
|
3,995,914
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2020
|
|
$
|
65,052,700
|
|
|
$
|
(42,887,800
|
)
|
|
$
|
22,164,900
|
|
|
$
|
14,077,200
|
|
|
$
|
8,087,700
|
|
[1]
Represents lease payments to be made in the next 12 months
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
The
$42,887,800 is expected to be recognized into interest as follows:
Remainder of 2021
|
|
$
|
4,782,861
|
|
Fiscal year ending March 31, 2022
|
|
|
9,565,721
|
|
Fiscal year ending March 31, 2023
|
|
|
9,565,721
|
|
Fiscal year ending March 31, 2024
|
|
|
9,565,721
|
|
Fiscal year ending March 31, 2025 and beyond
|
|
|
9,407,776
|
|
|
|
$
|
42,887,800
|
|
During
the six months ended September 30, 2020 we received additional proceeds for APEX sales which were recorded in the customer advance
amount shown on our balance sheet, resulting in a net increase in the account of $81,845 since March 31, 2020. As of September
30, 2020 we have ceased selling the APEX package. We may re-introduce APEX at a later date after further evaluation of the model.
Revenue
Recognition
Subscription
Revenue
The
majority of our revenue is generated by subscription sales and payment is received at the time of purchase. We recognize subscription
revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer
and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide
services over a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue
is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a 10-day trial
period to first time subscription customers, during which a full refund can be requested if a customer does not like the product.
Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented
net of refunds, sales incentives, credits, and known and estimated credit card chargebacks.
Mining
Revenue
Through
our wholly owned subsidiary, SAFETek, LLC, we lease equipment under a sales-type lease and use the equipment on blockchain networks
to validate and add blocks of transactions to blockchain ledgers (commonly referred to as “mining”). As compensation
for mining we are issued fees from processors and/or block rewards that are newly created cryptocurrency units granted to us.
Our mining activities constitute our ongoing major and central operations of SAFETek, LLC. Because we do not have contracts, nor
do we have customers associated with our mining revenue, we recognize revenue when fees and/or rewards are settled, or ultimately
granted to us as a result of our mining activities.
Fee
Revenue
We
generate fee revenue from our customers through SAFE Management, our subsidiary licensed as a Registered Investment Advisor and
Commodities Trading Advisor. We recognize fee revenue in accordance with ASC 606-10 where revenue is measured based on a consideration
specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
Our performance obligation is to deliver fully managed trading services to individuals who do not meet the requirements of Qualified
Investors and who lack the time to trade for themselves. We recognize fee revenue as our performance obligation is met and we
receive payment for such advisory fees in the month following recognition.
Revenue
generated for the six months ended September 30, 2020 is as follows:
|
|
Subscription
Revenue
|
|
|
Mining
Revenue
|
|
|
Fee Revenue
|
|
|
Total
|
|
Gross billings/receipts
|
|
$
|
10,159,115
|
|
|
$
|
3,836,285
|
|
|
$
|
7,723
|
|
|
$
|
14,003,123
|
|
Refunds, incentives, credits, and chargebacks
|
|
|
(659,970
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(659,970
|
)
|
Net revenue
|
|
$
|
9,499,145
|
|
|
$
|
3,836,285
|
|
|
$
|
7,723
|
|
|
$
|
13,343,153
|
|
For
the six months ended September 30, 2020 foreign and domestic revenues were approximately $9 million and $4.4 million, respectively.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Revenue
generated for the six months ended September 30, 2019 is as follows:
|
|
Subscription
Revenue
|
|
|
Mining
Revenue
|
|
|
Fee Revenue
|
|
|
Total
|
|
Gross billings/receipts
|
|
$
|
16,117,861
|
|
|
$
|
-
|
|
|
$
|
5,369
|
|
|
$
|
16,123,230
|
|
Refunds, incentives, credits, and chargebacks
|
|
|
(1,369,393
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,369,393
|
)
|
Net revenue
|
|
$
|
14,748,468
|
|
|
$
|
-
|
|
|
$
|
5,369
|
|
|
$
|
14,753,837
|
|
For
the six months ended September 30, 2019 foreign and domestic revenues were approximately $13.9 million and $800,000, respectively.
Revenue
generated for the three months ended September 30, 2020 is as follows:
|
|
Subscription
Revenue
|
|
|
Mining Revenue
|
|
|
Fee Revenue
|
|
|
Total
|
|
Gross billings/receipts
|
|
$
|
5,599,155
|
|
|
$
|
2,493,739
|
|
|
$
|
3,710
|
|
|
$
|
8,096,604
|
|
Refunds, incentives, credits, and chargebacks
|
|
|
(343,267
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(343,267
|
)
|
Net revenue
|
|
$
|
5,255,888
|
|
|
$
|
2,493,739
|
|
|
$
|
3,710
|
|
|
$
|
7,753,337
|
|
For
the three months ended September 30, 2020 foreign and domestic revenues were approximately $7.3 million and $426,000, respectively.
Revenue
generated for the three months ended September 30, 2019 is as follows:
|
|
Subscription
Revenue
|
|
|
Mining
Revenue
|
|
|
Fee
Revenue
|
|
|
Total
|
|
Gross
billings/receipts
|
|
$
|
7,825,160
|
|
|
$
|
-
|
|
|
$
|
5,369
|
|
|
$
|
7,830,529
|
|
Refunds,
incentives, credits, and chargebacks
|
|
|
(588,405
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(588,405
|
)
|
Net
revenue
|
|
$
|
7,236,755
|
|
|
$
|
-
|
|
|
$
|
5,369
|
|
|
$
|
7,242,124
|
|
For
the three months ended September 30, 2019 foreign and domestic revenues were approximately $6.8 million and $403,000, respectively.
Net
Income (Loss) per Share
We
follow ASC subtopic 260-10, Earnings per Share (“ASC 260-10”), which specifies the computation, presentation, and
disclosure requirements of earnings per share information. Basic loss per share has been calculated based upon the weighted average
number of common shares outstanding. Convertible debt, stock options, and warrants have been excluded as common stock equivalents
in the diluted loss per share because their effect is anti-dilutive on the computation.
Potentially
dilutive securities excluded from the computation of basic and diluted net loss per share are as follows:
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
Options to purchase common stock
|
|
|
-
|
|
|
|
35,000
|
|
Warrants to purchase common stock
|
|
|
233,060
|
|
|
|
599,800
|
|
Notes convertible into common stock
|
|
|
161,742,478
|
|
|
|
58,416,067
|
|
Totals
|
|
|
161,975,538
|
|
|
|
59,050,867
|
|
Lease
Obligation
We
determine if an arrangement is a lease at inception. Operating leases are included in the operating lease right-of-use asset account,
the operating lease liability, current account, and the operating lease liability, long term account in our balance sheet. Right-of-use
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make
lease payments arising from the lease.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Operating
lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over
the lease term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing
rate based on the information available at commencement date in determining the present value of lease payments. We have elected
to not apply the recognition requirements of ASC 842 to short-term leases (leases with terms of twelve months or less). Lease
terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease
expense for operating lease arrangements is recognized on a straight-line basis over the lease term. We have elected the practical
expedient and will not separate non-lease components from lease components and will instead account for each separate lease component
and non-lease component associated with the lease components as a single lease component.
NOTE
3 – RECENT ACCOUNTING PRONOUNCEMENTS
There
are no recently issued accounting pronouncements that the Company has not yet adopted that they believe are applicable or would
have a material impact on the financial statements of the Company.
NOTE
4 – GOING CONCERN AND LIQUIDITY
Our
financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates
the realization of assets and liquidation of liabilities in the normal course of business. We have incurred significant recurring
losses, which have resulted in an accumulated deficit of $52,536,063 as of September 30, 2020, along with a net loss of $6,101,547
for the six months ended September 30, 2020. Additionally, as of September 30, 2020, we had cash of $583,955 and a working capital
deficit of $18,383,173. These factors raise substantial doubt about our ability to continue as a going concern.
Historically
we have relied on increasing revenues and new debt and equity financing to pay for operational expenses and debt as it came due.
During the six months ended September 30, 2020, we raised $1,405,300 in cash proceeds from new debt arrangements and raised $4,474,137
in cash proceeds from related parties. Additionally, net cash provided by operations was $661,629 for the six months ended September
30, 2020. Subsequent to September 30, 2020, we received gross proceeds of $93,300 in connection with our Unit Offering (see NOTE
11). Additionally, subject to a Securities Purchase agreement entered into in April 2020 we have a commitment from an investor
to purchase a $9 million promissory note on or before October 31, 2020, subject to certain conditions.
On
January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International
Concern” and on March 11, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread
of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of
public places and businesses. The coronavirus and actions taken to mitigate the spread of it have had and are expected to continue
to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the
Company operates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted to amongst
other provisions, provide emergency assistance for individuals, families and businesses affected by the coronavirus pandemic.
It is unknown how long the adverse conditions associated with the coronavirus will last and what the complete financial effect
will be to the company. To date, the Company is experiencing challenges in multiple areas of the organization and the full economic
impact is yet to be established.
During
the year ended March 31, 2020 we made significant strides and wide sweeping changes. While we believe they will be beneficial
to our bottom line, there is no assurance of this. Some of the concerns we face going forward will continue, including but not
limited to:
|
●
|
Supply
chain issues for Apex Tek, LLC and the sourcing of miners due to the worldwide COVID pandemic and manufacturing slow downs
|
|
|
|
|
●
|
SAFETek,
LLC operations not scaling according to projections with decreased output due to mining difficulty and operational cost
|
|
|
|
|
●
|
Regulatory
reform that could adversely impact the use and demand of digital currencies
|
|
|
|
|
●
|
The
recent Bitcoin (BTC) halving event that further reduced mining output in addition to the supply chain issues
|
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Apex
Tek, LLC and SAFETek, LLC carry additional risk and generated recent losses, however, they also provide Investview a stake in
4IR, HPC, app development, fintech, blockchain and personal money management sectors. Each of these are areas that are targeted
for significant growth spurred by innovations through technology which solidify our position in the fintech space.
While
our liabilities are larger than our assets it is important to note that we seek to further reduce our operating expense. The assets
we have acquired and will continue to seek out are those of technology, mobile apps, and human resources. These assets are not
easily defined on our balance sheet but represent our ability to carry out our objectives which we believe will ultimately lead
to positive cash flow, reduced debt and then profitability.
Accordingly,
the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities
in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not
necessarily purport to represent realizable or settlement values. The financial statements do not include any adjustment that
might result from the outcome of this uncertainty.
NOTE
5 – RELATED-PARTY TRANSACTIONS
Our
related-party payables consisted of the following:
|
|
September 30,
2020
|
|
|
March 31,
2020
|
|
Short-term advances [1]
|
|
$
|
489,850
|
|
|
$
|
876,427
|
|
Promissory note entered into on 1/30/20 [2]
|
|
|
1,133,333
|
|
|
|
1,033,333
|
|
Convertible Promissory Note entered into on 4/27/20 [3]
|
|
|
77,198
|
|
|
|
-
|
|
Convertible Promissory Note entered into on 5/27/20 [4]
|
|
|
36,019
|
|
|
|
-
|
|
Accounts payable – related party [5]
|
|
|
30,000
|
|
|
|
55,000
|
|
|
|
$
|
1,766,400
|
|
|
$
|
1,964,760
|
|
[1]
|
We
periodically receive advances for operating funds from our current majority shareholders and other related parties, including
entities that are owned, controlled, or influenced by our owners or management. These advances are due on demand and are unsecured.
During the six months ended September 30, 2020, we received $2,338,137 in cash proceeds from advances, incurred $50,000 in
interest expense on the advances, and repaid related parties $2,816,713. Also during the six months ended September 30, 2020
there was a change in senior management therefore $26,001 due to a former member of the senior management team was reclassified
from a related party payable to debt on our balance sheet (see NOTE 6).
|
|
|
[2]
|
We
entered into a $1,000,000 promissory note with Joeseph Cammarata, our Chief Executive Officer, on January 30, 2020. The term
of the note is one year, at which time the principal and interest of 20%, or $200,000 will be due. During the six months ended
September 30, 2020 we recognized $100,000 of interest expense on the note.
|
|
|
[3]
|
On
April 27, 2020 we received proceeds of $1,300,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors.
The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. The note
is convertible into common stock at a conversion price of $0.01257 per share therefore during the six months ended September
30, 2020 we recorded a beneficial conversion feature and debt discount of $1,300,000 (see NOTE 8). During the six months ended
September 30, 2020 we recognized $55,531 of the debt discount into interest expense as well as expensed an additional $111,223
of interest expense on the note, of which $89,556 was repaid during the period.
|
|
|
[4]
|
On
May 27, 2020 we received proceeds of $700,000 from DBR Capital, LLC, an entity controlled by members of our Board of Directors.
The note bears interest at 20% per annum, payable monthly, and the principal is due and payable on April 27, 2030. The note
is convertible into common stock at a conversion price of $0.01257 per share therefore during the six months ended September
30, 2020 we recorded a beneficial conversion feature and debt discount of $700,000 (see NOTE 8). During the six months ended
September 30, 2020 we recognized $24,352 of the debt discount into interest expense as well as expensed an additional $48,614
of interest expense on the note, of which $36,947 was repaid during the period.
|
|
|
[5]
|
During
the six months ended September 30, 2020 we paid $25,000 to an accounting firm owned by our Chief Financial Officer to reduce
amounts previously owed. We also incurred $68,000 to reimburse DBR Capital, LLC, for amounts paid on our behalf. The entire
amount was repaid during the six months ended September 30, 2020.
|
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
NOTE
6 – DEBT
Our
debt consisted of the following:
|
|
September 30,
2020
|
|
|
March 31,
2020
|
|
Short-term advance received on 8/31/18 [1]
|
|
$
|
35,000
|
|
|
$
|
65,000
|
|
Secured merchant agreement for future receivables entered into on 8/16/19 and refinanced on 12/10/19 [2]
|
|
|
-
|
|
|
|
1,223,615
|
|
Secured merchant agreement for future receivables entered into on 8/16/19 [3]
|
|
|
-
|
|
|
|
260,090
|
|
Convertible promissory note entered into on 3/5/20 [4]
|
|
|
-
|
|
|
|
13,072
|
|
Convertible promissory note entered into on 3/11/20 [5]
|
|
|
-
|
|
|
|
7,549
|
|
Short-term advance received on 3/25/20 [6]
|
|
|
95,000
|
|
|
|
150,000
|
|
Promissory note entered into on 4/10/20 [7]
|
|
|
400,000
|
|
|
|
-
|
|
Note issued under the Paycheck Protection Program on 4/17/20 [8]
|
|
|
507,598
|
|
|
|
-
|
|
Loan with the U.S. Small Business Administration dated 4/19/20 [9]
|
|
|
508,322
|
|
|
|
-
|
|
Short-term advance received from a former member of senior management [10]
|
|
|
26,001
|
|
|
|
-
|
|
|
|
$
|
1,571,921
|
|
|
$
|
1,719,326
|
|
[1]
|
In
August 2018, we received a $75,000 short-term advance. The advance is due on demand, has no interest rate, and is unsecured.
During the six months ended September 30, 2020 we made repayments of $30,000 on the debt.
|
|
|
[2]
|
During
August 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. On August 15, 2019, we received proceeds from this arrangement of $339,270 after paying off $316,093 and
$297,033 from two separate February 2018 agreements. In accordance with the terms of the new agreement, we were required to
repay $1,399,000 by making daily ACH payments of $6,823. Accordingly, we recorded $446,604 as a debt discount at the inception
of the agreement, which was the difference between the funds received plus the earlier debt paid off, and the amount that
was to be repaid.
|
|
|
|
Effective
December 10, 2019 this debt was refinanced and the outstanding balance of $839,514 was rolled into a new Secured Merchant
Agreement for future receivables. Prior to the refinance, we repaid $559,486 and amortized $446,605 into interest expense
related to the August 2019 arrangement. As a result of the refinancing arrangement we received proceeds of $854,801. In accordance
with the terms of the agreement, we were required to repay $2,448,250 by making daily ACH payments of $10,999. Accordingly,
we recorded $753,935 as a debt discount at the inception of the agreement, which was the difference between the funds received
plus the earlier debt paid off, and the amount that was to be repaid. During the year ended March 31, 2020, after the refinance,
we repaid $747,932 and amortized $277,232 into interest expense related to the new December 2019 agreement. During the six
months ended September 30, 2020 we amortized $442,894 into interest expense and repaid $1,071,996 to pay the debt off in full,
which resulted in a gain on settlement of debt being recorded for $594,513.
|
|
|
[3]
|
During
August 2019, we entered into a Secured Merchant Agreement for future receivables with an entity that provides quick access
to working capital. In August 2019, we received proceeds from this arrangement of $418,381 after paying off $382,000 from
an October 2018 agreement. In accordance with the terms of the agreement, we were required to repay $1,189,150 by making daily
ACH payments of $5,801. Accordingly, we recorded $388,769 as a debt discount at the inception of the agreement, which was
the difference between the funds received plus the earlier debt paid off, and the amount that was to be repaid. During the
year ended March 31, 2020, we repaid $853,203 and amortized $312,912 into interest expense. During the six months ended September
30, 2020 we repaid $330,013, recorded a $5,934 gain on settlement of debt, and amortized $75,857 into interest expense
|
|
|
[4]
|
In
March 2020, we entered into a Convertible Promissory Note and received proceeds of $200,000 after incurring loan fees of $3,000.
The note incurred interest at 10% per annum and had a maturity date of June 2, 2021. The Convertible Promissory Note had a
variable conversion rate that was 65% of the average of the two lowest trading prices during the previous 15-trading-day period,
subject to adjustment. Therefore, the conversion feature was accounted for as a derivative instrument (see NOTE 7). At inception,
we recorded a debt discount of $203,000 and captured loan fees, recorded as interest expense, of $116,077. During the year
ended March 31, 2020, we amortized $11,626 into interest expense, and recorded additional interest expense on the note of
$1,446. During the six months ended September 30, 2020, we amortized $59,916 into interest expense, and recorded additional
interest expense on the note of $7,453 before we repaid the note in full for $262,649 and wrote off the derivative liability
associated with the debt of $265,584 (see NOTE 7), resulting in a net gain on settlement of debt being recorded for $83,376.
|
|
|
[5]
|
In
March 2020, we entered into a Convertible Promissory Note and received proceeds of $150,000 after incurring loan fees of $3,000.
The note incurred interest at 10% per annum and had a maturity date of June 10, 2021. The Convertible Promissory Note had
a variable conversion rate that was 65% of the average of the two lowest trading prices during the previous 15-trading-day
period, subject to adjustment. Therefore, the conversion feature was accounted for as a derivative instrument (see NOTE 7).
At inception, we recorded a debt discount of $153,000 and captured loan fees, recorded as interest expense, of $148,432. During
the year ended March 31, 2020, we amortized $6,711 into interest expense, and recorded additional interest expense on the
note of $838. During the six months ended September 30, 2020, we amortized $44,960 into interest expense and recorded additional
interest expense on the note of $5,617 before we repaid the note in full for $197,351 and wrote off the derivative liability
associated with the debt of $203,357 (see NOTE 7), resulting in a net gain on settlement of debt being recorded for $64,132.
|
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
[6]
|
In
March 2020, we received a $150,000 short-term advance. The advance is due on demand, has no interest rate, and is unsecured.
During the six months ended September 30, 2020 we made repayments of $55,000 on the debt.
|
|
|
[7]
|
In
April 2020, we received proceeds of $400,000 after entering into a promissory note that is due six months from the funding
date. Under the note six interest only payments of $16,667 are to be made on the 20th of each month beginning in
May 2020. Collateral for the note is, in priority order, is: the reserve and current balance in one of our merchant accounts,
the reserve account in a second separate merchant accounts, shares of our common stock, and high-speed computer processing
equipment. During the six months ended September 30, 2020 we recorded and paid $83,335 worth of interest expense.
|
|
|
[8]
|
In
April 2020 we received $505,300 in proceeds from the Paycheck Protection Program as established by the CARES Act as a result
of a Note entered into with the U.S. Small Business Administration. The note has an interest rate of 1% and matures on April
1, 2022. Under the Note we are required to make monthly payments beginning November 1, 2020, however, under the terms of the
CARES Act the loan may be forgiven if funds are used for qualifying expenses. During the six months ended September 30, 2020
we recorded $2,298 worth of interest expense on the Note.
|
|
|
[9]
|
In
April 2020 we received proceeds of $500,000 from a loan entered into with the U.S. Small Business Administration. Under the
terms of the loan interest is to accrue at a rate of 3.75% per annum and installment payments of $2,437 monthly will begin
twelve months from the date of the loan, with all interest and principal due and payable thirty years from the date of the
loan. During the six months ended September 30, 2020 we recorded $8,322 worth of interest on the loan.
|
|
|
[10]
|
During
the six months ended September 30, 2020 there was a change in senior management therefore $26,001 due to a former member of
the senior management team was reclassified on our balance sheet from a related party payable to debt (see NOTE 5).
|
NOTE
7 – DERIVATIVE LIABILITY
During
the six months ended September 30, 2020, we had the following activity in our derivative liability account:
|
|
Debt
|
|
|
Warrants
|
|
|
Total
|
|
Derivative liability at March 31, 2020
|
|
$
|
793,495
|
|
|
$
|
-
|
|
|
$
|
793,495
|
|
Derivative liability recorded on new instruments
|
|
|
-
|
|
|
|
6,499
|
|
|
|
6,499
|
|
Derivative liability reduced by debt settlement (see NOTE 6)
|
|
|
(468,941
|
)
|
|
|
-
|
|
|
|
(468,941
|
)
|
Change in fair value
|
|
|
(324,554
|
)
|
|
|
(2,234
|
)
|
|
|
(326,788
|
)
|
Derivative liability at September 30, 2020
|
|
$
|
-
|
|
|
$
|
4,265
|
|
|
$
|
4,265
|
|
We
use the binomial option pricing model to estimate fair value for those instruments convertible into common stock, at inception,
at conversion or settlement date, and at each reporting date. During the six months ended September 30, 2020, the assumptions
used in our binomial option pricing model were in the following range:
|
|
|
Debt
|
|
|
|
Warrants
|
|
Risk free interest rate
|
|
|
0.11 - 0.17
|
%
|
|
|
0.21 - 0.28
|
%
|
Expected life in years
|
|
|
0.80 - 1.11
|
|
|
|
4.84 - 5.00
|
|
Expected volatility
|
|
|
128% - 239
|
%
|
|
|
265% - 306
|
%
|
NOTE
8 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred
Stock
We
are authorized to issue up to 50,000,000 shares of preferred stock with a par value of $0.001 and our board of directors has the
authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights,
privileges, and preferences of that preferred stock.
As
of March 31, 2020, we had no preferred stock issued or outstanding.
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
During
the year ended March 31, 2020 our Board of Directors approved the designation of 2,000,000 of the Company’s shares of preferred
stock as Series B Cumulative Redeemable Perpetual Preferred Stock (“Series B Preferred Stock”), each with a stated
value of $25 per share. Our Series B Preferred Stock holders are entitled to 500 votes per share, are entitled to receive cumulative
dividends at the annual rate of 13% per annum of the stated value, equal to $3.25 per annum per share.
During
the six months ended September 30, 2020 we commenced a security offering to sell a total of 2,000,000 units at $25 per unit (“Unit
Offering”), such that each unit consisted of: (i) one share of our newly authorized Series B Preferred Stock and (ii) five
warrants each exercisable to purchase one share of common stock at an exercise price of $0.10 per warrant share. Each Warrant
offered is immediately exercisable on the date of issuance, will expire 5 years from the date of issuance, and its value has been
classified as a fair value liability due to the terms of the instrument (see NOTE 7). During the six months ended September 30,
2020 we sold 46,612 units for gross proceeds of $1,165,300, therefore recorded the issuance of 46,612 shares of Series B Preferred
Stock and the grant of 233,060 warrants during the period. Of the gross proceeds, $6,499 was allocated to the warrants and recorded
as a derivative liability and $1,158,801 was allocated to the preferred stock ($47 recorded as the par value and $1,158,754 allocated
to additional paid in capital). Also in conjunction with the Unit Offering we paid $21,000 of offering costs which was allocated
between the preferred stock and warrants. The $20,994 allocated to the preferred stock decreased additional paid in capital due
to the underlying instrument being classified as equity and the $6 allocated to the warrants was immediately expensed as offering
costs due to the underlying instrument being classified as a fair value liability.
Preferred
Stock Dividends
During
the six months ended September 30, 2020 we recorded $52,342 for the cumulative cash dividends due to the shareholders of our Series
B Preferred Stock and paid $14,567 of these amounts owing. As a result we recorded $37,775 as a dividend liability on our balance
sheet as of September 30, 2020.
Common
Stock
During
the six months ended September 30, 2020, we issued 21,000,000 shares of common stock, valued at $399,000 based on the market value
on the day of issuance, for services and compensation, which is subject to forfeiture if the employee or contractor is not in
good standing at the time the shares are fully vested. Of the $399,000 value we recognized $128,497 as an expense during the six
months ending September 30, 2020 and the remaining $270,503 will be recognized ratably over the vesting term. In addition, during
the six months ended September 30, 2020, we recognized $666,738 as expense due to the vesting of shares of common stock previously
issued.
During
the six months ended September 30, 2020, we repurchased 9,079 shares of our common stock from a third party for $272 and repurchased
106,000,000 shares of our common stock from former members of our senior management team and founders for $120,000, all of which
was recorded in Accounts Payable on our balance sheet at September 30, 2020. These shares repurchased were immediately canceled.
Also, during the six months ended September 30, 2020 we recorded an increase in Additional Paid in Capital of $2,000,000 related
to beneficial conversion features on our related party debt (see NOTE 5) and recorded an increase in Additional Paid in Capital
of $373,832 for accrued payroll forgiven by a member of our senior management team at the time his employment with the Company
ended.
During
the six months ended September 30, 2020 we cancelled 200,000,000 shares returned in conjunction with the termination of a Joint
Venture Agreement entered into in March of 2019, reducing common stock by $200,000, reducing additional paid in capital by $3,180,000,
offset with a reduction in our prepaid asset of $2,428,044 and a reversal of previously recorded expense of $951,956.
As
of September 30, 2020 and March 31, 2020, we had 2,929,481,329 and 3,214,490,408 shares of common stock issued and outstanding,
respectively.
Warrants
During
the six months ended September 30, 2020 we granted 233,060 warrants in conjunction with our Unit Offering. The warrants are classified
as a derivative liability on our balance sheet in accordance with ASC 480, Distinguishing Liabilities from Equity, based on the
warrants terms that indicate a fundamental transaction could give rise to an obligation for us to pay cash to our warrant holders
(see NOTE 7).
INVESTVIEW,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2020
(Unaudited)
Details
of our warrants outstanding as of September 30, 2020 is as follows:
Exercise Price
|
|
|
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
|
Weighted Average
Contractual Life
(Years)
|
|
$
|
0.10
|
|
|
|
233,060
|
|
|
|
233,060
|
|
|
|
4.79
|
|
NOTE
9 – COMMITMENTS AND CONTINGENCIES
Litigation
In
the ordinary course of business, we may be, or have been, involved in legal proceedings from time to time. During the six months
ended September 30, 2020 we were not involved in any material legal proceedings.
NOTE
10 – OPERATING LEASE
In
February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”)
model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases. Leases are classified
as either finance or operating with classification affecting the pattern of expense recognition in the statement of operations.
We adopted ASU No. 2016-02 on April 1, 2019. We did not record a lease asset and lease liability as of the adoption date as we
had no lease arrangements or lease obligation at that time.
In
August 2019 we entered an operating lease for office space in Eatontown, New Jersey (the “Eatontown Lease”) and in
September 2019 we entered an operating lease for office space in Kaysville, Utah (the “Kaysville Lease”). We have
the option to extend the three year lease term of the Eatontown Lease for a period of one year. In addition, we are obligated
to pay twelve monthly installments to cover an annual utility charge of $1.75 per rentable square foot for electric usage within
the demised premises. As the lessor has the right to digitally meter and charge us accordingly, these payments were deemed variable
and will be expensed as incurred. During the three and six months ended September 30, 2020 the variable lease costs amounted to
$831 and $1,662, respectively. At commencement of the Eatontown Lease, right-of-use assets obtained in exchange for new operating
lease liabilities amounted to $110,097. At commencement of the Kaysville Lease, right-of-use assets obtained in exchange for new
operating lease liabilities amounted to $21,147. As of October 1, 2020, the Company began leasing the property located in Kaysville
on a month to month basis.
Operating
lease expense was $16,397 and $32,794 for the three and six months ended September 30, 2020. Operating cash flows used for the
operating leases during the three and six months ended September 30, 2020 were $16,897 and $32,794. As of September 30, 2020,
the weighted average remaining lease term was 1.83 years and the weighted average discount rate was 12%.
Future
minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows:
Remainder of 2021
|
|
$
|
24,000
|
|
2022
|
|
|
48,000
|
|
2023
|
|
|
16,000
|
|
Total
|
|
|
88,000
|
|
Less: Interest
|
|
|
(8,572
|
)
|
Present value of lease liability
|
|
|
79,428
|
|
Operating lease liability, current [1]
|
|
|
(48,000
|
)
|
Operating lease liability, long term
|
|
$
|
31,428
|
|
[1]
Represents lease payments to be made in the next 12 months
NOTE
11 – SUBSEQUENT EVENTS
Subsequent
to September 30, 2020, we paid $7,601 of dividends that were accrued as of September 30, 2020. Also, subsequent to September 30,
2020, we received gross proceeds of $93,300 in connection with our Unit Offering.
In
accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have
determined that there are no additional subsequent events that require disclosure.