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INVESTVIEW, INC.
2023 FORM 10-K ANNUAL REPORT
Table of Contents
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We and our representatives may from time to time make written or oral statements that are “forward-looking”, including statements contained in Item 1. “Business” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within this Form 10-K, in our other filings with the SEC, or in reports to our stockholders. In some cases, we have identified forward-looking statements by such words or phrases as “will likely result,” “is confident that,” “expect,” “expects,” “should,” “could,” “may,” “will continue to,” “believe,” “believes,” “anticipates,” “predicts,” “forecasts,” “estimates,” “projects,” “potential,” “intends” or similar expressions identifying “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on our current views and assumptions regarding future events, future business conditions and the outlook for the company based on currently available information. These forward-looking statements may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the risk factors listed in Item 1A “Risk Factors” of this Form 10-K. You should specifically consider the numerous risks outlined under “Risk Factors.” We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this Form 10-K to conform our prior statements to actual results or revised expectations.
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PART I
Item 1. Business
General
Investview, Inc., a Nevada corporation (which we refer to as “we,” “us,” “our,” “Investview,” or the “Company”), operates a diversified financial technology company that through its subsidiaries and global distribution network provides financial technology, education tools, content, research, and a digital asset technology company, which develops, operates, and supports blockchain technologies, with a focus on the Bitcoin blockchain ecosystem and the generation of digital assets. In addition, we are planning to expand our business into the retail brokerage and financial markets industry by integrating the online brokerage trading platform we acquired in connection with our recent acquisition of Opencash Securities, LLC (“Opencash”), with the proprietary algorithmic trading platform we acquired in September 2021. Opencash is an early-stage registered broker-dealer that plans to offer investors an online trading platform to enable self-directed retail brokerage services and develop synergies with the educational content and products offered by other of our business units.
Business
Financial Education and Technology
Through our wholly-owned subsidiary, iGenius, LLC (“iGenius”), we deliver multiple services and products, both domestically and internationally, through a direct selling network of independent distributors. Our products and services are offered through a subscription-based revenue model to a large base of customers that we refer to as “members”. These services and products consist of market research, analysis, education, and tools designed to assist the self-directed investor in successfully navigating the financial markets. These services include research, analysis, and education regarding equities, options, FOREX, ETFs, binary options, and cryptocurrency. We have multiple tiers of membership at varying upfront and monthly subscription costs, which provide members with the ability to meet their product and service needs and price point. We offer first time members a guarantee of satisfaction, whereby, during the designated trial period (10 days from initial purchase for domestic customers and 14 days from initial purchase for international customers) if the member for any reason is not satisfied with our products or services, the member may request a full refund.
Our services include access to our library of financial education content, as well as access to live and recorded education sessions, and trade alerts provided by independent market educators who are experienced professionals. We also offer access to education and software applications that are designed to assist our members in debt reduction, increased savings, budgeting, and proper tax management. In addition to the financial education technology and tools, iGenius members also gain access to a variety of benefits provided through third party partnerships and affinity arrangements, including access to a crypto trading software and a digital wallet platform. Further, through a distribution arrangement we had with Oneiro NA, Inc., we provided our members with an opportunity to purchase a specialty form of adaptive digital currency called “ndau”. These distribution arrangements ended after August 2023.
We believe that the use of a direct selling distribution network is an effective way to market our products and services for purchase because demand for financial education and other services is strengthened by the ongoing personal contact between members and distributors. In addition, most of our distributors are members and use our products and services themselves, and therefore can provide first-hand testimonials about our products and services, which can serve as a powerful sales tool.
Blockchain Technology and Crypto Mining Products and Services
Through our wholly-owned subsidiary, SAFETek, LLC (“SAFETek”), we operate a Blockchain technology company that provides leading-edge research, development, and FinTech services involving the management of digital asset technologies with a focus on Bitcoin mining and the new generation of digital assets. At our North American and other international locations, SAFETek owns and manages over 5,000 next-generation Bitcoin application-specific integrated circuit (“ASIC”) miner machines, with 100% of such machines being powered by renewable energy sources, mainly hydropower plants and geothermal. Bitcoin mined at our locations is used to pay certain of our expenses, including bonus and commission payments to our U.S. and foreign independent distributors for our iGenius business, or otherwise held for investment purposes. We are also developing new and more efficient ways to mine cryptocurrencies through innovations in hardware, firmware, and additional ways to develop and utilize renewable energy sources. SAFETek operates a round-the-clock Network Operation Center (NOC) to achieve higher efficiency, productivity, and availability of Bitcoin Mining Servers. Through these activities, we aim to increase the hash rate, uptime, profitability, and overall ROI of our crypto currency mining operations.
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Brokerage and Financial Technologies Services
Since 2021, we have pursued the development of a brokerage and financial markets business. This was originally designed to, among other things, commercialize on the proprietary trading platform we acquired in September 2021 from MPower Trading Systems, LLC (“MPower”), and take advantage of the growing on-line retail brokerage market. Our growth plan contemplated the organic start-up or acquisition of a registered broker-dealer through which we planned to offer a suite of financial services that would include self-directed retail brokerage services and access to our algorithmic trading platform. Following our recent acquisition of Opencash, we now plan to expand into the retail brokerage and financial markets industry by, among other things, integrating the online brokerage trading platform we acquired in connection with the Opencash acquisition, with the proprietary algorithmic trading platform we acquired in September 2021.
Apex Tek, LLC
Historically, through our wholly-owned subsidiaries Apex Tek, LLC and SAFETek, LLC, we sold high powered data processing equipment, known as the Apex package, to our customers which was then leased back to us for use in our crypto mining operations. We discontinued sales of the Apex package in June 2020, principally when COVID-19 created certain supply chain-related limitations on that business. Confronted with these limitations in the business, we offered the holders of our Apex leases the opportunity to cancel their leases, in exchange for which, we repurchased substantially all of the data processing equipment (subject to these leases) for approximately $19 million of promissory notes due on or about December 31, 2024 (which amount reflects the principal amount invested by all of such lease holders, plus a 25% premium). During the fourth quarter ended December 31, 2023, we further offered all note holders an early payoff option. By December 31, 2023, we had repaid or settled approximately $18.4 million of the outstanding principal amount owed on the promissory notes, and for promissory notes not repaid or settled, we will continue to pay monthly installments under the promissory notes as they become due. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Sales and Marketing
We market our financial education and technology services and products through a network of independent “distributors” located both within the United States and internationally who market our products and services to customers through a direct sales model. Approximately 90% of our independent distributors are members who elect to participate in our distribution program. Approximately 9% of our members are currently also distributors. We have adopted various policies and procedures to which our members and independent distributors are expected to adhere, and for which we provide regular compliance training programs and conduct active compliance monitoring. We seek to motivate our independent distributors by offering high quality products and services and providing product support and financial incentives. iGenius members are eligible to receive bonuses on sales of new memberships and on upgrades in membership sold to their personally enrolled members. Bonuses for enrollments and upgraded enrollments vary depending on the level of membership that a member is enrolled in. In addition, our distributors are eligible for additional bonuses each time their personally enrolled members renew their subscriptions. We believe that the opportunity for our independent distributors to earn bonuses and commissions contributes significantly to our ability to retain our most active and productive distributors.
We principally market our Blockchain technology and crypto mining products and services through trade shows, business to business marketing and Blockchain supporting relationships.
In the United States, we generally sell our products and services on a cash or credit card basis. We also periodically accept Bitcoin as a form of payment and use it to satisfy liabilities and certain operating expenses.
Materials and Suppliers
Digital asset mining is dependent on specialized digital asset mining hardware utilizing ASIC chips to discover blocks on blockchains using the 256-bit secure hashing algorithm. Almost all of these miners are produced outside of the United States, mostly in China and Southeast Asia, by a few manufacturers. As the market value of digital assets has increased, the demand for the newest, most efficient miners has also increased, thereby resulting in an increase in the price of miners. Our mining business is highly dependent upon digital asset mining equipment suppliers providing an adequate supply of new generation digital asset mining machines at economical prices to enable profitable mining by us. We are also dependent on the host of our power supply in Northern Europe who provides our power generation through hydroelectric sources. We believe that our relationship with our power supplier is good and that we generally have sufficient supply to conduct our business operations as presently contemplated. However, since the beginning of 2024, our power supply has been temporarily curtailed by approximately 38% as a direct result of low water levels that have cutback local hydroelectric power capacity. While we are hopeful that the water shortage responsible for this curtailment is temporary, we are unable to predict when our mining levels will return to pre-2024 levels.
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Competition
Our financial education and technology services are sold in competition with other companies. We rely on our independent distributors to compete effectively in the direct selling markets, and our ability to attract and retain new members depends on various factors, including the training, support, product offerings, and financial incentives for the independent distributors.
With respect to our crypto mining business, we operate in a highly competitive environment. The primary drivers of competition include the demand for Bitcoin, the Bitcoin Network Difficulty level, sufficient capital resources to acquire large quantities of high-quality miners, the ability to secure these miners from a limited number of suppliers on rapid delivery schedules, and the ability to generate the highest productivity. Recently, there has been a significant increase in the number of Bitcoin miners attempting to expand their mining operations at scale. As more Bitcoin miners enter the space, we expect additional pressure on the industry, with greater competition for access to miners and mining infrastructure, which is in limited supply. Data center hosting is also highly competitive in the Bitcoin mining space. Our Bitcoin ASIC miner machines are nearly all powered by renewable energy, which supports our commitment to the highest level of ESG related standards and regulations.
Government Regulation
General
We are subject to government regulation in connection with securities laws and regulations applicable to all publicly owned companies as well as laws and regulations applicable to businesses generally. We are also increasingly subject to governmental regulation and legislation specifically targeting Internet companies, such as privacy regulations and taxes adopted at the local, state, national and international levels. Due to the increasing use of the internet, enforcement of existing laws, (such as consumer protection regulations in connection with web-based activities), has become more aggressive, and it is expected that new laws and regulations will continue to be enacted at the local, state, national, and international levels. Such existing and new legislation, alone or combined with increasingly aggressive enforcement of existing laws, could have a material adverse effect on our future operating performance and business.
Distribution Network Model
Our direct selling activities are regulated by the Federal Trade Commission (“FTC”), as well as various federal, state and local governmental agencies in the United States and foreign countries. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, which compensate participants primarily for recruiting additional participants without sufficient emphasis on providing tangible products and/or services. The laws and regulations governing direct selling are modified from time to time, and, like other direct selling companies, we may be subject from time to time to government investigations related to our direct selling activities. This may require us to make changes to our business model and our sales compensation plan.
Cryptocurrency Mining
Cryptocurrency mining is largely an unregulated activity at both the state and federal level, but government regulation is being actively considered by the United States federal government via a number of agencies and regulatory bodies. Regulations may substantially change in the future, and it is presently not possible to know how regulations will apply to or impact our businesses, or when they will be effective. United States and foreign country regulation of cryptocurrency mining is also important and determinative with respect to where we conduct our mining operations.
As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which may affect our mining and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part I, Item 1A. “Risk Factors” beginning on page 9 of this Annual Report.
Human Capital Resources
As of March 29, 2024, we had 26 employees, of which 24 were full-time and 2 are part-time. None of these employees are covered by a collective bargaining agreement. We have experienced no work stoppages and consider our relations with our employees to be good. We contract with a professional employer organization, or PEO, that administers our human resources, payroll and employee benefits functions for our employees in the United States. Although we recruit and select our workers, each of these workers is also an employee of record of the PEO. As a result, these workers are compensated through the PEO, are governed by the work policies created jointly by us and the PEO and receive their annual wage statements and other payroll or labor related reports from the PEO.
In addition to our employees, our human capital resources also include our independent distributors for our iGenius products and services, who are located worldwide. For information about our independent distributors, see Item 1. Business “Sales and Marketing.”
Intellectual Property
We rely on a combination of trade-secret protection and confidentiality and/or license agreements with our employees, customers, partners, and others to protect our proprietary rights. Relative to our distributors, we rely on a more customary form of confidentiality protection. It is our general practice to enter into confidentiality and invention assignment agreements with all of our employees and independent contractors. Such agreements include a confidentiality undertaking by the employee or independent contractor; ensure that all new intellectual property developed in the course of our relationship with employees or independent contractors is assigned to us; and require the employee or independent contractor to cooperate with us to protect our intellectual property during and after their relationship with us. With respect to our financial education and technology business, the intellectual property that makes our business competitive consists of, among others, the valuable trade secrets, know-how, concepts, methods, techniques and materials used in our business, consisting principally of educational materials, domain names, relationships with strategic vendors and customer lists.
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With respect to our cryptocurrency mining business, we actively use specific hardware and software. In certain cases, source code and other software assets may be subject to an open-source license, as much technology development underway in this sector is open source. For these works, we adhere to the terms of any license agreements that may be in place. We do not currently own, and do not have any current plans to seek, any patents in connection with our existing and planned blockchain and cryptocurrency related operations.
With respect to our planned Brokerage and Financial Markets business, in September 2021 we acquired the source code and object code of the proprietary algorithmic trading platform of MPower. This also included all know-how and other intellectual property necessary, useful and/or used in the software. We also acquired a proprietary trading platform in connection with our acquisition of Opencash. The proprietary elements of each of our trading platforms are protected as trade secrets.
Corporate History
Investview was formed in the State of Utah on January 30, 1946, under its prior name Uintah Mountain Copper Mining Company. After the commencement and abandonment of several business plans, and after several name changes and change of domicile to Nevada, on March 27, 2012, we adopted our new business model and changed our name to Investview, Inc.
Internet Address
Additional information concerning our business can be found on our website at www.investview.com for the most up-to-date corporate financial information, presentation announcements, transcripts, and archives. Information regarding our products and services offered by our wholly owned subsidiary, iGenius LLC, may be found at www.igeniusglobal.com.Information regarding SAFETek LLC is available at www.safeteksolutions.com. Website links provided may change in the future. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such material with or furnish it to the Securities and Exchange Commission.
Item 1A. Risk Factors
Our business, financial condition, and results of operations, may be adversely affected by a number of factors, including the risk, factors, and uncertainties described under this Item 1A, and elsewhere in this Form 10-K. This is not an exhaustive list, and there are other factors that may be applicable to our business that are not currently known to us or that we currently do not believe are material. Any of these risks could have an adverse effect on our business, financial condition, operating results, or prospects, which could cause the trading price of our common stock to decline, and you could lose part or all of your investment. You should carefully consider the risks, factors, and uncertainties described below, together with the other information contained in this Form 10-K, as well as the risk, factors, uncertainties, and other information we disclose in other filings we make with the SEC before making an investment decision regarding our securities.
Risks Related to our Business Generally
Even though we were profitable for the year ended December 31, 2023, we have a history of losses from operations.
Although during our most recent year ended December 31, 2023, we recorded net income of $2,831,920, in prior years the Company has experienced losses. During the year ended December 31, 2022, we recorded a net loss of $12,944,944 which was due to our non-cash impairment expense of $14.6 million that had no impact on our cash flow, liquidity, or capital resources, and after excluding the impairment expense, we were able to show net income from operations of $1.7 million and $9.4 million of cash provided by our operating activities. During the nine-month period ended December 31, 2021, we recorded a net loss of $28,375,235 which was due to a one-time non-recurring charge of $51.6 million that had no impact on our cash flow, liquidity, or capital resources, and after excluding the one-time non-recurring charge, we were able to show net income from operations of $23.2 million and $27.7 million of cash provided by our operating activities. Although the losses during the year ended December 31, 2022, and during the nine months ended December 31, 2021, were due to non-cash impairment and a one-time non-recurring charge, respectively, losses of that magnitude could have an adverse reputational and commercial effect on us, including on our credit rating, banking matters, relationships with vendors, insurers, and credit processors, and other commercial relationships.
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Climate change, and the regulatory and legislative developments related to climate change, may materially adversely affect our business and financial condition: Recent curtailment of power supply.
The impacts of climate change may materially and adversely impact the cost, production and financial performance of our operations. Further, any impacts to our business and financial condition as a result of climate change are likely to occur over a sustained period of time and are therefore difficult to quantify with any degree of specificity. For example, extreme weather events may result in adverse physical effects on portions of our infrastructure, which could disrupt our supply chain and ultimately our business operations. In addition, disruption of transportation and distribution systems could result in reduced operational efficiency and customer service interruption. Climate related events have the potential to disrupt our business, including the business of our customers, and may cause us to experience higher attrition, losses and additional costs to resume operations. Since the beginning of 2024, our power supply has been temporarily curtailed by approximately 38% as a direct result of low water levels that have cutback local hydroelectric power capacity. While we are hopeful that the water shortage responsible for this curtailment is temporary, we are unable to predict when our mining levels will return to pre-2024 levels. A prolonged disruption in our power supply levels could have a material adverse effect on our bitcoin mining operations, and possibly our overall results of operations.
In addition, a number of governments or governmental bodies have introduced or are contemplating legislative and regulatory changes in response to various climate change interest groups and the potential impact of climate change. Given the significant amount of electrical power required to operate cryptocurrency miners, as well the environmental impact of mining for metals used in the production of mining servers, the cryptocurrency mining industry may become a target for future environmental and energy regulation. Legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business and financial condition.
Our growth plan contemplates our ability to create a Brokerage and Financial Markets business; however, this has been delayed for several years, and may be difficult to achieve as our platform for expansion is a start-up business in the early stages of its development.
Since 2021, we pursued the development of a brokerage and financial markets business. Our growth plan, however, contemplated the acquisition of a registered broker-dealer, which was originally to have been acquired from an affiliate of Joseph Cammarata, a former executive officer who was terminated in late 2021. However, due to delays and complications in that process, relating primarily to Mr. Cammarata’s then ongoing legal proceedings, even though unrelated to the business of the Company, we were caused in 2022 to abandon those efforts and continue our search for alternative acquisitions within the brokerage industry. With our recent acquisition of Opencash, a broker-dealer in the pre-revenue and early stages of its operations, we believe we will now be able to launch our expansion into the retail brokerage and financial markets industry. However, to do so, we will need to, among others, develop the infrastructure necessary to achieve retail operations, on-board customer support personnel and software developers, develop and implement a marketing strategy, secure the necessary securities clearing arrangements, continue the development of the online Opencash trading platform and complete our integration with the proprietary algorithmic trading platform we acquired in September 2021. Despite our best efforts, there can be no assurance that we will be able to achieve these objectives on a timely basis, if at all, as the development of an early-stage securities brokerage business involves inherent regulatory and operational risks and uncertainties.
Our business remains heavily impacted by interested party transactions with certain of our officers and directors.
Prior to 2022, the Company had engaged in a series of interested party transactions with its former directors and officers, Mario Romano and Annette Raynor. Those transactions were terminated in conjunction with a January 6, 2022, Separation and Release Agreement by which Mr. Romano and Ms. Raynor resigned their positions as officers and directors of the Company and surrendered 150,000,000 shares of our common stock, Subsequently, on September 9, 2023, we closed on the purchase in a private transaction of an aggregate of 302,919,223 shares of the Company’s common stock from sellers consisting of Mario Romano, Annette Raynor, and a series of their family members and related entities. These shares were purchased for aggregate consideration of $2,922,380, representing a price of $0.00964739 per share, with one-eighth of the purchase price paid on or about the closing, with the balance payable in a series of equal quarterly payments over seven (7) consecutive quarters thereafter.
During September 2021, we acquired, among other assets, a proprietary algorithmic trading platform from MPower, a business controlled by two members of our Board of Directors. The assets of MPower were acquired in consideration of the issuance of Class B Redeemable Units consisting of non-voting membership interests in our wholly owned subsidiary IFGH that are in the future redeemable for 565,000,000 Company common shares, presently representing over 20% of the Company’s current fully-diluted shares.
Further, by virtue of an April 27, 2020, convertible note financing arrangement we have with DBR Capital, LLC (“DBR Capital”) (see “ITEM 13. Certain Relationships and Related Transactions, and Director Independence”), an affiliate of our Chairman, David B. Rothrock, we borrowed the principal amount of $3,300,000 under convertible promissory notes that bear rates of interest between 20% and 38.5% per annum and are subject to conversion by DBR at a price of $.007 per share. Under this 2020 arrangement, DBR Capital has the right to compel the Company on or before December 31, 2024, to borrow up to an additional principal amount of $7,700,000. The presence of these arrangements, although negotiated by DBR Capital on an arms-length basis and in April 2020, at the time when the Company’s solvency was at imminent risk, could make it difficult for the Company to attract third-party capital in the future.
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We might fail to realize the expected benefits and strategic objectives of our 2021 acquisition of a proprietary trading platform from a business affiliated with two members of the Company’s Board of Directors.
During September 2021, we acquired, among other assets, a proprietary algorithmic trading platform from MPower, a business controlled by two members of our Board of Directors. The assets of MPower were acquired in consideration of the issuance of Class B Redeemable Units consisting of non-voting membership interests in our wholly owned subsidiary IFGH that are in the future redeemable for 565,000,000 Company common shares on a one-for-one basis. While we believe such acquisition is expected to become a fundamental part of an overall strategy to create a Brokerage and Financial Markets business, we might not achieve our expected, or any, return on this investment. If we are unsuccessful at creating or growing this line of business, we may not be able to achieve our planned rates of growth or improve our market share, profitability or competitive position.
Substantially all of our employees are employed by professional employer organizations.
We contract with a professional employer organization, or PEO, that administers our human resources, payroll and employee benefits functions for our employees in the United States. Although we recruit and select our workers, each of these workers is also an employee of record of the PEO. As a result, these workers are compensated through the PEO, are governed by the work policies created jointly by us and the PEO and receive their annual wage statements and other payroll or labor related reports from the PEO. This relationship permits management to focus on operations and profitability rather than payroll administration, but this relationship also exposes us to some risks. Among other risks, if the PEO fails to adequately withhold or pay employer taxes or to comply with other laws, such as the Fair Labor Standards Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act or state and federal anti-discrimination laws, each of which is outside of our control, we would be liable for such violations, and indemnification provisions with the PEO, if applicable, and Company insurance may not be sufficient to insulate us from those liabilities.
Court and administrative proceedings related to matters of employment tax, labor law and other laws applicable to PEO arrangements could distract management from our business and cause us to incur significant expense. If we were held liable for violations by the PEO, such amounts may adversely affect our profitability and could negatively affect our business and results of operations.
Our business could be negatively affected if the SEC determines that we violated federal securities laws.
During November 2021, we received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. Following our own internal review, we believe that we have complied at all times with the federal securities laws, and we have received no follow-up communications from the SEC following our production of documents in 2022. We have cooperated fully with the SEC’s investigation and will continue to work with outside counsel to respond to any further inquiries of the SEC, if, and to the extent they arise.
Unfavorable publicity associated with our ongoing regulatory matters.
Regardless of the ultimate outcome, we have experienced unfavorable publicity as a result of the SEC inquiry, even though we have fully cooperated with their inquiry and have received no follow-up from the SEC following our production of documents in 2022. Unfavorable publicity, whether justified or not, continues to have a negative impact on our commercial banking and credit card processing relationships, employees, business, products, and reputation, and could negatively impact our ability to attract, motivate, and retain banking relationships, members and distributors, and our ability to generate revenue.
We may be impacted by macroeconomic conditions due to global pandemics, epidemics or outbreaks of disease and the resulting global supply chain crisis.
Global trade conditions and consumer trends that originated during the COVID-19 pandemic may continue to persist and may also have long-lasting adverse impact on us and our industry. There are continued risks arising from new pandemics, epidemics or outbreaks of disease, and ongoing COVID-19 related issues which have had and could further have an adverse effect on suppliers and customers and create significant volatility and uncertainty and economic disruption. We believe the extent to which global pandemics, including new surges of COVID-19 variants, or any other pandemics, ultimately impact our business, financial condition, results of operations or cash flows will depend on numerous evolving factors that we may not be able to accurately predict, including, without limitation: the duration and scope of the pandemic; the success in delivering and efficacy of vaccines; governmental, business and individuals’ actions that have been and will be taken in response to the pandemic (including restrictions on travel and transport and workforce pressures); the effect on our suppliers and customers and customer demand for our core products and services; the effect on our sources of supply; the impact of the pandemic on economic activity and actions taken in response; closures of our and our suppliers’ and customers’ offices and facilities; the ability of our customers to pay for our products and services; financial market volatility; commodity prices; and the pace of recovery when the COVID-19 or other pandemic subsides. We cannot predict the duration or direction of current or new global trends or their sustained impact. Ultimately, we continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and we will have to accurately project demand and infrastructure requirements globally and deploy our workforce and capital resources accordingly. If we experience unfavorable global market conditions, or if we cannot or do not maintain operations at a scope that is commensurate with such conditions or are later required to or choose to suspend such operations again, our business, prospects, financial condition, and operating results may be harmed.
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Cyber-attacks may disrupt our operations and expose us to significant liability.
We are at risk for cyber-attacks, such as phishing, and other attempts to gain unauthorized access to our systems, and we anticipate continuing to be subject to such attempts. There is an ongoing risk that some or all of our cryptocurrencies could be lost or stolen as a result of one or more of these incursions. As we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks or other security threats, and, despite our implementation of strict security measures and frequent security audits, it is impossible to eliminate all such vulnerability. For instance, we may not be able to ensure the adequacy of the security measures employed by third parties, such as our service providers and any of our Data Center Hosting customers. Additionally, though we provide cybersecurity training for employees, we cannot guarantee that we will not be affected by attempted security breaches. Efforts to limit the ability of malicious actors to disrupt the operations of the internet or undermine our own security efforts may be costly to implement and may not be successful. Such breaches, whether attributable to a vulnerability in our systems or otherwise, could subject us to liability to our customers, suppliers, business partners and others, or give rise to legal and/or regulatory action, which could damage our reputation or otherwise materially harm our business, operating results, and financial condition, and result in claims of liability against us, damage our reputation and materially harm our business.
We rely on a well-known U.S. based third-party digital asset-focused custodian to safeguard our Bitcoin. If our third-party service provider experiences a security breach or cyber-attack and unauthorized parties obtain access to our Bitcoin, we may lose some or all of our Bitcoin and our financial condition and results of operations could be materially adversely affected.
We may accept, disburse, and hold cryptocurrency, which may subject us to exchange risk and additional tax and regulatory requirements.
We periodically accept Bitcoin as a form of payment and use it to satisfy liabilities. Cryptocurrency is not considered legal tender or backed by any government and has experienced significant price volatility, technological glitches, and various law enforcement and regulatory interventions. If we fail to comply with regulations or prohibitions applicable to us, we could face regulatory or other enforcement actions and potential fines and other consequences. We also hold cryptocurrencies directly, subjecting us to exchange rate risk as well as the risk that regulatory or other developments and the recent price volatility may adversely affect the value of the cryptocurrencies we hold. The uncertainties regarding legal and regulatory requirements relating to cryptocurrencies or transactions using cryptocurrencies, as well as potential accounting and tax issues or other requirements relating to cryptocurrencies, could have a material adverse effect on our business.
We may not be able to fully protect our proprietary rights and we may infringe upon the proprietary rights of others, which could result in costly litigation.
Our future success depends on our ability to protect and preserve the proprietary rights related to our products. We cannot assure that we will be able to prevent third parties from using our intellectual property and technology without our authorization. We also rely on trade secrets, common law trademark rights, and trademark registrations, as well as confidentiality and work for hire, development, assignment, and license agreements with employees, consultants, third-party developers, licensees, and customers. Our protective measures for these intangible assets afford only limited protection from illegal actors and may be flawed or become inadequate with the passage of time.
Policing unauthorized use of our technology is difficult, and some foreign laws do not provide the same level of protection as U.S. laws. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trademarks or trade secrets that we may obtain, or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of resources and have a material adverse effect on our future operating results.
In recent years, there has been significant litigation in the United States involving intellectual property rights. In particular, there has been an increase in the filing of lawsuits alleging infringement of intellectual property rights, which pressure defendants into entering settlement arrangements quickly to dispose of such lawsuits, regardless of their merits. Other companies or individuals may allege that we infringe on their intellectual property rights. Litigation, particularly in the area of intellectual property rights, is costly and the outcome is inherently uncertain. In the event that we become involved in such a lawsuit in the future and receive an adverse result, we could be liable for substantial damages, and we may be forced to discontinue our use of the intellectual property in question or obtain a license to use those rights or develop non-infringing alternatives.
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Risks Related to our Financial Education and Technology Business
Our business could be negatively affected by any adverse economic developments in the securities markets or the domestic or international economy in general.
We depend on the interest of individuals in obtaining financial information and securities trading strategies to assist them in making their own investment decisions. Significant downturns in the securities markets or in general economic and political conditions domestically or internationally may cause individuals to be reluctant to make their own investment decisions and thus decrease the demand for our products and services. Significant upturns in the securities markets or in general economic and political conditions domestically or internationally may cause individuals to be less proactive in seeking ways to improve the returns on their trading or investment decisions and, thus, decrease the demand for our products and services.
We may encounter risks relating to security or other system disruptions and failures that could reduce the attractiveness of our websites and that could harm our business and results of operations.
Although we have implemented various security mechanisms, our business is vulnerable to computer viruses, physical or electronic break-ins, and similar disruptions, which could lead to interruptions, delays, or loss of data. For instance, because a portion of our revenue is based on individuals using credit cards to purchase subscriptions over the Internet, our business could be adversely affected by credit card fraud and other electronic break-ins or disruptions. Additionally, our operations depend on our ability to protect systems against damage from fire, earthquakes, power loss, telecommunications failure, and other events beyond our control. Moreover, our website may experience slower response times or other problems for a variety of reasons, including hardware and communication line capacity restraints, software failures, or significant increases in traffic when there have been important business or financial news stories. These strains on our systems could cause customer dissatisfaction and could discourage visitors from becoming paying subscribers. Our websites could experience disruptions or interruptions in service due to the failure or delay in the transmission or receipt of information from us. These types of occurrences could cause users to perceive our website and technology solutions as not functioning properly and cause them to use other methods or services of our competitors. Any disruption resulting from these actions may harm our business and may be expensive to remedy, may not be fully covered by our insurance, could damage our reputation, and discourage new and existing users from using our products and services. Any disruptions could increase costs and make profitability even more difficult to achieve.
We will need to introduce new products and services and enhance existing products and services to remain competitive.
Our future success depends in part on our ability to develop and enhance our products and services. In addition, the adoption of new Internet, networking or telecommunications technologies or other technological changes could require us to incur substantial expenditures to enhance or adapt our services or infrastructure. There are significant technical and financial costs and risks in the development of new or enhanced products and services, including the risk that we might be unable to effectively use new technologies, adapt our services to emerging industry standards, or develop, introduce and market enhanced or new products and services. An inability to develop new products and services, or enhance existing offerings, could have a material adverse effect on our profitability.
We rely on external service providers to perform certain key functions.
We rely on a number of external service providers for certain key technology, processing, service, and support functions. External content providers provide us with crypto mining services, financial information, market news, charts, option and stock quotes, research reports, and other fundamental data that we offer to clients. These service providers face technological and operational risks of their own. Any significant failures by them, including improper use or disclosure of our confidential client, employee, or company information, could cause us to incur losses and could harm our reputation.
We cannot assure that any external service providers will be able to continue to provide these services in an efficient, cost-effective manner or that they will be able to adequately expand their services to meet our needs. An interruption in or the cessation of service by any external service provider as a result of systems failures, capacity constraints, financial constraints or problems, unanticipated trading market closures, or for any other reason, and our inability to make alternative arrangements in a smooth and timely manner, if at all, could have a material adverse effect on our business, results of operations, and financial condition.
We could face liability and other costs relating to storage and use of personal information about our users.
Users provide us with personal information, including tax identification numbers, which we do not share without the user’s consent. Despite this policy of obtaining consent, however, if third persons were able to penetrate our network security or otherwise misappropriate our users’ personal information, we could be subject to liability, including claims for unauthorized purchases with credit card information, impersonation or other similar fraud claims, and misuses of personal information, such as for unauthorized marketing purposes. New privacy legislation may further increase this type of liability. Furthermore, we could incur additional expenses if additional regulations regarding the use of personal information were introduced or if federal or state agencies were to investigate our privacy practices. We do not store user credit card information and rely upon our merchant processing partners to collect and store this information with the necessary Payment Card Industry Security Standards compliance in place. However, a breach of the merchant’s security standards could create liability for us.
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Our business could be negatively affected if we are required to defend allegations of unfair competition and unfair false or deceptive acts or practices in or affecting commerce.
Advertising and marketing of our products in the United States are also subject to regulation by the Federal Trade Commission (“FTC”) under the Federal Trade Commission Act, or FTC Act. Among other things, the FTC Act prohibits unfair methods of competition and unfair false or deceptive acts or practices in or affecting commerce. The FTC Act also makes it illegal to disseminate or cause to be disseminated any false advertisement. The FTC routinely reviews websites to identify questionable advertising claims and practices. Competitors sometimes inform the FTC when they believe other competitors are violating the FTC Act and consumers also notify the FTC of what they believe may be wrongful advertising. The FTC may initiate a nonpublic investigation that focuses on our advertising claims, which usually involves nonpublic, pre-lawsuit, extensive formal discovery. Such an investigation may be lengthy and expensive to defend and result in a publicly disclosed consent decree or settlement agreement. If no settlement can be reached, the FTC may start an administrative proceeding or a federal court lawsuit against us or our principal officers. The FTC often seeks to recover from the defendants, whether in a consent decree or a proceeding, any or all of the following: (i) consumer redress in the form of monetary relief or disgorgement of profits; (ii) significant reporting requirements for several years; and (iii) injunctive relief. In addition, most, if not all, states have statutes prohibiting deceptive and unfair acts and practices. The requirements under these state statutes are similar to those of the FTC Act.
Our business could be negatively affected if we are required to defend allegations that our direct selling activities are fraudulent or deceptive schemes, or against public interest.
Our iGenius products and services are marketed by a global network of independent distributors using a direct selling business model. Although we believe that our direct selling business model is generally in compliance with applicable legal standards, direct selling programs, in general, have often been the target of regulatory scrutiny by federal, state, and local governmental agencies in the United States and foreign countries, including the FTC. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramid” schemes, which compensate participants primarily for recruiting additional participants without significant emphasis on product sales, whereas the more successful direct selling business models have and emphasize sales of products and services. The regulatory requirements concerning direct selling programs do not include “bright line” rules and are inherently fact-based and, thus, we are subject to the risk that these regulations or the enforcement or interpretation of these regulations by regulators or courts can change. The adoption of new regulations, or changes in the interpretations or enforcement of existing regulations, may result in significant compliance costs or require us to change or cease aspects of our network marketing program. In addition, the ambiguity surrounding these regulations can also affect the public perception of our business. In the normal course of operations, we may periodically receive an inquiry from a foreign regulator relative to matters of this nature, however, to our knowledge we are not under formal investigation relative to the practices of our direct selling network activities in any foreign country.
Our independent distributors could fail to comply with applicable legal requirements or our distributor policies and procedures, which could result in claims against us that could harm our business.
Our independent distributors are independent contractors and, accordingly, we are not able to directly provide the same oversight and direction as we could if they were our employees. As a result, we have implemented compliance measures that are designed to train our distributors and attempt to monitor our distributors’ use of marketing materials that are in compliance with FTC and other legal standards. Despite our compliance initiatives we cannot always ensure that our independent distributors will comply with applicable laws or regulations, our distributor policies and procedures, or that such marketing materials or other distributor practices comply with applicable laws, rules, and regulations. It is possible that a court or governmental agency could hold us liable for the actions of our distributors, which could materially harm our business, financial condition, and operating results.
Extensive federal, state, local, and international laws regulate our business, products and direct selling activities. In addition, because we have expanded into foreign countries, our policies and procedures for our independent distributors differ slightly in some countries due to the different legal requirements of each country in which we do business.
Our proprietary systems may be compromised by hackers.
Our current products and other products and services that we may develop in the future will be based on proprietary software and customer-specific data that we protect by routine measures such as password protection, confidentiality and nondisclosure agreements with employees, and similar measures. Any unauthorized access to our software or data could materially disrupt our business and result in financial loss and damage to our business and reputation.
Our business could be negatively affected if any of the third-party providers of products or services offered through our membership packages default on their obligation to our members.
Through our iGenius membership program and our now discontinued Apex sale and leaseback program, our members gained access to a variety of benefits provided through third party partnerships and affinity arrangements, including products and services provided by third party investment professionals, access to a proprietary digital currency called “ndau” (which was discontinued during August 2023) and a supplemental total protection program offered by a third-party that claims to be an affiliate of a global insurance brokerage firm. We cannot ensure that such third-party providers will comply with their contractual requirements to our members or with applicable laws, rules, and regulations. Any significant failures by them could cause us to incur losses and could harm our reputation.
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Included in our now discontinued Apex sale and leaseback program was a “guaranteed assets buy-back product” offered, administered and managed by a third-party provider, Total Protection Plus (“TPP”), a purported affiliate of a global insurance brokerage firm. According to marketing and legal documents provided by TPP, the product offered by TPP (the “TPP Program”) would function as a supplemental financial guaranty of a return on investment by providing Apex program customers with protection for the purchase price of such equipment, which could be redeemed by the customer by exercising an option for a cash payout to be paid by the third-party provider after a certain period of time, either 5 or 10 years. As an accommodation to our customers, the premiums for the TPP Program were paid for directly by the Company at no additional cost to the customer.
We have also historically offered our iGenius members the opportunity to access through TPP the right to participate in the TPP Program, in connection with such members’ purchases of ndau through the Oneiro ndau distribution program. Even though we suspended the distribution of ndau during August 2023, prior to such suspension, we had distributed over $16.8 million in ndau to our members who purchased ndau in conjunction with the TPP Program. According to marketing and legal documents provided by TPP, the TPP Program was purported by TPP to provide a supplemental financial guaranty of a return on investment in excess of the purchase price of the ndau. In its marketing materials, we believe TPP offered customers the right to receive a supplemental cash payout after 5 or 10 years, of between 50% to 100% of the original price of ndau purchased. As an accommodation to our ndau customers, the premiums paid to participate in the TPP Program, which the Company estimates at approximately $3.6 million, were paid directly by the Company at no additional cost to the customer.
During the fourth calendar quarter of 2021, we suspended any further offering of the TPP program in connection with the sale of ndau after the third-party provider was unable to comply with our standard vendor compliance protocols, citing certain offshore confidentiality entitlements. That suspension has remained in place as we have been unable to further validate the continued integrity of the TPP program and the vendor’s ability to honor its commitments to our members. We cannot ensure that such third-party provider will comply with its contractual requirements, which could cause our members to not achieve the level of return on their investments offered by TPP. While we do not believe that we have any legal responsibility to the customers who participated in the TPP Program, as it was offered and administered, and to be underwritten by TPP, there is a risk that any failure of TPP to perform its obligations to our customers, could expose us to claims of dissatisfied customers, even though we had no responsibility to underwrite the risk of the TPP Program, for which we paid to TPP premiums of approximately $3.6 million. The possible substantiality of those claims could have an adverse effect on our business, financial condition, and operating results.
Risks Related to our Blockchain Technology and Crypto Mining Products and Services
The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us.
Digital assets such as Bitcoin, that may be used, among other things, to buy and sell goods and services are a new and rapidly evolving industry of which the digital asset networks are prominent, but not unique, parts. The growth of the digital asset industry in general, and the digital asset networks of Bitcoin in particular, are subject to a high degree of uncertainty. The factors affecting the further development of the digital asset industry, as well as the digital asset networks, include:
| ● | continued worldwide growth in the adoption and use of Bitcoin and other digital assets; | |
| ● | government and quasi-government regulation of Bitcoin and other digital assets and their use, or restrictions on or regulation of access to and operation of the digital asset network or similar digital assets systems; | |
| ● | the maintenance and development of the open-source software protocol of the Bitcoin network; | |
| ● | changes in consumer demographics and public tastes and preferences; | |
| ● | the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; | |
| ● | general economic conditions and the regulatory environment relating to digital assets; | |
| ● | the impact of regulators focusing on digital assets and digital securities and the costs associated with such regulatory oversight; and | |
| ● | A decline in the popularity or acceptance of the digital asset networks of Bitcoin, or similar digital asset systems, could adversely affect an investment in us. | |
| ● | Changes or improvements in mining technologies and cryptology that could pose a threat to the efficiency or security of current mining technologies, for example, if quantum computing overcomes 256-bit encryption. |
Our ability to achieve profitability is largely dependent on the price of Bitcoin, which has historically been volatile.
Our focus on our Bitcoin mining operations is largely based on our assumptions regarding the future value of Bitcoin, which has been subject to significant historical volatility and may be subject to influence from malicious actors, real or perceived scarcity, political, economic, and regulatory conditions, and speculation making its price more volatile or creating “bubble” type risks for the trading price of Bitcoin. Further, unlike traditional stock exchanges, which have listing requirements and vet issuers, requiring them to comply with rigorous listing standards and rules, and which monitor transactions for fraud and other improprieties, markets for Bitcoin and other cryptocurrencies tend to be underregulated, if they are regulated at all. Less stringent cryptocurrency markets have a higher risk of fraud or manipulation, and any lack of oversight or perceived lack of transparency could reduce confidence in the price of Bitcoin and other cryptocurrencies, which could adversely affect their price.
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These factors make it difficult to accurately predict the future market price of Bitcoin and may also inhibit consumer trust in and market acceptance of cryptocurrencies as a means of exchange, which could limit the future adoption of Bitcoin and, as a result, our assumptions could prove incorrect. If our assumptions prove incorrect and the future price of Bitcoin is not sufficiently high, our income from our Bitcoin mining operations may not exceed our costs, and our operations may never achieve profitability.
Transaction fees may decrease demand for Bitcoin and prevent expansion.
As the number of Bitcoin block subsidy rewards for solving a block in a blockchain continue to reduce in half approximately every 4 years, transaction fees have increasingly been used to incentivize miners to continue to contribute to the Bitcoin network. However, high Bitcoin transaction fees may slow the adoption of Bitcoin as a means of payment, which may decrease demand for Bitcoin and future prices of Bitcoin may suffer as a result. If Bitcoin prices are not sufficiently high, our mining revenue may not exceed our associated costs, and our results of operations and financial condition may suffer. Further, because the price of shares of our common stock may be linked to the price of Bitcoin, if demand for Bitcoin decreases, causing future Bitcoin prices to decrease, the market price of our securities may be materially and adversely affected, limiting our ability to raise additional capital to fund our strategic growth plans.
Bitcoin is programmatically subject to “Halving,” meaning that the Bitcoin rewarded for solving a block will be reduced in the future and its value may not commensurately adjust to compensate us for such reductions, and the overall supply of Bitcoin is finite.
Bitcoin is subject to Halving, which is the process by which the Bitcoin reward for solving a block is reduced by 50% every 210,000 blocks that are solved. This Halving occurs approximately every 4 years and means that the amount of Bitcoin we (or any other miner) are rewarded for solving a block in the Blockchain is permanently cut in half. For example, the last Halving occurred in May 2020, with a revised payout of 6.25 Bitcoin per block solved, down from the previous reward rate of 12.5 Bitcoin per block solved. The next Halving date is estimated to occur in April 2024, at which time the payout shall be revised to 3.125 Bitcoin per block solved, down from the previous reward rate of 6.25 Bitcoin per block solved. There can be no assurance that the price of Bitcoin will sufficiently increase to justify the increasingly high costs of mining for Bitcoin given the Halving feature. If a corresponding and proportionate increase in the trading price of these cryptocurrencies does not follow these anticipated Halving events, the revenue we earn from our mining operations would see a corresponding decrease, which would have a material adverse effect on our business and operations. To illustrate, even if the price of Bitcoin remains at its price as of today, all other factors being equal (including the same number of miners and a stable hash rate) our revenue would decrease substantially upon the next Halving.
Further, due to the Halving process, unless the underlying code of the Bitcoin Blockchain is altered (which may be unlikely or difficult given its decentralized nature), the supply of Bitcoin is finite. Once 21 million Bitcoin have been generated by virtue of solving blocks in the Blockchain, the network will stop producing more. Currently, there are approximately 19.0 million Bitcoin in circulation representing about 90% of the total supply of Bitcoin under the current source code. For the foregoing reasons, the Halving feature exposes us to inherent uncertainty and reliance upon the historically volatile price of Bitcoin, rendering an investment in us particularly speculative, especially in the long-term. If the price of Bitcoin does not significantly increase in value, your investment could become worthless.
We are subject to risks associated with our need for significant electrical power, with that risk heightened as we are currently supplied electrical power by a sole source provider.
Our Bitcoin mining operations have required significant amounts of electrical power, and, to the extent we purchase additional miners or acquire new miners which require higher energy inputs, our electricity requirements would grow. If we are unable to continue to obtain sufficient electrical power to operate our miners on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments in new miners. Even at our current energy usage, there can be no guarantee that our operational costs will not increase in the future. Additionally, our mining operations could be materially adversely affected by prolonged power outages, and we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. We are subject to additional risks by currently being dependent upon a sole source provider of electrical power. We are dependent on the sole host of our power supply in Northern Europe who provides our power generation through hydroelectric sources. While our relationship with our power supplier is good, and while we generally have sufficient supply to conduct our business operations as presently contemplated, since the beginning of 2024, our power supply has been temporarily curtailed by approximately 38% as a direct result of low water levels that have cutback local hydroelectric power capacity. While we are hopeful that the water shortage responsible for this curtailment is temporary, we are unable to predict when our mining levels will return to pre-2024 levels. During this period of curtailment, and further, if this curtailment continues for longer than the near term, our business and results of operations could be materially and adversely affected, and investors in our securities could be harmed.
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Changing environmental regulation and public energy policy may expose our business to new risks.
If new environmental and energy regulations, policies, and initiatives enacted by federal regulators are imposed, or if existing regulations are modified, the assumptions we made underlying our plans and strategic initiatives may be inaccurate, and we may incur additional costs to adapt our planned business, if we are able to adapt at all, to such regulations.
In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the cryptocurrency mining industry, with its high energy demand, may become a target for future environmental and energy regulation. New legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Further, any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.
Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition and results of operations. Further, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business and financial condition.
The compliance costs of responding to new and changing regulation could adversely affect our operations.
We (along with those from whom we purchase electricity) are subject to various federal, state, local, and international environmental laws and regulations, including those relating to the generation, storage, handling, and disposal of hazardous substances and wastes. Certain of these laws and regulations also impose joint and several liability, without regard to fault, for investigation and cleanup costs on current and former owners and operators of real property and persons who have disposed of or released hazardous substances into the environment. Our operations may involve the use of hazardous substances and materials, such as petroleum fuel for emergency generators, as well as batteries, cleaning solutions, and other materials.
Electricity costs could also be affected due to existing or new regulations on greenhouse gas emissions, whether such regulations apply to all consumers of electricity or just to specified uses, such as Bitcoin mining. There has been interest in the U.S. Congress in addressing climate change, including through regulation of Bitcoin mining. Past legislative proposals to address climate change include measures ranging from taxes on carbon use or generation to federally imposed limits on greenhouse gas emissions. The course of future legislation and regulation in the United States remains difficult to predict, and potential increased costs associated with new legislation or regulation cannot be estimated at this time.
Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the U.S., subject the mining, ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements. Ongoing and future regulatory actions could have a material adverse effect on our business, prospects or operations.
Our interactions with a blockchain may expose us to SDN or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies.
The Office of Financial Assets Control (“OFAC”) of the U.S. Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its specially designated nationals (“SDN”) list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list. Our Company’s policy prohibits any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling cryptocurrency assets; for example, the use of cryptocurrencies, including Bitcoin, as a potential means of avoiding federally imposed sanctions, such as those imposed in connection with the Russian invasion of Ukraine. On March 2, 2022, a group of United States Senators sent the Secretary of the United States Treasury Department a letter asking Secretary Yellen to investigate its ability to enforce such sanctions vis-à-vis Bitcoin, and on March 8, 2022, President Biden announced an executive order on cryptocurrencies which seeks to establish a unified federal regulatory regime for cryptocurrencies. We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the cryptocurrency industry, or the potential impact of the use of cryptocurrencies by SDN or other blocked or sanctioned persons, which could have material adverse effects on our business and our industry more broadly. Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our common stock.
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Bitcoin and Bitcoin mining, as well as cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect our business prospects and operations.
Although we do not anticipate any material adverse regulations on Bitcoin mining in our jurisdictions of operation, it is possible that state or federal regulators may seek to impose harsh restrictions or total bans on cryptocurrency mining which may make it impossible for us to do business without relocating our mining operations, which could be very costly and time consuming. Further, although Bitcoin and Bitcoin mining, as well as cryptocurrencies generally, are largely unregulated in most countries (including the United States), regulators in certain jurisdictions may undertake new or intensify existing regulatory actions in the future that could severely restrict the right to mine, acquire, own, hold, sell, or use cryptocurrency or to exchange it for traditional fiat currency such as the United States Dollar. Such restrictions may adversely affect us as the large-scale use of cryptocurrencies as a means of exchange is presently confined to certain regions globally. Such circumstances could have a material adverse effect on us, which could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account, and thus negatively affect the value of our common stock.
The costs associated with our Bitcoin mining operations could be subject to significant increase in the future should there occur an increase in the VAT tax imposed on our hosting services.
The Company’s Bitcoin mining operations are hosted in a Northern European country that imposes a broadly-based consumption tax assessed on the value added to goods and services within its country (a “VAT tax”). However, upon the advice of our local tax advisors, an international accounting firm, the Company has concluded that the imposition of a VAT tax upon in-country hosting services is subject to uncertainty. Rather than paying no VAT tax pending clarification of this uncertainty, and upon the advice of our local tax advisors, the Company has implemented a structured leasing arrangement with its hosting counterparty in which lease payments to be received will be subject to a VAT tax upon which the Company will remit payment. While the Company believes that by adopting this type of structured arrangement, it can avoid any penalties or fines in the future should the local tax laws be modified or interpreted to apply to the local hosting services, there can be no assurances to this effect as the tax laws and interpretations thereof are subject to change, particularly in response to the tremendous growth in the high-powered computing industry. Further, there can be no assurances that if and to the extent that local tax laws are interpreted in the future to apply to hosting services, that the amount of VAT tax imposed upon the Company may not substantially exceed the amount payable under the currently contemplated structured leasing arrangement. A substantial increase in the amount of VAT tax due upon these local hosting operations, if it occurs, would increase the costs associated with the Company’s Bitcoin operations, which could have a materially adverse effect on the Company’s business and operating results.
Risks Related to Our Common Stock
We may need to raise additional capital to execute on our growth plan. If we are unable to raise additional capital, our business may fail.
Although our current financial resources are sufficient for us to sustain our existing operations, we may be required to raise additional capital to help finance our planned growth within the financial services sector; particularly, as we will be caused to fund the start-up operations and planned expansion of our newly acquired Opencash broker-dealer. If we find that we need, but are unable, to obtain adequate additional financing, we may not be able to successfully market and sell our products and our business operations will most likely be discontinued. To secure additional financing, we may need to borrow money or sell more securities. Under these circumstances, we may be unable to secure additional financing on favorable terms or at all. Selling additional stock, either privately or publicly, would dilute the equity interests of our stockholders. If we borrow money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing on terms acceptable to us, we may have to curtail business operations, which would have a material negative effect on operating results and most likely result in a lower stock price.
Our common stock price has been and may continue to be extremely volatile.
Our common stock has closed as low as $0.01 per share and as high as $0.03 per share during the year ended December 31, 2023. We believe this volatility may be caused, in part, by variations in our quarterly operating results, delays in development of our technologies, changes in market valuations of similar companies, and the volume of our stock in the market.
Additionally, in recent years the stock market in general, and the OTC Markets and technology stocks in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price regardless of our operating performance. The historical trading of our common stock is not necessarily an indicator of how it will trade in the future and our trading price as of the date of this report is not necessarily an indicator of what the trading price of our common stock might be in the future.
In the past, class action litigation has often been brought against companies following periods of volatility in the market price of those companies’ common stock. If we become involved in this type of litigation in the future it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on our stock price.
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The trading price of shares of our common stock may increase or decrease as does the trading price of Bitcoin and other digital currencies, which subject investors to pricing risks, including “bubble” type risks, and volatility.
Because of our connection with Bitcoin and other digital currencies, the trading prices of our common stock may at times be tied to the trading prices of Bitcoin and such other digital currencies. Specifically, we may experience adverse effects on our stock price when the value of Bitcoin or other digital currencies drops. Furthermore, if the market for Bitcoin or other digital currency company stocks or the stock market in general experiences a loss of investor confidence, the trading price of our stock could decline for reasons unrelated to our business, operating results or financial condition. The trading price of our common stock could be subject to arbitrary pricing factors that are not necessarily associated with traditional factors that influence stock prices or the value of non-cryptocurrency assets such as revenue, cash flows, profitability, growth prospects or business activity since the value and price, as determined by the investing public, may be influenced by uncertain contingencies such as future anticipated adoption or appreciation in value of cryptocurrencies or Blockchains generally, and other factors over which we have little or no influence or control.
Bitcoin and other cryptocurrency market prices, which have historically been volatile and are impacted by a variety of factors, are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms. Furthermore, such prices may be subject to factors such as those that impact commodities, more so than business activities, which could be subjected to additional influence from fraudulent or illegitimate actors, real or perceived scarcity, and political, economic, regulatory or other conditions. Pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of cryptocurrencies, or our share price, making their market prices more volatile or creating “bubble” type risks for the trading price of Bitcoin.
Conversion of existing convertible notes purchased by DBR Capital could cause additional substantial dilution to our stockholders.
Under the terms of its convertible notes, DBR Capital has the right to convert an aggregate of $3.3 million in principal of convertible notes into shares of our common stock at a conversion price of $0.007 per share. Exclusive of interest that could accrue on these notes, conversion of the outstanding principal of these notes would result in the issuance to DBR Capital of approximately 471 million additional shares of our common stock. Substantial additional dilution of up to an additional 1,100,000,000 shares of our common stock could be experienced by our shareholders should DBR Capital advance and ultimately convert additional notes of $7.7 million on or before December 31, 2024. The presence of these arrangements, although negotiated by DBR Capital on an arms-length basis and in April 2020, when the Company’s solvency was at imminent risk, could make it difficult for the Company to attract third-party capital in the future.
Conversion of exchangeable shares issued in connection with the acquisition of the assets of MPower.
During September 2021, we acquired, among other assets, a proprietary algorithmic trading platform from MPower, a business controlled by two members of our Board of Directors. The assets of MPower were acquired in consideration of the issuance of Class B Redeemable Units consisting of non-voting membership interests in our wholly owned subsidiary IFGH that are in the future redeemable for 565,000,000 Company common shares on a one-for-one basis. That could ultimately result in the issuance of 565,000,000 Company common shares, presently representing over 20% of the Company’s current fully-diluted shares.
Special Governance Rights included within DBR Capital’s investments enable DBR Capital to retain significant control of the Company for the foreseeable future.
In connection with its investment, DBR Capital, LLC, has been accorded certain special governance rights, including the right to appoint four of our seven directors, and to require that certain capital, financial and other material actions of our board of directors be approved by at least one DBR Capital-appointed director, who shall be David B. Rothrock if he is then serving as a director. The special governance rights shall remain in place for so long as DBR Capital holds a convertible note or any of our other securities. The presence of these governance rights, although negotiated by DBR Capital on an arms-length basis and in April 2020, at the time when the Company’s solvency was at imminent risk, could make it difficult for the Company to attract third-party capital in the future.
Additional issuances of stock options and warrants, convertible notes, and stock grants will cause additional substantial dilution to our stockholders.
Given our growth plans, and given our current limited cash resources, it is possible that in the future we will need to issue additional warrants, stock grants, and convertible debt to finance our future business operations and acquisitions and strategic relationships. The issuance of additional shares of common stock, the exercise of warrants, and the conversion of debt to stock could cause additional dilution to our stockholders and could have further adverse effects on the market price for our securities or on our ability to obtain future financing. The 2018 increase in our authorized common shares from two billion to ten billion increased the magnitude of this risk substantially.
Shares of our common stock may never become eligible for trading on Nasdaq or a national securities exchange: we do not have a majority of independent directors.
We cannot assure that we will ever be listed on the Nasdaq Stock Market or on another national securities exchange. Listing on one of the Nasdaq markets or one of the national securities exchanges is subject to a variety of requirements, including, among others, us having a majority of independent directors, a minimum trading price and a minimum public “float” requirement. There are also continuing eligibility requirements for companies listed on national securities exchanges. If we are unable to satisfy the initial or continuing eligibility requirements of any such market, then our stock may not be listed or could be delisted. This could result in a lower trading price for our common stock and may limit the ability of our stockholders to sell their shares, which could result in a loss of some or all of their investments.
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If we fail to file periodic reports with the U.S. Securities and Exchange Commission, our common stock will not be able to be traded on the OTCQB.
Although our common stock trades on the OTCQB, a regular trading market for our common stock may not be sustained in the future. OTC Markets limits quotation on the OTCQB to securities of issuers that are current in their reports filed with the Securities and Exchange Commission. If we fail to remain current in the filing of our reports with the Securities and Exchange Commission, our common stock will not be able to be traded on the OTCQB. The OTCQB is an inter-dealer market that provides significantly less liquidity than a national securities exchange or automated quotation system.
Because we have no plans to pay dividends on our common stock, stockholders must look solely to appreciation of our common stock to realize a gain on their investments.
We do not anticipate paying any dividends on our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business. Our future dividend policy is within the discretion of our board of directors and will depend upon numerous factors, including our business, financial condition, results of operations, capital requirements, and investment opportunities. Accordingly, stockholders must look solely to appreciation of our common stock to realize a gain on their investment. This appreciation may not occur.
Certain provisions of Nevada law and of our governing documents may inhibit a potential acquisition of our company, and this could negatively impact our stock price.
Nevada corporate law and our governing documents include provisions that could delay, defer, or prevent a change in control of our company or our management. These provisions could discourage information contests and make it more difficult for our stockholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. For example:
| ● | without prior stockholder approval, our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of our common stock and to determine the rights, privileges, and preferences of that preferred stock; | |
| ● | there is no cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and | |
| ● | only our board of directors or stockholders holding at least 25% of the outstanding capital stock of the Company can call a special meeting of stockholders. |
Our indemnification of our directors and officers may limit the rights of our stockholders.
While our board of directors and officers are generally accountable to our stockholders and us, the liability of our directors and officers to all parties is limited in certain respects under applicable state law and our articles of incorporation and bylaws, as in effect. Further, we have agreed or may agree to indemnify our directors and officers against liabilities not attributable to certain limited circumstances. This limitation of liability and indemnity may limit rights that our stockholders would otherwise have to seek redress against our directors and officers.
We may be caused to issue a substantial number of shares of our common stock to our former Chief Executive Officer if our attempts to retire his note in cash are unsuccessful.
We owe payment on a promissory note in the principal amount of $1,550,000 to our former Chief Executive Officer, Joseph Cammarata, (the “Cammarata Note”). Further, the Cammarata Note is convertible into shares of our common stock at $0.008 per share. During February 2022, we provided 30 days’ notice of our intent to retire and repay the Cammarata Note in cash. Having not timely received a properly executed conversion notice within the proscribed period, and citing certain other damages incurred by us arising from Mr. Cammarata’s then ongoing legal proceedings, on or about March 31, 2022, we tendered to Mr. Cammarata cash payment in full for the Cammarata Note. As of the date of this Report, Mr. Cammarata has not accepted our tender of the cash payment, and instead during 2022 asserted his entitlement to exercise his right to convert the Cammarata Note into our common shares, although we believe his attempted conversion was not timely, nor in compliance with the conversion features of the note. Although we believe that our cash tender was appropriate under the terms of the Cammarata Note and otherwise at law, and Mr. Cammarata’s attempt to convert the note were ineffective, if Mr. Cammarata elects to challenge our cash tender in a court proceeding, and if we are unable to sustain our legal position on the matter, Mr. Cammarata could receive up to approximately 203 million shares of our common stock upon conversion of the Cammarata Note.
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The amount of authorized common stock may result in management implementing anti-takeover procedures by issuing new securities.
The proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect, for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of our board of directors or contemplating a tender offer or other transaction for the combination of our company with another entity. Although, we have no current plans to issue additional stock for this purpose, management could use the additional shares that are now available or that may be available after a possible further recapitalization to resist or frustrate a third-party transaction. Generally, no stockholder approval would be necessary for the issuance of all or any portion of the additional shares of common stock unless required by law or any rules or regulations to which we are subject.
Our stockholders may not recoup all or any portion of their investment upon our dissolution.
In the event of a liquidation, dissolution, or winding-up of our company, whether voluntary or involuntary, our net remaining proceeds and/or assets, after paying all of our debts and liabilities, will be distributed to the holders of common stock on a pro-rata basis. We cannot assure that we will have available assets to pay to the holders of common stock any amounts upon such a liquidation, dissolution, or winding-up of our company. In this event, our stockholders could lose some or all of their investment.
Item 1B. Unresolved Staff Comments
None.
Item 1C. CYBERSECURITY
Risk Management and Strategy
The Company’s cybersecurity risk management practices are intended to assess, identify and manage risks from threats to the security of our information, systems, products and network. Our cybersecurity program is a key component of our broader risk management strategy in which cyber risk has been identified and is actively managed with preventive and mitigating measures. We design and assess our cybersecurity program based on the National Institute of Standards and Technology’s Cybersecurity Framework, ISO 27001, and industry-specific regulations. This does not imply that we meet any particular technical standards, specifications or requirements, but rather that we use them as a guide to help us identify, assess and manage cybersecurity risks relevant to our business.
Cybersecurity incidents could result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to Investview’s System Technology for the purposes of misappropriating assets or information or causing operational disruption and damage. To mitigate the risk of an impact to our business operations and/or damage from cybersecurity incidents or cyberattacks, Investview invests in multiple forms of cybersecurity and operational safeguards.
On an ongoing basis, we assess our people, processes, and technology, and when necessary, modify the overall program in order to meet the demands of the ever-changing cyber risk environment. As part of our regular training and readiness program, we conduct phishing and penetration testing campaigns in order to ensure that our employees are familiar with all types of phishing emails and similar threats.
Our data is dynamically backed up to mitigate against data loss. To prevent unauthorized access and data breaches, we encrypt sensitive data both in transit and at rest. We have also implemented access controls and multi-factor authentication to ensure that only authorized personnel can access sensitive information. We also utilize third-party information technology systems vendors to conduct constant network and endpoint monitoring.
Our risk management program is comprised of, among other things, policies that are designed to identify, assess, manage, and mitigate cybersecurity risk, and is based on applicable laws and regulations, derived from industry standards and best practices.
We conduct risk assessments to evaluate the effectiveness of our systems and processes in addressing threats and to identify opportunities for enhancements. Additionally, we conduct privacy and cybersecurity reviews, as well as annual employee training, and monitor emerging laws and regulations related to information security and data protection. We utilize third party tools and techniques to test and enhance our security controls, perform annual cybersecurity framework assessments, conduct ongoing penetration testing of our systems, and benchmark against best practices. Our internal audit function provides an independent assessment on the overall operations of our cybersecurity program and the supporting framework.
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Our cybersecurity team engages and utilizes third-party services as it monitors and actively responds to cybersecurity threats. We utilize an Endpoint Detection and Response (EDR) platform, an anti-virus application, through which incoming electronic communications are filtered, and an email security platform which seeks out identifiers in communications that disguise, impersonate, or otherwise misrepresent the source of the communication. If such a communication is detected, it is subject to quarantine or removal depending on the severity of issue. Additionally, we use a Security Information and Event Management (SIEM) system, which allows us to store logs off the system of record to prevent log tampering and provides the cybersecurity team functionality to build alerts on specific use cases that are important and unique to our business. If our applications fail or our software does not successfully block a malicious electronic communication, employees are required to notify an immediate supervisor or the cybersecurity team promptly, but in no circumstances later than twenty-four (24) hours after such occurrence.
Upon detection of a cybersecurity incident and initial intake and validation by our cybersecurity team, our incident response team triages and evaluates the cybersecurity incident, and, depending on the severity, escalates the incident to management and a cross-functional working group. Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment and reported to executive management. Determination of what resources are needed to address the incident, prioritizing of response activities, forming of action plans, and notification of external parties as needed are then undertaken by executive management and the cross-functional working group, led by our Senior Information Officer (SIO). We consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and our executive management makes the final materiality and disclosure determinations, among other compliance decisions.
Governance
The Board, the Senior Information Officer (“SIO”) and Management actively assess the Company’s cybersecurity and data privacy risk management practices with the goal of being proactive rather than reactive. The Board and the Senior Information Officer and Management regularly review the Company’s cybersecurity and data privacy risks, including our policies, controls and procedures for identifying, managing and mitigating such risks. The Board receives periodic reports from our SIO and other members of Management to the extent their relevant areas are impacted, regarding cybersecurity and data privacy measures and procedures, the identification of security gaps and compliance with applicable cybersecurity and data privacy regulations. The Senior Information Officer then briefs the Board at scheduled meetings regarding cybersecurity and data privacy developments.
Management and the SIO are responsible for day-to-day monitoring of the prevention, detection, mitigation and remediation of cybersecurity incidents. Our SIO, who reports to our Chief Operating Officer, has primary oversight of the material risks from cybersecurity and data privacy matters. Our SIO has more than 20 years of experience across various information technology, information security and management roles, including leading the development and implementation of cybersecurity and data privacy strategies for the employee and customer-facing aspects of our business.
In 2023, we did not identify any cybersecurity incidents or threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. However, despite our efforts, we may not be successful in eliminating all risks from cybersecurity threats and can provide no assurances that undetected cybersecurity incidents have not occurred. See Part I, Item 1A. “Risk Factors” of this Annual Report for more information regarding the cybersecurity risks we face.
Item 2. Properties
Our corporate headquarters are located at 521 West Lancaster Avenue, Second Floor, Haverford, Pennsylvania 19041 and are being leased under a two-year lease agreement that will expire in December 2024. Our iGenius LLC headquarters are located at 459 North 300 West, #15, Kaysville, Utah 84037 and is on a month-to-month lease. We lease office space for our CFO which is located at 386 Main Street, #212, Wyckoff, New Jersey 07481 and is being leased under a two-year lease agreement that will expire in July 2025 with an option for the Company to terminate with 60 days’ written notice beginning June 1, 2024.
Item 3. Legal Proceedings
In the ordinary course of business, we may be or have been involved in legal proceedings from time to time; however, we do not anticipate that the outcome of such matters and disputes will materially affect our financial statements.
None of our directors, officers, or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
We are not involved in any material legal proceedings, however, during November 2021, we received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. Following our own internal review, we believe that we have complied at all times with the federal securities laws, and we have received no follow-up communications from the SEC following our production of documents in 2022. We have cooperated fully with the SEC’s investigation and will continue to work with outside counsel to respond to any further inquiries of the SEC, if, and to the extent they arise.
Item 4. Mine Safety Disclosure
Not applicable
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is traded on the OTCQB under the symbol “INVU.”
As of March 29, 2024, we had approximately 630 stockholders of record of our common stock and 1,860,981,786 shares of common stock issued and outstanding.
Dividends
Holders of shares of common stock are entitled to share pro rata in dividends and distributions for the common stock when, as, and if declared by the board of directors out of funds legally available therefor. We have not paid any dividends on our common stock and intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy is subject to the discretion of the board of directors and will depend upon a number of factors, including future revenues, capital requirements, overall financial condition, and such other factors as our board of directors deems relevant.
Recent Sales of Unregistered Securities
None.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, as noted by use of the words “believe,” “expect,” “plan,” “project,” “estimate,” and similar expressions are used, they identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management, and involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found elsewhere in this Report and in our periodic reports filed with the U.S. Securities and Exchange Commission. The forward-looking statements included are made only as of the date of this report. Except as required by law, we have no obligation and do not undertake to update or revise any such forward-looking statements to reflect events or circumstances after the date of the report.
Overview
We operate a diversified financial technology company that through its subsidiaries and global distribution network provides financial technology, education tools, content, research, and a digital asset technology company, which develops, operates, and supports blockchain technologies, with a focus on the Bitcoin blockchain ecosystem and the generation of digital assets. In addition, we are planning to expand our business into the retail brokerage and financial markets industry by integrating the online brokerage trading platform we acquired in connection with our recent acquisition of Opencash, with the proprietary algorithmic trading platform we acquired in September 2021. Opencash is an early-stage registered broker-dealer that plans to offer investors an online trading platform to enable self-directed retail brokerage services and develop synergies with the educational content and products offered by other of our business units.
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Impact of COVID-19
While COVID-19 related supply chain issues created challenges for us for the last several years, relating primarily to acquiring supplies and equipment for SAFETek, these issues have, to a great extent, abated as we have successfully sourced new equipment, repaired existing equipment and expanded our operations to include repair of third-party equipment and the creation of mobile mining trailers and containers.
COVID-19 related travel challenges which also impacted iGenius distribution and marketing operations for the last several years, have also largely abated as out member base quickly adapted and leveraged on-line meeting services which in turn expanded interest and attention.
Recent Material Developments
On March 22, 2021, we acquired the operating assets and intellectual property rights of MPower, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members. Included within the acquisition was a proprietary software-based trading platform with applications within the brokerage industry. In consideration for the acquisition of such assets, we issued non-voting Class B membership interests in our wholly owned subsidiary, IFGH, which are in the future redeemable for 565,000,000 Investview common shares on a one-for-one basis (the “Class B Redeemable Units”). The Class B Redeemable Units are subject to a lock-up agreement in which resale of the Investview common shares is substantially restricted through 2025.
The acquisition of the operating assets and intellectual property rights of MPower was completed in anticipation of the Company’s acquisition of a securities broker-dealer from an affiliate of Joseph Cammarata, a former executive officer who was terminated in late 2021. However, due to delays and complications relating primarily to Mr. Cammarata’s then ongoing legal proceedings, even though unrelated to the Company, we were caused in 2022 to terminate the agreement to acquire his affiliated broker-dealer and continue our search for alternative acquisitions within the brokerage industry, which we concluded with our recent acquisition of Opencash Securities, LLC.
During the first quarter of 2022, we restructured our Board of Directors and executive management team with the appointment of Victor M. Oviedo as a director and as the Company’s new Chief Executive Officer; the appointment of David B. Rothrock as Chairman of the Board of Directors and chair of our Up-listing Initiative Sub-Committee; the transition of James R. Bell from acting Chief Executive Officer to President and Acting Chief Operating Officer, and the appointment of Myles Gill as Director of Operations. This occurred as we entered into a Separation and Release Agreement resulting in the resignation of two of our former Directors and executive officers and following the termination of our former CEO in Q4-2021 in light of pending government charges relating to an outside business venture that was totally unrelated to the Company.
We have also attempted to repurchase shares privately, when the circumstances arise, as an opportunistic way to use our existing cash resources strategically to add shareholder value by significantly reducing our outstanding capitalization at a discounted price to the market. These opportunities have arisen for us on two occasions. First, on September 29, 2023, we purchased for surrender in a series of private transactions, an aggregate of 302,919,223 shares of the Company’s common stock from two of our former Directors and executive officers, and a series of their family members and related entities. The shares were purchased for an aggregate consideration of $2,922,380, equating to a price of $0.00964739 per share; representing a discount of approximately 52.5% to the average market price at the time of the closing. One-eighth of the purchase price was paid within seven (7) days of the closing, with the balance payable in a series of equal quarterly payments over seven (7) consecutive quarters thereafter. See Item 13 of this Form 10-K for additional details on the transaction.
Next, further private purchases were effectuated on February 7, 2024, when we repurchased for surrender and cancellation an aggregate of 472,374,710 shares of the Company’s common stock from Ryan Smith and Chad Miller and certain of their respective affiliates and family members. These shares were purchased for an aggregate purchase price of $3,571,146, equating to a price of $0.007559985 per share; representing a discount of approximately 57.6% to the average market price at the time of the closing. One-eighth of the purchase price was paid within seven (7) days of the closing, with the balance payable in a series of equal quarterly payments over seven (7) consecutive quarters thereafter. See Item 13 of this Form 10-K for additional details on the transaction.
Finally, on March 18, 2024, we announced the acquisition of Opencash, an early-stage registered broker-dealer that plans to offer investors an online platform to enable self-directed retail brokerage and other related services.
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Results of Operations
Year Ended December 31, 2023, Compared to Year Ended December 31, 2022
Revenues
| Year Ended December 31, | Increase | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | 56,036,052 | $ | 48,260,197 | $ | 7,775,855 | ||||||
| Mining revenue | 11,348,156 | 11,796,215 | (448,059 | ) | ||||||||
| Cryptocurrency revenue | 513,285 | 1,614,568 | (1,101,283 | ) | ||||||||
| Mining equipment repair revenue | 23,378 | 172,056 | (148,678 | ) | ||||||||
| Digital wallet revenue | - | 5,868 | (5,868 | ) | ||||||||
| Total revenue, net | $ | 67,920,871 | $ | 61,848,904 | $ | 6,071,967 | ||||||
Revenue, net, increased $6,071,967, or 10%, from $61,848,904 for the year ended December 31, 2022, to $67,920,871 for the year ended December 31, 2023. The increase can be explained by a $7.8 million increase in our net subscription revenue, offset by a $1.1 million decrease in our cryptocurrency revenue, a $448 thousand decrease in our mining revenue, a $149 thousand decrease in our mining equipment repair revenue, and a $6 thousand decrease in digital wallet revenue. The $7.8 million or 16% increase in subscription revenue was due to significant product enhancements and expansion into new markets globally, resulting in substantial growth in our membership; the $448 thousand or (4%) decrease in mining revenue was mainly the result of a 107% increase in the Bitcoin mining difficulty level, the migration of mining servers to a new data center and increased power and hosting costs, partially offset by the replacement of older less efficient Bitcoin mining equipment with new generation higher performing miners; the $1.1 million or (68%) decrease in cryptocurrency revenue was due to an overall decrease in the number of sales of NDAU and the discontinuation of the NDAU program offering; and the $149 thousand or (86%) decrease in miner equipment repair revenue was due to the discontinuance of our miner repair business during the quarter ended June 30, 2023.
Operating Costs
| Year Ended December 31, | Increase | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| Cost of sales and service | $ | 10,736,709 | $ | 8,249,790 | $ | 2,486,919 | ||||||
| Commissions | 31,716,399 | 26,986,048 | 4,730,351 | |||||||||
| Selling and marketing | 560,065 | 58,617 | 501,448 | |||||||||
| Salary and related | 7,112,954 | 7,441,829 | (328,875 | ) | ||||||||
| Professional fees | 1,378,367 | 2,615,016 | (1,236,649 | ) | ||||||||
| Impairment expense | 2,056,386 | 14,632,823 | (12,576,437 | ) | ||||||||
| Bad debt expense | - | 3,975 | (3,975 | ) | ||||||||
| Loss (gain) on disposal of assets | 223,630 | (266,838 | ) | 490,468 | ||||||||
| General and administrative | 9,531,431 | 10,740,430 | (1,208,999 | ) | ||||||||
| Total operating costs and expenses | $ | 63,315,941 | $ | 70,461,690 | $ | (7,145,749 | ) | |||||
Operating costs decreased $7,145,749, or (10%), from $70,461,690 for the year ended December 31, 2022, to $63,315,941 for the year ended December 31, 2023. The decrease can be explained by a decrease in salary and related costs of $329 thousand, which was a result of the recognition of more stock-based compensation during the prior period, a decrease in general and administrative of $1.2 million which was a result of a decrease in depreciation expense, a decrease in professional fees of $1.2 million due to decreased legal expenses, and a $12.6 million decrease in impairment expense. During the year ended December 31, 2022, we impaired $6 million worth of fixed asset mining equipment, wrote-off $676 thousand worth of inventory, $690 thousand worth of other assets, and $7.2 million worth of intangible assets due to our concern with recoverability of our proprietary software based algorithmic trading platform, , compared to during the year ended December 31, 2023, we wrote-off $2.1 million worth of other assets. These decreases were offset by an increase in commissions of $4.7 million, which was a result of increases in our subscription revenue, an increase in cost of sales and services of $2.5 million, which was a result of an increase in the cost of mining, an increase in selling and marketing of $501 thousand, which was mainly driven by an iGenius sales and marketing event, and an increase in loss (gain) on disposal of assets of $490 thousand, which was a result of a gain recognized during the current year and a loss recognized in the prior year from the sale of mining equipment from our repair business.
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Other Income (Expense)
| Year Ended December 31, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Gain (loss) on debt extinguishment | $ | - | $ | 455 | $ | (455 | ) | |||||
| Gain (loss) on fair value of derivative liability | 18,691 | 44,945 | (26,254 | ) | ||||||||
| Realized gain (loss) on cryptocurrency | 255,268 | (1,575,164 | ) | 1,830,432 | ||||||||
| Interest expense | (18,750 | ) | (18,750 | ) | - | |||||||
| Interest expense, related parties | (1,239,603 | ) | (2,650,324 | ) | 1,410,721 | |||||||
| Other income (expense) | 1,389,796 | 193,235 | 1,196,561 | |||||||||
| Total other income (expense) | $ | 405,402 | $ | (4,005,603 | ) | $ | 4,411,005 | |||||
We recorded other income of $405,402 for the year ended December 31, 2023, which was a difference of $4,411,005, or 110%, from the prior period other loss of $4,005,603. The change is due to a realized gain recorded on cryptocurrency in the current period of $255 thousand compared to a realized loss of $1.6 million in the prior period, less related party interest expense recorded in current period versus the prior period ($1.2 million for the year ended December 31, 2023 compared to $2.7 million for the year ended December 31, 2022), and an increase in Other income (expense) in the current period of $1.2 million compared to $193 thousand in the prior period, which was a result of ticket sales from a promotional event iGenius held during the year ended December 31, 2023, earning more interest income due to our cash balances being held in higher interest bearing accounts in the current period compared to the prior period, and lease payments received under a structured equipment lease agreement. Amounts recorded in related party interest expense included the amortization of debt discounts, which was being recognized over the term of the debt, however, during the year ended December 31, 2022, we repaid two of our related party notes early, which resulted in the recognition of $1.2 million of the amortization of the related debt discount amounts into interest.
Liquidity and Capital Resources
During the year ended December 31, 2023, we met our short-and long-term working capital and capital expenditure requirements, including funding for operations, capital expenditures, growth initiatives, and for dividends on our Series B Preferred Stock, through net cash flows provided by operating activities. We believe we will have sufficient resources, including cash flow from operations and access to capital markets, to meet debt service obligations in a timely manner and be able to meet our objectives.
During the year ended December 31, 2023, we recorded a net income from operations of $4,604,930 and net income of $2,831,920. As of December 31, 2023, we have unrestricted cash of $20,912,276 and a working capital balance of $12,414,023 and our unrestricted cryptocurrency balance was reported at a cost basis of $585,632. Management does not believe there are any liquidity issues as of December 31, 2023.
Commitments and Contingencies
At December 31, 2023, we had related party debt of approximately $2.4 million and debt of approximately $1.2 million of which we owe $686 thousand to the holders of long-term notes that we issued in connection with a lease buyback program we initiated in September 2020.
Through June 2020, we sold high powered data processing equipment (“APEX”) to our customers, and they leased the equipment back to us on terms sufficient for the customers to recover their investment and an agreed upon return on their investment. On June 30, 2020, we temporarily discontinued the APEX program to assess the impact on the Company of COVID-19 related delays in the manufacturing and shipping of the APEX processing equipment, and to determine our ability to meet the lease commitments in light of such delays. Having concluded that we would be unable to meet the APEX lease obligations, in September 2020, we commenced a buyback program in which we offered to repurchase such equipment and cancel the existing lease, by way of a 48-month promissory note that included repayment terms to ensure an agreed-upon return on their initial purchase price. As a result of the buyback program, we entered into notes with third parties totaling $19,089,500 and notes with related parties of $237,720 in exchange for $474,155 worth of customer advances on the APEX leases and the release of $22,889,331 of the net APEX lease liability. During the fourth quarter ended December 31, 2023, we offered all note holders an early payoff option. During the year ended December 31, 2023, we repaid a portion of the debt with cash payments of $1,917,225 and issuances of cryptocurrency valued at $5,322,058.
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Included in our now discontinued Apex sale and leaseback program was a “guaranteed assets buy-back product” offered, administered and managed by a third-party provider, Total Protection Plus (“TPP”), a purported affiliate of a global insurance brokerage firm. According to marketing and legal documents provided by TPP, the product they offered (the “TPP Program”) would function as a supplemental financial guaranty of a return on investment by providing Apex program customers with protection for the purchase price of such equipment, which could be redeemed by the customer by exercising an option for a cash payout to be paid by the third-party provider after a certain period of time, either 5 or 10 years. The premium for the TPP program was included in the Apex program, at no additional cost to the customer. As an accommodation to our Apex customers, the premiums paid to participate in the TPP Program, were paid for directly by the Company at no additional cost to the customer.
We have also historically offered our iGenius members the opportunity to participate in the TPP Program administered and managed by TPP in connection with such members’ purchases of ndau through the Oneiro ndau distribution program. Even though we chose to terminate the distribution of ndau during August 2023, prior to such termination, we had distributed over $16.8 million in ndau to our members who purchased ndau in conjunction with the TPP Program. According to marketing and legal documents provided by TPP, the TPP Program was purported by TPP to provide a supplemental financial guaranty for a return on investment in excess of the purchase price of the ndau. In its marketing materials, TPP offered customers the right to receive a supplemental cash payout after 5 or 10 years, of between 50% to 100% of the original price of ndau purchased. As an accommodation to our ndau customers, the premiums paid to participate in the TPP Program of approximately $3.6 million, were paid for directly by the Company at no additional cost to the customer.
During the fourth calendar quarter of 2021, we suspended any further offering of the TPP Program in connection with the sale of ndau after TPP was unable to comply with our standard vendor compliance protocols, citing certain offshore confidentiality entitlements. That suspension has remained in place as we have been unable to further validate the continued integrity of the TPP Program and the vendor’s ability to honor its commitments to our members. We cannot ensure that TPP will comply with its contractual requirements, which could cause our members to not achieve the level of return on their investments offered by TPP. While we do not believe that we have any legal responsibility to the customers who participated in the TPP Program, as it was offered and administered, and to be underwritten by TPP, there is a risk that any failure of TPP to perform its obligations to our customers, could expose us to claims of dissatisfied customers, even though we had no responsibility to underwrite the risk of the TPP Program, for which we paid to TPP premiums of approximately $3.6 million. The possible substantiality of those claims could have an adverse effect on our business, financial condition, and operating results.
Critical Accounting Policies
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are several significant accounting policies affecting our consolidated financial statements; we believe the following critical accounting policies involve the most complex, difficult, and subjective estimates and judgments.
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: iGenius, LLC, Apex Tek, LLC, SAFETek, LLC, Investview Financial Group Holdings, LLC, Investview MTS, LLC, and MyLife Wellness Company. All intercompany transactions and balances have been eliminated in consolidation.
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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.
Long-Lived Assets – Intangible Assets & License Agreement
We account for our cryptocurrencies and intangible assets 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, which requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
We hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies as of December 31, 2023 and December 31, 2022, were $585,632 (current) and $2,474,096 ($2,360,957 current and $113,139 restricted long term), respectively. Cryptocurrencies purchased or received for payment from customers are recorded in accordance with ASC 350-30 and cryptocurrencies awarded to the Company through its mining activities ($11,348,156 and $11,796,215 for the year ended December 31, 2023 and 2022, respectively) are accounted for in connection with the Company’s revenue recognition policy. The use of cryptocurrencies is accounted for in accordance with the first in first out method of accounting. For the year ended December 31, 2023 and 2022, we recorded realized gains (losses) on our cryptocurrency transactions of $255,268 and $(1,575,164), respectively.
On March 22, 2021, we entered into Securities Purchase Agreement to acquire the operating assets and intellectual property rights of MPower, a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members. As a result, we obtained a proprietary software-based trading platform with applications within the brokerage industry, which was valued at $7,240,000 and recorded on our balance sheet as an intangible asset as of December 31, 2021. The intangible asset was expected to have a definite life, however, during the year ended December 31, 2022, the software had not been placed in service, therefore a useful life had not been assigned and no amortization had been recorded. Instead, as of December 31, 2022, the intangible asset was conservatively impaired due to a question on the recoverability of the value recorded.
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 year ended December 31, 2023, no impairment was recorded. During the year ended December 31, 2022, we impaired computer equipment with a cost basis of $3,263, furniture fixtures and equipment with a cost basis of $11,372, and data processing equipment with a cost basis of $9,431,923. The impairment was due to disposals of computer equipment and furniture fixtures and equipment and the carrying value of our data processing equipment exceeding its fair value which was determined using the price that similar equipment would sell for in the open market. We had recorded accumulated depreciation for the impaired assets of $3,419,825 through the date of disposal, therefore we recorded $6,026,733 as impairment expense related to the fixed assets for the year ended December 31, 2022. Also, during the year ended December 31, 2022, we impaired intangible assets of $7,240,000 due to questions regarding the recoverability of the asset value.
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Revenue Recognition
Subscription Revenue
Most of our revenue is generated by membership and subscription sales and payment is received at the time of purchase. We recognize subscription revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first-time subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds, sales incentives, credits, and known and estimated credit card chargebacks. As of December 31, 2023 and 2022 our deferred revenues were $2,703,398 and $2,074,574, respectively.
Mining Revenue
We generate revenue from mining bitcoin. The Company has entered into a digital asset mining pool by executing a contract, as amended from time to time, with the mining pool operator to provide computing power to the mining pool. The contract is terminable at any time by either party without penalty and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, we are entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator.
Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contract with the mining pool operator. The transaction consideration the Company receives is net of digital asset transaction fees kept by the mining pool operator and is noncash, in the form of Bitcoin, which the Company measures at fair value on the date Bitcoin is received. This value is not materially different than the fair value at the moment we meet the performance obligation, which can be recalculated based on the contractual formula. The consideration is variable. The amount of consideration recognized is constrained to the amount of consideration received, which is when it is probable a significant reversal will not occur. There is no significant financing component or risk of a significant revenue reversal in these transactions due to the performance obligations and settlement of the transactions being on a daily basis.
Cryptocurrency Revenue
We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the year ended December 31, 2023.
We recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third-party to provide to our customers and payment is received from our customers at the time of order placement. All customers are given two weeks to request a refund, therefore we record a customer advance on our balance sheet upon receipt of payment. After the two weeks have passed from order placement, we request our third-party supplier to deliver coin, at which time we recognize revenue and the amounts due to our supplier on our books. As of December 31, 2023 and December 31, 2022, our customer advances related to cryptocurrency revenue were $0 and $96,609, respectively.
Mining Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
We recognize miner repair revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver the promised goods to our customers.
Digital Wallet Revenue
We generate revenue from the sale of digital wallets to our customers through an arrangement with a third-party supplier. We offer three tiers of wallets which include different features. The digital wallets are delivered by a third-party supplier. The sale of digital wallets to our customers was discontinued during the year ended December 31, 2022.
We recognize digital wallet revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third parties to provide the wallet to our customers and payment is received from our customers at the time of order placement.
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Revenue generated for the year ended December 31, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | 60,516,836 | $ | 990,785 | $ | 11,348,156 | $ | 23,378 | $ | 72,879,156 | ||||||||||
| Refunds, incentives, credits, and chargebacks | (4,480,784 | ) | - | - | - | (4,480,784 | ) | |||||||||||||
| Amounts paid to supplier | - | (477,500 | ) | - | - | (477,500 | ) | |||||||||||||
| Net revenue | $ | 56,036,052 | $ | 513,285 | $ | 11,348,156 | $ | 23,378 | $ | 67,920,871 | ||||||||||
Foreign revenues for the year ended December 31, 2023 was approximately $51.1 million while domestic revenue for the year ended December 31, 2023 was approximately $16.9 million.
Revenue generated for the year ended December 31, 2022, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | 51,454,922 | $ | 3,189,074 | $ | 11,796,215 | $ | 173,980 | $ | 7,156 | $ | 66,621,347 | ||||||||||||
| Refunds, incentives, credits, and chargebacks | (3,194,725 | ) | - | - | (1,924 | ) | - | (3,196,649 | ) | |||||||||||||||
| Amounts paid to supplier | - | (1,574,506 | ) | - | - | (1,288 | ) | (1,575,794 | ) | |||||||||||||||
| Net revenue | $ | 48,260,197 | $ | 1,614,568 | $ | 11,796,215 | $ | 172,056 | $ | 5,868 | $ | 61,848,904 | ||||||||||||
Foreign revenues for the year ended December 31, 2022 was approximately $42.3 million while domestic revenue for the year ended December 31, 2022 was approximately $19.5 million.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company has not yet adopted ASU No. 2023-08 and is currently evaluating the impact that the adoption will have on the Company’s financial statement presentation and disclosures.
We have noted no other recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity, or capital expenditures.
Trends, Risks, and Uncertainties
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all such risk factors before making an investment decision with respect to our common stock.
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Cautionary Factors That May Affect Future Results
We have sought to identify what we believe are significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.
Potential Fluctuations in Annual Operating Results
Our annual operating results may fluctuate significantly in the future as a result of a variety of factors, most of which are outside our control, including: the demand for our products and services; seasonal trends in purchasing, the amount and timing of capital expenditures; price competition or pricing changes in the market; technical difficulties or system downtime; and general economic conditions.
Our annual results may also be significantly impacted by the accounting treatment of acquisitions, financing transactions, or other matters. Particularly at our early stage of development, such accounting treatment can have a material impact on the results for any quarter. Due to the foregoing factors, among others, it is likely that our operating results may fall below our expectations or those of investors in some future quarter.
Management of Growth
We may experience growth, which will place a strain on our managerial, operational, and financial systems resources. To accommodate our current size and manage growth if it occurs, we must devote management attention and resources to improve our financial strength and our operational systems. Further, we will need to expand, train, and manage our sales and distribution base. There is no guarantee that we will be able to effectively manage our existing operations or the growth of our operations, or that our facilities, systems, procedures, or controls will be adequate to support any future growth. Our ability to manage our operations and any future growth will have a material effect on our stockholders.
Companies trading on the OTCQB tier of OTC Markets, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and must be current in their reports under Section 13, to maintain price quotation privileges on the OTCQB tier. If we fail to remain current on our reporting requirements, we could be removed from the OTCQB tier. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are not required to provide the information required by this item.
Item 8. Financial Statements and Supplementary Data
The financial statements begin on Page F-1.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on this evaluation management concluded that our disclosure controls and procedures were effective as of December 31, 2023.
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Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
With the participation of our Chief Executive Officer and Chief Financial Officer (principal financial officer), our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our evaluation management concluded that we maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO framework criteria. Management believes our processes and controls are sufficient to ensure the consolidated financial statements for the year ended December 31, 2023, included in this Form 10-K, were fairly stated in accordance with U.S. GAAP.
Management’s report on internal control over financial reporting was not subject to attestation by our registered public accounting firm pursuant to Securities and Exchange Commission rules that permit us to provide only management’s report in this Annual Report on Form 10-K.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer (principal financial officer), does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Controls
During the fiscal quarter ended December 31, 2023, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
Item 9B. Other Information
During
the fourth quarter of the fiscal year ended December 31, 2023, no director of “officer” as defined in Rule 16a-1(f) under
the Exchange Act
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
The following table sets forth certain information with respect to our directors and executive officers:
| Name | Age | Position | ||
| David B. Rothrock | 59 | Chairman | ||
| Victor M. Oviedo | 47 | Chief Executive Officer and Director | ||
| James Bell | 58 | President, Acting Chief Operating Officer and Director | ||
| Ralph R. Valvano | 54 | Chief Financial Officer | ||
| Jayme L. McWidener | 45 | Chief Accounting Officer | ||
| Myles Gill | 50 | Director of Operations |
David B. Rothrock has extensive executive management, board, and operational expertise in the automobile industry, fintech, financial services, residential and commercial real estate, property management, corporate financing, private equity, utility technology, environmental remediation services, insurance, wine retail operations and distribution, and wealth management. Mr. Rothrock is the chief executive officer of DBR Capital, LLC. Through his leadership, guidance, and vision, in key roles as president and chief executive officer of DBR Capital LLC, MPower Trading Systems, LLC, Cedar Crest Partners G.P. LLC, and Rothrock Motors Sales, Inc. (a group of franchised automobile dealerships), these businesses collectively generated over $300 million in annual sales revenue. Mr. Rothrock is an active board member of charitable organizations that support breast cancer research and women’s health and fitness as well as the arts and theater in Lehigh Valley, PA. Mr. Rothrock has a B.S. in Business Management graduating Magna Cum Laude from Widener University and holds a J.D. from the New York Law School with bar admittance to New York, New Jersey, and Pennsylvania. Mr. Rothrock was appointed to the Board at the request of DBR Capital, LLC, pursuant to the terms of a Voting Agreement between DBR Capital and certain key holders of our common stock dated April 27, 2020 and amended November 9, 2020. Mr. Rothrock is the sole owner of DBR Capital, LLC. See Item 13. Certain Relationships and Related Transactions, and Director Independence. We believe Mr. Rothrock is qualified to serve as a director due to his executive management, board, and operational expertise across multiple disciplines and industries.
Victor M. Oviedo has served for the past 4 years as co-founder and Managing Partner for StageLight Group, a strategic capital and advisory firm which provides strategic capital to early and growth-stage companies. Previously, he was a Partner at SkyBridge Capital and Global Head of Business Development & Strategy where he was directly responsible for the firm’s growth, international expansion, new business development and brand strategy initiatives. During his 12-year tenure, he was instrumental in growing the firm’s assets from $300M to $14B, acquiring their flagship fund-of-fund business and creating & launching the world-renowned SALT Conference. Prior to joining SkyBridge, Mr. Oviedo was a Senior Consultant within Oliver Wyman’s capital markets division where he focused on international acquisitions and growth strategies for major financial institutions. In addition, he was a Manager of Strategic Growth for Kozmo – a venture capital funded start-up. He began his career as an investment banker at Donaldson, Lufkin & Jenrette (DLJ) within the media & communications team. Mr. Oviedo received an MBA in Finance & Entrepreneurship from the Wharton School at the University of Pennsylvania and a MA in Advance International Studies from the Paul H. Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University. He also graduated with honors with a BSFS in International Economics from the Edmund A. Walsh School of Foreign Service at Georgetown University. We believe Mr. Oviedo is qualified to serve as a director based on his role as our Chief Executive Officer and his extensive management experience in the financial industry.
James R. Bell has extensive experience in financial management and operations with more than 30 years of experience in the capital markets. Previously, as co-founder and chief executive officer of MPower Trading Systems, LCC, Mr. Bell was responsible for overseeing all principal functions of the firm, including corporate strategy and deployment of initiatives, product, and partnerships. Mr. Bell has been at the forefront of online trading since its infancy. Prior to co-founding MPower in 2004, Mr. Bell served as managing director of trading development of thinkorswim-TD Ameritrade, Inc. from 2002-2011, where he led the company’s product and technology team to develop client digital content. Mr. Bell is co-founder and passive investor of Shadow Trader Technologies, which provides real-time digital financial research and education content to TD Ameritrade/Charles Schwab (2004-December 31, 2023). Prior to MPower, Mr. Bell also co-founded B/C Interactive Trading Technologies in 2001, which was ultimately sold to MPower in 2004. Prior to B/C, Mr. Bell served as SVP of Janney Montgomery Scott, and before that position, with Morgan Stanley. Mr. Bell studied economics and business management at Frostburg State University. Mr. Bell holds multiple business accreditations and previously held securities licenses, including FINRA Series 7, FINRA Series 55, and FINRA Series 63. Mr. Bell was appointed to the Board at the request of DBR Capital, LLC, pursuant to the terms of a Voting Agreement between DBR Capital and certain key holders of our common stock dated April 27, 2020 and amended November 9, 2020. We believe Mr. Bell is qualified to serve as a director due to his extensive experience in financial management and operations.
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Ralph R. Valvano has over 26 years of global finance and transformation experience in the financial services industry. Mr. Valvano’s prior experience included the positions of CFO/COO of J.C. Flowers Asset Management, part of a $15 billion-dollar private equity firm, Financial Operations and Principal (FinOp) of J.C. Flowers Securities, a FINRA registered broker-dealer, and CFO of Flowers National Bank NA. Prior to that Mr. Valvano held various roles at JPMorgan Chase & Co. and ended his tenure as the Global Investment Bank Management Controller. Mr. Valvano began his career as a financial services auditor for PricewaterhouseCoopers. He earned a BS in Accounting from William Paterson University, a MS in Tax from Fairleigh Dickinson University and obtained his CPA license in 1994.
Jayme L. McWidener earned her Bachelor’s degree and Masters of Business Administration from Drake University and became an auditor for Cahaba GBA in 2001 before joining HJ & Associates, LLC (“HJ”) in January 2004 as an audit staff member. She obtained her CPA license in 2007 and worked at HJ focusing on auditing SEC reporting companies, eventually being promoted to an audit senior and audit manager before she became a partner at HJ in January 2014. Ms. McWidener spent just over 2 years as a partner with HJ and with its successor, Haynie & Company. In April of 2016 she established Mac Accounting Group, LLP, specializing in PCAOB audits for SEC reporting companies and AICPA audits for private companies in a variety of industries.
Myles P. Gill has held several key leadership roles and brings significant knowledge and expertise in various disciplines following an 18-year career that began as a Naval Officer. From 2017 -2021, Mr. Gill had been President/ CIO for Mannis Operations Group, a private family office. In that role, Mr. Gill provided strategic direction, vision, leadership, and management in all functional areas (including investments, operations, environmental, social, governance, trust and estate planning/compliance, risk management, legal, human resources) for a $2B AUM, 23 entity single-family office. Mr. Gill earned a Bachelor of Science degree in Mathematics and Oceanography as a Naval Officer from the United States Naval Academy.
Our directors are elected for a term of one year and until their successors are qualified, nominated, and elected. We currently have four vacancies on our board of directors. Two vacancies were created by the resignations of Mario Romano and Annette Raynor and two vacancies have never been filled after we agreed to expand the size of the board of directors to seven members in connection with the investment of DBR Capital, LLC.
Role of the Board
It is the paramount duty of the board to oversee our management in the competent and ethical operation of the company on a day-to-day basis and to assure that the long-term interests of the shareholders are being served. To satisfy this duty, the directors take a proactive, focused approach to their position, and set standards to ensure that we are committed to business success through maintenance of ambitious standards of responsibility and ethics.
The board of directors met formally six times and acted by written consent four times during the year ended December 31, 2023.
Special Governance Rights Associated with the Investment of DBR Capital, LLC
In connection with its investment, DBR Capital, LLC, has been accorded certain special governance rights, including the right to appoint four of our seven director’s positions (of which, four remain vacant) so long as it holds a convertible note or any of our other securities. The investment agreements also require that certain capital, financial and other material actions of our board of directors be approved by at least one DBR Capital-appointed director, who shall be David B. Rothrock if he is then serving as a director. DBR Capital appointed David B. Rothrock and James R. Bell to two of its four nominee positions, with the other two nominee positions remaining vacant. If we default under the investment agreements, DBR Capital, LLC, will have the right to remove any directors it did not appoint and appoint its designees to fill all seven positions on the board of directors.
Committees
Our business, property, and affairs are managed by or under the direction of the board of directors. Members of the board are kept informed of our business through discussion with the chief executive and financial officers and other officers, by reviewing materials provided to them, and by participating at meetings of the board and its committees.
Audit Committee
We currently do not have a designated audit committee, and accordingly, our board of directors preapproves all audit and permissible non-audit services provided by the independent auditor, including audit, audit-related, tax, and other services. Preapproval is generally provided for up to one year, detailed as to the service or category of services, and subject to a specific budget. The independent auditor and management are required to periodically report to our board of directors regarding the extent of services provided by the independent auditor in accordance with this preapproval and the fees for the services performed to date. The board of directors may also preapprove particular services on a case-by-case basis.
Compensation Committee
We currently do not have a designated compensation committee, and accordingly, our board of directors will approve all compensation matters until such committee is established and approved.
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Code of Ethics
We have a code of ethics that applies to all of our employees, including our principal executive officer, principal financial officer, principal accounting officer, and the directors, a copy of which is available in the Employee Handbook. We intend to disclose any changes in or waivers from our code of ethics by posting such information on our website or by filing a Form 8-K.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other of our equity securities. Our officers, directors, and 10% stockholders made the required filings pursuant to Section 16(a) for all reports required to be filed in the year ended December 31, 2023.
Item 11. Executive Compensation
Directors’ Compensation
Our directors were awarded compensation for their services as directors as follows:
David B. Rothrock currently receives board fees of $96,000 annually, to be paid in monthly amounts of $8,000.
In June 2022, for their service as directors of the Company, we awarded (i) Mr. Rothrock options to purchase an aggregate of 85,416,668 shares of our common stock, (ii) James R. Bell options to purchase an aggregate of 37,500,000 shares of our common stock and (iii) Victor M. Oviedo options to purchase an aggregate of 25 million shares of our common stock. All of the options have an exercise price of $.05 per share and are subject to vesting over a five-year period following the date of grant. The options were issued in replacement of an agreement to grant each of Mr. Rothrock, Mr. Bell and Mr. Oviedo restricted shares in 2022 – see Item 13 of this Annual Report on Form 10-K for more information.
In addition, Mr. Bell and Mr. Oviedo also receive additional compensation for their service as executive officers of the Company.
Executive Officers’ Compensation
The following table sets forth information concerning the annual and long-term compensation earned by our chief executive officer and to other persons who served as executive officers as, at, or during the years ended December 31, 2023 and 2022 (the “named executive officers”), for services as executive officers for the last two periods.
Summary Compensation Table
| Name and Principal Position | Period/Year Ended |
Salary | Stock Awards | Option Awards |
Non-Equity Incentive Plan Compensation | Change in Pension Value and Non-Qualified Deferred Compensation Earnings | All Other Compensation |
Total | ||||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||
| Victor Oviedo [1] | 12/31/2023 | 427,548 | - | 622,552 | [2] | - | - | 11,858 | [3] | 1,061,958 | ||||||||||||||||||||
| Chief Executive Officer and Director | 12/31/2022 | 371,441 | - | 451,639 | [2] | - | - | 9,610 | [3] | 832,690 | ||||||||||||||||||||
| James Bell [4] | 12/31/2023 | 345,877 | - | 768,149 | [6] | - | - | 36,159 | [7] | 1,150,185 | ||||||||||||||||||||
| President, Chief Operating Officer, and Director | 12/31/2022 | 291,073 | 120,386 | [5] | 790,165 | [6] | - | - | 29,130 | [7] | 1,230,754 | |||||||||||||||||||
| Ralph Valvano [8] | 12/31/2023 | 293,008 | - | 423,085 | [10] | - | - | 39,659 | [11] | 755,752 | ||||||||||||||||||||
| Chief Financial Officer | 12/31/2022 | 278,705 | 89,711 | [9] | 379,180 | [10] | - | - | 57,908 | [11] | 805,504 | |||||||||||||||||||
| [1] | On February 23,2022, Victor Oviedo was appointed as Chief Executive Officer. |
| [2] | Reflects the expense recognized in connection with the options granted to Mr. Oviedo during the year-ended December 31, 2022. On June 24, 2022, Victor Oviedo was awarded options to purchase 20,000,000 shares, vesting in equal amounts over a five-year period, at an exercise price of $0.05 per share, with a seven-year life. Total stock compensation expense related to the options for the year ended December 31, 2023 and 2022, was $622,552 and $451,639, respectively. |
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| [3] | These other compensation amounts for the years ended December 31, 2023 and 2022 are for $1,000 and $600 of bonuses, respectively, and for $10,858 and $9,010 of medical and other fringe benefits, respectively. |
| [4] | On February 23, 2022, James Bell transitioned from acting Chief Executive Officer and was appointed President and Chief Operating Officer. |
| [5] | On November 9, 2020, James Bell was awarded 45,000,000 shares that vest over three years for his services as a director. The expense related to this issuance is being recognized based on the vesting terms which resulted in $120,386 of expense recognized during the twelve ended December 31, 2022. During the twelve months ended December 31, 2022, Mr. Bell surrendered 30,0000,000 of these shares to the Company prior to their vesting date. |
| [6] | Reflects the expense recognized in connection with the options granted to Mr. Bell during the year-ended December 31, 2022. On June 24, 2022, James Bell was awarded options to purchase 33,750,00 shares, vesting in equal amounts over a five-year period, at an exercise price of $0.05 per share, with a seven-year life. Total stock compensation expense related to the options for the year ended December 31, 2023 and 2022, was $768,149 and $790,165, respectively. |
| [7] | These other compensation amounts for the years ended December 31, 2023 and 2022 are for $2,500 and $1,200 of bonuses, respectively, and for $33,659 and $27,930 of medical and other fringe benefits, respectively. |
| [8] | On June 7, 2021, Ralph Valvano was named Chief Financial Officer. |
| [9] | On June 7, 2021, Ralph Valvano was awarded 6,500,000 shares of common stock as part of his employment agreement. In accordance with the agreement, 20% of the shares vested upon execution of the agreement and the remaining shares vest 20% per year over the next four years, contingent upon Mr. Valvano’s continued employment by the Company. The fair market value of these shares was $272,870 or $0.2099 per share (the per share price on the date of issuance). The expense related to this issuance is being recognized based on the vesting terms per the agreement which resulted in $89,711 of expense recognized during the twelve months ended December 31, 2022. During the twelve months ended December 31, 2022, Mr. Valvano surrendered 1,3000,000 of these shares to the Company prior to their vesting date. |
| [10] | Reflects the expense recognized in connection with the options granted to Mr. Valvano during the year-ended December 31, 2022. On June 24, 2022, Ralph Valvano was awarded options to purchase 37,500,000 shares, vesting in equal amounts over a five-year period, at an exercise price of $0.05 per share, with a seven-year life. Total stock compensation expense related to the options for the year ended December 31, 2023 and 2022, was $423,085 and $397,180, respectively. |
| [11] | These other compensation amounts for the years ended December 31, 2023 and 2022 were for $6,000 and $27,500 of bonuses, respectively, and for $33,659 and $30,408 of medical and other fringe benefits, respectively. |
Outstanding Equity Awards at Fiscal Year-End
As of December 31, 2023, the following stock option awards were issued and exercisable for the Company’s executive officers.
| Options | Options | |||||||
| Holder | Outstanding | Exercisable | ||||||
| David B. Rothrock, Chairman | 85,416,665 | 50,416,665 | ||||||
| Victor Oviedo, CEO and Director | 100,000,000 | 20,000,000 | ||||||
| James R. Bell, President, COO and Director | 112,500,000 | 52,500,000 | ||||||
| Myles P. Gill, Director of Operations | 25,000,000 | 5,000,000 | ||||||
| Ralph Valvano, CFO | 37,500,000 | 9,125,000 | ||||||
| 360,416,665 | 137,041,665 | |||||||
Employment Agreements
On September 6, 2019, the Company entered into an Employment Agreement with Jayme McWidener that became effective September 15, 2019, appointing her as Chief Financial Officer. The Employment Agreement has a term of two years commencing on the effective date and automatically renews for one-year periods for three consecutive years, unless terminated prior to the 90th day following the expiration of the applicable term. Compensation for the position is $175,000 per year plus expenses. Other consideration is 20,000,000 restricted shares of the Company’s common stock vesting over a two-year period with one third vesting upon issuance and one third vesting on each of the next two anniversaries. On June 7, 2021, the Company amended the September 6, 2019 Employment Agreement to appoint Ms. McWidener as Chief Accounting Officer.
On June 4, 2021, we entered into an Employment Agreement with Ralph Valvano to take effect June 7, 2021, appointing him as the Chief Financial Officer of Investview, Inc. The contract has a term of one year commencing on the effective date and automatically renews for one-year periods for four consecutive years, unless terminated. Compensation for the position is $225,000 per year. Other consideration was 6,500,000 restricted shares of the Company’s common stock vesting over a five-year period with 20% vesting upon each annual anniversary of employment. On or about June 24, 2022, we entered into an amended and restated employment agreement with Mr. Valvano pursuant to which he will receive an annual salary of $285,000 with additional quarterly incentive cash and common stock bonuses to be paid if certain target key performance indicators are achieved. In addition, Mr. Valvano shall be eligible to receive: (i) periodic cash and common stock “Market Capitalization” bonuses once we achieve certain pre-determined minimum levels of market capitalization, share price and trading volume; and (ii) a one-time cash “Up-Listing” bonus upon our shares being listed on the Nasdaq Stock Market, the New York Stock Exchange, the NYSE American or such other national stock exchange as approved by the board of directors (or committee thereof). We have also agreed to grant Mr. Valvano options to purchase 37,500,000 shares of common stock at an exercise price of $.05 per share, subject to a seven-year term and vesting over a five-year period. Mr. Valvano surrendered all rights in and to the prior grant of restricted shares he had received.
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On February 10, 2022, we entered into an employment agreement with Victor M. Oviedo, our new Chief Executive Officer. Mr. Oviedo will receive an annual salary of $415,000 with additional quarterly incentive cash and common stock bonuses to be paid if certain target key performance indicators are achieved. In addition, Mr. Oviedo shall be eligible to receive: (i) periodic cash and common stock “Market Capitalization” bonuses once we achieve certain pre-determined minimum levels of market capitalization, share price and trading volume; and (ii) a one-time cash “Up-Listing” bonus upon our shares being listed on the Nasdaq Stock Market, the New York Stock Exchange, the NYSE American or such other national stock exchange as approved by the board of directors (or committee thereof). During June 2022, in connection with his services to the Company as an executive officer, we awarded to Mr. Oviedo options to purchase an aggregate of 100 million shares of our common stock at an exercise price of $.05 per share. The options are subject to a seven-year term and vest over a five-year period following the date of grant. Additional options were granted to Mr. Oviedo in connection with his service to the Company as a member of its Board of Directors. See “Directors’ Compensation” above.
On February 22, 2022, we entered into an employment with our President and Acting Chief Operating Officer, James R. Bell. Mr. Bell will receive an annual salary of $335,000 with additional quarterly incentive cash and common stock bonuses to be paid if certain target key performance indicators are achieved. In addition, Mr. Bell shall be eligible to receive: (i) periodic cash and common stock “Market Capitalization” bonuses once we achieve certain pre-determined minimum levels of market capitalization, share price and trading volume; and (ii) a one-time cash “Up-Listing” bonus upon our shares being listed on the Nasdaq Stock Market, the New York Stock Exchange, the NYSE American or such other national stock exchange as approved by the board of directors (or committee thereof). During June 2022, in connection with his services to the Company as an executive officer, we awarded to Mr. Bell options to purchase an aggregate of 75 million shares of our common stock at an exercise price of $.05 per share. The options are subject to a seven-year term and vest over a five-year period following the date of grant. Additional options were granted to Mr. Bell in connection with his service to the Company as a member of its Board of Directors. See “Directors’ Compensation” above.
On February 22, 2022, we entered into an employment agreement with our Director of Operations, Myles Gill. Mr. Gill will receive an annual salary of $250,000 with additional quarterly incentive cash and common stock bonuses to be paid if certain target key performance indicators are achieved. In addition, Mr. Gill shall be eligible to receive: (i) periodic cash and common stock “Market Capitalization” bonuses once the Company achieves certain pre-determined minimum levels of market capitalization, share price and trading volume; and (ii) a one-time cash “Up-Listing” bonus upon our shares being listed on the Nasdaq Stock Market, the New York Stock Exchange, the NYSE American or such other national stock exchange as approved by the board of directors (or committee thereof). During June 2022, in connection with his services to the Company as an executive officer, we awarded to Mr. Gill options to purchase an aggregate of 25 million shares of our common stock at an exercise price of $.05 per share. The options are subject to a seven-year term and vest over a five-year period following the date of grant.
We have also entered into indemnification agreements with our current named executive officers and directors.
Potential Payments Upon Termination of Employment or Change in Control
Employment Agreements
The employment agreements with our named executive officers contain severance provisions, including in connection with a change of control, intended to induce these executives to continue employment with our Company and to retain them and provide consideration to them for certain restrictive covenants that apply following a termination of employment.
Under each of our employment agreements with Messrs. Oviedo, Bell, Valvano and Gill, we may terminate the agreement at any time. If we terminate the agreement due to the executive’s disability or death, the executive’s unvested options that are scheduled to vest during the period from the date of termination through the next scheduled vesting date will immediately vest and the remaining unvested options shall terminate and be forfeited, and we must pay to the executive or his estate, no later than 90 days following his termination, any quarterly cash bonuses, market capitalization bonuses, up-listing cash bonuses that he earned for any fiscal quarters prior to the termination of his employment, as well as a lump sum amount in cash equal to 6 months base salary. If the executive terminates the agreement for good reason or we terminate for any reason other than for cause, (i) we must pay to the executive an amount equal to his base salary as salary continuation payments over six months if his termination occurs on or before the first anniversary of his employment or, for Mr. Oviedo, over twelve months if his termination occurs after the first anniversary of his employment; (ii) his unvested options that are scheduled to vest during the severance period will immediately vest and the remaining unvested options shall terminate and be forfeited; (iii) we must pay to the executive, no later than 90 days following his termination, any quarterly cash bonuses, market capitalization bonuses, up-listing cash bonuses that he earned for any fiscal quarters prior to the termination of his employment; and (iv) we shall pay or reimburse him for his and his covered dependents continued coverage under our group medical, dental and health plans during the applicable severance period. The employment agreements with Messrs. Oviedo, Bell, Valvano and Gill also contain a change of control provision whereby the executive’s unvested options shall immediately vest if his employment is terminated without cause or for good reason within 12 months of a change in control. For purposes of these employment agreements, the term “change in control” is as defined in our 2022 Incentive Plan. The receipt of any severance by these executives is conditioned upon his execution of a broad release of claims.
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Other Change in Control Arrangements
The Investview, Inc. 2022 Incentive Plan under which awards have been issued to our named executive officers and directors contains “change in control” provisions. Under the 2022 Incentive Plan, without limiting the authority of the Board or a committee delegated authority by the Board to adjust awards, if a “change in control” of the Company occurs, then, unless otherwise provided in the award or other agreement, if an award is continued, assumed or substituted by the successor entity, the award will not vest or lapse solely as a result of the change of control but will instead remain outstanding under the terms pursuant to which it has been continued, assumed or substituted and will continue to vest or lapse pursuant to such terms.
Item 12. Security Ownership of Certain Beneficial Owners, Management and Related Stockholder Matters
The following table sets forth certain information, as of March 29, 2024, respecting the beneficial ownership of our outstanding common stock by: (i) any holder of more than 5%; (ii) each of the Named Executive Officers and directors; and (iii) our directors and Named Executive Officers as a group, based on 1,860,981,786 shares of common stock outstanding as of March 29, 2024. Except as otherwise indicated, each stockholder listed below has sole voting and investment power over the shares beneficially owned:
| Name of Beneficial Owner(1) | Common Stock Beneficially Owned | Percentage of Common Stock(2) | ||||||
| Principal Stockholders: | ||||||||
| DBR Capital, LLC(3) | 471,428,572 | 20.21 | % | |||||
| MPower Trading Systems, LLC | 565,000,000 | 23.29 | % | |||||
| Brian McMullen (4) | 290,000,000 | 15.58 | % | |||||
| Joseph Hagan (5) | 203,981,945 | 10.96 | % | |||||
| Directors and Officers: | ||||||||
| David B. Rothrock, Chairman (6) | 1,107,061,903 | 37.44 | % | |||||
| Victor M. Oviedo, CEO and Director (7) | 40,000,000 | 2.10 | % | |||||
| James R. Bell, President, COO, and Director (8) | 77,820,000 | 4.04 | % | |||||
| Myles P. Gill, Director of Operations (9) | 10,000,000 | * | ||||||
| Ralph R. Valvano, CFO (10) | 15,000,000 | * | ||||||
| Jayme L. McWidener, CAO (11) | 13,333,334 | * | ||||||
| All Officers and Directors as a group (6 persons) (6)(7)(8)(9)(10)(11) | 1,263,215,237 | 40.89 | % | |||||
| * | Less than 1%. |
| (1) | Except as otherwise indicated, the address of each beneficial owner is c/o Investview Inc., 521 W. Lancaster Avenue, 2nd Floor, Haverford, PA 19041. |
| (2) | Applicable percentage ownership is based on 1,860,981,786 shares of common stock outstanding as of March 29, 2024, together with securities exercisable or convertible into shares of common stock within 60 days of that date, for each stockholder. |
| (3) | Reflects the shares issuable, if at all, upon the conversion of $3.3 million of convertible notes issued to DBR Capital in 2020. DBR Capital is controlled by Company Chairman, David Rothrock. |
| (4) | Brian McMullen (5348 Vegas Drive #1342, Las Vegas NV 89108) beneficially owns 90,000,000 shares through an entity he controls, plus 200,000,000 shares owned personally. |
| (5) | Joseph Hagan owns 199,683,274 shares through two entities he controls, plus 4,298,671 shares owned personally. |
| (6) | David B. Rothrock is deemed to be the beneficial owner of 471,428,572 shares issuable upon the conversion of Convertible Notes in the amount of $3,300,000 issued to DBR Capital, LLC, because Mr. Rothrock is the sole owner of DBR Capital. As the managing member of MPower Trading Systems, LLC and as part of the acquisition of the operating assets and intellectual property rights of MPower Trading Systems, LLC, Mr. Rothrock is also deemed the beneficial owner of 565 million non-voting membership interests in our wholly owned subsidiary IFGH, which are redeemable in the future for 565 million shares of the Company. Mr. Rothrock also owns 11,466,666 shares and vested options to purchase 59,166,665 shares. |
| (7) | Includes vested options to purchase 40,000,000 shares. |
| (8) | Includes 10,320,000 shares and vested options to purchase 67,500,000 shares. |
| (9) | Includes vested options to purchase 10,000,000 shares. |
| (10) | Includes vested options to purchase 15,000,000 shares. |
| (11) | Ms. McWidener personally owns 13,333,334 shares of common stock. |
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No director, executive officer, affiliate, or any owner of record or beneficial owner of more than 5% of any class of our voting securities is a party adverse to us or has a material interest adverse to us.
Material Agreement Regarding Stock Ownership
We have entered into a Lock-Up agreement dated March 22, 2021, with all of our current and former officers, directors, and certain of our significant shareholders, covering an aggregate of approximately 381,205,961 shares of our common stock. The Lock-Up agreement will run through the earlier of April 25, 2025, the date we complete a liquidation, merger, stock exchange, or similar transaction resulting in all our shareholders having the right to exchange their shares of common stock for cash, securities, or other property, or the date we determine to release some or all of the shares of common stock from the Lock-Up Agreement. The Lock-Up Agreement does provide for limited resale provisions if certain price per share and trading volume benchmarks are met.
Equity Compensation Plans
The following table summarizes the equity compensation plans under which our securities may be issued as of December 31, 2023:
| Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (c) | |||||||||
| Equity compensation plans approved by security holders | — | — | — | |||||||||
| Equity compensation plans not approved by security holders | — | — | 237,500,000 | |||||||||
Item 13. Certain Relationships and Related Transactions, and Director Independence
Convertible Note Financing Arrangements with DBR Capital, LLC
On April 27, 2020, we entered into a Securities Purchase Agreement and related agreements with DBR Capital, LLC (“DBR Capital”), a company wholly owned by David B. Rothrock, the Chairman of our Board of Directors. Pursuant to this Securities Purchase Agreement, between April 27 and November 9, 2020, we received aggregate proceeds of $3,300,000 from DBR Capital, and entered into three convertible promissory notes in support thereof. Each note is secured by collateral of the Company and its subsidiaries. The notes bear interest at rates between 20% and 38.5% per annum, payable monthly, with the principal for each note due and payable on April 27, 2030. Each note is convertible into our common stock at a conversion price of $0.007 per share by DBR Capital at any time prior to their maturity or by the Company if certain benchmarks relating to the trading price and volume of the common stock are met. During the years ended December 31, 2023 and December 31, 2022 we made aggregate payments of interest to DBR Capital in the amounts of $900,516 and $975,560, respectively.
In addition, DBR Capital has the right to purchase additional convertible promissory notes in additional tranches of $5.7 million and $2.0 million. Pursuant to November 2021 and August 12, 2022 amendments to the Securities Purchase Agreement, the deadlines for closing loans for these additional tranches, which were originally December 31, 2021 and December 31, 2022, respectively, were extended until December 31, 2024.
In connection with the April 27, 2020 Securities Purchase Agreement and related agreements, Messrs. Rothrock and Bell were appointed as DBR Capital’s designees to our Board of Directors. On November 9, 2020, the Securities Purchase Agreement and related transaction documents were amended to, among other things, expand our Board of Directors to seven members, leaving two seats vacant, and to allow DBR Capital to fill those vacancies and remove directors in the event of default under the transaction documents.
Separation, Stock Purchase, and Release Agreements with Two Former Officers and Directors
On January 6, 2022, we entered into a Separation and Release Agreement (the “Separation Agreements”) with Mario Romano and Annette Raynor, two of the Company’s founders and former members of management and the Board of Directors, and Wealth Engineering, LLC, an affiliate of Mr. Romano and Ms. Raynor. Under the Separation Agreements, Mr. Romano and Ms. Raynor resigned their positions as officers and directors of the Company effective immediately upon execution of the Separation Agreements as they each transitioned to the roles of consultants to the Company. Mr. Romano and Ms. Raynor provided consulting services to the Company in their roles from January 6, 2022, through the elimination of these positions on or about July 14, 2023. In conjunction with the Separation Agreements, Mr. Romano and Ms. Raynor forfeited 150,000,000 shares, in total, which were returned to the Company and cancelled. The Company also repurchased a total of 43,101,939 shares from Mr. Romano and Ms. Raynor in exchange for cash of $1,724,008, which was paid to federal and state taxing authorities on behalf of Wealth Engineering, LLC as payment for the estimated federal and state taxes that Wealth Engineering, LLC may be subject to in connection with the vesting of 63,333,333 Company restricted shares that vested on July 22, 2021.
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On September 29, 2023, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase and Release Agreement, dated September 18, 2023 (the “2023 Agreement”). Under the 2023 Agreement, the Company purchased for surrender in a series of private transactions, an aggregate of 302,919,223 shares of the Company’s common stock (the “2023 Purchased Shares”) from sellers consisting of Mario Romano and Annette Raynor, two of the Company’s founders and former members of management and the Board of Directors, and a series of their family members and related entities (collectively, the 2023 “Sellers”). The 2023 Purchased Shares were purchased for aggregate consideration of $2,922,380, equating to a price of $0.00964739 per share, representing a discount of approximately 52.5% to the average market price at the time of the closing. One-eighth of the purchase price was paid within seven (7) days of the closing, with the balance payable in a series of equal quarterly payments over seven (7) consecutive quarters thereafter.
In addition to the cash consideration for the 2023 Purchased Shares, the Company also agreed to cover a limited amount of the legal fees incurred by the 2023 Sellers in the transaction, as well as provide Mr. Romano and Ms. Raynor with a $250,000 expense allowance, payable in installments, to cover legal fees and other expenses on a non-accountable basis, in connection with any matters that may arise in which either or both of Mr. Romano and/or Ms. Raynor served as officers and directors of the Company. In return, Mr. Romano and Ms. Raynor agreed to waive any future entitlement, if at all, to indemnification of costs and expenses, including legal fees under Nevada law or otherwise arising from or relating to any period in which Romano or Raynor were officers and directors of the Company.
The consideration paid for the Purchased Shares of $2,922,380 plus the $250,000 expense allowance was allocated to the share purchase for a total of $3,172,380.
Forfeiture of Shares
During the year ended December 31, 2022, we recorded 69,833,334 shares as forfeited as a result of 1) our Chief Financial Officer returning 1,300,000 shares to the Company prior to their vesting date and 2) our senior management team and board of directors unanimously agreeing to surrender and terminate an aggregate of 68,533,334 outstanding unvested restricted shares and 218,500,000 ungranted shares in exchange for the issuance of options to purchase 360,416,665 shares.
Executive Compensation Restructuring
On June 24, 2022, we undertook to restructure unvested incentive equity awards previously granted to our senior leadership team. The Company’s senior management team and board of directors unanimously agreed to surrender and terminate an aggregate of approximately 288 million outstanding unvested restricted shares in exchange for the issuance of options to purchase approximately 360 million shares, vesting in equal amounts over a five-year period, at an exercise price of $0.05 per share, or approximately a 66% premium over the closing price of the Company’s shares on Thursday, June 23, 2022. The exercise price and number of options into which the unvested restricted shares were surrendered (based on an exchange ratio of 1.25 to 1) were established by an independent valuation firm engaged by the Company that applied relevant valuation methodologies in a manner consistent with the Company’s recently completed December 31, 2021 audit. Of particular note, the shares issuable, if at all, upon exercise of the options, remain subject to the terms of the Company’s existing lock-up agreement through April 2025.
As part of the restructuring, for their service as directors of the Company, we awarded (i) David B. Rothrock options to purchase an aggregate of 85,416,668 shares of our common stock, (ii) James R. Bell options to purchase an aggregate of 37,500,000 shares of our common stock and (iii) Victor M. Oviedo options to purchase an aggregate of 25 million shares of our common stock. All of the options have an exercise price of $.05 per share and are subject to vesting over a five-year period following the date of grant.
Additionally, in connection with their service as executive officers of the Company, we awarded (i) Mr. Oviedo options to purchase an aggregate of 100 million shares of our common stock, (ii) Mr. Bell options to purchase an aggregate of 75 million shares of our common stock and (iii) Myles Gill options to purchase an aggregate of 25 million shares of our common stock. All of the options have an exercise price of $.05 per share and are subject to a seven-year term and vest over a five-year period following the date of grant.
Purchase of Company Shares in a Private Transaction
On February 7, 2024, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase and Release Agreement, dated February 6, 2024 (the “2024 Agreement”). Under the 2024 Agreement, the Company repurchased for surrender and cancellation a total of 472,374,710 shares of the Company’s common stock (the “2024 Purchased Shares”) from Ryan Smith and Chad Miller and certain of their respective affiliates and family members (collectively, the “2024 Sellers”). The 2024 Purchased Shares were purchased for an aggregate purchase price of $3,571,146, representing a price of $0.007559985 per share, representing a discount of approximately 57.6% to the average market price at the time of the closing. One-eighth of the purchase price was paid within seven (7) days of the closing, with the balance payable in a series of equal quarterly payments over seven (7) consecutive quarters thereafter.
| 38 |
Item 14. Principal Accountant Fees and Services
The following is a summary of the fees billed to us for professional services rendered for the following periods:
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||
| Audit Fees | $ | 165,000 | $ | 122,600 | ||||
| Audit Related Fees | - | - | ||||||
| Tax Fees | - | - | ||||||
| All Other Fees | - | - | ||||||
| Total | $ | 165,000 | $ | 122,600 | ||||
Audit Fees. Consists of fees billed for professional services rendered for the audit of our consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports and services in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.”
Tax Fees. Consists of fees billed for professional services for tax compliance, tax advice, and tax planning.
All Other Fees. Consists of fees for products and services other than the services reported above.
Policy on Audit Committee Preapproval of Audit and Permissible Non-Audit Services of Independent Auditors
We do not have a designated Audit Committee, and accordingly, our board of directors’ policy is to preapprove all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services, and other services. Preapproval is generally provided for up to one year and any preapproval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Company’s board of directors regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The board of directors may also preapprove particular services on a case-by-case basis.
Item 15. Exhibits and Financial Statement Schedules
| Exhibit
Number* |
Title of Document |
Location | ||
| Item 2 | Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession | |||
| 2.01 | Contribution Agreement between Investview, Inc., Wealth Generators, LLC, and the members of Wealth Generators, LLC dated March 31, 2017 | Incorporated by reference to the Current Report on Form 8-K filed April 6, 2017 | ||
| Item 3 | Articles of Incorporation and Bylaws | |||
| 3.01 | Articles of Incorporation | Incorporated by reference to the Form 10-SB filed August 12, 1999 | ||
| 3.02 | Articles of Amendments to the Articles of Incorporation | Incorporated by reference to the Form 10-SB filed August 12, 1999 | ||
| 3.03 | Bylaws | Incorporated by reference to the Form 10-SB filed August 12, 1999 |
| 39 |
| Exhibit
Number* |
Title of Document |
Location | ||
| 3.04 | Certificate of Change filed pursuant to NRS 78.209 | Incorporated by reference to the Current Report on Form 8-K filed April 6, 2012 | ||
| 3.05 | Articles of Merger filed pursuant to NRS 92.A.200 | Incorporated by reference to the Current Report on Form 8-K filed April 6, 2012 | ||
| 3.06 | Certificate of Amendment to Articles of Incorporation | This filing. | ||
| 3.07 | Certificate of Amendment to Articles of Incorporation | This filing. | ||
| Item 4 | Instruments Defining the Rights of Security Holders, including indentures | |||
| 4.01 | Common Stock Specimen | Incorporated by reference to the Registration Statement on Form S-1 filed January 12, 2018 | ||
| Item 10 | Material Contracts | |||
| 10.50 | Convertible Promissory Note, dated as of July 23, 2019 | Incorporated by reference to the Current Report on Form 8-K filed August 1, 2019 | ||
| 10.51 | Employment Agreement between Investview, Inc. and Jayme McWidener, effective as of September 15, 2019 | Incorporated by reference to the Current Report on Form 8-K filed September 12, 2019 | ||
| 10.55.1 | Certificate of Amendment of Certificate of Designation of Designation of 13% Series B Cumulative Redeemable Perpetual Preferred Stock, as Amended, filed herewith | Filed with the POS AM as filed with the SEC on June 2, 2020. | ||
| 10.57 | Common Stock Purchase Warrant | Filed with the S-1/A on March 3, 2020. | ||
| 10.58 | Form of Warrant Exercise | Filed as part of Exhibit 10.57. | ||
| 10.63.1 | Securities Purchase Agreement between Investview, Inc., and DBR Capital, LLC dated as of April 27, 2020 | Incorporated by reference to the Current Report on Form 8-K filed on April 30, 2020 | ||
| 10.63.2 | Voting Rights Agreement between certain Investview, Inc. stockholders and DBR Capital, LLC dated as of April 27, 2020 | Incorporated by reference to the Current Report on Form 8-K filed on April 30, 2020 | ||
| 10.63.3 | Lock-up Agreement between certain Investview, Inc., stockholders and DBR Capital, LLC dated as of April 27, 2020 | Incorporated by reference to the Current Report on Form 8-K filed on April 30, 2020 | ||
| 10.63.4 | Investor Rights Agreement between Investview, Inc., and DBR Capital, LLC dated as of April 27, 2020 | Incorporated by reference to the Current Report on Form 8-K filed on April 30, 2020 | ||
| 10.63.5 | Convertible Secured Promissory Note by Investview, Inc., and DBR Capital, LLC dated as of April 27, 2020 | Incorporated by reference to the Current Report on Form 8-K filed on April 30, 2020 | ||
| 10.64 | Consent of Holders of Series B Preferred | Filed with the POS AM as filed with the SEC on June 2, 2020 |
| 40 |
| Exhibit
Number* |
Title of Document |
Location | ||
| 10.65 | Convertible Secured Promissory Note by Investview, Inc., and DBR Capital, LLC, dated as of May 27, 2020 | Incorporated by reference to the Current Report on form 8-K filed on June 2, 2020 | ||
| 10.66 | Amended and Restated Securities Purchase Agreement dated November 9, 2020 | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.67 | Convertible Promissory Note dated November 9, 2020 | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.68 | Amended and Restated Convertible Secured Promissory Note in the Amount of $1,300,000 dated November 9, 2020 (originally dated April 27, 2020) | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.69 | Amended and Restated Convertible Secured Promissory Note in the Amount of $700,000 dated November 9, 2020 (originally dated May 27, 2020) | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.70 | First Amendment to Investor Rights Agreement of April 27, 2020, dated November 9, 2020 | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.71 | First Amendment to Voting Agreement of April 27, 2020, dated November 9, 2020 | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.72 | Guaranty and Collateral Agreement dated May 15, 2020 | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.74 | Cover Letter and Restricted Shares Award Agreement for David Rothrock | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.75 | Cover Letter and Restricted Shares Award Agreement for James Bell | Incorporated by reference to the Current Report on form 8-K filed on November 13, 2020 | ||
| 10.78 | Joinder Agreement dated December 23, 2020 | Incorporated by reference to the Current Report on form 8-K filed on December 31, 2020 | ||
| 10.79 | Promissory Note in the Amount of $1,000,000 with Joe Cammarata, dated January 30, 2020, First Amendment to the $1,000,000 Promissory Note dated January 31, 2020 and Second Amendment to the $1,000,000 Promissory Note dated January 30, 2020 | Incorporated by reference to the periodic report on Form 10-Q filed February 26, 2021 |
| 41 |
| 42 |
| 43 |
| Exhibit
Number* |
Title of Document |
Location | ||
| 10.101 | Indemnification Agreement between Investview, Inc., and Victor M. Oviedo, dated as of February 10, 2022 | Incorporated by reference to the Current Report on Form 8-K filed on February 23, 2022 | ||
| 10.102 | Victor M. Oviedo Joinder to Lock-Up Agreement dated March 22, 2021 | Incorporated by reference to the Current Report on Form 8-K filed on February 23, 2022 | ||
| 10.103 | Employment Agreement between Investview, Inc., and James R. Bell, dated as of February 22, 2022 | Incorporated by reference to the Current Report on Form 8-K filed on February 23, 2022 | ||
| 10.104 | Employment Agreement between Investview, Inc., and Myles Gill, dated as of February 21, 2022 | Incorporated by reference to the Current Report on Form 8-K filed on February 23, 2022 | ||
| 10.105 | Myles Gill Joinder to Lock-Up Agreement dated March 22, 2021 | Incorporated by reference to the Current Report on Form 8-K filed on February 23, 2022 | ||
| 10.106 | Form of Executive Indemnification Agreement in Use as of February 2022 | Incorporated by reference to the Current Report on Form 8-K filed on February 23, 2022 | ||
| 10.107 | Investview, Inc., 2022 Incentive Plan | Incorporated by reference to the Current Report on Form 8-K filed on February 23, 2022 | ||
| 10.110 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for David B. Rothrock #1 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.111 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for David B. Rothrock #2 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 |
| 44 |
| Exhibit
Number* |
Title of Document |
Location | ||
| 10.112 | Amendment to Employment Agreement with Victor Oviedo | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.113 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for Victor Oviedo #1 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.114 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for Victor Oviedo #2 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.115 | Amendment to Employment Agreement with James R. Bell | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.116 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for James R. Bell #1 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.117 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for James R. Bell #2 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.118 | Amendment to Employment Agreement with Myles Gill | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.119 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for Myles P Gill | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.120 | Amended and Restated Employment Agreement with Ralph Valvano | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.121 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for Ralph Valvano #1 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.122 | Non-Statutory Option Award and Non-Statutory Option Award Agreement for Ralph Valvano #2 | Incorporated by reference to the Current Report on Form 8-K filed on June 30, 2022 | ||
| 10.123 | Fourth Amendment to Amended and Restated Securities Purchase Agreement dated as of November 9, 2020 | Incorporated by reference to the Quarterly Report on Form 10-Q filed on August 15, 2022 | ||
| 10.124 | Stock Purchase and Release Agreement dated September 18, 2023 | Incorporated by reference to the Current Report on Form 8-K filed on October 4, 2023 | ||
| 10.125 | Stock Purchase and Release Agreement dated February 6, 2024 | Incorporated by reference to the Current Report on Form 8-K filed on February 9, 2024 |
| 45 |
| Exhibit Number* |
Title of Document |
Location | ||
| Item 21 | Subsidiaries of the Registrant | |||
| 21.01 | Schedule of Subsidiaries | Incorporated by reference to Amendment No. 2 to the Registration Statement on Form S-1/A filed March 11, 2019 | ||
| Item 23 | Consents of Experts and Counsel | |||
| 23.01 | Consent of M&K CPAs | This filing. | ||
| Item 31 | Rule 13a-14(a)/15d-14(a) Certifications | |||
| 31.01 | Rule 13a-14(a) Certification of Principal Executive Officer | This filing. | ||
| 31.02 | Rule 13a-14(a) Certification of Principal Financial Officer | This filing. | ||
| Item 32 | Section 1350 Certifications | |||
| 32.01 | Section 1350 Certification of the Principal Executive Officer | This filing. | ||
| 32.02 | Section 1350 Certification of the Principal Financial Officer | This filing. | ||
| Item 101 | Interactive Data Files*** | |||
| 101.INS | XBRL Instance Document | This filing. | ||
| 101.SCH | XBRL Taxonomy Extension Schema | This filing. | ||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | This filing. | ||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | This filing. |
| 46 |
| Exhibit
Number* |
Title of Document |
Location | ||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | This filing. | ||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | This filing. | ||
| Item 104 | Cover Page Interactive Data File | |||
| Cover Page Interactive Data File (formatted as Inline XBRL and continued in Exhibit 101). | This filing. |
| * | All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. Omitted numbers in the sequence refer to documents previously filed as an exhibit. |
| ** | Identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit, as required by Item 15(a)(3) of Form 10-K. |
| *** | Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of this annual report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act and otherwise are not subject to liability. |
Item 16. Form 10-K Summary
Not included.
| 47 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Investview Inc. | ||
| Dated: March 29, 2024 | By: | /s/ Victor M. Oviedo |
| Victor M. Oviedo | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: March 29, 2024 | By: | /s/ Ralph R. Valvano |
| Ralph R. Valvano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Accounting Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| SIGNATURE | TITLE | DATE | ||
| /s/ Victor M. Oviedo | Chief Executive Officer and Director | March 29, 2024 | ||
| Victor M. Oviedo | (Principal Executive Officer) | |||
| /s/ Ralph R. Valvano | Chief Financial Officer | March 29, 2024 | ||
| Ralph R. Valvano | (Principal Financial and Accounting Officer) | |||
| /s/ James Bell | President, Chief Operating Officer | March 29, 2024 | ||
| James Bell | and Director | |||
| /s/ David B. Rothrock | Chairman | March 29, 2024 | ||
| David B. Rothrock |
| 48 |
DECEMBER 31, 2023 AND 2022
FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
INVESTVIEW, INC.
Index to Consolidated Financial Statements
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of Investview, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Investview, Inc. (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations and other comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the years ended and the related notes to the consolidated financial statements. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the year ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition
The Company generates revenues from the mining of Bitcoin that requires significant judgements with regard to how the revenues are recognized. As discussed in the notes to the financial statements, management’s estimate of the consideration received and recognized from its cryptocurrency mining activities is considered variable.
Given the intricate technological considerations and complexities inherent in cryptocurrency transactions, the assessment of mining revenues requires a nuanced understanding of cryptocurrency technology, transaction processes, verification procedures, and valuation methodologies. As such, Auditing management’s evaluation of the accounting for mining revenues recognized involved significant judgement and subjectivity due to technological considerations and complexity of cryptocurrency transactions.
We evaluated the appropriateness and accuracy of management’s assessment in relation to our understanding of cryptocurrency technology, evaluation of transaction processes, verification of transactions, and assessment of valuation methods.
/s/
We have served as the Company’s auditor since 2021.
March 29, 2024
| F-2 |
INVESTVIEW, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Prepaid assets | ||||||||
| Receivables | ||||||||
| Inventory | ||||||||
| Income tax paid in advance | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Other assets: | ||||||||
| Restricted cash, long term | ||||||||
| Other restricted assets, long term | ||||||||
| Operating lease right-of-use asset | ||||||||
| Deposits | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Income tax payable | ||||||||
| Customer advance | ||||||||
| Deferred revenue | ||||||||
| Derivative liability | ||||||||
| Dividend liability | ||||||||
| Operating lease liability, current | ||||||||
| Related party debt, net of discounts, current | ||||||||
| Debt, net of discounts, current | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, long term | ||||||||
| Accrued liabilities, long term | ||||||||
| Related party debt, net of discounts, long term | ||||||||
| Debt, net of discounts, long term | ||||||||
| Total long term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, par value: $; shares authorized, and issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | ||||||||
| Common stock, par value $; shares authorized; and shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
INVESTVIEW, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
| Year Ended | Year Ended | |||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Revenue: | ||||||||
| Subscription revenue, net of refunds, incentives, credits, and chargebacks | $ | $ | ||||||
| Mining revenue | ||||||||
| Cryptocurrency revenue | ||||||||
| Mining equipment repair revenue | ||||||||
| Digital wallet revenue | ||||||||
| Total revenue, net | ||||||||
| Operating costs and expenses: | ||||||||
| Cost of sales and service | ||||||||
| Commissions | ||||||||
| Selling and marketing | ||||||||
| Salary and related | ||||||||
| Professional fees | ||||||||
| Impairment expense | ||||||||
| Bad debt expense | ||||||||
| Loss (gain) on disposal of assets | ( | ) | ||||||
| General and administrative | ||||||||
| Total operating costs and expenses | ||||||||
| Net income (loss) from operations | ( | ) | ||||||
| Other income (expense): | ||||||||
| Gain (loss) on debt extinguishment | ||||||||
| Gain (loss) on fair value of derivative liability | ||||||||
| Realized gain (loss) on cryptocurrency | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest expense, related parties | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Total other income (expense) | ( | ) | ||||||
| Income (loss) before income taxes | ( | ) | ||||||
| Income tax expense | ( | ) | ( | ) | ||||
| Net income (loss) | ( | ) | ||||||
| Dividends on Preferred Stock | ( | ) | ( | ) | ||||
| Net income (loss) applicable to common shareholders | $ | $ | ( | ) | ||||
| Other comprehensive income (loss), net of tax: | ||||||||
| Foreign currency translation adjustments | $ | $ | ( | ) | ||||
| Total other comprehensive income (loss) | ( | ) | ||||||
| Comprehensive income (loss) applicable to common shareholders | $ | $ | ( | ) | ||||
| Basic income (loss) per common share | $ | $ | ( | ) | ||||
| Diluted income (loss) per common share | $ | $ | ( | ) | ||||
| Basic weighted average number of common shares outstanding | ||||||||
| Diluted weighted average number of common shares outstanding | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
INVESTVIEW, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid in | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Common stock repurchased and canceled | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Common stock repurchased from related parties and canceled | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Common stock canceled | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Contributed capital | - | - | ||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services and other stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Warrant Exercise | - | |||||||||||||||||||||||||||||||
| Derivative liability extinguished with warrant exercise | - | - | ||||||||||||||||||||||||||||||
| Common stock repurchased from related parties and canceled | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
INVESTVIEW INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended | Year Ended | |||||||
| December 31, 2023 | December 31, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt discount | ||||||||
| Stock issued for services and other stock based compensation | ||||||||
| Lease cost, net of repayment | ( | ) | ||||||
| (Gain) loss on debt extinguishment | ( | ) | ||||||
| (Gain) loss on disposal of assets | ( | ) | ||||||
| Gain on fair value of derivative liability | ( | ) | ( | ) | ||||
| Realized (gain) loss on cryptocurrency | ( | ) | ||||||
| Bad debt expense | ||||||||
| Impairment expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid assets | ( | ) | ( | ) | ||||
| Income tax paid in advance | ( | ) | ||||||
| Other current assets | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Income tax payable | ( | ) | ||||||
| Customer advance | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Accrued interest | ||||||||
| Accrued interest, related parties | ||||||||
| Net cash provided by (used in) operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash received from the disposal of fixed assets | ||||||||
| Cash paid for fixed assets | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayments for related party debt | ( | ) | ( | ) | ||||
| Repayments for debt | ( | ) | ( | ) | ||||
| Payments for shares repurchased | ( | ) | ||||||
| Payments for shares repurchased from related parties | ( | ) | ( | ) | ||||
| Dividends paid | ( | ) | ( | ) | ||||
| Proceeds from the exercise of warrants | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate translation on cash | ( | ) | ||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents, and restricted cash - beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash - end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Debt extinguished in exchange for cryptocurrency | $ | $ | ||||||
| Common stock cancelled | $ | $ | ||||||
| Common stock repurchased for payables | $ | $ | ||||||
| Dividends declared | $ | $ | ||||||
| Dividends paid with cryptocurrency | $ | $ | ||||||
| Recognition of lease liability and ROU asset at lease commencement | $ | $ | ||||||
| Cryptocurrency received from sale of fixed assets | $ | $ | ||||||
| Derivative liability extinguished with warrant exercise | $ | $ | ||||||
| Contribution of crypto currency from related party | $ | $ | ||||||
| Fixed assets moved to inventory | $ | $ | ||||||
| Fixed asset acquired with cryptocurrency | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Organization
Investview,
Inc. was incorporated on
Effective April 1, 2017, we closed on a Contribution Agreement with the members of Wealth Generators, LLC, a limited liability company (“Wealth Generators”), pursuant to which the Wealth Generators members contributed % of the outstanding securities of Wealth Generators in exchange for an aggregate of shares of our common stock. Following this transaction, Wealth Generators became our wholly owned subsidiary, and the former members of Wealth Generators became our stockholders and controlled the majority of our outstanding common stock.
On
June 6, 2017, we entered into an Acquisition Agreement with Market Trend Strategies, LLC, a company whose members are also former members
of our management. Under the Acquisition Agreement, we spun-off our operations that existed prior to the merger with Wealth Generators
and sold the intangible assets used in those pre-merger operations in exchange for Market Trend Strategies’ assumption of $
On February 28, 2018, we filed a name change for Wealth Generators, LLC to Kuvera, LLC (“Kuvera”).
On January 17, 2019, we renamed our non-operating wholly owned subsidiary WealthGen Global, LLC to SAFETek, LLC, a Utah limited liability company.
On January 11, 2021, we filed a name change for Kuvera, LLC to iGenius, LLC (“iGenius”) and on February 2, 2021, we filed a name change for Kuvera (N.I.) Limited to iGenius Global LTD.
On September 20, 2021, the Board of Directors approved a change in our fiscal year from March 31 to December 31.
Nature of Business
We operate a diversified financial technology company that through its subsidiaries and global distribution network provides financial technology, education tools, content, research, and a digital asset technology company, which develops, operates, and supports blockchain technologies, with a focus on the Bitcoin blockchain ecosystem and the generation of digital assets. In addition, we are planning to expand our business into the retail brokerage and financial markets industry by integrating the online brokerage trading platform we acquired in connection with our recent acquisition of Opencash, with the proprietary algorithmic trading platform we acquired in September 2021. Opencash is an early-stage registered broker-dealer that plans to offer investors an online trading platform to enable self-directed retail brokerage services and develop synergies with the educational content and products offered by other of our business units.
| F-7 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
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: iGenius, LLC, Apex Tek, LLC, SAFETek, LLC, Investview Financial Group Holdings, LLC, Investview MTS, LLC, and MyLife Wellness Company. All intercompany transactions and balances have been eliminated in consolidation.
Financial Statement Reclassification
Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Foreign Exchange
We have consolidated the accounts of Kuvera France S.A.S. into our consolidated financial statements. The operations of Kuvera France S.A.S. were conducted in France through its closure date in June of 2021 and its functional currency is the Euro. Subsequent to June 2021 we maintained a Euro bank account in France that had minimal transactions. The Euro bank account was closed in April 2022.
Prior to June 2021, the financial statements of Kuvera France S.A.S. were prepared using their functional currency and were translated into U.S. dollars (“USD”). Assets and liabilities were translated into USD at the applicable exchange rates at period-end. Stockholders’ equity was translated using historical exchange rates. Revenue and expenses were translated at the average exchange rates for the period. Any translation adjustments were included as foreign currency translation adjustments in accumulated other comprehensive income in our stockholders’ equity (deficit).
Subsequent to June 2021 and prior to the closure of the Euro bank account in April 2022, we translated all transactions in our Euro bank account into USD and translated the ending bank balance into USD at the applicable exchange rate at period-end.
The following rates were used to translate the accounts of Kuvera France S.A.S. into USD for the following operating periods.
| Year ended December 31, 2022 | ||||
| Euro to USD | ||||
| F-8 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
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 $
Cash Equivalents and Restricted Cash
For purposes of reporting cash flows, we consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. As of December 31, 2023 and 2022, we had no cash equivalents.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same such amounts shown in the statement of cash flows.
| December 31, 2023 | December 31, 2022 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Restricted cash, long term | ||||||||
| Total cash, cash equivalents, and restricted cash shown on the statement of cash flows | $ | $ | ||||||
Amount included in restricted cash represent funds required to be held in an escrow account by a contractual agreement and will be used for paying dividends to our Series B Preferred Stockholders and funds required to be held in an account as collateral for business charges on our Company credit card.
Receivables
Receivables
are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of
all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables and
receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. We
had an allowance for doubtful accounts of $
Fixed Assets
Fixed assets are stated at cost and depreciated using the straight-line method over their estimated useful lives. When retired or otherwise disposed, the carrying value and accumulated depreciation of the fixed asset is removed from its respective accounts and the net difference less any amount realized from disposition is reflected in earnings. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred.
Fixed assets were made up of the following at each balance sheet date:
| Estimated | ||||||||||||
| Useful | ||||||||||||
| Life | December 31, | December 31, | ||||||||||
| (years) | 2023 | 2022 | ||||||||||
| Furniture, fixtures, and equipment | $ | $ | ||||||||||
| Computer equipment | ||||||||||||
| Leasehold improvements | ||||||||||||
| Data processing equipment | ||||||||||||
| Mining repair tools and equipment | ||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||||
| Net book value | $ | $ | ||||||||||
Total
depreciation expense for the years ended December 31, 2023 and 2022, was $
| F-9 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Long-Lived Assets – Cryptocurrencies & Intangible Assets
We account for our cryptocurrencies and intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-30, General Intangibles Other Than Goodwill, and ASC Subtopic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-30 requires assets to be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. Our cryptocurrencies are deemed to have an indefinite useful life; therefore, amounts are not amortized, but rather are assessed for impairment as further discussed in our impairment policy. Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs of internally developing, maintaining, or restoring intangible assets are recognized as an expense when incurred.
We
hold cryptocurrency-denominated assets and include them in our consolidated balance sheet as other assets. The value of our cryptocurrencies
as of December 31, 2023 and 2022 were $
On
March 22, 2021, we entered into Securities Purchase Agreement to acquire the operating assets and intellectual property rights of MPower,
a company controlled and partially owned by David B. Rothrock and James R. Bell, two of our board members. As a result,
we obtained Prodigio, a proprietary software-based trading platform with applications within the brokerage industry, which was valued
at $
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.
During
the year ended December 31, 2023,
| F-10 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
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 December 31, 2023 and 2022, 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 December 31, 2023:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31, 2022:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
| F-11 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Revenue Recognition
Subscription Revenue
Most
of our revenue is generated by membership and subscription sales and payment is received at the time of purchase. We recognize subscription
revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and
recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to provide services over
a fixed subscription period; therefore, we recognize revenue ratably over the subscription period and deferred revenue is recorded for
the portion of the subscription period subsequent to each reporting date. Additionally, we offer a designated trial period to first-time
subscription customers, during which a full refund can be requested if a customer does not wish to continue with the subscription. Revenues
are deferred during the trial period as collection is not probable until that time has passed. Revenues are presented net of refunds,
sales incentives, credits, and known and estimated credit card chargebacks. As of December 31, 2023 and 2022 our deferred revenues were
$
Mining Revenue
We generate revenue from mining bitcoin. The Company has entered into a digital asset mining pool by executing a contract, as amended from time to time, with the mining pool operator to provide computing power to the mining pool. The contract is terminable at any time by either party without penalty and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, we are entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator.
Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contract with the mining pool operator. The transaction consideration the Company receives is net of digital asset transaction fees kept by the mining pool operator and is noncash, in the form of Bitcoin, which the Company measures at fair value on the date Bitcoin is received. This value is not materially different than the fair value at the moment we meet the performance obligation, which can be recalculated based on the contractual formula. The consideration is variable. The amount of consideration recognized is constrained to the amount of consideration received, which is when it is probable a significant reversal will not occur. There is no significant financing component or risk of a significant revenue reversal in these transactions due to the performance obligations and settlement of the transactions being on a daily basis.
Cryptocurrency Revenue
We generate revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party supplier. The various packages included different amounts of coin with differing rates of returns and terms. The coin is delivered by a third-party supplier. The sale of cryptocurrency packages was discontinued during the year ended December 31, 2023.
We
recognize cryptocurrency revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract
with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to
arrange for the third-party to provide to our customers and payment is received from our customers at the time of order placement. All
customers are given two weeks to request a refund, therefore we record a customer advance on our balance sheet upon receipt of payment.
After the two weeks have passed from order placement, we request our third-party supplier to deliver coin, at which time we recognize
revenue and the amounts due to our supplier on our books. As of December 31, 2023 and 2022 our customer advances related to cryptocurrency
revenue were $ and $
Mining Equipment Repair Revenue
Through our wholly owned subsidiary, SAFETek, LLC, we repair broken mining equipment for sale to third-party customers. Our mining equipment repair business was discontinued during the quarter ended June 30, 2023.
We recognize miner repair revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to deliver the promised goods to our customers.
| F-12 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Digital Wallet Revenue
We generate revenue from the sale of digital wallets to our customers through an arrangement with a third-party supplier. We offer three tiers of wallets which include different features. The digital wallets are delivered by a third-party supplier. The sale of digital wallets to our customers was discontinued during the year ended December 31, 2022.
We recognize digital wallet revenue in accordance with ASC 606-10 where revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract. Our performance obligation is to arrange for the third parties to provide the wallet to our customers and payment is received from our customers at the time of order placement.
Revenue generated for the year ended December 31, 2023, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Total | ||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | |||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ||||||||||||||||
| Amounts paid to supplier | ( | ) | ( | ) | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | |||||||||||||||
Foreign
revenues for the year ended December 31, 2023 was approximately $
Revenue generated for the year ended December 31, 2022, was as follows:
| Subscription Revenue | Cryptocurrency Revenue | Mining Revenue | Miner Repair Revenue | Digital Wallet Revenue | Total | |||||||||||||||||||
| Gross billings/receipts | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Refunds, incentives, credits, and chargebacks | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Amounts paid to supplier | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Foreign
revenues for the year ended December 31, 2022 was approximately $
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 year ended December 31, 2023 and
2022, totaled $
Cost of Sales and Service
Included
in our costs of sales and services is amounts paid to our trading and market experts that provide financial education content and tools
to our subscription customers and hosting and electricity fees that we pay to vendors to set up our mining equipment at third-party sites
in order to generate mining revenue. Costs of sales and services for the year ended December 31, 2023 and 2022, totaled $
Inventory
Inventory
consists of finished goods to be sold as part of our miner repair revenue and materials that were purchased for refurbishment but
will be sold as purchased due to the Company winding down the refurbishment and sale of repaired miners. Inventory is valued at the
lower of cost or net realizable value using the first-in, first-out (FIFO) method and is inclusive of any shipping and tax costs.
During the year ended December 31, 2023, we recognized a loss on disposal of assets of $
| F-13 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
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.
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. Diluted income (loss) per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.
| Net income (loss) | $ | |||
| Less: preferred dividends | ( | ) | ||
| Add: interest expense on convertible debt | ||||
| Net income available to common shareholders (numerator) | $ | |||
| Basic weighted average number of common shares outstanding | ||||
| Dilutive impact of convertible notes | ||||
| Dilutive impact of non-voting membership interest | ||||
| Diluted weighted average number of common shares outstanding (denominator) | ||||
| Diluted income per common share | $ |
As of December 31, 2022 basic and diluted income per share were the same, as all securities had an antidilutive effect, therefore securities were excluded from the dilutive income per common share calculation ( for warrants, for options, for convertible notes, and for Class B Redeemable Units of subsidiary).
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.
| F-14 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company has not yet adopted ASU No. 2023-08 and is currently evaluating the impact that the adoption will have on the Company’s financial statement presentation and disclosures.
We have noted no other recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements.
NOTE 4 – LIQUIDITY
Our financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
During
the year ended December 31, 2023, we recorded a net income from operations of $
NOTE 5 – RELATED PARTY TRANSACTIONS
Related Party Debt
Our related party debt consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Convertible Promissory Note entered into on 4/27/20, net of debt discount of $ | $ | $ | ||||||
| Convertible Promissory Note entered into on 5/27/20, net of debt discount of $ | ||||||||
| Convertible Promissory Note entered into on 11/9/20, net of debt discount of $ | ||||||||
| Working Capital Promissory Note entered into on 3/22/21 [4] | ||||||||
| Total related-party debt | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Related-party debt, long term | $ | $ | ||||||
| [1] |
| F-15 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
| [2] | |
| [3] | |
| [4] |
The loans referenced in footnotes 1-3 above, were
advanced under a Securities Purchase Agreement we entered into on April 27, 2020, with DBR Capital. Under the Securities Purchase Agreement
(which was subsequently amended and restated), DBR Capital agreed to advance up to $
On August 12, 2022, we and DBR Capital, entered into a Fourth Amendment to the now Amended and Restated Securities Purchase Agreement that extends the deadlines for the fourth and fifth closings under that Agreement from December 31, 2022, to December 31, 2024. The fourth and fifth closings remain at the sole discretion of DBR Capital and we cannot provide any assurance that they will occur when contemplated or ever.
Other Related Party Arrangements
On
January 6, 2022, we entered into a Separation and Release Agreement (the “Separation Agreements”) with Mario Romano and Annette
Raynor, two of the Company’s founders and former members of management and the Board of Directors, and Wealth Engineering, LLC,
an affiliate of Mr. Romano and Ms. Raynor. Under the Separation Agreements, Mr. Romano and Ms. Raynor resigned their positions as officers
and directors of the Company effective immediately upon execution of the Separation Agreements as they each transitioned to the roles
of consultants to the Company. Mr. Romano and Ms. Raynor provided consulting services to the Company in their roles from January 6, 2022,
through the elimination of these positions on or about July 14, 2023. In conjunction with the Separation Agreements, Mr. Romano and Ms.
Raynor forfeited shares, in total, which were returned to the Company and cancelled. The Company also repurchased a total
of shares from Mr. Romano and Ms. Raynor in exchange for cash of $
On
September 29, 2023, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase
and Release Agreement dated September 18, 2023 (the “Agreement”). Under the Agreement, the Company purchased for surrender
in a series of private transactions, an aggregate of shares of the Company’s common stock (the “Purchased Shares”)
from sellers consisting of Mario Romano, Annette Raynor, and a series of their family members and related entities (collectively, the
“Sellers”). The Purchased Shares were purchased for aggregate consideration of $
In
addition to the cash consideration for the Purchased Shares, the Company also agreed to cover a limited amount of the legal fees incurred
by the Sellers in the transaction, as well as provide Mr. Romano and Ms. Raynor with a $
| F-16 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
The
consideration paid for the Purchased Shares of $
During the year ended December 31, 2022, we recorded shares as forfeited as a result of 1) our Chief Financial Officer returning shares to the Company prior to their vesting date and 2) our senior management team and board of directors unanimously agreeing to surrender and terminate an aggregate of outstanding unvested restricted shares and ungranted shares in exchange for the issuance of options to purchase shares (see NOTE 9).
NOTE 6 – DEBT
Our debt consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Loan with the U.S. Small Business Administration dated 4/19/20 [1] | $ | $ | ||||||
| Long term notes for APEX lease buyback [2] | ||||||||
| Total debt | ||||||||
| Less: Current portion | ||||||||
| Debt, long term portion | $ | $ | ||||||
| [1] | |
| [2] |
| F-17 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
NOTE 7 – DERIVATIVE LIABILITY
During the year ended December 31, 2023 and 2022, we had the following activity in our derivative liability account:
| Total | ||||
| Derivative liability at December 31, 2021 | $ | |||
| Change in fair value | ( | ) | ||
| Derivative liability at December 31, 2022 | ||||
| Derivative extinguished with warrant exercise (see NOTE 9) | ( | ) | ||
| Change in fair value | ( | ) | ||
| Derivative liability at December 31, 2023 | $ | |||
We use the binomial option pricing model to estimate fair value for those instruments, at inception, at warrant exercise, and at each reporting date. During the years ended December 31, 2023 and 2022, the assumptions used in our binomial option pricing model were in the following range:
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||
| Risk free interest rate | ||||||||
| Expected life in years | ||||||||
| Expected volatility |
NOTE 8 – OPERATING LEASE
In August 2019, we entered an operating lease for office space in Eatontown, New Jersey (the “Eatontown Lease”), in September 2019 we entered an operating lease for office space in Kaysville, Utah (the “Kaysville Lease”), in May 2021 we entered an operating lease for office space in Conroe, Texas (the “Conroe Lease”), in July 2021 we entered an operating lease for office space in Wyckoff, New Jersey (the “Wyckoff Lease”), and in September 2021, we assumed an operating lease for office space in Haverford, Pennsylvania (the “Haverford Lease”) in connection with the MPower acquisition. This facility is now being used as the headquarters of the company.
At
commencement of the Eatontown Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Conroe Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
commencement of the Wyckoff Lease, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
At
date of acquisition of the Haverford Lease, right-of-use assets and lease liabilities obtained amounted to $
Operating
lease expense was $
Future minimum lease payments under non-cancellable leases as of December 31, 2023, were as follows:
| 2024 | $ | |||
| 2025 | ||||
| Total | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liability | ||||
| Operating lease liability, current [1] | ( | ) | ||
| Operating lease liability, long term | $ |
| [1] |
| F-18 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
NOTE 9 – STOCKHOLDERS’ EQUITY
Preferred Stock
We are authorized to issue up to shares of preferred stock with a par value of $ and our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of common stock and to determine the rights, privileges, and preferences of that preferred stock.
Our
Board of Directors approved the designation of
During
the year ended March 31, 2021, we commenced a security offering to sell a total of units at $ per unit (“Unit Offering”),
such that each unit consisted of:
As of December 31, 2023 and 2022, we had shares of preferred stock issued and outstanding.
Preferred Stock Dividends
During
the year ended December 31, 2023, we recorded $
During
the year ended December 31, 2022, we recorded $
Common Stock Transactions
During
the year ended December 31, 2023, we issued
During
the year ended December 31, 2022, we recognized a total of $ in stock-based compensation based on grant date fair values and vesting
terms of awards granted in prior periods. We also cancelled shares that had been issued but were forfeited by choice or as
a result of certain forfeiture conditions (see NOTE 5). As a result, we decreased common stock by $, and increased additional
paid in capital by the same. Also, during the year ended December 31, 2022, we repurchased shares from members of our then
Board of Directors in exchange for cash of $
As of December 31, 2023 and 2022, we had and shares of common stock issued and outstanding, respectively.
| F-19 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Options
During
the year ended December 31, 2022, we undertook to restructure unvested incentive equity awards previously granted to our senior leadership
team. The Company’s senior management team and board of directors unanimously agreed to surrender and terminate an aggregate of
outstanding unvested restricted shares and ungranted shares in exchange for the issuance of options to purchase
shares, vesting in equal amounts over a five-year period, at an exercise price of $
Warrants
Transactions involving our warrants are summarized as follows:
| Weighted | ||||||||
| Number of | Average | |||||||
| Shares | Exercise Price | |||||||
| Warrants outstanding at December 31, 2021 | $ | |||||||
| Granted | $ | |||||||
| Canceled/Expired | $ | |||||||
| Exercised | $ | |||||||
| Warrants outstanding at December 31, 2022 | $ | |||||||
| Granted | $ | |||||||
| Canceled/Expired | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Warrants outstanding at December 31, 2023 | $ | |||||||
Details of our warrants outstanding as of December 31, 2023 is as follows:
| Exercise Price | Warrants Outstanding | Warrants Exercisable | Weighted Average Contractual Life (Years) | |||||||||||
| $ | ||||||||||||||
Class B Units of Investview Financial Group Holdings, LLC
As
of December 31, 2023, and December 31, 2022, there were
| F-20 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
NOTE 10 – COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we may be, or have been, involved in legal proceedings. During November 2021, we received a subpoena from the United States Securities and Exchange Commission (“SEC”) for the production of documents. In the subpoena, the SEC advised that the investigation does not mean that the SEC has concluded that we or anyone else has violated federal securities laws and or any other law. Following our own internal review, we believe that we have complied at all times with the federal securities laws, and we have received no follow-up communications from the SEC following our production of documents in 2022. We have cooperated fully with the SEC’s investigation and will continue to work with outside counsel to respond to any further inquiries of the SEC, if, and to the extent they arise.
Through
August 2023, we generated revenue from the sale of cryptocurrency packages to our customers through an arrangement with a third-party
supplier, certain of which, until January 2022, included a product protection option provided by a third-party provider.
Joseph Cammarata served as an officer and director of the Company from December 2019 through his termination for cause on or about December 7, 2021. Mr. Cammarata was terminated following the announcement of civil and criminal charges filed against him in connection with his involvement with a class action claims aggregator unrelated to the Company. The Company was unaware of these outside business interests. Based on public reporting of the matter, the Company believes that Mr. Cammarata was convicted of certain of these criminal charges and is presently incarcerated.
Prior to his termination, Mr. Cammarata and the Company engaged in certain transactions as described below:
We
issued a promissory note to Mr. Cammarata, which, following certain modifications, on or about March 30, 2021, was restated in the principal
amount of $
On
March 22, 2021, we entered into Securities Purchase Agreements to purchase
| F-21 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
NOTE 11 – 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
The Company’s income (loss) before income taxes were broken down as follows:
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||
| Domestic | $ | $ | ( | ) | ||||
| Foreign | ||||||||
| Total Income (loss) before income taxes | $ | $ | ( | ) | ||||
The Company’s tax provision (benefit) as of December 31, 2023 and 2022 is summarized as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Current | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | ||||||||
| Total current income tax expense | ||||||||
| Total income tax expense | $ | $ | ||||||
Net deferred tax assets consist of the following components as of December 31, 2023 and 2022:
| December 31, 2023 | December 31, 2022 | |||||||
| Deferred tax assets | ||||||||
| NOL carryover | $ | $ | ||||||
| Amortization | ||||||||
| Other accruals | ||||||||
| Investment in partnership | ||||||||
| Deferred tax liabilities | ||||||||
| Depreciation | ( | ) | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax liability | $ | $ | ||||||
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 year ended December 31, 2023 and 2022, due to the following:
| Year ended December 31, 2023 | Year ended December 31, 2022 | |||||||
| Income taxes at statutory rate | $ | $ | ( | ) | ||||
| State taxes – net of federal benefit | ||||||||
| Valuation allowance | ||||||||
| Foreign derived intangible income | ( | ) | ||||||
| Stock based compensation | ( | ) | ||||||
| Interest | ||||||||
| Other | ( | ) | ||||||
| Total income tax provision (benefit) | $ | $ | ||||||
| F-22 |
INVESTVIEW, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
At
December 31, 2023 and December 31, 2022, we had net operating loss carryforwards of approximately $
The
Company will recognize interest accrued related to unrecognized tax benefits as interest expense and penalties as a component of operating
expenses. As of December 31, 2023 and 2022, the Company had
The Company is required to file income tax returns in various States. The Company is subject to income tax examinations by federal and state taxing authorities. The taxable years that are open under federal and state statute of limitations are 2019 through 2023. Due to net operating loss carryforwards that remain unutilized, such loss carryforwards remain subject to review until utilized.
NOTE 12 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent Events, we have evaluated subsequent events through the date of this filing and have determined that the following events require disclosure.
On
February 7, 2024, we closed on the purchase in a private transaction of shares of our common stock under the terms of a Stock Purchase
and Release Agreement dated February 6, 2024 (the “Agreement”). Under the Agreement, the Company purchased for surrender
and cancellation a total of shares of the Company’s common stock (the “Purchased Shares”) from Ryan Smith
and Chad Miller and certain of their respective affiliates and family members. The Purchased Shares were purchased for aggregate purchase
price of $
On
March 14, 2024, closed on the purchase of Opencash Securities LLC, an early-stage registered broker-dealer that plans to offer investors
an online platform to enable self-directed retail brokerage and other related services. Pursuant to the Purchase Agreement, the Company
purchased
Since the beginning of 2024, our power supply has been temporarily curtailed by approximately 38% as a direct result of low water levels that have cutback local hydroelectric power capacity. While we are hopeful that the water shortage responsible for this curtailment is temporary, we are unable to predict when our mining levels will return to pre-2024 levels.
| F-23 |