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INVU > SEC Filings for INVU > Form 10-Q on 8-Nov-2012All Recent SEC Filings

Show all filings for INVESTVIEW, INC.

Form 10-Q for INVESTVIEW, INC.


8-Nov-2012

Quarterly Report


Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report Form 10-Q, including this discussion and analysis by management, contains or incorporates forward-looking statements. All statements other than statements of historical fact made in report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as "believes," "estimates," "could," "possibly," "probably," anticipates," "projects," "expects," "may," "will," or "should" or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management's current expectations and are inherently uncertain. Our actual results may differ significantly from management's expectations. For factors that may cause actual results to differ from management's expectations, reference should be made to the Company's Form 10-K for the year ended March 31, 2012 filed with the Securities and Exchange Commission and our other periodic filings with the Securities and Exchange Commission.

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Corporate History

InvestView, Inc. (hereinafter referred to as the "Company", "InvestView" or "INVU") was incorporated in the State of Nevada on August 1, 2005. Effective September 18, 2006, the Company changed its name to TheRetirementSolution.com, Inc., on October 1, 2008 the Company changed its name to Global Investor Services, Inc. and on March 27, 2012, the Company changed its name to InvestView, Inc. The Company was initially formed to market portfolios of stocks via subscription. In 2007, a new chief executive officer was installed and a strategy was developed to create and market a diverse portfolio of products and services for the financial education and financial information industry. This strategy included strategic acquisitions, such as the acquisitions of Razor Data, LLC and Investment Tools and Training, LLC, which have provided the Company with an integrated platform in which it can market and deliver investor education products and investor services. The stock symbol is INVU.

Business Overview

As an investor technology and education company, we provide a broad suite of state-of-the-art products that allow the individual investor to find, analyze, track and manage his or her portfolio. Our educational services focus on empowering investors with the skills that allow them to rely on their own investing knowledge to make intelligent and sound investment decisions. Our flagship product is InvestView, an all-inclusive on-line education, analysis and application platform. InvestView is equipped with in-house, qualified professionals who have collectively taught over a quarter of a million students in the past decade on how to trade in the stock market.

These tools and educational programs arm the common investor and provide them with the ability to traverse today's turbulent marketplace, regardless of the direction of the market - whether it is moving up, down or sideways.

It is our opinion that now, more than ever before, it is critical that the individual investor come to understand the forces that influence the marketplace. We specialize in assisting common investors through this process by offering them the tools, training and confidence that is required to successfully navigate the market in these trying times.

Regardless of investors' ages or varying backgrounds, we help the everyday investor turn market uncertainty into opportunity. We do this by providing powerful investment tools and training, coupled with a rules-based system that allows individuals to make more intelligent and disciplined investment decisions.

We are committed to the education and support of the individual investor. Our innovative products, proprietary tools and all-inclusive platform are cost effective and engineered to meet the needs of investors world-wide.

The Company's unique offerings include:

A comprehensive program of successively more complex financial educational courses that are sold to customers on a subscription basis and are delivered on line through the Company's website;

In-house developed trading tools with actionable trading indicators;

Blogs, newsletters and other reference materials that describe investment strategies; and

Mentoring, coaching and advisory services that are available on a subscription basis.

The Company believes that offering financial information and financial education, in one integrated operating platform, is a viable business strategy, but needs to evolve for greater diversification and shareholder value. Currently, our business model monetizes our products and services primarily from subscription revenues. Online brokers bundle the cost of their education platform into the commission and spreads they charge. To better monetize the value of our scalable platform, we believe our business strategy needs to evolve to be more like the online brokerage model.

Results of Operations

Three months ended September 30, 2012 compared to three months ended September 30, 2011:

Revenues:



                          Three Months Ended          Three Months Ended
                          September 30, 2012          September 30, 2011              Variance
Subscription revenues   $    390,835        100 %   $    556,947        100 %   $ (166,112 )     (30 )%

We realized a drop in our revenues of 31% for the three months ended September 30, 2012 from the prior year as we transition to our online based modeling. The New York Stock Exchange Composite Volume experienced a similar drop for the same period equal to 30%. We proactively introduced both new products and a new marketing strategy to improve the lifetime value of our accounts. We are now emphasizing our online based business model which provides subscription based services including trading ideas, tools and education through live and recorded webinars and is marketed through a number of online media channels. Our trading and education tools are located at www.investview.comwhereas our 7 minute trader product has its own website at www.7minute trader.com.

As we measured the attrition rates of the trading and education offerings we determined that their lifetime value was approximating our cost of acquisition. As clients move through the education modules they tend to exhaust their interest and either attrite or shift to the lower priced trading modules. Introduction of the 7 minute trader has resulted in a better adoption rate, a markedly improved retention rate and significantly lower acquisition costs.

The new 7 minute trader product saw a 30% reduction from the June 2012 quarter for an - adoption rate. The 7 minute trader is advertised at $49.95 per month whereas the trading and education tools are advertised at $99 and $199 per month. This quarter we recorded approximately $171,000 of receipts for this product versus about $223,000 in the June 2012 quarter. For the core education and legacy products, receipts for this quarter fell to approximately $175,000 from about $254,000 in the June 2012 quarter. So there was no deceleration of the attrition rates on the core education and legacy products in spite of the slower summer season.

This quarter also included about $25,000 more accretion of deferred revenues than the June 2012 quarter.

Operating Costs and Expenses:



A summary of significant operating costs and expenses for the three months ended
September 30, 2012 and the three months ended September 30, 2011 follows:



                                     Three Months                    Three Months
                                         Ended                           Ended
                                  September 30, 2012              September 30, 2011                 Variance
Costs of sales and services   $      169,275           13 %   $      185,856            8 %   $  (16,581 )         (9 )%
Selling, general and
administrative                     1,125,864           84 %        2,044,623           90 %     (918,759 )        (45 )%
Depreciation and
amortization                          51,834            3 %           52,718            2 %         (884 )         (2 )%
Total                         $    1,346,973          100 %   $    2,283,197          100 %   $ (936,224 )        (41 )%

Operating costs were substantially lower year over year, primarily from a reduction of selling, general and administrative expenses.

During the three months ended September 30, 2012, our cost of sales and service was $169,275 as compared to $185,856 during the three months ended September 30, 2011. Most of this expense is composed of stock market data feeds to the Company's core educational product line's stock analysis tools. As a percentage of revenues, the operating margin decreased to 57% in the current quarter from 67% in the same quarter last year primarily because of the reduction in revenue.

Our selling, general and administrative expenses decreased from $2,044,623 for the three months ended September 30, 2011 to $1,125,864 in current 2012 period or $918,759 (45%). Last year the Company incurred $452,931 as stock based compensation as compared to $402,717 for the current period. In addition, for the three months ended September 30, 2011, we incurred $180,000 in marketing accretion as compared to nil for current year period.

This quarter we spent approximately $46,000 on direct marketing or 12% of revenues versus 96% or about $535,000 for the same quarter last year.

Depreciation and amortization decreased from $52,718 to $51,834 or a decrease of $884 due to the full amortization of certain property and equipment during the last fiscal year.

Other:



A summary of significant other income (expenses) for the three months ended
September 30, 2012 and the three months ended September 30, 2012 follows:



                                    Three Months                    Three Months
                                        Ended                          Ended
                                 September 30, 2012              September 30, 2011                  Variance
Interest                      $   (184,482 )       (149 )%   $  (1,632,129 )         55 %    $ 1,447,647           89 %
Gain (loss) on change in
fair value of warrant and
derivatives                   $      3,751            3 %    $      18,775           (1 )%   $   (15,024 )        (80 )%
Gain (loss) on settlement
of debt                            304,065          246 %       (1,331,410 )         46 %      1,635,475          123 %
Interest and other, net                 40            - %              (42 )          - %             82         (196 )%
Total                         $    123,374          100 %    $  (2,944,806 )        100 %    $ 3,068,180          104 %

Interest expense decreased from $1,632,129 to $184,482, a $1,447,647 or 89% decrease. The decrease is because of the significant recapitalization of the Company over the past year.

During the year ended March 31, 2010, we issued promissory notes and related warrants that contain certain reset provisions. As such, we are required to record these reset provisions as a liability and mark them to market each reporting period. For the three months ended September 30, 2012, we recorded a gain of $3,751 in change in the fair value of these reset provisions vs. a gain for the three months ended September 30, 2011 of $18,775. The volatility of our stock price increased in fiscal year 2012 from the prior fiscal year. This increase in volatility caused the value of the warrants to increase and resulted in some of the loss in the current period.

In addition, during the year ended March 31, 2012, we modified a significant number of these outstanding warrants and reduced the number of warrants with reset provisions to 2,500 warrants.

For the three months ended September 30, 2011, we settled or restructured a significant portion of our outstanding convertible debt obligations and warrants containing reset provisions. As such, we incurred a loss on debt settlement of $1,331,410 as compared to a gain of $304,065 for the three months ended September 30, 2012 as a primary result of settlement of an outstanding note payable.

Six months ended September 30, 2012 compared to six months ended September 30, 2011:

Revenues:



                           Six Months Ended            Six Months Ended
                          September 30, 2012          September 30, 2011              Variance
Subscription revenues   $     946,489       100 %   $     1,090,109       0 %   $ (143,620 )     (13 )%

We realized a drop in our revenues of 13% for the six months ended September 30, 2012 from the prior year as we transition to our online based modeling. We proactively introduced both new products and a new marketing strategy to improve the lifetime value of our accounts. We are now emphasizing our online based business model which provides subscription based services including trading ideas, tools and education through live and recorded webinars and is marketed through a number of online media channels. Our trading and education tools are located at www.investview.comwhereas our 7 minute trader product has its own website at www.7minute trader.com.

As we measured the attrition rates of the trading and education offerings we determined that their lifetime value was approximating our cost of acquisition. As clients move through the education modules they tend to exhaust their interest and either attrite or shift to the lower priced trading modules. Introduction of the 7 minute trader has resulted in a better adoption rate, a markedly improved retention rate and significantly lower acquisition costs.

Operating Costs and Expenses:



A summary of significant operating costs and expenses for the six months ended
September 30, 2012 and the six months ended September 30, 2011 follows:



                                      Six Months                     Six Months
                                         Ended                          Ended
                                  September 30, 2012              September30, 2011                 Variance
Costs of sales and services   $      325,362           11 %   $    389,087            9 %   $    (63,725 )        (16 )%
Selling, general and
administrative                     2,591,757           86 %      3,750,376           88 %     (1,158,619 )        (31 )%
Depreciation and
amortization                         103,667            3 %        105,435            3 %         (1,768 )         (2 )%
Total                         $    3,020,786          100 %   $  4,244,898          100 %   $ (1,224,112 )        (29 )%

Operating costs were substantially lower year over year, primarily from a reduction of selling, general and administrative expenses.

During the six months ended September 30, 2012, our cost of sales and service was $325,362 as compared to $389,087 during the six months ended September 30, 2011. Most of this expense is composed of stock market data feeds to the Company's core educational product line's stock analysis tools. As a percentage of revenues, the operating margin improved to 66% in the current quarter from 64% in the same quarter last year primarily because the reduction in revenue.

Our selling, general and administrative expenses decreased from $3,750,376 for the six months ended September 30, 2011 to $2,591,757 in current 2012 period or $1,158,619 (31%). Last year the Company incurred approximately $1,412,000 as stock based compensation as compared to $1,231,102 for the current period. In addition, for the six months ended September 30, 2011, we incurred $270,000 in marketing accretion as compared to nil for current year period.

This quarter we spent approximately $140,000 on direct marketing or 15% of revenues versus 70% or about $764,000 for the same quarter last year.

Depreciation and amortization decreased from $105,435 to $103,667 or a decrease of $1,768 due to the full amortization of certain property and equipment during the last fiscal year.

Other:



A summary of significant other income (expenses) for the six months ended
September 30, 2012 and the six months ended September 30, 2012 follows:



                                     Six Months                      Six Months
                                        Ended                          Ended
                                 September 30, 2012              September 30, 2011                  Variance
Interest                      $   (347,603 )       (435 )%   $  (2,052,200 )         52 %    $ 1,704,597           83 %
Gain (loss) on change in
fair value of warrant and
derivatives                   $       (137 )          - %    $      46,965           (1 )%   $   (47,102 )       (100 )%
Gain (loss) on settlement
of debt                            267,678          335 %       (1,911,211 )         49 %      2,178,889          114 %
Interest and other, net                201            - %              (48 )          - %            249            -
Total                         $    (79,861 )        100 %    $  (3,916,494 )        100 %    $ 3,836,633           98 %

Interest expense decreased from $2,052,200 to $347,603, a $1,704,597 or 83% decrease. The decrease is because of the significant recapitalization of the Company over the past year.

During the year ended March 31, 2010, we issued promissory notes and related warrants that contain certain reset provisions. As such, we are required to record these reset provisions as a liability and mark them to market each reporting period. For the six months ended September 30, 2012, we recorded a loss of $137 in change in the fair value of these reset provisions vs. a gain for the three months ended September 30, 2011 of $46,965. The volatility of our stock price increased in fiscal year 2012 from the prior fiscal year. This increase in volatility caused the value of the warrants to increase and resulted in some of the loss in the current period.

In addition, during the year ended March 31, 2012, we modified a significant number of these outstanding warrants and reduced the number of warrants with reset provisions to 2,500 warrants.

In addition, for the six months ended September 30, 2011, we settled or restructured a significant portion of our outstanding convertible debt obligations and warrants containing reset provisions. As such, we incurred a loss on debt settlement of $1,911,211 as compared to a gain of $267,678 for the six months ended September 30, 2012 as a primary result of settlement of outstanding note payable.

Cash Used in Operating Activities:

During the six months ended September 30, 2012, we were able to decrease our rate of usage of cash on a monthly basis from operations to approximately $77,000 as compared to approximately $158,000 in the same period last year. We anticipate we will see enhanced cash flow from operations at the point we produce profits as we will be able to utilize our Net Operating Loss Carry-forwards. With our recent acquisitions we anticipate more opportunities to generate revenues and from varied sources.

Liquidity and Capital Resources

During six months ended September 30, 2012, the Company incurred a loss from operations of $2,154,158. However, only $461,972 was cash related. This negative cash flow was funded by existing cash, issuance and closing of $500,000 of additional convertible notes payable and borrowing from related parties. As a result, our cash and cash equivalents increased by $3,003 to $182,924 from the beginning of the fiscal year of $179,921.

The Company's current liabilities exceeded its current assets (working capital deficit) by $986,015 as of September 30, 2012 as compared to $952,214 at March 31, 2012. The increase in the working capital deficit is primarily due to the combination of increased accounts payable and accrued expenses of $177,957. We anticipate funding and closing of the remaining $200,000 of August convertible notes in the December 2012 Quarter. In addition we anticipate $100,000 of the October convertible notes funding and closing in the December Quarter. We also anticipate the funding and closing of the remaining October convertible notes of $700,000 in March and April of 2013.

Auditor's Opinion Expresses Doubt About the Company's Ability to Continue as a "Going Concern"

The independent auditors report on our March 31, 2012 consolidated financial statements states that the Company's historical losses and accumulated deficiency raise substantial doubts about the Company's ability to continue as a going concern, due to the losses incurred and deficiency. If we are unable to develop our business, we will have to reduce, discontinue operations or cease to exist, which would be detrimental to the value of the Company's common stock. We can make no assurances that our business operations will develop and provide us with significant cash to continue operations.

In order to improve the Company's liquidity, the Company's management is actively pursuing additional financing through discussions with investment bankers, financial institutions and private investors. There can be no assurance that the Company will be successful in its effort to secure additional financing.

Critical Accounting Policies

The preparation of our 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 a number of significant accounting policies affecting our consolidated financial statements; we believe the following critical accounting policy involves the most complex, difficult and subjective estimates and judgments.

Revenue Recognition

For revenue from product sales and services, the Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition ("ASC 605-10") which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

Revenue arises from subscriptions to the websites/software, workshops, online workshops and training and coaching/counseling services where the customers are charged a monthly subscription fee for access to the online training and courses and website/data. All revenues are recognized in the month the products and services are delivered.

We sell our products separately and in various bundles that contain multiple deliverables that include website/data subscriptions, educational workshops, online workshops and training, one-on-one coaching and counseling sessions, along with other products and services. In accordance with 605-25, sales arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria:
(i) the product has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of undelivered items; and
(iii) delivery or performances of any undelivered item is probable and substantially in our control. The fair value of each separate element is generally determined by prices charged when sold separately. In certain arrangements, we offer these products bundled together. If there is any discount from the combined fair value of the individual elements, the discount is allocated to the portion of the revenues that is attributed to the online courses and training. As per 605-25, if fair value of all undelivered elements in an arrangement exists, but fair value does not exist for a delivered element, then revenue is recognized using the residual method. Under the residual method, the fair value of undelivered elements is deferred and the remaining portion of the arrangement fee (after allocation of 100 percent of any discount to the delivered item) is recognized as revenue. The deferral policy for each of the different types of revenues is summarized as follows:

Product                         Recognition Policy

Live Workshops and Workshop     Deferred and recognized as the workshop is provided
Certificates                    or certificate expires

Online training and courses     Deferred and recognized a.) as the services are
                                delivered, or b.) when usage thresholds are met, or
                                c.) on a straight-line basis over the initial
                                product period

Coaching/Counseling services    Deferred and recognized as services are delivered,
                                or on a straight-line basis over the term of the
                                service contract

Website/data fees (monthly)   Not deferred, recognized in the month delivered

Website/data fees (pre-paid   Deferred and recognized on a straight-line basis over
subscriptions)                the subscription period

Stock-Based Compensation

The Company has adopted Accounting Standards Codification subtopic 718-10, Compensation-Stock Compensation ("ASC 718-10") which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, directors and key consultants including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.

For the six months ended September 30, 2012 and 2011, the Company did not grant stock options to employees. The fair value of vesting options granted in previous years and vested during the three and six months ended September 30, 2012 of $26,973 and $53,947, respectively, and $26,974 and $53,948 for the three and six months ended September 30, 2011 was recorded as a current period charge to earnings.

In addition, the Company issued a restricted stock units ("RSU") during the six months ended September 30, 2012. The fair value of the vesting RSU of $151,783 and $210,377 was recorded as a current period charge to earnings during the three and six months ended September 30, 2012.

Derivative Instruments and Fair Value of Financial Instruments

We have evaluated the application of Accounting Standards Codification 815-40, Derivatives and Hedging, Contracts in Entity's Own Equity ("ASC 815-40") to . . .

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