FOMO WORLDWIDE, INC. - Annual Report: 2021 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2021

For the transition period from _____________ to _____________

Commission file number 001-13126

FOMO CORP.

(Exact name of small business issuer as specified in its charter)

1 E Erie St, Ste 525 Unit #2250, Chicago, IL 60611

(Address of principal executive offices) (Zip Code)

(630) 286-9560

(Issuer’s telephone number)

Securities registered under Section 12(b) of the Exchange Act:

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, no par value

(Title of Class)

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal year 2021, was $5,988,248.

As of April 12, 2022 there were 7,939,754,800 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

The information contained in this Annual Report on Form 10-K includes some statements that are not purely historical and that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such, may involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, perceived opportunities in the market and statements regarding our mission and vision. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, will, would” and similar expressions, or the negatives of such terms, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein are based on various assumptions, many of which are based, in turn, upon further assumptions. Our expectations, beliefs and forward-looking statements are expressed in good faith based on management’s views and assumptions as of the time the statements were made, but there can be no assurance that management’s expectations, beliefs, or projections will result or be achieved or accomplished.

In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements: technological advances, impact of competition, dependence on key personnel and the need to attract new management, effectiveness of cost and marketing efforts, acceptances of products, ability to expand markets and the availability of capital or other funding on terms satisfactory to us. We disclaim any obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

As used in this Annual Report on Form 10-K (the “Annual Report”), the terms “FOMO,” “the Company,” “we,” “us” and “our” refer to FOMO Corp. and its subsidiaries.

PART I

Item 1. Description of Business.

Company Background

From 2014 through 2019, the Company, which was then known as “2050 Motors, Inc.” was seeking to import, market and sell in the United States, Puerto Rico, the U.S. Territories and Peru, the “e-Go” lightweight carbon fiber all-electric vehicle and electric light truck which was to be manufactured by Jiangsu Aoxin New Energy Automobile Co., Ltd. (“Aoxin Automobile”) located in the People’s Republic of China (the “PRC”). Although the Company had entered into a definitive agreement with Aoxin Automobile, However, due to export restrictions imposed by the PRC, as well as tariffs imposed by the United States as a result of its trade dispute with China, the Company encountered substantial delays and was unable to commercially launch the vehicles in the U.S. Accordingly, in May 2019, the Company discontinued its planned electric vehicle business and instead focused its efforts on exploring potential opportunities which management believed offered better potential to generate revenues and create shareholder value.

Acquisition of IAQ Technologies LLC On October 19, 2020, the Company acquired 100% of the membership interests of Purge Virus, LLC in exchange for the issuance of 2,000,000 Series B Preferred Shares valued at $800,000 to its member. We subsequently changed the name of the company to IAQ Technologies LLC (“IAQ”). IAQ, which is based in Philadelphia, PA, is engaged in the marketing and sale of disinfection products and services to businesses, including hotels, hospitals, cruise ships, offices and government facilities, as well as to individuals. Products and services marketed by IAQ include:

IAQ markets and sells its disinfection products and services through two in-house sales managers.

Acquisitions of Independence LED LLC and Energy Intelligence Center LLC

On February 12, 2021 the Company purchased the assets of Independence LED LLC (“iLED”), an affiliate of IAQ, in exchange for the issuance of 250,000 Series B Preferred Shares valued at $3.3 million iLED, is in the sale of clean air products intended for use in disinfecting and improving air quality.

On March 7, 2021, the Company purchased the assets of Energy Intelligence Center LLC (“EIC”), a second affiliate of IAQ, in exchange for the issuance of 125,000 Series B Preferred Shares valued at $1,479,121. EIC is engaged in the commercialization, marketing and licensing of d software designed to work in conjunction with a commercial building’s HVAC system to clean the air that circulates within the building

Following the acquisitions of the assets of ILEDI and EIC, the Company combined the assets and businesses of iLED and EIC into a newly formed wholly- owned subsidiary, EIC of Wyoming LLC (“EIC Wyoming”).

The managing member of IAQ, iLED and EIC stayed on following the acquisitions to run their businesses. However, in July 2021, the former managing member stepped down and assumed a consulting roll and a new chief executive officer was hired to run the businesses of IAQ and EIC Wyoming. Such individual resigned from his position on March 2, 2022 and we have appointed an interim chief executive officer.

Operating results for IAQ since its acquisition have not met expectations, Accordingly, the interim chief executive is in the process of reorganizing IAQ. Accordingly, we determined that IAQ’s value was impaired at December 31, 2021.

In addition, the software developer responsible for completing development and implementation of EIC Wyoming left the company and has refused to assist us with completing the software and transitioning the work to other individuals. Accordingly, we are now in the process of identifying another person or entity to take over and complete development of the software. As a result of this delay, we determined that EIC Wyoming’s value was impaired was impaired at December 31, 2021

Acquisition of SMARTSolution Technologies L.P.

.

On February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies L.P. (“SST”) pursuant to a Securities Purchase Agreement dated February 28, 2022 (the “SPA”), by and between the Company and Mitchell Schwartz (“Seller”), the beneficial owner of the general and limited partnership interests in SST. SST is a Pittsburgh, Pennsylvania–based audio/visual systems integration company that designs and builds presentation, teleconferencing and collaborative systems for businesses, educational institutions and other nonprofit organizations.

Pursuant to the SPA, FOMO:

SST has been engaged in the EdTech business for over 25 years. SST markets its systems to and installs the systems in elementary, middle and high schools, as well as colleges, universities and other commercial facilities. A current focus of SST’s business is the sale and installation of interactive smartboards to elementary, middle and high schools. These interactive smartboards provide students with interactive remote access from home or other locations to classrooms and teachers via personal computers, laptops, tablets and similar devices. Students can gain SST currently markets its systems primarily in Pennsylvania and Ohio, is in the process of expanding into the Alabama and Michigan markets and plan to expand further throughout the United States as opportunities present itself.

As a result of the growth in remote learning, as a result of the COVID-19 pandemic and otherwise, SST is currently experiencing a significant increase in orders and sales and a growth in backlog. Since the closing of the acquisition, FOMO Corp. has secured approximately $600,000 thousand in debt and convertible debt financing to support SST’s fulfillment of additional orders and reduction of its backlog.

The interactive smartboards which form the key element of SST’s interactive systems are supplied by a single supplier in Canada, which is a subsidiary of a large multi-national company. SST believes that its relationship with its supplier is excellent, although there can be no assurance that if the relationship with the supplier was interrupted or otherwise adversely affected that an alternative source of supply at commercially reasonable cost would be available or that SST’s business would not be seriously harmed.

SST markets its systems and services through a lead sales manager who has contacts with school boards in Pennsylvania and Ohio. SST also works with former elected government officials that have contacts with school boards in Alabama and Michigan.

The primary competitor of SST in the Pennsylvania and Ohio regions is a Philadelphia-based entity which also markets and sells the interactive whiteboards. SST believes that it competes effectively based on its contacts and relationships with its existing and potential customers. However, there can be no assurance given that SST additional competitors with greater financial and other resources will not enter SST’s market or that SST will be able to successfully compete as it enters new geographic markets.

SST currently employs 13 people, including 4 in administration, 2 in sales and 7 in installation. As a result of its growing backlog, SST is currently seeking to expand its installation and sales staff.

Series B Preferred Shares

Each Series B Preferred Share issued in connection with the above acquisitions entitles the holder to a preferred cumulative annual dividend of $0.01 per share, when, as and if declared by FOMO’s board of directors out of funds legally available therefor. Each Series B Preferred Share is convertible at the option of the holder into 1,000 shares of the Company’s common stock for an aggregate of 1,000,000,000 shares of common stock, subject to adjustment for stock splits, stock dividends and similar transactions. The Series B Preferred Shares have a liquidation preference of $0.001 per share and vote on all matters presented to stockholders for a vote on an “as converted” basis together with our common stock as a single class, except as required by law.

Corporate Information

We were incorporated in the State of California in 2007. Our principal executive offices are located at 1 E Erie St, Ste 525 Unit #2250, Chicago, IL 60611 and our telephone number is (630) 286-9560. Our website is www.fomoworldwide.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report.

Item 1A. Risk Factors.

Not applicable to smaller reporting companies

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Company currently leases property in its wholly owned subsidiary SMARTSolution Technologies at 831 West North Ave, Pittsburgh, PA 15233. The property lease is between SMARTSolution Technologies LP and GraMax LLC, which is wholly owned by SST’s Chief Executive Officer, Mitchell Schwartz. The initial lease term is five (5) years with and annual lease of $84,000.

The Company currently uses an address in Chicago of 1 E Erie St, Ste 525 Unit #2250, Chicago, IL 60611 as its home office address. This address is a mail stop used only to receive mail. Our Company Chief Executive Officer works out of his apartment.

Item 3. Legal Proceedings.

None.

Item 4. Mine Safety Disclosures.

None.

PART II

Item 5. Market for Registrant’s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our shares of common stock are quoted on the OTCPink tier of the over-the-counter market operated by OTC Markets Group Inc. under the symbol “FOMC”. Such market is extremely limited. We can provide no assurance that our shares of common stock will be continued to be traded on the OTCPink or another exchange, or if traded, that the current public market will be sustainable.

Holders of Record

As of the date of this Annual Report, there were approximately 197 holders of record of our common stock, as reported by the Company’s transfer agent. In computing the number of holders of record, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single shareholder and accordingly, the Company believes that the number of beneficial owners of its common stock is significantly higher.

Dividends

We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors.

Securities Authorized for Issuance under Equity Compensation Plans

None.

Recent Sales of Unregistered Securities

None.

Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

This Annual Report contains forward-looking statements. Our actual results could differ materially from those set forth because of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this Annual Report. See “Cautionary Note Regarding Forward Looking Statements” above.

Results of Operations

Year ended December 31, 2021 as compared to year ended December 31, 2020

Revenues. During the year ended December 31, 2021, the Company had operating revenues of $657,136, as compared to operating revenues of $92,114 for the year ended December 31, 2020. Revenues for 2021 and 2020 were generated primarily from sales of clean air technology. The Company believes that, revenues for 2022 will be primarily generated by sales of interactive audio-visual systems and related services by SST.

Cost of Revenues. During the year ended December 31, 2021, cost of revenues was $539,308, consisting primarily of cost of products for clean air technology, as compared to cost or revenues of $88,354 for the year ended December 31, 2020 consisting primarily of cost of products for clean air technology.

Gross Profit. Gross profit for the year ended December 31, 2021 was $117,828 as compared to gross profit of $3,760 for the year ended December 31, 2020. The change in gross profit from 2020 to 2021 was due to increase in sales from acquisition of EIC and iLED.

Operating Expenses. During the year ended December 31, 2021, the Company incurred operating expenses of $11,340,784 consisting primarily of consulting fees, travel expenses, general and administrative costs, bad debt expense, loss on impairment and amortization of debt discount. During the year ended December 31, 2020, the Company incurred operating expenses of $1,602,046,. The increase in operating expenses in 2021 from 2020 was due primarily to increase efforts to generate revenue.

Other Income (Expenses). During the year ended December 31, 2021, the Company incurred other income(expense) $(1,359,544) consisting of interest expense, loss on investments, debt settlement, loan forgiveness, loss on debt conversions, derivative liability gain and derivative expense. During the year ended December 31, 2020, the Company incurred other income(expense) of $38,433 consisting of interest expense, unrealized loss on investment, derivative expense and impairment of acquired entities.

Net Losses. As a result of the above, the Company incurred a net loss of $12,582,500, for the year ended December 31, 2021, as compared to a net loss of $1,636,719 for the year ended December 31, 2020.

Liquidity and Capital Resources at December 31, 2021-

We have incurred losses since inception of our business and at December 31, 2021, we had an accumulated deficit of $20,245,145. As of December 31, 2021, we had cash of $94,224 and negative working capital of $1,075,690. Our total assets as of December 31, 2021 were $958,546, after giving effect to impairment at such date of the assets purchased in the acquisitions of iLED and EIC in early 2021 as described in “Item 1 Business “ above.

To date, we have funded our operations through short-term debt and equity financing. During the year ended December 31, 2021 the Company received $2,149,750, comprised of $874,750 loans from non-related parties, and $1,275,000 from the sale of common and preferred stock in private transactions. From January 1, 2022 through the date of this Annual Report, the Company obtained additional short-term debt financing aggregating $1,198,750.

Summary of Significant Accounting Policies

See Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report.

Off-balance Sheet Arrangements

None.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Not required under Regulation S-K for “smaller reporting companies.”

Item 8. Financial Statements and Supplementary Data.

Our audited consolidated financial statements are set forth below1.

FOMO CORP. and Subsidiaries

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of FOMO Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of FOMO Corp (the Company) as of December 31, 2021 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as 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, 2021 and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph- Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses for the year ended December 31, 2021. The Company had a net loss of $12,582,500, accumulated deficit of $20,245,145, net cash used in operating activities of $885,503 and had negative working capital of $1,075,690. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty

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 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 financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters to be communicated, are matters arising from the current period audit of the financial statements that were 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.

Valuation and impairment of intangible assets

Description of the Matter

During the year ended December 31, 2021, the Company recorded intangible assets including goodwill, trade name and website from two acquisitions which occurred during the year. The fair values recorded were based on independent valuations obtained by the Company. As discussed in Note 2 to the consolidated financial statements, intangible assets including goodwill are tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company measured the fair value of these intangible assets based on projected cash flows and combined with other qualitative factors the Company determined the intangible assets to be fully impaired as of December 31, 2021.

Auditing the Company’s annual impairment test related to these intangible assets was complex due to the estimation uncertainty in determining their fair values. The significant assumptions used to estimate the fair value of these intangible assets included forecasted sales and discount rates. These assumptions are forward-looking which can vary significantly and depend on market forces and events outside of the Company’s control.

How We Addressed the Matter in Our Audit

To test the estimated fair value of these intangible assets, our audit procedures included, among others, evaluating the valuation methodology used, the significant assumptions discussed above, and the underlying data used by the Company. Such data includes historical sales and projections. We reviewed the assumptions and data provided by management and concluded that the impairment recorded was reasonable.

Boyle CPA, LLC

Certified Public Accountants & Consultants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and

Board of Directors of FOMO CORP.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of FOMO CORP. (the “Company”) as of December 31, 2020, the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

As discussed in Note 3 to the financial statements, the Company’s cumulative net losses, recurring operating losses and working capital deficiency raise substantial doubt about its ability to continue as a going concern for a period of one year from the issuance of the financial statements. Management’s plans are also described in Note 3. The financial statements do not include adjustments that might result from the outcome of this uncertainty.

Basis of Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the 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 audits, 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 audits included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Boyle CPA, LLC

We have served as the Company’s auditor from 2019 to 2021.

Bayville, NJ

April 6, 2021

FOMO CORP and Subsidiaries

Consolidated Balance Sheets

The accompanying notes are an integral part of these financial statements

FOMO CORP and Subsidiaries

Consolidated Statement of Operations

The accompanying notes are an integral part of these financial statements

FOMO CORP and Subsidiaries

Consolidated Statement of Stockholders’ Deficit

For the years ended December 31, 2021 and 2020

The accompanying notes are an integral part of these financial statements

FOMO CORP and Subsidiaries

Consolidated Statement of Cash Flows

The accompanying notes are an integral part of these financial statements

FOMO CORP. and subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021 and 2020

Note 1 – BASIS OF PRESENTATION AND ORGANIZATION

FOMO CORP. previously known as “2050 Motors, Inc.” (“the Company”) is the successor to an entity incorporated on April 22, 1986 in the state of California. 2050 Motors, Inc., the Company’s sole operating subsidiary from 2014-2019, was incorporated on October 9, 2012 in the state of Nevada to import, market, and sell electric cars manufactured in China. In 2019, management dissolved the Company’s Nevada subsidiary as the electric vehicle (“EV”) strategies had failed. Meanwhile, the Company incubated an internet business targeting the Cannabis market @ www.kanab.club and pursued various ventures in the internet, communications, and technology markets. The Company purchased Purge Virus, LLC to enter the viral disinfection market on October 19, 2020. On February 12, 2021, the Company purchased the assets of Independence LED LLC, a manufacturer and distributer of lighting and disinfection systems On March 7, 2021, the Company purchased the assets of Energy Intelligence Center LLC, who owns software to integrate into the HVAC systems of buildings to disinfect and purify the air circulation. The Company formed EIC of Wyoming, LLC and contributed the assets from both purchases.

Corporate Actions

On October 19, 2020, FOMO CORP purchased Purge Virus, LLC and consequently entered the viral disinfection market.

On November 17, 2020, an application was submitted to FINRA to change the name and ticker symbol from 2050 Motors and ETFM to FOMO CORP. and FOMO, respectively. Subsequently, FINRA stated that the “FOMO” ticker symbol was no longer available, and a new ticker symbol was requested.

On May, 18 2021, FOMO CORP. (“FOMO”) incorporated FOMO ADVISORS LLC, a Wyoming limited liability company, as a wholly owned private merchant banking subsidiary. FOMO ADVISORS LLC intends to assist private companies in accessing the capital markets through “pass through” investments that allow investors to gain liquidity, while benefiting from direct exposure to private company growth through derivative instruments or other rights. The subsidiary is engaging with strategic targets to introduce them to its network of financial and strategic contacts, provide them management consulting, and create a portfolio of technology investments for future incubation, capital formation, and wealth creation. The Company is currently evaluating its corporate development pipeline and has identified a number of candidates for this capital formation model, though there can be no assurances.

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”).

Consolidation

The consolidated financial statements of the Company include the Company and its wholly owned subsidiaries, IAQ Technologies LLC(formerly known as Purge Virus, LLC) and EIC of Wyoming LLC. All material intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make certain 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the recoverability of long-term assets, the valuation of derivative liabilities, allowance for doubtful accounts, valuation of deferred tax assets and estimates of fair market value of investments.

Cash

Cash consists of deposits in one large national bank. On December 31, 2021 and December 31, 2020, respectively, the Company had $94,225 and $12,069 in cash in the United States. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash accounts payable, accrued liabilities, short-term debt, and derivative liability, the carrying amounts approximate their fair values due to their short maturities. We adopted ASC Topic 820, “Fair Value Measurements and Disclosures,”, which requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of valuation hierarchy are defined as follows:

Level 1 input to the valuation methodology are quoted prices for identical assets or liabilities in active markets. The Company’s investment in Mobicard Inc., see Note 4, is actively traded on the pink sheets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company’s analyses of all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

We have recorded the conversion option on notes as a derivative liability because of the variable conversion price, which in accordance with U.S. GAAP, prevents them from being considered as indexed to our stock and qualified for an exception to derivative accounting.

We recognize derivative instruments as either assets or liabilities on the accompanying balance sheets at fair value. We record changes in the fair value of the derivatives in the accompanying statement of operations.

Assets and liabilities measured at fair value are as follows as of December 31, 2021:

 SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES

Assets and liabilities measured at fair value are as follows as of December 31, 2020:

Earnings Per Share (EPS)

Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS assumes that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). During the year ended December 31, 2021 and 2020, the Company generated no revenues and incurred substantial losses, of which the vast majority were due to mostly non-cash charges for accrued interest, penalties and derivative charges related to convertible debt instruments. Therefore, the effect of any common stock equivalents on EPS is anti-dilutive during those periods.

Dilutive Securities Calculation

SCHEDULE OF DILUTIVE SECURITIES CALCULATION

Concentration of Credit Risk

Cash is mainly maintained by one highly qualified institution in the United States. At no time were such amounts more than federally insured limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. The Company has not experienced any losses on our deposits of cash.

Income Taxes

The Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 provides accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.

On December 31, 2021 and December 31, 2020, the Company had not taken any significant uncertain tax positions on its tax returns for the period ended December 31, 2020 and prior years or in computing its tax provisions for any years. Prior management considered its tax positions, and believed that all of the positions taken by the Company in its Federal and State tax returns were more likely than not to be sustained upon examination. The Company is subject to examination by U.S. Federal and State tax authorities from inception to present, generally for three years after they are filed. New management, which took control of the Company on March 5, 2019, is currently evaluating prior management’s decision to not file federal tax returns and plans on filing past returns and related 1099 filings for compensation paid to prior management, employees, consultants, contractors and affiliates. The Company does not believe it has a material tax liability due to its operating losses in these periods but is preparing tax filings to bring itself current as it completes and moves forward on announced mergers and acquisitions.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of December 31, 2021 and 2020, which consist of convertible instruments and warrants in the Company’s common stock and determined that such derivatives meet the criteria for liability classification under ASC 815.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.

The Company uses judgment in determining the fair value of derivative liabilities at the date of issuance and at every balance sheet thereafter and in determining which valuation method is most appropriate for the instrument, the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate, if any. The Company recorded a derivative liability-convertible debt as of December 31, 2021 and 2020 of $330,294 and $834,230, respectively. The Company recorded a derivative liability-warrants as of December 31, 2021 and 2020 of $775,243 and $0, respectively.

Convertible Instruments

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40, Contracts in Entity’s own Equity, generally provides that, among other things, if an event is not within the entity’s control, such contract could require net cash settlement and shall be classified as an asset or a liability.

The Company determines whether the instruments issued in the transactions are considered indexed to the Company’s own stock. During fiscal years 2014 through 2020 the Company’s issued convertible securities with variable conversion provisions that resulted in derivative liabilities. See discussion above under derivative liabilities that resulted in a change in derivative liability accounting.

Risks and Uncertainties

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts. The allowance for doubtful accounts as of December 31, 2021 and 2020 was $18,992 and $0, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606 “Revenue from Contracts with Customers.” The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Product sales are recorded net of variable consideration, such as provisions for returns, discounts and allowances. Such provisions are calculated using historical averages and adjusted for any expected changes due to current business conditions. Consideration given to customers for cooperative advertising is recognized as a reduction of revenue except to the extent that there is a distinct good or service, in which case the expense is classified as selling or marketing expense. Provisions for customer volume rebates are based on achieving a certain level of purchases and other performance criteria that are established on a situation basis. These rebates are estimated based on the expected amount to be provided to the customers and are recognized as a reduction of revenue. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers and their customers. Additionally, for any agreements which are 1 year or less, the practical expedient under ASC 340-40-25-4 is applied to expense costs when incurred if the amortization period of the contract asset would have otherwise been recognized in one year or less. Sales taxes and other similar taxes are excluded from revenue. The revenue for the year ended December 31, 2021 and 2020 is made up of the sale of clean air technology products. All of the revenue is in the United States of America.

Stock-Based Compensation

The Company accounts for all stock-based compensation using a fair value-based method. The fair value of equity-classified awards granted to employees is estimated on the date of the grant using the Black-Scholes option-pricing model and the related stock-based compensation expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award.

Goodwill and Other Acquired Intangible Assets

The Company initially records goodwill and other intangible assets at their estimated fair values and reviews these assets periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment, historically during our fourth quarter.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued an update within the scope of Topic 740, Income Taxes. The update simplifies the accounting for income taxes by removing certain exceptions to the general principles within the Topic and improves consistent application of and simplifies GAAP for other areas by clarifying and amending existing guidance. The amendments in this update became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued the update Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the estimation of credit losses from an “incurred loss” methodology to one that reflects “expected credit losses” (the Current Expected Credit Loss model, or CECL) which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Measurement under CECL is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability of reported amounts. The amendments in the update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company continues to evaluate the impact, if any, the implementation of the CECL model will have on our financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

Note 3 – GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate the continuation of the Company as a going concern. The Company reported an accumulated deficit of $20,245,145 as of December 31, 2021. The Company also had negative working capital of $1,075,690 on December 31, 2021, and had net losses of $12,582,500 and cash used in operations of $885,503. To date, these losses and deficiencies have been financed principally through the issuance of common stock, loans from related parties and from third parties.

In view of the matters described, there is substantial doubt as to the Company’s ability to continue as a going concern without a significant infusion of capital. We anticipate that we will have to raise additional capital to fund operations over the next 12 months. To the extent that we are required to raise additional funds to acquire properties, and to cover costs of operations, we intend to do so through additional offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, no guaranties that any such financings would be forthcoming, or as to the terms of any such financings. Any future financing may involve substantial dilution to existing investors.

Note 4 - INVESTMENTS

During the year ended December 31, 2019, the Company issued 400,000 share of preferred class B stock in exchange for 210,000,000 shares of Peer-to-Peer Inc (PTOP). The shares were valued at the market price of $0.0023 per share, or $483,000, at the acquisition date. The shares are valued at the market price at December 31, 2021 and 2020 of $0.00070 and $0.000741 per share for a total investment of $147,000 and $155,780, respectively.

During the year ended December 31, 2019, the Company received 1,000,000 shares of KANAB CORP. for consulting services provided by the Company’s CEO, Vikram Grover. The shares were valued at $0.0122 per share or $12,220 at the acquisition date. On July 31, 2021 the Company transferred the shares to Himalaya Technologies Inc (HMLA) for 150,000 shares of the preferred B stock in HMLA. The Company valued the investment of HMLA and the carrying value of KANAB CORP at the time the shares were exchanged. The fair value at December 31, 2021 for HMLA is $12,220 and December 31, 2020 for KANAB CORP is $12,220. HMLA is a related party as it has common officers and control.

On October 4, 2021, the Company invested $25,000 for 25,000 common shares in GENBIO Inc. The Company valued the shares at $1.00 per share. The GENBIO transaction is being accounted for as an investment on our balance sheet. We will not consolidate GENBIO’s financial statements. GENBIO Inc is a private Biotechnology Company that researches natural products that act on new molecular pathways, primarily to suppress inflammation at critical points in these biochemical pathways. The Company’s research has shown that these active compounds decrease obesity-induced increases in abdominal fat pads, blood pressure, fatty liver and insulin resistance.

In the first quarter of 2021, the Company’s Chief Executive Officer assigned his investment brokerage account with Interactive Brokers to the Company. The Company subsequently invested $1,007,500 into the account. The investments in the account are marketable equity securities. The value of the securities was $581,243 at December 31, 2021.

The total investments on the balance sheet at December 31, 2021 was as follows:

 SCHEDULE OF INVESTMENTS

Note 5 – LOANS DUE FROM/TO RELATED PARTIES

As of December 31, 2021 and 2020, the Company subsidiary’s former chief executive officer had an outstanding balance of $5,168 and $3,574. The loan is non-interest bearing and due on demand.

The Company uses a credit card owned by the Company’s Chief Executive Officer(CEO). The Company accounts for the transactions charged on this card as a loan payable to the CEO. The credit card is used exclusively for Company business and is paid with Company funds. The outstanding balance at December 31, 2021 was $17,546.

The total loan payable to related party at December 31, 2021 and 2020 was $22,714 and 3,574, respectively.

During the year ended December 31, 2021, the Company loaned a related party $53,732. This loan was to pay operating expenses. The loan is interest free and due on demand. The related party has become a fully reporting entity with the SEC and is in the process of raising capital and is expected to repay the loan.

Note 6 - CONVERTIBLE LOANS PAYABLES

The Company had convertible note payables with three third parties with stated interest rates ranging between 10% and 12% and 22% default interest not including penalties. At December 31, 2021, none of the loans were in default, The loans had a one-year maturity date. These notes have a conversion feature such that the Company could not ensure it would have adequate authorized shares to meet all possible conversion demands; accordingly, the conversion option has been treated as a derivative liability in the accompanying consolidated financial statements. As of December 31, 2021, the Company had the following third-party convertible notes outstanding:

 SCHEDULE OF CONVERTIBLE NOTES OUTSTANDING

As of December 31, 2020, the Company had the following third-party convertible notes outstanding:

During the year ended December 31, 2020, third-party lenders converted $646,456 of principal and interest into 2,936,347,316 shares of common stock.

During the year ended December 31, 2021, third-party lenders converted $2,822,118 of principal, interest and penalties into 1,396,567,128 shares of common stock. This resulted in a loss of $475,199.

The Company amortized a debt discount of $481,555 and $0 respectively, during the years ended December 31, 2021 and 2020, respectively.

On October 28, 2020, a third-party lender funded the Company $115,000 in a 12% convertible debenture due October 28, 2021. The transaction netted the Company $98,000 after original issue discount (OID) of $15,000 and placement agent fees of $2,000. During the year ended December 31, 2021 was paid off with proceeds from a new loan received on January 20, 2021.

On January 20, 2021, a third-party lender funded the Company $205,000 in a 10% convertible debenture due January 20, 2022. The transaction netted the Company $180,000 after a $20,000 original issue discount and $5,000 in legal fees. During the year ended December 31, 2021 the loan was converted into common shares.

On April 8, 2021, a third-party lender funded the Company $103,500 in a 12% convertible debenture due April 8, 2022. The transaction netted the Company $100,000 after $3,500 legal and due diligence fees. During the year ended December 31, 2021 the loan was converted into common shares.

On May 10, 2021, a third-party lender funded the Company $53,750 in a 12% convertible debenture due May 10, 2022. The transaction netted the Company $50,000 after $3,750 legal and due diligence fees. During the year ended December 31, 2021 the loan was converted into common shares.

On June 25, 2021, a third-party lender funded the Company $65,000 in a 10% convertible debenture due June 25, 2022. The transaction netted the Company $60,000 after a $2,000 original issue discount and $3,000 in legal fees. During the year ended December 31, 2021 $10,000 of this loan was converted into common shares. The remaining balance of $55,000 was still outstanding.

On September 22, 2021, a third-party lender funded the Company $43,750 in a 12% convertible debenture due September 20, 2022. The transaction netted the Company $40,000 after $3,750 legal and due diligence fees. At December 31, 2021, the loan was still outstanding and had not been converted or paid.

On October 26, 2021, a third-party lender funded the Company $78,750 in a 12% convertible debenture due October 26, 2022. The transaction netted the Company $75,000 after $3,750 legal and due diligence fees. At December 31, 2021, the loan was still outstanding and had not been converted or paid.

On October 10, 2021, a third-party lender funded the Company $325,000 in a 10% convertible debenture due October 10, 2022. The transaction netted the Company $300,000 after a $12,500 original issue discount and $12,500 in legal fees. At December 31, 2021, the loan was still outstanding and had not been converted or paid.

Note 7 – DERIVATIVE LIABILITY

During 2021, the Company issued 1,268,541,667 warrants as incentives to invest in the Company or to various convertible lenders to loan funds for operations. These warrants have a three-year expiration and a strike price between $0.001 and $0.002 These warrants are derivative instruments. Because it is indeterminate whether there is a sufficient number of authorized and unissued shares exists at the assessment date, the Company calculates a derivative liability associated with the warrants in accordance with FASB ASC Topic 815-40-25. The initial derivative expense for the year ended December 31, 2021 was $878,263.

The Company’s derivative warrant instruments have been measured at fair value at December 31, 2021 using the Cox, Ross & Rubinstein Binomial Tree valuation model. The Company recognizes the derivative liability related to those warrants that contain price protection features in its consolidated balance sheet as liabilities. The liability is revalued at each reporting period and changes in fair value are recognized currently in the consolidated statements of operations. The initial recognition and subsequent changes in fair value of the derivative warrant liability have no effect on the Company’s cash flows.

The Company has certain convertible notes with variable price conversion terms. Upon the issuance of these convertible notes and as a consequence of their conversion features, the convertible notes give rise to derivative liabilities. The Company’s derivative liabilities related to its convertible notes payable have been measured at fair value at December 31, 2021 and 2020 using the Cox, Ross & Rubinstein Binomial Tree valuation model.

The Company revalues the warrants and convertible debt at each reporting period, as well as the charges associated with issuing additional convertible notes, and warrants with price protection features. This resulted in the recognition of a gain of $393,465 on convertible debt and $1,289,422 on warrants for the year ended December 31, 2021 and $58,941 on convertible debt for the year ended December 31, and 2020, respectively in the Company’s consolidated statements of operations, under the caption “Gain in change of fair value of derivative liability convertible debt” and “Gain in change of fair value of derivative liability warrants”. The fair value of the derivative liabilities related to the convertible debt and warrants at December 31, 2021 and 2020 is $1,105,537 and $834,230, respectively, which is reported on the consolidated balance sheets under the caption “Derivative liabilities”.

The Company has determined its derivative liability to be a Level 3 fair value measurement. The significant assumptions used in the Cox, Ross & Rubinstein Binomial Tree valuation of the derivative are as follows:

 SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE

Rollforward:

SCHEDULE OF DERIVATIVE LIABILITIES