FOMO WORLDWIDE, INC. - Quarter Report: 2021 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 001-13126
FOMO CORP.
(Exact name of small business issuer as specified in its charter)
| california | 5511 | 83-3889101 | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
1 E Erie St, Ste 525 Unit #2250, Chicago, IL 60611
(Address of principal executive offices)
(630) 286-9560
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
| COMMON | FOMC | OTC PINK |
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 and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) 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, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Non-accelerated filer ☐ | Smaller reporting company ☒ Emerging growth company ☐ |
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 Act). Yes ☐ No ☒
The number of shares of Common Stock (no par value) of the registrant outstanding was at October 28, 2021. The number of shares of Series A Preferred Stock ($0.0001 par value and that each convert into one share of common stock) of the registrant outstanding was 5,750,000 at October 28 2021. The number of shares of Series B Preferred Stock ($0.0001 par value and that each convert into 1,000 shares of common stock) of the registrant outstanding was 5,253,815 at October 28, 2021. The number of shares of Series C Preferred Stock ($0.0001 par value and that each convert into one share of common stock) of the registrant outstanding was 1,000,000 at October 28, 2021. The market value of diluted shares outstanding as of October 28 was $20,661,862.
FOMO CORP.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
| 2 |
PART I
ITEM 1. FINANCIAL STATEMENTS
FOMO CORP. and Subsidiaries
INDEX TO FINANCIAL STATEMENTS
| 3 |
FOMO CORP and Subsidiary
(Formerly 2050 Motors, Inc.)
Condensed Balance Sheets
| As of | As of | |||||||
| September 30, 2021 | December 31, 2020 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 201,574 | $ | 12,069 | ||||
| Accounts receivable, net | 68,677 | 20,859 | ||||||
| Investment securities | 272,736 | |||||||
| Deposit on option to purchase business | 17,500 | - | ||||||
| Inventory | 233,252 | - | ||||||
| Loan receivable | 45,549 | - | ||||||
| Prepaid expense | 171,287 | 910 | ||||||
| Total current assets | 1,010,575 | 33,838 | ||||||
| Other assets: | ||||||||
| Investments | 168,000 | 168,000 | ||||||
| Intangible assets | 1,138,547 | 206,250 | ||||||
| Goodwill | 596,906 | 596,906 | ||||||
| Total other assets | 1,903,453 | 971,156 | ||||||
| Total assets | $ | 2,914,028 | $ | 1,004,994 | ||||
| Liabilities and stockholders’ deficit | ||||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 72,290 | $ | 63,291 | ||||
| Accrued intertest on loans payable | 24,945 | 24,945 | ||||||
| Customer deposit | 193,897 | 5,614 | ||||||
| Loan payable related party | 5,168 | 3,574 | ||||||
| Loans payable due to non-related parties, net | 349,920 | 226,186 | ||||||
| Warranty reserve | 48,136 | - | ||||||
| Loan Cares PPP | - | 11,593 | ||||||
| Derivative liability | 447,605 | 834,230 | ||||||
| Total current liabilities | 1,141,961 | 1,169,433 | ||||||
| Total liabilities | 1,141,961 | 1,169,433 | ||||||
| Stockholders’ deficit | ||||||||
| Common stock; no par value authorized: issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 5,898,784 | 4,232,960 | ||||||
| Preferred stock Class A; $ par value authorized: issued and outstanding and at September 30, 2021 and December 31, 2020, respectively: discretionary 1% dividend | 575 | 300 | ||||||
| Preferred stock Class B; $ par value authorized: issued and outstanding and at September 30, 2021 and December 31, 2020, respectively: discretionary 1% dividend | 525 | 446 | ||||||
| Preferred stock Class C; $ par value authorized: and issued and outstanding at September 30, 2021 and December 31, 2020, respectively: discretionary 1% dividend | 100 | 100 | ||||||
| Additional paid-in-capital | 4,831,295 | 3,139,400 | ||||||
| Accumulated deficit | (9,084,212 | ) | (7,662,645 | ) | ||||
| Common stock issuable | 125,000 | 125,000 | ||||||
| Total stockholders’ deficit | 1,772,067 | (164,439 | ) | |||||
| Total liabilities and stockholders’ deficit | $ | 2,914,028 | $ | 1,004,994 | ||||
The accompanying notes are an integral part of these financial statements
| 4 |
FOMO Corp
(Formerly 2050 Motors, Inc.)
Condense Statement of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||
| Operating revenue | $ | 107,805 | $ | $ | 398,917 | $ | ||||||||||
| Cost of revenues | 97,905 | - | 296,631 | - | ||||||||||||
| Gross profit | 9,900 | - | 102,286 | - | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 233,025 | 215,372 | 1,213,503 | 314,646 | ||||||||||||
| Net loss from operations | (223,125 | ) | (215,372 | ) | (1,111,217 | ) | (314,646 | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest expense | (7,564 | ) | (33,206 | ) | (241,875 | ) | (64,930 | ) | ||||||||
| Loan forgiveness | - | 11,593 | ||||||||||||||
| Gain (Loss) on investment | 53,643 | 42,000 | (234,764 | ) | (21,000 | ) | ||||||||||
| Impairment loss | - | - | - | - | ||||||||||||
| Derivative liability gain (loss) | (38,000 | ) | (150,173 | ) | 386,626 | 529,909 | ||||||||||
| Debt settlement gain (loss) | - | 25,000 | (231,930 | ) | 25,000 | |||||||||||
| Total other income (expenses) | 8,079 | (116,379 | ) | (310,350 | ) | 468,979 | ||||||||||
| Income (loss) before income taxes | (215,046 | ) | (331,751 | ) | (1,421,567 | ) | 154,333 | |||||||||
| Provision for income taxes | ||||||||||||||||
| Net income (loss) | $ | (215,046 | ) | $ | (331,751 | ) | $ | (1,421,567 | ) | $ | 154,333 | |||||
| Net income (loss) per share, basic and diluted | $ | (0.0000 | ) | $ | (0.0001 | ) | $ | (0.0002 | ) | $ | 0.0001 | |||||
| Weighted average common equivalent share outstanding, basic and diluted | 6,218,580,694 | 2,344,262,083 | 5,916,222,100 | 2,202,595,038 | ||||||||||||
The accompanying notes are an integral part of these financial statements
| 5 |
FOMO Corp
(Formerly 2050 Motors, Inc.)
Condensed Statement of Stockholders’ Deficit
(Unaudited)
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Class C | Common | Additional | Total | |||||||||||||||||||||||||||||||||||||||||||
| Number | No | Number | $0.0001 | Number | $0.0001 | Number | $0.0001 | Stock | paid-in | Accumulated | stockholders’ | |||||||||||||||||||||||||||||||||||||
| of Shares | par value | of Shares | par value | of Shares | par value | of Shares | par value | Issuable | capital | deficit | deficit | |||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | 1,777,198,805 | $ | 3,800,405 | 3,000,000 | $ | 300 | 400,000 | $ | 40 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 858,218 | $ | (6,025,926 | ) | $ | (1,241,863 | ) | ||||||||||||||||||||||||||
| Conversion of convertible debt | 428,306,667 | 22,582 | - | - | - | 22,582 | ||||||||||||||||||||||||||||||||||||||||||
| Warrants | - | - | - | - | 5,781 | 5,781 | ||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | 359,710 | 359,710 | ||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | 2,205,505,472 | 3,822,987 | 3,000,000 | 300 | 400,000 | 40 | 1,000,000 | 100 | 125,000 | 863,999 | (5,666,216 | ) | (853,790 | ) | ||||||||||||||||||||||||||||||||||
| Warrants | - | - | - | - | 5,781 | 5,781 | ||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | 154,333 | 154,333 | ||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | 2,205,505,472 | 3,822,987 | 3,000,000 | 300 | 400,000 | 40 | 1,000,000 | 100 | 125,000 | 869,780 | (5,511,883 | ) | (693,676 | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible debt | 6,704,695,141 | 62,804 | - | - | - | 62,804 | ||||||||||||||||||||||||||||||||||||||||||
| Preferred series B issued for services | - | - | 250,000 | 25 | 154,975 | 155,000 | ||||||||||||||||||||||||||||||||||||||||||
| Preferred series B issued for accrued compensation | - | - | 1,495,065 | 150 | - | 161,915 | 162,065 | |||||||||||||||||||||||||||||||||||||||||
| Preferred series B issued for deposit on asset purchase | - | - | 100,000 | 10 | - | 49,990 | 50,000 | |||||||||||||||||||||||||||||||||||||||||
| Preferred series B issued for investment | - | - | 160,851 | 16 | - | 64,324 | 64,340 | |||||||||||||||||||||||||||||||||||||||||
| Warrants | - | - | - | - | 5,844 | 5,844 | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | (331,751 | ) | (331,751 | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | 8,910,200,613 | $ | 3,885,791.00 | 3,000,000 | $ | 300.00 | 2,405,916 | $ | 241.00 | 1,000,000 | $ | 100.00 | $ | 125,000.00 | $ | 1,306,828.00 | $ | (5,843,634.00 | ) | $ | (525,374.00 | ) | ||||||||||||||||||||||||||
| Balance December 31, 2020 | 4,713,543,121 | $ | 4,232,960 | 3,000,000 | $ | 300 | 4,463,815 | $ | 446 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 3,139,400 | $ | (7,662,645 | ) | $ | (164,439 | ) | ||||||||||||||||||||||||||
| Conversion of convertible debt | 905,435,038 | 563,643 | - | - | - | 563,643 | ||||||||||||||||||||||||||||||||||||||||||
| Stock issued for compensation | 6,550,000 | 99,640 | - | - | - | 99,640 | ||||||||||||||||||||||||||||||||||||||||||
| Stock issued for loan cost | 10,000,000 | 20,000 | - | - | - | 20,000 | ||||||||||||||||||||||||||||||||||||||||||
| Purchase common share | 65,000,000 | 250,000 | - | - | - | 250,000 | ||||||||||||||||||||||||||||||||||||||||||
| Purchase Preferred A shares | - | 2,750,000 | 275 | - | - | 274,725 | 275,000 | |||||||||||||||||||||||||||||||||||||||||
| Stock issued for compensation | - | - | 300,000 | 30 | - | 123,970 | 124,000 | |||||||||||||||||||||||||||||||||||||||||
| Options to purchase business | - | - | 175,000 | 17 | - | 38,483 | 38,500 | |||||||||||||||||||||||||||||||||||||||||
| Purchase assets | - | - | 375,000 | 38 | 924,962 | 925,000 | ||||||||||||||||||||||||||||||||||||||||||
| Warrants | - | - | - | - | 194,000 | 194,000 | ||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | (2,389,230 | ) | (2,389,230 | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | 5,700,528,159 | 5,166,243 | 5,750,000 | 575 | 5,313,815 | 531 | 1,000,000 | 100 | 125,000 | 4,695,540 | (10,051,875 | ) | (63,886 | ) | ||||||||||||||||||||||||||||||||||
| Purchase common shares | 75,000,000 | 176,000 | 176,000 | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | 1,182,709 | 1,182,709 | ||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2021 | 5,775,528,159 | 5,342,243 | 5,750,000 | 575 | 5,313,815 | 531 | 1,000,000 | 100 | 125,000 | 4,695,540 | (8,869,166 | ) | 1,294,823 | |||||||||||||||||||||||||||||||||||
| Conversion of convertible debt | 504,396,087 | 44,015 | 44,015 | |||||||||||||||||||||||||||||||||||||||||||||
| Preferred series B issued for services | - | - | 200,000 | 20 | - | 19,980 | 20,000 | |||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred series B shares to common shares | 260,000,000 | 26 | - | (260,000 | ) | (26 | ) | - | ||||||||||||||||||||||||||||||||||||||||
| Common shares issued for services | 7,512,500 | 87,500 | - | - | - | 87,500 | ||||||||||||||||||||||||||||||||||||||||||
| Common shares issued for retainer | 25,000,000 | 25,000 | - | - | - | 25,000 | ||||||||||||||||||||||||||||||||||||||||||
| Purchase common shares | 200,000,000 | 400,000 | - | - | - | 400,000 | ||||||||||||||||||||||||||||||||||||||||||
| Warrants | 115,775 | 115,775 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | (215,046 | ) | (215,046 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance September 30, 2021 | 6,772,436,746 | $ | 5,898,784 | 5,750,000 | $ | 575 | 5,253,815 | $ | 525 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 4,831,295 | $ | (9,084,212 | ) | $ | 1,772,067 | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements
| 6 |
FOMO Corp
(Formerly 2050 Motors, Inc)
Condensed Statement of Cash Flows
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, 2021 | September 30, 2020 | |||||||
| Cash flows provided by (used for) operating activities: | ||||||||
| Net income (loss) | $ | (1,421,567 | ) | $ | 154,333 | |||
| Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | ||||||||
| Amortization | 91,000 | - | ||||||
| Debt settlement (income) loss | 231,930 | (25,000 | ) | |||||
| Issuance of common stock for services | 459,000 | 172,406 | ||||||
| Derivative liability adjustment | (386,626 | ) | (529,909 | ) | ||||
| Loan forgiveness | (11,593 | ) | - | |||||
| Loss on investment | 234,764 | 21,000 | ||||||
| Increase (decrease) in assets and liabilities: | ||||||||
| Accounts receivable | (47,818 | ) | - | |||||
| Accounts payable | 8,999 | 5,000 | ||||||
| Inventory | (233,252 | ) | - | |||||
| Prepaid expenses | (145,930 | ) | ||||||
| Accrued interest expense | 241,875 | |||||||
| Customer deposits | 188,283 | - | ||||||
| Accrued expenses | - | 190,400 | ||||||
| Net cash used for operating activities | (790,935 | ) | (11,770 | ) | ||||
| Cash flows provided by (used for) Investing activities | ||||||||
| Cash flows provided by (used for) Financing activities | ||||||||
| Bank overdraft | - | 114 | ||||||
| Proceeds from non-related loans | 430,020 | - | ||||||
| Payment of loan receivable | (9,580 | ) | - | |||||
| Proceeds from sale of common stock | 400,000 | - | ||||||
| Proceeds from sale Preferred A shares | 275,000 | |||||||
| Payments of loans non related | (115,000 | ) | ||||||
| Proceeds from CARES Act loan | 11,593 | |||||||
| Net cash provided by (used for) financing activities | 980,440 | 11,707 | ||||||
| Net (decrease increase in cash | 189,505 | (63 | ) | |||||
| Cash, beginning of period | 12,069 | 63 | ||||||
| Cash, end of period | $ | 201,574 | $ | |||||
| Supplemental disclosure of cash flow information | ||||||||
| Amortization of deferred finance cost from non-cash transaction | $ | $ | ||||||
| Common stock issued for debt | $ | 563,643 | $ | 28,819 | ||||
| Debt discount from convertible loan | $ | $ | 40,500 | |||||
| Reclassification of derivative liability | $ | $ | 39,852 | |||||
| Interest paid | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements
| 7 |
FOMO CORP. and subsidiaries
(formerly 2050 MOTORS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 February 27, 1990 in the state of California as a blank check company named “K7 Capital Corporation”. On or around the year 2000, the Company restructured to seek acquisition candidates. 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, new management dissolved the Company’s Nevada subsidiary as the electric vehicle strategy had failed. Meanwhile, the Company incubated an internet business targeting the cannabis market and pursued various ventures in the internet, communications, and technology markets. The Company purchased Purge Virus, LLC to enter the viral disinfection technology market on October 19, 2020. Purge Virus LLC changed its name to IAQ Technologies effective September 21, 2021. The Company closed lighting and energy management asset purchases of Independence LED Lighting, LLC and Energy Intelligence Center, LLC during the first three months of 2021. The Company formed Energy Intelligence Center LLC, (a Wyoming LLC), a wholly owned subsidiary of the Company and subsequently contributed the assets purchased from Independence LED Lighting, LLC and Energy Intelligence Center, LLC. The Company has since announced letters of intent and definitive agreements to acquire additional technology and services businesses.
Corporate Actions and Related
On March 6, 2019, William Fowler resigned as our President, Chief Executive Officer, Chief Financial Officer and Director. His resignation was not due to any matter relating to our operations, policies, or practices. On March 6, 2019, pursuant to a Special Board of Directors Meeting, our Board of Directors accepted his resignation.
On March 6, 2019, Bernd Schaefer’s resigned as our Secretary and Director. His resignation was not due to any matter relating to our operations, policies, or practices. On March 6, 2019, pursuant to a Special Board of Directors Meeting, our Board of Directors accepted his resignation.
On March 6, 2019, Vikram Grover was appointed our President, Chief Executive Officer, Chief Financial Officer, Secretary and Director. Mr. Grover’s compensation consists of $12,500 per month, of which $5,000 is payable in cash while the Company is delinquent in its SEC filings and the balance to be accrued and payable in cash or stock on December 31 of each calendar year. Upon bringing the Company current with its SEC filings, Mr. Grover will be compensated $12,500 per month, of which $7,500 is payable in cash and $5,000 will be accrued and payable in cash or stock on December 31 of each calendar year. Additionally, upon bringing the Company current with its SEC filings, Mr. Grover was to be issued 100 million common stock purchase warrants with a $0.001 exercise price and a -year expiration. If the Company’s common stock closed over $ for 10 consecutive trading sessions, Mr. Grover was to be issued an additional 100 million common stock purchase warrants with a $0.001 strike price and a -year expiration. Subsequently, Mr. Grover subsequently waived his rights to these options.
On April 4, 2019, we removed all Officers and/or Directors of our wholly owned subsidiary, 2050 Motors, Inc., a Nevada corporation (“2050 Private”); thereafter, 2050 Private appointed our Chief Executive Officer, Vikram Grover, as 2050 Private’s President and Sole Director.
On May 14, 2019, we officially dissolved our 2050 Motors, Inc. Nevada subsidiary and terminated all discussions and contractual relationships with Chinese manufacturers.
On December 16, 2019, we changed our company name to “FOMO CORP.” with the Secretary of State of California on the SEC’s EDGAR system.
| 8 |
On October 19, 2020, FOMO CORP. purchased Purge Virus, LLC and consequently entered the viral disinfection market. Purge Virus, LLC was renamed IAQ Technologies, LLC on September 21, 2021 in recognition of the importance of Indoor Air Quality.
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, on May 7, 2021, FINRA issued a name change and ticker change to “FOMO CORP.” and applied the ticker “FOMC”.
On February 12, 2021, we purchased the assets of Independence LED Lighting, LLC (a Pennsylvania LLC). The assets were subsequently placed into a newly formed subsidiary, Energy Intelligence Center LLC (a Wyoming LLC).
On March 6, 2021, we purchased the assets of Energy Intelligence Center, LLC (a Pennsylvania LLC). The assets were subsequently placed into a newly formed subsidiary, Energy Intelligence Center LLC (a Wyoming LLC).
As of June 30, 2021, the Company was current with its financials.
Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”).
Use of Estimates
The preparation of 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 accounts payable, the recoverability of long-term assets, and the valuation of derivative liabilities.
Consolidation
The consolidated financial statements of the Company include the Company and its wholly owned subsidiaries, 2050 Motors, Inc., IAQ Technologies LLC (formerly Purge Virus, LLC) and Energy Intelligence Center LLC. All material intercompany balances and transactions have been eliminated in consolidation.
Cash
Cash consists of deposits in one large national bank. On September 30, 2021 and December 31, 2020, respectively, the Company had $201,574 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. The Company’s investment in Himalaya Technologies, Inc. aka Homeland Resources Ltd, see Note 4, is currently traded on the OTC Expert Market.
| 9 |
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 September 30, 2021:
| Total | Level 1 | Level 2 | Level 4 | |||||||||||||
| Assets | ||||||||||||||||
| Investment securities | 272,736 | 272,736 | ||||||||||||||
| Investments | 168,000 | 168,000 | 1 | |||||||||||||
| Total assets measured at fair value | 440,736 | 440,736 | ||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liability | 447,605 | 447,605 | ||||||||||||||
| Total liabilities measured at fair value | ||||||||||||||||
Assets and liabilities measured at fair value are as follows as of December 31, 2020:
| Total | Level 1 | Level 2 | Level 4 | |||||||||||||
| Assets | ||||||||||||||||
| Investments | 168,000 | 168,000 | ||||||||||||||
| Total assets measured at fair value | 168,000 | 168,000 | ||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liability | 834,230 | 834,230 | ||||||||||||||
| Total liabilities measured at fair value | 834,230 | 834,230 | ||||||||||||||
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
| Balance as of December 31, 2019 | $ | 893,171 | ||
| Fair value of derivative liabilities | 266,068 | |||
| Loss on conversion | (483,793 | ) | ||
| Gain on change in derivative liabilities | 158,784 | |||
| Balance as of December 31, 2020 | $ | 834,230 | ||
| Balance as of December 31, 2020 | $ | 834,230 | ||
| Fair value of derivative liabilities | 1,135,503 | |||
| Loss on conversion | (1,375,374 | ) | ||
| Gain (loss) on change in derivative liabilities | (144,754 | ) | ||
| Balance as of September 30, 2021 | $ | 447,605 |
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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, 2020 and 2019, the Company generated minimal 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.
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.
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On September 30, 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, filed federal and state taxes in California, Illinois and Pennsylvania as required and brought the Company current in all regards in 2021.
Concentration of Credit Risk
Cash is mainly maintained by one highly qualified institution in the United States. At various times, such amounts are 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.
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 September 30, 2021 and December 31, 2020 was $4,464 and , respectively.
Revenue Recognition
The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606 – Contracts with Customers. Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products to customers.
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.
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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 February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.
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 ($9,084,212) as of September 30, 2021. The Company also had negative working capital of ($131,386) on September 30, 2021, and had operating losses of ($1,421,567) for the nine months ended September 30, 2021 and (1,636,719) for the year ended December 31, 2020, respectively. To date, these losses and deficiencies have been financed principally through the issuance of common stock, loans from related parties and loans 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 share of preferred class B stock in exchange for shares of Mobicard Inc. The shares were valued at the market price of $ per share, or $483,000, at the acquisition date. The shares are currently valued at the market price of $ per share on March 31, 2021 for a total investment of $168,000.
During the year ended December 31, 2019, the Company received shares of KANAB CORP. for consulting services provided by the Company’s CEO, Vikram Grover. The shares were valued at $ per share.
On October 19, 2020, the Company acquired 100% of the member interests of Purge Virus, LLC for consideration of Series B Preferred Shares, valued at their market value of $800,000. As a result of the acquisition, the Company recognized intangible assets of $225,000 and goodwill of $596,906. The intangible assets are being amortized over their useful lives, ranging from 3 to 10 years.
On February 12, 2021, we purchased 100.0% of the assets, including inventory, customer lists, GSA schedule, intellectual property and other of Independence LED Lighting, LLC for two hundred fifty thousand () Series B Preferred shares. Based on market prices at closing, the transaction was valued at two and one half million dollars ($2,500,000), but for accounting purposes we wrote the purchase price down to $242,500.
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On March 6, 2021, we purchased 100.0% of the assets, including inventory, customer lists, GSA schedule, intellectual property and other of Energy Intelligence Center, LLC for one hundred twenty-five thousand () Series B Preferred shares. Based on market prices at closing, the transaction was valued at one million two hundred fifty thousand ($1,250,000), but for accounting purposes we wrote the purchase price down to $825,000.
On May 18 2021, FOMO CORP. (“FOMO”) incorporated FOMO ADVISORS LLC, a Wyoming limited liability company, as a wholly owned public/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 from FOMO stock 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. An outline of FOMO’s plans is attached herein as Exhibit 10.1. 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.
On July 31, 2021, we sold our 50.0% interest in KANAB CORP. (one million shares) to Himalaya Technologies, Inc. a/k/a Homeland Resources Ltd. (OTC: HMLA) for one hundred fifty thousand () Series B Preferred shares of the buyer, convertible into one hundred fifty million () common shares. Our CEO, Vikram Grover, is also CEO of Himalaya Technologies, Inc. As part of the Advisory work performed by FOMO ADVISORS LLC to Himalaya Technologies, Inc., we are issued fifty () million common stock purchase warrants in Himalaya with a $ strike price and a five-year expiration.
Note 5 – LOANS PAYABLE DUE TO RELATED PARTIES
As of September 30, 2021, the Company subsidiary’s chief executive officer had an outstanding balance on a personal loan to us of $1,294. The loan is non-interest bearing and due on demand.
Note 6 - CONVERTIBLE NOTE 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. 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 interim financial statements. As of September 30, 2021, the Company had the following third-party convertible notes outstanding:
| Lender | Origination | Maturity | Amount | Interest | ||||||||||
| Note | GS Capital | 1/20/2021 | 1/20/2022 | 95,000 | 10 | % | ||||||||
| Note | Power up Lending | 4/8/2021 | 4/8/2022 | 53,750 | 12 | % | ||||||||
| Note | Power up Lending | 5/10/2021 | 5/10/2022 | 103,500 | 12 | % | ||||||||
| Note | GS Capital | 6/25/2021 | 6/25/2022 | 53,920 | 10 | % | ||||||||
| Note | Power up Lending | 9/20/2021 | 9/20/2022 | 43,750 | 12 | % | ||||||||
| Total | $ | 349,920 | ||||||||||||
| Less Discount | ||||||||||||||
| Net | $ | 349,920 | ||||||||||||
During the year ended December 31, 2020, third-party lenders converted $809,292 of principal and interest into shares of common stock.
| 14 |
During the nine months ended September 30, 2021, third-party lenders converted $6,076,589 of principal, interest and penalties into shares of common stock.
The variables used for the Black-Scholes model are as listed below:
| September 30, 2021 | December 31, 2020 | |||
| ● | Volatility: 253% - 466% | Volatility: 253% - 466% | ||
| ● | Risk free rate of return: 1.24%- 1.53% | Risk free rate of return: 1.24% - 1.53% | ||
| ● | Expected term: 1-3 years | Expected term: 1-3 years |
The Company amortized a debt discount of $0 and $63,350 respectively, during the nine months ended September 30, 2021 and year ended December 31, 2020, respectively.
On October 28, 2020, a third-party lender funded the Company $115,000.00 in a 12% convertible debenture due October 28, 2021. The transaction netted the Company $98,000.00 after original issue discount (OID) of $15,000.00 and placement agent fees of $2,000.00.
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.
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.
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.
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 nine months ended September 30, 2021 third-party lenders converted $607,658 of principle, interest and penalties into shares of no-par common stock.
Note 7 – COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company may from time to time, become a party to various legal proceedings, arising in the ordinary course of business. The Company investigates these claims as they arise. There is no litigation outstanding as of September 30, 2021.
Note 8 – INCOME TAXES
The Company did not file its federal tax returns for fiscal years from 2012 through 2020. Management at year-end 2020 believed that it should not have any material impact on the Company’s financials because the Company did not have any tax liabilities due to net loss incurred during these years.
Based on the available information and other factors, management believes it is more likely than not that any potential net deferred tax assets on September31, 2021 and December 31, 2020 will not be fully realizable. The Company is current with franchise tax board fees due to the State of California and in 2021 filed tax statements for the federal and state requirements (California, Illinois, Pennsylvania) for 2018 – 2019 - 2020. Today, the Company is current with its federal and state tax filings.
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Note 9 – WARRANTS AND OPTIONS
As of December 31, 2019, the Company had fifty million warrants with an exercise price of $0.001 and a -year expiration issued and outstanding to three members of our Advisory Board who were added to that newly created committee during March - April 2019. Additionally, we issued ten million warrants with a strike price of $0.005 and a -year expiration to EDGE FiberNet, Inc. as compensation for strategic consulting. During the year ended December 31, 2019, the Company recognized $16,803 in expense related to these warrants. During the year ended December 31, 2020 the Company issued 328,571,428 warrants to a third-party lender for fees on a loan cost. The Company recognized $844,754 in expense related to these warrants. On December 31, 2020, a total of 713,571,428 warrants were outstanding with a weighted average life of 3.87 years and an intrinsic value of $844,754.
On March 4, 2021, we issued Dilip Limaye 20,000,000 warrants with a strike price of $0.01 and a expiration as compensation for joining our Advisory Board.
On March 20, 2021 the Company issued 100,000,000 warrants with a strike price of $0.01 and a expiration to Online Energy Manager as consideration for a software license.
On March 31, 2021 The Company issued 50,000,000 warrants with a strike price of $0.01 and a expiration to Energy Intelligence as consideration on the asset purchase.
On May 12, 2021, we issued John Conklin 20,000,000 warrants with a strike price of $0.01 and a expiration as compensation for joining our Advisory Board.
During the quarter ending September 40, 2021, the Company issued warrants for services.
During the quarter ending September 30, 2021, the Company issued warrants to a third-party lender as an incentive to fund the Company from an S-1 that was filed July 14, 2021.
Note 10 – EQUITY
Between January 1, 2020 and December 31, 2020, the Company issued to third-party lenders a total of shares of common stock pursuant to conversions of $761,456 debt.
On January 8, 2020, a third-party lender converted $5,300.00 principal of a convertible debenture into common shares.
On February 3, 2020, a third-party lender converted $5,600.00 principal of a convertible debenture into common shares.
On February 5, 2020, a third-party lender converted $4,682.00 principal of a convertible debenture into common shares.
On February 18, 2020, a third-party lender converted $7,000.00 principal of a convertible debenture into common shares.
On August 26, 2020, the Company issued its CEO, Vikram Grover, Series B Preferred Shares for accrued compensation of $25,000.00.
On August 27, 2020, a third-party lender converted $6,100.00 principal and $947.93 interest of a convertible debenture into restricted common shares.
On August 31, 2020, a third-party lender converted $2,950.00 principal and $500.00 of fees of a convertible debenture into common shares.
On September 3, 2020, the Company issued its CEO, Vikram Grover, Restricted Series B Preferred shares for accrued compensation of $.00.
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On September 4, 2020, a third-party lender converted $57.96 principal, $2,811.59 intertest and $500.00 of fees of a convertible debenture into common shares.
From September 10, 2020 through October 8, 2020, a third-party lender converted $25,000.00 warrants attached to a 2017 loan into common shares. As a result, the debenture and warrants were retired.
On September 15, 2020, a third-party lender converted $5,069.54 principal and $1,689.85 interest of a convertible debenture into common shares.
On September 30, 2020, a third-party lender converted $20,229.66 principal and $6,743.22 interest of a convertible debenture into common shares.
On October 8, 2020, a third-party lender converted $21,239.12 principal and $7,079.71 interest of a convertible debenture into common shares.
On October 9, 2020, the Company issued its CEO, Vikram Grover, Restricted Series B Preferred shares for accrued compensation of $37,500.00.
On October 13, 2020, we amended the terms of our Series A Preferred Shares to include an annual dividend of $0.0035 per share, a 1-50 conversion ratio and to vote on an as converted basis.
On October 20, 2020, a third-party lender converted $0 principal, $86.40 interest and $30,237.55 penalties related to a convertible debenture into common shares.
From January 1, 2020 through October 23, 2020, the Company issued Restricted Series B Preferred shares to consultants for professional services, including due diligence on the Purge Virus transaction, corporate development, sales and marketing, and other.
Effective October 25, 2020, the Company and a third party lender amended a prior settlement agreement effected in 2019 to require the issuance of seven hundred ninety four million, forty one thousand, one hundred thirty three (794,041,133) Settlement Shares of common stock, as follows: a) publicly tradeable shares of common stock (the “Settlement Shares” or the “Shares”) to be converted, transferred and delivered to the third party lender, in whole or in part pursuant to the third party lender’s notice: 1) on or before November 1, 2020 – Settlement Shares, in whole or in part as determined by the third party lender, in its discretion; plus 2) on or before December 1, 2020 – Settlement Shares, in whole or in part as determined by the third party lender, in its discretion; plus 3) on or before January 1, 2021 – Settlement Shares, in whole or in part, as determined by the third party lender, in its discretion. Remaining shares, which were reserved and subsequently sold, settled the balance of the November 2019 $283,000.00 lawsuit brought by the third-party lender against the Company. The lender subsequently executed conversions of principal, interest, and penalties into common shares, and the note and associated settlement are now retired/closed.
On November 2, 2020, a third-party lender converted $10,944.39 principal, $93.60 interest and $20,799.13 penalties related to a convertible debenture into common shares.
On October 28, 2020, a third-party lender funded the Company $115,000.00 in a redeemable convertible note, netting $98,000.00 after an original issue discount (OID) of $10,000.00, legal fees of $5,000.00 in legal fees and $2,000.00 in broker fees.
On December 2, 2020, a third-party lender converted $55,709.65 penalties related to a convertible debenture into common shares.
| 17 |
On December 30, 2020, a third-party lender converted $12,000.00 principal related to a convertible debenture into common shares.
On December 31, 2020, we issued a consultant Series B Preferred shares for cannabis legal analysis.
On January 1, 2021, the Company issued a consultant Series B Preferred shares for services.
On January 6, 2021, the Company issued Series B Preferred shares as a non-refundable deposit to purchase SmartGuard.
On January 6, 2021, the Company issued 175,000 Series B Preferred shares as a refundable deposit to purchase SmartGuard.
On January 21, 2021 the Company issued a third-party lender shares of no-par common stock for loan cost.
On February 11, 2021, the Company issued Series B Preferred shares as a non-refundable deposit to purchase PVBJ.
On February 24, 2021, the Company issued Series B Preferred shares to purchase assets of Independence LED Lighting LLC.
On February 27, 2021, the Company issued a consultant shares of no-par common stock for investor relations services.
During February 2021 the Company sold Series A Preferred shares for $275,000. These had 100% warrant coverage at .003.
On March 1, 2021, the Company issued a consultant shares of no-par common stock for consulting services.
On March 20, 2021, the Company issued Series B Preferred shares to purchase the assets of Energy Intelligence Center LLC.
On March 31, 2021, the Company sold commitment and initial shares of common stock for $250,000 as part of an equity line of credit program with an institutional investor.
During the three months ended March 31, 2021 third-party lenders converted $563,643 of principle, interest and penalties into shares of common stock
On April 9, 2021, the Company issued a consultant shares of no-par common stock for consulting services.
On July 22, 2021, the Company issued shares of common stock for consulting services.
On August 30, 2021, the Company issued shares of Preferred series B stock, convertible into shares of common stock for consulting services.
On September 9, 2021, the Company issued shares Preferred series B stock, convertible into shares of common stock, for $15,000 in consulting services.
On September 25, 2021, the Company issued shares of Preferred series B stock, convertible into shares of common stock for accounting services.
During the quarter ending September 30, 2021, shares of Preferred series B stock was converted into shares of common stock.
During the quarter ending September, 2021, third-party lenders converted $121,080 of debt into shares of common stock.
During the quarter ending September 30, 2021 the Company sold shares of common stock for $400,000 to an institutional investor off of the S-1 filed July 14, 2021.
Business Development and Related
On October 2, 2020, The option was subsequently canceled.
On February, 11, 2021, the Company issued shares of Preferred B series stock for non-refundable to buy Company. The Company did not close on this deal. The seller backed out.
The joint venture partnership with PPESI was subsequently canceled.
| 18 |
COVID-19 Pandemic Update
In March 2020, the World Health Organization declared a global health pandemic related to the outbreak of a novel coronavirus. The COVID-19 pandemic adversely affected the company’s financial performance in the third and fourth quarters of fiscal year 2020 and could have an impact throughout fiscal year 2021. In response to the COVID-19 pandemic, government health officials have recommended and mandated precautions to mitigate the spread of the virus, including shelter-in-place orders, prohibitions on public gatherings and other similar measures. There is uncertainty around the duration and breadth of the COVID-19 pandemic, as well as the impact it will have on the company’s operations, supply chain and demand for its products. As a result, the ultimate impact on the company’s business, financial condition or operating results cannot be reasonably estimated at this time.
On June 4, 2020, the Company entered a $11,593 note payable to Bank of America, pursuant to the Paycheck Protection Program (“PPP Loan”) under the CARES Act. The loan remains outstanding but is expected to be forgiven by the U.S. government based on guidance from the Company’s commercial bank, Bank of America. The SBA forgave this loan subsequent to quarter end.
On June 22, 2021, Himalaya Technologies, Inc. a/k/a Homeland Resources Ltd. (OTC: HMLA) retained our merchant banking subsidiary FOMO ADVISORS LLC to advise on its restructuring and merger and acquisition activities. As part of the program, Himalaya Technologies issued us 50,000,000 common stock purchase warrants with a $0.0001 exercise price and a expiration.
On June 28, 2021, Himalaya Technologies, Inc. issued us 50,000,000 common stock purchase warrants with a $0.0001 exercise price and a expiration as a non-refundable deposit for the purchase of our stake in KANAB CORP., owner and operator of a cannabis social network.
During June 2021, we entered into a Master Note with Himalaya Technologies, Inc. for up to $25,000.00 with an annual interest rate of 20.0% and a maturity date of December 25, 2021. As of June 30, 2021, a total of $25,000.00 has been funded under the program.
Warrants
On October 28, 2020, the Company issued 328,571,428 warrants to a third-party lender with a expiration and an exercise price of $0.0007 per share.
On November 3, 2020, the Company issued 10,000,000 warrants to a consultant with at a expiration and an exercise price of $0.001 per share.
On December 2, 2020, the Company reduced the exercise price on 10,000,000 warrants owned by a former Advisory Board member who provided working capital to the Company from $ per share to $ per share.
On December 7, 2020, we issued Paul Benis, an Advisory Board member, 20,000,000 common stock purchase warrants with a expiration and $0.001 exercise price, for services to be rendered during 2021.
On December 31, 2020, we issued a consultant 25,000,000 warrants with a expiration and a $0.001 exercise price for digital consultation and sales incentive.
On December 31, 2020, as compensation for bring the Company SEC current and for retention purposes, we issued our CEO Vikram Grover 200,000,000 warrants with a expiration and an exercise price of $0.001.
On December 31, 2020, we issued Roderick Martin, CEO of AGILE Technologies Group, LLC, 20,000,000 common stock purchase warrants with a expiration and $0.01 exercise price as compensation for joining our Advisory Board.
On December 31, 2020, we issued AGILE Technologies Group, LLC, 100,000,000 common stock purchase warrants with a expiration and $0.001 exercise price as a sales incentive for offering our disinfection products and others to AGILE’s rapid diagnostic testing (“RDT”) clients. The warrants shall vest upon the generation of $500,000 in cumulative disinfection sales from our subsidiary Purge Virus, LLC by December 31, 2021 or $1,000,000 in cumulative disinfection sales from our subsidiary Purge Virus, LLC by December 31, 2023. Both Companies have an exclusive cross-selling agreement for their products which has generated material revenues to date.
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On February 12, 2021, the Company issued 50,000,000 warrants to Energy Intelligence Center LLC as added incentive to purchase assets.
On March 20, 2021 the Company issued 100,000,000 warrants with a strike price of $0.01 and a expiration to Online Energy Manager for a software license.
On March 31, 2021 The Company issued 50,000,000 warrants with a strike price of $0.01and an expiration to Energy Intelligence as additional price on asset purchase.
On April 9, 2021, the Company issued a consultant 6,250,000 shares of no-par common shares for consulting services.
On April 24, 2021, the Company issued Series B Preferred shares for consulting services.
On April 20, 2021, the Company issued Series B Preferred shares for consulting services relating to Kanab Corp.
On April 8, 2021, a third-party lender funded the Company $103,500 in a 22% convertible debenture due April 8, 2022. The transaction netted the Company $100,000 after $3,500 loan fees.
On April 16, 2021, the Company extended the LOI’s to purchase Ecolite and PPE Source International LLC until July 1, 2021
On or around April 14, 2021, the Company signed an agreement to purchase 100% interest in Lux Solutions, LLC for $5,000,000 in Series B Preferred shares, cash and seller notes. The Agreement has subsequently been extended due to market conditions.
On or around April 14, 2021, the Company signed an agreement to purchase 100% interest in Led IV Funding, LLC for $7,000,000 in Series B Preferred shares, cash and seller notes. The Agreement has subsequently been extended due to market conditions.
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 fees.
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 quarter ending September 40, 2021, the Company issued 110,000,000 warrants for services.
During the quarter ending September 30, 2021, the Company issued 50,000,000 warrants to a third-party lender as an incentive to fund the Company from an S-1 that was filed.
Note 11 – SUBSEQUENT EVENTS
During the period since the balance sheet date, the third-party lenders have converted $173,500 of debt into shares of common stock.
On October 6, 2021 the Company issued 16,667 shares of Preferred series B stock, convertible into shares of common stock, for consulting services.
On October 20, 2021 the Company issued 25,000 shares of Preferred series B stock, convertible into shares of common stock, for consulting services.
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Item 2. Management’s Discussion and Analysis or Plan of Operation
Plan of Operations
This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result 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 report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.
Plan of Operations
On May 2, 2014, the Company had nominal assets whose sole business was to identify, evaluate, and investigate various companies to acquire or with which to merge. Upon consummation of a merger with 2050 Motors, Inc., a Nevada corporation, the Company’s business became the business of 2050 Motors, which at the time was the Company’s sole operating subsidiary focused on the importation of electric vehicles (“EV’s”) from China. That business was dissolved in May 2019. Today, our principal business objective for the next 12 months will be to achieve long-term growth through the launch of new business units, subsidiaries and ventures, initially, with a business concentration in the areas of communications, power over ethernet (PoE) and LED lighting, energy management software, and social media.
FOMO CORP. is a development stage company with no operating history and may never be able to carry out its business plan or achieve any revenues or profitability. The Company was incorporated February 27, 1990 and has not generated meaningful revenues, nor has it realized a profit from its operations to date, and there is little likelihood that it will generate any meaningful revenues or realize any profits in the short term. Any profitability in the future from its business will be dependent upon the successful marketing and sales of future business activities. The Company may not be able to successfully carry out its business plan. There can be no assurance that it will ever achieve meaningful revenues or profitability. Accordingly, its prospects must be considered in light of the risks, expenses, and difficulties frequently encountered in establishing a new business and therefore it is a highly speculative venture involving significant financial risk. Since new management was appointed in March 2019, we expanded our mission statement to invest in, incubate and accelerate businesses in the communications, energy, and Internet industries.
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Costs and Resources
FOMO CORP. is currently pursuing additional funding resources that will potentially enable it to maintain its current and planned operations through the next 12 months. The Company anticipates that it will need to raise additional capital in order to sustain and grow its operations over the next few years. To the extent that the Company’s capital resources are insufficient to meet current or planned operating requirements, the Company will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has no current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders or creditors will provide any portion of the Company’s future financing requirements. No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company.
Results of Operation for the Three Months Ended September 30, 2021 and 2020
During the three months ended September 30, 2021 and 2020, the Company had $107,805 and $0 in operating revenues, respectively. During the three months ended September 30, 2021 the Company incurred $97,905 in cost of revenues. During the three months ended September 30, 2021, the Company incurred operating expenses of $223,025 consisting primarily of G&A expenses, consulting fees and travel expenses and other general and administrative costs. For the three months ended September 30, 2021, these operating losses combined with non-operating income (expenses) of $8.079 resulted in net loss of $215,046. For the three months ended September 30, 2020, the Company had operating losses of $215,372 and non-operating income (expenses) of ($116,379) leading to net loss of $331,751.
Results of Operation for the Nine Months Ended September 30, 2021 and 2020
During the nine months ended September 30, 2021 and 2020, the Company had $398,917 and $0 in operating revenues. During the nine months ended September 30, 2021 the Company incurred $296,631 in cost of revenues. During the nine months ended September 30, 2021, the Company incurred operating expenses of $1,213,503, consisting primarily of G&A expenses, consulting fees, travel expenses and other general and administrative costs. For the nine months ended September 30, 2021, these operating losses combined with non-operating income (expenses) of ($310,350) resulted in net loss of $1,421,567. For the nine months ended September 30, 2020, the Company had operating losses of $314,646 and non-operating income (expenses) of $468,979 leading to net income of $154,333.
Equity and Capital Resources
We have incurred losses since the inception of our business and as of September 30, 2021 we had an accumulated deficit of $9,084,212. As of September 30, 2021, the Company had cash balance of $201,574 and a negative working capital of $131,386.
To date, we have funded our operations through short-term debt and equity financing. During the nine months ended September 30, 2021, the Company received $430,020 of borrowed funds from non-related parties. In addition, during this period the Company issued 1,409,831,125 shares of common stock to lenders for conversions of $607,658 of principal and interest related to third-party debt and issued 10,000,000 shares of common no-par shares for loan costs. The Company issued 14,062,500 shares of common no-par shares and 500,000 Preferred B shares for compensation. The Company sold 234,000,000 shares of common stock for $826,000. The Company also issued 175,000 Preferred B shares to purchase the assets of a business.
We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of our automobile business. However, we do not expect to start generating revenues from our operations for another 12 months. Consequently, we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of additional capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this Report we did not have any commitments from any source to provide such additional capital. Even if we are able to secure outside financing, it may be unavailable in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases or debt would increase our capital requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms.
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Delinquent Loans
As of September 30, 2021, the Company is no longer delinquent in its payments on any loans owing to third-party lenders.
Off-balance Sheet Arrangements
Since our inception through September 30, 2021, we have not engaged in any off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “small reporting company” we are not required to provide this information under this item pursuant to Regulation S-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report on Form 10-Q, our President and Chief Financial Officer performed an evaluation of the effectiveness of and the operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our President and Chief Financial Officer concluded that as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures are not effective in timely alerting them to material information relating to FOMO CORP. (formerly 2050 Motors, Inc.) required to be included in our Exchange Act filings.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the quarter ended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
The Company has settled all lawsuits with third-party lenders regarding delinquent loans as of September 30, 2021.
Item 1A. Risk Factors.
As a “smaller reporting company”, we are not required to provide this information under this item pursuant to Regulation S-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the nine months ended September 30, 2021, the Company received $430,000 of borrowed funds from non-related parties. In addition, during this period the Company issued 1,40,831,125 of common stock to lenders for conversions of $607,650 of principal and interest related to third-party debt and issued 10,000,000 shares of common no-par shares for 20,000 of loan costs. The company also sold 2,750,000 shares of Preferred A shares for $275,000. The Company issued 14,062,500 shares of common shares and 200,000 Preferred B shares for compensation. The Company sold 340,000,000 shares of common stock for $826,000. The Company also issued 175,000 Preferred B shares as a deposit for a future business purchase and 350,000 Preferred B shares to purchase the assets of a business, of which half is refundable.
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During the three months ended June 30, 2021, the Company received $250,000 initial investment from the sale of 65,000,000 common shares to Tysadco Partners, LLC under an equity line of credit (“ELOC”) facility, which was subsequently canceled and repapered in the format of a Form S-1 equity sale of up to two billion (2,000,000) registered common shares @ $0.002 and five hundred million warrants struck at $0.004 with a three-year expiration. The Company also received $222,250 of borrowed funds from third parties.
Item 3. Defaults Upon Senior Securities.
As of September 30, 2020, the Company is no longer delinquent in its payments on any loans owing to third-party lenders.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
(a) Exhibits.
*Filed by reference to Form 10-Q for the three months ended March 31, 2021 filed on EDGAR on May 24, 2021and Form 10-Q for six months ended June 30, 2021 filed on EDGAR on August 16, 2021.
**Filed herewith.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FOMO CORP. | |
| Date: November 15, 2021 | /s/ Vikram Grover |
| Vikram Grover, President | |
| (Principal Executive Officer) | |
| Date: November 15, 2021 | /s/ Vikram Grover |
| Vikram Grover, Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
EXHIBIT INDEX
*Filed by reference to Form 10-Q for the three months ended March 31, 2021 filed on EDGAR on May 24, 2021 and Form 10-Q for six months ended June 30, 2021 filed on EDGAR on August 16, 2021.
**Filed herewith.
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