NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note
1 – BASIS OF PRESENTATION AND ORGANIZATION
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, was incorporated on October 9, 2012 in the state of Nevada to
import, market, and sell electric cars manufactured in China. On May 2, 2014, that entity sold its business, operations and assets
to the Company, whose sole business at the time was to identify, evaluate, and investigate various companies to acquire or with
which to merge. Upon consummation of the acquisition of 2050 Motors, Inc., the Company’s sole business became the business
of the Company, and the public Company renamed itself “2050 Motors, Inc.” Our principal business objective is to achieve
long-term growth through 2050 Motors, Inc.
On
October 25, 2012, 2050 Motors, Inc. entered into an agreement with Jiangsu Aoxin New Energy Automobile Co., Ltd., (“Aoxin”),
located in Jiangsu, China, for the distribution in the United States of a new electric automobile, known as the “e-Go”.
This Agreement was amended in 2017 to exclude certain markets in Central America and South America.
The
condensed interim financial statements included herein, have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required
by accounting principles generally accepted in the United States of America.
These
statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary
for fair presentation of the information contained therein. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for
the year ended December 31, 2017. The Company follows the same accounting policies in preparation of interim reports. Results
of operations for the interim periods are not indicative of annual results.
Note
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates
The
preparation of financial statements in conformity with U.S. 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.
Fair
Value of Financial Instruments
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 measurements) and the lowest priority
to unobservable inputs (level 3 measurements). The three levels of valuation hierarchy are defined as follows:
Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
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.
Derivative
Financial Instruments-Level 3
Derivatives
are recorded on the condensed balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives
and are separately valued and accounted for on the balance sheet with changes in fair value recognized during the period of change
as a separate component of other income/expense. We use the binomial option-pricing model for determining the fair value of our
derivatives. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs
involves management’s judgment and may impact net income.
Assets
and liabilities measured at fair value are as follows as of September 30, 2018
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
958,930
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
958,930
|
|
Total liabilities measured at fair value
|
|
$
|
958,930
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
958,930
|
|
Assets
and liabilities measured at fair value are as follows as of December 31, 2017:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
1,030,132
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,030,132
|
|
Total liabilities measured at fair value
|
|
$
|
1,030,132
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,030,132
|
|
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, 2017
|
|
$
|
1,030,132
|
|
Fair value of derivative liabilities issued
|
|
|
336,706
|
|
Loss on change in derivative liabilities
|
|
|
148,622
|
|
Reclassify to equity upon payoff or conversion
|
|
|
(556,530
|
)
|
Balance as of September 30, 2018
|
|
$
|
958,930
|
|
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 is based on the assumption 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 three-month and nine-month periods ended September 30, 2018 and September 30, 2017,
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.
Concentration
of Credit Risk
Cash
is mainly maintained by one highly qualified institution in the United States. At no time were such amounts in excess of 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.
Recently
Adopted Accounting Policies:
In
May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which
supersedes all existing revenue recognition requirements, including most industry specific guidance. This new standard requires
a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration
that the company expects to receive for those goods or services. The FASB subsequently issued the following amendments to ASU
No. 2014-09 that have the same effective date and transition date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic
606): Principal versus Agent Considerations; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance
Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical
Expedients; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The
Company adopted these amendments with ASU 2014-09 (collectively, the new revenue standards).
The
new revenue standards became effective for the Company on January 1, 2018 and were adopted using the modified retrospective method.
The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the
majority of its revenues continue to be recognized when the customer takes control of its product. As the Company did not identify
any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained
earnings was required upon adoption.
In
May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718). ASU 2017-09 provides guidance about
which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in
Topic 718. ASU 2017-09 is effective for interim periods and fiscal years beginning after December 15, 2017, and early application
is permitted. The implementation of ASU 2017-09 did not have a material effect on the Company’s consolidated financial statements.
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.
In
July 2017, the FASB issued ASU No. 2017-11 Part I, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic
480), Derivatives and Hedging (Topic 815). ASU 2017-11 Part I changes the classification analysis of certain equity linked financial
instruments with down round features. ASU 2017-11 Part I is effective, for public business entities, for interim periods and fiscal
years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if
any, that the adoption of this guidance will have on its consolidated financial statements.
Reclassification
Certain
prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no
material effect on the reported results of operations or cash flow.
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 ($5,623,680) as of September 30, 2018. The Company also had negative working capital of ($1,860,098) and ($1,477,483), respectively,
as of September 30, 2018 and December 31, 2017. 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 above, 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 will be forthcoming, or as to the terms of any such financings.
Any future financing will involve substantial dilution to existing investors.
Note
4 – VEHICLE DEPOSITS
A
vehicle deposit of $24,405, as of September 30, 2018 and December 31, 2017, represents a prototype test model for delivery into
the United States when specifications are completed for an advanced crash test known in the Automobile Safety Industry as the
“overlap crash test”. Based on recent conversations with Aoxin and former management, we took an impairment charge
for the vehicle deposit of $24,405 and wrote this asset down to $0.
Note
5 – LICENSE AGREEMENT
In 2012 and 2013, the Company made a total
payment of $50,000 in connection with an executed exclusive license agreement with Aoxin to import, assemble and manufacture an
advanced carbon fiber electric vehicle called the “e-Go”. The cost of this license agreement was recognized as a long-term
asset and was evaluated for impairment losses at the end of each reporting period. As of September 30, 2018, and December 31, 2017,
impairment losses related to this license of $50,000 and 0, respectively, were identified by management, meaning the value of the
Aoxin license has been written off. We have requested information regarding the Company’s prior relationship with Aoxin from
prior management who have provided unresponsive and unsatisfactory responses to date.
Note
6 – LOANS PAYABLE DUE TO RELATED PARTIES
All
the notes are unsecured and bear interest at the rate of $100 per day. As of September 30, 2018, all the notes are in default.
At September 30, 2018, $13,000 in principal and $71,176 in accrued interest was outstanding on these notes. During the nine months
ended September 30, 2018, the Company recognized $45,500 in interest expense on these loans.
Note
7 – CONVERTIBLE NOTE PAYABLES
The
Company had several convertible note payables with unrelated third parties with interest rates ranging between 10% and 12%. 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, 2018, and December 31, 2017, the Company had the following convertible notes outstanding:
|
|
Lender
|
|
|
|
Maturity
|
|
Amount
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note #1*
|
|
Auctus
|
|
1/6/17
|
|
2/6/18
|
|
$
|
507,832
|
|
|
|
22.0
|
%
|
Note #2*
|
|
Emunah
|
|
1/18/17
|
|
12/31/18
|
|
|
26,577
|
|
|
|
24.0
|
%
|
Note #3*, **
|
|
UBC
|
|
1/18/17
|
|
12/31/18
|
|
|
5,477
|
|
|
|
24.0
|
%
|
Note #4*
|
|
JSJ
|
|
4/25/17
|
|
1/26/18
|
|
|
20,814
|
|
|
|
18.0
|
%
|
Note #5*
|
|
Crown Bridge
|
|
9/15/17
|
|
9/15/18
|
|
|
8,083
|
|
|
|
10.0
|
%
|
Note #6*
|
|
PowerUp 4
|
|
11/13/17
|
|
8/30/18
|
|
|
4,544
|
|
|
|
12.0
|
%
|
Note #7*
|
|
LG
|
|
11/14/17
|
|
11/14/18
|
|
|
26,254
|
|
|
|
12.0
|
%
|
Not*e #8*
|
|
PowerUp 5
|
|
1/24/18
|
|
10/30/18
|
|
|
52,500
|
|
|
|
22.0
|
%
|
Note #9*
|
|
PowerUp 6
|
|
2/22/18
|
|
11/30/18
|
|
|
64,500
|
|
|
|
22.0
|
%
|
Note #10*
|
|
PowerUp 7
|
|
4/11/18
|
|
1/30/19
|
|
|
22,500
|
|
|
|
22.0
|
%
|
Note #11*
|
|
PowerUp 8
|
|
4/27/18
|
|
2/15/19
|
|
|
32,250
|
|
|
|
22.0
|
%
|
Note #12*
|
|
Jabro 1
|
|
7/23/18
|
|
4/30/19
|
|
|
21,000
|
|
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
792,431
|
|
|
|
|
|
less discount
|
|
|
|
|
|
|
|
|
(98,319
|
)
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
$
|
694,112
|
|
|
|
|
|
*Note
is currently in default; **Note is owned by an entity related to William Fowler, CEO.
Note#1, issued on January 6, 2017, is in default and under the terms of the convertible promissory note, the Company is liable to pay 150% of the then outstanding principal and interest plus additional penalties for certain covenants that are breached. In addition to the note balance of $112,463 as of September 30, 2018, there are penalties totaling $395,369 relating to the default of this note.
During
the nine-month period ended September 30, 2018, the Company recorded conversion of $34,301 of notes payable into 36,490,407 shares
of common stock. The Company recorded a loss on conversion of debt of $179,980 during this period. During the nine-month period
ended September 30, 2017, the Company issued 1,500,000 shares of the Company’s common stock to convert a non-refundable
promissory note of $75,000 along with interest accrued on the same of $6,576, based on a stock price upon notice of conversion
of $0.054.
The
derivative liability for all the remaining convertible notes was recalculated on September 30, 2018 to be $905,930 and the loss
on change in derivative liability of $108,091 for the nine-months period ended September 30, 2018, was recorded on the accompanying
financial statements.
The
variables used for the Binomial model are as listed below:
|
|
December
31, 2017
|
|
September
30, 2018
|
|
●
|
Volatility:
253% - 286%
|
|
Volatility:
191% - 301%
|
|
|
|
|
|
|
●
|
Risk
free rate of return: 1.28%- 1.76%
|
|
Risk
free rate of return: 1.93% - 1.99%
|
|
|
|
|
|
|
●
|
Expected
term: 1-11 months
|
|
Expected
term: 1-10 months
|
The
Company amortized a debt discount of $199,713 and $183,486 respectively, during the nine-month periods ended September 30, 2018
and 2017. The Company amortized the finance fee of $12,930 and $37,088, respectively, during the nine-month periods ended September
30, 2018 and 2017. Interest expense accrued on non-related convertible notes was $108,261 and $87,612 for the nine-month periods
ended September 30, 2018 and 2017, respectively. During the nine-month period ended September 30, 2018, the note holders converted
$512,828 of debt into 129,667,221 shares of common stock.
Note
8 – COMMITMENTS AND CONTINGENCIES
Industrial
Lease
Effective
March 1, 2014, the Company signed a lease for four thousand square feet of industrial space in North Las Vegas. The term of the
lease was for three years and cost $2,200 per month. The lease expired on April 30, 2017 and the Company was on a month to month
lease thereafter. The lease was terminated as of June 30, 2018.
Rent
expense amounted to $0 and $6,539 for the three-month periods ended September 30, 2018 and 2017, respectively. Rent expense amounted
to $13,400 and $19,556 for the nine-month periods ended September 30, 2018 and 2017, respectively.
Aoxin
License Agreement
Pursuant
to a 2012 license agreement and 2017 amendment executed between the Company and Aoxin, in order to maintain exclusive rights for
the United States (US), the Company was required to purchase and sell certain amount of e-Go model vehicles per year for a certain
period of time starting from the completion of the requirements established by the United States Department of Transportation’s
protocols for the e-Go model. As part of the license agreement, the Company was committed to pay expenses related to any required
airbag testing procedures. The Company estimated the cost of these airbags could be as little as $500,000 or as much as $2 million.
Aoxin
has been unable to procure a license to design, test and manufacture e-Go vehicles in China. Additionally, our
representatives in China have been told by Aoxin that any such agreement and amendment has expired. Based on this
information, we may prepare a business plan and re-approach Aoxin if and when Aoxin obtains the required licenses to provide
a next-generation version of the e-Go vehicle. Given these circumstances, during the nine-month period ended September 30,
2018, we took a $50,000 charge and wrote down the value of the Aoxin license to $0 and associated vehicle deposits were also
fully-impaired.
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. Management does not believe, based on current knowledge, that there were any such claims
outstanding as of September 30, 2018.
Note
9 – REVOLVING LINE OF CREDIT- RELATED PARTY
The
Company has a revolving line of credit agreement with a related party. The line amount is $100,000 and carries interest at 12%
per annum, due on December 31, 2018 with a conversion option for the restricted common stock of the Company. The note is convertible
at 50% of the Average Market Price for the 15 previous trading days before the conversion notice date. During the year ended December
31, 2017, the related party assigned $30,000 of the loan to an unrelated third party on the same terms.
During
the nine-month period ended September 30, 2018, the Company made cash payments totaling $17,400, of which $6,067 was applied to
principal and $11,333 to accrued interest. In addition, 24,000,000 shares of common stock were issued as payment of $59,957 in
principal and $43 in accrued interest during the nine-month period ended September 30, 2018. As of September 30, 2018, and December
31, 2017, the balance outstanding on the loan was $5,477 and $71,400, respectively. The balance on the loan has an extended maturity
date of December 31, 2018.
Of
the derivative liability balance of $905,930 at September 30, 2018, $8,083 is attributable to the revolving line of credit.
Note
10 – EQUITY
During
the year ended December 31, 2016, the Company agreed to issue 3,200,000 shares for services at a price between $0.157 to $0.075,
for a total of $256,480. Additionally, the Company agreed to issue 825,000 shares of common stock for marketing services at a
per share price of $0.1497 for a total consideration of $125,000. As of June 30, 2018, these shares are yet to be issued and have
been recorded as common stock issuable.
During
the nine-month period ended September 30, 2018, the Company issued three million shares of preferred stock to the prior president
of the Company valued at the fair market value of $45,000.
During
the nine-month period ended September 30, 2018, the Company issued five million shares of common stock valued at the fair market
value of $12,500 for services.
During
the nine-month period ended September 30, 2018, the Company issued 129,667,221 shares of common stock to effect the conversions
of various convertible note payables amounting to $218,777 and accrued interest of $23,284 on the same and recorded a net loss
on debt settlement of $158,380 for the difference with the agreed conversion price.
During
the nine-month period ended September 30, 2018, the Company issued 24,000,000 shares of common stock to effect the conversions
of related party line of credit and accrued interest on same and recorded a loss on debt settlement of $21,600 for the difference
with the agreed conversion price.
During
the nine-month period ended September 30, 2018, the Company issued 12,640,000 shares of common stock to effect the conversions
of related party loan amounting to $31,600.
During
the nine-month period ended September 30, 2018, several convertible notes matured and were converted and the embedded conversion
feature on the same of $503,356, was reclassed as equity.
During
the nine-month period ended September 30, 2018, the Company reclassified $503,356 from equity to derivative liability for the
embedded feature on the options and warrants attached to convertible loans and related party notes.
During
the nine-month period ended September 30, 2018, the Company amortized $18,750 for the equity offering costs.
During
the nine-month period ended September 30, 2018, the Company issued 6,000,000 shares of common stock for $15,000 cash received
during the year ended December 31, 2017. These shares were recorded as shares to be issued in the prior period.
On
or around February 26, 2018, the Company obtained shareholder consent for the approval of an amendment to the Company’s
certificate of incorporation to increase the authorized shares of common stock, no par value, of the Company from 300,000,000
to 1,000,000,000.
On
July 23, 2018, the Company borrowed $21,000 pursuant to a convertible note agreement bearing an interest rate of 12% per annum
and with a maturity date of April 30, 2019.
On
July 31, 2018, the Company issued 2,000,000 shares of Series B Convertible Preferred Stock to officers and directors for services
rendered, totaling $2,000. In March 2019, these shares were returned to the Company and canceled.
During
the three-month period ended September 30, 2018, the Company issued 36,490,407 shares of common stock to effect the conversion
of $34,301 of convertible notes payable and $812 of accrued interest on the same.
On
August 1, 2018, the Company obtained shareholder consent for the approval of an amendment to the Company’s certificate of
incorporation to increase the authorized shares of common stock, no par value, of the Company from 1,000,000,000 to 3,000,000,000.
As
of September 30, 2018, the Company was negotiating with a note holder who sent the Company a legal notice, dated June 25, 2018,
demanding approximately $404,000, from the note holder for defaulting on the loan. The Company has been incurring a penalty of
$2,000 per day while delinquent in its filings with the SEC, including its 10-Q for the period ending June 30, 2018, which was
not filed on time, and its 10-Q for the period ending September 30, 2018 and 10K for the fiscal year ended December 31, 2018,
which were also not filed on time and/or are in the process of being filed. The Company is working with the lender to reach a
favorable resolution in this matter, though there can be no assurances.
Note
11 – WARRANTS AND OPTIONS
As
of September 30, 2018, there were 1,000,000 options outstanding and exercisable, issued in relation with loans payable due to
related parties. Each whole share purchase option has an exercise price of $0.015 per common share. The options were evaluated
for purposes of classification between liability and equity. The options contain features that would require a liability classification
and are therefore recorded as derivative liability. The Binomial model was used to estimate the fair value of $1,021 for the options.
Following inputs were used for the Binomial model:
Options
|
|
|
1,000,000
|
|
Term
|
|
|
3-6
months
|
|
Exercise
price
|
|
$
|
0.015
|
|
Volatility
|
|
|
285%-326
|
%
|
Risk
Free Interest Rate
|
|
|
1.73%-1.93
|
%
|
Fair
Value
|
|
$
|
1,021
|
|
These
options expired on November 1, 2018.
As
of September 30, 2018, there were 250,000 warrants outstanding and exercisable, issued in relation with a convertible note payable.
Each whole share purchase option has an exercise price of $0.015 per common share. The warrants were evaluated for purposes of
classification between liability and equity. The warrants contain features that would require a liability classification and are
therefore recorded as derivative liability. The Binomial model was used to estimate the fair value of $255 for the Warrants. The
following inputs were used for the Binomial model:
Warrants
|
|
|
250,000
|
|
Term
|
|
|
3
Years
|
|
Exercise
price
|
|
$
|
0.10
|
|
Volatility
|
|
|
285
|
%
|
Risk
Free Interest Rate
|
|
|
2.33
|
%
|
Fair
Value
|
|
$
|
255
|
|
Note
12 – SUBSEQUENT EVENTS
On
October1, 2018, a lender funded $11,500 in a convertible debenture with an interest rate of 12% and a maturity date of July 15,
2019.
On
November 1, 2018, a lender funded $14,700 in a convertible debenture with an interest rate of 12% and a maturity date of April
30, 2019.
During
the three months ended December 31, 2018, lenders converted $64,708.66 principal and $4,742.75 interest into 217,646,840 common
shares.
During
the three months ended March 31, 2019, lenders converted $8,085.43 principal and $8,548.36 interest into 93,410,190 common shares.
On
April 10, 2019, a lender converted $13,272.60 principal into 66,363,000 common shares.
On
February 26, 2019, Farber, Hass, Hurley LLP (“FHH”) announced that the auditor-client relationship with 2050 Motors,
Inc. had ceased. There were no disagreements about accounting issues, financial statements or related matters. FHH is cooperating
with the Company to affirm prior period audited statements.
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 Schaefers 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 will be issued 100 million common stock purchase warrants with a $0.001 exercise
price and a three-year expiration. If the Company’s common stock closes over $0.01 for 10 consecutive trading sessions,
Mr. Grover shall be issued an additional 100 million common stock purchase warrants with a $0.001 strike price and a three-year
expiration.
On
March 6, 2019, our Board of Directors approved, and we filed a Certificate of Determination for with the Secretary of State of
California, a new class of Series C Preferred Shares with a total of one million such shares authorized. Each share converts into
one common share, has 10,000 votes on every corporate matter requiring a shareholder vote, has a par value of $0.0001, and pays
an annual dividend at the option of the Company of $0.01. On March 6, 2019, the Company issued one million Series C Preferred
Shares to our CEO, Vikram Grover, as consideration for the change of control of the Company.
On
March 7, 2019, our Board of Directors appointed Boyle CPA, LLC of Bayville, New Jersey as our independent registered public accounting
firm, to audit our financial statements for the years ended December 31, 2018 and 2019.
On
March 8, 2019, we executed a $28,000 convertible promissory note with a third-party lender generating net funding to us of $25,000
after expenses. The note bears interest at a rate of 12% per annum and matures on January 15, 2020.
On
March 10, 2019, Aldo Baiocchi joined the Company’s Advisory Board to guide the Company’s growth of electric vehicle
(EV) ventures. As compensation, Aldo Baiocchi was issued 10 million incentive common stock purchase warrants with a strike price
of $0.01 and three-year expiration.
On
March 10, 2019, Ted Flomenhaft joined the Company’s Advisory Board to guide the Company’s growth of technology and
communications ventures. As compensation, Ted Flomenhaft was issued 10 million incentive common stock purchase warrants with a
strike price of $0.01 and three-year expiration.
On
March 19, 2019, we engaged EDGE FiberNet, Inc. for consulting, support and back office services to assist us in development of
our planned businesses in communications, electric vehicles, lighting, including power over Ethernet and LED, and other mediums.
As part of the Agreement, we received an option on 4,000 square feet of office/retail space at EDGE FiberNet’s headquarters
in Industry City, Brooklyn, New York. As compensation, we issued EDGE FiberNet 10 million common stock purchase warrants with
a strike price of $.005 and a three-year expiration.
On
April 12, 2019, Michael Shevack joined the Company’s Advisory Board to guide the formation of an Environmental, Social and
Governance (“ESG”) Division. As compensation, Shevack was issued 10 million incentive common stock purchase warrants
with a strike price of $0.01 and three-year expiration.
On
March 27, 2019, we issued a demand letter to BKS Cambria, LLC (“BKS”) and United Biorefineries, Inc. (“United”)
to return 84,770,115 and 53,347,701 of our common stock shares in certificate form, respectively, that were invalidly issued by
our prior management to the corporate entities they controlled. BKS and United failed to respond to our demand letter by the demand
date and we have not received the foregoing share amounts in certificate form from either BKS or United. To this date, BKS has
still not responded to our demand letter. UBC has electronically responded, denied any wrongdoing, and refuses to return the certificates.
These shares were issued from conversions of insiders’ affiliate debt and attached penalty interest and penalties into common
stock at a floating rate discount to market prices. We are evaluating our legal remedies regarding what we believe could be self-dealing,
breaches of fiduciary trust and potential disclosure related violations by our prior management
As
part of its management transition plan, on or around March 6, 2019, the Company agreed to transfer to prior Management eighty
(80) percent ownership of its Nevada subsidiary, 2050 Motors (“2050 Private” or “TFPC”) in exchange for
a corporate note from TFPC in the amount of fifty thousand dollars at 8% interest per annum to be paid out of net profits. 2050
Motors (2050 Public) agreed to appoint William Fowler as President of 2050 Private to raise operating capital for expenses to
negotiate terms and conditions to maintain Exclusive License with Aoxin Motors. Subsequent to the change of control and based
on due diligence on TFPM and the status of the Aoxin Motors relationship, on or around April 2, 2019, we terminated the transaction
as we deemed that it was not in the best interests of shareholders. We continue to demand information regarding TFPC from former
management but have received unresponsive and unsatisfactory responses to our inquiries.
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/Sole Director.
On
April 7, 2019, our Board of Directors approved the creation of a new class of Series B Preferred Shares. A total of six million
such shares were authorized. Each share converts into 1,000 common shares, votes on an as converted basis, has a par value of
$0.001, and pays a cumulative annual dividend in cash or in kind of $0.01. As of April 7, 2019, none of the shares had been issued.
On
April 8, 2019, we amended the terms of our existing Series A Preferred stock by changing the par value from nil to $0.0001 and
establishing a $0.01 per share annual dividend to be approved by our Board of Directors each year. Each share remains convertible
into one common share and has 50 votes on corporate matters. As part of the management transition plan announced in March 2019,
two million Series A Preferred Shares were transferred from former owners to our current CEO, Vikram Grover. A total of three
million Series A Preferred Shares are authorized, all of which are currently issued and outstanding.
On
April 18, 2019, we agreed to purchase a 50% interest in CLEC Networks, Inc., a Delaware corporation, from EDGE FiberNet Inc.,
a Delaware corporation. As consideration, we agreed to issue EDGE FiberNet 100,000 newly-created Series B Preferred Shares convertible
into 100 million common shares of our Company. Additionally, we made a funding commitment of $150,000 over seven months to CLEC
Networks, to be renamed 2050Tel Corp. or similar such corporate name. The transaction was originally expected to close by April
30, 2019, but the closing deadline was extended to May 17, 2019 on April 30, 2019 to allow both parties to complete corporate
actions, including requisite state approvals of share issuances and other.
On
April 22, 2019, we executed a letter of intent (LOI) to invest in and partner with ERide Club Corp. (ECC), a Company developing
an Internet-based cloud platform to enable rentals and related services for the electric vehicle (EV) market, including automobiles,
eBikes and mobility products. Upon delivery of a working beta system vetted by businesses, consumers and third-party testing no
later than August 1, 2019, we will issue ECC 100,000 Series B Preferred shares convertible into 100 million common shares in return
for 10% of the equity of ECC, with a right of participation on future financings by ECC through year-end 2020. Additionally, we
will become a preferred marketing partner of ECC in the United States and provide ECC with a three-year option to perform a spin-out
IPO to our shareholders. ECC expects to launch a first-generation version of the platform on May 15, 2019, after which time we
will vet the system with our staff and advisors.