NOTES
TO 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 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.” Today, our principal business objective is to achieve long-term growth through investments in minority and
majority-owned businesses (see subsequent events).
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. In 2019, management dissolved
the Company’s Nevada subsidiary as the Aoxin agreement and related EV strategies had failed. Meanwhile, the Company incubated
an Internet business targeting the Cannabis market @ www.kanab.club and pursued various ventures in the Internet, communications,
and ESG markets. See SUBSEQUENT EVENTS for further information on corporate developments post-2019.
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 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 was to 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 closed over $0.01 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 three-year
expiration. Subsequently, Mr. Grover 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 dissolved our 2050 Motors, Inc. Nevada subsidiary and terminated all discussions and contractual relationships
with Aoxin Automobile.
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 subsidiary, 2050 Motors, Inc. All material
intercompany balances and transactions have been eliminated in consolidation.
Cash
Cash
consists of deposits in one large national bank. On December 31, 2019 and December 31, 2018, respectively, the Company had $63
and $1 in cash in the United States. The Company has not experienced any losses in such accounts and believes it is not exposed
to any risks on its cash in bank accounts.
Fair
Value of Financial Instruments
For
certain of the Company’s financial instruments, including cash accounts payable, accrued liabilities, short-term debt, and
derivative liability, the carrying amounts approximate their fair values due to their short maturities. We adopted ASC Topic 820,
“Fair Value Measurements and Disclosures,”, which requires disclosure of the fair value of financial instruments held
by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying
amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a
reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their
expected realization and their current market rate of interest. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs
(level 3 measurements). The three levels of valuation hierarchy are defined as follows:
Level
1 input to the valuation methodology are quoted prices for identical assets or liabilities in active markets. The Company’s
investment in Mobicard Inc., see Note 4, is actively traded on the pink sheets.
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level
3 inputs to the valuation methodology are unobservable in which little or no market data exists, therefore requiring an entity
to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or
significant value drivers are unobservable.
The
Company analyzes 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 as a result of the variable conversion price, which in
accordance with U.S. GAAP, prevents them from being considered as indexed to our stock and qualified for an exception to derivative
accounting.
We
recognize derivative instruments as either assets or liabilities on the accompanying balance sheets at fair value. We record changes
in the fair value of the derivatives in the accompanying statement of operations.
Assets
and liabilities measured at fair value are as follows as of December 31, 2019:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
$
|
189,000
|
|
|
|
189,000
|
|
|
|
-
|
|
|
|
-
|
|
Total assets measured at fair value
|
|
$
|
189,000
|
|
|
|
189,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
893,171
|
|
|
|
-
|
|
|
|
-
|
|
|
|
893,171
|
|
Total liabilities measured at fair value
|
|
$
|
893,171
|
|
|
|
-
|
|
|
|
-
|
|
|
|
893,171
|
|
Assets
and liabilities measured at fair value are as follows as of December 31, 2018:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
876,058
|
|
|
|
-
|
|
|
|
-
|
|
|
|
876,058
|
|
Total liabilities measured at fair value
|
|
$
|
876,058
|
|
|
|
-
|
|
|
|
-
|
|
|
|
876,258
|
|
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
|
|
|
400,078
|
|
Loss on conversions
|
|
|
(710,076
|
)
|
Gain on change in derivative liabilities
|
|
|
155,924
|
|
Balance as of December 31, 2018
|
|
$
|
876,058
|
|
|
|
|
|
|
Balance as of December 31, 2018
|
|
$
|
876,058
|
|
Fair value of derivative liabilities issued
|
|
|
134,115
|
|
Loss on change in derivative liabilities
|
|
|
69,576
|
|
Reclassify to equity upon payoff or conversion
|
|
|
(186,578
|
)
|
Balance as of December 31, 2019
|
|
$
|
893,171
|
|
Earnings
Per Share (EPS)
Basic
EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding
for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock
options had been issued and if the additional common shares were dilutive. Diluted EPS assumes that all dilutive convertible shares
and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding
options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options
and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds
obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method,
convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time
of issuance, if later). During the years ended December 31, 2019 and December 31, 2018, the Company incurred losses. Therefore,
the effect of any common stock equivalents is anti-dilutive during those periods.
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 year ended December 31, 2019 and 2018, 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.
Income
Taxes
The
Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
740 provides accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain.
When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions
that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50
percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax
benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing
authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties
are classified in selling, general and administrative expenses in the statements of income.
On
December 31, 2019 and December 31, 2018, the Company had not taken any significant uncertain tax positions on its tax returns
for the period ended December 31, 2019 and prior years or in computing its tax provisions for any years. Prior management considered
its tax positions and believed that all of the positions taken by the Company in its Federal and State tax returns were more likely
than not to be sustained upon examination. The Company is subject to examination by U.S. Federal and State tax authorities from
inception to present, generally for three years after they are filed. New management, which took control of the Company on March
5, 2019, is currently evaluating prior management’s decision to not file federal tax returns and plans on filing past returns,
and related 10-99 filings for compensation paid to prior management, employees, consultants, contractors and affiliates. The Company
does not believe it has a material tax liability due to its operating losses in these periods.
Concentration
of Credit Risk
Cash
is mainly maintained by one highly qualified institution in the United States. At various times, such amounts are 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.
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.
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 $6,009,123 as of December 31, 2019. The Company also had negative working capital of $1,430,863 on December 31, 2019, and had
operating losses of $195,905 and $217,236 for the years ended December 31, 2019 and 2018, respectively. To date, these losses
and deficiencies have been financed principally through the issuance of common stock, loans from related parties and from third
parties.
In
view of the matters described, there is substantial doubt as to the Company’s ability to continue as a going concern without
a significant infusion of capital. We anticipate that we will have to raise additional capital to fund operations over the next
12 months. To the extent that we are required to raise additional funds to acquire properties, and to cover costs of operations,
we intend to do so through additional offerings of debt or equity securities. There are no commitments or arrangements for other
offerings in place, no guaranties that any such financings would be forthcoming, or as to the terms of any such financings. Any
future financing may involve substantial dilution to existing investors.
Note
4 - INVESTMENTS
During
the year ended December 31, 2019, the Company issued 400,000 share of preferred class B stock in exchange for 210,000,000 shares
of Mobicard Inc. The shares were valued at the market price of $0.0023 per share, or $483,000, at the acquisition date. The shares
are currently valued at the market price of $0.0009 per share on December 31, 2019 for a total investment of $189,000, resulting
in a loss of $294,000.
During
the year ended December 31, 2019, the Company received 1,000,000 shares of Kanab Corp. for consulting services provided by the
Company’s CEO, Vikram Grover. The shares were valued at $0.0001 per share.
Note
5 – VEHICLE DEPOSITS
Based
on recent conversations with Aoxin and former management, we took an impairment charge for the vehicle deposit of $24,405.00 and
wrote this asset down to $0 in the fourth quarter of 2018. Further, during the year ended December 31, 2019, we terminated all
discussions and agreements with Aoxin Motors and exited the market for importation of electric vehicles from China.
Note
6 – LICENSE AGREEMENT
In
2012 and 2013, the Company made a total payment of $50,000 and signed an exclusive license agreement with Aoxin to import, assemble
and manufacture the e-Go. The cost of this license agreement was recognized as a long-term asset and was evaluated, by management,
for impairment losses at each reporting period. The Company wrote-off the value of this license agreement during the three-month
period ended March 31, 2018 due to Aoxin’s inability to produce the e-Go and ship vehicles and auto parts to the United
States. During the year ended December 31, 2019, we terminated all discussions with Aoxin regarding importation of electric automobiles
and related parts and equipment from China into the United States.
Note
7 – LOANS PAYABLE DUE TO RELATED PARTIES
As
of December 31, 2019, all related party loans and associated interest and penalties were converted into common equity. Current
management has demanded documentation of the providence of these loans. Management is reviewing legal options for recovery of
these shares and has placed a stop action order on these shares with the Company’s transfer agent. On December 31, 2019
there were no outstanding loans to related parties
During
the year ended December 31, 2014, the Company entered into two loans for a total amount of $100,000 due to a shareholder whose
control party, William Fowler, became our CEO and a Director during 2018. The loans charged 12% interest and matured on February
28, 2015 and March 30, 2015, respectively. Subsequently, the loans were combined, and the maturity date was extended to April
1, 2018. The outstanding balance of the loans as of December 31, 2019 and December 31, 2018 was $0 and $0, respectively. During
the year ended December 31, 2018, the Company recorded $8,568 of interest expense for these loans. The balance of the loans, which
included penalty interest, was paid in cash and/or converted into 53,347,701 common shares during the twelve-month period ended
December 31, 2018. Current management has been unable to confirm the details of these loans and accordingly has frozen the shares
taken for conversion of the loans during the fourth quarter of 2018.
On
July 1, 2017, the Company entered into an unsecured loan payable agreement with a related party for $14,100, due on September
15, 2017. The Company granted the related party an option to purchase up to 1,000,000 shares of common stock at an exercise price
of $0.015 per share. The Company valued the options using the Black Scholes options pricing model. The fair market value of the
options was $26,746. The value was restricted to the face value of the note and hence, $14,100 was recorded as a debt discount
which was amortized over the term of the loan. The Company also agreed to pay $1,500 as an interest on the loan. On September
27, 2017, the Company entered into a note amendment, whereby, the term of the note was extended until November 1, 2017, in exchange
for an additional $1,500 finance fee and $1,500 late fee. The Company recorded the same as interest expense in the accompanying
financials. During the year ended December 31, 2017, the Company amortized the debt discount of $14,100. During the year ended
December 31, 2017, the Company recorded $1,500 of interest expense for amortization of and another $1,500 of interest expense
for the excess derivative. During the year ended December 31, 2018, the Company recorded $14,259 of interest expense for a loan
with a related party. As of December 31, 2017, the loan was in default and the outstanding balance of the loan, as of December
31, 2017 was $17,100. The Company accrued a penalty of $1,750 plus $100 per day of default, aggregating to $7,750 in the accompanying
financial statements for 2018.
On
September 27, 2017, the Company entered into another unsecured loan payable agreement with the same related party for $17,500,
due on November 1, 2017. The lender charged $1,750 as funding fee and $1,650 as processing fee for the loan, which were recorded
as debt discount, with net loan proceeds of $14,100. The Company also granted the related party an option to purchase up to 1,000,000
shares of common stock at an exercise price of $0.015 per share. The Company valued the options using the Black Scholes options
pricing model. The fair market value of the options was $22,945. The value was restricted to the net proceeds of the note and
hence, $14,100 was recorded as a debt discount which is being amortized over the term of the loan. During the year ended December
31, 2017, the Company amortized the debt discount of $14,100 and the finance fee of $3,400. As of December 31, 2017, the loan
was in default and the outstanding balance of the loan was $17,500. The Company accrued a penalty of $1,750 plus $100 per day
of default, aggregating to $7,750 in the accompanying financial statements. During the twelve-month period ended December 31,
2018, the balance of this loan and associated interest and penalties was converted into 84,770,115 shares of common stock, eliminating
the loan and accrued interest from the Company’s balance sheet.
Current
management has been unable to confirm the details of these last two loans and accordingly has issued a stop action notice to the
Company’s transfer agent freezing sales and transfers of the shares taken for conversion of the loans during the fourth
quarter of 2018.
NOTE
8 - CONVERTIBLE NOTE PAYABLES
The
Company had convertible note payables with several 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 December 31, 2019, the Company had the following
third-party convertible notes outstanding:
|
|
Lender
|
|
Origination
|
|
Maturity
|
|
Amount
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note #1*
|
|
Auctus
|
|
1/6/17
|
|
10/6/17
|
|
$
|
60,522
|
|
|
|
24.0
|
%
|
Note #2*
|
|
Crown Bridge
|
|
9/15/17
|
|
9/15/18
|
|
|
3,240
|
|
|
|
15.0
|
%
|
Note #5*
|
|
Jabro 1
|
|
7/23/18
|
|
4/30/19
|
|
|
21,000
|
|
|
|
22.0
|
%
|
Note #6*
|
|
Jabro 2
|
|
10/01/18
|
|
7/15/19
|
|
|
11,500
|
|
|
|
22.0
|
%
|
Note #7*
|
|
PowerUp 9
|
|
11/01/18
|
|
8/30/19
|
|
|
14,700
|
|
|
|
22.0
|
%
|
Note #8*
|
|
PowerUp 10
|
|
3/08/19
|
|
01/15/20
|
|
|
28,000
|
|
|
|
12.0
|
%
|
Note #9*
|
|
Other
|
|
3/16/17
|
|
4/1/18
|
|
|
10,000
|
|
|
|
12.0
|
%
|
Note #10*
|
|
Tri-Bridge
|
|
3/15/19
|
|
9/15/19
|
|
|
2,286
|
|
|
|
10.0
|
%
|
Note #11*
|
|
PowerUp 11
|
|
7/9/19
|
|
4/30/20
|
|
|
35,000
|
|
|
|
12.0
|
%
|
Note #12*
|
|
GS Capital
|
|
9/6/19
|
|
9/6/20
|
|
|
28,900
|
|
|
|
12.0
|
%
|
Note #13*
|
|
GS Capital
|
|
11/21/19
|
|
11/21/20
|
|
|
18,000
|
|
|
|
12.0
|
%
|
Note #14*
|
|
PowerUp
|
|
11/21/19
|
|
11/21/20
|
|
|
18,000
|
|
|
|
12.0
|
%
|
Total
|
|
|
|
|
|
|
|
$
|
251,148
|
|
|
|
|
|
less discount
|
|
|
|
|
|
|
|
|
(63,350
|
)
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
$
|
187,798
|
|
|
|
|
|
*Note
is currently in default.
Note
#1, issued on January 6, 2017, is in default and under the terms of the convertible promissory note, the Company was 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 $60,522 as of December 31, 2019, there were additional penalties and damages sought by the lender,
which filed a civil lawsuit against the Company. The litigation has subsequently been settled and the note is no longer in
default as of the date of filing of this report.
During
the year ended December 31, 2019, third-party lenders converted $231,444 of principal and interest into 1,153,211,664 shares of
common stock.
The
variables used for the Black-Scholes model are as listed below:
|
|
December
31, 2018
|
|
December
31, 2019
|
|
|
|
|
|
|
●
|
Volatility:
253% - 286%
|
|
Volatility:
191% - 455%
|
|
|
|
|
|
|
●
|
Risk
free rate of return: 1.24%- 1.53%
|
|
Risk
free rate of return: 1.93% - 1.99%
|
|
|
|
|
|
|
●
|
Expected
term: 1-3 years
|
|
Expected
term: 1-3 years
|
The
Company amortized a debt discount of $100,299 and $158,635 respectively, during the years ended December 31, 2019 and 2018, respectively.
On
January 24, 2018, the Company entered into an unsecured convertible note agreement with a third party for $35,000. The Company
received $35,000 net of financing fees.
On
February 22, 2018, the Company entered into an unsecured convertible note agreement with a third party for $43,000. The Company
received $43,000 net of financing fees.
On
April 11, 2018, the Company entered into an unsecured convertible note agreement with a third party for $15,000. The Company received
$15,000 net of financing fees.
On
April 27, 2018, the Company entered into an unsecured convertible note agreement with a third party for $21,500. The Company received
$21,500 net of financing fees.
On
July 23, 2018, the Company entered into an unsecured convertible note agreement with a third party for $21,000. The Company received
$21,000 net of financing fees.
On
October 1, 2018, the Company entered into an unsecured convertible note agreement with a third party for $11,500. The Company
received $11,500 net of financing fees.
On
November 1, 2018, the Company entered into an unsecured convertible note agreement with a third party for $14,700. The Company
received $14,700 net of financing fees.
On
March 8, 2019, a third-party loaned the Company $28,000.00 in a 12% debenture that matures on January 15, 2020. The transaction
netted the Company $25,000.00 after legal fees and due diligence expenses.
On
May 13, 2019, the Company borrowed $12,500.00 pursuant to a convertible note agreement bearing an interest rate of 12% per annum
and with a maturity date of September 15, 2019.
On
July 9, 2019, a third-party lender funded the Company $35,000.00 in the form of a 12% convertible debenture that matures April
30, 2020. The transaction netted the Company $32,000.00 after legal fees and due diligence expenses.
On
September 6, 2019, a third-party lender funded the Company $35,000.00 in the form of a 12% convertible debenture that matures
September 6, 2020. The transaction netted the Company $30,500.00 after legal fees and due diligence expenses
On
November 12, 2019, a third-party lender funded the Company $18,000.00 in a 10% convertible debenture due November 12, 2020. The
transaction netted the Company $15,500.00 after original issue discount (OID) of $2,500.00.
On
November 14, 2019, a third-party lender funded the Company $18,000.00 in a 10% convertible debenture due November 14, 2020. The
transaction netted the Company $12,500.00 after original issue discount (OID) of $3,000.00 and legal fees of $2,500.00.
Note
9 – 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 $0 for the year ended December 31, 2019 and 2018, respectively. Rent expenses amounted to $0 and $13,400
for the year ended December 31, 2019 and 2018, 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. As part of the license agreement, the Company was committed to pay expenses related to any required airbag
testing procedures.
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. Given these circumstances, during the three-month
period ended March 31, 2018, we wrote down the value of the Aoxin license to $0 and associated vehicle deposits were fully impaired
during the fourth quarter of 2018. During the year ended December 31, 2019, based on failure to perform including a lack of a
license to manufacture and export electric vehicles under our Agreement with them, we terminated all discussions and agreements
with Aoxin Motors.
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.
A
third-party lender, Auctus Fund, LLC, served the Company notice of a civil lawsuit on November 1, 2019 seeking principal, interest
and penalties of $283,000.00 related to a loan provided to the Company on or around January 6, 2017. On November 25, 2019, the
Company reached a Settlement Agreement and Mutual General Release with Auctus Fund, LLC. As part of the agreement, the Company
agreed that the settlement value of the note and accrued interest was $60,522.32 and the Company would issue the following shares
to settle the note and accrued interest:
●
|
On
or before December 5, 2019- 300,000,000 Settlement Shares; plus
|
●
|
On
or before January 6, 2020 - 300,000,000 Settlement Shares: plus
|
●
|
On
or before February 5, 2020 - 300,000,000 Settlement Shares: plus
|
●
|
On
or before March 5, 2020 - 300,000,000 Settlement Shares; plus
|
●
|
On
or before April 6, 2020 - 300,000,000 Settlement Shares.
|
The
Company agreed to irrevocably authorize and reserve a sufficient amount of Settlement Shares of the Company’s common stock
pursuant to the reserve requirements of the Note (with an initial amount of at least One Billion - Five Hundred Million (1,500,000,000)
Shares of the publicly tradeable ETFM Common Stock for delivery and issuance to the Auctus Fund, LLC. For year-end 2019, the Company
accrued a liability of $260,000, representing the fair value of the settlement shares at the date of the settlement agreement.
The Settlement Agreement was subsequently amended in 2020 (see SUBSEQUENT EVENTS) and all principal and interest has been retired
as of the date of filing of this report.
Note
10 – REVOLVING LINE OF CREDIT- RELATED PARTY
On
February 12, 2016, the Company signed a twelve-month revolving line of credit agreement with a related party. The line amount
was $100,000 and carried interest at 12% per annum. In January 2017, the Company signed an amendment to extend the due date of
the loan to June 30, 2018 for a conversion option for the restricted common stock of the Company. The note carried interest at
the rate of 12% per annum and was convertible at any time starting from January 18, 2017 and ending on the later of the maturity
date or the date of payment. The note was convertible at 50% of the Average Market Price for the 15 previous trading days before
the conversion notice date. The derivative liability on the note was calculated, using the Binomial model, to be $227,760, of
which $101,400 was recorded as a debt discount and the balance $126,360 was recorded as an interest expense, at inception. During
the year ended December 31, 2018, the balance on the revolving line of credit and related interest were converted to 53,347,701
shares of common stock.
The
derivative liability was recalculated on December 31, 2019 and December 31, 2018 as $0 and $0, respectively, on the balance of
the related party loan and the difference in the value recorded as a change in derivative liability in the income statement. As
of December 31, 2019, the balance outstanding on the related party loans was $0. Management has been unable to confirm the details
of these loans and accordingly has frozen the shares taken for conversion of the loans.
Note
11 – INCOME TAXES
The
Company did not file its federal tax returns for fiscal years from 2012 through 2019. Management at year-end 2019 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 the net deferred tax assets
on December 31, 2019 and December 31, 2018 will not be fully realizable. Accordingly, management has recorded a full valuation
allowance against its net deferred tax assets on December 31, 2019 and December 31, 2018. On December 31, 2019 and December 31,
2018, the Company projected it has potential net operating loss carryforwards of approximately $6,000,000 and $6,000,000, respectively.
Deferred
tax assets consist of the following components:
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Net loss carryforward
|
|
$
|
1,265,000
|
|
|
$
|
1,252,000
|
|
Valuation allowance
|
|
|
(1,265,000
|
)
|
|
|
(1,252,000
|
)
|
Total deferred tax assets
|
|
$
|
|
|
|
$
|
-
|
|
Note
12 – WARRANTS AND OPTIONS
As
of December 31, 2019, the Company has thirty million warrants with an exercise price of $0.01 and a three-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 three-year expiration to EDGE FiberNet, Inc.
as compensation for strategic consulting. Further, our CEO, Vikram Grover, was to be issued 100 million warrants with a strike
price of $0.001 upon bringing the Company current with its SEC reporting requirements, with an additional 100 million warrants
with a strike price of $0.001 due upon our common stock closing at or above $0.01 for ten consecutive trading sessions. On July
22, 2019, the Company was brought current with regard to its SEC reporting requirements, and as a result, the initial 100 million
warrants were due to be issued to Vikram Grover. To expedite auditor review, Vikram Grover forfeited his right to receive the
100 million warrants due to him for bringing the company current with its SEC filings. During the year ended December 31, 2019,
the Company recognized $16,803 in expense related to these warrants. On December 31, 2019, a total of 40,000,000 warrants were
outstanding with a weighted average life of 2.28 years and an intrinsic value of zero.
Note
13 – EQUITY
During
the year ended December 31, 2018, the Company increased its authorized shares two times, first from 300 million to one billion,
and later from one billion to three billion. During the year ended December 31, 2019, the Company increased the authorized shares
for common stock of the Company from three billion to then (10) billion and for preferred shares from ten (10) million to one
hundred (100) million.
Between
January 1, 2019 and December 31, 2019, the Company issued to third-party lenders a total of 1,242,231,661 shares of common stock
pursuant to conversions of $255,334 debt.
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. Subsequent to the end of the three months ended March 30, 2019, the
Company issued one million (1,000,000) Series C Preferred Shares to our CEO, Vikram Grover, as consideration for the change of
control of the Company. Effective November 6, 2020, the Company increased the authorized Series C Preferred Shares to two (2)
million from one (1) million and increased the voting rights of the Series C Preferred shares to 100,000 for every one (1) share
from 10,000 for every one (1) share.
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 may have been invalidly
issued by 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. UBC has electronically
responded, denied any wrongdoing, and refuses to return the certificates. We are evaluating our legal remedies regarding these
share issuances.
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. Effective November 6, 2020, the Company increased the
authorized number of Series B Preferred Shares to twenty million from six million to facilitate mergers and acquisitions.
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. At the time, each share was
convertible into one common share and had 50 votes on corporate matters. As part of the management transition plan announced in
March 2019, two million of the Series A Preferred Shares were transferred from former management to our current CEO, Vikram Grover.
At the time, a total of three million Series A Preferred Shares were authorized, all of which were and are currently issued and
outstanding. The financial statements were retroactively adjusted to give effect to this change in par value.
On
May 5, 2019, 2050 Motors, Inc. executed a Securities Purchase Agreement with our CEO, Vikram Grover, for an investment in the
Company of $483,000 in the form of 210,000,000 free-trading common shares of Peer to Peer Network aka Mobicard Inc. The transaction
closed on May 15, 2019. As consideration, the Company issued the investor 400,000 newly created 1% Cumulative Series B Preferred
Shares, each of which bears a RESTRICTED CONTROL STOCK legend.
On
May 14, 2019, our Board of Directors approved the dissolution of our wholly-owned subsidiary, 2050 Motors, Inc., a Nevada corporation
doing business under the same name as our publicly traded company, 2050 Motors, Inc., a California corporation. Additionally,
our Board of Directors approved the termination of any and all discussions and prior agreements with Aoxin Motors regarding the
importation of electric vehicles to be made by Aoxin Motors in China into the United States. Our termination was driven by Aoxin
Motors’ failure to obtain the necessary license(s) to manufacture e-GO electric vehicles, which have been under development
since 2012. Accordingly, on May 14, 2019, we filed paperwork with the Secretary of State of Nevada to dissolve our wholly owned
subsidiary, 2050 Motors, Inc., a Nevada corporation, and that dissolution went effective on or around May 17, 2019.
On
May 15, 2019, based on due diligence and research by management and the Company’s advisors, the Board of Directors of 2050
Motors, Inc., a California corporation, approved stop action orders on 162,846,149 common shares held by former management, employees,
affiliates and representatives of the Company. Accordingly, management has directed the Company’s transfer agent to prohibit
the transfer or sale of any shares associated with their certificates. Pending investigation of the providence of these shares
and proof of consideration for said shares, these shares will remain frozen indefinitely and subject to the Company’s powers
of enforcement and the rules of law.
On
November 18, 2019, a third-party lender converted $2,170.00 of principal and $500.00 of fees into 89,000,000 shares of common
stock.
On
December 6, 2019, a third-party lender converted $2,350.00 principal and $1,290.00 interest of a convertible debenture into 72,800,000
common shares.
SUBSEQUENT
EVENTS
On
January 8, 2020, a third-party lender converted $5,300.00 principal of a convertible debenture into 106,000,000 common shares.
On
February 3, 2020, a third-party lender converted $5,600.00 principal of a convertible debenture into 112,000,000 common shares.
On
February 5, 2020, a third-party lender converted $4,682.00 principal of a convertible debenture into 93,640,000 common shares.
On
February 18, 2020, a third-party lender converted $7,000.00 principal of a convertible debenture into 116,666,667 common shares.
On
August 26, 2020, the Company issued its, CEO, Vikram Grover, 125,000 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 128,144,181
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 115,000,000
common shares.
On
September 3, 2020, the Company issued its CEO, Vikram Grover, 1,370,065 Restricted Series B Preferred shares for accrued compensation
of $137,065.00.
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 112,318,333 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 611,005,229
common shares. As a result, the debenture and warrants were retired.
On
September 30, 2020, a third-party lender converted $20,229.66 principal and $6,743.22 interest of a convertible debenture into
179,819,200 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
188,792,200 common shares.
On
October 9, 2020, the Company issued its CEO, Vikram Grover, 93,750 Restricted Series B Preferred shares for accrued compensation
of $37,500.00.
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 202,159,667 common shares.
From
January 1, 2020 through October 23, 2020, the Company issued 275,000 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 – 264,680,377 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 – 264,680,378 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 – 264,680,378 Settlement
Shares, in whole or in part, as determined by the third party lender, in its discretion. Remaining shares, which have already
been reserved, will settle the balance of the November 2019 $283,000.00 lawsuit brought by the third-party lender against the
Company. The lender has subsequently executed two conversions of principal, interest and penalties into 435,086,069 common shares
(below).
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 212,247,469 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 222,838,600 common
shares.
Business
Development and Related
On
March 10, 2019, Aldo Baiocchi joined the Company’s Advisory Board to guide the Company’s growth of electric vehicle
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 December 3, 2020, Aldo Baiocchi resigned from the Company’s Advisory Board.
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 or around March 31, 2020, Mr. Flomenhaft resigned from the Company’s
Advisory Board.
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 ten (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 ten (10) million incentive common stock purchase
warrants with a strike price of $0.01 and three-year expiration. On August 22, 2019, Mr. Shevack resigned from the Company’s
Advisory Board and his warrants were canceled.
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 continued to demand information regarding TFPC from former
management but have received unresponsive and unsatisfactory responses to our inquiries.
On
May 2, 2019, we engaged Markup Designs Pvt. Ltd. (“MDPL”; https://www.markupdesigns.com), a global Web and
mobile application development company, to design and build a social network to be named “KANAB.CLUB” (www.kanab.club)
targeting the global cannabis market. On May 13, 2019, we completed an initial payment to MDPL, mandating them to deploy a home
page with launch information and sign-up capabilities for customers and to complete a working Web platform during summer 2019.
After coding industry-standard social media functionality, we intend to add an online marketplace, 420 dating services, discussion
forums, rewards programs/points including potential utility crypto coins, differentiated advertising and navigation capabilities
(www.linkstorm.net), and Android/iOS mobile applications to the platform.
On
May 9, 2019, the Company appointed Charles Szoradi to its Advisory Board. Mr. Szoradi was issued ten (10) million common stock
purchase warrants with a $0.01 strike price and three-year expiration, which were subsequently canceled bur reinstated as part
of the Purge Virus, LLC acquisition at a strike price of $0.001. As part of the October 19, 2020 acquisition of 100% of the member
interests of Purge Virus, LLC from Mr. Szoradi, the Company will appoint him to the Board of Directors upon retention of Directors
and Officers insurance (D&O).
On
May 14, 2019, to eliminate any confusion regarding the future direction of the Company and to provide transparency and clarity
for our investors, our Board of Directors approved the dissolution of our wholly owned subsidiary, 2050 Motors, Inc., a Nevada
corporation doing business under the same name as our publicly traded company at the time, 2050 Motors, Inc., a California corporation.
Additionally, our Board of Directors approved the termination of any and all discussions and prior agreements with Aoxin Motors
regarding the importation of electric vehicles to be made by Aoxin Motors in China into the United States. Our termination was
driven by Aoxin Motors’ failure to obtain the necessary license(s) to manufacture e-GO electric vehicles, which have been
under development since 2012. Accordingly, on May 14, 2019, we filed paperwork with the Secretary of State of Nevada to dissolve
our wholly owned subsidiary, 2050 Motors, Inc., a Nevada corporation, and that dissolution went effective on or around May 17,
2019.
On
October 12, 2019, we appointed Dr. Wayman Baker, PhD, a scientist previously employed by NASA, to the Advisory Board. As a result,
we issued Dr. Baker, ten (10) million common stock purchase warrants with a strike price of $0.01 and a three-year expiration,
whose strike price was subsequently amended to $0.001 in 2020.
On
October 2, 2020, we issued John Kelly, owner of PPE Source International LLC (PPESI), a provider of PPE to small, medium and large
businesses, institutions and government customers, 100,000 Series B Preferred Shares for a 180-day exclusive option to purchase
his 100% member interests in PPESI.
On
October 19, 2020, we closed the acquisition of 100% of the member interests of Purge Virus, LLC from Charles Szoradi for consideration
of two million (2,000,000) Series B Preferred Shares. The purchase maintains PV as a 100% owned subsidiary of FOMO CORP., includes
cross-selling relationships with Mr. Szoradi’s 100% owned LED company Independence LED and 33% owned energy management software
company Energy Intelligence Center (EIC), and JV partner Company PPE Source International LLC.
On
December 6, 2020, we appointed Paul Benis, a 30-year veteran of the industrial HVAC market, technology executive and owner of
PVBG Inc, to the Advisory Board. As part of the appointment, we issued Benis ten (10) million common stock purchase warrants with
a strike price of $0.001 and a three-year expiration.
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 into 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.
Warrants
On
November 3, 2020, the Company reduced the strike price on 10,000,000 warrants owned by Dr. Wayman Baker, PhD, from $0.01 per share
to $0.001 per share.
On
December 2, 2020, the Company reduced the strike price on 10,000,000 warrants owned by Aldo Baiocchi, from $0.01 per share to
$0.001 per share.