NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – BASIS OF PRESENTATION AND ORGANIZATION
FOMO
CORP. previously known as “2050 Motors, Inc.” (“the Company”) is the successor to an entity incorporated
on April 22, 1986 in the state of California. 2050 Motors, Inc., the Company’s sole operating subsidiary from 2014-2019,
was incorporated on October 9, 2012 in the state of Nevada to import, market, and sell electric cars manufactured in China. In
2019, management dissolved the Company’s Nevada subsidiary as the electric vehicle (“EV”) strategies had failed.
Meanwhile, the Company incubated an internet business targeting the Cannabis market @ www.kanab.club and pursued various
ventures in the internet, communications, and technology markets. The Company purchased Purge Virus, LLC to enter the viral disinfection
market on October 19, 2020, has since closed lighting and energy management acquisitions, and has announced several letters of
intent (“LOI’s”) to acquire additional technology and services businesses. See SUBSEQUENT EVENTS for further
information on corporate developments post-2020.
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 Chinese manufacturers.
On
December 16, 2019, we changed our company name to “FOMO CORP.” with the Secretary of State of California on the SEC’s
EDGAR system. On November 17, 2020, we applied for a name change with FINRA and have responded to comments several times.
On
October 19, 2020, FOMO CORP purchased Purge Virus, LLC and consequently entered the viral disinfection market.
On
November 17, 2020, an application was submitted to FINRA to change the name and ticker symbol from 2050 Motors and ETFM to FOMO
CORP. and FOMO, respectively. Subsequently, FINRA stated that the “FOMO” ticker symbol was no longer available, and
a new ticker symbol was requested.
As
of December 30, 2020, the Company was current with its financials.
Note
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying financial statements were prepared in conformity with generally accepted accounting principles in the United States
of America (“US GAAP”).
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates. Significant estimates include accounts payable, the recoverability of long-term assets, and the valuation of derivative
liabilities.
Consolidation
The consolidated financial statements of the
Company include the Company and its wholly owned subsidiaries, 2050 Motors, Inc. and Purge Virus, LLC. All material
intercompany balances and transactions have been eliminated in consolidation.
Cash
Cash
consists of deposits in one large national bank. On December 31, 2020 and December 31, 2019, respectively, the Company had $12,069
and $63 in cash in the United States. The Company has not experienced any losses in such accounts and believes it is not exposed
to any risks on its cash in bank accounts.
Fair
Value of Financial Instruments
For
certain of the Company’s financial instruments, including cash accounts payable, accrued liabilities, short-term debt, and
derivative liability, the carrying amounts approximate their fair values due to their short maturities. We adopted ASC Topic 820,
“Fair Value Measurements and Disclosures,”, which requires disclosure of the fair value of financial instruments held
by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying
amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a
reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their
expected realization and their current market rate of interest. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs
(level 3 measurements). The three levels of valuation hierarchy are defined as follows:
Level
1 input to the valuation methodology are quoted prices for identical assets or liabilities in active markets. The Company’s
investment in Mobicard Inc., see Note 4, is actively traded on the pink sheets.
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level
3 inputs to the valuation methodology are unobservable in which little or no market data exists, therefore requiring an entity
to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or
significant value drivers are unobservable.
The
Company’s analyses of all financial instruments with features of both liabilities and equity under ASC 480,
“Distinguishing Liabilities from Equity,” and ASC 815.
We
have recorded the conversion option on notes as a derivative liability because of the variable conversion price, which in accordance
with U.S. GAAP, prevents them from being considered as indexed to our stock and qualified for an exception to derivative accounting.
We
recognize derivative instruments as either assets or liabilities on the accompanying balance sheets at fair value. We record changes
in the fair value of the derivatives in the accompanying statement of operations.
Assets
and liabilities measured at fair value are as follows as of December 31, 2020:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 4
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
168,000
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
|
168,000
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
834,230
|
|
|
|
|
|
|
|
|
|
|
|
834,230
|
|
Total liabilities measured at fair value
|
|
|
834,230
|
|
|
|
|
|
|
|
|
|
|
|
834,230
|
|
Assets and liabilities measured
at fair value are as follows as of December 31, 2019:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 4
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
189,000
|
|
|
|
189,000
|
|
|
|
|
|
|
|
|
|
Total assets measured
at fair value
|
|
|
189,000
|
|
|
|
189,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liability
|
|
|
893,171
|
|
|
|
|
|
|
|
|
|
|
|
893,171
|
|
Total liabilities
measured at fair value
|
|
|
893,171
|
|
|
|
|
|
|
|
|
|
|
|
893,171
|
|
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, 2018
|
|
$
|
876,058
|
|
Fair value of derivative liabilities
|
|
|
134,115
|
|
Loss on conversion
|
|
|
69,576
|
|
Gain on change in derivative liabilities
|
|
|
(186,578
|
)
|
Balance as of December 31, 2019
|
|
$
|
893,171
|
|
|
|
|
|
|
Balance as of December 31, 2019
|
|
$
|
893,171
|
|
Fair value of derivative liabilities
|
|
|
266,068
|
|
Loss on conversion
|
|
|
(483,793
|
)
|
Gain on change in derivative liabilities
|
|
|
158,784
|
|
Balance as of December 31, 2020
|
|
$
|
834,230
|
|
Earnings
Per Share (EPS)
Basic
EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding
for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock
options had been issued and if the additional common shares were dilutive. Diluted EPS assumes that all dilutive convertible shares
and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding
options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options
and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds
obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method,
convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time
of issuance, if later). During the year ended December 31, 2020 and 2019, 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 more than federally
insured limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated
with commercial banking relationships. The Company has not experienced any losses on our deposits of cash.
Income
Taxes
The
Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
740 provides accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain.
When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions
that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50
percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax
benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing
authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties
are classified in selling, general and administrative expenses in the statements of income.
On
December 31, 2020 and December 31, 2019, 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 but is preparing tax filings to
bring itself current as it completes and moves forward on announced mergers and acquisitions.
Concentration
of Credit Risk
Cash
is mainly maintained by one highly qualified institution in the United States. At various times, such amounts are more than federally
insured limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated
with commercial banking relationships. The Company has not experienced any losses on our deposits of cash.
Risks
and Uncertainties
The
Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated
with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of
public markets.
Accounts
Receivable
Accounts
receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible
amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts.
The allowance for doubtful accounts as of December 31, 2020 and 2019 was zero.
Revenue
Recognition
The
Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606 – Contracts with
Customers. Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance
obligation is satisfied upon the shipment or delivery of products to customers.
Stock-Based
Compensation
The
Company accounts for all stock-based compensation using a fair value-based method. The fair value of equity-classified awards granted
to employees is estimated on the date of the grant using the Black-Scholes option-pricing model and the related stock-based compensation
expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award.
Goodwill
and Other Acquired Intangible Assets
The
Company initially records goodwill and other intangible assets at their estimated fair values and reviews these assets periodically for
impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired
and liabilities assumed in a business combination and is tested at least annually for impairment, historically during our fourth quarter.
Recently
Issued Accounting Pronouncements
In
February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires an entity to
recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements.
For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim
periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are evaluating
the impact this guidance will have on our financial position and statement of operations.
Note
3 – GOING CONCERN
The accompanying financial statements have
been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate the
continuation of the Company as a going concern. The Company reported an accumulated deficit of ($7,662,645) as of December
31, 2020. The Company also had negative working capital of ($1,135,595) on December 31, 2020, and had operating losses
of ($1,598,286) and ($65,235) for the years ended December 31, 2020 and 2019, 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 $0.0008 per share on December 31, 2020 for a total investment of $168,000.
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.
On October 19, 2020, the Company acquired
100% of the member interests of Purge Virus, LLC for consideration of 2,000,000 Series B Preferred Shares, valued at their
market value of $800,000. As a result of the acquisition, the Company recognized intangible assets of $225,000 and Goodwill
of $596,906. The intangible assets are being amortized over their useful lives, ranging from 3 to 10 years.
Note
5 – LOANS PAYABLE DUE TO RELATED PARTIES
As
of December 31, 2020, the Company subsidiary’s chief executive officer had an outstanding balance of $3,574. The
loan is non-interest bearing and due on demand.
Note
6 - CONVERTIBLE NOTE PAYABLES
The
Company had convertible note payables with three third parties with stated interest rates ranging between 10% and 12% and
22% default interest not including penalties. These notes have a conversion feature such that the Company could not ensure it
would have adequate authorized shares to meet all possible conversion demands; accordingly, the conversion option has been treated
as a derivative liability in the accompanying interim financial statements. As of December 31, 2020, the Company had the following
third-party convertible notes outstanding:
|
|
Lender
|
|
Origination
|
|
|
Maturity
|
|
|
Amount
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Auctus
|
|
10/28/20
|
|
|
10/28/21
|
|
|
|
115,000
|
|
|
|
10.0
|
%
|
Note #8*
|
|
Power Up 10
|
|
03/08/19
|
|
|
01/15/20
|
|
|
|
9,000
|
|
|
|
10.0
|
%
|
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
|
|
|
|
|
|
|
|
|
|
$
|
226,186
|
|
|
|
|
|
less discount
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
$
|
226,186
|
|
|
|
|
|
*Note
is currently in default.
As
of March 31, 2021, all of the above notes have been retired and there are no loans in default at March 31, 2021.
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.
During
the year ended December 31, 2020, third-party lenders converted $809,292 of principal and interest into 2,936,347,316 shares of
common stock.
The
variables used for the Black-Scholes model are as listed below:
|
|
December
31, 2020
|
|
December
31, 2019
|
|
|
|
|
|
|
●
|
Volatility:
253% - 466%
|
|
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 $63,350 and $100,299 respectively, during the years ended December 31, 2020 and 2019, respectively.
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.
On
October 28, 2020, a third-party lender funded the Company $115,000.00 in a 12% convertible debenture due October 28, 2021. The
transaction netted the Company $98,000.00 after original issue discount (OID) of $15,000.00 and placement agent fees of $2,000.00.
Note
7 – COMMITMENTS AND CONTINGENCIES
Aoxin
License Agreement
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 November 1, 2020- 264,680,377 Settlement Shares; plus
|
●
|
On
or before December 2, 2020 – 264,680,378 Settlement Shares; plus
|
●
|
On
or before January 1, 2021 – 264,680,378 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 and all principal, interest and penalties were retired
as of December 31, 2020.
Note
8 – INCOME TAXES
The
Company did not file its federal tax returns for fiscal years from 2012 through 2020. Management at year-end 2020 believed that
it should not have any material impact on the Company’s financials because the Company did not have any tax liabilities
due to net loss incurred during these years.
Based
on the available information and other factors, management believes it is more likely than not that any potential net deferred
tax assets on December 31, 2020 and December 31, 2019 will not be fully realizable. The Company is current with franchise tax
board fees due to the State of California and intends to prepare tax statements for the federal and state requirements for 2019
and 2020.
Note
9 – WARRANTS AND OPTIONS
As of December 31, 2019, the Company has fifty
million warrants with an exercise price of $0.001 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. During the
year ended December 31, 2019, the Company recognized $16,803 in expense related to these warrants. During the year ended December
31, 2020, the Company issued warrants for services. During the year ended December 31, 2020 the Company issued 328,571,428
warrants to a third-party lender for fees on a loan default. The Company recognized $844,754 in expense related to
these warrants. On December 31, 2020, a total of 713,571,428 warrants were outstanding with a weighted average life of
3.87 years and an intrinsic value of $844,754.
Note
10 – EQUITY
During
the year ended December 31, 2019, the Company increased the authorized shares for common stock of the Company from three (3)
billion to ten (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 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.
Between
January 1, 2020 and December 31, 2020, the Company issued to third-party lenders a total of 2,936,347,316 shares of common stock
pursuant to conversions of $761,456 debt.
On
January 8, 2020, a third-party lender converted $5,300.00 principal of a convertible debenture into 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 15, 2020, a third-party lender
converted $5,069.54 principal and $1,689.85 interest of a convertible debenture into 135,187,800 common shares.
On
September 30, 2020, a third-party lender converted $20,229.66 principal and $6,743.22 interest of a convertible debenture into
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 13, 2020, we amended the terms of our Series A Preferred Shares to include an annual dividend of $0.0035 per share, a
1-50 conversion ratio and to vote on an as converted basis.
On
October 20, 2020, a third-party lender converted $0 principal, $86.40 interest and $30,237.55 penalties related to a convertible
debenture into 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 were reserved
and subsequently sold, settled the balance of the November 2019 $283,000.00 lawsuit brought by the third-party lender against
the Company. The lender subsequently executed conversions of principal, interest, and penalties into 794,041,134 common shares,
and the note and associated settlement are now retired/closed.
On
November 2, 2020, a third-party lender converted $10,944.39 principal, $93.60 interest and $20,799.13 penalties related to a convertible
debenture into 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.
On
December 30, 2020, a third-party lender converted $12,000.00 principal related to a convertible debenture into 25,000,000 common
shares.
On
December 31, 2020, we issued a consultant 25,000 Series B Preferred shares for cannabis legal analysis.
Business
Development and Related
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. We are in negotiations to extend this purchase option.
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 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. We have applied for forgiveness of the loan with the SBA
through our commercial bank, Bank of America.
Warrants
On October 28, 2020, the Company issued
328,571,428 warrants to a third-party lender with a 5-year expiration and an exercise price of $0.0007 per share.
On November 3, 2020, the Company issued 10,000,000
warrants to Dr. Wayman Baker, PhD with at a three-year expiration and an exercise price of $0.001 per share.
On
December 2, 2020, the Company reduced the exercise price on 10,000,000 warrants owned by Aldo Baiocchi, former Advisory
Board member who has provided working capital to the Company, from $0.01 per share to $0.001 per share.
On
December 7, 2020, we issued Paul Benis, an Advisory Board member, 20,000,000 common stock purchase warrants with a three-year
expiration and $0.001 exercise price, for services to be rendered during 2021.
On
December 31, 2020, we issued a consultant 25,000,000 warrants with a three-year expiration and a $0.001 exercise price
for digital consultation and sales incentive.
On
December 31, 2020, as compensation for bring the Company SEC current and for retention purposes, we issued our CEO Vikram Grover
200,000,000 warrants with a three-year expiration and an exercise price of $0.001.
On
December 31, 2020, we issued Roderick Martin, CEO of AGILE Technologies Group, LLC, 20,000,000 common stock purchase warrants
with a three-year expiration and $0.01 exercise price as compensation for joining our Advisory Board.
On
December 31, 2020, we issued AGILE Technologies Group, LLC, 100,000,000 common stock purchase warrants with a three-year expiration
and $0.001 exercise price as a sales incentive for offering our disinfection products and others to AGILE’s rapid diagnostic
testing (“RDT”) clients. The warrants shall vest upon the generation of $500,000 in cumulative disinfection sales
from our subsidiary Purge Virus, LLC by December 31, 2021 or $1,000,000 in cumulative disinfection sales from our subsidiary Purge
Virus, LLC by December 31, 2023. Both Companies have an exclusive cross-selling agreement for their products which has generated
material revenues to date.
Note
11 – SUBSEQUENT EVENTS
On
January 1, 2021, we issued a consultant 25,000 Series B Preferred shares as a sales incentive for introducing us to native tribes,
professional sports players, major recording artists, and other.
On
January 4, 2021, a third-party lender converted $19,200.00 of principal and $0.00 interest related to a debenture into 40,000,000
common shares.
On
January 5, 2021, a third-party lender converted $10,800.00 of principal and $7,248.16 interest related to a debenture into 40,000,000
common shares.
On
January 6, 2021, we issued 175,000 Series B Preferred shares to two owners of SmartGuard UV for exclusive negotiations
right to buy some or all units of the Company for a six-month period.
On
January 7, 2021, a third-party lender converted $20,000.00 of principal and $0.00 interest related to a debenture into 55,555,556
common shares.
On
January 11, 2021, a third-party lender converted $20,000.00 of principal and $0.00 interest related to a debenture into 55,555,556
common shares.
On
January 11, 2021, a third-party lender converted $28,900.00 of principal and $7,094.36 interest and $1,590.00 in fees related
to a debenture into 97,621,714 common shares.
On
January 13, 2021, a third-party lender converted $21,059.18 of principal and $0.00 interest related to a debenture into 58,497,722
common shares.
On
January 14, 2021, a third-party lender converted $18,000.00 of principal and $4,166.14 interest and $800.00 in fees related to
a debenture into 59,652,311 common shares.
On
January 20, 2021, a third-party lender funded a $205,000.00 debenture netting us $180,000.00 after OID and fees. We used a portion
of the funds to retire a $115,000.00 third-party note funded to us on October 28, 2020.
On
January 21, 2021, a third-party lender converted $18,000.00 of principal and $11,478.58 interest related to a debenture into 58,497,722
common shares.
On
February 11, 2021, we issued 100,000 Series B Preferred shares to the owner of a nationwide HVAC services company as a down payment
for potential acquisition of the business.
On
February 12, 2021, we acquired 100% of the assets of Independence LED Lighting, LLC (“ILED”) for 250,000 Series B
shares to move into the smart lighting and grow lights sectors.
On
February 17, 2021, we issued Dr. Wayman Baker, an Advisory Board member, 20,000,000 common stock purchase warrants with a three-year
expiration and $0.01 exercise price as compensation for services to be rendered in 2021.
On February 26, 2021, we retained BRIO Financial
Group for outsource CFO services. We have committed 100,000,000 common stock purchase warrants with a three-year expiration and
$0.02 exercise price as part of the compensation package. We expect BRIO will improve our financial controls. On or around the same timeframe,
we retained a strategic M&A consultant to integrate our closed and planned acquisitions and issued his firm 6,250,000 restricted
common shares. Further, we engaged an investor relations consultant in part with 300,000 restricted common shares, to update our presentation
deck. We believe these engaged companies and professionals will help our Company move to the next level in finance, operations, and
the public markets.
On
February 27, 2021, the Company issued RHK Capital, a FINRA investment banking and brokerage firm, 100,000,000 common stock purchase
warrants with a three-year expiration and a $0.02 exercise price as a retainer for services.
On
March 4, 2021, we entered into a strategic partnership agreement with Online Energy Manager, LLC (“OEM”), including
cross-selling and referrals of energy management software, a purchase option for up to 100% of OEM with a valuation cap at $10
million, and the issuance to OEM of 100,000,000 common stock purchase warrants with a five-year expiration and a $0.01 exercise
price. We can redeem the warrants if our common stock closes over $0.03 for 20 sessions and the underlying common shares have
been registered, which would provide capital.
On
March 4, 2021, we issued Andrea Breaux, an executive at EcoLite Holdings, LLC one of our acquisition targets, 20,000,000 common
stock purchase warrants with a three-year expiration and $0.01 exercise price. Ms. Breaux has joined our Advisory Board and is
managing our social media.
On
March 4, 2021, we issued Dilip Limaye, owner of Online Energy Manager, LLC (“OEM”) one of our strategic partners,
20,000,000 common stock purchase warrants with a three-year expiration and $0.01 exercise price. Mr. Limaye has joined our Advisory
Board and is partnering with us for clean building energy management.
On
March 6, 2021, we acquired 100% of the assets of Energy Intelligence Center, LLC (“EIC”) to further push into the
clean building market. As consideration, we issued EIC 125,000 Series B Preferred shares and 50,000,000 common stock purchase
warrants with a three-year expiration and a $0.01 exercise price.
Since
December 31, 2020, the Company has signed letters of intent (“LOIs”) now in various stages of due diligence to acquire
EcoLite Holdings, LLC, an HVAC services contractor (name redacted), LED Funding, LLC and LUX Solutions, LLC, which are structured
with consideration in the form of restricted Preferred B shares equity, cash subject to financing and seller notes. All said transactions’
documentation is available on Forms 8-K filed with the SEC’s EDGAR system. The offers are non-binding and there are no assurances.
Per
Note 6 the Company had $111,186 of convertible notes that were in default. During the first quarter of 2021 the Company converted all
of that balance thereby curing all debt defaults. With regard to the final conversion of these default notes, on March 31, 2021, the
Company retired the residual balance of a $200,000.00 Master Note partially funded by Tri-Bridge Ventures (“TBV”) on March
15, 2019, with $2,286.00 remaining principal, $3,069.86 accrued interest and $231,930.14 accrued penalties. For consideration, FOMO CORP.
issued TBV 75,000,000 common shares. The transaction eliminated all default debt within FOMO’s capital stack/debt table making
the Company current with its sole creditor GS Capital.
On
May 31, 2021, the Company terminated its letter of intent to acquire the HVAC services contractor.
INDEX
TO FINANCIAL STATEMENTS
FOMO
CORP and Subsidiary
(Formerly
2050 Motors, Inc.)
Condensed
Balance Sheets
(Unaudited)
|
|
As of
|
|
|
As of
|
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
269,002
|
|
|
$
|
12,069
|
|
Accounts receivable
|
|
|
86,993
|
|
|
|
20,859
|
|
Deposit on option to purchase business
|
|
|
17,500
|
|
|
|
-
|
|
Prepaid expense
|
|
|
-
|
|
|
|
910
|
|
Total current assets
|
|
|
373,495
|
|
|
|
33,838
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Investments
|
|
|
168,000
|
|
|
|
168,000
|
|
Intangible assets
|
|
|
1,378,662
|
|
|
|
206,250
|
|
Goodwill
|
|
|
596,906
|
|
|
|
596,906
|
|
Total other assets
|
|
|
2,143,568
|
|
|
|
971,156
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,517,063
|
|
|
$
|
1,004,994
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
46,239
|
|
|
$
|
63,291
|
|
Accrued intertest on loans payable
|
|
|
3,932
|
|
|
|
24,945
|
|
Customer deposit
|
|
|
97,048
|
|
|
|
5,614
|
|
Loan payable related party
|
|
|
7,532
|
|
|
|
3,574
|
|
Loans payable due to non-related parties, net
|
|
|
205,000
|
|
|
|
226,186
|
|
Loan Cares PPP
|
|
|
11,593
|
|
|
|
11,593
|
|
Derivative liability
|
|
|
2,209,605
|
|
|
|
834,230
|
|
Total current liabilities
|
|
|
2,580,949
|
|
|
|
1,169,433
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,580,949
|
|
|
|
1,169,433
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
|
|
|
|
Common stock; no par value authorized: 10,000,000,000
issued and outstanding 5,700,528,159 at March 31, 2021 and 4,713,543,121 December 31, 2020, respectively
|
|
|
5,166,243
|
|
|
|
4,232,960
|
|
Preferred stock Class A; $0.0001 par value authorized:
78,000,000 issued and outstanding 5,750,000 and 3,000,000 at March 31, 2021 and December 31, 2020, respectively: discretionary 1%
dividend
|
|
|
575
|
|
|
|
300
|
|
Preferred stock Class B; $0.0001 par value authorized:
20,000,000 issued and outstanding 5,313,815 and 4,463,815 at March 31, 2021 and December 31, 2020, respectively: discretionary 1%
dividend
|
|
|
531
|
|
|
|
446
|
|
Preferred stock Class C; $0.0001 par value authorized:
2,000,000 and issued and outstanding 1,000,000 at March 31, 2021 and December 31, 2020, respectively: discretionary 1% dividend
|
|
|
100
|
|
|
|
100
|
|
Additional paid-in-capital
|
|
|
4,695,540
|
|
|
|
3,139,400
|
|
Accumulated deficit
|
|
|
(10,051,875
|
)
|
|
|
(7,662,645
|
)
|
Common stock issuable
|
|
|
125,000
|
|
|
|
125,000
|
|
Total stockholders’ deficit
|
|
|
(63,886
|
)
|
|
|
(164,439
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
|
$
|
2,517,063
|
|
|
$
|
1,004,994
|
|
The
accompanying notes are an integral part of these financial statements
FOMO
CORP and Subsidiary
(Formerly
2050 Motors, Inc.)
Condensed
Statement of Operations
(Unaudited)
|
|
For the Three Months Ended March 31,
|
|
|
|
2020
|
|
|
2020
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$
|
151,392
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
132,221
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
19,171
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
589,785
|
|
|
|
50,532
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
|
(570,614
|
)
|
|
|
(50,532
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(211,312
|
)
|
|
|
(10,551
|
)
|
Debt Settlement
|
|
|
(231,930
|
)
|
|
|
-
|
|
Impairment loss
|
|
|
-
|
|
|
|
(63,000
|
)
|
Derivative liability gain (loss)
|
|
|
(1,375,374
|
)
|
|
|
483,793
|
|
Total other income (expenses)
|
|
|
(1,818,616
|
)
|
|
|
410,242
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(2,389,230
|
)
|
|
|
359,710
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(2,389,230
|
)
|
|
$
|
359,710
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share, basic and diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Weighted average common equivalent share outstanding, basic and diluted
|
|
|
5,445,268,799
|
|
|
|
2,053,310,893
|
|
The
accompanying notes are an integral part of these financial statements
FOMO
CORP and Subsidiary
(Formerly
2050 Motors, Inc.)
Condensed
Statement of Stockholders’ Deficit
(Unaudited)
|
|
Common Stock
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class C
|
|
|
Common
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Number
|
|
|
No
|
|
|
Number
|
|
|
$0.0001
|
|
|
Number
|
|
|
$0.0001
|
|
|
Number
|
|
|
$0.0001
|
|
|
Stock
|
|
|
paid-in
|
|
|
Accumulated
|
|
|
stockholders’
|
|
|
|
of Shares
|
|
|
par value
|
|
|
of Shares
|
|
|
par
value
|
|
|
of Shares
|
|
|
par
value
|
|
|
of Shares
|
|
|
par
value
|
|
|
Issuable
|
|
|
capital
|
|
|
deficit
|
|
|
deficit
|
|
Balance December 31, 2019
|
|
|
1,777,198,805
|
|
|
$
|
3,800,405
|
|
|
|
3,000,000
|
|
|
$
|
300
|
|
|
|
400,000
|
|
|
$
|
40
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
$
|
125,000
|
|
|
$
|
858,218
|
|
|
$
|
(6,025,926
|
)
|
|
$
|
(1,241,863
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible debt
|
|
|
428,306,667
|
|
|
|
22,582
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,781
|
|
|
|
-
|
|
|
|
5,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
359,710
|
|
|
|
359,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
2,205,505,472
|
|
|
$
|
3,822,987
|
|
|
|
3,000,000
|
|
|
$
|
300
|
|
|
|
400,000
|
|
|
$
|
40
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
$
|
125,000
|
|
|
$
|
863,999
|
|
|
$
|
(5,666,216
|
)
|
|
$
|
(853,790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2020
|
|
|
4,713,543,121
|
|
|
$
|
4,232,960
|
|
|
|
3,000,000
|
|
|
$
|
300
|
|
|
|
4,463,815
|
|
|
$
|
446
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
$
|
125,000
|
|
|
$
|
3,139,400
|
|
|
$
|
(7,662,645
|
)
|
|
$
|
(164,439
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible debt
|
|
|
905,435,038
|
|
|
|
563,643
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
563,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for compensation
|
|
|
6,550,000
|
|
|
|
99,640
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for loan cost
|
|
|
10,000,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase common share
|
|
|
65,000,000
|
|
|
|
250,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase Preferred A shares
|
|
|
-
|
|
|
|
-
|
|
|
|
2,750,000
|
|
|
|
275
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
274,725
|
|
|
|
-
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300,000
|
|
|
|
30
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
123,970
|
|
|
|
-
|
|
|
|
124,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options to purchase business
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
175,000
|
|
|
|
17
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,483
|
|
|
|
-
|
|
|
|
38,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
375,000
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
924,962
|
|
|
|
|
|
|
|
925,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
194,000
|
|
|
|
|
|
|
|
194,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,389,230
|
)
|
|
|
(2,389,230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2021
|
|
|
5,700,528,159
|
|
|
$
|
5,166,243
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
|
5,313,815
|
|
|
$
|
531
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
$
|
125,000
|
|
|
$
|
4,695,540
|
|
|
$
|
(10,051,875
|
)
|
|
$
|
(63,886
|
)
|
The
accompanying notes are an integral part of these financial statements
FOMO
CORP and Subsidiary
(Formerly
2050 Motors, Inc.)
Condensed
Statement of Cash Flows
(Unaudited)
|
|
For the three months ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows provided by (used for) operating activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(2,389,230
|
)
|
|
$
|
359,710
|
|
Adjustments to reconcile net loss to net cash provided by (used for) operating
activities:
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
165,500
|
|
|
|
5,781
|
|
Stock issued for Interest and loan costs
|
|
|
37,940
|
|
|
|
|
|
Interest expense paid by issuance of stock
|
|
|
220,527
|
|
|
|
|
|
Amortization
|
|
|
43,583
|
|
|
|
-
|
|
Interest expense from initial derivative liability
|
|
|
-
|
|
|
|
926
|
|
Derivative liability adjustment
|
|
|
1,375,375
|
|
|
|
(483,793
|
)
|
Debt settlement
|
|
|
231,930
|
|
|
|
|
|
Impairment of investment
|
|
|
-
|
|
|
|
63,000
|
|
Increase (decrease) in assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
910
|
|
|
|
-
|
|
Accounts receivable
|
|
|
(66,134
|
)
|
|
|
-
|
|
Accounts payable
|
|
|
(39,047
|
)
|
|
|
5,000
|
|
Customer deposits
|
|
|
91,434
|
|
|
|
|
|
Accrued interest
|
|
|
(21,013
|
)
|
|
|
|
|
Accrued expenses
|
|
|
|
|
|
|
49,331
|
|
|
|
|
|
|
|
|
|
|
Net cash used for operating activities
|
|
|
(348,225
|
)
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) Investing activities
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
|
250,000
|
|
|
|
-
|
|
Proceeds from sale of Preferred Series A shares
|
|
|
275,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
525,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) Financing activities
|
|
|
|
|
|
|
|
|
Payment to non-related loans
|
|
|
(128,800
|
)
|
|
|
-
|
|
Proceeds from loan from officer
|
|
|
3,958
|
|
|
|
-
|
|
Proceeds from non-related loans
|
|
|
205,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) financing activities
|
|
|
80,158
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
256,933
|
|
|
|
(45
|
)
|
Cash, beginning of period
|
|
|
12,069
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
269,002
|
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Common stock issued for debt
|
|
$
|
563,643
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial statements
FOMO
CORP. and subsidiaries
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – BASIS OF PRESENTATION AND ORGANIZATION
FOMO
CORP. previously known as “2050 Motors, Inc.” (“the Company”) is the successor to an entity incorporated on
April 22, 1986 in the state of California. 2050 Motors, Inc., the Company’s sole operating subsidiary from 2014-2019, was
incorporated on October 9, 2012 in the state of Nevada to import, market, and sell electric cars manufactured in China. In 2019,
management dissolved the Company’s Nevada subsidiary as the electric vehicle (“EV”) strategies had failed.
Meanwhile, the Company incubated an internet business targeting the Cannabis market @ www.kanab.club and pursued various
ventures in the internet, communications, and technology markets. The Company purchased Purge Virus, LLC to enter the viral
disinfection market on October 19, 2020, has since closed lighting and energy management acquisitions, and has announced several
letters of intent (“LOI’s”) and signed several definitive agreements to acquire additional technology and
services businesses.
On
May 14, 2019, we dissolved our 2050 Motors, Inc. Nevada subsidiary and terminated all discussions and contractual relationships with
Chinese manufacturers.
On
December 16, 2019, we changed our company name to “FOMO CORP.” with the Secretary of State of California on the SEC’s
EDGAR system. On November 17, 2020, we applied for a name change with FINRA and have responded to comments several times.
On
October 19, 2020, FOMO CORP purchased Purge Virus, LLC and consequently entered the viral disinfection market.
On
November 17, 2020, an application was submitted to FINRA to change the name and ticker symbol from 2050 Motors and ETFM to FOMO CORP.
and FOMO, respectively. Subsequently, FINRA issued a name change and ticker change to “FOMO CORP.” and applied the ticker
“FOMC”.
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, Purge Virus, LLC. All material intercompany balances and transactions have been eliminated in consolidation.
Cash
Cash
consists of deposits in one large national bank. On March 31, 2021 and December 31, 2020, respectively, the Company had $269,002 and
$12,069 in cash in the United States. The Company has not experienced any losses in such accounts and believes it is not exposed to any
risks on its cash in bank accounts.
Fair
Value of Financial Instruments
For
certain of the Company’s financial instruments, including cash accounts payable, accrued liabilities, short-term debt, and derivative
liability, the carrying amounts approximate their fair values due to their short maturities. We adopted ASC Topic 820, “Fair Value
Measurements and Disclosures,”, which requires disclosure of the fair value of financial instruments held by the Company. ASC Topic
825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair
value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets
for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because
of the short period of time between the origination of such instruments and their expected realization and their current market rate
of interest. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of valuation hierarchy
are defined as follows:
Level
1 input to the valuation methodology are quoted prices for identical assets or liabilities in active markets. The Company’s investment
in Mobicard Inc., see Note 4, is actively traded on the pink sheets.
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are
observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level
3 inputs to the valuation methodology are unobservable in which little or no market data exists, therefore requiring an entity to develop
its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable.
The
Company’s analyses of all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing
Liabilities from Equity,” and ASC 815.
We
have recorded the conversion option on notes as a derivative liability because of the variable conversion price, which in accordance
with U.S. GAAP, prevents them from being considered as indexed to our stock and qualified for an exception to derivative accounting.
We
recognize derivative instruments as either assets or liabilities on the accompanying balance sheets at fair value. We record changes
in the fair value of the derivatives in the accompanying statement of operations.
Assets
and liabilities measured at fair value are as follows as of March 31,2021:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 4
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
168,000
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
|
168,000
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
2,209,605
|
|
|
|
|
|
|
|
|
|
|
|
2,209,605
|
|
Total liabilities measured at fair value
|
|
|
2,209,605
|
|
|
|
|
|
|
|
|
|
|
|
2,209,605
|
|
Assets
and liabilities measured at fair value are as follows as of December 31, 2020:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 4
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
168,000
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
|
168,000
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
834,230
|
|
|
|
|
|
|
|
|
|
|
|
834,230
|
|
Total liabilities measured at fair value
|
|
|
834,230
|
|
|
|
|
|
|
|
|
|
|
|
834,230
|
|
The
following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
Balance as of December 31, 2019
|
|
$
|
893,171
|
|
Fair value of derivative liabilities
|
|
|
266,068
|
|
Loss on conversion
|
|
|
(483,793
|
)
|
Gain on change in derivative liabilities
|
|
|
158,784
|
|
Balance as of December 31, 2020
|
|
$
|
834,230
|
|
|
|
|
|
|
Balance as of December 31, 2020
|
|
$
|
834,230
|
|
Fair value of derivative liabilities
|
|
|
2,750,749
|
|
Loss on conversion
|
|
|
(1,375,374
|
)
|
Gain on change in derivative liabilities
|
|
|
0
|
|
Balance as of March 31, 2021
|
|
$
|
2,209,605
|
|
Earnings
Per Share (EPS)
Basic
EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the
period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number
of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been
issued and if the additional common shares were dilutive. Diluted EPS assumes that all dilutive convertible shares and stock options
were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted
method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised
at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to
be converted into common stock at the beginning of the period (or at the time of issuance, if later). During the year ended December
31, 2020 and 2019, 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 more than federally insured
limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated with
commercial banking relationships. The Company has not experienced any losses on our deposits of cash.
Income
Taxes
The
Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under
this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
ASC
740 provides accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain.
When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while
others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.
The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals
or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured
as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits
is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.
On
March 31, 2021 and December 31, 2020, the Company had not taken any significant uncertain tax positions on its tax returns for the period
ended December 31, 2020 and prior years or in computing its tax provisions for any years. Prior management considered its tax positions,
and believed that all of the positions taken by the Company in its Federal and State tax returns were more likely than not to be sustained
upon examination. The Company is subject to examination by U.S. Federal and State tax authorities from inception to present, generally
for three years after they are filed. New management, which took control of the Company on March 5, 2019, has filed federal and state
taxes in California, Illinois and Pennsylvania as required and had brought the Company current in all regards.
Concentration
of Credit Risk
Cash
is mainly maintained by one highly qualified institution in the United States. At various times, such amounts are more than federally
insured limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated
with commercial banking relationships. The Company has not experienced any losses on our deposits of cash.
Risks
and Uncertainties
The
Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.
Accounts
Receivable
Accounts
receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible
amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts.
The allowance for doubtful accounts as of March 31, 2021 and December 31, 2020 was zero.
Revenue
Recognition
The
Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606 – Contracts with
Customers. Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance
obligation is satisfied upon the shipment or delivery of products to customers.
Stock-Based
Compensation
The
Company accounts for all stock-based compensation using a fair value-based method. The fair value of equity-classified awards granted
to employees is estimated on the date of the grant using the Black-Scholes option-pricing model and the related stock-based compensation
expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award.
Goodwill
and Other Acquired Intangible Assets
The
Company initially records goodwill and other intangible assets at their estimated fair values and reviews these assets periodically for
impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired
and liabilities assumed in a business combination and is tested at least annually for impairment, historically during our fourth quarter.
Recently
Issued Accounting Pronouncements
In
February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize
right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. For public companies,
ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting
period, and requires a modified retrospective adoption, with early adoption permitted. We are evaluating the impact this guidance will
have on our financial position and statement of operations.
Note
3 – GOING CONCERN
The accompanying financial statements have been prepared
in conformity with accounting principles generally accepted in the United States of America, which contemplate the continuation of the
Company as a going concern. The Company reported an accumulated deficit of $10,051,875 as of March 31, 2021. The Company also had negative
working capital of $2,207,454 on March 31, 2021, and had an operating loss of $570,614 for the three months ended March 31, 2021. 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 $0.0008 per share on March 31, 2021 for a total investment of $168,000.
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.
On
October 19, 2020, the Company acquired 100% of the member interests of Purge Virus, LLC for consideration of 2,000,000 Series B Preferred
Shares, valued at their market value of $800,000. As a result of the acquisition, the Company recognized intangible assets of $225,000
and goodwill of $596,906. The intangible assets are being amortized over their useful lives, ranging from 3 to 10 years.
Note
5 –RELATED PARTIES TRANSACTIONS
As
of March 31, 2021, the Company subsidiary’s chief executive officer had an outstanding balance of $7,532. The loan is non-interest
bearing and due on demand.
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.
Note
6 – CONVERTIBLE NOTE PAYABLES
The
Company had convertible note payables with three third parties with stated interest rates ranging between 10% and 12% and 22% default
interest not including penalties. These notes have a conversion feature such that the Company could not ensure it would have adequate
authorized shares to meet all possible conversion demands; accordingly, the conversion option has been treated as a derivative liability
in the accompanying interim financial statements. As of March 31, 2021, the Company had the following third-party convertible notes outstanding:
|
|
Lender
|
|
Origination
|
|
|
Maturity
|
|
|
Amount
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
GS Capital
|
|
01/20/21
|
|
|
01/20/22
|
|
|
|
205,000
|
|
|
|
12.0
|
%
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
205,000
|
|
|
|
|
|
less discount
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
$
|
205,000
|
|
|
|
|
|
During
the year ended December 31, 2020, third-party lenders converted $809,292 of principal and interest into 2,936,347,316 shares of common
stock.
During
the three months ended March 31, 2021, third-party lenders converted $563,643 of principal, interest and penalties into 905,435,038 shares
of common stock.
The
variables used for the Black-Scholes model are as listed below:
|
|
March
31, 2021
|
|
December
31, 2020
|
|
|
|
|
|
|
●
|
Volatility:
253% - 466%
|
|
Volatility:
253% - 466%
|
|
|
|
|
|
|
●
|
Risk
free rate of return: 1.24%- 1.53%
|
|
Risk
free rate of return: 1.24% - 1.53%
|
|
|
|
|
|
|
●
|
Expected
term: 1-3 years
|
|
Expected
term: 1-3 years
|
The
Company amortized a debt discount of $0 and $63,350 respectively, during the three months ended March 31, 2021 and year ended December
31, 2020, respectively.
On
October 28, 2020, a third-party lender funded the Company $115,000.00 in a 12% convertible debenture due October 28, 2021. The transaction
netted the Company $98,000.00 after original issue discount (OID) of $15,000.00 and placement agent fees of $2,000.00.
On
January 20, 2021, a third-party lender funded the Company $205,000 in a 12% convertible debenture due January 20, 2022. The transaction
netted the Company $180,000 after $25,000 loan fees.
During
the three months ended March 31, 2021 third-party lenders converted $563,643 of principle, interest and penalties into 905,435,038 shares
of no-par common stock
Note
7 – COMMITMENTS AND CONTINGENCIES
Legal
Proceedings
The
Company may from time to time, become a party to various legal proceedings, arising in the ordinary course of business. The Company investigates
these claims as they arise. There is no litigation outstanding as of March 31, 2021.
COVID-19
Pandemic Update
In
March 2020, the World Health Organization declared a global health pandemic related to the outbreak of a novel coronavirus. The COVID-19
pandemic adversely affected the company’s financial performance in the third and fourth quarters of fiscal year 2020 and could
have an impact throughout fiscal year 2021. In response to the COVID-19 pandemic, government health officials have recommended and mandated
precautions to mitigate the spread of the virus, including shelter-in-place orders, prohibitions on public gatherings and other similar
measures. There is uncertainty around the duration and breadth of the COVID-19 pandemic, as well as the impact it will have on the company’s
operations, supply chain and demand for its products. As a result, the ultimate impact on the company’s business, financial condition
or operating results cannot be reasonably estimated at this time.
On
June 4, 2020, the Company entered a $11,593 note payable to Bank of America, pursuant to the Paycheck Protection Program (“PPP
Loan”) under the CARES Act. The loan remains outstanding but is expected to be forgiven by the U.S. government based on guidance
from the Company’s commercial bank, Bank of America. The SBA forgave this loan subsequent to quarter end.
Note
8 – INCOME TAXES
The
Company did not file its federal tax returns for fiscal years from 2012 through 2020. Management at year-end 2020 believed that it should
not have any material impact on the Company’s financials because the Company did not have any tax liabilities due to net loss incurred
during these years.
Based
on the available information and other factors, management believes it is more likely than not that any potential net deferred tax assets
on March 31, 2021 and December 31, 2020 will not be fully realizable. The Company is current with franchise tax board fees due to the
State of California and intends to prepare tax statements for the federal and state requirements for 2020. Today, the Company is current
with its federal and state tax filings.
Note
9 – WARRANTS AND OPTIONS
At
March 31, 2021 and December 31, 2020, a total of 1,163,660,714 and 713,571,428 warrants were outstanding, respectively
On
March 20, 2021 the Company issued 100,000,000 warrants with a strike price of $0.01 and a five-year expiration to Online Energy Manager
as consideration for a software license.
On
March 31, 2021 The Company issued 50,000,000 warrants with a strike price of $0.01and an three-year expiration to Energy Intelligence
as consideration on the asset purchase.
Note
10 – EQUITY
During
the three months ended March 31, 2021 third-party lenders converted $563,643 of principle, interest and penalties into 905,435,038 shares
of no-par common stock
On
January 21, 2021 the Company issued a third-party lender 10,000,000 shares of no-par common stock for loan cost of $20,000.
On
February 27, 2021, the Company issued a consultant 300,000 shares of no-par common stock for investor relations services of $4,140.
On
March 1, 2021, the Company issued a consultant 6,250,000 shares of no-par common stock for consulting services of $95,500.
On
March 31, 2021, the Company sold 65,000,000 shares of common no-par stock for $250,00, as part of an equity line of credit
During
February 2021 the Company sold 2,750,000 Series A Preferred shares for $275,000.
On
January 1, 2021, the Company issued a consultant 25,000 Series B Preferred shares for services valued at $5,500.
On
January 6, 2021, the Company issued 175,000 Series B Preferred shares as a non-refundable deposit to purchase SmartGuard valued at $38,500.
On
January 6, 2021, the Company issued 175,000 Series B Preferred shares as a refundable deposit to purchase SmartGuard valued at
$38,500
On
February 11, 2021, the Company issued 100,000 Series B Preferred shares as a non-refundable deposit to purchase PVBJ valued at $80,000.
On
February 24, 2021, the Company issued 250,000 Series B Preferred shares to purchase assets of Independence LED Lighting LLC valued at
$80,000.
On
March 20, 2021, the Company issued 125,000 Series B Preferred shares to purchase the assets of Energy Intelligence Center LLC valued
at $265,000.
Note
11 – ACQUISITIONS
PPE
Source International LLC
On
October 2, 2020, we issued the 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. We are in negotiations to extend this purchase option.
Purge
Virus, LLC
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.
Independence
LED Lighting, LLC
On
January 3, 2021, the Company offered to purchase 100% of the assets of Independence LED Lighting, LLC (“ILED”) for
250,000 1% Series B Preferred Shares and the assumption of critical vendor liabilities, subject to customer due diligence and legal
review. ILED is an entity controlled by Charles Szoradi, CEO of FOMO’s Purge Virus LLC subsidiary acquired on October 19,
2020. The letter of intent (LOI) was approved by ILED’s Board of Directors and signed by Szoradi on January 5, 2021. On
February 12, 2021, the Company closed the asset purchase of Independence LED Lighting, LLC for total consideration of 250,000
Restricted Series B Preferred Shares and the assumption of no debt. The assets were recorded at the fair value of the Series B
Preferred shares of $660,000.
Energy
Intelligence Center, LLC
On
March 6, 2021, we completed an Asset Purchase Agreement to acquire 100% of the assets of Energy Intelligence Center, LLC. The Company
paid Energy Intelligence 125,000 Series B Preferred Shares and 50,000,000 Common Stock Warrants with 3-year exercise term and an exercise
price one cent. The assets were recorded at the fair value of the Series B Preferred shares and warrants of $361,995.
Online
Energy Manager, LLC
On
March 4, 2021, the Company signed a Licensing/ Strategic Agreement with Online Energy Manager, LLC (“OEM”). Under the agreement,
OEM granted the Company a two-year non-exclusive right to license ENCORE-CI, the patented and other intellectual property of OEM. The
Company shall pay a license fee of 7.50% of gross revenue per project for ENCORE-CI projects. The license is renewable beyond the two-year
term if the Company generates a minimum of $100,000 in license fees in the second year.
OEM
granted the Company a three-year option to purchase the assets of OEM for a cash payment of $10,000,000 and a two year option to purchase
19.90% of OEM Membership Units for a cash payment of $2,000,000.
As
consideration, the Company granted OEM a five-year warrant to acquire 100,000,000 shares of the Company’s stock at an exercise
price of $0.010 per share. If the shares are registered and the stock closes over $0.03 per share for 20 sessions out of the prior 30
sessions, the warrants shall be callable. The warrants were valued at $194,000.
SmartGuard
Holdings LLC
On
January 5, 2021, the Company and the principals of SmartGuard Holdings LLC entered into a six-month exclusive Agreement to explore acquisition
of, investment in and/or partnership with 100% of SmartGuard Holdings LLC, consisting of:
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●
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75%
interest in SmartGuard Financing LLC, which is the exclusive sales and financing arm for an expanding portfolio of SmartGuard Disinfection
& Robotic Products consisting of a disinfection robot, disinfection locker and cart wash plus 100% of the income from the financing
of Cyberclean Systems, LLC’s robotic products.
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25%
interest in GNW Technologies LLC (owner of Cyberclean Systems, LLC) plus an option to acquire an additional 25.1% of GNW. Cyberclean’s
revenues consist of robot deployment revenues (80% of total) and RaaS (Robots as a Service) and EaaS (Energy as a Service) revenues
(20% of total)
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100%
of SmartGuard Energy Solutions LLC including 100% interest in LED Funding LLC, whose revenues are derived from installation of LED
lighting and energy efficiency control.
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Consideration
for the Agreement was 175,000 1% Series B Preferred Shares, valued at $17,500.
Ecolite
Holdings LLC
On
January 10, 2021, the Company offered to purchase 100% of the Member Interests of Ecolite Holdings LLC (“Ecolite” for the
following consideration: 1) 2,549,383 Restricted 1% Series B Preferred Shares, 2) $2,000,000 cash, 3) $750,000 two-year 8% redeemable
seller note, 4) a three-year earn-out of annual profits greater than $960,000, and 5) stock option grants to key employees in admin and
sales/marketing. Ecolite is an entity controlled by John Kelly, a FOMO Advisory Board member and owner of PPE Source International LLC
(“PPESI”), a business partner of FOMO’s wholly owned subsidiary Purge Virus LLC (“PV”). The letter of intent
(LOI) was approved by FOMO’s Board of Directors and executed by John Kelly and FOMO’s CEO on January 10, 2021.
Other
On
February 7, 2021, the Company extended an offer to acquire a nationwide HVAC services contractor. Consideration will include 650,000
restricted Series B Preferred Shares; $1,000,000 cash and a $500,000 two-year seller note. The Company has
extended the deadline to close a definitive agreement to acquire a national HVAC services contractor to July 1, 2021.
Note
12 – SUBSEQUENT EVENTS
On
April 9, 2021, the Company issued a consultant 6,250,000 shares of no-par common shares for consulting services.
On
April 24, 2021, the Company issued 2,300 Series B Preferred shares for consulting services.
On
April 20, 2021, the Company issued 25,000 Series B Preferred shares for consulting services relating to Kanab Corp.
On
April 8, 2021, a third-party lender funded the Company $103,500 in a 22% convertible debenture due April 8, 2022. The transaction netted
the Company $100,000 after $3,500 loan fees.
On
April 16, 2021, the Company extended the LOI’s to purchase Ecolite and PPE Source International LLC until July 1, 2021
On
April 14, 2021, the Company signed an agreement to purchase 100% interest in Lux Solutions LLC for $5,000,000. The purchase price is
payable $1,250,000 in cash, $1,250,000 note payable and 1,250,000 series B Preferred shares at $.002 per share.
On
April 14, 2021, the Company signed an agreement to purchase 100% interest in LED IV Funding LLC for $7,000,000. The purchase price is
payable $1,750,000 in cash, $1,750,000 note payable and 1,750,000 series B Preferred shares at $.002 per share.
On
April 22, 2021, the Company issued Brokerwebs LLC 25,000 Series B Preferred shares as a retainer for one-year administration of its cannabis
social network Kanab Club 2.0 @ www.kanab.club which is currently under beta testing and expected to go live summer 2021.
On
May 18, 2021, the Company incorporated FOMO ADVISORS LLC, a Wyoming limited liability company, as a wholly owned public/private
merchant banking subsidiary.
On
May 18, 2021, the Company restored FOMO CORP. (private), a Wyoming C-Corp. by the same name, to good standing. Management intends to
utilize the vehicle as a strategic asset to develop cryptocurrencies to be named “FOMO COIN” and “KANAB COIN”
or other.
On
May 31, 2021, the Company terminated its letter of intent to acquire the HVAC services contractor.
PART
II – INFORMATION NOT REQUIRED IN PROSPECTUS