Item
1.01 Entry into a Material Definitive Agreement.
Acquisition
of SmartSolutions Technologies, L.P. (“SST”)
On
February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies
L.P. (“SST”) pursuant to a Securities Purchase Agreement dated February 28, 2022 (the “SPA”), by
and between the Company and Mitchell Schwartz (“Seller”), the beneficial owner of the general and limited partnership
interests in SST. SST is a Pittsburgh, Pennsylvania–based audiovisual systems integration
company that designs and builds presentation, teleconferencing and collaborative systems for businesses, educational institutions and
other nonprofits organizations.
Pursuant
to the SPA, FOMO:
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issued
to Seller 1,000,000 shares of its authorized but unissued Series B Preferred Stock (the “Series B Preferred Shares”); |
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paid
approximately $927,600 of SST’s indebtedness to third parties; |
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entered
into an “at will” employment agreement with Seller, pursuant to which Seller will continue to serve as SST’s
Chief Executive Officer at an annual salary of $100,000; and |
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as
an incentive to retain SST’s other employees, issued to such employees, a total of 300,000,000 three-year common stock purchase
warrants (the “Incentive Warrants”), each entitling the holder to purchase one share of SST common stock at an
exercise price of $0.001 per share. |
Each
Series B Preferred Share entitles the holder to a preferred cumulative annual dividend of $0.01 per share, when, as and if declared by
FOMO’s board of directors out of funds legally available therefor. Each Series B Preferred Share is convertible at the option of
the holder into 1,000,000 shares of the Company’s common stock for an aggregate of 1,000,000,000 shares of common stock, subject
to adjustment for stock splits, stock dividends and similar transactions. The Series B Preferred Shares have a liquidation preference
of $0.001 per share and vote on all matters presented to stockholders for a vote on an “as converted” basis together
with our common stock as a single class, except as required by law.
The
Series B Preferred Shares, Incentive Warrants and shares of common stock issuable upon conversion of the Series B Preferred Shares and
exercise of the Incentive Warrants were issued in a transaction exempt from the registration requirements of the Securities Act of 1933
(the “Securities Act”), as amended, pursuant to the exemption afforded by Section 4(a)(2) of the Securities Act.
The
above description of the SPA, the employment agreement with Seller, the rights, preferences, powers, restrictions and limitations of
the Series B Preferred Shares and the Incentive Warrants are only summaries and are qualified in their entirety by reference to the copies
of those documents filed as Exhibits to this Report.
Financing
with Thermo King Communications Funding, LLC (“TMC”)
In
order to finance the repayment of SST indebtedness, on February 28, 2022, FOMO and its subsidiaries, including SST (collectively, the
“Borrower”) entered into a Loan and Security Agreement (the “Loan Agreement”) with TCM, an institutional
investor, pursuant to which TCM afforded the Borrower a line of credit facility of up to $1,000,000 (the “Credit Facility”).
Under the Credit Facility, the Borrower may, from time to time until the maturity date of February 28, 2024, request advances, provided
the aggregate of all outstanding advances does not exceed an amount equal to the borrowing base of 85% of eligible accounts, up to a
maximum of $1,00.000 and that at the time of each advance, the Borrower meets certain other conditions customary and typical for agreements
of this type and nature. Advances under the Credit Facility are evidenced by a promissory note (the “Promissory Note”)
bearing interest at prime plus 5.25% (adjusted quarterly), with a minimum interest rate of 11.5% per annum. All amounts repaid may be
reborrowed subject to compliance with the borrowing base and other conditions. The Credit Facility is secured by the grant of security
interest on all the Borrower’s assets and is guaranteed by a Limited Recourse Guaranty (the “Guaranty”) made
by Vikram Grover, our Chief Executive Officer.
The
above description of the Credit Facility, the Loan Agreement, the Promissory Note and the Guaranty Warrants are only summaries and are
qualified in their entirety by reference to the copies of those documents filed as Exhibits to this Report.