NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Note
1 - Organization and Nature of Operations
Organization
and Nature of Operations
FOMO CORP. (“FOMO,” “we,”
“our” or “the Company”), is focused on the sale of its smart board technology as well as related installation
services through its wholly owned subsidiary SMARTSolution Technologies L.P. (“SST”). Additionally, the Company
markets and sells clean air disinfection products.
On
May, 18 2021, FOMO incorporated FOMO ADVISORS LLC, a Wyoming limited liability company, as a wholly owned private merchant banking subsidiary.
FOMO ADVISORS LLC intends to assist private companies in accessing the capital markets through “pass through” investments
that allow investors to gain liquidity, while benefiting from direct exposure to private company growth through derivative instruments
or other rights. The subsidiary is engaging with strategic targets to introduce them to its network of financial and strategic contacts,
provide them management consulting, and create a portfolio of technology investments for future incubation, capital formation, and wealth
creation. The Company is currently evaluating its corporate development pipeline and has identified a number of candidates for this capital
formation model, though there can be no assurances. Currently, this entity is inactive.
On February 28, 2022, the Company acquired SST , see
Note 9.
In
June 2022, the Company applied with the State of California for a name change to FOMO Worldwide, Inc. The name change is being reviewed
for approval.
The
parent (FOMO CORP.) and subsidiaries are organized as follows:
Schedule of Parent and Subsidiaries
Company
Name | |
Incorporation
Date |
| |
State
of Incorporation | |
FOMO
CORP. (“FOMO” or the “Company”) | |
| 1990 |
| |
| California | |
FOMO
Advisors, LLC (“FOMOAD”) | |
| 2021 |
| |
| Wyoming | |
SMARTSolution
Technologies L.P. (“SST”) | |
| 1995 |
1 | |
| Pennsylvania | |
IAQ
Technologies, LLC (“IAQ”) | |
| 2020 |
2 | |
| Pennsylvania | |
Energy Intelligence Center LLC (“EIC”) | |
| 2021 |
3 | |
| Wyoming | |
1 |
The Company
was acquired on February 28, 2022 |
2 |
The Company was acquired in 2020 |
3 |
The Company
was formed in 2021 |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
IAQ
Technologies, LLC
On
October 19, 2020, the Company acquired 100% of the membership interests of Purge Virus, LLC in exchange for the issuance of 2,000,000
Series B Preferred Shares valued at $800,000 to its member. We subsequently changed the name of the company to IAQ Technologies LLC (“IAQ”).
IAQ, which is based in Philadelphia, PA, is engaged in the marketing and sale of disinfection products and services to businesses, including
hotels, hospitals, cruise ships, offices, and government facilities, as well as to individuals. Products and services marketed by IAQ
include:
| ● | Ultraviolet-C
in-duct and portable devices, |
| ● | Hybrid
disinfection devices with UVC, carbon filtration and HEPA filtration, |
| ● | Hybrid
disinfection devices with UVC and Photo Plasma, |
| ● | Bio-polar
ionization disinfection for virus and Volatile Organic Compound disinfection; and |
| ● | PPE
(personal protective equipment) ranging from masks to gloves with factory-direct supply side
logistics. |
Operating
results for IAQ since its acquisition have not met expectations, Accordingly, the interim chief executive is in the process of reorganizing
IAQ. Accordingly, we determined that IAQ’s value was impaired at December 31, 2021.
Independence
LED Lighting, LLC and Energy Intelligence Center, LLC
On
February 12, 2021, the Company purchased the assets of Independence LED Lighting, LLC (“iLED”), an affiliate of IAQ, in exchange
for the issuance of 250,000 Series B Preferred Shares valued at $3.3 million, iLED is in the sale of clean air products intended for
use in disinfecting and improving air quality.
On
March 7, 2021, the Company purchased the assets of Energy Intelligence Center, LLC (“EIC PA”) in exchange for the issuance
of 125,000 Series B Preferred Shares and 50,000,000 warrants valued at $1,479,121. EIC is engaged in the commercialization, marketing
and licensing of software and hardware designed to work in conjunction with a commercial building’s HVAC system to reduce energy
consumption and optimize operating efficiency.
Following
the acquisitions of the assets of iLED and EIC, the Company combined the assets and businesses of iLED and EIC into a newly formed
wholly owned subsidiary, Energy Intelligence Center LLC (“EIC Wyoming”).
The
Founder and Former Managing Member of IAQ, iLED and EIC stayed on following the asset acquisitions to run their businesses. However,
in July 2021, he stepped down and assumed a consulting role and a new chief executive operating officer was hired to run the businesses
of IAQ and EIC Wyoming. Such individual resigned from his position on March 2, 2022 and we then appointed an interim chief executive
officer.
See
Note 9.
SMARTSolution
Technologies L.P.
On
February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies
L.P. and SMARTSolution Technologies, Inc. (collectively “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 audio/visual systems integration company that designs and builds presentation, teleconferencing
and collaborative systems for businesses, educational institutions, and other nonprofit organizations.
SST
has been engaged in the EdTech business for over 25 years. SST markets its systems to and installs the systems in elementary, middle
and high schools, as well as colleges, universities, and commercial facilities. A current focus of SST’s business is the sale and
installation of interactive smartboards to elementary, middle and high schools. These interactive smartboards provide students with interactive
remote access from home or other locations to classrooms and teachers via personal computers, laptops, tablets, and similar devices. SST
currently markets its systems primarily in Western Pennsylvania, Eastern Ohio, and West Virginia, is in the process of expanding into
the Alabama and Michigan markets and plans to expand further throughout the United States as opportunities present itself organically
or through strategic acquisitions.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
As
a result of the growth in remote learning, as a result of the COVID-19 pandemic and otherwise, and due to $500 billion in stimulus funding
(“ESSER funds”) from the federal government, SST is currently experiencing a significant increase in orders and sales and
a growth in backlog.
The
interactive smartboards which form the key element of SST’s interactive systems are supplied by a single supplier in Canada,
SMART Technologies ULC, which is a subsidiary of a large multi-national company, Foxconn (of Hon Hai Technology Group). SST believes that its relationship with its
supplier is excellent, although there can be no assurance that if the relationship with the supplier was interrupted or otherwise
adversely affected that an alternative source of supply at commercially reasonable cost would be available or that SST’s
business would not be seriously harmed.
See
note 9.
Note
2 - Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and
Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain
all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial
statements.
In
the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments
necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2022 and the
results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2022 are
not necessarily indicative of the operating results for the full fiscal year or any future period.
These
unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 28, 2022.
Management
acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all
adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated
financial position and the consolidated results of its operations for the periods presented.
Principles
of Consolidation
These
consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly
owned subsidiaries. All intercompany transactions and balances have been eliminated.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Business
Combinations
The
Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities
assumed are recorded at their respective fair values at the acquisition date.
The
fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed
based on their respective fair values. Goodwill represents excess of the purchase price over the estimated fair values of the assets
acquired and liabilities assumed.
Significant
judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful
life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in
computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets
acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these
estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement
period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets
and liabilities made after the end of the measurement period are recorded within the Company’s operating results.
On
February 28, 2022 (the “closing”, the “closing date”), the Company and SST executed
a securities purchase agreement, which is treated as a business combination, and accounted for using the acquisition method. SST became
a wholly owned subsidiary of the Company. See Note 9.
At
March 31, 2022 and December 31, 2021, goodwill was $1,443,688 and $0, respectively.
As
a result of the SST acquisition, the consolidated financial statements include the balance sheet of SST at March 31, 2022, as well as
the results of operations and cash flows of SST from the date of acquisition through March 31, 2022.
Goodwill
and Intangible Assets
The
Company initially records 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.
For
the three months ended March 31, 2022 and 2021, impairment expense was $0 and $0, respectively.
Business
Segments and Concentrations
The
Company uses the “management approach” to identify its reportable segments. The management approach requires companies to
report segment financial information consistent with information used by management for making operating decisions and assessing performance
as the basis for identifying the Company’s reportable segments. The Company manages its business as a single reportable segment.
Customers in the United States accounted for approximately 100% of our revenues. We do not have any property or equipment outside of
the United States.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Use
of Estimates
Preparing
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues
and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Significant
estimates during the three months ended March 31, 2022 and the year ended December 31, 2021, respectively, include, allowance for
doubtful accounts and other receivables, inventory reserves and classifications, valuation of investments, valuation of goodwill and
intangible assets, valuation of loss contingencies, valuation of derivative liabilities, valuation of stock-based compensation,
estimated useful lives related to intangible assets and property and equipment, uncertain tax positions, and the valuation allowance
on deferred tax assets.
Risks
and Uncertainties
The
Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations
are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business
failure.
The
Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected
to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in
the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility
of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project
the Company’s operating results on a consistent basis.
Coronavirus
(“COVID-19”) Pandemic
During
the three months ended March 31, 2022, the Company’s financial results and operations were not materially adversely impacted by
the COVID-19 pandemic. The extent to which the Company’s future financial results could be impacted by the COVID-19 pandemic depends
on future developments that are highly uncertain and cannot be predicted at this time. The Company is not aware of any specific event
or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities.
These
estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these
estimates under different assumptions or conditions.
Fair
Value of Financial Instruments
The
Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements.
ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined
as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific
asset or liability.
The
Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring
basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement.
The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining
fair value.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The
three tiers are defined as follows:
| ● | Level
1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets
or liabilities in active markets; |
| ● | Level
2 - Observable inputs other than quoted prices in active markets that are observable either
directly or indirectly in the marketplace for identical or similar assets and liabilities;
and |
| ● | Level
3 - Unobservable inputs that are supported by little or no market data, which require the
Company to develop its own assumptions. |
The
determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations
often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation
methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the
asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions
of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors
to assist us in determining fair value, as appropriate.
Although
the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative
of net realizable value or reflective of future fair values.
The
Company’s financial instruments, including cash, accounts receivable, inventory, accounts payable and accrued expenses, loans payable
and notes payable are carried at historical cost. At March 31, 2022 and December 31, 2021, respectively, the carrying amounts of these
instruments approximated their fair values because of the short-term nature of these instruments.
ASC
825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities
at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable
unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument
should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding
financial instruments.
The
Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate
level in which to classify them for each reporting period. This determination requires significant judgments to be made.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Assets
and liabilities measured at fair value at March 31, 2022 and December 31, 2021 are as follows:
Schedule of Fair Value of Assets And Liabilities
| |
March
31, 2022 | |
| |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
Assets | |
| | |
| | |
| | |
| |
Investments | |
$ | 467,599 | | |
| - | | |
$ | 50,000 | | |
$ | 517,599 | |
Total
Assets | |
$ | 467,599 | | |
$ | - | | |
$ | 50,000 | | |
$ | 517,599 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative
liabilities | |
$ | - | | |
| - | | |
$ | 761,603 | | |
$ | 761,603 | |
Total | |
$ | - | | |
$ | - | | |
$ | 761,603 | | |
$ | 761,603 | |
| |
| December
31, 2021 | |
| |
| Level
1 | | |
| Level
2 | | |
| Level
3 | | |
| Total | |
Assets | |
| | | |
| | | |
| | | |
| | |
Investments | |
$ | 740,463 | | |
| - | | |
$ | 25,000 | | |
$ | 765,463 | |
Total
Assets | |
$ | 740,463 | | |
$ | - | | |
$ | 25,000 | | |
$ | 765,463 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative
liabilities | |
$ | - | | |
| - | | |
$ | 1,105,537 | | |
$ | 1,105,537 | |
Total | |
$ | - | | |
$ | - | | |
$ | 1,105,537 | | |
$ | 1,105,537 | |
Level
1 Investments consist of common stock, options and warrants of publicly traded companies which are considered to be highly liquid and
easily tradeable. The Company also holds Level 3 investments in the common stock of a private company.
Derivative
liabilities are derived from certain convertible notes payable and warrants.
Cash
and Cash Equivalents and Concentration of Credit Risk
For
purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months
or less at the purchase date and money market accounts to be cash equivalents. At March 31, 2022 and December 31, 2021, respectively,
the Company did not have any cash equivalents.
The
Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent
account balances exceed the amount insured by the FDIC, which is $250,000. There were no accounts in excess of this insured limit.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Accounts
Receivable
The
Company has a policy of reserving for uncollectible accounts based on the best estimate of the amount of probable credit losses in our
existing accounts receivable. We extend credit to customers based on an evaluation of their financial condition and other factors. The
Company generally does not require collateral or other security to support accounts receivable and perform ongoing credit evaluations
of customers and maintain an allowance for potential bad debts if required.
It
is determined whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates the
customers may have an inability to meet financial obligations. In these cases, we use assumptions and judgment, based on the best available
facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount
expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts
calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance, as necessary.
Direct
write-offs are taken in the period when we have exhausted our efforts to collect overdue and unpaid receivables or otherwise evaluate
other circumstances that indicate the collectability of receivables.
Allowance
for doubtful accounts at March 31, 2022 and December 31, 2021, were $0, respectively. For the three months ended March 31,
2022 and 2021, the Company recorded bad debt expense of $0 and $0, respectively.
Bad
debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements
of operations.
The
Company had the following concentrations at March 31, 2022 and December 31, 2021, respectively. All concentrations relate solely to the
operations of SST.
Schedules of Concentration of Risk Percentage
| |
Three
Months Ended | | |
Year
Ended | |
Customer | |
March
31, 2022 | | |
December
31, 2021 | |
A | |
| 46 | % | |
| 0 | % |
B | |
| 18 | % | |
| 0 | % |
C | |
| 10 | % | |
| 0 | % |
Total | |
| 74 | % | |
| 0 | % |
Inventory
Inventory
consists of finished products purchased from third-party suppliers. The Company’s inventory primarily consists of Smart Boards
which are sold by SST.
Inventory
is stated at the lower of cost or net realizable value. Cost is determined using the specific identification method for finished goods.
Management compares the cost of inventory with the net realizable value and, if applicable, an allowance is made for writing down the
inventory to its net realizable value, if lower than cost, inventory is reviewed for potential write-down for estimated obsolescence
or unmarketable inventory based upon forecasts for future demand and market conditions. Generally, the Company only keeps inventory on
hand for sales made and in which a deposit has been received.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
At
March 31, 2022 and December 31, 2021 inventory consisted of:
Schedule of Inventory
Classification | |
March
31, 2022 | | |
December
31, 2021 | |
Smart
Boards | |
$ | 513,750 | | |
$ | - | |
Clean
Air Technology | |
| 11,555 | | |
| 8,114 | |
Total
Inventory | |
$ | 525,305 | | |
$ | 8,114 | |
During
the three months ended March 31, 2022 and 2021 , impairment expense was $0 and $0, respectively.
The
Company had the following vendor purchase concentrations at March 31, 2022 and 2021, respectively. All concentrations relate solely to
the operations of SST.
Schedule of Vendor Purchase Concentrations Percentage
| |
Three
Months Ended March 31, | |
Customer | |
2022 | | |
2021 | |
A | |
| 84 | % | |
| 0 | % |
Total | |
| 84 | % | |
| 0 | % |
Impairment
of Long-lived Assets
Management
evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances
indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived
Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible
assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative
to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes
in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be
generated from the use and ultimate disposition of these assets.
If
impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to
be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
For
the three months ended March 31, 2022 and 2021, impairment expense was $0 and $0, respectively.
Property
and Equipment
Property
and equipment are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated
useful lives of the assets, which range from one to seven years.
Expenditures
for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When
property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective
accounts with the resulting gain or loss reflected in operations.
Management
reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
For the three months ended March 31, 2022 and 2021, impairment expense
was $0 and $0, respectively.
Derivative
Liabilities
The
Company assessed the classification of its derivative financial instruments as of March 31, 2022 and December 31, 2021, which consist
of convertible notes payable and certain warrants (excluding those for compensation) and has determined that such instruments qualify
for treatment as derivative liabilities as they meet the criteria for liability classification under ASC 815.
The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”),
“Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives
and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease
in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. The
Company uses a binomial pricing model to determine fair value of these instruments.
Upon
conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated
and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock
at fair value, relieves all related debt, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment.
In connection with the debt extinguishment, the Company typically records an increase to additional paid-in capital for any remaining
liability balance.
Equity
instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities
at the fair value of the instrument on the reclassification date.
Original
Issue Discount
For
certain notes issued, the Company may provide the debt holder with an original issue discount. The original issue discount is recorded
as a debt discount, reducing the face amount of the note, and is amortized to interest expense over the life of the debt, in the Consolidated
Statements of Operations.
Debt
Issue Cost
Debt
issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense over the life of the
underlying debt instrument, in the Consolidated Statements of Operations.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Operating
Lease
From
time to time, we may enter into operating lease or sub-lease agreements, including our corporate headquarters. We account for leases in
accordance with ASC Topic 842: Leases, which requires a lessee to utilize the right-of-use model and to record a right-of-use
asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either financing
or operating, with classification affecting the pattern of expense recognition in the statement of operations. In addition, a lessor
is required to classify leases as either sales-type, financing or operating. A lease will be treated as a sale if it transfers all of
the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer
of control, the lease is treated as financing. If the lessor does not convey risk and rewards or control, the lease is treated as operating.
We determine if an arrangement is a lease, or contains a lease, at inception and record the lease in our financial statements upon lease
commencement, which is the date when the underlying asset is made available for use by the lessor.
Right-of-use
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease
payments over the lease term. Lease right-of-use assets and liabilities at commencement are initially measured at the present value of
lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at commencement
to determine the present value of lease payments except when an implicit interest rate is readily determinable. We determine our incremental
borrowing rate based on market sources including relevant industry data.
We
may have lease agreements with lease and non-lease components and have elected to utilize the practical expedient to account for lease
and non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception
of direct sales-type leases and production equipment classes embedded in supply agreements. From a lessor perspective, the timing and
pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for
separately, would be classified as an operating lease.
We
have elected not to present short-term leases on the balance sheet as these leases have a lease term of 12 months or less at lease inception
and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities
are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not
provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date
in determining the present value of lease payments.
Our
leases, where we are the lessee, do not include an option to extend the lease term. Our lease does not include an option to terminate
the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease term would include options
to extend or terminate the lease when it is reasonably certain that we will exercise such options.
Lease
expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, included as a component
of general and administrative expenses, in the accompanying consolidated statements of operations.
Certain
operating leases provide for annual increases to lease payments based on an index or rate, our lease has no stated increase, payments
were fixed at lease inception. We calculate the present value of future lease payments based on the index or rate at the lease commencement
date. Differences between the calculated lease payment and actual payment are expensed as incurred.
See
Note 10.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that an
entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for arrangements
that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
| ● | Identification
of the contract, or contracts, with a customer |
| ● | Identification
of the performance obligations in the contract |
| ● | Determination
of the transaction price |
| ● | Allocation
of the transaction price to the performance obligations in the contract |
| ● | Recognition
of the revenue when, or as, performance obligations are satisfied |
Identify
the contract with a customer.
A
contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s
rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial
substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable
based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s
ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or,
in the case of a new customer, published credit and financial information pertaining to the customer.
Identify
the performance obligations in the contract.
Performance
obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable
of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily
available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services
is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company
must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract.
If these criteria are not met the promised services are accounted for as a combined performance obligation.
Determine
the transaction price.
The
transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services
to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration
that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending
on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment,
it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s
contracts as of March 31, 2022 and 2021, contained a significant financing component.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Allocate
the transaction price to performance obligations in the contract.
If
the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract
with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a
specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised
in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations
require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless
the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service
that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance
obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the
standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines
related to the performance obligations.
Recognize
revenue when or as the Company satisfies a performance obligation.
The
Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance
obligation is satisfied by transferring a promised service to a customer.
When
determining revenues, no significant judgements or assumptions are required. For all transactions, the sales price is fixed and determinable
(no variable consideration). All consideration from contracts is included in the transaction price. The Company’s contracts all
contain single performance obligations.
For
our contracts with customers, payment terms generally range from advance payments prior to product delivery and/or installation to certain
cases where payment is due within 30 days from job completion. The timing of satisfying our performance obligations does not vary significantly
from the typical timing of payment.
For
each revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. However, the Company acts
as a reseller of warranties for its Smart Boards, which are serviced by the manufacturer, and in some cases requires SST to perform warranty
related services.
Sales
taxes and other similar taxes are excluded from revenue.
Smart
Boards and Installation Services
Smart
Boards are sold to customers and may require an upfront deposit. The Company also installs its Smart Boards in connection with the
sale. All revenue is recognized at a point in time upon completion of any installation, which typically occurs withing thirty (30)
days of delivering the product.
Installation
Services
Certain
customers contract with the Company to perform installation only services where they have acquired products from a different company/seller.
All revenue is recognized at a point in time upon completion of any installation.
Clean
Air Technology
All
sales are recognized upon delivery of products to the customer.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Contract
Liabilities (Deferred Revenue)
Contract
liabilities represent deposits made by customers before the satisfaction of a performance obligation and recognition of revenue. Upon
completion of the performance obligation that the Company has with the customer based on the terms of the contract, the liability for
the customer deposit is relieved and revenue is recognized.
At
March 31, 2022 and December 31, 2021, the Company had deferred revenue of $648,286 and $11,100, respectively.
The
following represents the Company’s disaggregation of revenues for the three months ended March 31, 2022 and 2021:
Schedule of Disaggregation of Revenue
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Revenue | |
Revenue | | |
%
of Revenues | | |
Revenue | | |
%
of Revenues | |
Smart
boards and installation | |
$ | 531,076 | | |
| 90 | % | |
$ | - | | |
| 0 | % |
Installation
services | |
| 48,490 | | |
| 8 | % | |
| - | | |
| 0 | % |
Clean
air technology products | |
| 12,725 | | |
| 2 | % | |
| 151,392 | | |
| 100 | % |
Total
Revenues | |
$ | 592,291 | | |
| 100 | % | |
$ | 151,392 | | |
| 100 | % |
The
Company had the following sales concentrations at March 31, 2022 and 2021, respectively. All concentrations relate solely to the operations
of SST.
Schedule of Sales Concentrations Percentage
| |
Three
Months Ended March 31, | |
Customer | |
2022 | | |
2021 | |
A | |
| 31 | % | |
| 0 | % |
B | |
| 29 | % | |
| 0 | % |
C | |
| 18 | % | |
| 0 | % |
Total | |
| 78 | % | |
| 0 | % |
Cost
of Sales
Cost
of sales primarily consists of product sales, purchased supplies, materials and overhead.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Income
Taxes
The
Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under
this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases
of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse.
The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not
that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is
recognized as income or loss in the period that includes the enactment date.
The
Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using
that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of March 31, 2022 and December 31, 2021, respectively, the Company had
no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The
Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related
to uncertain income tax positions were recorded for the three months ended March 31, 2022 and 2021, respectively.
Advertising
Costs
Advertising
costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the consolidated
statements of operations.
The
Company recognized $13,300 and $0 in marketing and advertising costs during the three months ended March 31, 2022 and 2021.
Stock-Based
Compensation
The
Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the
fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized
over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions
in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by
the issuance of those equity instruments.
The
Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the
fair value of options.
The
fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services
is completed (measurement date) and is recognized over the vesting periods.
When
determining fair value, the Company considers the following assumptions in the Black-Scholes model:
● |
Exercise
price, |
● |
Expected
dividends, |
● |
Expected
volatility, |
● |
Risk-free
interest rate; and |
● |
Expected
life of option |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Stock
Warrants
In
connection with certain financing (debt or equity), consulting and collaboration arrangements, the Company may issue warrants to purchase
shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the
holder and are classified as equity awards. The Company measures the fair value of warrants issued for compensation using the Black-Scholes
option pricing model as of the measurement date. However, for warrants issued that meet the definition of a derivative liability, fair
value is determined based upon the use of a binomial pricing model.
Warrants
issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital
of the common stock issued. All other warrants are recorded at fair value and expensed over the requisite service period or at the date
of issuance if there is not a service period.
Basic
and Diluted Earnings (Loss) per Share
Pursuant
to ASC 260-10-45, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of
shares of common stock outstanding for the periods presented. Diluted earnings per share is computed by dividing net income by the weighted
average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method),
convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. In the event of a net loss,
diluted loss per share is the same as basic loss per share since the effect of the potential common stock equivalents upon conversion
would be anti-dilutive.
The
following potentially dilutive equity securities outstanding as of March 31, 2022 were as follows:
Schedule
of Anti Dilutive Equity Securities Outstanding
| |
March
31,2022 | |
Series
A, preferred stock (1) | |
| 287,500,000 | |
Series
B, preferred stock (2) | |
| 6,839,982,000 | |
Series
C, preferred stock (3) | |
| 1,000,000 | |
Convertible
notes and related accrued interest (4) | |
| 886,455,655 | |
Warrants
(5) | |
| 1,932,113,095 | |
Total | |
| 9,947,050,750 | |
1
– |
Each
share converts into 50 shares of common stock. |
|
|
2
– |
Each
share converts into 1,000 shares of common stock. |
|
|
3
– |
Each
share converts into 1 share of common stock. |
|
|
4
- |
Certain
notes have exercise prices that have a discount to market and cause variability into the potential amount of common stock equivalents
outstanding at each reporting period. As a result, the amount computed for common stock equivalents could change given the quoted closing
trading price at each reporting period. |
|
|
5
- |
Represents
those that are vested and exercisable. |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Based
on the potential common stock equivalents noted above at March 31, 2022, and the potential variability in stock prices, which directly
affect the Company’s ability to determine if it has sufficient shares to settle all possible debt or equity conversions, the Company
has determined that it does not have sufficient authorized shares of common stock (1,000,000,000) to settle any potential exercises of
common stock equivalents.
Related
Parties
Parties
are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are
controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company may
deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests.
Reclassifications
Certain
prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on
the consolidated results of operations, stockholders’ deficit, or cash flows.
Recent
Accounting Standards
Changes
to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability
and impact of all ASUs on our consolidated financial position, results of operations, stockholders’ deficit, cash flows,
or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting
Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting
pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated
financial statements of the Company.
In
August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”),
as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or
improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes
from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component,
unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium.
As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and
will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method
when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current
accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning
after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the
fiscal year.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
We
adopted this pronouncement on January 1, 2022; however, the adoption of this standard did not have a material effect on the Company’s
consolidated financial statements.
In
May 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04,
Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation
(Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for
Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and
reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options
(such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning
after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to
modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in
an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the
beginning of the fiscal year that includes that interim period. The Company does not expect the adoption of this standard to have a material
effect on the Company’s consolidated financial statements.
In
October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract
liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years beginning after
December 15, 2022 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential
impacts of ASU 2021-08, it does not expect ASU 2021-08 will have a material effect, if any, on its consolidated financial statements.
Note
3 - Liquidity, Going Concern and Management’s Plans
These
consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business.
As
reflected in the accompanying consolidated financial statements, for the three months ended March 31, 2022, the Company had:
● | Net
loss of $1,825,808; and |
● | Net
cash used in operations was $791,893 |
Additionally,
at March 31, 2022, the Company had:
● |
Accumulated
deficit of $22,116,012 |
● |
Stockholders’
deficit of $87,341; and |
● |
Working
capital deficit of $1,851,920 |
We
manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand
of $69,666 at March 31, 2022. Although the Company intends to raise additional debt or equity capital, the Company expects to continue
to incur significant losses from operations and have negative cash flows from operating activities for the near-term. These losses could
be significant as product and service sales ramp up along with continuing expenses related to compensation, professional fees, development
and regulatory are incurred.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The
Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from
the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will ever
be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis
of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended March
31, 2023, and our current capital structure including equity-based instruments and our obligations and debts.
If
the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities
or cease operations. The Company continues to explore obtaining additional capital financing and the Company is closely monitoring its
cash balances, cash needs, and expense levels.
These
factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent
to the date that these consolidated financial statements are issued. The consolidated financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have
been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and
satisfaction of liabilities and commitments in the ordinary course of business.
Management’s
strategic plans include the following:
● | Pursuing
additional capital raising opportunities (debt or equity), |
● | Continue
to execute on our strategic planning while increasing operational efficiency, |
● | Continuing
to explore and execute prospective partnering or distribution opportunities; and |
● | Identifying
unique market opportunities that represent potential positive short-term cash flow. |
Note
4 – Loan Receivable – Related Party
During
2021, the Company has advanced funds to an affiliate of the Company’s Chief Executive Officer to pay for corporate operating expenses.
The Company expects to receive repayment in 2022.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The
following is a summary of the Company’s advances – related party is as follows:
Summary
of Loans Receivable Advances Related Party
| |
Loan
Receivable | |
Terms | |
Related
Party | |
| |
| |
Issuance
dates of advances | |
| 2021 | |
Maturity
date | |
| Due
on Demand | |
Interest
rate | |
| 0 | % |
Collateral | |
| Unsecured | |
| |
| | |
Balance
- December 31, 2020 | |
$ | - | |
Advances | |
| 53,732 | |
Balance
- December 31, 2021 | |
| 53,732 | |
Beginning balance | |
| 53,732 | |
Advances | |
| 525 | |
Repayments | |
| (15,199 | ) |
Balance
- March 31, 2022 | |
$ | 39,058 | |
Ending balance | |
$ | 39,058 | |
Note
5 – Property and Equipment
Property
and equipment consisted of the following:
Schedule
of Property and Equipment
| |
| | |
| | |
Estimated
Useful | |
| |
March
31, 2022 | | |
December
31, 2021 | | |
Lives
(Years) | |
| |
| | |
| | |
| |
Leasehold
Improvements | |
$ | 178,278 | | |
$ | - | | |
| 40 | |
Vehicles | |
| 70,221 | | |
| - | | |
| 5
- 10 | |
Furniture | |
| 19,595 | | |
| - | | |
| 10 | |
Equipment | |
| 5,000 | | |
| - | | |
| 5 | |
Property
and Equipment gross | |
| 273,094 | | |
| - | | |
| | |
Accumulated
depreciation | |
| 191,120 | | |
| - | | |
| | |
Total
property and equipment - net | |
$ | 81,974 | | |
$ | - | | |
| | |
Depreciation
expense for the three months ended March 31, 2022 and 2021, was $579 and $0, respectively.
These
amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations.
In
connection with the acquisition of SST on February 28, 2022, the Company acquired property and equipment with a net carrying amount of
$82,553.
See
Note 9.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Note
6 – Investments
The
Company’s marketable securities consist of investments in equity securities. Dividends and interest income are accrued as earned.
Realized gains and losses are determined on a specific identification basis. The Company reviews marketable securities for impairment
whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. The changes
in the fair value of these securities are recognized in current period earnings in accordance with ASC 825.
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 Peer-to-Peer
Inc (PTOP). The shares were valued at the market price of $0.0023 per share, or $483,000, at the acquisition date. The shares are valued
at the market price at December 31, 2021 of $0.00070 and per share for a total investment of $147,000.
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 $0.0122 per share or $12,220 at the acquisition date. On July 31, 2021, the Company transferred
the shares to Himalaya Technologies Inc (HMLA) for 150,000 shares of the preferred B stock in HMLA. The Company valued the investment
of HMLA and the carrying value of KANAB CORP at the time the shares were exchanged. The fair value at December 31, 2021 for HMLA is $12,220.
HMLA is a related party as it has common officers and control. On June 28, 2021, FOMO Advisors LLC was also granted 50,000,000 warrants with a five-year expiration and $.0001 exercise
price of Himalaya Technologies Inc (HMLA). The warrants were valued at zero due to their illiquid nature.
On
October 4, 2021, the Company invested $25,000
for 25,000
common shares in GENBIO Inc. On January 24, 2022 and March 3, 2022, the Company invested an additional $15,000 for 15,000 shares and
$10,000 for 10,000 shares of GENBIO, Inc., respectively. The Company valued the shares at $1.00
per share. GENBIO Inc is a private Biotechnology Company that researches natural products that act on new molecular pathways,
primarily to suppress inflammation at critical points in these biochemical pathways. The Company’s research has shown that
these active compounds decrease obesity-induced increases in abdominal fat pads, blood pressure, fatty liver, and insulin
resistance.
In
2021, the Company’s Chief Executive Officer assigned his investment brokerage account with Interactive Brokers to the Company.
The investments in the account are marketable equity securities.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The
following is a summary of the Company’s investments at March 31, 2022 and December 31, 2021.
Schedule
of Investments
March 31, 2022 |
Securities Held | |
Acquisition Date | |
Shares Held | | |
Price per Share | | |
Value of Securities | |
| |
| |
| |
| | |
| | |
| |
Securities | |
Stock, options, and warrants | |
Various | |
| Various | | |
| Various | | |
$ | 371,599 | 1 |
Himalaya Technologies, Inc. (HMLA) | |
Series B, preferred stock and warrants | |
2021 | |
| 150,000 | | |
$ | 0.08 | | |
| 12,000 | 2 |
Peer to Peer, Inc. (PTOP) | |
Common stock | |
2019 | |
| 210,000,000 | | |
$ | 0.0004 | | |
| 84,000 | 3 |
GenBio | |
Private company | |
2021 and 2022 | |
| 50,000 | | |
$ | 1.00 | | |
| 50,000 | 4 |
| |
| |
| |
| | | |
| | | |
$ | 517,599 | |
1
- |
all
investments are held at our third-party independent broker. $328,249
of the investments were in
one security at March 31, 2022. The remaining investments are in foreign exchange cash. $487,813 in one security were also lent by the Company at March 31, 2022. |
2
- |
during
2021, the Company exchanged 1,000,000 shares of Kanab Corp for 150,000 shares of Series B, preferred stock in HMLA. During 2021, a subsidiary of the Company also received 50,000,000
warrants with a five-year expiration and $.0001 exercise price of HMLA Our CEO is also
the CEO of HMLA. |
|
The
Series B shares are not publicly traded and are based upon the cost method. The valuation of these shares was determined at
the time of exchange. |
3
- |
based
upon the quoted closing trading price. |
4
- |
based
on cost method. |
During
2022, the Company purchased 25,000 shares of GenBio for $25,000 ($1/share)
March
31, 2022 |
Description | |
Cost | | |
Gross
Unrealized
Gains | | |
Gross Unrealized
Losses | | |
Fair
Value | |
| |
| | | |
| | | |
| | | |
| | |
Marketable
securities | |
$ | 1,410,579 | | |
$ | - | | |
$ | (892,980 | ) | |
| 517,599 | |
December
31, 2021 |
Securities
Held | |
Acquisition
Date | |
Shares
Held | | |
Price
per Share | | |
Value
of Securities | |
| |
| |
| |
| | |
| | |
| |
Securities | |
Stock,
options, and warrants | |
Various | |
| Various | | |
| Various | | |
$ | 581,243 | 1 |
Himalaya
Technologies, Inc. (HMLA) | |
Series
B, preferred stock and warrants | |
2021 | |
| 150,000 | | |
$ | 0.08 | | |
| 12,220 | 2 |
Peer
to Peer, Inc. (PTOP) | |
Common
stock | |
2019 | |
| 210,000,000 | | |
$ | 0.0007 | | |
| 147,000 | 3 |
GenBio | |
Private
company | |
2021 | |
| 25,000 | | |
$ | 1.00 | | |
| 25,000 | 4 |
| |
| |
| |
| | | |
| | | |
$ | 765,463 | |
1
- |
all
investments are held at our third-party independent broker. |
2
- |
during
2021, the Company exchanged 1,000,000 shares of Kanab Corp for 150,000 shares of Series B, preferred stock in HMLA. During 2021, a subsidiary of the Company also received 50,000,000
warrants with a five-year expiration and $.0001 exercise price of HMLA Our CEO
is also the CEO of HMLA. |
|
The
Series B shares are not publicly traded and are based upon the cost method. The valuation of these shares was determined at
the time of exchange. |
3
- |
based
upon the quoted closing trading price. |
4
- |
based
on cost method. |
During
2021, the Company purchased 25,000 shares of GenBio for $25,000 ($1/share)
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
December
31, 2021 |
Description | |
Cost | | |
Gross Unrealized
Gains | | |
Gross Unrealized
Losses | | |
Fair
Value | |
| |
| | | |
| | | |
| | | |
| | |
Marketable
securities | |
$ | 1,200,500 | | |
$ | - | | |
$ | (435,037 | ) | |
| 765,463 | |
Note
7 – Debt
The
following represents a summary of the Company’s convertible notes payable, convertible note payable – related party, accounts
receivable credit facility, and loans payable – related parties, key terms, and outstanding balances at March 31, 2022 and December
31, 2021, respectively:
Convertible
Notes Payable
The
Company executed several convertible notes with various lenders as follows:
Schedule
of Convertible Notes Payable
| |
Convertible
Notes Payable | |
| |
GS
Capital | | |
PowerUp
Lending | | |
Sixth
Street Lending | | |
Various | |
| |
| | |
| | |
| | |
| |
Issuance
Dates of Convertible Notes | |
| June
2021 - January 2022 | | |
| September
2021 | | |
| October
2021 - January 2022 | | |
| 2019
- 2020 | |
Maturity
Dates of Convertible Notes | |
| April
2022 - January 2023 | | |
| September
2022 | | |
| October
2022 - January 2023 | | |
| 2019
- 2021 | |
Interest
Rate | |
| 10 | % | |
| 12 | % | |
| 12 | % | |
| 10%
- 12 | % |
Default
Interest Rate | |
| 24 | % | |
| 22 | % | |
| 22 | % | |
| 22 | % |
Collateral | |
| Unsecured | | |
| Unsecured | | |
| Unsecured | | |
| Unsecured | |
Conversion
Rate | |
| $0.001
or 60% of the average of the two (2) lowest prices in the prior 20-day period | | |
| 61%
of the average of the two (2) lowest prices in the prior 20-day period | | |
| 61%
of the average of the two (2) lowest prices in the prior 20-day period | | |
| | |
| |
GS
Capital | | |
PowerUp
Lending | | |
Sixth
Street Lending | | |
Various | | |
Total | |
| |
| | |
| | |
| | |
| | |
| |
Balance
- December 31, 2020 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 226,186 | | |
$ | 226,186 | |
Beginning Balance | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 226,186 | | |
$ | 226,186 | |
Debt
converted to common stock | |
| - | | |
| - | | |
| - | | |
| (483,436 | ) | |
| (483,436 | ) |
Proceeds
from issuance of notes | |
| 380,000 | | |
| 43,750 | | |
| 78,750 | | |
| 372,250 | | |
| 874,750 | |
Prepayment
of convertible note in cash | |
| - | | |
| - | | |
| - | | |
| (115,000 | ) | |
| (115,000 | ) |
Ending Balance | |
$ | 380,000 | | |
$ | 43,750 | | |
$ | 78,750 | | |
$ | - | | |
$ | 502,500 | |
Less:
unamortized debt discount | |
| (318,455 | ) | |
| (31,524 | ) | |
| (63,216 | ) | |
| | | |
| (413,195 | ) |
Balance
- December 31, 2021 | |
$ | 61,545 | | |
$ | 12,226 | | |
$ | 15,534 | | |
$ | - | | |
$ | 89,305 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance
- December 31, 2021 | |
$ | 380,000 | | |
$ | 43,750 | | |
$ | 78,750 | | |
$ | - | | |
$ | 502,500 | |
Beginning Balance | |
$ | 380,000 | | |
$ | 43,750 | | |
$ | 78,750 | | |
$ | - | | |
$ | 502,500 | |
Proceeds
from issuance of notes | |
| 220,000 | | |
| - | | |
| 43,750 | | |
| - | | |
| 263,750 | |
Conversion
of debt to common stock | |
| (55,000 | ) | |
| (43,750 | ) | |
| - | | |
| - | | |
| (98,750 | ) |
Ending Balance | |
| 545,000 | | |
| - | | |
| 122,500 | | |
| - | | |
| 667,500 | |
Less:
unamortized debt discount | |
| (206,071 | ) | |
| - | | |
| (78,199 | ) | |
| | | |
| (284,270 | ) |
Balance
- March 31, 2022 | |
$ | 338,929 | | |
$ | - | | |
$ | 44,301 | | |
| | | |
$ | 383,230 | |
Balance | |
| 338,929 | | |
| - | | |
| 44,301 | | |
| | | |
$ | 383,230 | |
During
the three months ended March 31, 2022, third-party lenders converted $104,367 of principal, interest, and penalties into 301,448,152 shares
of common stock. This resulted in a loss on debt extinguishment of $205,691.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Convertible
Note Payable – Related Party
In
March 2022, the Chief Executive Officer of SST advanced funds to the Company as follows:
Schedule
of Convertible Note Payable Related Party
| |
Convertible
Debt | |
| |
Related
Party | |
| |
| |
Issuance
Date of Convertible Note | |
| March
31, 2022 | |
Maturity
Date of Convertible Note | |
| September
30, 2022 | |
Interest
Rate | |
| 11.50 | % |
Default
Interest Rate | |
| 0.00 | % |
Collateral | |
| 1 | |
Conversion
Rate | |
| 2 | |
| |
| | |
Balance
- December 31, 2021 | |
$ | - | |
Proceeds
from issuance of note | |
$ | 195,000 | |
Balance
- March 31, 2022 | |
$ | 195,000 | |
1 |
200,000
shares of Series B, Preferred Stock |
2 |
Converts
into Series B, preferred stock at $1/share ($0.001/share in common stock - 1,000 ratio) |
Loans
Payable – Related Parties
In
2022, the Company, in connection with the acquisition of SST, assumed a loan due to SST’s Chief Executive Officer for $321,705.
In
2021 and prior, the Company’s current Chief Executive Officer and former Chief Executive Officer made advances for business operating
expenses.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Loans
payable - related parties is as follows:
Schedule
of Loans Payable - Related Parties
| |
1 | | |
2 | | |
3 | | |
| |
| |
Loan
Payable | | |
Loan
Payable | | |
Loan
Payable | | |
| |
| |
Related
Party | | |
Related
Party | | |
Related
Party | | |
Total | |
| |
| | |
| | |
| | |
| |
Issuance
Date of Loan | |
| Various | | |
| Various | | |
| Various | | |
| | |
Maturity
Date of Convertible Note | |
| Due
on Demand | | |
| Due
on Demand | | |
| Due
on Demand | | |
| | |
Interest
Rate | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % | |
| | |
Default
Interest Rate | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % | |
| | |
Collateral | |
| Unsecured | | |
| Unsecured | | |
| Unsecured | | |
| | |
Conversion
Rate | |
| None | | |
| None | | |
| None | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Balance
- December 31, 2020 | |
$ | - | | |
$ | 3,574 | | |
$ | - | | |
$ | 3,574 | |
Proceeds
from advances | |
| - | | |
| 1,594 | | |
| 17,546 | | |
| 19,140 | |
Balance
- December 31, 2021 | |
| - | | |
| 5,168 | | |
| 17,546 | | |
| 22,714 | |
Beginning Balance | |
| - | | |
| 5,168 | | |
| 17,546 | | |
| 22,714 | |
Debt
acquired in SST acquisition | |
| 321,705 | | |
| - | | |
| - | | |
| 321,705 | |
Repayments | |
| (182,317 | ) | |
| - | | |
| (11,731 | ) | |
| (194,048 | ) |
Balance
- March 31, 2022 | |
$ | 139,388 | | |
$ | 5,168 | | |
$ | 5,815 | | |
$ | 150,371 | |
Ending Balance | |
$ | 139,388 | | |
$ | 5,168 | | |
$ | 5,815 | | |
$ | 150,371 | |
1
- |
reflects
activity related to the Company’s current Chief Executive Officer of SST. |
2 - |
reflects activity related to the Company’s former Chief Executive Officer of FOMO. |
3
- |
reflects
activity related to the Company’s current Chief Executive Officer of FOMO. |
Accounts
Receivable Credit Facility
The
Company, in connection with the acquisition of SST, assumed an accounts receivable credit facility.
On
February 28, 2022, SST entered into a revolving accounts receivable and term loan financing and security agreement in the
aggregate amount of $1,000,000 (subject to adjustment by the lender). The financing provides for advances up to $1,000,000, based upon
85% of eligible accounts receivable (as defined in the agreement) and subject to adjustment at the discretion of the lender.
The
Facility is paid for from the collections of accounts receivable and is secured by all assets of SST. The AR Facility has an
interest rate of the lesser of (a) maximum rate allowed by law and (b) prime plus 5.25%.
The minimum rate of interest is 11.50%.
The
lender charges the following fees:
|
1. |
2%
commitment fee for the establishment of the facility (1% due at funding and 1% due on February 28, 2023); and |
|
2. |
Monitoring
fee of 0.40% of the outstanding credit facility at the end of each month |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The
Company is subject to financial covenants (unless waived by lender) as follows:
|
1. |
Debt
service coverage ratio of 1.25 to 1, |
|
2. |
Fixed
charge coverage ratio of 1.25 to1; and |
|
3. |
Tangible
net worth of $350,000 |
At
March 31, 2022, the Company is in default on the financial covenants noted above, however, the lender has not exercised its rights
of default and has indicated in writing it does not intend to exercise such rights.
The Company and the lender continue to operate under the terms of the agreement without disruption.
The
Company and its subsidiaries are guarantors of this Agreement.
Accounts
receivable credit facility is as follows:
Schedule
of Accounts Receivable Credit Facility
| |
Accounts
Receivable | |
| |
Credit
Facility | |
| |
| |
Issuance
Date of credit facility | |
| February
28, 2022 | |
Maturity
Date of credit facility | |
| February
28, 2024 | |
Interest
Rate | |
| 11.50 | % |
Default
Interest Rate | |
| 0.00 | % |
Collateral | |
| All
assets | |
Conversion
Rate | |
| None | |
| |
| | |
Balance
- December 31, 2021 | |
$ | - | |
Proceed
from drawdowns | |
| 1,022,749 | |
Repayments | |
| (40,232 | ) |
Balance
- March 31, 2022 | |
$ | 982,517 | |
Note
8 – Derivative Liabilities
Certain
of the above convertible notes contained an embedded conversion option with a conversion price that could result in issuing an undeterminable
amount of future common stock to settle the host contract. Accordingly, the embedded conversion option is required to be bifurcated from
the host instrument (convertible note) and treated as a liability, which is calculated at fair value, and marked to market at each reporting
period.
Additionally,
the Company has accounted for certain outstanding warrants (those issued with the above debt) as derivative liabilities as there is an
insufficient amount of authorized common stock to settle all potential conversions.
The
Company used the binomial pricing model to estimate the fair value of its embedded conversion option and warrant liabilities on both
the commitment date and the remeasurement date with the following inputs:
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Schedule
of Derivative Liabilities At Fair Value
| |
Three
Months Ended | | |
Year
Ended | |
| |
March
31, 2022 | | |
December
31, 2021 | |
| |
| | |
| |
Exercise price | |
$ | 0.0001
- $0.01 | | |
$ | 0.0001
- $0.01 | |
Expected
volatility | |
| 184%
- 377 | % | |
| 384 | % |
Risk-free
interest rate | |
| 0.73%
- 2.45 | % | |
| 0.10 | % |
Expected
term (in years) | |
| 0.42
- 3.00 | | |
| 3.00
- 5.00 | |
Expected
dividend rate | |
| 0 | % | |
| 0 | % |
A
reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) is as follows at March 31, 2022 and December 31, 2021:
Schedule
of Derivative Liabilities
| |
Convertible
Debt | | |
Warrants | | |
Total | |
Derivative
liabilities - December 31, 2020 | |
$ | 834,230 | | |
$ | - | | |
$ | 834,230 | |
Fair
value - commitment date | |
| 1,753,013 | | |
| 2,064,665 | | |
| 3,817,678 | |
Fair
value - mark to market adjustment | |
| (393,465 | ) | |
| (1,289,422 | ) | |
| (1,682,887 | ) |
Reclassification
to APIC for financial instruments that ceased to be derivative liabilities | |
| (1,863,484 | ) | |
| - | | |
| (1,863,484 | ) |
Derivative liabilities
- December 31, 2021 | |
| 330,294 | | |
| 775,243 | | |
| 1,105,537 | |
Derivative liabilities
- Beginning | |
| 330,294 | | |
| 775,243 | | |
| 1,105,537 | |
Fair
value - commitment date | |
| 66,943 | | |
| 12,100 | | |
| 79,043 | |
Fair
value - mark to market adjustment | |
| 19,033 | | |
| (16,317 | ) | |
| 2,716 | |
Gain on debt extinguishment (derivative liabilities – convertible debt) | |
| (100,693 | ) | |
| - | | |
| (100,693 | ) |
Reclassification
to APIC for financial instruments that ceased to be derivative liabilities | |
| - | | |
| (325,000 | ) | |
| (325,000 | ) |
Derivative
liabilities - March 31, 2022 | |
$ | 315,577 | | |
$ | 446,026 | | |
$ | 761,603 | |
Derivative
liabilities - Ending | |
$ | 315,577 | | |
$ | 446,026 | | |
$ | 761,603 | |
Changes
in fair value of derivative liabilities (mark to market adjustment) are included in other income (expense) in the accompanying consolidated
statements of operations.
In
2022 and 2021, in connection with the conversion of certain debt and warrants, the corresponding derivative liabilities were market
to market on the conversion date and the remaining derivative liability balance was reclassified to gain on debt extinguishment for
derivative liabilities related to debt and to additional paid-in capital for derivative liabilities classified as
warrants.
Note
9 – Acquisition and Pro Forma Financial Information
Acquisitions
for the Three Months Ended March 31, 2022
On
February 28, 2022, the Company issued 1,000,000 shares of Class B, convertible preferred stock (convertible into 1,000,000,000 shares of common stock) having a fair
value of $700,000 ($0.0007/share), based upon the quoted closing trading price on the acquisition date, in exchange for 100% of the issued
and outstanding member ownership interests held by SST, in
a transaction treated as a business combination. With the acquisition, the Company entered the audio-visual systems integration business
that designs and builds presentation, teleconferencing and collaborative systems for businesses, education, and nonprofits.
The
valuation of the consideration was determined on an as converted basis by multiplying the Series B preferred shares by the conversion
rate of 1,000 shares of common stock for each one (1) share of Series B preferred stock held, then multiplying by the quoted closing
trading price of the common stock.
We
made an initial allocation of the purchase price at the date of acquisition based on our understanding of the fair value of assets
acquired and liabilities assumed. The allocation of the purchase price consideration is considered preliminary as of March 31, 2022,
with the excess purchase price allocated to goodwill and is subject to change. We expect to finalize the allocation of purchase
price as soon as possible, but no later than one year from the acquisition date.
The
acquisition of SST was reflected in the accompanying consolidated financial statements at March 31, 2022, the results of operations and
cash flows are included in the consolidated financial statements as of and from the acquisition date.
The
table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition
date.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Schedule
of Fair Value of Assets Acquired and Liabilities Assumed
Consideration | |
| |
Series
B, preferred stock issued on February 28, 2022 (1,000,000 shares) (1) | |
$ | 700,000 | |
| |
| | |
Fair
value of consideration transferred | |
| 700,000 | |
| |
| | |
Recognized
amounts of identifiable assets acquired and liabilities assumed: | |
| | |
| |
| | |
Cash | |
| 223,457 | |
Accounts
receivable | |
| 669,580 | |
Inventory | |
| 208,431 | |
Property
and equipment | |
| 82,553 | |
Operating
lease - right-of-use asset | |
| 345,229 | |
Total
assets acquired | |
| 1,529,250 | |
| |
| | |
Accounts
payable and accrued expenses | |
| 268,553 | |
Contract
liabilities (deferred revenue) | |
| 671,217 | |
Loan
payable - related party | |
| 321,705 | |
Note
payable - government - SBA | |
| 150,000 | |
Notes
payable | |
| 516,234 | |
Operating
lease liability | |
| 345,229 | |
Total
liabilities assumed | |
| 2,272,938 | |
| |
| | |
Total
net liabilities assumed | |
| (743,688 | ) |
| |
| | |
Goodwill
in purchase of Smart Solution Technologies, Inc. | |
$ | 1,443,688 | |
(1) |
Fair
value of common stock was determined based upon the quoted closing trading price on date of issuance on as-converted basis to common
stock. |
In
connection with the purchase of SST, $50,000 was paid as a broker fee. This amount has been included in the consolidated statements of operations as a component of general and administrative
expenses. There were no other additional transaction costs incurred.
The
goodwill of $1,443,688 is primarily related to factors such as synergies and market share.
Goodwill
is not deductible for tax purposes.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Supplemental
Pro Forma Information (Unaudited)
The
unaudited pro forma information for the periods set forth below gives effect to the acquisition as if the transaction had occurred on
January 1, 2021.
This
proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that
actually would have been achieved had the transactions been consummated as of that time:
Schedule of Business Acquisition Proforma Information
| |
Year
Ended | |
| |
December
31, 2021 | |
| |
| |
Revenues | |
$ | 4,351,409 | |
| |
| | |
Net
loss | |
$ | (12,263,881 | ) |
| |
| | |
Loss
per share - basic | |
$ | (0.00 | ) |
| |
| | |
Loss
per share - diluted | |
$ | (0.00 | ) |
| |
| | |
Weighted
average number of shares - basic | |
| 16,511,004,083 | |
| |
| | |
Weighted
average number of shares - diluted | |
| 16,511,004,083 | |
The
weighted average shares assume the as-converted amount to common stock .
Acquisitions
for the Year Ended December 31, 2021
On
October 19, 2020, the Company acquired 100% of the member interests of IAQ Technologies LLC (formerly known as Purge Virus, LLC) for
consideration of 2,000,000 Series B Preferred Shares, having a fair 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 were being amortized over their useful lives, ranging from
3 to 10 years. In October of 2021, the Company changed its name to IAQ Technologies LLC (IAQ). At December 31, 2021 it was determined
by management to write off the value of the assets due to lack of business generated resulting in impairment of $803,156.
On
February 12, 2021, we purchased assets, including website and trade names of Independence LED Lighting, LLC for 250,000 Series B Preferred
shares. Based on an agreed upon price at closing, the transaction was valued $3,300,000, At December 31, 2021 it was determined by management
to write off the value of the assets due to lack of business generated resulting in impairment of $3,300,000.
On
March 6, 2021, we purchased the assets, including website, trade names and software of Energy Intelligence Center, LLC for 125,000 Series
B Preferred shares and 50,000,000 common stock warrants. Based on an agreed upon price at closing, the transaction was valued $1,479,121.
At December 31, 2021 it was determined by management to write off the value of the assets due to lack of business generated resulting
in impairment of $1,479,121.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
These
acquisitions were treated as business combinations and the Company recorded the fair value of the assets acquired.
The
table below summarizes preliminary estimated fair value of the assets acquired at the effective acquisition date.
Schedule of Acquisition of Intangible Asset
| |
EIC | | |
iLED | |
Consideration | |
| | | |
| | |
| |
$ | 1,250,000 | | |
$ | - | |
Series
B, preferred stock (125,000 shares) | |
$ | 1,250,000 | | |
$ | - | |
Series
B, preferred stock (250,000 shares) | |
| - | | |
| 3,300,000 | |
Warrants
(50,000,000) | |
| 229,121 | | |
| - | |
Fair
value of consideration transferred | |
$ | 1,479,121 | | |
$ | 3,300,000 | |
| |
| | | |
| | |
Recognized
amounts of identifiable assets acquired: | |
| | | |
| | |
| |
| | | |
| | |
Website | |
| 259,000 | | |
| 261,600 | |
Tradename | |
| 505,600 | | |
| 2,157,800 | |
Software | |
| 401,000 | | |
| - | |
Total
assets acquired | |
| 1,165,600 | | |
| 2,419,400 | |
| |
| | | |
| | |
Goodwill | |
$ | 313,521 | | |
$ | 880,600 | |
Supplemental
Pro Forma Information (Unaudited)
The
unaudited pro forma information for the periods set forth below gives effect to the acquisitions as if the transactions had occurred
on January 1, 2021.
This
proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that
actually would have been achieved had the transactions been consummated as of that time:
Schedule of Business Acquisition Proforma Related To Supplement Information
| |
Year
Ended | |
| |
December
31, 2021 | |
| |
| |
Revenues | |
$ | 890,075 | |
| |
| | |
Net
loss | |
$ | (8,501,417 | ) |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Note
10 –
Right-of-Use
Operating Lease
On
February 28, 2022, in connection with the acquisition of SST, the Company assumed a Right-of-Use (“ROU”) operating lease
for its office space. The lease is for an initial term of five (5) years at $7,000 per month. There are no stated renewal terms. There
were no other ROU leases in effect prior to the acquisition of SST.
At
March 31, 2022, the Company has no financing leases as defined in ASC 842, “Leases.”
The
tables below present information regarding the Company’s operating lease assets and liabilities at March 31, 2022:
Schedule of Operating Lease Assets and Liabilities
| |
March 31, 2022 | |
Assets | |
| | |
| |
| | |
Operating lease - right-of-use asset - non-current | |
$ | 333,721 | |
| |
| | |
Liabilities | |
| | |
| |
| | |
Operating lease liability | |
$ | 335,801 | |
| |
| | |
Weighted-average remaining lease term (years) | |
| 4.92 | |
| |
| | |
Weighted-average discount rate | |
| 8 | % |
| |
| | |
The components of lease expense were as follows: | |
| | |
| |
| | |
Operating lease costs | |
| | |
| |
| | |
Amortization of right-of-use operating lease asset | |
$ | 11,508 | |
Lease liability expense in connection with obligation repayment | |
| 4,572 | |
Total operating lease costs | |
$ | 16,079 | |
| |
| | |
Supplemental cash flow information related to operating leases was as follows: | |
| | |
| |
| | |
Operating cash outflows from operating lease (obligation payment) | |
$ | 9,428 | |
Right-of-use asset obtained in exchange for new operating lease liability | |
$ | 345,229 | |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Future
minimum lease payments required under leases that have initial or remaining non-cancelable lease terms in excess of one year at March
31, 2022:
Schedule of Future Minimum Lease Payments
| |
| 2022 | |
2022 (9 Months) | |
$ | 63,000 | |
2023 | |
| 84,000 | |
2024 | |
| 84,000 | |
2025 | |
| 84,000 | |
2026 | |
| 84,000 | |
2027 | |
| 7,000 | |
Total undiscounted cash flows | |
| 406,000 | |
Less: amount representing interest | |
| (70,199 | ) |
Present value of operating lease liability | |
| 335,801 | |
Less: current portion of operating lease liability | |
| (59,278 | ) |
Long-term operating lease liability | |
$ | 276,523 | |
Note
11– Stockholders’ Deficit
At
March 31, 2022 and December 31, 2021, the Company had various classes of stock:
Class
A, Convertible Preferred Stock
|
- |
78,000,000
shares authorized |
|
- |
5,750,000
and 5,750,000 shares designated, issued and outstanding at March 31, 2022 and December 31, 2021, respectively |
|
- |
Stated
value – none |
|
- |
Par
value - $0.0001 |
|
- |
Conversion
– each share of Class A converts into 50 shares of common stock (287,500,000 and 287,500,000 equivalent shares of common stock,
at March 31, 2022 and December 31, 2021, respectively) |
|
- |
Voting
– on an as-converted basis – 50 votes for each share held (287,500,000 and 287,500,000 votes, at March 31, 2022 and December
31, 2021, respectively) |
|
- |
Dividends
– $0.0035
per share per year in kind or in cash |
|
- |
Liquidation
preference – none |
|
- |
Rights
of redemption – none |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Class
B, Convertible Preferred Stock
|
- |
20,000,000
shares authorized |
|
- |
6,839,982
and 5,249,982 shares designated, issued and outstanding at March 31, 2022 and December 31, 2021, respectively |
|
- |
Stated
value – none |
|
- |
Par
value - $0.0001 |
|
- |
Conversion
– each share of Class B converts into 1,000 shares of common stock (6,839,982,000 and 5,249,982,000 equivalent shares of common
stock, at March 31, 2022 and December 31, 2021, respectively) |
|
- |
Voting
– on an as-converted basis – 1,000 votes for each share held (6,839,982,000 and 5,249,982,000 votes, at March 31, 2022
and December 31, 2021, respectively) |
|
- |
Dividends
– 1% per year accrue whether or not declared by the Board of Directors |
|
- |
Liquidation
preference – none |
|
- |
Rights
of redemption – none |
Class
C, Convertible Preferred Stock
|
- |
2,000,000
shares authorized |
|
- |
1,000,000
and 1,000,000 shares designated, issued and outstanding at March 31, 2022 and December 31, 2021, respectively |
|
- |
Stated
value – none |
|
- |
Par
value - $0.0001 |
|
- |
Conversion
– each share of Class C converts into 1 share of common stock (1,000,000 and 1,000,000 equivalent shares of common stock, at
March 31, 2022 and December 31, 2021, respectively) |
|
- |
Voting
– 100,000 votes for each share held (100,000,000.000 and 100,000,000,000 votes, at March 31, 2022 and December
31, 2021, respectively) |
|
- |
Dividends – 1% per year accrue whether or not declared by the Board
of Directors |
|
- |
Liquidation
preference – none |
|
- |
Rights
of redemption – none |
Common
Stock
|
- |
20,000,000,000
shares authorized |
|
- |
No
par value |
|
- |
Voting
at 1 vote per share |
Equity
Transactions for the Three Months Ended March 31, 2022
Stock
Issued for Cashless Exercise of Warrants
The
Company issued 437,500,000
shares of common stock in exchange for the cashless exercise of 500,000,000 warrants. The net effect on stockholders’ equity was $0.
Stock
Issued for Services – Class B, Preferred Stock
The
Company issued 650,000 shares of common stock for services rendered, having a fair value of $535,000 ($0.0008 - $0.0009/share), based
upon the quoted closing trading price of the Company’s common stock, on an as-converted basis of 1,000 shares of common stock for
each share of Class B, preferred stock.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Acquisition
of SST
On
February 28, 2022, the Company issued 1,000,000 shares of Series B preferred stock (1,000,000,000 as converted common stock) having a
fair value of $700,000 ($0.0007/share), based upon the quoted closing trading price on the acquisition date, in exchange for 100% of
the issued and outstanding member ownership interests held by SST, in
a transaction treated as a business combination.
See
Note 9.
Stock
Issued from Conversion of Convertible Debt and Loss on Debt Extinguishment
The
Company issued 301,448,152
shares of common stock in connection with the conversion of convertible debt (which had embedded derivative liabilities) and accrued
interest totaling $104,368,
having a fair value of $310,059
($0.0007
- $0.0015/share),
based upon the quoted closing trading price on the date of conversion/extinguishment. As a result of the debt conversion, the
Company recognized a loss on debt extinguishment of $205,691.
Conversion
of Class B Preferred Stock to Common Stock
The
Company issued 60,000,000 shares of common stock in connection with the conversion of 60,000 shares of Class B preferred stock. The transaction
had a net effect of $0 on stockholders’ deficit.
Equity
Transactions for the Year Ended December 31, 2021
Stock
Issued from Conversion of Convertible Debt
The
Company issued 1,396,567,128
shares of common stock in connection with the
conversion of convertible debt and accrued interest totaling $2,882,118.
As a result of the debt conversion, the Company
recognized a loss on debt extinguishment of $475,199.
Stock
Issued for Loan Costs
The
Company issued 10,000,000 shares of common stock for loan costs totaling $20,000.
Stock
Issued for Cash – Common Stock
The
Company issued 527,500,000 shares of common stock for $1,000,000.
Stock
Issued for Cash – Class A, Preferred Stock
The
Company issued 2,750,000 shares of Class A preferred stock for $275,000.
Stock
Issued as a Non-Refundable Deposit to Acquire
The
Company issued 175,000 shares of Class B preferred stock having a fair value of $449,279. The acquisition was cancelled in 2021, and
the Company recorded a loss on cancellation of $449,279.
Stock
Issued to Acquire Assets of Businesses
The
Company issued 375,000 shares of Class B preferred stock having a fair value of $4,550,000 in connection with the acquisitions of EIC
and iLED. See Note 9.
Stock
Issued for Services – Class B Preferred Stock
The
Company issued 571,167 shares of Class B preferred stock for services rendered, having a fair value of $1,766,014.
Conversion
of Class B Preferred Stock to Common Stock
The
Company issued 335,000,000 shares of common stock in connection with the conversion of 335,000 shares of Class B preferred stock. The
transaction had a net effect of $0 on stockholders’ deficit.
Stock
Issued for Services – Common Stock
The
Company issued 195,321,508 shares of common stock for services rendered, having a fair value of $556,664.
Cancellation
of Common Stock Issuable
The
Company cancelled 125,000 shares of common stock issuable from 2020, having a fair value of $125,000.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Note
12 – Warrants
Warrant
activity for the three months ended March 31, 2022 and the year ended December 31, 2021 are summarized as follows:
Schedule
of Warrants Activity
| |
| | |
| | |
Weighted | | |
| |
| |
| | |
| | |
Average | | |
| |
| |
| | |
Weighted | | |
Remaining | | |
Aggregate | |
| |
Number of | | |
Average | | |
Contractual | | |
Intrinsic | |
Warrants | |
Warrants | | |
Exercise Price | | |
Term (Years) | | |
Value | |
Outstanding and exercisable - December 31, 2020 | |
| 713,571,428 | | |
$ | 0.0011 | | |
| 2.92 | | |
$ | 149,500 | |
Granted | |
| 1,288,541,667 | | |
$ | 0.0018 | | |
| - | | |
| - | |
Exercised | |
| - | | |
$ | - | | |
| - | | |
| - | |
Cancelled/Forfeited | |
| - | | |
$ | - | | |
| - | | |
| - | |
Outstanding - December 31, 2021 | |
| 2,002,113,095 | | |
$ | 0.0016 | | |
| 2.38 | | |
$ | 450,000 | |
Exercisable - December 31, 2021 | |
| 2,002,113,095 | | |
$ | 0.0016 | | |
| 2.38 | | |
$ | 450,000 | |
| |
| | | |
| | | |
| | | |
| | |
Outstanding - December 31, 2021 | |
| 2,002,113,095 | | |
$ | 0.0016 | | |
| 2.38 | | |
$ | 450,000 | |
Exercisable - December 31, 2021 | |
| 2,002,113,095 | | |
$ | 0.0016 | | |
| 2.38 | | |
$ | 450,000 | |
Granted | |
| 430,000,000 | | |
$ | 0.0013 | | |
| - | | |
| - | |
Exercised | |
| (500,000,000 | ) | |
$ | 0.0001 | | |
| - | | |
| - | |
Cancelled/Forfeited | |
| - | | |
$ | - | | |
| - | | |
| - | |
Outstanding - March 31, 2022 | |
| 1,932,113,095 | | |
$ | 0.0019 | | |
| 2.21 | | |
$ | 150,000 | |
Exercisable - March 31, 2022 | |
| 1,932,113,095 | | |
$ | 0.0019 | | |
| 2.21 | | |
$ | 150,000 | |
Warrant
Transactions for the Three Months Ended March 31, 2022
Convertible
Debt Issuances
In
connection with convertible debt issued to various lenders, the Company granted 110,000,000, three-year (3) warrants. These warrants
have an exercise price of $0.0001. See Note 7 for derivative liabilities and related mark to market accounting.
Employee
Compensation
Concurrent
with the acquisition of SST, the Company granted 300,000,000, three-year (3) warrants to employees of SST for services rendered.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The
fair value of these services rendered was $209,713, based upon the following weighted average assumptions:
Summary of Fair Value of Warrants
Exercise
price | |
$ | 0.001 | |
Exercise
price | |
$ | 0.001 | |
Expected
volatility | |
| 375 | % |
Risk-free
interest rate | |
| 1.62 | % |
Expected
term (in years) | |
| 3.00 | |
Expected
dividend rate | |
| 0 | % |
Board
Advisory Compensation – Related Party
The
Company granted 20,000,000, three-year (3) warrants to a board director for services rendered.
The
fair value of these services rendered was $13,981, based upon the following weighted average assumptions:
Summary
of Fair Value of Warrants
Exercise
price | |
$ | 0.001 | |
Exercise
price | |
$ | 0.001 | |
Expected
volatility | |
| 374 | % |
Risk-free
interest rate | |
| 1.76 | % |
Expected
term (in years) | |
| 3.00 | |
Expected
dividend rate | |
| 0 | % |
Cashless
Exercise of Warrants
The
Company issued 437,500,000
shares of common stock in connection with a cashless exercise of 500,000,000
warrants. The net effect on stockholders’ equity was $0.
Warrant
Transactions for the Year Ended December 31, 2021
Convertible
Debt Issuances
In
connection with convertible debt issued to various lenders, the Company granted 1,108,541,667 three-year (3) warrants. These warrants
have an exercise price of $0.0001. See Note 7 for derivative liabilities and related mark to market accounting.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Employee
Compensation
The
Company granted 180,000,000, three-year (3) warrants to various employees for services rendered.
The
fair value of these services rendered was $997,637, based upon the following weighted average assumptions:
Note
13 – Restatements
The
following misstatement related to accounting errors attributable to the Company’s revenue
recognition policies relating to its percentage of completion calculations as well as work in progress (“WIP”) billings,
as well as inventory for our wholly owned subsidiary, SMARTSolution Technologies LP. The following summarizes the impact of the restatements
on the consolidated Balance Sheets:
Schedule
of Consolidated Balance Sheets
| |
As Filed | | |
Adjustments | | |
Restated | |
Assets | |
| | | |
| | | |
| | |
Current Assets | |
| | | |
| | | |
| | |
Cash | |
$ | 64,849 | | |
$ | 4,817 | | |
$ | 69,666 | |
Accounts receivable - net | |
| 1,125,057 | | |
| (103,700 | ) | |
| 1,021,357 | |
Loan receivable - related party | |
| 54,257 | | |
| (15,199 | ) | |
| 39,058 | |
Inventory - net | |
| 1,042,169 | | |
| (516,864 | ) | |
| 525,305 | |
Prepaids and other | |
| 1,301 | | |
| (223 | ) | |
| 1,078 | |
Total Current Assets | |
| 2,287,633 | | |
| (631,169 | ) | |
| 1,656,464 | |
| |
| | | |
| | | |
| | |
Property and equipment - net | |
| 142,361 | | |
| (60,387 | ) | |
| 81,974 | |
Operating lease - right-of-use asset | |
| 333,721 | | |
| - | | |
| 333,721 | |
Goodwill | |
| 806,854 | | |
| 636,834 | | |
| 1,443,688 | |
Investments | |
| 517,819 | | |
| (220 | ) | |
| 517,599 | |
Total Assets | |
$ | 4,088,388 | | |
$ | (54,942 | ) | |
$ | 4,033,446 | |
| |
| | | |
| | | |
| | |
Liabilities and Stockholders’ Equity (Deficit) | |
| | | |
| | | |
| | |
Current Liabilities | |
| | | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 706,391 | | |
$ | (560,987 | ) | |
$ | 145,404 | |
Accounts receivable credit facility | |
| 959,768 | | |
| 22,749 | | |
| 982,517 | |
Operating lease liability | |
| 59,278 | | |
| - | | |
| 59,278 | |
Convertible notes payable – net | |
| 383,230 | | |
| - | | |
| 383,230 | |
Loans payable - related parties | |
| 9,491 | | |
| - | | |
| 9,491 | |
Preferred dividend payable | |
| - | | |
| 45,059 | | |
| 45,059 | |
Deferred revenue | |
| 648,286 | | |
| 473,516 | | |
| 1,121,802 | |
Derivative liabilities | |
| 761,603 | | |
| - | | |
| 761,603 | |
Total Current Liabilities | |
| 3,528,047 | | |
| (19,663 | ) | |
| 3,508,384 | |
Long Term Liabilities | |
| | | |
| | | |
| | |
Loans payable - related parties | |
| 23,577 | | |
| 117,303 | | |
| 140,880 | |
Convertible notes payable - related party – net | |
| 195,000 | | |
| - | | |
| 195,000 | |
Operating lease liability | |
| 276,523 | | |
| - | | |
| 276,523 | |
Total Long-Term Liabilities | |
| 495,100 | | |
| 117,303 | | |
| 612,403 | |
Total Liabilities | |
| 4,023,147 | | |
| 97,640 | | |
| 4,120,787 | |
Stockholders’ Equity (Deficit) | |
| | | |
| | | |
| | |
Preferred stock, Class A | |
| 575 | | |
| - | | |
| 575 | |
Preferred stock, Class B | |
| 684 | | |
| - | | |
| 684 | |
Preferred stock, Class C | |
| 100 | | |
| - | | |
| 100 | |
Preferred stock, value | |
| | | |
| | | |
| | |
Common stock | |
| 8,941,835 | | |
| - | | |
| 8,941,835 | |
Additional paid-in capital | |
| 13,085,477 | | |
| - | | |
| 13,085,477 | |
Accumulated deficit | |
| (21,963,430 | ) | |
| (152,582 | ) | |
| (22,116,012 | ) |
Total Stockholders’ Equity (Deficit) | |
| 65,241 | | |
| (152,581 | ) | |
| (87,341 | ) |
Total Liabilities and Stockholders’ Equity (Deficit) | |
$ | 4,088,388 | | |
$ | (54,942 | ) | |
$ | 4,033,446 | |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The following summarizes the impact of the restatements on the consolidated
Statements of Operations:
Schedule
of Consolidated Statements of Operations
| |
As Filed | | |
Adjustments | | |
Restated | |
| |
| | |
| | |
| |
Sales - net | |
$ | 1,234,567 | | |
$ | (642,276 | ) | |
$ | 592,291 | |
| |
| | | |
| | | |
| | |
Cost of sales | |
| 1,068,640 | | |
| (547,793 | ) | |
| 520,847 | |
| |
| | | |
| | | |
| | |
Gross profit | |
| 165,927 | | |
| (94,483 | ) | |
| 71,444 | |
| |
| | | |
| | | |
| | |
General and administrative expenses | |
| 1,206,091 | | |
| 17,733 | | |
| 1,223,824 | |
| |
| | | |
| | | |
| | |
Loss from operations | |
| (1,040,164 | ) | |
| (112,216 | ) | |
| (1,152,380 | ) |
| |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | |
Interest expense | |
| (62,795 | ) | |
| 4,693 | | |
| (58,102 | ) |
Amortization of debt discount | |
| (205,776 | ) | |
| - | | |
| (205,776 | ) |
Change in fair value of derivative liabilities | |
| (2,716 | ) | |
| - | | |
| (2,716 | ) |
Derivative expense | |
| (12,192 | ) | |
| - | | |
| (12,192 | ) |
Gain on debt extinguishment (derivative liabilities – convertible debt) | |
| 100,693 | | |
| - | | |
| 100,693 | |
Loss on debt extinguishment | |
| (205,691 | ) | |
| - | | |
| (205,691 | ) |
Change in fair value of marketable equity securities | |
| (289,644 | ) | |
| - | | |
| (289,644 | ) |
Total other expense – net | |
| (678,121 | ) | |
| 4,693 | | |
| (673,428 | ) |
| |
| | | |
| | | |
| | |
Net loss | |
$ | (1,718,285 | ) | |
$ | (107,523 | ) | |
$ | (1,825,808 | ) |
| |
| | | |
| | | |
| | |
Preferred stock dividends | |
| - | | |
| (45,059 | ) | |
| (45,059 | ) |
| |
| | | |
| | | |
| | |
Net loss available to common shareholders | |
$ | (1,718,285 | ) | |
$ | (152,582 | ) | |
$ | (1,870,867 | ) |
| |
| | | |
| | | |
| | |
Loss per share - basic and diluted | |
| (0.00 | ) | |
| | | |
| (0.00 | ) |
| |
| | | |
| | | |
| | |
Weighted average number of shares - basic and diluted | |
| 7,896,234,748 | | |
| | | |
| 7,896,234,748 | |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
The following summarizes the impacts of the restatements on the Company’
consolidated Statements of Cash Flows:
Schedule
of Consolidated Statements of Cash Flows
| |
As Filed | | |
Adjustments | | |
Restated | |
Operating activities | |
| | | |
| | | |
| | |
Net loss | |
$ | (1,718,285 | ) | |
$ | (107,523 | ) | |
$ | (1,825,808 | ) |
Adjustments to reconcile net loss to net cash used in operations | |
| | | |
| | | |
| | |
Stock based compensation | |
| 535,000 | | |
| - | | |
| 535,000 | |
Warrants issued for services | |
| 209,713 | | |
| - | | |
| 209,713 | |
Warrants issued for service - related party | |
| 13,981 | | |
| - | | |
| 13,981 | |
Amortization of debt discount | |
| 205,776 | | |
| - | | |
| 205,776 | |
Amortization of operating lease - right-of-use asset | |
| 11,508 | | |
| - | | |
| 11,508 | |
Depreciation and amortization expense | |
| 579 | | |
| - | | |
| 579 | |
Change in fair value of derivative liabilities | |
| 2,716 | | |
| - | | |
| 2,716 | |
Derivative expense | |
| 12,192 | | |
| - | | |
| 12,192 | |
Gain on debt extinguishment | |
| (100,693 | ) | |
| - | | |
| (100,693 | ) |
Loss on debt extinguishment | |
| 205,691 | | |
| - | | |
| 205,691 | |
Change in fair value of marketable equity securities | |
| (289,644 | ) | |
| 579,288 | | |
| 289,644 | |
Changes in operating assets and liabilities | |
| | | |
| | | |
| | |
(Increase) decrease in | |
| | | |
| | | |
| | |
Accounts receivable | |
| (480,146 | ) | |
| 694,413 | | |
| 214,267 | |
Inventory | |
| 410,569 | | |
| (539,510 | ) | |
| (128,941 | ) |
Prepaids and other | |
| (1,078 | ) | |
| (179,597 | ) | |
| (180,675 | ) |
Increase (decrease) in | |
| | | |
| | | |
| | |
Accounts payable and accrued expenses | |
| (142,343 | ) | |
| (15,302 | ) | |
| (157,645 | ) |
Customer deposits | |
| - | | |
| - | | |
| - | |
Deferred revenue | |
| (203,451 | ) | |
| 113,681 | | |
| (89,770 | ) |
Operating lease liability | |
| (9,428 | ) | |
| - | | |
| (9,428 | ) |
Net cash used in operating activities | |
| (1,337,343 | ) | |
| 545,450 | | |
| (791,893 | ) |
| |
| | | |
| | | |
| | |
Investing activities | |
| | | |
| | | |
| | |
Cash acquired in acquisition of Smart Solutions Technologies, Inc. | |
| 218,640 | | |
| 4,817 | | |
| 223,457 | |
Proceeds from sales of securities - net of purchases | |
| 537,288 | | |
| (579,068 | ) | |
| (41,780 | ) |
Repayment - loan receivable - related party | |
| - | | |
| 15,199 | | |
| 15,199 | |
Advance - loan receivable - related party | |
| (525 | ) | |
| - | | |
| (525 | ) |
Net cash provided by investing activities | |
| 755,403 | | |
| (559,052 | ) | |
| 196,351 | |
| |
| | | |
| | | |
| | |
Financing investing | |
| | | |
| | | |
| | |
Proceeds from issuance of convertible notes | |
| 253,750 | | |
| - | | |
| 253,750 | |
Proceeds from issuance of convertible note - related party | |
| 195,000 | | |
| - | | |
| 195,000 | |
Repayments of notes payable - government - SBA | |
| (150,000 | ) | |
| - | | |
| (150,000 | ) |
Repayments of loans payable - related parties | |
| (189,719 | ) | |
| (4,330 | ) | |
| (194,049 | ) |
Repayment of notes payable | |
| (516,234 | ) | |
| - | | |
| (516,234 | ) |
Proceeds from draw downs on accounts receivable credit facility | |
| 1,000,000 | | |
| 22,749 | | |
| 1,022,749 | |
Repayment on accounts receivable credit facility | |
| (40,232 | ) | |
| - | | |
| (40,232 | ) |
Net cash provided by financing activities | |
| 552,565 | | |
| 18,419 | | |
| 570,984 | |
| |
| | | |
| | | |
| | |
Net increase (decrease) in cash | |
| (29,375 | ) | |
| 4,817 | | |
| (24,558 | ) |
Cash - beginning of period | |
| 94,224 | | |
| - | | |
| 94,224 | |
Cash - end of period | |
$ | 64,849 | | |
$ | 4,817 | | |
$ | 69,666 | |
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
Note
13 – Subsequent Events
Subsequent
to March 31, 2022, the Company had the following transactions:
Loan
Payable
Effective
April 1, 2022, the Company executed a merchant loan for $266,000.
The Company paid $4,000
in related debt costs, $66,050 in interest, and received net proceeds of $195,950.
The Company is required to make 52
weekly payments of $5,116.
The Company is current with all payments.
Convertible
Note Payable
In
April 2022, we executed a one-year (1) convertible note payable with an existing lender (GS Capital, LLC) for $115,000. The terms of the note contained
an original issue discount of $10,000 and payment of legal fees of $5,000, resulting in net proceeds of $100,000. The note was convertible
at 60% of the lowest trading price twenty (20) days prior to conversion. The note was unsecured. The note bears interest at 10% and has
a default rate of interest of 24%. In addition to the note, the lender also received 55,000,000 three-year (3) warrants, exercisable
at $0.0012/share. The convertible note (embedded conversion feature) and warrants are treated as derivative liabilities.
Convertible
Note Payable – Modification
On
April 19, 2022, the Company modified the terms of a loan it had with GS Capital LLC for $325,000.
The note retained all terms of the initial debt agreement, however, the maturity date was extended from April
19, 2022 to October
19, 2022. The note, along with accrued interest of $16,206,
resulted in the issuance of a new convertible note for $341,206.
The
modification of the maturity date did not meet the requirements of a debt extinguishment under ASC 470-50 - Debt Modifications and Exchanges.
The Company determined that the exchange should be treated as a debt modification prospectively. The Company accounted for this transaction
as a debt modification and did not incur any gain or loss relating to the modification. The debt modification did not meet the greater
than ten percent test and was deemed not substantial.
Cashless
Exercise of Warrants
In
May 2022, the Company issued 208,333,333
shares of common stock in connection with a cashless exercise of 250,000,000
warrants. The net effect on stockholders’ equity was $0.
Purchase
Order Financing
On
April 4, 2022, our SST subsidiary entered into a $500,000 purchase order financing agreement with First Avenue Funding. Draws on the
facility incur a 2% per month interest rate, are secured by signed purchase orders, and personally guaranteed by our CEO, Vikram Grover.
We immediately drew down the entire facility and wired proceeds to SMART Technologies ULC to pay down our line with that vendor. Today,
the line has a balance of $0.
Increase
to Asset Backed Credit Facility
On
June 21, 2022, we increased the availability under our asset backed financing facility with Thermo Communications Funding, LLC to $1.5
million from $1.0 million. An additional commitment fee equal to 2% of the amount of the increase was due and payable pro rata on a monthly
basis.
Repayment
of Convertible Debt in Default
On
July 25, 2022, we retired $122,500 in third-party junior convertible debt owed to 1800 Diagonal Lending LLC in default for $169,000 cash.
Subsequent to the payment, we have no loans drawn from 1800 Diagonal Lending LLC or its affiliates.
$264,000
MCA Refinancing
On
December 1, 2022, our SST subsidiary entered into a first position merchant cash advance (“MCA”) agreement with Capitalized
Business Funding that netted us $200,000, with proceeds applied to retire balances under a previous similar facility and to provide working
capital. The loan matures in one year, with $264,000 due at that time subject to early payment discounts.
FOMO
WORLDWIDE, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
UNAUDITED (RESTATED)
$140,000
MCA Financing
On
January 12, 2023, we entered into a second position merchant cash advance (“MCA”) agreement with CAPYBARA CAPITAL, LLC netting
us $95,000. Monies of $140,000 are due in 44 weeks, with early payment discounts.
SST
Founder Employment Status and Compensation Change Agreement:
On
or around December 19, 2022, after several weeks of negotiations, FOMO Worldwide entered into a Employment Status and Compensation
Change Agreement which consisted of the following elements:
Element
1: Total Dollar Value: $45,480
|
1. |
In
March of 2022, Mitchell Schwartz issued a cash loan to FOMO Worldwide in the amount of $185,000 with a Success Fee of $10,000 for
a total repayment of $195,000; non-amortized. |
|
|
|
|
2. |
Mr.
Schwartz received a single payment of $50,000 from SST for partial repayment of this loan. |
|
|
|
|
3. |
In
exchange for the remainder of Insider Loan, ($145,000) Mr. Schwartz agreed to take assignment of a $100,000 Real Estate Loan, made
by SST to an affiliate. This note included the repayment to Mr. Schwartz of the $10,000 Success Fee and monthly interest of $1,250
which matured Feb. 28, 2022. Total value of this note now issued to Mr. Schwartz and no longer associated with FOMO was $118,750.00 |
|
4. |
The
remaining balance of the Insider Loan, equal to $26,250 ($145,000 - $118,750) |
|
|
|
|
5. |
This
agreement retained Mr. Schwartz residual salary through Feb. 2023, equal to $19,230 |
Element
2: Total Dollar Value: $139,000
|
1. |
At
point of purchase of SMARTSolution Technologies, LP, INC., FOMO Worldwide agreed to a 1.5% override of gross revenues for the prior
year, ending Dec. 2021. This was equivalent to $139,000 and was included in the purchase agreement. |
Element
3: Total Dollar Value: $100,000
|
1. |
At
point of purchase of SMARTSolution Technologies, LP/Inc., FOMO Worldwide issued One-Million Series B Shares to Mr. Schwartz. This
was included in the purchase agreement. |
|
|
|
|
2. |
At
the point of the Employment Status and Compensation Change Agreement, Mr. Schwartz agreed to return to FOMO these shares as a goodwill
gesture and for exclusion of liability for any accounting discrepancy that may have occurred prior to his new employee agreement.
|
|
|
|
|
3. |
FOMO
WORLDWIDE, along with accepting the return of the aforementioned shares, included as part of the new purchase and employee agreement,
agreed to a single payment of $100,000 for the total value of the shares returned by Mr. Schwartz. |
Summary:
|
1. |
All
items associated with this agreement were equal in value to $284,480 and are to be paid to Mr. Schwartz as monthly payroll outlay over
36 Months, beginning in March of 2023. |
Amended
Loan to Affiliate Himalaya Technologies, Inc. p/k/a Homeland Resources Ltd.
Effective
September 1, 2022, we increased our available loan to Himalaya Technologies, Inc. of $50,000.00 to $100,000.00 to fund its operations.
On or around that date we waived all defaults on the loan and extended the maturity of the loan to December 31, 2023.
Letters
of Intent Signed for Acquisitions of Learning Management Systems and Training Content Providers
On
January 13, 2023, FOMO signed a letter of intent (“LOI”) to acquire a UK-based provider of learning management systems (“LMS”),
which are software applications for the administration, documentation, tracking, reporting, automation, and delivery of educational courses,
training programs, materials or learning and development programs. The business generates revenues of several hundred thousand British
pounds and is growing its top line at a double digit % annual rate (unaudited). Total consideration is as follows: 1) GBP £800,000
cash at close, plus 2) GBP £400,000 in a non-interest-bearing seller’s note (paid in one year after close), plus 3) a performance-based
payment of up to GBP £200,000 subject to 30% revenue growth for the calendar year after the Closing Date. The Company’s balance
sheet will remain as-is during the term the LOI is active and until the Closing Date, with no distributions, capital calls, bonuses to
management or shareholders, salary increases, adjustments to working capital, etc. for any purpose, unless otherwise agreed by FOMO in
writing. The process is conditioned on the completion of due diligence, legal and accounting review, documentation that is satisfactory
to all parties, and the successful raise by us of certain financing, if any. Execution of a securities purchase agreement (“SPA”)
and related definitive agreements are targeted as soon as practical but not later than April 30, 2023 (the “Closing” and
such date, the “Closing Date”).
On
January 17, 2023, we signed a purchase agreement to acquire the assets of a provider of online training and compliance software, services,
and content primarily to the agriculture and food industries based in the Midwest. The business was founded in 1980, generates roughly
$400,000 - $500,000 in annual revenues, is EBITDA+, and can potentially be grown organically into other regions of the country and into
new verticals including education, manufacturing, healthcare, and other. We intend to place the assets, which have a total purchase price
of $280,000 cash including closing funds of $155,000, seller notes of $110,000 and an earn-out valued at $15,000 but with no ceiling,
into our wholly owned subsidiary SMARTSolution Technologies Inc., a sister entity to our wholly owned education technology subsidiary
SMARTSolution Technologies LP. Closing is targeted by March 17, 2023, though we intend to work vigorously to consummate the deal sooner.
Our auditors have indicated the size of the business relative to FOMO will not trigger an audit requirement for the target. We agreed
to make a $10,000 non-refundable earnest payment towards closing. There is no equity component to the consideration for this transaction
or dilution to existing shareholders.
On
February 3, 2023, we signed a letter of intent (“LOI”) to acquire the assets of a USA-based learning management system (“LMS”)
and training content provider for $400,000, including $150,000 cash, $150,000 in Series B Preferred stock, and a $100,000 earn-out plus
incentive stock options for employees. Execution of a definitive agreement for the proposed transaction is required by May 31, 2023.
On
February 27, 2023, the Company signed a letter of intent to purchase a provider of modular buildings and construction services generating
an estimated $10 million annual revenues and $ million annual EBITDA in 2022. The Target’s customers include K12 schools, police
departments, fire departments, and municipalities in the state of Florida. There are no assurances FOMO will be able to complete the
transaction based on planned due diligence or required financing.
On
February 28, 2023, the Company issued 310,000,000 incentive stock options to employees of its wholly owned subsidiary SMARTSolution Technologies
L.P. with a strike price of .0005 and a three-year expiration. The options expire at close of business on March 1, 2026 and do not vest
unless each employee is employed by SST on or after March 1, 2024.