NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
Note
1 – BASIS OF PRESENTATION AND ORGANIZATION
FOMO
CORP. previously known as “2050 Motors, Inc.” (“the Company”) is the successor to an entity incorporated on April
22, 1986 in the state of California. 2050 Motors, Inc., the Company’s sole operating subsidiary from 2014-2019, was incorporated
on October 9, 2012 in the state of Nevada to import, market, and sell electric cars manufactured in China. In 2019, management dissolved
the Company’s Nevada subsidiary as the electric vehicle (“EV”) strategies had failed. Meanwhile, the Company incubated
an internet business targeting the Cannabis market @ www.kanab.club and pursued various ventures in the internet, communications,
and technology markets. The Company purchased Purge Virus, LLC to enter the viral disinfection market on October 19, 2020. On February
12, 2021, the Company purchased the assets of Independence LED LLC, a manufacturer and distributer of lighting and disinfection systems
On March 7, 2021, the Company purchased the assets of Energy Intelligence Center LLC, who owns software to integrate into the HVAC systems
of buildings to disinfect and purify the air circulation. The Company formed EIC of Wyoming, LLC and contributed the assets from
both purchases.
Corporate
Actions
On
October 19, 2020, FOMO CORP purchased Purge Virus, LLC and consequently entered the viral disinfection market.
On
November 17, 2020, an application was submitted to FINRA to change the name and ticker symbol from 2050 Motors and ETFM to FOMO CORP.
and FOMO, respectively. Subsequently, FINRA stated that the “FOMO” ticker symbol was no longer available, and a new ticker
symbol was requested.
On
May, 18 2021, FOMO CORP. (“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.
Note
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United
States of America (“US GAAP”).
Consolidation
The
consolidated financial statements of the Company include the Company and its wholly owned subsidiaries, IAQ Technologies
LLC(formerly known as Purge Virus, LLC) and EIC of Wyoming LLC. All material intercompany balances and transactions have been
eliminated in consolidation.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with US GAAP requires management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates include the recoverability of long-term assets, the valuation of derivative liabilities, allowance for doubtful
accounts, valuation of deferred tax assets and estimates of fair market value of investments.
Cash
Cash
consists of deposits in one large national bank. On December 31, 2021 and December 31, 2020, respectively, the Company had $94,225 and
$12,069 in cash in the United States. The Company has not experienced any losses in such accounts and believes it is not exposed to any
risks on its cash in bank accounts.
Fair
Value of Financial Instruments
For
certain of the Company’s financial instruments, including cash accounts payable, accrued liabilities, short-term debt, and derivative
liability, the carrying amounts approximate their fair values due to their short maturities. We adopted ASC Topic 820, “Fair Value
Measurements and Disclosures,”, which requires disclosure of the fair value of financial instruments held by the Company. ASC Topic
825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair
value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets
for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because
of the short period of time between the origination of such instruments and their expected realization and their current market rate
of interest. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of valuation hierarchy
are defined as follows:
Level
1 input to the valuation methodology are quoted prices for identical assets or liabilities in active markets. The Company’s investment
in Mobicard Inc., see Note 4, is actively traded on the pink sheets.
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are
observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level
3 inputs to the valuation methodology are unobservable in which little or no market data exists, therefore requiring an entity to develop
its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable.
The
Company’s analyses of all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing
Liabilities from Equity,” and ASC 815.
We
have recorded the conversion option on notes as a derivative liability because of the variable conversion price, which in accordance
with U.S. GAAP, prevents them from being considered as indexed to our stock and qualified for an exception to derivative accounting.
We
recognize derivative instruments as either assets or liabilities on the accompanying balance sheets at fair value. We record changes
in the fair value of the derivatives in the accompanying statement of operations.
Assets
and liabilities measured at fair value are as follows as of December 31, 2021:
SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets | |
| | | |
| | | |
| | | |
| | |
Investments | |
$ | 765,463 | | |
$ | 740,463 | | |
| - | | |
$ | 25,000 | |
Total assets measured at fair value | |
$ | 765,463 | | |
$ | 740,463 | | |
| - | | |
$ | 25,000 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative liability | |
$ | 1,105,537 | | |
| - | | |
| - | | |
$ | 1,105,537 | |
Total liabilities measured at fair value | |
$ | 1,105,537 | | |
| - | | |
| - | | |
$ | 1,105,537 | |
Assets
and liabilities measured at fair value are as follows as of December 31, 2020:
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 4 | |
Assets | |
| | | |
| | | |
| | | |
| | |
Investments | |
$ | 168,000 | | |
$ | 168,000 | | |
| - | | |
| - | |
Total assets measured at fair value | |
$ | 168,000 | | |
$ | 168,000 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative liability | |
$ | 834,230 | | |
| - | | |
| - | | |
$ | 834,230 | |
Total liabilities measured at fair value | |
$ | 834,230 | | |
| - | | |
| - | | |
$ | 834,230 | |
Earnings Per Share (EPS)
Basic
EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the
period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number
of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been
issued and if the additional common shares were dilutive. Diluted EPS assumes that all dilutive convertible shares and stock options
were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted
method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised
at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to
be converted into common stock at the beginning of the period (or at the time of issuance, if later). During the year ended December
31, 2021 and 2020, the Company generated no revenues and incurred substantial losses, of which the vast majority were due to mostly non-cash
charges for accrued interest, penalties and derivative charges related to convertible debt instruments. Therefore, the effect of any
common stock equivalents on EPS is anti-dilutive during those periods.
Dilutive Securities Calculation
SCHEDULE
OF DILUTIVE SECURITIES CALCULATION
| |
Conversion | |
2021 | | |
Conversion | |
2020 | |
Common shares outstanding | |
| | | |
| |
| 7,177,931,757 | | |
| | | |
| |
| 4,713,543,121 | |
Preferred A shares | |
| 5,750,000 | | |
1 to 50 | |
| 287,500,000 | | |
| 3,000,000 | | |
1 to 50 | |
| 150,000,000 | |
Preferred B shares | |
| 5,249,982 | | |
1 to 1000 | |
| 5,249,982,000 | | |
| 4,463,815 | | |
1 to 1000 | |
| 4,463,815,000 | |
Preferred C shares | |
| 1,000,000 | | |
1 to 1 | |
| 1,000,000 | | |
| 1,000,000 | | |
1 to 1 | |
| 1,000,000 | |
| |
| | | |
| |
| 12,716,413,757 | | |
| | | |
| |
| 9,328,358,121 | |
Warrants | |
| 1,982,113,095 | | |
1 to 1 | |
| 1,982,113,095 | | |
| 713,571,428 | | |
1 to 1 | |
| 713,571,428 | |
| |
| | | |
| |
| 14,698,268,852 | | |
| | | |
| |
| 10,041,929,549 | |
Convertible loans | |
| | | |
| |
| 812,477,231 | | |
| | | |
| |
| - | |
| |
| | | |
| |
| 15,511,004,083 | | |
| | | |
| |
| 10,041,929,549 | |
Concentration
of Credit Risk
Cash
is mainly maintained by one highly qualified institution in the United States. At no time were such amounts more than federally insured
limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated with
commercial banking relationships. The Company has not experienced any losses on our deposits of cash.
Income
Taxes
The
Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under
this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
ASC
740 provides accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain.
When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while
others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.
The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals
or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured
as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits
is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.
On
December 31, 2021 and December 31, 2020, the Company had not taken any significant uncertain tax positions on its tax returns for the
period ended December 31, 2020 and prior years or in computing its tax provisions for any years. Prior management considered its tax
positions, and believed that all of the positions taken by the Company in its Federal and State tax returns were more likely than not
to be sustained upon examination. The Company is subject to examination by U.S. Federal and State tax authorities from inception to present,
generally for three years after they are filed. New management, which took control of the Company on March 5, 2019, is currently evaluating
prior management’s decision to not file federal tax returns and plans on filing past returns and related 1099 filings for compensation
paid to prior management, employees, consultants, contractors and affiliates. The Company does not believe it has a material tax liability
due to its operating losses in these periods but is preparing tax filings to bring itself current as it completes and moves forward on
announced mergers and acquisitions.
Derivative
Liabilities
The
Company assessed the classification of its derivative financial instruments as of December 31, 2021 and 2020, which consist of
convertible instruments and warrants in the Company’s common stock and determined that such derivatives meet the criteria
for liability classification under ASC 815.
ASC
815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and
account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the
economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics
and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract
is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported
in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered
a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument
is deemed to be conventional, as described.
The
Company uses judgment in determining the fair value of derivative liabilities at the date of issuance and at every balance sheet thereafter
and in determining which valuation method is most appropriate for the instrument, the expected volatility, the implied risk-free interest
rate, as well as the expected dividend rate, if any. The Company recorded a derivative liability-convertible debt as of December 31, 2021 and 2020 of $330,294
and $834,230,
respectively. The Company recorded a derivative
liability-warrants as of December 31, 2021 and 2020 of $775,243 and $0, respectively.
Convertible
Instruments
The
Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from
their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when
necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences
between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price
embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date
of redemption. The Company also records deemed dividends for the intrinsic value of conversion options embedded in preferred shares based
upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective
conversion price embedded in the note.
ASC
815-40, Contracts in Entity’s own Equity, generally provides that, among other things, if an event is not within the entity’s
control, such contract could require net cash settlement and shall be classified as an asset or a liability.
The
Company determines whether the instruments issued in the transactions are considered indexed to the Company’s own stock. During
fiscal years 2014 through 2020 the Company’s issued convertible securities with variable conversion provisions that resulted in
derivative liabilities. See discussion above under derivative liabilities that resulted in a change in derivative liability accounting.
Risks
and Uncertainties
The
Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.
Accounts
Receivable
Accounts
receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible
amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts.
The allowance for doubtful accounts as of December 31, 2021 and 2020 was $18,992 and $0, respectively.
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC Topic 606 “Revenue from Contracts with Customers.” The Company recognizes
revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control
or title is transferred based on the commercial terms. Revenue is measured as the amount of consideration the Company expects to receive
in exchange for transferring goods. Product sales are recorded net of variable consideration, such as provisions for returns, discounts
and allowances. Such provisions are calculated using historical averages and adjusted for any expected changes due to current business
conditions. Consideration given to customers for cooperative advertising is recognized as a reduction of revenue except to the extent
that there is a distinct good or service, in which case the expense is classified as selling or marketing expense. Provisions for customer
volume rebates are based on achieving a certain level of purchases and other performance criteria that are established on a situation
basis. These rebates are estimated based on the expected amount to be provided to the customers and are recognized as a reduction of
revenue. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives
the Company offers to its customers and their customers. Additionally, for any agreements which are 1 year or less, the practical expedient
under ASC 340-40-25-4 is applied to expense costs when incurred if the amortization period of the contract asset would have otherwise
been recognized in one year or less. Sales taxes and other similar taxes are excluded from revenue. The revenue for the year ended December 31, 2021 and 2020 is made up of the sale of clean air technology products.
All of the revenue is in the United States of America.
Stock-Based
Compensation
The
Company accounts for all stock-based compensation using a fair value-based method. The fair value of equity-classified awards granted
to employees is estimated on the date of the grant using the Black-Scholes option-pricing model and the related stock-based compensation
expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award.
Goodwill
and Other Acquired Intangible Assets
The
Company initially records goodwill and other intangible assets at their estimated fair values and reviews these assets periodically for
impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired
and liabilities assumed in a business combination and is tested at least annually for impairment, historically during our fourth quarter.
Recently
Issued Accounting Pronouncements
In
December 2019, the FASB issued an update within the scope of Topic 740, Income Taxes. The update simplifies the accounting for income
taxes by removing certain exceptions to the general principles within the Topic and improves consistent application of and simplifies
GAAP for other areas by clarifying and amending existing guidance. The amendments in this update became effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2020 and did not have a material impact on our consolidated financial
statements.
In
June 2016, the FASB issued the update Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments, which changes the estimation of credit losses from an “incurred loss” methodology to one that reflects “expected
credit losses” (the Current Expected Credit Loss model, or CECL) which requires consideration of a broader range of reasonable
and supportable information to inform credit loss estimates. Measurement under CECL is based on relevant information about past events,
including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability of reported
amounts. The amendments in the update are effective for fiscal years beginning after December 15, 2021, including interim periods within
those fiscal years. The Company continues to evaluate the impact, if any, the implementation of the CECL model will have on our financial
statements.
In
August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging
– Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts on an Entity’s
Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP.
Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded
conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative
scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income
per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim
periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of
the standard on the consolidated financial statements.
In
May 2021, the FASB issued 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). The new ASU addresses
issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment
is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal
years. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated
financial statements.
Note
3 – GOING CONCERN
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States
of America, which contemplate the continuation of the Company as a going concern. The Company reported an accumulated deficit of $20,245,145
as of December 31, 2021. The Company also
had negative working capital of $1,075,690
on December 31, 2021, and had net losses of $12,582,500
and cash used in operations of $885,503.
To date, these losses and deficiencies have been
financed principally through the issuance of common stock, loans from related parties and from third parties.
In
view of the matters described, there is substantial doubt as to the Company’s ability to continue as a going concern without a
significant infusion of capital. We anticipate that we will have to raise additional capital to fund operations over the next 12 months.
To the extent that we are required to raise additional funds to acquire properties, and to cover costs of operations, we intend to do
so through additional offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place,
no guaranties that any such financings would be forthcoming, or as to the terms of any such financings. Any future financing may involve
substantial dilution to existing investors.
Note
4 - INVESTMENTS
During
the year ended December 31, 2019, the Company issued 400,000
share of preferred class B stock in exchange
for 210,000,000
shares of 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 and 2020 of $0.00070
and $0.000741
per share for a total investment of $147,000
and $155,780,
respectively.
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
and December 31, 2020 for KANAB CORP is $12,220.
HMLA is a related party as it has common officers and control.
On
October 4, 2021, the Company invested $25,000
for 25,000
common shares in GENBIO Inc. The Company valued the shares at $1.00 per share. The GENBIO transaction is being accounted for as an
investment on our balance sheet. We will not consolidate GENBIO’s financial statements. 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
the first quarter of 2021, the Company’s Chief Executive Officer assigned his investment brokerage account with Interactive Brokers
to the Company. The Company subsequently invested $1,007,500 into the account. The investments in the account are marketable equity
securities. The value of the securities was $581,243 at December 31, 2021.
The
total investments on the balance sheet at December 31, 2021 was as follows:
SCHEDULE OF INVESTMENTS
Investments | |
| | |
| |
December 31, 2021 | |
| | |
| |
| |
| | |
| |
| |
2021 | | |
2020 | |
Investment in Securities | |
$ | 581,243 | | |
$ | - | |
Investment Himalaya Technologies Inc (HMLA) | |
| 12,220 | | |
| - | |
Investment Kanab Corp | |
| - | | |
| 12,220 | |
Investment in Peer to Peer Inc (PTOP) | |
| 147,000 | | |
| 155,780 | |
Investment in GENBIO Inc | |
| 25,000 | | |
| - | |
Total investments | |
$ | 765,463 | | |
$ | 168,000 | |
Note
5 – LOANS DUE FROM/TO RELATED PARTIES
As
of December 31, 2021 and 2020, the Company subsidiary’s former chief executive officer had an outstanding balance of $5,168
and $3,574.
The loan is non-interest bearing and due on demand.
The
Company uses a credit card owned by the Company’s Chief Executive Officer(CEO). The Company accounts for the transactions charged
on this card as a loan payable to the CEO. The credit card is used exclusively for Company business and is paid with Company funds. The
outstanding balance at December 31, 2021 was $17,546.
The total loan payable to
related party at December 31, 2021 and 2020 was $22,714 and 3,574, respectively.
During the year ended December 31, 2021, the Company
loaned a related party $53,732. This loan was to pay operating expenses. The loan is interest free and due on demand. The related party has
become a fully reporting entity with the SEC and is in the process of raising capital and is expected to repay the loan.
Note
6 - CONVERTIBLE LOANS PAYABLES
The
Company had convertible note payables with three third parties with stated interest rates ranging between 10%
and 12%
and 22%
default interest not including penalties. At December 31, 2021, none of the loans were in default, The loans had a one-year maturity
date. These notes have a conversion feature such that the Company could not ensure it would have adequate authorized shares to meet
all possible conversion demands; accordingly, the conversion option has been treated as a derivative liability in the accompanying consolidated
financial statements. As of December 31, 2021, the Company had the following third-party convertible notes outstanding:
SCHEDULE
OF CONVERTIBLE NOTES OUTSTANDING
| |
Lender | |
Origination | | |
Maturity | | |
Amount | | |
Interest | |
| |
| |
| | |
| | |
| | |
| |
Note | |
GS Capital | |
| 6/25/2021 | | |
| 6/25/2022 | | |
| 55,000 | | |
| 10 | % |
Note | |
GS Capital | |
| 10/19/2021 | | |
| 10/19/2022 | | |
| 325,000 | | |
| 10 | % |
Note | |
Power Up Lending | |
| 9/20/2021 | | |
| 9/20/2022 | | |
| 43,750 | | |
| 12 | % |
Note | |
Sixth Street Lending | |
| 10/20/2021 | | |
| 10/20/2022 | | |
| 78,750 | | |
| 12 | % |
Total | |
| |
| | | |
| | | |
$ | 502,500 | | |
| | |
Less Discount | |
| |
| | | |
| | | |
| (413,195 | ) | |
| | |
Net | |
| |
| | | |
| | | |
$ | 89,305 | | |
| | |
As
of December 31, 2020, the Company had the following third-party convertible notes outstanding:
| |
Lender | |
Origination | |
Maturity | |
Amount | |
Interest |
| |
| |
| |
| |
| |
|
Note | |
Auctus | |
10/28/20 | |
10/28/21 | |
| 115,000 | | |
| 10.0 | % |
Note #8* | |
Power Up 10 | |
03/08/19 | |
01/15/20 | |
| 9,000 | | |
| 10.0 | % |
Note #10* | |
Tri-Bridge | |
3/15/19 | |
9/15/19 | |
| 2,286 | | |
| 10.0 | % |
Note #11* | |
Power Up 11 | |
7/9/19 | |
4/30/20 | |
| 35,000 | | |
| 12.0 | % |
Note #12* | |
GS Capital | |
9/6/19 | |
9/6/20 | |
| 28,900 | | |
| 12.0 | % |
Note #13* | |
GS Capital | |
11/21/19 | |
11/21/20 | |
| 18,000 | | |
| 12.0 | % |
Note #14* | |
Power Up | |
11/21/19 | |
11/21/20 | |
| 18,000 | | |
| 12.0 | % |
Total | |
| |
| |
| |
$ | 226,186 | | |
| | |
less discount | |
| |
| |
| |
| 0 | | |
| | |
Net | |
| |
| |
| |
$ | 226,186 | | |
| | |
* |
Note was in default at December 31, 2020. |
During
the year ended December 31, 2020, third-party lenders converted $646,456
of principal and interest into 2,936,347,316
shares
of common stock.
During
the year ended December 31, 2021, third-party lenders converted $2,822,118 of
principal, interest and penalties into 1,396,567,128 shares
of common stock. This resulted in a loss of $475,199.
The
Company amortized a debt discount of $481,555
and $0
respectively, during the years ended December
31, 2021 and 2020, respectively.
On
October 28, 2020, a third-party lender funded the Company $115,000
in a 12%
convertible debenture due October
28, 2021. The transaction netted the Company
$98,000
after original issue discount (OID) of $15,000
and placement agent fees of $2,000.
During the year ended December 31, 2021 was paid off with proceeds from a new loan received on January 20, 2021.
On
January 20, 2021, a third-party lender funded the Company $205,000
in a 10%
convertible debenture due January
20, 2022. The transaction netted the Company
$180,000
after a $20,000
original issue discount and $5,000
in legal fees. During the year ended December
31, 2021 the loan was converted into common shares.
On
April 8, 2021, a third-party lender funded the Company $103,500
in a 12%
convertible debenture due April
8, 2022. The transaction netted the Company $100,000
after $3,500
legal and due diligence fees. During the year
ended December 31, 2021 the loan was converted into common shares.
On
May 10, 2021, a third-party lender funded the Company $53,750
in a 12%
convertible debenture due May
10, 2022. The transaction netted the Company
$50,000
after $3,750
legal and due diligence fees. During the year
ended December 31, 2021 the loan was converted into common shares.
On
June 25, 2021, a third-party lender funded the Company $65,000
in a 10%
convertible debenture due June
25, 2022. The transaction netted the Company
$60,000
after a $2,000
original issue discount and $3,000
in legal fees. During the year ended December
31, 2021 $10,000 of this loan was converted into common shares. The remaining balance of $55,000 was still outstanding.
On
September 22, 2021, a third-party lender funded the Company $43,750
in a 12%
convertible debenture due September
20, 2022. The transaction netted the Company
$40,000
after $3,750
legal and due diligence fees. At December
31, 2021, the loan was still outstanding and had not been converted or paid.
On
October 26, 2021, a third-party lender funded the Company $78,750
in a 12%
convertible debenture due October
26, 2022. The transaction netted the Company
$75,000
after $3,750
legal and due diligence fees. At December
31, 2021, the loan was still outstanding and had not been converted or paid.
On
October 10, 2021, a third-party lender funded the Company $325,000
in a 10%
convertible debenture due October
10, 2022. The transaction netted the Company
$300,000
after a $12,500
original issue discount and $12,500
in legal fees. At December 31, 2021, the loan
was still outstanding and had not been converted or paid.
Note
7 – DERIVATIVE LIABILITY
During 2021, the
Company issued 1,268,541,667 warrants as
incentives to invest in the Company or to various convertible lenders to loan funds for operations. These warrants have a three-year expiration
and a strike price between $0.001 and
$0.002 These
warrants are derivative instruments. Because it is indeterminate whether there is a sufficient number of authorized and
unissued shares exists at the assessment date, the Company calculates a derivative liability associated with the warrants in
accordance with FASB ASC Topic 815-40-25. The initial derivative expense for the year ended December 31, 2021 was
$878,263.
The
Company’s derivative warrant instruments have been measured at fair value at December 31, 2021 using the Cox, Ross & Rubinstein
Binomial Tree valuation model. The Company recognizes the derivative liability related to those warrants that contain price protection
features in its consolidated balance sheet as liabilities. The liability is revalued at each reporting period and changes in fair value
are recognized currently in the consolidated statements of operations. The initial recognition and subsequent changes in fair value of
the derivative warrant liability have no effect on the Company’s cash flows.
The
Company has certain convertible notes with variable price conversion terms. Upon the issuance of
these convertible notes and as a consequence of their conversion features, the convertible notes give rise to derivative liabilities.
The Company’s derivative liabilities related to its convertible notes payable have been measured at fair value at December
31, 2021 and 2020 using the Cox, Ross & Rubinstein Binomial Tree valuation model.
The
Company revalues the warrants and convertible debt at each reporting period, as well as the charges associated with issuing additional
convertible notes, and warrants with price protection features. This resulted in the recognition of a gain of $393,465
on convertible debt and $1,289,422 on warrants for the year ended December 31, 2021 and
$58,941
on convertible debt for the year ended December
31, and 2020, respectively in the Company’s consolidated statements of operations, under the caption “Gain in change of fair
value of derivative liability convertible debt” and “Gain in change of fair value of derivative liability warrants”.
The fair value of the derivative liabilities related to the convertible debt and warrants at December 31, 2021 and 2020 is $1,105,537
and $834,230,
respectively, which is reported on the consolidated balance sheets under the caption “Derivative liabilities”.
The
Company has determined its derivative liability to be a Level 3 fair value measurement. The significant assumptions used in the Cox,
Ross & Rubinstein Binomial Tree valuation of the derivative are as follows:
SCHEDULE
OF DERIVATIVE LIABILITIES AT FAIR VALUE
| |
Year ended December 31, | |
| |
2021 | | |
2020 | |
Effective exercise price | |
| 0.01 - 0.0001 | | |
| 0.001 | |
Effective Market price | |
| 0.0007 | | |
| 0.0012 | |
Expected volatility | |
| 384 | % | |
| 253 | % |
Risk free interest | |
| 0.10 | % | |
| 0.10 | % |
Expected terms | |
| 1,0950
to 1,825
days | | |
| 1,095
days | |
Expected dividend rate | |
| 0 | % | |
| 0 | % |
Rollforward:
SCHEDULE
OF DERIVATIVE LIABILITIES
| |
Debt | | |
Warrants | | |
Total | |
Derivative balance December 31, 2020 | |
$ | 834,230 | | |
$ | - | | |
$ | 834,230 | |
New derivative liabilities | |
| 1,753,013 | | |
| - | | |
| 1,753,013 | |
New derivative warrants | |
| - | | |
| 2,064,665 | | |
| 2,064,665 | |
Conversions | |
| (1,863,484 | ) | |
| - | | |
| (1,863,484 | ) |
Change in fair value of derivatives | |
| (393,465 | ) | |
| (1,289,422 | ) | |
| (1,682,887 | ) |
Derivitive balance | |
$ | 330,294 | | |
$ | 775,243 | | |
$ | 1,105,537 | |
Note
8 – ACQUISITIONS AND INTANGIBLE ASSET
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, valued at their market value of $800,000.
As a result of the acquisition, the Company recognized intangible assets of $225,000
and Goodwill of $596,906.
The intangible assets are being amortized over their useful lives, ranging from 3
to 10
years. 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.
These
acquisitions were treated as business combinations and the Company recorded the fair value of the assets and liabilities assumed in accordance
with applicable guidance.
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.
SCHEDULE
OF ACQUISITION OF INTANGIBLE ASSET
Purchase Price | |
| | |
| |
| |
| | |
| |
| |
EIC | | |
iLED | |
Fair value of series B Preferred stock | |
$ | 1,250,000 | | |
$ | 3,300,000 | |
Common stock warrants | |
| 229,121 | | |
| - | |
| |
$ | 1,479,121 | | |
$ | 3,300,000 | |
| |
| | | |
| | |
The purchase price allocation of the fair value of the assets acquired are
as follows: | |
| | | |
| | |
| |
| | | |
| | |
Website | |
$ | 259,000 | | |
$ | 261,600 | |
Trade name | |
| 505,600 | | |
| 2,157,800 | |
Software | |
| 401,000 | | |
| - | |
Goodwill | |
| 313,521 | | |
| 880,600 | |
| |
$ | 1,479,121 | | |
$ | 3,300,000 | |
The
following unaudited proforma consolidated results of operations have been presented as if the acquisition occurred on
January 1, 2020:
SCHEDULE
OF BUSINESS ACQUISITION PROFORMA INFORMATION
Unaudited Proforma Statement of Operation | |
| | |
| |
December 31, 2021 and 2020 | |
| | |
| |
| |
| | |
| |
| |
| 2021 | | |
| 2020 | |
| |
| | | |
| | |
Operating revenues | |
$ | 890,075 | | |
$ | 705,180 | |
| |
| | | |
| | |
Cost of revenues | |
| 607,833 | | |
| 473,066 | |
| |
| | | |
| | |
Gross profit | |
| 282,242 | | |
| 232,114 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
General and administrative | |
| 5,061,430 | | |
| 2,519,283 | |
| |
| | | |
| | |
Loss from operations | |
| (4,779,188 | ) | |
| (2,287,169 | ) |
| |
| | | |
| | |
Other income (expenses) | |
| | | |
| | |
Interest expense | |
| (730,825 | ) | |
| (165,821 | ) |
Bad debt | |
| - | | |
| - | |
Loan forgiveness | |
| 11,593 | | |
| - | |
Loss on investment | |
| (435,037 | ) | |
| - | |
Loss on impairment | |
| (6,419,944 | ) | |
| - | |
Gain on debt conversion | |
| 514,425 | | |
| - | |
Debt settlement gain (loss) | |
| (231,930 | ) | |
| 35,000 | |
Write off old inventory | |
| - | | |
| (204,981 | ) |
Derivative liability gain (loss) | |
| 3,569,489 | | |
| (58,941 | ) |
Total other expenses | |
| (3,722,229 | ) | |
| (394,743 | ) |
| |
| | | |
| | |
Loss before income taxes | |
| (8,501,417 | ) | |
| (2,681,912 | ) |
| |
| | | |
| | |
Provision for income taxes | |
| - | | |
| - | |
| |
| | | |
| | |
Net loss | |
$ | (8,501,417 | ) | |
$ | (2,681,912 | ) |
Note
9 – COMMITMENTS AND CONTINGENCIES
Legal
Proceedings
The
Company may from time to time, become a party to various legal proceedings, arising in the ordinary course of business. The Company investigates
these claims as they arise.
A
third-party lender, Auctus Fund, LLC, served the Company notice of a civil lawsuit on November 1, 2019 seeking principal, interest and
penalties of $283,000 related to a loan provided to the Company on or around January 6, 2017. On November 25, 2019, the Company reached
a Settlement Agreement and Mutual General Release with Auctus Fund, LLC. As part of the agreement, the Company agreed that the settlement
value of the note and accrued interest was $60,522.32 and the Company would issue the following shares to settle the note and accrued
interest:
● |
On
or before November 1, 2020- 264,680,377 Settlement Shares; plus |
● |
On
or before December 2, 2020 – 264,680,378 Settlement Shares; plus |
● |
On
or before January 1, 2021 – 264,680,378 Settlement Shares. |
Prior
to the settlement of the debt with Auctus Fund LLC the Company agreed to irrevocably authorize and reserve a sufficient amount of Settlement
Shares of the Company’s common stock pursuant to the reserve requirements of the Note 1,500,000,000 Shares of the publicly tradeable ETFM Common Stock for delivery and issuance to the Auctus Fund,
LLC. For year-end 2019, the Company accrued a liability of $260,000, representing the fair value of the settlement shares at the date
of the settlement agreement. In the year ended December 31, 2020, the Company settled on a balance of the note to Auctus Fund LLC of
$115,000. Auctus was issued 794,041,134 shares the Company common stock in the settlement. This resulted in a settlement gain of $89,447
during the year ended December 31, 2020. The 1,500,000,000 reserve shares of the Company were released.
Note
10 – INCOME TAXES
The
Company did not file its federal tax returns for fiscal years from 2012 through 2020. Management at year-end 2020 believed that it would
not have any material impact on the Company’s financials because the Company did not have any tax liabilities due to net loss
incurred during these years. During the year ended December 31, 2021 the Company filed returns for 2018, 2019 and 2020
Based
on the available information and other factors, management believes it is more likely than not that any potential net deferred tax assets
on December 31, 2021 and 2020 will not be fully realizable. The Company is current with franchise tax board fees due to the State of
California and in 2021 filed tax statements for the federal and state requirements (California, Illinois, Pennsylvania) for 2018,
2019 and 2020. Today, the Company is current with its federal and state tax filings.
Due
to recurring losses, the Company’s tax provision for the years ended December 31 2021 and 2020 was $0.
The
difference between the effective income tax rate and the applicable statutory federal income tax rate is summarized as follows:
SUMMARY
OF EFFECTIVE INCOME TAX RATE
| |
2021 | | |
2022 | |
Statutory
federal rate | |
| -21.0 | % | |
| -21.0 | % |
State
income tax rate, net of federal Benefit | |
| -3.6 | % | |
| -3.6 | % |
Permanent
differences, including stock-based compensation and impairment of acquired assets | |
| 8.6 | % | |
| 8.6 | % |
Change
in valuation allowance | |
| 16.0 | % | |
| 16.0 | % |
Effective
tax rate | |
| 0.0 | % | |
| 0.0 | % |
At
December 31, 2021 and 2020 the Company’s deferred tax assets were as follows:
SUMMARY
OF DEFERRED TAX ASSETS
| |
December 31, 2021 | | |
December 31, 2020 | |
Tax benefit of net operating loss carry forward | |
$ | 1,998,003 | | |
$ | 85,902 | |
less valuation allowance | |
| (1,998,003 | ) | |
| (85,902 | ) |
Net deferred tax assets | |
$ | - | | |
$ | - | |
As
of December 31, 2021, the Company had unused net operating loss carry forwards of approximately $13.9 million available to reduce future
federal taxable income. Net operating loss carryforwards expire through fiscal years ending 2039. Internal Revenue Code Section 382 places
a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally a greater than
50% change in ownership).
The
Company’s ability to offset future taxable income, if any, with tax net operating loss carryforwards may be limited due to the
non-filing of tax returns and the impact of the statute of limitations on the Company’s ability to claim such benefits. Furthermore,
changes in ownership may result in limitations under Internal Revenue Code Section 382. Due to these limitations, and other considerations,
management has established full valuation allowances on deferred tax assets relating to net operating loss carryforward, as the realization
of any future benefits from these assets is uncertain.
The
Company’s valuation allowance at December 31, 2021 and 2020 was $2,178,954
and $1,029,845,
respectively. The change in the valuation allowance during the year ended December 31, 2021 was an increase of approximately $1,149,000.
The change in the valuation allowance during the year ended December 31, 2020 was an increase of $943,000.
SCHEDULE OF NET OPERATING LOSS CARRYOVER LOSS
NOL carry over loss | |
Nol carry over loss | |
Expiration |
Expiration | |
| |
| |
|
NOL | |
| 2012 | | |
$ | 15,996 | | |
| 2022 | |
| |
| 2013 | | |
| 84,206 | | |
| 2023 | |
| |
| 2014 | | |
| 494,301 | | |
| 2024 | |
| |
| 2015 | | |
| 680,549 | | |
| 2025 | |
| |
| 2016 | | |
| 651,537 | | |
| 2026 | |
| |
| 2017 | | |
| 129,493 | | |
| 2027 | |
| |
| 2018 | | |
| 1,842,498 | | |
| 2028 | |
| |
| 2019 | | |
| 48,201 | | |
| 2029 | |
| |
| 2020 | | |
| 409,057 | | |
| 2030 | |
| |
| 2021 | | |
| 9,514,300 | | |
| 2031 | |
| |
| | | |
$ | 13,870,138 | | |
| | |
Note
11 – WARRANTS AND OPTIONS
During
the year ended December 31, 2021 and 2020, the Company issued 1,268,541,667 and 713,571,428 warrants valued at $3,062,302 and $862,160,
respectively to purchase 1,982,113,095 shares of the Company’s common stock outstanding which may dilute future EPS.
The
Company estimates the fair value of each award on the date of grant using a Black-Scholes option valuation model that uses the assumptions
noted in the table below. Since Black-Scholes option valuation models incorporate ranges of assumptions for inputs, those ranges are
disclosed. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses historical data
to estimate award exercise and employee termination within the valuation model, whereby separate groups of employees that have similar
historical exercise behavior are considered separately for valuation purposes. The expected term of granted awards is derived from the
output of the option valuation model and represents the period of time that granted awards are expected to be outstanding; the range
given below results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual
life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.
SUMMARY
OF FAIR VALUE OF WARRANTS
| |
2021 | | |
2020 | |
Expected volatility | |
| 384 | % | |
| 466 | % |
Weighted average volatility | |
| 384 | % | |
| 466 | % |
Expected dividends | |
| 0 | % | |
| 0 | % |
Expected term (in years) | |
| 3
to 5 | | |
| 3
to 5 | |
Rick free rate | |
| 1.00 | % | |
| 1.24 | % |
The following
table sets forth common share purchase warrants outstanding as of December 31, 2021 and 2020:
SCHEDULE OF STOCKHOLDERS EQUITY NOTE WARRANTS
| |
| |
Weighted | |
|
| |
| |
Average | |
|
| |
| |
Exercise | |
Intrinsic |
| |
Warrants | |
Price | |
Value |
Outstanding warrants outstanding December 31, 2019 | |
- | |
- | |
|
Warrants granted | |
| 713,571,428 | | |
$ | 0.0100 | | |
$ | - | |
Warrant exercised | |
| - | | |
$ | - | | |
$ | - | |
Warrants forfeited | |
| - | | |
$ | - | | |
$ | - | |
Outstanding December 31, 2020 | |
| 713,571,428 | | |
$ | 0.0100 | | |
$ | - | |
Warrants granted | |
| 1,268,541,667 | | |
$ | 0.0034 | | |
$ | - | |
Warrant exercised | |
| - | | |
$ | - | | |
$ | - | |
Warrants forfeited | |
| - | | |
$ | - | | |
$ | - | |
Outstanding December 31, 2021 | |
| 1,982,113,095 | | |
$ | 0.0134 | | |
$ | - | |
During the year ended December 31, 2021 the Company
issued warrants for stockholder relations. These warrants were valued at $2,064,665 and expensed as general and administrative expense.
Note
12 – EQUITY
During
the year ended December 31, 2020, the Company:
Issued
2,936,347,316 shares of its common stock valued at $646,456, as repayment for outstanding principal and interest on convertible promissory
notes as requested by the note holders in accordance with contractual terms.
Issued
312,500 of its Restricted Preferred B shares to the Company CEO, Vikram Grover, for accrued compensation of $100,000.
Issued
1,651,315 of its Preferred B shares to consultants for professional services, including due diligence on the Purge Virus transaction,
corporate development, sales and marketing, and other for $293,027.
Issued
100,000 of its Preferred B shares to the owner of PPE Source International LLC (PPESI), a provider of PPE to small, medium, and large
businesses, institutions, and government customers, 100,000 Series B Preferred Shares for a 180-day exclusive option to purchase his
100% member interests in PPESI for $50,000. These shares were non-refundable and expensed during the year ended December 31, 2020.
Issued
2,000,000 share of Restricted Preferred B shares for the acquisition of 100% of the member interests of Purge Virus, LLC from Charles
Szoradi. The purchase maintains PV as a 100% owned subsidiary of FOMO CORP., includes cross-selling relationships with Mr. Szoradi’s
100% owned LED company Independence LED and 33% owned energy management software company Energy Intelligence Center (EIC), and JV partner
Company PPE Source International LLC. The joint venture partnership with PPESI was subsequently canceled. These shares were valued at
$800,000.
During
the year ended December 31, 2021, the Company:
Issued
1,396,567,128, shares of its common stock valued at $2,822,118, as repayment for outstanding principal and interest on convertible promissory
notes as requested by the note holders in accordance with contractual terms.
Issued
10,000,000 shares of its common stock valued at $20,000 for loan costs.
Issued
527,500,000 shares of its common stock valued at $1,000,000 for cash.
Issued
2,750,000 shares of its Preferred A shares valued at $275,000 for cash.
Issued
175,000 shares of its Preferred B shares valued at $449,279 for a non-refundable deposit to acquire a business. The acquisition was terminated
in the year ended December 31, 2021.
Issued
375,000 shares of its Preferred B shares valued at $4,550,000 to acquire assets of a business.
Issued
571,167 shares of its Preferred B shares valued at $1,766,014 for services
Converted
335,000 shares of Preferred B shares into 335,000,000 shares of common stock.
On
October 13, 2020, we amended the terms of our Series A Preferred Shares to include an annual dividend of $0.0035
per share, a
1-50 conversion ratio and to receive 1 vote per converted common shares on an as converted basis. If declared the dividends
would accrue until paid in full.
COVID-19 Pandemic Update
In
March 2020, the World Health Organization declared a global health pandemic related to the outbreak of a novel coronavirus. The COVID-19
pandemic adversely affected the company’s financial performance in the third and fourth quarters of fiscal year 2020 and could
have an impact throughout fiscal year 2021. In response to the COVID-19 pandemic, government health officials have recommended and mandated
precautions to mitigate the spread of the virus, including shelter-in-place orders, prohibitions on public gatherings and other similar
measures. There is uncertainty around the duration and breadth of the COVID-19 pandemic, as well as the impact it will have on the company’s
operations, supply chain and demand for its products. As a result, the ultimate impact on the company’s business, financial condition
or operating results cannot be reasonably estimated at this time.
On
June 4, 2020, the Company entered a $11,593 note payable to Bank of America, pursuant to the Paycheck Protection Program (“PPP
Loan”) under the CARES Act. The loan remains outstanding but is expected to be forgiven by the U.S. government based on guidance
from the Company’s commercial bank, Bank of America. We have applied for forgiveness of the loan with the SBA through our commercial
bank, Bank of America. The loan has been forgiven and the Company has recognized loan forgiveness.
Note
13 – SUBSEQUENT EVENTS
On
January 3, 2022, a third-party lender converted $15,000
principal, $2,203
and $350
in fees into 44,830,666
common shares. The Company had a loss on conversion
of $18,312.
On
January 12, 2022, a third-party lender converted $40,000 principal,
$789 and
$350 in
fees into 118,202,055 common
shares. The Company had a loss on conversion of $136,164.
On
January 12, 2022, we borrowed $43,750 from a third-party lender netting us $40,000 after fees and legal expenses.
On
January 14, 2022, we borrowed $220,000 from a third-party lender netting us $200,000 after a $10,000 original issue discount and $10,000
in legal expenses.
On
January 21, 2022, we invested $15,000 into GenBio, Inc. for 15,000 common shares of GenBio, Inc.
On
February 18, 2022, we invested $10,000 into GenBio, Inc. for 10,000 common shares of GenBio, Inc.
On
February 26, 2022, we engaged former Michigan Representative Robert Kosowski as an Advisory Board member. As compensation we issued
the former Representative 20,000,000
common stock purchase warrants with a strike
price of $0.001
and a three-year
expiration.
On
February 28, 2022, we acquired 100%
of the member interests of SMARTsolution Technologies LP for consideration of 1,000,000 Series B Preferred shares, 300,000,000
common stock purchase warrants, and refinancing
of up to $1,000,000
debt. The fair value of the Series B preferred
shares and common stock purchase warrants is $910,000 based on an as converted basis of the closing price of the shares at February 28,
2022.
On
February 28, 2022, we issued 990,000 Series B Preferred shares to Mitchell Schwartz, founder and CEO of SMARTsolution Technologies LP.,
for the purchase of his 90% ownership interest in SST.
On
February 28, 2022, we issued 10,000 Series B Preferred shares to SMARTsolution Technologies, Inc. for the purchase of its 10% ownership
position in SST LP.
On
or around February 28, 2022, we issued 300,000 common stock purchase warrants with a strike price of $0.001 and a three-year expiration
to employees and consultants of SST as part of our acquisition agreement with SST.
On
February 28, 2022, we entered into a $1 million secured promissory note with a third-party lender to finance mergers and acquisitions.
Proceeds were used to retire loans owed by SMARTSolution Technologies LP.
On
March 15, 2022, we issued 500,000 Series B Preferred shares to a consultant for advisory services.
On
March 21, 2022, a third-party exercised 500,000,000 common stock purchase warrants and we issued 437,500,000 common shares.
On
March 22, 2022, a third-party lender converted $25,000 principal of a loan into 80,645,161 common shares.
On
March 31, 2022, we borrowed $250,000 in a one-year junior note netting the Company $196,000 less original issue discount of $50,000 and
$4,000 in legal fees.
On
March 31, 2022, we borrowed $185,000 from the founder of SMARTsolution Technologies LP in a junior note.
On
April 4, 2022, we entered into a $500,000 purchase order financing line with a third-party lender, of which proceeds went to our supplier
in Canada to finance signed orders for equipment.
On
April 5, 2022, we sold $115,000
of junior convertible debt to a third-party netting
the Company $105,000
after original issue discount (“OID”)
and legal fees.
SUMMARY
OF SHARES ISSUED AND OUTSTANDING
Shares issued subsequent to December 31, 2021 | |
| | |
| |
| |
Common shares | | |
Preferred B shares | |
Common shares outstanding at December 31, 2021 | |
| 7,177,931,757 | | |
| 5,253,815 | |
Issued January 3, 2022 | |
| 44,830,666 | | |
| - | |
issued January 12, 2022 | |
| 118,202,055 | | |
| - | |
Issued February 28, 2022 | |
| - | | |
| 1,000,000 | |
issued March 3, 2022 | |
| 80,645,161 | | |
| - | |
Issued March 15, 2022 | |
| - | | |
| 500,000 | |
Issued March 21, 2022 | |
| 437,500,000 | | |
| - | |
Issued March 22, 2022 | |
| 80,645,161 | | |
| - | |
Number of shares issued | |
| 7,939,754,800 | | |
| 6,753,815 | |