EDGAR 10-K Filing

Company CIK: 867028
Filing Year: 2024
Filename: 867028_10-K_2024_0001472375-24-000065.json

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ITEM 1. BUSINESS
Item 1. Description of Business.
Company Background
From 2014 through 2019, the Company, which was then known as “2050 Motors, Inc.” was seeking to import, market and sell in the United States, Puerto Rico, the U.S. Territories and Peru, the “e-Go” lightweight carbon fiber all-electric vehicle and electric light truck which was to be manufactured by Jiangsu Aoxin New Energy Automobile Co., Ltd. (“Aoxin Automobile”) located in the People’s Republic of China (the “PRC”). Although the Company had entered into a definitive agreement with Aoxin Automobile, due to export restrictions imposed by the PRC, as well as tariffs imposed by the United States as a result of its trade dispute with China, the Company encountered substantial delays and was unable to commercially launch the vehicles in the U.S. Accordingly, in May 2019, the Company discontinued its planned electric vehicle business and instead focused its efforts on exploring investment opportunities which management believed offered better potential to generate revenues and create shareholder value.
Acquisition of 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.
IAQ markets and sells its disinfection products and services through two in-house sales managers.
Acquisitions of Independence LED Lighting LLC and Energy Intelligence Center LLC
On February 12, 2021, the Company purchased the assets of Independence LED Lighting LLC (“iLED”), later rebranded as IAQ Technologies, LLC, 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 of PA”), an affiliate of iLED, in exchange for the issuance of 125,000 Series B Preferred Shares valued at $1,479,121. EIC is engaged in the commercialization, marketing and licensing of software designed to work in conjunction with a commercial building’s HVAC system to clean the air that circulates within the building.
Following the acquisitions of the assets of ILED and EIC, the Company combined the assets and businesses of iLED and EIC PA into a newly formed wholly-owned subsidiary, Energy Intelligence Center, LLC (“EIC Wyoming”). The assets of this business were combined with a successor entity and EIC was dissolved in 2024.
Acquisitions of SMARTSolution Technologies L.P. and SMARTSolution Technologies, Inc.
On February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies L.P. and shares of SMARTSolution Technologies, Inc. (the General Partner) (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.
Pursuant to the SPA, FOMO:
●
issued to Seller 1,000,000 shares of its authorized but unissued Series B Preferred Shares;
●
paid approximately $927,600 of SST’s indebtedness to the Seller and third parties;
●
entered into an “at will” employment agreement with Seller, pursuant to which Seller will continue to serve as SST’s Chief Executive Officer at an annual salary of $100,000; and
●
as an incentive to retain SST’s other employees, issued to such employees, a total of 300,000,000 three-year common stock purchase warrants (the “Incentive Warrants”), each entitling the holder to purchase one share of SST common stock at an exercise price of $0.001 per share.
SST has been engaged in the education technology and services business for over 25 years. SST markets its systems to and installs these systems in elementary, middle and high schools, as well as colleges, universities, and commercial facilities. 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 Pennsylvania, 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 themselves either organically or through strategic acquisitions.
As a result of the growth in remote learning driven in part by the COVID-19 pandemic and government funding including ESSER Funds (Elementary Secondary School Emergency Relief) and the CARES Act (Coronavirus Aid, Relief, and Economic Security), SST is currently experiencing a significant increase in orders and sales and continuous growth in backlog. Since the closing of the acquisition, FOMO has secured several millions dollars financing to support SST’s fulfillment of additional orders and delivery of its backlog.
The digital smartboards which form the key element of SST’s interactive audio visual systems are primarily supplied by a leading manufacturer based in Canada, which is a subsidiary of a large multi-national company Hon Hai Precision Industry Co., Ltd., trading as Hon Hai Technology Group in China, Taiwan and Foxconn internationally. SST believes that its relationship with its supplier is adequate, 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. Due to liquidity issues and a business downturn since June 2023, SST is has been placed into receivership by our senior lender effective April 1, 2024 and will be carried as a discontinued operation for accounting purposes.
SST currently employs 4 people, including 1 in administration, 1 in sales management and 2 in installation. As a result of its backlog and due to turnover, SST is currently seeking to expand its installation and sales staff. On or around June 15, 2023, we merged out SMARTSolution Technologies LP into SMARTSolution Technologies, Inc. due our ownership of both the LP and the GP.
Formation of Diamond Technology Solutions, LLC
On or around June 15, 2023, we formed a new subsidiary Diamond Technology Solutions, LLC to offer a wide array of products and services to customers nationwide including smart boards, access control systems, smart cameras, indoor farming, and other. In January 2024, we merged the assets and intellectual property of our EIC business into DTS to further add to its offering. We are currently seeking to capitalize DTS for growth.
Corporate Information
We were incorporated in the State of California on February 27, 1990 and redomiciled to Wyoming on November 22, 2023. Our principal executive offices are located at 625 Stanwix St. #2504, Pittsburgh, PA 15222 and our telephone number is (630) 708-0750. Our website is www.fomoworldwide.com.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
Not applicable to smaller reporting companies

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
The Company currently rents property through its wholly owned subsidiary SMARTSolution Technologies LP at 831 West North Ave, Pittsburgh, PA 15233. The property rental is between SMARTSolution Technologies LP and GraMax LLC, which is wholly owned by SST’s Founder and Brand Ambassador, Mitchell Schwartz. On closing of the SST acquisitions on February 28, 2022, the initial lease term was five (5) years with an annual lease of $84,000 subject to modification. The lease is currently in default.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
We have been named in lawsuits by a former salesperson for unpaid commissions, by merchant cash advance providers CFS, Globex, and Swift Funding for $171,343.35 plus interest, $161,631.25 plus interest, and $142,739.21 plus interest respectively which have resulted in unsecured judgments, and by our senior lender Thermo Communications Funding, LLC in the amount of $1,074,276.15 plus interest. We are working to settle these claims through a planned capital raise and sales of assets subject to Court approval.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
None.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our shares of common stock are quoted on the OTC Pink tier of the over-the-counter market operated by OTC Markets Group Inc. under the symbol “IGOT”. Such market is extremely limited. We can provide no assurance that our shares of common stock will be continued to be traded on the OTC Pink or another exchange, or if traded, that the current public market will be sustainable.
Holders of Record
As of the date of this Annual Report, there were approximately 457 holders of record of our common stock, as reported by the Company’s transfer agent. In computing the number of holders of record, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single shareholder and accordingly, the Company believes that the number of beneficial owners of its common stock is significantly higher.
Dividends
We have never declared or paid any cash dividends on our common stock, nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors.
Securities Authorized for Issuance under Equity Compensation Plans
None.
Recent Sales of Unregistered Securities
None.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
This Annual Report contains forward-looking statements. Our actual results could differ materially from those set forth because of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this Annual Report. See “Cautionary Note Regarding Forward Looking Statements” above.
Results of Operations
Year ended December 31, 2023 as compared to year ended December 31, 2022
Revenues. During the year ended December 31, 2023, the Company had operating revenues of $2,498,566, as compared to operating revenues of $$7,515,451 for the year ended December 31, 2022. The decrease from 2022 to 2023 was $5,016,975 (67%). The decline was due to a decline in sales at SST.
Cost of Revenues. During the year ended December 31, 2023, cost of revenues was $1,920,142, as compared to cost or revenues of $6,467,990 for the year ended December 31, 2022. The decrease from 2022 to 2023 was $4,547,848 (70%). Cost of sales primarily includes cost of equipment, cost of labor, cost of transportation and delivery, and allocation of corporate overhead. The decline was due to a decline in sales at SST.
Gross Profit. Gross profit for the year ended December 31, 2023 was $578,424as compared to gross profit of $1,047,551 for the year ended December 31, 2022. Gross profit expressed as a percentage of sales for 2022 was 23%, as compared to 14% for 2022.
Operating Expenses. During the year ended December 31, 2023, the Company incurred operating expenses of $2,241,606 consisting primarily of the impairment of Goodwill and Intangible assets, payroll, professional and consulting fees. Of the operating expense, $1,031,638 consists of non-cash expenses, such as depreciation and amortization and expenses for shares and warrants issued for services. During the year ended December 31, 2022, the Company incurred operating expenses of $2,645,480 consisting primarily of payroll, professional and consulting fees. Of the operating expense, $981,594 consists of non-cash expenses, such as depreciation and amortization and expenses for shares and warrants issued for services.
Other Income (Expenses). During the year ended December 31, 2023, the Company incurred other income (expense) $79,444 consisting of interest expense, amortization of debt discounts, gain on investments, debt settlement, loan forgiveness, loss on debt conversions, derivative liability expense and derivative expense. During the year ended December 31, 2022, the Company incurred other income (expense) $2,083,561 consisting of interest expense, amortization of debt discounts, loss on investments, debt settlement, loan forgiveness, loss on debt conversions, derivative liability expense and derivative expense.
Net Losses. As a result of the above, the Company incurred a net loss of $1,583,738, for the year ended December 31, 2023, as compared to a net loss of $3,681,490 for the year ended December 31, 2022.
Our Auditors Have Issued a Going Concern Opinion
The Company’s independent registered public accounting firm has expressed substantial doubt as to the Company’s ability to continue as a going concern as of December 31, 2023. The consolidated financial statements in this report on Form 10-K have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the consolidated financial statements, these conditions raise substantial doubt from the Company’s ability to continue as a going concern. The Company’s plans in regard to these matters are also described in the notes to the Company’s consolidated financial statements. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
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 year ended December 31, 2023, the Company had:
●
a net loss of $1,583,738; and
●
net cash used in operations of $176,588.
Additionally, at December 31, 2023, the Company had:
●
an accumulated deficit of $25,799,891;
●
stockholders’ deficit of $3,120,474; and
●
a working capital deficit of $3,701,663.
Liquidity and Capital Resources at December 31, 2023
Operating Activities
For the years ended December 31, 2023 and 2022, the Company reflected net cash used in operating activities of $176,588 and $858,229, respectively, a decrease of $681,641 (79%). Operating activities primarily consist of a net loss of $1,583,738, offset by non-cash net expenses of $361,878, and increases in accounts receivable, inventory, and prepaid expenses, offset by an increase in accounts payable and decrease in deferred revenues.
Investing Activities
For the year ended December 31, 2023 and 2022, the Company reflected net cash provided by (used in) investing activities of $(9,007) and $89,941.
Financing Activities
For the year ended December 31, 2023 and 2022, the Company reflected net cash provided by financing activities of $93,071 and $817,612, respectively, a decrease of $724,541 (89%). Financing activities primarily consisted of proceeds and repayments from debt, proceeds and related drawdown on the accounts receivable credit facility and proceeds from the issuance of common stock and Class A preferred stock.
We manage liquidity risk by reviewing, on an ongoing basis, our sources of capital and capital required to support sales and operations. The Company has cash on hand of $99,954 at December 31, 2022. Although the Company intends to raise additional debt and equity capital, the Company may continue to incur losses from operations and incur negative cash flows from operating activities over the near-term. Future potential losses could be significant as sales increase along with associated expenses related to compensation, professional fees, business development and regulatory compliance.
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 December 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 is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about our 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 we are 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.
We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of our clean air and audio/visual businesses. Consequently, our dependence on the proceeds from future debt or equity investments will be used to implement our business plan of expanding our business through mergers and acquisition and expanding revenues through growing sales in the clean air and audio/visual businesses. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of additional capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this report, we did not have any commitments from any source to provide such additional capital. Even if we are able to secure outside financing, it may be unavailable in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases, or debt which would increase our capital requirements and a possible loss of valuable assets if such obligations were not repaid in accordance with their terms.
Summary of Significant Accounting Policies
See Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report.
Off-balance Sheet Arrangements
None.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not required under Regulation S-K for “smaller reporting companies.”

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
Our unaudited consolidated financial statements are set forth below.
FOMO WORLDWIDE, INC. and Subsidiaries
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheets, December 31, 2023 and 2022 (Unaudited)
Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 (Unaudited)
Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2023 and 2022 (Unaudited)
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 (Unaudited)
Notes to Consolidated Financial Statements December 31, 2023 and 2022 (Unaudited)
FOMO WORLDWIDE, INC. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
December 31, 2023
December 31, 2022
Assets
Current Assets
Cash
$
4,430
$
96,954
Accounts receivable - net
359,008
1,682,654
Loan receivable - related party
38,807
45,261
Inventory - net
69,982
382,457
Prepaids and other
8,267
9,458
Total Current Assets
480,494
2,216,784
Property and equipment - net
3,232
80,844
Operating lease - right-of-use asset
-
281,937
Intangible assets
-
514,476
Goodwill
-
350,110
Investments
694,400
140,006
Total Assets
$
1,178,126
$
3,584,157
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities
Bank overdraft
$
$
-
Accounts payable and accrued expenses
1,441,803
1,657,084
Accounts receivable credit facility
1,046,828
1,276,467
Operating lease liability
-
63,556
Deferred revenue
59,896
578,354
Warranty reserve
5,010
-
Loans payable - related parties
5,588
25,048
Convertible notes payable - net
214,750
645,006
Loans payable- other
720,396
243,692
Preferred dividend payable
289,518
171,646
Derivative liabilities
398,164
981,766
Total Current Liabilities
4,182,157
5,642,619
Long Term Liabilities
Loans payable - related parties
116,443
284,480
Operating lease liability
-
227,701
Total Long-Term Liabilities
116,443
512,181
Total Liabilities
4,298,600
6,154,800
Commitments and Contingencies (Note 10)
Stockholders’ Equity (Deficit)
Preferred stock, Class A, $0.0001 par value, 78,000,000 shares designated,
24,729,492 and 5,750,000 shares issued and outstanding, respectively
2,493
Preferred stock, Class B, $0.0001 par value, 20,000,000 shares designated,
6,083,316 and 5,289,982 shares issued and outstanding, respectively
Preferred stock, Class C, $0.0001 par value, 2,000,000 shares designated,
1,000,000 and 1,000,000 shares issued and outstanding, respectively
Common stock, no par value, unlimited shares authorized
104,000,514 and 86,201,881 shares issued and outstanding, respectively
9,533,145
9,023,334
Additional paid-in capital
13,143,055
12,503,100
Accumulated deficit
(25,799,891)
(24,098,281)
Total Stockholders’ Equity (Deficit)
(3,120,474)
(2,570,643)
Total Liabilities and Stockholders’ Equity (Deficit)
$
1,178,126
$
3,584,157
The accompanying notes are an integral part of these unaudited consolidated financial statements
FOMO WORLDWIDE, INC. and Subsidiaries
Consolidated Statement of Operations (Unaudited)
For the Years Ended December 31,
Sales - net
$
2,498,566
$
7,515,541
Cost of sales
1,920,142
6,467,990
Gross profit
578,424
1,047,551
General and administrative expenses
1,442,270
2,645,480
Impairment of Goodwill and intangible assets
799,336
-
Total operating expenses
2,241,606
2,645,480
Loss from operations
(1,663,182)
(1,597,929)
Other income (expense)
Interest expense
(594,191)
(502,409)
Amortization of debt discount
(31,200)
(573,845)
Change in fair value of derivative liabilities
(73,339)
(165,883)
Derivative expense
-
(194,887)
Gain on debt extinguishment (derivative liabilities - convertible debt)
600,261
226,391
Loss on debt extinguishment
(255,850)
(205,691)
Unrealized gain (loss) on investment
517,377
(667,237)
Other expenses
(83,614)
-
Total other expense - net
79,444
(2,083,561)
Net income (loss)
$
(1,583,738)
$
(3,681,490)
Preferred stock dividends
(117,872)
(171,646)
Net loss available to common shareholders
(1,701,610)
(3,853,136)
Loss per share - basic and diluted
$
(0.02)
$
(0.04)
93,033,917
83,088,894
The accompanying notes are an integral part of these unaudited consolidated financial statements
FOMO WORLDWIDE, INC. and Subsidiaries
Consolidated Statement of Stockholders’ Deficit
For the years ended December 31, 2023 and 2022
Unaudited
Preferred Stock - Class A
Preferred Stock - Class B
Preferred Stock - Class C
Common Stock
Total
Additional
Stockholders’
Paid-in
Accumulated
Equity
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
(Deficit)
December 31, 2021
5,750,000
$
5,249,982
$
1,000,000
$
7,177,931,757
$
8,631,776
$
11,301,942
$
(20,245,145)
$
(310,227)
Issuance of stock in cashless exercise of warrants
-
-
-
-
-
-
645,833,333
-
-
-
-
Issuance of stock for services
-
-
650,000
-
-
-
-
534,935
-
535,000
Acquisition of Smart Solutions Technologies, Inc. - net of broker fees
-
-
1,000,000
-
-
-
-
699,900
-
700,000
Shares returned in acquisition of Smart Solutions Technologies, Inc. - net of broker fees
-
-
(1,000,000)
(100)
-
-
-
-
(699,900)
-
(700,000)
Issuance of stock in conversion of debt and accrued interest
-
-
-
-
-
-
301,448,152
310,059
-
-
310,059
Return and cancellation of Series B shares
-
-
(250,000)
(25)
-
-
-
-
-
-
Conversion of Series B preferred stock into common stock
-
-
(360,000)
(36)
-
-
360,000,000
-
-
Warrants issued for services
-
-
-
-
-
-
-
-
227,211
-
227,211
Warrants issued for services - related party
-
-
-
-
-
-
-
-
13,981
-
13,981
Reclassification of financial instruments that ceased to be derivative liabilities (warrants)
-
-
-
-
-
-
-
-
425,000
-
425,000
Shares issued in transfer agent conversion
-
-
-
-
-
-
134,974,846
81,469
-
-
81,469
Preferred dividends
(171,646)
(171,646)
Net loss
-
-
-
-
-
-
-
-
-
(3,681,490)
(3,681,490)
December 31, 2022
5,750,000
$
5,289,982
$
1,000,000
$
8,620,188,088
$
9,023,334
$
12,503,100
(24,098,281)
(2,570,643)
Issuance of Series B preferred stock for services
-
-
385,000
-
-
-
-
128,461
-
128,500
Warrants issued for services - related party
-
-
-
-
-
-
-
-
32,309
-
32,309
Conversion of Accrued Salary to Series A Preferred shares
3,533,333
-
-
-
-
-
-
67,814
-
68,167
Conversion of Accrued Salary to Series B Preferred shares
-
-
567,834
-
-
-
-
178,244
-
178,300
Conversion of accrued salary to common stock
-
-
-
-
-
-
347,083,333
105,583
-
-
105,583
Conversion of Related Party Loan to Common Shares
-
-
-
-
-
-
50,000,000
50,000
-
-
50,000
Conversion of convertible debt to Series A Preferred Stock
15,646,159
1,565
-
-
-
-
-
-
233,127
-
234,692
Conversion of convertible debt and accrued interest to common stock
-
-
-
-
-
-
1,382,539,332
354,228
-
-
354,228
Preferred dividends
-
-
-
-
-
-
-
-
-
(117,872)
(117,872)
Net loss
-
-
-
-
-
-
-
-
-
(1,583,738)
(1,583,738)
December 31, 2023
24,929,492
$
2,493
6,242,816
$
1,000,000
$
10,399,810,753
$
9,533,145
$
13,143,055
$
(25,799,891)
$
(3,120,474)
The accompanying notes are an integral part of these unaudited consolidated financial statements
FOMO WORLDWIDE, INC. and Subsidiaries
Consolidated Statement of Cash Flows
Unaudited
For the Years Ended December 31,
Sales - net
$
2,498,566
$
7,515,541
Cost of sales
1,920,142
6,467,990
Gross profit
578,424
1,047,551
General and administrative expenses
1,442,270
2,645,480
Impairment of Goodwill and intangible assets
799,336
-
Total operating expenses
2,241,606
2,645,480
Loss from operations
(1,663,182)
(1,597,929)
Other income (expense)
Interest expense
(594,191)
(502,409)
Amortization of debt discount
(31,200)
(573,845)
Change in fair value of derivative liabilities
(73,339)
(165,883)
Derivative expense
-
(194,887)
Gain on debt extinguishment (derivative liabilities - convertible debt)
600,261
226,391
Loss on debt extinguishment
(255,850)
(205,691)
Unrealized gain (loss) on investment
517,377
(667,237)
Other expenses
(83,614)
-
Total other expense - net
79,444
(2,083,561)
Net income (loss)
$
(1,583,738)
$
(3,681,490)
Preferred stock dividends
(117,872)
(171,646)
Net loss available to common shareholders
(1,701,610)
(3,853,136)
Loss per share - basic and diluted
$
(0.02)
$
(0.04)
93,033,917
83,088,894
The accompanying notes are an integral part of these unaudited consolidated financial statements
FOMO WORLDWIDE, INC. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 31, 2023 and 2022
Note 1 - BASIS OF PRESENTATION AND ORGANIZATION
FOMO WORLDWIDE, INC. (“FOMO,” “we,” “our” or “the Company”), is a business incubator with subsidiaries focused on the sale of its smart board technology as well as related installation services. 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. Currently, this entity is inactive.
On December 14, 2021, FOMO incorporated FOMO CORP., later renamed “FOMO WORLDWIDE, INC.”, a Wyoming C-Corp., as a wholly owned subsidiary for the purposes of providing back office services to its employees and for its wholly owned and majority-owned businesses. The Company is currently performing a short-form merger of parent FOMO WORLDWIDE, INC. (CA) into and with FOMO WORLDWIDE, INC. (WY).
On February 28, 2022, the Company acquired SMARTSolution Technologies, LP and SMARTSolution Technologies, Inc. (together “SST”).
In June 2022, the Company applied with the State of California for a name change to FOMO WORLDWIDE, INC. The name change was subsequently approved.
On June 21, 2023, the Company established Diamond Technology Solutions LLC (“DTS”) in Pennsylvania. The Company intends DTS to offer education technology and services, including interactive flat panels, computer equipment, communications, security and access control products, and audio-visual solutions from U.S.-based vendors.
On June 27, 2023, the Company assigned 100% of the operating assets, customer lists and data, and software systems and support contracts from SST to DTS. The transfer closed on October 1, 2023 but was reversed subsequent to year-end
On August 3, 2023, the Company approved the transfer of 100% of the assets of EIC Wyoming to its wholly owned subsidiary Diamond Solution Technologies LLC (“DTS”). These assets include EIC Wyoming’s clean technology installation group’s employee contracts, vehicles, tools, and equipment and intellectual property and websites used to perform services for EIC contracts and orders as well as for other vendors and markets in the United States.
On November 22, 2023, we redomiciled FOMO WORLDWIDE, INC. to Wyoming through short-form merger into a wholly owned subsidiary by the same name.
FOMO WORLDWIDE, INC. and its subsidiaries are organized as follows:
Company Name
Incorporation Date
State of Incorporation
FOMO WORLDWIDE, INC. (“FOMO” or the “Company”)
California
SMARTSolution Technologies, L.P. (“SST”)
Pennsylvania
Energy Intelligence Center, LLC (“EIC”)
Wyoming
Diamond Technology Solutions, LLC
Wyoming
The Company was acquired on February 28, 2022
The Company was acquired and created through a series of transactions in 2020 and 2021. The Company was dissolved in 2023.
The Company was formed in June 2023.
SMARTSolution Technologies, L.P. and SMARTSolution Technologies, Inc.
On February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies L.P. and shares of 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.
Pursuant to the SPA, FOMO:
●
issued to Seller 1,000 shares of its authorized but unissued Series B Preferred Shares;
●
paid approximately $927,600 of SST’s indebtedness to the Seller and third parties;
●
entered into an “at will” employment agreement with Seller, pursuant to which Seller will continue to serve as SST’s Chief Executive Officer at an annual salary of $100,000; and
●
as an incentive to retain SST’s other employees, issued to such employees, a total of 3,000,000 three-year common stock purchase warrants (the “Incentive Warrants”) (post-split), each entitling the holder to purchase one share of SST common stock at an exercise price of $0.10 per share.
SST has been engaged in the education technology and services business for over 25 years. SST markets its systems to and installs these systems in elementary, middle and high schools, as well as colleges, universities, and commercial facilities. 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 Pennsylvania, 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 themselves either organically or through strategic acquisitions.
As a result of the growth in remote learning driven in part by the COVID-19 pandemic and government funding including ESSER Funds (Elementary Secondary School Emergency Relief) and the CARES Act (Coronavirus Aid, Relief, and Economic Security), SST experienced a significant increase in orders and sales in 2022 due to a backlog in orders. In 2023 sales have dropped back to more historical levels.
The digital smartboards which form the key element of SST’s interactive audio-visual systems are primarily supplied by a leading manufacturer based in Canada, which is a subsidiary of a large multi-national company Hon Hai Precision Industry Co., Ltd., trading as Hon Hai Technology Group in China and Taiwan and Foxconn internationally. SST believes that its relationship with its supplier is stable, 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.
On June 12, 2023, because we owned both the limited partner and general partner interests, we filed with the Commonwealth of Pennsylvania to merge SMARTSolution Technologies LP with SMARTSolution Technologies, Inc. The combination was subsequently approved, thereby dissolving the limited partnership and combining its assets and liabilities with SMARTSolution Technologies, Inc., which is now the successor entity.
On June 27, 2023, the Company approved the transfer of 100% of the operating assets, customer lists and data, and software systems and support contracts from SST to DTS. This transfer occurred on Oct 1, 2023 but was reversed subsequent to year-end
See note 9.
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 (“U.S. GAAP”).
Reverse Stock Split
On February 22, 2024, the Company effectuated a 1:100 reverse stock split. All common share and per share information has been retroactively updated to account for the reverse stock split; however, all series of preferred shares has their conversion ratios into common stock proportionately adjusted.
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.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. 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 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.
Cash
Cash consists of deposits in large national banks. 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
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.
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 December 31, 2023 and 2022 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.
Assets and liabilities measured at fair value are as follows as of December 31, 2023:
Total
Level 1
Level 2
Level 3
Assets
Investments
$
694,400
$
-
$
694,400
$
-
Total assets measured at fair value
$
694,400
$
-
$
694,400
$
-
Liabilities
Derivative liability
$
356,832
$
-
$
-
$
356,832
Total liabilities measured at fair value
$
356,832
$
-
$
-
$
356,832
Assets and liabilities measured at fair value are as follows as of December 31, 2022:
Total
Level 1
Level 2
Level 3
Assets
Investments
$
140,006
$
75,006
-
$
65,000
Total assets measured at fair value
$
140,006
$
75,006
-
$
65,000
Liabilities
Derivative liability
$
981,766
-
-
$
981,766
Total liabilities measured at fair value
$
981,766
-
-
$
981,766
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 2 investments in the preferred stock of a publicly traded company, whose values are derived as if converted from the public company’s common stock. .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 December 31, 2023 and 2022, 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. At December 31, 2023 and 2022, the Company did not experience any losses on cash balances in excess of FDIC insured limits.
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 December 31, 2023 and 2022, were $15,587 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 December 31, 2023 and 2022. All concentrations relate solely to the operations of SST.
Year Ended
Year Ended
Customer
December 31, 2023
December 31, 2022
A
%
%
B
%
%
C
%
%
Total
%
%
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.
At December 31, 2023 and 2022 inventory consisted of:
Classification
December 31, 2023
December 31, 2022
Smart Boards
$
69,880
$
382,355
Clean Air Technology
Total Inventory
$
69,982
$
382,457
The Company had the following vendor purchase concentrations at December 31, 2023 and 2022, respectively. All concentrations relate solely to the operations of SST.
Year Ended December 31,
Vendor
A
%
%
Total
%
%
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. See Note 10.
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 annually for impairment, historically during our fourth quarter. See Note 10.
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.
Derivative Liabilities
The Company assessed the classification of its derivative financial instruments as of December 31, 2023 and 2022, 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.
Earnings Per Share (EPS)
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.
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.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that the Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company 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 December 31, 2023 and 2022, contained a significant financing component.
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 cancelable. 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 within 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.
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 December 31, 2023 and 2022, the Company had deferred revenue of $59,896 and $578,354, respectively.
The following represents the Company’s disaggregation of revenues for the years ended December 31, 2023 and 2022:
Years Ended December 31,
Revenue
Revenue
% of Revenues
Revenue
% of Revenues
Smart boards and installation
$
7,014,591
%
$
2,114,298
%
Installation and repair services
471,942
%
384,268
%
Clean air technology products
29,008
%
-
%
Total Revenues
$
7,515,541
%
$
2,498,566
%
The Company had the following sales concentrations at December 31, 2023 and 2022, respectively. All concentrations relate solely to the operations of SST.
Years Ended December 31,
Customer
A
%
%
B
-
%
%
C
-
%
%
Total
%
%
Cost of Sales
Cost of sales primarily consists of product sales, purchased supplies, materials and overhead.
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 December 31, 2023 and 2022, 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 years ended December 31, 2023 and 2022.
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 $10,148 and $34,937 in marketing and advertising costs during the years ended December 31, 2023 and 2022.
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 the Company exchanges it equity instruments for goods or services. It also addresses transactions in which the Company incurs liabilities in exchange for goods or services that are based on the fair value of the Company’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
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 December 31, 2023 were as follows:
December 31, 2023
Series A, preferred stock (1)
12,464,750
Series B, preferred stock (2)
62,428,000
Series C, preferred stock (3)
10,000
Convertible notes and related accrued interest (4)
46,428,167
Warrants (5)
19,767,995
Total
141,098,912
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.
Based on the potential common stock equivalents noted above at December 31, 2023, 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 have sufficient authorized shares of common stock (unlimited) to settle any and all 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.
Recently Issued Accounting Pronouncements
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.
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 year ended December 31, 2023, the Company had:
●
Net loss of $1,583,738; and
●
Net cash used in operations was $176,588
Additionally, at December 31, 2023, the Company had:
●
Accumulated deficit of $25,799,891
●
Stockholders’ deficit of $3,120,474; and
●
Working capital deficit of $3,701,663
We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand of $4,430, as well as a bank overdraft of $204, at December 31, 2023. 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.
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 December 31, 2024, 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, Himalaya Technologies, Inc. (OTC: HMLA) to pay for corporate operating expenses. The Company expects to receive repayment in 2024.
Effective September 1, 2022, the Company increased our available loan to Himalaya of $50,000 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. Subsequent to year-end, the entire loan balance was repaid through cash payments and equity issuances by Himalaya to the Company.
The following is a summary of the Company’s advances - related party is as follows:
Loan Receivable
Terms
Related Party
Issuance dates of advances
Maturity date
Due on Demand
Interest rate
%
Collateral
Unsecured
Balance - December 31, 2021
$
53,732
Advances
25,149
Repayments
(33,620
Balance - December 31, 2022
45,261
Advances
40,694
Repayments
(20,131
)
Exercise of warrant for Preferred A Shares
(10,000
)
Acquisition of KANAB CORP.
(17,017
)
Balance - December 31, 2023
$
38,807
Note 5 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
December 31,
December 31,
Estimated Useful
Lives (Years)
Leasehold Improvements
$
-
$
178,278
Vehicles
53,777
53,777
5 - 10
Furniture
-
19,595
Equipment
9,408
9,408
Computer
-
-
63,185
261,058
Accumulated depreciation
59,953
180,214
Total property and equipment - net
$
3,232
$
80,844
Depreciation expense for the years ended December 31, 2023 and 2022, was $ 6,243 and $6,117, 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.
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 shares 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 prices at December 31, 2022 and 2021 of $0.00030 and $0.00070 and per share, respectively, for a total investment of $63,000 and $147,000, 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 $12,000. 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 a $25,000 convertible note and 25,000 common shares in GenBio, Inc. The Company valued the shares at $1/share, the Company’s cash investment. On January 24, 2022, March 3, 2022, April 6, 2022 and April 7, 2022, the Company invested an additional $15,000 for 15,000 shares, $10,000 for 10,000 shares, $7,500 for 7,500 shares and $7,500 for 7,500 shares of GenBio, Inc., respectively. 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 preliminary research has shown that these patent pending active compounds may 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.
The following is a summary of the Company’s investments at December 31, 2023 and 2022:
December 31, 2023
Securities Held
Acquisition Date
Shares Held
Price per Share
Value of Securities
Securities
Stock, options, and warrants
Various
Various
Various
$
-
Himalaya Technologies, Inc. (HMLA)
Series B, preferred stock
250,000
$
1.60
400,000
2,3
Series A, preferred stock
3,680,000
0.08
294,400
3,4,5
GenBio Inc.
Private company
2021 and 2022
50,000
$
1.00
-
$
694,400
1 -
all investments were held at our third-party independent broker. Account closed in 2023.
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. The Company’s CEO is also the CEO of HMLA.
The shares of series B preferred stock were valued at the fair value of HMLA as-if converted. The warrants were valued utilizing the Black-Scholes option pricing model.
3 -
In April 2023, the company exercised HMLA warrants for 2,000,000 shares of Series A stock in HMLA
4 -
In June 2023, the company sold its shares in PTOP to HMLA in exchange for 1,680,000 series A preferred stock in HMLA
5 -
In May 2023, the company sold Kanab Club back to HMLA in exchange for 100,000 series B preferred shares in HMLA
6 -
based on cost method. At December 31, 2023, the Company wrote off its’ investment in GenBio.
December 31, 2022
Securities Held
Acquisition Date
Shares Held
Price per Share
Value of Securities
Securities
Stock, options, and warrants
Various
Various
Various
$
Himalaya Technologies, Inc. (HMLA)
Series B, preferred stock and warrants
150,000
$
0.08
12,000
Peer to Peer Network (PTOP)
Common stock
210,000,000
$
0.0007
63,000
GenBio, Inc.
Private company
25,000
$
1.00
65,000
$
140,006
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. They are convertible into HMLA common shares on a 1-1000 basis. At December 31, 2022, the value of common shares of HMLA if converted would be $450,000.
3 -
based upon the quoted closing trading price.
4 -
based on cost method.
During 2022, the Company purchased 40,000 shares of GenBio, Inc. for $40,000 ($1/share)
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 December 31, 2023 and 2022, respectively:
Convertible Notes Payable
The Company executed several convertible notes with various lenders as follows
Convertible Notes Payable
GS Capital
PowerUp Lending
Sixth Street Lending
Issuance Dates of Convertible Notes
June 2021 - April 2022
September 2021
October 2021 - January 2022
Maturity Dates of Convertible Notes
April 2022 - April 2023
September 2022
October 2022 - January 2023
Interest Rate
%
%
%
Default Interest Rate
%
%
%
Collateral
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
Total
Balance - December 31, 2021
$
380,000
$
43,750
$
78,750
$
502,500
Proceeds from issuance of notes
335,000
-
43,750
378,750
Conversion of accrued interest to note
16,206
16,206
Repayment of notes
-
-
(122,500
)
(122,500
)
Conversion of debt to common stock
(55,000
)
(43,750
)
-
(98,750
)
676,206
-
-
676,206
Less: unamortized debt discount
(31,200
)
Balance - December 31, 2022
645,006
Proceeds from issuance of notes
-
-
-
-
Conversion of debt to preferred stock
(335,000
)
-
-
(335,000
)
Conversion of debt to common stock
(126,456
)
-
-
(126,456
)
Repayment of notes
-
-
-
-
214,750
-
-
214,750
Less: unamortized debt discount
-
-
-
-
Balance - December 31, 2023
$
214,750
$
-
$
-
$
214,750
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. During the year ended December 31, 2022, the remaining $55,000 loan was converted into common shares.
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. During the year ended December 31, 2022, the loan was converted into common shares.
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. During the year ended December 31, 2022, the loan was repaid.
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. See below for modification.
On January 12, 2022, a third-party lender funded the Company $43,750 in a 12% convertible debenture due January 12, 2023. The transaction netted the Company $40,000 after $3,750 legal and due diligence fees. During the year ended December 31, 2022, the loan was converted into common shares. .
On January 14, 2022, a third-party lender funded the Company $220,000 in a 12% convertible debenture due January 14, 2023. The transaction netted the Company $200,000 after $10,000 legal and due diligence fees and a $10,000 original issue discount. At December 31, 2022, the loan was outstanding.
On April 5, 2022, a third-party lender funded the Company $115,000 in a 12% convertible debenture due April 25, 2023. At December 31, 2022, the loan was outstanding. The transaction netted the Company $100,000 after $5,000 legal and due diligence fees and a $10,000 original issue discount. At December 31, 2022, the loan was outstanding.
Convertible Note Payable - Modification
On April 19, 2022, the Company modified the terms of a loan it had with GS Capital 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.
On May 30, 2023, the Company exchanged two convertible notes held by third-party lender GS Capital Partners, LLC in the amounts of $220,000 dated January 14, 2022, with a current balance of $260,842 and a $115,000 dated April 5, 2022, with a current balance of $130,312, totaling $391,154 for 15,646,159 shares of Series A Preferred stock at a price per share equal to $0.025 per share. On an as converted basis, the Series A Preferred shares can convert into 782,307,950 common shares. As consideration for the exchange, we reduced the strike price on a total of 557,424,483 common stock purchase warrants held by the lender to $0.0005 and extended their expiration dates to May 26, 2026. This resulted in a gain on debt extinguishment of $156,462.
During the year ended December, 2023, third-party lender GS Capital converted $354,228 of principal, interest and penalties into 1,382,539,332 shares of common stock. This resulted in a loss on debt extinguishment of $409,805.
During the year ended December 31, 2022, third-party lenders converted $104,368 of principal, interest and penalties into 301,448,152 shares of common stock. This resulted in a loss on debt extinguishment of $255,850.
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.
Convertible Note Payable - Related Party
In March 2022, the Chief Executive Officer of SST advanced funds to the Company as follows:
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
Conversion Rate
Balance - December 31, 2021
$
-
Principal due from issuance of note
195,000
Repayments
(195,000
)
Balance - December 31, 2022
$
-
200,000 shares of Series B, Preferred Stock
Converts into Series B, preferred stock at $1/share ($0.001/share in common stock - 1:1,000 ratio)
During the year ended December 31, 2022, $50,000 of this loan was repaid. On or around December 19, 2022, the remaining $145,000 was exchanged as part of the SST Founder Employment Status and Compensation Change Agreement.
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.
Loans payable - related parties is as follows:
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, 2021
-
5,168
17,546
22,714
Debt acquired in SST acquisition
321,705
-
-
321,705
Advance
326,911
-
14,741
341,652
Repayments
(364,136
)
-
(12,407
)
(376,543
)
Balance - December 31, 2022
$
284,480
$
5,168
$
19,880
$
309,528
,
Advance
58,588
-
3,440
62,028
Repayments
(226,625
)
-
(12,900
)
(239,525
)
Conversions
-
-
(10,000
)
(10,000
)
Balance - December 31, 2023
$
116,443
$
5,168
$
$
122,031
reflects activity related to the Company’s current Chief Executive Officer of SST.
reflects activity related to the Company’s former Chief Executive Officer of EIC.
reflects activity related to the Company’s current Chief Executive Officer of FOMO.
Loan Payable - Other
The Company has various merchant cash advances (“MCAs”). The following summarizes the borrowings:
Loan 1
Loan 2
Loan 3
Loan 4
Loan 5
Loan 6
Issuance Date
April 1, 2022
January 17, 2023
March 22, 2023
May 23, 2023
May 5, 2023
August 1, 2023
Maturity Date
April 1, 2023
January 1, 2024
March 22, 2024
May 23, 2024
May 5, 2024
May 5, 2024
Interest Rate
16%
18%
33%
33%
29%
36%
Default Interest Rate
0%
0%
0%
0%
0%
0%
Collateral
Unsecured
Unsecured
Unsecured
Assets of SST
FOMO, Himalya and CEO
Unsecured
Conversion
None
None
None
None
None
None
Balance, December 31, 2022
$ 243,692
$ -
$ -
$ -
$ -
$ -
$ 243,692
Borrowings
48,038
140,000
228,800
149,990
179,191
435,594
1,181,613
Repayments
(121,787)
(63,864)
(54,480)
(20,991)
(36,452)
(407,335)
(704,909)
Balance, December 31, 2023
$ 169,943
$ 76,136
$ 174,320
$ 128,999
$ 142,739
$ 28,259
$ 720,396
The Company has various merchant cash advances (“MCAs”). The following summarizes the borrowings:
Accounts Receivable Credit Facility
The Company, in connection with the acquisition of SST, entered into 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 amount was increased on June 21, 2022 to a total availability of $1,500,000.
The Facility is paid from 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
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 December 31, 2023 and 2022, the Company was in default on the financial covenants noted above, however, the lender has since year-end exercised its rights of default. The Company and the lender continue to operate under the terms of the agreement subject to Court supervision and receivership implemented April 1, 2024.
The Company and its subsidiaries are guarantors of this Agreement.
Accounts receivable credit facility is as follows:
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
7,269,906
Repayments
(5,993,439
)
Balance - December 31, 2022
1,276,467
Proceed from drawdowns
2,235,533
Repayments
(2,465,162
)
Balance - December 31, 2023
$
1,046,838
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 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:
Year Ended
Year Ended
December 31, 2023
December 31, 2022
Exercise price
$
0.01
$
0.01 - $1.0
Expected volatility
%
196% - 377
%
Risk-free interest rate
4.64% - 5.65
%
0.73% - 2.99
%
Expected term (in years)
1 - 3.00
3.00 - 5.00
Expected dividend rate
%
%
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 December 31, 2023 and 2022:
Convertible Debt
Warrants
Total
Derivative liabilities - December 31, 2021
$
330,294
$
775,243
$
1,105,537
Fair value - commitment date
300,137
61,600
361,737
Fair value - mark to market adjustment
404,695
(238,813
)
165,882
Gain on debt extinguishment (derivative liabilities - convertible debt)
(226,391
)
-
(226,391
)
Reclassification to APIC for financial instruments that ceased to be derivative liabilities
-
(425,000
)
(425,000
)
Derivative liabilities - December 31, 2022
808,736
173,030
981,766
Fair value - commitment date
-
-
-
Fair value - mark to market adjustment
203,643
(126,396
)
77,247
Gain on debt extinguishment (derivative liabilities - convertible debt)
(660,849
)
-
(660,849
)
Derivative liabilities - December 31, 2023
$
351,530
$
46,634
$
398,164
Changes in fair value of derivative liabilities (mark to market adjustment) are included in other income (expense) in the accompanying Consolidated Statements of Operations.
Note 9 - ACQUISITIONS
Acquisition for the Year Ended December 31, 2022
On February 28, 2022, the Company issued 10,000 shares (post-split) of Class B, convertible preferred stock (convertible into 10,000,000 post-split 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 completed the valuation and allocation of purchase price in April 2023. The final valuation and allocation is reflected in the table below.
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 finalized fair value of the assets acquired and the liabilities assumed at the effective acquisition date.
Consideration
Value of earn out agreement
$
75,328
Fair value of consideration transferred
75,328
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
Supplier relationships
149,000
Trade name
420,000
Total assets acquired
2,098,250
Accounts payable and accrued expenses
268,553
Contract liabilities (deferred revenue)
671,217
Loan payable - related party
421,799
Note payable - government - SBA
150,000
Notes payable
516,234
Operating lease liability
345,229
Total liabilities assumed
2,373,032
Total net liabilities assumed
(274,782
)
Goodwill in purchase of Smart Solution Technologies L.P.
$
350,110
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 Company initially granted 1,000,000 shares of Series B preferred stock, valued at $700,000 based upon the quoted closing trading price on date of issuance on as-converted basis to common stock. The agreement was amended in December 2022, and all of the shares returned to the Company.
The goodwill of $350,110 is primarily related to factors such as synergies and market share.
Goodwill is not deductible for tax purposes.
On or around December 19, 2022, FOMO WORLDWIDE, INC. 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
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, L.P./Inc., FOMO WORLDWIDE agreed to a 1.5% override of gross revenues for the prior year, ending December 2021. This, plus the extension of the closing date causing an add-on of the agreement, was equivalent to $139,000 and was included in the purchase agreement, of which $75,328 was the estimated value of the earn-out.
Element 3: Total Dollar Value: $100,000
1.
At point of purchase of SMARTSolution Technologies, L.P./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.
Note 10 - IMPAIRMENT OF GOODILL AND INTANGIBLE ASSETS
In the 4th Quarter of 2023, the Company assessed its’ Goodwill and Intangible assets for impairment. The intangible assets are the Tradename and Supplier relationship related to it’s acquisition of SST, with the Goodwill derived from the SST acquisition. The Company determined the Goodwill and Intangible assets are fully impaired at December 31, 2023. The factors include the following:
●
During 2023, our primary vendor SMART Technologies notified us that they reduced our credit line for equipment orders to $350,000 from $1 million as part of their channel management program and migration towards a distribution model for the market.
●
Subsequently, the Company created a new wholly owned subsidiary “Diamond Technology Solutions LLC” (“DTS”). The Company transferred all of the assets of SST to DTS. All customer orders requiring equipment not supplied by SST’s primary vendor, SMART Technologies, will be fulfilled by DTS going forward. DTS has signed dealer agreements with Clear Touch, Galaxy Next Generation, ActiveFloor, and other providers.
●
During 2023, revenues declined 67% from $7,515,541 to $2,498,566.
As a result of the above, the following impairment loss was recorded:
Goodwill
$ 350,110
Trade Name
353,936
Supplier Relationship
95,290
$ 799,336
Note 11 - COMMITMENTS AND CONTINGENCIES
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. The lease went into default in 2023 but the landlord has been amicable to our payments of reduced rent and is not enforcing his rights of termination.
At December 31, 2023, the Company has no financing leases as defined in ASC 842, “Leases.”
During the year ended December 31, 2023, we terminated the lease in writing and gave notice to vacate. As such, the right of use asset and lease liability were derecognized.
Litigation
On July 10, 2023, FOMO, its subsidiary SMARTSolution Technologies, Inc. and its predecessor SMARTSolution Technologies LP (together “SST”), our CEO Vikram Grover, and our former SVP Finance Mary Kirk were served with a business lawsuit by a former salaried employee seeking $600,000+ (later modified to $480,000) in commissions plus liquidated damages of 25%, legal fees, penalties and interest. We spent over one year enhancing the Company’s financial systems and data in order to track job costs which are paramount to calculating commissions as per this individual’s contract. Upon completion of the SST audit and our own consolidated audit filed earlier this year, we calculated a commission amount due to this former employee that is significantly less than the alleged unspecified number, which we believe has no basis under the terms of the former employee’s contract with SST. We are retaining counsel and intend to defend the matter vigorously.
On January 4, 2024, Thermo Communications Funding, LLC (“Thermo”) defaulted us and our subsidiary SMARTSolution Technologies, Inc. (“SST”), terminated its senior secured asset backed lending agreement executed with us on February 28, 2022, and demanded repayment of $1,044,164.93 plus future interest. In its termination letter, Thermo claimed conversion of accounts receivable by SST that instead should have been remitted to its lockbox bank account directly by customers or forwarded by us to their offices. Since our last draw from the Thermo credit line on March 10, 2023, we have worked to protect our shareholders and creditors by obtaining lifeline funding and collecting past due accounts receivables to fund operations. Thermo has indicated to us that they intend to foreclose on the SST business and plan to negotiate a supply agreement with our primary vendor to continue providing equipment to SST’s customers. On April 1, 2024, Thermo obtained a court order appointing a receiver of the Company, all subsidiary companies, as well as our Chief Executive Officer Vikram Grover. The receivership is being negotiated and under Court review at this time to allow our public company and DTS subsidiary to exit, though there can be no assurances.
Note 12- STOCKHOLDERS’ DEFICIT
At December 31, 2023 and 2022, the Company had various classes of stock:
Class A, Convertible Preferred Stock
-
78,000,000 shares authorized
-
24,929,492 and 5,750,000 shares designated, issued and outstanding at December 31, 2023 and 2022, respectively
-
Stated value - none
-
,,Voting - on an as-converted basis - 50 votes for each share held (1,246,474,600 and 287,500,000 votes, at December 31, 2023 and 2022, respectively),,
-
Dividends - $0.0035 per share per annum accrued whether or not declared by the Board of Directors
-
Liquidation preference - none
-
Rights of redemption - none
Class B, Convertible Preferred Stock
-
20,000,000 shares authorized
-
6,242,816 and 5,289,982 shares designated, issued and outstanding at December 31, 2023 and 2022, respectively
-
Stated value - none
-
Par value - $0.0001
-
Conversion - each share of Class B converts into 1,000 shares of common stock (6,242,816,000 and 5,289,982,000 equivalent shares of common stock, at December 31, 2023 and 2022, respectively)
-
Voting - on an as-converted basis - 1,000 votes for each share held (6,242,816,000 and 5,289,982,000 votes, at December 31, 2023 and 2022, respectively)
-
Dividends - 1% per annum accrued 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, respectively)
-
Voting - on an as-converted basis - 100,000 votes for each share held (100,000,000,000 and 100,000,000,000 votes, at December 31, 2023 and 2022, respectively)
-
Dividends - 1% per annum accrued whether or not declared by the Board of Directors
-
Liquidation preference - none
-
Rights of redemption - none
Common Stock
-
Unlimited shares authorized
-
No par value
-
Voting at 1 vote per share
Equity Transactions for the Year Ended December 31, 2023
Stock Issued for Services
During the year ended December 31, 2023, the Company issued 385,000 Series B Preferred shares for services, valued at $128,500.
During the year ended December 31, 2023, the Company issued 2,000,000 (post-split) warrants to its CEO, Vikram Grover, for services, valued at $32,309.
Stock Issued from Conversion of Accrued Compensation
During the year ended December 31, 2023, the Company issued 3,470,833 (post-split) common shares for $51,500 of accrued compensation owed to its CEO Vikram Grover and 500,000 (post-split) common shares, valued at $50,000, for $10,000 of monies loaned to the Company by its CEO Vikram Grover.
During the year ended December 31, 2023, the Company issued 3,533,333 Series A Preferred shares for $11,000 of accrued compensation owed to its CEO Vikram Grover, valued at $68,167.
During the year ended December 31, 2023, the Company issued 567,834 Series B Preferred shares for $39,450 of accrued compensation owed to its CEO Vikram Grover, valued at $178,300.
Stock Issued from Conversion of Convertible Debt and Loss on Debt Extinguishment
During the year ended December 31, 2023, the Company issued 13,825,393 (post-split) shares of common stock in connection with the conversion of convertible debt (which had embedded derivative liabilities) and accrued interest totaling $141,086, having a fair value of $354,228, based upon the quoted closing trading price on the date of conversion/extinguishment.
During the year ended December 31, 2023, the Company issued 15,646,159 shares of Series A Preferred stock in connection with the conversion of convertible debt (which had embedded derivative liabilities) and accrued interest totaling $335,000, having a fair value of $234,692, based upon the quoted closing trading price on the date of conversion/extinguishment.
Equity Transactions for the Year Ended December 31, 2022
Stock Issued for Cashless Exercise of Warrants
The Company issued 6,458,333 (post-split) shares of common stock in exchange for the cashless exercise of 750,000,000 warrants. The net effect on stockholders’ equity was $0.
Stock Issued for Services - Class B, Preferred Stock
The Company issued 650,000 shares of Class B, preferred stock for services rendered, having a fair value of $535,000 ($0. 8 - $0. 9/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.
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. 7/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.
On or around December 19, 2022, FOMO Worldwide entered into a Employment Status and Compensation Change Agreement. As part of this agreement, the 10,000 (post-split) shares of Series B preferred stock were returned to the Company.
Stock Issued from Conversion of Convertible Debt and Loss on Debt Extinguishment
The Company issued 3,014,482 (post-split) 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 3,600,000 (post-split) shares of common stock in connection with the conversion of 360,000 shares of Class B preferred stock. The transaction had a net effect of $0 on stockholders’ deficit.[VG1] [JG2]
Return and Cancellation of Class B Preferred Stock to Common Stock
The Company received and cancelled 250,000 shares of Class B preferred stock. The transaction had a net effect of $0 on stockholders’ deficit.
Note 13 - WARRANTS
Warrant activity (split-adjusted) for the years ended December 31, 2023 and 2022 are summarized as follows:
Weighted
Weighted
Average
Average
Remaining
Aggregate
Warrants
Number of Warrants
Exercise
Price
Contractual
Term (Years)
Intrinsic
Value
Outstanding and exercisable - December 31, 2021
20,021,131
$
0.155
2.38
$
450,000
Granted
6,600,000
$
0.110
-
-
Exercised
(7,500,000
)
$
0.001
-
-
Cancelled/Forfeited
(6,185,714
)
$
0.034
-
-
Outstanding - December 31, 2022
12,935,417
$
0.126
1.86
$
-
Exercisable - December 31, 2022
11,435,417
$
0.135
1.71
$
-
Granted
7,050,000
$
0.050
-
-
Exercised
-
-
-
-
Cancelled/Forfeited
(817,422
)
$
0.080
-
-
Outstanding - December 31, 2023
19,167,995
$
0.059
1.85
$
-
Exercisable - December 31, 2023
17,217,995
$
0.060
1.81
$
-
Warrant Transactions for the Year Ended December 31, 2023
Employee Compensation
During the year ended December 31, 2023, the Company issued 7,050,000 post-split incentive stock options to employees with a strike price of 0.05 and a three-year expiration. The options do not vest unless each employee is employed by SST on or after March 1, 2024. No expense was recognized on these options in the year ended December 31, 2023 as they did not vest.
During the year ended December 31, 2023, 817,422 post-split warrants were forfeited.
Warrant Transactions for the Year Ended December 31, 2022
Convertible Debt Issuances
In connection with convertible debt issued to various lenders, the Company granted 1,650,000 post-split, three-year (3) warrants. These warrants have an post-split exercise price of $0.01 - $0.12. See Note 7 for derivative liabilities and related mark to market accounting.
Employee Compensation
Concurrent with the acquisition of SST, the Company granted 3,000,000 post-split, three-year (3) warrants to employees of SST for services rendered.
The fair value of these services rendered was $209,713, based upon the following weighted average assumptions:
Exercise price
$
0.001
Expected volatility
%
Risk-free interest rate
1.62
%
Expected term (in years)
3.00
Expected dividend rate
%
Employee Compensation
The Company granted 1,950,000 post-split, three-year (3) warrants to a board director and employee for services rendered.
The fair value of these services rendered was $91,127, of which $59,648 was unvested at December 31, 2022, based upon the following weighted average assumptions:
Exercise price
$
0.001
Expected volatility
%
Risk-free interest rate
1.76
%
Expected term (in years)
3.00
Expected dividend rate
%
Cashless Exercise of Warrants
The Company issued 6,458,333 shares of common stock in connection with cashless exercises of 7,500,000 warrants. The net effect on stockholders’ equity was $0.
Note 14 - INCOME TAXES
The Company did not file its federal or state tax returns for fiscal years from 2012 through 2017. Previous management had 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 losses incurred during those years. During the year ended December 31, 2021, the Company under new management since 2019 filed returns for 2018, 2019 and 2020. During the year ended December 31, 2022, the Company filed returns for 2021 as well.
Based on available information, management believes it is more likely than not that any potential net deferred tax assets as of December 31, 2023 and 2022 may not be fully realizable.
Due to recurring losses, the Company’s tax provisions for the years ended December 31, 2023 and 2022 were $0.
The difference between the effective income tax rate and the applicable statutory federal income tax rate is summarized as follows:
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, 2023 and 2022 the Company’s deferred tax assets were as follows:
December 31, 2023
December 31, 2022
Tax benefit of net operating loss carry forward
$
4,577,403
$
4,248,077
less valuation allowance
(4,577,403
)
(4,248,077
)
Net deferred tax assets
$
-
$
-
As of December 31, 2023 the Company had unused net operating loss carry forwards of approximately $18.7 million available to reduce future federal taxable income. Net operating loss carryforwards expire through fiscal years beginning in 2023 and extending to indefinite. 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, 2023 and 2022 was $4,598,118 and $4,248,077, respectively. The change in the valuation allowance during the year ended December 31, 2022 was an increase of approximately $350,000.
NOL carry over loss
Expiration
NOL
$
494,301
680,549
651,537
1,239,493
1,843,498
Indefinite
48,201
Indefinite
140,808
Indefinite
9,262,185
Indefinite
2,823,829
Indefinite
1,422,929
Indefinite
$
18,607,330
Note 14 - SUBSEQUENT EVENTS
On January 4, 2024, our senior lender Thermo Communications Funding LLC defaulted its loan to us in the amount of $1,044,163.93 excluding fees and future interest. On February 26, 2024, Thermo enforced a confession of judgment against us in the amount of $1,074,276.15 which included additional interestr. On April 1, 2024, the Court of Common Pleas of Allegheny County placed our corporation and our subsidiaries under Receivership, which we are currently negotiating to exit at the public company levelk and the Diamond Technology Solutions, LLC subsidiary level in order to recapitalize our business and pursue strategic mergers and acquisitions.
On February 13, 2024, a third-party lender converted $17,250.00 principal and $3,142.81 interest of a junior note into 3,398,802 common shares (post-split)..
On March 28, 2024, a third-party lender converted $5,900.00 principal and $1,146.05 interest of a junior note into 5,337,916 common shares.
On May 20, 2024, a third-party lender converted $2,950.00 principal and $578.68 interest of a junior note into 5,348,484 common shares.
Since November 15, 2023 and subsequent to year-end 2023, our CEO Vikram Grover converted $357,500.00 accrued compensation into 13,169,819 Series B Preferred shares and 1,041,667 common shares but we have not issued any of the owed shares to him since his conversions.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed with an objective of ensuring that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission, such as this Annual Report on Form 10-K, is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission. Disclosure controls are also designed with an objective of ensuring that such information is accumulated and communicated to our management, including our chief executive officer, to allow timely consideration regarding required disclosures.
The evaluation of our disclosure controls by our Chief Executive Officer (our principal executive, financial and accounting officer) included a review of the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented in this Annual Report. Our management, including our chief executive officer, does not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of the disclosure controls and procedures to future periods are subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive, financial and accounting officer), of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that there were material weaknesses in our internal controls over Financial reporting as of December 31, 2023 and they were therefore not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The material weaknesses in our controls and procedure were failure to timely file tax returns, lack of formal documents such as invoices and consulting agreements, and lack of evidence for proper approval and review of disbursements. Management does not believe that any of these weaknesses materially affected the results and accuracy of its financial statements. However, in view of this discovery of such weaknesses, management has begun a review to improve them.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s assessment of the effectiveness of the small business issuer’s internal control over financial reporting is as of the year ended December 31, 2023. We believe that internal controls over financial reporting as set forth above shows some weaknesses and are not effective.
Notwithstanding the identified material weaknesses, management believes the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. generally accepted accounting principles
Under applicable rules of the Securities and Exchange Commission, as a “smaller reporting company” this Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
Not applicable.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth the names and ages of the directors and executive officers of the Company as of the date of this Annual Report and the principal offices and positions with the Company held by each person. There are no family relationships among any of the directors and executive officers.
Name
Age
Position(s)
Vikram Grover
Chairman, CEO, President, CFO, Secretary
Vikram Grover has 25 years-experience on Wall Street as an equity research analyst, investment banker and consultant that has been advising, financing, and launching businesses for several years. He has worked at Thomas Weisel Partners Group, Inc. (now Stifel Nicolaus), Needham & Co., Source Capital Group, Inc. and Kaufman Bros., LLC in various capacities ranging from Director of Research, Senior Managing Director Investment Banking, and Managing Director Equity Research covering Telecommunications, Media, and Technology (TMT) companies. Prior to FOMO WORLDWIDE, INC., he was CEO of the first publicly traded eSports social site and tournament platform, Good Gaming. He was introduced to Charles Szoradi, the founder of Purge Virus three years ago. Mr. Grover has a Master of Science in Management (“MSM”) from the Georgia Institute of Technology (“Georgia Tech”), a BA in Marketing from the University of California San Diego (“UCSD”) and is a Chartered Financial Analyst (“CFA”).
The Company currently maintains an Advisory Board comprised of several individuals with technology, finance, and various industry experience.
Term of Office
All directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified or until removed from office in accordance with our bylaws. There are no agreements with respect to the election of Directors. Other than stock options of various amounts, we have not compensated our directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our Board of directors. Executive Officers serve at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay directors’ fees and reimburse directors for expenses related to their activities.
Code of Ethics
As of the date of this Report, the Company has adopted a Code of Ethics applicable to our principal executive officer and principal financial officer.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
Other than an employment agreement with our CEO Vikram Grover (below), we have not entered into employment agreements with our executive officers and their compensation, if any, is determined at the discretion of our Board of Directors.
We do not offer retirement benefit plans to our executive officers, nor have we entered any contract, agreement, plan, or arrangement, whether written or unwritten, that provides for payments to a named executive officer at, or in connection with, the resignation, retirement or other termination of a named executive officer, or a change in control of the company or a change in the named executive officer’s responsibilities following a change in control. We do not have any standard arrangement for compensation of our directors for any services provided as director, including services for committee participation or for special assignments.
The Company does not have a compensation committee. Given the nature of the Company’s business, its limited stockholder base and the current composition of management, the board of directors does not believe that the Company requires a compensation committee at this time.
The following table summarizes all compensation recorded by us in 2023 and 2022 for our Chief Executive Officer, who is are only executive officer.
SUMMARY COMPENSATION TABLE
Name and Principal Position
Year
Salary ($)
Bonus ($)
Stock Awards ($)
Option Awards ($)
Non-Equity Incentive Plan Compensation ($)
Nonqualified Deferred Compensation ($)
All Other Compensation ($)
Total ($)
Vikram Grover, CEO
150,000
150,000
150,000
150,000
Employment Agreement
The Company had an employment agreement with its Chief Executive Officer, Vikram Grover, compensating him $12,500 per month, including $5,000 in cash compensation if the Company is not current and $7,500 in cash compensation if current with its Exchange Act, with the balance due in restricted Series B Preferred shares. During the year ended December 31, 2023, the Company paid $42,104 and accrued $107,896 in compensation. During the year ended December 31, 2022, the Company paid $52,499 and accrued $97,401 in compensation. Subsequent to year-end 2023, Mr. Grover’s employment agreement was amended to compensation of $15,000 per month, payable half in cash and half in equity determined by our liquidity.
Stock Option Plan
We do not have a stock option plan although we may adopt one or more such plans in the future.
Employee Pension, Profit Sharing, or other Retirement Plans
We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of the date of this Annual Report, certain information with respect to the Company’s common stock owned of record or beneficially by (a) each director and executive officer of the Company; (b) each person who owns beneficially more than five percent (5%) of each class of the Company’s outstanding common stock; and (c) all directors and executive officers as a group. The address of each of these individuals are c/o the Company, 831 W North Ave., Pittsburgh, PA 15233.
Title of Class
Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership(1)
Percent of
Class (2)
Common Stock
Vikram Grover
21,498,000
12.0
%
Common Stock
All Directors and Officers as a Group (1 person)
21,498,000
12.0
%
(1)
Represents shares of common stock issuable upon conversion of Series A, B and C Preferred Shares. Holders of Series A, B and C Preferred Shares vote on all matters presented to stockholders for a vote on an “as converted” basis together with our common stock as a single class, except as required by law.
(2)
Unless otherwise indicated, based on 8,620,188,088 shares of common stock issued and outstanding as of the date of this Annual Report. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants but are not deemed outstanding for the purposes of computing the percentage of any other person.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions and Director Independence.
Related Party Transactions
None.
Director Independence
Our Common Stock is not quoted or listed on any national exchange or interdealer quotation system with a requirement that a majority of our board of directors be independent and therefore, the Company is not subject to any director independence requirements. Under NASDAQ Rule 5605(a)(2)(A), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. Under such definition, Vikram Grover who holds the titles of CEO, CFO and Secretary and sole Director, would not be considered an independent director.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services.
Urish Popeck LLC, was our independent registered public accounting firm for the year ended December 31, 2022 and through their resignation on June 21, 2024. Assurance Dimensions was our independent registered public accounting firm for the year ended December 31, 2021.
Year ended December 31,
Audit Fees
$
110,000
$
50,000
Audit-Related Fees
$
$
5,000
Tax Fees
$
$
All Other Fees
$
$
Pre-Approval Policy
Our Board preapproved all services provided by our independent registered public accounting firm. For any non-audit or non-audit related services, the Board must conclude that such services are compatible with their independence as our independent registered public accounting firm.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Financial Statements and Exhibits.
(a)
The following documents are filed as part of this Report:
(1)
Financial Statements. The following consolidated financial statements and the report of our independent registered public accounting firm, are filed as “Item 8. Financial Statements and Supplementary Data” of this Report:
Consolidated Balance Sheets as of December 31, 2023 and 2022 (Unaudited)
Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 (Unaudited)
Consolidated Statements of Stockholders’ Deficiency for the years ended December 31, 2023 and 2022 (Unaudited)
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 (Unaudited)
Notes to Consolidated Financial Statements December 31, 2023 and 2022 (Unaudited)
(2)
Financial Statement Schedules
None.
(3)
Exhibits
Exhibit No.
Description
2.1*
Plan and Agreement of Reorganization dated as of January 30, 2014, among the Company, 2050 Motors and the 2050 Motors Shareholders.
3.1**
Articles of Incorporation
3.2**
Articles of Amendment
3.3**
Amended and Restated By-laws December 16, 2019
10.1**
Convertible Note Between the Company and Auctus Fund LLC dated January 6, 2017
10.2**
Convertible Note Between the Company and JSJ Investments dated April 25, 2017
10.3**
Convertible Note and Warrant Agreement Between the Company and Crown Bridge Partners LLC September 15, 2017
10.4**
Convertible Note Between the Company and LG Capital Funding, LLC dated November 14, 2017
10.5**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated January 24, 2018
10.6**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated February 22, 2018
10.7**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated April 11, 2018
10.8**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated April 27, 2018.
10.9**
Convertible Note Between the Company and Jabro Funding Corp. dated July 23, 2018
10.10**
Convertible Note Between the Company and Jabro Funding Corp. dated October 1, 2018
10.11**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated November 1, 2018
10.12**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated March 8, 2019
10.13**
Convertible Note Between the Company and Tri-Bridge Ventures LLC dated March 15, 2019
10.14**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated July 9, 2019
10.15**
Convertible Note Between the Company and GS Capital Partners LLC dated September 6, 2019
10.16**
Convertible Note Between the Company and GS Capital Partners LLC dated November 12, 2019
10.17**
Convertible Note Between the Company and Power Up Lending Group Ltd. dated November 14, 2019
10.18**
Convertible Note Between the Company and Auctus Fund LLC dated October 28, 2020
10.19**
Definitive Acquisition Agreement Between the Company and Purge Virus, LLC September 29, 2020
10.20**
FOMO WORLDWIDE, INC. - Purge Virus, LLC Reps and Warranties October 18, 2020
10.21**
Convertible Debenture Loan Agreement with GS Capital - January 20, 2021
10.22**
Convertible Loan Agreement Power Up Lending - April 8, 2021
10.23**
Convertible Loan Agreement Power Up Lending - May 10, 2021
10.24**
Convertible Loan Agreement GS Capital - June 25, 2021
10.25**
Convertible Loan Agreement Power Up Lending - September 22, 2021
10.26***
Convertible Loan Agreement 1800 Diagonal Lending LLC - March 4, 2024
31.1***
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as Amended.
32.1***
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Link base Document
101.DEF
Inline XBRL Taxonomy Extension Definition Link base Document
101.LAB
Inline XBRL Taxonomy Extension Label Link base Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Link base Document
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
Incorporated by reference to the Company’s Form 8-K as filed with the SEC on February 5, 2014.
**
Incorporated by reference to the Company’s Registration Statement on Form 10’s as filed with the SEC on October 30, 2012, July 19, 2019 and December 7, 2020 (amended December 8, 2020). And by reference to Company’s Form 10K filed December 31, 2020 and the Company’s 8K filed October 7, 2020. Filed by reference to Form 10-Q for the three months ended March 31, 2021 filed on EDGAR on May 24, 2021 and Form 10-Q for six months ended June 30, 2021 filed on EDGAR on August 16, 2021.
***
Filed herewith.