UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
For
the Quarterly Period Ended
OR
For the transition period from ______________ to ______________
Commission
File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
n/a
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files.)
Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
There were shares of common stock, no par value, of the Registrant issued and outstanding as of August 12, 2022.
FOMO CORP.
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOMO CORP.
INDEX TO FINANCIAL STATEMENTS
| 3 |
FOMO CORP. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable - net | ||||||||
| Loan receivable - related party | ||||||||
| Inventory - net | ||||||||
| Prepaids and other | ||||||||
| Total Current Assets | ||||||||
| Property and equipment - net | ||||||||
| Operating lease - right-of-use asset | ||||||||
| Goodwill | ||||||||
| Investments | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Operating lease liability | ||||||||
| Convertible notes payable - net | ||||||||
| Convertible note payable - related party - net | ||||||||
| Loan payable - related parties | ||||||||
| Loans payable - other | ||||||||
| Deferred revenue | ||||||||
| Derivative liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long Term Liabilities | ||||||||
| Operating lease liability | ||||||||
| Accounts receivable credit facility | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 10) | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred stock, Class A, $ par value, shares designated, and shares issued and outstanding, respectively | ||||||||
| Preferred stock, Class B, $ par value, shares designated, and shares issued and outstanding, respectively | ||||||||
| Preferred stock, Class C, $ par value, shares designated, and shares issued and outstanding, respectively | ||||||||
| Common stock, par value, shares authorized and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
FOMO CORP. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Sales - net | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||||||||||
| Derivative expense | ( | ) | ( | ) | ||||||||||||
| Gain on debt extinguishment (derivative liabilities - convertible debt) | ||||||||||||||||
| Gain (loss) on debt extinguishment | ( | ) | ( | ) | ||||||||||||
| Change in fair value of marketable equity securities | ( | ) | ( | ) | ||||||||||||
| Gain on debt forgiveness | ||||||||||||||||
| Loss on investment | ( | ) | ( | ) | ||||||||||||
| Total other income (expense) - net | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Income (loss) per share - basic and diluted | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average number of shares - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 5 |
FOMO Corp and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Three and Six Months Ended June 30, 2022
(Unaudited)
| Preferred Stock - Class A | Preferred Stock - Class B | Preferred Stock - Class C | Common Stock | Additional Paid-in | Accumulated | Total Stockholders’
| ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||||||||
| December 31, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of stock in cashless exercise of warrants | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Acquisition of Smart Solutions Technologies, Inc. - net of broker fees | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of stock in conversion of debt and accrued interest | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Conversion of Series B preferred stock into common stock | - | ( | ) | ( | ) | - | ||||||||||||||||||||||||||||||||||||||
| Warrants issued for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Warrants issued for services - related party | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Reclassification of financial instruments that ceased to be derivative liabilities (warrants) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| March 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock in cashless exercise of warrants | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Reclassification of financial instruments that ceased to be derivative liabilities (warrants) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| June 30, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 6 |
FOMO Corp and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Three and Six Months Ended June 30, 2021
(Unaudited)
| Preferred Stock - Class A | Preferred Stock - Class B | Preferred Stock - Class C | Common Stock | Additional Paid-in | Common Stock | Accumulated | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Issuable | Deficit | (Deficit) | |||||||||||||||||||||||||||||||||||||
| December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
| Conversion of convertible debt | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Stock issued for loan cost | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for cash - common stock | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for cash - class A preferred stock | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of class B preferred stock as non-refundable deposit to acquire business | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of class B preferred stock to acquire assets | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| March 31, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for cash - common stock | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 7 |
FOMO CORP. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operations | ||||||||
| Stock based compensation | ||||||||
| Warrants issued for services | ||||||||
| Warrants issued for service - related party | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of operating lease - right-of-use asset | ||||||||
| Depreciation and amortization expense | ||||||||
| Change in fair value of derivative liabilities | ||||||||
| Derivative expense | ||||||||
| Gain on debt extinguishment (derivative liabilities - convertible debt) | ( | ) | ||||||
| Loss on debt extinguishment | ||||||||
| Change in fair value of marketable equity securities | ||||||||
| Gain on debt forgiveness | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaids and other | ( | ) | ( | ) | ||||
| Increase (decrease) in | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Customer deposits | ||||||||
| Deferred revenue | ( | ) | ||||||
| Operating lease liability | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities | ||||||||
| Cash acquired in acquisition of Smart Solutions Technologies, Inc. | ||||||||
| Proceeds from sales of securities - net of purchases | ( | ) | ||||||
| Advance - loan receivable - related party | ( | ) | ||||||
| Net cash provided by investing activities | ||||||||
| Financing investing | ||||||||
| Proceeds from loans payable | ||||||||
| Proceeds from loans payable - related party | ||||||||
| Proceeds from issuance of convertible notes | ||||||||
| Proceeds from issuance of convertible note - related party | ||||||||
| Repayment of loan receivable | ( | ) | ||||||
| Repayments of notes payable - government - SBA | ( | ) | ||||||
| Repayments of loans payable - related parties | ( | ) | ||||||
| Repayment of loan payable | ( | ) | ||||||
| Repayment of notes payable | ( | ) | ||||||
| Repayment of convertible note - related party | ( | ) | ||||||
| Proceeds from draw downs on accounts receivable credit facility | ||||||||
| Repayment on accounts receivable credit facility | ( | ) | ||||||
| Proceeds from issuance of Class A preferred stock | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ||||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income tax | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Right-of-use asset obtained in exchange for new operating lease liability | $ | $ | ||||||
| Acquisition of SST in exchange for Class B preferred stock | $ | $ | ||||||
| Conversion of accrued interest to note | $ | |||||||
| Debt discount recorded in connection with derivative liability | $ | $ | ||||||
| Issuance of stock in conversion of debt and accrued interest | $ | $ | ||||||
| Conversion of Class B preferred stock into common stock | $ | $ | ||||||
| Reclassification of financial instruments that ceased to be derivative liabilities (notes and warrants) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 8 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Note 1 - Organization and Nature of Operations
Organization and Nature of Operations
FOMO Corp, Inc. (“FOMO,” “we,” “our” or “the Company”), is focused on the sale of its smart board technology as well as related installation services through its wholly-owned subsidiary SMARTSolution Technologies, L.P. (“SST”). Additionally, the Company markets and sells clean air disinfection products.
On May 18, 2021, FOMO incorporated FOMO ADVISORS LLC, a Wyoming limited liability company, as a wholly owned private merchant banking subsidiary. FOMO ADVISORS LLC intends to assist private companies in accessing the capital markets through “pass through” investments that allow investors to gain liquidity, while benefiting from direct exposure to private company growth through derivative instruments or other rights. The subsidiary is engaging with strategic targets to introduce them to its network of financial and strategic contacts, provide them management consulting, and create a portfolio of technology investments for future incubation, capital formation, and wealth creation. The Company is currently evaluating its corporate development pipeline and has identified a number of candidates for this capital formation model, though there can be no assurances. Currently, this entity is inactive.
On February 28, 2022, the Company acquired SST, see Note 9.
In June 2022, the Company applied with the State of California for a name change to FOMO Worldwide, Inc. The name change is being reviewed for approval.
The parent (FOMO CORP.) and subsidiaries are organized as follows:
| Company Name | Incorporation Date | State of Incorporation | ||||||
| FOMO CORP. (“FOMO” or the “Company”) | ||||||||
| FOMO Advisors, LLC (“FOMOAD”) | ||||||||
| SMARTSolution Technologies, L.P. (“SST”) | 1 | |||||||
| IAQ Technologies, LLC (“IAQ”) | 2 | |||||||
| Energy Intelligence Center, LLC of Wyoming (“EIC”) | 3 | |||||||
| 1 | |
| 2 | |
| 3 |
| 9 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
IAQ Technologies, LLC
On
October 19, 2020, the Company acquired
| ● | Ultraviolet-C in-duct and portable devices, | |
| ● | Hybrid disinfection devices with UVC, carbon filtration and HEPA filtration, | |
| ● | Hybrid disinfection devices with UVC and Photo Plasma, | |
| ● | Bio-polar ionization disinfection for virus and Volatile Organic Compound disinfection; and | |
| ● | PPE (personal protective equipment) ranging from masks to gloves with factory-direct supply side logistics. |
Operating results for IAQ since its acquisition have not met expectations, Accordingly, the interim chief executive is in the process of reorganizing IAQ. Accordingly, we determined that IAQ’s value was impaired at December 31, 2021.
Independence Lighting LED, LLC and Energy Intelligence Center, LLC
On
February 12, 2021, the Company purchased the assets of Independence LED Lighting, LLC (“iLED”), an affiliate of IAQ, in exchange
for the issuance of Series B Preferred Shares valued at $
On
March 7, 2021, the Company purchased the assets of Energy Intelligence Center, LLC (“EIC PA”) in exchange for the issuance
of Series B Preferred Shares and warrants valued at $
Following the acquisitions of the assets of iLED and EIC, the Company combined the assets and businesses of iLED and EIC into a newly formed wholly-owned subsidiary, EIC of Wyoming LLC (“EIC Wyoming”).
| 10 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
The Founder and Former Managing Member of IAQ, iLED and EIC stayed on following the asset acquisitions to run their businesses. However, in July 2021, he stepped down and assumed a consulting role and a new chief executive operating officer was hired to run the businesses of IAQ and EIC Wyoming. Such individual resigned from his position on March 2, 2022 and we then appointed an interim chief executive officer.
See Note 9.
SMARTSolution Technologies, L.P.
On February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies L.P. (“SST”) pursuant to a Securities Purchase Agreement dated February 28, 2022 (the “SPA”), by and between the Company and Mitchell Schwartz (“Seller”), the beneficial owner of the general and limited partnership interests in SST. SST is a Pittsburgh, Pennsylvania–based audio/visual systems integration company that designs and builds presentation, teleconferencing and collaborative systems for businesses, educational institutions and other nonprofit organizations.
SST has been engaged in the EdTech business for over 25 years. SST markets its systems to and installs the systems in elementary, middle and high schools, as well as colleges, universities and commercial facilities. A current focus of SST’s business is the sale and installation of interactive smartboards to elementary, middle and high schools. These interactive smartboards provide students with interactive remote access from home or other locations to classrooms and teachers via personal computers, laptops, tablets and similar devices. SST currently markets its systems primarily in Western Pennsylvania, Eastern Ohio and West Virginia, is in the process of expanding into the Alabama and Michigan markets and plans to expand further throughout the United States as opportunities present itself organically or through strategic acquisitions.
As a result of the growth in remote learning, as a result of the COVID-19 pandemic and otherwise, and due to $500 billion in stimulus funding (“ESSER funds”) from the federal government, SST is currently experiencing a significant increase in orders and sales and a growth in backlog.
The interactive smartboards which form the key element of SST’s interactive systems are supplied by a single supplier in Canada, which is a subsidiary of a large multi-national company. SST believes that its relationship with its supplier is excellent, although there can be no assurance that if the relationship with the supplier was interrupted or otherwise adversely affected that an alternative source of supply at commercially reasonable cost would be available or that SST’s business would not be seriously harmed.
See note 9.
| 11 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2022 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 28, 2022.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
Business Combinations
The Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date.
| 12 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
The fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed based on their respective fair values. Goodwill represents excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed.
Significant judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results.
On February 28, 2022 (the “closing”, the “closing date”, “acquisition date”), the Company and SST executed a securities purchase agreement, which is treated as a business combination, and accounted for using the acquisition method. SST became a wholly-owned subsidiary of the Company. See Note 9.
At
June 30, 2022 and December 31, 2021, goodwill was $
As a result of the SST acquisition, the consolidated financial statements include the balance sheet of SST at June 30, 2022, as well as the results of operations and cash flows of SST from the date of acquisition through June 30, 2022.
Goodwill and Intangible Assets
The Company initially records intangible assets at their estimated fair values and reviews these assets periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment.
For
the three and six months ended June 30, 2022 and 2021, impairment expense was $
| 13 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Business Segments and Concentrations
The
Company uses the “management approach” to identify its reportable segments. The management approach requires companies to
report segment financial information consistent with information used by management for making operating decisions and assessing performance
as the basis for identifying the Company’s reportable segments. The Company manages its business as a single reportable segment.
Customers in the United States accounted for approximately
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Significant estimates during the six months ended June 30, 2022 and the year ended December 31, 2021, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of investments, valuation of goodwill and intangible assets, valuation of loss contingencies, valuation of derivative liabilities, valuation of stock-based compensation, estimated useful lives related to intangible assets and property and equipment, uncertain tax positions, and the valuation allowance on deferred tax assets.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.
The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
| 14 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
During the six months ended June 30, 2022, the Company’s financial results and operations were not materially adversely impacted by the COVID-19 pandemic. The extent to which the Company’s future financial results could be impacted by the COVID-19 pandemic depends on future developments that are highly uncertain and cannot be predicted at this time. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities.
These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
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. |
| 15 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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 June 30, 2022 and December 31, 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.
| 16 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Assets and liabilities measured at fair value at June 30, 2022 and December 31, 2021 are as follows:
| June 30, 2022 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Investments | $ | - | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | - | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2021 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Investments | $ | - | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | - | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Level 1 Investments consist of common stock, options and warrants of publicly traded companies which are considered to be highly liquid and easily tradeable. The Company also holds Level 3 investments in the common stock of a private company.
Derivative liabilities are derived from certain convertible notes payable and warrants.
| 17 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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 June 30, 2022 and December 31, 2021, respectively,
the Company did
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 $
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 June 30, 2022 and December 31, 2021, were $
For
the three and six months ended June 30, 2022 and 2021, the Company recorded bad debt expense of $
Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.
| 18 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
The Company had the following concentrations at June 30, 2022 and December 31, 2021, respectively. All concentrations relate solely to the operations of SST.
| Six Months Ended | Year Ended | |||||||
| Customer | June 30, 2022 | December 31, 2021 | ||||||
| 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 June 30, 2022 and December 31, 2021 inventory consisted of:
| Classification | June 30, 2022 | December 31, 2021 | ||||||
| Smart Boards | $ | $ | ||||||
| Clean Air Technology | ||||||||
| Total Inventory | $ | $ | ||||||
During
the three and six months ended June 30 , 2022 and 2021 , impairment expense was $
The Company had the following vendor purchase concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
| Six Months Ended June 30, | ||||||||
| Vendor | 2022 | 2021 | ||||||
| A | % | % | ||||||
| Total | % | % | ||||||
| 19 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
For
the three and six months ended June 30, 2022 and 2021, impairment expense was $
Property and Equipment
Property
and equipment is 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 to
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.
For
the three and six months ended June 30, 2022 and 2021, impairment expense was $
| 20 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Derivative Liabilities
The Company assessed the classification of its derivative financial instruments as of June 30, 2022 and December 31, 2021, which consist of convertible notes payable and certain warrants (excluding those for compensation) and has determined that such instruments qualify for treatment as derivative liabilities as they meet the criteria for liability classification under ASC 815.
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. The Company uses a binomial pricing model to determine fair value of these instruments.
Upon conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock at fair value, relieves all related debt, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment. In connection with the debt extinguishment, the Company typically records an increase to additional paid-in capital for any remaining liability balance.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
Original Issue Discount
For certain notes issued, the Company may provide the debt holder with an original issue discount. The original issue discount is recorded as a debt discount, reducing the face amount of the note, and is amortized to interest expense over the life of the debt, in the Consolidated Statements of Operations.
Debt Issue Cost
Debt issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense over the life of the underlying debt instrument, in the Consolidated Statements of Operations.
| 21 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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.
| 22 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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 an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
| ● | Identification of the contract, or contracts, with a customer | |
| ● | Identification of the performance obligations in the contract | |
| ● | Determination of the transaction price | |
| ● | Allocation of the transaction price to the performance obligations in the contract | |
| ● | Recognition of the revenue when, or as, performance obligations are satisfied |
| 23 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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 June 30, 2022 and 2021, contained a significant financing component.
| 24 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
When determining revenues, no significant judgements or assumptions are required. For all transactions, the sales price is fixed and determinable (no variable consideration). All consideration from contracts is included in the transaction price. The Company’s contracts all contain single performance obligations.
For our contracts with customers, payment terms generally range from advance payments prior to product delivery and/or installation to certain cases where payment is due within 30 days from job completion. The timing of satisfying our performance obligations does not vary significantly from the typical timing of payment.
For each revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. However, the Company acts as a reseller of warranties for its Smart Boards, which are serviced by the manufacturer, and in some cases requires SST to perform warranty related services.
Sales taxes and other similar taxes are excluded from revenue.
| 25 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Smart Boards and Installation Services
Smart Boards are sold to customers and may require an upfront deposit. The Company also installs its Smart Boards in connection with the sale. All revenue is recognized at a point in time upon completion of any installation, which typically occurs withing thirty (30) days of delivering the product.
Installation Services
Certain customers contract with the Company to perform installation only services where they have acquired products from a different company/seller. All revenue is recognized at a point in time upon completion of any installation.
Clean Air Technology
All sales are recognized upon delivery of products to the customer.
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
June 30, 2022 and December 31, 2021, the Company had deferred revenue of $
The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2022 and 2021:
| Six Months Ended June 30, | ||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Revenue | Revenue | % of Revenues | Revenue | % of Revenues | ||||||||||||
| Smart boards and installation | $ | % | $ | % | ||||||||||||
| Installation and repair services | % | % | ||||||||||||||
| Clean air technology products | % | % | ||||||||||||||
| Total Revenues | $ | % | $ | % | ||||||||||||
| 26 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
The Company had the following sales concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
| Six Months Ended June 30, | ||||||||
| Customer | 2022 | 2021 | ||||||
| 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 March 31, 2022 and December 31, 2021, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The
Company recognizes interest and penalties related to uncertain income tax positions in other expense.
| 27 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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 $
The
Company recognized $
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
| ● | Exercise price, |
| ● | Expected dividends, |
| ● | Expected volatility, |
| ● | Risk-free interest rate; and |
| ● | Expected life of option |
| 28 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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.
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.
| 29 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
| June 30, 2022 | ||||
| Series A, preferred stock (1) | ||||
| Series B, preferred stock (2) | ||||
| Series C, preferred stock (3) | ||||
| Convertible notes and related accrued interest (4) | ||||
| Warrants (5) | ||||
| Total | ||||
| 1 – |
| 2 – |
| 3 – |
| 4 - |
| 5 - |
Based on the potential common stock equivalents noted above at June 30, 2022, and the potential variability in stock prices, which directly affect the Company’s ability to determine if it has sufficient shares to settle all possible debt or equity conversions, the Company has determined that it does not have sufficient authorized shares of common stock () to settle any potential exercises of common stock equivalents.
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
| 30 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
UNAUDITED
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations, stockholders’ deficit, or cash flows.
Recent Accounting Standards
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
We adopted this pronouncement on January 1, 2022; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
| 31 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
In May 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company does not expect the adoption of this standard to have a material effect on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 will have a material effect, if any, on its consolidated financial statements.
Note 3 - Liquidity, Going Concern and Management’s Plans
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As reflected in the accompanying consolidated financial statements, for the six months ended June 30, 2022, the Company had:
| ● | Net
loss of $ |
| ● | Net
cash used in operations was $ |
Additionally, at June 30, 2022, the Company had:
| ● | Accumulated deficit
of $ |
| ● | Stockholders’
deficit of $ |
| ● | Working capital deficit
of $ |
| 32 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
We
manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand
of $
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 June 30, 2023, and our current capital structure including equity-based instruments and our obligations and debts.
If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company continues to explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
| ● | Pursuing additional capital raising opportunities (debt or equity), |
| ● | Continue to execute on our strategic planning while increasing operational efficiency, |
| ● | Continuing to explore and execute prospective partnering or distribution opportunities; and |
| ● | Identifying unique market opportunities that represent potential positive short-term cash flow. |
| 33 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Note 4 – Loan Receivable – Related Party
During 2021, the Company has advanced funds to an affiliate of the Company’s Chief Executive Officer to pay for corporate operating expenses. The Company expects to receive repayment in 2022.
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 | ||||
| Interest rate | % | |||
| Collateral | ||||
| Balance - December 31, 2020 | $ | |||
| Advances | ||||
| Balance - December 31, 2021 | ||||
| Advances | ||||
| Balance - June 30, 2022 | $ | |||
Note 5 – Property and Equipment
Property and equipment consisted of the following:
| Estimated Useful | ||||||||||||
| June 30, 2022 | December 31, 2021 | Lives (Years) | ||||||||||
| Leasehold Improvements | $ | $ | ||||||||||
| Vehicles | ||||||||||||
| Furniture | ||||||||||||
| Equipment | ||||||||||||
| Computer | ||||||||||||
| Accumulated depreciation | ||||||||||||
| Total property and equipment - net | $ | $ | ||||||||||
| 34 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Depreciation
expense for the three months ended June 30, 2022 and 2021, was $
Depreciation
expense for the six months ended June 30, 2022 and 2021, was $
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
$
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 share of preferred class B stock in exchange for shares of Peer-to-Peer
Inc (PTOP). The shares were valued at the market price of $ per share, or $
During
the year ended December 31, 2019, the Company received shares of KANAB CORP. for consulting services provided by the Company’s
CEO, Vikram Grover. The shares were valued at $ per share or $
On
October 4, 2021, the Company invested $
| 35 |
In
2021, the Company’s Chief Executive Officer assigned his investment brokerage account with Interactive Brokers to the Company.
The Company subsequently invested $
The following is a summary of the Company’s investments at June 30, 2022 and December 31, 2021.
| June 30, 2022 | ||||||||||||||||
| Securities Held | Acquisition Date | Shares Held | Price per Share | Value of Securities | ||||||||||||
| Securities | Stock, options and warrants | Various | Various | Various | $ | 1 | ||||||||||
| Himalaya Technologies, Inc. (HMLA) | Series B, preferred stock | $ | 2 | |||||||||||||
| Mobicard, Inc. (PTOP) | Common stock | $ | 3 | |||||||||||||
| GenBio, Inc. | Private company | $ | 4 | |||||||||||||
| $ | ||||||||||||||||
| 1 - | |
| 2 - | |
| The Series B shares are not publicly traded and are based upon the cost method. The valuation of these shares was determined at the time of exchange. | |
| 3 - | |
| 4 - |
During
2022, the Company purchased shares of GenBio, Inc. for $
| June 30, 2022 | ||||||||||||||||
| Gross Unrealized | Gross Unrealized | |||||||||||||||
| Description | Cost | Gains | Losses | Fair Value | ||||||||||||
| Marketable securities | $ | $ | $ | ( | ) | |||||||||||
| 36 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
| December 31, 2021 | ||||||||||||||||
| Securities Held | Acquisition Date | Shares Held | Price per Share | Value of Securities | ||||||||||||
| Securities | Stock, options and warrants | Various | Various | Various | $ | 1 | ||||||||||
| Himalaya Technologies, Inc. (HMLA) | Series B, preferred stock | $ | 2 | |||||||||||||
| Mobicard, Inc. (PTOP) | Common stock | $ | 3 | |||||||||||||
| GenBio, Inc. | Private company | $ | 4 | |||||||||||||
| $ | ||||||||||||||||
| 1 - | |
| 2 - | |
| The Series B shares are not publicly traded and are based upon the cost method. The valuation of these shares was determined at the time of exchange. | |
| 3 - | |
| 4 - |
During
2021, the Company purchased shares of GenBio, Inc. for $
| December 31, 2021 | ||||||||||||||||
| Gross Unrealized | Gross Unrealized | |||||||||||||||
| Description | Cost | Gains | Losses | Fair Value | ||||||||||||
| Marketable securities | $ | $ | $ | ( | ) | |||||||||||
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 June 30, 2022 and December 31, 2021, respectively:
| 37 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Convertible Notes Payable
The Company executed several convertible notes with various lenders as follows:
| Convertible Notes Payable | ||||||||||||||||
| GS Capital | PowerUp Lending | Sixth Street Lending | Various | |||||||||||||
| Issuance Dates of Convertible Notes | ||||||||||||||||
| Maturity Dates of Convertible Notes | ||||||||||||||||
| Interest Rate | % | % | % | % | ||||||||||||
| Default Interest Rate | % | % | % | % | ||||||||||||
| Collateral | ||||||||||||||||
| Conversion Rate | $ |
|||||||||||||||
| GS Capital | PowerUp Lending | Sixth Street Lending | Various | Total | ||||||||||||||||
| Balance - December 31, 2020 | $ | $ | $ | $ | $ | |||||||||||||||
| Debt converted to common stock | ( | ) | ( | ) | ||||||||||||||||
| Proceeds from issuance of notes | ||||||||||||||||||||
| Prepayment of convertible note in cash | ( | ) | ( | ) | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Less: unamortized debt discount | ( | ) | ||||||||||||||||||
| Balance - December 31, 2021 | $ | |||||||||||||||||||
| Balance - December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||
| Proceeds from issuance of notes | ||||||||||||||||||||
| Conversion of accrued interest to note | ||||||||||||||||||||
| Conversion of debt to common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Less: unamortized debt discount | ( | ) | ||||||||||||||||||
| Balance - June 30, 2022 | $ | |||||||||||||||||||
| 38 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Convertible Note Payable – Modification
On
April 19, 2022, the Company modified the terms of a loan it had with GS Capital for $
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.
During
the year ended December 31, 2021, third-party lenders converted $
| 39 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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 | ||||
| Maturity Date of Convertible Note | ||||
| Interest Rate | % | |||
| Default Interest Rate | % | |||
| Collateral | 1 | |||
| Conversion Rate | 2 | |||
| Balance - December 31, 2021 | $ | |||
| Proceeds from issuance of note | ||||
| Repayments | ( | ) | ||
| Balance - June 30, 2022 | $ | |||
| 1 | |
| 2 |
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 $
In 2021 and prior, the Company’s current Chief Executive Officer and former Chief Executive Officer made advances for business operating expenses.
| 40 |
FOMO CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Loans payable - related parties is as follows:
| 1 | 2 | 3 | ||||||||||||||
| Loan Payable | Loan Payable | Loan Payable | ||||||||||||||
| Related Party | Related Party | Related Party | Total | |||||||||||||
| Issuance Date of Loan | ||||||||||||||||
| Maturity Date of Convertible Note | ||||||||||||||||
| Interest Rate | % | % | % | |||||||||||||
| Default Interest Rate | % | % | % | |||||||||||||
| Collateral | ||||||||||||||||
| Conversion Rate | ||||||||||||||||
| Balance - December 31, 2020 | $ | $ | $ | $ | ||||||||||||
| Proceeds from advances | ||||||||||||||||
| Balance - December 31, 2021 | ||||||||||||||||
| Debt acquired in SST acquisition | ||||||||||||||||
| Repayments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance - June 30, 2022 | $ | $ | $ | $ | ||||||||||||
| 1 | - |
| 2 | - |
| 3 | - |
Loan Payable – Other
In
2022, the Company executed a loan with a lender for $
| 41 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
| Loan Payable - Other | ||||
| Issuance Date of Loan | ||||
| Maturity Date of Loan | ||||
| Interest Rate | % | |||
| Default Interest Rate | % | |||
| Collateral | ||||
| Conversion Rate | ||||
| Balance - December 31, 2021 | $ | |||
| Proceeds | ||||
| Repayments | ( | ) | ||
| Balance - June 30, 2022 | $ | |||
Accounts Receivable Credit Facility
The Company, in connection with the acquisition of SST, assumed an accounts receivable credit facility.
On
February 28, 2022, SST entered into a revolving accounts receivable and term loan financing and security agreement in the aggregate amount
of $
The
Facility is paid for 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
The lender charges the following fees:
| 1. |
| 2. | Monitoring
fee of |
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 $ |
| 42 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
At June 30, 2022, the Company is in default on the financial covenants noted above, however, the lender has not exercised its rights of default. The Company and the lender continue to operate under the terms of the agreement without disruption.
The Company and its subsidiaries are guarantors of this Agreement.
Accounts receivable credit facility is as follows:
| Accounts Receivable | ||||
| Credit Facility | ||||
| Issuance Date of credit facility | ||||
| Maturity Date of credit facility | ||||
| Interest Rate | % | |||
| Default Interest Rate | % | |||
| Collateral | ||||
| Conversion Rate | None | |||
| Balance - December 31, 2021 | $ | |||
| Proceed from drawdowns | ||||
| Repayments | ( | ) | ||
| Balance - June 30, 2022 | $ | |||
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.
| 43 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
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:
| Six Months Ended | Year Ended | |||||||
| June 30, 2022 | December 31, 2021 | |||||||
| Exercise price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| 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 June 30, 2022 and December 31, 2021:
| Convertible Debt | Warrants | Total | ||||||||||
| Derivative liabilities - December 31, 2020 | $ | $ | $ | |||||||||
| Fair value - commitment date | ||||||||||||
| Fair value - mark to market adjustment | ( | ) | ( | ) | ( | ) | ||||||
| Reclassification to APIC for financial instruments that ceased to be derivative liabilities | ( | ) | ( | ) | ||||||||
| Derivative liabilities - December 31, 2021 | ||||||||||||
| Fair value - commitment date | ||||||||||||
| Fair value - mark to market adjustment | ( | ) | ||||||||||
| Gain on debt extinguishment (derivative liabilities - convertible debt) | ( | ) | ( | ) | ||||||||
| Reclassification to APIC for financial instruments that ceased to be derivative liabilities | ( | ) | ( | ) | ||||||||
| Derivative liabilities - June 30, 2022 | $ | $ | $ | |||||||||
Changes in fair value of derivative liabilities (mark to market adjustment) are included in other income (expense) in the accompanying consolidated statements of operations.
In 2022 and 2021, in connection with the conversion of certain debt and warrants, the corresponding derivative liabilities were market to market on the conversion date and the remaining derivative liability balance was reclassified to gain on debt extinguishment for derivative liabilities related to debt and to additional paid-in capital for derivative liabilities classified as warrants.
| 44 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Note 9 – Acquisition and Pro Forma Financial Information
Acquisition for the Three Months Ended March 31, 2022
On
February 28, 2022, the Company issued shares of Class B, convertible preferred stock (convertible into shares
of common stock) having a fair value of $
The valuation of the consideration was determined on an as converted basis by multiplying the Series B preferred shares by the conversion rate of shares of common stock for each one (1) share of Series B preferred stock held, then multiplying by the quoted closing trading price of the common stock.
We made an initial allocation of the purchase price at the date of acquisition based on our understanding of the fair value of assets acquired and liabilities assumed. The allocation of the purchase price consideration is considered preliminary as of March 31, 2022, with the excess purchase price allocated to goodwill and is subject to change. We expect to finalize the allocation of purchase price as soon as possible, but no later than one year from the acquisition date.
The acquisition of SST was reflected in the accompanying consolidated financial statements at March 31, 2022, the results of operations and cash flows are included in the consolidated financial statements as of and from the acquisition date.
| 45 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
The table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.
| Consideration | ||||
| Series B, preferred stock issued on February 28, 2022 (shares) (1) | $ | |||
| Fair value of consideration transferred | ||||
| Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||
| Cash | ||||
| Accounts receivable | ||||
| Inventory | ||||
| Property and equipment | ||||
| Operating lease - right-of-use asset | ||||
| Total assets acquired | ||||
| Accounts payable and accrued expenses | ||||
| Contract liabilities (deferred revenue) | ||||
| Loan payable - related party | ||||
| Note payable - government - SBA | ||||
| Notes payable | ||||
| Operating lease liability | ||||
| Total liabilities assumed | ||||
| Total net liabilities assumed | ( | ) | ||
| Goodwill in purchase of Smart Solution Technologies, Inc. | $ | |||
| (1) |
In
connection with the purchase of SST, $
The
goodwill of $
Goodwill is not deductible for tax purposes.
| 46 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Supplemental Pro Forma Information (Unaudited)
The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if the transaction had occurred on January 1, 2021.
This proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time:
| Year Ended | ||||
| December 31, 2021 | ||||
| Revenues | $ | |||
| Net loss | $ | ( | ) | |
| Loss per share - basic | $ | ( | ) | |
| Loss per share - diluted | $ | ( | ) | |
| Weighted average number of shares - basic | ||||
| Weighted average number of shares - diluted | ||||
The weighted average shares assume the as-converted amount to common stock .
Acquisitions for the Year Ended December 31, 2021
On
October 19, 2020, the Company acquired
| 47 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
On
February 12, 2021, we purchased assets, including website and trade names of Independence LED Lighting, LLC for Series
B Preferred shares. Based on an agreed upon price at closing, the transaction was valued $
On
March 6, 2021, we purchased the assets, including website, trade names and software of Energy Intelligence Center, LLC for Series
B Preferred shares and common stock warrants. Based on an agreed upon price at closing, the transaction was valued
$
These acquisitions were treated as business combinations and the Company recorded the fair value of the assets acquired.
The table below summarizes preliminary estimated fair value of the assets acquired at the effective acquisition date.
| EIC | iLed | |||||||
| Consideration | ||||||||
| Series B, preferred stock ( shares) | $ | $ | ||||||
| Series B, preferred stock ( shares) | ||||||||
| Warrants () | ||||||||
| Fair value of consideration transferred | $ | $ | ||||||
| Recognized amounts of identifiable assets acquired: | ||||||||
| Website | ||||||||
| Tradename | ||||||||
| Software | ||||||||
| Total assets acquired | ||||||||
| Goodwill | $ | $ | ||||||
| 48 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Supplemental Pro Forma Information (Unaudited)
The unaudited pro forma information for the periods set forth below gives effect to the acquisitions as if the transactions had occurred on January 1, 2021.
This proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time:
| Year Ended | ||||
| December 31, 2021 | ||||
| Revenues | $ | |||
| Net loss | $ | ( | ) | |
Note 10 – 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 (
At June 30, 2022, the Company has no financing leases as defined in ASC 842, “Leases.”
| 49 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
The tables below present information regarding the Company’s operating lease assets and liabilities at June 30, 2022:
| June 30, 2022 | ||||
| Assets | ||||
| Operating lease - right-of-use asset - non-current | $ | |||
| Liabilities | ||||
| Operating lease liability | $ | |||
| Weighted-average remaining lease term (years) | ||||
| Weighted-average discount rate | % | |||
| The components of lease expense were as follows: | ||||
| Operating lease costs | ||||
| Amortization of right-of-use operating lease asset | $ | |||
| Lease liability expense in connection with obligation repayment | ||||
| Total operating lease costs | $ | |||
| Supplemental cash flow information related to operating leases was as follows: | ||||
| Operating cash outflows from operating lease (obligation payment) | $ | |||
| Right-of-use asset obtained in exchange for new operating lease liability | $ | |||
| 50 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Future minimum lease payments required under leases that have initial or remaining non- cancelable lease terms in excess of one year at June 30, 2022:
| 2022 (6 Months) | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total undiscounted cash flows | ||||
| Less: amount representing interest | ( | ) | ||
| Present value of operating lease liability | ||||
| Less: current portion of operating lease liability | ( | ) | ||
| Long-term operating lease liability | $ |
Note 11– Stockholders’ Deficit
At June 30, 2022 and December 31, 2021, the Company had various classes of stock:
Class A, Convertible Preferred Stock
| - | shares authorized |
| - | and shares designated, issued and outstanding at June 30, 2022 and December 31, 2021, respectively |
| - | Stated
value - |
| - | Par value - $ |
| - | Conversion – each share of Class A converts into shares of common stock ( and equivalent shares of common stock, at June 30, 2022 and December 31, 2021, respectively) |
| - | Voting – on an as-converted basis – ( and votes, at June 30, 2022 and December 31, 2021, respectively) |
| - | Dividends – if declared by the Board of Directors |
| - | Liquidation
preference – |
| - | Rights
of redemption – |
| 51 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Class B, Convertible Preferred Stock
| - | shares authorized |
| - | and shares designated, issued and outstanding at June 30, 2022 and December 31, 2021, respectively |
| - | Stated
value - |
| - | Par value - $ |
| - | Conversion – each share of Class B converts into shares of common stock ( and equivalent shares of common stock, at June 30, 2022 and December 31, 2021, respectively) |
| - | Voting – on an as-converted basis – ( and votes, at June 30, 2022 and December 31, 2021, respectively) |
| - | Dividends – if declared by the Board of Directors |
| - | Liquidation
preference – |
| - | Rights
of redemption – |
Class C, Convertible Preferred Stock
| - | shares authorized |
| - | and shares designated, issued and outstanding at June 30, 2022 and December 31, 2021, respectively |
| - | Stated
value - |
| - | Par value - $ |
| - | Conversion – each share of Class C converts into share of common stock ( and equivalent shares of common stock, at June 30, 2022 and December 31, 2021, respectively) |
| - | Voting – on an as-converted basis – held ( and votes, at June 30, 2022 and December 31, 2021, respectively) |
| - | Dividends – if declared by the Board of Directors |
| - | Liquidation
preference – |
| - | Rights
of redemption – |
| 52 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Common Stock
| - | shares authorized |
| - | par value |
| - |
Equity Transactions for the Six Months Ended June 30, 2022
Stock Issued for Cashless Exercise of Warrants
The
Company issued
Stock Issued for Services – Class B, Preferred Stock
The
Company issued shares of Class B, preferred stock for services rendered, having a fair value of $
Acquisition of SST
On
February 28, 2022, the Company issued shares of Series B preferred stock ( as converted common stock) having a
fair value of $
See Note 9.
Stock Issued from Conversion of Convertible Debt and Loss on Debt Extinguishment
The
Company issued shares of common stock in connection with the conversion of convertible debt (which had embedded derivative
liabilities) and accrued interest totaling $
Conversion of Class B Preferred Stock to Common Stock
The
Company issued shares of common stock in connection with the conversion of shares of Class B preferred stock. The transaction
had a net effect of $
| 53 |
FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Equity Transactions for the Year Ended December 31, 2021
Stock Issued from Conversion of Convertible Debt
The
Company issued shares of common stock in connection with the conversion of convertible debt and accrued interest totaling
$
Stock Issued for Loan Costs
The
Company issued shares of common stock for loan costs totaling $
Stock Issued for Cash – Common Stock
The
Company issued shares of common stock for $
Stock Issued for Cash – Class A, Preferred Stock
The
Company issued shares of Class A preferred stock for $
Stock Issued as a Non-Refundable Deposit to Acquire
The
Company issued shares of Class B preferred stock having a fair value of $
Stock Issued to Acquire Assets of Businesses
The
Company issued shares of Class B preferred stock having a fair value of $
Stock Issued for Services – Class B Preferred Stock
The
Company issued shares of Class B preferred stock for services rendered, having a fair value of $
Conversion of Class B Preferred Stock to Common Stock
The
Company issued shares of common stock in connection with the conversion of shares of Class B preferred stock. The
transaction had a net effect of $
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FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Stock Issued for Services – Common Stock
The
Company issued shares of common stock for services rendered, having a fair value of $
Cancellation of Common Stock Issuable
The Company cancelled shares of common stock issuable from 2020, having a fair value of $.
Note 12 – Warrants
Warrant activity for the six months ended June 30, 2022 and the year ended December
31, 2021 are summarized as follows:
| Weighted | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted | Remaining | Aggregate | ||||||||||||||
| Number of | Average | Contractual | Intrinsic | |||||||||||||
| Warrants | Warrants | Exercise Price | Term (Years) | Value | ||||||||||||
| Outstanding and exercisable - December 31, 2020 | $ | $ | ||||||||||||||
| Granted | $ | - | - | |||||||||||||
| Exercised | $ | - | - | |||||||||||||
| Cancelled/Forfeited | $ | - | - | |||||||||||||
| Outstanding - December 31, 2021 | $ | $ | ||||||||||||||
| Exercisable - December 31, 2021 | $ | $ | ||||||||||||||
| Outstanding - December 31, 2021 | $ | # | $ | |||||||||||||
| Exercisable - December 31, 2021 | $ | # | $ | |||||||||||||
| Granted | $ | - | - | |||||||||||||
| Exercised | ( | ) | $ | - | - | |||||||||||
| Cancelled/Forfeited | $ | - | - | |||||||||||||
| Outstanding - June 30, 2022 | $ | $ | ||||||||||||||
| Exercisable - June 30, 2022 | $ | $ | ||||||||||||||
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FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Warrant Transactions for the Six Months Ended June 30, 2022
Convertible Debt Issuances
In connection with convertible debt issued to various lenders, the Company granted , three-year () warrants. These warrants have an exercise price of $ - $. See Note 7 for derivative liabilities and related mark to market accounting.
Employee Compensation
Concurrent with the acquisition of SST, the Company granted , three-year () warrants to employees of SST for services rendered.
The
fair value of these services rendered was $
| Exercise price | $ | |||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term (in years) | ||||
| Expected dividend rate | % |
Board Advisory Compensation – Related Party
The Company granted , three-year () warrants to a board director for services rendered.
The
fair value of these services rendered was $
| Exercise price | $ | |||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term (in years) | ||||
| Expected dividend rate | % |
Cashless Exercise of Warrants
The
Company issued shares of common stock in connection with cashless exercises of
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FOMO
CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
UNAUDITED
Warrant Transactions for the Year Ended December 31, 2021
Convertible Debt Issuances
In connection with convertible debt issued to various lenders, the Company granted three-year () warrants. These warrants have an exercise price of $. See Note 7 for derivative liabilities and related mark to market accounting.
Employee Compensation
The Company granted , three-year () warrants to various employees for services rendered.
The
fair value of these services rendered was $
| Exercise price | $ | |||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term (in years) | ||||
| Expected dividend rate | % | |||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this Quarterly Report on Form 10-Q to “the Company,” “FOMO,” “us,” “we,” “our,” and similar terms refer to FOMO and its subsidiaries.
Cautionary Note Regarding Forward- Looking Statements
The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “may,” “could,” “should,” “expect,” “plan,” “project,” “strategy,” “forecast,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” or similar expressions help identify forward-looking statements.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance, and management cannot assure any reader that such statements will be realized, or the forward-looking events and circumstances will in fact occur. The Company’s actual results may differ materially from those anticipated, estimated, projected or expected by management.
All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.
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Company Overview
General
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, However, 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 potential 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 LLC and Energy Intelligence Center LLC
On February 12, 2021, the Company purchased the assets of Independence LED LLC (“iLED”), an affiliate of IAQ, in exchange for the issuance of 250,000 Series B Preferred Shares valued at $3.3 million iLED, is in the sale of clean air products intended for use in disinfecting and improving air quality.
On March 7, 2021, the Company purchased the assets of Energy Intelligence Center LLC (“EIC”), a second affiliate of IAQ, 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 d 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 ILEDI and EIC, the Company combined the assets and businesses of iLED and EIC into a newly formed wholly- owned subsidiary, EIC of Wyoming LLC (“EIC Wyoming”).
The managing member of IAQ, iLED and EIC stayed on following the acquisitions to run their businesses. However, in July 2021, the former managing member stepped down and assumed a consulting roll and a new chief executive officer was hired to run the businesses of IAQ and EIC Wyoming. Such individual resigned from his position on March 2, 2022 and we have appointed an interim chief executive officer.
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Operating results for IAQ since its acquisition have not met expectations, Accordingly, the interim chief executive is in the process of reorganizing IAQ. Accordingly, we determined that IAQ’s value was impaired at December 31, 2021.
In addition, the software developer responsible for completing development and implementation of EIC Wyoming left the company and has refused to assist us with completing the software and transitioning the work to other individuals. Accordingly, we are now in the process of identifying another person or entity to take over and complete development of the software. As a result of this delay, we determined that EIC Wyoming’s value was impaired was impaired at December 31, 2021.
Acquisition of SMARTSolution Technologies L.P.
On February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies L.P. (“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 EdTech business for over 25 years. SST markets its systems to and installs the systems in elementary, middle and high schools, as well as colleges, universities and other commercial facilities. A current focus of SST’s business is the sale and installation of interactive smartboards to elementary, middle and high schools. These interactive smartboards provide students with interactive remote access from home or other locations to classrooms and teachers via personal computers, laptops, tablets and similar devices. Students can gain SST currently markets its systems primarily in Pennsylvania and Ohio, is in the process of expanding into the Alabama and Michigan markets and plan to expand further throughout the United States as opportunities present itself.
As a result of the growth in remote learning, as a result of the COVID-19 pandemic and otherwise, SST is currently experiencing a significant increase in orders and sales and a growth in backlog. Since the closing of the acquisition, FOMO has secured approximately $600,000 in debt and convertible debt financing to support SST’s fulfillment of additional orders and reduction of its backlog.
The interactive smartboards which form the key element of SST’s interactive systems are supplied by a single supplier in Canada, which is a subsidiary of a large multi-national company. SST believes that its relationship with its supplier is excellent, although there can be no assurance that if the relationship with the supplier was interrupted or otherwise adversely affected that an alternative source of supply at commercially reasonable cost would be available or that SST’s business would not be seriously harmed.
SST markets its systems and services through a lead sales manager who has contacts with school boards in Pennsylvania and Ohio. SST also works with former elected government officials that have contacts with school boards in Alabama and Michigan.
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The primary competitor of SST in the Pennsylvania and Ohio regions is a Philadelphia-based entity which also markets and sells the interactive whiteboards. SST believes that it competes effectively based on its contacts and relationships with its existing and potential customers. However, there can be no assurance given that SST additional competitors with greater financial and other resources will not enter SST’s market or that SST will be able to successfully compete as it enters new geographic markets.
SST currently employs 13 people, including 4 in administration, 2 in sales and 7 in installation. As a result of its growing backlog, SST is currently seeking to expand its installation and sales staff.
Costs and Resources
FOMO is currently pursuing additional funding resources that will potentially enable it to maintain its current and planned operations through the next 12 months. The Company anticipates that it will need to raise additional capital in order to sustain and grow its operations over the next few years. To the extent that the Company’s capital resources are insufficient to meet current or planned operating requirements, the Company will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. As of March 31, 2021, the Company had no current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders or creditors will provide any portion of the Company’s future financing requirements. No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Significant estimates during the six months ended June 30, 2022 and 2021, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of investments, 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.
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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.
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 re 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 June 30, 2022 and December 31, 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
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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.
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.
Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.
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.
Derivative Liabilities
The Company assessed the classification of its derivative financial instruments as of June 30, 2022 and December 31, 2021, which consist of convertible notes payable and certain warrants (excluding those for compensation) and has determined that such instruments qualify for treatment as derivative liabilities as they meet the criteria for liability classification under ASC 815.
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. The Company uses a binomial pricing model to determine fair value of these instruments.
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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.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
| ● | Identification of the contract, or contracts, with a customer | |
| ● | Identification of the performance obligations in the contract | |
| ● | Determination of the transaction price | |
| ● | Allocation of the transaction price to the performance obligations in the contract | |
| ● | Recognition of the revenue when, or as, performance obligations are satisfied |
Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.
Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of June 30, 2022 and 2021, contained a significant financing component.
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Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
When determining revenues, no significant judgements or assumptions are required. For all transactions, the sales price is fixed and determinable (no variable consideration). All consideration from contracts is included in the transaction price. The Company’s contracts all contain single performance obligations.
For our contracts with customers, payment terms generally range from advance payments prior to product delivery and/or installation to certain cases where payment is due within 30 days from job completion. The timing of satisfying our performance obligations does not vary significantly from the typical timing of payment.
For each revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. However, the Company acts as a reseller of warranties for its Smart Boards, which are serviced by the manufacturer, and in some cases requires SST to perform warranty related services.
Sales taxes and other similar taxes are excluded from revenue.
Smart Boards and Installation Services
Smart Boards are sold to customers and may require an upfront deposit. The Company also installs its Smart Boards in connection with the sale. All revenue is recognized at a point in time upon completion of any installation, which typically occurs withing thirty (30) days of delivering the product.
Installation Services
Certain customers contract with the Company to perform installation only services where they have acquired products from a different company/seller. All revenue is recognized at a point in time upon completion of any installation.
Clean Air Technology
All sales are recognized upon delivery of products to the customer.
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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.
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 June 30, 2022 and December 31, 2021, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the six months ended June 30, 2022 and 2021, respectively.
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black- Scholes model:
| ● | Exercise price, |
| ● | Expected dividends, |
| ● | Expected volatility, |
| ● | Risk-free interest rate; and |
| ● | Expected life of option |
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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.
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.
Recent Accounting Standards
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
We adopted this pronouncement on January 1, 2022; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
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In May 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company does not expect the adoption of this standard to have a material effect on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 will have a material effect, if any, on its consolidated financial statements.
Results of Operations
Three months ended June 30, 2022 as compared to three months ended June 30, 2021
Sales. During the three months ended June 30, 2022 and 2021, the Company had $2,646,008 and $84,661 in sales, respectively. The increase from the 2021 quarter to the 2022 quarter was $2,561,347 (3,025%). Sales for the 2022 quarter included SST’s operations (acquired on February 28, 2022), which resulted in the increase from the 2021 quarter.
Cost of Sales. During the three months ended June 30, 2022 and 2021, the Company incurred $2,440,520 and $65,286 in cost of sales, respectively. The increase from the 2021 quarter to the 2022 quarter was $2,375,234 (3,638%). Cost of sales primarily include product sales and payroll. Cost of sales for the 2022 quarter included SST’s operations (acquired on February 28, 2022), which resulted in the increase from the 2021 quarter.
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Gross Profit. Gross profit expressed as a percentage of sales for the three months ended June 30, 2022 was 8%, as compared to 23% for the three months ended June 30, 2021. During 2022, the Company included the gross profit of SST (acquired on February 28, 2022). Sales and cost of sales were relatively immaterial in 2021 as compared to 2022.
General and Administrative Expenses. During the three months ended June 30, 2022 and 2021, the Company incurred general and administrative expenses of $458,351 and $359,853, respectively, consisting primarily of salaries and professional fees. The increase from the 2021 quarter to the 2022 quarter was $98,498 (27%). General and administrative expenses for the 2022 quarter included SST’s operations (acquired on February 28, 2022), which resulted in the increase from the 2021 quarter.
Other Income (Expense). For the three months ended June 30, 2022 the Company reflected other expense – net of $831,889 and other income – net of $1,523,187 for the three months ended June 30, 2021, respectively. The change of $2,355,076 (155%) was primarily due to the change in fair value of derivative liabilities, $(14,109 in 2022) and $1,800,000 in 2021.
For the three months ended June 30, 2022, other income (expenses) – net consisted of interest expense of $198,776, amortization of debt discount of $146,917, change in fair value of derivative liabilities of $14,109, derivative expense of $182,694, and change in fair value of marketable securities of $289,393.
For the three months ended June 30, 2021, other income (expenses) consisted of change in fair value of derivative liabilities of $1,800,000, loan forgiveness of $11,593 and loss on investment of $288,406.
Net Loss.
For the three months ended June 30, 2022, operating losses of ($252,863) combined with non-operating expense of ($831,889), resulted in a net loss of ($1,084,752).
For the three months ended June 30, 2021, operating losses of ($340,478) combined with non-operating income of $1,523,187, resulted in net income of $1,182,709.
Net income in 2021 became a net loss on 2022, was largely a result of the change in fair value of derivative liabilities of $1,800,000.
Six months ended June 30, 2022 as compared to six months ended June 30, 2021
Sales. During the six months ended June 30, 2022 and 2021, the Company had $3,880,576 and $256,863 in sales, respectively. The increase from the 2021 period to the 2022 period was $3,623,713 (1,411%). Sales for the 2022 period included SST’s operations (acquired on February 28, 2022), which resulted in the increase from the 2021 period.
Cost of Sales. During the six months ended June 30, 2022 and 2021, the Company incurred $3,509,160 and $197,506 in cost of sales, respectively. The increase from the 2021 period to the 2022 period was $2,375,234 (3,638%). Cost of sales primarily include product sales and payroll. Cost of sales for the 2022 period included SST’s operations (acquired on February 28, 2022), which resulted in the increase from the 2021 period.
Gross Profit. Gross profit expressed as a percentage of sales for the six months ended June 30, 2022 was 10%, as compared to 23% for the six months ended June 30, 2021. During 2022, the Company included the gross profit of SST (acquired on February 28, 2022). Sales and cost of sales were relatively immaterial in 2021 as compared to 2022.
General and Administrative Expenses. During the six months ended June 30, 2022 and 2021, the Company incurred general and administrative expenses of $1,664,444 and $1,416,071, respectively, consisting primarily of salaries and professional fees. The increase from the 2021 period to the 2022 period was $248,373 (18%). General and administrative expenses for the 2022 period included SST’s operations (acquired on February 28, 2022), which resulted in the increase from the 2021 period.
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Other Income (Expense). For the six months ended June 30, 2022 the Company reflected other expense – net of $1,510,009 and other income – net of $150,193 for the six months ended June 30, 2021, respectively. The change was $1,660,202 (1,105%).
For the six months ended June 30, 2022, other income (expenses) – net consisted of interest expense of $261,571, amortization of debt discount of $352,692, change in fair value of derivative liabilities of $16,825, derivative expense of $194,887, gain on debt extinguishment (derivative liabilities – convertible debt) $100,693, loss on debt extinguishment of $205,691, and change in fair value of marketable securities of $579,036.
Net Loss.
For the six months ended June 30, 2022, operating losses of ($1,293,028) combined with non-operating expense of ($1,510,009), resulted in a net loss of ($2,803,037).
For the six months ended June 30, 2021, operating losses of ($1,356,714) combined with non-operating income of $150,193, resulted in net loss of ($1,206,521).
Net income in 2021 became a net loss on 2022, was largely a result interest expense, amortization of debt discount, derivative expense and loss on debt extinguishment.
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, 2021 [I believe this is only expressed as of year-end, i.e., 12/31/2001]. The unaudited consolidated financial statements in this report on Form 10-Q have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the unaudited 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 unaudited consolidated financial statements. The unaudited 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 six months ended June 30, 2022, the Company had:
| ● | a net loss of $2,803,037; and |
| ● | net cash used in operations of $607,545. |
Additionally, at June 30, 2022, the Company had:
| ● | an accumulated deficit of $23,048,182; |
| ● | stockholders’ deficit of $919,511; and |
| ● | a working capital deficit of $1,418,496. |
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Liquidity and Capital Resources
Operating Activities
For the six months ended June 30, 2022 and 2021, the Company reflected net cash used in operating activities of $607,546 and $918,827, respectively, and decrease of $311,281 (34%). Operating activities primarily consist of stock-based compensation, warrants issued for services, amortization of debt discount, derivative expense, change in fair value of derivative liabilities, loss on debt extinguishment, gain on debt extinguishment (derivative liabilities – convertible debt), change in fair value of marketable equity securities accounts receivable, inventory, accounts payable and accrued expenses and deferred revenues.
Investing Activities
For the six months ended June 30, 2022 and 2021, the Company reflected net cash provided by investing activities of $173,376 and $0; primarily consisting of cash acquired in acquisition of SST and purchases of securities - net of proceeds from sales of securities.
Financing Activities
For the six months ended June 30, 2022 and 2021, the Company reflected net cash provided by financing activities of $573,633 and $938,834, respectively, a decrease of $365,201 (39%). 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.
During the six months ended June 30, 2022, the Company received net proceeds of $353,750 of borrowed funds from non-related parties through the sale of convertible notes payable, $3,774,456 in an asset backed loan against the accounts receivable of SST offset by repayments of $3,042,024 and $195,000 loan from a related party (CEO of SST) net of repayments of 32,245. The Company also executed a loan for $266,000 and repaid $61,392. The Company repaid an SBA loan for $150,000, loans payable – related parties for $213,678 and notes payable for $516,234.
In addition, during this period the Company issued 301,448,152 shares of common stock to lenders for conversions of $104,367 of principal and interest related to third-party debt. The Company issued 650,000 shares of common stock for services rendered, having a fair value of $535,000 ($0.0008 - $0.0009/share), based upon the quoted closing trading price of the Company’s common stock, on an as-converted basis of 1,000 shares of common stock for each share of Class B, preferred stock.
We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand of $233,688 at June 30, 2022. Although the Company intends to raise additional debt or equity capital, the Company expects to continue to incur significant losses from operations and have negative cash flows from operating activities for the near-term. These losses could be significant as product and service sales ramp up along with continuing expenses related to compensation, professional fees, development and regulatory are incurred.
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 June 30, 2023, and our current capital structure including equity-based instruments and our obligations and debts.
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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. |
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. However, we do not expect and have already generating revenues from our operations for the audio/visual business. 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 would increase our capital requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms.
Contractual Obligations and Commitments
The Company had a material change in contractual obligations related to its right-of-use operating lease, which was acquired in March 2022. [What was the material change?] There were no commitments at December 31, 2021 as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021.
Delinquent Loans
The Company is not in default on any of its debt arrangements.
Off-Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required under Regulation S-K for “smaller reporting companies.”
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the PCAOB standards, a control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit the attention by those responsible for oversight of the company’s financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive, financial and accounting officer), we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our management has determined that, as of June 30, 2022, the Company’s disclosure controls are not effective for the reasons set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, including the lack of segregation of duties similar to other companies our size.
We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report on Form 10-Q, our President and Chief Financial Officer performed an evaluation of the effectiveness of and the operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our President and Chief Financial Officer concluded that as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures are not effective in timely alerting them to material information relating to FOMO required to be included in our Exchange Act filings.
Limitations on the Effectiveness of Controls
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, 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. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the six months ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business.
Item 1A. Risk Factors.
Not required under Regulation S-K for “smaller reporting companies.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None
Item 6. Exhibits.
(a) Exhibits.
| Exhibit | Item | |
| 31.1* | Section 302 Sarbanes-Oxley Act Certification | |
| 32.1* | Section 906 Sarbanes-Oxley Act Certification | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed or furnished herewith. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FOMO Corp | |
| Date: August 15, 2022 | /s/ Vikram Grover |
| Vikram Grover, President | |
| (Principal Executive. Financial and Accounting Officer) |
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EXHIBIT 31.1
CERTIFICATION
I, Vikram Grover, certify that:
| 1. | I have reviewed this report on Form 10-Q of FOMO Corp; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| c. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Vikram Grover | |
| Vikram Grover | |
| President (Principal Executive, Financial and Accounting Officer) | |
| August 15, 2022 |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the report of FOMO Corp (the “Company”) on Form 10-Q for the period ending June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Vikram Grover | |
| Vikram Grover | |
| President (Principal Executive, Financial and Accounting Officer) | |
| August 15, 2022 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Income Statement [Abstract] | ||||
| Sales - net | $ 2,646,008 | $ 84,661 | $ 3,880,576 | $ 256,863 |
| Cost of sales | 2,440,520 | 65,286 | 3,509,160 | 197,506 |
| Gross profit | 205,488 | 19,375 | 371,416 | 59,357 |
| General and administrative expenses | 458,351 | 359,853 | 1,664,444 | 1,416,071 |
| Loss from operations | (252,863) | (340,478) | (1,293,028) | (1,356,714) |
| Other income (expense) | ||||
| Interest expense | (198,776) | (261,571) | 234,310 | |
| Amortization of debt discount | (146,917) | (352,692) | ||
| Change in fair value of derivative liabilities | (14,109) | 1,800,000 | (16,825) | 424,626 |
| Derivative expense | (182,694) | (194,887) | ||
| Gain on debt extinguishment (derivative liabilities - convertible debt) | 100,693 | |||
| Gain (loss) on debt extinguishment | (205,691) | (231,930) | ||
| Change in fair value of marketable equity securities | (289,393) | (579,036) | ||
| Gain on debt forgiveness | 11,593 | 11,593 | ||
| Loss on investment | (288,406) | (288,406) | ||
| Total other income (expense) - net | (831,889) | 1,523,187 | (1,510,009) | 150,193 |
| Net income (loss) | $ (1,084,752) | $ 1,182,709 | $ (2,803,037) | $ (1,206,521) |
| Income (loss) per share - basic and diluted | $ (0.00) | $ 0.00 | $ (0.00) | $ (0.00) |
| Weighted average number of shares - basic and diluted | 8,105,085,037 | 5,578,818,213 | 7,776,910,177 | 5,653,234,527 |
Organization and Nature of Operations |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Nature of Operations | Note 1 - Organization and Nature of Operations
Organization and Nature of Operations
FOMO Corp, Inc. (“FOMO,” “we,” “our” or “the Company”), is focused on the sale of its smart board technology as well as related installation services through its wholly-owned subsidiary SMARTSolution Technologies, L.P. (“SST”). Additionally, the Company markets and sells clean air disinfection products.
On May 18, 2021, FOMO incorporated FOMO ADVISORS LLC, a Wyoming limited liability company, as a wholly owned private merchant banking subsidiary. FOMO ADVISORS LLC intends to assist private companies in accessing the capital markets through “pass through” investments that allow investors to gain liquidity, while benefiting from direct exposure to private company growth through derivative instruments or other rights. The subsidiary is engaging with strategic targets to introduce them to its network of financial and strategic contacts, provide them management consulting, and create a portfolio of technology investments for future incubation, capital formation, and wealth creation. The Company is currently evaluating its corporate development pipeline and has identified a number of candidates for this capital formation model, though there can be no assurances. Currently, this entity is inactive.
On February 28, 2022, the Company acquired SST, see Note 9.
In June 2022, the Company applied with the State of California for a name change to FOMO Worldwide, Inc. The name change is being reviewed for approval.
The parent (FOMO CORP.) and subsidiaries are organized as follows:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 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:
Operating results for IAQ since its acquisition have not met expectations, Accordingly, the interim chief executive is in the process of reorganizing IAQ. Accordingly, we determined that IAQ’s value was impaired at December 31, 2021.
Independence Lighting LED, LLC and Energy Intelligence Center, LLC
On February 12, 2021, the Company purchased the assets of Independence LED Lighting, LLC (“iLED”), an affiliate of IAQ, in exchange for the issuance of Series B Preferred Shares valued at $3.3 million, iLED is in the sale of clean air products intended for use in disinfecting and improving air quality.
On March 7, 2021, the Company purchased the assets of Energy Intelligence Center, LLC (“EIC PA”) in exchange for the issuance of Series B Preferred Shares and warrants valued at $1,479,121. EIC is engaged in the commercialization, marketing and licensing of software and hardware designed to work in conjunction with a commercial building’s HVAC system to reduce energy consumption and optimize operating efficiency.
Following the acquisitions of the assets of iLED and EIC, the Company combined the assets and businesses of iLED and EIC into a newly formed wholly-owned subsidiary, EIC of Wyoming LLC (“EIC Wyoming”).
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
The Founder and Former Managing Member of IAQ, iLED and EIC stayed on following the asset acquisitions to run their businesses. However, in July 2021, he stepped down and assumed a consulting role and a new chief executive operating officer was hired to run the businesses of IAQ and EIC Wyoming. Such individual resigned from his position on March 2, 2022 and we then appointed an interim chief executive officer.
See Note 9.
SMARTSolution Technologies, L.P.
On February 28, 2022, FOMO closed the acquisition of the general and all the limited partnership interests of SMARTSolution Technologies L.P. (“SST”) pursuant to a Securities Purchase Agreement dated February 28, 2022 (the “SPA”), by and between the Company and Mitchell Schwartz (“Seller”), the beneficial owner of the general and limited partnership interests in SST. SST is a Pittsburgh, Pennsylvania–based audio/visual systems integration company that designs and builds presentation, teleconferencing and collaborative systems for businesses, educational institutions and other nonprofit organizations.
SST has been engaged in the EdTech business for over 25 years. SST markets its systems to and installs the systems in elementary, middle and high schools, as well as colleges, universities and commercial facilities. A current focus of SST’s business is the sale and installation of interactive smartboards to elementary, middle and high schools. These interactive smartboards provide students with interactive remote access from home or other locations to classrooms and teachers via personal computers, laptops, tablets and similar devices. SST currently markets its systems primarily in Western Pennsylvania, Eastern Ohio and West Virginia, is in the process of expanding into the Alabama and Michigan markets and plans to expand further throughout the United States as opportunities present itself organically or through strategic acquisitions.
As a result of the growth in remote learning, as a result of the COVID-19 pandemic and otherwise, and due to $500 billion in stimulus funding (“ESSER funds”) from the federal government, SST is currently experiencing a significant increase in orders and sales and a growth in backlog.
The interactive smartboards which form the key element of SST’s interactive systems are supplied by a single supplier in Canada, which is a subsidiary of a large multi-national company. SST believes that its relationship with its supplier is excellent, although there can be no assurance that if the relationship with the supplier was interrupted or otherwise adversely affected that an alternative source of supply at commercially reasonable cost would be available or that SST’s business would not be seriously harmed.
See note 9.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2022 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 28, 2022.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
Business Combinations
The Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
The fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed based on their respective fair values. Goodwill represents excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed.
Significant judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results.
On February 28, 2022 (the “closing”, the “closing date”, “acquisition date”), the Company and SST executed a securities purchase agreement, which is treated as a business combination, and accounted for using the acquisition method. SST became a wholly-owned subsidiary of the Company. See Note 9.
At June 30, 2022 and December 31, 2021, goodwill was $806,854 and $0, respectively.
As a result of the SST acquisition, the consolidated financial statements include the balance sheet of SST at June 30, 2022, as well as the results of operations and cash flows of SST from the date of acquisition through June 30, 2022.
Goodwill and Intangible Assets
The Company initially records intangible assets at their estimated fair values and reviews these assets periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment.
For the three and six months ended June 30, 2022 and 2021, impairment expense was $0 and $0, respectively.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Business Segments and Concentrations
The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as a single reportable segment. Customers in the United States accounted for approximately 100% of our revenues. We do not have any property or equipment outside of the United States.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Significant estimates during the six months ended June 30, 2022 and the year ended December 31, 2021, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of investments, valuation of goodwill and intangible assets, valuation of loss contingencies, valuation of derivative liabilities, valuation of stock-based compensation, estimated useful lives related to intangible assets and property and equipment, uncertain tax positions, and the valuation allowance on deferred tax assets.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.
The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
During the six months ended June 30, 2022, the Company’s financial results and operations were not materially adversely impacted by the COVID-19 pandemic. The extent to which the Company’s future financial results could be impacted by the COVID-19 pandemic depends on future developments that are highly uncertain and cannot be predicted at this time. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities.
These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 June 30, 2022 and December 31, 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Assets and liabilities measured at fair value at June 30, 2022 and December 31, 2021 are as follows:
Level 1 Investments consist of common stock, options and warrants of publicly traded companies which are considered to be highly liquid and easily tradeable. The Company also holds Level 3 investments in the common stock of a private company.
Derivative liabilities are derived from certain convertible notes payable and warrants.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 June 30, 2022 and December 31, 2021, respectively, the Company did not have any cash equivalents.
The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. At June 30, 2022 and December 31, 2021, 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 June 30, 2022 and December 31, 2021, were $0, respectively.
For the three and six months ended June 30, 2022 and 2021, the Company recorded bad debt expense of $0 and $0, respectively.
Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
The Company had the following concentrations at June 30, 2022 and December 31, 2021, respectively. All concentrations relate solely to the operations of SST.
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 June 30, 2022 and December 31, 2021 inventory consisted of:
During the three and six months ended June 30 , 2022 and 2021 , impairment expense was $0 and $0, respectively.
The Company had the following vendor purchase concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
For the three and six months ended June 30, 2022 and 2021, impairment expense was $0 and $0, respectively.
Property and Equipment
Property and equipment is 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 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.
For the three and six months ended June 30, 2022 and 2021, impairment expense was $0 and $0, respectively.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Derivative Liabilities
The Company assessed the classification of its derivative financial instruments as of June 30, 2022 and December 31, 2021, which consist of convertible notes payable and certain warrants (excluding those for compensation) and has determined that such instruments qualify for treatment as derivative liabilities as they meet the criteria for liability classification under ASC 815.
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. The Company uses a binomial pricing model to determine fair value of these instruments.
Upon conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock at fair value, relieves all related debt, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment. In connection with the debt extinguishment, the Company typically records an increase to additional paid-in capital for any remaining liability balance.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
Original Issue Discount
For certain notes issued, the Company may provide the debt holder with an original issue discount. The original issue discount is recorded as a debt discount, reducing the face amount of the note, and is amortized to interest expense over the life of the debt, in the Consolidated Statements of Operations.
Debt Issue Cost
Debt issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense over the life of the underlying debt instrument, in the Consolidated Statements of Operations.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 June 30, 2022 and 2021, contained a significant financing component.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
When determining revenues, no significant judgements or assumptions are required. For all transactions, the sales price is fixed and determinable (no variable consideration). All consideration from contracts is included in the transaction price. The Company’s contracts all contain single performance obligations.
For our contracts with customers, payment terms generally range from advance payments prior to product delivery and/or installation to certain cases where payment is due within 30 days from job completion. The timing of satisfying our performance obligations does not vary significantly from the typical timing of payment.
For each revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. However, the Company acts as a reseller of warranties for its Smart Boards, which are serviced by the manufacturer, and in some cases requires SST to perform warranty related services.
Sales taxes and other similar taxes are excluded from revenue.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Smart Boards and Installation Services
Smart Boards are sold to customers and may require an upfront deposit. The Company also installs its Smart Boards in connection with the sale. All revenue is recognized at a point in time upon completion of any installation, which typically occurs withing thirty (30) days of delivering the product.
Installation Services
Certain customers contract with the Company to perform installation only services where they have acquired products from a different company/seller. All revenue is recognized at a point in time upon completion of any installation.
Clean Air Technology
All sales are recognized upon delivery of products to the customer.
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 June 30, 2022 and December 31, 2021, the Company had deferred revenue of $825,340 and $11,100, respectively.
The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2022 and 2021:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
The Company had the following sales concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
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 March 31, 2022 and December 31, 2021, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the six months ended June 30, 2022 and 2021, respectively.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 $10,684 and $0 in marketing and advertising costs during the three months ended June 30, 2022 and 2021.
The Company recognized $23,464 and $0 in marketing and advertising costs during the six months ended June 30, 2022 and 2021.
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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.
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.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Based on the potential common stock equivalents noted above at June 30, 2022, and the potential variability in stock prices, which directly affect the Company’s ability to determine if it has sufficient shares to settle all possible debt or equity conversions, the Company has determined that it does not have sufficient authorized shares of common stock () to settle any potential exercises of common stock equivalents.
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2022 UNAUDITED
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations, stockholders’ deficit, or cash flows.
Recent Accounting Standards
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
We adopted this pronouncement on January 1, 2022; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
In May 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company does not expect the adoption of this standard to have a material effect on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 will have a material effect, if any, on its consolidated financial statements.
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Liquidity, Going Concern and Management’s Plans |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||
| Liquidity, Going Concern and Management’s Plans | 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 six months ended June 30, 2022, the Company had:
Additionally, at June 30, 2022, the Company had:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand of $233,688 at June 30, 2022. Although the Company intends to raise additional debt or equity capital, the Company expects to continue to incur significant losses from operations and have negative cash flows from operating activities for the near-term. These losses could be significant as product and service sales ramp up along with continuing expenses related to compensation, professional fees, development and regulatory are incurred.
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 June 30, 2023, and our current capital structure including equity-based instruments and our obligations and debts.
If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company continues to explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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Loan Receivable – Related Party |
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| Loan Receivable – Related Party | Note 4 – Loan Receivable – Related Party
During 2021, the Company has advanced funds to an affiliate of the Company’s Chief Executive Officer to pay for corporate operating expenses. The Company expects to receive repayment in 2022.
The following is a summary of the Company’s advances – related party is as follows:
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Property and Equipment |
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| Property and Equipment | Note 5 – Property and Equipment
Property and equipment consisted of the following:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Depreciation expense for the three months ended June 30, 2022 and 2021, was $1,735 and $0, respectively.
Depreciation expense for the six months ended June 30, 2022 and 2021, was $2,314 and $0, respectively.
These amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations.
In connection with the acquisition of SST on February 28, 2022, the Company acquired property and equipment with a net carrying amount of $142,940.
See Note 9.
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| Investments | 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 share of preferred class B stock in exchange for shares of Peer-to-Peer Inc (PTOP). The shares were valued at the market price of $ per share, or $483,000, at the acquisition date. The shares are valued at the market price at December 31, 2021 of $ and per share for a total investment of $147,000.
During the year ended December 31, 2019, the Company received shares of KANAB CORP. for consulting services provided by the Company’s CEO, Vikram Grover. The shares were valued at $ per share or $12,220 at the acquisition date. On July 31, 2021, the Company transferred the shares to Himalaya Technologies Inc (HMLA) for shares of the preferred B stock in HMLA. The Company valued the investment of HMLA and the carrying value of KANAB CORP at the time the shares were exchanged. The fair value at December 31, 2021 for HMLA is $12,220. HMLA is a related party as it has common officers and control.
On October 4, 2021, the Company invested $25,000 for common shares in GenBio, Inc. The Company valued the shares at $/share. GenBio, Inc is a private Biotechnology Company that researches natural products that act on new molecular pathways, primarily to suppress inflammation at critical points in these biochemical pathways. The Company’s research has shown that these active compounds decrease obesity-induced increases in abdominal fat pads, blood pressure, fatty liver and insulin resistance.
In 2021, the Company’s Chief Executive Officer assigned his investment brokerage account with Interactive Brokers to the Company. The Company subsequently invested $1,007,500 into the account. The investments in the account are marketable equity securities.
The following is a summary of the Company’s investments at June 30, 2022 and December 31, 2021.
During 2022, the Company purchased shares of GenBio, Inc. for $40,000 ($/share)
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
During 2021, the Company purchased shares of GenBio, Inc. for $25,000 ($/share)
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Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 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 June 30, 2022 and December 31, 2021, respectively:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Convertible Notes Payable
The Company executed several convertible notes with various lenders as follows:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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.
During the year ended December 31, 2021, third-party lenders converted $2,822,118 of principal, interest and penalties into shares of common stock. This resulted in a loss on debt extinguishment of $475,199.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Convertible Note Payable – Related Party
In March 2022, the Chief Executive Officer of SST advanced funds to the Company as follows:
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 $200,073.
In 2021 and prior, the Company’s current Chief Executive Officer and former Chief Executive Officer made advances for business operating expenses.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Loans payable - related parties is as follows:
Loan Payable – Other
In 2022, the Company executed a loan with a lender for $266,000, including interest of $70,050, resulting in net proceeds of $195,950. The Company is required to pay $5,116 over a period of 52 weeks to repay the loan.
FOMO
CORP AND SUBSIDIARIES
Accounts Receivable Credit Facility
The Company, in connection with the acquisition of SST, assumed an accounts receivable credit facility.
On February 28, 2022, SST entered into a revolving accounts receivable and term loan financing and security agreement in the aggregate amount of $1,000,000 (subject to adjustment by the lender). The financing provides for advances up to $1,000,000, based upon 85% of eligible accounts receivable (as defined in the agreement) and subject to adjustment at the discretion of the lender.
The Facility is paid for from 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:
The Company is subject to financial covenants (unless waived by lender) as follows:
FOMO
CORP AND SUBSIDIARIES
At June 30, 2022, the Company is in default on the financial covenants noted above, however, the lender has not exercised its rights of default. The Company and the lender continue to operate under the terms of the agreement without disruption.
The Company and its subsidiaries are guarantors of this Agreement.
Accounts receivable credit facility is as follows:
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Derivative Liabilities |
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| Derivative Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Liabilities | 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.
FOMO
CORP AND SUBSIDIARIES
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:
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 June 30, 2022 and December 31, 2021:
Changes in fair value of derivative liabilities (mark to market adjustment) are included in other income (expense) in the accompanying consolidated statements of operations.
In 2022 and 2021, in connection with the conversion of certain debt and warrants, the corresponding derivative liabilities were market to market on the conversion date and the remaining derivative liability balance was reclassified to gain on debt extinguishment for derivative liabilities related to debt and to additional paid-in capital for derivative liabilities classified as warrants.
FOMO
CORP AND SUBSIDIARIES
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Acquisition and Pro Forma Financial Information |
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| Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and Pro Forma Financial Information | Note 9 – Acquisition and Pro Forma Financial Information
Acquisition for the Three Months Ended March 31, 2022
On February 28, 2022, the Company issued shares of Class B, convertible preferred stock (convertible into shares of common stock) having a fair value of $700,000 ($/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 shares of common stock for each one (1) share of Series B preferred stock held, then multiplying by the quoted closing trading price of the common stock.
We made an initial allocation of the purchase price at the date of acquisition based on our understanding of the fair value of assets acquired and liabilities assumed. The allocation of the purchase price consideration is considered preliminary as of March 31, 2022, with the excess purchase price allocated to goodwill and is subject to change. We expect to finalize the allocation of purchase price as soon as possible, but no later than one year from the acquisition date.
The acquisition of SST was reflected in the accompanying consolidated financial statements at March 31, 2022, the results of operations and cash flows are included in the consolidated financial statements as of and from the acquisition date.
FOMO
CORP AND SUBSIDIARIES
The table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.
In connection with the purchase of SST, $50,000 was paid as a broker fee. This amount has been included in the consolidated statements of operations as a component of general and administrative expenses. There were no other additional transaction costs incurred.
The goodwill of $806,854 is primarily related to factors such as synergies and market share.
Goodwill is not deductible for tax purposes.
FOMO
CORP AND SUBSIDIARIES
Supplemental Pro Forma Information (Unaudited)
The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if the transaction had occurred on January 1, 2021.
This proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time:
The weighted average shares assume the as-converted amount to common stock .
Acquisitions for the Year Ended December 31, 2021
On October 19, 2020, the Company acquired 100% of the member interests of IAQ Technologies LLC (formerly known as Purge Virus, LLC) for consideration of Series B Preferred Shares, having a fair value of $800,000. As a result of the acquisition, the Company recognized intangible assets of $225,000 and Goodwill of $596,906. The intangible assets were being amortized over their useful lives, ranging from 3 to 10 years. In October of 2021, the Company changed its name to IAQ Technologies LLC (IAQ). At December 31, 2021 it was determined by management to write off the value of the assets due to lack of business generated resulting in impairment of $803,156.
FOMO
CORP AND SUBSIDIARIES
On February 12, 2021, we purchased assets, including website and trade names of Independence LED Lighting, LLC for Series B Preferred shares. Based on an agreed upon price at closing, the transaction was valued $3,300,000, At December 31, 2021 it was determined by management to write off the value of the assets due to lack of business generated resulting in impairment of $3,300,000.
On March 6, 2021, we purchased the assets, including website, trade names and software of Energy Intelligence Center, LLC for Series B Preferred shares and common stock warrants. Based on an agreed upon price at closing, the transaction was valued $1,479,121. At December 31, 2021 it was determined by management to write off the value of the assets due to lack of business generated resulting in impairment of $1,479,121.
These acquisitions were treated as business combinations and the Company recorded the fair value of the assets acquired.
The table below summarizes preliminary estimated fair value of the assets acquired at the effective acquisition date.
FOMO
CORP AND SUBSIDIARIES
Supplemental Pro Forma Information (Unaudited)
The unaudited pro forma information for the periods set forth below gives effect to the acquisitions as if the transactions had occurred on January 1, 2021.
This proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time:
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | Note 10 – 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
At June 30, 2022, the Company has no financing leases as defined in ASC 842, “Leases.”
FOMO
CORP AND SUBSIDIARIES
The tables below present information regarding the Company’s operating lease assets and liabilities at June 30, 2022:
FOMO
CORP AND SUBSIDIARIES
Future minimum lease payments required under leases that have initial or remaining non- cancelable lease terms in excess of one year at June 30, 2022:
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Stockholders’ Deficit |
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| Stockholders’ Deficit | Note 11– Stockholders’ Deficit
At June 30, 2022 and December 31, 2021, the Company had various classes of stock:
Class A, Convertible Preferred Stock
FOMO
CORP AND SUBSIDIARIES
Class B, Convertible Preferred Stock
Class C, Convertible Preferred Stock
FOMO
CORP AND SUBSIDIARIES
Common Stock
Equity Transactions for the Six Months Ended June 30, 2022
Stock Issued for Cashless Exercise of Warrants
The Company issued 645,833,333 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 shares of Class B, preferred stock for services rendered, having a fair value of $535,000 ($ - $/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 shares of Series B preferred stock ( as converted common stock) having a fair value of $700,000 ($/share), based upon the quoted closing trading price on the acquisition date, in exchange for 100% of the issued and outstanding member ownership interests held by SST, in a transaction treated as a business combination.
See Note 9.
Stock Issued from Conversion of Convertible Debt and Loss on Debt Extinguishment
The Company issued 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 $310,059 ($ - $/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 shares of common stock in connection with the conversion of shares of Class B preferred stock. The transaction had a net effect of $0 on stockholders’ deficit.
FOMO
CORP AND SUBSIDIARIES
Equity Transactions for the Year Ended December 31, 2021
Stock Issued from Conversion of Convertible Debt
The Company issued shares of common stock in connection with the conversion of convertible debt and accrued interest totaling $2,822,218. As a result of the debt conversion, the Company recognized a loss on debt extinguishment of $475,199.
Stock Issued for Loan Costs
The Company issued shares of common stock for loan costs totaling $20,000.
Stock Issued for Cash – Common Stock
The Company issued shares of common stock for $1,000,000.
Stock Issued for Cash – Class A, Preferred Stock
The Company issued shares of Class A preferred stock for $275,000.
Stock Issued as a Non-Refundable Deposit to Acquire
The Company issued shares of Class B preferred stock having a fair value of $449,279. The acquisition was cancelled in 2021, and the Company recorded a loss on cancellation of $.
Stock Issued to Acquire Assets of Businesses
The Company issued shares of Class B preferred stock having a fair value of $4,550,000 in connection with the acquisitions of EIC and iLed. See Note 9.
Stock Issued for Services – Class B Preferred Stock
The Company issued shares of Class B preferred stock for services rendered, having a fair value of $1,766,014.
Conversion of Class B Preferred Stock to Common Stock
The Company issued shares of common stock in connection with the conversion of shares of Class B preferred stock. The transaction had a net effect of $0 on stockholders’ deficit.
FOMO
CORP AND SUBSIDIARIES
Stock Issued for Services – Common Stock
The Company issued shares of common stock for services rendered, having a fair value of $556,664.
Cancellation of Common Stock Issuable
The Company cancelled shares of common stock issuable from 2020, having a fair value of $.
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Warrants |
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| Warrants | Note 12 – Warrants
Warrant activity for the six months ended June 30, 2022 and the year ended December 31, 2021 are summarized as follows:
FOMO
CORP AND SUBSIDIARIES
Warrant Transactions for the Six Months Ended June 30, 2022
Convertible Debt Issuances
In connection with convertible debt issued to various lenders, the Company granted , three-year () warrants. These warrants have an exercise price of $ - $. See Note 7 for derivative liabilities and related mark to market accounting.
Employee Compensation
Concurrent with the acquisition of SST, the Company granted , three-year () 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:
Board Advisory Compensation – Related Party
The Company granted , three-year () warrants to a board director for services rendered.
The fair value of these services rendered was $13,981, based upon the following weighted average assumptions:
Cashless Exercise of Warrants
The Company issued shares of common stock in connection with cashless exercises of 750,000,000 warrants. The net effect on stockholders’ equity was $0.
FOMO
CORP AND SUBSIDIARIES
Warrant Transactions for the Year Ended December 31, 2021
Convertible Debt Issuances
In connection with convertible debt issued to various lenders, the Company granted three-year () warrants. These warrants have an exercise price of $. See Note 7 for derivative liabilities and related mark to market accounting.
Employee Compensation
The Company granted , three-year () warrants to various employees for services rendered.
The fair value of these services rendered was $997,637, based upon the following weighted average assumptions:
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2022 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 28, 2022.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
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| Principles of Consolidation | Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
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| Business Combinations | Business Combinations
The Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
The fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed based on their respective fair values. Goodwill represents excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed.
Significant judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results.
On February 28, 2022 (the “closing”, the “closing date”, “acquisition date”), the Company and SST executed a securities purchase agreement, which is treated as a business combination, and accounted for using the acquisition method. SST became a wholly-owned subsidiary of the Company. See Note 9.
At June 30, 2022 and December 31, 2021, goodwill was $806,854 and $0, respectively.
As a result of the SST acquisition, the consolidated financial statements include the balance sheet of SST at June 30, 2022, as well as the results of operations and cash flows of SST from the date of acquisition through June 30, 2022.
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| Goodwill and Intangible Assets | Goodwill and Intangible Assets
The Company initially records intangible assets at their estimated fair values and reviews these assets periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment.
For the three and six months ended June 30, 2022 and 2021, impairment expense was $0 and $0, respectively.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Business Segments and Concentrations | Business Segments and Concentrations
The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as a single reportable segment. Customers in the United States accounted for approximately 100% of our revenues. We do not have any property or equipment outside of the United States.
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| Use of Estimates | Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Significant estimates during the six months ended June 30, 2022 and the year ended December 31, 2021, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of investments, valuation of goodwill and intangible assets, valuation of loss contingencies, valuation of derivative liabilities, valuation of stock-based compensation, estimated useful lives related to intangible assets and property and equipment, uncertain tax positions, and the valuation allowance on deferred tax assets.
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| Risks and Uncertainties | 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.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Coronavirus (“COVID-19”) Pandemic |
During the six months ended June 30, 2022, the Company’s financial results and operations were not materially adversely impacted by the COVID-19 pandemic. The extent to which the Company’s future financial results could be impacted by the COVID-19 pandemic depends on future developments that are highly uncertain and cannot be predicted at this time. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities.
These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
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| Fair Value of Financial Instruments | 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:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 June 30, 2022 and December 31, 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Assets and liabilities measured at fair value at June 30, 2022 and December 31, 2021 are as follows:
Level 1 Investments consist of common stock, options and warrants of publicly traded companies which are considered to be highly liquid and easily tradeable. The Company also holds Level 3 investments in the common stock of a private company.
Derivative liabilities are derived from certain convertible notes payable and warrants.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Cash and Cash Equivalents and Concentration of Credit Risk | 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 June 30, 2022 and December 31, 2021, respectively, the Company did not have any cash equivalents.
The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. At June 30, 2022 and December 31, 2021, the Company did not experience any losses on cash balances in excess of FDIC insured limits.
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| Accounts Receivable | 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 June 30, 2022 and December 31, 2021, were $0, respectively.
For the three and six months ended June 30, 2022 and 2021, the Company recorded bad debt expense of $0 and $0, respectively.
Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
The Company had the following concentrations at June 30, 2022 and December 31, 2021, respectively. All concentrations relate solely to the operations of SST.
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| Inventory | 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 June 30, 2022 and December 31, 2021 inventory consisted of:
During the three and six months ended June 30 , 2022 and 2021 , impairment expense was $0 and $0, respectively.
The Company had the following vendor purchase concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Impairment of Long-lived Assets | Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
For the three and six months ended June 30, 2022 and 2021, impairment expense was $0 and $0, respectively.
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| Property and Equipment | Property and Equipment
Property and equipment is 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 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.
For the three and six months ended June 30, 2022 and 2021, impairment expense was $0 and $0, respectively.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Derivative Liabilities | Derivative Liabilities
The Company assessed the classification of its derivative financial instruments as of June 30, 2022 and December 31, 2021, which consist of convertible notes payable and certain warrants (excluding those for compensation) and has determined that such instruments qualify for treatment as derivative liabilities as they meet the criteria for liability classification under ASC 815.
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. The Company uses a binomial pricing model to determine fair value of these instruments.
Upon conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock at fair value, relieves all related debt, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment. In connection with the debt extinguishment, the Company typically records an increase to additional paid-in capital for any remaining liability balance.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
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| Original Issue Discount | 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.
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| Debt Issue Cost | Debt Issue Cost
Debt issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense over the life of the underlying debt instrument, in the Consolidated Statements of Operations.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Operating Lease | 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.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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.
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| Revenue Recognition | Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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 June 30, 2022 and 2021, contained a significant financing component.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
When determining revenues, no significant judgements or assumptions are required. For all transactions, the sales price is fixed and determinable (no variable consideration). All consideration from contracts is included in the transaction price. The Company’s contracts all contain single performance obligations.
For our contracts with customers, payment terms generally range from advance payments prior to product delivery and/or installation to certain cases where payment is due within 30 days from job completion. The timing of satisfying our performance obligations does not vary significantly from the typical timing of payment.
For each revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. However, the Company acts as a reseller of warranties for its Smart Boards, which are serviced by the manufacturer, and in some cases requires SST to perform warranty related services.
Sales taxes and other similar taxes are excluded from revenue.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Smart Boards and Installation Services
Smart Boards are sold to customers and may require an upfront deposit. The Company also installs its Smart Boards in connection with the sale. All revenue is recognized at a point in time upon completion of any installation, which typically occurs withing thirty (30) days of delivering the product.
Installation Services
Certain customers contract with the Company to perform installation only services where they have acquired products from a different company/seller. All revenue is recognized at a point in time upon completion of any installation.
Clean Air Technology
All sales are recognized upon delivery of products to the customer.
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| Contract Liabilities (Deferred Revenue) | 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 June 30, 2022 and December 31, 2021, the Company had deferred revenue of $825,340 and $11,100, respectively.
The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2022 and 2021:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
The Company had the following sales concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
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| Cost of Sales | Cost of Sales
Cost of sales primarily consists of product sales, purchased supplies, materials and overhead.
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| Income Taxes | Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of March 31, 2022 and December 31, 2021, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the six months ended June 30, 2022 and 2021, respectively.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Advertising Costs | 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 $10,684 and $0 in marketing and advertising costs during the three months ended June 30, 2022 and 2021.
The Company recognized $23,464 and $0 in marketing and advertising costs during the six months ended June 30, 2022 and 2021.
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| Stock-Based Compensation |
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
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| Stock Warrants | 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.
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| 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.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
Based on the potential common stock equivalents noted above at June 30, 2022, and the potential variability in stock prices, which directly affect the Company’s ability to determine if it has sufficient shares to settle all possible debt or equity conversions, the Company has determined that it does not have sufficient authorized shares of common stock () to settle any potential exercises of common stock equivalents.
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| Related Parties | 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.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2022 UNAUDITED
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| Reclassifications | Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations, stockholders’ deficit, or cash flows.
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| Recent Accounting Standards | Recent Accounting Standards
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
We adopted this pronouncement on January 1, 2022; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
In May 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company does not expect the adoption of this standard to have a material effect on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 will have a material effect, if any, on its consolidated financial statements.
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Organization and Nature of Operations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Parent and Subsidiaries | The parent (FOMO CORP.) and subsidiaries are organized as follows:
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Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value of Assets And Liabilities | Assets and liabilities measured at fair value at June 30, 2022 and December 31, 2021 are as follows:
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| Schedules of Concentration of Risk Percentage | The Company had the following concentrations at June 30, 2022 and December 31, 2021, respectively. All concentrations relate solely to the operations of SST.
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| Schedule of Inventory | At June 30, 2022 and December 31, 2021 inventory consisted of:
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| Schedule of Vendor Purchase Concentrations Percentage | The Company had the following vendor purchase concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
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| Schedule of Disaggregation of Revenue | The following represents the Company’s disaggregation of revenues for the six months ended June 30, 2022 and 2021:
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| Schedule of Sales Concentrations Percentage | The Company had the following sales concentrations at June 30, 2022 and 2021, respectively. All concentrations relate solely to the operations of SST.
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| Schedule of Anti Dilutive Equity Securities Outstanding |
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Loan Receivable – Related Party (Tables) |
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Receivable Related Party | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Loans Receivable Advances Related Party | The following is a summary of the Company’s advances – related party is as follows:
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Property and Equipment (Tables) |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment | Property and equipment consisted of the following:
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Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Investments | The following is a summary of the Company’s investments at June 30, 2022 and December 31, 2021.
During 2022, the Company purchased shares of GenBio, Inc. for $40,000 ($/share)
FOMO CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 UNAUDITED
During 2021, the Company purchased shares of GenBio, Inc. for $25,000 ($/share)
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Notes Payable | The Company executed several convertible notes with various lenders as follows:
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| Schedule of Convertible Note Payable Related Party | In March 2022, the Chief Executive Officer of SST advanced funds to the Company as follows:
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| Schedule of Loans Payable - Related Parties | Loans payable - related parties is as follows:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Loan Payable Other |
|
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| Schedule of Accounts Receivable Credit Facility | Accounts receivable credit facility is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Liabilities at Fair Value | 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:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Liabilities | 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 June 30, 2022 and December 31, 2021:
|
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Acquisition and Pro Forma Financial Information (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value of Assets Acquired and Liabilities Assumed | The table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.
|
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| Schedule of Business Acquisition Proforma Information | This proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time:
|
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| Schedule of Acquisition of Intangible Asset | The table below summarizes preliminary estimated fair value of the assets acquired at the effective acquisition date.
|
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| Schedule of Business Acquisition Proforma Related to Supplement Information | This proforma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time:
|
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Commitments and Contingencies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Lease Assets and Liabilities | The tables below present information regarding the Company’s operating lease assets and liabilities at June 30, 2022:
|
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| Schedule of Future Minimum Lease Payments | Future minimum lease payments required under leases that have initial or remaining non- cancelable lease terms in excess of one year at June 30, 2022:
|
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Warrants (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Activity | Warrant activity for the six months ended June 30, 2022 and the year ended December 31, 2021 are summarized as follows:
|
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| Employee Compensation [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Fair Value of Warrants |
|
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| Board Advisory Compensation [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Fair Value of Warrants |
|
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Organization and Nature of Operations (Details Narrative) - USD ($) |
6 Months Ended | ||||
|---|---|---|---|---|---|
Mar. 07, 2021 |
Mar. 06, 2021 |
Feb. 12, 2021 |
Oct. 19, 2020 |
Jun. 30, 2022 |
|
| Warrant [Member] | |||||
| Issue of preferred B shares to acquire assets, shares | 50,000,000 | ||||
| Energy Intelligencer Center LLC [Member] | Warrant [Member] | |||||
| Issue of preferred B shares to acquire assets, shares | 50,000,000 | 50,000,000 | |||
| Series B Preferred Stock [Member] | |||||
| Issue of preferred B shares to acquire assets, shares | 125,000 | ||||
| Series B Preferred Stock [Member] | Independence LED Lighting LLC [Member] | |||||
| Issue of preferred B shares to acquire assets, shares | 250,000 | ||||
| Issue of preferred B shares to acquire assets | $ 3,300,000 | ||||
| Series B Preferred Stock [Member] | Energy Intelligencer Center LLC [Member] | |||||
| Issue of preferred B shares to acquire assets, shares | 125,000 | 125,000 | |||
| Issue of preferred B shares to acquire assets | $ 1,479,121 | $ 1,479,121 | |||
| Purge Virus LLC [Member] | Series B Preferred Stock [Member] | |||||
| Number of shares issued for consideration | 2,000,000 | ||||
| Value of shares invested | $ 800,000 | ||||
| Purge Virus LLC [Member] | |||||
| Ownership percentage | 100.00% |
Schedule of Fair Value of Assets And Liabilities (Details) - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | |||
| Investments | $ 163,427 | $ 740,463 | |
| Total Assets | 163,427 | 740,463 | |
| Derivative liabilities | 958,406 | 1,105,537 | $ 834,230 |
| Total Liabilities | 958,406 | 1,105,537 | |
| Fair Value, Inputs, Level 1 [Member] | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Investments | 163,427 | 740,463 | |
| Total Assets | 163,427 | 740,463 | |
| Derivative liabilities | |||
| Total Liabilities | |||
| Fair Value, Inputs, Level 3 [Member] | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Investments | |||
| Total Assets | |||
| Derivative liabilities | 958,406 | 1,105,537 | |
| Total Liabilities | 958,406 | 1,105,537 | |
| Fair Value, Inputs, Level 2 [Member] | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Total Assets | |||
| Total Liabilities |
Schedules of Concentration of Risk Percentage (Details) - Customer Concentration Risk [Member] - Accounts Receivable [Member] |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Customer A [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 15.00% | 0.00% |
| Customer B [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 11.00% | 0.00% |
| Customer C [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 11.00% | 0.00% |
| Customer [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 37.00% | 0.00% |
Schedule of Inventory (Details) - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Inventory [Line Items] | ||
| Total Inventory | $ 725,265 | $ 8,114 |
| Smart Boards [Member] | ||
| Inventory [Line Items] | ||
| Total Inventory | 713,710 | |
| Clean Air Technology [Member] | ||
| Inventory [Line Items] | ||
| Total Inventory | $ 11,555 | $ 8,114 |
Schedule of Vendor Purchase Concentrations Percentage (Details) - Product Concentration Risk [Member] - Cost of Goods and Service Benchmark [Member] |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Customer A [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 93.00% | 0.00% |
| Customer [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 93.00% | 0.00% |
Schedule of Disaggregation of Revenue (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Product Information [Line Items] | ||
| Revenue | $ 3,880,576 | $ 256,863 |
| Percentage of revenues | 100.00% | 100.00% |
| Smart Boards And Installation [Member] | ||
| Product Information [Line Items] | ||
| Revenue | $ 3,570,212 | |
| Percentage of revenues | 92.00% | 0.00% |
| Installation Services [Member] | ||
| Product Information [Line Items] | ||
| Revenue | $ 286,185 | |
| Percentage of revenues | 7.00% | 0.00% |
| Clean Air Technology Products [Member] | ||
| Product Information [Line Items] | ||
| Revenue | $ 24,179 | $ 256,863 |
| Percentage of revenues | 1.00% | 100.00% |
Schedule of Sales Concentrations Percentage (Details) - Customer Concentration Risk [Member] - Revenue Benchmark [Member] |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Customer A [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 16.00% | 0.00% |
| Customer B [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 15.00% | 0.00% |
| Customer C [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 14.00% | 0.00% |
| Customer [Member] | ||
| Product Information [Line Items] | ||
| Concentration risk percentage | 45.00% | 0.00% |
Schedule of Anti Dilutive Equity Securities Outstanding (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2022
shares
| |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Total | 12,794,350,185 |
| Series A Preferred Stock [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Total | 287,500,000 |
| Series B Preferred Stock [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Total | 6,839,982,000 |
| Series C Preferred Stock [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Total | 1,000,000 |
| Convertible Debt [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Total | 3,928,755,090 |
| Warrant [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Total | 1,737,113,095 |
Schedule of Anti Dilutive Equity Securities Outstanding (Details) (Parenthetical) |
6 Months Ended |
|---|---|
|
Jun. 30, 2022
shares
| |
| Series A Preferred Stock [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Conversion of convertible debt, shares | 50 |
| Series B Preferred Stock [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Conversion of convertible debt, shares | 1,000 |
| Series C Preferred Stock [Member] | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
| Conversion of convertible debt, shares | 1 |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Property, Plant and Equipment [Line Items] | |||||
| Goodwill | $ 806,854 | $ 806,854 | |||
| Impairment expense | 0 | $ 0 | $ 0 | $ 0 | |
| Percentage of revenues | 100.00% | 100.00% | |||
| Cash equivalents | 0 | $ 0 | 0 | ||
| FDIC insured amount | 250,000 | 250,000 | |||
| Allowance for doubtful accounts | 0 | 0 | 0 | ||
| Bad debt expense | 0 | 0 | 0 | $ 0 | |
| Impairment expense related to inventory | 0 | 0 | 0 | 0 | |
| Impairment expense related to long lived assets | 0 | 0 | 0 | 0 | |
| Impairment expense related to property and equipment | 0 | 0 | 0 | 0 | |
| Deferred revenue | 825,340 | 825,340 | 11,100 | ||
| Interest and penalties related to uncertain income tax positions | 0 | 0 | |||
| Marketing and advertising costs | 10,684 | $ 0 | $ 23,464 | $ 0 | |
| Common stock authorized to settle exercise of common stock equivalents | 1,000,000,000 | ||||
| Minimum [Member] | |||||
| Property, Plant and Equipment [Line Items] | |||||
| Estimated useful lives | 1 year | ||||
| Maximum [Member] | |||||
| Property, Plant and Equipment [Line Items] | |||||
| Estimated useful lives | 7 years | ||||
| SMARTSolution Technologies, L.P. [Member] | |||||
| Property, Plant and Equipment [Line Items] | |||||
| Goodwill | $ 806,854 | $ 806,854 | $ 0 | ||
Liquidity, Going Concern and Management’s Plans (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
| Net loss | $ 1,084,752 | $ 1,718,285 | $ (1,182,709) | $ 2,389,230 | $ 2,803,037 | $ 1,206,521 | ||
| Net cash used for operating activities | 607,545 | 918,827 | ||||||
| Accumulated deficit | 23,048,182 | 23,048,182 | $ 20,245,145 | |||||
| Stockholders equity | 919,511 | $ (65,241) | $ (1,294,823) | $ 63,886 | 919,511 | $ (1,294,823) | 310,227 | $ 164,439 |
| Working capital deficit | 1,418,496 | 1,418,496 | ||||||
| Cash | $ 233,688 | $ 233,688 | $ 94,224 | |||||
Summary of Loans Receivable Advances Related Party (Details) - Loans Payable Related Party [Member] - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Short-Term Debt [Line Items] | ||
| Issuance dates of advances | 2021 | |
| Maturity date | Due on Demand | |
| Interest rate | 20.00% | |
| Collateral | Unsecured | |
| Beginning balance | $ 53,732 | |
| Advances | 3,264 | 53,732 |
| Ending balance | $ 56,996 | $ 53,732 |
Schedule of Property and Equipment (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Property, Plant and Equipment [Line Items] | ||
| Property and Equipment gross | $ 268,617 | |
| Accumulated depreciation | 127,991 | |
| Total property and equipment - net | $ 140,626 | |
| Minimum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Propety and Equipment Estimated Useful Lives | 1 year | |
| Maximum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Propety and Equipment Estimated Useful Lives | 7 years | |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and Equipment gross | $ 178,278 | |
| Propety and Equipment Estimated Useful Lives | 40 years | |
| Vehicles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and Equipment gross | $ 64,563 | |
| Vehicles [Member] | Minimum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Propety and Equipment Estimated Useful Lives | 5 years | |
| Vehicles [Member] | Maximum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Propety and Equipment Estimated Useful Lives | 10 years | |
| Furniture and Fixtures [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and Equipment gross | $ 19,595 | |
| Propety and Equipment Estimated Useful Lives | 10 years | |
| Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and Equipment gross | $ 5,000 | |
| Propety and Equipment Estimated Useful Lives | 5 years | |
| Computer Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and Equipment gross | $ 1,181 | |
| Propety and Equipment Estimated Useful Lives | 5 years |
Property and Equipment (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Feb. 28, 2022 |
|
| Restructuring Cost and Reserve [Line Items] | |||||
| Depreciation expense | $ 1,735 | $ 0 | $ 2,314 | $ 0 | |
| Property and equipment | $ 142,940 | $ 142,940 | |||
| SMARTSolution Technologies, L.P. [Member] | |||||
| Restructuring Cost and Reserve [Line Items] | |||||
| Property and equipment | $ 142,940 | ||||
Schedule of Investments (Details) - USD ($) |
6 Months Ended | 12 Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|||||||||||||||||||
| Net Investment Income [Line Items] | ||||||||||||||||||||
| Marketable securities, fair value | $ 228,427 | $ 765,463 | ||||||||||||||||||
| Marketable securities, cost | 807,463 | 1,200,500 | ||||||||||||||||||
| Marketable securities, unrealized gains | ||||||||||||||||||||
| Marketable securities, unrealized losses | (579,036) | (435,037) | ||||||||||||||||||
| Himalaya Technologies Inc [Member] | ||||||||||||||||||||
| Net Investment Income [Line Items] | ||||||||||||||||||||
| Marketable securities, fair value | $ 12,220 | [1] | $ 12,220 | [2] | ||||||||||||||||
| Acquisition Date | 2021 | [1] | 2021 | [2] | ||||||||||||||||
| Investment Owned, Balance, Shares | 150,000 | [1] | 150,000 | [2] | ||||||||||||||||
| Share Price | $ 0.08 | [1] | $ 0.08 | [2] | ||||||||||||||||
| Mobicard, Inc. (PTOP) [Member] | ||||||||||||||||||||
| Net Investment Income [Line Items] | ||||||||||||||||||||
| Marketable securities, fair value | $ 84,000 | [3] | $ 147,000 | [4] | ||||||||||||||||
| Acquisition Date | 2019 | [3] | 2019 | [4] | ||||||||||||||||
| Investment Owned, Balance, Shares | 210,000,000 | [3] | 210,000,000 | [4] | ||||||||||||||||
| Share Price | $ 0.0004 | [3] | $ 0.0007 | [4] | ||||||||||||||||
| GenBio Inc [Member] | ||||||||||||||||||||
| Net Investment Income [Line Items] | ||||||||||||||||||||
| Marketable securities, fair value | $ 65,000 | [5] | $ 25,000 | [6] | ||||||||||||||||
| Acquisition Date | 2021 and 2022 | [5] | 2021 | [6] | ||||||||||||||||
| Investment Owned, Balance, Shares | 50,000 | [5] | 25,000 | [6] | ||||||||||||||||
| Share Price | $ 1.00 | [5] | $ 1.00 | [6] | ||||||||||||||||
| Securities Investment [Member] | ||||||||||||||||||||
| Net Investment Income [Line Items] | ||||||||||||||||||||
| Marketable securities, fair value | $ 67,207 | [7] | $ 581,243 | [8] | ||||||||||||||||
| ||||||||||||||||||||
Schedule of Investments (Details) (Parenthetical) - Himalaya Technologies Inc [Member] - shares |
12 Months Ended | |
|---|---|---|
Jul. 31, 2021 |
Dec. 31, 2021 |
|
| Stock issued for conversion, shares | 150,000 | 1,000,000 |
| Series B Preferred Stock [Member] | ||
| Stock issued for conversion, shares | 150,000 |
Investments (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2021 |
Jul. 31, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|||||||
| Shares value | $ 176,000 | $ 250,000 | |||||||||||
| Marketable securities | $ 807,463 | $ 1,200,500 | |||||||||||
| Chief Executive Officer [Member] | |||||||||||||
| Marketable securities | 1,007,500 | ||||||||||||
| GenBio Inc [Member] | |||||||||||||
| Share price | $ 1 | ||||||||||||
| Value of shares invested | $ 25,000 | $ 40,000 | $ 25,000 | ||||||||||
| Number of shares issued for consideration | 25,000 | 40,000 | 25,000 | ||||||||||
| Share price | $ 1 | $ 1 | |||||||||||
| Peer to Peer Inc [Member] | |||||||||||||
| Stock issued for conversion, shares | 210,000,000 | ||||||||||||
| Share price | $ 0.00070 | $ 0.0023 | |||||||||||
| Shares value | $ 147,000 | $ 483,000 | |||||||||||
| Peer to Peer Inc [Member] | Preferred Class B [Member] | |||||||||||||
| Number of shares issued during period | 400,000 | ||||||||||||
| Kanab Corp [Member] | |||||||||||||
| Share price | $ 0.0122 | ||||||||||||
| Shares value | $ 12,220 | ||||||||||||
| Number of shares received for services | 1,000,000 | ||||||||||||
| Himalaya Technologies Inc [Member] | |||||||||||||
| Stock issued for conversion, shares | 150,000 | 1,000,000 | |||||||||||
| Share price | $ 0.08 | [1] | $ 0.08 | [2] | |||||||||
| Equity Method Investment, Quoted Market Value | $ 12,220 | ||||||||||||
| |||||||||||||
Schedule of Convertible Notes Payable (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Short-Term Debt [Line Items] | |||
| Less: unamortized debt discount | $ 352,692 | ||
| Conversion of accrued interest to note | $ 16,206 | ||
| Convertible Notes Payable One [Member] | |||
| Short-Term Debt [Line Items] | |||
| Issuance Dates of Convertible Notes | June 2021 - January 2022 | ||
| Maturity dates of convertible notes | April 2022 - January 2023 | ||
| Debt instrument, interest rate | 10.00% | ||
| Debt instrument, default interest rate | 24.00% | ||
| Debt instrument, collateral | Unsecured | ||
| Debt instrument convertible conversion rate | 0.001 or 60% of the average of the two (2) lowest prices in the prior 20 day period | ||
| Balance - December 31, 2021 | $ 380,000 | ||
| Conversion of debt to common stock | (55,000) | ||
| Proceeds from issuance of notes | 335,000 | 380,000 | |
| Prepayment of convertible note in cash | |||
| Ending Balance | 676,206 | 380,000 | |
| Less: unamortized debt discount | |||
| Balance | |||
| Conversion of accrued interest to note | $ 16,206 | ||
| Convertible Notes Payable Two [Member] | |||
| Short-Term Debt [Line Items] | |||
| Issuance Dates of Convertible Notes | September 2021 | ||
| Maturity dates of convertible notes | September 2022 | ||
| Debt instrument, interest rate | 12.00% | ||
| Debt instrument, default interest rate | 22.00% | ||
| Debt instrument, collateral | Unsecured | ||
| Debt instrument convertible conversion rate | 61% of the average of the two (2) lowest prices in the prior 20 day period | ||
| Balance - December 31, 2021 | $ 43,750 | ||
| Conversion of debt to common stock | (43,750) | ||
| Proceeds from issuance of notes | 43,750 | ||
| Prepayment of convertible note in cash | |||
| Ending Balance | 43,750 | ||
| Less: unamortized debt discount | |||
| Balance | |||
| Convertible Notes Payable Three [Member] | |||
| Short-Term Debt [Line Items] | |||
| Issuance Dates of Convertible Notes | October 2021 - January 2022 | ||
| Maturity dates of convertible notes | October 2022 - January 2023 | ||
| Debt instrument, interest rate | 12.00% | ||
| Debt instrument, default interest rate | 22.00% | ||
| Debt instrument, collateral | Unsecured | ||
| Debt instrument convertible conversion rate | 61% of the average of the two (2) lowest prices in the prior 20 day period | ||
| Balance - December 31, 2021 | $ 78,750 | ||
| Conversion of debt to common stock | |||
| Proceeds from issuance of notes | 43,750 | 78,750 | |
| Prepayment of convertible note in cash | |||
| Ending Balance | 122,500 | 78,750 | |
| Less: unamortized debt discount | |||
| Balance | |||
| Convertible Notes Payable Four [Member] | |||
| Short-Term Debt [Line Items] | |||
| Issuance Dates of Convertible Notes | 2019 - 2020 | ||
| Maturity dates of convertible notes | 2019 - 2021 | ||
| Debt instrument, default interest rate | 22.00% | ||
| Debt instrument, collateral | Unsecured | ||
| Balance - December 31, 2021 | 226,186 | 226,186 | |
| Conversion of debt to common stock | (483,436) | ||
| Proceeds from issuance of notes | 372,250 | ||
| Prepayment of convertible note in cash | (115,000) | ||
| Ending Balance | |||
| Less: unamortized debt discount | |||
| Balance | |||
| Convertible Notes Payable Four [Member] | Minimum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt instrument, interest rate | 10.00% | ||
| Convertible Notes Payable Four [Member] | Maximum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt instrument, interest rate | 12.00% | ||
| Convertible Notes Payable [Member] | |||
| Short-Term Debt [Line Items] | |||
| Balance - December 31, 2021 | $ 502,500 | $ 226,186 | 226,186 |
| Conversion of debt to common stock | (98,750) | (483,436) | |
| Proceeds from issuance of notes | 378,750 | 874,750 | |
| Prepayment of convertible note in cash | (115,000) | ||
| Ending Balance | 798,706 | 502,500 | |
| Less: unamortized debt discount | (252,353) | (413,195) | |
| Balance | 546,353 | $ 89,305 | |
| Conversion of accrued interest to note | $ 16,206 | ||
Schedule of Convertible Note Payable Related Party (Details) - Convertible Debt [Member] |
6 Months Ended | |||||
|---|---|---|---|---|---|---|
|
Jun. 30, 2022
USD ($)
| ||||||
| Debt Instrument [Line Items] | ||||||
| Issuance Date of Convertible Note | Mar. 31, 2022 | |||||
| Maturity date of convertible note | Sep. 30, 2022 | |||||
| Interest Rate | 11.50% | |||||
| Default Interest Rate | 0.00% | |||||
| Debt Instrument, Collateral Fee | [1] | |||||
| Debt Conversion, Converted Instrument, Rate | [2] | |||||
| Beginning Balance | ||||||
| Proceeds from issuance of note | 195,000 | |||||
| Repayments | (32,245) | |||||
| Balance | $ 162,755 | |||||
| ||||||
Schedule of Convertible Note Payable Related Party (Details) (Parenthetical) - Convertible Debt [Member] |
6 Months Ended |
|---|---|
|
Jun. 30, 2022
$ / shares
shares
| |
| Debt Instrument [Line Items] | |
| Share price | $ 0.001 |
| Series B Preferred Stock [Member] | |
| Debt Instrument [Line Items] | |
| Preferred Stock, Shares Issued | shares | 200,000 |
| Preferred stock conversion price | $ 1 |
| Common stock conversion basis | 1,000 |
Schedule of Loans Payable - Related Parties (Details) - USD ($) |
6 Months Ended | 12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|||||||
| Short-Term Debt [Line Items] | ||||||||
| Balance - December 31, 2021 | $ 22,714 | $ 3,574 | ||||||
| Proceeds from advances | 19,140 | |||||||
| Debt acquired in SST acquisition | 200,073 | |||||||
| Repayments | (213,678) | |||||||
| Balance - June 30, 2022 | $ 9,109 | 22,714 | ||||||
| Loans Payable Related Party One [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Issuance Date of Loan | [1] | Various | ||||||
| Maturity Date of Convertible Note | [1] | Due on Demand | ||||||
| Interest Rate | [1] | 0.00% | ||||||
| Default Interest Rate | [1] | 0.00% | ||||||
| Collateral | [1] | Unsecured | ||||||
| Conversion Rate | [1] | 0.00% | ||||||
| Balance - December 31, 2021 | [1] | |||||||
| Proceeds from advances | [1] | |||||||
| Debt acquired in SST acquisition | [1] | 200,073 | ||||||
| Repayments | [1] | (200,073) | ||||||
| Balance - June 30, 2022 | [1] | |||||||
| Loans Payable Related Party Two [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Issuance Date of Loan | [2] | Various | ||||||
| Maturity Date of Convertible Note | [2] | Due on Demand | ||||||
| Interest Rate | [2] | 0.00% | ||||||
| Default Interest Rate | [2] | 0.00% | ||||||
| Collateral | [2] | Unsecured | ||||||
| Conversion Rate | [2] | 0.00% | ||||||
| Balance - December 31, 2021 | [2] | $ 5,168 | 3,574 | |||||
| Proceeds from advances | [2] | 1,594 | ||||||
| Debt acquired in SST acquisition | [2] | |||||||
| Repayments | [2] | (101) | ||||||
| Balance - June 30, 2022 | [2] | $ 5,067 | 5,168 | |||||
| Loans Payable Related Party Three [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Issuance Date of Loan | [3] | Various | ||||||
| Maturity Date of Convertible Note | [3] | Due on Demand | ||||||
| Interest Rate | [3] | 0.00% | ||||||
| Default Interest Rate | [3] | 0.00% | ||||||
| Collateral | [3] | Unsecured | ||||||
| Conversion Rate | [3] | 0.00% | ||||||
| Balance - December 31, 2021 | [3] | $ 17,546 | ||||||
| Proceeds from advances | [3] | 17,546 | ||||||
| Debt acquired in SST acquisition | [3] | |||||||
| Repayments | [3] | (13,504) | ||||||
| Balance - June 30, 2022 | [3] | $ 4,042 | $ 17,546 | |||||
| ||||||||
Schedule of Loan Payable Other (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2022
USD ($)
| |
| Short-Term Debt [Line Items] | |
| Repayments of Long-Term Debt | $ (213,678) |
| Loans Payable Other [Member] | |
| Short-Term Debt [Line Items] | |
| Issuance Date of Loan | Apr. 01, 2022 |
| Maturity Date of Loan | Apr. 01, 2023 |
| Interest Rate | 16.00% |
| Default Interest Rate | 0.00% |
| Debt Instrument, Collateral | Unsecured |
| Conversion Rate | 0.00% |
| Beginning Balance | |
| Proceeds from Issuance of Debt | 266,000 |
| Repayments of Long-Term Debt | (61,392) |
| Balance | $ 204,608 |
Schedule of Accounts Receivable Credit Facility (Details) - Revolving Credit Facility [Member] |
6 Months Ended |
|---|---|
|
Jun. 30, 2022
USD ($)
| |
| Line of Credit Facility [Line Items] | |
| Issuance Date of credit facility | Feb. 28, 2022 |
| Maturity Date of credit facility | Feb. 28, 2024 |
| Interest Rate | 11.50% |
| Default Interest Rate | 0.00% |
| Collateral | All assets |
| Beginning Balance | |
| Proceeds from issuance of notes | 3,774,456 |
| Repayments | (3,042,024) |
| Balance | $ 732,432 |
Debt (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|---|
Apr. 19, 2022 |
Feb. 28, 2022 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Debt Instrument [Line Items] | |||||||
| Loss on debt extinguishment | $ (205,691) | $ (231,930) | |||||
| Due to officer | 200,073 | $ 200,073 | |||||
| Credit facility commitment fee description | 2% commitment fee for the establishment of the facility (1% due at funding and 1% due on February 28, 2023); and | ||||||
| Tangible net worth | 350,000 | $ 350,000 | |||||
| Revolving Credit Facility [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Revolving accounts receivable credit facility | $ 1,000,000 | ||||||
| Credit facility interest rate | 85.00% | ||||||
| Credit facility interest rate at period end | 0.40% | ||||||
| Revolving Credit Facility [Member] | Minimum [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Credit facility interest rate | 11.50% | ||||||
| Revolving Credit Facility [Member] | Prime Rate [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Credit facility variable interest rate | 5.25% | ||||||
| Third Parties [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Debt conversion, amount | $ 2,822,118 | ||||||
| Debt conversion, shares issued | 1,396,567,128 | ||||||
| Loss on debt extinguishment | $ 475,199 | ||||||
| Lender [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Accrued interest | 70,050 | 70,050 | |||||
| Loans payable other | $ 266,000 | 266,000 | |||||
| Proceeds from other loans payable | 195,950 | ||||||
| Debt instrument, periodic payment, interest | $ 5,116 | ||||||
| GS Capital [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Modified term of loan | $ 325,000 | ||||||
| Accrued interest | 16,206 | ||||||
| Convertible debt | $ 341,206 | ||||||
| GS Capital [Member] | Extended Maturity [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Maturity date | the maturity date was extended from April 19, 2022 to October 19, 2022 | ||||||
Schedule of Derivative Liabilities at Fair Value (Details) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Minimum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected terms | 3 months 18 days | 3 years |
| Maximum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected terms | 3 years | 5 years |
| Measurement Input, Exercise Price [Member] | Minimum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 0.0001 | 0.0001 |
| Measurement Input, Exercise Price [Member] | Maximum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 0.01 | 0.01 |
| Measurement Input, Price Volatility [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 384 | |
| Measurement Input, Price Volatility [Member] | Minimum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 196 | |
| Measurement Input, Price Volatility [Member] | Maximum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 377 | |
| Measurement Input, Risk Free Interest Rate [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 0.10 | |
| Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 0.73 | |
| Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 2.99 | |
| Measurement Input, Expected Dividend Rate [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected dividend rate | 0 | 0 |
Schedule of Derivative Liabilities (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||||
| Derivative liabilities - December 31, 2021 | $ 1,105,537 | $ 834,230 | $ 834,230 | ||
| Fair value - commitment date | 361,737 | 3,817,678 | |||
| Fair value - mark to market adjustment | 16,825 | (1,682,887) | |||
| Reclassification to APIC for financial instruments that ceased to be derivative liabilities | (425,000) | (1,863,484) | |||
| Gain on debt extinguishment (derivative liabilities - convertible debt) | (100,693) | ||||
| Derivative liabilities - June 30, 2022 | 958,406 | 958,406 | 1,105,537 | ||
| Convertible Debt [Member] | |||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||||
| Derivative liabilities - December 31, 2021 | 330,294 | 834,230 | 834,230 | ||
| Fair value - commitment date | 300,137 | 1,753,013 | |||
| Fair value - mark to market adjustment | 241,711 | (393,465) | |||
| Reclassification to APIC for financial instruments that ceased to be derivative liabilities | (1,863,484) | ||||
| Gain on debt extinguishment (derivative liabilities - convertible debt) | (100,693) | ||||
| Derivative liabilities - June 30, 2022 | 771,449 | 771,449 | 330,294 | ||
| Warrant [Member] | |||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||||
| Derivative liabilities - December 31, 2021 | 775,243 | ||||
| Fair value - commitment date | 61,600 | 2,064,665 | |||
| Fair value - mark to market adjustment | (224,886) | (1,289,422) | |||
| Reclassification to APIC for financial instruments that ceased to be derivative liabilities | (425,000) | ||||
| Gain on debt extinguishment (derivative liabilities - convertible debt) | |||||
| Derivative liabilities - June 30, 2022 | $ 186,957 | $ 186,957 | $ 775,243 | ||
Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) |
Jun. 30, 2022
USD ($)
|
|||
|---|---|---|---|---|
| Business Combination and Asset Acquisition [Abstract] | ||||
| Series B, preferred stock issued on February 28, 2022 (1,000,000 shares) | $ 700,000 | [1] | ||
| Fair value of consideration transferred | 700,000 | |||
| Cash | 218,640 | |||
| Accounts receivable | 608,121 | |||
| Inventory | 1,444,624 | |||
| Property and equipment | 142,940 | |||
| Operating lease - right-of-use asset | 345,229 | |||
| Total assets acquired | 2,759,554 | |||
| Accounts payable and accrued expenses | 814,235 | |||
| Contract liabilities (deferred revenue) | 840,637 | |||
| Loan payable - related party | 200,073 | |||
| Note payable - government - SBA | 150,000 | |||
| Notes payable | 516,234 | |||
| Operating lease liability | 345,229 | |||
| Total liabilities assumed | 2,866,408 | |||
| Total net liabilities assumed | (106,854) | |||
| Goodwill in purchase of Smart Solution Technologies, Inc. | $ 806,854 | |||
| ||||
Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) (Parenthetical) |
Feb. 28, 2022
shares
|
|---|---|
| Business Combination and Asset Acquisition [Abstract] | |
| Business combination recognized identifiable assets acquired and liabilities | 1,000,000 |
Schedule of Business Acquisition Proforma Information (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
$ / shares
shares
| |
| Business Combination and Asset Acquisition [Abstract] | |
| Revenues | $ | $ 3,529,079 |
| Net loss | $ | $ (12,340,554) |
| Loss per share - basic | $ / shares | $ (0.00) |
| Loss per share - diluted | $ / shares | $ (0.00) |
| Weighted average number of shares - basic | shares | 16,511,004,083 |
| Weighted average number of shares - diluted | shares | 16,511,004,083 |
Schedule of Acquisition of Intangible Asset (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Business Acquisition [Line Items] | ||
| Total assets acquired | $ 2,759,554 | |
| Goodwill | 806,854 | |
| Energy Intelligencer Center LLC [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | 1,479,121 | |
| Total assets acquired | 1,165,600 | |
| Goodwill | 313,521 | |
| Energy Intelligencer Center LLC [Member] | Trade Names [Member] | ||
| Business Acquisition [Line Items] | ||
| Total assets acquired | 505,600 | |
| Energy Intelligencer Center LLC [Member] | Software [Member] | ||
| Business Acquisition [Line Items] | ||
| Total assets acquired | 401,000 | |
| Energy Intelligencer Center LLC [Member] | Website [Member] | ||
| Business Acquisition [Line Items] | ||
| Total assets acquired | 259,000 | |
| Energy Intelligencer Center LLC [Member] | Warrant [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | 229,121 | |
| Energy Intelligencer Center LLC [Member] | Series B Preferred Stock [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | 1,250,000 | |
| Energy Intelligencer Center LLC [Member] | Series B1 Preferred Stock [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | ||
| Independence LED Lighting LLC [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | 3,300,000 | |
| Total assets acquired | 2,419,400 | |
| Goodwill | 880,600 | |
| Independence LED Lighting LLC [Member] | Trade Names [Member] | ||
| Business Acquisition [Line Items] | ||
| Total assets acquired | 2,157,800 | |
| Independence LED Lighting LLC [Member] | Software [Member] | ||
| Business Acquisition [Line Items] | ||
| Total assets acquired | ||
| Independence LED Lighting LLC [Member] | Website [Member] | ||
| Business Acquisition [Line Items] | ||
| Total assets acquired | 261,600 | |
| Independence LED Lighting LLC [Member] | Warrant [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | ||
| Independence LED Lighting LLC [Member] | Series B Preferred Stock [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | ||
| Independence LED Lighting LLC [Member] | Series B1 Preferred Stock [Member] | ||
| Business Acquisition [Line Items] | ||
| Fair value of consideration transferred | $ 3,300,000 |
Schedule of Acquisition of Intangible Asset (Details) (Parenthetical) |
6 Months Ended |
|---|---|
|
Jun. 30, 2022
shares
| |
| Warrant [Member] | |
| Business Acquisition [Line Items] | |
| Stock issued during period, shares, purchase of assets | 50,000,000 |
| Series B Preferred Stock [Member] | |
| Business Acquisition [Line Items] | |
| Stock issued during period, shares, purchase of assets | 125,000 |
| Series B1 Preferred Stock [Member] | |
| Business Acquisition [Line Items] | |
| Stock issued during period, shares, purchase of assets | 250,000 |
Schedule of Business Acquisition Proforma Related to Supplement Information (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
| |
| Business Combination and Asset Acquisition [Abstract] | |
| Revenues | $ 890,075 |
| Net loss | $ (8,501,417) |
Acquisition and Pro Forma Financial Information (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 |
Mar. 07, 2021 |
Mar. 06, 2021 |
Feb. 12, 2021 |
Oct. 19, 2020 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Business Acquisition [Line Items] | |||||||||||
| Conversion of preferred Series B shares to common shares, shares | 1,000 | ||||||||||
| Acquisition of goodwill | $ 806,854 | $ 806,854 | |||||||||
| Impairment amount | 0 | $ 0 | 0 | $ 0 | |||||||
| Gain (loss) on sales of assets and asset impairment charges | 1,479,121 | ||||||||||
| Independence LED Lighting LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Acquisition of goodwill | 880,600 | 880,600 | |||||||||
| Gain (loss) on sales of assets and asset impairment charges | 3,300,000 | ||||||||||
| Energy Intelligencer Center LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Acquisition of goodwill | $ 313,521 | $ 313,521 | |||||||||
| SST [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Ownership percentage | 100.00% | ||||||||||
| Purge Virus LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Ownership percentage | 100.00% | ||||||||||
| Common Stock [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Conversion of preferred Series B shares to common shares, shares | 60,000,000 | ||||||||||
| Warrant [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Stock issued during period purchase of assets shares | 50,000,000 | ||||||||||
| Warrant [Member] | Energy Intelligencer Center LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Stock issued during period purchase of assets shares | 50,000,000 | 50,000,000 | |||||||||
| SST [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Brokerage fees | $ 50,000 | ||||||||||
| SST [Member] | Common Stock [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Number of shares issued for consideration | 1,000,000,000 | ||||||||||
| Purge Virus LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Acquisition of goodwill | $ 596,906 | ||||||||||
| Acquisition of intangible assets | $ 225,000 | ||||||||||
| Purge Virus LLC [Member] | Minimum [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Acquisition of intangible assets useful lives | 3 years | ||||||||||
| Purge Virus LLC [Member] | Maximum [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Acquisition of intangible assets useful lives | 10 years | ||||||||||
| IAQ Technologies LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Impairment amount | $ 803,156 | ||||||||||
| Series B Preferred Stock [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Stock issued during period purchase of assets shares | 125,000 | ||||||||||
| Series B Preferred Stock [Member] | Independence LED Lighting LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Stock issued during period purchase of assets shares | 250,000 | ||||||||||
| Stock issued during period value purchase of assets | $ 3,300,000 | ||||||||||
| Series B Preferred Stock [Member] | Energy Intelligencer Center LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Stock issued during period purchase of assets shares | 125,000 | 125,000 | |||||||||
| Stock issued during period value purchase of assets | $ 1,479,121 | $ 1,479,121 | |||||||||
| Series B Preferred Stock [Member] | SST [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Number of shares issued for consideration | 1,000,000 | ||||||||||
| Value of shares invested | $ 700,000 | ||||||||||
| Acquisition share price | $ 0.0007 | ||||||||||
| Series B Preferred Stock [Member] | Purge Virus LLC [Member] | |||||||||||
| Business Acquisition [Line Items] | |||||||||||
| Number of shares issued for consideration | 2,000,000 | ||||||||||
| Value of shares invested | $ 800,000 | ||||||||||
Schedule of Operating Lease Assets and Liabilities (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Commitments and Contingencies Disclosure [Abstract] | |||
| Operating lease - right-of-use asset - non-current | $ 316,460 | ||
| Operating lease liability | $ 321,422 | ||
| Weighted-average remaining lease term (years) | 4 years 8 months 1 day | ||
| Weighted-average discount rate | 8.00% | ||
| Amortization of right-of-use operating lease asset | $ 28,769 | ||
| Lease liability expense in connection with obligation repayment | 11,193 | ||
| Total operating lease costs | 39,962 | ||
| Operating cash outflows from operating lease (obligation payment) | 23,807 | ||
| Right-of-use asset obtained in exchange for new operating lease liability | $ 345,229 | ||
Schedule of Future Minimum Lease Payments (Details) - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| 2022 (6 Months) | $ 42,000 | |
| 2023 | 84,000 | |
| 2024 | 84,000 | |
| 2025 | 84,000 | |
| 2026 | 84,000 | |
| 2027 | 7,000 | |
| Total undiscounted cash flows | 385,000 | |
| Less: amount representing interest | (63,578) | |
| Present value of operating lease liability | 321,422 | |
| Less: current portion of operating lease liability | (60,472) | |
| Long-term operating lease liability | $ 260,950 |
Commitments and Contingencies (Details Narrative) |
1 Months Ended |
|---|---|
|
Feb. 28, 2022
USD ($)
| |
| Commitments and Contingencies Disclosure [Abstract] | |
| Lease term | 5 years |
| Lease and rental expense | $ 7,000 |
Stockholders’ Deficit (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Class of Stock [Line Items] | ||||||||
| Common stock, par value | $ 0 | $ 0 | $ 0 | |||||
| Warrants converted | 750,000,000 | 750,000,000 | ||||||
| Stock Issued for services value | $ 535,000 | $ 99,640 | ||||||
| Conversion of convertible securities value | 563,643 | |||||||
| Debt extinguishment | $ (205,691) | $ (231,930) | ||||||
| Stock issued during period, value, new issues | $ 176,000 | $ 250,000 | ||||||
| Stock issued during period, value, acquisitions | 700,000 | |||||||
| Stock issued for services | $ 1,766,014 | |||||||
| Independence LED LLC and Energy Intelligence Center LLC [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Stock issued during period, shares, acquisitions | 375,000 | |||||||
| Stock issued during period, value, acquisitions | $ 4,550,000 | |||||||
| Convertible Debt [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Conversion of convertible securities share | 1,396,567,128 | |||||||
| Conversion of convertible securities value | $ 2,822,218 | |||||||
| Shares issued | 301,448,152 | |||||||
| Interest payable | $ 104,368 | $ 104,368 | ||||||
| Converted instrument value | 310,059 | |||||||
| Debt extinguishment | $ 205,691 | $ 475,199 | ||||||
| SST [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Ownership interest percentage | 100.00% | |||||||
| Minimum [Member] | Convertible Debt [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Shares issued, price per share | $ 0.0007 | $ 0.0007 | ||||||
| Maximum [Member] | Convertible Debt [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Shares issued, price per share | $ 0.0015 | $ 0.0015 | ||||||
| Common Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Conversion of convertible securities share | 905,435,038 | |||||||
| Common stock, shares authorized | 20,000,000,000 | 20,000,000,000 | ||||||
| Common stock, par value | $ 0 | $ 0 | ||||||
| Voting rights | Voting at 1 vote per share | |||||||
| Stock Issued for services shares | 6,550,000 | 195,321,508 | ||||||
| Stock Issued for services value | $ 99,640 | $ 556,664 | ||||||
| Number of shares issued during period | 75,000,000 | 65,000,000 | ||||||
| Conversion of convertible securities value | $ 563,643 | |||||||
| Stock issued during period, value, new issues | $ 176,000 | 250,000 | ||||||
| Stock issued during period, value, acquisitions | ||||||||
| Stock Issued for cancellation shares | 125,000 | |||||||
| Stock Issued for cancellation shares | $ 125,000 | |||||||
| Common Stock [Member] | Cash [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of shares issued during period | 527,500,000 | |||||||
| Stock issued during period, value, new issues | $ 1,000,000 | |||||||
| Common Stock [Member] | Convertible Promissory Notes [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of shares issued during period | 10,000,000 | |||||||
| Stock issued during period, value, new issues | $ 20,000 | |||||||
| Common Stock [Member] | SST [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Conversion of convertible securities share | 1,000,000,000 | |||||||
| Shares issued, price per share | $ 0.0007 | |||||||
| Conversion of convertible securities value | $ 700,000 | |||||||
| Warrant [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Warrant cashless exercise | 645,833,333 | 645,833,333 | ||||||
| Warrants converted | 750,000,000 | 750,000,000 | ||||||
| Net effect on stockholders equity | $ 0 | $ 0 | ||||||
| Shares issued | 645,833,333 | |||||||
| Convertible Preferred Stock Class A [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Conversion of convertible securities share | 50 | 50 | ||||||
| Incremental Common Shares Attributable to Dilutive Effect of Share-Based Payment Arrangements | 287,500,000 | 287,500,000 | ||||||
| Preferred stock voting rights | 50 votes for each share held | 50 votes for each share held | ||||||
| Convertible Preferred Stock Class B [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Conversion of convertible securities share | 1,000 | 1,000 | ||||||
| Incremental Common Shares Attributable to Dilutive Effect of Share-Based Payment Arrangements | 6,839,982,000 | 5,249,982,000 | ||||||
| Preferred stock voting rights | 1,000 votes for each share held | 1,000 votes for each share held | ||||||
| Convertible Preferred Stock Class C [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Conversion of convertible securities share | 1 | 1 | ||||||
| Incremental Common Shares Attributable to Dilutive Effect of Share-Based Payment Arrangements | 1,000,000 | 1,000,000 | ||||||
| Preferred stock voting rights | 1 vote for each share | 1 vote for each share | ||||||
| Convertible Preferred Stock Class A [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares authorized | 78,000,000 | 78,000,000 | 78,000,000 | |||||
| Preferred stock, shares issued | 5,750,000 | 5,750,000 | 5,750,000 | |||||
| Preferred stock, shares outstanding | 5,750,000 | 5,750,000 | 5,750,000 | |||||
| Preferred stock stated value | $ 0 | $ 0 | $ 0 | |||||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
| Preferred stock, liquidation preference, value | $ 0 | $ 0 | $ 0 | |||||
| Preferred stock, redemption amount | $ 0 | $ 0 | $ 0 | |||||
| Convertible Preferred Stock Class B [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | |||||
| Preferred stock, shares issued | 6,839,982 | 6,839,982 | 5,249,982 | |||||
| Preferred stock, shares outstanding | 6,839,982 | 6,839,982 | 5,249,982 | |||||
| Preferred stock stated value | $ 0 | $ 0 | $ 0 | |||||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
| Preferred stock, liquidation preference, value | $ 0 | $ 0 | $ 0 | |||||
| Preferred stock, redemption amount | $ 0 | $ 0 | 0 | |||||
| Convertible Preferred Stock Class B [Member] | Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Net effect on stockholders equity | $ 0 | |||||||
| Convertible Preferred Stock Class C [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | |||||
| Preferred stock, shares issued | 1,000,000 | 1,000,000 | 1,000,000 | |||||
| Preferred stock, shares outstanding | 1,000,000 | 1,000,000 | 1,000,000 | |||||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
| Preferred stock, liquidation preference, value | $ 0 | $ 0 | $ 0 | |||||
| Preferred stock, redemption amount | $ 0 | $ 0 | $ 0 | |||||
| Series B Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Stock Issued for services shares | 650,000 | |||||||
| Stock Issued for services value | $ 535,000 | |||||||
| Preferred stock, converted basic | 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. | |||||||
| Series B Preferred Stock [Member] | Minimum [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Shares issued, price per share | $ 0.0008 | $ 0.0008 | ||||||
| Series B Preferred Stock [Member] | Maximum [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Shares issued, price per share | $ 0.0009 | $ 0.0009 | ||||||
| Series B Preferred Stock [Member] | SST [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of shares issued during period | 1,000,000 | |||||||
| Preferred Class B [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares issued | 6,839,982 | 6,839,982 | 5,249,982 | |||||
| Preferred stock, shares outstanding | 6,839,982 | 6,839,982 | 5,249,982 | |||||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
| Net effect on stockholders equity | $ 0 | $ 0 | ||||||
| Conversion of stock | 60,000,000 | |||||||
| Conversion of Stock, Shares Converted | 60,000 | 335,000 | ||||||
| Preferred Class B [Member] | Cash [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of shares issued during period | 175,000 | |||||||
| Stock issued during period, value, new issues | $ 449,279 | |||||||
| Gain loss on cancellation | $ 449,279 | |||||||
| Preferred Class B [Member] | Common Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Conversion of Stock, Shares Converted | 335,000,000 | |||||||
| Preferred Class B [Member] | Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Stock Issued for services shares | 650,000 | |||||||
| Stock Issued for services value | $ 65 | |||||||
| Conversion of convertible securities value | ||||||||
| Stock issued during period, value, new issues | ||||||||
| Stock issued during period, shares, acquisitions | 1,000,000 | |||||||
| Stock issued during period, value, acquisitions | $ 100 | |||||||
| Stock issued for services, shares | 571,167 | |||||||
| Preferred Class A [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares issued | 5,750,000 | 5,750,000 | 5,750,000 | |||||
| Preferred stock, shares outstanding | 5,750,000 | 5,750,000 | 5,750,000 | |||||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
| Preferred Class A [Member] | Cash [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of shares issued during period | 2,750,000 | |||||||
| Stock issued during period, value, new issues | $ 275,000 | |||||||
| Preferred Class A [Member] | Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Stock Issued for services value | ||||||||
| Conversion of convertible securities value | ||||||||
| Stock issued during period, value, new issues | ||||||||
| Stock issued during period, value, acquisitions | ||||||||
Schedule of Warrants Activity (Details) - USD ($) |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Warrants | ||||
| Number of Warrants, Outstanding, Balance | 2,002,113,095 | 713,571,428 | 713,571,428 | |
| Weighted Average Exercise Price, Outstanding, Balance | $ 0.0016 | $ 0.0011 | $ 0.0011 | |
| Weighted Average Remaining Contractual Term (Years), Outstanding | 1 year 11 months 4 days | 2 years 4 months 17 days | 2 years 11 months 1 day | |
| Aggregate Intrinsic Value, Outstanding | $ 450,000 | $ 149,500 | $ 149,500 | |
| Number of Warrants, Granted | 485,000,000 | 1,288,541,667 | ||
| Weighted Average Exercise Price, Granted | $ 0.0012 | $ 0.0018 | ||
| Number of Warrants, Exercised | (750,000,000) | |||
| Weighted Average Exercise Price, Exercised | $ 0.0001 | |||
| Number of Warrants, Cancelled/Forfeited | ||||
| Weighted Average Exercise Price, Cancelled/Forfeited | ||||
| Number of Warrants, Outstanding, Balance | 2,002,113,095 | 2,002,113,095 | ||
| Weighted Average Exercise Price, Outstanding, Balance | $ 0.0021 | $ 0.0016 | $ 0.0011 | |
| Aggregate Intrinsic Value, Outstanding | $ 450,000 | $ 149,500 | ||
| Number of Warrants,Exercisable, Balance | 1,737,113,095 | 2,002,113,095 | ||
| Weighted Average Exercise Price, Exercisable, Balance | $ 0.0021 | $ 0.0016 | ||
| Weighted Average Remaining Contractual Term (Years), Exercisable | 1 year 11 months 4 days | 2 years 4 months 17 days | 2 years 4 months 17 days | |
| Aggregate Intrinsic Value, Exercisable | $ 450,000 | |||
| Weighted Average Remaining Contractual Term (Years), Outstanding | 2 years 4 months 17 days | |||
| Number of Warrants,Exercisable, Balance | 2,002,113,095 | |||
| Weighted Average Exercise Price, Exercisable, Balance | $ 0.0016 | |||
| Aggregate Intrinsic Value, Exercisable | $ 450,000 | |||
| Number of Warrants, Outstanding, Balance | 1,737,113,095 | 2,002,113,095 | 713,571,428 | |
Summary of Fair Value of Warrants (Details) - $ / shares |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Employee Compensation [Member] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Exercise price | $ 0.001 | $ 0.002 |
| Expected volatility | 375.00% | 384.00% |
| Risk-free interest rate | 1.62% | 0.00% |
| Expected term (in years) | 3 years | 3 years |
| Expected dividend rate | 0.00% | 0.00% |
| Board Advisory Compensation [Member] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Exercise price | $ 0.001 | |
| Expected volatility | 374.00% | |
| Risk-free interest rate | 1.76% | |
| Expected term (in years) | 3 years | |
| Expected dividend rate | 0.00% |
Warrants (Details Narrative) - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Warrants granted for services | $ 209,713 | ||
| Warrants converted | 750,000,000 | ||
| Warrant [Member] | |||
| Shares issued in conversion | 645,833,333 | ||
| Warrants converted | 750,000,000 | ||
| Net effect on stockholders equity | $ 0 | ||
| Convertible Debt Issuances [Member] | |||
| Warrants granted | 165,000,000 | 1,108,541,667 | |
| Warrants grant period | 3 years | 3 years | |
| Share Price | $ 0.0001 | ||
| Convertible Debt Issuances [Member] | Minimum [Member] | |||
| Share Price | $ 0.0001 | ||
| Convertible Debt Issuances [Member] | Maximum [Member] | |||
| Share Price | $ 0.0012 | ||
| Employee Compensation [Member] | |||
| Warrants granted | 300,000,000 | 180,000,000 | |
| Warrants grant period | 3 years | 3 years | |
| Warrants granted for services | $ 209,713 | $ 997,637 | |
| Board Advisory Compensation [Member] | |||
| Warrants granted | 20,000,000 | ||
| Warrants grant period | 3 years | ||
| Warrants granted for services | $ 13,981 | ||