UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
For the quarterly period ended March 31,June 30, 2023
or
☐
For the transition period from __________ to __________
Commission File No.:
(Exact name of registrant as specified in its charter) |
Wyoming | 26-4144571 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
99 Wall Street, Suite 891, New York City, New York 10005 |
(Address of principal executive offices) |
(212) 398-0002 |
(Registrant’s telephone number, including area code) |
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 and Section 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 files 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer | ||
Non-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 12-b2 of the Exchange Act). Yes
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock | BOMO | OTC Markets - Other |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 22,August 25, 2023, there were 31,297,119,46233,360,984,221 shares of Common Stock, par value $0.00001 per shares outstanding.
Company Letterhead
August 28, 2023
BF Borgers CPA PC
5400 W. Cedar Avenue
Lakewood, CO 80226
We are providing this letter in connection with your review of the Interim Financial Information of Bowmo, Inc. as of March 31,June 30, 2023, for the purpose of determining whether any material modifications should be made to the interim financial information for it to conform with accounting principles generally accepted in the United States of America. We confirm that we are responsible for the fair presentation of the interim financial information in conformity with generally accepted accounting principles. We are also responsible for establishing and maintaining effective internal control over financial reporting.
Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.
We confirm, to the best of our knowledge and belief, as of May 31,August 28, 2023, the following representations made to you during your review.
1) | The interim financial information referred to above has been prepared and presented in conformity with generally accepted accounting principles applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The interim financial information has been prepared on a basis consistent with prior interim periods and years and includes all disclosures necessary and required to be included by the laws and regulations to which the Company is subject. |
2) | We have designed our internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of interim financial information for external purposes in accordance with generally accepted accounting principles. |
3) | We have disclosed to you all deficiencies in the design or operation of internal control over financial reporting identified as part of our evaluation, including separately disclosing to you all such deficiencies that we believe to be significant deficiencies or material weaknesses in internal control over financial reporting. |
4) |
5) | We have made available to you all— |
a) | Financial records and related data. |
b) | Minutes of the meetings of stockholders, directors, and committees of directors, or summaries of actions of recent meetings for which minutes have not yet been prepared. All significant board and committee actions are included in the summaries. |
6) | There have been no communications from the SEC or other regulatory agencies regarding noncompliance with, or deficiencies, in financial reporting practices. |
7) | There are no material transactions that have not been properly recorded in the accounting records underlying the interim financial information. |
8) | We are not aware of any uncorrected financial statement misstatements. |
9) | We acknowledge our responsibility for the design and implementation of programs and controls to prevent and detect fraud. |
10) | We have no knowledge of any fraud or suspected fraud affecting the Company involving: |
a) | Management; |
b) | Employees who have significant roles in internal control over financial reporting; or |
c) | Others where the fraud could have a material effect on the interim financial information. |
11) | We have no knowledge of any allegations of fraud or suspected fraud affecting the Company received in communications from employees, former employees, analysts, regulators, short sellers, or others. |
12) | The Company has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities. |
13) | The following have been properly recorded or disclosed in the interim financial information: |
a) | Related-party transactions, including sales, purchases, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. |
b) | Guarantees, whether written or oral, under which the Company is contingently liable. |
c) | Significant estimates and material concentrations known to management that are required to be disclosed in accordance with the AICPA Statement of Position 94-6, Disclosure of Certain Significant Risks and |
There are no: |
| a) | Violations or possible violations of laws or regulations whose effects should be considered for disclosure in the interim financial information or as a basis for recording a loss contingency. |
b) | Unasserted claims or assessments that are probable of assertion and must be disclosed in accordance with FASB ASC 450. |
c) | Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by FASB ASC 450. |
15) | The Company has appropriately reconciled its general ledger accounts to their related supporting information. All reconciling items considered to be material were identified and included on the reconciliations and were appropriately adjusted in the interim financial information. All intracompany (and intercompany) accounts have been eliminated or appropriately measured and considered for disclosure in the interim financial information. |
16) | The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets, nor has any asset been pledged as collateral. j |
17) | The company has complied with all aspects of contractual agreements that would have a material effect on the interim financial information in the event of noncompliance. |
18) | The company is not aware of any violation of the Foreign Corrupt Practices act. |
19) | Our plans with respect to alleviating the adverse financial conditions that caused you to express substantial doubt about the |
a) | Debt and/or equity placements and continued loans and advances from shareholders and those associated with the company. |
To the best of our knowledge and belief, no events have occurred subsequent to the balance sheet date and through the date of this letter that would require adjustment to or disclosure in the interim financial information referred to above.
Bowmo, Inc.
| /s/ Michael Lakshin | |
| Name: Michael Lakshin | |
| Title: President and Chairman of the Board |
Table of Contents
i
PART I – FINANCIAL INFORMATION
2 | |
3 | |
4 | |
5 | |
6 |
March 31, 2023 | December 31, 2022 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 87,616 | $ | 167,103 | ||||
Accounts receivable | - | 15,542 | ||||||
Prepaid expenses and other current assets | 858 | 858 | ||||||
Total Current Assets | 88,474 | 183,503 | ||||||
Total Assets | $ | 88,474 | $ | 183,503 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 952,859 | $ | 813,378 | ||||
Accrued expenses | 200,000 | 200,286 | ||||||
Accrued interest | 331,986 | 366,622 | ||||||
Accrued officer compensation | 1,113,211 | 1,074,361 | ||||||
Loans payable, current portion | 113,006 | 113,006 | ||||||
Loans payable, related party | 190,500 | 190,500 | ||||||
Convertible Notes, net of debt discount | 607,222 | 669,581 | ||||||
Put premium on stock settled debt | 199,684 | 219,687 | ||||||
Derivative liability | 936,636 | 2,172,250 | ||||||
Deferred revenue | - | - | ||||||
Total Current Liabilities | 4,645,104 | 5,819,671 | ||||||
Loans payable, net of current portion | 260,494 | 260,494 | ||||||
Total Liabilities | 4,905,598 | 6,080,165 | ||||||
Commitments and Contingencies | ||||||||
STOCKHOLDERS’ DEFICIT: | ||||||||
Series A Preferred stock, 3,500,000 shares authorized, par value $0.01; 3,381,520 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 33,815 | 33,815 | ||||||
Series B Preferred stock, 10,000 shares authorized, par value $0.01; 5,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 50 | 50 | ||||||
Series C Preferred stock, 10,000,000 shares authorized, par value $0.01; 5,000,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 50,000 | 50,000 | ||||||
Series D Preferred stock, 125,000 shares authorized, par value $0.0001; 125,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 12 | 12 | ||||||
Series E Preferred stock to be issued | 166,331 | 166,331 | ||||||
Series F Preferred stock, 101 shares authorized, par value $0.0001; 101 shares issued and outstanding as of March 31 ,2023 and December 31, 2022 | - | - | ||||||
Series G Preferred stock, 1,000,000 shares authorized, par value $0.0001; 1,000,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 1,000 | 1,000 | ||||||
Series AA Preferred stock, 10,000,000 shares authorized, par value $0.0001; No shares issued and outstanding as of March 31, 2023 and December 31, 2022 | - | - | ||||||
Series Super Preferred stock, 10,000,000 shares authorized, par value $0.0001; No shares issued and outstanding as of March 31, 2023 and December 31, 2022 | - | - | ||||||
Common stock 40,000,000,000 shares authorized, $0.00001 par value; 31,297,119,462 and 27,049,736,362 shares issued and outstanding, respectively at March 31, 2023 and December 31, 2022, respectively | 312,971 | 270,497 | ||||||
Common stock to be issued, 2,550,000 shares as of March 31, 2023 and December 31, 2022 | 26 | 26 | ||||||
Treasury stock, at cost – 2,917 shares as of March 31, 2023 and December 31, 2022 | (773,500 | ) | (773,500 | ) | ||||
Additional paid in capital | 4,018,454 | 3,599,032 | ||||||
Accumulated deficit | (8,626,283 | ) | (9,243,925 | ) | ||||
Total Stockholders’ Deficit | (4,817,124 | ) | (5,896,662 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 88,474 | $ | 183,503 | ||||
| June 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 77,745 | $ | 167,103 | ||||
| Accounts receivable | - | 15,542 | ||||||
| Prepaid expenses and other current assets | 858 | 858 | ||||||
| Total Current Assets | 78,603 | 183,503 | ||||||
| Total Assets | $ | 78,603 | $ | 183,503 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 952,860 | $ | 813,378 | ||||
| Accrued expenses | 200,000 | 200,286 | ||||||
| Accrued interest | 329,342 | 366,622 | ||||||
| Accrued officer compensation | 1,207,642 | 1,074,361 | ||||||
| Loans payable, current portion | 308,520 | 113,006 | ||||||
| Loans payable, related party | 254,500 | 190,500 | ||||||
| Convertible notes, net of debt discount | 775,141 | 669,581 | ||||||
| Put premium on stock settled debt | 179,684 | 219,687 | ||||||
| Derivative liability | 1,809,399 | 2,172,250 | ||||||
| Total Current Liabilities | 6,017,088 | 5,819,671 | ||||||
| Loans payable, net of current portion | - | 260,494 | ||||||
| Total Liabilities | 6,017,088 | 6,080,165 | ||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
| Series A Preferred stock, 3,500,000 shares authorized, par value $0.01; 3,381,520 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 33,815 | 33,815 | ||||||
| Series B Preferred stock, 10,000 shares authorized, par value $0.01; 5,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 50 | 50 | ||||||
| Series C Preferred stock, 10,000,000 shares authorized, par value $0.01; 5,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 50,000 | 50,000 | ||||||
| Series D Preferred stock, 125,000 shares authorized, par value $0.0001; 125,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 12 | 12 | ||||||
| Series E Preferred stock to be issued | 166,331 | 166,331 | ||||||
| Series G Preferred stock, 1,000,000 shares authorized, par value $0.0001; 1,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 1,000 | 1,000 | ||||||
| Common stock 40,000,000,000 shares authorized, $0.00001 par value; 32,441,177,421 and 27,049,736,362 shares issued and outstanding, respectively at June 30, 2023 and December 31, 2022, respectively | 324,412 | 270,497 | ||||||
| Common stock to be issued, 2,550,000 shares as of June 30, 2023 and December 31, 2022 | 26 | 26 | ||||||
| Treasury stock, at cost – 2,917 shares as of June 30, 2023 and December 31, 2022 | (773,500 | ) | (773,500 | ) | ||||
| Additional paid in capital | 4,151,380 | 3,599,032 | ||||||
| Accumulated deficit | (9,892,011 | ) | (9,243,925 | ) | ||||
| Total Stockholders’ Deficit | (5,938,485 | ) | (5,896,662 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | 78,603 | $ | 183,503 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
For the three months ended | ||||||||
March 31, 2023 | March 31, 2022 | |||||||
Revenue | $ | 4,476 | $ | 88,667 | ||||
Cost of revenue | - | 27,579 | ||||||
Gross profit | 4,476 | 61,088 | ||||||
Operating expenses: | ||||||||
Compensation expense | 121,314 | 102,268 | ||||||
Consulting fees | 30,000 | - | ||||||
Professional fees | 160,054 | 10,000 | ||||||
General and administrative | 76,581 | 6,327 | ||||||
Total operating expenses | 387,949 | 118,595 | ||||||
Loss from operations | (383,473 | ) | (57,507 | ) | ||||
Other income (expenses): | ||||||||
Interest expense | (269,500 | ) | (5,010 | ) | ||||
Forgiveness of notes payable – PPP loan | - | - | ||||||
Grant income | - | - | ||||||
Gain on new methodology for accounting for debt conversion features | - | - | ||||||
Initial recognition of derivative liability | (32,429 | ) | - | |||||
Change in fair value of derivative liability | 1,303,044 | (1,545 | ) | |||||
Total other income (expenses) | 1,001,115 | (6,555 | ) | |||||
Loss before income taxes | 617,642 | (64,062 | ) | |||||
Provision for income taxes | - | - | ||||||
Net Loss | 617,642 | (64,062 | ) | |||||
Net loss per common share – basic and diluted | $ | - | $ | - | ||||
Weighted average common shares – basic and diluted | 28,158,862,202 | 18,150,000 | ||||||
(Unaudited)
| For the Six Months Ended | For the Three Months Ended | |||||||||||||||
| June 30 | June 30 | June 30 | June 30 | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUES | 4,476 | 149,848 | - | 61,181 | ||||||||||||
| Cost of Revenues | - | 48,470 | - | 20,891 | ||||||||||||
| Gross Profit | 4,476 | 101,378 | - | 40,290 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Compensation expense | 222,119 | 203,285 | 100,805 | 101,017 | ||||||||||||
| Consulting fees | 60,000 | 46,667 | 30,000 | 46,667 | ||||||||||||
| Professional fees | 163,469 | 130,718 | 3,415 | 120,718 | ||||||||||||
| General and administrative expenses | 107,421 | 54,915 | 30,840 | 48,588 | ||||||||||||
| Total Operating Expenses | 553,009 | 435,585 | 165,060 | 316,990 | ||||||||||||
| Loss from Operations | (548,533 | ) | (334,207 | ) | (165,060 | ) | (276,700 | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense | (497,405 | ) | (43,160 | ) | (227,905 | ) | (38,150 | ) | ||||||||
| Gain on new methodology for accounting for debt conversion features | - | 27,856 | - | 27,856 | ||||||||||||
| Initial recognition of derivative liability | (32,429 | ) | - | - | - | |||||||||||
| Change in fair value of derivative liability | 430,281 | (1,545 | ) | (872,763 | ) | - | ||||||||||
| Total Other Income (Expense) | (99,553 | ) | (16,849 | ) | (1,100,668 | ) | (10,294 | ) | ||||||||
| Net loss | $ | (648,086 | ) | $ | (351,056 | ) | $ | (1,265,728 | ) | $ | (286,994 | ) | ||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic and Diluted | 30,223,358,741 | 3,392,972,124 | 32,265,168,504 | 6,730,708,291 | ||||||||||||
| Earnings per common share: | ||||||||||||||||
| Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
For the ThreeSix Months Ended March 31,June 30, 2023 and 2022
(Unaudited)
| Series A | Series B | Series C | Series D | Series F | Series G | Series E Preferred | Common Stock | Additional | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Stock to be issued | Common Stock | to be | Paid-In | Treasury | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Stock | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2021 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 18,150,000 | 18,150 | - | 3,802,391 | - | (4,663,488 | ) | (842,294 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (64,062 | ) | (64,062 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 18,150,000 | 18,150 | - | 3,802,391 | - | (4,727,550 | ) | (906,356 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recapitalization at reverse merger - May 4, 2022 | 3,381,520 | 33,815 | 5,000 | 50 | 5,000,000 | 50,000 | 125,000 | 12 | 101 | - | 1,000,000 | 1,000 | - | 166,331 | 8,936,864,497 | 71,400 | 26 | (2,630,899 | ) | (773,500 | ) | - | (3,082,418 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 306,220 | - | - | 306,220 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for extinguishment of convertible debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 6,673,960,315 | 66,740 | - | 532,379 | - | - | 599,119 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (286,994 | ) | (286,994 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | 3,381,520 | 33,815 | 5,000 | 50 | 5,000,000 | 50,000 | 125,000 | 12 | 101 | - | 1,000,000 | 1,000 | - | 166,331 | 15,628,974,812 | 156,290 | 26 | 2,010,091 | (773,500 | ) | (5,014,544 | ) | (3,370,429 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Series F | Series G | Series E Preferred | Common Stock | Additional | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Stock to be issued | Common Stock | to be | Paid-In | Treasury | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Stock | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2022 | 3,381,520 | 33,815 | 5,000 | 50 | 5,000,000 | 50,000 | 125,000 | 12 | 101 | - | 1,000,000 | 1,000 | - | 166,331 | 27,049,736,362 | 270,497 | 26 | 3,599,032 | (773,500 | ) | (9,243,925 | ) | (5,896,662 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 28,314 | - | - | 28,314 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Relative fair value of warrants issued with convertible debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 14,995 | - | - | 14,995 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for extinguishment of convertible debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 4,247,383,100 | 42,474 | - | 376,113 | - | - | 418,587 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 617,642 | 617,642 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | 3,381,520 | 33,815 | 5,000 | 50 | 5,000,000 | 50,000 | 125,000 | 12 | 101 | - | 1,000,000 | 1,000 | - | 166,331 | 31,297,119,462 | 312,971 | 26 | 4,018,454 | (773,500 | ) | (8,626,283 | ) | (4,817,124 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 28,314 | - | - | 28,314 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Relative fair value of warrants issued with convertible debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 9,994 | - | - | 9,994 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for extinguishment of convertible debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 1,144,057,959 | 11,441 | - | 94,618 | - | - | 106,059 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (1,265,728 | ) | (1,265,728 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | 3,381,520 | 33,815 | 5,000 | 50 | 5,000,000 | 50,000 | 125,000 | 12 | 101 | - | 1,000,000 | 1,000 | - | 166,331 | 32,441,177,421 | 324,412 | 26 | 4,151,380 | (773,500 | ) | (9,892,011 | ) | (5,938,485 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Series AA | Super | Series A | Series B | Series C | Series D | Series F | Series G | Series E Preferred | Additional | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Stock to be issued | Common Stock | Common Stock | Paid-In | Treasury | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | to be Issued | Capital | Stock | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance December 31.2022 | - | - | - | - | 3,381,520 | 33,815 | 5,000 | 50 | 5,000,000 | 50,000 | 125,000 | 12 | 101 | - | 1,000,000 | 1,000 | - | 166,331 | 27,049,736,362 | 270,497 | 26 | 3,599,032 | (773,500 | ) | (9,243,925 | ) | (5,896,662 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 28,314 | - | - | 28,314 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Relative Fair value of warrants issued with convertible debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 14,995 | - | - | 14,995 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued For extinguishment of convertible debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 4,247,383,100 | 42,474 | - | 376,113 | - | - | 418,587 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 617,642 | 617,642 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31.2023 | - | - | - | - | 3,381,520 | 33,815 | 5,000 | 50 | 5,000,000 | 50,000 | 125,000 | 12 | 101 | - | 1,000,000 | 1,000 | - | 166,331 | 31,297,119,462 | 312,971 | 26 | 4,018,454 | (773,500) | (8,626,283 | ) | (4,817,124 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series AA Preferred Stock | Super Preferred Stock | Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series F Preferred Stock | Series G Preferred Stock | Series E Preferred Stock to be issued | Common Stock | Common Stock to be | Additional Paid-In | Treasury | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Stock | Deficit | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance December 31,2021 | 652.259 | - | 500 | 1 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 18,150,000 | 270,497 | - | 3,599,032 | - | (9,243,925 | ) | (5,374,395 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (64,062 | ) | (64,062 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31,2022 | 652,259 | - | 500 | 1 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 18,150,000 | 270,497 | - | 3,599.032 | - | (9,307,987 | ) | (5,438.457 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, | March 31, | |||||||
2023 | 2022 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income (loss) | 617,642 | $ | (64,062 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Interest expense incurred on put premium on stock settled debt | 30,000 | - | ||||||
Amortization of debt discount | 245,146 | - | ||||||
Stock-based compensation and shares issued for services | 96,314 | - | ||||||
Expenses incurred on extinguishment of convertible debt and accrued interest | 17,075 | - | ||||||
Initial derivative expense | 32,429 | - | ||||||
Change in fair value of derivative liability | (1,303,044 | ) | 1,545 | |||||
Changes in operating assets and liabilities (net of amounts acquired): | ||||||||
Accounts receivable | 15,542 | (2,112 | ) | |||||
Accounts payable | 138,972 | - | ||||||
Accrued expenses | (286 | ) | 5,011 | |||||
Accrued interest | (8,127 | ) | - | |||||
Accrued compensation | 38,850 | 48,268 | ||||||
Deferred revenue | - | (3,108 | ) | |||||
Net Cash (Used In) Operating Activities | (79,487 | ) | (14,458 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from loans payable | - | 269,100 | ||||||
Net Cash Provided by Financing Activities | - | 269,100 | ||||||
Net Change in Cash and Cash Equivalents | (79,487 | ) | 254,642 | |||||
Cash And Cash Equivalents - Beginning of Periof | 167,103 | 385 | ||||||
Cash And Cash Equivalents - End of Period | 87,616 | $ | 255,027 | |||||
| June 30, | June 30, | |||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | (648,086 | ) | $ | (265,917 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Interest expense incurred on put premium on stock settled debt | 60,000 | - | ||||||
| Change in fair value of derivative liability | (430,281 | ) | 17,820 | |||||
| Amortization of debt discount | 442,550 | 42,457 | ||||||
| Stock-based compensation and shares issued for services | 154,628 | 50 | ||||||
| Forgiveness of note payable – PPP Note | - | (91,035 | ) | |||||
| Grant income | - | (6,000 | ) | |||||
| Expenses incurred on extinguishment of convertible debt and accrued interest | 20,490 | - | ||||||
| Initial derivative expense | 32,429 | - | ||||||
| Changes in operating assets and liabilities (net of amounts acquired): | ||||||||
| Accounts receivable | 15,543 | (37,638 | ) | |||||
| Accounts payable | 139,483 | 13,970 | ||||||
| Accrued expenses | (287 | ) | 14,380 | |||||
| Accrued interest | (8,128 | ) | - | |||||
| Accrued compensation | 133,281 | 309,079 | ||||||
| Deferred revenue | - | 3,108 | ||||||
| Net Cash (Used In) Provided By Operating Activities | (88,378 | ) | 274 | |||||
| Cash Flows from Financing Activities | ||||||||
| Payments of loans payable | (980 | ) | - | |||||
| Net Cash (Used In) Financing Activities | (980 | ) | - | |||||
| Net Change in Cash and Cash Equivalents | (89,358 | ) | 274 | |||||
| Cash And Cash Equivalents - Beginning of Period | 167,103 | 111 | ||||||
| Cash And Cash Equivalents - End of Period | 77,745 | $ | 385 | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2023
Reverse Merger and Corporate Restructure
On May 4, 2022, Cruzani, Inc. (“Cruzani” or the “Predecessor”) entered into a merger agreement (the “Merger Agreement”) with Bowmo, Inc. (“Bowmo”or the “Company”) and Bowmo Merger Sub, Inc. to acquire Bowmo. (the “Acquisition”). The transactions contemplated by the Merger Agreement were consummated on May 4, 2022 and, pursuant to the terms of the Merger Agreement, all outstanding shares of Bowmo were exchanged for shares of Cruzani’s common stock and Bowmo became Cruzani’s wholly owned subsidiary.
The Merger was effected pursuant to the Merger Agreement. The Merger is being accounted for as a reverse merger whereby: Bowmo is considered the acquiring company for accounting purposes as upon completion of the Merger, Bowmo’s former stockholders held a majority of the voting interest of the combined company.
Pursuant to the Merger, the Company issued Series G Preferred Stock holding the voting rights to 78% of the total voting equity securities to Bowmo’s stockholders.
Upon completion of the acquisition, bowmo is treated as the surviving entity and accounting acquirer although Cruzani was the legal acquirer. Accordingly, the historical financial statements are those of Bowmo.
Organization and Business
Bowmo, Inc. (FKA Cruzani, Inc.)
The Company offers recruiting software and services through an online AI-driven platform to connect potential candidates to employers for all businesses looking to address hiring needs.
The Company was incorporated as a Delaware corporation in 2016.
Basis of Presentation
The accompanying unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the Securities and Exchange Commission for interim financial statements which omit cerincertain disclosures. These unaudited consolidated condensed financial statements should be read in conjunction with the audited financial statements and footnotes for the year ended December 31, 2022 included on the Company’s Form 10-K. The results of the three months and six months ended March 31,June 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.
In the opinion of management, all adjustments necessary to present fairly the financial position as of March 31,June 30, 2023 and the results of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year.
Principles of Consolidation
The accompanying unaudited interim consolidated condensed financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated. All financial information has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
Level 3: | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2022June 30, 2023 and December 31, 2020.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with various accounting standards.
ASC 480 “Distinguishing Liabilities From Equity” provides that instruments convertible predominantly at a fixed rate resulting in a fixed monetary amount due upon conversion with a
ASC 815 “Derivatives and Hedging” generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”
The Company accounts for convertible instruments (when it has determined that the instrument is not a stock settled debt and the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the share transaction and the effective conversion price embedded in the preferred shares.
ASC 815-40 provides that generally if an event is not within the entity’s control and could require net cash settlement, then the contract shall be classified as an asset or a liability.
Convertible Notes with Fixed Rate Conversion Options
The Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability as stock settled debt in accordance with ASC 480 - “Distinguishing Liabilities from Equity” and measures the convertible note at its fixed monetary amount, which is the result of the share price discount at the time of conversion, and records the put premium, as applicable, on the note date with a charge to interest expense.
Derivative Instruments
The Company’s derivative financial instruments consist of derivatives with the sale of a convertible notes in 2022. The accounting treatment of derivative financial instruments requires that the Company records the derivatives at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. The carrying value assigned to the host instrument will be the difference between the previous carrying value of the host instrument and the fair value of the derivatives. There is an offsetting debt discount or premium as a result of the fair value assigned to the derivatives, as well as any debt issuance costs, which are amortized under the straight-line method over the term of the loan. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, the Company recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, the Company recorded non-operating, non-cash income.
Business Combinations
The Company accounts for its business combinations using the acquisition method of accounting. Under the acquisition method, assets acquired, liabilities assumed, and consideration transferred are recorded at the date of acquisition at their respective fair values. Definite-lived intangible assets are amortized over the expected life of the asset. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.
Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. The Company remeasures fair value as of each reporting date and changes resulting from events after the acquisition date, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value and accretion costs are recognized in earnings.
Revenue Recognition
The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (1) identification of the contract, or contracts, with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when or as a performance obligation is satisfied.
The Company generates revenue from the following activities:
Recruiting as a Service (“RaaS”):
RaaS allows the Company’s customers to outsource the management of their recruiting process allowing the Company to use the Application to assist its customers hiring needs by strategically gearing the service to reach the customer’s objectives. Revenue from RaaS consists of monthly billing to the customer for services provided.
RaaS service contracts with customers are month-to-month for a fixed price. Revenues are recognized on a gross basis when each monthly subscription service is completed.
Direct Placement:
The Company generates direct placement revenue by earning one-time fees for each time an employer hires one of the candidates that the Company refers. The Company sources qualified candidate referrals for the employers’ available jobs through the use of the Company’s Application. Upon the employer hiring one or more of the Company’s candidate referrals, the Company earns the direct placement fee, which consists of an amount agreed upon between the Company and its customers. The fee is a percentage of the referred candidates’ first year’s base salary.
Direct placement revenues are recognized on a gross basis on the date of hire of the candidate placed with an employer, as it is more than probable that a significant revenue reversal will not occur. This fee is only charged to the employer. Any payments received prior to the hire date are recorded as deferred revenue on the consolidated balance sheets. Payments for recruitment services are typically due within 30 days of completion of services.
Direct placement revenue is subject to a 90-180 day guarantee that the candidate will not resign or be terminated in that time period. The Company uses historical evidence as well as additional factors to determine and estimate the amount of consideration received that the Company does not expect to be entitled to. For any amounts received for which the Company does not expect to be entitled, it would not recognize revenue when the candidate is hired but would recognize those amounts received as a refund liability. The Company included in the transaction price the estimated amount of variable consideration per the expected value method. A refund liability would be credited for the difference between cash consideration received and variable consideration recognized. The refund liability would be updated at the end of each reporting period for any changes in circumstances. As of March 31,June 30, 2023 and December 31, 2022 there was no refund liability on the unaudited condensed consolidated balance sheets as historically no direct placement revenue has been refunded to the Company.
Revenue Disaggregation
For the three months and six months ended March 31,June 30, 2023 and 2022, revenues can be categorized into the following:
For the three months ended | ||||||||
March 31, 2023 | March 31, 2022 | |||||||
Direct placement | $ | - | $ | 39,750 | ||||
Recruiting as a Service | 4,476 | 48,917 | ||||||
Total revenues | $ | 4,476 | $ | 88,667 | ||||
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Direct placement | $ | - | $ | 61,000 | $ | - | $ | 100,750 | ||||||||
| Recruiting as a Service | - | 181 | 4,476 | 49,098 | ||||||||||||
| Total revenues | $ | - | $ | 61,181 | $ | 4,476 | $ | 149,848 | ||||||||
Cost of revenues
Cost of revenue consists of employee costs, third party staffing costs, hosting service fees, and other fees, outsourced recruiter fees and commissions.
Concentrations of credit risk
Financial instruments which potentially subject the Company to credit risks consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are held in United States financial institutions. At times, such amounts may exceed federally insured limits.
As of June 30, 2023, the Company had a zero balance in accounts receivable. As of December 31, 2022, one customer accounted for 100% of accounts receivable.
During the three months ended June 30, 2023, no customer accounted for more than 100% of revenues. During the three months ended June 30, 2022, two customers accounted for more than 10% of revenue, at 83% and 11%, for a total 94%.
During the six months ended June 30, 2023, one customer accounted for 100% of revenues. During the six months ended June 30, 2022, four customers accounted for more than 10% of revenue, at 60%, 14%, 14%, and 12%, for a total of 100%.
Stock-based compensation
We account 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 shorter of the service period or the vesting period of the stock-based compensation. 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 estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model. Determining the fair value of stock-based compensation at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based compensation represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment.
Recently issued accounting pronouncements
The Company has implemented all new accounting
Change in accounting principle
Commencing in the second quarter of 2022, the Company prospectively changed its accounting treatment for securities that contain predominantly fixed rate conversion features by recording the derivative feature as a put premium on stock settled debt. See Note 7 for further discussion. The Company believes this change in accounting principle is preferable as it applies a more consistent method of accounting for convertible notes that contain similar conversion features. This accounting change resulted in a gain on new methodology for accounting for debt conversion features of $27,856 on the consolidated statement of operations for the six months ended June 30, 2022.
NOTE 2 – GOING CONCERN
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going-concern basis. The going concern basis assumes that assets are realized, and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operations. The Company has an accumulated deficit of approximately $8.6$9.89 million. The company historically has had negative cash flow from operations. The Company’s ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing efforts.
NOTE 3 – BUSINESS COMBINATIONS
Interview Mastery
On December 16, 2022, the Company entered into an Asset Purchase Agreement (the “APA”) with a related party, Interview Mastery Corporation (“Interview Mastery”), a Delaware corporation, by and through Michael R. Neece (“Neece”), the Company’s Chief Product Officer, and Caseridus, Inc. Under the terms of the APA, the Company will pay the purchase price through the issuance of 1,000,000,000 shares of the Company’s common stock to the stockholders of Interview Mastery, valued at the stock price of $0.0002 on the acquisition date, that vest immediately for all of the business assets of Interview Mastery. An additional 1,000,000,000 shares of Company common stock will be issued as compensation in consideration of Neece’s employment with the Company which shall vest over a four (4) year period during which 250,000,000 shares will vest on the first-year anniversary of Neece’s employment, followed by vesting in increments of 62,500,000 shares per quarter (3-month period) thereafter until the full amount is vested and all of which shall be contingent upon Neece’s continual employment with the Company. These shares were valued using the share price of $0.0002 at the date of acquisition, and they will be expensed as stock-based compensation based on the vesting terms contingent upon continual employment of Neece. In connection with the APA, the Company shall create a new board seat and offer such seat to Neece who will be formally invited to join the Company’s Board of Directors.
The acquisition was accounted for as a business combination in accordance with the acquisition method under the guidance in ASC 805-10 and 805-20. This business combination was accounted for as a related party acquisition, as Neece is the chief product officer of the Company. Accordingly, the total purchase consideration was allocated to net assets acquired based on their respective historical costs. The assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their historical costs as of the acquisition date.
The final allocation of the purchase price in connection with the Interview Mastery acquisition was calculated as follows:
| Description | Fair Value | |||
| Cash | $ | 1,633 | ||
| Prepaid expenses | 997 | |||
| Loss on acquisition – related party | 197,370 | |||
| $ | 200,000 | |||
As a result of the business combination, the Company recognized a related party loss of $197,370 which was included in general and administrative expenses on the consolidated statements of operations.
The approximate revenue and net loss for the acquired business as a standalone entity per ASC 805 from January 1, 20222021 to MarchDecember 31, 20222021 was $14,692 and $21,862, respectively, and from January 1, 2022 to December 17, 2022 was $13,059 and $15,279, respectively.
NOTE 4 – LOANS PAYABLE
The loan payable balances are as follows:
Rate | March 31, 2023 | December 31, 2022 | ||||||||||
Loan 1 | 1 | % | $ | 27,000 | $ | 27,000 | ||||||
Loan 2 | 1 | % | 3,000 | 3,000 | ||||||||
Loan 3 | 8 | % | 64,000 | 64,000 | ||||||||
Loan 4 | 8 | % | 160,500 | 160,500 | ||||||||
Loan 5 | 3.75 | % | 309,500 | 309,500 | ||||||||
Total | $ | 564,000 | $ | 564,000 | ||||||||
| Rate | June 30, 2023 | December 31, 2022 | ||||||||||
| Loan 1 | 1 | % | $ | 27,000 | $ | 27,000 | ||||||
| Loan 2 | 1 | % | 3,000 | 3,000 | ||||||||
| Loan 3 | 8 | % | 64,000 | 64,000 | ||||||||
| Loan 4 | 8 | % | 160,000 | 160,500 | ||||||||
| Loan 5 | 3.75 | % | 309,500 | 309,500 | ||||||||
| Total | $ | 564,000 | $ | 564,000 | ||||||||
Loans 1 through 45 are past due as of the issuance of these financial statements.
Loan 1) 1
On May 30, 2013 and August 12, 2013, Cruzani received advances from a director for $2,000 and $25,000, respectively. On August 12, 2013, the Company entered into an unsecured, non-guaranteed, demand loan agreement with the director for $27,000. The loan bears interest at 1% per annum compounded monthly.
Loan 2) 2
On February 27, 2014, and March 19, 2015, Cruzani received advances from a director of $6,000, and $10,200, respectively. During the year ended December 31, 2015, the Company repaid $13,200. The advances are unsecured, due on demand and bears interest at 1% per annum compounded and calculated monthly.
Loan 3) 3
On September 18, 2014, May 29, 2015, July 3, 2015, December 2, 2015, and January 4, 2016, Cruzani entered into unsecured, non-guaranteed loan agreements pursuant to which the Company received proceeds of $35,000, $4,000, $5,000, $22,000, and $45,000, respectively. The loans bear interest at 8% per annum compounded annually and are due 1 year after the date of issuance.
Loan 4) 4
On December 4, 2014, January 29, 2015, August 12, 2015, August 21, 2015, September 1, 2015, September 15, 2015, November 13, 2015, and December 23, 2015, Cruzani issued unsecured notes payable of $20,000, $20,000, $20,000, $25,000, $40,000, $25,000, $30,000 and $10,000, respectively, to a significant shareholder. The notes bear interest at an annual rate of 8% per annum, are uncollateralized, and due 1 year after the date of issuance.
Loan 5) 5
Entities negatively impacted by the coronavirus (“COVID-19”) pandemic were eligible to apply for loans sponsored by the United States Small Business Administration (“SBA”) Economic Injury Disaster Loan (“EIDL Loan”) program. On July 15, 2020, the Company received cash proceeds of $40,400 under this program. In addition, in July 2020, the Company received $6,000 from the SBA as a COVID-19 Economic Injury Disaster Loan Advance (the “EIDL Advance”). The proceeds can be used to fund payroll, healthcare benefits, rent and other qualifying expenses, and the loan is not subject to a loan forgiveness provision. The standard EIDL Loan repayment terms include interest accruing at 3.75% per annum effective July 15, 2020; the payment schedule contains a one-year deferral period on initial principal and interest payments; the loan term is thirty years; and there is no prepayment penalty or fees. The Company pledged all assets of the Company as collateral for the loan. As of December 31, 2021, the amounts outstanding totaled $40,400, and was classified as part of notes payable on the consolidated balance sheet. Additionally, the Company entered into a security agreement with the SBA in which this promissory note is collateralized by all tangible and intangible assets of the Company. On January 6, 2021, the SBA announced a one-year extension of the deferral period for loans that commenced in 2020 delaying payments of principal and interest to July 2022. Pursuant to an SBA Procedural Notice in December 2020, the EIDL Advance was forgiven. The Company has recognized the entire EIDL Advance amount of $6,000 as grant income, which is included in other income (expense) in the consolidated statement of operations for the year ended December 31, 2021.
In Februar
NOTE 5 – CONVERTIBLE NOTES
The following table summarizes the convertible notes as of March 31,June 30, 2023, and December 31, 2022:
Creditor | Date Issued | Interest Rate | Maturity Date | March 31, 2023 | December 31, 2022 | |||||||||||||||
Travel Data Solutions, Inc. (1) | 18-Nov-17 | 10 | % | 30-Nov-19 | $ | 100,000 | $ | 100,000 | ||||||||||||
Travel Data Solutions, Inc. (2) | 18-Jan-19 | 10 | % | 31-Jan-20 | 25,000 | 25,000 | ||||||||||||||
Third Party (7) | 07-Jul-20 | 10 | % | 07-Jul-21 | 84,681 | 84,681 | ||||||||||||||
Trillium Partners, LP (8) | 15-Jun-22 | 12 | % | 15-Jun-23 | - | 165,000 | ||||||||||||||
Trillium Partners, LP (8) | 05-Aug-22 | 12 | % | 28-Jun-23 | - | 110,000 | ||||||||||||||
Frondeur Partners LLC (9) | 01-Aug-22 | 10 | % | 28-Feb-23 | - | 50,000 | ||||||||||||||
Frondeur Partners LLC (9) | 01-Oct-22 | 10 | % | 31-Jul-23 | 50,000 | 50,000 | ||||||||||||||
Trillium Partners, LP (10) | 19-Oct-22 | 8 | % | 09-Oct-23 | 275,000 | 275,000 | ||||||||||||||
King Wharf Opportunities Fund (11) | 19-Oct-22 | 8 | % | 09-Oct-23 | 275,000 | 275,000 | ||||||||||||||
Trillium Partners, LP (8) | 21-Oct-22 | 12 | % | 21-Oct-23 | 11,000 | 11,000 | ||||||||||||||
Trillium Partners, LP (8) | 06-Dec-22 | 10 | % | 30-Nov-23 | 17,000 | 17,000 | ||||||||||||||
Frondeur Partners LLC (9) | 01-Nov-22 | 10 | % | 31-Aug-23 | 25,000 | 25,000 | ||||||||||||||
Frondeur Partners LLC | 01-Dec-22 | 10 | % | 30-Sep-23 | 10,000 | 10,000 | ||||||||||||||
Frondeur Partners LLC | 01-Jan-22 | 10 | % | 31-Oct-23 | 10,000 | - | ||||||||||||||
Frondeur Partners LLC | 01-Feb-23 | 12 | % | 30-Nov-23 | 10,000 | - | ||||||||||||||
Frondeur Partners LLC | 01-Mar-23 | 12 | % | 31-Dec-23 | 10,000 | - | ||||||||||||||
Trillium Partners, LP | 31-Mar-23 | 10 | % | 31-Dec-23 | 38,000 | - | ||||||||||||||
Total | $ | 940,681 | $ | 1,197,681 | ||||||||||||||||
Less: debt discount | (333,460 | ) | (528,100 | ) | ||||||||||||||||
Convertible notes payable, total | 607,221 | 669,581 | ||||||||||||||||||
| Creditor | Date Issued | Interest Rate | Maturity Date | June 30, 2023 | December 31, 2022 | |||||||||||
| Travel Data Solutions, Inc. (1) | 18-Nov-17 | 10 | % | 30-Nov-19 | $ | 100,000 | $ | 100,000 | ||||||||
| Travel Data Solutions, Inc. (2) | 18-Jan-19 | 10 | % | 31-Jan-20 | 25,000 | 25,000 | ||||||||||
| Third Party (3) | 07-Jul-20 | 10 | % | 07-Jul-21 | 84,681 | 84,681 | ||||||||||
| Trillium Partners, LP (4) | 15-Jun-22 | 12 | % | 15-Jun-23 | - | 165,000 | ||||||||||
| Trillium Partners, LP (4) | 05-Aug-22 | 12 | % | 28-Jun-23 | - | 110,000 | ||||||||||
| Frondeur Partners LLC (5) | 01-Aug-22 | 10 | % | 28-Feb-23 | - | 50,000 | ||||||||||
| Frondeur Partners LLC (5) | 01-Oct-22 | 10 | % | 31-Jul-23 | - | 50,000 | ||||||||||
| Trillium Partners, LP (6) | 19-Oct-22 | 8 | % | 09-Oct-23 | 275,000 | 275,000 | ||||||||||
| King Wharf Opportunities Fund (7) | 19-Oct-22 | 8 | % | 09-Oct-23 | 275,000 | 275,000 | ||||||||||
| Trillium Partners, LP (4) | 21-Oct-22 | 12 | % | 21-Oct-23 | 11,000 | 11,000 | ||||||||||
| Trillium Partners, LP (4) | 06-Dec-22 | 10 | % | 30-Nov-23 | 17,000 | 17,000 | ||||||||||
| Frondeur Partners LLC (5) | 01-Nov-22 | 10 | % | 31-Aug-23 | 25,000 | 25,000 | ||||||||||
| Frondeur Partners LLC (5) | 01-Dec-22 | 10 | % | 30-Sep-23 | 10,000 | 10,000 | ||||||||||
| Frondeur Partners LLC (5) | 01-Jan-22 | 10 | % | 31-Oct-23 | 10,000 | - | ||||||||||
| Frondeur Partners LLC (5) | 01-Feb-23 | 12 | % | 30-Nov-23 | 10,000 | - | ||||||||||
| Frondeur Partners LLC (5) | 01-Mar-23 | 12 | % | 31-Dec-23 | 10,000 | - | ||||||||||
| Trillium Partners, LP (4) | 31-Mar-23 | 10 | % | 31-Dec-23 | 38,000 | - | ||||||||||
| Frondeur Partners LLC (5) | 01-Apr-23 | 10 | % | 31-Jan-24 | 10,000 | - | ||||||||||
| Frondeur Partners LLC (5) | 01-May-23 | 10 | % | 29-Feb-24 | 10,000 | - | ||||||||||
| Frondeur Partners LLC (5) | 01-Jun-23 | 10 | % | 31-Mar-24 | 10,000 | - | ||||||||||
| Total | $ | 920,681 | $ | 1,197,681 | ||||||||||||
| Less: debt discount | (145,540 | ) | (528,100 | ) | ||||||||||||
| Convertible notes payable, total | 775,141 | 669,581 | ||||||||||||||
| 1) | On November 18, 2017, Cruzani entered into a convertible promissory note for $25,000 with Travel Data Solutions, Inc., pursuant to which the Company received proceeds of $25,000. The notes are convertible at any time after September 13, 2018 at a mutually agreed upon conversion price, bearing interest rate at 10% per annum and due on November 30, 2019. During January and February 2018, the Company received an additional $75,000 under the same terms as the previously issued convertible promissory note. As of June 30, 2023 and December 31, 2022, $100,000 remains outstanding. |
| On January 18, 2019, Cruzani executed a promissory note with Travel Data Solutions LLC for $35,000, of which it has received $25,000. The note bears interest at 10% and matures on January 31, 2020. The specific terms of conversion are still being negotiated. Commencing on January 31, 2019 and on the last day of each month thereafter, the Company shall pay to the Holder Three Thousand Two Hundred Eight dollars and Thirty-Three cents ($3,208.33) of which Two Thousand Nine Hundred Sixteen Dollars and Sixty-Six cents ($2,916.66) represents payment towards the outstanding Principal Amount and Two Hundred Nineteen Dollars and Sixty-Six cents ($219.66) represents accrued interest thereon. As of June 30, 2023 and December 31, 2022, $25,000 remains outstanding. |
| On July 7, 2020, the Company issued a $84,681 convertible promissory note to a third party in exchange for $84,681. The Convertible Note bears interest at 10% per annum. All unpaid principal and accrued interest under the Convertible Note will be due and payable in full one year from issuance. After six months from the issuance date, the Holder may elect to convert into that number of shares of common stock equal to the quotient obtained by dividing the outstanding principal balance and unpaid accrued interest under this Note by the amount equal to the anticipate public market price of the Company’s common stock multiplied by fifty percent (50%). This convertible note was accounted for as stock settled debt in accordance with ASC 480 - “Distinguishing Liabilities from Equity”, resulting in put premiums on stock settled debt being recognized. See Note 7. As of June 30, 2023 and December 31, 2022, this convertible note is in default and the principal and accrued interest balance remain outstanding. |
| 4) | Between June 15, 2022 and March 31, 2023, the Company entered into several convertible notes with Trillium Partners, LP bearing interest between 10% and 12% per annum and totaling $414,800. These convertible notes are convertible at a fixed price between $0.0001 and $0.0002. As of June 30, 2023 and December 31, 2022, $348,800 and $29,800 of these convertible notes were converted into shares of the Company’s common stock, respectively, and $66,000 and $303,000 are outstanding, respectively. |
| 5) | Between June 1, 2022 and June 1, 2023, the Company entered into several convertible notes with Frondeur Partners, LLC bearing interest at 10% per annum and totaling $395,000. These convertible notes are convertible between 50% and 70% of the lowest close bid price of the Company’s stock price for a twenty day period. These convertible notes were accounted for as stock settled debt in accordance with ASC 480 - “Distinguishing Liabilities from Equity”, resulting in put premiums on stock settled debt being recognized. See Note 7. As of June 30, 2023 and December 31, 2022, $300,000 and $25,000 of these convertible notes were converted into shares of the Company’s common stock, and as of June 30, 2023 and December 31, 2022, $95,000 and $135,000 of principal remains outstanding. |
| 6) | On October 19, 2022, the Company entered into a convertible note with Trillium Partners, LP bearing interest at 8% totaling $275,000. The note included an original issue discount of $25,000. This convertible note is convertible at the lesser of $0.0001 or 50% of the lowest trading price of the Company’s stock price for a thirty-day period. The embedded conversion option of the convertible note contains conversion features that qualify for embedded derivative classification as a result of variable conversion price features, which is not a fixed discount rate. See Note 8. This convertible note is fully guaranteed by the Company’s Chief Executive Officer, Eddie Aizman, and President, Michael Lakshin. Additionally, on October 19, 2022, both Mr., Aizman and Mr. Lakshin, entered into pledge agreements in which they each have agreed to secure the Company’s payment obligations to the lender with a guaranty and a pledge of 163,461 shares of Series G preferred stock of the Company, for a total of 326,922 shares of Series G Preferred Stock. As of June 30, 2023 and December 31, 2022, the outstanding principal balance totaled $275,000. |
| 7) | On October 19, 2022, the Company entered into a convertible note with King Wharf Opportunities Fund bearing interest at 8% totaling $275,000. The note included an original issue discount of $25,000. This convertible note is convertible at the lesser of $0.0001 or 50% of the lowest trading price of the Company’s stock price for a thirty-day period. The embedded conversion option of the convertible note contains conversion features that qualify for embedded derivative classification as a result of variable conversion price features, which is not a fixed discount rate. See Note 8. This convertible note is fully guaranteed by the Company’s Chief Executive Officer, Eddie Aizman, and President, Michael Lakshin. Additionally, on October 19, 2022, both Mr. Aizman and Mr. Lakshin, entered into pledge agreements in which they each have agreed to secure the Company’s payment obligations to the lender with a guaranty and a pledge of 163,461 shares of Series G preferred stock of the Company, for a total of 326,922 shares of Series G Preferred Stock. As of June 30, 2023 and December 31, 2022, the outstanding principal balance totaled $275,000. |
NOTE 6 – PUT PREMIUM ON STOCK SETTLED DEBT
When the Company enters into convertible notes, some of which contain, predominantly, fixed rate conversion features (See Note 5 for conversion terms), whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at its fixed monetary amount by measuring and recording a put premium on the consolidated balance sheets, as applicable, on the note date with a charge to interest expense. The put premiums are expensed on issuance of the debt with the liability released to additional paid in capital on conversion of the principal.
All put premiums are recorded as a liability as put premium on stock settled debt on the consolidated balance sheets with a charge to interest expense.
Put premium on stock settled debt by individual note is as follows:
Date Issued | Maturity Date | March 31, 2023 | Discount Percentage | Put premium on stock settled debt | ||||||||||||||||
Travel Data Solutions, Inc. | 18-Nov-17 | 30-Nov-19 | $ | 100,000 | - | $ | - | |||||||||||||
Travel Data Solutions, Inc. | 18-Jan-19 | 31-Jan-20 | $ | 25,000 | - | - | ||||||||||||||
Third party | 7-Jul-20 | 7-Jul-21 | 84,684 | 50 | % | 84,684 | ||||||||||||||
Trillium Partners, LP | 15-Jun-22 | 15-Jun-23 | 165,000 | 0 | % | - | ||||||||||||||
Trillium Partners, LP | 05-Aug-22 | 28-Jun-23 | 110,000 | 0 | % | - | ||||||||||||||
Frondeur Partners LLC | 01-Sept-22 | 31-June-23 | 50,000 | 30 | % | - | ||||||||||||||
Frondeur Partners LLC | 01-Oct-22 | 31-Jul-23 | 50,000 | 30 | % | 50,000 | ||||||||||||||
Trillium Partners, LP* | 19-Oct-22 | 09-Oct-23 | 275,000 | 0 | % | - | ||||||||||||||
King Wharf Opportunities Fund* | 19-Oct-22 | 09-Oct-23 | 275,000 | 0 | % | - | ||||||||||||||
Trillium Partners, LP | 21-Oct-22 | 21-Oct-23 | 11,000 | 0 | % | - | ||||||||||||||
Trillium Partners, LP | 06-Dec-22 | 30-Nov-23 | 17,000 | 0 | % | - | ||||||||||||||
Frondeur Partners LLC | 01-Nov-22 | 31-Aug-23 | 25,000 | 50 | % | 25,000 | ||||||||||||||
Frondeur Partners LLC | 01-Dec-22 | 30-Sep-23 | 10,000 | 50 | % | 10,000 | ||||||||||||||
Frondeur Partners LLC | 01-Jan-23 | 31-Oct-23 | 10,000 | 10,000 | ||||||||||||||||
Frondeur Partners LLC | 01-Feb-23 | 30-Nov-23 | 10,000 | 10,000 | ||||||||||||||||
Frondeur Partners LLC | 01-Mar-23 | 31-Dec-23 | 10,000 | 10,000 | ||||||||||||||||
Trillium Partners, LP | 31-Mar-23 | 31-Dec-23 | 38,000 | - | ||||||||||||||||
Put premium on stock settled debt | $ | 1,265,684 | $ | 199,684 | ||||||||||||||||
| Date Issued | Maturity Date | Note balance as of June 30, 2023 | Discount Percentage | Put premium on stock settled debt | ||||||||||||
| Travel Data Solutions, Inc. | 18-Nov-17 | 30-Nov-19 | $ | 100,000 | 0 | % | $ | - | ||||||||
| Travel Data Solutions, Inc. | 18-Jan-19 | 31-Jan-20 | 25,000 | 0 | % | - | ||||||||||
| Third party | 7-Jul-20 | 7-Jul-21 | 84,681 | 50 | % | 84,681 | ||||||||||
| Trillium Partners, LP* | 19-Oct-22 | 09-Oct-23 | 275,000 | 0 | % | - | ||||||||||
| King Wharf Opportunities Fund* | 19-Oct-22 | 09-Oct-23 | 275,000 | 0 | % | - | ||||||||||
| Trillium Partners, LP | 21-Oct-22 | 21-Oct-23 | 11,000 | 0 | % | - | ||||||||||
| Trillium Partners, LP | 06-Dec-22 | 30-Nov-23 | 17,000 | 0 | % | - | ||||||||||
| Frondeur Partners LLC | 01-Oct-22 | 31-Aug-23 | 25,000 | 50 | % | 25,000 | ||||||||||
| Frondeur Partners LLC | 01-Dec-22 | 30-Sep-23 | 10,000 | 50 | % | 10,000 | ||||||||||
| Frondeur Partners LLC | 01-Jan-23 | 31-Oct-23 | 10,000 | 50 | % | 10,000 | ||||||||||
| Frondeur Partners LLC | 01-Feb-23 | 30-Nov-23 | 10,000 | 50 | % | 10,000 | ||||||||||
| Frondeur Partners LLC | 01-Mar-23 | 31-Dec-23 | 10,000 | 50 | % | 10,000 | ||||||||||
| Trillium Partners, LP | 31-Mar-23 | 31-Dec-23 | 38,000 | 0 | % | - | ||||||||||
| Frondeur Partners LLC | 01-Apr-23 | 31-Jan-24 | 10,000 | 50 | % | 10,000 | ||||||||||
| Frondeur Partners LLC | 01-May-23 | 29-Feb-24 | 10,000 | 50 | % | 10,000 | ||||||||||
| Frondeur Partners LLC | 01-Jun-23 | 31-Mar-24 | 10,000 | 50 | % | 10,000 | ||||||||||
| Total | 920,681 | 179,684 | ||||||||||||||
| Less: debt discount | (145,540 | ) | - | |||||||||||||
| Convertible notes payable, total | $ | 775,141 | $ | 179,684 | ||||||||||||
NOTE 7 – DERIVATIVE LIABILITIES
The embedded conversion options of certain of the Company’s convertible debentures summarized in Note 5 contain variable conversion features that qualify for embedded derivative classification under ASC 815-15 Embedded Derivatives (See Note 5 for conversion terms). The fair value of these liabilities is re-measured at the end of every reporting period and the change in fair value is reported in the statement of operations as a gain or loss on derivative financial instruments.
The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities:
Total | ||||
Balance as of December 31, 2021 | $ | 110,992 | ||
Change Due to Issuances | 2,718,645 | |||
Transfer to put premium | (112,537 | ) | ||
Change in fair value | (544,850 | ) | ||
Balance as of December 31, 2022 | $ | 2,172,250 | ||
Change Due to Issuances | 67,429 | |||
Change in fair value | (1,303,044 | ) | ||
Balance as of March 31, 2023 | $ | 936,636 | ||
| Total | ||||
| Balance as of December 31, 2021 | $ | 110,992 | ||
| Change Due to Issuances | 2,718,645 | |||
| Transfer to put premium | (112,537 | ) | ||
| Change in fair value | (544,850 | ) | ||
| Balance as of December 31, 2022 | $ | 2,172,250 | ||
| Change Due to Issuances | 129,929 | |||
| Transfer to put premium | (62,338 | ) | ||
| Change in fair value | (430,442 | ) | ||
| Balance as of June 30, 2023 | $ | 1,809,399 | ||
The Company uses Level 3 inputs for its valuation methodology for its conversion option liabilities as their fair values were determined by using Black-Scholes options pricing model. The option-pricing model requires a number of assumptions, of which the most significant are share price, expected volatility and the expected option term (the time from the issuance date until the maturity date). The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental zero-coupon bonds with an equivalent term. As, required, these are classified based on the lowest level of input that is significant to the fair value measurement.
The following table shows the assumptions used in the calculations of its derivatives:
2023 | December 31, 2022 | ||||||||
Stock price | $0.0001- $0.0005 | $0.0002 - $0.0005 | |||||||
Exercise price | $0.00003- $0.0001 | $0.00005 - $0.0001 | |||||||
Contractual term (in years) | 1.00 - 0.28 | 1.00 | |||||||
Volatility (annual) | 174%- 443% | 441% - | |||||||
Risk-free rate | 4.41% - | 4.41% - | |||||||
NOTE 8 – COMMON STOCK
The Company has been authorized to issue 40,000,000,000 shares of common stock, $0.00001 par value. Each share of issued and outstanding common stock shall entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the corporation upon liquidation or dissolution.
As of March 31,June 30, 2023 and December 31, 2022, the Company had 31,297,119,46232,441,177,421 and 27,049,736,362 shares of common stock outstanding, respectively.
During the three and six months ended March 31,June 30, 2023, the Company issued 4,247,383,1001,144,057,959 and 5,391,441,059 shares of common stockstock. respectively for the extinguishment of convertible debt as follows:
Creditor | Date | Shares Issued | Principal Retired | Accrued Interest | Fees | Total | ||||||||||||||||||||||
Frondeur Partners, LLC | 17-Feb-23 | 1,123,094,600 | 50,000 | 2,740 | 3,415 | 56,155 | ||||||||||||||||||||||
Trillium Partners, LP | 7-Mar-23 | 1,895,387,800 | 165,000 | 14,294 | 10,245 | 189,539 | ||||||||||||||||||||||
Trillium Partners, LP | 17-Mar-23 | 1,228,900,700 | 110,000 | 9,475 | 3,415 | 122,890 | ||||||||||||||||||||||
4,247,383,100 | 325,000 | 26,509 | 17,075 | 368,584 | ||||||||||||||||||||||||
| Creditor | Date | Shares Issued | Principal Retired | Accrued Interest | Fees | Total | ||||||||||||||||
| Frondeur Partners, LLC | 17-Feb-23 | 1,123,094,600 | 50,000 | 2,740 | 3,415 | 56,155 | ||||||||||||||||
| Trillium Partners, LP | 7-Mar-23 | 1,895,387,800 | 165,000 | 14,294 | 10,245 | 189,539 | ||||||||||||||||
| Trillium Partners, LP | 17-Mar-23 | 1,228,900,700 | 110,000 | 9,475 | 3,415 | 122,890 | ||||||||||||||||
| Frondeur Partners, LLC | 12-Apr-23 | 1,144,057,959 | 50,000 | 2,644 | 3,415 | 56,059 | ||||||||||||||||
| 5,391,441,059 | 375,000 | 29,152 | 20,490 | 424,642 | ||||||||||||||||||
Acquisition of Interview Mastery
As discussed in Note 4, on December 16, 2022, the Company acquired Interview Mastery at a purchase price of 1,000,000,000 shares of the Company’s common stock, valued at $200,000 using the stock price on the acquisition date. As of March 31,June 30, 2023 and December 31, 2022, these shares have not been issued and are recorded as a liability within accrued expenses on the unaudited condensed consolidated balance sheets.
Michael Neece employment agreement
On December 16, 2022, the Company entered into an employment agreement with Michael Neece, Chief Product Officer. Under the agreement, 1,000,000,000 shares of Company common stock will be issued as compensation in consideration of Neece’s employment with the Company which shall vest over a four (4) year period during which 250,000,000 shares will vest on the first-year anniversary of Neece’s employment, followed by vesting in increments of 62,500,000 shares per quarter (3-month period) thereafter until the full amount is vested and all of which shall be contingent upon Neece’s continual employment with the Company. These shares were valued using the share price of $0.0002 at the date of acquisition, and they will be expensed as stock-based compensation based on the vesting terms contingent upon continual employment of Neece. As of March 31,June 30, 2023, none of these shares have vested, and the Company has recognized $28,314 and $56,628, respectively, of stock-based compensation within general and administrative expenses on the consolidated statement of operations during the three and six months ended March 31,June 30, 2023.
NOTE 9 – WARRANTS
In 2022, in connection with the issuance of convertible notenotes with Frondeur Partners, LLC (“Frondeur”), King Wharf Opportunities Fund, and Trillium Partners, LP, the Company also issued 5,616,000,000 common stock purchase warrants to purchase 5,616,000,000 shares of the Company’s common stock pursuant to the terms therein as a commitment fee.
These warrants have an exercise price per share between $0.0025 - $0.0001 the above and expire between five – seven years. The aggregate fair value of the warrants, which was allocated against the debt proceeds totaled $596,927$619,427 based on the Black Scholes Merton pricing model using the following estimates: exercise price ranging from $0.00025 and $0.0025, 2.50% - 4.28% risk free rate, 266.74%256.61% - 699.48% volatility and expected life of the warrants of 5 to 7 years. The fair value was credited to additional paid in capital and debited to debt discount to be amortized over the term of the loan.
A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:
Shares available to purchase with warrants | Weighted Average Price | Weighted Average Remaining life | ||||||||||
Outstanding, December 31, 2022 | 5,616,000,000 | $ | 0.0001 | $ | 6.09 | |||||||
Issued | 200,000 | $ | 0.0001 | 5.00 | ||||||||
Exercised | - | $ | - | $ | - | |||||||
Forfeited | - | $ | - | $ | - | |||||||
Expired | - | $ | - | $ | - | |||||||
Outstanding, March 31, 2023 | 5,816,000,000 | $ | 0.0001 | $ | 5.86 | |||||||
Exercisable, March 31, 2023 | 5,816,000,000 | $ | 0.0001 | $ | 5.86 | |||||||
| Shares available to purchase with warrants | Weighted Average Price | Weighted Average Remaining life | ||||||||||
| Outstanding, December 31, 2022 | 5,616,000,000 | $ | 0.0001 | $ | 6.09 | |||||||
| Issued | 500,000,000 | $ | 0.0001 | 4.72 | ||||||||
| Exercised | – | $ | – | $ | – | |||||||
| Forfeited | – | $ | – | $ | – | |||||||
| Expired | – | $ | – | $ | – | |||||||
| Outstanding, June 30, 2023 | 6,116,000,000 | $ | 0.0001 | $ | 5.14 | |||||||
| Exercisable, June 30, 2023 | 6,116,000,000 | $ | 0.0001 | $ | 5.14 | |||||||
The Company uses Level 3 inputs for its valuation methodology for its conversion option liabilities as their fair values were determined by using the Binomial option pricing model based on various assumptions. The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As, required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:
Range of Exercise Prices | Number Outstanding March 31, 2023 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | |||||||||
$ 0.00025-0.0025 | 5,816,000,000 | 5.86 years | $ | 0.0001 | ||||||||
| Range of Exercise Prices | Number Outstanding June 30, | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | |||||||
| $ 0.00025-0.0025 | 6,116,000,000 | 5.86 years | $ | 0.0001 | ||||||
NOTE 10 – PREFERRED STOCK
Series AA and Super Convertible Preferred Stock
Series A Convertible Preferred Stock
Series B Convertible Preferred Stock
Series C Convertible Preferred Stock
Series D Convertible Preferred Stock
Series E Convertible Preferred Stock,
Series F Convertible Preferred Stock
Series G Convertible Preferred Stock
During the year ended December 31, 2022, as consideration for the reverse merger, the Company issued 1,000,000 shares of Series G Convertible Preferred stock.
NOTE 11 – RELATED PARTY TRANSACTIONS
For the years ended December 31, 2022 and 2021, expenses of $40,875 and $50,500 were incurred for recruitment services by an entity owned by Michael Neece, Chief Product Officer. On December 16, bowmo, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “APA”) with a related party, Interview Mastery Corporation (“Interview Mastery”), a Delaware corporation, by and through Michael R. Neece (“Neece”) and Caseridus, Inc. See Note 4. Michael Neece, the seller of Interview Mastery, is the chief product officer of the Company. This resulted in a related party loss of $197,370 which is included in general and administrative expenses on the consolidated statements of operations.
Through December 31, 2022, the Company owed Eddie Aizman and Michael Lakshin compensation based on their employee agreements. The agreements provide for a salary of $200,000 and $180,000 per year, respectively. As of March 31,June 30, 2023 and December 31, 2022, $551,210$438,415 and $474,884 has been credited to accrued compensation.
On July 8, 2019, the Company executed an employment agreement with Conrad Huss. The agreement provides for a salary of $10,000 per month. As of March 31,June 30, 2023, $562,000$594,295 has been credited to accrued compensation.compensation and related payroll taxes.
The Company executed an employment agreement with Damian Hischier. The agreement provides for a salary of $10,000 per month. As of June 30, 2023, $53,825 has been credited to accrued compensation and related payroll taxes.
The Company executed an employment agreement with Keith Carlson. The agreement provides for a salary of $12,500 per month. As of June 30, 2023, $121,106 has been credited to accrued compensation and related payroll taxes.
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Contingency arising from indebtedness owed to Oasis Capital, LLC
A contingency arises when there is a situation for which the outcome is uncertain, and which should be resolved in the future, Generally Accepted Accounting Principles require recognition of only those losses that are probable and for which a loss amount can be reasonably estimated.
The following details the nature of the contingency with Oasis Capital LLC (“Oasis”). In the normal course of its business, Oasis files notices to convert (“conversion notices”) a portion of its outstanding ownership of the Company’s indebtedness into shares of common stock. As a customary procedure for the annual audit for the period ended December 31, 2020 of Cruzani, Cruzani’s auditors confirmed its outstanding balance of the indebtedness and related accrued interest. During the year ended December 31, 2021, Oasis submitted conversions which stated that the outstanding indebtedness was far greater than that which was on the Company’s books. The total amount of the increased indebtedness was approximately $1.2 million. After investigation, the Company determined that the difference related to liquidated damages that the Company does not believe that it owes.
Since the Company believes that the loss is not probable and no litigation has been pursued at this time, there has been no recognition of this liability on the books and records of the Company.
COVID-19 pandemic contingencies
The spread of the COVID-19 outbreak in the United States has resulted in economic uncertainties which may negatively impact the Company’s business operations. While the disruption is expected to be temporary, there is uncertainty surrounding the duration and extent of the impact. The impact of the coronavirus outbreak on the consolidated financial statements cannot be reasonably estimated at this time.
Adverse events such as health-related concerns about working in our offices, the inability to travel and other matters affecting the general work environment could harm our business and our business strategy. While we do not anticipate any material impact to our business operations as a result of the coronavirus, in the event of a major disruption caused by the outbreak of pandemic diseases such as coronavirus, we may lose the services of our employees or experience system interruptions, which could lead to diminishment of our business operations. Any of the foregoing could harm our business and delay the implementation of our business strategy and we cannot anticipate all the ways in which the current global health crisis and financial market conditions could adversely impact our business.
Management is actively monitoring the global situation on its financial condition, liquidity, operations, industry, and workforce.
Legal
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. A contingency arises when there is a situation for which the outcome is uncertain, and which should be resolved in the future, Generally Accepted Accounting Principles require recognition of only those losses that are probable and for which a loss amount can be reasonably estimated.
On February 13, 2017, Baum Glass & Jayne PLLC (“Plaintiff”) obtained a default judgment against the Company in the amount of $27,084. Plaintiff has not attempted enforced collection. The amount was included in accounts payable as of March 31, 2023 and December 31, 2022.
NOTE 13 – SUBSEQUENT EVENTS
Through August 25, 2023 the Company issued two convertible notes. The principal amount of these notes are $10,000 each, for a total amount of $20,000. They bear interest at 10% and are due in full on May 31, 2024 and June 30, 2024, respectively.
From July 1, 2023 through August 25, 2023, the Company issued 919,806,800 shares of the Company’s common stock upon conversion of $45,990 of principal and interest on its notes payable.
On July 12, 2023, the Company entered into a promissory note with a principal amount of $20,000. The note bears interest compounding monthly at a rate of 12% and matures on April 30, 2024.
On July 26, 2023, the Company entered into a promissory note with a principal amount of $10,000. The note bears interest compounding monthly at a rate of 12% and matures on April 30, 2024.
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” and similar expressions or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.
These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under “Liquidity and Capital Resources”. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws. Unless stated otherwise, terms such as the “Company,” “bowmo,” “we,” “us,” “our,” and similar terms shall refer to bowmo, Inc., a Wyoming corporation, and its subsidiaries.
Acquisitions
Interview masteryMastery
On December 16 2022, bowmo, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “APA”) with Interview Mastery Corporation (“Interview Mastery”), a Delaware corporation, by and through Michael R. Neece (“Neece”) and Caseridus, Inc. Under the terms of the APA, the Company will pay the purchase price through the issuance of 2,000,000,000 shares of the Company’s common stock in two tranches: (i) 1,000,000,000 shares of Company common stock to the stockholders of Interview Mastery that vest immediately for all of the business assets of Interview Mastery, valued at $200,000 based on the acquisition date share price of $0.0002; and (ii) 1,000,000,000 shares of Company common stock issued in consideration of Neece’s employment with the Company which shall vest over a four (4) year period during which 250,000,000 shares will vest on the first-year anniversary of Neece’s employment, followed by vesting in increments of 62,500,000 shares per quarter (3-month period) thereafter until the full amount is vested and all of which shall be contingent upon Neece’s continual employment with the Company. As of December 31, 2022, the 1,000,000,000 shares of common stock for the acquisition of Interview Mastery have not been issued, and as such, has been recorded as a liability in accrued expenses on the consolidated balance sheets. In connection with the APA, the Company shall create a new board seat and offer such seat to Neece who will be formally invited to join the Company’s Board of Directors.
The acquisition was accounted for as a business combination in accordance with the acquisition method under the guidance in ASC 805-10 and 805-20. This business combination was accounted for as a related party acquisition, as Neece is the chief product officer of the Company Accordingly, the total purchase consideration was allocated to net acquired based on their respective historical costs. The assets acquired, and liabilities assumed, if any, in a business purchase combination be recognized at their historical costs as of the acquisition date.
The final allocation of the purchase price in connection with the Interview Mastery acquisition was calculated as follows:
Description | Fair Value | |||
| Cash | $ | 1,633 | ||
| Prepaid expenses | 997 | |||
| Loss on acquisition – related party | 197,370 | |||
| $ | 200,000 | |||
Results of Operations
The following discussion and analysis of the results of operations and financial condition for the three months and six months ended March 31,June 30, 2023 and 2022 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Forward-Looking Statements.”
Three Months Ended March 31,June 30, 2023 Compared to the Three Months Ended March 31,June 30, 2022
For the three months ended | ||||||||
March 31, 2023 | March 31, 2022 | |||||||
Revenue | $ | 4,476 | $ | 88,667 | ||||
Cost of revenue | - | 27,579 | ||||||
Gross profit | 4,476 | 61,088 | ||||||
Operating expenses: | ||||||||
Compensation expense | 121,314 | 102,268 | ||||||
Consulting fees | 30,000 | - | ||||||
Professional fees | 160,054 | 10,000 | ||||||
General and administrative | 76,581 | 6,327 | ||||||
Total operating expenses | 387,949 | 118,595 | ||||||
Loss from operations | (383,473 | ) | (57,507 | ) | ||||
Other income (expenses): | ||||||||
Interest expense | (269,500 | ) | (5,010 | ) | ||||
Forgiveness of notes payable – PPP loan | - | |||||||
Grant income | - | |||||||
Gain on new methodology for accounting for debt conversion features | - | |||||||
Initial recognition of derivative liability | (32,429 | ) | - | |||||
Change in fair value of derivative liability | 1,303,044 | (1,545 | ) | |||||
Total other income (expenses) | 1,001,115 | (6,555 | ) | |||||
Income (loss) before income taxes | 617,642 | (64,062 | ) | |||||
Provision for income taxes | - | - | ||||||
Net Loss | 617,642 | (64,062 | ) | |||||
| For the three months ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Revenue | $ | - | $ | 61,181 | ||||
| Cost of revenue | - | 20,891 | ||||||
| Gross profit | - | 40,290 | ||||||
| Operating expenses: | ||||||||
| Compensation expense | 100,805 | 101,017 | ||||||
| Consulting fees | 30,000 | 46,667 | ||||||
| Professional fees | 3,415 | 120,718 | ||||||
| General and administrative | 30,840 | 48,588 | ||||||
| Total operating expenses | 165,060 | 316,990 | ||||||
| Loss from operations | (165,060 | ) | (276,700 | ) | ||||
| Other income (expenses): | ||||||||
| Interest expense | (227,905 | ) | (38,150 | ) | ||||
| Gain on new methodology for accounting for debt conversion features | - | 27,856 | ||||||
| Change in fair value of derivative liability | (872,763 | ) | - | |||||
| Total other income (expenses) | (1,100,668 | ) | (10,294 | ) | ||||
| Income (loss) before income taxes | (1,265,728 | ) | (286,994 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net Loss | (1,265,728 | ) | (286,994 | ) | ||||
Revenue
Revenues for the three months ended March 31,June 30, 2023 totaled $4,476,$0, a decrease of $84,191$61,181 or 95%100% compared to $88,667$61,181 of revenues for the three months ended March 31,June 30, 2022. This was primarily due to decreased operations for the three months ended March 31,June 30, 2023.
Cost of Revenue
Cost of revenues for the three months ended March 31,June 30, 2023 totaled $0, a decrease of $27,579$20,891 or 100% compared to $27,579$20,891 cost of revenues for the three months ended March 31,June 30, 2022. This was primarily a result of decreased operations for the three months ended March 31,June 30, 2023.
Compensation Expense
Compensation expense for the three months ended March 31,June 30, 2023 and March 31,June 30, 2022 was $121,314$100,805 and $102,268,$101,017, respectively, and consists entirely of compensation paid to officers.
Consulting Expense
Consulting expense for the three months ended March 31,June 30, 2023 and March 31,June 30, 2022 was $30,000 and $0$46,667 due to a consulting contract signed with a fixed fee of $10,000 per month.
General and administrative expenses
General and administrative expenses for the three months ended March 31,June 30, 2023 were $76,581$30,840 compared to $6,327$48,588 for the three months ended March 31,June 30, 2022. The decrease was primarily due to the company’s decreased operations during the three months ended June 30, 2023.
Professional fees
Professional fees for the three months ended June 30, 2023 were $3,415 compared to $120,718 for the three months ended June 30, 2022. The decrease in expenses was due to lower legal expenses.
Other Income (Expense)
Total other income (expense) of $1,100,668 for the three months ended June 30, 2023 was primarily attributable to the change in the value of derivative liabilities of $872,763 as well as interest expense of $227,905. Total other expense of $10,294 for the three months ended June 30, 2022, was comprised of interest expense of $38,150 and a gain on new methodology for accounting for debt conversion features of $27,856.
Net Income (Loss)
The Company had a net loss of $1,265,728 for the three months ended June 30, 2023, as compared to a net loss of $286,994 for the three months ended June 30, 2022.
Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022
| For the six months ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Revenue | $ | 4,476 | $ | 149,848 | ||||
| Cost of revenue | - | 48,470 | ||||||
| Gross profit | 4,476 | 101,378 | ||||||
| Operating expenses: | ||||||||
| Compensation expense | 222,119 | 203,285 | ||||||
| Consulting fees | 60,000 | 46,667 | ||||||
| Professional fees | 163,469 | 130,718 | ||||||
| General and administrative | 107,421 | 54,915 | ||||||
| Total operating expenses | 553,009 | 435,585 | ||||||
| Loss from operations | (548,533 | ) | (334,207 | ) | ||||
| - | ||||||||
| Other income (expenses): | - | |||||||
| Interest expense | (497,405 | ) | (43,160 | ) | ||||
| Gain on new methodology for accounting for debt conversion features | - | 27,856 | ||||||
| Initial recognition of derivative liability | (32,429 | ) | - | |||||
| Change in fair value of derivative liability | 430,281 | (1,545 | ) | |||||
| Total other income (expenses) | (99,553 | ) | (16,849 | ) | ||||
| Income (loss) before income taxes | (648,086 | ) | (351,056 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net Loss | (648,086 | ) | (351,056 | ) | ||||
Revenue
Revenues for the six months ended June 30, 2023 totaled $4,476, a decrease of $145,372 or 97% compared to $149,848 of revenues for the six months ended June 30, 2022. This was primarily due to decreased operations for the six months ended June 30, 2023.
Cost of Revenue
Cost of revenues for the six months ended June 30, 2023 totaled $0, a decrease of $48,470 or 100% compared to $48,470 cost of revenues for the six months ended June 30, 2022. This was primarily a result of decreased operations for the six months ended June 30, 2023.
Compensation Expense
Compensation expense for the six months ended June 30, 2023 and June 30, 2022 was $222,119 and $203,285, respectively, and consists entirely of compensation paid to officers.
Consulting Expense
Consulting expense for the six months ended June 30, 2023 and June 30, 2022 was $60,000 and $46,667 due to a consulting contract signed with a fixed fee of $10,000 per month.
General and administrative expenses
General and administrative expenses for the six months ended June 30, 2023 were $107,421 compared to $54,915 for the six months ended June 30, 2022. The increase was primarily due to payments for software services.the addition of stock based compensation issued to an officer of the Company.
Professional fees
Professional fees for the threesix months ended March 31,June 30, 2023 were $160,054$163,469 compared to $10,000$130,718 for the threesix months ended March 31,June 30, 2022. The increase in expenses were due to greater legal expenses.
Other Income (Expense)
Total other income (expense)expense of $1,001,115$99,553 for the threesix months ended March 31,June 30, 2023 was primarily attributable to the interest expense of $497,405 as well as the initial recognition andof derivative liability of $32,429; offset by a gain on the change in the fair value of the derivative liabilitiesliability of $1,270,615 as well as interest expense of $(269,500)$430,281. Total other expense of $(6,555)$16,849 for the threesix months ended March 31,June 30, 2022, was comprised of interest expense of ($5,010)$43,160 and a loss on the change in the fair value of derivatives of ($1,545).$1,545; offset by a gain on new methodology for accounting for debt conversion features.
Net Income (Loss)
The Company had net incomeloss of $617,642$648,086 for the threesix months ended March 31,June 30, 2023, as compared to a net loss of ($64,062)$351,056 for the threesix months ended March 31,June 30, 2022.
Quarterly Developments
None.
Significant Developments
On May 4, 2022, Cruzani, Inc., acquired Bowmo Inc. for the issuance of the Company’s Series G Preferred Stock holding the voting rights to 78% of the total voting equity securities. bowmo Inc. (“bowmo”) is an Artificial intelligence Human resource technology company delivering software and services that transform the hiring process. We provide our services to a broad range of clients in major cities around the world. bowmo and its predecessors have been a leadership advisor for more than 60 years. bowmo was formed as a Delaware corporation in 2015 by Robert Boyer and J. Strother Moore who in 1977 created the Boyer-Moore string-search algorithm, which serves as a predecessor algorithm for all search modalities such as Google.
Going Concern
The accompanying unaudited interim consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company on a going-concern basis. The going concern basis assumes that assets are realized, and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operations and has an accumulated deficit of $(8,626,283).$9.89 million. The Company’s ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing efforts.
Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Off Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were not effective for the quarterly period ended March 31,June 30, 2023.
The following aspects of the Company were noted as potential material weaknesses:
| 1. | We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the period ended |
| 2. | We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. As a result, as of the date of filing, we have not completed our ASC 606 implementation process and, thus, cannot disclose the quantitative impact of adoption on our financial statements. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
| 3. | We have inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the lack of timely communication between non–financial personnel and financial personnel on our assessment of our reporting controls and procedures and has concluded that the control deficiency represented a material weakness. |
| 4. | Certain control procedures were unable to be verified due to performance not being sufficiently documented. As an example, some procedures requiring review of certain reports could not be verified due to there being no written documentation of such review. Management evaluated the impact of its failure to maintain proper documentation of the review process on its assessment of its reporting controls and procedures and has concluded deficiencies represented a material weakness. |
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.
Changes in Internal Controls
Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company’s internal controls over financial reporting during the quarter ended March 31, 2022,June 30, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
On February 13, 2017, Baum Glass & Jayne PLLC (“Plaintiff”) obtained a default judgment against the Company in the amount of $27,083.74. Plaintiff has not attempted enforced collection. The amount was included in accounts payable as of March 31, 2022 and December 31, 2018. The management is having discussions with respect to the timing and structure of the settlement.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.
June 30, 2023 See Note Eight above for all unregistered sales of equity during the ThreeSix months ended March 31,June 30, 2022.
Not applicable.
Exhibit | Description | |
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 (formatted as Inline XBRL and contained in Exhibit 101). |
| * | filed herewith |
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BOWMO, INC. | ||
Date: | By: | /s/ Michael Lakshin |
Name: | Michael Lakshin | |
Title: | President and Chairman of the Board | |
(Principal Executive Officer) | ||
(Principal Financial and Accounting Officer) | ||
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