FOMO CORP. Management’s Discussion and Analysis of Financial

References in this Quarterly Report on Form 10-Q to “the Company,” “FOMO,” “us,”
“we,” “our,” and similar terms refer to FOMO Corp. and its subsidiaries.

Cautionary Note Regarding Forward- Looking Statements

The statements contained in this Quarterly Report on Form 10-Q that are not
historical facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the
Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking
statements are identified as any statement that does not relate strictly to
historical or current facts. Statements using words such as “may,” “could,”
“should,” “expect,” “plan,” “project,” “strategy,” “forecast,” “intend,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,”
“continue,” or similar expressions help identify forward-looking statements.

The forward-looking statements contained in this Quarterly Report on Form 10-Q
are largely based on our expectations, which reflect estimates and assumptions
made by our management. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other factors. Although
we believe such estimates and assumptions to be reasonable, they are inherently
uncertain and involve a number of risks and uncertainties that are beyond our
control. In addition, management’s assumptions about future events may prove to
be inaccurate. Management cautions all readers that the forward-looking
statements contained in this Quarterly Report on Form 10-Q are not guarantees of
future performance, and management cannot assure any reader that such statements
will be realized, or the forward-looking events and circumstances will in fact
occur. The Company’s actual results may differ materially from those
anticipated, estimated, projected or expected by management.

All forward-looking statements speak only as of the date of this Quarterly
Report on Form 10-Q. We do not intend to publicly update or revise any
forward-looking statements as a result of new information, future events or


Company Overview


From 2014 through 2019, the Company, which was then known as “2050 Motors, Inc.
was seeking to import, market and sell in the United States, Puerto Rico, the
U.S. Territories and Peru, the “e-Go” lightweight carbon fiber all-electric
vehicle and electric light truck which was to be manufactured by Jiangsu Aoxin
New Energy Automobile Co., Ltd.
(“Aoxin Automobile”) located in the People’s
Republic of China
(the “PRC”). Although the Company had entered into a
definitive agreement with Aoxin Automobile, However, due to export restrictions
imposed by the PRC, as well as tariffs imposed by the United States as a result
of its trade dispute with China, the Company encountered substantial delays and
was unable to commercially launch the vehicles in the U.S. Accordingly, in May
, the Company discontinued its planned electric vehicle business and instead
focused its efforts on exploring potential opportunities which management
believed offered better potential to generate revenues and create shareholder

Acquisition of IAQ Technologies LLC

On October 19, 2020, the Company acquired 100% of the membership interests of
Purge Virus, LLC in exchange for the issuance of 2,000,000 Series B Preferred
Shares valued at $800,000 to its member. We subsequently changed the name of the
company to IAQ Technologies LLC (“IAQ”). IAQ, which is based in Philadelphia,
, is engaged in the marketing and sale of disinfection products and services
to businesses, including hotels, hospitals, cruise ships, offices and government
facilities, as well as to individuals. Products and services marketed by IAQ

  ? Ultraviolet-C in-duct and portable devices;
  ? Hybrid disinfection devices with UVC, carbon filtration and HEPA filtration;
  ? Hybrid disinfection devices with UVC and Photo Plasma;
  ? Bio-polar ionization disinfection for virus and Volatile Organic Compound
    disinfection; and
  ? PPE (personal protective equipment) ranging from masks to gloves with
    factory-direct supply side logistics.

IAQ markets and sells its disinfection products and services through two
in-house sales managers.

Acquisitions of Independence LED LLC and Energy Intelligence Center LLC

On February 12, 2021 the Company purchased the assets of Independence LED LLC
(“iLED”), an affiliate of IAQ, in exchange for the issuance of 250,000 Series B
Preferred Shares valued at $3.3 million iLED, is in the sale of clean air
products intended for use in disinfecting and improving air quality.

On March 7, 2021, the Company purchased the assets of Energy Intelligence Center
(“EIC”), a second affiliate of IAQ, in exchange for the issuance of 125,000
Series B Preferred Shares valued at $1,479,121. EIC is engaged in the
commercialization, marketing and licensing of d software designed to work in
conjunction with a commercial building’s HVAC system to clean the air that
circulates within the building

Following the acquisitions of the assets of ILEDI and EIC, the Company combined
the assets and businesses of iLED and EIC into a newly formed wholly- owned
subsidiary, EIC of Wyoming LLC (“EIC Wyoming”).

The managing member of IAQ, iLED and EIC stayed on following the acquisitions to
run their businesses. However, in July 2021, the former managing member stepped
down and assumed a consulting roll and a new chief executive officer was hired
to run the businesses of IAQ and EIC Wyoming. Such individual resigned from his
position on March 2, 2022 and we have appointed an interim chief executive


Operating results for IAQ since its acquisition have not met expectations,
Accordingly, the interim chief executive is in the process of reorganizing IAQ.
Accordingly, we determined that IAQ’s value was impaired at December 31, 2021.

In addition, the software developer responsible for completing development and
implementation of EIC Wyoming left the company and has refused to assist us with
completing the software and transitioning the work to other individuals.
Accordingly, we are now in the process of identifying another person or entity
to take over and complete development of the software. As a result of this
delay, we determined that EIC Wyoming’s value was impaired was impaired at
December 31, 2021

Acquisition of SMARTSolution Technologies L.P.


On February 28, 2022, FOMO closed the acquisition of the general and all the
limited partnership interests of SMARTSolution Technologies L.P. (“SST”)
pursuant to a Securities Purchase Agreement dated February 28, 2022 (the “SPA”),
by and between the Company and Mitchell Schwartz (“Seller”), the beneficial
owner of the general and limited partnership interests in SST. SST is a
Pittsburgh, Pennsylvania-based audio/visual systems integration company that
designs and builds presentation, teleconferencing and collaborative systems for
businesses, educational institutions and other nonprofit organizations.

Pursuant to the SPA, FOMO:

  ? issued to Seller 1,000,000 shares of its authorized but unissued Series B
    Preferred Shares;
  ? paid approximately $927,600 of SST's indebtedness to the Seller and third
  ? entered into an "at will" employment agreement with Seller, pursuant to which
    Seller will continue to serve as SST's Chief Executive Officer at an annual
    salary of $100,000; and
  ? as an incentive to retain SST's other employees, issued to such employees, a
    total of 300,000,000 three-year common stock purchase warrants (the "Incentive
    Warrants"), each entitling the holder to purchase one share of SST common
    stock at an exercise price of $0.001 per share.

SST has been engaged in the EdTech business for over 25 years. SST markets its
systems to and installs the systems in elementary, middle and high schools, as
well as colleges, universities and other commercial facilities. A current focus
of SST’s business is the sale and installation of interactive smartboards to
elementary, middle and high schools. These interactive smartboards provide
students with interactive remote access from home or other locations to
classrooms and teachers via personal computers, laptops, tablets and similar
devices. Students can gain SST currently markets its systems primarily in
Pennsylvania and Ohio, is in the process of expanding into the Alabama and
Michigan markets and plan to expand further throughout the United States as
opportunities present itself.

As a result of the growth in remote learning, as a result of the COVID-19
pandemic and otherwise, SST is currently experiencing a significant increase in
orders and sales and a growth in backlog. Since the closing of the acquisition,
FOMO Corp. has secured approximately $600,000 in debt and convertible debt
financing to support SST’s fulfillment of additional orders and reduction of its

The interactive smartboards which form the key element of SST’s interactive
systems are supplied by a single supplier in Canada, which is a subsidiary of a
large multi-national company. SST believes that its relationship with its
supplier is excellent, although there can be no assurance that if the
relationship with the supplier was interrupted or otherwise adversely affected
that an alternative source of supply at commercially reasonable cost would be
available or that SST’s business would not be seriously harmed.

SST markets its systems and services through a lead sales manager who has
contacts with school boards in Pennsylvania and Ohio. SST also works with former
elected government officials that have contacts with school boards in Alabama
and Michigan.


The primary competitor of SST in the Pennsylvania and Ohio regions is a
Philadelphia-based entity which also markets and sells the interactive
whiteboards. SST believes that it competes effectively based on its contacts and
relationships with its existing and potential customers. However, there can be
no assurance given that SST additional competitors with greater financial and
other resources will not enter SST’s market or that SST will be able to
successfully compete as it enters new geographic markets.

SST currently employs 13 people, including 4 in administration, 2 in sales and 7
in installation. As a result of its growing backlog, SST is currently seeking to
expand its installation and sales staff.

Costs and Resources

FOMO CORP. is currently pursuing additional funding resources that will
potentially enable it to maintain its current and planned operations through the
next 12 months. The Company anticipates that it will need to raise additional
capital in order to sustain and grow its operations over the next few years. To
the extent that the Company’s capital resources are insufficient to meet current
or planned operating requirements, the Company will seek additional funds
through equity or debt financing, collaborative or other arrangements with
corporate partners, licensees or others, and from other sources, which may have
the effect of diluting the holdings of existing shareholders. As of March 31,
, the Company had no current arrangements with respect to, or sources of,
such additional financing and the Company does not anticipate that existing
shareholders or creditors will provide any portion of the Company’s future
financing requirements. No assurance can be given that additional financing will
be available when needed or that such financing will be available on terms
acceptable to the Company. If adequate funds are not available, the Company may
be required to delay or terminate expenditures for certain of its programs that
it would otherwise seek to develop and commercialize. This would have a material
adverse effect on the Company.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with generally accepted accounting principles in the United States. The
preparation of financial statements requires management to make estimates and
disclosures on the date of the financial statements. On an on-going basis, we
evaluate our estimates including, but not limited to, those related to revenue
recognition. We use authoritative pronouncements, historical experience and
other assumptions as the basis for making judgments. We believe that the
following critical accounting policies affect our more significant judgments and
estimates in the preparation of our financial statements.

Use of Estimates

Preparing financial statements in conformity with U.S. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates, and those estimates
may be material.

Significant estimates during the three months ended March 31, 2022 and 2021,
respectively, include, allowance for doubtful accounts and other receivables,
inventory reserves and classifications, valuation of investments, valuation of
loss contingencies, valuation of derivative liabilities, valuation of
stock-based compensation, estimated useful lives related to intangible assets
and property and equipment, uncertain tax positions, and the valuation allowance
on deferred tax assets.


Risks and Uncertainties

The Company operates in an industry that is subject to intense competition and
change in consumer demand. The Company’s operations are subject to significant
risk and uncertainties including financial and operational risks including the
potential risk of business failure.

The Company has experienced, and in the future expects to continue to
experience, variability in sales and earnings. The factors expected to
contribute to this variability include, among others, (i) the cyclical nature of
the industry, (ii) general economic conditions in the various local markets in
which the Company competes, including a potential general downturn in the
economy, and (iii) the volatility of prices in connection with the Company’s
distribution of the product. These factors, among others, make it difficult to
project the Company’s operating results on a consistent basis.

Fair Value of Financial Instruments

The Company accounts for financial instruments under Financial Accounting
Standards Board
(“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a
framework for measuring fair value and requires disclosures regarding fair value
measurements. Fair value is defined as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, based on the Company’s principal
or, in absence of a principal, most advantageous market for the specific asset
or liability.

The Company uses a three-tier fair value hierarchy to classify and disclose all
assets and liabilities measured at fair value on a recurring basis, as well as
assets and liabilities measured at fair value on a non-recurring basis, in
periods subsequent to their initial measurement. The hierarchy requires the
Company to use observable inputs when available, and to minimize the use of
unobservable inputs, when determining fair value.

The three tiers are defined as follows:

  ? Level 1 - Observable inputs that reflect quoted market prices (unadjusted) for
    identical assets or liabilities in active markets;
  ? Level 2 - Observable inputs other than quoted prices in active markets that
    are observable either directly or indirectly in the marketplace for identical
    or similar assets and liabilities; and
  ? Level 3 - Unobservable inputs that are supported by little or no market data,
    which require the Company to develop its own assumptions.

The determination of fair value and the assessment of a measurement’s placement
within the hierarchy requires judgment. Level 3 valuations often involve a
higher degree of judgment and complexity. Level 3 valuations may require the use
of various cost, market, or income valuation methodologies applied to
unobservable management estimates and assumptions. Management’s assumptions
could vary depending on the asset or liability valued and the valuation method
used. Such assumptions could include estimates of prices, earnings, costs,
actions of market participants, market factors, or the weighting of various
valuation methods. The Company may also engage external advisors to assist us in
determining fair value, as appropriate.

Although the Company believes that the recorded fair value of our financial
instruments is appropriate, these fair values may not be indicative of net
realizable value or reflective of re fair values.

The Company’s financial instruments, including cash, accounts receivable,
inventory, accounts payable and accrued expenses, loans payable and notes
payable are carried at historical cost. At March 31, 2022 and December 31, 2021,
respectively, the carrying amounts of these instruments approximated their fair
values because of the short-term nature of these instruments.

ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to
measure certain financial assets and liabilities at fair value (“fair value
option”). The fair value option may be elected on an instrument-by-instrument
basis and is irrevocable unless a new election date occurs. If the fair value
option is elected for an instrument, unrealized gains and losses for that
instrument should be reported in earnings at each subsequent reporting date. The
Company did not elect to apply the fair value option to any outstanding
financial instruments.


The Company evaluates its financial assets and liabilities subject to fair value
measurements on a recurring basis to determine the appropriate level in which to
classify them for each reporting period. This determination requires significant
judgments to be made.

Accounts Receivable

The Company has a policy of reserving for uncollectible accounts based on the
best estimate of the amount of probable credit losses in our existing accounts
receivable. We extend credit to customers based on an evaluation of their
financial condition and other factors. The Company generally does not require
collateral or other security to support accounts receivable and perform ongoing
credit evaluations of customers and maintain an allowance for potential bad
debts if required.

It is determined whether an allowance for doubtful accounts is required by
evaluating specific accounts where information indicates the customers may have
an inability to meet financial obligations. In these cases, we use assumptions
and judgment, based on the best available facts and circumstances, to record a
specific allowance for those customers against amounts due to reduce the
receivable to the amount expected to be collected. These specific allowances are
re-evaluated and adjusted as additional information is received. The amounts
calculated are analyzed to determine the total amount of the allowance. The
Company may also record a general allowance, as necessary.

Direct write-offs are taken in the period when we have exhausted our efforts to
collect overdue and unpaid receivables or otherwise evaluate other circumstances
that indicate the collectability of receivables.

Bad debt expense (recovery) is recorded as a component of general and
administrative expenses in the accompanying consolidated statements of


Inventory consists of finished products purchased from third-party suppliers.
The Company’s inventory primarily consists of Smart Boards which are sold by

Inventory is stated at the lower of cost or net realizable value. Cost is
determined using the specific identification method for finished goods.
Management compares the cost of inventory with the net realizable value and, if
applicable, an allowance is made for writing down the inventory to its net
realizable value, if lower than cost, inventory is reviewed for potential
write-down for estimated obsolescence or unmarketable inventory based upon
forecasts for future demand and market conditions. Generally, the Company only
keeps inventory on hand for sales made and in which a deposit has been received.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments
as of March 31, 2022 and December 31, 2021, which consist of convertible notes
payable and certain warrants (excluding those for compensation) and has
determined that such instruments qualify for treatment as derivative liabilities
as they meet the criteria for liability classification under ASC 815.

The Company analyzes all financial instruments with features of both liabilities
and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing
Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives
and Hedging”. Derivative liabilities are adjusted to reflect fair value at each
reporting period, with any increase or decrease in the fair value recorded in
the results of operations (other income/expense) as change in fair value of
derivative liabilities. The Company uses a binomial pricing model to determine
fair value of these instruments.


Upon conversion or repayment of a debt instrument in exchange for shares of
common stock, where the embedded conversion option has been bifurcated and
accounted for as a derivative liability (generally convertible debt and
warrants), the Company records the shares of common stock at fair value,
relieves all related debt, derivatives, and debt discounts, and recognizes a net
gain or loss on debt extinguishment. In connection with the debt extinguishment,
the Company typically records an increase to additional paid-in capital for any
remaining liability balance.

Equity instruments that are initially classified as equity that become subject
to reclassification under ASC Topic 815 are reclassified to liabilities at the
fair value of the instrument on the reclassification date.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from
Contracts with Customers, the core principle of which is that an entity should
recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity
expects to be entitled to receive in exchange for those goods or services. To
determine revenue recognition for arrangements that the Company determines are
within the scope of ASC 606, the Company performs the following five steps:

  ? Identification of the contract, or contracts, with a customer
  ? Identification of the performance obligations in the contract
  ? Determination of the transaction price
  ? Allocation of the transaction price to the performance obligations in the
  ? Recognition of the revenue when, or as, performance obligations are satisfied

Identify the contract with a customer

A contract with a customer exists when (i) the Company enters into an
enforceable contract with a customer that defines each party’s rights regarding
the services to be transferred and identifies the payment terms related to these
services, (ii) the contract has commercial substance and, (iii) the Company
determines that collection of substantially all consideration for services that
are transferred is probable based on the customer’s intent and ability to pay
the promised consideration. The Company applies judgment in determining the
customer’s ability and intention to pay, which is based on a variety of factors
including the customer’s historical payment experience or, in the case of a new
customer, published credit and financial information pertaining to the customer.

Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the
services that will be transferred to the customer that are both capable of being
distinct, whereby the customer can benefit from the service either on its own or
together with other resources that are readily available from third parties or
from the Company, and are distinct in the context of the contract, whereby the
transfer of the services is separately identifiable from other promises in the
contract. To the extent a contract includes multiple promised services, the
Company must apply judgment to determine whether promised services are capable
of being distinct and distinct in the context of the contract. If these criteria
are not met the promised services are accounted for as a combined performance

Determine the transaction price

The transaction price is determined based on the consideration to which the
Company will be entitled in exchange for transferring services to the customer.
To the extent the transaction price includes variable consideration, the Company
estimates the amount of variable consideration that should be included in the
transaction price utilizing either the expected value method or the most likely
amount method depending on the nature of the variable consideration. Variable
consideration is included in the transaction price if, in the Company’s
judgment, it is probable that a significant future reversal of cumulative
revenue under the contract will not occur. None of the Company’s contracts as of
March 31, 2022 and 2021, contained a significant financing component.


Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction
price is allocated to the single performance obligation. However, if a series of
distinct services that are substantially the same qualifies as a single
performance obligation in a contract with variable consideration, the Company
must determine if the variable consideration is attributable to the entire
contract or to a specific part of the contract. For example, a bonus or penalty
may be associated with one or more, but not all, distinct services promised in a
series of distinct services that forms part of a single performance obligation.
Contracts that contain multiple performance obligations require an allocation of
the transaction price to each performance obligation based on a relative
standalone selling price basis unless the transaction price is variable and
meets the criteria to be allocated entirely to a performance obligation or to a
distinct service that forms part of a single performance obligation. The Company
determines standalone selling price based on the price at which the performance
obligation is sold separately. If the standalone selling price is not observable
through past transactions, the Company estimates the standalone selling price
taking into account available information such as market conditions and
internally approved pricing guidelines related to the performance obligations.

Recognize revenue when or as the Company satisfies a performance obligation

The Company satisfies performance obligations either over time or at a point in
time. Revenue is recognized at the time the related performance obligation is
satisfied by transferring a promised service to a customer.

When determining revenues, no significant judgements or assumptions are
required. For all transactions, the sales price is fixed and determinable (no
variable consideration). All consideration from contracts is included in the
transaction price. The Company’s contracts all contain single performance

For our contracts with customers, payment terms generally range from advance
payments prior to product delivery and/or installation to certain cases where
payment is due within 30 days from job completion. The timing of satisfying our
performance obligations does not vary significantly from the typical timing of

For each revenue stream we do not offer any returns, refunds or warranties, and
no arrangements are cancellable. However, the Company acts as a reseller of
warranties for its Smart Boards, which are serviced by the manufacturer, and in
some cases requires SST to perform warranty related services.

Sales taxes and other similar taxes are excluded from revenue.

Smart Boards and Installation Services

Smart Boards are sold to customers and may require an upfront deposit. The
Company also installs its Smart Boards in connection with the sale. All revenue
is recognized at a point in time upon completion of any installation, which
typically occurs withing thirty (30) days of delivering the product.

Installation Services

Certain customers contract with the Company to perform installation only
services where they have acquired products from a different company/seller. All
revenue is recognized at a point in time upon completion of any installation.

Clean Air Technology

All sales are recognized upon delivery of products to the customer.


Contract Liabilities (Deferred Revenue)

Contract liabilities represent deposits made by customers before the
satisfaction of a performance obligation and recognition of revenue. Upon
completion of the performance obligation that the Company has with the customer
based on the terms of the contract, the liability for the customer deposit is
relieved and revenue is recognized.

Income Taxes

The Company accounts for income tax using the asset and liability method
prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets
and liabilities are determined based on the difference between the financial
reporting and tax bases of assets and liabilities using enacted tax rates that
will be in effect in the year in which the differences are expected to reverse.
The Company records a valuation allowance to offset deferred tax assets if based
on the weight of available evidence, it is more-likely-than-not that some
portion, or all, of the deferred tax assets will not be realized. The effect on
deferred taxes of a change in tax rates is recognized as income or loss in the
period that includes the enactment date.

The Company follows the accounting guidance for uncertainty in income taxes
using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax
positions initially need to be recognized in the financial statements when it is
more likely than not the position will be sustained upon examination by the tax
authorities. As of March 31, 2022 and December 31, 2021, respectively, the
Company had no uncertain tax positions that qualify for either recognition or
disclosure in the financial statements.

The Company recognizes interest and penalties related to uncertain income tax
positions in other expense. No interest and penalties related to uncertain
income tax positions were recorded for the three months ended March 31, 2022 and
2021, respectively.

Stock-Based Compensation

The Company accounts for our stock-based compensation under ASC 718
“Compensation – Stock Compensation” using the fair value-based method. Under
this method, compensation cost is measured at the grant date based on the value
of the award and is recognized over the service period, which is usually the
vesting period. This guidance establishes standards for the accounting for
transactions in which an entity exchanges it equity instruments for goods or
services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the
entity’s equity instruments or that may be settled by the issuance of those
equity instruments.

The Company uses the fair value method for equity instruments granted to
non-employees and use the Black-Scholes model for measuring the fair value of

The fair value of stock-based compensation is determined as of the date of the
grant or the date at which the performance of the services is completed
(measurement date) and is recognized over the vesting periods.

When determining fair value, the Company considers the following assumptions in
the Black- Scholes model:

? Exercise price,
? Expected dividends,
? Expected volatility,
? Risk-free interest rate; and
? Expected life of option


Basic and Diluted Earnings (Loss) per Share

Pursuant to ASC 260-10-45, basic earnings (loss) per common share is computed by
dividing net income (loss) by the weighted average number of shares of common
stock outstanding for the periods presented. Diluted earnings per share is
computed by dividing net income by the weighted average number of shares of
common stock, common stock equivalents and potentially dilutive securities
outstanding during the period. Potentially dilutive common shares may consist of
common stock issuable for stock options and warrants (using the treasury stock
method), convertible notes and common stock issuable. These common stock
equivalents may be dilutive in the future. In the event of a net loss, diluted
loss per share is the same as basic loss per share since the effect of the
potential common stock equivalents upon conversion would be anti-dilutive.

Related Parties

Parties are considered to be related to the Company if the parties, directly or
indirectly, through one or more intermediaries, control, are controlled by, or
are under common control with the Company. Related parties also include
principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties
with which the Company may deal with if one party controls or can significantly
influence the management or operating policies of the other to an extent that
one of the transacting parties might be prevented from fully pursuing its own
separate interests.

Recent Accounting Standards

Changes to accounting principles are established by the FASB in the form of
ASU’s to the FASB’s Codification. We consider the applicability and impact of
all ASU’s on our consolidated financial position, results of operations,
stockholders’ deficit, cash flows, or presentation thereof. Management has
evaluated all recent accounting pronouncements as issued by the FASB in the form
of Accounting Standards Updates (“ASU”) through the date these financial
statements were available to be issued and found no recent accounting
pronouncements issued, but not yet effective accounting pronouncements, when
adopted, will have a material impact on the consolidated financial statements of
the Company.

In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments
and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall
simplification initiative to reduce costs and complexity of applying accounting
standards while maintaining or improving the usefulness of the information
provided to users of financial statements. Among other changes, the new guidance
removes from GAAP separation models for convertible debt that require the
convertible debt to be separated into a debt and equity component, unless the
conversion feature is required to be bifurcated and accounted for as a
derivative or the debt is issued at a substantial premium. As a result, after
adopting the guidance, entities will no longer separately present such embedded
conversion features in equity and will instead account for the convertible debt
wholly as debt. The new guidance also requires use of the “if-converted” method
when calculating the dilutive impact of convertible debt on earnings per share,
which is consistent with the Company’s current accounting treatment under the
current guidance. The guidance is effective for financial statements issued for
fiscal years beginning after December 15, 2021, and interim periods within those
fiscal years, with early adoption permitted, but only at the beginning of the
fiscal year.

We adopted this pronouncement on January 1, 2022; however, the adoption of this
standard did not have a material effect on the Company’s consolidated financial


In May 2021, the Financial Accounting Standards Board (the “FASB”) issued
Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260),
Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock
Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own
Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or
Exchanges of Freestanding Equity-Classified Written Call Options. This new
standard provides clarification and reduces diversity in an issuer’s accounting
for modifications or exchanges of freestanding equity-classified written call
options (such as warrants) that remain equity classified after modification or
exchange. This standard is effective for fiscal years beginning after December
15, 2021
, including interim periods within those fiscal years. Issuers should
apply the new standard prospectively to modifications or exchanges occurring
after the effective date of the new standard. Early adoption is permitted,
including adoption in an interim period. If an issuer elects to early adopt the
new standard in an interim period, the guidance should be applied as of the
beginning of the fiscal year that includes that interim period. The Company does
not expect the adoption of this standard to have a material effect on the
Company’s consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):
Accounting for Contract Assets and Contract Liabilities from Contracts with
Customers, which requires an acquirer in a business combination to recognize and
measure contract assets and contract liabilities in accordance with Accounting
Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years
beginning after December 15, 2022 and early adoption is permitted. While the
Company is continuing to assess the timing of adoption and the potential impacts
of ASU 2021-08, it does not expect ASU 2021-08 will have a material effect, if
any, on its consolidated financial statements.

Results of Operations

Three months ended March 31, 2022 as compared to three months ended March 31,

Sales. During the three months ended March 31, 2022 and 2021, the Company had
$1,234,567 and $151,392 in sales, respectively. The increase from the 2021
quarter to the 2022 quarter was $1,083,175 (715%). Sales for the 2022 quarter
included one month of SST’s operations, which resulted in the increase from the

Cost of Sales. During the three months ended March 31, 2022 and 2021, the
Company incurred $1,068,640 and $132,221 in cost of sales, respectively. The
increase from the 2021 quarter to the 2022 quarter was $936,419 (708%). Cost of
sales include product sales and payroll. Cost of sales for the 2022 quarter
included one month of SST’s operations, which resulted in the increase from the
2021 quarter.

Gross Profit. Gross profit expressed as a percentage of sales for the three
months ended March 31, 2022 was 13%, which was relatively unchanged from 13% for
the three months ended March 31, 2021.

General and Administrative Expenses. During the three months ended March 31,
and 2021, the Company incurred general and administrative expenses of
$1,206,091 and $589,785, respectively, consisting primarily of salaries and
professional fees. The increase from the 2021 quarter to the 2022 quarter was
$616,306 (104%). General and administrative expenses for the 2022 quarter
included one month of SST’s operations, which resulted in the increase from the
2021 quarter.


Other Income (Expense). For the three months ended March 31, 2022 and 2021, the
Company reflected other expense – net of $678,121 and $1,818,616, respectively.
The decrease from the prior period was $1,140,495 (63%).

For the quarter ended March 31, 2022, other income (expenses) consisted of
interest expense of $62,795, amortization of debt discount of $205,776, change
in fair value of derivative liabilities of $2,716, derivative expense of
$12,192, loss on debt extinguishment of $205,691, gain on debt extinguishment of
$100,693 and change in fair value of marketable securities of $289,644.

For the quarter ended March 31, 2021, other income (expenses) consisted of
interest expense of $211,312, change in fair value of derivative liabilities of
$1,375,374 and loss on debt extinguishment of $231,930.

Net Loss. For the three months ended March 31, 2022, operating losses combined
with non-operating expenses of $678,121 resulted in net loss of $(1,718,285).

For the three months ended March 31, 2021, operating losses combined with
non-operating expense of $1,818,616, resulted in a net loss of ($2,389,230).

The decrease in net loss from the 2021 quarter to the 2022 quarter was a result
in the increase in sales as a result of the acquisition of SST on February 28,
and the inclusion of one month of SST’s operations in the 2022 quarter.

Our Auditors Have Issued a Going Concern Opinion

The Company’s independent registered public accounting firm has expressed
substantial doubt as to the Company’s ability to continue as a going concern as
of March 31, 2022. The unaudited consolidated financial statements in this
report on Form 10-Q have been prepared assuming that the Company will continue
as a going concern. As discussed in the notes to the unaudited consolidated
financial statements, these conditions raise substantial doubt from the
Company’s ability to continue as a going concern. The Company’s plans in regard
to these matters are also described in the notes to the Company’s unaudited
consolidated financial statements. The unaudited consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.

These consolidated financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business.

As reflected in the accompanying consolidated financial statements, for the
three months ended March 31, 2022, the Company had:

? a net loss of $1,718,285; and
? net cash used in operations of $780,363.

Additionally, at March 31, 2022, the Company had:

? an accumulated deficit of $21,963,430;
? stockholders' equity of $65,241; and
? a working capital deficit of $499,223.

Liquidity and Capital Resources

Cash Flows

Operating Activities

For the three months ended March 31, 2022 and 2021, the Company reflected net
cash used in operating activities of $1,337,343 and $348,225, respectively, an
increase of $989,118 (284%). Operating activities primarily consist of
stock-based compensation, warrants issued for services, change in fair value of
derivative liabilities, loss on debt extinguishment, gain on debt
extinguishment, change in fair value of marketable equity securities accounts
receivable, inventory, accounts payable and accrued expenses and deferred

Investing Activities

For the three months ended March 31, 2022 and 2021, the Company reflected net
cash provided by investing activities of $755,403 and $0; primarily consisting
of cash acquired in acquisition of SST and purchases of securities – net of
proceeds from sales of securities.

Financing Activities

For the three months ended March 31, 2022 and 2021, the Company reflected net
cash provided by financing activities of $552,565 and $605,158, respectively, a
decrease of $52,593 (9%). Financing activities primarily consisted of proceeds
and repayments from debt, drawdown on the accounts receivable credit facility
and proceeds from the issuance of common stock and Class A preferred stock.

During the three months ended March 31, 2022, the Company received $253,750 of
borrowed funds from non-related parties through the sale of convertible notes
payable, $1,000,000 in an asset backed loan against the accounts receivable of
SST and $195,000 loan from a related party (CEO of SST).

In addition, during this period the Company issued 301,448,152 shares of common
stock to lenders for conversions of $104,367 of principal and interest related
to third-party debt. The Company issued 650,000 shares of common stock for
services rendered, having a fair value of $535,000 ($0.0008$0.0009/share),
based upon the quoted closing trading price of the Company’s common stock, on an
as-converted basis of 1,000 shares of common stock for each share of Class B,
preferred stock.

We manage liquidity risk by reviewing, on an ongoing basis, our sources of
liquidity and capital requirements. The Company has cash on hand of $64,849 at
March 31, 2022. Although the Company intends to raise additional debt or equity
capital, the Company expects to continue to incur significant losses from
operations and have negative cash flows from operating activities for the
near-term. These losses could be significant as product and service sales ramp
up along with continuing expenses related to compensation, professional fees,
development and regulatory are incurred.

The Company has incurred significant losses since its inception and has not
demonstrated an ability to generate sufficient revenues from the sales of its
products and services to achieve profitable operations. There can be no
assurance that profitable operations will ever be achieved, or if achieved,
could be sustained on a continuing basis. In making this assessment we performed
a comprehensive analysis of our current circumstances including: our financial
position, our cash flows and cash usage forecasts for the twelve months ended
March 31, 2023, and our current capital structure including equity-based
instruments and our obligations and debts.


If the Company does not obtain additional capital, the Company will be required
to reduce the scope of its business development activities or cease operations.
The Company continues to explore obtaining additional capital financing and the
Company is closely monitoring its cash balances, cash needs, and expense levels.

These factors create substantial doubt about the Company’s ability to continue
as a going concern within the twelve-month period subsequent to the date that
these consolidated financial statements are issued. The consolidated financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern. Accordingly, the consolidated
financial statements have been prepared on a basis that assumes the Company will
continue as a going concern and which contemplates the realization of assets and
satisfaction of liabilities and commitments in the ordinary course of business.

Management’s strategic plans include the following:

? Pursuing additional capital raising opportunities (debt or equity),
? Continue to execute on our strategic planning while increasing operational


? Continuing to explore and execute prospective partnering or distribution

  opportunities? and
? Identifying unique market opportunities that represent potential positive
  short-term cash flow.

We expect our expenses will continue to increase during the foreseeable future
as a result of increased operational expenses and the development of our clean
air and audio/visual businesses. However, we do not expect and have already
generating revenues from our operations for the audio/visual business.
Consequently, our dependence on the proceeds from future debt or equity
investments will be used to implement our business plan of expanding our
business through mergers and acquisition and expanding revenues through growing
sales in the clean air and audio/visual businesses. If we are unable to raise
sufficient capital, we will be required to delay or forego some portion of our
business plan, which would have a material adverse effect on our anticipated
results from operations and financial condition. There is no assurance that we
will be able to obtain necessary amounts of additional capital or that our
estimates of our capital requirements will prove to be accurate. As of the date
of this Report we did not have any commitments from any source to provide such
additional capital. Even if we are able to secure outside financing, it may be
unavailable in the amounts or the times when we require. Furthermore, such
financing would likely take the form of bank loans, private placement of debt or
equity securities or some combination of these. The issuance of additional
equity securities would dilute the stock ownership of current investors while
incurring loans, leases or debt would increase our capital requirements and
possible loss of valuable assets if such obligations were not repaid in
accordance with their terms.

Contractual Obligations and Commitments

The Company had a material change in contractual obligations related to its
right-of-use operating lease, which was acquired in March 2022. There were no
commitments at December 31, 2021 as disclosed in the Annual Report on Form 10-K
for the year ended December 31, 2021.

Delinquent Loans

The Company is not in default on any of its debt arrangements.

Off-Balance Sheet Arrangements


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