UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September
30, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to
__________
Commission File No.: 000-54624
| Bowmo, inc. |
| (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 ☐ No ☒
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 ☒ No
☐
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 ☐ No ☒
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 November 19, 2024, there were 136,458,010 shares
of common stock outstanding.
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
Bowmo, Inc. and Subsidiaries
Consolidated Balance Sheets
| | |
September 30,
2024 (unaudited) | | |
December 31,
2023 (audited) | |
| | |
| | |
| |
| ASSETS | |
| | |
| |
| Cash and cash equivalents | |
$ | 5,345 | | |
$ | 6,308 | |
| Accounts receivable | |
| 18,172 | | |
| 18,172 | |
| Prepaid expenses and other current assets | |
| - | | |
| 1,838 | |
| Total Current Assets | |
| 23,517 | | |
| 26,318 | |
| | |
| | | |
| | |
| Loan to related party – Michael Laskshin | |
| 360 | | |
| - | |
| Loan to related party – Eddie A. | |
| 1,400 | | |
| - | |
| Prepaid expenses | |
| 858 | | |
| - | |
| Total Other Assets | |
| 2,618 | | |
| - | |
| | |
| | | |
| | |
| Total Assets | |
$ | 26,135 | | |
$ | 26,318 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accounts payable | |
| 1,235,030 | | |
| 1,144,735 | |
| Accrued expenses | |
| 13,500 | | |
| 213,707 | |
| Accrued interest | |
| 364,598 | | |
| 364,598 | |
| Accrued officer compensation | |
| 1,658,583 | | |
| 1,384,499 | |
| Accrued payroll taxes | |
| 91,127 | | |
| - | |
| Loans payable, current portion | |
| 30,000 | | |
| 30,000 | |
| Loans payable, related party | |
| 269,500 | | |
| 254,500 | |
| Convertible Notes, net of debt discount of $304,889 and $206,570 | |
| 98,193 | | |
| 440,109 | |
| Put premium on stock settled debt | |
| 205,684 | | |
| 205,684 | |
| Acquisition payable | |
| 200,000 | | |
| - | |
| Derivative liability | |
| 564,237 | | |
| 433,818 | |
| Total Current Liabilities | |
| 4,730,452 | | |
| 4,471,650 | |
| | |
| | | |
| | |
| Loans payable, net of current portion | |
| 193,202 | | |
| 193,202 | |
| Total Liabilities | |
| 4,923,654 | | |
| 4,664,852 | |
| | |
| | | |
| | |
| Commitments and Contingencies | |
| | | |
| | |
| | |
| | | |
| | |
| STOCKHOLDERS’ DEFICIT: | |
| | | |
| | |
| Series A Preferred stock, 3,500,000 shares authorized, par value $0.01; 3,381,520 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| 33,815 | | |
| 33,815 | |
| Series B Preferred stock, 10,000 shares authorized, par value $0.01; 5,000 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| 50 | | |
| 50 | |
| Series C Preferred stock, 10,000,000 shares authorized, par value $0.01; 5,000,000 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| 50,000 | | |
| 50,000 | |
| Series D Preferred stock, 125,000 shares authorized, par value $0.0001; 125,000 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| 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 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| - | | |
| - | |
| Series G Preferred stock, 1,000,000 shares authorized, par value $0.0001; 1,000,000 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| 1,000 | | |
| 1,000 | |
| Series H Preferred stock, 1,000,000 shares authorized, par value $0.0001; 1,000,000 and 0 and 10 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| - | | |
| 10 | |
| Series AA Preferred stock, 10,000,000 shares authorized, par value $0.0001; 0 and 652,259 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| - | | |
| - | |
| Series Super Preferred stock, 10,000,000 shares authorized, par value $0.0001; 0 and 500 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | |
| - | | |
| - | |
| Common stock 40,000,000,000 shares authorized, $0.00001 par value; 136,458,010 and 53,520,830 shares issued and outstanding, respectively at September 30, 2024 and December 31, 2023.* | |
| 1,365 | | |
| 535 | |
| Common stock to be issued, 2,550,000 and 2,550,000 shares as of September 30, 2024 and December 31, 2023, respectively | |
| 26 | | |
| 26 | |
| Treasury stock, at cost 2,917 shares as of September 30, 2024 and December 31, 2023, respectively. | |
| (773,500 | ) | |
| (773,500 | ) |
| Additional paid in capital * | |
| 9,471,986 | | |
| 8,876,064 | |
| Accumulated deficit | |
| (13,848,604 | ) | |
| (12,992,877 | ) |
| Total Stockholders’ Deficit | |
| (4,897,519 | ) | |
| (4,638,534 | ) |
| Total Liabilities and Stockholders’ Deficit | |
$ | 26,135 | | |
$ | 26,318 | |
The accompanying notes are an integral part
of these consolidated financial statements
Bowmo, Inc. and Subsidiaries
Consolidated Statements of Operations
Unaudited
| | |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
$ | - | | |
$ | 62,000 | | |
$ | - | | |
$ | 66,476 | |
| Cost of revenue | |
| - | | |
| - | | |
| - | | |
| - | |
| Gross Profit | |
| - | | |
| 62,000 | | |
| - | | |
| 66,476 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | | |
| | | |
| | |
| Compensation expense | |
| 125,000 | | |
| 209,303 | | |
| 375,000 | | |
| 431,421 | |
| Consulting fees | |
| - | | |
| 30,000 | | |
| - | | |
| 90,000 | |
| Professional fees | |
| 49,750 | | |
| 3,415 | | |
| 114,750 | | |
| 166,884 | |
| General and administrative | |
| 31,537 | | |
| 67,163 | | |
| 93,143 | | |
| 174,584 | |
| Total Operating Expenses | |
| 206,287 | | |
| 309,881 | | |
| 582,893 | | |
| 862,889 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss from Operations | |
| (206,287 | ) | |
| (247,881 | ) | |
| (582,893 | ) | |
| (796,413 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other Income (Expenses) | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
| - | | |
| (169,369 | ) | |
| - | | |
| (666,774 | ) |
| Gain on new methodology for accounting for debt conversion features | |
| - | | |
| - | | |
| - | | |
| - | |
| Initial recognition of derivative liability | |
| - | | |
| - | | |
| - | | |
| (32,429 | ) |
| Change in fair value of derivative liability | |
| 41,646 | | |
| (580,189 | ) | |
| (272,834 | ) | |
| (149,909 | ) |
| Total other income (expenses) | |
| 41,646 | | |
| (749,558 | ) | |
| (272,834 | ) | |
| (849,112 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Loss before income taxes | |
| (164,641 | ) | |
| (997,439 | ) | |
| (855,727 | ) | |
| (1,645,525 | ) |
| Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| NET (Loss) Income | |
$ | (164,641 | ) | |
$ | (997,439 | ) | |
$ | (855,727 | ) | |
$ | (1,645,525 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss per common share – basic and diluted | |
| (0.00 | ) | |
| (0.03 | ) | |
| (0.01 | ) | |
| (0.05 | ) |
| Weighted average common shares – basic and diluted * | |
| | | |
| 33,300,997 | | |
| | | |
| 31,260,512 | |
The accompanying notes are an integral part
of these consolidated financial statements
Bowmo, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders’
Deficit
For the Three and Nine Months Ended September 30, 2024 and 2023
| | |
Preferred
Stock AA | | |
Super
Preferred Stock | | |
Preferred
Stock A | | |
Preferred
Stock B | | |
Preferred
Stock C | | |
Preferred
Stock D | | |
Preferred
Stock E | | |
Preferred
Stock G | | |
Preferred
Stock H | | |
Common
Stock | | |
Common
Stock to be
issued | | |
| | |
| | |
| | |
Total
Equity
Equity/ | |
| | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Shares | | |
Amount
($) | | |
Additional
Paid-in | | |
Treasury
Stock | | |
Accumulated
Deficit | | |
(Deficit)
$ | |
| Balance
as of December 31, 2022 | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 3,381,520 | | |
$ | 33,815 | | |
| 5,000 | | |
$ | 50 | | |
| 5,000,000 | | |
$ | 50,000 | | |
| 125,000 | | |
$ | 12 | | |
| 0 | | |
$ | 166,331 | | |
| 1,000,000 | | |
$ | 1,000 | | |
| 0 | | |
$ | 0 | | |
| 27,049,736,362 | | |
$ | 270,497 | | |
| 0 | | |
$ | 26 | | |
$ | 3,599,032 | | |
$ | (773,500 | ) | |
$ | (9,243,925 | ) | |
$ | (5,896,662 | ) |
| Stock-based
compensation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 85,885 | | |
| | | |
| | | |
$ | 85,885 | |
| Relative
fair value of warrants issued with convertible debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 24,989 | | |
| | | |
| | | |
$ | 24,989 | |
| Share
issued for extinguishment of convertible debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 5,400,639,127 | | |
$ | 63,112 | | |
| | | |
| | | |
$ | 518,579 | | |
| | | |
| | | |
$ | 581,691 | |
| Shares issued
in exchange for services | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 100 | | |
$ | 10 | | |
| | | |
| | | |
| | | |
| | | |
$ | 1,364,837 | | |
| | | |
| | | |
| | |
| Net
Loss for nine months ended September 30, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (1,645,525 | ) | |
| (1,645,525 | ) |
| Balance
as of September 30, 2023 | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 3,381,520 | | |
$ | 33,815 | | |
| 5,000 | | |
$ | 50 | | |
| 5,000,000 | | |
$ | 50,000 | | |
| 125,000 | | |
$ | 12 | | |
| 0 | | |
$ | 166,331 | | |
| 1,000,000 | | |
$ | 1,000 | | |
| 100 | | |
$ | 10 | | |
| 32,450,375,489 | | |
$ | 333,610 | | |
| 0 | | |
$ | 26 | | |
$ | 5,593,322 | | |
$ | (773,500 | ) | |
$ | (10,889,450 | ) | |
$ | (6,849,621 | ) |
| Balance
as of December 31, 2023 | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 3,381,520 | | |
| 33,815 | | |
| 5,000 | | |
| 50 | | |
| 5,000,000 | | |
| 50,000 | | |
| 125,000 | | |
| 12 | | |
| 0 | | |
$ | 166,331 | | |
| 1,000,000 | | |
$ | 1,000 | | |
| 10,000 | | |
$ | 10 | | |
| 53,520,830 | | |
$ | 535 | | |
| 0 | | |
$ | 26 | | |
$ | 8,876,064 | | |
$ | (773,500 | ) | |
$ | (12,992,877 | ) | |
$ | (4,638,534 | ) |
| Equity
Issuance during 2024 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (10 | ) | |
| 82,937,180 | | |
$ | 829 | | |
| | | |
| | | |
$ | 368,467 | | |
| | | |
| | | |
$ | 369,286 | |
| Derivative
liability adjustments for Q2 2024 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 227,455 | | |
| | | |
| | | |
$ | 227,455 | |
| Net
Loss for nine months ended September 30, 2024 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (855,727 | ) | |
| (855,727 | ) |
| Balance
as of September 30, 2024 | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 3,381,520 | | |
$ | 33,815 | | |
| 5,000 | | |
$ | 50 | | |
| 5,000,000 | | |
$ | 50,000 | | |
| 125,000 | | |
$ | 12 | | |
| 0 | | |
$ | 166,331 | | |
| 1,000,000 | | |
$ | 1,000 | | |
| 10,000 | | |
$ | 0 | | |
| 136,458,010 | | |
$ | 1,365 | | |
| 0 | | |
$ | 26 | | |
$ | 9,471,986 | | |
$ | (773,500 | ) | |
$ | (13,848,604 | ) | |
$ | (4,897,519 | ) |
The accompanying notes are an integral part
of these consolidated financial statements
Bowmo, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Unaudited
| | |
September 30, | | |
September 30, | |
| | |
2024 | | |
2023 | |
| Cash Flows from Operating Activities | |
| | |
| |
| Net loss | |
$ | (855,727 | ) | |
$ | (1,645,525 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |
| | | |
| | |
| Interest expense incurred on put premium on stock settled debt | |
| - | | |
| 111,000 | |
| Amortization of debt discount | |
| (98,319 | ) | |
| 418,163 | |
| Stock-based compensation and shares issued for services | |
| - | | |
| 265,802 | |
| Expenses incurred on extinguishment of convertible debt and accrued interest | |
| - | | |
| 23,905 | |
| Initial derivative expense | |
| - | | |
| 32,429 | |
| Change in fair value of derivative liability | |
| 272,834 | | |
| 149,910 | |
| Changes in operating assets and liabilities (net of amounts acquired): | |
| | | |
| | |
| Accounts receivable | |
| - | | |
| 15,541 | |
| Prepaid expenses and other current assets | |
| 980 | | |
| - | |
| Related party loans | |
| (1,760 | ) | |
| - | |
| Accounts payable | |
| (52,129 | ) | |
| 139,454 | |
| Accrued expenses | |
| (200,207 | ) | |
| (286 | ) |
| Accrued Interest | |
| - | | |
| 30,511 | |
| Accrued compensation | |
| 274,083 | | |
| 324,139 | |
| Accrued payroll taxes | |
| 91,127 | | |
| | |
| Acquisition payable | |
| 200,000 | | |
| - | |
| Net Cash (Used In) Provided By Operating Activities | |
| (369,118 | ) | |
| (134,957 | ) |
| | |
| | | |
| | |
| Cash Flows from Investing Activities | |
| | | |
| | |
| Net Cash Provided by Investing Activities | |
| - | | |
| - | |
| | |
| | | |
| | |
| Cash Flows from Financing Activities | |
| | | |
| | |
| Proceeds from loans payable | |
| 15,000 | | |
| 89,000 | |
| Proceeds from equity issuances | |
| 596,751 | | |
| - | |
| Repayment of loans | |
| (243,596 | ) | |
| (117,278 | ) |
| Net Cash Provided by Financing Activities | |
| 368,155 | | |
| (28,278 | ) |
| | |
| | | |
| | |
| Net Change in Cash and Cash Equivalents | |
| (963 | ) | |
| (163,235 | ) |
| | |
| | | |
| | |
| Cash And Cash Equivalents - Beginning of Year | |
| 6,308 | | |
| 167,103 | |
| | |
| | | |
| | |
| Cash And Cash Equivalents - End of Year | |
$ | 5,345 | | |
$ | 3,868 | |
| | |
| | | |
| | |
| Supplemental Disclosure of Cash and Non-cash Transactions: | |
| | | |
| | |
| Cash paid for interest | |
$ | - | | |
$ | - | |
| Cash paid for interest | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Non-Cash Transactions | |
| | | |
| | |
| Conversion of convertible debt to Common Stock | |
$ | 369,286 | | |
$ | - | |
| Derivative liability adjustments to Additional Paid-In Capital | |
$ | 227,455 | | |
$ | - | |
The accompanying notes are an integral part of
these consolidated financial statements
Bowmo, Inc. and Subsidiaries
Notes to the Audited Consolidated Financial
Statements
For the Nine Months Ended September 30, 2024
and 2023
NOTE 1 – BACKGROUND
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”)
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 the acquirer for accounting purposes. 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.
Accounting for Reverse Merger
The fair value of Cruzani assets acquired and
liabilities assumed was based upon management’s estimates.
The following table summarizes the allocation
of purchase price of the acquisition:
| Tangible Assets Acquired: | |
Allocation | |
| Cash and cash equivalents | |
| 517 | |
| Accounts payable | |
| (326,400 | ) |
| Accrued interest | |
| (1,197,027 | ) |
| Accrued officer compensation | |
| (453,333 | ) |
| Convertible Notes | |
| (620,933 | ) |
| Put premium on stock settled debt | |
| (230,743 | ) |
| Loans payable | |
| (254,500 | ) |
| Net Tangible Assets Acquired | |
$ | (3,082,419 | ) |
| | |
| | |
| Equity Acquired: | |
| | |
| Series A Preferred stock, 3,500,000 shares authorized, par value $0.01; 3,381,520 shares issued and outstanding | |
| (33,815 | ) |
| Series B Preferred stock, 10,000 shares authorized, par value $0.01; 5,000 shares issued and outstanding | |
| (50 | ) |
| Series C Preferred stock, 10,000,000 shares authorized, par value $0.01; 5,000,000 shares issued and outstanding | |
| (50,000 | ) |
| Series D Preferred stock, 125,000 shares authorized, par value $0.0001; 125,000 shares issued and outstanding | |
| (12 | ) |
| Series E Preferred stock to be issued | |
| (166,331 | ) |
| Series F Preferred stock, 101 shares authorized, par value $0.0001; 101 shares issued and outstanding | |
| - | |
| Common stock 20,000,000,000 shares authorized, $0.00001 par value; 8,955,014,498 shares issued and outstanding | |
| (89,550 | ) |
| Treasury stock, at cost – 2,917 shares | |
| 773,500 | |
| Additional paid in capital | |
| (2,648,676 | ) |
| | |
| | |
| Consideration: | |
| | |
| Series G Preferred Stock holding the voting rights to 78% of the total voting equity securities to Bowmo’s stockholders | |
| 1,000 | |
Organization and Business
Bowmo, Inc. (FKA Cruzani, Inc.) (the “Company”)
is an AI-powered recruiting platform. The Company’s principal lines of business are direct placement of candidates with employers
and Recruiting as a Service which allows the Company’s customers to outsource the management of their recruiting process to the
Company. 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.
NOTE 2 – GOING CONCERN
The accompanying 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 incurred a net loss for the nine months
ended September 30, 2024, of $855,727, of which $582,893 was due to operations and the remainder was due primarily to derivative liabilities.
As of September 30, 2024, the Company has a working capital deficit of $4,706,935 and an accumulated deficit of $13,848,604.
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 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The Company’s financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).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 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. Management further acknowledges that it is solely responsible for adopting sound accounting practices,
establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal
accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) valid transactions are recorded;
and (3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial
condition, results of operations and cash flows of the Company for the respective periods being presented.
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Significant estimates include the fair value of the Company’s stock, stock-based compensation, fair values
relating to derivative liabilities, debt discounts and the valuation allowance related to deferred tax assets. Actual results may differ
from these estimates.
COVID-19 Impacts on Accounting Policies and
Estimates
COVID-19 Impacts on Accounting Policies and Estimates
In light of the currently unknown ultimate duration and severity of COVID-19, we face a greater degree of uncertainty than normal in making
the judgments and estimates needed to apply our significant accounting policies. As COVID-19 continues to develop, we may make changes
to these estimates and judgments over time, which could result in meaningful impacts to our financial statements in future periods.
Principals of Consolidation
The consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
Cash and Cash Equivalents
The Company accounts for cash and cash equivalents
under FASB ASC 305, Cash and Cash Equivalents, and considers all highly liquid investments with an original maturity of three months
or less to be cash equivalents. At September 30, 2024 and December 31, 2023, the Company had cash and cash equivalents of $5,345 and $6,308,
respectively. There are no amounts that are uninsured by the FDIC (Federal Deposit Insurance Corporation).
Deferred Income Taxes and Valuation Allowance
We recognize deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with
applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the
differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected
to be realized. For the years ended December 31, 2023 and 2022, respectively, due to cumulative losses, we recorded a valuation
allowance against our deferred tax asset that reduced our income tax benefit for the period to zero. As of December 31, 2023 and 2022,
we had no liabilities related to federal or state income taxes and the carrying value of our deferred tax asset was zero.
The Company accounts for income taxes applying
FASB ASC 740, which requires the recognition of deferred tax liabilities and assets for expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based
on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.
Financial Instruments
The Company adopted the provisions of Accounting
Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value
as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded
at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that
market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:
| Level 1 – | Quoted prices in active markets for identical
assets or liabilities. |
| Level 2 – | Observable inputs other than Level 1 prices
such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from
or corroborated by observable market data for substantially the full term of the assets or liabilities. |
| Level 3 – | Unobservable inputs to the valuation methodology
that are significant to the measurement of fair value of assets or liabilities. |
All items required to be recorded or measured
on a recurring basis are based upon level 3 inputs. To the extent that valuation is based on models or inputs that are less observable
or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair
value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value
hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to
the fair value measurement.
Upon adoption of ASC 825-10, there was no cumulative
effect adjustment to beginning retained earnings and no impact on the financial statements.
The carrying value of the Company’s cash
and cash equivalents, accounts receivable, accounts payable, short-term borrowings (including convertible notes payable), and other current
assets and liabilities approximate fair value because of their short-term maturity.
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 variable quantity of shares (“stock settled debt”) be recorded as a liability at the fixed monetary amount.
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 2024 and 2023. 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
For annual reporting periods after December 15,
2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 Revenue from Contracts with Customers,
to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now recognized in accordance with FASB ASC Topic
606, Revenue Recognition. The objective of the guidance is to establish the principles that an entity shall apply to report useful
information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from
a contract with a customer. The principle is to recognize revenue to depict the transfer of promised services to customers in an amount
that reflects the consideration to which the Company expects to be entitled in exchange for those services. Two options were made available
for implementation of the standard: the full retrospective approach or modified retrospective approach. The guidance became effective
for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption
permitted.
The Company generates revenue from (1) Recruiting
as a Service (“Raas”), and (2) Direct Placement.
Recruiting as a Service:
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 December 31, 2023 and 2022 there was no refund liability on the consolidated balance
sheets as historically no direct placement revenue has been refunded to the Company.
Revenue Segementation
For nine months ended September 30, 2024, and
September 30, 2023, revenues can be categorized into the following:
| | |
September 30,
2024 | | |
September 30,
2023 | |
| | |
| | |
| |
| Direct placement | |
$ | - | | |
$ | 62,000 | |
| Recruiting as a Service | |
| - | | |
| 4,476 | |
| Total revenues | |
$ | - | | |
$ | 66,476 | |
Cost of revenues
Cost of revenue consist 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.
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
We have reviewed the FASB issued Accounting Standards
Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported
and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles
and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position
or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain
standards are under consideration.
Change in account principle
Commencing with 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.
NOTE 4 – BUSINESS COMBINATIONS
Interview Mastery Asset Purchase
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 (pre-reverse split) 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 (pre-reverse split) 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 (pre-reverse split) 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 created a new board seat and offered this seat to Neece who
was 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 | |
Weighted Average
Useful Life
(Years) | |
| Cash | |
$ | 1,633 | |
| | |
| Prepaid expenses | |
| 997 | |
| | |
| Loss on acquisition – related party | |
| 197,370 | |
| | |
| | |
$ | 200,000 | |
| | |
Total acquisition costs incurred were $58,092
recorded as a component of General and administrative expenses. As a result of the business combination, the Company recognized a related
party loss of $197,370 which is included in general and administrative expenses on the consolidated statements of operations during the
year ended December 31, 2022.
Pro Forma Information
The results of operations of Interview Mastery
will be included in the Company’s consolidated financial statements as of the date of acquisition through the current period end.
The following supplemental pro-forma financial information approximate combined financial information assumes that the acquisition had
occurred at the beginning of the years ended December 31, 2022 and 2021:
| | |
December 31, | | |
December 31, | |
| | |
2022 | | |
2021 | |
| Revenue | |
$ | 198,982 | | |
$ | 216,367 | |
| Net Loss | |
$ | (4,595,717 | ) | |
$ | (287,779 | ) |
| Earnings (Loss) per common share, basic and diluted | |
$ | | | |
$ | (0.02 | ) |
NOTE 5 – LOANS PAYABLE
As a result of the reverse merger that occurred
on May 4, 2022, as discussed in Note 1, the Company assumed Loans 1 through 5 on the table below from Cruzani.
The Cruzani loan payable balances are as follows:
| | |
Rate | | |
September 30,
2024 | | |
December 31,
2023 | |
| Loan 1 | |
| 1 | % | |
$ | 42,000 | | |
$ | 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 | |
| | | |
| - | | |
| - | |
| Total | |
| | | |
$ | 269,500 | | |
$ | 254,500 | |
Annual maturities of the Cruzani notes payable are as follows:
| For the year ending | |
Amount | |
| December 31, 2024 | |
| 6,807 | |
| December 31, 2025 | |
| 7,066 | |
| December 31, 2026 | |
| 7,336 | |
| December 31, 2027 | |
| 7,616 | |
| Thereafter | |
| 240,675 | |
| Total payments | |
$ | 269,500 | |
Loans 1 through 5 are past due as of the issuance
of these financial statements.
Loan 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) 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) 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) 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) 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 February 2022, the Company agreed to the first
and second modifications of the EIDL Loan. The EIDL was modified to include additional borrowings of $269,200, which were received in
full in February 2022. Periodic monthly payments have increased to $1,556 in the first modification, and reduced to $1,506 in the second
modification. Additionally, the Company entered into an amended security agreement with the SBA in which this promissory note, and the
modifications, is collateralized by all tangible and intangible assets of the Company. The balance of the EIDL loan balance at September
30, 2024, and December 31, 2023 $193,202 and $193,202, respectively.
NOTE 6 – CONVERTIBLE NOTES
The following table summarizes the convertible
notes as of September 30, 2024, and December 31, 2023:
| | |
September 30, | | |
December 31, | | |
Put Premium
On Stock | |
| Creditor | |
2024 | | |
2023 | | |
Settled Debt | |
| Frondeur | |
$ | 16,083 | | |
$ | 123,793 | | |
$ | 16,083 | |
| Kings Wharf | |
| 46,900 | | |
| 42,200 | | |
| - | |
| 1800 Diagonal Lending | |
| 152,000 | | |
| 117,000 | | |
| 40,000 | |
| Trillium | |
| 124,000 | | |
| - | | |
| 124,000 | |
| Matterhorn | |
| 12,000 | | |
| 8,454 | | |
| - | |
| Travel Data Solutions | |
| - | | |
| 125,000 | | |
| - | |
| Travere Opportunity Fund | |
| 12,000 | | |
| - | | |
| - | |
| Third Party | |
| 40,099 | | |
| 230,232 | | |
| 25,601 | |
| Total | |
| 403,083 | | |
| 646,679 | | |
| 205,684 | |
| Less: Debt discount | |
| (304,889 | ) | |
| (206,570 | ) | |
| | |
| Total Convertible notes payable | |
$ | 98,194 | | |
$ | 440,109 | | |
| | |
Frondeur
Between June 1, 2022 and December 1, 2022, the
Company entered into several convertible notes with Frondeur Partners, LLC bearing interest at 10% per annum and totaling $160,000. 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. During the years ended December
31, 2023 and 2022, the lender opted to convert certain portions of the notes into shares of the Company’s common stock.
During the three months ended March 31, 2024,
the Company issued three additional convertible notes to Fondeur. The aggregate principal amount of these notes is $30,000, and the notes
are dated January 1, 2024 ($10,000), February 1, 2024 ($10,000) and March 1, 2024 ($10,000). They bear interest at 12% and are due in
full at October 31, 2024, November 30, 2024 and December 31, 2024, respectively. Due to these conversions, the remaining principal balances
at September 30, 2024, and December 31, 2023, was $16,083 and $123,793, respectively. The Company granted 150,000 warrants to purchase
150,000 shares of the Company’s common stock with these convertible notes. These warrants have an exercise price of $0.0001 and
a term of five years.
Kings Wharf
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. During the years ended December 31, 2023 and 2022, the lender opted to convert certain
portions of the note into shares of the Company’s common stock. Due to these conversions, the remaining principal balances at September
30, 2024, and December 31, 2023, was $46,900 and $42,200, respectively.
1800 Diagonal Lending
November 10, 2023, the Company entered into a
convertible note with 1800 Diagonal Lending bearing interest at 10% totaling $77,000. This convertible note is convertible at the lesser
of $0.0001 or 61% 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 quality for embedded derivative classification as a result of variable conversion
price features, which is not a fixed discount rate. The outstanding remaining principal balances at September 30, 2024, and December 31,
2023, was $112,000 and $77,000, respectively.
December 12, 2023, the Company entered into a
convertible note with 1800 Diagonal Lending bearing interest at 10% totaling $40,000. This convertible note is convertible at the lesser
of $0.0001 or 61% 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 quality for embedded derivative classification as a result of variable conversion
price features, which is not a fixed discount rate. The outstanding remaining principal balances at September 30, 2024, and December 31,
2023, was $40,000 and $40,000, respectively.
During the six months ended June 30, 2024, the
Company entered into a convertible note with 1800 Diagonal Lending bearing interest at 10% totaling $35,000. This convertible note is
convertible at the lesser of $0.0001 or 61% 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 quality for embedded derivative classification as
a result of variable conversion price features, which is not a fixed discount rate. The outstanding remaining principal balances at September
30, 2024, and December 31, 2023, was $35,000 and $0, respectively.
Trillium
Between May 25, 2021 and July 6, 2021, Cruzani
entered into two convertible notes with Trillium Partners, LP bearing interest at 10% per annum and totaling $44,000. These convertible
notes were convertible at a fixed price of $0.0001. During the years ended December 31, 2023 and 2022, the lender opted to convert certain
portions of the note into shares of the Company’s common stock. Due to these conversions, the remaining principal balances at September
30, 2024, and December 31, 2023, was $0 and $0, respectively.
Between June 1, 2022 and December 6, 2022, the
Company entered into several convertible notes with Trillium Partners, LP bearing interest between 10% and 12% per annum and totaling
$332,800. These convertible notes are convertible at a fixed price between $0.0001 and $0.0002. During the years ended December 31,
2023 and 2022, the lender opted to convert certain portions of the note into shares of the Company’s common stock. Due to these
conversions, the remaining principal balances at September 30, 2024, and December 31, 2023, was $0 and $0, respectely.
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. During the years ended December 31, 2023 and 2022, the lender opted to convert certain
portions of the note into shares of the Company’s common stock. Due to these conversions, the remaining principal balances at September
30, 2024, and December 31, 2023, was $62,000 and $0, respectively.
During the six months ended June 30, 2024, the
Company entered into four additional convertible notes with Trillium Partners, LP bearing interest of 10% to 12% totaling $62,000. These
notes include original issue discounts totaling $7,000. These notes have 6 months maturity dates and are 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. The remaining principal balances at September 30, 2024, and December 31, 2023, was
$62,000 and $0, respectively.
Matterhorn
On August 15, 2023, the Company entered into a
convertible note with Matterhorn Partners LLC bearing interest at 12% totaling $25,000. The note included an original issue discount of
$4,000. 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 quality for embedded
derivative classification as a result of variable conversion price features, which is not a fixed discount rate. This convertible note
is fully guaranteed by the Company’s Chief Executive Officer, Eddie Aizman and President, Michael Lakshin. During the years ended
December 31, 2023 and 2022, the lender opted to convert certain portions of the note into shares of the Company’s common stock.
Due to these conversions, the remaining principal balances at September 30, 2024, and December 31, 2023, was $0 and $8,454, respectively.
On June 20, 2024 (not funded until July 1, 2024),
the Company entered into a convertible note with Matterhorn Partners LLC bearing interest at 10% totaling $12,000. The note included an
original issue discount of $2,000. This convertible note is convertible at a 50% discount to market 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 quality for embedded derivative classification as a result of variable conversion price features, which is not a fixed discount rate.
The remaining principal balances at September 30, 2024, and December 31, 2023, was $12,000 and $0, respectively.
Travel Data Solutions
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 agree 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. During the year ended December 31, 2023, the balance of the note was converted into shares of the
Company’s common stock. As of September 30, 2024, and December 31, 2023, the outstanding balance was $ 0 and $125,000, respectively.
Travere Opportunity Fund
On June 20, 2024 (not funded until July 3, 2024),
the Company entered into a convertible note with Matterhorn Partners LLC bearing interest at 10% totaling $12,000. The note included an
original issue discount of $2,000. This convertible note is convertible at a 50% discount to market 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 quality for embedded derivative classification as a result of variable conversion price features, which is not a fixed discount rate.
The remaining principal balances at September 30, 2024, and December 31, 2023, was $12,000 and $0, respectively.
Third Party
As a result of the reverse merger that occurred
on May 4, 2022, as discussed in Note 1, the Company assumed convertible notes from Cruzani, most of which have been converted into common
stock in the Company. The last remaining convertible debt outstanding during the nine months ended September 30, 2024, and the year ended
December 31, 2023, was a note that was entered into 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 December 31, 2022,
this convertible note is in default and the principal and accrued interest balance remain outstanding. During the year ended December
31, 2023, the Company had additional borrowings of $6,728. As of September 30, 2024, and December 31, 2023, the outstanding balance was
$40,099 and $230,232, respectively
NOTE 7 – PUT PREMIUM ON STOCK SETTLED
DEBT
At the end of the quarter ended June 30, 2022,
the Company decided to adopt ASC 480 - “Distinguishing Liabilities from Equity.” When they enter into convertible notes, some
of which contain, predominantly, fixed rate conversion features (See Note 7 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.
In previous years, the Company had recorded such
items as derivative liabilities (See Note 8). Thus, there was a charge to put premium on stock settled debt and a decrease to derivative
liability for all convertible debt determined to have fixed rate conversion options. On a going-forward basis, all put premiums will be
recorded as a liability as
put premium on stock settled debt on the consolidated
balance sheets with a charge to interest expense.
The company believes this change in accounting
principles 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 $0 and $27,856 on the statement
of operations for the years ended December 31, 2023, and December 31, 2022, respectively.
NOTE 8 – DERIVATIVE LIABILITIES
Commencing with the second quarter of 2022, the
Company 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.
The embedded conversion options of certain of
the Company’s convertible debentures summarized in Note 6 contain variable conversion features that qualify for embedded derivative
classification under ASC 815-15 Embedded Derivatives. 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 | |
| (4,035,300 | ) |
| Transfer to put premium | |
| 651,156 | |
| Change in fair value | |
| 1,645,712 | |
| Balance as of December 31, 2023 | |
| 433,818 | |
| Change in fair value | |
| 130,419 | |
| Balance as of September 30, 2024 | |
$ | 564,237 | |
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:
| | |
September 30,
2024 | |
December 31,
2023 |
| Stock price | |
$0.0001 - $0.1500 | |
$0.0001 - $0.1500 |
| Exercise price | |
$0.00003 - $0.2572 | |
$0.00003 - $0.2572 |
| Contractual term (in years) | |
7.00 – 0.025 | |
7.00 – 0.025 |
| Volatility (annual) | |
174% - 2068% | |
174% - 2068% |
| Risk-free rate | |
4.41% - 5.57% | |
4.41% - 5.57% |
NOTE 9 – RELATED PARTY TRANSACTIONS
For the nine months ended September 30, 2024,
and the year ended December 31, 2023, expenses of $9,693 and $38,771 were incurred for recruitment services by an entity owned by Michael
Neece, Chief Product Officer.
Per the agreement with Michael Neece, a salary
of $12,500 and a bonus of $4,167 was accrued for the year ended December 31, 2022. For the year ended December 31, 2023, an additional
$150,000 in salary and a bonus of $50,000 was accrued. For the nine months ended September 30, 2024, an additional $112,500 in salary
was accrued.
On December 16, 2022, 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. Michael Neece, the
seller of Interview Mastery, is the chief product officer of the Company.
Through September 30, 2024, the Company owed Eddie
Aizman and Michael Lakshin compensation based on their employment agreements; the agreements provide for annual salaries of $180,000 and
$200,000, respectively commencing on September 6, 2022. During the year ended December 31, 2022, salaries of $57,205 and $63,562, were
accrued for Eddie Aizman and Michael Lakshin, respectively. During the nine months ended September 30, 2024, and the year ended December
31, 2023, salaries of $180,000 and $200,000, were accrued for Eddie Aizman and Michael Lakshin, respectively on an annualized basis. As
of September 30, 2024, the total due to Eddie Aizman and Michal Lakshin is $372,205 and $413,562, respectively.
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 September 30, 2024, no additional amounts
have been credited to accrued compensation.
NOTE 10 – 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.
During the year ended December 31, 2022, the Company
issued 18,094,721,962 (pre-reverse split) shares of common stock for the extinguishment of convertible debt.
During the year ended December 31, 2023, the Company
issued 6,364,768,689 (post-reverse split) shares of common stock for the extinguishment of convertible debt.
During the three and nine months ended September
30, 2024, the Company issued 0 and 82,937,180 shares of common stock respectively for the extinguishment of convertible debt.
As of September 30, 2024, the Company had 136,458,010
shares of common stock outstanding.
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 (pre-reverse split) shares of the Company’s common stock,
valued at $200,000 using the stock price on the acquisition date. As of September 30, 2024 and December 31, 2023, these shares have not
been issued and are recorded as a liability within accrued expenses on the consolidated balance sheet.
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 (pre-reverse split) 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 (pre-reverse split) shares will vest on the first-year anniversary of Neece’s employment,
followed by vesting in increments of 62,500,000 (pre-reverse split) 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 the nine months ended September 30, 2024 and the year ended December 31, 2023, 250,000
and 250,000 shares have vested, respectively.
NOTE 11 – WARRANTS
In connection with the issuance of convertible
notes to Trillium and Fondeur, the Company issued 38,650,000 post-reverse split) common stock purchase warrants to purchase 38,650,000
shares of the Company’s common stock pursuant to the terms therein as a commitment fee. During the three months ended March 31,
2024, the Company, in connection with the three additional notes issued to Fondeur, granted the issuance of an additional 150,000 warrants
to purchase 150,000 shares of the Company’s common stock.
These warrants have an exercise price per share
between $0.025- $0.0010 the above and expire between five and seven years. The aggregate fair value of the warrants, which was allocated
against the debt proceeds totaled $596,927 based on the Black Scholes Merton pricing model using the following estimates: exercise
price ranging from $0.00025 and $0.0025, 2.50% to 4.28% risk free rate, 266.74% to 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, 2023 | | | 38,650,000 | | | $ | 0.001 | | | $ | 6.54 | |
| | | | | | | | | | | | | |
| Issued | | | 39,150,000 | | | | 0.001 | | | | - | |
| Exercised | | | - | | | | - | | | | - | |
| Forfeited | | | - | | | | - | | | | - | |
| Expired | | | - | | | | - | | | | - | |
| Outstanding, September 30, 2024 | | | 77,800,000 | | | $ | 0.001 | | | $ | 6.19 | |
| | | | | | | | | | | | | |
| Exercisable, September 30, 2024 | | | 77,800,000 | | | $ | 0.001 | | | $ | 6.19 | |
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 September 30,
2024 | | | Weighted Average
Remaining
Contractual Life | | | Weighted
Average Exercise
Price | |
| $0.025-0.0010 | | | 77,800,000 | | | | 6.19 years | | | $ | 0.0001 | |
NOTE 12 – PREFERRED STOCK
Series AA and Super Convertible Preferred
Stock, has a par value of $0.001, may be converted at the holder’s election into shares of common stock at the conversion
rate of one share of common stock for one share of Preferred Stock.
As of September 30, 2024, and December 31, 2023,
there are 0 and 0 shares of Series AA and Super preferred stock outstanding, respectively.
Series A Convertible Preferred Stock,
has a par value of $0.01, may be converted at the holder’s election into shares of common stock at the conversion rate of ten shares
of common stock for one share of Series A Preferred Stock. Each share is entitled to 10 votes, voting with the common stock as a single
class, has liquidation rights of $2.00 per share and is not entitled to receive dividends.
As of September 30, 2024, and December 31, 2023,
there are 3,381,520 and 3,381,520 shares of Series A preferred stock outstanding, respectively.
Series B Convertible Preferred Stock,
has a par value of $0.01, may be converted at the holder’s election into shares of common stock at the conversion rate of 4,000
shares of common stock for one share of Series B Preferred Stock. Each share is entitled to 4,000 votes, voting with the common stock
as a single class, has liquidation rights of $0.01 per share and is not entitled to receive dividends.
As of September 30, 2024, and December 31, 2023,
there are 5,000 and 5,000 shares of Series B preferred stock outstanding, respectively.
Series C Convertible Preferred Stock,
has a par value of $0.01, may be converted at the holder’s election into shares of common stock at the conversion rate of 400 shares
of common stock for one share of Series C Preferred Stock. Each share is entitled to 400 votes, voting with the common stock as a single
class, has liquidation rights of $0.01 per share and is entitled to receive four hundred times the dividends declared and paid with respect
to each share of Common Stock.
As of September 30, 2024, and December 31, 2023,
there are 5,000,000 and 5,000,000 shares of Series C preferred stock outstanding, respectively.
Series D Convertible Preferred Stock,
has a par value of $0.0001, may be converted at a ratio of the Stated Value plus dividends accrued but unpaid divided by the fixed conversion
price of $0.0015, which conversion price is subject to adjustment. Series D is non-voting, has liquidation rights to be paid in cash,
before any payment to common or junior stock, 140% of the Stated Value ($2.00) per share plus any dividends accrued but unpaid thereon
and is entitled to 8% cumulative dividends.
As of September 30, 2024, and December 31, 2023,
there are 125,000 and 125,000 shares of Series D preferred stock outstanding, respectively.
Series E Convertible Preferred Stock, has
a par value of $0.001, and a stated value of $1.00 per share, subject to adjustment. The shares of Series E Convertible Preferred Stock
can convert at a conversion price that is equal to the amount that is 61% of the lowest trading price of the Company’s common stock
during the 20 trading days immediately preceding such conversion. The shares of Series E Convertible Preferred Stock are subject to redemption
by the Company at its option from the date of issuance until the date that is 180 days therefrom, subject to premium that ranges from
120% to 145%, increasing by 5% during each 30-day period following issuance. Series E carries a 12% cumulative dividend, which will increase
to 22% upon an event of default, is non-voting, and has liquidation rights to be paid in cash, before any payment to common or junior
stock.
Series F Convertible Preferred Stock,
has a par value of $0.001, may be converted at the holder’s election into shares of common stock at the current conversion rate
of 93,761,718 shares of common stock for one share of Series F Preferred Stock. Each share is entitled to 93,761,718 votes, voting with
the common stock as a single class, has no liquidation rights and is not entitled to receive dividends.
As of September 30, 2024, and December 31, 2023,
there are 0 and 0 shares of Series F preferred stock issued, respectively.
Series G Convertible Preferred Stock,
has a par value of $0.001, may be converted at the holder’s election into shares of common stock for a period ending 18 months following
issuance at the conversion rate that will result, in the aggregate, in the holders of Series G Preferred Stock receiving that number of
shares of Common Stock which equals Seventy Eight Percent (78%) of the total issued and outstanding shares of commons stock of the company
on a fully diluted basis. The Series G Preferred Stock shall vote with the common stock as a single class, has liquidation rights of $0.001
per share and is entitled to receive an annal dividend of 6% of the Stated Value (the “Divided Rate”), which shall be cumulative,
payable solely upon redemption, liquidation, or conversion.
As of September 30, 2024 and December 31, 2023,
there are 1,000,000 and 1,000,000 shares of Series G preferred stock issued, respectively.
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.
On November 18, 2021, pursuant to the Founders
Agreement, Michael Lakshin, President, and Edward Aizman, CEO, were issued 500 shares of Super Preferred Stock at a fair value of $50.
These preferred shares, along with the 652,259 Series AA preferred stock, were cancelled on May 4, 2022, upon completion of the Reverse
Merger. See Note 1.
NOTE 13 – 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.
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 September 30, 2024.
NOTE 14 – INCOME TAX
There was no income tax expense reflected in the
results of operations for the years ended December 31, 2023 and 2022 because the Company incurred a net loss for tax purposes.
As of December 31, 2023 and 2022, the Company
had federal and state net operating loss carry forwards of $12,992,877 and $9,243,925, respectively which may be used to offset future
taxable income. Approximately $1,696,000 will begin to expire in 2036 while $5,920,000 will not expire but will be limited in annual utilization
of 80% of current year income.
The tax effects of temporary differences which
give rise to deferred tax assets (liabilities) are summarized as follows:
| | |
December 31,
2023 | | |
December 31,
2022 | |
| Deferred tax assets / (liabilities) | |
| | |
| |
| Net operating loss carry forward | |
$ | 3,361,000 | | |
$ | 2,923,000 | |
| Stock-based compensation | |
| 517,618 | | |
| 245,000 | |
| Accrued expenses | |
| 192,697 | | |
| 193,000 | |
| Net deferred tax assets | |
| 4,071,315 | | |
| 3,361,000 | |
| Valuation allowance | |
| (4,071,315 | ) | |
| (3,361,000 | ) |
| Net deferred tax assets, net of valuation allowance | |
$ | - | | |
$ | - | |
In assessing the realization of deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided
a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
Reconciliation of the statutory federal income tax to the Company’s
effective income tax rate for the years ended December 31, 2023 and 2022:
| | |
December 31,
2023 | | |
December 31,
2022 | |
| Statutory federal income tax rate | |
| 21.0 | % | |
| 21.00 | % |
| State tax, net of federal benefit | |
| 15.29 | % | |
| 15.29 | % |
| Permanent differences | |
| 2.50 | % | |
| 2.50 | % |
| Valuation allowance | |
| (38.79 | )% | |
| (38.79 | )% |
| Effective rate | |
| - | % | |
| - | % |
Internal Revenue Code Section 382 limits the ability
to utilize net operating losses if a 50% change in ownership occurs over a three-year period. Such limitation of the net operating losses
may have occurred, but we have not analyzed it at this time as the deferred tax asset is fully reserved.
On March 27, 2020, the US government signed the
CARES Act into law, a $2 trillion relief package to provide support to individuals, businesses, and government organizations during the
COVID-19 pandemic. During 2020, $91,035 in PPP relief was received under the CARES Act and was forgiven free of taxation in 2021.
The Company’s policy is to record interest
and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of December
31, 2023 and 2022 the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits
during the years ended December 31, 2023 and 2022. The Company did not recognize any interest or penalties during fiscal 2023 or 2022
related to unrecognized tax benefits.
For the years ended December 31, 2023 and 2022, the net increase in
valuation allowance was approximately $710,315 and $1,777,000, respectively.
Tax years 2018-2021 remain open to examination
for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.
NOTE 15 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, the company has
analyzed its operations subsequent to September 30, 2024, through the date these financial statements were issued, and has determined
that it does not have any material subsequent events to disclose in these financial statements.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The statements contained
in the following MD&A and elsewhere throughout this Quarterly Report on Form 10-Q, including any documents incorporated by reference,
that are not historical facts, including statements about our beliefs and expectations, are “forward-looking statements” within
the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements preceded by, followed
by or that include the words “may,” “could,” “would,” “should,” “believe,”
“expect,” “anticipate,” “plan,” “estimate,” “target,” “project,”
“intend” and similar words or expressions. In addition, any statements that refer to expectations, projections, or other characterizations
of future events or circumstances are forward-looking statements.
These forward-looking
statements, which reflect our management’s beliefs, objectives, and expectations as of the date hereof, are based on the best judgement
of our management. All forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are
subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from
those anticipated in such statements, including, without limitation, the following: economic, social and political conditions, global
economic downturns resulting from extraordinary events and other securities industry risks; interest rate risks; liquidity risks; credit
risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and
capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting
our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; failure to maintain relationships
with employees, customers, business partners or governmental entities; the inability to achieve synergies or to implement integration
plans and other consequences associated with risks and uncertainties detailed in our filings with the SEC, including our most recent filings
on Forms 10-K and 10-Q.
We caution that the foregoing
list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business.
We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise,
except to the extent required by the federal securities laws.
Certain information contained
in this discussion and elsewhere in this report may include “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 and is subject to the safe harbor created by that act. The safe harbor created by the Private
Securities Litigation Reform Act will not apply to certain “forward looking statements” because we issued “penny stock”
(as defined in Section 3(a)(51) of the Securities Exchange Act of 1934 and Rule 3(a)(51-1) under the Exchange Act) during the three year
period preceding the date(s) on which those forward looking statements were first made, except to the extent otherwise specifically provided
by rule, regulation or order of the Securities and Exchange Commission. We caution readers that certain important factors may affect our
actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been
made in this Report or which are otherwise made by or on our behalf. For this purpose, any statements contained in this report that are
not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words
such as “may,” “will,” “expect,” “believe,” “explore,” “consider,”
“anticipate,” “intend,” “could,” “estimate,” “plan,” or “propose”
or the negative variations of those words or comparable terminology are intended to identify forward-looking statements. Factors that
may affect our results include, but are not limited to, the risks and uncertainties associated with:
| ● | Our
ability to raise capital necessary to sustain our anticipated operations and implement our business plan, |
| ● | Our
ability to implement our business plan, |
| ● | Our
ability to generate sufficient cash to survive, |
| ● | The
degree and nature of our competition, |
| ● | The
lack of diversification of our business plan, |
| ● | The
general volatility of the capital markets and the establishment of a market for our shares, and |
| ● | Disruption
in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future
attacks, police and military activities overseas and other disruptive worldwide political and economic events and environmental weather
conditions. |
We are also subject to
other risks detailed from time to time in our other filings with SEC and elsewhere in this Annual Report. Any one or more of these uncertainties,
risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately
prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these
forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information,
future events or otherwise.
Recent Event
On March 22, 2024, we entered into a Plan and
Agreement of Merger (the “Merger Agreement”) with OWNverse, LLC, a Delaware limited liability company (“OWNverse”),
pursuant to which OWNverse would become a wholly-owned subsidiary of our company. Pursuant to the Merger Agreement, our company would
deliver an aggregate of 2,000 shares of to-be-designated Series I Preferred Stock of the Company, an aggregate of $2,000,000 in principal
amount promissory notes that are to be due and payable two years from their issuance dates and promissory notes with an aggregate of up
to $270,000 that are to be due and payable six months from their issuance dates. The consummation of the Merger Agreement has not been
completed, due to our company’s lack of capital. There is no assurance that we will be able to obtain sufficient capital to do so.
However, the owners of OWNverse remain, as of the date of this Quarterly Report, committed to completing the Merger.
2022 Acquisition – Interview Mastery
Effective December 16, 2022, pursuant to an Asset
Purchase Agreement (the “APA”) with Interview Mastery (“Interview Mastery”), by and through Michael R. Neece (“Neece”)
and Caseridus, Inc. Under the terms of the APA, the Company is to pay the purchase price through the issuance of 22,000,000 shares of
the Company’s common stock in two tranches: (i) 11,000,000 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; and (ii) 11,000,000 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 25% of the shares will vest on the first-year anniversary of Neece’s employment,
followed by vesting in increments of 6.25% of the 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 the date of this Annual Report, none of the
shares issuable in connection with the APA has 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 is to create a new board seat and offer such seat to Neece who will be formally
invited to join the Company’s Board of Directors. As of the date of this Annual Report, none of these actions has been taken by
the Company.
This 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 | | |
Weighted
Average
Useful Life
(Years) | |
| Cash | |
$ | 1,633 | | |
| | |
| Prepaid expenses | |
| 997 | | |
| | |
| Loss on acquisition – related party | |
| 197,370 | | |
| | |
No acquisition costs were incurred. The approximate
revenue and net loss for the acquired business as a standalone entity per ASC 805 from January 1, 2021, to December 31, 2021, was $14,692
and $21,862, respectively, and, from January 1, 2022, to December 16, 2022, $13,059 and $15,279, respectively.
Results of Operations
The following discussion and analysis of the
results of operations and financial condition for the nine months ended September 30, 2024 and 2023, should be read in conjunction with
our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Quarterly
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.”
Nine Months Ended September 30, 2024, Compared
to the Nine Months Ended September 30, 2023.
Revenue. We derived no revenues from operations
for the nine months ended September 30, 2024, compared to revenues for the nine months ended September 30, 2023, of $66,476. Our lack
of revenues during current period is due to our lack of operating capital. We are unable to predict if and when we will obtain the capital
needed to begin to generate revenues again.
Cost of Revenue. Cost of revenues for the
nine months ended September 30, 2024 and 2023, was $0 and $0, respectively.
Compensation Expense. Compensation expense
for the nine months ended September 30, 2024, was $375,000, compared to the nine months ended September 30, 2023, when we reported compensation
expense of $431,421. In both periods, compensation expense consisted entirely of compensation paid and accrued to officers.
Consulting Expense. Consulting expense
for the nine months ended September 30, 2024, was $0, compared to the nine months ended September 30, 2023, when consulting expenses was
$90,000.
General and Administrative Expenses. General
and administrative expenses for the nine months ended September 30, 2024, was $93,143, compared to $174,584 for the nine months ended
September 30, 2023. The decrease in the current period is attributable to our lack of operating capital.
Professional fees. Professional fees for
the nine months ended September 30, 2024, were $114,750, compared to $166,884 for the nine months ended September 30, 2023. The decrease
in professional fees is primarily due to our lower level of operations required by our lack of operating capital.
Other Income (Expense). For the nine months
ended September 30, 2024, total other expense was $272,834, comprised exclusively of change in fair value of derivative liability. For
the nine months ended September 30, 2023, total other expense was $849,112, comprised of change in the value of derivative liabilities
of $149,909, the initial recognition of a derivative liability of $32,429, and interest expense of $666,774.
Net Income (Loss). The Company reported
a net loss of $855,727 for the nine months ended September 30, 2024, compared to net loss of $1,645,525 for the nine months ended September
30, 2023.
Liquidity and Capital Resources
For the nine months ended September 30, 2024,
we used $369,118 of cash in operating activities, compared to the nine months ended September 30, 2023, when we used $134,957 of cash
in operating activities.
For the nine months ended September 30, 2024 and
2023, investing activities did not use or provide cash.
For the nine months ended September 30, 2024,
financing activities provide $368,155 of cash, compared to the nine months ended September 30, 2023, when financing activities used $28,278
of cash.
The Company currently owes approximately $270,000
on non-convertible loans payable, all of which are in default, and approximately $400,000 for outstanding convertible notes, net of discounts,
all of which are in default.
In addition, entities negatively impacted by the
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. In addition, the Company’s CEO, Edward Aizman, provided his personal guaranty of the EIDL Loan and pledged
certain of his personal assets in conjunction with his guaranty. 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 February 2022, the Company agreed to the first
and second modifications of the EIDL Loan. The EIDL was modified to include additional borrowings of $269,200, which were received in
full in February 2022. Periodic monthly payments have increased to $1,556 in the first modification and reduced to $1,506 in the second
modification. Additionally, the Company entered into an amended security agreement with the SBA in which this promissory note, and the
modifications, is collateralized by all tangible and intangible assets of the Company. The balance of the EIDL loan balance at December
31, 2023 is $309,500, respectively. The Company is in default under the EIDL Loan and the EIDL Loan has been referred by the SBA to the
U.S. Treasury Offset Program. The Company is currently in the process of addressing the charged-off status of the EIDL Loan with the SBA
and simultaneously submitting an application to the SBA’s Hardship Accommodation Program (HAP), whereby the Company hopes to receive
some relief while arranging for, and keeping current, reduced payments thereon. There is no assurance that the Company will be able to
secure any such relief.
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 $(13,848,604). 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.
Item 3. Quantitative and Qualitative Disclosures
about Market Risk.
Not applicable to smaller reporting companies.
Item 4. Controls and Procedures.
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 September 30, 2024.
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 September
30, 2024. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our
assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material
weakness. |
| 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 September 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s
internal controls over financial reporting.
PART II – OTHER INFORMATION
Item. 1. Legal Proceedings.
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.
As of the date of this filing, there are no material
pending legal or governmental proceedings relating to our Company or properties to which we are a party, and, to our knowledge, there
are no material proceedings to which any of our directors, executive officers, or affiliates are a party adverse to us or which have a
material interest adverse to us.
Item 1A. Risk Factors.
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.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
We issued no securities during the three months
ended September 30, 2024, not previously reported.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
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: November 19, 2024 |
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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The certification set forth below is being submitted
in connection with this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (the “Report”) for the purpose
of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350
of Chapter 63 of Title 18 of the United States Code.
