Derivative Liabilities

3 Months Ended

Mar. 31, 2023

Derivative Liabilities

Derivative Liabilities

Note 8 – Derivative Liabilities

Certain of the above convertible notes contained an embedded conversion option with a conversion price that could result in issuing an undeterminable amount of future common stock to settle the host contract. Accordingly, the embedded conversion option is required to be bifurcated from the host instrument (convertible note) and treated as a liability, which is calculated at fair value, and marked to market at each reporting period.

Additionally, the Company has accounted for outstanding warrants (those issued with the above debt) as derivative liabilities as there is an insufficient amount of authorized common stock to settle all potential conversions.

The Company used the binomial pricing model to estimate the fair value of its embedded conversion option and warrant liabilities on both the commitment date and the remeasurement date with the following inputs:

	Three Months Ended			Year Ended
	March 31, 2023			December 31, 2022
Exercise price	$	0.0001 - $0.01		$	0.0001 - $0.01
Expected volatility		282% - 292	%		196% - 377	%
Risk-free interest rate		4.64	%		0.73% - 2.99	%
Expected term (in years)		0.01 - 2.02			0.30 - 3.00
Expected dividend rate		0	%		0	%

A reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows at March 31, 2023 and December 31, 2022:

	Convertible Debt			Warrants			Total
Derivative liabilities - December 31, 2021	$	330,294		$	775,243		$	1,105,537
Fair value - commitment date		300,137			61,600			361,737
Fair value - mark to market adjustment		404,695			(238,813	)		165,882
Gain on debt extinguishment (derivative liabilities - convertible debt)		(226,391	)		-			(226,391	)
Reclassification to APIC for financial instruments that ceased to be derivative liabilities		-			(425,000	)		(425,000	)
Derivative liabilities – December 31, 2022		808,736			173,030			981,766
Fair value - commitment date		-			-			-
Fair value - mark to market adjustment		3,466,013			(10,607	)		3,455,406
Gain on debt extinguishment (derivative liabilities - convertible debt)		-			-			-
Reclassification to APIC for financial instruments that ceased to be derivative liabilities		-			-			-
Derivative liabilities – March 31, 2023	$	4,274,749		$	162,423		$	4,437,172

Changes in fair value of derivative liabilities (mark to market adjustment) are included in other income (expense) in the accompanying Consolidated Statements of Operations.

In 2023 and 2022, in connection with the conversion of certain debt and warrants, the corresponding derivative liabilities were market to market on the conversion date and the remaining derivative liability balance was reclassified to gain on debt extinguishment for derivative liabilities related to debt and to additional paid-in capital for derivative liabilities classified as warrants.

FOMO WORLDWIDE, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

UNAUDITED