Acquisition and Pro Forma Financial Information

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisition and Pro Forma Financial Information

Note 9 – Acquisition and Pro Forma Financial Information

Acquisitions for the Three Months Ended March 31, 2022

On February 28, 2022, the Company issued 1,000,000 shares of Class B, convertible preferred stock (convertible into 1,000,000,000 shares of common stock) having a fair value of $700,000 ($0.0007/share), based upon the quoted closing trading price on the acquisition date, in exchange for 100% of the issued and outstanding member ownership interests held by SST, in a transaction treated as a business combination. With the acquisition, the Company entered the audio-visual systems integration business that designs and builds presentation, teleconferencing and collaborative systems for businesses, education and nonprofits.

The valuation of the consideration was determined on an as converted basis by multiplying the Series B preferred shares by the conversion rate of 1,000 shares of common stock for each one (1) share of Series B preferred stock held, then multiplying by the quoted closing trading price of the common stock.

We made an initial allocation of the purchase price at the date of acquisition based on our understanding of the fair value of assets acquired and liabilities assumed. The allocation of the purchase price consideration is considered preliminary as of March 31, 2022, with the excess purchase price allocated to goodwill and is subject to change. We completed the valuation and allocation of purchase price in April 2023. The final valuation and allocation is reflected in the table below.

The acquisition of SST was reflected in the accompanying consolidated financial statements at March 31, 2023 and 2022, the results of operations and cash flows are included in the consolidated financial statements as of and from the acquisition date.

Consideration
Value of earn out agreement	$	75,328
Fair value of consideration transferred		75,328
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash		223,457
Accounts receivable		669,580
Inventory		208,431
Property and equipment		82,553
Operating lease - right-of-use asset		345,229
Supplier relationships		149,000
Trade name		420,000
Total assets acquired		2,098,250
Accounts payable and accrued expenses		268,553
Contract liabilities (deferred revenue)		671,217
Loan payable - related party		421,799
Note payable - government – SBA		150,000
Notes payable		516,234
Operating lease liability		345,229
Total liabilities assumed		2,373,032

FOMO WORLDWIDE, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

UNAUDITED

Total net liabilities assumed		(274,782	)
Goodwill in purchase of SMARTSolution Technologies L.P.	$	350,110

In connection with the purchase of SST, $50,000 was paid as a broker fee. This amount has been included in the consolidated statements of operations as a component of general and administrative expenses. There were no other additional transaction costs incurred.

The Company initially granted 1,000,000 shares of Series B preferred stock, valued at $700,000 based upon the quoted closing trading price on date of issuance on as-converted basis to common stock. The agreement was amended in December 2022, and all of the shares returned to the Company.

The goodwill of $350,110 is primarily related to factors such as synergies and market share.

Goodwill is not deductible for tax purposes.

The estimated future amortization of the acquired supplier relationships and trade name are as follows at March 31, 2023:

2023	$	48,937
2024		65,250
2025		65,250
2026		34,123
2027		28,000
Thereafter		256,604
	$	498,164

The following summarizes the intangible assets at March 31, 2023 and December 31, 2022:

	March 31, 2023			December 31, 2022			Useful Life
Supplier relationships	$	149,000		$	149,000		4 years
Trade name		420,000			420,000		15 years
		569,000			569,000
Accumulated amortization		(70,836	)		(54,524	)
	$	498,164		$	514,476

On or around December 19, 2022, FOMO WORLDWIDE, INC. entered into an Employment Status and Compensation Change Agreement which consisted of the following elements:

Element 1: Total Dollar Value: $45,480

1.	In March of 2022, Mitchell Schwartz issued a cash loan to FOMO WORLDWIDE in the amount of $185,000 with a Success Fee of $10,000 for a total repayment of $195,000; non-amortized.
2.	Mr. Schwartz received a single payment of $50,000 from SST for partial repayment of this loan.

FOMO WORLDWIDE, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

UNAUDITED

3.	In exchange for the remainder of Insider Loan, ($145,000) Mr. Schwartz agreed to take assignment of a $100,000 Real Estate Loan, made by SST to an affiliate. This note included the repayment to Mr. Schwartz of the $10,000 Success Fee and monthly interest of $1,250 which matured Feb. 28, 2022. Total value of this note now issued to Mr. Schwartz and no longer associated with FOMO was $118,750
4.	The remaining balance of the Insider Loan, equal to $26,250 ($145,000 - $118,750)
5.	This agreement retained Mr. Schwartz residual salary through Feb. 2023, equal to $19,230

Element 2: Total Dollar Value: $139,000

1. At point of purchase of SMARTSolution Technologies L.P. and Inc., FOMO WORLDWIDE agreed to a 1.5% override of gross revenues for the prior year, ending December 2021. This, plus the extension of the closing date causing an add-on of the agreement, was equivalent to $139,000 and was included in the purchase agreement, of which $75,328 was the estimated value of the earn-out.

Element 3: Total Dollar Value: $100,000

1.	At point of purchase of SMARTSolution Technologies, L.P. and Inc., FOMO WORLDWIDE issued One-Million Series B Shares to Mr. Schwartz. This was included in the purchase agreement.
2.	At the point of the Employment Status and Compensation Change Agreement, Mr. Schwartz agreed to return to FOMO WORLDWIDE these shares as a goodwill gesture and for exclusion of liability for any accounting discrepancy that may have occurred prior to his new employee agreement.
3.	FOMO WORLDWIDE, along with accepting the return of the aforementioned shares, included as part of the new purchase and employee agreement, agreed to a single payment of $100,000 for the total value of the shares returned by Mr. Schwartz.

Summary:

1. All items associated with this agreement were equal in value to $284,480 and are to be paid to Mr. Schwartz as monthly payroll outlay over 36 months, beginning in March of 2023.