UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
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 or organization) | | (I.R.S. Employer
Identification No.) |
| | | |
| 99 Wall Street, Suite 891 New York, New York 10005 | | 10005 |
| (Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including
area code: (212) 398-0002
Securities registered under Section 12(b) of the
Exchange Act: None.
Securities registered under Section 12(g) of the
Exchange Act: common stock, par value $0.0001 per share.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ☐ No ☒
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 file 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 and posted on its corporate website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to file such reports). Yes ☐ No ☒
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company.
| 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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether
any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-b2 of the Exchange Act).
Yes ☐ No ☒
As
of June 30, 2023, the last business day of the registrant’s most recently completed second quarter, the aggregate market value
of the shares of common stock held by non-affiliates of the registrant was approximately $13,645 based on a per share price of $0.0001,
the closing price of the registrant’s common stock on that date.
As of October 9, 2024, the registrant
had 136,458,010 shares of common stock issued and outstanding.
Documents Incorporated by Reference: None.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
This Report on Form 10-K (this “Report”)
contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1934, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial
risks and uncertainties. Forward-looking statements present our current expectations or forecasts of future events. You can identify these
statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties
and include statements regarding, among other things, our projected revenue growth and profitability, our growth strategies and opportunity,
anticipated trends in our market and our anticipated needs for working capital. They are generally identifiable by use of the words “may,”
“will,” “should,” “anticipate,” “estimate,” “plans,” “potential,”
“projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we
believe,” “we intend” or the negative of these words or other variations on these words or comparable
terminology.
From time to time, forward-looking statements
also are included in our other periodic reports on Forms 10-Q and 8-K, in our press releases, in our presentations, on our website and
in other materials released to the public. Any or all of the forward-looking statements included in this Report and in any other reports
or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements
represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and
other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed
or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking
statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral
forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.
Except to the extent required by law, we undertake
no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events,
conditions, circumstances or assumptions underlying such statements, or otherwise.
In this Annual Report, unless otherwise indicated
or the context otherwise requires, “bowmo, the “Company”, “we”, “us” or “our” refer
to bowmo, Inc., a Nevada corporation, and its subsidiaries.
PART I
Item 1. Business.
Background
Cruzani, Inc., a Wyoming corporation that was
incorporated on February 5, 1999 (“Cruzani”), was previously a franchise development company that built and represented popular
franchise concepts, and other related businesses, throughout the United States as well as in international markets.
On April 29, 2022, Cruzani entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with bowmo Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Cruzani (“Merger Sub”), bowmo, Inc., a Delaware corporation that was incorporated on May 22, 2015 (“Target”),
and Michael E. Lakshin on behalf of Target’s stockholders. Pursuant to the Merger Agreement, on May 4, 2022, Merger Sub was merged
with and into Target with Target surviving the merger as the wholly owned subsidiary of Cruzani (the “Merger”). As consideration
for the Merger, Cruzani received all of the issued and outstanding shares of capital stock of Target, and the legacy stockholders of Target
received shares of Series G preferred stock of Cruzani having voting rights equivalent to 78% of the total voting rights of all holders
of capital stock of Cruzani.
On June 16, 2022, Cruzani filed articles of amendment
with the Secretary of State of the State of Wyoming to change its name to “bowmo, Inc.”
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 Annual Report, committed to completing the Merger.
Overview
Prior to the Merger, Cruzani was reassessing its
business model and strategic goals. Upon completion of the Merger, however, we have decided to pursue our Vertically Integrated Business
Model (“VIBM”) which is capable of providing services and added value to all segments of the human resources technology (“HR-Tech”)
market globally. Our goal is to constantly improve our HR-Tech platform to address present and future market needs by offering a unique
combination of proprietary artificial intelligence (“AI”) based technology with a do-it-yourself sourcing experience able
to match candidates to jobs without having to use keyword searches or Boolean strings.
Our AI-driven platform will automate the end-to-end
hiring processes with its AI-based matching engine while providing just-in-time content, resources, and tools, such as video interviewing
and cultural and technical assessments so that hiring organizations can vet their candidates. We refer to this as Software as a Service
(“SaaS”).
We expect to complete our VIBM by our Recruiting
as a Service (“RaaS”) which allows clients to outsource the management of the recruiting process (“RPO”). Our
RaaS offering will complement our improved HR-Tech platform by offering our clients with a choice of high-touch and high-tech services
strategically geared to market needs and objectives.
In addition, since our acquisition of Interview
Mastery® from Michael R. Neece, our current Chief Product Officer, our VIBM offers unique added value via e-learning programs
by Interview Mastery® and Selecting Excellence®, designed by Michael R. Neece, one of the pioneers in the
human resources e-learning field. Both programs have been continually improving in order to solve the challenges of today’s job-market
realities for more than 20 years.
Our clients receive assistance across all recruiting
functions, such as job-description development, branded career-page management, pre-employment and cultural assessments, and a video interview
platform—all managed by a team of experienced recruiters.
With our HR-Tech platform as a foundation for
our VIBM—performing matching and sourcing at the core—we are reshaping how businesses find talent and provide a quality on-demand
experience.
Facilities
The Company currently has no ownership or leases
of property. The Company’s business mailing address is 99 Wall Street, Suite 891, New York, New York 10005.
Employees
The Company does not have any employees other
than our executive officers. There are no collective-bargaining agreements with our employees, and we have not experienced work interruptions
or strikes. We believe our relationship with our employees is good. Each of our executive officers has entered into an employment contract
with our company.
Item 1A. Risk Factors.
Not applicable to a smaller
reporting company.
Item 1B. Unresolved
Staff Comments.
Not applicable.
Item 1C. Cybersecurity.
We use, store and process
data for and about our customers, employees, partners and suppliers. We have not yet implemented a formal cybersecurity risk management
program designed to identify, assess and mitigate risks from cybersecurity threats to this data, our systems and business operations.
We intend to implement a cybersecurity risk management program before the end of 2024.
Cyber Risk Management
and Strategy
Under the oversight of
the Board of Directors (since we do not currently have an Audit Committee), we intend to implement and maintain a risk management program
that includes processes for the systematic identification, assessment, management, and treatment of cybersecurity risks. Our cybersecurity
oversight and operational processes would be integrated into our overall risk management processes. We intend to implement a risk-based
approach to the management of cyber threats, supported by cybersecurity technologies, including automated tools, designed to monitor,
identify and address cybersecurity risks. In support of this approach, it is expected that we would have a third-party security consultant
implement processes to assess, identify and manage security risks to our company, including in the pillar areas of security and compliance,
application security, infrastructure security and data privacy. This process, once implemented, would include regular compliance and critical
system access reviews. In addition, we intend to conduct application security assessments, vulnerability management, penetration testing,
security audits and ongoing risk assessments as part of our risk management process.
We expect to utilize
third parties and consultants to assist in the identification and assessment of risks, including to support tabletop exercises and to
conduct security testing. We intend to utilize well-known cloud-based technologies and service providers, such as Amazon AWS, Microsoft
Office, and Google enterprise to provide protection against cybersecurity threats.
Further, we intend to
put processes in place that would evaluate potential risks from cybersecurity threats associated with our use of third-party service providers
that would have access to our data, including a review process for such providers’ cybersecurity practices, risk assessments, contractual
requirement and system monitoring.
Part of our intended
program would be ongoing evaluation and enhancement of our systems, controls and processes where possible, including in response to actual
or perceived threats specific to us or experienced by other companies.
Risks from cybersecurity
threats have, to date, not materially affected us, our business strategy, results of operations or financial condition.
Item 2. Properties.
The Company currently has no ownership or leases
of property. The Company’s business mailing address is 99 Wall Street, Suite 891, New York City, New York.
Item 3. 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 4. Mine Safety Disclosures.
Not applicable.
Item 5. Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s common
stock is not traded on any national securities exchange but is quoted on the alternative trading system operated by OTC Markets Group,
Inc. (the OTC Link ATS) under the “BOMO” trading symbol at the OTC Pink level. The following table summarizes the high and
low historical trading prices of the Company’s common stock for the periods indicated as reported by OTCMarkets.com (as historic
high and low bid prices are not reported by OTCMarkets.com).
Fiscal Year Ended
December 31, 2023
| | |
High | | |
Low | |
| First Quarter | |
| 0.20 | | |
| 0.098 | |
| Second Quarter | |
| 0.10 | | |
| 0.098 | |
| Third Quarter | |
| 0.15 | | |
| 0.001 | |
| Fourth Quarter | |
| 0.15 | | |
| 0.014 | |
Fiscal Year Ended
December 31, 2022
| | |
High | | |
Low | |
| First Quarter | |
| 0.40 | | |
| 0.20 | |
| Second Quarter | |
| 0.20 | | |
| 0.10 | |
| Third Quarter | |
| 1.05 | | |
| 0.45 | |
| Fourth Quarter | |
| 0.60 | | |
| 0.10 | |
Registered Holders
As of the date of this Annual Report, there were
approximately 116 record holders of our common stock and 136,458,010 shares are issued and outstanding.
Dividends
Holders of the Company’s common stock are
entitled to receive such dividends as may be declared by our Board of Directors. No dividends on the Company’s common stock have
ever been paid, and the Company does not anticipate that dividends will be paid on its common stock in the foreseeable future.
Securities Authorized for issuance under equity
compensation plans.
No securities are authorized for issuance by the
Company under equity compensation plans.
Unregistered Sales of Equity Securities and
Use of Proceeds
During the year ended December 31, 2023, we issued
no securities that were not registered under the Securities Act and were not previously disclosed.
Item 6. Reserved
Not applicable.
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operation.
The statements contained
in the following MD&A and elsewhere throughout this Annual Report on Form 10-K, 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 Annual 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
Revenues. Revenues for the
year ended December 31, 2023, were $243,434, compared to revenues for the year ended December 31, 2022, of $185,923, which increase is
due primarily to organic growth from consistent implementation of business strategies. A lack of operating capital restrained potential
growth in revenues.
Cost of Revenues. Cost of revenues
for the year ended December 31, 2023, was $200,039, compared to cost of revenues for the year ended December 31, 2022, of $75,873. The
increase of costs of revenues as a percentage of revenues is attributable primarily to increased costs associated with direct placement
revenue that did not generate associated revenues.
Compensation Expense. Compensation
expense for the year ended December 31, 2023, was $517,618, compared to compensation expense for the year ended December 31, 2022, of
$432,452, and consists entirely of compensation paid to officers, which was accrued.
Consulting Fees. Consulting fees
for the year ended December 31, 2023, were $90,000, compared to consulting fees for the year ended December 31, 2022, of $181,667. This
decrease is attributable to the Company’s lack of operating capital.
General and administrative expenses.
General and administrative expenses for the year ended December 31, 2023, were $131,590, compared to general and administrative expenses
for the year ended December 31, 2022, of $363,522, which reduction is primarily attributable to our experiencing a one-time loss of $197,000
as a result of the related-party loss on the acquisition of Interview Mastery.
Professional fees. Professional
fees for the year ended December 31, 2023, were $250,770, compared to professional fees for the year ended December 31, 2022, of $780,251.
The decrease in professional fees is attributable to our reduced activity associated with our lack of operating capital.
Other Income (Expense). Total other
expense for the year ended December 31, 2023, was $2,802,369, compared to other expense for the year ended December 31, 2022, of 2,932,596.
In future periods, it is expected that other expense will increase, due to our being in default under substantially all of our outstanding
debt instruments.
Net Loss. Our net loss for the year
ended December 31, 2023, was $3,748,952, compared to a net loss for the year ended December 31, 2022, of $4,580,438.
Liquidity and Capital Resources
For the year ended December 31, 2023, we used
$4,530,575 of cash in operating activities, compared to the year ended December 31, 2022, when we used $617,532 of cash in operating activities.
For the year ended December 31, 2023, investing
activities did not use or provide cash, compared to the year ended December 31, 2022, when investing activities provided $2,150 in cash,
which was attributable to the cash acquired in the reverse merger and acquisition.
For the year ended December 31, 2023, financing
activities did not use or provide cash, compared to the year ended December 31, 2022, when financing activities provided $782,100 in cash
derived from third-party debt financing.
The Company currently owes $477,702 on non-convertible
loans payable, all of which are in default, and $440,109 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 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. At December
31, 2023, the Company had an accumulated deficit of $12,992,877, and a net loss for the year ended December 31, 2023, of $3,748,952. Of
the net loss, 946,583 was due to operations and the remainder was due primarily to interest expense and the derivative liabilities. 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.
There can be no assurance that sufficient funds
required during the next year or thereafter will be generated from operations or available from external sources such as debt or equity
financings, or other potential sources. The inability to generate cash flow from operations or to raise capital from external sources
will force the Company to substantially curtail and cease operations, therefore, having a material adverse effect on its business. Furthermore,
there can be no assurance that any funds, if available, will possess attractive terms or not have a significant dilutive effect on the
Company’s existing stockholders.
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
We are not required to provide the information
required by this Item because we are a smaller reporting company.
Item 8. Financial Statements and Supplemental
Data
INDEX TO FINANCIAL STATEMENTS
bowmo, Inc.
Report of Independent
Registered Public Accounting Firm
The Board of Directors and Stockholders of
Bowmo Inc and Subsidiaries.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Bowmo Inc and Subsidiaries (the ‘Company’) as of December 31, 2023, and 2022, and the related consolidated
statements of operations, changes in stockholders’ equity / (deficit) and cash flows for each of the two years ended December 31,
2023, and 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023,
and 2022, and the results of its operations and its cash flows for each of the two years ended December 31, 2023 and 2022, in conformity
with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company suffered an accumulated
deficit of $(12,992,877), net loss of $(3,748,952) and a negative working capital of $(4,445,342). These matters raise substantial doubt
about the Company’s ability to continue as a going concern. Management’s plans with regards to these matters are also described
in Note 2 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. Communication of critical audit matters does not alter in any way our opinion on the financial statements
taken as a whole and we are not, by communicating the critical audit matters, providing separate opinions on the critical audit matter
or on the accounts or disclosures to which they relate.
| /s/ Olayinka Oyebola | |
| OLAYINKA OYEBOLA & CO. | |
| (Chartered Accountants) | |
| Lagos, Nigeria | |
We have served as the Company’s auditor
since 2024.
September 26, 2024
PCAOB No: 5968
Bowmo, Inc. and Subsidiaries
Consolidated Balance Sheets
Audited
| | |
December 31,
2023 | | |
December 31,
2022 | |
| | |
| | |
| |
| ASSETS | |
| | |
| |
| Cash and cash equivalents | |
$ | 6,308 | | |
$ | 167,103 | |
| Accounts receivable | |
| 18,172 | | |
| 15,542 | |
| Prepaid expenses and other current assets | |
| 1,838 | | |
| 858 | |
| Total Current Assets | |
| 26,318 | | |
| 183,503 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 26,318 | | |
$ | 183,503 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accounts payable | |
| 1,144,755 | | |
| 813,378 | |
| Accrued expenses | |
| 213,697 | | |
| 200,286 | |
| Accrued interest | |
| 364,598 | | |
| 366,622 | |
| Accrued officer compensation | |
| 1,384,499 | | |
| 1,074,361 | |
| Loans payable, current portion | |
| 30,000 | | |
| 113,006 | |
| Loans payable, related party | |
| 254,500 | | |
| 190,500 | |
| Convertible Notes, net of debt discount | |
| 440,109 | | |
| 669,581 | |
| Put premium on stock settled debt | |
| 205,684 | | |
| 219,687 | |
| Derivative liability | |
| 433,818 | | |
| 2,172,250 | |
| Total Current Liabilities | |
| 4,471,660 | | |
| 5,819,671 | |
| | |
| | | |
| | |
| Loans payable, net of current portion | |
| 193,202 | | |
| 260,494 | |
| Total Liabilities | |
| 4,664,862 | | |
| 6,080,165 | |
| | |
| | | |
| | |
| 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, respectively. | |
| 1,000 | | |
| 1,000 | |
| Series AA Preferred stock, 10,000,000 shares authorized, par value $0.0001; 0 and 652,259 shares issued and outstanding as of December 31, 2023 and 2022, respectively. | |
| - | | |
| 652 | |
| Series Super Preferred stock, 10,000,000 shares authorized, par value $0.0001; 0 and 500 shares issued and outstanding as of December 31, 2023, and 2022, respectively. | |
| - | | |
| - | |
| Common stock 40,000,000,000 shares authorized, $0.00001 par value; 53,520,830 and 27,049,736 shares issued and outstanding, respectively at December 31, 2023, and 2022.* | |
| 535 | | |
| 270 | |
| Common stock to be issued, 2,550,000 and 0 shares as of December 31, 2023, and 2022, respectively | |
| 26 | | |
| 26 | |
| Treasury stock, at cost 2,917 shares and 0 shares as of December 31, 2023 and 2022, respectively. | |
| (773,500 | ) | |
| (773,500 | ) |
| Additional paid in capital * | |
| 8,876,064 | | |
| 3,868,607 | |
| Accumulated deficit | |
| (12,992,877 | ) | |
| (9,243,925 | ) |
| Total Stockholders’ Deficit | |
| (4,638,544 | ) | |
| (5,896,662 | ) |
| Total Liabilities and Stockholders’ Deficit | |
$ | 26,318 | | |
$ | 183,503 | |
*
The accompanying notes are an integral part
of these consolidated financial statements
Bowmo, Inc. and Subsidiaries
Consolidated Statements of Operations
Audited
| | |
December 31,
2023 | | |
December 31,
2022 | |
| Revenue | |
$ | 243,434 | | |
$ | 185,923 | |
| Cost of revenue | |
| 200,039 | | |
| 75,873 | |
| Gross Profit | |
| 43,395 | | |
| 110,050 | |
| | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | |
| Compensation expense | |
| 517,618 | | |
| 432,452 | |
| Consulting fees | |
| 90,000 | | |
| 181,667 | |
| Professional fees | |
| 250,770 | | |
| 780,251 | |
| General and administrative | |
| 131,590 | | |
| 363,522 | |
| Total Operating Expenses | |
| 989,978 | | |
| 1,757,892 | |
| | |
| | | |
| | |
| Loss from Operations | |
| (946,583 | ) | |
| (1,647,842 | ) |
| | |
| | | |
| | |
| Other Income (Expenses) | |
| | | |
| | |
| Interest expense | |
| (666,814 | ) | |
| (927,072 | ) |
| Gain on new methodology for accounting for debt conversion features | |
| | | |
| 27,856 | |
| Initial recognition of derivative liability | |
| (32,429 | ) | |
| (2,578,230 | ) |
| Change in fair value of derivative liability | |
| (2,103,126 | ) | |
| 544,850 | |
| Total other income (expenses) | |
| (2,802,369 | ) | |
| (2,932,596 | ) |
| | |
| | | |
| | |
| Loss before income taxes | |
| (3,748,952 | ) | |
| (4,580,438 | ) |
| Provision for income taxes | |
| - | | |
| - | |
| | |
| | | |
| | |
| NET LOSS | |
| (3,748,952 | ) | |
| (4,580,438 | ) |
| | |
| | | |
| | |
| Net loss per common share – basic and diluted | |
$ |
-
| | |
$ |
-
| |
| Weighted average common shares – basic and diluted * | |
| 18,975,833 | | |
| 12,664,533 | |
*
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 Year Ended December 31, 2023 and 2022
Audited
| | |
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, 2021 | |
| 652,259 | | |
$ | 652 | | |
| 500 | | |
$ | 1 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | | |
| 18,150,000 | | |
$ | 18,150 | | |
| 0 | | |
$ | 0 | | |
$ | 3,802,391 | | |
$ | 0 | | |
$ | (4,663,487 | ) | |
$ | (842,293 | ) |
| Recapitalization
at reverse merger - May 4, 2022 | |
| (652,259 | ) | |
| (652 | ) | |
| (500 | ) | |
| (1 | ) | |
| 3,381,520 | | |
| 33,815 | | |
| 5,000 | | |
| 50 | | |
| 5,000,000 | | |
| 50,000 | | |
| 125,000 | | |
| 12 | | |
| 0 | | |
| 166,331 | | |
| 1,000,000 | | |
| 1,000 | | |
| | | |
| | | |
| 8,936,864,497 | | |
| 71,400 | | |
| | | |
| 26 | | |
| (2,630,899 | ) | |
| (773,500 | ) | |
| | | |
| (3,082,418 | ) |
| Stock
based compensation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 4,719 | | |
| | | |
| | | |
| 4,719 | |
| Distribution
to shareholders | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (257,500 | ) | |
| | | |
| | | |
| (257,500 | ) |
| Relative
fair value of warrants issued with convertible debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 596,927 | | |
| | | |
| | | |
| 596,927 | |
| Shares
issued for extinguishment of convertible debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 18,094,721,865 | | |
| 180,947 | | |
| | | |
| | | |
| 2,083,394 | | |
| | | |
| | | |
| 2,264,341 | |
| -
Net Loss 2022 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (4,580,438 | ) | |
| (4,580,438 | ) |
| 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 | ) |
| Effects
of reverse-split | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (33,360,984,221 | ) | |
$ | (333,610 | ) | |
| | | |
| | | |
$ | 333,610 | | |
| | | |
| | | |
| 0 | |
| Effects
of forward split | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 33,361,150 | | |
$ | 334 | | |
| | | |
| | | |
$ | (334 | ) | |
| | | |
| | | |
| (0 | ) |
| Stock
issuance | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 10,000 | | |
$ | 10 | | |
| 6,331,407,539 | | |
$ | 63,314 | | |
| | | |
| | | |
$ | 4,943,756 | | |
| | | |
| | | |
$ | 5,007,080 | |
| -
Net Loss 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (3,748,952 | ) | |
| (3,748,952 | ) |
| 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 | ) | |
$ | (4,638,544 | ) |
The accompanying notes are an integral part
of these consolidated financial statements.
Bowmo, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Audited
| | |
December 31, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| Cash Flows from Operating Activities | |
| | |
| |
| Net loss | |
$ | (3,748,952 | ) | |
$ | (4,580,438 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |
| | | |
| | |
| Interest expense incurred on put premium on stock settled debt | |
| - | | |
| 145,717 | |
| Loss on acquisition – related party | |
| - | | |
| 197,370 | |
| Amortization of debt discount | |
| 321,531 | | |
| 289,252 | |
| Stock-based compensation and shares issued for services | |
| - | | |
| 216,186 | |
| Gain on new methodology for accounting for debt conversion features | |
| - | | |
| (27,856 | |
| Forgiveness of note payable - PPP Note | |
| - | | |
| - | |
| Grant income | |
| - | | |
| - | |
| Expenses incurred on extinguishment of convertible debt and accrued interest | |
| (14,003 | ) | |
| 117,565 | |
| Initial derivative expense | |
| | | |
| 2,578,230 | |
| Change in fair value of derivative liability | |
| (1,738,432 | ) | |
| (544,850 | ) |
| Changes in operating assets and liabilities (net of amounts acquired): | |
| | | |
| | |
| Accounts receivable | |
| (2,630 | ) | |
| 22,098 | |
| Prepaid expenses and other current assets | |
| (980 | ) | |
| 139 | |
| Accounts payable | |
| 331,080 | | |
| 421,125 | |
| Accrued expenses | |
| 11,673 | | |
| - | |
| Accrued Interest | |
| - | | |
| 483,915 | |
| Accrued compensation | |
| 310,138 | | |
| 67,123 | |
| Deferred revenue | |
| - | | |
| (3,108 | ) |
| Net Cash (Used In) Provided By Operating Activities | |
| (4,530,575 | ) | |
| (617,532 | ) |
| | |
| | | |
| | |
| Cash Flows from Investing Activities | |
| | | |
| | |
| Cash acquired in reverse merger | |
| - | | |
| 517 | |
| Cash acquired in acquisition | |
| - | | |
| 1,633 | |
| Net Cash Provided by Investing Activities | |
| - | | |
| 2,150 | |
| | |
| | | |
| | |
| Cash Flows from Financing Activities | |
| | | |
| | |
| Proceeds from loans payable | |
| - | | |
| 269,100 | |
| Proceeds from convertible notes payable | |
| 521,679 | | |
| 770,500 | |
| Proceeds from equity issuances | |
| 5,277,042 | | |
| - | |
| Repayment of loans | |
| (1,428,941 | ) | |
| - | |
| Distributions to shareholders | |
| - | | |
| (257,500 | ) |
| Net Cash Provided by Financing Activities | |
| 4,369,780 | | |
| 782,100 | |
| | |
| | | |
| | |
| Net Change in Cash and Cash Equivalents | |
| (160,795 | ) | |
| 166,718 | |
| | |
| | | |
| | |
| Cash And Cash Equivalents - Beginning of Year | |
| 167,103 | | |
| 385 | |
| | |
| | | |
| | |
| Cash And Cash Equivalents - End of Year | |
| 6,308 | | |
| 167,103 | |
| | |
| | | |
| | |
| Supplemental Disclosure of Cash and Non-cash Transactions: | |
| | | |
| | |
| Cash paid for interest | |
$ | - | | |
$ | - | |
| Common stock issued for extinguishment of debt and accrued interest | |
$ | 279,002 | | |
$ | 1,905,322 | |
| Tangible assets acquired in Merger | |
$ | - | | |
$ | 3,082,419 | |
| Equity acquired in Merger, net of cancellation of shares | |
$ | - | | |
$ | 3,063,589 | |
| Debt discount associated with issuance of warrants and derivative liabilities | |
$ | - | | |
$ | 734,853 | |
| Put premium on stock settled debt extinguishment | |
$ | 205,684 | | |
$ | 241,454 | |
| Issuance of Series G Preferred Stock | |
$ | - | | |
$ | 1,000 | |
| Accrual for shares to be issued for acquisition of Interview Mastery | |
$ | - | | |
$ | 200,000 | |
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 Years Ended December 31, 2023 and 2022
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 year ended
December 31, 2023, of $3,748,952, of which approximately $947,000 was due to operations and the remainder was due primarily to interest
expense and derivative liabilities. At the year ended December 31, 2023, the Company has a working capital deficit of $3,750,722 and an
accumulated deficit of $12,992,877.
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 December 31, 2023 and 2022, the Company had cash and cash equivalents of $6,308 and $167,103, 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 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 Segmentation
For the years ended December 31, 2023 and 2022,
revenues can be categorized into the following:
| | |
December 31, 2023 | | |
December 31, 2022 | |
| | |
| | |
| |
| Direct placement | |
$ | 78,458 | | |
$ | 142,242 | |
| Recruiting as a Service | |
| 169,976 | | |
| 43,681 | |
| Total revenues | |
$ | 243,434 | | |
$ | 185,923 | |
(the $169,976 is a result the difference between
$78,458 and the other unidentified revenue accounts in QB)
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. This accounting change resulted in a gain on new methodology for accounting for debt conversion features of $27,856
on the consolidated statements of operations.
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 | | |
December 31, 2023 | | |
December 31, 2022 | |
| Loan 1 | |
| 1 | % | |
$ | 27,000 | | |
$ | 27,000 | |
| Loan 2 | |
| 1 | % | |
| 3,000 | | |
| 3,000 | |
| Loan 3 | |
| 8 | % | |
| 64,000 | | |
| 64,000 | |
| Loan 4 | |
| 8 | % | |
| 160,500 | | |
| 160,500 | |
| Loan 5 | |
| 3.75 | % | |
| - | | |
| 309,500 | |
| Total | |
| | | |
$ | 254,500 | | |
$ | 564,000 | |
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 | |
| 225,675 | |
| Total payments | |
$ | 254,500 | |
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. 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 and 2022 is $193,202 and $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.
NOTE 6 – CONVERTIBLE NOTES
The following table summarizes the convertible
notes as of December 31, 2023 and 2022:
| | |
| | |
| | |
Put Premium | |
| | |
December 31, | | |
On Stock | |
| Creditor | |
2023 | | |
2022 | | |
Settled Debt | |
| Frondeur | |
$ | 123,793 | | |
$ | 135,000 | | |
$ | 100,000 | |
| Kings Wharf | |
| 42,200 | | |
| 275,000 | | |
| - | |
| Diagonal Lending | |
| 117,000 | | |
| - | | |
| - | |
| Trillium | |
| - | | |
| 578,000 | | |
| 30,000 | |
| Matterhorn | |
| 8,454 | | |
| - | | |
| 21,000 | |
| Travel Data Solutions | |
| 125,000 | | |
| 125,000 | | |
| - | |
| Third Party * | |
| 230,232 | | |
| 84,681 | | |
| 54,684 | |
| Total | |
| 646,679 | | |
| 1,197,681 | | |
| 205,684 | |
| Less: Debt discount | |
| (206,570 | ) | |
| (528,100 | ) | |
| | |
| Total Convertible notes payable | |
$ | 440,109 | | |
$ | 669,581 | | |
| | |
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 note into shares of the Company’s common stock. Due to these
conversions, the remaining principal balances at December 31, 31, 2023 and 2022, was $123,793 and $135,000.
Between November 1, 2021 and May 1, 2022, Cruzani
entered into several convertible notes with Frondeur Partners, LLC bearing interest at 10% per annum and totaling $175,000. These convertible notes
were convertible at 70% of the lowest close bid price of the Company’s stock price for a twenty-day period. These convertible
notes were accounted for as stock settled debt in accordance with ASC 480 - “Distinguishing Liabilities from Equity”, resulting
in put premiums on stock settled debt being recognized. See Note 7. As of December 31, 2022, these convertible notes were converted into
shares of the Company’s common stock.
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 December
31, 2023 and 2022, was $42,200 and $275,000.
Diagonal Lending
November 10, 2023, the Company entered into a
convertible note with 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 December 31, 2023, was $77,000.
December 12, 2023, the Company entered into a
convertible note with 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 December 31, 2023, was $40,000.
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 December 31,
2023 and 2022, was $0 and $0.
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 December 31, 2023 and 2022, was $0 and $303,000.
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 December
31, 2023 and 2022, was $0 and $275,000.
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 December 31, 2023 and 2022, was $8,454 and $0.
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 December 31, 2023 and 2022, the outstanding balance was $125,000 and $125,000, 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 (1-3 below). Convertible debt outstanding during
the years ended December 31, 2023 and 2022, consist of the following:
| | 1) | Between May 20, 2020 and October 1, 2021, Cruzani entered into several convertible notes with Livingston Asset Management bearing interest at 10% per annum and totaling $331,600. These convertible notes were convertible at 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. As of December 31, 2022, these convertible notes were converted into shares of the Company’s common stock. |
| | 2) | On November 17, 2021, Cruzani entered into a convertible note with Oscaleta Partners, LLC bearing interest at 10% per annum and totaling $11,000. This convertible note was convertible at 50% of the lowest close bid price of the Company’s stock price for a twenty-day period. This convertible note was accounted for as stock settled debt in accordance with ASC 480 - “Distinguishing Liabilities from Equity”, resulting in a put premium on stock settled debt being recognized. As of December 31, 2022, the convertible note was converted into shares of the Company’s common stock. |
| 3) | 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 $145,551. As of December 31, 2023 and 2022, the outstanding balance was $230,232 and
$84,681, 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 in 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 | |
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:
| | |
| December 31,
2023 | | |
| December 31,
2022 | |
| Stock price | |
| $0.0001 - $0.1500 | | |
| $0.0002 - $0.0005 | |
| Exercise price | |
| $0.00003 - $0.2572 | | |
| $0.00005 - $0.0001 | |
| Contractual term (in years) | |
| 7.00 - 0.025 | | |
| 1.00 - 0.80 | |
| Volatility (annual) | |
| 174% - 2068% | | |
| 441% - 443% | |
| Risk-free rate | |
| 4.41% - 5.57% | | |
| 4.41% - 4.60% | |
NOTE 9 – RELATED PARTY TRANSACTIONS
For the years ended December 31, 2023 and 2022,
expenses of $38,771 and $30,842 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 and additional
$150,000 in salary and a bonus of $50,000 was accrued.
On December 16, Bowmo, Inc. (the “Company”)
entered into an Asset Purchase Agreement (the “APA”) with a related party, Interview Mastery Corporation (“Interview
Mastery”), a Delaware corporation, by and through Michael R. Neece (“Neece”) and Caseridus, Inc. Michael Neece, the
seller of Interview Mastery, is the chief product officer of the Company.
This resulted in a related party loss of $197,370
which is included in general and administrative expenses on the consolidated statements of operations.
Through December 31, 2023, 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 year ended December 31, 2023, salaries of $180,000 and $200,000,
were accrued for Eddie Aizman and Michael Lakshin, respectively. As of December 31, 2023, the total due to Eddie Aizman and Michael Lakshin
is $237,205 and $263,562, respectively.
The employment agreement of Conrad Huss, a director
of the Company, provides for a salary of $10,000 per month. For the year ended December 31, 2023, $120,000 has been credited to accrued
compensation. As of December 31, 2023, the total due to Conrad Huss is $652,000.
In connection with the EIDL Loan, the Company’s CEO, Edward Aizman,
provided his personal guaranty of the EIDL Loan and pledged his personal residence in conjunction with his guaranty (the “Collateral”).
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. In connection therewith, the Company also intends to replace the Collateral
with other property not owned by Mr. Aizman.
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.
As of December 31, 2023 and 2022, the Company
had 53,520,830 and 27,049,736 shares of common stock outstanding, respectively after a 1,000 to 1 reverse split.
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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 250,000 (post-reverse split) shares and 0 shares have
vested, respectively.
NOTE 11 – WARRANTS
In 2022, in connection with the issuance of convertible
note with Frondeur Partners, LLC (“Frondeur”), King Wharf Opportunities Fund, and Trillium Partners, LP, the Company also
issued 5,616,000,000 (pre-reverse split) common stock purchase warrants to purchase 5,616,000,000 (pre-reverse split) shares
of the Company’s common stock pursuant to the terms therein as a commitment fee. In 2023, in connection with further issuance to
the same lenders, additional warrants to purchase 7,500,000 (post-reverse split) shares of the Company’s common stock were issued
under the same terms as prior agreements.
These warrants
have an exercise price per share between $0.0025- $0.0001 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, 2022 | | | 5,616,000 | | | $ | 0.0001 | | | $ | 6.09 | |
| | | | | | | | | | | | | |
| Issued | | | 7,500,000 | | | | 0.0001 | | | | - | |
| Exercised | | | - | | | | - | | | | - | |
| Forfeited | | | - | | | | - | | | | - | |
| Expired | | | - | | | | - | | | | - | |
| Outstanding, December 31, 2023 | | | 13,116,000 | | | $ | 0.0001 | | | $ | 6.60 | |
| | | | | | | | | | | | | |
| Exercisable, December 31, 2023 | | | 13,116,000 | | | $ | 0.0001 | | | $ | 6.60 | |
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 December 31,
2023 | | | Weighted
Average
Remaining
Contractual Life | | | Weighted
Average
Exercise
Price | |
| $0.00025-0.0025 | | | 13,116,000 | | | | 6.60 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, there are 125,000
and 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 December 31, 2023 and 2022, there are 0 and 0 shares
of Series F preferred stock issued.
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.
There are 1,000,000 and 1,000,000 shares of Series
G preferred stock issued as of December 31, 2023 and 2022, 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 December 31, 2023.
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 2018-2022 remain open to examination
for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.
The Company has not filed its federal tax return for the year ended
December 31, 2023. Accordingly, it expects to be liable for late filing penalties in its taxable jurisdictions.
NOTE 15 – SUBSEQUENT EVENTS
Through March 31, 2024, the Company issued three convertible notes.
The principal amount of these notes are $10,000 each, for a total amount of $30,000. They bear interest at 10% and are due in full at
October 31, 2024, November 30, 2024, and December 31, 2024, 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.
From January 1, 2023 through the time of this
report, the Company issued 4,247,383,100 shares of the Company’s common stock upon
conversion of notes payable.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
On May 6, 2024, the Board of Directors of bowmo,
Inc., a Wyoming corporation (the “Company”), voted unanimously in favor of the immediate dismissal of the
Company’s current independent registered public accounting firm, BF Borgers CPA PC (“BF Borgers”), and
delivered written notice of such dismissal to BF Borgers on such date. The Board of Directors’ action was taken in response to the
entry of a final order by the Securities and Exchange Commission (the “Commission”) on May 3, 2024, denying
BF Borgers the privilege of appearing or practicing before the Commission as an accountant. The Company notified BF Borgers of the dismissal
action on May 6, 2024.
Further, during the Company’s three most
recent fiscal years ended December 31, 2023, 2022 and 2021, and the subsequent interim period through May 6, 2024: there were no disagreements
between the Company and BF Borgers on any matters of accounting principles or practices, financial statement disclosure or auditing scope
or procedure, which disagreements, if not resolved to the satisfaction of BF Borgers, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports on the Company’s financial statements.
On September 8, 2024 (the “Engagement Date”), the Company’s
Board of Directors approved the selection and engagement of Olayinka Oyebola & Co. (Chartered Accountants) (“Olayinka”)
as the Company’s new independent registered public accounting firm. During the years ended December 31, 2023 and 2022, and the subsequent
interim periods through the Engagement Date, neither the Company, nor anyone on its behalf, consulted Olayinka regarding any of the matters
or events set forth in Items 304(a)(2)(i) or (ii) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934,
is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate,
to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance
of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of
controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because
of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations
in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As required by the SEC Rules 13a-15(b) and 15d-15(b),
we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer
and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the
end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded
that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described
below.
To address these material weaknesses, management
engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein
fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.
Management’s Annual Report on Internal
Control Over Financial Reporting.
The management of the Company is responsible for
establishing and maintaining adequate internal control over financial reporting (“ICFR”) for the Company. Our internal control
system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation
and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Our management assessed the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2023. The framework used by management in making that assessment
was the criteria set forth in the document entitled “2013 Internal Control – Integrated Framework” issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management concluded that, during the period covered
by this report, such internal controls and procedures were not effective as of December 31, 2023, and that material weaknesses in ICFR
existed as more fully described below.
A material weakness is a deficiency, or a combination
of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard AS 2201, in internal
control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual
or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material
weaknesses which have caused management to conclude that as of December 31, 2023, our internal controls over financial reporting were
not effective at the reasonable assurance level:
| |
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 year ended December 31, 2023. 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. 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. |
We intend to continue to address these weaknesses
as resources permit.
Notwithstanding the assessment that our ICFR was
not effective and that there are material weaknesses as identified herein, we believe that our consolidated financial statements contained
in this Annual Report fairly present our financial position, results of operations and cash flows for the years covered thereby in all
material respects.
This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s registered public accounting firm as we are a smaller reporting company and
are not required to provide the report.
Changes in Internal Control Over Financial
Reporting
There has been no change in our internal control
over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during
the quarter ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting, except the implementation of the controls identified above.
Item 9B. Other Information.
None.
Item 9C. Disclosures Regarding Foreign Jurisdictions
That Prevent Inspections.
None.
PART III
Item 10. Directors, Executive Officers and
Corporate Governance.
The following table provides certain information
regarding our directors and executive officers. We do not have any significant employees other than our current directors and executive
officers named in the table below.
| Name |
|
Position |
|
Age |
|
|
Term of Office |
|
|
Full Time/Part
Time |
| Edward Aizman |
|
Director, Chief Executive Officer, Secretary and Treasurer |
|
|
48 |
|
|
|
April 2020 – Present |
|
|
Full Time |
| Michael E. Lakshin |
|
President and Chairman of the Board |
|
|
60 |
|
|
|
April 2020 – Present |
|
|
Full Time |
|
Conrad R. Huss
|
|
Co-Chairman of the Board
|
|
|
73
|
|
|
|
May 2022 – Present
|
|
|
Full Time
|
Other than the employment agreements described
in this report, there are no arrangements or understandings between the directors and executive officers listed in the table above and
any other person(s) pursuant to which he was elected as a director or appointed as an executive officer.
Edward Aizman, Director, Chief Executive Officer,
Secretary and Treasurer. Mr. Aizman serves as a Funder and Chief Executive Officer of the Company. Mr. Aizman is an accomplished staffing
and recruiting professional with over 20 years of extensive experience in recruiting, sales, management, business development, and marketing.
From Mar 1997 to August 2016, Mr. Aizman served as the Account Manager with SANS Consulting Services, Inc. located in Greater New York
City Area, Mr. Aizman’s Clients included: JPMorgan Chase, Citigroup, Credit Suisse, and others. In September 2016, Mr. Aizman
joined the Company as Co-Founder and Chief Operating Officer. On May 27, 2022, Mr. Aizman was appointed as a Director, Chief Executive
Officer, Secretary and Treasurer. We believe Mr. Aizman is qualified to serve as a director of the Company due to his extensive experience
in the technology and recruiting industry.
Michael E. Lakshin, MBA, President and Chairman
of the Board. Mr. Lakshin is a seasoned business executive and serial entrepreneur with more than 28 years of start-up and senior
business management experience. Participated in launching and developing various business ventures and overseeing multiple IPOs in the
U.S. and internationally. Designed and managed more than 50 marketing/advertising and IR campaigns for various companies across multiple
industries worldwide. Holds Executive MBA from Rutgers Business School. Prior to joining bowmo, Mr. Lakshin served as the CEO of 8K Miles
Media Group, the South-Asian Indian Media Company and the COO and Managing Director of Crescendo Communications, LLC., New York-based
Investor Relations Company. Mr. Lakshin joined bowmo in April 2020 as the Chief Revenue Officer to spearhead its new investment strategies
and on May 27, 2020 Mr. Lakshin has been appointed BOWMO™’s Chairman of the Board and President. We believe Mr. Lakshin is
qualified to serve as a director of the Company due to his vast financial, marketing and operational experience.
Conrad R. Huss, Co-Chairman of the Board.
Prior to joining us upon completion of the Merger, Mr. Huss served as the sole officer and director of Cruzani. Mr. Huss is a financial
professional with over 25 years of investment banking and operating experience. Most recently, he was with Ocean Cross Capital Markets,
as Senior Managing Director from 2011 to 2013. Previously, Mr. Huss served as the Senior Managing Director at Southridge Investment Group
from 2006 to 2011. We believe Mr. Huss is qualified to serve as a director of the Company due to his financial and operational experience.
Director Independence
We are not currently subject to listing requirements
of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board of Directors
be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority
of “independent directors.”
Involvement in Certain Legal Proceedings
None of our directors or executive officers has
been involved in any of the following events during the past ten years:
| |
● |
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| |
|
|
| |
● |
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
| |
● |
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or |
| |
● |
being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Audit Committee
We currently do not have a separately standing
Audit Committee due to our limited size. Our Board performs the functions that would otherwise be performed by an Audit Committee.
Compensation Committee
The Company does not have a Compensation Committee
due to our limited size and our Board performs the functions that would otherwise be performed by a Compensation Committee. Our Board
intends to form a Compensation Committee when needed.
Other Committees
We do not currently have a separately-designated
standing nominating committee. Further, we do not have a policy with regard to the consideration of any director candidates recommended
by security holders. To date, no security holders have made any such recommendations. The entire Board of Directors performs all functions
that would otherwise be performed by committees. Given the present size of our Board, it is not practical for us to have committees other
than those described above, or to have more than two directors on such committees. If we are able to grow our business and increase our
operations, we intend to expand the size of our board and our committees and allocate responsibilities accordingly.
Potential Conflicts of Interest
Because we do not have an audit or compensation
committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors.
The Board of Directors has not established an audit committee and does not have a financial expert, nor has the Board established a nominating
committee. The Board is of the opinion that such committees are not necessary since the Company has only five directors, and to date,
such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors
and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect
management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.
Significant Employees
We do not have any significant employees other
than our current executive officers and directors named in this Annual Report.
Code of Ethics
Our Board has adopted a Code of Ethics that applies
to all of our employees, including our Executive Chairman, Chief Executive Officer, and Chief Financial Officer. Although not required,
the Code of Ethics also applies to our directors. The Code of Ethics provides written standards that we believe are reasonably designed
to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships, full, fair, accurate, timely and understandable disclosure and compliance with laws,
rules and regulations, including insider trading, corporate opportunities and whistleblowing or the prompt reporting of illegal or unethical
behavior. We will provide a copy of our Code of Ethics, without charge, upon request in writing us.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of
1934 requires the Company’s officers and directors, and persons who own more than ten percent (10%) of a registered class of the
Company’s equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission (“SEC”).
Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on our review of certain reports
filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports
required to be filed with respect to transactions in our common stock during the fiscal year ended December 31, 2023, were not timely.
Item 11. Executive Compensation.
The following table presents summary information
regarding the total compensation awarded to, earned by and paid to our executive officers for the years ended December 31, 2023 and 2022:
| Name |
|
Capacities in which
compensation was received |
|
Year |
|
|
Cash
Compensation
($) |
|
|
Other
Compensation
($) |
|
|
Total
Compensation
($) |
|
| Edward Aizman |
|
Director, Chief Executive Officer, Secretary and Treasurer |
|
2023 |
|
|
$ |
0 |
|
|
$ |
180,000 |
(1) |
|
$ |
180,000 |
|
| |
|
|
|
2022 |
|
|
$ |
60,000 |
|
|
$ |
120,000 |
(1) |
|
$ |
180,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Michael E. Lakshin |
|
President and Chairman of the Board |
|
2023 |
|
|
$ |
0 |
|
|
$ |
200,000 |
(2) |
|
$ |
200,000 |
|
| |
|
|
|
2022 |
|
|
$ |
66,667 |
|
|
$ |
133,333 |
(2) |
|
$ |
200,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Conrad R Huss |
|
Co-Chairman of the Board |
|
2023 |
|
|
$ |
0 |
|
|
$ |
120,000 |
(3) |
|
$ |
120,000 |
|
| |
|
|
|
2022 |
|
|
$ |
0 |
|
|
$ |
120,000 |
(3) |
|
$ |
120,000 |
|
| (1) |
This amount was accrued. Mr.
Aizman is owed an aggregate amount of $237,205 as of December 31, 2023. Mr. Aizman will begin receiving his accrued compensation in
equal tranches when we begin generating positive cash flows, or as otherwise agreed between Mr. Aizman and the Company. |
| (2) |
This amount was accrued. Mr.
Lakshin is owed an aggregate amount of $263,563 as of December 31, 2023. Mr. Lakshin will begin receiving his accrued compensation
in equal tranches when we begin generating positive cash flows. |
| (3) |
This amount was accrued. Mr.
Huss is owed an aggregate amount of $652,000 in accrued but unpaid base salary as of December 31, 2023. Mr. Huss will begin
receiving his accrued compensation in equal tranches when we begin generating positive cash flows. |
General
We currently compensate our executive officers
through base salary. Each of our executive officers has substantial responsibilities in connection with our day-to-day operations.
Base Salary
We have entered into an employment agreement with
Mr. Aizman. The agreement provides for a salary of $180,000 per annum. As of December 31, 2022 and 2021, $284,514 and $260,430 in accrued
but unpaid base salary, respectively.
We have entered into an employment agreement with
Mr. Lakshin. The agreement provides for a salary of $200,000 per annum. As of December 31, 2022 and 2021, $152,871 and $249,648 has been
credited to accrued compensation, respectively.
We have entered into an employment agreement with
Mr. Huss. The agreement provides for a salary of $10,000 per month. As of December 31, 2022, $532,000 has been credited to accrued compensation.
We have entered into an employment agreement with
Mr. Neece. The agreement provides for a salary of $150,000 per annum. As of December 31, 2023, in accrued but unpaid base salary, respectively.
Equity Awards
We have adopted an equity incentive plan though,
as of the date of this Annual Report we have issued no awards under the plan.
Health and Welfare Benefits and Pension and
Retirement Plans
As of the date of this Annual Report, we offer
no group life, health, hospitalization, or medical reimbursement or relocation benefits. We have, however, adopted a 401(k) retirement
plan.
Termination and Change of Control Payments
As of the date of this 10-K, we do not have any
plans or agreements which provide compensation in the event of a termination of employment or a corporate change in control.
Director Compensation
We do not compensate our directors for their services
as directors. We do, however, reimburse our directors for their reasonable out-of-pocket expenses in fulfilling their duties as directors.
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
The following tables set forth certain information regarding our shares
of Common Stock beneficially owned as of the date of October 4, 2024, for (i) each stockholder known to be the beneficial owner of 5%
or more of our outstanding shares of Common Stock, (ii) each named executive officer and director, and (iii) all executive officers and
directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises
sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within
60 days through an exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares
shown in the tables for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the
owner’s spouse or children.
Unless otherwise indicated, the address of each
beneficial owner listed in the table below is c/o bowmo, Inc., 99 Wall Street, Suite 891, New York, New York 10005.
COMMON STOCK
| Name of Beneficial Owner | |
Title of Class | |
Amount and
Nature of
Beneficial
Ownership (1) | | |
Percent of
Class (2) | |
| Edward Aizman(3) | |
Common Stock | |
| 4,832,752,455 | (4) | |
| 43.52 | % |
| Michael E. Lakshin(3) | |
Common Stock | |
| 3,828,094,239 | (4) | |
| 34.48 | % |
| Conrad Huss(5) | |
Common Stock | |
| 2,252,529,694 | (6) | |
| 20.29 | % |
| All Officers and Directors as a Group (3 persons) | |
Common Stock | |
| 10,913,376,388 | | |
| 98.29 | % |
| (1) |
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power to the shares of the Company’s common stock. |
| (2) |
Based on 11,103,649,609 shares outstanding as of the date of this Annual Report, (A) including 136,458,010 shares of the Company's common stock that are issued and outstanding and (B) an additional 10,967,191,599 shares of common stock that are not issued, but are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each Beneficial Owner listed, any instruments convertible within 60 days have been also included for purposes of calculating their percent of class. |
| (3) |
Officer and director. |
| (4) |
None of these shares has been issued, but underlie the currently convertible shares of Series G Preferred Stock. |
| (5) |
Director. |
| (6) |
None of these shares is issued, but underlie the currently convertible shares of Series C Preferred Stock and Series F Preferred Stock. |
PREFERRED STOCK
| Name of Beneficial Owner | |
Title of Class | |
Amount and
Nature of
Beneficial
Ownership (1) | | |
Percent of
Class (2) | |
| Edward Aizman | |
Series G Preferred
Stock(3) | |
| 558,000 | | |
| 55.80 | % |
| Michael E. Lakshin | |
Series G Preferred Stock(3) | |
| 442,000 | | |
| 44.20 | % |
| Conrad Huss | |
Series C Preferred Stock(4) | |
| 1,000,000 | | |
| 100 | % |
| | |
Series F Preferred Stock(5) | |
| 101 | | |
| 100 | % |
| (1) |
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. The beneficial owner listed above has direct ownership of and sole voting power to the shares of the indicated shares. |
| (2) |
As of the date of this Annual Report, a total of 1,000,000 shares of the Company's Series A Preferred Stock issued and outstanding. |
| (3) |
With the voting rights of the Series G Preferred Stock, Messrs. Aizman and Lakshin control the Company through their collective ownership of the Company’s Series G Preferred Stock. |
| (4) |
The holders of the Series G Preferred Stock, as a class, have that number of votes which equals 78% of the total issued and outstanding shares of common stock on a fully-diluted basis. |
Item 13. Certain Relationships and Related
Transactions, and Director Independence.
Under Item 404 of Regulation S-K, we are required
to describe any transaction, since the beginning of December 31, 2015, or any currently proposed transaction, in which the Company was
or is to be a participant and in which any related person has or will have a direct or indirect material interest involving the lesser
of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A
related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s Common Stock,
or an immediate family member of any of those persons.
See the section captioned “Executive Compensation”
of this Annual Report for a discussion of the compensation arrangements of our directors and executive officers.
Item 14. Principal
Accountant Fees and Services.
The following table sets forth fees billed to
us by our independent auditors during the fiscal years ended December 31, 2023 and 2022, for: (a) services rendered for the audit of our
annual financial statements and the review of our quarterly financial statements, (b) services by our auditors that are reasonably related
to the performance of the audit or review of our financial statements and that are not reported as Audit Fees, (c) services rendered in
connection with tax compliance, tax advice and tax planning and (d) all other fees for services rendered.
| |
|
Year Ended
December 31,
2023(1) |
|
|
Year Ended
December 31,
2022(2) |
|
| Audit Fees |
|
$ |
18,000 |
|
|
$ |
25,000 |
|
| Audit Related Fees |
|
$ |
0 |
|
|
$ |
0 |
|
| Tax |
|
$ |
0 |
|
|
$ |
0 |
|
| All Other Fees |
|
$ |
0 |
|
|
$ |
0 |
|
| (1) |
These fees were paid to our current auditor, Olayinka Oyebola & Co.. |
| (2) | These fees were paid to our prior auditor, BF Borgers. |
PART IV
Item 15. Exhibits
and Financial Statement Schedules.
The following exhibits
are filed with this Form 10-K or incorporated by reference:
| ** | XBRL (Extensible Business Reporting Language) information is
furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of
1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is
not subject to liability under these sections. |
Item 16. Form 10-K Summary.
None.
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
| |
BOWMO, INC. |
| |
|
|
| Dated: October 9, 2024 |
By: |
/s/ Michael E. Lakshin |
| |
|
Michael E. Lakshin |
| |
|
President and Chairman of the Board
(Principal Executive, Financial and
Accounting Officer) |
Pursuant to the requirements
of the Securities Exchange Act of l934, this Report has been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/ Michael E. Lakshin |
|
|
|
|
| Michael E. Lakshin |
|
President, Chairman of the Board (Director) |
|
October 9, 2024 |
| |
|
(Principal Executive, Financial and |
|
|
| |
|
Accounting Officer) |
|
|
| |
|
|
|
|
| /s/ Edward Aizman |
|
|
|
|
| Edward Aizman |
|
Chief Executive Officer and Director |
|
October 9, 2024 |
| |
|
|
|
|
| /s/ Conrad Huss |
|
|
|
|
| Conrad Huss |
|
Director |
|
October 9, 2024 |
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The undersigned, Michael Lakshin, Acting President,
and Chairman of the Board, of bowmo, Inc. (the “Company”) certifies, under the standards set forth and solely for the purposes
of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge, the Annual
Report on Form 10-K of the Company for the year ended December 31, 2023, fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 and information contained in that Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Company.
A signed original of this written statement required
by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.