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

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended April 30, 20172020


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ___________to___________to___________


Commission file number 000-55519


Force Protection Video Equipment Corp.

 (Exact name of registrant as specified in its charter)


Force Protection Video Equipment Corp.

(Exact name of registrant as specified in its charter)

Florida

 

45-1443512

(State of other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification Number)

 

 

 

130 Iowa Lane, Suite 102,1249 Kildaire Farm Road Cary NC

 

1 27511

(Address of principal executive offices)

 

(Zip Code)


(919) 780-7897271-2994


(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act: None


Securities registered pursuant to Section 12(g) of the Act:


Common Stock, $0.0001 Par Value

(Title of Class)



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso     Nox


Indicate by check markif the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.Act. Yes ☐     No ☒

Yeso Nox


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 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 ☐

Yesx Noo


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months12-months (or for such shorter period that the registrant was required to submit and post such files). Yeso     Nox





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 registrantsregistrant’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.T


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large“large accelerated filer,accelerated filer“accelerated filer” and smaller“smaller reporting companycompany” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

Accelerated filer

o

Non-Accelerated filer

Smaller reporting company

Non-accelerated filer (Do(Do not check if a smaller reporting company)

 

 

Smaller reporting company

x


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).Act) Yes o     Nox


The aggregate market value of the voting and non-voting common equitystock of the registrant held by non-affiliates of the registrantwas approximately $76,000 as of October 31, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s common stock on October 31, 2016, as reported on the Over the Counter Markets Group Inc. QB tier (the “OTCQB”) was $2,867,000.


quarter. As of JulySeptember 14, 20172020 there were 4,710,296841,184,289 shares of the registrant’s common stock outstanding.


DOCUMENTS INCORPORATED BY REFERENCE


None.
























TABLE OF CONTENTS


FORCE PROTECTION VIDEO EQUIPMENT CORP.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED APRIL 30, 2017


PART I

PAGE


Item 1.

Business

1


Item 1A.

Risk Factors

4


Item 2.

Properties

13


Item 3.

Legal Proceedings

13


Item 4.

Mine Safety Disclosure

13


PART II2020

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities

14


Item 7.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

15


Item 8.

Financial Statements

21


Item 9.

Changes in and Disagreements With Accountants on Accounting and

Financial Disclosure

39


Item 9A.

Controls and Procedures

39


Item 9B.

Other Information

40


PART III


Item 10.

Directors, Executive Officers, and Corporate Governance

40


Item 11.

Executive Compensation

44


Item 12.

Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

45


Item 13.

Certain Relationships and Related Transactions, and Director Independence

46


Item 14.

Principal Accounting Fees and Services

46


PART IV


Item 15.

Exhibits, Financial Statement Schedules

47


SIGNATURES

48


EXHIBIT INDEX

49


PAGE

PART I

Item 1.

Business

4

Item 1A.

Risk Factors

6

Item 2.

Properties

6

Item 3.

Legal Proceedings

6

Item 4.

Mine Safety Disclosures

6

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities

7

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

7

Item 8.

Financial Statements

13

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

50

Item 9A.

Controls and Procedures

50

Item 9B.

Other Information

51

PART III

Item 10.

Directors, Executive Officers, and Corporate Governance

52

Item 11.

Executive Compensation

55

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

55

Item 13.

Certain Relationships and Related Transactions, and Director Independence

56

Item 14.

Principal Accountant Fees and Services

57

PART IV

Item 15.

Exhibits and Financial Statement Schedules

58

SIGNATURES

59

EXHIBIT INDEX

60

CERTIFICATIONS




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


Statements in this Report may be “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. However, as the Company issues “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this Report, including the risks described under “Risk Factors,” “Management’s Discussion and Analysis” and “Our Business.”


There are important factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors, include, without limitation, the following: our ability to develop our technology platform and our products; our ability to protect our intellectual property; the risk that we will not be able to develop our technology platform and products in the current projected timeframe; the risk that our products will not achieve performance standards in clinical trials; the risk that the clinical trial process will take longer than projected; the risk that our products will not receive regulatory approval; the risk that the regulatory review process will take longer than projected; the risk that we will not be unsuccessful in implementing our strategic, operating and personnel initiatives; the risk that we will not be able to commercialize our products; any of which could impact sales, costs and expenses and/or planned strategies. Additional information regarding factors that could cause results to differ can be found in this Report and in our other filings with the Securities and Exchange Commission.


The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act.  Unless otherwise provided in this Report, references to the "Company," the "Registrant," the "Issuer," "we," "us," and "our" refer to Force Protection Video Equipment Corp.


 

2


















CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements in this Report may be “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. However, as the Company issues “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions, or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this Report, including the risks described under “Risk Factors,” “Management’s Discussion and Analysis” and “Our Business.”

There are important factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors, include, without limitation, the following: our ability to develop our technology platform and our products; our ability to protect our intellectual property; the risk that we will not be able to develop our technology platform and products in the current projected timeframe; the risk that our products will not achieve performance standards in clinical trials; the risk that the clinical trial process will take longer than projected; the risk that our products will not receive regulatory approval; the risk that the regulatory review process will take longer than projected; the risk that we will not be unsuccessful in implementing our strategic, operating and personnel initiatives; the risk that we will not be able to commercialize our products; any of which could impact sales, costs and expenses and/or planned strategies. Additional information regarding factors that could cause results to differ can be found in this Report and in our other filings with the Securities and Exchange Commission.

The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act. Unless otherwise provided in this Report, references to the “Company,” the “Registrant,” the “Issuer,” “we,” “us,” and “our” refer to Force Protection Video Equipment Corp.

 

3

Table of Contents

PART I

ITEM 1: BUSINESS

Overview

The Company is in the business of selling video and audio capture devices initially targeted to law enforcement agencies. With over 30 years of marketing to law enforcement, the Company’s CEO, Paul Feldman is able to leverage his extensive knowledge and base of contacts to produce sales. The Company has established a web site at www.forceprovideo.com whereby customers can view the Company’s products and place orders. We believe that given recent current events between law enforcement agencies and the public, which has been widely reported by the media, there is a significant market opportunity for the Company’s products. In the first quarter of fiscal 2016, the Company received multiple orders for the LE10 camera System. The LE10 is a small bodied, high definition (HD) camera which is half the size and half the price of most law enforcement cameras currently available. The LE10 and more recent addition the LE50 are rich with features that make them ideal for on-demand video and audio capture. The LE10 and LE50 do not require special software or expensive storage contracts. The video files can quickly be downloaded into a standard law enforcement case file and the micro SD cards are sealed in the provided static evidence bags and then securely stored in the department’s evidence locker. The Company’s Video LE10 and LE50 cameras are a rugged design which incorporates Ambarella (NASDAQ “AMBA”) made chips that allow the cameras to record high definition video.

Product Development and Sales

Our on-body mini-camera was developed by Paul Feldman, our Chief Executive Officer, President and Director who has significant experience in the development and commercialization of security and surveillance related products. From 2001 through August 2009, Mr. Feldman served as President and a Director of Law Enforcement Associates, Inc., a manufacturer of surveillance products and audio intelligent devices which were sold to the U.S. military and law enforcement. Patent technologies previously developed by Mr. Feldman include U.S. Patent Number 7,631,601 Surveillance Projectile and U.S. Patent Number 2006/0283,345 Surveillance Projectile.

Our video and audio capture devices are compact, ergonomic, tamperproof and designed to capture HD video and/or audio on demand enabling our customers to capture content while engaged in a wide range of activity. We also sell accessories that enhance the functionality and versatility of our products, including mounts, such as the helmet, handlebar, roll bar and tripod mounts, as well as mounts that enable users to wear the camera on their bodies, such as the wrist housing, chest harness and head strap. Other accessories include spare batteries, charging accessories and memory drives. Our products are marketed primarily to law enforcement due to their unique need to capture important events in the course of their duties.

Our primary products consist of video and audio recording devices as follows:

LE10 Law Enforcement Video Recorder. Retail price: $195. The LE10 on-body camera is designed for use by law enforcement and can be mounted on helmets, tactical vest, and riot shields. The LE10 provides high quality video and a sensor that allows the device to shoot in full HD at 30 fps, and 8 MP photos with shutter speed of 8fps in burst mode. In photo mode, the user can take pictures with a delayed timer. The device has three (3) resolutions and slow-motion capability allowing its user to create highly quality video while engaged in a variety of physical activity. The LE10 has built-in Wi-Fi, providing connectivity with a smartphone or tablet to enable remote control and content viewing functionality. Video taken by the LE10 is stored on a micro HD SD card which can be transferred to a computer for use as evidence. Downloading the video into evidence requires no special software or expensive cloud storage contracts. The LE10 is equipped with a high definition microphone to capture and record audio. The LE10 can also be used only as a standalone audio recorder to record witness statements or conduct interviews.

LE50 HD Body Cam. Retail price: $495. The LE50 includes many of the LE10 features in an on-body camera designed for use by law enforcement which can be mounted on helmets, tactical vest, and riot shields. The LE50 provides up to 10 hours of high quality video with a built in audio announcement feature, 50 hours of standby time, sound and vibration operation indication, 2″ TFT-LCD High Resolution Color Display, 32 GB of internal tamper proof storage, supports up to 128GB of memory, 140 degree field of view, white led illumination, waterproof level of IP65, metal clip with 360 degrees rotation, one button tag of important file feature and GPS recording.

SC1 Sunglass Camera. Retail price: $199.95. The SC1 Sunglass Camera is made from TR90 high impact resistant and flexible material and features a 150° wide-angle full HD 1080p video camera, with one-hour record time, built between the eyes with the controls and battery built into the glasses’ ultra slim frame. A full range of polarized and clear lenses are available and easily interchangeable.

Surveillance Cameras. Retail price: $100-$1,800. The Surveillance cameras now offered are state of the art, disguised cameras sold exclusively to law enforcement. Due to the sensitive nature of these products no further information may be disclosed.

Our manufacturer provides a one (1) year warranty for our products, and customers can purchase another year.

Our customers include the federal government and more than twenty-five thousand (25,000) state and local law enforcement agencies.

  

4

Table of Contents

Distribution

Customers purchase products from our website, printed catalogs and by telephone order. All products are shipped from our manufacturer to our facility in North Carolina where we process and ship product to our customers using Federal Express or United Parcel Services. Customers pay all shipping charges for orders less than $200.

Manufacturing

We purchase our finished products on an as needed basis from several manufacturers in Shenzhen China, Taiwan, and the USA. Our manufacturers provide production, labeling and packaging of our finished product according to our specifications which is confirmed with each order placed. We are not subject to any supplier agreements which means we are not obligated to purchase a minimum amount of product or place orders in the future. We pay for all products we order at the time the order is placed. Upon placing an order, our manufacturer creates a purchase order reflecting: (i) the product ordered, (ii) price per item (iii) total cost for the order, (iv) total cost to ship product ordered from our manufacturer to our facility, (iv) that immediate payment in required at the time of the order, and (v) the delivery date and delivery address. All material used to manufacture our products is located, purchased and paid for by our manufacturers who invoices us only for our finished product. All products offered by Force Protection Video have a twelve (12) month warranty.

Marketing

Currently, our sales and marketing efforts include printed marketing brochures catalogs featuring our products which we distribute to state and local law enforcement agencies. We create and deliver brochures to state and local law enforcement, every four (4) weeks, using U.S. Mail. Our data base contains over 25,000 law enforcement agencies nationwide.

We believe that a marketing strategy focused on print marketing to law enforcement will provide our target customers with the opportunity to view our specific information about our products and their features, which is an optimal strategy to increase sales.

Product Development

We expense all product development costs as incurred. Product development costs have been negligible for the past few years but are incurred as needed to support new product ideas and launches.

Product Warranty

We accept returns of products two (2) weeks after purchase. Additionally, our manufacturer provides a twelve (12) month warranty on all products manufactured and the Company offers an extended warranty for year two. The occurrence of any material defects or product recalls could make us liable for damages and warranty claims. Any negative publicity related to the perceived quality of our products could affect our brand image, decrease retailer, distributor, and customer demand, and adversely affect our operating results and financial condition. Warranty claims may result in litigation, the occurrence of which could adversely affect our business and operating results.

Competition

The market for on-body cameras is highly competitive. Further, we expect competition to increase in the future as existing competitors introduce new and more competitive offerings alongside their existing products, and as new market entrants introduce new products into our markets. We compete against established, well-known camera manufacturers such as Axon-Taser, WatchGuard and Provision. Many of our current competitors have substantial market share, diversified product lines, well- established supply and distribution systems, strong worldwide brand recognition and greater financial, marketing, research and development and other resources than we do.

In addition, many of our existing and potential competitors have substantial competitive advantages, such as:






PART I

ITEM 1:·

BUSINESS


Overview


The Company is in the business of selling video and audio capture devices initially targeted to law enforcement agencies. With over 30 years of marketing to law enforcement, the Company’s CEO, Paul Feldman is able to leverage his extensive knowledge and base of contacts to produce sales. The Company has established a web site at www.forceprovideo.com whereby customers can view the Company’s products and place orders. We believe that given recent current events between law enforcement agencies and the public, which has been widely reported by the media, there is a significant market opportunity for the Company’s products.  In the first quarter of fiscal 2016, the Company received multiple orders for the LE10 camera System. The LE10 is a small bodied, high definition (HD) camera which is half the size and half the price of most law enforcement cameras currently available. The LE10 and more recent addition the LE50 are rich with features that make them ideal for on-demand video and audio capture. The LE10 and LE50 do not require special software or expensive storage contracts. The video files can quickly be downloaded into a standard law enforcement case file and the micro SD cards are sealed in the provided static evidence bags and then securely stored in the department's evidence locker. The Company’s Video LE10 and LE50 cameras are a rugged design which incorporates Ambarella (NASDAQ "AMBA") made chips that allow the cameras to record high definition video.

Product Development and Sales


Our on-body mini-camera was developed by Paul Feldman, our Chief Executive Officer, President and Director who has significant experience in the development and commercialization of security and surveillance related products. From 2001 through August 2009, Mr. Feldman served as President and a Director of Law Enforcement Associates, Inc., a manufacturer of surveillance products and audio intelligent devices which were sold to the U.S. military and law enforcement. Patent technologies previously developed by Mr. Feldman include U.S. Patent Number 7,631,601 Surveillance Projectile and U.S. Patent Number 2006/0283,345 Surveillance Projectile.


Our video and audio capture devices are compact, ergonomic, tamperproof and designed to capture HD video and/or audio on demand enabling our customers to capture content while engaged in a wide range of activity. We also sell accessories that enhance the functionality and versatility of our products, including mounts, such as the helmet, handlebar, roll bar and tripod mounts, as well as mounts that enable users to wear the camera on their bodies, such as the wrist housing, chest harness and head strap. Other accessories include spare batteries, charging accessories and memory drives. Our products are marketed primarily to law enforcement due to their unique need to capture important events in the course of their duties.


Our primary products consist of video and audio recording devices as follows:


LE10 Law Enforcement Video Recorder. Retail price: $195. The LE10 on-body camera is designed for use by law enforcement and can be mounted on helmets, tactical vest and riot shields. The LE10 provides high quality video and a sensor that allows the device to shoot in full HD at 30 fps, and 8 MP photos with shutter speed of 8fps in burst mode. In photo mode, the user can take pictures with a delayed timer. The device has three (3) resolutions and slow motion capability allowing its user to create highly quality video while engaged in a variety of physical activity. The LE10 has built-in Wi-Fi, providing connectivity with a smartphone or tablet to enable remote control and content viewing functionality. Video taken by the LE10 is stored on a micro HD SD card which can be transferred to a computer for use as evidence. Downloading the video into evidence requires no special software or expensive cloud storage contracts. The LE10 is equipped with a high definition microphone to capture and record audio. The LE10 can also be used only as a standalone audio recorder to record witness statements or conduct interviews.


LE50 HD Body Cam.Retail price: $495. The LE50 includes many of the LE10 features in an on-body camera designed for use by law enforcement which can be mounted on helmets, tactical vest and riot shields. The LE50 provides up to 10 hours of high quality video with a built in audio announcement feature, 50 hours of standby time, sound and vibration operation indication, 2 TFT-LCD High Resolution Color Display, 32 GB of internal tamper proof storage, supports up to 128GB of memory, 140 degree field of view, white led illumination, waterproof level of IP65, metal clip with 360 degrees rotation, one button tag of important file feature and GPS recording.






SC1 Sunglass Camera. Retail price: $199.95. The SC1 Sunglass Camera is made from TR90 high impact resistant and flexible material and features a 150° wide-angle full HD 1080p video camera, with one hour record time, built between the eyes with the controls and battery built into the glasses’ ultra slim frame. A full range of polarized and clear lenses are available and easily interchangeable.


Citadel 3G Solar Security Camera. Retail price: $5,995. The Citadel 3G/4G Solar Security Camera is the latest advance in remote wireless surveillance technology. The CitadelSolar Security Camera is a solar powered CCTV security solution which can be mounted anywhere with a 3G/4G cell network or where WiFi is available. The CitadelSolar Security Camera uses no cables or exterior power sources, internet connectivity is not required and it can be set up in minutes with Motion Detection and/or Time Lapse recording. Remote LIVE viewing and access to recordings is possible through our secure portal. The camera also supports USB flash drive recordings that are motion activated at a rate of up to 10 images per second with remote viewing access of the USB stored recordings.The Citadel Solar Security Camera is ideal for any surveillance application, includingconstruction sites, farms and properties, college campuses, shopping centers, boating marinas, building sites, Councils, National Parks & Wildlife, hospitals, Government Agencies, Power Grids and Water authorities, industrial Sites, wildlife monitoring, Graffiti, Bush dumping and unattended machinery to name a few applications.


Surveillance Cameras. Retail price: $100-$600. The Surveillance cameras now offered are state of the art, disguised cameras sold exclusively to law enforcement. Due to the sensitive nature of these products no further information may be disclosed.


Our manufacturer provides a one (1) year warranty for our products.


Our customers include more than twenty-nine (29) state and local law enforcement agencies.


Distribution


Customers purchase products from our website and by telephone order. All products are shipped from our manufacturer to our facility in North Carolina where we process and ship product to our customers using Federal Express or United Parcel Services. Customers pay all shipping charges.


Manufacturing


We purchase our finished products on an as needed basis from several manufacturers in Shenzhen China. Our manufacturers provide production, labeling and packaging of our finished product according to our specifications which is confirmed with each order placed. We are not subject to any supplier agreements which means we are not obligated to purchase a minimum amount of product or place orders in the future. We pay for all products we order at the time the order is placed. Upon placing an order, our manufacturer creates a purchase order reflecting: (i) the product ordered, (ii) price per item (iii) total cost for the order, (iv) total cost to ship product ordered from our manufacturer to our facility, (iv) that immediate payment in required at the time of the order, and (v) the delivery date and delivery address. All material used to manufacture our products is located, purchased and paid for by our manufacturers who invoices us only for our finished product. All products offered by Force Protection Video have a twelve (12) month warranty.


Marketing


Currently, our sales and marketing efforts include printed marketing brochures featuring our products which we distribute to state and local law enforcement agencies. We create and deliver brochures to state and local law enforcement, every four (4) weeks, using U.S. Mail.


We believe that a marketing strategy focused on print marketing to law enforcement will provide our target customers with the opportunity to view our specific information about our products and their features, which is an optimal strategy to increase sales.






Product Development


We expense all product development costs as incurred. Product development costs have been negligible for the past few years but are incurred as needed to support new product ideas and launches.


Product Warranty


We accept returns of products two (2) weeks after purchase. Additionally, our manufacturer provides a twelve (12) month warranty on all products manufactured and the Company offers an extended warranty for year two. The occurrence of any material defects or product recalls could make us liable for damages and warranty claims. Any negative publicity related to the perceived quality of our products could affect our brand image, decrease retailer, distributor and customer demand, and adversely affect our operating results and financial condition. Warranty claims may result in litigation, the occurrence of which could adversely affect our business and operating results.


Competition


The market for on-body cameras is highly competitive. Further, we expect competition to increase in the future as existing competitors introduce new and more competitive offerings alongside their existing products, and as new market entrants introduce new products into our markets. We compete against established, well-known camera manufacturers such as Go Pro, Canon Inc., Nikon Corporation, Olympus Corporation, Polaroid Holding Corporation and Vivitar Corporation, large, diversified electronics companies such as JVC Kenwood Corporation, Panasonic Corporation, Samsung Electronics Co., Sony Corporation and Toshiba Corporation, and specialty companies such as Garmin Ltd. Many of our current competitors have substantial market share, diversified product lines, well- established supply and distribution systems, strong worldwide brand recognition and greater financial, marketing, research and development and other resources than we do.


In addition, many of our existing and potential competitors have substantial competitive advantages, such as:


·

longer operating histories;

·

the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products;

·

broader distribution and established relationships with channel partners;

·

access to larger established customer bases;

·

greater financial resources;

·

large intellectual property portfolios; and

·

the ability to bundle competitive offerings with other products and services.


Moreover, smartphones and tablets with photo and video functionality have significantly displaced traditional camera sales. It is possible that, in the future, the manufacturers of these devices, such as Apple Inc. and Samsung, may design them for use in a range of conditions, including challenging physical environments, or develop products similar to ours. In addition to competition or potential competition from large, established companies, new companies may emerge and offer competitive products. Further, we are aware that certain companies have developed cameras designed and labeled to appear similar to our products, which may confuse consumers or distract consumers from purchasing our products.


Increased competition may result in pricing pressures and reduced profit margins and may impede our ability to continue to increase the sales of our products or cause us to lose market share, any of which could substantially harm our business and results of operations


Seasonality


Our business, as well as the industry in which we operate, is not seasonal.






Intellectual Property


We currently have a patent pending on a new product


Other than the aforementioned pending patent, we have no registered or patented intellectual property. Trademarks and trade names distinguish the various companies from each other. If customers are unable to distinguish our products from those of other companies, we could lose sales to our competitors. We do not have any registered trademarks and trade names, so we only have common law rights with respect to infractions or infringements on its products. Many subtleties exist in product descriptions, offering and names that can easily confuse customers. The name of our principal products may be found in numerous variations of the name and descriptions in various media and product labels. This presents a risk of losing potential customers looking for our products and buying someone else’s because they cannot differentiate between them.   


Employees


As of the date of this report, we have four full time employees including Paul Feldman who is our Director, Chief Executive Officer and Chief Financial Officer. Mr. Feldman spends approximately forty (40) hours per week on our business. We have two full time employees who provide clerical and administrative services and one full time sales person..


None of our employees are represented by a collective bargaining agreement, nor have we experienced any work stoppages. We maintain good relationships with our employees.


ITEM 1A.                RISK FACTORS


In the business sector in which we operate is extremely competitive. We compete with larger companies that are better funded including Taser International, Inc. We are in direct competition with such companies that sell similar equipment to law enforcement agencies.  


Risks Related to Our Financial Condition


We only commenced our present business plan to sell on-body cameras in May of 2015 and as such, there is little historical performance for you to base an investment decision upon, and we may never become profitable.


In February of 2015, we changed our business from reputation enhancement services to the commercialization of on-body cameras. Our first sale of on-body cameras was in May 2015. For the year ended April 30, 2017, we had revenues of only $86,075 and a net operating loss of $770,764. Accordingly, because we have had only limited sales since implementing our present business plan, there is limited historical performance for you to evaluate our prospects for achieving our business objectives and becoming profitable in light of the risks, difficulties and uncertainties frequently encountered by early stage companies such as us. Accordingly, before investing in our common stock, you should consider the challenges, expenses and difficulties that we will face as an early stage company, and whether we will ever become profitable.


We are dependent on the sale of our securities to fund our operations.


During the year ended April 30, 2017, we received proceeds of $720,000 from the sale of convertible promissory notes which funds our current operations. We are dependent on the sale of our securities to fund our operations, and will remain so until we generate sufficient revenues to pay for our operating costs. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans and/or financial guarantees.


If we are unable to generate sufficient revenues for our operating expenses we will need financing, which we may be unable to obtain; should we fail to obtain sufficient financing, our revenues will be negatively impacted.


For the year ended April 30, 2017, we had revenues of $86,075 from the sale of our on-body camera and related accessories. For the year ended April 30, 2017, we have a net loss of $770,764. Because we have limited revenues and lack historical financial data, including revenue data, our future revenues are unpredictable.






As of April 30, 2017, we had cash on hand of approximately $188,773 for our operational needs. Currently, our operating expenses are approximately $50,000 per month. If we fail to generate sufficient revenues or raise additional funds to meet our monthly operating costs, we would have available cash for our operating needs for approximately 3 months.


Until we generate material operating revenues, we require additional debt or equity funding to continue our operations and implement our plan of operations. There is no assurance we will receive such funds or such funds may be on terms unacceptable to us.


Risks Related to Our Business


Our business depends on the development of markets for detection and surveillance products and solutions.


Our products are designed to address the markets for detection, surveillance and integrated solutions. Our products are targeted to both state and local governmental agencies and the private sector. These markets and the types of products and services sold in these markets are emerging. Our ability to grow will depend in part on the rate at which markets for our products develop and on our ability to adapt to emerging demands in these markets. Geopolitical developments, terrorist attacks and government mandates may cause sharp fluctuations in the demand for our products.


Third parties can purchase the same products we sell which may negatively affect our revenues.


We purchase our products from a third party manufacturer in China which sells products to other companies. As such, third parties can purchase the same products as us which puts us at a competitive disadvantage and may have a negative impact on our revenues


Our industry is highly competitive, and our failure to compete effectively could adversely affect our market share, financial condition and future growth.


We operate in a highly competitive environment. In addition to facing competition generally from businesses seeking to attract discretionary spending dollars, the on-body camera industry itself is highly fragmented, resulting in intense competition. We compete with single location dealers and, to a lesser degree, with national specialty stores. Dealer competition is based on the quality of available products, the price and value of the products and attention to customer service. There is significant competition in the markets which we plan to enter.


Our competitors are large national or regional chains that have substantially greater financial, marketing and other resources than us. There can be no assurance that we will be able to compete successfully against current or future competitors or that competitive pressure will not have a material adverse effect on our business, operating results and financial condition.


The success of our business depends on our ability to market our on-body camera and accessories effectively.


Our ability to establish effective marketing and advertising campaigns is the key to our success. Our advertisements must effectively promote our corporate image and the pricing of such products. If we are unable to create awareness of our products, we may not be able to attract customers. Our marketing activities may not be successful in promoting the products we sell or pricing strategies or in retaining and increasing our customer base. We cannot assure you that our marketing programs will be adequate to create a demand for our products or support our future growth, which may result in a material adverse effect on our results of operations.


We may be subject to warranty claims that could result in significant direct or indirect costs, or we could experience greater returns from retailers than expected, which could harm our business and operating results.


We accept returns of products two (2) weeks after purchase. Additionally, our manufacturer provides a twelve (12) month warranty on all products manufactured and the Company offers an extended warranty for year two. The occurrence of any material defects or product recalls could make us liable for damages and warranty claims. Any negative publicity related to the perceived quality of our products could affect our brand image, decrease retailer, distributor and customer demand, and adversely affect our operating results and financial condition. Warranty claims may result in litigation, the occurrence of which could adversely affect our business and operating results.






A product recall would be particularly harmful to us because we have limited financial and administrative resources to effectively manage a product recall and it would detract management’s attention from implementing our core business strategies. As a result, a significant product defect or product recall could cause a decline in our sales and profitability, and could reduce or deplete our financial resources. Any negative publicity related to the perceived quality of our products could affect our brand image, decrease retailer, distributor and customer demand, and adversely affect our operating results and financial condition. Warranty claims may result in litigation, the occurrence of which could adversely affect our business and operating results.


Purchases of our products may be injured while engaging in activities that they self-capture with our on-body camera, and we may be exposed to claims, or regulations could be imposed, which could adversely affect our brand, operating results and financial condition.


Our law enforcement and other customers use our on-body camera and accessories to self-capture their participation in a wide variety of activities which may carry the risk of significant personal injury or result in death. We may be subject to claims if our customers are injured while using our products. We have no insurance coverage for such claims. Additionally, some businesses may ban the use of our products in their facilities to limit their own liability.  If lawmakers or governmental agencies were to determine that the use of our products increased the risk of injury to all or a subset of our customers, they may pass laws or adopt regulations that limit the use of our products or increase our liability associated with the use of our products. Any of these events could adversely affect our brand, operating results or financial condition.


We may be subject to intellectual property rights claims, which are costly to defend, could require us to pay damages and could limit our ability to sell some of our products.


We have not secured intellectual property protection of the Force Protection name. Our industry is characterized by vigorous pursuit and protection of intellectual property rights, which has resulted in protracted and expensive litigation for several companies. Third parties may assert claims of misappropriation of trade secrets or infringement of intellectual property rights against us for which we may be liable.


If our business expands, the number of products and competitors in our markets increases and product overlaps occur, infringement claims may increase in number and significance. Intellectual property lawsuits are subject to inherent uncertainties due to the complexity of the technical issues involved, and we cannot be certain that we would be successful in defending ourselves against intellectual property claims. Further, many potential litigants have the capability to dedicate substantially greater resources than we can to enforce their intellectual property rights and to defend claims that may be brought against them. Furthermore, a successful claimant could secure a judgment that requires us to pay substantial damages or prevents us from distributing our products.


If we fail to develop our brand, cost-effectively, our business may be adversely affected.


The success of our products marketed under the Force Protection brand will depend upon the effectiveness of our marketing efforts. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses incurred in building the brands. If we fail to successfully promote and maintain our brand, or incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business and results of operations could suffer.


We must be able to adapt to rapidly changing technology trends and evolving industry standards or we risk our products becoming obsolete.


The market in which we compete is characterized by intensive development efforts and rapidly advancing technology. Our future success will depend, in large part, upon our ability to anticipate and keep pace with advancing technology and competing innovations. We may not be successful in identifying, developing and marketing new products or enhancing our existing products. We believe that a number of large companies, with significantly greater financial, manufacturing, marketing, distribution and technical resources and experience than ours, are focusing on the development of products in the security and law enforcement industry.






We are dependent on our manufacturers in China. Any disruption or extended delay in product supply from any of our manufacturers could have a significant adverse impact on our operations.


We are dependent on one only a few manufacturers in China. We do not have guaranteed supply or pricing arrangements with our manufacturers, but submit purchase orders and pay for products as needed. As a result, we risk increased cost of our products.


Our ability to sustain satisfactory levels of sales will be dependent in part upon the ability of third party suppliers of raw materials to our manufacturers as well as our manufacturers to properly perform their functions in complance with local regulations. While outsourcing manufacturing and distribution to third parties may reduce the cost of operations, it also reduces direct control by us over the services rendered. Although we attempt to select reputable manufacturers, it is possible it could fail to perform as we expect.


The failure of our manufacturers to supply products as required by us could have a material adverse effect on our business, results of operations and financial condition. If we do not timely and effectively develop and implement our outsourcing strategy or if third party providers do not perform as anticipated, we may experience operational difficulties, increased costs, or even manufacturing delays, which could materially and adversely affect our business, financial condition and results of operations.


Although a number of alternative manufacturers exist that we believe could replace our manufacturers with alternative sources at comparable prices and terms, any disruption or extended delay in our manufacturing could have a significant adverse impact on our operations. In addition, the time needed to replace our manufacturers could adversely affect our operations by delaying shipments and potentially losing customers to our competition.


Our manufacturers purchase some components, subassemblies and products from third party suppliers. The loss of any of these suppliers may substantially disrupt our ability to obtain orders and fulfill sales as we design and qualify new components.


We rely on third party components and technology to build our products, and we rely on our manufacturers to obtain the components, subassemblies and products necessary for the manufacture of our products. Shortages in components that we use in our products are possible, and our ability to predict the availability of such components is limited. While components and supplies are generally available from a variety of sources, we and our manufacturer currently depend on a single or limited number of suppliers for several components for our products. If our suppliers of these components or technology were to enter into exclusive relationships with other providers, or were to discontinue providing such components and technology to us and we were unable to replace them cost effectively, or at all, our ability to provide our products would be impaired. Our manufacturer generally relies on purchase orders rather than long-term contracts with these suppliers. As a result, even if available, we and our manufacturers may not be able to secure sufficient components at reasonable prices or of acceptable quality to build our products in a timely manner. Therefore, we may be unable to meet customer demand for our products, which would have a material adverse effect on our business, operating results and financial condition.


Risks Related To Our Management


Should we lose the services of Paul Feldman, our sole officer and director, our operations and financial condition may be negatively impacted.


Our future depends on the continued contributions of Paul Feldman, our sole officer and director, who would be difficult to replace. Mr. Feldman’s services are critical to the management of our business and operations. We do not maintain key man life insurance on Mr. Feldman. Should we lose the services of Mr. Feldman, we may be unable to replace their services with equally competent and experienced personnel and our operational goals and strategies may be adversely affected, which will negatively affect our potential revenues.






We incur costs and management time related expenses pertaining to SEC reporting obligations and SEC compliance matters and our management has no experience in such matters.


Paul Feldman, our sole officer and director is responsible for managing us, including compliance with SEC reporting obligations and maintaining disclosure controls and procedures and internal control over financial reporting. These public reporting requirements and controls are relatively new to these individuals and at times will require us to obtain outside assistance from legal, accounting or other professionals that will increase our costs of doing business. Should we fail to comply with SEC reporting and internal controls and procedures, we may be subject to securities law violations that may result in additional compliance costs or costs associated with SEC judgments or fines, each of which would increase our costs and negatively affect our potential profitability and our ability to conduct our business.


Because we do not have an audit or compensation committee, shareholders must rely on our sole director Paul Feldman, who is not independent, to perform these functions.


We have only one officer and director. We do not have an audit or compensation committee or Board of Directors as a whole that is composed of independent directors. Because Paul Feldman, our sole director, is also our sole officer and controlling shareholder, he is not independent. There is a potential conflict between his interests, our interests and our shareholders’ interests, since our sole director is also our sole officer will make decisions concerning his own compensation and audit issues. Until we have an audit or compensation committee or independent directors, there may be less oversight of Mr. Feldman’s decisions and activities and little or no ability for our minority shareholders to challenge or reverse his activities and decisions, even if they are not in the best interests of minority shareholders.


Risks Related to the RDW Financing and our Common Stock


Common Shares that we issue upon conversion of promissory notes will dilute our existing stockholders and depress the market price of our common stock.


As of July 14, 2017, we are obligated to issue approximately 58,840,000 common shares upon conversion of the RDW Notes based upon the trading price of $0.0132_of our common shares. The issuance of these shares upon conversion of the related notes will dilute our existing shareholders. The number of common shares issuable by us upon conversion of the notes is dependent on the trading price of our common shares during the twenty (20) days prior to conversion. If the price of our stock declines in value, we will be obligated to issue more shares to the note holders which would have a further dilutive effect on our stock which could depress the market price of our common stock.


We may be required to issue significant amount of common shares upon conversion of notes that could result in a change of control.


The conversion price of the notes is based upon the trading price of our common shares. There is no way to determine with certainty the number of common shares we will be required to issue should note holders convert their notes into our common shares. As the RDW Notes are converted our stock price will decline requiring us to issue an increased number of common shares. We are currently authorized to issue 750,000,000 common shares. As of July 14, 2017, we have 4,710,296 shares outstanding. We could be required to increase our authorized shares to provide sufficient authorized common stock for conversion of the notes. Paul Feldman, our Chief Executive Officer, President and Director holds 200,040,000 votes on matters submitted to our common stockholders. If we increase our authorized shares and issue more than 200,040,000 common shares, Mr. Feldman could lose voting control. This would likely jeopardize the execution of our business plan and disrupt our operations.


Holders of the notes convertible into our common stock will pay less than the then- prevailing market price for our common stock.


We have issued notes that have a conversion feature which is based upon a percentage of our lowest trading price over a twenty (20) day period. If our common stock price materially declines, we will be obligated to issue a large number of shares to the holders of these notes upon conversion. This will likely materially dilute existing shareholders. The potential for such dilutive issuances upon conversion of outstanding notes may depress the price of common stock regardless of our business performance, and could encourage short selling by market participants, especially if the trading price of our common stock begins to decrease.






The market for shares quoted on the OTC Markets OTCQB has experienced numerous frauds and abuses, which could adversely affect investors in our stock.


We believe that the market for shares of companies quoted on the OTC Markets OTCQB has suffered from patterns of fraud and abuse. Such patterns include:


·

control of the market for the security by one or a few broker-dealers;

·

manipulation of prices through prearranged matching of purchases and sales and false and misleading statements made by parties unrelated to the issuer;

·

“boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

·

excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

·

wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.


We believe that many of these abuses have occurred with respect to the promotion of OTC Pink companies that lacked experienced management, adequate financial resources, an adequate business plan and/or marketable and successful business or product. Should this occur in our common stock, investors will likely be adversely affected.


Our common shares are thinly traded, so you may be unable to sell at or near asking prices, or at all.


Our common stock is quoted by the OTC Markets OTC Markets OTCQB. Shares of our common stock are thinly- traded, meaning that the number of persons interested in purchasing our common shares at or near asking prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including:


·

we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume; and

·

stock analysts, stock brokers and institutional investors may be risk-averse and be reluctant to follow an unproven, early stage company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned and viable


As a result, our stock price may not reflect an actual or perceived value. Also, there may be periods of several days or more when trading activity in our shares is minimal, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broader or more active public trading market for our common shares may not develop or if developed, may not be sustained. Due to these conditions, you may not be able to sell your shares at or near asking prices, or at all, should you attempt to sell your shares.


Our stock price may be volatile and you may not be able to resell your shares at or above the current trading price.


Our common stock is quoted on the OTC Markets Group’s OTCQB. Trading in stock quoted on the OTCQB is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. The market price of our Common Stock may be highly volatile. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTCQB and other over the counter trading systems do not benefit from the same type of Market- Maker trading systems utilized by stock exchanges such as the NYSE and AMEX and quotation systems such as the NASDAQ in which trading of a security is enhanced by to the presence of Market-Maker(s) who are dedicated to the trading of a particular listed company’s shares. Rather, on the OTCQB and other over the counter markets, there is no assurance that a bid/ask will be posted to facilitate trading of an over the counter listed issue at any particular point in time. As a result, trading of securities on the OTCQB and other over the counter systems is often more sporadic than the trading of securities listed on the NYSE, AMEX, NASDAQ or similar large stock exchanges or stock markets. Accordingly, shareholders may have difficulty selling their shares at any particular point in time. Additionally, the market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:






·

our ability to fully execute our business plan;

·

changes in our industry;

·

our ability to obtain working capital financing;

·

additions or departures of key personnel;

·

a “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;

·

sales of our common stock (particularly following effectiveness of this resale registration statement) upon conversion of outstanding promissory notes;

·

operating results that fall below expectations;

·

regulatory developments;

·

economic and other external factors;

·

period-to-period fluctuations in our financial results;

·

the public’s response to press releases or other public announcements by us or third parties,

·

the development and sustainability of an active trading market for our common stock; and

·

future sales of common stock by our officers, directors and significant stockholders.


In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.


Our officers and directors have voting control over all matters submitted to a vote of our common stockholders, which will prevent our minority shareholders from having the ability to control any of our corporate actions.


As of July 30, 2017, we had 4,710,296 shares of common stock outstanding, each entitled to one vote per common share and 1,000,000 shares of Series A Preferred Stock which entitled the holder two hundred (200) votes per share. Our sole officer and director, Paul Feldman, controls 40,000 common shares and 1,000,000 Series A Preferred Shares which represent an aggregate of 200,040,000 out of 204,710,296 total votes outstanding or 97.7% of the votes on all matters submitted to a vote of our stockholders. As such, Mr. Feldman has the ability to determine the outcome of all matters submitted to our stockholders for approval, including the election of directors. Mr. Feldman’s control of our voting securities may make it impossible to complete some corporate transactions without his support and may prevent a change in our control. In addition, this ownership could discourage the acquisition of our common stock by potential investors and could have an anti-takeover effect, possibly depressing the trading price of our common stock.


There is not now, and there may never be, an active, liquid and orderly trading market for our Common Stock, which may make it difficult for you to sell your shares of our Common Stock.


There is not now, nor has there been since our inception, significant trading activity in our common stock or a market for our common stock. An active trading market for our shares may never develop or be sustained. As a result, investors in our common stock must bear the economic risk of holding those shares for an indefinite period of time. Although our common stock is quoted on the OTC Markets OTCQB, an over-the-counter quotation system, operated by the OTC Markets, trading of our common stock is extremely limited and sporadic and at very low volumes. We do not now, and may not in the future, meet the initial listing standards of any national securities exchange, and we presently anticipate that our common stock will continue to be quoted by the OTC Markets or another over-the-counter quotation system in the foreseeable future. In those venues, our stockholders may find it difficult to obtain accurate quotations as to the market value of their shares of our common stock, and may find few buyers to purchase their stock and few market makers to support our stock price. As a result of these and other factors, you may be unable to resell your shares of our common stock at or above the price for which you purchased them, or at all. Further, an inactive market may also impair our ability to raise capital by selling additional equity in the future, and may impair our ability to enter into strategic partnerships or acquire companies or products by using shares of our common stock as consideration.






If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.


Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing  similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.


As a public company, we have significant additional requirements for enhanced financial reporting and internal controls. We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting. . However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) signed into law on July 21, 2010 permanently relieves smaller public companies from the requirement of providing auditor attestation under Section 404(b) of the Sarbanes-Oxley Act.


We cannot assure you that we will, in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.


Because our sole officer and director is our controlling stockholder, he can exert significant control over our business and affairs, and have actual or potential interests that may depart from those of investors.


As of July 14, 2017, our sole officer and director, Paul Feldman, holds approximately 97.7% of our outstanding voting stock and has the ability to control all matters submitted to a vote of our stockholders. The interests of Mr. Feldman may differ from the interests of our other stockholders, including investors. As a result, in addition to board seats and offices, Mr. Feldman controls all corporate actions requiring stockholder approval, irrespective of how our other stockholders, including investors, may vote, including the following actions:


·

to elect or defeat the election of our directors;

·

to amend or prevent amendment of our Certificate of Incorporation or By-laws;

·

to effect or prevent a merger, sale of assets or other corporate transaction; and

·

to control the outcome of any other matter submitted to our stockholders for vote.



A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.


A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors not to choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.






Because we do not intend to pay any cash dividends on our shares of common stock in the near future, our stockholders will not be able to receive a return on their shares unless they sell them.


We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the Board of Directors, and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the Board of Directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. For the foreseeable future, earnings generated from our operations will be retained for use in our business and not to pay dividends. In addition, the terms of our existing credit facilities preclude, and the terms of any future debt agreements is likely to similarly preclude, us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole resource of gain for the foreseeable future. Investors seeking cash dividends should not purchase our common stock.


Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission (“SEC”)’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock.


Our stock is a penny stock. The Securities and Exchange Commission (“SEC”) has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.


Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.


FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.






We may, in the future, issue additional securities, which would reduce investors’ percent of ownership and may dilute our share value.


Our Articles of Incorporation authorize us to issue 750,000,000 shares of common stock, $.0001 par value per share and 5,000,000 shares of Series A Preferred Stock. As of July 14, 2017, we had 4,710,296 shares of common stock and 1,000,000 shares of Series A Preferred Stock outstanding. Accordingly, we may issue up to an additional 545,289,704 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis including for services or acquisitions or other corporate actions that may have the effect of diluting the value of the shares held by our stockholders, and might have an adverse effect on any trading market for our common stock.


As an issuer of “penny stock” the protection provided by the federal securities laws relating to forward looking statements does not apply to us.


Although the federal securities law provides a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, if we are a penny stock we will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.



ITEM 2:

      PROPERTIES

We occupy approximately 900 square feet at 130 Iowa Lane, Suite 102, Cary, NC 27511 pursuant to a lease agreement which expires on December 31, 2018. Our calendar year annual rent for this location is $14,776 for 2018 and $9,851 for 2019.


We believe this location is suitable for our current needs.

 


5

ITEM 3:

LEGAL PROCEEDINGS


We are not aware

Table of any pending or threatened litigation against us that we expect will have a material adverse effect on our business, financial condition, liquidity, or operating results. We cannot assure you that we will not be adversely affected in the future by legal proceedings.


Contents

Moreover, smartphones and tablets with photo and video functionality have significantly displaced traditional camera sales. It is possible that, in the future, the manufacturers of these devices, such as Apple Inc. and Samsung, may design them for use in a range of conditions, including challenging physical environments, or develop products similar to ours. In addition to competition or potential competition from large, established companies, new companies may emerge and offer competitive products. Further, we are aware that certain companies have developed cameras designed and labeled to appear similar to our products, which may confuse consumers or distract consumers from purchasing our products.

Increased competition may result in pricing pressures and reduced profit margins and may impede our ability to continue to increase the sales of our products or cause us to lose market share, any of which could substantially harm our business and results of operations

Seasonality

Our business, as well as the industry in which we operate, is not seasonal.

Intellectual Property

We currently have a patent pending on a new product

Other than the aforementioned pending patent, we have no registered or patented intellectual property. Trademarks and trade names distinguish the various companies from each other. If customers are unable to distinguish our products from those of other companies, we could lose sales to our competitors. We do not have any registered trademarks and trade names, so we only have common law rights with respect to infractions or infringements on its products. Many subtleties exist in product descriptions, offering and names that can easily confuse customers. The name of our principal products may be found in numerous variations of the name and descriptions in various media and product labels. This presents a risk of losing potential customers looking for our products and buying someone else’s because they cannot differentiate between them.

Employees

As of the date of this report, we have three full time employees including Paul Feldman who is our Director, Chief Executive Officer and Chief Financial Officer. Mr. Feldman spends approximately sixty (60) hours per week on our business. We have one full time employees who provide clerical and administrative services and one full time salesperson.

None of our employees are represented by a collective bargaining agreement, nor have we experienced any work stoppages. We maintain good relationships with our employees.

ITEM 1A. RISK FACTORS

Our business could be adversely impacted by the effects of the Novel Coronavirus (COVID-19). In addition to global macroeconomic effects, the Novel Coronavirus (COVID-19) outbreak and any other related adverse public health developments could cause disruption to our operations and sales activities. Our third-party manufacturers, third-party distributors, and our customers have been and will be disrupted by worker absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions which could adversely affect our business, operations and customer relationships. In addition, we have experienced and will experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to develop and design our products and services in a timely manner or meet required milestones or customer commitments.

ITEM 2:PROPERTIES

We previously occupied approximately 1600 square feet at 1600 Olive Chapel Rd., Apex, NC 27502-6764 pursuant to a lease agreement which was set to expire on November 30, 2020. Our annual rent payments for this location were $19,800 in year 1 and $20,394 in year 2. On May 1, 2019, the Company and its landlord mutually agreed to terminate the outstanding lease, there were no additional amounts due related to the lease termination.

ITEM 3: LEGAL PROCEEDINGS

We are not aware of any pending or threatened litigation against us that we expect will have a material adverse effect on our business, financial condition, liquidity, or operating results. We cannot assure you that we will not be adversely affected in the future by legal proceedings.

ITEM 4: MINE SAFETY DISCLOSURE

 

ITEM 4:

MINE SAFETY DISCLOSURE


Not Applicable.







PART II



ITEM 5:

MMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information


Our common stock trades on the Over the Counter Markets Group Inc. QB tier (the “OTCQB”) under the symbol “FPVD”.


The following table sets forth the high and low bid quotations of our common stock for each quarter during the past two fiscal years as reported by the OTCQB after giving effect to the Company’s 1-250 reverse split which took effect April 24, 2017:


High

Low

Fiscal Year Ended April 30, 2017

First Quarter (May 1, 2016 – July 31, 2016)

$10.00

$0.85

Second Quarter (August 1, 2016 – October 31, 2016)

$11.50

$0.73

Third Quarter (November 1, 2016 – January 31, 2017)

$3.88

$1.20

Fourth Quarter (February 1, 2017 – April 30, 2017)

$1.69

$0.15


Fiscal Year Ended April 30, 2016

First Quarter (May 1, 2015 – July 31, 2015)

$1,125.00

$125.00

Second Quarter (August 1, 2015 – October 31, 2015)

$1,487.50

$370.00

Third Quarter (November 1, 2015 – January 31, 2016)

$437.50

$208.75

Fourth Quarter (February 1, 2016 – April 30, 2016)

$191.05

$7.50

 

6

Transfer Agent


Our Transfer Agent is Interwest Transfer Co., Inc. located at 1981 Murray Holladay Road, Suite 100, Salt Lake City, Utah. Their telephone number is 801-272-9294 and their website is www.interwesttc.com.


Holders


As

Table of July 14, 2017, there are approximately 40 holders of record of our common stock in certificate form, exclusive of those brokerage firms and/or clearing houses holding our Common Stock in street name for their clientele (with each such brokerage house and/or clearing house being considered as one holder). We have 4,710,296Contents

PART II

ITEM 5:MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock trades on the Over the Counter Markets Group Inc. Pink tier under the symbol “FPVD”.

The following table sets forth the closing high and low bid quotations of our common stock for each quarter during the past two fiscal years as reported by the OTC:

 

 

As of April 30, 2020

 

Fiscal Year 2020

 

High

 

 

Low

 

First quarter ended July 31, 2019

 

$0.0001

 

 

$0.0001

 

Second quarter ended October 31, 2019

 

$0.0001

 

 

$0.0001

 

Third quarter ended January 31, 2020

 

$0.0001

 

 

$0.0001

 

Fourth quarter ended April 30, 2020

 

$0.0001

 

 

$0.0001

 

 

 

As of April 30, 2019

 

Fiscal Year 2019

 

High

 

 

Low

 

First quarter ended July 31, 2018

 

$0.0012

 

 

$0.0002

 

Second quarter ended October 31, 2018

 

$0.0003

 

 

$0.0001

 

Third quarter ended January 31, 2019

 

$0.0003

 

 

$0.0001

 

Fourth quarter ended April 30, 2019

 

$0.0002

 

 

$0.0001

 

Transfer Agent

Our Transfer Agent is Issuer Direct, formerly Interwest Transfer Co., Inc. located at 1 Glenwood Avenue, Suite 1001, Raleigh, North Carolina, 276603. Their telephone number is 919-481-4000 and their website is www.issuerdirect.com

Holders

As of September 14, 2020, there are approximately 41 holders of record of our common stock in certificate form, exclusive of those brokerage firms and/or clearing houses holding our Common Stock in street name for their clientele (with each such brokerage house and/or clearing house being considered as one holder). We have 841,184,289 shares of common stock issued and outstanding.

Dividend Policy

We have not paid any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.

Securities Authorized for Issuance Under Equity Compensation Plans

At the present time, we have no securities authorized for issuance under equity compensation plans.

Additional Information

Copies of our annual reports, quarterly reports, current reports, and any amendments to those reports, are available free of charge on the internet at www.sec.gov. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Report. Some of the statements contained in this Report that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:


·

Dividend Policy


We have not paid any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.


Securities Authorized for Issuance Under Equity Compensation Plans


At the present time, we have no securities authorized for issuance under equity compensation plans.


Additional Information


Copies of our annual reports, quarterly reports, current reports, and any amendments to those reports, are available free of charge on the internet at www.sec.gov. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.






ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward Looking Statements


The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Report. Some of the statements contained in this Report that are not historical facts are "forward­looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51­1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. We urge you to be cautious of the forward­looking statements, that such statements, which are contained in this Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward­looking statements include without limitation:


·

Our ability to attract and retain management, and to integrate and maintain technical information and management information systems;systems;

·

Our ability to raise capital when needed and on acceptable terms and conditions;conditions;

·

The intensity of competition;competition;

·

General economic conditions;conditions; and

·

Changes in government regulations.

7


The Company disclaims any obligation to update any such factors or to announce publicly the results

Table of any revisions of the forward­looking statements contained or incorporated by reference herein to reflect future events or developments.


Overview


The Company is in the business of selling video and audio capture devices initially targeted to law enforcement agencies. The Company has established a web site at www.forceprovideo.com whereby customers can view the Company’s products and place orders. We believe that given recent current events between law enforcement agencies and the public, which has been widely reported by the media, there is a significant market opportunity for the Company’s products.  


Products


Contents

The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

Overview

The Company is in the business of selling video and audio capture devices initially targeted to law enforcement agencies. The Company has established a web site at www.forceprovideo.com whereby customers can view the Company’s products and place orders. We believe that given recent current events between law enforcement agencies and the public, which has been widely reported by the media, there is a significant market opportunity for the Company’s products.

Products

Our video and audio capture devices are compact, ergonomic, tamperproof and designed to capture HD video and/or audio on demand enabling our customers to capture content while engaged in a wide range of activity. We also sell accessories that enhance the functionality and versatility of our products, including mounts, such as the helmet, handlebar, roll bar and tripod mounts, as well as mounts that enable users to wear the camera on their bodies, such as the wrist housing, chest harness and head strap. Other accessories include spare batteries, charging accessories and memory drives. Our products are marketed primarily to law enforcement due to their unique need to capture important events in the course of their duties.

Our primary hardware products consist of our undercover surveillance devices which are restricted sales items to law enforcement agencies, the LE10 Law Enforcement Video Recorder, the LE15 and LE50 and the Recon 2000 HD Body Cams and evidence software as well as the SC1 Sunglass Camera.

Distribution

Customers purchase products from our website and by telephone order. All products are shipped from our manufacturer to our facility in North Carolina where we process and ship product to our customers using Federal Express or United Parcel Services. Customers pay all shipping charges.

Marketing

Currently, our sales and marketing efforts include print marketing catalogs featuring our products to state and local law enforcement agencies. We create and deliver brochures and catalogs to state and local law enforcement, every four (4) weeks, using U.S. Mail.

Results of Operations

As of April 30, 2020, we had total assets of $4,621 and total liabilities of $740,444. Since our inception to April 30, 2020, we have an accumulated a deficit of $4,605,504 and negative cash flows from operations of $38,962. We anticipate that we will continue to incur losses for the foreseeable future. Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through the sale of equity or debt securities.

Year Ended April 30, 2020 Compared with the year ended April 30, 2019

 

 

For the Year Ended April 30

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

$ Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$63,324

 

 

$163,740

 

 

$(100,416)

 

 

-61%

 

 

1

 

Gross profit (loss)

 

$35,332

 

 

$(20,668)

 

$56,000

 

 

 

-271%

 

 

2

 

General and administrative expenses

 

$46,135

 

 

$222,217

 

 

$(176,082)

 

 

-79%

 

 

3

 

Total other income (expense) - net

 

$(21,414)

 

$(300,940)

 

$279,526

 

 

 

-93%

 

 

4

 

___________

1

Revenues decreased due to lack of expected sales and a reduction in marketing and advertising.

2

The gross loss in 2019 was related to cost of revenues in the ordinary course of business as well as mounts that enable users to wear the camera on their bodies, such as the wrist housing, chest harness and head strap. Other accessories include spare batteries, charging accessories and memory drives. Our products are marketed primarily to law enforcement due to their unique need to capture important eventsimpairment of inventory of $113,184. Overall, however, in 2020, there was a decrease in the coursevolume of their duties.


Our primary hardware products consist of the LE10 Law Enforcement Video Recorder, LE50 HD Body Cam, SC1 Sunglass Camera and Citadel 3G Solar Security Camera






Distribution


Customers purchase products from our website and by telephone order. All products are shipped from our manufacturer to our facility in North Carolina where we process and ship product to our customers using Federal Express or United Parcel Services. Customers pay all shipping charges.


Marketing


Currently, our sales and marketing efforts include print marketing brochures featuring our products to state and local law enforcement agencies. We create and deliver brochures to state and local law enforcement, every four (4) weeks, using U.S. Mail.


Results of Operations


As of April 30, 2017, we had total assets of $343,533 and total liabilities of $210,661. Since our inception toApril 30, 2017, we have accumulated a deficit of $2,992,396. We anticipate that we will continue to incur losses for the foreseeable future. Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through the sale of equity or debt securities.


Year Ended April 30, 2017 Compared with the year ended April 30, 2016


Revenue


Revenues are generated from the sale of our video and audio capture devices and related accessories. For the year ended April 30, 2017, the Company recognized $86,075 of revenue compared to $67,964higher margin products. Additionally, during the year ended April 30, 2016. Sales were up $18,111, or 26.6% compared to the prior year. The increase in sales is due to an increase in product demand. To increase future sales volume,2020, the Company has begunstopped carrying inventory, and as a result, only had cost of revenues related to actively seek outitems purchased and submit competitive product quotes in response to police department requests for quotes (“RFQ”) domestically and internationally.immediately sold, thus reflecting a gross profit. The Company expects sales subjectdoes not have sufficient cash resources to RFQ to close between 3 to 12 monthskeep inventory on hand, which prevents the Company from submission.

Gross profit


Gross profit was a loss of $19,982 and $28,399 during the years ended April 30, 2017 and 2016, respectively. Our Gross margin for the year ended April 30, 2017 was negative compared to 41.8% for the year ended April 30, 2016. Gross margin collapsed in 2017 primarily due to downward lower of cost-or-market adjustments to inventory and the recognition of minimum software license fees for salable product with no meaningful corresponding productmaking potential sales. The Company anticipates fluctuations in the mix of its product sales and cannot meaningfully determine at this early stage if ourexpects its gross margin will increase or decrease with any degree of accuracy.to fluctuate due to changes in product mix.


Operating Expenses


3

General and administrative costs include costs related to personnel, professional fees, travel and entertainment, public company costs, product development, insurance, and other office related costs. General and administrative costs increased $93,206 to $604,381 during the year endedApril 30, 2017 compared to $511,175 during the year endedApril 30, 2016. General and administrative costs increased during 2017The decrease is primarily due to lower product development, technology anddecreased professional, services related costs partially offset by higher personnel, and travel related costs. Compared to the prior year, costs generally increased due to the Company beginning meaningful operations to promote and sell our products and administer the Company.


Salesas business has slumped. Additionally, sales and marketing costs include costs to promote and sell our products. Sales and marketing costs increased $88,074 to $146,400 during the year endedApril 30, 2017 compared2020 and 2019 were $7,918 and $9,303, respectively. The decrease of $1,385 coincides with the Company’s lack of available cash resources to $58,326maintain sufficient spending in this area.

4

Other income and expense during 2019, primarily consisted of interest expense on the year endedApril 30, 2016. Sales and marketing costs increased due to increased marketing activities to brand and promote our products.






Other Income (Expense)


AllCompany's debt as well the elementsaccretion of other income (expense) relate to ourdebt discount on various convertible promissory notes. In 2019, we recognized $63,788 in default penalties associated with three convertible notes. While in 2020, the Company continued to reflect interest on its debt, the Company also recognized a gain on debt settlement of $62,031 related to the elimination of certain convertible debt instruments and related accrued interest and the Strategic Funding loan. All convertible debt that contained debt discounts had been fully accreted as of April 30, 2019. Interest expense for 2020 and 2019 was $77,774 and $103,992, respectively. During the year ended April 30, 2017,2020, the Company incurred $29,198recognized a gain on ROU lease liability termination of $603 and $26,711, respectivelya related impairment charge of interest expense related to the stated interest and $717,309 and $694,188, respectively$6,274 for the accretionproperty and equipment that was no longer being used for operations. During 2019, the Company recorded a gain on sale of the debt discount resulting from note issuance fees and the beneficial conversion feature contained on our convertible promissory notes.


Liquidity and Working Capital


Our principal sourceasset of liquidity is cash in the bank and salable inventory. As$1,593.

8

Table of April 30, 2017 our current assets totaled $322,792 and were comprisedContents

Liquidity and Working Capital

Our principal source of liquidity is cash in the bank. As of April 30, 2020, our current assets totaled $4,621, of which $2,505 was cash on hand. The Company also has accounts receivable of $2,116. These conditions help raise doubt about our ability to continue as a going concern. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We expect to raise additional funds through private or public equity investment in order to expand the range and scope of business operations. We will try to raise additional funds through private or public equity but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

For the year ended April 30, 2020, net cash flows used in operating activities was $38,962, which primarily related to the Company's net loss adjusted for the recognition of prepaid interest of $10,234, impairment of property and equipment of $6,274 and gain on debt settlement of convertible promissory notes and related accrued interest and a note with Strategic Funding of $62,031, compared to net cash used in operating activities of $41,461 for the year ended April 30, 2019, which primarily consisted of the Company's net loss adjusted for the accretion of debt discount of $134,753, debt financing penalties related to convertible notes of $63,788 and the impairment of inventory of $110,418.

For the year ended April 30, 2020, net cash flows provided by investing activities was $0, compared to $6,646 for the year ended April 30, 2019, which consisted of proceeds from the sale of a vehicle.

For the year ended April 30, 2020, net cash flows provided by financing activities were $41,070 primarily related to net proceeds and repayments of debt totaling $43,570 and the repayment of a related party advance for $2,500, compared to the year ended April 30, 2019, which reflected net cash provided by financing activities of $28,892, primarily related to net proceeds and repayments of debt of $21,742 and proceeds from a shareholder advance of $13,150 with a related repayment of these advances of $6,000.

During the period October 11, 2019 through April 30, 2020, the Company issued to Red Diamond Partners, LLC, unsecured, 8% convertible notes for $175,756 and a 5% note for $27,500 which is secured by all 5,000,000 issued and outstanding shares of Series A, Redeemable Preferred Stock, held by the Company’s Chief Executive Officer. As of the date these financial statements were issued, the Company was in default on the term note for $27,500. All related accrued interest under this note of approximately $1,300 is also in default.

The note for $27,500, has not been called for payment and to date no action has been taken seeking the underlying collateral of 5,000,000 shares of Series A, Redeemable, Preferred Stock. Should the lender seek the collateral, this would result in a change of control of the Company due to the voting control currently held by the Company’s Chief Executive Officer.

Effective August 1, 2020, the Company’s outstanding convertible notes payable (8%) and related accrued interest of approximately $700,000 were no longer in default as these debt instruments were extended to February 1, 2021.

Also, effective August 1, 2020, all principal and accrued interest outstanding under the convertible notes as of July 31, 2020 were consolidated into one single convertible note. Additional financing subsequent to July 31, 2020 retains the same terms as the original convertible notes payable.

The Company’s lenders at April 30, 2020 and as of September 14, 2020 are RDW and Red Diamond Partners, LLC.

9

Table of $188,773 in cash and $132,281 of inventory and prepaid inventory. Due to the “start-up” nature of our business, we expect to incur losses as we develop and introduce our products and services. These conditions raise doubt about our ability to continue as a going concern. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We expect to raise additional funds through private or public equity investment in order to expand the range and scope of business operations. We will try to raise additional funds through private or public equity but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.Contents

Publicly Reporting Company Considerations

We will face several material challenges of operating as a publicly reporting company and we expect to incur significant costs and expenses applicable to us as a public company. We anticipate that our ongoing costs and expenses of complying with our public reporting company obligations will be approximately $50,000 annually, which we expect to pay for out of proceeds from our financing efforts during the next twelve months from the date of this report. Subsequent to the next twelve-month reporting and compliance period, we expect to pay for our publicly reporting company compliance and reporting costs from our gross profits, although there is no assurance that sufficient revenues will be generated to cover said costs. We must structure, establish, maintain and operate our Company under corporate policies designed to ensure compliance with all required public company laws, rules and regulations, including, without limitation, the Securities Act of 1933, the Securities Act of 1934, the Sarbanes- Oxley Act of 2002, the Foreign Corrupt Practices Act and the respective rules and regulations promulgated thereunder. Some of our more significant challenges of being a publicly reporting company will include the following:


·

For the year ended April 30, 2017, net cash flows used by operating activities was $742,020, compared to $634,369 for the year ended April 30, 2016.


For the year ended April 30, 2017, net cash flows used by investing activities was $16,480, compared to $7,588 for the year ended April 30, 2016.


For the year ended April 30, 2017, we generated cash flows from financing activities of $720,000 from the issuance of convertible promissory notes compared to $834,004 for the year ended April 30, 2016. To date, we have financed our operations primarily through the issuance of debt and equity.


Publicly Reporting Company Considerations


We will face several material challenges of operating as a publicly reporting company and we expect to incur significant costs and expenses applicable to us as a public company. We anticipate that our ongoing costs and expenses of complying with our public reporting company obligations will be approximately $50,000 annually, which we expect to pay for out of proceeds from our financing efforts during the next twelve months from the date of this report. Subsequent to the next twelve month reporting and compliance period, we expect to pay for our publicly reporting company compliance and reporting costs from our gross profits, although there is no assurance that sufficient revenues will be generated to cover said costs. We must structure, establish, maintain and operate our Company under corporate policies designed to ensure compliance with all required public company laws, rules and regulations, including, without limitation, the Securities Act of 1933, the Securities Act of 1934, the Sarbanes­ Oxley Act of 2002, the Foreign Corrupt Practices Act and the respective rules and regulations promulgated thereunder. Some of our more significant challenges of being a publicly reporting company will include the following:


·

We will have to carefully prepare and file, in the format mandated by the SEC, all periodic filings as required by the Securities Exchange Act of 1934 (Annual Report on Form 10K,10-K, Quarterly Reports on Form 10Q,10-Q, and interim reports of material significant events on Form 8K)8-K), as well as insider reporting compliance for all officers and director under Section 16 of the Securities Exchange Act of 1934 on FormForms 3, 4 and 5;


·

We will have to assure that our corporate governance principles and Board minutes are properly drafted and maintained;maintained;


·

We will have to carefully analyze and assess all disclosures in all forms of public communications, including periodic SEC filings, press releases, website posting,postings, and investor conferences to assure legal compliance;compliance;






·

We will have assureassured corporate and SEC legal compliance with respect to proxy statements and information statements circulated for our annual shareholder meetings, shareholder solicitations and other shareholder information events;events;


·

We will have to assure securities law compliance for all equity­basedequity-based employee benefit plans, including registration statements and prospectus distribution procedures;


·

We will have to continuously analyze the specific impact on our Company of all significant SEC initiatives, policies, proposals, and developments, as well as assess the rules of the Public Company Accounting Oversight Committee on governance procedures of the Company and our audit committee;committee;


·

We will have to comply with the specific listing requirements of a stock exchange if we qualify and apply for such listing;listing;


·

Being a public company increases our director and officer liability insurance costs;costs;


·

We will have to interface with our Transfer Agent regarding issuance and trading of our common stock, which may include Rule 144 stock transfer compliance matters;matters; and


·

We will incur additional costs for legal services as a function of our needs to seek guidance on securities law disclosure questions and evolving compliance standards.


We have assigned a high priority to corporate compliance and our public company reporting obligations, however, there can be no assurance that we will have sufficient cash resources available to satisfy our public company reporting and compliance obligations. If we are unable to cover the cost of proper administration of our public company compliance and reporting obligations, we could become subject to sanctions, fines and penalties, our stock could be barred from trading in public capital markets and we may have to cease operations.

Our actual results may differ from our projections if there are material changes in any of the factors or assumptions upon which we have based our projections. Such factors and assumptions, include, without limitation, the development of our proprietary technology platform and our products, the timing of such development, market acceptance of our products, protection of our intellectual property, our success in implementing our strategic, operating and personnel initiatives and our ability to commercialize our products, any of which could impact sales, costs and expenses and/or planned strategies and timing. As a result, it is possible that we may require significantly more capital resources to meet our capital needs.

10

Table of proper administrationContents

Off- Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that have a significant impact on the results that we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Certain of these significant accounting policies require us to make critical accounting estimates, as defined below.

A critical accounting estimate is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective, or complex judgments that could have a material effect on our financial condition and results of our public company compliance and reporting obligations, we could become subject to sanctions, fines and penalties, our stock could be barred from trading in public capital markets and we may have to cease operations. Specifically, critical accounting estimates have the following attributes:


Our actual results may differ from our projections if there are material changes in any of the factors or assumptions upon which we have based our projections. Such factors and assumptions, include, without limitation, the development of our proprietary technology platform and our products, the timing of such development, market acceptance of our products, protection of our intellectual property, our success in implementing our strategic, operating and personnel initiatives and our ability to commercialize our products, any of which could impact sales, costs and expenses and/or planned strategies and timing. As a result, it is possible that we may require significantly more capital resources to meet our capital needs.


Off­Balance Sheet Arrangements


None.


Critical Accounting Estimates


The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that have a significant impact on the results that we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Certain of these significant accounting policies require us to make critical accounting estimates, as defined below.


A critical accounting estimate is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:


·

we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and

·

different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.

Our most critical accounting estimates include:






Estimates and assumptions about future events and their effects cannot be determined with certainty.  We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances.  These estimates may change as new events occur, as additional information is obtained and as our operating environment changes.  These changes have historically been minor and have been included in the financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.


Our most critical accounting estimates include:


·

the recognition and measurement of current and deferred income taxes, which impact our provision for taxes.taxes

·

Fair value measurements

Below, we discuss this policy further, as well as the estimates and judgments involved.

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the current period and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

When accounting for Uncertainty in Income Taxes, first, the tax position is evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company’s utilization of U.S. Federal net operating losses will be limited in accordance to Section 381 rules. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

11

Below, we discuss this policy further, as well as the estimates and judgments involved.


Income Taxes


Provisions for income taxes are based on taxes payable or refundable for the current period and deferred taxes on temporary differences between the amount

Table of taxable income and pretax financial income and between the tax basesContents

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income, and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 — Quoted prices for identical assets and liabilities traded in active exchange markets, such as the national stock exchanges.

Level 2 — Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data.

Level 3 — Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single dealer quotes not corroborated by observable market data.

The Company has various processes and controls in place to ensure that fair value is reasonably estimated. Where market information is not available to support internal valuations, independent reviews of the valuations are performed, and any material exposures are evaluated.

Many of our financial instruments are issued in conjunction with the issuance of debt. At the time of issuance, we allocate the proceeds received to the various financial instruments and this involves the determination of fair value. From time to time, the fair value of these financial instruments exceeds the proceeds received. When this occurs, we critically evaluate the validity of the fair value computation.

12

Table of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.Contents

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS


When accounting for Uncertainty in Income Taxes, first, the tax position is evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amountReport of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company’s utilization of U.S. Federal net operating losses will be limited in accordance to Section 381 rules. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.Independent Registered Public Accounting Firms


Fair Value Measurements14


Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:


Level 1 — Quoted prices for identical assets and liabilities traded in active exchange markets, such as the national stock exchanges.


Level 2 — Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data.






Level 3 — Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single dealer quotes not corroborated by observable market data.


The Company has various processes and controls in place to ensure that fair value is reasonably estimated. Where market information is not available to support internal valuations, independent reviews of the valuations are performed and any material exposures are evaluated.


Many of our financial instruments are issued in conjunction with the issuance of debt. At the time of issuance we allocate the proceeds received to the various financial instruments and this involves the determination of fair value. From time to time, the fair value of these financial instruments exceeds the proceeds received. When this occurs, we critically evaluate the validity of the fair value computation.









ITEM 8: 

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 


Consolidated Balance Sheets

INDEX TO FINANCIAL STATEMENTS


15

Report of Independent Registered Public Accounting Firm

22

Consolidated Statements of Operations

16

Consolidated Statements of Stockholders’ Deficit

17

Consolidated Statements of Cash Flows

18

Notes to Consolidated Financial Statements

19

 

Balance Sheets

23

Statements of Operations

24

Statements of Stockholders’ Equity

25

Statements of Cash Flows

26

Notes to Financial Statements

27

 

13






Baum & Company, P.A.

Certified Public Accountants

1688 Meridian Avenue, Suite 504

Miami Beach, Florida 33139



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board

Table of Directors andContents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Force Protection Video Equipment, Corp

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Force Protection Video Equipment, Corp. (the “Company”) as of April 30, 2020 and 2019, the related consolidated statements of operations, statement of changes in stockholders’ deficit and cash flows for each of the two years in the period ended April 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).  In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of April 30, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the two years in the period ended April 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company had a net loss of $32,217 and net cash used in operations of $38,962 for the year ended of April 30, 2020 and a working capital deficit of $735,823 and stockholders’ deficit of $740,823 as of April 30, 2020. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.  We are a public accounting firm registered with the Public 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 auditing 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 include performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Assurance Dimensions                                                        

Certified Public Accountants

We have served as the Company’s auditor since 2019.

Margate, Florida

September 14, 2020

14

Force Protection Video Equipment Corp.



We have audited the accompanying balance sheet

Table of Force Protection Video Equipment Corp. ("the Company") asContents

 Force Protection Video Equipment Corp.

Consolidated Balance Sheets

 

 

April 30,

2020

 

 

April 30,

2019

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash

 

$2,505

 

 

$397

 

Accounts receivable

 

 

2,116

 

 

 

6,813

 

Total Current Assets

 

 

4,621

 

 

 

7,210

 

 

 

 

 

 

 

 

 

 

Property and Equipment - net

 

 

-

 

 

 

6,274

 

 

 

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

 

Operating lease - right of-use asset - net

 

 

-

 

 

 

29,208

 

Deposits

 

 

-

 

 

 

1,650

 

Total Other Assets

 

 

-

 

 

 

30,858

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$4,621

 

 

$44,342

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$237,233

 

 

$263,173

 

Related party advance

 

 

12,150

 

 

 

14,650

 

Deferred software maintenance revenue

 

 

-

 

 

 

1,270

 

Operating lease - right-of-use liability - net

 

 

-

 

 

 

18,033

 

Loan - net

 

 

-

 

 

 

17,966

 

Note payable

 

 

27,500

 

 

 

-

 

Convertible notes payable - net

 

 

463,561

 

 

 

439,465

 

Total Current Liabilities

 

 

740,444

 

 

 

754,557

 

 

 

 

 

 

 

 

 

 

Long-Term Liabilities

 

 

 

 

 

 

 

 

Operating lease - right of-use liability - net

 

 

-

 

 

 

11,778

 

Warranty

 

 

-

 

 

 

136

 

Total Long-Term Liabilities

 

 

-

 

 

 

11,914

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

740,444

 

 

 

766,471

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A, Redeemable Preferred Stock - Related Party - $0.0001 par value, 20,000,000 shares authorized 5,000,000 shares issued and outstanding, respectively

 

 

5,000

 

 

 

5,000

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

Common stock, $0.00001 par value, 20,000,000,000 shares authorized 841,184,289 shares issued and outstanding, respectively

 

 

84,119

 

 

 

84,119

 

Additional paid-in capital

 

 

3,780,562

 

 

 

3,762,039

 

Accumulated deficit

 

 

(4,605,504)

 

 

(4,573,287)

Total Stockholders' Deficit

 

 

(740,823)

 

 

(727,129)

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Deficit

 

$4,621

 

 

$44,342

 

The accompanying notes are an integral part of these consolidated financial statements

15

Table of April 30, 2017 and 2016, and the relatedContents

Force Protection Video Equipment Corp.

Consolidated Statements of Operations

 

 

Years Ended April 30,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Revenues

 

$63,324

 

 

$163,740

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

27,992

 

 

 

184,408

 

 

 

 

 

 

 

 

 

 

Gross profit (loss)

 

 

35,332

 

 

 

(20,668)

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

46,135

 

 

 

222,217

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(10,803)

 

 

(242,885)

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(77,774)

 

 

(103,992)

Accretion of debt discount

 

 

-

 

 

 

(134,753)

Impairment of property and equipment

 

 

(6,274)

 

 

-

 

Gain on debt settlements - net

 

 

62,031

 

 

 

-

 

Gain on lease termination

 

 

603

 

 

 

-

 

Default financing penalties

 

 

-

 

 

 

(63,788)

Gain on sale of asset

 

 

-

 

 

 

1,593

 

Total other income (expense) - net

 

 

(21,414)

 

 

(300,940)

 

 

 

 

 

 

 

 

 

Net loss

 

$(32,217)

 

$(543,825)

 

 

 

 

 

 

 

 

 

Loss per share - basic and diluted

 

$(0.00)

 

$(0.00)

 

 

 

 

 

 

 

 

 

Weighted average number of shares - basic and diluted

 

 

841,184,289

 

 

 

832,752,965

 

The accompanying notes are an integral part of these consolidated financial statements

16

Table of Contents

 Force Protection Video Equipment Corp.

Consolidated Statements of Changes in Stockholders' Deficit

For the Years Ended April 30, 2020 and 2019

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 30, 2019

 

 

841,184,289

 

 

$84,119

 

 

$3,762,039

 

 

$(4,573,287)

 

$(727,129)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forgiveness of accrued payroll - related party

 

 

-

 

 

 

-

 

 

 

18,523

 

 

 

-

 

 

 

18,523

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss - year ended April 30, 2020

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(32,217)

 

 

(32,217)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 30, 2020

 

 

841,184,289

 

 

$84,119

 

 

$3,780,562

 

 

$(4,605,504)

 

$(740,823)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 30, 2018

 

 

194,415,754

 

 

$19,441

 

 

$3,598,589

 

 

$(4,029,462)

 

$(411,432)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued in satisfaction of loan debt and related accrued interest

 

 

646,768,535

 

 

 

64,678

 

 

 

50,611

 

 

 

-

 

 

 

115,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount on convertible promissory note due to beneficial conversion feature

 

 

-

 

 

 

-

 

 

 

112,839

 

 

 

-

 

 

 

112,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss - year ended April 30, 2019

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(543,825)

 

 

(543,825)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 30, 2019

 

 

841,184,289

 

 

$84,119

 

 

$3,762,039

 

 

$(4,573,287)

 

$(727,129)

The accompanying notes are an integral part of these consolidated financial statements

17

Table of Contents

Force Protection Video Equipment Corp.

Consolidated Statements of Cash Flows

 

 

For the Year Ended April 30,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

Net loss

 

$(32,217)

 

$(543,825)
Adjustments to reconcile net loss to net cash used in operations

 

 

 

 

 

 

 

 

Bad debt

 

 

343

 

 

 

-

 

Depreciation and amortization

 

 

-

 

 

 

5,418

 

Accretion of debt discount and beneficial conversion feature

 

 

-

 

 

 

134,753

 

Debt financing penalties

 

 

 

 

 

 

63,788

 

Recognition of prepaid interest expense

 

 

10,234

 

 

 

-

 

Impairment of inventory

 

 

-

 

 

 

110,418

 

Impairment of property and equipment

 

 

6,274

 

 

 

-

 

Gain on ROU lease liability termination

 

 

(603)

 

 

-

 

Gain on debt settlements - net

 

 

(62,031)

 

 

-

 

Gain on sale of asset

 

 

-

 

 

 

(1,593)
Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

(Increase) decrease in

 

 

 

 

 

 

 

 

Accounts receivable

 

 

4,354

 

 

 

2,422

 

Inventory

 

 

-

 

 

 

4,722

 

Deposits and other assets

 

 

1,650

 

 

 

15,793

 

Increase (decrease) in

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

34,440

 

 

 

162,780

 

Deferred software maintenance revenue

 

 

(1,270)

 

 

-

 

Other

 

 

-

 

 

 

3,863

 

Warranty

 

 

(136)

 

 

-

 

Net cash used in operating activities

 

 

(38,962)

 

 

(41,461)

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Proceeds from disposal of vehicle

 

 

-

 

 

 

6,646

 

Net cash provided by financing activities

 

 

-

 

 

 

6,646

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from related party advance

 

 

-

 

 

 

13,150

 

Repayments on related party advance

 

 

(2,500)

 

 

(6,000)
Proceeds from note payable

 

 

27,500

 

 

 

-

 

Proceeds from loans

 

 

-

 

 

 

39,574

 

Repayments on loans

 

 

(27,226)

 

 

(23,332)
Proceeds from issuance of convertible notes payable

 

 

175,756

 

 

 

5,500

 

Repayments on convertible notes payable

 

 

(132,460)

 

 

-

 

Net cash provided by financing activities

 

 

41,070

 

 

 

28,892

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

2,108

 

 

 

(5,923)

 

 

 

 

 

 

 

 

 

Cash - beginning of year

 

 

397

 

 

 

6,320

 

 

 

 

 

 

 

 

 

 

Cash - end of year

 

$2,505

 

 

$397

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$56,304

 

 

$1,060

 

Cash paid for income tax

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

 

Forgiveness of accrued payroll - related party

 

$18,523

 

 

$-

 

Termination of ROU lease asset and related liability

 

$29,208

 

 

$-

 

Stock issued to settle convertible notes payable and related accrued interest

 

$-

 

 

$115,289

 

The accompanying notes are an integral part of these consolidated financial statements

18

Table of Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Note 1 - Organization and Nature of Operations

Organization

Force Protection Video Equipment Corp., together with its wholly owned subsidiary, Cobraxtreme HD Corp. (collectively, “we”, “us”, “our” or the “Company”), sells video and audio capture devices and accessories to consumers and law enforcement. The Company was incorporated on March 11, 2011, under the laws of the State of Florida. Cobraxtreme HD Corp. was incorporated under the laws of the State of North Carolina on September 19, 2017 and currently is non-operating. On February 2, 2015, the Company changed its name to Force Protection Video Equipment Corp.

The Company’s fiscal year end is April 30.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Liquidity and Going Concern

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

As reflected in the accompanying consolidated financial statements, for the year ended April 30, 2020, the Company had:

·

Net loss from operations stockholders' deficit, andof $32,217

·

Net cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.


We conducted our auditused in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Force Protection Video Equipment Corp. as of April 30,7 and 2016, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.


The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated positive net income since inception, has an accumulated deficit, and does not have positive cash flows from operating activities. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Miami Beach, Florida

July 26, 2017

/s/ Baum & Company, P.A.






Force Protection Video Equipment Corp.

 

 

 

Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

April 30,

 

 

 

2017

 

2016

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

$

188,773 

 

$

227,273 

 

Accounts receivable

1,738 

 

3,157 

 

Inventory

104,128 

 

70,361 

 

Prepaid inventory

28,153 

 

59,509 

 

 

Total current assets

322,792 

 

360,300 

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $5,272 and $476, respectively

18,796 

 

7,112 

 

Deposits

1,945 

 

1,945 

 

 

Total assets

$

343,533 

 

$

369,357 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued expenses

$

69,177 

 

$

30,059 

 

Convertible promissory notes net of discount of $286,159 and $204,718, respectively

140,969 

 

91,074 

 

 

Total current liabilities

210,146 

 

121,133 

 

 

 

 

 

 

Long-term liabilities

515 

 

983 

 

 

Total liabilities

210,661 

 

122,116 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

Preferred stock, $0.0001 par value 5,000,000 shares authorized; issued and outstanding 1,000,000 at April 30, 2017 and April 30, 2016.

100 

 

100 

 

Common stock, $0.0001 par value 750,000,000 shares authorized; issued and outstanding 1,698,494 and 162,102 at April 30, 2017 and 2016, respectively.

170 

 

16 

 

Additional paid-in capital

3,124,998 

 

1,722,250 

 

Accumulated deficit

(2,992,396)

 

(1,475,125)

 

 

Total stockholders' equity (deficit)

132,872 

 

247,241 

 

 

Total liabilities and stockholders' equity (deficit)

$

343,533 

 

$

369,357 

 

 

 

 

 

 

(The accompanying notes are an integral part of these financial statements)






Force Protection Video Equipment Corp

 

 

 

Statements of Operations

 

 

 

For the Years Ended April 30, 2017 and 2016

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended

April 30,

 

 

 

 

 

 

2017

 

2016

Income

 

 

 

 

Net revenue

$

86,075 

 

$

67,964 

 

Cost of goods sold

106,057 

 

39,565 

 

 

Gross profit (loss)

(19,982)

 

28,399 

 

 

 

 

 

 

Operating expenses

 

 

 

 

General and administrative

604,382 

 

511,175 

 

Sales and marketing

146,400 

 

58,326 

 

 

Total operating expenses

750,782 

 

569,501 

 

 

Loss from operations

(770,764)

 

(541,102)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

Interest expense

(29,198)

 

(26,711)

 

Accretion of debt discount

(717,309)

 

(694,188)

 

 

Total other income (expense)

(746,507)

 

(720,899)

Loss before taxes

(1,517,271)

 

(1,262,001)

Provision for income taxes

 

Net loss

$

(1,517,271)

 

$

(1,262,001)

 

 

 

 

 

 

Net (loss) per common share basic and diluted

$

(2.08)

 

$

(15.29)

 

 

 

 

 

 

Weighted average common shares outstanding basic and diluted

729,997 

 

82,524 

 

 

 

 

 

 

(The accompanying notes are an integral part of these financial statements)











Force Protection Video Equipment Corp

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended April 30, 2017 and 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

Total

 

 

Series A Preferred Stock

Common Stock

 

paid-in

 

Accumulated

 

Stockholders'

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity (deficit)

Balance, April 30, 2015

-

 

$

-

 

73,180

 

$

7

 

$

256,676

 

$

(213,124)

 

$

43,559 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock issued for cash

1,000,000

 

100

 

-

 

-

 

900

 

 

1,000 

 

Common stock issued for cash

-

 

-

 

1,800

 

-

 

45,000

 

 

45,000 

 

Common stock issued in exchange for services

-

 

-

 

40

 

-

 

14,500

 

 

14,500 

 

Discount on convertible promissory note due to common stock issued

-

 

-

 

128

 

-

 

18,000

 

 

18,000 

 

Common stock issued upon conversion of convertible promissory notes

-

 

-

 

86,954

 

9

 

632,764

 

 

632,773 

 

Discount on convertible promissory note due to beneficial conversion feature

-

 

-

 

-

 

-

 

754,410

 

 

754,410 

 

Net loss

-

 

-

 

-

 

-

 

-

 

(1,262,001)

 

(1,262,001)

Balance, April 30, 2016

1,000,000

 

100

 

162,102

 

16

 

1,722,250

 

(1,475,125)

 

247,241 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued upon conversion of convertible promissory notes

-

 

-

 

1,527,931

 

153

 

755,249

 

 

755,402 

 

Common stock issued for financing services

-

 

-

 

8,423

 

1

 

19,999

 

 

20,000 

 

Reverse stock split share adjustment

-

 

-

 

38

 

-

 

-

 

 

 

Discount on convertible promissory note due to beneficial conversion feature

-

 

-

 

-

 

-

 

627,500

 

 

627,500 

 

Net loss

-

 

-

 

-

 

-

 

-

 

(1,517,271)

 

(1,517,271)

Balance, April 30, 2017

1,000,000

 

$

100

 

1,698,494

 

$

170

 

$

3,124,998

 

$

(2,992,396)

 

$

132,872 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(The accompanying notes are an integral part of these financial statements)








Force Protection Video Equipment Corp

 

 

 

Statements of Cash Flows

 

 

 

For the Years Ended April 30, 2017 and 2016

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended

April 30,

 

 

 

Cash flows from operating activities:

2017

 

2016

 

Net (Loss)

$

(1,517,271)

 

$

(1,262,001)

 

Adjustments to reconcile net loss to net cash provided (used in) operating activities:

 

 

 

 

 Depreciation and Amortization

4,796 

 

476 

 

 

Accretion of debt discount

717,309 

 

694,188 

 

 

Share based compensation expense

 

14,500 

 

Changes in assets and liabilities:

 

 

 

 

 

(Increase) decrease in accounts receivable

1,419 

 

(3,157)

 

 

(Increase) decrease in inventory

(33,767)

 

(70,361)

 

 

(Increase) decrease in other assets

31,356 

 

(36,104)

 

 

Increase (decrease) in accounts payable and accrued expenses

54,606 

 

27,107 

 

 

Increase (decrease) in other liabilities

(468)

 

983 

 

 

Net cash (used) by operating activities

(742,020)

 

(634,369)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchase of equipment and vehicles

(16,480)

 

(7,588)

 

Net cash (used) by investing activities

(16,480)

 

(7,588)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from sale of common stock

 

45,000 

 

Proceeds from sale of preferred stock

 

1,000 

 

Proceeds from convertible promissory notes

720,000 

 

788,004 

 

Net cash provided by financing activities

720,000 

 

834,004 

 

 

 

 

 

 

Increase (decrease) in cash

(38,500)

 

192,047 

Cash and cash equivalents at beginning of period

227,273 

 

35,226 

Cash and cash equivalents at end of period

$

188,773 

 

$

227,273 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid for interest

$

 

$

 

Cash paid for income taxes

$

 

$

 

 

 

 

 

 

 Non-cash operating activities:

 

 

 

 

Value of common stock issued in exchange for services

$

 

$

14,500 

 

Common stock issued for conversion of notes payable

$

755,402 

 

$


(The accompanying notes are an integral part of these financial statements)






FORCE PROTECTION VIDEO EQUIPMENT CORP.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED APRIL 30, 2017 AND 2016



NOTE 1 – ORGANIZATION AND GOING CONCERN


Organization


Force Protection Video Equipment Corp., (the Company), was incorporated on March 11, 2011, under the laws of the State of Florida as M Street Gallery, Inc.  On September 25, 2013, we changed our name to Enhance-Your-Reputation.com, Inc. and changed our business to providing reputation management and enhancement services. On February 2, 2015 the Company changed its name to Force Protection Video Equipment Corp. to focus on the sale of mini body video cameras and accessories to consumers and law enforcement.$38,962

Additionally, at April 30, 2020, the Company had:

 


·

Going Concern


The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America and applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.


During the year ended April 30, 2017, the Company recognized revenue of $86,075 and a net operating loss of $770,764. As of April 30, 2017, the Company had working capital of $112,646 and an accumulated

Accumulated deficit of $2,992,396.$4,605,504,

·


In view

Stockholders’ deficit of these conditions, the ability$740,823; and

·

Working capital deficit of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level$735,823

The Company is currently in default on certain convertible debt instruments. In September and October 2019, the Company reached an agreement to settle certain of its in-default convertible notes, loans, and related accrued interest (See Note 4 for additional changes to the Company’s convertible notes and term note). Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report.

19

Table of operations and on theContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its goods and services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis.

In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flow and cash usage forecasts for the year ending April 30, 2020, and our current capital structure including equity-based instruments and our obligations and debts.

We expect that our existing cash and cash equivalents as of April 30, 2020, will not be sufficient to enable us to fund our anticipated level of operations based on our current operating plans, through the fiscal year end 2021. Accordingly, we will require additional capital to fund our operations. We anticipate raising additional capital through the private and public sales of our equity or debt securities, or a combination thereof. Although management believes that such capital sources will be available, there can be no assurance that financing will be available to us when needed in order to allow us to continue our operations, or if available, on terms acceptable to us.

At April 30, 2020, the Company had $2,505 in cash. If we do not raise sufficient capital in a timely manner, among other things, we may be forced to scale back our operations or cease operations all together.

During the year ended April 30, 2020, the Company was able to raise $203,256 in gross proceeds in convertible promissory notes ($175,756) and a note payable ($27,500). The Company’s capital-raising efforts are ongoing, and the Company has undertaken the following to reduce its burn rate: an ongoing review and reduction of monthly operating expenses. If sufficient capital cannot be raised during fiscal year 2021, the Company will continue its plans of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations to the extent practicable.

Because COVID-19 infections have been reported throughout the United States, certain federal, state, and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future.

20

Table of the Company to obtain necessary financing to fund ongoing operations. Historically, the Company has relied upon funds from the saleContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition, and results of operations.

The significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. In light of the COVID-19 pandemic, the Company has taken proactive steps to manage its costs and discretionary spending.

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

Note 2 - Summary of Significant Accounting Policies

Principles of Consolidation

These consolidated financial statements have been prepared in accordance with US GAAP and include the accounts of the Company and its wholly owned subsidiary, Cobraxtreme HD Corp. All intercompany transactions and balances have been eliminated.

Business Segments

The Company uses the “management approach” to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. Using the management approach, the Company determined that it has one operating segment due to business similarities and similar economic characteristics.

21

Table of shares of stock, issuance of promissory notes and loans from its shareholders and private investors to finance its operations and growth. Management is planning to raise necessary additional funds for working capital through loans and/or additional sales of its common stock. However, there is no assuranceContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.

Significant estimates during the year ended April 30, 2020 include estimated useful life and related impairment of property and equipment, valuation of operating lease right-of-use (“ROU”) assets and liabilities and the related lease termination and estimates of current and deferred income taxes and deferred tax valuation allowance.

Fair Value of Financial Instruments

The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.

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

·

Level 1 —Observable inputs that the Company will be successful in raising additional capital or that such additional funds will be available on acceptable terms, if at all. Should the Company be unable to raise this amount of capital its operating plans will be limited to the amount of capital that it can access. These financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Estimates


The preparation of the Company’s financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from these estimates and assumptions.


Cash and Cash Equivalents


The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.






Inventory


Our inventory is comprised of finished goods and primarily includes cameras and recording equipment. The Company’s inventory is stated at the lower of cost orreflect quoted market and expensed to cost of goods sold upon sale using the average-cost method. The Company also makes prepayments against the future delivery of inventory classified as prepaid inventory. During the Year ended April 30, 2017, the Company recognized $32,207 of lower of cost–or-market value adjustments to inventory and a $24,000 reduction in prepaid software license fees related to an annual resalable software license agreement with a term from April 2016 through April 2017 for minimum software license fees for salable software that is reduced from prepaid inventory as licenses are sold. However, during the year, since only a few software licenses were sold and the agreement terminated without recourse in April 2017, the balance became the property of the software vendor and the Company recorded a $24,000 reduction to prepaid inventory and corresponding increase in COGS.


Accounts Receivable


Accounts receivable are reported at the customers' outstanding balances. The Company does not have a history of significant bad debt and has not recorded any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.  The Company evaluates receivables on a regular basis for potential reserve.


Property and Equipment


Fixed assets are carried at cost, less accumulated depreciation and amortization. Major improvements are capitalized, while repair and maintenance are expensed when incurred. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period.


For federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. Depreciation for financial statement purposes is computed on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:


Estimated

Useful Lives

 Vehicles

     5 years

Office Equipment

3 - 5 years

Furniture & equipment

5 - 7 years


Income Taxes


The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively.


Revenue Recognition


The Company recognizes revenue when (a) pervasive evidence of an arrangement exists (b) products are delivered or services have been rendered (c) the sales price is fixed or determinable, and (d) collection is reasonably assured.






Marketing and Advertising Costs


Marketing and advertising costs are expensed as incurred. The Company recognized $108,603 and $38,176 in marketing and advertising costs during the years ended April 30, 2017 and 2016, respectively.


Stock Based Compensation


The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.


Fair Value Measurements


Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets(unadjusted) for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:


Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;


·

Level 2, defined as2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted pricesthe marketplace for identical or similar instruments in marketsassets and liabilities; and

·

Level 3—Unobservable inputs that are not active; and


Level 3, defined as unobservable inputs in whichsupported by little or no market data, exists, therefore requiring an entitywhich require the Company to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.


Asassumptions.

The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions.

22

Table of Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.

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

The Company’s financial instruments, including cash, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At April 30, 2020 and April 30, 2019, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

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

Concentrations of Risk

During the years ended April 30, 2020 and 2019, respectively, the following customers accounted for greater than 10% of sales as follows:

Year Ended

Customer

April 30, 2017 and 2016, the Company did not have any assets or liabilities that were required to be measured at fair value on a recurring basis or on a non-recurring basis.  


2020

Fair Value of Financial Instruments


The Company’s financial instruments consist of cash and cash equivalents and accounts payable and accrued expenses. The carrying amounts of the Company’s financial instruments approximate fair value because of the short term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect those estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.


Net Income (Loss) Per Share


The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS, if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money).






Following is the computation of basic and diluted net loss per share for the years ended April 30, 2017 and 2016:


2019

 

 

Years Ended

April 30,

 

 

 

 

2017

 

2016

Basic and Diluted EPS Computation

 

 

 

Numerator:

 

 

 

 

Loss available to common stockholders'

$

(1,517,271)

 

$

(1,262,001)

 

 

 

 

 

Denominator:

 

 

 

 

Weighted average number of common shares outstanding

729,997 

 

82,524 

 

 

 

 

 

Basic and diluted EPS

$

(2.08)

 

$

(15.29)

 

 

 

 

 

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

 

 

 

 

 

 

Convertible promissory notes

6,332,156

 

71,042


ConcentrationsA

11%

-

B

10%

-

Total

21%

-

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At April 30, 2020 and 2019, respectively, the Company did not have any cash equivalents.

23

Table of riskContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. There were no balances in excess of FDIC insured levels and the Company has not experienced any losses in such accounts at April 30, 2020 and 2019, respectively.

Accounts Receivable

Credit is extended to customers based on an evaluation of their financial condition and other factors. Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Accounts determined to be uncollectible are charged to operations when that determination is made. Interest is not accrued on overdue accounts receivable. The Company does not require collateral.

Allowance for doubtful accounts was $0 and $0 at April 30, 2020 and 2019, respectively.

Inventory

The Company’s inventory is comprised of finished goods and primarily includes cameras and recording equipment. The Company’s inventory is stated at the lower of cost or market and expensed to cost of revenues upon sale using the average-cost method. The Company also makes prepayments against the future delivery of inventory classified as prepaid inventory. The Company plans to become a drop ship third-party seller that will reduce the need to carry inventory.

During the years ended April 30, 2020 and 2019, the Company wrote down $0 and $110,418, respectively, of obsolete inventory.

Long-lived Assets

Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in the Company’s stock price for a sustained period of time; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.

24


During the year ended April 30, 2017, two customers accounted for 34.1% (26.7% and 7.4%)

Table of sales. During the year ended April 30, 2016, no customer accounted for more than 5%Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets ranging from three to seven years.

Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its property and equipment for impairment.

On May 1, 2019, the Company and its landlord mutually agreed to terminate the outstanding office lease. All related property and equipment at that time were determined to be impaired.

During the years ended April 30, 2020 and 2019, the Company recorded impairment losses of property and equipment of $6,274 and $0, respectively. See Notes 3 and 5.

Right of Use Assets and Lease Obligations

The Right of Use (“ROU”) Asset and Lease Liability reflect the present value of the Company’s estimated future minimum lease payments over the lease term, which may include options that are reasonably assured of being exercised, discounted using a collateralized incremental borrowing rate.

Typically, renewal options are considered reasonably assured of being exercised if the associated asset lives of the building or leasehold improvements exceed that of the initial lease term, and the Company’s operations remains strong. Therefore, the Right of Use Asset and Lease Liability may include an assumption on renewal options that have not yet been exercised by the Company.

Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the consolidated statements of operations.

25

Table of sales.Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

On May 1, 2019, the Company and its landlord mutually agreed to terminate the outstanding office lease. The Company had an ROU asset of $29,208 and a lease liability of $29,811 at the date of termination, resulting in a gain on lease termination of $603. See Note 5.

Derivative Liabilities

The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial instruments. The Company uses a Black-Scholes option pricing model to determine fair value.

Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment recognized in the Company’s consolidated statements of operations

The Company has adopted ASU 2017-11, “Earnings per share (Topic 260)”, provided that when determining whether certain financial instruments should be classified as liability or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. If a down round feature on the conversion option embedded in the note is triggered, the Company will evaluate whether a beneficial conversion feature exists, the Company will record the amount as a debt discount and will amortize it over the remaining term of the debt.

If the down round feature in the warrants that are classified as equity is triggered, the Company will recognize the effect of the down round as a deemed dividend, which will reduce the income available to common stockholders.

At April 30, 2020 and 2019, respectively, the Company did not have any derivative liabilities.

Stock Warrant Liability

The Company accounts for certain stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statements of operations. The fair value of the warrants issued by the Company are estimated using a Black-Scholes option pricing model, at each measurement date.

At April 30, 2020 and 2019, respectively, the Company did not have any warrant liabilities.

26


The Company relies on third parties for the supply and manufacture

Table of its capture devices, someContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Debt Discounts (Derivative Liabilities)

The Company accounts for debt discounts originating in connection with conversion features that remain embedded in the related notes (ASC 815) in accordance with ASC 470-20, Debt with Conversion and Other Options. These costs are classified as a component of debt discount on the consolidated balance sheets as a direct deduction from the debt liability. The Company amortizes these costs over the term of the related debt agreement as interest expense (accretion) - debt discount, in the consolidated statements of operations.

At April 30, 2020 and 2019, respectively, the Company did not have any debt discounts recorded in connection with any derivative or stock warrant liabilities.

Beneficial Conversion Features and Debt Discounts

For instruments that are not considered liabilities under ASC 480 or ASC 815, the Company applies ASC 470-20 to convertible securities with beneficial conversion features that must be settled in stock and to those that give the issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature should be valued at the commitment date as the difference between the conversion price and the fair market value of the common stock (whereby the conversion price is lower than the fair market value) into which the security is convertible, multiplied by the number of shares into which the security is convertible. This amount is recorded as a debt discount and amortized over the life of the debt. ASC 470-20 further limits this debt discount amount to the proceeds allocated to the convertible instrument.

Revenue Recognition

Our revenue is generated from the sale of products consisting primarily of video and audio capture devices and accessories.  Payment or invoicing typically occurs upon shipment and the term between invoicing and when payment is due is not significant. Revenue is recorded net of discounts and promotions and is disaggregated based on significant product lines, types of customers and timing of revenue recognition. See Note 7.

ASC Topic 606 is a comprehensive revenue recognition model that requires revenue to be recognized when control of the promised goods or services are transferred to our customers at an amount that reflects the consideration that we expect to receive.

27

Table of which are sole-source suppliers. The Company believes that outsourcing manufacturing enables greater scale and flexibility. As demand and product lines change, the Company periodically evaluates the need and advisabilityContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Application of ASC Topic 606 requires us to use more judgment and make more estimates than under former guidance. Application of ASC Topic 606 requires a five-step model applicable to all product offerings revenue streams as follows:

Identification of the contract, or contracts, with a customer

A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer.

Identification of the performance obligations in the contract

Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract.

When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation.

Determination of the transaction price

The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below.

28

Table of adding manufacturers to support its operations. In instances where a supply and manufacture agreement does not exist or suppliers fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to its customers on time, if at all.  During the year ended April 30 2017, two suppliers accounted for 82.1% (72.5% and 9.6%Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Allocation of the transaction price to the performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines.

Recognition of revenue when, or as, we satisfy a performance obligation

We recognize revenue at the point in time that the related performance obligation is satisfied by transferring the promised goods or services to our customer.

Principal versus Agent Considerations

When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent.

Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators:

We are primarily responsible for fulfilling the promise to provide the specified good or service

When we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without penalty or without permission from our customer.

We have risk before the specified good or service have been transferred to a customer or after transfer of control to the customer.

We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer.

29

Table of our inventory purchases. During the year ended April 30 2016, two suppliers accounted for 97% (84% and 13%) of our inventory purchases.


Recent Accounting Pronouncements


In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation-Stock Compensation : Improvements to Employee Share-Based Payment Accounting (Topic 718)”, which is intended to simplify several aspects of the accounting for share-based payment award transactions. The guidance will be effective for the fiscal year beginning after December 15, 2016, including interim periods within that year. The Company does not expect adoption of ASU 2016-09 to have a material impact on its financial statements.


In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which supersedes ASC Topic 840, Leases, and creates a new topic, ASC Topic 842, Leases. ASU 2016-02 requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. ASU 2016-02 also expands the required quantitative and qualitative disclosures surrounding leases. ASU 2016-02 is effective for the Company beginning January 1, 2019. Early adoption is permitted. The Company has determined that the adoption of ASU 2016-02 will currently have no impact on its consolidated financial statements.


In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assetsContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The entity has discretion in establishing the price for the specified good or service

We have discretion in establishing the price our customer pays for the specified goods or services.

Contract Liabilities

Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. We record contract liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company has determined that the adoption of ASU 2015-17 will currently have no impact on its consolidated financial statements.





In July 2015, the FASB issued ASU No. 2015-11, "Inventory (Topic 330):


Simplifying the Measurement of Inventory". The amendments in this update require an entity to measure inventory within the scope of ASU 2015-11 (the amendments in ASU 2015-11 do not apply to inventory that is measured using last-in, first-out or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out or average cost) at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is uncharged for inventory measured using last-in, first-out or the retail inventory method. The amendments in ASU 2015-11 more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards ("IFRS"). ASU 2015-11 is effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in ASU 2015-11 should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We do not expect the adoption of ASU No. 2015-11 to have a material impact on our consolidated financial statements.


We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We believe that none of the new standards will have a significant impact on our financial statements.


NOTE 3 - FIXED ASSETS


Fixed assets consisted of the following:


 

 

April 30,

 

 

2017

 

2016

 Vehicles

 

$

15,376 

 

$

Furniture and fixtures

 

6,212 

 

6,212 

Computers and office equipment

 

2,480 

 

1,376 

   Total fixed assets

 

24,068 

 

7,588 

Accumulated depreciation

 

(5,272)

 

(476)

Total fixed assets

 

$

18,796 

 

$

7,112 


During the years ended April 30, 2017 and 2016, the Company recognized $4,796 and $476, respectively, in depreciation expense.


NOTE 4 – CONVERTIBLE PROMISSORY NOTES


Following is a summary of our outstanding convertible promissory notes as of April 30, 2017:


 

 

 

 

 

 

Current Balances

 

 

Lender

 

Issue Date

 

Maturity

 

Principle

 

Interest

 

Total

RDW Capital, LLC Note 3

 

3/10/2016

 

9/10/16

 

792 

 

-

 

792

RDW Capital, LLC Note 4

 

5/13/2016

 

11/13/16

 

 

4,540

 

4,540

RDW Capital, LLC Note 5

 

5/20/2016

 

11/20/16

 

 

2,742

 

2,742

RDW Capital, LLC Note 6

 

8/22/2016

 

2/22/17

 

31,674 

 

8,291

 

39,965

RDW Capital, LLC Note 7

 

9/1/2016

 

3/1/17

 

157,500 

 

8,664

 

166,164

RDW Capital, LLC Note 8

 

2/6/2017

 

8/5/17

 

48,412 

 

1,477

 

49,889

RDW Capital, LLC Note 9

 

3/30/2017

 

9/29/17

 

78,750 

 

544

 

79,294

RDW Capital, LLC Note 10

 

4/26/2017

 

10/26/17

 

110,000 

 

98

 

110,098

   Totals

 

 

 

 

 

$

427,128 

 

$

26,356

 

$

453,484

Debt discount balance

 

 

 

 

 

(286,159)

 

 

 

 

   Balance sheet balances

 

 

 

 

 

$

140,969 

 

 

 

 






Following is a summary of our outstanding convertible promissory notes as of April 30, 2016:


 

 

 

 

 

 

Current Balances

 

 

Lender

 

Issue Date

 

Maturity

 

Principle

 

Interest

 

Total

LG Capital Funding, LLC

 

4/20/2016

 

9/11/2016

 

$

13,000 

 

$

34

 

$

13,034

Black Forest Capital, LLC

 

10/8/2015

 

10/8/2016

 

19,500 

 

3,001

 

22,501

RDW Capital, LLC Note 1

 

11/10/2015

 

5/10/16

 

157,500 

 

6,136

 

163,636

RDW Capital, LLC Note 2

 

1/0/1900

 

6/30/16

 

105,000 

 

2,861

 

107,861

RDW Capital, LLC Note 3

 

3/10/2016

 

9/10/16

 

792 

 

614

 

1,406

   Totals

 

 

 

 

 

$

295,792 

 

$

12,646

 

$

308,438

Debt discount balance

 

 

 

 

 

(204,718)

 

 

 

 

   Balance sheet balances

 

 

 

 

 

$

91,074 

 

 

 

 


The company determined that each convertible promissory notes conversion feature is indexed to the Company’s stock, which is an input to a fair value measurement of a fixed-for-fixed option on equity shares. Thus, the conversion feature of the notes meets the scope exception under FASB Accounting Standards Codification ("ASC") 815-40-15-7 and treatment under ASC 470-20 – Debt with Conversion and Other Options is appropriate.


LG Capital Funding, LLC


On September 11, 2015 the Company entered into a Securities Purchase Agreement with LG Capital Funding, LLC ("LG") for the sale of an 8% convertible note in the principal amount of $81,000 and proceeds of $75,000 net of legal expenses (the “LG Note”).


The LG Note was convertible into common stock at a price equal to the amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels the contract according to the contract terms. Contract liabilities have been historically low and are generally recorded as current liabilities on our consolidated financial statements when the time to fulfill the performance obligations under terms of our contracts is less than one year. We have no Long-term contract liabilities which would represent the amount of payments received in excess of revenue earned, including those that are refundable, when the time to fulfill the performance obligation is greater than one year.

30

Table of Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Cost of Revenues

Cost of revenues represents costs directly related to the production, manufacturing and freight-in of the Company’s product inventory purchased from third-party manufacturers.

Income Taxes

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

The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. At April 30, 2020 and 2019, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. However, no such interest and penalties were recorded for the year ended April 30, 2020 and 2019, respectively. As of April 30, 2020, tax years 2017-2020 remain open for IRS audit.

Marketing and Advertising Costs

Marketing and advertising costs are expensed as incurred.

The Company recognized $3,313 and $9,303 in marketing and advertising costs during the years ended April 30, 2020 and 2019, respectively, and are included as a component of general and administrative expense on the consolidated statements of operations.

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 service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

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Table of Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

We use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

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

·

Exercise price,

·

Expected dividends,

·

Expected volatility,

·

Risk-free interest rate,

·

Expected life of option; and

·

Expected forfeiture rate

There were no stock option grants during the years ended April 30, 2020 and 2019, respectively.

Additionally, there were no stock options issued, outstanding or exercisable as of April 30, 2020 and April 30, 2019, respectively.

Common stock awards

The Company may grant common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded in accordance with ASU 2018-07 (June 2018) on the consolidated statement of operations in the same manner and charged to the same account as if such settlements had been made in cash.

There were no stock awards granted during the years ended April 30, 2020 and 2019, respectively.

32

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Stock Warrants

In connection with certain financing, consulting and collaboration arrangements, the Company may issue warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period or at the date of issuance if there is not a service period.

There were no warrants grants during the years ended April 30, 2020 and 2019, respectively. Additionally, there were no warrants issued, outstanding or exercisable as of April 30, 2020 and 2019, respectively.

Basic and diluted loss per share

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future.

The following potentially dilutive equity securities outstanding as of April 30, 2020 and 2019, respectively, were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive:

 

 

April 30,

2020

 

 

April 30,

2019

 

 

 

 

 

 

 

 

Convertible notes (P&I)

 

 

3,312,069,399

 

 

 

9,649,685,143

 

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Table of Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Related Parties

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

Recently Issued Accounting Standards

Changes to accounting principles are established by the FASB in the form of ASUs to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations, cash flows, or presentation thereof. Described below are ASUs that are not yet effective, but may be applicable to our financial position, results of operations, cash flows, or presentation thereof. ASUs not listed below were assessed and determined to not be applicable to our financial position, results of operations, cash flows, or presentation thereof.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 (with amendments issued in 2018), which changes the accounting for leases and requires expanded disclosures about leasing activities. This new guidance also requires lessees to recognize a ROU asset and a lease liability at the commencement date for all leases with terms greater than twelve months. Accounting by lessors is largely unchanged. ASU 2016-02 is effective for fiscal periods beginning after December 15, 2018. We adopted ASU 2016-02 on January 1, 2019 using the modified retrospective optional transition method. Thus, the standard was applied starting January 1, 2019 and prior periods were not restated.

We applied the package of practical expedients permitted under the transition guidance. As a result, we did not reassess the identification, classification and initial direct costs of leases commencing before the effective date. We also applied the practical expedient to not separate lease and non-lease components to all new leases as well as leases commencing before the effective date. See Note 5.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” This guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal periods beginning after December 31, 2019.

Early adoption is permitted. We adopted ASU 2017-04 and it did not have a material impact on our consolidated financial statements.

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APRIL 30, 2020 AND 2019

In June 2018, the FASB issued ASU 2018-07, “Improvements to Non-employee Share-Based Payment Accounting.” This guidance expands the scope of Topic 718 “Compensation - Stock Compensation” to include share-based payment transactions for acquiring goods and services from non-employees, but excludes awards granted in conjunction with selling goods or services to a customer as part of a contract accounted for under ASC 606, “Revenue from Contracts with Customers.” The adoption of ASU 2018-07 did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement”, to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU 2018-13 during the quarter ended April 30, 2020 and its adoption did not have any material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which amends ASC 350-40, “Intangibles - Goodwill and Other - Internal-Use Software.” The ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and requires the capitalized implementation costs to be expensed over the term of the hosting arrangement. The accounting for the service element of a hosting arrangement that is a service contract is not affected. ASU 2018-15 is effective for fiscal periods beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-15, effective January 1, 2019, did not have a material impact on our consolidated financial statements.

Recent Accounting Updates Not Yet Effective

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this guidance.

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APRIL 30, 2020 AND 2019

Note 3 – Property and Equipment

Property and equipment consisted of the following:

 

 

 

 

 

 

Estimated Useful

 

 

 

April 30,

2020

 

 

April 30,

2019

 

 

Lives

(Years)

 

 

 

 

 

 

 

 

 

 

 
Furniture and fixtures

 

$-

 

 

$9,656

 

 

5 - 7

 
Computers and office equipment

 

 

-

 

 

 

4,226

 

 

3 - 5

 
Leasehold improvements

 

 

-

 

 

 

1,775

 

 

Life of lease

 

 

 

 

-

 

 

 

15,657

 

 

 

 
Accumulated depreciation

 

 

-

 

 

 

(9,383)

 

 

 
Total property and equipment - net

 

$-

 

 

$6,274

 

 

 

 

Depreciation expense for the years ended April 30, 2020 and 2019 was $0 and $5,418, respectively.

The Company sold two vehicles during the year ended April 30, 2019 for $6,646. The Company recognized a gain on the sale of assets in the amount of $1,593.

On May 1, 2019, the Company recorded an impairment loss of $6,274. See Note 5 regarding related ROU lease liability termination.

Note 4 – Debt

Convertible Notes Payable

The Company has issued numerous convertible promissory notes. In certain cases, these notes contained conversion features that require a discount to the market price based upon a formula using the Company’s stock prices. The Company has determined that each convertible promissory note conversion feature is indexed to the Company’s stock, which is an input to a fair value measurement of a fixed-for-fixed option on equity shares. Thus, the conversion feature of the notes meets the scope exception under FASB Accounting Standards Codification (“ASC”) 815-40-15-7 and treatment under ASC 470-20 – “Debt with Conversion and Other Options” is appropriate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The following represents a summary of the Company’s lenders, key terms of the debt and outstanding balances at April 30, 2020 and 2019, respectively. See Note 11 regarding the extension of the maturity date for the Company’s 8% convertible notes to February 1, 2021.

Lenders

RDW Capital, LLC (“RDW”) - Convertible Notes (6 Notes)

Term of Convertible Notes

Approximately 6 months

Maturity Dates

September 10, 2016 – October 31, 2018

Interest Rate

8%

Default Interest Rate

24%

Collateral

Unsecured

Conversion Discount

60% of the lowest trading price during the 20 tradingtwenty (20) days immediately preceding conversion

Conversion Restriction

Ownership cannot exceed 4.99%

Prepayment Penalty (P&I)

130%

Default Penalty (P&I)

150%

Common Share Reserve

Three (3) times the applicable conversion.  possible shares needed upon conversion

Effective May 1, 2019, the lender amended the conversion price for all outstanding notes to a fixed price of$0.0003. As a result of this amendment, the Company determined that the present value of the cash flows of the outstanding debt were similar (less than 10%) to the present value of the cash flows of the new debt.

The Company had no debt issuance costs left to amortize from the prior outstanding, in-default notes. Additionally, in connection with the change in conversion price, there were no fees paid to the lender or other third parties. The change in terms (conversion price fixed at $0.0003) resulted in a debt modification, accordingly, there is no effect for financial reporting.

Additionally, on May 1, 2019, the lenders amended all of their 8% convertible promissory notes previously outstanding as well as those issued after May 1, 2019 to suspend the default provision which would allow for a default penalty of 150% on the outstanding principal and accrued interest at the time of default and upon the lender accelerating the amounts due. The notes, while in default, have not been accelerated for payment. The lender has reserved the right to reinstate the default provision at their discretion.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Power Up Lending Group Ltd. (“Power Up”) - Convertible Notes (3 Notes)

The LG Note principle was discounted for the valueTerm of Convertible Notes

Approximately 9 months

Maturity Dates

November 16, 2017 – December 15, 2018

Interest Rate

12%

Default Interest Rate

22%

Collateral

Unsecured

Conversion Discount

61% of the legal fees of $6,000 and the intrinsic valueaverage of the beneficiallowest two (2) trading prices twenty (20) days immediately preceding conversion feature

Conversion Restriction #1

Ownership cannot exceed 4.99%

Conversion Restriction #2

Not convertible until 180 days after issuance of $68,000. The resulting $74,000 discount was fully accreted through July 31, 2016 due to full repayment of the LG Note on May 2, 2016.


During the year ended April 30, 2017, the Company recognized no interest expense and debt discount accretion of $7,741. On May 2, 2016, LG converted the remaining $13,034 of principal and interest into 3,104 shares of common stock.


Black Forest Capital, LLC


On October 8, 2015 the Company sold and Black Forest Capital, LLC (“Black Forest”) purchased a 10% convertible note in the principal amount

Prepayment Penalty (P&I)

115% - 140% (within 1st 180 days of $53,000 (the “Black Forest Note”note being outstanding)

Default Penalty (P&I)

150%

Common Share Reserve

N/A

Adar Bays, LLC (“Adar”) - Convertible Note (1 Note)

Term of which the Company received $50,000 after payment of legal fees. The Black Forest Note matured inConvertible Notes

Approximately 12 months on October 8, 2016.The Black Forest Note was convertible into common stock, at Black Forest’s option anytime following the issuance date, at a price for each share of common stock equal to 40%

Maturity Dates

March 5, 2018 – March 5, 2019

Interest Rate

8%

Default Interest Rate

24%

Collateral

Unsecured

Conversion Discount

60% of the lowest trading price during the 20 tradingtwenty (20) days immediately preceding conversion

Conversion Restriction

Not convertible until 180 days after issuance of convertible note

Prepayment Penalty (P&I)

N/A

Default Penalty (P&I)

N/A

Common Share Reserve

Three (3) times the applicable conversion.possible shares needed upon conversion


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APRIL 30, 2020 AND 2019

Red Diamond Partners, LLC (“Red”) – Convertible Notes (8 Notes)

Issuance Date of Convertible Notes

October 11, 2019 – January 14, 2020

Term of Convertible Notes

Approximately 6 months

Maturity Dates

April 11, 2020 – July 14, 2020

Gross Proceeds

$175,756

Interest Rate

8%

Default Interest Rate

24%

Collateral

Unsecured

Conversion Feature

Fixed at $0.0003

Conversion Restriction

Ownership cannot exceed 4.99%

Prepayment Penalty (P&I)

130%

Default Penalty (P&I)

150%

Common Share Reserve

Three (3) times the possible shares needed upon conversion

Red Diamond Partners, LLC (“Red”) – Term Note (1 Note)

Issuance Date of Note

October 11, 2019

Term of Note

Approximately 6 months

Maturity Date

April 11, 2020

Gross Proceeds

$27,500

Interest Rate

5%

Default Interest Rate

24%

Collateral

5,000,000 shares, Series A, Redeemable Preferred Stock – all held by the Company’s CEO

Conversion Feature

None

Conversion Restriction

N/A

Prepayment Penalty (P&I)

130%

Default Penalty (P&I)

N/A

Common Share Reserve

N/A

As of April 30, 2020 and September 14, 2020, the term note of $27,500 was in default.

The lender has not called this debt and is not seeking to foreclose on the collateral and obtain the 5,000,000 shares of Series A, Redeemable, Preferred Stock. See Note 6.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The following is a summary of the Company’s convertible notes and related accrued interest (included as a component of accounts payable and accrued expenses) at April 30, 2020 and 2019, respectively:

 

 

Convertible Notes Payable

 

 

 

 

 

 

 

 

 

 

Amounts

 

 

In-Default

 

Balance - April 30, 2018

 

 

480,623

 

 

$210,000

 

Proceeds

 

 

5,500

 

 

 

 

 

Default Penalties

 

 

63,788

 

 

 

 

 

Conversions

 

 

(110,446)

 

 

 

 

Balance - April 30, 2019

 

 

439,465

 

 

 

439,465

 

Proceeds

 

 

175,756

 

 

 

 

 

Repayments

 

 

(132,460)

 

 

 

 

Gain on Debt Settlements - Net

 

 

(19,200)

 

 

 

 

Balance - April 30, 2020

 

$463,561

 

 

$420,661

 

 

 

Accrued Interest Payable

 

 

 

 

 

 

 

 

 

 

Amounts

 

 

In-Default

 

Balance - April 30, 2018

 

 

62,281

 

 

$62,281

 

Interest Expense - Net

 

 

103,992

 

 

 

 

 

Conversions

 

 

(16,637)

 

 

 

 

Balance - April 30, 2019

 

 

149,636

 

 

 

149,636

 

Interest Expense - Net

 

 

65,367

 

 

 

 

 

Repayments

 

 

(2,040)

 

 

 

 

Gain on Debt Settlements - Net

 

 

(41,857)

 

 

 

 

Balance - April 30, 2020

 

$171,106

 

 

$168,174

 

Convertible Note Settlements

(A) Power Up Lending Group Ltd.

On October 8, 2019, the Company executed a settlement agreement for $60,000. All outstanding notes and accrued interest totaling $129,938 were paid in three installments:

1.

 October 11, 2019 for $30,000,

2.

October 24, 2019 for $15,000; and

3.

November 19, 2019 for $15,000

For the fiscal year end April 30, 2020, the Company recognized a gain on debt settlement (principal and interest) of $69,938.

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APRIL 30, 2020 AND 2019

(B) Adar Bays, LLC

On October 3, 2019, the Company executed a settlement agreement for $74,750. All outstanding notes and accrued interest totaling $65,619 were paid in three installments:

1.

October 11, 2019 for $37,000,

2.

October 24, 2019 for $18,750; and

3.

November 26, 2019 for $18,750

For the fiscal year end April 30, 2020, the Company recognized a loss on debt settlement (principal and interest) of $8,881.

Gain on debt settlement – net, related to convertible notes and related accrued interest for the fiscal year end April 30, 2020 was $61,057.

Loan Settlement

On September 25, 2018, the Company repaid an outstanding loan totaling $13,372 with funds received from Strategic Funding Source, Inc.

On September 25, 2018, the Company borrowed $39,574 from Strategic Funding Source, Inc. under the Loan Agreement. Pursuant to the terms of the Loan Agreement, the Company received $13,233 of proceeds after deductions for $395 of service fees and $11,340 related to interest. Repayment was to be achieved through 246 daily bank account withdrawals of $156.

The Loan Agreement was secured by all current and future assets of the Company. As of April 30, 2019, the Company was in arrears under the terms of the Agreement by $13,104 and the balance owed on the note was $17,966, after a debt discount of $10,234.

On September 4, 2019, the Company executed a settlement agreement with Strategic Funding Source, Inc. for $27,226. The outstanding balance of the loan was $28,200. Payment was made on October 18, 2019. For the fiscal year end April 30, 2020, the Company recognized a gain on debt settlement (principal and interest) of $974.

Additionally, the $10,234 debt discount was expensed during the year ended April 30, 2020.

Total gain on debt settlement – net, related to convertible notes and related accrued interest and the loan above for the fiscal year end April 30, 2020 was $62,031.

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APRIL 30, 2020 AND 2019

Note 5 – Commitments and Contingencies

Product Warranties

The Company’s manufacturer(s) provide the Company with a 2-year warranty. The Company products are sold with a 1-year manufacturer’s warranty. The Company offers a 1-year extended warranty for a fee. The extended warranty expires at the end of the second year from the date of purchase with warranty costs during the two-year period being born by the manufacturer. As a result, the Company has no, or limited warranty liability exposure.

Right of Use Assets and Liabilities (“ROU”)

In February 2016, the FASB issued ASU No. 2016-02 (“ASC 842”), “Leases”, to require lessees to recognize all leases, with certain exceptions, on the balance sheet, while recognition on the statement of operations will remain similar to current lease accounting. Subsequently, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842”, “Leases”, ASU No. 2018-11, “Targeted Improvements”, ASU No. 2018-20, “Narrow-Scope Improvements for Lessors”, and ASU 2019-01, “Codification Improvements”, to clarify and amend the guidance in ASU No. 2016-02. ASC 842 eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. This standard is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company early adopted the provisions of ASC 842 during the fiscal year ended April 30, 2018.

On November 15, 2017, the Company entered into a lease for office space. The lease expires on November 30, 2020 and includes an option to extend the lease an additional term of three years.

During fiscal year 2018, the Company determined the ROU Asset and lease liability to be $51,063 which compares to the total, undiscounted cash flow payments of the initial three-year term of $61,200. As of April 30, 2018, since the right of use asset and lease liability were the same, no adjustment to retained earnings was required. The company determined that there was no discount rate implicit in the lease. Thus, the Company used its incremental borrowing rate of 12% to discount the lease payments in the determination of the ROU asset and related lease liability.

Rent is $1,650 per month and is increased each anniversary by 3%. The Company paid a $1,650 security deposit. In connection with the lease termination noted below, the $1,650 deposit was recognized as rent expense on May 1, 2019.

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APRIL 30, 2020 AND 2019

On May 1, 2019, the Company and its landlord mutually agreed to terminate the outstanding lease. The following summarizes the lease termination:

Operating lease assets - termination date - May 1, 2019

 

$29,208

 

Operating lease liabilities - termination date - May 1, 2019

 

 

29,811

 

Operating lease asset and (liability) - net - termination date May 1, 2019

 

 

(603)
Gain on lease termination

 

 

603

 

Operating lease asset and (liability) - net - April 30, 2020

 

$-

 

We recognized lease expense on a straight-line basis over the term of our operating leases, as reported within “general and administrative” expense on the accompanying Consolidated Statements of Operations.

During the year ended April 30, 2020 and 2019, operating lease expense was $0 and $15,300, respectively.

NOTE 6 – SERIES A, REDEEMABLE PREFERRED STOCK – RELATED PARTY

At April 30, 2020 and 2019, respectively, there were 5,000,000 shares of $0.0001 par value, Series A, Redeemable Preferred Stock outstanding held by the Company’s Chief Executive Officer (“CEO”). The Preferred Stock pays no dividends and has no conversion rights into common stock. Each share of Preferred Stock is entitled to 200 votes per share and is redeemable in whole, but not in part, at the option of the holder for $0.0001 per share. Due to the redemption feature being at the option of the holder, the Company classifies the purchase price in the temporary equity section of the balance sheet.

See Note 4 regarding these 5,000,000 shares serving as collateral for a debt issuance to Red Diamond Partners, LLC (“Red”) on October 11, 2019 for $27,500.

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APRIL 30, 2020 AND 2019

NOTE 7 – REVENUES

All of the Company’s revenues are derived from business in North America. The following tables disaggregate our revenue by major product line, types of customers, and timing of revenue recognition for the years ended April 30, 2020 and 2019, respectively:

 

 

April 30, 2020

 

 

April 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Major Product Lines

 

 Revenue

 

 

% of Revenues

 

 

 Revenue

 

 

% of Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cameras

 

$38,701

 

 

 

61%

 

$150,490

 

 

 

92%

Accessories

 

 

24,623

 

 

 

39%

 

 

7,210

 

 

 

4%

Software

 

 

-

 

 

 

-

 

 

 

6,040

 

 

 

4%

Total Net Revenue

 

$63,324

 

 

 

100%

 

$163,740

 

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Types of Customers

 

 Revenue

 

 

% of Revenues

 

 

 Revenue

 

 

% of Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$3,166

 

 

 

5%

 

$149,003

 

 

 

91%

State and Local

 

 

58,258

 

 

 

92%

 

 

3,275

 

 

 

2%

Non-government

 

 

1,900

 

 

 

3%

 

 

11,462

 

 

 

7%

 

 

$63,324

 

 

 

100%

 

$163,740

 

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of Revenue Recognition

 

 Revenue

 

 

% of Revenues

 

 

 Revenue

 

 

% of Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transferred at a point in time

 

$63,324

 

 

 

100%

 

$163,740

 

 

 

100%

Transferred over time

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

$63,324

 

 

 

100%

 

$163,740

 

 

 

100%

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APRIL 30, 2020 AND 2019

NOTE 8 - STOCKHOLDER’S DEFICIT

April 30, 2020

During the year ended April 30, 2020, the Company’s CEO forgave accrued payroll of $18,523. Since the forgiveness occurred with a related party, accordingly, there can be no gain or loss, this results in a contribution to equity. See Note 9.

April 30, 2019

During the year ended April 30, 2019, the Company had the following activity:

·

On May 17, 2018, the Company filed its Amended Articles of Incorporation which increased its authorized common stock to 20,000,000,000 shares and its Series A Preferred to 20,000,000 shares, with no changes in par value. The Black Forrest Note principleincrease in the common stock was discounted for the value of legal fees of $3,000 and the intrinsic valuemade necessary because of the beneficial conversion featurereserves required by the Company’s holders of $50,000. The calculated intrinsic value was $127,199.convertible notes,

·

On September 20, 2018, the Company amended its Articles of Incorporation to affect a 1:1,000 reverse stock split. As this amount resulted in a total debt discount that exceeded the Black Forest Note principal, the discount recorded for the beneficial conversion feature was limited to the principal amount of the Black Forest Note. The resulting $53,000 discount was accreted through July 31, 2016 due to repaymentdate of the Black Forest Note.


During the year ended April 30, 2017,this filing, the Company recognized no interest expense and debt discount accretion of $9,992. Duringis waiting for FINRA to approve this corporate action. All share amounts included in this report have not been updated to reflect the year ended April 30, 2017, Black Forrest converted the remaining $22,499 of principal and interest into 44,307 shares of common stock.reverse split.



·




RDW Capital, LLC


On November 12, 2015, the Company entered into a Securities Purchase Agreement (“RDW SPA 1”) with RDW Capital, LLC (“RDW”), a Florida limited liability company. On November 12, 2015, the Company and RDW entered into the First Amended Securities Purchase Agreement. On November 12, 2015, the Company and RDW entered into the Second Amended Securities Purchase Agreement. On February 17, 2016, the Company and RDW entered into the Third Amended Securities Purchase Agreement. On February 17, 2016, the Company and RDW entered into the Fourth Amended Securities Purchase Agreement. On May 9, 2016, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 2”). On August 22, 2016, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 3”). On September 1, 2016, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 4”). On March 31, 2017, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 5”). RDW SPA 1, amendments thereto, RDW SPA 2, RDW SPA 3, RDW SPA 4 and RDW SPA 5 may hereinafter be referred to collectively as, the “RDW SPAs”.


RDW Note 1 - In connection with RDW SPA 1 and amendments thereto, on November 12, 2016, the Company issued to RDW a convertible note (“RWD Note 1”) due on April 10, 2016 in the principal amount of $157,500 of which the Company received proceeds of $130,000 after payment of a $7,500 original issue discount (“OID”) and legal and due diligence fees totaling $20,000.


RDW Note 1 principle was discounted for the value of the OID, due diligence fees and the intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $121,406. As this amount resulted in a total debt discount that was less than RDW Note 1 principal, the full $121,406 discount was recognized. The resulting $148,906 discount was accreted over the 5 month term of RDW Note 1 through April 10, 2016.


RDW Note 2 - In connection with RDW SPA 1 and amendments thereto, on December 31, 2015, the Company issued to RDW a convertible note (“RDW Note 2”) due on June 30, 2016 in the principal amount of $105,000 of which the Company received proceeds of $90,000 after payment of a $5,000 OID and due diligence fees totaling $10,000.


RDW Note 2 principle was discounted for the value of the OID, due diligence fees and the intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $98,000. As this amount resulted in a total debt discount that exceeds RDW Note 2 principal, the discount recorded for the beneficial conversion feature was limited to the principal amount of RDW Note 2. The resulting $105,000 discount was accreted over the 5 month term of RDW Note 2 through June 30, 2016.


Related to RDW Note1 and RDW Note 2, during the year ended April 30, 2017, the Company recognized $3,458 of interest expense, $35,192 of accretion related to the debt discount and issued 478,853Issued 646,768,535 shares of common stock in exchange the entire principlesatisfaction of loan debt and related accrued interest, balance of RDW Note 1 and RDW Note 2 which totaled $274,954.Related to RDW Note1 and RDW Note 2, during the year ended April 30, 2016, the Company recognized $8,996 of interest expense and $218,714 of accretion related to the debt discount.


RDW Note 3 - In connection with RDW SPA 1 and amendments thereto, on March 10, 2016, the Company issued to RDWhaving a convertible note (“RDW Note 3”) due on September 10, 2016 in the principal amount of $210,000 of which the Company received proceeds of $180,000 after payment of a $10,000 OID and due diligence fees totaling $20,000.


RDW Note 3 principal was discounted for the OID, due diligence fees, stock issued to an advisor in connection with RDW Note 3 totaling $18,000, and the intrinsicfair value of the beneficial conversion feature. The calculated intrinsic value was $227,000. As this amount resulted in$115,289; and

·

Recorded a total debt discount that exceeded RDW Note 3 principal, the discount recorded for the beneficial conversion feature was limited to the principal amount of RDW Note 3. The resulting $210,000 discount was accreted through April 30, 2016, the date RDW Note 3 was paid down to a principal and interest balance of $1,405.


During the year ended April 30, 2017, the Company recognized ($613) of interest expense and $151,793 of debt discount accretion related to RDW Note 3. As of April 30, 2017, RDW Note 3 carries a principal balance of $792.


RDW Note 4 - In connection with RDW SPA 2, on May 13, 2016, the Company issued to RDW a convertible note (“RDW Note 4”) due on November 13, 2016 in the principal amount of $105,000 of which the Company received proceeds of $82,500 after payment of a $5,000 OID, $7,500 of legal fees and $10,000 of due diligence fees.






RDW Note 4 principle was discounted for the value of the OID, legal fees due diligence fees and intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $70,000. As this amount resulted in a total debt discount that was less than RDW Note 4 principal, the full $70,000 discount was recognized. The resulting $92,500 discount was accreted over the 6 month term of RDW Note 4 through November 13, 2016.


During the year ended April 30, 2017, the Company recognized $4,540 of interest expense, $92,500 of accretion related to the debt discount and issued 166,689 shares of common stock upon the conversion of $105,000 of RDW Note 4 principal. As of April 30, 2017, RDW Note 4 carries an interest payable balance of $4,540.


RDW Note 5 - In connection with RDW SPA 2, on May 20, 2016, the Company issued to RDW a convertible note (“RDW Note 5”) due on November 20, 2016 in the principal amount of $52,500 of which the Company received proceeds of $45,000 after payment of a $2,500 OID and $5,000 of due diligence fees.


RDW Note 5 principle was discounted for the value of the OID, due diligence fees and intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $35,000. As this amount resulted in a total debt discount that was less than RDW Note 5 principal, the full $35,000 discount was recognized. The resulting $42,500 discount was accreted over the 6 month term of RDW Note 5 through November 20, 2016.


During the year ended April 30, 2017, the Company recognized $2,742 of interest expense, $42,500 of accretion related to the debt discount and issued 80,769 of common stock upon the conversion of $52,500,000 of RDW Note 5 principal. As of April 30, 2017, RDW Note 5 carries an interest payable balance of $2,742.


RDW Note 6 - In connection with RDW SPA 3, on August 22, 2016, the Company issued to RDW a convertible note (“RDW Note 6”) due on February 22, 2017 in the principal amount of $157,500 of which the Company received proceeds of $130,000 after payment of a $7,500 OID and legal and due diligence fees totaling $20,000.


RDW Note 6 principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $105,000. As this amount resulted in a total debt discount that was less than RDW Note 6 principal, the full $105,000 discount was recognized. The resulting $132,500 discount was accreted over the 6 month term of RDW Note 6 through February 22, 2017.


During the year ended April 30, 2017, the Company recognized $8,291 of interest expense, $132,500 of accretion related to the debt discount and issued 80,700 of common stock upon the conversion of $125,826 of RDW Note 6 principal. As of April 30, 2017, RDW Note 6 carries a principal balance of $31,674 and interest payable balance of $8,291.  


RDW Note 7 – In connection with RDW SPA 4 under which RDW agreed to purchase an aggregate of up to $367,500 in principal amount of notes, on September 1, 2016, the Company issued to RDW a convertible note (“RDW Note 7”) due on March 1, 2017 in the principal amount of $157,500 of which the Company received proceeds of $130,000 after payment of a $7,500 OID and legal and due diligence fees totaling $20,000. The second tranche for $210,000 will occur on the date that is two trading days from the date a registration statement is declared effective by the SEC.


RDW Note 7 principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $105,000. As this amount resulted in a total debt discount that was less than RDW Note 7 principal, the full $105,000 discount was recognized. The resulting $132,500 discount was accreted over the 6 month term of RDW Note 7 through March 1, 2017.


During the year ended April 30, 2017, the Company recognized $8,664 of interest expense and $132,500 of accretion related to the debt discount. As of April 30, 2017, RDW Note 7 carries a principal balance of $157,500 and interest payable balance of $8,664.


RDW Note 8 – In connection with RDW SPA 4, on February 6, 2017, the Company issued to RDW a convertible note (“RDW Note 8”) due on August 5, 2017 in the principal amount of $210,000 of which the Company received proceeds of $180,000 after payment of a $10,000 OID and legal and due diligence fees totaling $20,000.






RDW Note 8 principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $217,000. As this amount resulted in a total debt discount that exceeded RDW Note 8 principal, the discount recorded for the beneficial conversion feature was limited to the principal amount of RDW Note 8. The resulting $210,000 discount is being accreted over the 6 month term of RDW Note 8 through August 5, 2017.


During the year ended April 30, 2017, the Company recognized $1,477 of interest expense, $96,833 of accretion related to the debt discount and issued 279,999 of common stock upon the conversion of $161,588 of RDW Note 8 principal. As of April 30, 2017, RDW Note 8 carries a principal balance of $48,412 and interest payable balance of $3,909.  


RDW Note 9 – In connection with RDW SPA 5, on March 30, 2017, the Company issued to RDW a convertible note (“RDW Note 9”) due on September 29, 2017 in the principal amount of $78,750 of which the Company received proceeds of $62,500 after payment of a $3,750 OID and legal and due diligence fees totaling $12,500.


RDW Note 9 principle was discounted for the value of the OID, fees and intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $72,000. As this amount resulted in a total debt discount that exceeded RDW Note 9 principal, the discount recorded for the beneficial conversion feature was limited to the principal amount of RDW Note 9. The resulting $78,750 discount is being accreted over the 6 month term of RDW Note 9 through September 29, 2017.


During the year ended April 30, 2017, the Company recognized $544 of interest expense and $13,340 of accretion related to the debt discount. As of April 30, 2017, RDW Note 9 carries a principal balance of $78,750 and interest payable balance of $544.  


RDW Note 10 – In connection with RDW SPA 5, on April 26, 2017, the Company issued to RDW a convertible note (“RDW Note 10”) due on October 26, 2017 in the principal amount of $110,000 of which the Company received proceeds of $90,000 after payment of a $10,000 OID and legal fees totaling $10,000.


RDW Note 10 principle was discounted for the value of the OID, fees and intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $134,000. As this amount resulted in a total debt discount that exceeded RDW Note 10 principal, the discount recorded for the beneficial conversion feature was limited to the principal amount of RDW Note 10. The resulting $110,000 discount is being accreted over the 6 month term of RDW Note 10 through October 26, 2017.


During the year ended April 30, 2017, the Company recognized $98 of interest expense and $2,418 of accretion related to the debt discount. As of April 30, 2017, RDW Note 10 carries a principal balance of $110,000 and interest payable balance of $98.  


RDW Note 1, RDW Note 2, RDW Note 3, RDW Note 4, RDW Note 5, RDW Note 6 and RDW Note 7 may hereinafter be referred to collectively as, the “RDW Notes”.


The RDW Notes have the following terms and conditions:


·The principal amount outstanding accrues interest at a rate of eight percent (8%) per annum.

·Interest is due and payable on each conversion date and on the Maturity Date.

·At any time, at the option of the holder, the RDW notes are convertible, into shares of our common stock at a conversion price equal to sixty percent (60%) of the lowest traded price of our common stock in the twenty (20) days prior to the conversion date, at any time, at the option of the holder (the Conversion Price).

· TheRDW Notes are unsecured obligations.

·We may prepay the RDW Notes in whole or in part at any time with ten (10) days written notice to the holder for the sum of the outstanding principal and interest multiplied by one hundred and thirty percent (130%).  RDW may continue to convert the notes from the date of the notice of prepayment until the date of prepayment.

· Default interest of twenty-four percent (24%) per annum.

·Interest on overdue accrued and unpaid interest will incur a late fee of the lower of eighteen percent (18%) per annum or the maximum rate permitted by law.






·Upon an event of default, RDW may accelerate the outstanding principal, plus accrued and unpaid interest, and other amounts owing through the date of acceleration (Acceleration).

·Upon Acceleration, the amount due will be one hundred thirty percent (130%) of the outstanding principal amount of the Note and accrued and unpaid interest, together with payment of all other amounts, costs, expenses and liquidated damages.

·In the event of our default, at the request of the holder, we must pay one hundred fifty percent (150%) of the outstanding balance plus accrued interest and default interest.

·We must reserve three (3) times the amount of shares necessary for the issuance of common stock upon conversion. 

·Conversions of the RDW Notes shall not be permitted if such conversion will result in the holder owning more than four point ninety-nine percent (4.99%) of our common shares outstanding after giving effect to such conversion.


In total, during the year ended April 30, 2017 and 2016, the Company recognized $29,198 and $8,997, respectively, of interest expense and $699,576 and $276,921, respectively, of accretion related to the debt discount of the RDW Notes.


In total, during the year ended April 30, 2017, RDW converted $719,869 of RDW Note(s) principal and interest payable into 1,480,521 shares of common stock. In total, during the year ended April 30, 2016, RDW converted $209,208 of RDW Note(s) principal and interest payable into 9,660 shares of common stock.


NOTE 5 – COMMITMENTS AND CONTINGENCIES


Product Warranties


Our products are sold with a one (1) year manufacturer’s warranty. The Company has no obligation to provide warranty service or replacement. The Company does offer an extended warranty for a fee. The extended warranty expires one year from the day the manufacturer warranty expires. Warranty costs during the second year of an extended warranty are born by the manufacturer. As a result, the Company has no, or limited warranty liability exposure.


Operating Lease


On March 21, 2015, the Company entered into a lease of office space at 130 Iowa Lane, Suite 102, Carry, North Carolina 27511. The lease expires$112,839 on March 31, 2018. The Company has no other noncancelable operating leases. Future minimum lease payments under this operating lease with an initial term in excess of one year as of April 30, 2017 are as follows:


Fiscal Year

2018

$14,920

2019

$10,144

Thereafter

$0


During the year ended April 30, 2017 and 2016, rent expense for office space totaled $14,776 and $10,295, respectively.


NOTE 6 – STOCKHOLDER'S EQUITY


As of April 30, 2017 and 2016, there were 1,698,494 and 106,102 shares of common stock outstanding, respectively. As of April 30, 2017 and 2016 there were 1,000,000 shares of Series A Preferred Stock outstanding.


On January 19, 2016, we amended our Articles of Incorporation to increase our authorized common stock from 50,000,000 shares to 250,000,000 shares and authorized the creation of 1,000,000 shares of Series A preferred stock with each share being entitled to 200,000 (i.e., 200:1) votes per share and with no right of conversion into shares of common stock.


On September 8, 2016, we amended our Articles of Incorporation to increase our authorized common stock from 250,000,000 shares to 750,000,000 shares and to increase our authorized Series A Preferred Stock from 1,000,000 shares to 5,000,000 shares.






On March 31, 2017, we amended our Articles of Incorporation to effect a 1:250 reverse stock split  which became effective on April 24, 2017. These financial statements retroactively reflect this reverse split.


During the year endedApril 30, 2017, we issued 1,527,931 shares of common stock in exchange for convertible promissory notes totaling $755,401, and issued 8,423 shares of common stock as fees related to the issuance of RDW Notes.


During the year endedApril 30, 2016, the Company issued preferred stock and common stock as follows:


·

10,095 shares of common stock were issued in exchange for services valued at the close price of our stock resulting in stock compensation expense of $14,500.

·

31,912 shares of common stock were issued in connection with RDW Note 3 and valued at $18,000 as stated in the related agreements.

·

450,000 shares of common stock were issued for cash of $0.10 per share resulting in the Company receiving $45,000.  

·

1,000,000 shares of non-convertible Series A Preferred Stock to Paul Feldman, CEO, which entitle him to 200,000 votes per share or an aggregate of 200,000,000 votes on all matters submitted to our common stockholders. We valued the 1,000 Series A shares at $.0001 per share or an aggregate of $1,000.

·

21,738,588 shares of common stock were issued upon the conversion of $618,708 of convertible note principal and interest. 


NOTE 7 – INCOME TAXES


No provision for income taxes was recorded in the periods presented due to tax losses incurred in each period.  As of April 30, 2017 and 2016, the Company had net operating loss carry forwards of approximately $1,467,711 and $668,383, respectively, for income tax reporting purposes.


 

 

April 30,

 

 

2017

 

2016

Deferred tax assets:

 

 

 

 

Net operating loss carryforwards

$

1,467,711  

 

$

668,383  

 

Statutory tax rate

34%

 

34%

Gross deferred tax assets

499,022  

 

227,250  

Valuation allowance

(499,022) 

 

(227,250) 

Net deferred tax asset

$

-  

 

$

-  

 

 

 

 

 

 

 

 

 

 

Net Loss

1,125,659  

 

1,318,629  

 

Stock comp

9,075  

 

635,000  

 

Accretion

273,403  

 

24,759  

 

meals and ent

6,358  

 

3,157  


A reconciliation between the amount of income tax benefit determined by applying the applicable U.S. statutory income tax rate to pre-tax loss for the years ended April 30, 2017 and 2016 is as follows:


 

April 30,

 

2017

 

2016

 Federal Statutory Rate

$

(515,872)

 

$

(429,080)

 Nondeductible expenses

244,101 

 

241,567 

 Change in allowance on deferred tax assets

(271,771)

 

(187,513)

 

$

 

$






The valuation allowance for deferred tax assets as of April 30, 2017 and 2016 was $499,022 and $227,250, respectively. The net change in the total valuation allowance for the year ended April 30, 2017 was an increase of $271,771. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not 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. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Due to the uncertainty of realizing the deferred tax asset, management has recorded a valuation allowance against the entire deferred tax asset.beneficial conversion feature.


The Company's U.S. federal net operating loss carry forward ("NOL") will expire in years 2033 through 2036; $15,616 of which will expire April 30, 2032, $38,259 on April 30, 2033, $62,999 on April 30, 2034, $551,509 on April 30, 2035 and $799,328 on April 30, 2036. Utilization of the NOL is subject to annual limitations under Internal Revenue Code Sections 382 and 383, respectively, as a result of significant changes in ownership, private placements and debt conversions. Subsequent significant equity changes, could further limit the utilization of the NOL. The annual limitations have not yet been determined; however, when the annual limitations are determined, the gross deferred tax assets for the NOL will be reduced with a reduction in the valuation allowance of a like amount.


The Company has adopted the accounting guidance related to uncertain tax positions, and has evaluated its tax positions and believes that all of the positions taken by the Company in its federal and state tax returns are more likely than not to be sustained upon examination.  The Company returns are subject to examination by federal and state taxing authorities generally for three years after they are filed.


As of April 30, 2015 and 2016, there were no unrecognized tax benefits.  Accordingly, a tabular reconciliation from beginning to ending periods is not provided.  The Company will classify any future interest and penalties as a component of income tax expense if incurred.  To date, there have been no interest or penalties charged or accrued in relation to unrecognized tax benefits.


The Company does not anticipate that the total amount of unrecognized tax benefits will change significantly in the next twelve months.


In September 2013, the Company’s sole shareholder and former President sold all of his common stock, which represented 94.5% of the Company’s issued and outstanding stock, to the Company’s new president. Pursuant to Internal Revenue Service (IRS) Code Section 382, an ownership change of greater than 50% triggers certain limits to the corporation’s right to use its net operating loss (NOL) carryovers each year thereafter to an annual percentage of the fair market value of the corporation at the time of the ownership change. The Company determined that the ownership change will limit the Company to utilize $15,616 of the $41,828 of NOL’s it incurred prior to the ownership change.  


The Company’s tax returns are subject to examination by the federal and state tax authorities for years ended April 30, 2014 through 2017.  


NOTE 8 – SUBSEQUENT EVENTS


Management has reviewed material events subsequent of the annual period ended April 30, 2017 and prior to the filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”.  


In connection with RDW SPA 5, on May 30, 2017, the Company issued to RDW a convertible note (“RDW Note 11”) due on November 30, 2017 in the principal amount of $81,375 of which the Company received proceeds of $65,000 after reduction of a $3,875 OID and legal and due diligence fees totaling $12,500.


Subsequent to April 30, 2017 and through June 16, 2017, RDW converted $59,157 of convertible note principal into 1,828,933 shares of common stock.






ITEM 9:

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIALDISCLOSURE

None.


ITEM 9A:               CONTROLS AND PROCEDURES


(a) Evaluation of Disclosure Controls and Procedures


As of April 30, 2017, under the direction of the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a — 15(e) under the Securities Exchange Act of 1934, as amended.  Based on the evaluation of these controls and procedures required by paragraph (b) of Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures have been found to be ineffective.


The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this 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.


(b) Management’s Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations.  Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties.  Smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.


Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of April 30, 2017. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on that evaluation, our management concluded that as of the end of the fiscal year covered by this Annual Report on Form 10-K that our internal control over financial reporting has not been effective due to the following material weaknesses:


(1)    Lack of segregation of duties.  Management has found it necessary to limit the Company’s administrative staffing in order to conserve cash, until the Company’s level of business activity increases. As a result, there is limited segregation of duties amongst the employees, and the Company has identified this as a material weakness in the Company’s internal controls. The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of employees and limited segregation of duties, management believes that the Company is capable of following its disclosure controls and procedures effectively.


(2)    Lack of in-house US GAAP Expertise.  Our current accounting personnel perform adequately in the basic accounting and recordkeeping function.  However, our operations and business practices include complex technical accounting issues that are outside the routine basic functions.  These technical accounting issues are complex and require significant expertise to ensure that the accounting and reporting are accurate and in accordance with generally accepted accounting principles. 

NOTE 9 – RELATED PARTY TRANSACTIONS

Shareholder advances (repayments)

From time to time, the Company receives advances from and repays such advances to the Company’s CEO for working capital purposes and to repay indebtedness. The advances are non-interest bearing, unsecured and due on demand.

April 30, 2020

During the year ended April 30, 2020, the Company repaid $2,500, resulting in an outstanding balance of $12,150.

April 30, 2019

During the year ended April 30, 2019, the Company received proceeds of $13,150 and made repayments of $6,000, resulting in an outstanding balance of $14,650.

 

45






This annual report does not include an attestation report

Table of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts non-accelerated filers (generally issuers with a public float under $75 million) from complying with Section 404(b)Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Pursuant to an employment agreement for the Company’s CEO (effective through November 30, 2020), the CEO is entitled to an annual salary of $100,000.

As of April 30, 2019, the Company owed deferred compensation in the amount of $16,538, an additional $1,985 was accrued for in 2020 bringing the total to $18,523. During the first quarter of 2020, all deferred compensation was forgiven (see Note 8). Additionally, the CEO agreed to suspend all compensation until such time the Company has sufficient cash flows to pay this salary under the terms of the agreement.

NOTE 10 – INCOME TAXES

The Company's tax expense differs from the "expected" tax expense for the period (computed by applying the blended corporate tax rate to loss before taxes), are approximately as follows:

 

 

April 30,

2020

 

 

April 30,

2019

 

Federal income tax benefit net of state benefit - at 20.48%

 

$(7,000)

 

$(114,000)
State income tax - net of federal tax effect - 2.5%

 

 

(1,000)

 

 

(18,000)
Non-deductible items

 

 

(12,000)

 

 

-

 

Subtotal

 

 

(20,000)

 

 

(132,000)
Valuation allowance

 

 

20,000

 

 

 

132,000

 

 

 

$-

 

 

$-

 

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at April 30, 2020 and 2019 are approximately as follows:

 

 

April 30,

2020

 

 

April 30,

2019

 

 

 

 

 

 

 

 

Deferred Tax Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating loss carryforwards

 

$(1,036,000)

 

$(1,016,000)

Total deferred tax assets

 

 

(1,036,000)

 

 

(1,016,000)

Less: valuation allowance

 

 

1,036,000

 

 

 

1,016,000

 

Net deferred tax asset recorded

 

$-

 

 

$-

 

Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carryforwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse.

46

Table of the Sarbanes-Oxley ActContents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

During the years ended April 30, 2020 and 2019, the valuation allowance increased by approximately $20,000 and $123,000, respectively. The increase for both years was primarily attributable to the increase in our net operating loss carryforwards. The total valuation allowance results from the Company’s estimate of its inability to recover its net deferred tax assets.

At April 30, 2020, the Company has federal and state net operating loss carryforwards, which are available to offset future taxable income, of approximately $4,511,000. The Company is in the process of analyzing their NOL and has not determined if the company has had any change of control issues that could limit the future use of NOL's. NOL carryforwards that were generated after 2017 of approximately $1,669,000 may only be used to offset 80% of taxable income and are carried forward indefinitely. NOL's totaling approximately $2,842,000 expired as of April 30, 2017. 

These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis. If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate.

The Company files income tax returns in the United States and the state of North Carolina jurisdictions. Due to the Company’s net operating loss posture, all tax years are open and subject to income tax examination by tax authorities. The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. At April 30, 2020 and 2019, there are no unrecognized tax benefits, and there are no significant accruals for interest related to unrecognized tax benefits or tax penalties.

47

Table of 2002.Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

NOTE 11 - SUBSEQUENT EVENTS

Effective August 1, 2020, the Company’s outstanding convertible notes payable (8%) and related accrued interest of approximately $589,000 were no longer in default as these debt instruments were extended to February 1, 2021.

Also, effective August 1, 2020, all principal and accrued interest outstanding under the convertible notes as of July 31, 2020 were consolidated into one single convertible note. Additional financing subsequent to July 31, 2020 retains the same terms as the original convertible notes payable.

The Company’s lenders at April 30, 2020 and as of September 14, 2020 are RDW and Red.

The following is a summary of the Company’s convertible notes payable and related accrued interest (included as a component of accounts payable and accrued expenses) for the fiscal year ended April 30, 2020 through September 14, 2020:

 

 

Convertible Notes Payable

 

 

 

 

 

 

 

 

Amounts

 

 

In-Default

 

Balance - April 30, 2018

 

 

480,623

 

 

$210,000

 

Proceeds

 

 

5,500

 

 

 

 

 

Default Penalties

 

 

63,788

 

 

 

 

 

Conversions

 

 

(110,446)

 

 

 

 

Balance - April 30, 2019

 

 

439,465

 

 

 

439,465

 

Proceeds

 

 

175,756

 

 

 

 

 

Repayments

 

 

(132,460)

 

 

 

 

Gain on Debt Settlements - Net

 

 

(19,200)

 

 

 

 

Balance - April 30, 2020

 

 

463,561

 

 

 

420,661

 

Proceeds

 

 

36,050

 

 

 

 

 

Balance - July 31, 2020

 

 

499,611

 

 

 

491,061

 

Proceeds

 

 

41,195

 

 

 

 

 

Balance - September 14, 2020

 

$540,806

 

 

$-

 

48


Table of Contents

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

 

 

Accrued Interest Payable

 

 

 

 

 

 

 

 

 

 

Amounts

 

 

In-Default

 

Balance - April 30, 2018

 

 

62,281

 

 

$62,281

 

Interest Expense - Net

 

 

103,992

 

 

 

 

 

Conversions

 

 

(16,637)

 

 

 

 

Balance - April 30, 2019

 

 

149,636

 

 

 

149,636

 

Interest Expense - Net

 

 

65,367

 

 

 

 

 

Repayments

 

 

(2,040)

 

 

 

 

Gain on Debt Settlements - Net

 

 

(41,857)

 

 

 

 

Balance - April 30, 2020

 

 

171,106

 

 

 

168,174

 

Interest Expense

 

 

27,732

 

 

 

 

 

Balance - July 31, 2020

 

$198,838

 

 

$198,701

 

Interest Expense

 

 

27,732

 

 

 

 

 

Balance -July 31, 2020

 

 

198,88

 

 

 

198,701

 

Interest Expense

 

 

5,436

 

 

 

 

 

Balance – September 14, 2020

 

$204,274

 

 

 

-

 

49

(c) Changes in Internal Control over Financial Reporting

Table of Contents

ITEM 9:CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIALDISCLOSURE

On October 16, 2019, the Registrant retained Assurance Dimensions as its principal independent accountants. The decision to retain Assurance Dimensions as the Registrant’s principal independent accountants was approved by the Registrant’s Board of Directors.

ITEM 9A: CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

As of April 30, 2020, under the direction of the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a — 15(e) under the Securities Exchange Act of 1934, as amended. Based on the evaluation of these controls and procedures required by paragraph (b) of Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures have been found to be ineffective.

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this 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.

(b) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

50


There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B:

OTHER INFORMATION

Table of Contents


Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of April 30, 2020. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on that evaluation, our management concluded that as of the end of the fiscal year covered by this Annual Report on Form 10-K that our internal control over financial reporting has not been effective due to the following material weaknesses:

(1) Lack of segregation of duties. Management has found it necessary to limit the Company’s administrative staffing in order to conserve cash, until the Company’s level of business activity increases. As a result, there is limited segregation of duties amongst the employees, and the Company has identified this as a material weakness in the Company’s internal controls. The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of employees and limited segregation of duties, management believes that the Company is capable of following its disclosure controls and procedures effectively.

(2) Lack of in-house US GAAP Expertise. Our current accounting personnel perform adequately in the basic accounting and recordkeeping function. However, our operations and business practices include complex technical accounting issues that are outside the routine basic functions. These technical accounting issues are complex and require significant expertise to ensure that the accounting and reporting are accurate and in accordance with generally accepted accounting principles.

(3) Lack of formal documentation. We maintain very informal controls over the billing and invoicing procedures. As a result, invoicing delays have occurred. This is a significant material weakness in the billing cycle because this will cause inaccuracies in the ultimate completion of the sale, which is the collection of cash. Also, sales cutoff complications could arise due to these delays in billing. Bills should be sent to customers as soon as possible to expedite payment and otherwise keep the accounting system current.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts non-accelerated filers (generally issuers with a public float under $75 million) from complying with Section 404(b) of the Sarbanes-Oxley Act of 2002.

(c) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B:OTHER INFORMATION

None.

 

51

Table of Contents

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE DIRECTORS AND EXECUTIVE OFFICERS

The following table presents information with respect to our officers, directors, and significant employees as of April 30, 2020:

 

PART IIIName


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEAge


DIRECTORS AND EXECUTIVE OFFICERSPosition


Paul Feldman

The following table presents information with respect to our officers, directors and significant employees as of April 30, 2017:


64

Name

Age

Position

Paul Feldman

53

Chief Executive Officer, President and Chief Financial Officer, Director

Biographical Information Regarding Officers and Directors

Mr. Feldman has served as our sole Director, President, CEO and CFO since February 1, 2015. From October 2011 to January 29, 2015, Mr. Feldman served as President of Cobra Xtreme Video, Inc. which sold video cameras to consumers and had sales in excess of $300,000 Prior to that, Mr. Feldman had been an officer and director of a publicly traded company. From 2001 through August 2009, Mr. Feldman served as President and a Director of Law Enforcement Associates, Inc. (LEA) whose common stock was previously listed on the OTCBB and the American Stock Exchange. LEA was in the business of manufacturing surveillance products and audio intelligent devices which were sold to the military and law enforcement. In his last year at LEA, Mr. Feldman helped LEA increase its net sales to over $10,000,000. In addition, Mr. Feldman was a named inventor on multiple patents relating to video surveillance

Term of Office

 


Biographical Information Regarding Officers and Directors


Mr. Feldman has served as our sole Director, President, CEO and CFO since February 1, 2015. From October 2011 to January 29, 2015, Mr. Feldman served as President of Cobra Xtreme Video, Inc. which sold video cameras to consumers and had sales in excess of $300,000 Prior to that, Mr. Feldman had  been an officer and director of a publicly traded company.  From 2001 through August 2009, Mr. Feldman served as President and a Director of Law Enforcement Associates, Inc. (LEA) whose common stock was previously listed on the OTCBB and the American Stock Exchange.  LEA was in the business of manufacturing surveillance products and audio intelligent devices which were sold to the military and law enforcement.  In his last year at LEA, Mr. Feldman helped LEA increase its net sales to over $10,000,000. In addition, Mr. Feldman was a named inventor on multiple patents relating to video surveillance


Term of Office


All of our directors are appointed for a one-year term to hold office until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation, or removal. Executive officers serve at the discretion of the Board of Directors and are elected or appointed to serve until the next Board of Directors meeting following the annual meeting of stockholders. Our executive officers are appointed by our Board of Directors and hold office until removed by the Board.

Significant Employees

At the present time, we have only one significant employee, our President, Mr. Paul Feldman whose employment agreement provides for a base salary of $100,000 per year. For the year ended April 30, 2020, Mr. Feldman has agreed to permanently forego his compensation until such time the Company’s revenues support the agreed upon compensation.

Family Relationships

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past five years, none of the following occurred with respect to a present director (or person nominated to become director), executive officer, founder, promoter or control person: (1) 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; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) 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; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

 

52

Significant Employees


At the present time, we have only one significant employee, our President, Mr. Paul Feldman whose base salary is $100,000 per year.






Family Relationships


There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.


Involvement in Certain Legal Proceedings


To the bestTable of our knowledge, during the past five years, none of the following occurred with respect to a present director (or person nominated to become director), executive officer, founder, promoter or control person: (1) 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; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) 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; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. Contents

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16 of the Exchange Act requires our Directors, executive officers, and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial reports of beneficial ownership (Form 3) and reports of changes in beneficial ownership (Forms 4 and 5) of our Common Stock and our other equity securities. Officers, Directors, and greater than 10% shareholders are required by the SEC’s regulations to furnish us with copies of all Section 16(a) reports they file.

Based solely upon a review of Forms 3 and 4 furnished to the company under Rule 16a-3(e) of the Securities Exchange Act during its most recent fiscal year and Forms 5 furnished to the company with respect to its most recent fiscal year and any written representations received by the company from persons required to file such forms, the following persons – either officers, directors or beneficial owners of more than ten percent of any class of equity of the company registered pursuant to Section 12 of the Securities Exchange Act – failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act during the most recent fiscal year or prior fiscal years:

 

 

# of Late Reports

 

 

# of Transactions

Not Timely Reported

 

 

# of Failures to File

a Required Report

 

Paul Feldman

 

 

0

 

 

 

8

 

 

 

1

 

Code of Ethics

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. To the knowledge of the Company, there have been no reported violations of the Code of Ethics.

Whistleblower Procedures Policy

In accordance with the requirements of Section 301 of the Sarbanes-Oxley Act of 2002, the Board of Directors of the Company has adopted a Whistleblower Procedures Policy, stating that all employees of the Company are strongly encouraged to report any evidence of financial irregularities which they may become aware of, including those with respect to internal controls, accounting or auditing matters. Under the Whistleblower Procedures Policy, the management of the Company shall promptly and periodically communicate to all employees with access to accounting, payroll, and financial information the means by which they may report any such irregularities. In the event an employee is uncomfortable for any reason reporting irregularities to his or her supervisor or other management of the Company, employees may report directly to any member of the Board of Directors of the Company. The identity of any employee reporting under these procedures will be maintained as confidential at the request of the employee or may be made on an anonymous basis. Notice must be provided to all of the Company’s employees with access to accounting, payroll, and financial information in respect of these procedures.

 

Section 16(a) Beneficial Ownership Reporting Compliance


Section 16 of the Exchange Act requires our Directors, executive officers, and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial reports of beneficial ownership (Form 3) and reports of changes in beneficial ownership (Forms 4 and 5) of our Common Stock and our other equity securities. Officers, Directors, and greater than 10% shareholders are required by the SEC’s regulations to furnish us with copies of all Section 16(a) reports they file.


Based solely upon a review of Forms 3 and 4 furnished to the company under Rule 16a-3(e) of the Securities Exchange Act during its most recent fiscal year and Forms 5 furnished to the company with respect to its most recent fiscal year and any written representations received by the company from persons required to file such forms, the following persons – either officers, directors or beneficial owners of more than ten percent of any class of equity of the company registered pursuant to Section 12 of the Securities Exchange Act – failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act during the most recent fiscal year or prior fiscal years:


 

 

# of Late Reports

 

# of Transactions

Not Timely Reported

 

# of Failures to File

a Required Report

Paul Feldman

 

0

 

0

 

1


Code of Ethics


We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.  To the knowledge of the Company, there have been no reported violations of the Code of Ethics.   






Whistleblower Procedures Policy


In accordance with the requirements of Section 301 of the Sarbanes-Oxley Act of 2002, the Board of Directors of the Company has adopted a Whistleblower Procedures Policy, stating that all employees of the Company are strongly encouraged to report any evidence of financial irregularities which they may become aware of, including those with respect to internal controls, accounting or auditing matters.  Under the Whistleblower Procedures Policy, the management of the Company shall promptly and periodically communicate to all employees with access to accounting, payroll and financial information the means by which they may report any such irregularities.  In the event an employee is uncomfortable for any reason reporting irregularities to his or her supervisor or other management of the Company, employees may report directly to any member of the Board of Directors of the Company.  The identity of any employee reporting under these procedures will be maintained as confidential at the request of the employee, or may be made on an anonymous basis.  Notice must be provided to all of the Company’s employees with access to accounting, payroll and financial information in respect of these procedures.


The Company does not have any Committees of the Board


CORPORATE GOVERNANCE


Director Independence


We are not listed on a major U.S. securities exchange and, therefore, are not subject to the corporate governance requirements of any such exchange, including those related to the independence of directors. Upon our listing on any national securities exchange or any inter-dealer quotation system, we will elect such independent directors as is necessary under the rules of any such securities exchange.


Board Leadership Structure


We currently have one executive officer who is also a Director. Our Board has reviewed the Company’s current Board leadership structure. In light of the Company’s size, nature of the Company’s business, regulatory framework under which the Company operates, stockholder base, the Company’s peer group and other relevant factors, the Company has determined that this structure is currently the most appropriate Board leadership structure for our company. Nevertheless, the Board intends to carefully evaluate from time to time whether our current structure should be modified based on what the Board believes is best for the Company and our stockholders.


53

Table of Contents

Board Role in Risk Oversight


Risk is inherent in every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including strategic risks, enterprise risks, financial risks, and regulatory risks. While our management is responsible for day to day management of various risks we face, the Board, as a whole, is responsible for evaluating our exposure to risk and to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The Board reviews and discusses policies with respect to risk assessment and risk management. The Board also has oversight responsibility with respect to the integrity of the Company’s financial reporting process and systems of internal control regarding finance and accounting, as well as its financial statements.


Audit Committee


The Board does not currently have a standing Audit Committee. The full Board performs the principal functions of the Audit Committee. The full Board monitors our financial reporting process and internal control system and reviews and appraises the audit efforts of our independent accountants.


Compensation Committee


The Board does not currently have a standing Compensation Committee. The full Board establishes our overall compensation policies and reviews recommendations submitted by our management.






Nominating Committee


The Board does not currently have a standing Nominating Committee. We do not maintain a policy for considering nominees. Our Bylaws provides that the number of Directors shall be fixed from time to time by the Board, but in no event shall be less than the minimum required by law. The Board of Directors shall be large enough to maintain our required expertise but not too large to function efficiently. Director nominees are recommended, reviewed, and approved by the entire Board. The Board believes that this process is appropriate due to the relatively small number of directors on the Board and the opportunity to benefit from a variety of opinions and perspectives in determining director nominees by involving the full Board.


While the Board is solely responsible for the selection and nomination of directors, the Board may consider nominees recommended by stockholders as it deems appropriate. The Board evaluates each potential nominee in the same manner regardless of the source of the potential nominee’s recommendation. Although we do not have a policy regarding diversity, the Board does take into consideration the value of diversity among Board members in background, experience, education, and perspective in considering potential nominees for recommendation to the Board for selection. Stockholders who wish to recommend a nominee should send nominations to our President, Paul Feldman, 130 Iowa Lane, Suite 102, Cary,1600 Olive Chapel Rd., Apex, NC 27511,27502, that includes all information relating to such person that is required to be disclosed in solicitations of proxies for the election of directors. The recommendation must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected.


Compensation Consultants


We have not historically relied upon the advice of compensation consultants in determining Named Executive Officer compensation. Instead, the full Board reviews compensation levels and makes adjustments based on their personal knowledge of competition in the market place,marketplace, publicly available information, and informal surveys of human resource professionals.


54

Table of Contents

Stockholder Communications


Stockholders who wish to communicate with the Board may do so by addressing their correspondence to the Board at Force Protection Video Equipment Corp., Attention: Paul Feldman, 130 Iowa Lane, Suite 102,1249 Kildaire Farm Road Cary NC 27511.27511 The Board shall review and respond to all correspondence received, as appropriate.

 

ITEM 11:EXECUTIVE COMPENSATION






ITEM 11:

EXECUTIVE COMPENSATION


Executive Compensation


The following table sets forth compensation for each of the past twothree fiscal years with respect to each person who served as an Executive Officer of the Company and each of the four most highly-compensated executive officers of the Company who earned a total annual salary and bonuses that exceeded $100,000 in any of the two preceding fiscal years.


Summary Compensation Table




Name and Principal Position


Year Ended April 30,



Salary ($)




Bonus ($)


Option Awards ($)


All Other Compensation ($)


Total ($)

Paul Feldman(1),

CEO, CFO

2017

100,000

12,000

 

$6,500

118,500

2016

81,461

-

-

$2,000

83,461

2015

9,000

-

-

-

9,000

Name and Principal Position

 

Year Ended

April 30,

 

Salary

($)

 

 

Bonus

($)

 

 

Option

Awards

($)

 

 

All Other Compensation

($)

 

 

Total

($)

 

Paul Feldman (1),

 

2020

 

$1,985

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$1,985

 

CEO, CFO

 

2019

 

$16,538

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$16,538

 

 

 

2018

 

$105,769

 

 

 

-

 

 

 

-

 

 

 

6,000

 

 

$111,769

 


(1) Mr. Feldman became the Company'sCompany’s Director, President, Secretary, Chief Executive officer and Chief Financial Officer on February 1, 2015. On November 24, 2015, the Company and Mr. Feldman entered into an employment agreement. Pursuant to Mr. Feldman’s Employment Agreement, he is entitled to an annual salary of $100,000 for a term of 2 years. On December 1, 2017, Mr. Feldman’s employment agreement was extended for an additional three years to November 30, 2020. During the year ended April 30, 2019, Mr. Feldman agreed to suspend his compensation until such time the Company’s revenues support the agreed upon compensation. As of April 30, 2019, the balance owed to Mr. Feldman was $16,538. During 2020, the Company accrued an additional $1,985 in executive compensation bringing the accrual to $18,523. The $18,523 was forgiven by Mr. Feldman during the 1st quarter of fiscal year ended April 30, 2020, and no other accruals are being made at this time. Other Compensation consisted of a car allowance in 2018. We may award our officers and directors shares of common stock or stock purchase options as non-cash compensation as determined by the Board of Directors from time to time. Other Compensation consisted of a car allowance.

 


Director Compensation


For the years ended April 30, 20172020 and 2016,2019, respectively, the directors were not awarded any options or paid any cash compensation.

   





ITEM 12:SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


ITEM 12:

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS  


The following table sets forth certain information as of June 16, 2017July 1, 2020 by (i) all persons who are known by us to beneficially own more than 5% of our outstanding shares of common stock, (ii) each director, director nominee, and Named Executive Officer; and (iii) all executive officers and directors as a group:


 

Title of Class

 

 

 

 

 

 

 

 

 

Title of Class

 

 

 

 

Series A Preferred Stock

 

Common Stock

 

 

 

 

 

 

Series A Preferred Stock

 

Common Stock

 

 

 

Name and Address of Beneficial Owner(1)

Name and Address of Beneficial Owner(1)

Number of shares Beneficially Owned(2)

% of Class(2)

Shares Owned

 

Number of Shares Beneficially Owned

% of Class(2)

Total Voting Power (3)

 

Number of shares Beneficially Owned (2)

 

 

% of

Class (2)

 

 

Shares

Owned

 

 

Number of Shares Beneficially Owned

 

 

% of

Class (2)

 

 

Total Voting Power (3)

 

Directors and Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paul Feldman

 

1,000,000

 

100.0%

 

40,000

 

40,000

 

1.1%

 

97.7%

 

5,000,000

 

100.0%

 

40,000

 

40,000

 

1.1%

 

54.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5% shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



55

Table of Contents

(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 and investment power with respect to the shares of Company preferred stock and common stock. Except as indicated the address of each beneficial owner is 130 Iowa Lane, Suite 102,1249 Kildare Farm Road, Cary, NC 27511.


(2)

Calculated pursuant to rule 13d-3(d) of the Exchange Act. Beneficial ownership is calculated based on 4,710,296841,184,284 shares of Common Stock and 1,000,0005,000,000 shares of Series A Preferred Stock issued and outstanding on a fully diluted basis as of July 14, 2017.July1, 2020. Each share of preferred stock is entitled to vote on all matters submitted to the Company's stockholders and are entitled to such number of votes as is equal to 200,000 times the number of shares of Series A Preferred Stock such holder owns. The Series A Preferred Stock is not convertible into shares of common stock. Under Rule 13d-3(d) of the Exchange Act, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person listed.


(3)

Calculated based on 4,710,296841,184,289 shares of Common Stock and 1,000,0005,000,000 shares of Series A Preferred Stock, with common stock equivalent voting rights of 200:1, issued and outstanding as of June 16, 2017.July 20, 20208. Holders of the Series A Preferred Stock are entitled to vote on all matters submitted to the Company's stockholders.


Potential Changes in Control


At the present time, theresince the $27,500 term-note is currently in default, Red Diamond Partners, LLC (the “lender”) is entitled to foreclose upon the collateral, which would provide voting control of the Company. The lender has not called this debt and is not seeking to foreclose on the collateral and obtain the 5,000,000 shares of Series A, Redeemable, Preferred Stock. There are no other arrangements known, including any pledge by any person of securities, the operation of which may at a subsequent date result in a change in control of the Company.


Stock Option Plan Information


To date, the Company has not adopted a Stock Option Plan. The Company may adopt an option plan in the future.






Adverse Interests


The Company is not aware of any material proceeding to which any director, officer, or affiliate of the Company, or any owner of record or beneficially of more than five percent of any class of the Company’s voting securities, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

 

ITEM 13:

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE


ITEM 13:CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS

 

Except as otherwise disclosed herein, since the beginning of the last fiscal year the Company has not entered into any other transactions, nor are there any currently proposed transactions, in which the Company was, or is, to be a participant and in which any related person had or will have a direct or indirect material interest.


During the past five years, none of the following occurred with respect to any founder, promoter or control person: (1) 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; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) 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; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

 


56

ITEM 14:

PRINCIPAL ACCOUNTANT FEES AND SERVICES 

Table of Contents


ITEM 14:PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

On October 16, 2019, the Registrant appointed Assurance Dimensions as its principal independent accountant. Prior to the appointment of Assurance Dimensions, Soles, Heyn, & Company, LLP acted as the Company’s principal independent accountant.

The aggregate fees of Baum & Company, P.A.our principal independent accountants for professional services rendered for the audit of the financial statements included in our Annual Report on Form 10-K and review of interim financial statements included in the quarterly reports on Form 10-Q for the yearsyear ended April 30, 20172020 and 2016,2019, totaled $26,000$27,300 and $19,950,$16,000, respectively.


Audit­Audit- Related Fees


The Company did not pay any audit-related fees for the year ended April 30, 20172020 and 20162019 which are not disclosed in “Audit Fees” above.


Tax Fees


There were no tax fees billed by Baum & Company, P.Aour principal independent accountants for tax compliance for the year ended April 30, 20172020 and 2016.2019.


All Other Fees


There were no other fees billed for services other than those described above for the years ended April 30, 20172020 and 2016.2019.


Audit Committee Pre­ApprovalPre--Approval Policies


Our sole Director reviewed the audit and non­auditnon-audit services rendered by Baum & Company, P.AAssurance Dimensions during the periods set forth above and concluded that such services were compatible with maintaining the auditors’ independence. All audit and non­auditnon-audit services performed by our independent accountants are pre­approvedpre-approved by our Board of Directors to assure that such services do not impair the auditors’ independence from us.






PART IV


57

Table of Contents

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.


(a) The following documents are filed as a part of this Form 10-K:

 


1. Financial Statements


The following financial statements are included in Part II, Item 8 of this Form 10-K:


·

Report of Independent Registered Public Accounting Firm

·

Consolidated Balance Sheets as of April 30, 20172020 and 20162019

·

Consolidated Statements of Operations for the years endedYears Ended April 30, 20172020 and 20162019

·

Consolidated Statements of Stockholders’ Deficit for the years endedYears Ended April 30, 20172020 and 20162019

·

Consolidated Statements of Cash Flows for the years endedYears Ended April 30, 20172020 and 20162019

·

Notes to Consolidated Financial Statements

2. Exhibits

The exhibits listed in the Exhibit Index, which appears immediately following the signature page, are incorporated herein by reference, and are filed as part of this Form 10-K.

3. Financial Statement Schedules

Financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the financial statements or notes described in Item 15(a)(1) above.

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Table of Contents

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 2. Exhibits


The exhibits listed in the Exhibit Index, which appears immediately following the signature page, are incorporated herein by reference, and are filed as part of this Form 10-K.


3. Financial Statement Schedules


Financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the financial statements or notes described in Item 15(a)(1) above.







SIGNATURES


Pursuant to the requirements of Sections 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Force Protection Video Equipment Corp.

(Registrant)



July 27, 2017

By

September 14, 2020

By:

/s/ Paul Feldman

Paul Feldman

Chief Executive Officer, Chief Financial Officer and Director

(Principal Executive Officer and Principal Financial Officer)






Exhibit Index


Exhibit No.

Description of Exhibit


3.1

Articles of Incorporation dated March 11, 2011(1)

3.2

Amendment to Articles of Incorporation dated March 28, 2011(1)

3.3

Amendment to Articles of Incorporation dated September 25, 2013(1)

3.4

Amendment to Articles of Incorporation dated January 30, 2015(1)

3.5

Amendment to Articles of Incorporation dated December 1, 2015(1)

3.6

Amendment to Articles of Incorporation filed on January 19, 2016 to increase the authorized common stock outstanding from 50,000,000 to 250,000,000; par value $0.0001 and to create a series of preferred stock consisting of 1,000,000 shares designated as Series A Preferred stock;  par value $0.0001(1)

3.7

Amendment to Articles of Incorporation effective September 8, 2016 to increase the authorized common stock outstanding to 750,000,000; par value $0.0001 and increase Series A Preferred stock to 5,000,000;  par value $0.0001(7)

3.8

Bylaws(1)

3.9

Amendment to Articles of Incorporation filed on March 31, 2017 to reduce the number of common shares outstanding in a 1:250 reverse stock split(8)

10.1

Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC(1)

10.2

First Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital LLC(1)

10.3

Second Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC(1)

10.4

Registration Rights Agreement dated November 12, 2015 with RDW Capital, LLC(1)

10.5

Convertible Promissory Note dated November 12, 2015 held by RDW Capital, LLC(1)

10.6

Convertible Promissory Note dated December 31, 2015 held by RDW Capital, LLC(2)

10.7

Convertible Promissory Note dated March 10, 2016 held by RDW Capital, LLC(5)

10.8

Third Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC(1)

10.9

Fourth Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC(3)

10.10

Securities Purchase Agreement dated May 9, 2016 with RDW Capital, LLC(4)

10.11

Convertible Promissory Note dated May 13, 2016  held by RDW Capital, LLC(4)

10.12

Convertible Promissory Note dated May 20, 2016  held by RDW Capital, LLC(5)

10.13

Registration Rights Agreement dated May 9, 2016 with RDW Capital, LLC(4)

10.14

Securities Purchase Agreement dated August 22, 2016 with RDW Capital, LLC(6)

10.15

Convertible Promissory Note dated August 22, 2016  held by RDW Capital, LLC(6)

10.16

Securities Purchase Agreement dated September 1, 2016 with RDW Capital, LLC(7)

10.17

Convertible Promissory Note dated September 1, 2016  held by RDW Capital, LLC(7)

10.18

Registration Rights Agreement dated September 1, 2016 with RDW Capital, LLC(7)

10.19*

Convertible Promissory Note dated February 6, 2017  held by RDW Capital, LLC

10.20

Securities Purchase Agreement dated March 31, 2017 with RDW Capital, LLC(8)

10.21

Convertible Promissory Note dated March 30, 2017 held by RDW Capital, LLC(8)

10.22*

Convertible Promissory Note dated April 26, 2017 held by RDW Capital, LLC

10.23*

Convertible Promissory Note dated May 30, 2017  held by RDW Capital, LLC

10.19

Convertible Promissory Note dated October 8, 2015 with Black Forest Capital, LLC(1)

10.20

Convertible Promissory Note dated September 11, 2015 LG Capital Funding, LLC(1)

10.21

Employment Agreement Paul Feldman(1)

10.22

Shenzen AE Technology Purchase Order(1)

10.23

Agreement with Carter, Terry & Company(1)








 

31.1 *

59

Table of Contents

Exhibit Index

Exhibit No.

 

Description of Exhibit

3.1

Articles of Incorporation dated March 11, 2011 (1)

3.2

Amendment to Articles of Incorporation dated March 28, 2011 (1)

3.3

Amendment to Articles of Incorporation dated September 25, 2013 (1)

3.4

Amendment to Articles of Incorporation dated January 30, 2015 (1)

3.5

Amendment to Articles of Incorporation dated December 1, 2015 (1)

3.6

Amendment to Articles of Incorporation filed on January 19, 2016 to increase the authorized common stock outstanding from 50,000,000 to 250,000,000; par value $0.0001 and to create a series of preferred stock consisting of 1,000,000 shares designated as Series A Preferred stock; par value $0.0001 (12)

3.7

Amendment to Articles of Incorporation effective September 8, 2016 to increase the authorized common stock outstanding to 750,000,000; par value $0.0001 and increase Series A Preferred stock to 5,000,000; par value $0.0001 (7)

3.8

Bylaws (1)

3.9

Amendment to Articles of Incorporation filed on March 31, 2017 to reduce the number of common shares outstanding in a 1:250 reverse stock split (8)

3.10

Amendment to Articles of Incorporation effective December 8, 2017 to increase the authorized common stock outstanding to 2,000,000,000 and increase Series A Preferred stock to 15,000,000 (12)

10.1

Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC (1)

10.2

First Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital LLC (1)

10.3

Second Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC (1)

10.4

Registration Rights Agreement dated November 12, 2015 with RDW Capital, LLC (1)

10.5

Convertible Promissory Note dated November 12, 2015 held by RDW Capital, LLC (1)

10.6

Convertible Promissory Note dated December 31, 2015 held by RDW Capital, LLC (2)

10.7

Convertible Promissory Note dated March 10, 2016 held by RDW Capital, LLC (5)

10.8

Third Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC (1)

10.9

Fourth Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC (3)

10.10

Securities Purchase Agreement dated May 9, 2016 with RDW Capital, LLC (4)

10.11

Convertible Promissory Note dated May 13, 2016 held by RDW Capital, LLC (4)

10.12

Convertible Promissory Note dated May 20, 2016 held by RDW Capital, LLC (5)

10.13

Registration Rights Agreement dated May 9, 2016 with RDW Capital, LLC (4)

10.14

Securities Purchase Agreement dated August 22, 2016 with RDW Capital, LLC (6)

10.15

Convertible Promissory Note dated August 22, 2016 held by RDW Capital, LLC (6)

10.16

Securities Purchase Agreement dated September 1, 2016 with RDW Capital, LLC (7)

10.17

Convertible Promissory Note dated September 1, 2016 held by RDW Capital, LLC (7)

10.18

Registration Rights Agreement dated September 1, 2016 with RDW Capital, LLC (7)

10.19

Convertible Promissory Note dated February 6, 2017 held by RDW Capital, LLC (9)

10.20

Securities Purchase Agreement dated March 31, 2017 with RDW Capital, LLC (8)

10.21

Convertible Promissory Note dated March 30, 2017 held by RDW Capital, LLC (8)

10.22

Convertible Promissory Note dated April 26, 2017 held by RDW Capital, LLC (9)

10.23

Convertible Promissory Note dated May 30, 2017 held by RDW Capital, LLC (9)

10.24

Securities Purchase Agreement dated August 8, 2017 with RDW Capital, LLC (10)

10.25

Convertible Promissory Note dated August 7, 2017 held by RDW Capital, LLC (10)

10.26

Securities Purchase Agreement dated October 20, 2017 with Power Up Lending Group, Ltd. (11)

10.27

Convertible Promissory Note dated October 20, 2017 with Power Up Lending Group, Ltd. (11)

10.29

Employment Agreement Paul Feldman (1)

10.30

Shenzen AE Technology Purchase Order (1)

10.31

Agreement with Carter, Terry & Company (1)

10.32

Convertible Promissory Note dated November 16, 2017 with Power Up Lending Group, Ltd. (13)

10.33

Convertible Promissory Note dated January 5, 2018 with Power Up Lending Group, Ltd. (13)

10.34

Form of Adar Securities purchase Agreement dated March 5, 2018 with Adar bays , LLC (14)

10.35

Form of Convertible Promissory Note dated March 5, 2018 with Adar bays, LLC (14)

10.36

Form of Back end Note 1 dated March 5, 2018 with Adar bays, LLC (14)

10.37

Form of Back end Note 2 dated March 5, 2018 with Adar bays, LLC (14)

10.38

Form of Collateralized Secured Promissory Note 1 dated March 5, 2018 with Adar bays, LLC (14)

10.39

Form of Collateralized Secured Promissory Note 2 dated March 5, 2018 with Adar bays, LLC (14)

10.40

Securities Purchase Agreement dated March 5, 2018 with Power Up Lending Group, Ltd. (15)

10.41

Convertible Promissory Note dated October 20, 2017 with Power Up Lending Group, Ltd. (15)

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Table of Contents

10.42*

ACH Total Receipts Agreement dated June 8, 2018 with Reliant Funding

10.43*

Loan Agreement dated September 25, 2018 with Strategic Funding Source, Inc.

10.44

Promissory Note dated October 11, 2019 with Red Diamond Partners, LLC

10.45

Promissory Note dated October 11, 2019 with Red Diamond Partners, LLC

10.46

Promissory Note dated October 11, 2019 with Red Diamond Partners, LLC

10.47

Promissory Note dated October 24, 2019 with Red Diamond Partners, LLC

10.48

Promissory Note dated November 19, 2019 with Red Diamond Partners, LLC

10.49

Promissory Note dated November 26, 2019 with Red Diamond Partners, LLC

10.50

Promissory Note dated December 24, 2019 with Red Diamond Partners, LLC

10.51

Promissory Note dated January 14, 2020 with Red Diamond Partners, LLC

10.52

Promissory Note dated June 18, 2020 with Red Diamond Partners, LLC

10.53

Promissory Note dated July 13, 2020 with Red Diamond Partners, LLC

10.54

Promissory Note dated July 16, 2020 with Red Diamond Partners, LLC

10.55

Promissory Note dated July 23, 2020 with Red Diamond Partners, LLC

10.56

Promissory Note dated August 21, 2020 with Red Diamond Partners, LLC

31.1 *

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 *

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS

XBRL Instance Document**

101.SCH

XBRL Taxonomy Extension - Schema Document**

101.CAL

XBRL Taxonomy Extension - Calculation Linkbase Document**

101.DEF

XBRL Taxonomy Extension - Definition Linkbase Document**

101.LAB

XBRL Taxonomy Extension - Label Linkbase Document**

101.PRE

XBRL Taxonomy Extension - Presentation Linkbase Document**



* Filed herewith

** Furnished herewith. 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,As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 *

Certification of Principal Executive Officer and otherwise is not subjectPrincipal Financial Officer Pursuant to liability under these sections.18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*


101.INS

XBRL Instance Document**

101.SCH

XBRL Taxonomy Extension - Schema Document**

101.CAL

XBRL Taxonomy Extension - Calculation Linkbase Document**

101.DEF

XBRL Taxonomy Extension - Definition Linkbase Document**

101.LAB

XBRL Taxonomy Extension - Label Linkbase Document**

101.PRE

XBRL Taxonomy Extension - Presentation Linkbase Document**

__________

* Filed herewith

** Furnished herewith. 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.

(1)

Incorporated by reference to Form S-1 filed on February 22, 2016.

(2)

Incorporated by reference to Form 8-K filed on January 4, 2016.

(3)

Incorporated by reference to Form S-1/A filed on March 11,7, 2016

(4)

Incorporated by reference to Form 8-K filed on May 18, 2016.

(5)

Incorporated by reference to Form 10-K filed on June 27, 2016.

(6)

Incorporated by reference to Form 8-K filed on August 24, 2016.

(7)

Incorporated by reference to Form S-1 filed on October 11, 2016.

(8)

Incorporated by reference to Form 8-K filed on March 31, 2017.


(9)


Incorporated by reference to Form 10-K filed on July 27, 2017.



(10)

50Incorporated by reference to Form 8-K filed on August 10, 2017.


(11)


Incorporated by reference to Form 8-K filed on October 25, 2017.

(12)

Incorporated by reference to Form 10-Q filed on December 14, 2017.

(13)

Incorporated by reference to Form 10-Q filed on February 28, 2018.

(14)

Incorporated by reference to Form 8-K filed on March 5, 2018.

(15)

Incorporated by reference to Form 8-K filed on March 8, 2018.

61