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

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended April 30, 20182020


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)

 

 

 

1600 Olive Chapel Rd., Apex,1249 Kildaire Farm Road Cary NC

 

275021 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 accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

Accelerated filer

o

Non-Accelerated filer

Smaller reporting company

x

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

 

 

Emerging growth 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 registrantsregistrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s common stock on October 31, 2017, as reported on the Over the Counter Markets Group Inc. was $118,000.


quarter. As of August 13, 2018September 14, 2020 there were 606,417,622841,184,289 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, 20182020


 

 

PAGE

PART I

 

 

Item 1.

Business

 

54

Item 1A.

Risk Factors

 

86

Item 2.

Properties

 

86

Item 3.

Legal Proceedings

 

86

Item 4.

Mine Safety Disclosures

 

86

 

 

 

PART II

 

 

Item 5.

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

 

87

Item 7.  Management's

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

 

107

Item 8.

Financial Statements

 

1513

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

3550

Item 9A.

Controls and Procedures

 

3650

Item 9B.

Other Information

 

3651

 

 

 

PART III

 

 

Item 10.

Directors, Executive Officers, and Corporate Governance

 

3752

Item 11.

Executive Compensation

 

4055

Item 12.

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

 

4155

Item 13.

Certain Relationships and Related Transactions, and Director Independence

 

4256

Item 14.

Principal Accountant Fees and Services

 

4257

 

 

 

PART IV

 

 

Item 15.

Exhibits and Financial Statement Schedules

 

4358

 

 

 

SIGNATURES

 

4459

 

 

 

EXHIBIT INDEX

 

4560

 

 

 

CERTIFICATIONS

 

 





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,"“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,"“Company,” the "Registrant,"“Registrant,” the "Issuer," "we," "us,"“Issuer,” “we,” “us,” and "our"“our” refer to Force Protection Video Equipment Corp.

 

3

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PART I

 

ITEM 1: BUSINESS

BUSINESS


Overview

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'sdepartment’s evidence locker. The Company’s Video LE10 and LE50 cameras are a rugged design which incorporates Ambarella (NASDAQ "AMBA"“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 motionslow-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, 22″ 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 hourone-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 five hundred (500)twenty-five thousand (25,000) state and local law enforcement agencies.


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Table of Contents

Distribution


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


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,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:


·

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

5

Table of Contents

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 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 sales person.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


Smaller reporting companies are not required to provide the information required by this item.


ITEM 2:

      PROPERTIES

 

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 occupypreviously occupied approximately 1600 square feet at 1600 Olive Chapel Rd., Apex, NC 27502-6764 pursuant to a lease agreement which expireswas set to expire on November 30, 2020. Our annual rent payments for this location arewere $19,800 in year 1 and $20,394 in year 2.


We believe this location is suitable for our current needs. 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


Not Applicable.


6

Table of Contents


PART II


ITEM 5:

MMARKETMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MMATTERSMATTERS 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 after giving effect to the Company’s 1-250 reverse split which took effect April 24, 2017: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

 

High

 

 

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

 

Low

Fiscal Year Ended April 30, 2018

First Quarter (May 1, 2017 – July 31, 2017)

$0.2290

$0.0121

Second Quarter (August 1, 2017 – October 31, 2017)

$0.0400

$0.0062

Third Quarter (November 1, 2017 – January 31, 2018)

$0.0067

$0.0025

Fourth Quarter (February 1, 2018 – April 30, 2018)

$0.0040

$0.0007


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

 

Transfer Agent


Our Transfer Agent is Issuer Direct, formerly Interwest Transfer Co., Inc. located at 1981 Murray Holladay Road,1 Glenwood Avenue, Suite 100, Salt Lake City, Utah.1001, Raleigh, North Carolina, 276603. Their telephone number is 801-272-9294919-481-4000 and their website is www.interwesttc.com.www.issuerdirect.com






Holders

Holders


As of August 8, 2018,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 448,998,178841,184,289 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'SMANAGEMENT’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"“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,"“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 3a51­13a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. We urge you to be cautious of the forward­lookingforward-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 forward­lookingforward-looking statements include without limitation:


·

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

·

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

·

The intensity of competition;

·

General economic conditions; and

·

Changes in government regulations.

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

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

The intensity of competition;

General economic conditions; and

Changes in government regulations.


The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward­lookingforward-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,, 2018, 2020, we had total assets of $205,562$4,621 and total liabilities of $519,795.$740,444. Since our inception toApril 30, 2018,2020, we have an accumulated a deficit of $4,029,460.$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 termlong-term operating requirements. We expect to raise additional capital through the sale of equity or debt securities.


Year Ended April 30, 20182020 Compared with the year ended April 30, 20172019


 

 

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

 

Revenue___________

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 the impairment of inventory of $113,184. Overall, however, in 2020, there was a decrease in the volume of higher margin products. Additionally, during the year ended April 30, 2020, the Company stopped carrying inventory, and as a result, only had cost of revenues related to items purchased and immediately sold, thus reflecting a gross profit. The Company does not have sufficient cash resources to keep inventory on hand, which prevents the Company from making potential sales. The Company anticipates fluctuations in the mix of its product sales and expects its gross margin to fluctuate due to changes in product mix.

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. The decrease is primarily due to decreased professional, personnel, and travel costs as business has slumped. Additionally, sales and marketing costs include costs to promote and sell our products. Sales and marketing costs during the year ended April 30, 2020 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 maintain sufficient spending in this area.

4

Other income and expense during 2019, primarily consisted of interest expense on the Company's debt as well the accretion of debt 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, 2020, the Company recognized a gain on ROU lease liability termination of $603 and a related impairment charge of $6,274 for the property and equipment that was no longer being used for operations. During 2019, the Company recorded a gain on sale of asset of $1,593.


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Table of Contents

Revenue is generated from the sale of our video and audio capture devices and related accessories. For the year ended April 30, 2018, the Company recognized $159,672 of revenue compared to $86,075 during the year ended April 30, 2017. Sales were up $73,597, or 85.5% compared to the prior year. The increase in sales is due to the introduction of our line of covert video surveillance devices as well as an increase in product demand and the implementation of our marketing strategy. To increase future sales volume, the Company has begun to actively seek out and submit competitive product quotes in response to police department requests for quotes (“RFQ”) as well as the continued introduction of new products. The Company expects sales subject to RFQ to close between 3 to 12 months from submission.

Gross profit


Gross profit was $86,376 during the year ended April 30, 2018 compared to negative $19,982 during the year ended April 30, 2017. Our Gross margin collapsed in 2017 primarily due to lower of cost-or-market adjustments to inventory and the recognition of minimum software license fees for salable product with no meaningful corresponding product sales. The Company anticipates fluctuations in the mix of product sales and expects its gross margin to fluctuate due to changes in product mix.


Operating Expenses


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 decreased by $113,011 to $491,371 during the year endedApril 30, 2018 compared to $604,382 during the year endedApril 30, 2017. General and administrative costs decreased during 2018 primarily due to lower costs related to professional services, personnel, travel and product development costs.


Sales and marketing costs include costs to promote and sell our products. Sales and marketing costs decreased by $57,593 to $88,807 during the year endedApril 30, 2018 compared to $146,400 the year endedApril 30, 2017. Sales and marketing costs decreased due to more strategic marketing activities.

  

Other Income (Expense)


The elements of other income (expense) primarily relate to our convertible promissory notes. During the years ended April 30, 2018 and 2017, the Company incurred $43,141 and $29,198, respectively, of interest expense related to the stated interest of our notes; and $499,475 and $717,309, respectively, of accretion 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 source of liquidity is cash in the bank and salable inventory.bank. As of April 30, 20182020, our current assets totaled $142,242 and were comprised$4,621, of $6,320 inwhich $2,505 was cash $9,235 ofon hand. The Company also has accounts receivable $126,687 of inventory and prepaid inventory.$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.


DuringFor the year ended April 30, 2018,2020, net cash flows used byin operating activities was $495,755,$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 $742,020 duringnet cash used in operating activities of $41,461 for the year ended April 30, 2017.2019, 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.


DuringFor the year ended April 30, 2018,2020, net cash flows usedprovided by investing activities was $3,098,$0, compared to $16,480 during$6,646 for the year ended April 30, 2017.2019, which consisted of proceeds from the sale of a vehicle.


DuringFor the year ended April 30, 2018, we generated2020, net cash flows fromprovided by financing activities were $41,070 primarily related to net proceeds and repayments of $316,400 primarily fromdebt totaling $43,570 and the issuancerepayment of convertible promissory notesa related party advance for $2,500, compared to $720,000 from the issuance of convertible promissory notes during the year ended April 30, 2017. To date, we have financed our operations2019, which reflected net cash provided by financing activities of $28,892, primarily through the issuancerelated to net proceeds and repayments of debt of $21,742 and equity.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.

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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 monthtwelve-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 Sarbanes­Sarbanes- 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 10-K, Quarterly Reports on Form 10-Q, and interim reports of material significant events on Form 8-K), as well as insider reporting compliance for all officers and director under Section 16 of the Securities Exchange Act of 1934 on Forms 3, 4 and 5;

·

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

·

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

·

We will have assured 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;

·

We will have to assure securities law compliance for all equity-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;

·

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

·

Being a public company increases our director and officer liability insurance 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; 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 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, Quarterly Reports   on Form 10­Q, and interim reports of material significant events on Form 8­K), as well as insider reporting compliance for all officers and director under Section 16 of the Securities Exchange Act of 1934 on Forms 3, 4 and 5;


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


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


We will have assure 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;


We will have to assure securities law compliance for all equity 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;


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


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


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Off­

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 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.

·

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:


·

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

·

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


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Table of Contents

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.

 

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ITEM 8:

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 


INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered PublicPublic Accounting FirmFirms

 

14

Consolidated Balance Sheets

15

Consolidated Statements of Operations

 

16

 

 

 

 

 

Consolidated Balance Sheets

Statements of Stockholders’ Deficit

 

17

 

 

 

 

 

Consolidated Statements of Operations

Cash Flows

 

18

 

 

 

 

 

Notes to Consolidated Financial Statements of Stockholders’ Equity

 

19

 

13

Consolidated StatementsTable of Cash Flows

20

Notes to Consolidated Financial Statements

21

Contents

 





[fpvd43020182.gif]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders and Board of Directors and
Stockholders of

Force Protection Video Equipment, Corp.Corp


Opinion on the Financial Statements


We have audited the accompanying consolidated balance sheets of Force Protection Video Equipment, Corp. (the Company)“Company”) as of April 30, 20182020 and 2017 and2019, the related consolidated statements of income,operations, statement of changes in stockholders’ equity,deficit and cash flows for each of the two years in the two-year period ended April 30, 2018,2020, and the related notes (collectively referred to as the “consolidated financial statements)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, 20182020 and 2017,2019, and the consolidated results of its operations and its cash flows for each of the two years in the two-year period ended April 30, 2018 and 2017,2020, in conformity with accounting principles generally accepted in the United States of America.


Explanatory Paragraph – Going Concern


The accompanying financialsconsolidated 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, 2018, the Company had accumulated losses of approximately $4,000,000, has2020 and a negative working capital deficit of approximately $440,000$735,823 and has generated limited revenue, and may experiences losses in the near term.stockholders’ deficit of $740,823 as of April 30, 2020. These factors and the need for additional financing in order for the Company to meet its business plan,conditions raise substantial doubt about itsthe Company’s ability to continue as a going concern. Management's planManagement’s plans in regards to continue as a going concern isthese 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 Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the auditing standards of the PCAOB. Those standards require that we plan and perform the auditaudits 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 includedinclude 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/soles, Heyn & Company, LLP Assurance Dimensions                                                        


Certified Public Accountants

Soles, Heyn & Company


We have served as the Company’s auditorsauditor since 2018.2019.


West Palm Beach,Margate, Florida

AugustSeptember 14, 20182020

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14

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 Force Protection Video Equipment Corp.




Force Protection Video Equipment Corp.

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

April 30,

 

 

 

 

2018

 

2017

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

6,320 

 

$

188,773 

 

Accounts receivable

 

9,235 

 

1,738 

 

Inventory

 

117,889 

 

104,128 

 

Prepaid inventory

 

8,798 

 

28,153 

 

 

Total current assets

 

142,242 

 

322,792 

 

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $7,922 and $5,272, respectively

16,669 

 

18,796 

 

Operating lease right of use asset

 

45,001 

 

 

Deposits

 

1,650 

 

1,945 

 

 

Total assets

 

$

205,562 

 

$

343,533 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued expenses

 

$

99,702 

 

$

69,177 

 

Shareholder advance

 

7,500 

 

 

Operating lease liability

 

15,440 

 

 

Convertible promissory notes net of discount of $21,225 and $286,159, respectively

459,398 

 

140,969 

 

 

Total current liabilities

 

582,040 

 

210,146 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

Warranty

 

143 

 

515 

 

 

Operating lease liability

 

29,811 

 

 

 

Total liabilities

 

611,994 

 

210,661 

 

 

 

 

 

 

 

Redeemable Preferred Stock

 

5,000 

 

1,000 

 

 

 

 

 

 

 

Stockholders' equity (deficit)

 

 

 

 

 

Common stock, $0.0001 par value 20,000,000,000 shares authorized; issued and outstanding 194,415,754 and 1,698,494 at April 30, 2018 and 2017, respectively.

19,441 

 

170 

 

Additional paid-in capital

 

3,598,589 

 

3,124,098 

 

Accumulated deficit

 

(4,029,462)

 

(2,992,396)

 

 

Total stockholders' equity (deficit)

 

(411,432)

 

131,872 

 

 

Total liabilities and stockholders' equity (deficit)

 

 $      205,562

 

 $     343,533

 

 

 

 

 

 

 

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


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

 








Force Protection Video Equipment Corp.

Consolidated Statements of Operations

For the Years Ended April 30, 2018 and 2017

 

 

 

 

 

 

 

 

 

Years Ended April 30,

 

 

 

2018

 

2017

Income

 

 

 

 

Net revenue

$

159,672 

 

$

86,075 

 

Cost of goods sold

73,296 

 

106,057 

 

 

Gross profit

86,376 

 

(19,982)

 

 

 

 

 

 

Operating expenses

 

 

 

 

General and administrative

491,371 

 

604,382 

 

Sales and marketing

88,807 

 

146,400 

 

 

Total operating expenses

580,178 

 

750,782 

 

 

Loss from operations

(493,802)

 

(770,764)

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense)

 

 

 

 

Loss on sale of vehicle

(648)

 

 

Interest expense

(43,141)

 

(29,198)

 

Accretion of debt discount

(499,475)

 

(717,309)

 

 

Total other (expense)

(543,264)

 

(746,507)

Loss before taxes

(1,037,066)

 

(1,517,271)

Provision for income taxes

 

Net loss

$

(1,037,066)

 

$

(1,517,271)

 

 

 

 

 

 

Net (loss) per common share basic and diluted

$

(0.03)

 

$

(2.08)

 

 

 

 

 

 

Weighted average common shares outstanding basic and diluted

40,926,044 

 

729,997 

 

 

 

 

 

 

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


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


15

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Force Protection Video Equipment Corp.

Consolidated  Statement of Stockholders' Equity

For the Years Ended April 30, 2018 and 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

Total

 

 

 

Common Stock

 

 

 

paid-in

 

Accumulated

 

Stockholders'

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity (deficit)

Balance, April 30, 2016

 

162,102

 

16

 

1,721,350

 

(1,475,125)

 

246,241 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1,698,494

 

170

 

3,124,098

 

(2,992,396)

 

131,872 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued upon conversion of convertible promissory notes

192,516,391

 

19,251

 

297,845

 

 

317,096 

 

Common stock issued for cash

 

100,000

 

10

 

590

 

 

600 

 

Common stock issued for services

 

100,000

 

10

 

590

 

 

600 

 

Reverse stock split share adjustment

 

869

 

-

 

-

 

 

 

Discount on convertible promissory note due to beneficial conversion feature

-

 

-

 

175,466

 

 

175,466 

 

Net loss

 

-

 

-

 

-

 

(1,037,066)

 

(1,037,066)

Balance, April 30, 2018

 

194,415,754

 

$

19,441

 

$

3,598,589

 

$

(4,029,462)

 

$

(411,432)

 

 

 

 

 

 

 

 

 

 

 

 

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


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

 





Force Protection Video Equipment Corp.

Consolidated Statements of Cash Flows

For the Years Ended April 30, 2018 and 2017

 

 

 

 

 

 

 

 

 

Years Ended April 30,

 

2018

 

2017

Cash flows from operating activities:

 

 

 

 

Net (Loss)

$

(1,037,066)

 

$

(1,517,271)

 

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

 

 

 

 

 

Depreciation and Amortization

5,224 

 

4,796 

 

 

Accretion of debt discount

499,475 

 

717,309 

 

 

Share based compensation expense

600 

 

 

 

Loss on disposal of vehicle

648 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

(Increase) decrease in accounts receivable

(7,497)

 

1,419 

 

 

(Increase) decrease in inventory

(13,761)

 

(33,767)

 

 

(Increase) decrease in other assets

(25,351)

 

31,356 

 

 

Increase (decrease) in accounts payable and accrued expenses

37,742 

 

54,606 

 

 

Increase (decrease) in other liabilities

44,879 

 

(468)

 

 

Net cash (used) by operating activities

(495,107)

 

(742,020)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchase of equipment and vehicles

(8,246)

 

(16,480)

 

Proceeds from disposal of vehicle

4,500 

 

 

Net cash (used) by investing activities

(3,746)

 

(16,480)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from sale of common stock

600 

 

 

Proceeds from sale of preferred stock

4,000 

 

 

Proceeds from shareholder advance

7,500 

 

 

Proceeds from convertible promissory notes

304,300 

 

720,000 

 

Net cash provided by financing activities

316,400 

 

720,000 

 

 

 

 

 

 

Increase (decrease) in cash

(182,453)

 

(38,500)

Cash and cash equivalents at beginning of period

188,773 

 

227,273 

Cash and cash equivalents at end of period

$

6,320 

 

$

188,773 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid for interest

$

 

$

 

Cash paid for income taxes

$

 

$

 

 

 

 

 

 

 Non-cash operating activities:

 

 

 

 

Value of 100,000 shares issued in exchange for services

$

600 

 

$

 

Conversion of notes payable into 192,516,391 and 1,527,931 shares, respectively

$

317,096 

 

$

755,402 

 

Operating lease right of use asset

$

51,063 

 

$

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






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

16

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 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

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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

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED APRIL 30, 20182020 AND 20172019



Note 1 - Organization and Nature of Operations

NOTE 1 –ORGANIZATION AND GOING CONCERN


Organization

Organization


Force Protection Video Equipment Corp., (the Company)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 as M Street Gallery, Inc.  OnFlorida. Cobraxtreme HD Corp. was incorporated under the laws of the State of North Carolina on September 25, 2013, the Company changed its name to Enhance-Your-Reputation.com, Inc.19, 2017 and changed its business to providing reputation management and enhancement services.currently is non-operating. 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.  


Going Concern


The Company’s fiscal year end is April 30.

Basis of Presentation

The accompanying consolidated financial statements arehave been prepared usingin accordance with accounting principles generally accepted in the United States of AmericaStates.

Liquidity and applicable toGoing 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 of $32,217

·

Net cash used in operations was $38,962

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

·

Accumulated deficit of $4,605,504,

·

Stockholders’ deficit of $740,823; and

·

Working capital deficit of $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.

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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

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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 normalordinary course of business.


During the year ended April 30, 2018, the Company recognized revenue of $159,672 and a net operating loss of $493,802. As of April 30, 2018, the Company had a working capital deficit of $439,798 and an accumulated deficit of $4,029,462.


In view of these conditions, the ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. Historically, the Company has relied upon funds from the sale 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 assurance 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 consolidated 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 consolidated financial statements.


NOTENote 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESSummary 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 significant intercompany transactions and balances have been eliminated.Cobraxtreme HD Corp. was incorporated under the laws of the State of North Carolina on September 19, 2017.eliminated.


EstimatesBusiness Segments


The preparation ofCompany 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.

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Use of Estimates

In preparing financial statements requiresin conformity with generally accepted accounting principles, management is required to make certain estimates and use 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. Theseexpenses during the reported period. Actual results could differ from those estimates, and assumptions are affected by management’s applicationthose 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 policies. Onstandard 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 on-goingasset 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 evaluates its estimates. Actual resultsto use observable inputs when available, and outcomesto minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

·

Level 1 —Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

·

Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

·

Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

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 differ materially from theserequire the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions.


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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,

2020

April 30,

2019

A

11%

-

B

10%

-

Total

21%

-

Cash and Cash Equivalents


TheFor purposes of the consolidated statements of cash flows, the Company considers all highly liquid investmentsinstruments with the original maturitiesa 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.


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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

InventoryNOTES 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 goods soldrevenues 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 yearyears ended April 30, 2017,2020 and 2019, the Company recorded $32,207wrote down $0 and $110,418, respectively, of lowerobsolete inventory.

Long-lived Assets

Management evaluates the recoverability of cost–or-marketthe 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 adjustmentsof 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 chargesignificant decline in the Company’s stock price for a sustained period of $24,000 relatedtime; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to prepaid software license fees for an annual resalable software license agreement withbe generated from the use and ultimate disposition of these assets.

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

If impairment is indicated based on a term from April 2016 through April 2017 which included minimum software license fees for salable software that was reduced from prepaid inventory as licenses were sold. During 2017, only a few software licenses were soldcomparison of the assets’ carrying values and the software license agreement terminated without recourse in April 2017. As a result,undiscounted cash flows, the balance becameimpairment loss is measured as the propertyamount by which the carrying amount of the software vendor andassets exceeds the Company recorded a $24,000 reduction to prepaid inventory and corresponding increase in cost of goods sold.


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.


Leases


The Company recognizes lease assets and liabilities with terms in excess of twelve months on its balance sheet.  The Company capitalizes operating lease obligations as a right-of-use asset with a corresponding liability based on the presentfair value of future operating leases.the assets.


Property and Equipment


Fixed assets are carriedProperty and equipment is stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, whiledepreciation. 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 are expensed when incurred. Renewals and betterments thatwhich do not materially extend the lifeuseful lives of the assetsproperty and equipment are capitalized.charged to operations. When assets are retiredproperty or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts and anywith the resulting gain or loss is reflected in incomeoperations. 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 period.


For federal income tax purposes, depreciationlease 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 computed under the modified accelerated cost recovery system. Depreciation for financial statement purposes is computedamortized on a straight-line basis over estimated useful livesthe lease term and is included in general and administrative expenses in the consolidated statements of the related assets. The estimated useful lives of depreciable assets are:operations.


25

Estimated

Useful Lives

 Vehicles

     5 years

Office Equipment

3 - 5 years

Furniture & equipment

5 - 7 years

Table of Contents


Income Taxes


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 accounts for income taxes using the assetanalyzes all financial instruments with features of both liabilities and liability method. Under the assetequity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and liability method, deferred tax assetsFASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are recognized for the future tax consequences attributedadjusted 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 incomereflect fair value at each period end, with any increase or decrease in the yearsfair value being recorded in which those temporary differencesresults of operations as adjustments to fair value of derivatives. The effects of interactions between embedded derivatives are calculated 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.


Sales are recorded when products are shipped to customers. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are providedaccounted for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures and the customer’s acceptance.


Marketing and Advertising Costs


Marketing and advertising costs are expensed as incurred. The Company recognized $71,016 and $108,603 in marketing and advertising costs during the years ended April 30, 2018 and 2017, 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 the Financial Accounting Standards Board (FASB) Accounting Standards Codification ASC 718-10 and the conclusions reached by FASB ASC 505-50. Costs are measuredarriving at the estimated fair market value of the consideration received or the estimatedoverall 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.financial instruments. The Company utilizesuses a three-tierBlack-Scholes option pricing model to determine 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 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 as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and


Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity 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.


As of April 30, 2018 and 2017, 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.  


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. The Company does not hold or issue financial instruments for trading purposes, nor does the Company 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 assumeUpon conversion, exercise or contingent issuancerepayment, 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 securities that would have an antidilutive effectgain or loss on earnings per share. Therefore, when calculating EPS, if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusiondebt extinguishment recognized 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 priceCompany’s consolidated statements of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money).operations


Following is the computation of basic and diluted net loss per share for the years ended April 30, 2018 and 2017:


 

 

 

April 30,

 

 

 

2018

 

2017

Basic and Diluted EPS Computation

 

 

 

 

Numerator:

 

 

 

 

 

Loss available to common stockholders'

 

$

(1,037,066)

 

$

(1,517,271)

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Weighted average number of common shares outstanding

 

40,926,044 

 

729,997 

 

 

 

 

 

 

Basic and diluted EPS

 

$

(0.03)

 

$

(2.08)

 

 

 

 

 

 

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

 

1,425,915,102

 

6,332,156


Concentrations of risk


During the year ended April 30, 2018, two customers accounted for 34.5% (24.1% and 10.4%) of sales. During the year ended April 30, 2017, two customers accounted for 34.1% (26.7% and 7.4%) of sales.


The Company relies on third parties for the supply and manufacture of its capture devices, some of which are sole-source suppliers. The Company believeshas adopted ASU 2017-11, “Earnings per share (Topic 260)”, provided that outsourcing manufacturing enables greater scale and flexibility. As demand and product lines change, the Company periodically evaluates the need and advisability 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 2018, four suppliers accounted for 62.6% (19.2%, 16.9%, 14.3% and 12.2%) of the Company’s inventory purchases. During the year ended April 30 2017, two suppliers accounted for 82.1% (72.5% and 9.6%) of the Company’s inventory purchases.






Recent Accounting Pronouncements


In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. Whenwhen determining whether certain financial instruments should be classified as liabilitiesliability 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. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence ofIf a down round feature. For freestandingfeature 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 classified financial instruments,is triggered, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 toCompany will recognize the effect of the down round feature when it is triggered. That effect is treated as a deemed dividend, and as a reduction ofwhich will reduce the income available to common shareholders in basic EPS. Convertiblestockholders.

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 with embedded conversion options that have down round features are nowto 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 specialized guidanceCompany’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.

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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 contingent beneficialdebt discounts originating in connection with conversion features (in Subtopicthat remain embedded in the related notes (ASC 815) in accordance with ASC 470-20, Debt—Debt with Conversion and Other Options)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.

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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.

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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.

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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 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.

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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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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.

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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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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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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 related EPS guidance (in Topic 260).the consideration of costs and benefits. The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early2019. 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 permitteda service contract with the requirements for all entities, including adoption in an interim period. If an entity early adoptscapitalizing implementation costs incurred to develop or obtain internal-use software and requires the amendments in an interim period, any adjustments shouldcapitalized implementation costs to be reflected asexpensed 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 of theafter December 15, 2019, and interim periods within those fiscal year that includes that interim period.years. The Company does not expect adoption of ASU 2017-11 to2018-15, effective January 1, 2019, did not have a material impact on itsour consolidated financial statements.


Recent Accounting Updates Not Yet Effective

In May 2017,December 2019, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in this Update provide2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, about which changesamong other provisions, eliminates certain exceptions to existing guidance related to the terms or conditionsapproach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of a share-based payment awards requiredeferred tax liabilities for outside basis differences. This guidance also requires an entity to apply modification accountingreflect the effect of an enacted change in Topic 718. The amendmentstax laws or rates in this Update areits 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 all entities for annual periods,interim and interim periods within those annual periods beginning after December 15, 2017. Early2020, with early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The Company does not expect adoptionpermitted. We are currently evaluating the impact of ASU 2017-09 to have a material impact on its consolidated financial statements.


In March 2016, the FASB issuedauthoritative guidance underASU 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 consolidated financial statements.


In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. Subsequently, the FASB issued the following accounting standard updates related to Topic 606, Revenue from Contracts with Customers:


ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) in March 2016. ASU 2016-08 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on principal versus agent considerations.


ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing in April 2016. ASU 2016-10 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on identifying performance obligations and its licensing.


ASUs 2016-12 and 2016-20, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, and Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, respectively, issued in May and December 2016, respectively. These ASUs do not change the core principle of revenue recognition in Topic 606 but clarify the implementation guidance on a few narrow areas and add some practical expedients to thethis guidance.




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The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company has evaluated the new standardFORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

Note 3 – Property and intends to elect the modified retrospective method of adoption beginning on May 1, 2018. The Company does not expect adoption of ASU 2014-09 to have a material impact on its consolidated financial statements.Equipment


The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, the Company has not identified any standards that it believes merit further discussion. The Company believes that none of the new standards will have a significant impact on its consolidated financial statements.


NOTE 3 - FIXED ASSETS


Fixed assetsProperty and equipment consisted of the following:


 

 

 

Estimated Useful

 

 

April 30,

 

April 30,

2020

 

April 30,

2019

 

Lives

(Years)

 

 

2018

 

2017

 

 

 

 

 

 

 

Vehicles

 

$

7,654 

 

$

15,376 

Furniture and fixtures

 

10,936 

 

6,212 

 

$-

 

$9,656

 

5 - 7

 

Computers and office equipment

 

4,226 

 

2,480 

 

-

 

4,226

 

3 - 5

 

Leasehold improvements

 

1,775 

 

 

 

-

 

 

1,775

 

Life of lease

 

Total fixed assets

 

24,591 

 

24,068 

 

-

 

15,657

 

 

 

Accumulated depreciation

 

(7,922)

 

(5,272)

 

 

-

 

 

(9,383)

 

 

 

Total fixed assets

 

$

16,669 

 

$

18,796 

Total property and equipment - net

 

$-

 

$6,274

 

 

 


During

Depreciation expense for the years ended April 30, 20182020 and 2017, the2019 was $0 and $5,418, respectively.

The Company recognized $5,224 and $4,796, respectively, in depreciation expense. Additionally,sold two vehicles during the year ended April 30, 2018, the2019 for $6,646. The Company soldrecognized a vehicle for proceeds of $4,500 and recorded a lossgain on the sale of $648.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.

NOTENote 4 – CONVERTIBLE PROMISSORY NOTESDebt


Following isConvertible Notes Payable

The Company has issued numerous convertible promissory notes. In certain cases, these notes contained conversion features that require a summary ofdiscount to the market price based upon a formula using the Company’s outstanding convertible promissory notes as of April 30, 2018:


 

 

 

 

Current/

 

 

 

 

 

 

 

 

 

 

Amended

 

Current Balances

 

 

Lender

 

Issue Date

 

Maturity Date

 

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

 

 

889

 

889

RDW Capital, LLC Note 7

 

9/1/2016

 

2/1/18

 

25,701 

 

15,074

 

40,775

RDW Capital, LLC Note 8

 

2/6/2017

 

2/1/18

 

15,975 

 

5,512

 

21,487

RDW Capital, LLC Note 9

 

3/30/2017

 

2/1/18

 

78,750 

 

7,243

 

85,993

RDW Capital, LLC Note 10

 

4/26/2017

 

2/1/18

 

 

7,510

 

7,510

RDW Capital, LLC Note 11

 

5/30/2017

 

2/1/18

 

81,375 

 

6,288

 

87,663

RDW Capital, LLC Note 12

 

8/7/2017

 

2/7/18

 

52,500 

 

3,197

 

55,697

Power Up Lending Gp Note 1

 

10/20/2017

 

7/30/18

 

66,030 

 

4,554

 

70,584

Power Up Lending Gp Note 2

 

11/16/2017

 

8/30/18

 

36,000 

 

2,006

 

38,006

Power Up Lending Gp Note 3

 

1/5/2018

 

10/10/18

 

38,000 

 

1,464

 

39,464

Power Up Lending Gp Note 3

 

3/5/2018

 

12/15/18

 

33,000 

 

613

 

33,613

Adar Note 1

 

3/5/2018

 

3/5/19

 

52,500 

 

648

 

53,148

   Totals

 

 

 

 

 

$

480,623 

 

$

62,281

 

$

542,904

Debt discount balance

 

 

 

 

 

(21,225)

 

 

 

 

   Balance sheet balances

 

 

 

 

 

$

459,398 

 

 

 

 







Following is a summary of the Company’s 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 

 

 

 

 



During the year ended April 30, 2018, the companystock prices. The Company has determined that each convertible promissory note conversion feature will be settled withis indexed to the Company’s stock, which is an input to a fixed monetaryfair value at settlement and is classified asmeasurement of a liability.fixed-for-fixed option on equity shares. Thus, the conversion feature of the notes meets the scope exception under FASB Accounting Standards Codification ("ASC"(“ASC”) 480-10-25-14 Distinguishing Liabilities from Equity.815-40-15-7 and treatment under ASC 470-20 – “Debt with Conversion and Other Options” is appropriate.


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RDW Capital, LLC


FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

On November 12, 2015,NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The following represents a summary of the Company entered into a Securities Purchase Agreement (“RDW SPA 1”) with 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 twenty (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 possible shares needed upon conversion

Effective May 1, 2019, the lender amended the conversion price for all outstanding notes to a Florida limited liability company. On November 12, 2015,fixed price of$0.0003. As a result of this amendment, the Company and RDW entered intodetermined that 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”). On August 8, 2017, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 6”). RDW SPA 1, amendments thereto, RDW SPA 2, RDW SPA 3, RDW SPA 4, RDW SPA 5 and RDW SPA 6 may hereinafter be referred to collectively as, the “RDW SPAs”.


RDW Note 3 - In connection with RDW SPA 1 and amendments thereto, on March 10, 2016, the Company issued to RDW 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.


As of April 30, 2018, RDW Note 3 was converted into stock down to a principal balance of $792.


During the years ended April 30, 2018 and 2017, the Company recognized no interest expense.


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 thepresent value of the OID, legal fees due diligence fees and intrinsiccash flows of the outstanding debt were similar (less than 10%) to the present value of the beneficialcash 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 feature (the “BCF”).price, there were no fees paid to the lender or other third parties. The calculated intrinsic value was $70,000. As this amountchange in terms (conversion price fixed at $0.0003) resulted in a total BCF 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.modification, accordingly, there is no effect for financial reporting.


As of April 30, 2018, RDW Note 4 was converted into stock down to an interest payable balance of $4,540. During the year ended April 30, 2018, no note conversions to stock were made. During the year ended April 30, 2017, $105,000 of principal was converted into 562,249 shares of stock.


During the years ended April 30, 2018 and 2017, the Company recognized $0 and $4,540, respectively, of interest expense.


RDW Note 5 - In connection with RDW SPA 2,Additionally, on May 20, 2016,1, 2019, the Companylenders amended all of their 8% convertible promissory notes previously outstanding as well as those issued after May 1, 2019 to RDWsuspend the default provision which would allow for a convertible note (“RDW Note 5”) duedefault penalty of 150% 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 BCF. The calculated intrinsic value was $35,000. As this amount resulted in a total BCF debt discount that was less than RDW Note 5 principal, the full $35,000 BCF discount was recognized. The resulting $42,500 discount was accreted over the 6 month term of RDW Note 5 through November 20, 2016.


As of April 30, 2018, RDW Note 5 was converted into stock down to an interest payable balance of $2,742. During the year ended April 30, 2018, no note conversions to stock were made. During the year ended April 30, 2017, $52,500 of principal was converted into 116,769 shares of stock.


During the years ended April 30, 2018 and 2017, the Company recognized $0 and $2,742, respectively, of interest expense.


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 BCF. The calculated intrinsic value was $105,000. As this amount resulted in a total BCF debt discount that was less than RDW Note 6 principal, the full $105,000 BCF 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 years ended April 30, 2018 and 2017, the Company recognized -$186 and $8,291, respectively, of interest expense. During years ended April 30, 2018 and 2017, the Company recognized $0 and $132,500, respectively, of accretion related to the debt discount. RDW began converting the RDW Note 6 principal into shares of common stock beginning in March 2017. During years ended April 30, 2018 and 2017, RDW converted $38,890 into 4,919,733 shares and $125,826 into 474,212 shares, respectively.


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. On November 30, 2017, the Company and RDW agreed to amend RDW Note 7 to extend the Maturity Date to February 1, 2018. On March 16, 2018, the Company and RDW agreed to amend RDW Note 7 to extend the Maturity Date to October 31, 2018.


RDW Note 7 principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the BCF. The calculated intrinsic value was $105,000. As this amount resulted in a total BCF 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 years ended April 30, 2018 and 2017, the Company recognized $6,410 and $8,664, respectively, of interest expense.  During the year ended April 30, 2017, the Company recognized $132,500 of accretion related to the debt discount which was fully accreted as of April 30, 2017. RDW began converting the RDW Note 7 principal into shares of common stock beginning in May 2017. During the year ended April 30, 2018 and 2017, RDW converted $131,800 into 24,585,900 shares. No conversions occurred in 2017.


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. On November 30, 2017, the Company and RDW agreed to amend RDW Note 8 to extend the Maturity Date to February 1, 2018. On March 16, 2018, the Company and RDW agreed to amend RDW Note 8 to extend the Maturity Date to October 31, 2018.


RDW Note 8 principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the BCF. 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 BCF was limited to the principal amount of RDW Note 8. The resulting $210,000 discount was accreted over the 6 month term of RDW Note 8 through August 5, 2017.


During the years ended April 30, 2018 and 2017, the Company recognized $4,035 and $1,477, respectively, of interest expense and $113,167 and $96,833, respectively, of accretion related to the debt discount. RDW began converting the RDW Note 8 principal into shares of common stock beginning in February 2017. During the years ended April 30, 2018 and 2017, RDW converted $32,437 into 53,560,000 shares and $$161,588 into 279,999 shares, respectively.


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. On November 30, 2017, the Company and RDW agreed to amend RDW Note 9 to extend the Maturity Date to February 1, 2018. On March 16, 2018, the Company and RDW agreed to amend RDW Note 9 to extend the Maturity Date to October 31, 2018.


RDW Note 9 principle was discounted for the value of the OID, fees and intrinsic value of the BCF. 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 BCF was limited to the principal amount of RDW Note 9. The resulting $78,750 discount was accreted over the 6 month term of RDW Note 9 through September 29, 2017.


During the years ended April 30, 2018 and 2017, the Company recognized $6,699 and $544, respectively, of interest expense and $65,410 and $13,340, respectively, of accretion related to the debt discount.


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. On November 30, 2017, the Company and RDW agreed to amend RDW Note 10 to extend the Maturity Date to February 1, 2018. On March 16, 2018, the Company and RDW agreed to amend RDW Note 10 to extend the Maturity Date to October 31, 2018.


RDW Note 10 principle was discounted for the value of the OID, fees and intrinsic value of the BCF. 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 BCF was limited to the principal amount of RDW Note 10. The resulting $110,000 discount was accreted over the 6 month term of RDW Note 10 through October 26, 2017.


During the years ended April 30, 2018 and 2017, the Company recognized $7,412 and $98, respectively, of interest expense and $107,582 and $2,418, respectively, of accretion related to the debt discount. RDW began converting the RDW Note 10 principal into shares of common stock beginning in December 2017. During the year ended April 30, 2018, RDW converted $110,000 into 100,218,200 shares.






RDW Note 11 – 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 payment of a $3,875 OID and legal and due diligence fees totaling $12,500. On November 30, 2017, the Company and RDW agreed to amend RDW Note 11 to extend the Maturity Date to February 1, 2018. On March 16, 2018, the Company and RDW agreed to amend RDW Note 11 to extend the Maturity Date to October 31, 2018.


RDW Note 11 principle was discounted for the value of the OID and issuance fees. The BCF intrinsic value was $102,000. As this amount resulted in a BCF that exceeded RDW Note 11 proceeds, accretion of the BCF was limited to $65,000 which was accreted over the 6 month term of RDW Note 11 through November 30, 2017.


During the year ended April 30, 2018, the Company recognized $6,288 of interest expense and $81,375 of accretion related to the debt discount and BCF.


RDW Note 12 – In connection with RDW SPA 6, on August 7, 2017, the Company issued to RDW a convertible note (“RDW Note 12”) due on February 7, 2018 in the principal amount of $52,500 of which the Company received proceeds of $46,000 after payment of a $2,500 OID and legal and due diligence fees totaling $4,000. On March 16, 2018, the Company and RDW agreed to amend RDW Note 12 to extend the Maturity Date to October 31, 2018.


RDW Note 12 principle was discounted for the value of the OID and issuance fees. The BCF intrinsic value was $107,283. As this amount resulted in a BCF that exceeded RDW Note 12 proceeds, accretion of the BCF was limited to 46,000which was accreted over the 6 month term of RDW Note 12 through February 7, 2018.


During the year ended April 30, 2018, the Company recognized $3,197 of interest expense and $52,500 of accretion related to the debt discount and BCF.


RDW Note 1 through RDW Note 12 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 the Company’s common stock at a conversion price equal to sixty percent (60%) of the lowest traded price of the Company’s 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.

·The Company 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 accrued interest multiplied by one hundred and thirty percent (130%).  RDW may continue to convertat 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 eventtime of default RDW may accelerateand upon the outstanding principal, plus accrued and unpaid interest, and otherlender accelerating the amounts owing throughdue. The notes, while in default, have not been accelerated for payment. The lender has reserved the date of acceleration (Acceleration).right to reinstate the default provision at their discretion.

·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.

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

·The Company must reserve three (3) times the amount of shares necessary for the issuance of common stock upon conversion. FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


APRIL 30, 2020 AND 2019

·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 the Companys common shares outstanding after giving effect to such conversion.


In total, during the years ended April 30, 2018 and 2017, the Company recognized $33,856 and $29,201, respectively, of interest expense and $420,034 and $664,384, respectively, of accretion related to the debt discount of the RDW Notes.


In total, during the year ended April 30, 2018, RDW converted $313,126 of RDW Note principal and interest into 183,283,833 shares of common stock.


Power Up Lending Group Ltd.


Power Up Note 1 – On October 20, 2017 the Company sold and Power Up Lending Group Ltd. (“Power Up”) purchased- Convertible Notes (3 Notes)

Term 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 average of the lowest two (2) trading prices twenty (20) days immediately preceding conversion

Conversion Restriction #1

Ownership cannot exceed 4.99%

Conversion Restriction #2

Not convertible until 180 days after issuance of convertible note

Prepayment Penalty (P&I)

115% - 140% (within 1st 180 days of note being outstanding)

Default Penalty (P&I)

150%

Common Share Reserve

N/A

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

Term of Convertible Notes

Approximately 12 months

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 twenty (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 possible shares needed upon conversion

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

The following is a 12%summary of the Company’s convertible notenotes 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 principal amountfiscal year end April 30, 2020, the Company recognized a gain on debt settlement (principal and interest) of $70,000 (the “Power Up Note 1”)$69,938.

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 which$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 $60,300$13,233 of proceeds after paymentdeductions for $395 of legal fees. The Power Up Note 1 matures on July 30, 2018.service fees and $11,340 related to interest. Repayment was to be achieved through 246 daily bank account withdrawals of $156.


The intrinsic valueLoan Agreement was secured by all current and future assets of the BCFCompany. As of April 30, 2019, the Company was computed asin arrears under the difference between the fair valueterms of the common stock issuable upon conversionAgreement 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 Power Up Note 1loan 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 total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value$10,234 debt discount was $44,754 and is being accreted over the 10 month term of the Power Up Note 1 through July 30, 2018.


Duringexpensed during the year ended April 30, 2018,2020.

Total gain on debt settlement – net, related to convertible notes and related accrued interest and the Company recognized interest expense of $4,554 and $36,945 of accretion. Power Up began convertingloan above for the Power Up Note 1 principal into shares of common stock beginning in April 2018. During thefiscal year endedend April 30, 2018, RDW converted $3,970 into 9,232,558 shares.2020 was $62,031.


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Power Up Note 2 – On November 16, 2017 the Company sold and Power Up purchased a 12% convertible note in the principal amount of $36,000 (the “Power Up Note 2”) of which the Company received $30,000 after payment of legal fees. The Power Up Note 2 matures on August

FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2018.2020 AND 2019


The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Power Up Note 2 and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $23,016 and is being accreted over the 9.5 month term of the Power Up Note through August 30, 2018.


During the year ended April 30, 2018, the Company recognized interest expense of $2,006 and $16,682 of accretion.


Power Up Note 3 – On January 5, 2018 the Company sold and Power Up purchased a 12% convertible note in the principal amount of $38,000 (the “Power Up Note 3”) of which the Company received $32,000 after payment of legal fees. The Power Up Note 3 matures on October 10, 2018.


The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Power Up Note 3 and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $24,295 and is being accreted over the 10 month term of the Power Up Note through October 10, 2018.


During the year ended April 30, 2018, the Company recognized interest expense of $1,464 and $12,532 of accretion.


Power Up Note 4 – On January 5, 2018 the Company sold and Power Up purchased a 12% convertible note in the principal amount of $33,000 (the “Power Up Note 4”) of which the Company received $27,500 after payment of legal fees. The Power Up Note 4 matures on December 15, 2018.


The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Power Up Note 4 and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $21,098 And is being accreted over the 9 month term of the Power Up Note 4 through December 15, 2018.






During the year ended April 30, 2018, the Company recognized interest expense of $613 and $5,227 of accretion.


Power Up Note 1 through Power Up Note 4 may hereinafter be referred to collectively as, the “Power Up Notes”.


The Power Up Notes have identical terms and conditions, including convertibility into common stock, at Power Up’s option any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Power Up Note, at a price for each share of common stock equal to 61% of the average of the lowest two (2) trading prices during the twenty (20) trading days immediately preceding the applicable conversion. In no event shall Power Up effect a conversion if such conversion results in Power Up beneficially owning in excess of 4.99% of the outstanding common stock of the Company. The Power Up Notes and accrued interest may be prepaid within the 180 day period following the issuance date at an amount equal to 115% - 140% of the outstanding principle and unpaid interest. After expiration of the 180 days, the Power Up Note may not be prepaid. Any principal and interest unpaid when due shall bear interest at 22%. Upon the occurrence of an event of default the balance of principle and interest shall become immediately due at the default amount which is equal to the sum of the unpaid principal and unpaid interest multiplied by 150%.


Adar Note 1 - On March 5, 2018 the Company entered into a Securities Purchase Agreement with Adar Bays, LLC (“Adar”) providing for the purchase of a Convertible Promissory Note in the principal amount of $52,500 (the "Adar Note 1"); and two Collateralized Secured Promissory Notes also in the amount of $52,500 each (the “Adar Collateralized Notes”) and the delivery by the Registrant of two Back End Notes payable to Adar each in the principal amount of $52,500. The first $52,500 financing closed on March 5, 2018 with the Company receiving net proceeds of $43,500 after payment of legal fees of $6,500 and a 5%, or $2,500 original issue discount.


Adar Note 1 bears interest at the rate of 8% per annum. All interest and principal must be repaid on or before March 5, 2019. After six months, Adar Note 1 is convertible into common stock, at Adar's option, at a 40% discount to the average of the twenty lowest closing prices of the Registrant’s common stock during the 20 consecutive trading days prior to conversion. The two Adar Collateralized Notes may only be converted by Adar in the event they are paid in full. In addition, the Adar Note 1 contains pre-payment penalties. The Registrant is only required to make payments on the Back End Notes if Adar funds the Collateralized Notes.


Adar has agreed to restrict its ability to convert the Adar Note 1 and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The Adar Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. The Adar Note also provides for penalties and rescission rights if the Company does not deliver shares of its common stock upon conversion within the required timeframes. In the event of default, the note interest rate increases to 24%.


The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Adar Note 1 and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $82,809. As this amount exceeds the Adar Note 1 proceeds, accretion of the BCF was limited to$43,500 which is being accreted over the 12 month term of the Adar Note 1 through March 5, 2019.


During the year ended April 30, 2018, the Company recognized interest expense of $648 and $8,055 of accretion.


NOTE 5 – COMMITMENTS AND CONTINGENCIESCommitments and Contingencies


Product Warranties


The Company’s manufacturer(s) provide the Company with a 2 year2-year warranty. The Company products are sold with a 1 year1-year manufacturer’s warranty. The Company offers a 1 year1-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 yeartwo-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”)

Operating Leases


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 offor office space at 1600 Olive Chapel Road, Apex, North Carolina 27502.space. The lease expires on November 30, 2020 and includes an option to extend the lease an additional term orof three years. Rent is $1,650 per month and is increased each anniversary by 3%. The Company paid a $1,650 security deposit. The Company has adopted ASC 2016-2; Leases (Topic 842). As a result,

During fiscal year 2018, the Company is required to estimate and record the right of use asset (“ROU Asset”) and lease liability on the face of The Company’s balance sheet. 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 yearthree-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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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

On March 21, 2015,May 1, 2019, the Company entered into a lease of office space at 130 Iowa Lane, Suite 102, Carry, North Carolina 27511. During January, 2018,and its landlord mutually agreed to terminate the Company moved and this lease was terminated with no further obligations


The Company has no other non-cancelable operating leases.outstanding lease. The following issummarizes 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 maturity analysisstraight-line basis over the term of our operating leases, as reported within “general and administrative” expense on the annual undiscounted cash flowsaccompanying Consolidated Statements of the operating lease liabilities as of April 30, 2018:Operations.


Fiscal Year

2019

$20,048

2020

$20,649

2021

$12,253

$52,950


As of April 30, 2018, total operating lease liability was as follows:

Undiscounted cash flows

$20,048

Less unamortized interest

   (7,699)

Total operating lease liability

$45,251


During the year ended April 30, 20182020 and 2017,2019, operating lease expense for rent for office space totaled $17,119was $0 and $14,776,$15,300, respectively.


NOTE 6 –REDEEMABLE– SERIES A, REDEEMABLE PREFERRED STOCK AND STOCKHOLDER'S EQUITY– RELATED PARTY


Redeemable Preferred Stock


As ofAt April 30, 20182020 and 2017,2019, respectively, there were 5,000,000 and 1,000,000 shares of $0.0001 par value, $0.0001, Series A, Redeemable Preferred Stock outstanding.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.


During Due to the year endedApril 30, 2018,redemption feature being at the option of the holder, the Company issued 4,000,000 sharesclassifies the purchase price in the temporary equity section of Series A Preferred Stock to Paul Feldman, CEO in exchange for $4,000. Each Series A preferred share is entitled to 200,000 (i.e., 200:1) votes per share and carries no right of conversion into shares of common stock.the balance sheet.


Common Stock


As of April 30, 2018 and 2017, there were 194,415,754 and 1,698,494 shares of common stock outstanding, respectively.


On January 19, 2016, the Company amended its Articles of Incorporation to increase its 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, the Company amended its Articles of Incorporation to increase its authorized common stock from 250,000,000 shares to 750,000,000 shares and to increase its authorized Series A Preferred Stock from 1,000,000 shares to 5,000,000 shares.


On March 31, 2017, the Company amended its Articles of Incorporation to affect a 1:250 reverse stock split which became effective on April 24, 2017. The stock split is reflected retrospectively as of May 1, 2016.  






On December 8, 2017, the Company amended its Articles of Incorporation to increase its authorized common stock from 750,000,000 shares to 2,000,000,000 shares and to increase its authorized Series A Preferred Stock fromSee Note 4 regarding these 5,000,000 shares serving as collateral for a debt issuance to 15,000,000 shares.Red Diamond Partners, LLC (“Red”) on October 11, 2019 for $27,500.


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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 it Series A Preferred to 20,000,000 shares, with no changes in par value. The increase in the common stock was made necessary because of the reserves required by the Company’s holders of convertible notes.


FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

During the year endedAprilNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2018, the Company issued 1) 192,516,391 shares of common stock in exchange for convertible notes totaling $317,096; 2) 100,000 shares in exchange for $600 and 3) 100,000 shares in exchange for services valued at $600.2020 AND 2019


During the year endedApril 30, 2017, the Company issued 1,527,931 shares of common stock in exchange for convertible notes totaling $755,402, and issued 8,423 shares of common stock valued at $20,000 as fees related to the issuance of certain RDW Notes.


NOTE 7 – INCOME TAXESREVENUES


No provision for income taxes was recordedAll of the Company’s revenues are derived from business in the periods presented due to tax losses incurred in each period.  AsNorth America. The following tables disaggregate our revenue by major product line, types of April 30, 2018customers, and 2017, the Company had net operating loss carry forwardstiming of approximately $2,003,233 and $1,467,711, respectively, for income tax reporting purposes.


 

 

April 30,

 

 

2018

 

2017

 

2014

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards

$

2,003,233  

 

$

1,467,711  

 

$

58,864  

 

Statutory tax rate

21%

 

21%

 

34%

Gross deferred tax assets

420,679  

 

308,219  

 

20,014  

Valuation allowance

(420,679) 

 

(308,219) 

 

(20,014) 

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 amounts of income tax benefit determined by applying the applicable U.S. statutory income tax rate to pre-tax lossrevenue recognition for the years ended April 30, 20182020 and 2017 is as follows:2019, respectively:


 

April 30,

 

2018

 

2017

 Federal Statutory Rate

$

(217,784)

 

$

(318,627)

 Nondeductible expenses

105,324 

 

150,768 

 Change in allowance on deferred tax assets

(112,460)

 

(167,859)

 

$

 

$

 

 

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%


The valuation allowance for deferred tax assets as

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

NOTE 8 - STOCKHOLDER’S DEFICIT

April 30, 2018 and 2017 was $112,460 and $80,969, respectively. The net change in the total valuation allowance for2020

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 increase in the common stock was made necessary because of the reserves required by the Company’s holders of convertible notes,

·

On September 20, 2018, the Company amended its Articles of Incorporation to affect a 1:1,000 reverse stock split. As of the date of this filing, the Company is waiting for FINRA to approve this corporate action. All share amounts included in this report have not been updated to reflect the reverse split.

·

Issued 646,768,535 shares of common stock in satisfaction of loan debt and related accrued interest, having a fair value of $115,289; and

·

Recorded a debt discount of $112,839 on convertible promissory notes due to a beneficial conversion feature.

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.

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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 an increaseaccrued for in 2020 bringing the total to $18,523. During the first quarter of $112,460. In assessing2020, all deferred compensation was forgiven (see Note 8). Additionally, the realizabilityCEO 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 managementand 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 portion or all of thethese 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 periodsperiod in which thosethese deductible temporary differences become deductible. Management considersreverse.

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FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2020 AND 2019

During the scheduled reversalyears 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 liabilities, projectedassets.

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, planning strategiesrespectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in making this assessment. Duethe 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 uncertainty of realizingrelated asset would be removed from the deferred tax asset management has recordedschedule with a valuation allowance against the entire deferred tax asset.






The Company's U.S. federal net operating loss carry forward ("NOL") will expire in years 2033 through 2037; $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, $799,328 on April 30, 2036 and $535,522 on April 30, 2037. 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 acorresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, of a like amount.limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate.


The Company has adoptedfiles income tax returns in the accounting guidanceUnited 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 uncertainincome tax positions, and has evaluated itsmatters as 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 ofexpense. At April 30, 20182020 and 2017,2019, there wereare no unrecognized tax benefits.  Accordingly,benefits, and there are no significant accruals for interest related to unrecognized tax benefits or tax penalties.

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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 tabular reconciliation from beginning to ending periods is not provided.  The Company will classify any futuresummary of the Company’s convertible notes payable and related accrued interest and penalties(included as a component of income tax expense if incurred.  To date, there have been no interest or penalties charged oraccounts payable and accrued in relation to unrecognized tax benefits.


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


The Company’s tax returns are subject to examination by the federal and state tax authorities for yearsfiscal year ended April 30, 20152020 through 2018.  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

 

 

$-

 

NOTE 9 – RECLASSIFICATIONS

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Due to the Company’s Preferred Stock containing a redemption feature at the option of the holder, the Company reclassified the purchase price of the Preferred Stock from Preferred Stock and additional paid-in-capital (“APIC”) to the mezzanine section of the balance sheet. This reclassification amounted to $5,000 and $1,000 as of April 30, 2018 and 2017, respectively.


NOTE 10 – SUBSEQUENT EVENTS


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 it Series A Preferred to 20,000,000 shares, with no changes in par value. The increase in the common stock was made necessary because of the reserves required by the Company’s holders of convertible notes.


Subsequent to April 30, 2018, RDW converted $27,906 of convertible note principal into 156,200,000 shares of common stock.


Subsequent to April 30, 2018, Power Up converted $71,674 of convertible note principal into 255,801,868 shares of common stock.

 





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

ITEM 9:

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIALDISCLOSURE

Table of Contents


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

On March 1, 2018,October 16, 2019, the Registrant was informed by Baum & Co., Inc. that they were resigning and thus terminating their services as the Registrant’s independent registered public accounting firm effective March 1, 2018. On March 6, 2018, the Registrant appointed Soles, Heyn & Company, LLPretained Assurance Dimensions as its principal independent accountant.accountants. The decision to retain Soles, Heyn & Company, LLPAssurance Dimensions as the Registrant’s principal independent accountantaccountants 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, 2018,2020, 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.


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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, 2018.2020. 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'sManagement’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

ITEM 9B:

 OTHER INFORMATION


None.

 

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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, 2018:2020:


Name

Age

Age

Position

Paul Feldman

54

64

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


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 isof $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.

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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

 

 

# 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.


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.


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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, 1600 Olive Chapel Rd., Apex, NC 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.




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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, 1600 Olive Chapel Rd., Apex,1249 Kildaire Farm Road Cary NC 27502.27511 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),

 

2020

 

$1,985

 

-

 

-

 

-

 

$1,985

 

CEO, CFO

 

2019

 

$16,538

 

-

 

-

 

-

 

$16,538

 

 

2018

 

$105,769

 

-

 

-

 

6,000

 

$111,769

 



Name and Principal Position


Year Ended April 30,



Salary ($)




Bonus ($)


Option Awards ($)


All Other Compensation ($)


Total ($)

Paul Feldman(1),

CEO, CFO

2018

105,769

-

6,000

111,769

2017

100,000

12,000

-

6,500

118,500

2016

81,461

-

2,000

83,461


(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 20182020. During the Company recognized $[]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 salary expense relatedApril 30, 2019, the balance owed to Mr. Feldman’s employment agreement of which Mr. Feldman was paid $[].$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.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.

 

Director Compensation


For the years ended April 30, 20182020 and 2017,2019, 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 


The following table sets forth certain information as of July 1, 20182020 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

 

 

 

 

 

Series A Preferred Stock

 

 

Common Stock

 

 

 

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)

 

Directors and Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paul Feldman

 

 

5,000,000

 

 

 

100.0%

 

 

40,000

 

 

 

40,000

 

 

 

1.1%

 

 

54.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5% shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* less than 1%


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 1600 Olive Chapel Rd., Apex,1249 Kildare Farm Road, Cary, NC 27502.27511.


(2)

Calculated pursuant to rule 13d-3(d) of the Exchange Act. Beneficial ownership is calculated based on 448,998,178841,184,284 shares of Common Stock and 5,000,000 shares of Series A Preferred Stock issued and outstanding on a fully diluted basis as of July 1, 2018.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 448,998,178841,184,289 shares of Common Stock and 5,000,000 shares of Series A Preferred Stock, with common stock equivalent voting rights of 200:1, issued and outstanding as of July 1, 2018.20, 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 March 6, 2018,October 16, 2019, the Registrant appointed Soles, Heyn & Company, LLPAssurance Dimensions as its principal independent accountant. Prior to the appointment of Assurance Dimensions, Soles, Heyn, & Company, LLP Baum & Company, P.A. acted as the Company’s principal independent accountant.

The aggregate fees of 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 year ended April 30, 20182020 and 2017,2019, totaled $16,000$27,300 and $26,000,$16,000, respectively.


Audit­Audit- Related Fees


The Company did not pay any audit-related fees for the year ended April 30, 20182020 and 20172019 which are not disclosed in “Audit Fees” above.


Tax Fees


There were no tax fees billed by our principal independent accountants for tax compliance for the year ended April 30, 20182020 and 2017.2019.


All Other Fees


There were no other fees billed for services other than those described above for the years ended April 30, 20182020 and 2017.2019.


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, 20182020 and 20172019

·

Consolidated Statements of Operations for the years endedYears Ended April 30, 20182020 and 20172019

·

Consolidated Statements of Stockholders’ Deficit for the years endedYears Ended April 30, 20182020 and 20172019

·

Consolidated Statements of Cash Flows for the years endedYears Ended April 30, 20182020 and 20172019

·

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.

58


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)



August

September 14, 20182020

ByBy:

/s/ Paul Feldman

Paul Feldman

Chief Executive Officer, Chief Financial Officer and Director

(Principal Executive Officer and Principal Financial Officer)

 





Exhibit Index


Exhibit No.

 

59

Description of Exhibit

Table of Contents

3.1

Exhibit Index

 

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)








31.1 *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)

60

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 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)

Incorporated 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



46