~~For~~For the transition period from ~~___________~~ _______________ to~~___________~~ _______________

~~Commission file number~~ ~~000-55519~~Force Protection Video Equipment Corp.

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes ☐[X] No ☒

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

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. [X] Yes ☒[ ] No ☐

Indicate by check mark whether the registrant has submitted electronically 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-months~~12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). [X] Yes ☐[ ] No ☒

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act). [ ] Yes ☐[X] No ☒

~~The~~State the aggregate market value of the voting and non-voting common ~~stock of the registrant~~equity held by non-affiliates computed by reference to the price at which the common equity was ~~approximately $76,000~~sold, or the average bid and asked prices of such common equity, as of ~~October 31, 2019,~~ the last business day of the registrant’s most recently completed second fiscal quarter. As$2,018,842 based on the closing price of ~~September 14,~~$0.002 on October 31, 2020 ~~there were 841,184,289~~.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, ~~outstanding.~~as of the latest practicable date. 158,244,935,162 shares of Class A common stock are outstanding as of April 14, 2021.

~~None.~~Portions of the registrant’s definitive proxy statement relating to its 2021 annual meeting of shareholders (the “2021 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2021 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

~~Statements in~~Except for historical information, this ~~Report may be “forward-looking~~report contains 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. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Description of Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks described in this Annual Report on Form 10-K and in other documents we file from time to time with the Securities and Exchange Commission including and our Quarterly Reports on Form 10-Q. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

All references in this Annual to the “Company,” “we,” “us” or “our” refer to Force Protection Video Equipment Corporation and our wholly owned subsidiary BIG Token, Inc. on a consolidated basis. All references to “Common Stock” or “Common Shares” refers to the common stock, $0.00000001 par value (upon effectiveness of our amendment to the articles of incorporation filed on April 15, 2021), of Forced Protection Video Equipment. All references to “BIG Token”, “BIG Token Application” or “BIG Token business” refers to our wholly owned subsidiary and corresponding operations that consist of a consumer based platform, technologies offer and services used to identify and reach target consumers which we purchased from SRAX, Inc. (“SRAX”) on February 4, 2021.

As used herein, references to (i) “Exchange Agreement” refer to that certain share exchange agreement entered into by and between the Company, SRAX, and Paul Feldman (the Company’s prior CEO) on September 30, 2020, (ii) “Exchange Amendment” refer to the amendment to the Exchange Agreement entered into by between the Company, SRAX, and Paul Feldman on January 27, 2021, (iii) “TSA” refer to the transition services agreement entered into by and between SRAX and BIGtoken on January 27, 2021, (iv) “MSA” refer to the master separation agreement entered into by BIGtoken and SRAX on January 27, 2021, (v) “FPVD Warrants” refer to the common stock purchase warrants the Company issued as a result of SRAX’s June 30, 2020 convertible debt offering whereby we assumed the obligation to issue 25,568,064,462 Common Stock purchase warrants, and (vi) “Debt Exchange Agreement” refer to the debt exchange agreement the Company entered into with Red Diamond Partners, LLC pursuant to which Red Diamond exchanged an aggregate of $815,520 of principal plus accrued interest for (i) 7,000,000,000 shares of unrestricted Common Stock and (ii) 8,313 shares of Series C Convertible Preferred Stock, convertible into approximately 12,864,419,313 shares of common Stock.

Prior to the completion of the Share Exchange, BIG Token was an operating segment of SRAX. On February 4, 2021 we completed the Share Exchange. As a result, BIG Token became our wholly owned subsidiary and we adopted BIG Token’s business plan. We anticipate formally changing our name to BIG Token in the future. In connection with the Share Exchange, we also entered into certain agreements with SRAX including but not limited to the TSA and MSA, as more fully described below. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties.

We were initially incorporated as M Street Gallery, Inc. in March of 2011, in the state of Florida. On September 25, 2013, we changed our name to Enhance-Your-Reputation.com, Inc. On February 1, 2015, we changed our name to Force Protection Video Equipment Corporation. Our headquarters are located in Westlake Village, California, but we work as a virtually distributed organization. On February 4, 2021 we completed a share exchange with BIG Token, Inc., a wholly owned subsidiary of SRAX. As a result of the exchange, BIG Token became our wholly owned subsidiary. Additionally, simultaneous with the exchange, we adopted BIG Token’s business plan.

We are a data technology company offering a consumer based mobile application that allows consumers to own and earn from their digital data. We generate revenue by anonymizing the data, and using it to extract consumer insights that we sell to brand advertisers. Our consumer- based platform and technologies offer tools and services to identify and reach the target consumers of our brand advertisers. Our technologies assist our clients to identify their core consumers and such consumers’ characteristics across various channels in order to discover new and measurable opportunities that amplify the performance of marketing campaigns and maximize a return on marketing spend.

When consumers download our app, we ask them some questions, engage them with surveys, and ask them to connect their various online accounts including their bank accounts, credit card accounts, and social media accounts. Based on the amount of information they provide directly by answering questions or taking surveys, or passively, by connecting accounts, we’re able to track more than 4,000 attributes per consumer.

We derive our revenues from applying the data we collect, and deriving insights and audiences that we use to increase the efficiency of the online advertising of our clients. We then share the revenue generated with our consumers based on their activity and various other parameters.

To date, there have been more than 16 million accounts registered on BIG Token. The vast majority of our registrations have been driven by referrals from existing users who get rewards for driving new users. Of the 16 million, we’ve “verified” over 9 million through emails and bot detection techniques.

The global big data market is forecasted to grow to $103B by 2027, more than double its market size in 2018. A consumer’s digital footprint includes everything they search for, view, read, listen to, purchase, like or comment on.

Data spending keeps rising - The majority of survey respondents (69.2%) said their organizations increased spending on data and related services in 2018 (relative to 2017), while over three-fourths (78.2%) anticipate investing even more in the coming year.

Companies are prioritizing data-driven insights in order to develop marketing strategy and allocate marketing spend.

Government Regulation On Data Privacy Is Driving Major Tech Companies To Restrict Or Eliminate Traditional Data Collection Techniques

Regulation is changing the way businesses and tech can use data. In 2016, the European Union (EU) passed the General Data Protection Regulation (GDPR) to give individuals control over their personal data and to unify regulations within the EU. Other seminal regulatory events include the 2018 passage of the California Consumer Privacy Act (CCPA) intended to enhance privacy rights and consumer protection for Californians.

In response to the changing global regulatory environment around data privacy, major tech companies are changing how they allow their customers to collect user data. Notably, the major browsers, including Google’s Chrome and Apple’s Safari, are eliminating, or severely restricting, the use of 3rd party cookies. Those cookies have been a principal way that brands have been able to identify and market to consumers. In addition, in iOS 14, Apple is changing the Identifier For Advertiser (IDFA) tags used by mobile apps to identify users from opt out, to opt-in.

As a result of the intensifying regulatory landscape, and the tech industry’s response, first-party opt-in data, like that collected by BIGtoken, is becoming increasingly valuable. As we scale our compliant first party data set, BIGtoken will be strongly positioned to capitalize on the rapidly evolving data marketplace. We are currently focused on increasing registered users on the platform, increasing the engagement of our users, monetizing our data driven insights, and rewarding our users for sharing their data.

Given the massive tailwinds in data privacy, and our focus on first-party opt-in data, we believe BIGtoken is well positioned to accelerate growth as we play an increasingly larger role in ensuring data privacy is treated as a human right.

For additional information about government regulation applicable to our business, see Risk Factors in Part I, Item 1A.

With the changing data privacy landscape, BIGtoken’s product offering is well positioned to provide marketing solutions compliant with these new and evolving regulations. BIGtoken’s product offering provides marketers with data solutions that traditional data providers cannot:

Consumers are increasingly demanding data privacy, compensation for their data, and transparency and choice of how their data is used. The BIGtoken platform is focused on providing consumers with the tools and preferences they need to achieve their unique data requirements, including:

Our business is currently based on using our mobile app to aggregate users who opt-in to provide us their data via direct and passive actions, anonymizing that data, and using that data to provide unique consumer insights that enable marketers to advertise more efficiently. We believe that as the information gathered through the BIGtoken platform scales, we will be able to introduce new products, and monetize our growing user base at increasingly higher rates.

We are currently focused on increasing registered users on the platform, increasing the engagement of our users, monetizing our data driven insights, and rewarding our users for sharing their data. As part of this strategy, we continue to explore partnership opportunities that would allow us to leverage the capabilities of the BIGtoken platform to effectively grow the platform and increase and enhance our user experience and user rewards / compensation.

Examples of how we plan to use BIGtoken and the proprietary consumer data derived therefrom include:

We market our services through our in-house sales team, with a focus today on the largest brand advertisers with the biggest advertising budgets. Our customers include 8 of the 10 largest brand advertisers, each poised to dramatically increase their spend with BIGtoken in 2021. We believe that our focus on the largest brand advertisers will not only drive meaningful revenue growth but will help build the BIGtoken brand as the leader in privacy focused, opt in, first-party data, positioning us well when we expand our focus to mid-market agencies and brands.

On the client side, our in-house marketing is focused on positioning BIGtoken as a thought leader in data privacy, via social media, including Facebook, LinkedIn and Twitter, public relations (PR), industry events and the creation of white papers which assist in our marketing efforts and are used as lead generation tools for our sales team.

On the consumer side, we are focused on marrying our privacy leadership, with a reward system that provides meaningful value to our users who provide us with meaningful data.

We currently rely on a combination of trade secret laws and restrictions on disclosure to protect our intellectual property rights. Our success depends on the protection of the proprietary aspects of our technology as well as our ability to operate without infringing on the proprietary rights of others. We also enter into proprietary information and confidentiality agreements with our employees, consultants and commercial partners and control access to, and distribution of, our software documentation and other proprietary information. We have one Trademark, “BIGtoken.”

We operate in a highly competitive digital media and ad tech environment. We compete based on our ability to: assist our customers in obtaining the best available prices, data, and analytics, our customer service and, the quality and accessibility of our innovative products and service offerings. We believe our platform provides for a competitive advantage. We expect an increasing number of other companies to provide similar services, leading to an increasingly competitive landscape.

We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business. Many of these laws and regulations are still evolving and being tested in courts and could be interpreted in ways that could harm our business. These may involve privacy, data protection and personal information, rights of publicity, content, intellectual property, advertising, marketing, distribution, data security, data retention and deletion, electronic contracts and other communications, competition, protection of minors, consumer protection, product liability, taxation, economic or other trade prohibitions or sanctions, anti-corruption law compliance, securities law compliance, and online payment services. In particular, we are subject to federal, state, and foreign laws regarding privacy and protection of people’s data. Foreign data protection, privacy, content, competition, and other laws and regulations can impose different obligations or be more restrictive than those in the United States. U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate, and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices.

Proposed or new legislation and regulations could also significantly affect our business. For example, the European General Data Protection Regulation (GDPR) took effect in May 2018 and applies to all of our products and services used by people in Europe. The GDPR includes operational requirements for companies that receive or process personal data of residents of the European Union that are different from those previously in place in the European Union and includes significant penalties for non-compliance. The California Consumer Privacy Act, which took effect in January 2020, also establishes certain transparency rules and creates new data privacy rights for users. Similarly, there are a number of legislative proposals in the European Union, the United States, at both the federal and state level, as well as other jurisdictions that could impose new obligations or limitations in areas affecting our business, such as liability for copyright infringement. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services.

We may become the subject of investigations, inquiries, data requests, requests for information, actions, and audits by government authorities and regulators in the United States, Europe, and around the world, particularly in the areas of privacy, data protection, law enforcement, consumer protection, and competition, as we continue to grow and expand our operations. We are currently, and may in the future be, subject to regulatory orders or consent decrees, including the modified consent order we entered into in July 2019 with the U.S. Federal Trade Commission (FTC) which is pending federal court approval and which, among other matters, will require us to implement a comprehensive expansion of our privacy program. Orders issued by, or inquiries or enforcement actions initiated by, government or regulatory authorities could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary remedies), interrupt or require us to change our business practices in a manner materially adverse to our business, divert resources and the attention of management from our business, or subject us to other remedies that adversely affect our business.

We anticipate embracing crypto and digital assets in the future. The regulatory regime governing blockchain technologies, cryptocurrencies, digital assets, utility tokens, security tokens and offerings of digital assets is uncertain, and new regulations or policies may materially adversely affect our development and the value. Regulation of digital assets, like cryptocurrencies, blockchain technologies and cryptocurrency exchanges, is currently undeveloped and likely to rapidly evolve as government agencies take greater interest in them. Regulation also varies significantly among international, federal, state and local jurisdictions and is subject to significant uncertainty. Various legislative and executive bodies in the United States and in other countries may in the future adopt laws, regulations, or guidance, or take other actions, which may severely impact the permissibility of tokens generally and the technology behind them or the means of transaction or in transferring them. Failure by us to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including civil penalties and fines.

As of March 26, 2021, we had 86 full-time employees. 7 are engaged in executive management such as our Chief Executive Officer, 57 in information technology including those participating in our research and development efforts, 7 in sales and marketing, 8 in integration and customer support and 7 in administration. All employees are employed “at will.” We believe our relations with our employees are generally positive and we have no collective bargaining agreements with any labor unions.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees. The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel, whether existing employees or new hires, through the granting of stock-based and cash-based compensation awards. We believe that this increases value to our stockholders and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

As the success of our business is fundamentally connected to the well-being of our employees, we are committed to their health, safety and wellness. We provide our employees and their families with access to convenient health and wellness programs, including benefits that provide protection and security giving them peace of mind concerning events that may require time away from work or that impact their financial well-being; and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families. In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the community in which we operate, and which comply with government regulations, including working in a remote environment where appropriate or required.

We have operated as an operating segment of SRAX since April 1, 2020. SRAX currently provides certain services to us, and costs associated with these functions are billed to us. These services relate to: executive management, information technology, legal, finance and accounting, human resources, tax, treasury, research and development, sales and marketing, shared facilities and other services.

On February 4, 2021, we completed the share exchange transaction (“Share Exchange”) as described in the share exchange agreement (“Exchange Agreement”). The Exchange Agreement and proposed Share Exchange was disclosed in our Current Report on Form 8-K that was filed with the Securities and Exchange Commission (the “Commission” or “SEC”)) on October 5, 2020.

Pursuant to the Share Exchange, we acquired all of the outstanding capital stock of BIG Token. As a result, we became a majority owned subsidiary of SRAX, BIG Token became our wholly owned subsidiary and Force Protection Video Equipment Corporation adopted BIG Token’s business plan. In connection with the Share Exchange, we entered into the following agreements:

On January 27, 2021, we entered into the Transition Services Agreement (“TSA”) with SRAX and BIG Token. Pursuant to the TSA, SRAX will provide us with certain transitional related services for such period of time as needed. Pursuant to the TSA, we pay SRAX, on a monthly basis, for certain services required to run the BIG Token business and platform, including but not limited to: (i) general and administrative services, (ii) finance and accounting services, (iii) technical operations, (iv) software services, (v) human resources services, (vi) use of facilities, (vii) and other services on an as needed basis if requested by the Company.

On January 27, 2021, we entered into a Master Separation Agreement (“MSA”) with SRAX. Pursuant to the MSA: (a) SRAX transferred all of the BIG Token assets required to run the BIG Token business including but not limited to (i) SRAXauto, SRAXcore, and SRAXshopper advertising tools and software, (ii) the BIG Token platform, (iii) associated BIG Token software and hardware; (iv) contracts associated with BIG Token, (v) intellectual property rights associated with BIG Token, (vi) bank accounts and certain inventory of BIG Token, and (vii) other assets required in the BIG Token business; and (b) certain liabilities and obligations related to the BIG Token business including but not limited to (v) liabilities related to the BIG Token business, (w) certain BIG Token accounts payable, (x) liabilities resulting from BIG Token contracts, (y) liabilities arising out of third-party claims against the BIG Token business and its assets, and (z) other liabilities that arise out of or result from the BIG Token business prior or subsequent to the closing of the Share Exchange. SRAX and the Company further agreed to take such steps necessary to facilitate the transfers, including continued efforts on each party if there is any delay in the assignment of any asset or liability.

The MSA also requires, for as long as SRAX is required to consolidate our results of operations and financial position, that we agree to: (i) prepare its annual and quarterly financial statements in accordance with the general accepted accounting principles (GAAP), (ii) undertake certain internal controls and procedures over financial reporting, (iii) provide our preliminary financial statements to SRAX for review, (iv) file all required quarterly and annual reports with the Commission on a timely basis, (v) provide SRAX with all annual budgets and periodic financial projections related to our operations on a consolidated basis, (vi) cooperate with SRAX on all public filings, press releases, and proxy statements filed or disseminated by SRAX as needed, and (vii) to use the same certified public accountant as SRAX.

Provided that SRAX owns at least fifty percent (50%) of the total voting power of our capital stock, without the prior consent of SRAX, we (i) will not restrict the ability of SRAX to sell, transfer or dispose of the Common Stock, (ii) will not breach certain contraction obligation to which SRAX is a party to and pursuant to which we receive a benefit pursuant to the TSA, and (iii) will not make any acquisitions or dispositions of businesses or assets in excess of $3,000,000 in the aggregate, or acquire shares, or interest in any company or partnership or loans in excess of $3,000,000 in the aggregate.

SRAX currently owns 149,562,566,584 shares of our Common Stock or approximately 95% of the voting power of the Company. For as long as SRAX continues to control more than 50% of our outstanding common stock, SRAX or its successor-in-interest will be able to direct the election of all the members of our board of directors. Similarly, SRAX will have the power to determine matters submitted to a vote of our stockholders without the consent of our other stockholders, will have the power to prevent a change in control of us and will have the power to take certain other actions that might be favorable to SRAX. In addition, the master separation agreement will provide that, as long as SRAX beneficially owns at least 50% of the total voting power of our outstanding capital stock entitled to vote in the election of our board of directors, we will not (without SRAX’s prior written consent) take certain actions, such as incurring additional indebtedness and acquiring businesses or assets or disposing of assets in excess of certain amounts. To preserve the tax-free treatment of the separation, the master separation agreement will include certain covenants and restrictions to ensure that, until immediately prior to the share exchange, SRAX will retain beneficial ownership of at least 80% of our carve-out voting power and 80% of each class of nonvoting capital stock, if any is outstanding. In addition, to preserve the tax-free treatment of the separation, we will agree in the tax matters agreement to restrictions, including restrictions that would be effective during the period following the distribution, that could limit our ability to pursue certain strategic transactions, equity issuances or repurchases or other transactions that we may believe to be in the best interests of our stockholders or that might increase the value of our business.

Investing in our Common Stock involves substantial risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report, including our financial statements and the related notes included elsewhere in this Annual Report, before deciding whether to invest in shares of our common stock. We describe below what we believe are currently the material risks and uncertainties we face, but they are not the only risks and uncertainties we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the following risks actually occur, our business, financial condition, results of operations and future prospects could be materially and adversely affected. In that event, the market price of our common stock could decline and you could lose part or all of your investment.

The COVID-19 pandemic, or other epidemic and pandemic diseases or governmental or other actions taken in response to them, could significantly disrupt our business.

Outbreaks of epidemic, pandemic or contagious diseases, such as the recent SARS-CoV-2 virus, or coronavirus, which causes coronavirus disease 2019, or COVID-19, or, historically, the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome or the H1N1 virus, could significantly disrupt our business. These outbreaks pose the risk that we or our employees, contractors, and other partners may be prevented from conducting business activities for an indefinite period of time due to spread of the disease within these groups, or due to restrictions that may be requested or mandated by governmental authorities. Business disruptions could include disruptions or restrictions on our ability to travel, as well as temporary closures of all or part of our facilities and the facilities of our partners. As the COVID-19 pandemic rapidly evolves and spreads, both across the United States and through much of the world, we continue to actively monitor the impact that COVID-19 is having and may have on our business.

As a result of the COVID-19 pandemic, many states and counties have issued and may in the future issue orders for all residents to remain at home, except as needed for essential activities, and have placed restrictions on the scope and conduct of business activities. As a result, we have implemented work from home policies for a majority of our employees that may continue for an indefinite period. We have taken steps to ensure the safety of our patients and employees, while working to ensure the sustainability of our business operations as this unprecedented situation continues to evolve.

In addition, a significant outbreak of epidemic, pandemic or contagious diseases in the human population, such as the global COVID-19 pandemic, could result in a widespread health crisis and adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our current or future products.

While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a continuing widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the value of our common stock.

We have a history of operating losses and there are no assurances we will report profitable operations in the foreseeable future.

We have losses from operations of $8,581,000 and $15,981,000 for the years ended December 31, 2020 and 2019, respectively. Our future success depends upon our ability to continue to grow our revenues, contain our operating expenses and generate profits. We do not have any long-term agreements with our customers. There are no assurances that we will be able to increase our revenues and cash flow to a level which supports profitable operations. We may continue to incur losses in future periods until such time, if ever, as we are successful in significantly increasing our revenues and cash flow beyond what is necessary to fund our ongoing operations and pay our obligations as they become due. If we are not able to grow, increase revenue and begin generating consistent profits, it is unlikely we will be able to generate sufficient cash from operations to pay our operating expenses and service our debt obligations, or report profitable operations in future periods.

We may not be able to continue as a going concern if we do not obtain additional financing.

We have incurred losses since our inception and have not demonstrated an ability to generate revenues from the sales of our proposed products. Our ability to continue as a going concern is dependent on raising capital from the sale of our common stock and/or obtaining debt financing. Our cash, cash equivalents and short-term investment balance as of December 31, 2020 was approximately $1,000. On March 12, 2021 we closed on the private placement of our Series B Preferred Stock. The offering resulted in gross proceeds of 4,724,827, not including an additional $1,050,000 that we closed on in October 2020. Based on our cash, cash equivalents and short term investments, as well as the proceeds from our offering, as well as our current expected level of operating expenditures, we expect to be able to fund our operations through the third quarter of 2021. Our ability to remain a going concern is wholly dependent upon our ability to continue to obtain sufficient capital to fund our operations. Accordingly, despite our ability to secure capital in the past, there can be no assurance that additional equity or debt financing will be available to us when needed or that we may be able to secure funding from any other sources. In the event that we are not able to secure funding, we may be forced to curtail operations, delay or stop ongoing clinical trials, cease operations altogether or file for bankruptcy.

We have historically operated as a business unit of SRAX and accordingly, SRAX has funded our operations. As of December 31, 2020, we had minimal cash or cash equivalents or short-term investment. On March 12, 2021, we closed on a private placement of our Series B Preferred Stock resulting in gross proceeds of approximately $4.7 million. Based on our cash, cash equivalents and short term investments, as well as the proceeds from our offering, as well as our current expected level of operating expenditures, we expect to be able to fund our operations through the third quarter of 2021. We cannot assure you that we will be able to secure additional capital through financing transactions, including issuance of debt. Our inability to operate profitably, or secure additional financing will materially impact our ability to fund our current and planned operations.

We have spent and expect to continue spending substantial cash in the execution of our business plan and the development of the BIG Token platform. We cannot assure you that financing will be available if needed. If additional financing is not available, we may not be able to fund our operations, develop or enhance our product offerings, take advantage of business opportunities or respond to competitive market pressures. If we exhaust our cash reserves and are unable to secure additional financing, we may be unable to meet our obligations which could result in us initiating bankruptcy proceedings or delaying or eliminating some or all our research and product development programs.

Our failure to maintain an effective system of internal control over financial reporting may result in the need for us to restate previously issued financial statements. As a result, current and potential stockholders may lose confidence in our financial reporting, which could harm our business and value of our stock.

Or management has determined that, as of December 31, 2020, we did not maintain effective internal controls over financial reporting based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework as a result of identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Our auditors have expressed substantial doubt about our ability to continue as a going concern.

Our auditors’ report on our December 31, 2020 consolidated financial statements expresses an opinion that our capital resources as of the date of their audit report were not sufficient to sustain operations or complete our planned activities for the upcoming year unless we raised additional funds. Our current cash level raises substantial doubt about our ability to continue as a going concern past the third quarter of 2021. If we do not obtain additional capital by such time, we may no longer be able to continue as a going concern and may cease operation or seek bankruptcy protection.

If we are unable to successfully retain and integrate a new management team, our business could be harmed.

We have historically operated as a business unit of SRAX. Our success depends largely on the development and execution of our business strategy by our senior management team. Effective February 16, 2021, Lou Kerner was appointed Chief Executive Officer. Our success depends largely on the development and execution of our business strategy by our senior management team. We currently have a limited executive team which may adversely affect our business. Additionally, the loss of any members or key personnel would likely harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate. There may be a limited number of persons with the requisite skills to serve in these positions, and we cannot assure you that we would be able to identify or employ such qualified personnel on acceptable terms, if at all. We cannot assure you that management will succeed in working together as a team. In the event we are unsuccessful, our business and prospects could be harmed.

We depend on the services of our executive officers and the loss of any of their services could harm our ability to operate our business in future periods.

Our success largely depends on the efforts and abilities of our or Chief Executive Officer, Lou Kerner. We are a party to an employment agreement with Mr. Kerner. Although we do not expect to lose his services in the foreseeable future, the loss of any of them could materially harm our business and operations in future periods until such time as we were able to engage a suitable replacement.

We have no operating history as a standalone entity or management team as presently configured which results in a high degree of uncertainty regarding our ability to effectively operate our business.

Our limited staff, operating history as well as our recently appointed management team means that there is a high degree of uncertainty regarding our ability to:

No assurances can be given as to exactly when, if at all, we will be able to develop our business or take the necessary steps to derive net income.

The employment contract of Lou Kerner contains anti-termination provisions which could make changes in management difficult or expensive.

We have entered into an employment agreement with Lou Kerner, our Chief Executive Officer. This agreement may require the payment of severance in the event he ceases to be employed. The provision makes the replacement of Mr. Kerner costly and could cause difficulty in effecting any required changes in management or a change in control.

We may be required to expend significant capital to redeem BIGtoken Points which will negatively impact our ability to fund our core operations.

Users of BIGtoken receive points for undertaking certain actions on the platform that may be redeemed directly for cash from us, with such value as determined by management. Accordingly, we are currently obligated to redeem users’ points which are earned on BIGtoken. We are currently redeeming each point for up to $0.01, subject to the user meeting certain conditions. As of December 31, 2020, we recorded a contingent liability for future point redemptions equal to approximately $445,000 and we have redeemed an aggregate amount of approximately $1,250,000. As of December 31, 2020, we had approximately 16 million application downloads. If our users continue to increase, we will be required to have enough cash reserves to redeem points held by our qualified users for cash. There can be no assurance that we will have enough cash reserves, or if we do have sufficient cash, if we will be able to continue to fund our other business obligations and operational expenses.

If our efforts to attract and retain BIGtoken users are not successful, our number of users and the amount of data collected could fail to reach critical mass, grow or decline and our potential for BIGtoken to earn revenues may be materially affected.

We will be dependent on advertisers to pay us for access to user data. We must attract users to grow the amount of accessible data and make it attractive to these third parties. If the public does not perceive our mission or our services to be reliable, valuable or of high quality, we may not be able to attract or retain users and create a critical mass of data which will impact our ability to earn revenues which could have a materially adversely affected us.

The regulatory regime governing blockchain technologies, cryptocurrencies, digital assets, utility tokens, security tokens and offerings of digital assets is evolving and uncertain, and new regulations or policies may materially adversely affect our development.

We anticipate embracing digital assets and cryptocurrencies in the future. Regulation of digital assets like, cryptocurrencies, blockchain technologies and cryptocurrency exchanges, is currently undeveloped and likely to rapidly evolve as government agencies take greater interest in them. Regulation also varies significantly among international, federal, state and local jurisdictions and is subject to significant uncertainty. Various legislative and executive bodies in the United States and in other countries may in the future adopt laws, regulations, or guidance, or take other actions, which may severely impact the permissibility of tokens generally and the technology behind them or the means of transaction or in transferring them. The regulatory regime governing blockchain technologies, cryptocurrencies, digital assets, utility tokens, security tokens and offerings of digital assets is uncertain, and new regulations or policies may materially adversely affect the development and the value of the Company if we materially embrace digital assets and cryptocurrencies in the future.

Natural disasters, epidemic or pandemic disease outbreaks, trade wars, political unrest or other events could disrupt our business or operations or those of our development partners, manufacturers, regulators or other third parties with whom we conduct business now or in the future.

A wide variety of events beyond our control, including natural disasters, epidemic or pandemic disease outbreaks (such as the recent novel coronavirus outbreak), trade wars, political unrest or other events could disrupt our business or operations or those of our manufacturers, regulatory authorities, or other third parties with whom we conduct business. These events may cause businesses and government agencies to be shut down, supply chains to be interrupted, slowed, or rendered inoperable, and individuals to become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. For example, California recently ordered most businesses closed, mandating work-from-home arrangements, where feasible, in response to the coronavirus pandemic. These limitations could negatively affect our business operations and continuity and could negatively impact our ability to timely perform basic business functions, including making SEC filings and preparing financial reports. If our operations or those of third parties with whom we have business are impaired or curtailed as a result of these events, the development and commercialization of our products and product candidates could be impaired or halted, which could have a material adverse impact on our business.

Challenges in acquiring user data could adversely affect our ability to retain and expand BIGtoken, and therefore could materially affect our business, financial condition and results of operations.

In order to expand BIGtoken, we must continue to expend resources to make the submission of user data as user-friendly as possible. We, and our users, may face legal, logistical, cultural and commercial challenges in procuring user data. Additionally, once such data is obtained, if the process for validation and collection of rewards may be perceived as too cumbersome and discourage potential users from submission. We may need to expend significant resources on user interfaces for evolving platforms, such as mobile devices. Inconveniences to our users or potential users at any stage of the process may materially challenge our growth.

If we fail to ensure that the user data derived from BIGtoken is of high quality, our ability to attract customers or monetize the data may be materially impaired.

The reliability of our user data depends upon the integrity and the quality of the process of accepting user data into BIGtoken. We will take certain measures to validate user data submitted by our users and potential users to assure a high quality of data in BIGtoken and generally confirming that data is submitted in accordance with our terms for such data. We must continue to invest in our quality control measures relating to BIGtoken in order to provide a high-quality product to potential customers.

If BIGtoken experiences an excessive rate of user attrition, our ability to attract customers could fail.

Users may elect to have their data deleted from BIGtoken at any time. We must continually add new users both to replace users who choose to delete their data and to increase our user base. Users may choose to delete their data for many reasons. If users are concerned about privacy and security and do not perceive BIGtoken to be reliable, if we fail to keep users engaged and interested in our application, or if we simply lose our users’ attention, we could fail to gather sufficient user data and our ability to earn revenues may be materially affected.

If we are unable to manage our marketing and advertising expenses, it could materially harm our results of operations and growth.

We plan to rely in part on our marketing and advertising efforts to attract new members. Our future growth and profitability, as well as the maintenance and enhancement of our brand, will depend in large part on the effectiveness and efficiency of our marketing and advertising strategies and expenditures. If we are unable to maintain our marketing and advertising channels on cost-effective terms, our marketing and advertising expenses could increase substantially, and our business, financial condition and results of operations may suffer. In addition, we may be required to incur significantly higher marketing and advertising expenses than we currently anticipate if excessive numbers of members withdraw their member data from our database.

Failure to comply with federal, state and local laws and regulations or our contractual obligations relating to data privacy, protection and security of BIGtoken user data, and civil liabilities relating to breaches of privacy and security of user data, could damage our reputation and harm our business.

A variety of federal, state and local laws and regulations govern the collection, use, retention, sharing and security of user data. We will collect BIGtoken user data from and about our members when they redeem rewards and maintain that date in our BIGtoken Application. Claims or allegations that we have violated applicable laws or regulations related to privacy, data protection or data security could in the future result in negative publicity and a loss of confidence in us by our users and potential new users and may subject us to fines and penalties by regulatory authorities. In addition, we have privacy policies and practices concerning the collection, use and disclosure of user data as part of our agreements with our members, including ones posted on our website. Several Internet companies have incurred penalties for failing to abide by the representations made in their privacy policies and practices. In addition, our use and retention of user data could lead to civil liability exposure in the event of any disclosure of such information due to hacking, malware, phishing, inadvertent action or other unauthorized use or disclosure. Several companies have been subject to civil actions, including class actions, relating to this exposure.

We have incurred, and will continue to incur, expenses to comply with data privacy, protection and security standards and protocols for BIGtoken user data imposed by law, regulation, self-regulatory bodies, industry standards and contractual obligations. Such laws, standards and regulations, however, are evolving and subject to potentially differing interpretations, and federal, state and provincial legislative and regulatory bodies may expand current or enact new laws or regulations regarding privacy matters. Additionally, we accept user from foreign countries which subjects us to the personal and other data privacy, protection and security laws of those countries, We are unable to predict what additional legislation, standards or regulation in the area of privacy and security of personal information could be enacted or its effect on our operations and business.

If we are unable to satisfy data privacy, protection, security, and other government- and industry-specific requirements, our growth could be harmed.

We need or may in the future need to comply with a number of data protection, security, privacy and other government- and industry-specific requirements, including those that require companies to notify individuals of data security incidents involving certain types of personal data. Security compromises could harm our reputation, erode user confidence in the effectiveness of our security measures, negatively impact our ability to attract new members, or cause existing users to withdraw their data from BIGtoken.

Regulatory, legislative or self-regulatory developments regarding internet privacy matters could adversely affect our ability to conduct our business.

The United States and foreign governments have enacted, considered or are considering legislation or regulations that could significantly restrict our ability to collect, process, use, transfer and pool data collected from and about consumers and devices. Trade associations and industry self-regulatory groups have also promulgated best practices and other industry standards relating to targeted advertising. Various U.S. and foreign governments, self-regulatory bodies and public advocacy groups have called for new regulations specifically directed at the digital advertising industry, and we expect to see an increase in legislation, regulation and self-regulation in this area. The legal, regulatory and judicial environment we face around privacy and other matters is constantly evolving and can be subject to significant change. For example, the General Data Protection Regulation, or GDPR, which was agreed by E.U. institutions in 2016 and came into effect after a two-year transition period on May 25, 2018, updated and modernized the principles of the 1995 Data Protection Directive and significantly increases the level of sanctions for non-compliance. Data Protection Authorities will have the power to impose administrative fines of up to a maximum of €20 million or 4% of the data controller’s or data processor’s total worldwide turnover of the preceding financial year. Similarly, the E-Privacy Regulation, which was launched by the European Parliament in October 2016, could result in, once enacted, new rules and mechanisms for “cookie” consent. In addition, the interpretation and application of data protection laws in the U.S., Europe and elsewhere are often uncertain and in flux. Legislative and regulatory authorities around the world may decide to enact additional legislation or regulations, which could reduce the amount of data we can collect or process and, as a result, significantly impact our business. Similarly, clarifications of and changes to these existing and proposed laws, regulations, judicial interpretations and industry standards can be costly to comply with, and we may be unable to pass along those costs to our clients in the form of increased fees, which may negatively affect our operating results. Such changes can also delay or impede the development of new solutions, result in negative publicity and reputational harm, require significant incremental management time and attention, increase our risk of non-compliance and subject us to claims or other remedies, including fines or demands that we modify or cease existing business practices, including our ability to charge per click or the scope of clicks for which we charge. Additionally, any perception of our practices or solutions as an invasion of privacy, whether or not such practices or solutions are consistent with current or future regulations and industry practices, may subject us to public criticism, private class actions, reputational harm or claims by regulators, which could disrupt our business and expose us to increased liability. Finally, our legal and financial exposure often depends in part on our clients’ or other third parties’ adherence to privacy laws and regulations and their use of our services in ways consistent with visitors’ expectations. We rely on representations made to us by clients that they will comply with all applicable laws, including all relevant privacy and data protection regulations. We make reasonable efforts to enforce such representations and contractual requirements, but we do not fully audit our clients’ compliance with our recommended disclosures or their adherence to privacy laws and regulations. If our clients fail to adhere to our contracts in this regard, or a court or governmental agency determines that we have not adequately, accurately or completely described our own solutions, services and data collection, use and sharing practices in our own disclosures to consumers, then we and our clients may be subject to potentially adverse publicity, damages and related possible investigation or other regulatory activity in connection with our privacy practices or those of our clients.

Privacy concerns could damage our reputation and deter current and potential users from contributing additional data through our BIGtoken Application. If our security measures are breached resulting in the improper use and disclosure of user data, BIGtoken may be perceived as not being secure, users and customers may curtail or stop using BIGtoken, and we may incur significant legal and financial exposure.

Concerns about our practices with regard to the collection, use, disclosure, or security of user data or other privacy related matters, even if unfounded, could damage our reputation and adversely affect our operating results. Our services will involve the purchase, storage, transmission and sale of user data, and theft and security breaches expose us to a risk of loss of this information, improper use and disclosure of such information, litigation, and potential liability. Any systems failure or compromise of our security that results in the release of user data, or in our or our users’ ability to access such data, could seriously harm our reputation and brand and, therefore, our business, and impair our ability to attract and retain users. Additionally, if user data is somehow made public or made available through a security breach, it may be used to identify our users and people related thereto. We may experience cyber attacks of varying degrees. Our security measures may also be breached due to employee error, malfeasance, system errors or vulnerabilities, including vulnerabilities of our vendors, suppliers, their products, or otherwise. Such breach or unauthorized access, increased government surveillance, or attempts by outside parties to fraudulently induce employees, users, or customers to disclose sensitive information in order to gain access to user data could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of BIGtoken that could potentially have an adverse effect on our business. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, become more sophisticated, and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Additionally, cyber attacks could also compromise trade secrets and other sensitive information and result in such information being disclosed to others and becoming less valuable, which could negatively affect our business. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose members and customers.

Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, content, competition, consumer protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.

We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, such as privacy, data protection and personal information, rights of publicity, content, intellectual property, advertising, marketing, distribution, data security, data retention and deletion, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and securities law compliance. Expansion of our activities in certain jurisdictions, or other actions that we may take, may subject us to additional laws, regulations, or other government scrutiny. In addition, foreign data protection, privacy, content, competition, and other laws and regulations can impose different obligations or be more restrictive than those in the United States.

Additionally, as we allow European users, we are subject to the European General Data Protection Regulation (GDPR), effective as of May 2018. The GDPR increases privacy rights for individuals in Europe, extends the scope of responsibilities for data controllers and data processors and imposes increased requirements and potential penalties on companies offering goods or services to individuals who are located in Europe or monitoring the behavior of such individuals (including by companies based outside of Europe). Noncompliance can result in penalties of up to the greater of €20 million, or 4% of global company revenues.

These U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government authorities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the newer industry in which we operate, and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices.

These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with and may delay or impede our international growth, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business.

Security breaches and improper access to or disclosure of our data or user data, or other hacking and phishing attacks on our systems, could harm our reputation and adversely affect our business.

Our industry is prone to cyber-attacks by third parties seeking unauthorized access to our data or users’ data or to disrupt our ability to provide service. Any failure to prevent or mitigate security breaches and improper access to or disclosure of our data or user data, including personal information, content, or payment information from or to users, or information from marketers, could result in the loss or misuse of such data, which could harm our business and reputation and diminish our competitive position. In addition, computer malware, viruses, social engineering (predominantly spear phishing attacks), and general hacking have become more prevalent in our industry. Our BIGtoken platform has experienced an increase in the occurrence of such attempts and we cannot be assured that we will be able to prevent a successful attack on our systems in the future. We also regularly encounter attempts to create false or undesirable user accounts or take other actions on our BIGtoken platform for purposes such as spreading misinformation, attempting to have us improperly purchase user data or other objectionable ends. As a result of recent attention and growth of our BIGtoken platform, the size of our user base, and the types and volume of personal data on our systems, we believe that we are a particularly attractive target for such breaches and attacks. Our efforts to address undesirable activity may also increase the risk of retaliatory attacks. Such attacks may cause interruptions to the services we provide, degrade the user experience, cause users or marketers to lose confidence and trust in our products, impair our internal systems, or result in financial harm to us. Our efforts to protect our company data or the information we receive may also be unsuccessful due to software bugs or other technical malfunctions; employee, contractor, or vendor error or malfeasance; government surveillance; or other threats that evolve. In addition, third parties may attempt to fraudulently induce employees or users to disclose information in order to gain access to our data or our users’ data. Cyber-attacks continue to evolve in sophistication and volume, and inherently may be difficult to detect for long periods of time. Although we are currently in the process of developing systems and processes that are designed to protect our data and user data, to prevent data loss, to disable undesirable accounts and activities on our BIGtoken platform, and to prevent or detect security breaches, we cannot assure you that such measures will ultimately become operational or provide absolute security, and we may incur significant costs in protecting against or remediating cyber-attacks.

Affected users or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or improper disclosure of data, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices, especially with regard to the BIGtoken platform. Such incidents or our efforts to remediate such incidents may also result in a decline in our active user base or engagement levels. Any of these events could have a material and adverse effect on our business, reputation, or financial results.

Certain user data must be provided on a recurring basis in order to provide full value.

Certain types of user data will need to be contributed by users recurrently for such data to provide full value to our potential customers. If users fail to provide us with sufficient recurring data, the value of the user data may substantially decrease and our ability to earn revenues may be materially affected.

Unfavorable publicity regarding, for example, our privacy practices, terms of service, regulatory activity, the actions of third parties, the use of our products or services for illicit, objectionable, or illegal ends or the actions of other companies that provide similar services to us, could adversely affect our reputation. Such negative publicity also could have an adverse effect on the size, engagement, and loyalty of our user base and result in user attrition which could adversely affect our business and financial results.

Weak economic conditions may reduce consumer demand for products and services.

A weak economy in the United States could adversely affect demand for advertising products, and services. A substantial portion of our revenue is derived from businesses that are highly dependent on discretionary spending by individuals, which typically falls during times of economic instability. Accordingly, the ability of our advertisers to increase or maintain revenue and earnings could be adversely affected to the extent that relevant economic environments remain weak or decline further. We currently are unable to predict the extent of any of these potential adverse effects.

Because we store, process and use data, some of which contain personal information, we are subject to complex and evolving federal, state and foreign laws and regulations regarding privacy, data protection and other matters, which are subject to change.

We are subject to a variety of laws and regulations in the United States and other countries that involve matters central to our business, including with respect to user privacy, rights of publicity, data protection, content, protection of minors and consumer protection. These laws can be particularly restrictive in countries outside the United States. Both in the United States and abroad, these laws and regulations constantly evolve and remain subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate. Because we store, process and use data, some of which contain personal information, we are subject to complex and evolving federal, state and foreign laws and regulations regarding privacy, data protection and other matters. Many of these laws and regulations are subject to change and uncertain interpretation and could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could materially adversely affect our business, results of operations and financial condition.

Several proposals are pending before federal, state and foreign legislative and regulatory bodies that could significantly affect our business. For example, a revision to the 1995 European Union Data Protection Directive is currently being considered by European legislative bodies that may include more stringent operational requirements for data processors and significant penalties for non-compliance. In addition, the EU General Data Protection Regulation 2016/679 (“GDPR”), which came into effect on May 25, 2018, establishes new requirements applicable to the processing of personal data ( i.e. , data which identifies an individual or from which an individual is identifiable), affords new data protection rights to individuals ( e.g. , the right to erasure of personal data) and imposes penalties for serious data breaches. Individuals also have a right to compensation under GDPR for financial or non-financial losses. GDPR will impose additional responsibility and liability in relation to our processing of personal data. GDPR may require us to change our policies and procedures and, if we are not compliant, could materially adversely affect our business, results of operations and financial condition.

If advertising on the Internet loses its appeal, our revenue could decline.

Our business model may not continue to be effective in the future for a number of reasons, including:

If the number of companies who purchase online advertising and promotional services from us does not grow, we may experience difficulty in attracting publishers, and our revenue could decline.

Our stock price may be volatile and your investment in our common stock could suffer a decline in value.

There has been significant volatility in the market price and trading volume of securities of technology and other companies, which may be unrelated to the financial performance of these companies. These broad market fluctuations may negatively affect the market price of our common stock.

Some specific factors that may have a significant effect on the market price of our common stock include:

We rely upon third parties for technology that is critical to our products, and if we are unable to continue to use this technology and future technology, our ability to develop, sell, maintain and support technologically innovative products would be limited.

We rely on third parties to obtain non-exclusive patented hardware and software license rights in technologies that are incorporated into and necessary for the operation and functionality of most of our products. In these cases, because the intellectual property we license is available from third parties, barriers to entry into certain markets may be lower for potential or existing competitors than if we owned exclusive rights to the technology that we license and use. Moreover, if a competitor or potential competitor enters into an exclusive arrangement with any of our key third-party technology providers, or if any of these providers unilaterally decides not to do business with us for any reason, our ability to develop and sell products and services containing that technology would be severely limited.

If we are offering products or services that contain third-party technology that we subsequently lose the right to license, then we will not be able to continue to offer or support those products or services. In addition, these licenses may require royalty payments or other consideration to the third-party licensor. Our success will depend, in part, on our continued ability to access these technologies, and we do not know whether these third-party technologies will continue to be licensed to us on commercially acceptable terms, if at all. In addition, if these third-party licensors fail or experience instability, then we may be unable to continue to sell products and services that incorporate the licensed technologies, in addition to being unable to continue to maintain and support these products and services. We do require escrow arrangements with respect to certain third-party software which entitle us to certain limited rights to the source code, in the event of certain failures by the third party, in order to maintain and support such software. However, there is no guarantee that we would be able to fully understand and use the source code, as we may not have the expertise to do so. We are increasingly exposed to these risks as we continue to develop and market more products containing third-party technology and software. If we are unable to license the necessary technology, we may be forced to acquire or develop alternative technology, which could be of lower quality or performance standards. The acquisition or development of alternative technology may limit and delay our ability to offer new or competitive products and services and increase our costs of production. As a result, our business, results of operations and financial condition could be materially adversely affected.

The development of our operations and infrastructure in connection with our separation from SRAX, and any future expansion of such operations and infrastructure, may not be successful, and may strain our operations and increase our operating expenses.

In connection with our separation from SRAX, we have begun to implement a new information technology infrastructure for our business, which includes the creation of management information systems and operational and financial controls unique to our business. We may not be able to put in place adequate controls in an efficient and timely manner in connection with our separation from SRAX and as our business grows, and our current systems may not be adequate to support our future operations. The difficulties associated with installing and implementing new systems, procedures and controls may place a significant burden on our management and operational and financial resources. In addition, as we grow internationally, we will have to expand and enhance our communications infrastructure. If we fail to continue to improve our management information systems, procedures and financial controls, or encounter unexpected difficulties during expansion and reorganization, our business could be harmed.

For example, we plan to invest significant capital and human resources in the design, development and enhancement of our financial and operational systems. We will depend on these systems in order to timely and accurately process and report key components of our results of operations, financial condition and cash flows. If the systems fail to operate appropriately or we experience any disruptions or delays in enhancing their functionality to meet current business requirements, fulfill contractual obligations, accurately report our financials and otherwise run our business could be adversely affected. Even if we do not encounter these adverse effects, the development and enhancement of systems may be much more costly than we anticipated. If we are unable to continue to develop and enhance our information technology systems as planned, our business, results of operations and financial condition could be materially adversely affected.

As part of growing our business, we may make acquisitions. If we fail to successfully select, execute or integrate our acquisitions, then our business, results of operations and financial condition could be materially adversely affected and our stock price could decline.

From time to time, we may undertake acquisitions to add new product and service lines and technologies, acquire talent, gain new sales channels or enter into new sales territories. Acquisitions involve numerous risks and challenges, including relating to the successful integration of the acquired business, entering into new territories or markets with which we have limited or no prior experience, establishing or maintaining business relationships with new retailers, distributors or other channel partners, vendors and suppliers and potential post-closing disputes.

We cannot ensure that we will be successful in selecting, executing and integrating acquisitions. Failure to manage and successfully integrate acquisitions could materially harm our business, financial condition and results of operations. In addition, if stock market analysts or our stockholders do not support or believe in the value of the acquisitions that we choose to undertake, our stock price may decline.

Pursuant to the completion of the Share Exchange, we became a stand-alone public company, although we will continue to be controlled by SRAX. The process of becoming a stand-alone public company is complex and may distract our management from focusing on our business and strategic priorities. Further, although we expect to have direct access to the debt and equity capital markets following this offering, we may not be able to issue debt or equity on terms acceptable to us or at all. Moreover, even with equity compensation tied to our business, we may not be able to attract and retain employees as desired.

We also may not fully realize the intended benefits of being a stand-alone public company if any of the risks identified in this “Risk Factors” section, or other events, were to occur. These intended benefits include improving the strategic and operational flexibility of both companies, increasing the focus of the management teams on their respective business operations, allowing each company to adopt the capital structure, investment policy and dividend policy best suited to its financial profile and business needs, and providing each company with its own equity currency to facilitate acquisitions and to better incentivize management. If we do not realize these intended benefits for any reason, our business may be negatively affected. In addition, the separation could materially adversely affect our business, results of operations and financial condition.

As long as SRAX controls us, the ability of our other shareholders to influence matters requiring stockholder approval will be limited.

As a result of the Share Exchange, SRAX owns 149,562,566,584 shares of our common stock and 5,000,000 shares of our Series A Preferred Stock, representing voting power of approximately 95% of our issued and outstanding capital stock. For so long as SRAX beneficially owns shares of our outstanding securities representing at least a majority of the votes entitled to be cast by the holders of our outstanding securities, SRAX will be able to elect all of the members of our board of directors and influence other voting matters.

SRAX’s ability to control our board of directors may make it difficult for us to recruit high-quality independent directors.

So long as SRAX beneficially owns shares of our outstanding securities representing at least a majority of the votes entitled to be cast by the holders of our outstanding shares, SRAX can effectively control and direct our board of directors. Further, the interests of SRAX and our other stockholders may diverge. Under these circumstances, persons who might otherwise accept our invitation to join our board of directors may decline.

SRAX’s interests may conflict with our interests and the interests of our other stockholders. Conflicts of interest between us and SRAX could be resolved in a manner unfavorable to us and our other stockholders.

Various conflicts of interest between us and SRAX could arise. The ownership interest and voting power of SRAX in our capital stock and ownership interests of our directors and officers in SRAX capital stock, or service by an individual as either a director and/or officer of both companies, could create or appear to create potential conflicts of interest when such individuals are faced with decisions relating to us. These decisions could include:

Potential conflicts of interest could also arise if we decide to enter into new commercial arrangements with SRAX in the future or in connection with SRAX’s desire to enter into new commercial arrangements with third parties. Additionally, we may be constrained by the terms of agreements relating to our indebtedness or equity securities from taking actions, or permitting us to take actions, that may be in our best interest.

Furthermore, disputes may arise between us and SRAX relating to our past and ongoing relationships, and these potential conflicts of interest may make it more difficult for us to favorably resolve such disputes, including those related to:

We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable to us than if we were dealing with an unaffiliated third party. While we are controlled by SRAX, we may not have the leverage to negotiate amendments to our various agreements with SRAX (if any are required) on terms as favorable to us as those we would negotiate with an unaffiliated third party.

The terms of the agreements that we expect to enter into with SRAX in connection with the separation may limit our ability to take certain actions which may prevent us from pursuing opportunities to raise capital, acquire other businesses or provide equity incentives to our employees, which could impair our ability to grow.

The terms of the agreements that we expect to enter into with SRAX in connection with the separation, including the MSA, may limit our ability to take certain actions, which could impair our ability to grow. The MSA provides that, as long as SRAX beneficially owns at least 50% of the total voting power of our outstanding capital stock entitled to vote in the election of our board of directors, we will not (without SRAX’s prior written consent) take certain actions, such as incurring additional indebtedness and acquiring businesses or assets or disposing of assets in excess of certain amounts.

We have no operating history as a stand-alone public company and our historical and carve-out financial information is not necessarily representative of the results we would have achieved as a stand-alone public company and may not be a reliable indicator of our future results.

The historical financial information we have included in this Annual Report does not reflect, what our financial condition, results of operations or cash flows would have been had we been a stand-alone entity during the historical periods presented, or what our financial condition, results of operations or cash flows will be in the future as an independent entity.

In addition, we have not made pro forma adjustments to reflect many significant changes that will occur in our cost structure, funding and operations as a result of our transition to becoming a public company, including changes in our employee base, potential increased costs associated with reduced economies of scale and increased costs associated with being a publicly traded, stand-alone company.

If SRAX experiences a change in control, our current plans and strategies could be subject to change.

As long as SRAX controls us, it will have significant influence over our plans and strategies, including strategies relating to marketing and growth. In the event SRAX experiences a change in control, SRAX’s incumbent owner(s) may attempt to cause us to revise or change our plans and strategies, as well as the agreements between SRAX and us, described in this Annual Report.

The assets and resources that we acquire from SRAX in the separation may not be sufficient for us to operate as a stand-alone company, and we may experience difficulty in separating our assets and resources from SRAX.

Because we have not operated as an independent company in the past, we will need to acquire assets in addition to those contributed by SRAX and its subsidiaries to us and our subsidiaries in connection with our separation from SRAX. We may also face difficulty in separating our assets from SRAX’s assets and integrating newly acquired assets into our business. Our business, financial condition and results of operations could be harmed if we fail to acquire assets that prove to be important to our operations or if we incur unexpected costs in separating our assets from SRAX’s assets or integrating newly acquired assets.

The services that SRAX provides to us may not be sufficient to meet our needs, which may result in increased costs and otherwise adversely affect our business.

Pursuant to the TSA, we expect SRAX to continue to provide us with corporate and shared services for a transitional period related to corporate functions, such as executive oversight, risk management, information technology, accounting, audit, legal, investor relations, tax, treasury, shared facilities, operations, customer support, human resources and employee benefits, sales and sales operations and other services in exchange for the fees specified in the TSA between us and SRAX. SRAX will not be obligated to provide these services in a manner that differs from the nature of the services provided to the BIGtoken business during the 12-month period prior to the separation, and thus we may not be able to modify these services in a manner desirable to us as a stand-alone public company. Further, if we no longer receive these services from SRAX due to the termination of the TSA or otherwise, we may not be able to perform these services ourselves and/or find appropriate third party arrangements at a reasonable cost (and any such costs may be higher than those charged by SRAX).

Our ability to operate our business effectively may suffer if we are unable to cost-effectively establish our own administrative and other support functions in order to operate as a stand-alone company after the termination of our shared services and other intercompany agreements with SRAX.

As an operating segment of SRAX, we relied on administrative and other resources of SRAX, including information technology, accounting, finance, human resources and legal services, to operate our business. In anticipation of the closing of the Share Exchange, we have entered into various service agreements to retain the ability for specified periods to use these SRAX resources. These services may not be provided at the same level as when we were a business segment within SRAX, and we may not be able to obtain the same benefits that we received prior to becoming a stand-alone company. These services may not be sufficient to meet our needs, and after our agreements with SRAX terminates, we may not be able to replace these services at all or obtain these services at prices and on terms as favorable as we currently have with SRAX. We will need to create our own administrative and other support systems or contract with third parties to replace SRAX’s systems. In addition, we have received informal support from SRAX, which may not be addressed in the agreements we have entered into with SRAX, and the level of this informal support may diminish as we become a more independent company. Any failure or significant downtime in our own administrative systems or in SRAX’S administrative systems during the transitional period could result in unexpected costs, impact our results and/or prevent us from paying our suppliers or employees and performing other administrative services on a timely basis.

We are a smaller company relative to SRAX, which could result in increased costs and decreased revenue due to difficulty maintaining existing customer relationships and obtaining new customers.

Prior to the completion of the Share Exchange with SRAX, we were able to take advantage of SRAX’s size, technology and services, including insurance, employee benefit support and audit and other professional services. We are a smaller company than SRAX and we cannot assure you that we will have access to financial and other resources comparable to those available to us prior to this offering. As a stand-alone company, we may be unable to obtain office space, goods, technology and services in general, as well as components and services that are part of our supply chain, at prices or on terms as favorable as those available to us prior to this offering, which could increase our costs and reduce our profitability. Our future success depends on our ability to maintain our current relationships with existing customers, and we may have difficulty attracting new customers.

SRAX has agreed to indemnify us for certain liabilities. However, we cannot assure that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that SRAX’s ability to satisfy its indemnification obligation will not be impaired in the future.

Pursuant to the MSA and certain other agreements with SRAX, SRAX has agreed to indemnify us for certain liabilities. The MSA will provide for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of SRAX’s business with SRAX.

However, third parties could also seek to hold us responsible for any of the liabilities that SRAX has agreed to retain, and we cannot assure that an indemnity from SRAX will be sufficient to protect us against the full amount of such liabilities, or that SRAX will be able to fully satisfy its indemnification obligations in the future. Even if we ultimately succeed in recovering from SRAX any amounts for which we are held liable, we may be temporarily required to bear these losses. Each of these risks could materially adversely affect our business, results of operations and financial condition.

Certain contracts used in our business will need to be replaced, or assigned from SRAX or its affiliates in connection with the separation, which may require the consent of the counterparty to such an assignment, and failure to obtain such replacement contracts or consents could increase our expenses or otherwise adversely affect our results of operations.

Our separation from SRAX requires us to replace shared contracts and, with respect to certain contracts that are to be assigned from SRAX or its affiliates to us or our affiliates, to obtain consents and assignments from third parties. It is possible that, in connection with the replacement or consent process, some parties may seek more favorable contractual terms from us. If we are unable to obtain such replacement contracts or consents, as applicable, we may be unable to obtain some of the benefits, assets and contractual commitments that are intended to be allocated to us as part of the separation. If we are unable to obtain such replacement contracts or consents, the loss of these contracts could increase our expenses or otherwise materially adversely affect our business, results of operations and financial condition.

Some of our directors and officers own SRAX common stock, restricted shares of SRAX common stock or options to acquire SRAX common stock and hold positions with SRAX, which could cause conflicts of interest, or the appearance of conflicts of interest, that result in our not acting on opportunities we otherwise may have.

Some of our directors and executive officers own SRAX common stock, restricted shares of SRAX stock or options to purchase SRAX common stock.

Ownership of SRAX common stock, restricted shares of SRAX common stock and options to purchase SRAX common stock by our directors and executive officers, and the presence of executive officers or directors of SRAX on our board of directors could create, or appear to create, conflicts of interest with respect to matters involving both us and SRAX that could have different implications for SRAX than they do for us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between SRAX and us regarding terms of the agreements governing the separation and the relationship between SRAX and us thereafter, including the MSA or the transition services agreement. Potential conflicts of interest could also arise if we enter into commercial arrangements with SRAX in the future. As a result of these actual or apparent conflicts of interest, we may be precluded from pursuing certain growth initiatives.

We may have received better terms from unaffiliated third parties than the terms we will receive in the agreements that we entered with SRAX.

The agreements that we entered into with SRAX in connection with the separation, including the MSA and the TSA were prepared in the context of the separation while we were still a wholly owned subsidiary of SRAX.

Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.

On January 27, 2021 we entered into the Debt Exchange Agreement with Red Diamond. Pursuant to the Debt Exchange Agreement, we issued Red Diamond 7,000,000,000 free trading shares of Common Stock or approximately 837% of the prior public float of 841,184,289. We also issued Red Diamond 8,313 shares of Series C Preferred Stock, convertible into approximately 12,864,419,313 shares of Common Stock. Although Red Diamond agreed to a leak out of 20% of average daily volume for the five trading days preceding the sale, this will still result in a significant number of shares compared to our prior public float and will be difficult to monitor compliance. Sales of a substantial number of such shares now and upon expiration of the leak-out period or the perception that such sales may occur, could cause our market price to fall or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

If our stock price is extremely volatile and subject to price which may result in you losing a significant part of your investment.

The market price of our common stock will be influenced by many factors, some of which are beyond our control, including those described in this Risk Factors section and include the following:

In particular, the realization of any of the risks described in these “Risk Factors” could have a material adverse impact on the market price of our common stock in the future and cause the value of your investment to decline. In addition, the stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.

We have never paid a cash dividend and do not intend to pay cash dividends on our common stock in the foreseeable future.

We have never paid a cash dividend, nor do we anticipate paying cash dividends in the foreseeable future. Accordingly, any return on your investment will be as a result of the appreciation of our common stock if any.

Future sales, or the perception of future sales, of our common stock, including by SRAX, may depress the price of our common stock.

The market price of our common stock could decline significantly as a result of sales or other distributions of a large number of shares of our common stock in the market, including shares that might be offered for sale or distributed by SRAX. The perception that these sales might occur could depress the market price of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As a result of the Share Exchange, we issued SRAX 149,562,566,584 shares of common stock. As we are currently not cash flow positive, we will be required to raise significant capital in the future through the sale of our debt and equity securities. Also, in the future, we may issue our securities in connection acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. The sale of these shares into the market could greatly depress the market price of our common stock.

Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

We have historically operated our business as a segment of a public company. As a stand-alone public company, we will have additional legal, accounting, insurance, compliance and other expenses that we have not incurred historically. After this offering, we will become obligated to file with the SEC annual and quarterly reports and other reports that are specified in Section 13 and other sections of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),. We will also be required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. In addition, we will become subject to other reporting and corporate governance requirements, including certain provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the regulations promulgated thereunder, which ~~can be identified~~will impose significant compliance obligations upon us.

Sarbanes-Oxley, as well as rules subsequently implemented by the ~~use~~SEC, have imposed increased regulation and disclosure and required enhanced corporate governance practices of ~~terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions~~public companies. We are committed to maintaining a high standard of ~~strategy that involve risks~~public disclosure, and ~~uncertainties. However, as the Company issues “penny stock,” as such term is defined~~our efforts to comply with evolving laws, regulations and standards 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, andthis regard are likely to ~~differ~~result in increased selling and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. These changes will require a significant commitment of additional resources. We may not be successful in implementing these requirements and implementing them could materially ~~from what is expressed or forecasted in~~adversely affect our business, results of operations and financial condition. In addition, if we fail to implement the ~~forward-looking statements due~~requirements with respect to ~~numerous factors, including those described above~~our internal accounting 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:~~audit functions, our ability to ~~develop~~report our ~~technology platform~~operating results on a timely and ~~our products; our ability to protect our intellectual property; the risk that~~accurate basis could be impaired. If we will not be able to develop our technology platform and products in the current projected timeframe; the risk that our products will not achieve performance standards in clinical trials; the risk that the clinical trial process will take longer than projected; the risk that our products will not receive regulatory approval; the risk that the regulatory review process will take longer than projected; the risk that we will not be unsuccessful in implementing our strategic, operating and personnel initiatives; the risk that we will not be able to commercialize our products; any of which could impact sales, costs and expenses and/or planned strategies. Additional information regarding factors that could cause results to differ can be found in this Report and in our other filings with the Securities and Exchange Commission.

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

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

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~~implement such requirements in a ~~wide range of activity. We also sell accessories that enhance the functionality and versatility of our products, including mounts,~~timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the ~~helmet, handlebar, roll bar~~SEC. Any such action could harm our reputation 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 courseconfidence of ~~their duties.~~

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

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

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

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

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

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

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

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.

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.

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.

~~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.~~

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 couldmaterially adversely affect our business and ~~operating results.~~cause our share price to fall.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley could materially adversely affect our business, results of operations, financial condition and stock price.

~~Competition~~As a public company, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of Sarbanes-Oxley (“Section 404”), which will require annual management assessments of the effectiveness of our internal control over financial reporting. Upon loss of emerging growth company status, an annual report by our independent registered public accounting firm that addresses the effectiveness of internal control over financial reporting will be required. During the course of our testing, we may identify deficiencies which we may not be able to remediate in time to meet our deadline for compliance with Section 404. Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. We also expect the regulations under Sarbanes-Oxley to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time consuming and costly. We may not be able to conclude on an ongoing basis that we have effective internal control over our financial reporting in accordance with Section 404 or our independent registered public accounting firm may not be able or willing to issue an unqualified report on the effectiveness of our internal control over financial reporting. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or their effect on our operations because there is presently no precedent available by which to measure compliance adequacy. If either we are unable to conclude that we have effective internal control over our financial reporting or, if required under SEC rules, our independent auditors are not engaged to provide us with an unqualified report as required by Section 404, then investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our stock or if our operating results do not meet their expectations, our stock price could decline.

The trading market for ~~on-body cameras is highly competitive. Further,~~our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we ~~expect competition to increase~~could lose visibility in the ~~future as existing competitors introduce new~~financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrades our stock or if our operating results do not meet their expectations, our stock price could decline.

In the past, securities class action litigation has often been instituted against companies whose securities have experienced periods of volatility and ~~more competitive offerings alongside their existing products, and as new~~decline in market ~~entrants introduce new products into our markets. We compete against established, well-known camera manufacturers such as Axon-Taser, WatchGuard and Provision. Many~~price. Recently, we have seen the price of our ~~current competitors~~Common Stock decline from approximately $0.10 to less than $0.02, a decline of approximately 80%. Securities litigation brought against us following such decline in the price of our common stock is likely regardless of the merit or ultimate results of such litigation. Such litigation will result in substantial costs, which would hurt our financial condition and results of operations and divert management’s attention and resources from our business.

In the future, your percentage ownership may be diluted because of our need to raise additional capital, the conversion of outstanding convertible securities and the granting of equity awards to our directors, officers and employees or otherwise as a result of equity issuances for acquisitions or capital market transactions. In connection with and following the Share Exchange, we anticipate granting equity awards to our employees and directors. In addition, following the Share Exchange, we will have outstanding a number of securities that are convertible into shares of our common stock. Upon conversion, you will experience 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.dilution.

In addition, ~~many~~our Articles of Incorporation authorize us to issue, without the approval of our ~~existing~~stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock respecting dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our Common Stock. For example, the Company could grant the holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions.

We are a smaller reporting company and as a result have certain reduced disclosure requirements.

We are a “smaller reporting company” as defined in the Securities Act, as such, we are required to comply with certain reduced disclosure requirements for public company reporting requirements for future filings. As a smaller reporting company, we are not required to disclose certain executive compensation information only two years of audited financial statements in our public filings.

Our board of directors will have the ability to issue blank check preferred stock, which may discourage or impede acquisition attempts or other transactions.

Our board of directors will have the power, subject to applicable law, to issue series of preferred stock that could, depending on the terms of the series, impede the completion of a merger, tender offer or other takeover attempt. For instance, subject to applicable law, a series of preferred stock may impede a business combination by including class voting rights, which would enable the holder or holders of such series to block a proposed transaction. Our board of directors will make any determination to issue shares of preferred stock on its judgment as to our and our stockholders’ best interests. Our board of directors, in so acting, could issue shares of preferred stock having terms which could discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders may believe to be in their best interests or in which stockholders would have received a premium for their stock over the then prevailing market price of the stock.

Our common stock may be considered a “penny stock,” and may be subject to additional sale and trading regulations that may make it more difficult to sell.

Our common stock may be considered a “penny stock.” The principal result or effect of being designated a penny stock is that securities broker-dealers participating in sales of our common stock may be subject to the penny stock regulations set forth in Rules 15g-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential ~~competitors have substantial competitive advantages,~~investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such ~~as:~~stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Pursuant to the TSA with SRAX, we are provided office space at SRAX’s corporate headquarters in Westlake Village, California and its engineering facilities in Mexicali, Baja California (Mexico). We believe both locations are suitable and adequate for our current levels of operations and anticipated growth.

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

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.

As of the date of this ~~report,~~Annual Report, there are no material pending legal or governmental proceedings relating to our company or properties to which we are a party, and to our knowledge there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have three full time employees including Paul Feldman who is our Director, Chief Executive Officer and Chief Financial Officer. Mr. Feldman spends approximately sixty (60) hours per week on our business. We have one full time employees who provide clerical and administrative services and one full time salesperson.a material interest adverse to us.

~~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.~~PART II

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 restrictionsClass A common stock is traded 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.~~

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

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.

~~Our common stock trades on the Over the Counter Markets Group Inc.~~OTC Market’s Pink ~~tier~~sheets under the symbol ~~“FPVD”.~~“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:~~

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

As of ~~September~~April 14, ~~2020,~~2021, there ~~are~~were approximately 4144 holders of record of our common ~~stock in certificate form, exclusive~~stock. Because many of ~~those brokerage firms and/or clearing houses holding~~ our ~~Common Stock in street name for their clientele (with each such brokerage house and/or clearing house being considered as one holder). We have 841,184,289~~ shares of common stock ~~issued~~are held by brokers and ~~outstanding.~~other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial holders represented by these record holders, but it is well in excess of the number of record holders.

We have ~~not~~never declared or paid any cash dividends ~~to the holders of~~on our ~~common~~capital stock and we do not ~~expect to pay any such~~currently anticipate declaring or paying cash dividends on our capital stock in the foreseeable ~~future as we expect~~future. We currently intend to retain all of our future earnings, ~~for use in~~if any, to finance the operation and expansion of our business. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions and covenants, applicable law and other factors that our board of directors may deem relevant. If we do not pay dividends, a return on your investment will occur only if the market price of our common stock appreciates.

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

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 madeNone as of the ~~date~~year end December 31, 2020.

The following information is given with regard to unregistered securities sold since January 1, 2020 by the Company. The following securities were issued in private offerings pursuant to the exemption from registration contained in the Securities Act and the rules promulgated thereunder in reliance on Section 4(2) thereof, relating to offers of securities by an issuer not involving any public offering.

● During the three months ended July 31, 2020, the Company sold $36,050 in 8%, convertible notes, under similar terms as its previous convertible note financings; and an additional $66,859 was sold during August and September 2020.

● During the six months ended October 31, 2020, the Company sold $126,729 in 8%, convertible notes.

● On October 22, 2020, the Company sold 10,500 shares of Series B Preferred Stock, with each share having a stated value of $100 for gross proceeds of $1,050,000. The Series B Preferred Stock is convertible into Common Stock at any time by the holder at conversion prices subject to certain adjustments as more fully described in the Company’s Designation of Preferences Rights and Limitations of Series B Preferred Stock. As of the ~~document, in which~~date hereof, the ~~statement is included, and we do not assume or undertake any obligation to update any~~Series B Preferred Shares are convertible into an aggregate of ~~those statements or documents unless~~13,636,906,500 shares of Common Stock.

● As of February 2021, we are required to ~~do so by law.~~issue Lou Kerner, our newly appointed CEO, options to purchase an aggregate of 13,951,066,447 shares of Common Stock at a weighted average exercise price of $0.000062719 per share, subject to certain vesting conditions.

● At the closing of the Share Exchange, we issued (i) 841,184,289 shares of Common Stock to Paul Feldman, our former CEO, (ii) 149,562,566,534 shares of Common Stock to SRAX, (iii) 7,000,000,000 shares of unrestricted Common Stock to Red Diamond, (iv) 8,318 shares of Series C Preferred Stock convertible into approximately 12,864,419,306 shares of Common Stock to Red Diamond, and (v) FPVD Warrants to purchase 25,568,064,453 shares of Common Stock at an exercise price per share of $0.00005844216 per share.

● On March 12, 2021, we closed on the private placement of 47,248.27 shares of Series B preferred Stock for an aggregate of $4,724,827 or $100 per share.

● On April 12, 2021, we closed on an additional the private placement of 850 shares of Series B preferred Stock for an aggregate of $$85,000 or $100 per share.

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

~~Forward Looking Statements~~Prior to the completion of the Share Exchange, BIG Token was an operating segment of SRAX. On February 4, 2021 we completed the Share Exchange. As a result, BIG Token became our wholly owned subsidiary, and we adopted BIG Token’s business plan. We anticipate formally changing our name to BIG Token in the future. In connection with the Share Exchange, we also entered into certain agreements with SRAX including but not limited to the TSA and MSA, as more fully described in this Annual Report. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties.

We are a data technology company offering a consumer-based application that allows consumers to own and earn from their digital identity and data. We generate revenue by providing this data, insights and the ability to connect with our users, to marketers. Our consumer-based platform and technologies offer tools and services to identify and reach their target consumers. Our technologies assist our clients in: (i) identifying their core consumers and such consumers’ characteristics across various channels in order to discover new and measurable opportunities that amplify the performance of marketing campaign in order to maximize a return on marketing spend.

Pursuant to the completion of the ~~financial condition~~Share Exchange, we entered into:

The agreements provide a framework for our relationship with SRAX after the separation and ~~results~~provide for the allocation between us and SRAX of ~~operations~~SRAX’s assets, employees, liabilities and obligations (including its investments, property and employee benefits assets and liabilities) attributable to periods prior to, at and after our separation from SRAX, specifically,

SRAX currently owns 95% of the ~~Company should~~voting power of our capital stock. Notwithstanding, pursuant to the sale of our Series B Preferred Stock on March 12, 2021, we are required to convert an aggregate of 57,748.27 shares of Series B Preferred Stock into approximately 82,343,910,015 shares of Common Stock subsequent to the effectiveness of the Company’s amendment to its articles of incorporation decreasing the par value of the Company’s Common Stock. Subsequent to such conversions, assuming no further issuances, SRAX will own approximately 64% of the voting power of our capital stock.

For as long as SRAX continues to control more than 50% of our outstanding common stock, SRAX or its successor-in-interest will be ~~read~~able to direct the election of all the members of our board of directors. Similarly, SRAX will have the power to determine matters submitted to a vote of our stockholders without the consent of our other stockholders, will have the power to prevent a change in control of us and will have the power to take certain other actions that might be favorable to SRAX. In addition, the MSA provides that, as long as SRAX beneficially owns at least 50% of the total voting power of our outstanding capital stock entitled to vote in the election of our board of directors, we will not (without SRAX’s prior written consent) take certain actions, such as incurring additional indebtedness and acquiring businesses or assets or disposing of assets in excess of certain amounts.

Our revenues consist of the sale of consumer data obtained through the BIGtoken platform in conjunction with various marketing related services, such as the following:

Our revenue can vary based on a number of factors, including changes in the overall advertising and data markets, user adoption of the BIGtoken platform, the effectiveness of our audience targeting abilities; changes in technology; and adoption of our current and future BIGtoken product offerings.

Cost of revenue consists of the costs of media and other third-party costs incurred in conjunction with the ~~financial statements~~marketing related services we provide.

Our cost of revenue as a percentage of revenue can vary based upon a number of factors, including those that may affect our revenue set forth above and factors that may affect our cost of revenue, including, without limitation: the ~~related notes thereto included elsewhere in this Report. Some~~cost of media utilized to perform our marketing services, the ~~statements contained in this Report that are not historical facts are “forward-looking statements” within the meaning~~volume 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,”media or the ~~negative or other variations, or by discussions~~effectiveness of ~~strategy that involve risks and uncertainties. However, as the Company intends~~our services. From time to ~~issue “penny stock,” as such term is defined~~time, however, we may experience fluctuations in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materiallygross margin as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

Employee related costs consist of salaries other compensation and related costs paid to ~~update any such factors or~~our employees and contractors. We expect these costs to ~~announce publicly~~increase in absolute dollars as we invest and expand our business.

Marketing and selling expenses consist primarily of advertising, corporate communications and user acquisition related costs. We expect our sales and marketing expense to increase in absolute dollars for the ~~results~~foreseeable future as we continue to invest in brand marketing to strengthen our competitive position, to accelerate growth and to raise brand awareness.

Platform costs consist the technology and content hosting of ~~any revisions~~our BIGtoken platform. We expect these costs to increase in absolute dollars for the foreseeable future as we continue to expand our user base.

Depreciation and Amortization cost represent an allocation of the ~~forward-looking statements contained or incorporated by reference herein~~costs incurred to ~~reflect future events or developments.~~acquire the long-lived assets used in our business over their estimated useful lives. Our long-lived assets consist of property and equipment and internally developed software.

General and administrative expense consists primarily of human resources, information technology, professional fees, IT and facility overhead, and other general corporate expense. We expect our general and administrative expense to increase in absolute dollars primarily as a result of the increased costs associated with being a stand-alone public company. However, we also expect our general and administrative expense to fluctuate as a percentage of our revenue in future periods based on fluctuations in our revenue and the timing of such expense.

In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to a number of other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. In addition, several states in the U.S., including California, where the Company is inheadquartered, have experienced an increase of new cases of COVID-19. It is uncertain if this trend will continue into 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 reported2021, as shown by the ~~media, there~~recent uptick in reported cases. The COVID-19 outbreak is ~~a significant market opportunity for the Company’s products.~~

~~Our video~~disrupting supply chains and ~~audio capture devices are compact, ergonomic, tamperproof~~affecting production and ~~designed to capture HD video and/or audio on demand enabling our customers to capture content while engaged in~~sales across a wide range of ~~activity. We also sell accessories that enhance~~industries. The extent of the ~~functionality~~impact of COVID-19 on our operational and ~~versatility~~financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our ~~products, including mounts, such as~~customers, employees and vendors all of which are uncertain and cannot be predicted. At this point, the ~~helmet, handlebar, roll bar and tripod mounts, as well as mounts that enable users~~extent 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 coursewhich COVID-19 may impact our financial condition or results of ~~their duties.~~operations is uncertain.

~~Our primary hardware products consist~~Results 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.Operations

~~Distribution~~We operate as one operating and reportable segment. The following table sets forth, for the periods presented, the combined statements of operations data, which we derived from the accompanying financial statements.

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.

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.

As of April 30, 2020, we had total assets of $4,621 and total liabilities of $740,444. Since our inception to April 30, 2020, we have an accumulated a deficit of $4,605,504 and negative cash flows from operations of $38,962. We anticipate that we will continue to incur lossesBIGtoken revenues 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~~year-ended December 31, 2020 decreased to ~~meet our long-term operating requirements. We expect~~$2,168,000 or 33% compared to ~~raise additional capital through the sale of equity or debt securities.~~

~~Year Ended April 30, 2020 Compared with~~$3,228,000 during the year ended ~~April 30, 2019~~December 31, 2019. This decrease is primarily driven by the suspension of several of our customer’s marketing campaigns during the end of the first quarter and through the second quarter.

BIGtoken’s costs of revenue consist of media acquired from third parties to fulfill the media and advertising components of our revenues. Profit margin for the year-ended December 31, 2020 increased to 63% as compared to 50% in 2019. The increase is driven by enhanced operational execution.

Our operating costs for the year-ended December 31, 2020 declined to $9,949,000 or by 43% as compared to $17,596,000 for the year-ended December 31, 2019. The decrease in operating expenses were attributable to the following: to the reductions in staffing related and other general administrative expenses attributable to our legacy media verticals, and the reduction of our BIGtoken point liability.

~~Liquidity~~Our financing cost for the year-ended December 31, 2020 increased to $7,421,000 compared to $694,000 for 2019 for an increase of approximately $6,727,000 or 969%. The increase is driven by cost incurred by our Parent in order to fund operations through the sale of convertible debentures in June of 2020 as compared to financing the operations of the business through the sale of assets and ~~Working Capital~~equity securities in 2019.

Income or loss associated with the changes in the fair value of warrant liabilities have been recorded in other income for the full years ended December 31, 2020 and 2019 and represent a proportionate allocation of the income / (loss) our Parent has incurred attributable to the changes in the calculated value of warrants it issued through various financing transactions in 2017 through 2020.

Our largest source of operating cash is payments from customers. Our customers typically pay us from 60 to 120 days from the date we invoice them. The primary use of operating cash is to pay our media suppliers, employees and our users through point redemptions, and others for a wide range of services. Cash flows used in our operating activities decreased by $3,162,000 or 42% in 2020 primarily driven by a reduction in operating expenses.

Our principal ~~source~~recurring investing activity is the funding of our internal software development. Expenditures for software development were $572,000 and $748,000 for the years ended 2020 and 2019, respectively. During the year-ended 2020, the Company generated $397,000 from the sale of marketable securities it held in a customer.

Cash provided by financing activities represents cash contributed by our Parent to fund our operations. We have accounted for these cash contributions initially as Net Parent Investment within the equity section of our Carve-Out Balance Sheets. Upon the Reverse Merger, the Net Parent Investment has been presented as the par value and additional paid-in capital for the common stock and series A preferred stock equivalent number of shares received by SRAX from the Reverse Merger.

Cash provided by financing activities for the year ended December 31, 2020 decreased by approximately $3,697,000 or 45%. This decrease was driven primarily by the decrease in our operating activities.

Historically, our operations have participated in cash management and funding arrangements managed by SRAX. Cash flows related to financing activities primarily reflect changes in Net parent investment. Other than those that are in BIGtoken designated legal entities, SRAX’s cash has not been assigned to us for any of the periods presented because those cash balances are not directly attributable to us. Cash and cash equivalents presented in the combined balance sheets represent amounts pertaining to the BIGtoken legal entity only. Cash used in operations decreased from $7,484,000 for the year ended December 31, 2019 to $4,322,000 for the year ended December 31, 2020 due primarily to a reduction in operating expenses. Prior to the Share Exchange, we were dependent on SRAX for our continued support to fund our operations. Upon the close of our Share Exchange, we obtained access to approximately $1,000,000 in cash on hand and have raised an additional $4,500,000 through a private offering of our Series B Preferred Stock.

Our capital structure and sources of liquidity iswill change significantly from our historical capital structure. Following the Share Exchange, we expect to use cash flows generated from operations, together with $1,000,000 in cash on-hand and the ~~bank. As~~proceeds of ~~April 30, 2020,~~$4,500,000 from the sale of preferred stock, as our primary sources of liquidity. Based on our current plans and market conditions, we believe that such sources of liquidity will be sufficient to satisfy our anticipated cash requirements for at least through the third quarter of 2021. We plan on embracing digital assets ~~totaled $4,621,~~such as cryptocurrencies going forward. At present we have not finalized any operating plans and accordingly, do not yet have an estimate of ~~which $2,505 was~~the amount of additional capital that such initiatives will require or the impact of such initiatives on our cash ~~on hand. The Company also has accounts receivable of $2,116. These conditions help raise doubt about~~burn rate. However, we may require or desire additional funds to support our ~~ability to continue as a going concern. Management recognizes that in order for us to meet our~~operating expenses and capital requirements or for other purposes, such as acquisitions, and ~~continue~~may seek to ~~operate,~~raise such additional funds through public or private equity or debt financing or from other sources. We cannot assure you that additional financing will be ~~necessary. We expect to raise additional funds through private~~available at all 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, if available, such ~~additional funds will~~financing would be ~~available for us to finance our operations~~obtainable on ~~acceptable~~ terms if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

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

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

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

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

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

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

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

~~We will face several material challenges of operating as a publicly reporting company and we expect to incur significant costs and expenses applicable~~favorable to us ~~as a public company. We anticipate that our ongoing costs~~ and ~~expenses of complying with our public reporting company obligations will~~would not be approximately $50,000 annually, which we expect to pay for out of proceeds from our financing efforts during the next twelve months from the date of this report. Subsequent to the next twelve-month reporting and compliance period, we expect to pay for our publicly reporting company compliance and reporting costs from our gross profits, although there is no assurance that sufficient revenues will be generated to cover said costs. We must structure, establish, maintain and operate our Company under corporate policies designed to ensure compliance with all required public company laws, rules and regulations, including, without limitation, the Securities Act of 1933, the Securities Act of 1934, the Sarbanes- Oxley Act of 2002, the Foreign Corrupt Practices Act and the respective rules and regulations promulgated thereunder. Some of our more significant challenges of being a publicly reporting company will include the following:

We 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.

dilutive. 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.

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:

~~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.

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

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.

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.

We have audited the accompanying consolidated balance sheets of Force Protection Video Equipment, Corp. (the “Company”) as of April 30, 2020 and 2019, the related consolidated statements of operations, statement of changes in stockholders’ deficitliquidity and cash ~~flows for each~~requirements will depend on numerous factors, including the introduction of ~~the two years in the period ended April 30, 2020,~~new products and ~~the~~potential acquisitions of related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of April 30, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the two years in the period ended April 30, 2020, in conformity with accounting principles generally accepted in the United States of America.businesses or technology.

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

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the auditing standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits include performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

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~~achieved profitable operations. ~~There can be no assurance that profitable~~In addition, the Company’s operations will ~~ever be achieved, or if achieved, could be sustained on a continuing basis.~~

~~In making this assessment we performed a comprehensive analysis~~require significant additional financing. As 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~~closing of the Series B offering the Company had cash and cash equivalents as of ~~April 30, 2020, will~~approximately $5 million which is 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.

~~The ultimate impact of the COVID-19 pandemic on~~ the Company’s planned operations ~~is unknown~~through one year after the date the consolidated financial statements are issued, 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~~accordingly, these factors create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

~~Note 2 -~~ ~~Summary~~In making this assessment we performed a comprehensive analysis of ~~Significant Accounting Policies~~our current circumstances including: our financial position, our cash flow and cash usage forecasts, and obligations and debts. Although our Parent Company’s management has a long history of successful capital raises, the analysis used to determine the Company’s ability to continue as a going concern does not include cash sources outside the Company’s direct control that management expects to be available within the next 12 months.

~~Principles~~We have entered into certain agreements that will affect the separation of ~~Consolidation~~

~~These consolidated financial statements have been prepared in accordance~~our business from SRAX, provide a framework for our relationship with ~~US GAAP~~SRAX after the separation and ~~include~~provide for the ~~accounts~~allocation between us and SRAX of ~~the Company~~SRAX’s assets, employees, liabilities and obligations (including its ~~wholly owned subsidiary, Cobraxtreme HD Corp. All intercompany transactions~~investments, property and ~~balances have been eliminated.~~

~~The Company uses the “management approach”~~employee benefits assets and liabilities) attributable to ~~identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions~~periods prior to, at 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.after our separation from SRAX, specifically:

The material terms of each of these agreements are summarized below. These summaries are qualified in their entirety by reference to the full text of such agreements, which are filed as exhibits to our public filings. When used in this section, “separation date” refers to the date on which SRAX will contribute the BIG Token business to us, which will occur prior to the completion of this Share Exchange.

~~Use~~The MSA identifies assets to be transferred, liabilities to be assumed and contracts to be assigned to each of ~~Estimates~~us and SRAX as part of the separation of SRAX into two companies, and will provide for when and how these transfers, assumptions and assignments will occur. In particular, the MSA provides for, among other things, that, subject to certain exceptions and the terms and conditions contained therein:

Except as may expressly be set forth in the MSA or any other transaction agreements, all assets will be transferred on an “as is,” “where is” basis, and the respective transferees will bear the economic and legal risks that (1) any conveyance will prove to be insufficient to vest in the transferee good title, free and clear of any security interest, and (2) any necessary consents or governmental approvals are not obtained or that any requirements of laws or judgments are not complied with.

In ~~preparing~~general, each party to the MSA will assume liability for all pending, threatened and unasserted legal matters related to its own business or its assumed or retained liabilities and will indemnify the other party for any liability to the extent arising out of or resulting from such assumed or retained legal matters.

The MSA provides that, subject to any provisions in the MSA or any other transaction agreement to the contrary, at or prior to the separation from SRAX, all intercompany accounts between SRAX and its subsidiaries, on the one hand, and BIG Token and its subsidiaries, on the other hand, will be settled.

To the extent that any transfers or assignments contemplated by the MSA have not been consummated on or prior to the date of the separation, the parties will agree to cooperate to effect such transfers as promptly as practicable following the date of the separation. In addition, each of the parties will agree to cooperate with the other party and use commercially reasonable efforts to take or to cause to be taken all actions, and to do, or to cause to be done, all things reasonably necessary under applicable law or contractual obligations to consummate and make effective the transactions contemplated by the MSA and the other transaction agreements.

Financial Covenants; Auditors and Audits; Annual Financial Statements and Accounting

We have agreed that, for so long as SRAX is required to consolidate our results of operations and financial position or account for its investment in our company under the equity method of accounting, we will, among other things:

In addition, the MSA provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of SRAX’s business with SRAX. Specifically, each party will indemnify, defend and hold harmless the other party, its affiliates and subsidiaries and their respective officers, directors, employees and agents (collectively, the “indemnified parties”) for any losses arising out of or otherwise in connection with:

We will also indemnify, defend and hold harmless the SRAX indemnified parties for any losses arising out of or otherwise in connection with any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information (1) contained in any of our public filings with the SEC following the Share Exchange or (3) provided by us to SRAX specifically for inclusion in SRAX’s annual or quarterly or current reports following the Share Exchange to the extent (A) such information pertains to us or the BIG Token business or (B) SRAX has provided prior written notice to us that such information will be included in one or more annual or quarterly or current reports, specifying how such information will be presented, and the information is included in such annual or quarterly or current reports (except, in the case of clause (B), for liabilities arising out of or resulting from, or in connection with, any action or inaction of any member of SRAX, including as a result of any misstatement or omission of any information by SRAX to us).

SRAX will also indemnify, defend and hold harmless the BIG Token indemnified parties for any losses arising out of or otherwise in connection with any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information (1) contained in our registration statement on Form S-1, of which this Form 10 is a part, or any Form 10 provided by SRAX specifically for inclusion therein to the extent such information pertains to (A) SRAX or (B) SRAX’s business (for the avoidance of doubt, other than the BIG Token business) or (2) provided by SRAX to us specifically for inclusion in our annual or quarterly or current reports following the Share Exchange to the extent (A) such information pertains to (x) SRAX or (y) SRAX’s business (for the avoidance of doubt, other than the BIG Token business) or (B) we have provided written notice to SRAX that such information will be included in one or more annual or quarterly or current reports, specifying how such information will be presented, and the information is included in such annual or quarterly or current reports (except, in the case of clause (B), for liabilities arising out of or resulting from, or in connection with, any action or inaction of ours, including as a result of any misstatement or omission of any information by us to SRAX.

The MSA also specifies procedures with respect to claims subject to indemnification and related matters.

The master separation agreement will also govern other matters related to the consummation of this Share Exchange and the distribution, the provision and retention of records, access to information, confidentiality, cooperation with respect to governmental filings and third-party consents and insurance.

In connection with the completion of this Share Exchange we entered into a TSA with SRAX pursuant to which SRAX will provide us with specified services for an indefinite period of limited time to help ensure an orderly transition following the separation. The TSA specifies the calculation of our costs for these services. The cost of these services will be negotiated between us and SRAX.

In general, the services will begin on the date of the closing of the Share Exchange and will cover a period generally not expected to exceed 12 months. We and SRAX have agreed to perform our respective services with substantially the same nature, quality, standard of care and service levels at which the same or similar services were performed by or on behalf of us or SRAX, as applicable, prior to the separation or, if not so previously provided, then substantially similar to those which are applicable to similar services provided to the affiliates or other business components of us or SRAX, as applicable.

The TSA generally provides that the applicable service recipient indemnifies the applicable service provider for liabilities that such service provider incurs arising from the provision of services other than liabilities arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the TSA, and that the applicable service provider indemnifies the applicable service recipient for liabilities that such service recipient incurs arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the TSA.

As of March 26, 2021, we had 59 full-time employees. 2 are engaged in executive management such as our Chief Executive Officer, 33 in information technology including those participating in our research and development efforts, 15 in sales and marketing, 8 in integration and customer support and 1 in administration. All employees are employed “at will.” We believe our relations with our employees are generally positive and we have no collective bargaining agreements with any labor unions.

The preparation of financial statements in conformity with ~~generally accepted accounting principles,~~GAAP requires management ~~is required~~ to make ~~certain~~ estimates and assumptions that affect the reported amount in our carve-out financial statements and related notes. On an ongoing basis, we evaluate estimates which are subject to significant judgment. The more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 1 to our carve-out financial statements for the years ended December 31, 2020 and 2019 appearing elsewhere in this report.

The following critical accounting policies affect the more significant judgments and estimates used in the preparation of our carve-out financial statements. In addition, you should refer to our accompanying carve-out balance sheets as of December 31, 2020 and 2019, and the carve-out statements of operations, changes in stockholders’ equity and cash flows for the fiscal years ended December 31, 2020 and 2019, and the related notes thereto, for further discussion of our accounting policies.

On an ongoing basis, we evaluate our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. To the extent that there are material differences between our estimates and our actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe the assumptions and estimates associated with the following have the greatest potential impact on our consolidated financial statements.

The Carve-Out Financial Statements have been prepared in conformity with U.S. GAAP and requires management of the Company to make estimates and assumptions in the preparation of these Carve-Out Financial Statements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the ~~financial statements~~Carve-Out Financial Statements and ~~revenues~~the reported amounts of revenue and expenses during the ~~reported~~reporting period. Actual results could differ from ~~those~~these estimates and ~~those estimates may be material.~~assumptions.

~~Significant estimates during~~The most significant areas that require management judgment and which are susceptible to possible change in the ~~year ended April 30, 2020~~near term 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~~Company’s revenue recognition, provision for bad debts, BIGtoken point redemption liability, stock-based compensation, income taxes, goodwill and ~~deferred tax valuation allowance.~~intangible assets.

As of December 31, 2020, the impact of COVID-19 continues to unfold and as a result, certain estimates and assumptions require increased judgment and carry a higher degree of variability and volatility that could result in material changes to our estimates in future periods.

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

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

Level 1—Observable inputs that 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 require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions.

Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could ~~include~~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 and cash equivalents, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At ~~April 30,~~December 31, 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~~ The Company measures certain ~~financial~~non-financial assets, liabilities, and ~~liabilities~~equity issuances at fair value ~~(“fair~~on a non-recurring basis. These non-recurring valuations include evaluating assets such as long-lived assets and goodwill for impairment; allocating value ~~option”). The fair value option may be elected on~~to assets in an ~~instrument-by-instrument basis~~acquired asset group; and ~~is irrevocable unless a new election date occurs. If the fair value option is elected~~applying accounting 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.business combinations.

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

~~For purposes~~Shares received will be accounted for in accordance with ASC 320 – Investments – Debt and Equity Securities, as such the shares will be classified as available-for-sale securities and will be measured at each reporting period at fair value with the unrealized gain (loss) as a component of other income (expense). Upon the sale of the ~~consolidated statements of cash flows,~~shares, the Company ~~considers all highly liquid instruments with~~will record the gain (loss) in the carve-out statement of operations as a ~~maturity~~component 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.~~

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.

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.~~

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

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

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

If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairments have been recorded regarding its identifiable intangible assets or other long-lived assets during the year ended December 31, 2020 and 2019, respectively.

Intangible assets consist of the Company’s intellectual property of internally developed software and are stated at cost less accumulated amortization. Amortization is provided for on the straight-line basis over the estimated useful lives of the assets of five to nine years.

Costs incurred to develop computer software for internal use are capitalized once: (1) the preliminary project stage is completed, (2) management authorizes and commits to funding a specific software project, and (3) it is probable that the project will be completed and the software will be used to perform the function intended. Costs incurred prior to meeting the qualifications are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Post-implementation costs related to the internal use computer software, are expensed as incurred. Internal use software development costs are amortized using the straight-line method over its estimated useful life which ranges up to three years. Software development costs may become impaired in situations where development efforts are abandoned due to the viability of the planned project becoming doubtful or due to technological obsolescence of the planned software product.

During 2018, the Company began to capitalize the costs of developing internal-use computer software, including directly related payroll costs.

The Company capitalizes costs incurred during the application development stage of internal-use software and amortize these costs over the estimated useful life. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred.

Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company tests goodwill for impairment for its reporting units on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that implied fair value of the goodwill within the reporting unit is less than its carrying value. The Company performed its most recent annual goodwill impairment test as of December 31, 2020 using market data and discounted cash flow analysis. Based on this analysis, it was determined that the fair value exceeded the carrying value of its reporting units.

The Company had historically performed its annual goodwill and impairment assessment on December 31^st of each year. This aligns the Company with other technology companies who also generally conduct this annual analysis in the fourth quarter.

When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology primarily using the income approach (discounted cash flow method).

We compare the carrying value of the goodwill, with its fair value, as determined by a combination of the market approach and income approach, its estimated discounted cash flows. If the carrying value of goodwill exceeds its fair value, the excess amount will be recognized as an impairment charge. We operate as one reporting unit.

When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.

BIGtoken applies Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

Under current and prior revenue guidance, revenues are recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those good or services.

The Company’s employees have historically participated in SRAX’s stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company’s employees as well as an allocation of SRAX’s corporate and shared functional employee expenses.

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.

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.

The Company’s operations have historically been included in SRAX’s combined U.S. income tax returns. Income tax expense included in the Carve-Out Financial Statements has been calculated following the separate return method, as if the Company was a stand-alone enterprise and a separate taxpayer for the periods presented. The calculation of income taxes on a separate return basis requires considerable judgment and the use of both estimates and allocations that affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and the Carve-Out Financial Statement recognition of revenues and expenses. As a result, the Company’s deferred income tax rate and deferred tax balances may differ from those in SRAX’s historical results.

The provision for income taxes is determined using the asset and liability approach. Deferred taxes represent the future tax consequences expected when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes result from differences between the Carve-Out Financial Statement and tax bases of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In evaluating the Company’s ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of operations. Any tax carryforwards reflected in the Carve-Out Financial Statements have also been determined using the separate return method. Tax carryforwards include net operating losses.

The complexity of tax regulations requires assessments of uncertainties in estimating taxes the Company will ultimately pay. The Company recognizes liabilities for anticipated tax audit uncertainties based on its estimate of whether, and the extent to which additional taxes would be due on a separate return basis. Tax liabilities are presented net of any related tax loss carryforwards.

For further information on recently issued accounting pronouncements, see Note 1—Summary of Significant Accounting Policies in the accompanying notes to consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Please see our consolidated financial statements beginning on page F-1 of this annual report.

Our management, consisting of our Principal Executive Officer and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2020. This evaluation included consideration of the controls, processes and procedures that are designed to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management has identified material weaknesses in the Company’s internal control over financial reporting. Based on that evaluation, management concluded that our disclosure controls and procedures as of December 31, 2020 were ineffective.

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

(iv) Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

On March 16, 2021, our Board of Directors approved the 2021 Equity Incentive Plan (“2021 Plan”). The 2021 Plan has not been approved by the Company’s stockholders, and is administered by our Board or such committee appointed by the Board. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock, performance units, performance shares, restricted stock units, and other stock-based awards to our employees, directors, and consultants. The purpose of the 2021 Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to our employees, directors and consultants, and to promote the success of the Company’s business. Under the terms of the 2021 Plan, the Company initially reserved 15,824,493,516 shares of Common Stock, subject to an automatic increase on the first day of each calendar year such that the number of shares available for issuance under the 2021 Plan will be 10% of the outstanding shares of Common Stock of the company. The 2021 Plan further authorizes the administrator to amend the exercise price and terms of certain awards thereunder. As of the date of this Annual Report, no awards have been granted under the 2021 Plan.

The information required by this Item is set forth under the heading “Directors, Executive Officers and Corporate Governance” in our 2021 Proxy Statement to be filed with the SEC in connection with the solicitation of proxies for our 2021 Annual Meeting of Shareholders (“2021 Proxy Statement”) and is incorporated herein by reference. Such Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year to which this report relates. The information required by this item regarding delinquent filers pursuant to Item 405 of Regulation S-K will be included under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2021 Proxy Statement and is incorporated herein by reference.

The information required by this Item is set forth under the headings “Director Compensation” and “Executive Compensation” of our 2021 Proxy Statement and is incorporated herein by reference.

The information required by this Item is set forth under the headings “Beneficial Owners of Shares of Common Stock” and “Equity Compensation Plan Information” of our 2021 Proxy Statement and is incorporated herein by reference.

The information required by this Item is set forth under the heading “Certain Relationships and Related Transactions” of our 2021 Proxy Statement and is incorporated herein by reference.

The information required by this Item is set forth under the heading “Independent Registered Public Accounting Firm” of our 2021 Proxy Statement and is incorporated herein by reference.

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

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

Intangible assets consist of BIGtoken’s intellectual property of internally developed software and are stated at cost less accumulated amortization. Amortization is provided for on the straight-line basis over the estimated useful lives of the assets of five to nine years.

During 2016, BIGtoken began capitalizing the costs of developing internal-use computer software, including directly related payroll costs. BIGtoken amortizes costs associated with its internally developed software over periods up to three years, beginning when the software is ready for its intended use.

BIGtoken capitalizes costs incurred during the application development stage of internal-use software and amortize these costs over the estimated useful life. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred.

Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. BIGtoken tests goodwill for impairment for its reporting units on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that implied fair value of the goodwill within the reporting unit is less than its carrying value. BIGtoken performed its most recent annual goodwill impairment test as of December 31, 2020 using market data and discounted cash flow analysis. Based on this analysis, it was determined that the fair value exceeded the carrying value of its reporting units. BIGtoken concluded the fair value of the goodwill exceed the carrying value accordingly there were no indicators of impairment for the years ended ~~April 30,~~December 31, 2020 and ~~2019, the Company recorded impairment losses of property and equipment of $6,274 and $0, respectively. See Notes 3 and 5.~~2019.

~~Right~~BIGtoken had historically performed its annual goodwill and impairment assessment on December 31^st of ~~Use Assets and Lease Obligations~~each year. This aligns BIGtoken with other advertising sales companies who also generally conduct this annual analysis in the fourth quarter.

~~The Right~~When evaluating the potential impairment of ~~Use (“ROU”) Asset~~goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for BIGtoken’s products and ~~Lease Liability reflect~~services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of BIGtoken’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology primarily using the income approach (discounted cash flow method).

When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of ~~the Company’s estimated~~those anticipated cash flows. Estimating future ~~minimum lease payments over the lease term, which may include options that are reasonably assured~~cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of ~~being exercised, discounted using a collateralized incremental borrowing rate.~~capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.

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

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

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.

~~The Company analyzes all financial instruments~~BIGtoken applies Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with ~~features of both liabilities and equity under FASB~~ Customers (“ASC Topic ~~No. 480, (“ASC 480”~~606”)~~, “~~~~Distinguishing Liabilities from Equity”~~ ~~and FASB ASC Topic No. 815, (“ASC 815”) “~~~~Derivatives and Hedging”~~. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial instruments. The Company uses a Black-Scholes option pricing model to determine fair value.

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

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

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

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

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

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

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

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

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.

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.

Application of ASC Topic 606 requires usBIGtoken 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:

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.

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.

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.

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.

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.

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~~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.

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

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

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 low historically, ~~low~~ and ~~are generally~~ recorded as current liabilities on our ~~consolidated financial statements~~Carve-Out 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.

We have elected certain practical expedients and policy elections as permitted under ASC Topic 606 as follows:

Cost of ~~revenues represents costs~~revenue consists of payments to media providers that are directly related to a revenue-generating event and project and application design costs. BIGtoken becomes obligated to make payments related to media providers in the ~~production, manufacturing and freight-in~~period the media is provided to us. Such expenses are classified as cost of revenue in the ~~Company’s product inventory purchased from third-party manufacturers.~~corresponding period in which the revenue is recognized in the accompanying Carve-Out Statements of Operations.

~~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~~BIGtoken’s employees have historically participated in SRAX’s stock-based compensation plans. Stock-based compensation expense has been allocated to BIGtoken based on the ~~difference between the financial reporting~~awards and ~~tax bases~~terms previously granted to BIGtoken’s employees as well as an allocation of ~~assets~~SRAX’s corporate 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.shared functional employee expenses.

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.

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.

We account for our stock-based compensation under ASC 718 “Compensation – Stock ~~Compensation”~~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.

~~When determining fair value, the Company considers the following assumptions~~Income taxes

BIGtoken’s operations have historically been included in SRAX’s combined U.S. income tax returns. Income tax expense included in the ~~Black-Scholes model:~~

~~There were no stock option grants during~~Carve-Out Financial Statements has been calculated following the ~~years ended April 30, 2020~~separate return method, as if BIGtoken was a stand-alone enterprise and ~~2019, respectively.~~

~~Additionally, there were no stock options issued, outstanding or exercisable as~~a separate taxpayer for the periods presented. The calculation of ~~April 30, 2020~~income taxes on a separate return basis requires considerable judgment and ~~April 30, 2019, respectively.~~

~~Common stock awards~~the use of both estimates and allocations that affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and the Carve-Out Financial Statement recognition of revenues and expenses. As a result, BIGtoken’s deferred income tax rate and deferred tax balances may differ from those in SRAX’s historical results.

The ~~Company may grant common stock awards to non-employees in exchange~~provision for ~~services provided. The Company measures the fair value of these awards~~income taxes is determined using the ~~fair value~~asset and liability approach. Deferred taxes represent the future tax consequences expected when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes result from differences between the ~~services provided~~Carve-Out Financial Statement and tax bases of BIGtoken’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In evaluating BIGtoken’s ability to recover our deferred tax assets within the ~~fair value~~jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of operations. Any tax carryforwards reflected in the ~~awards granted, whichever is more reliably measurable.~~ Carve-Out Financial Statements have also been determined using the separate return method. Tax carryforwards include net operating losses.

The ~~fair value measurement date~~complexity of ~~these awards is generally~~tax regulations requires assessments of uncertainties in estimating taxes BIGtoken will ultimately pay. BIGtoken recognizes liabilities for anticipated tax audit uncertainties based on its estimate of whether, and the ~~date the performance of services is complete. The fair value of the awards is recognized~~extent to which additional taxes would be due on a ~~straight-line basis as services~~separate return basis. Tax liabilities are ~~rendered. The share-based payments~~presented net of any 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.tax loss carryforwards.

~~There were no stock awards granted during~~We use ASC 260, “Earnings Per Share” for calculating the ~~years ended April 30, 2020~~basic and ~~2019, respectively.~~

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 redeemablediluted earnings (loss) per share. We compute basic earnings (loss) per share by dividing net income (loss) 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 issuanceweighted average number 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~~shares outstanding. Diluted earnings (loss) per ~~share~~

~~Pursuant to ASC 260-10-45, basic loss per common~~ share is computed ~~by dividing net loss by~~based on the weighted average number of shares of common stock ~~outstanding for~~plus the ~~periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number~~effect of ~~shares of~~dilutive potential common ~~stock, common stock equivalents and potentially dilutive securities~~shares outstanding during the ~~period. Potentially dilutive~~period using the treasury stock method. Dilutive potential common shares ~~may consist of common stock issuable for~~include outstanding stock options and warrants ~~(using~~and stock awards. For periods with a net loss, basic and diluted loss per share are the ~~treasury stock method), convertible notes and common stock issuable. These~~same, in that any potential common stock equivalents ~~may be dilutive in~~would have the ~~future.~~

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

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.

~~Changes to accounting principles are established by the FASB in the form of ASUs to the FASB’s Codification. We consider~~BIGtoken considers 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. ASUsAccounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board. ASU’s not listed below were assessed and determined to be either not be applicable or expected to ~~our~~have minimal impact on BIGtoken’s consolidated financial ~~position, results of operations, cash flows, or presentation thereof.~~results.

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~~as BIGtoken is not an obligator on any lease agreements this 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.~~

In ~~June~~September 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This guidance updates existing guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the “incurred loss” model with an “expected loss” model. Accordingly, these financial assets will be presented at the net amount expected to be collected. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The adoption of ASU 2016-13 did not have a material impact on our Carve-Out Financials Statements.

In September 2018, the FASB issued ASU 2018-07, ~~“Improvements~~“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~~“Revenue from Contracts with Customers.” The adoption of ASU 2018-07 did not have a material impact on our ~~consolidated financial statements.~~

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

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

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 Carve-Out Financials Statements.

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

~~Note 3~~the FASB issued ASU 2020-06, “Debt – ~~Property and Equipment~~

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

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

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

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

~~The following represents a summary of the Company’s lenders, key terms of the debt~~Options (Subtopic 470-20) and ~~outstanding balances at April 30, 2020~~Derivatives and ~~2019, respectively. See Note 11 regarding the extension of the maturity date~~Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for ~~the Company’s 8% convertible notes to February 1, 2021.~~

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

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

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

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

~~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.~~

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

~~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:~~

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

~~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:~~

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

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

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

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

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

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

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

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

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

~~In February 2016, the FASB issued ASU No. 2016-02 (“ASC 842”),~~ ~~“Leases”~~Entity’s Own Equity”, to ~~require lessees~~reduce complexity in applying GAAP to ~~recognize all leases,~~certain financial instruments with ~~certain exceptions, on the balance sheet, while recognition on the statement~~characteristics of ~~operations will remain similar to current lease accounting. Subsequently, the FASB issued~~liabilities and equity. 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~~2020-06 is effective for interim and annual periods beginning after December 15, ~~2018,~~2023, with early adoption permitted. ~~The Company early adopted~~We are currently evaluating the ~~provisions~~impact of ~~ASC 842 during the fiscal year ended April 30, 2018.~~this guidance.

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

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

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

~~Table of Contents~~

~~FORCE PROTECTION VIDEO~~NOTE 2 – ACCOUNTS RECEIVABLE

2020 2019
Gross accounts receivable $ 1,675,000 $ 1,333,000
Allowance for bad debts (476,000 ) (457,000 )
Accounts receivable, net $ 1,199,000 $ 876,000
The carve-out statements of operations include both provision for bad debts directly identifiable as BIGtoken’s and allocated provision for bad debts from SRAX, Inc. The following table summarizes BIGtoken’s provision for bad debts for the periods indicated:
2020 2019
Directly identifiable as BIGtoken’s $ 47,000 $ 440,000
Allocated from SRAX, Inc. − 10,000
Provision for bad debts $ 47,000 $ 450,000

NOTE 3 – PROPERTY AND EQUIPMENT ~~CORP. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~APRIL 30, 2020 AND 2019~~

~~On May 1, 2019, the Company~~The components of property and ~~its landlord mutually agreed to terminate the outstanding lease.~~equipment are as follows:

	2020			2019
Computer Equipment	$	4,000		$	4,000
Accumulated depreciation		(3,000	)		(1,000	)
Property and equipment, net	$	1,000		$	3,000

The carve-out statements of operations include both depreciation expense directly identifiable as BIGtoken’s and allocated depreciation expense from SRAX, Inc. The following table summarizes BIGtoken’s depreciation expense for the ~~lease termination:~~periods indicated:

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

$ -

	2020		2019
Directly identifiable as BIGtoken’s	$	2,000	$	1,000
Allocated from SRAX, Inc.		43,000		70,000
Depreciation expense	$	45,000	$	71,000

F-18

NOTE 4 – INTANGIBLE ASSETS

The components of intangible assets are as follows:

	2020			2019
Software	$	1,980,000		$	1,408,000
Accumulated amortization		(1,063,000	)		(539,000	)
Intangible assets, net	$	917,000		$	869,000

The carve-out statements of operations include both amortization expense directly identifiable as BIGtoken’s and allocated amortization expense from SRAX, Inc. The following table summarizes BIGtoken’s amortization expense for the periods indicated:

	2020		2019
Directly identifiable as BIGtoken’s	$	524,000	$	348,000
Allocated from SRAX, Inc.		349,000		510,000
Amortization expense	$	873,000	$	858,000

As of December 31, 2020 estimated amortization expense related to finite-lived intangibles for future years was as follows:

2021		518,000
2022		312,000
2023		87,000
Total estimated amortization expense	$	917,000

As of December 31, 2020 and 2019, goodwill was $5,445,000 and there were no additions or impairments during the years ended December 31, 2020 and 2019.

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses are comprised of the following:

	2020		2019
Accounts payable, trade	$	731,000	$	911,000
Accrued expenses		−		20,000
Accrued bonus		6,000		3,000
Accrued commissions		48,000		125,000
Other accruals		68,000		166,000
Accounts payable and accrued liabilities	$	853,000	$	1,225,000

F-19

~~We recognized lease expense~~NOTE 6 – OTHER CURRENT LIABILITIES

BIGtoken Point liability

In 2019, BIGtoken launched the BIGtoken consumer data management platform, where registered users are rewarded for undertaking actions and sharing data within the platform. The business is currently based on a ~~straight-line basis over the term~~platform of ~~our operating leases,~~registered users, developed as ~~reported within “general and administrative” expense on the accompanying Consolidated Statements of Operations.~~a direct to consumer data marketplace where users are paid for their data.

During the year ended ~~April 30,~~December 31, 2019 BIGtoken instituted a policy that allows BIGtoken users to redeem outstanding BIGtoken points for cash if their account and point balances meet certain criteria. As of December 31, 2020 and 2019, ~~operating lease expense was $0~~BIGtoken has estimated the future liability for point redemptions to be $452,000 and ~~$15,300, respectively.~~$445,000, respectively, recorded as other current liabilities. BIGtoken considered the total number of points outstanding, the conversion rate in which points are redeemable for cash, and each user’s redemption eligibility.

~~NOTE 6 – SERIES A, REDEEMABLE PREFERRED STOCK – RELATED PARTY~~BIGtoken utilizes an account scoring system that evaluates a number of factors in determining an account’s redemption eligibility. These factors include an evaluation of the following: the infrastructure utilized by the user when engaging with BIGtoken’s systems, the user’s geographical associations, consistency, and verifiability of the user’s data.

~~At April 30,~~NOTE 7 – COMMITMENTS AND CONTINGENCIES

Other Commitments

In the ordinary course of business, BIGtoken may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of BIGtoken’s breach of such agreements, services to be provided by BIGtoken, or from intellectual property infringement claims made by third parties. In addition, BIGtoken has entered indemnification agreements with its directors and certain of its officers and employees that will require BIGtoken to, among other things, indemnify them against certain liabilities that may arise due to their status or service as directors, officers or employees. BIGtoken has also agreed to indemnify certain former officers, directors and employees of acquired companies in connection with the acquisition of such companies. BIGtoken maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and certain of its officers and employees, and former officers, directors and employees of acquired companies, in certain circumstances.

It is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each agreement. Such indemnification agreements may not be subject to maximum loss clauses.

Employment agreements

BIGtoken has entered into employment agreements with key employees. These agreements may include provisions for base salary, guaranteed and discretionary bonuses and option grants. The agreements may contain severance provisions if the employees are terminated without cause, as defined in the agreements.

Litigation

From time to time, BIGtoken may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, BIGtoken may receive letters alleging infringement of patent or other intellectual property rights. BIGtoken is not currently a party to any material legal proceedings, nor is BIGtoken aware of any pending or threatened litigation that would have a material adverse effect on BIGtoken’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

F-20

Business Interruption

BIGtoken may be impacted by public health crises beyond its control. This could disrupt its operations and negatively impact sales of its products. BIGtoken’s customer and, suppliers may experience similar disruption. In December 2019, a novel strain of the Coronavirus, COVID-19, was reported to have surfaced in Wuhan, China, which has evolved into a pandemic. This situation and preventative or protective actions that governments have taken to counter the effects of the pandemic have resulted in a period of business disruption, including delays in shipments of products and raw materials. COVID-19 has spread to over 175 countries, including the United States, and efforts to contain the spread of COVID-19 have intensified. To the extent the impact of COVID-19 continues or worsens, the demand for BIGtoken’s products may be negatively impacted. COVID-19 has also impacted BIGtoken’s sales efforts as its ability to make sales calls is constrained. BIGtoken’s ability to promote sales through promotional activities has also been constrained. Trade shows and sales conferences, major events used to introduce and sell BIGtoken’s products, have been postponed indefinitely. The length and severity of the pandemic could also affect BIGtoken’s regular sales, which could in turn result in reduced sales and a lower gross margin.

NOTE 8 – STOCK OPTIONS AND AWARDS

BIGtoken’s employees have historically participated in SRAX’s various stock-based plans, which are described below. All references to shares in the tables below refer to shares of SRAX’s common stock and all references to stock prices in the tables below refer to the price of a share of SRAX’s common stock.

In January 2012, SRAX’s board of directors and stockholders authorized the 2012 Equity Compensation Plan, which SRAX refer to as the 2012 Plan, covering 600,000 shares of SRAX’s Class A common stock. On November 5, 2014, SRAX’s board of directors approved the adoption of SRAX 2014 Equity Compensation Plan (the “2014 Plan”) and reserved 600,000 shares of SRAX’s Class A common stock for grants under this plan.

On February 23, 2016, SRAX’s board of directors approved the adoption of SRAX 2016 Equity Compensation Plan (the “2016 Plan”) and reserved 600,000 shares of SRAX’s Class A common stock for grants under this plan.

The purpose of the 2012, 2014 and 2016 Plans is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to SRAX’s employees, directors and consultants and to promote the success of SRAX’s business. The 2012, 2014 and 2016 Plans are administered by SRAX’s board of directors. Plan options may either be:

	●	incentive stock options (ISOs)
	●	non-qualified options (NSOs),
	●	awards of our common stock,
	●	stock appreciation rights (SARs),
	●	restricted stock units (RSUs),
	●	performance units,
	●	performance shares, and
	●	other stock-based awards.

Any option granted under the 2012, 2014 and 2016 Plans must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of SRAX’s outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The exercise price of any NSO granted under the 2012, 2014 or 2016 Plans is determined by SRAX’s board of directors at the time of grant but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by SRAX’s board of directors or SRAX’s compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of grants of any other type of award under the 2012, 2014 or 2016 Plans is determined by SRAX’s board of directors at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.

F-21

Stock option and common stock award activities specifically identifiable or allocated to BIGtoken’s employees for the years ended December 31, 2020 and 2019, respectively, ~~there~~ were ~~5,000,000 shares~~summarized as follows:

In March 2019, 388,500 common stock options for SRAX’s common stock having an exercise price of $0.0001 par value, Series A, Redeemable Preferred Stock outstanding held by the Company’s Chief Executive Officer (“CEO”). The Preferred Stock pays no dividends and has no conversion rights into common stock. Each share of Preferred Stock is entitled to 200 votes$3.42 per share ~~and is redeemable in whole, but not in part, at the~~with an option value as of the ~~holder~~grant date of $858,000 calculated using the Black-Scholes option pricing model were granted to several employees and members of SRAX’s management team. The options were valued using the Black Scholes option pricing model at a total of $858,000 based on the three-year term, implied volatility of 102% and a risk-free equivalent yield of 4.50%, and a stock price of $3.42. The expense associated with this option award will be recognized in operating expenses ratably over the vesting period.

In April 2019, SRAX issued 5,626 options to purchase SRAX’s common stock at a price of $5.49 to SRAX’s non-executive directors. Each of SRAX’s four non-executive directors received 1,407 options that vest 1/4th quarterly over the next year with an expiration date of April 15, 2026. The options were valued using the Black Scholes option pricing model at a total of $30,000 based on the seven-year term, implied volatility of 102% and a risk-free equivalent yield of 2.46%, stock price of $5.49.

On May 13, 2019 SRAX entered into a consulting agreement with a contractor for ~~$0.0001~~services related to BIGtoken. The agreement provides for 300,000 warrants with vesting conditions based on BIGtoken’s user growth in Asia. The warrants were valued using the Black Scholes option pricing model at a total of $1,138,000 based on the five-year term, implied volatility of 101%, a risk-free equivalent yield of 1.8% and stock price of $4.99.

In April 2020, BIGtoken issued 4,522 common stock options to each of our independent directors for their services. The options have a strike price of $1.95 and vest one year from their issue date or April 16, 2021. The options have a term of seven years from their issue date.

In November 2020, 150,000 common stock options having an exercise price of $2.97 per ~~share. Due to the redemption feature being at the~~share with an option value as of the ~~holder,~~grant date of $325,000 calculated using the ~~Company classifies the purchase price~~Black-Scholes option pricing model were granted to an employee. The expense associated with this option award will be recognized in ~~the temporary equity section~~operating expenses at date of ~~the balance sheet.~~

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

~~Table of Contents~~

~~FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~APRIL 30, 2020 AND 2019~~

~~NOTE 7 – REVENUES~~

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

April 30, 2020

April 30, 2019

Major Product Lines

Revenue

% of Revenues

Revenue

% of Revenues

Cameras

$ 38,701

61 %

$ 150,490

92 %
Accessories

24,623

39 %

7,210

4 %
Software

-

-

6,040

4 %
Total Net Revenue

$ 63,324

100 %

$ 163,740

100 %

Types of Customers

Revenue

% of Revenues

Revenue

% of Revenues

Federal

$ 3,166

5 %

$ 149,003

91 %
State and Local

58,258

92 %

3,275

2 %
Non-government

1,900

3 %

11,462

7 %

$ 63,324

100 %

$ 163,740

100 %

Timing of Revenue Recognition

Revenue

% of Revenues

Revenue

% of Revenues

Transferred at a point in time

$ 63,324

100 %

$ 163,740

100 %
Transferred over time

-

-

-

-

$ 63,324

100 %

$ 163,740

100 %

~~Table of Contents~~

~~FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~APRIL 30, 2020 AND 2019~~

~~NOTE 8 - STOCKHOLDER’S DEFICIT~~

~~April 30, 2020~~grant.

During the year ended ~~April 30,~~December 31, 2020, ~~the Company’s CEO forgave accrued payroll~~36,454 common stock options were terminated, and a total of ~~$18,523. Since the forgiveness occurred with~~119,200 common stock options were issued to its employees. The options have a ~~related party, accordingly, there can be no gain~~strike price of $2.70 and vest five years from their issue date or ~~loss, this results in~~August 18, 2025. The options have a ~~contribution to equity. See Note 9.~~term of five years from their issue date.

~~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.~~

~~Table of Contents~~

~~FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~APRIL 30, 2020 AND 2019~~

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

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

~~NOTE 10 – INCOME TAXES~~

	Number of Shares			Weighted Average Strike Price/Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value		Weighted Average Grant Date Fair Value

Outstanding — December 31, 2018		348,105			5.94		2.39		−		−
Granted		694,126			4.01		3.38		−		1.14
Exercised		−			−		−		−		−
Forfeited		(28,951	)		6.60		−		−		2.79
Outstanding — December 31, 2019		1,013,280			4.60		2.63		−
Vested and exercisable — December 31, 2019		229,162			6.32		1.68		−		3.96
Unvested and non-exercisable - December 31, 2019		784,118			4.10		2.98		−		2.79

Outstanding — December 31, 2019		1,013,280			4.60		2.63		−		−
Granted		287,286			2.79		4.84		−		1.24
Exercised		−			−		−		−		−
Forfeited		(36,454	)		5.85		−		−		4.60
Outstanding — December 31, 2020		1,264,112			4.15		2.20		−		−
Vested and exercisable — December 31, 2020		553,250			4.54		2.04		−		2.95
Unvested and non-exercisable - December 31, 2020		710,862		$	3.85		2.79	$	−	$	2.88

The ~~Company's tax expense differs from the "expected" tax expense~~table above includes $300,000 warrants issued on May 13, 2019 to a contractor for ~~the period (computed by applying the blended corporate tax rate~~services related to ~~loss before taxes), are approximately as follows:~~BIGtoken.

April 30,
2020

April 30,
2019

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

$ (7,000 )

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

(1,000 )

(18,000 )
Non-deductible items

(12,000 )

-

Subtotal

(20,000 )

(132,000 )
Valuation allowance

20,000

132,000

$ -

$ -

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

F-22

April 30,
2020

April 30,
2019

Deferred Tax Assets

Net operating loss carryforwards

$ (1,036,000 )

$ (1,016,000 )
Total deferred tax assets

(1,036,000 )

(1,016,000 )
Less: valuation allowance

1,036,000

1,016,000

Net deferred tax asset recorded

$ -

$ -

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

~~Table of Contents~~

~~FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~APRIL 30, 2020 AND 2019~~

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

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

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

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

~~Table of Contents~~

~~FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~APRIL 30, 2020 AND 2019~~

~~NOTE 11 - SUBSEQUENT EVENTS~~

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

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

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

Convertible Notes Payable

Amounts

In-Default

Balance - April 30, 2018

480,623

$ 210,000

Proceeds

5,500

Default Penalties

63,788

Conversions

(110,446 )

Balance - April 30, 2019

439,465

439,465

Proceeds

175,756

Repayments

(132,460 )

Gain on Debt Settlements - Net

(19,200 )

Balance - April 30, 2020

463,561

420,661

Proceeds

36,050

Balance - July 31, 2020

499,611

491,061

Proceeds

41,195

Balance - September 14, 2020

$ 540,806

$ -

~~Table of Contents~~

~~FORCE PROTECTION VIDEO EQUIPMENT CORP. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~APRIL 30, 2020 AND 2019~~

Accrued Interest Payable

Amounts

In-Default

Balance - April 30, 2018

62,281

$ 62,281

Interest Expense - Net

103,992

Conversions

(16,637 )

Balance - April 30, 2019

149,636

149,636

Interest Expense - Net

65,367

Repayments

(2,040 )

Gain on Debt Settlements - Net

(41,857 )

Balance - April 30, 2020

171,106

168,174

Interest Expense

27,732

Balance - July 31, 2020

$ 198,838

$ 198,701

Interest Expense

27,732

Balance -July 31, 2020

198,88

198,701

Interest Expense

5,436

Balance – September 14, 2020

$ 204,274

-

~~Table of Contents~~

~~ITEM 9:~~~~CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND~~~~FINANCIAL~~~~DISCLOSURE~~

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

~~ITEM 9A: CONTROLS AND PROCEDURES~~

~~(a) Evaluation of Disclosure Controls and Procedures~~

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

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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

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

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

~~Table of Contents~~

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

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

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

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

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

~~(c) Changes in Internal Control over Financial Reporting~~

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

~~ITEM 9B:~~~~OTHER INFORMATION~~

~~None.~~

~~Table of Contents~~

~~PART III~~

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

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

~~Name~~		~~Age~~		~~Position~~
~~Paul Feldman~~		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 of $100,000 per year. For the year ended April 30, 2020, Mr. Feldman has agreed to permanently forego his compensation until such time the Company’s revenues support the agreed upon compensation.

~~Family Relationships~~

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

~~Involvement in Certain Legal Proceedings~~

To the best of our knowledge, during the past five years, none of the following occurred with respect to a present director (or person nominated to become director), executive officer, founder, promoter or control person: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

~~Table of Contents~~

~~Section 16(a) Beneficial Ownership Reporting Compliance~~

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

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

# of Late Reports

# of Transactions
Not Timely Reported

# of Failures to File
a Required Report

Paul Feldman

0

8

1

~~Code of Ethics~~

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

~~Whistleblower Procedures Policy~~

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

~~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.

~~Table of Contents~~

~~Board Role in Risk Oversight~~

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

~~Audit Committee~~

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

~~Compensation Committee~~

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

~~Nominating Committee~~

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

While the Board is solely responsible for the selection and nomination of directors, the Board may consider nominees recommended by stockholders as it deems appropriate. The Board evaluates each potential nominee in the same manner regardless of the source of the potential nominee’s recommendation. Although we do not have a policy regarding diversity, the Board does take into consideration the value of diversity among Board members in background, experience, education, and perspective in considering potential nominees for recommendation to the Board for selection. Stockholders who wish to recommend a nominee should send nominations to our President, Paul Feldman, 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 marketplace, publicly available information, and informal surveys of human resource professionals.

~~Table of Contents~~

~~Stockholder Communications~~

Stockholders who wish to communicate with the Board may do so by addressing their correspondence 1249 Kildaire Farm Road Cary NC 27511 The Board shall review and respond to all correspondence received, as appropriate.

~~ITEM 11:~~~~EXECUTIVE COMPENSATION~~

~~Executive Compensation~~

The following table sets forth ~~compensation~~the weighted-average assumptions used to estimate the fair value of option granted and warrants granted for each of the past three 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

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

~~Director Compensation~~

~~For~~ the years ended ~~April 30,~~December 31, 2020 and ~~2019, respectively, the directors were not awarded any options or paid any cash compensation.~~2019:

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

	2020			2019
Expected life (in years)		5.1			3.8
Risk-free interest rate		0.4% - 0.6%			1.3	%
Expected volatility		98% - 100%			102	%
Dividend yield		0	%		0	%

The following table sets forth stock-based compensation expense for employees specifically identifiable to BIGtoken and allocated charges deemed attributable to BIGtoken’s operations resulting to stock options and purchase warrant awards included in the employee related cost in BIGtoken’s Carve-Out Statements of Operations for the years ended December 31, 2020 and 2019:

	2020		2019
Directly identifiable as BIGtoken’s	$	237,000	$	467,000
Allocated from SRAX, Inc.		1,091,000		516,000
Stock-based compensation expense	$	1,328,000	$	983,000

As of December 31, 2020 compensation cost related to the unvested options not yet recognized was approximately $2,047,000. The weighted average period over which the $2,047,000 will vest is estimated to be 2.8 years.

NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of certain ~~information~~financial instruments, including cash and cash equivalents and accounts payable and accrued expenses, approximate their respective fair values due to the short-term nature of such instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

BIGtoken evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. BIGtoken had the following financial assets as of ~~July 1,~~December 31, 2020 ~~by (i)~~and 2019:

Balance as of December 31, 2020

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Marketable securities

−

Total assets

−

	Balance as of December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Marketable securities		64,000		64,000		−		−
Total assets	$	64,000	$	64,000	$	−	$	−

F-23

NOTE 10 – INCOME TAXES

Prior to the legal reorganization on February 4, 2021, certain Carve-out entities did not file separate tax returns as they were included in the consolidated tax reporting of other Parent entities, within the respective entity’s tax jurisdiction. Accordingly, the income tax provision included in these carve out financial statements was calculated using a method consistent with a separate return basis, as if the Carve-out business had been a separate taxpayer. As of December 31, 2020, all ~~persons who~~amounts related to BIGtoken’s tax positions are ~~known by us~~recognized on the Carve Out Balance Sheet. Income taxes are accounted for under the asset and liability method.

In the jurisdictions where the Carve-out business entities were included in the consolidated tax reporting of other Parent entities, the current tax payable or tax receivable of the Carve-out business represents the income tax to ~~beneficially own more than 5%~~be paid or to be received from the Parent Group. For the purpose of these carve out financial statements, it was assumed that only the current year was outstanding. For the years ended December 31, 2020, and 2019, the income tax benefit for the Carve-out business is $0.

Income tax benefit consists of the following components for the years ended December 31:

	2020		2019
Current tax benefit
The Federal	$	−	$	−
State		5,000		−
Total		5,000		−

Deferred tax benefit
The Federal		−		−
State		−		−
Total		−		−
Total provision for income taxes	$	5,000	$	−

The following table summarizes the principal components of deferred tax assets and liabilities of BIGtoken at December 31:

	2020			2019
Deferred income tax assets
Allowance for bad debts	$	132,000		$	126,000
Stock-based compensation expense		773,000			773,000
Interest expense limitation carryover		182,000			75,000
Contribution carryover		5,000			3,000
Accrued expenses		144,000			204,000
Net operating loss carry forwards		10,122,000			7,657,000
Total		11,358,000			8,838,000

Deferred income tax liabilities
Property and equipment		(19,000	)		(49,000	)
Intangible assets		(405,000	)		(478,000	)
Total		(424,000	)		(527,000	)

Net deferred income tax assets		10,934,000			8,311,000
Valuation allowance		(10,934,000	)		(8,311,000	)
Total income tax benefit	$	−		$	−

A reconciliation of income tax benefit computed using The Federal statutory tax rate to BIGtoken’s income tax benefit is as follows for the years ended December 31:

	2020			2019
Income tax benefit calculated at The Federal statutory rate		21	%		21	%
Fair market adjustment derivatives		0	%		1	%
Amortization of debt discount		(7	)%		0	%
Current state income tax expense (net of federal benefit)		0	%		0	%
Change in valuation allowance		(13	)%		(21	)%
Other		(1	)%		(1	)%
Total income tax benefit		(0	)%		0	%

All percentages are calculated as a percentage of pretax income for each respective year.

F-24

NOTE 11 – SUBSEQUENT EVENTS

Share Exchange Agreement (Reverse Merger)

On February 4, 2021, we completed a share exchange (“Share Exchange”) with SRAX, Inc. initially disclosed on the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on October 5, 2020. Pursuant to the Share Exchange, SRAX divested its ownership in BIGtoken, its wholly owned subsidiary. As a result of the Share Exchange, BIGtoken became our ~~outstanding~~wholly owned subsidiary and we adopted BIGtoken’s business plan.

The transaction was accounted for as a reverse merger; therefore, the Company has accounted for the transaction as if BIGtoken, the legal acquiree, acquired all of the assets and liabilities of the Company, the legal acquiror. BIGtoken is deemed to be the purchaser and surviving company for accounting purposes. Accordingly, due to the Share Exchange, BIGtoken’s net assets are included in the balance sheets at their historical book values and BIGtoken’s results of operations are presented for the comparative prior periods.

As consideration for the Share Exchange, the Company issued 149,562,566,584 shares of common stock ~~(ii) each director, director nominee,~~ and ~~Named Executive Officer;~~the holder of 5,000,000 shares of Series A Preferred Stock transferred all such shares to SRAX, in exchange for 100% of the of the issued and ~~(iii) all executive officers~~outstanding common stock of BIGtoken. Additionally, we assumed the obligation to issue an aggregate of 25,568,064,462 Common Stock purchase warrants (the “FPVD Warrants”) to certain SRAX debenture and ~~directors~~warrant holders as consideration for 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

~~Table of Contents~~

condition to the divestiture of BIGtoken and amending their outstanding warrants to remove certain fundament transaction adjustments. The FPVD Warrants have a term of three (3) years, an exercise price of $0.00005844216 per share, and contain adjustments in the event of stock dividends and splits, subsequent rights offerings, pro rata distributions, and certain fundamental transactions as more fully described in the FPVD Warrants. The FPVD Warrant provide for cashless exercise at any time after six (6) months of the issuance date in the event that the shares underlying the FPVD Warrants are not subject to an effective registration statement.

⁽¹⁾~~Beneficial Ownership is determined~~BIGtoken’s statement of changes in ~~accordance with~~stockholders’ equity, as presented in these financial statements, were restated to reflect 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 preferred149,562,566,584 common stock ~~and common stock. Except as indicated the address of each beneficial owner is 1249 Kildare Farm Road, Cary, NC 27511.~~

⁽²⁾~~Calculated pursuant to rule 13d-3(d) of the Exchange Act. Beneficial ownership is calculated based on 841,184,284 shares of Common Stock~~ and 5,000,000 shares of Series A Preferred Stock ~~issued and outstanding on~~received by SRAX as a ~~fully diluted basis as~~result of ~~July1, 2020. Each share of preferred stock is entitled~~the Share Exchange.

Amendment to ~~vote on all matters submitted~~Share Exchange Agreement

The Company entered into an Amendment to the ~~Company's stockholders~~Exchange Agreement on January 27, 2021. The Exchange Amendment amended the amount of securities each party thereto would receive in the Share Exchange and ~~are entitled~~included anti-dilution protection for SRAX should we sell equity securities at a pre-money valuation of less than $10,000,000 resulting in SRAX owning less than 70% of our voting power.

Transition Services Agreement

On January 27, 2021 we entered into the TSA with SRAX. Pursuant to the TSA, SRAX agreed to provide us with certain operational and administrative services as needed for certain agreed upon fees.

Master Separation Agreement

On January 27, 2021, we entered into the MSA with SRAX. The MSA describes our separation from SRAX.

Employment Agreement of Lou Kerner

On January 3, 2021 we entered into an at-will employment agreement with Lou Kerner to serve as chief executive officer, subject to the fulfillment of certain conditions. On February 16, 2021, the conditions contained in the employment agreement were either met or waived, and Mr. Kerner commenced his employment as chief executive officer.

On February 16, 2021, as required pursuant to his employment agreement, we issued Mr. Kerner, a Common Stock purchase option to purchase up 15,824,493,516 shares of Common Stock. The option has a term of ten (10) years from issuance and exercise prices of: (i) 33.33% of the Option will have an exercise price of $0.00005435, (ii) 33.33% of the Option will have an exercise price of $0.00006340 and (iii) all remaining amounts of the Option will have an exercise price $0.00007246. The option vests as follows: (i) 33.33% on the one-year anniversary of issuance and (ii) the remaining portion in equal quarterly amounts over a two (2) year period after the initial vesting occurs. As discussed in Note 1 – The Company, Basis of Presentation and Summary of Significant Accounting Policies, the Company currently use the Black-Scholes option-pricing model to value stock options granted to employees. Based upon the inputs and assumptions used by the Company in connection with the Black-Scholes option pricing model, the Company estimates that the non-cash option expense could exceed $400,000,000. The Company has retained a valuation firm to advise with regard to the inputs used in the valuation of the option. The company is also exploring the cancellation, amendment, reissuance, or exchange of the option, subject to Mr. Kerner’s approval, with the goal of reducing the overall option expense. There can be no assurances that we will be able to reduce such ~~number of votes as is equal~~expense or that such expense does not exceed our estimates.

Series B Offering

On March 12, 2021, we entered into a Securities Purchase Agreements (“SPA”) and Registration Rights Agreements (“RRA”) with accredited investors pursuant to ~~200,000 times the number of~~which investors purchased 47,248.27 shares of Series AB preferred Stock for an aggregate of $4,725,000 or $100 per share (the “Offering”). The Offering closed on March 12, 2021. We had previously closed on 10,500 shares of Series B Preferred stock or $1,050,000 in October of 2020. As a result, on March 12, 2021, there were 57,748.27 shares of Series B Stock outstanding.

Pursuant to the terms of the Company’s Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock (“COD”), (i) each share of Series B Stock has a stated value of $100, (ii) the Series B Stock accrues a 5% dividend beginning one year after the original issue date and thereafter on a quarterly basis, (iii) the Series B Stock has no voting rights, except as required by law, and (iv) the Series B Stock has no liquidation preference over the Company’s Common Stock. Additionally, the Series B Stock converts into Common Stock (i) at the election of the holder at any time at a price equal to $15,000,000 divided by the fully diluted outstanding securities of the Company at the time of conversion (“Standard Conversion Price”) or (ii) automatically upon the completion of an offering of $5,000,000 or more (“Qualified Offering”) at the lower of (a) the Standard Conversion Price or (b) eighty percent (80%) of the lowest per share purchase price of Common Stock in such ~~holder owns.~~Qualified Offering (“Qualified Offering Conversion Price”). The ~~Series A Preferred Stock is not convertible into~~Offering meets the definition of a Qualified Offering as described in the COD and accordingly, all of the outstanding shares of ~~common stock. Under Rule 13d-3(d)~~Series B Stock will convert into Common Stock at eighty percent (80%) of the ~~Exchange Act, shares not outstanding which are subject~~Standard Conversion Price. The Company has filed an amendment to ~~options, warrants, rights or~~its articles of incorporation decreasing the par value of its Common Stock in order to effect the conversion ~~privileges exercisable within 60 days are deemed outstanding for the purpose~~ of ~~calculating the number and percentage owned by~~all such ~~person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person listed.~~Series B Stock into Common Stock.

⁽³⁾~~Calculated based on 841,184,289~~In accordance with the foregoing, upon full conversion of the Series B Stock, and not taking into account nay beneficial ownership limitations, the Company will issue an additional 82,343,910,014 shares of Common ~~Stock and 5,000,000 shares of~~ Stock.

Series ~~A Preferred Stock, with common stock equivalent voting rights of 200:1, issued and outstanding as of July 20, 20208. Holders~~C Offering

On January 27, 2021, prior to the completion 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, since the $27,500 term-note is currently in default,~~Share Exchange, Force Protection Video Equipment Corp. (“FPVD”) entered into a debt exchange agreement with 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 5,000,000whereby FPVD issued 8,313 shares of Series ~~A, Redeemable,~~C Convertible Preferred Stock. ~~There are no other arrangements known, including any pledge by any person~~Each share of ~~securities, the operation~~Series C Preferred Stock is convertible into 1,546,576 shares of ~~which may at a subsequent date result in a change in control~~FPVD common stock. The aggregate number of ~~the Company.~~shares issuable upon conversion of all Series C Preferred Stock outstanding is approximately 12,864,419,313 common shares, subject to beneficial ownership limitations contained therein.

~~Stock Option Plan Information~~Amendments to the Articles of Incorporation

~~To date,~~On April 15, 2021, the Company ~~has not adopted a Stock Option Plan. The Company may adopt~~filed an ~~option plan in~~amendment to its articles of incorporation with the ~~future.~~

~~Adverse Interests~~

~~The Company is not aware~~Secretary of ~~any material proceeding~~State of Florida to ~~which any director, officer, or affiliate of~~change the ~~Company, or any owner of record or beneficially of more than five percent of any class~~par value of the Company’s ~~voting securities, or security holder~~common stock from $0.0001 to $0.00000001. As of the date hereof, the amendment is ~~a party adverse to the Company or has a material interest adverse to the Company.~~not yet effective. The change of par value is reflected in BIGtoken’s statements of changes in stockholders’ equity.

~~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.

~~Table of Contents~~F-25

~~ITEM 14:~~~~PRINCIPAL ACCOUNTANT FEES AND SERVICES~~

~~Audit Fees~~

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

The aggregate fees of 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, 2020 and 2019, totaled $27,300 and $16,000, respectively.

~~Audit- Related Fees~~

~~The Company did not pay any audit-related fees for the year ended April 30, 2020 and 2019 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, 2020 and 2019.~~

~~All Other Fees~~

~~There were no other fees billed for services other than those described above for the years ended April 30, 2020 and 2019.~~

~~Audit Committee Pre--Approval Policies~~

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

~~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, 2020 and 2019~~
	·	~~Consolidated Statements of Operations for the Years Ended April 30, 2020 and 2019~~
	·	~~Consolidated Statements of Stockholders’ Deficit for the Years Ended April 30, 2020 and 2019~~
	·	~~Consolidated Statements of Cash Flows for the Years Ended April 30, 2020 and 2019~~
	·	~~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.

~~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.

	~~Force Protection Video Equipment Corp.~~
	~~(Registrant)~~

~~September 14, 2020~~	~~By:~~	~~/s/ Paul Feldman~~
		~~Paul Feldman~~
		~~Chief Executive Officer, Chief Financial Officer and Director~~ ~~(Principal Executive Officer and Principal Financial Officer)~~

~~Table of Contents~~

~~Exhibit Index~~

~~Exhibit No.~~		~~Description of Exhibit~~
~~3.1~~		~~Articles of Incorporation dated March 11, 2011~~ ⁽¹⁾
~~3.2~~		~~Amendment to Articles of Incorporation dated March 28, 2011~~ ⁽¹⁾
~~3.3~~		~~Amendment to Articles of Incorporation dated September 25, 2013~~ ⁽¹⁾
~~3.4~~		~~Amendment to Articles of Incorporation dated January 30, 2015~~ ⁽¹⁾
~~3.5~~		~~Amendment to Articles of Incorporation dated December 1, 2015~~ ⁽¹⁾
~~3.6~~		Amendment to Articles of Incorporation filed on January 19, 2016 to increase the authorized common stock outstanding from 50,000,000 to 250,000,000; par value $0.0001 and to create a series of preferred stock consisting of 1,000,000 shares designated as Series A Preferred stock; par value $0.0001 ⁽¹²⁾
~~3.7~~		Amendment to Articles of Incorporation effective September 8, 2016 to increase the authorized common stock outstanding to 750,000,000; par value $0.0001 and increase Series A Preferred stock to 5,000,000; par value $0.0001 ⁽⁷⁾
~~3.8~~		~~Bylaws~~ ⁽¹⁾
~~3.9~~		~~Amendment to Articles of Incorporation filed on March 31, 2017 to reduce the number of common shares outstanding in a 1:250 reverse stock split~~ ⁽⁸⁾
~~3.10~~		~~Amendment to Articles of Incorporation effective December 8, 2017 to increase the authorized common stock outstanding to 2,000,000,000 and increase Series A Preferred stock to 15,000,000~~ ⁽¹²⁾
~~10.1~~		~~Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC~~ ⁽¹⁾
~~10.2~~		~~First Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital LLC~~ ⁽¹⁾
~~10.3~~		~~Second Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC~~ ⁽¹⁾
~~10.4~~		~~Registration Rights Agreement dated November 12, 2015 with RDW Capital, LLC~~ ⁽¹⁾
~~10.5~~		~~Convertible Promissory Note dated November 12, 2015 held by RDW Capital, LLC~~ ⁽¹⁾
~~10.6~~		~~Convertible Promissory Note dated December 31, 2015 held by RDW Capital, LLC~~ ⁽²⁾
~~10.7~~		~~Convertible Promissory Note dated March 10, 2016 held by RDW Capital, LLC~~ ⁽⁵⁾
~~10.8~~		~~Third Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC~~ ⁽¹⁾
~~10.9~~		~~Fourth Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC~~ ⁽³⁾
~~10.10~~		~~Securities Purchase Agreement dated May 9, 2016 with RDW Capital, LLC~~ ⁽⁴⁾
~~10.11~~		~~Convertible Promissory Note dated May 13, 2016 held by RDW Capital, LLC~~ ⁽⁴⁾
~~10.12~~		~~Convertible Promissory Note dated May 20, 2016 held by RDW Capital, LLC~~ ⁽⁵⁾
~~10.13~~		~~Registration Rights Agreement dated May 9, 2016 with RDW Capital, LLC~~ ⁽⁴⁾
~~10.14~~		~~Securities Purchase Agreement dated August 22, 2016 with RDW Capital, LLC~~ ⁽⁶⁾
~~10.15~~		~~Convertible Promissory Note dated August 22, 2016 held by RDW Capital, LLC~~ ⁽⁶⁾
~~10.16~~		~~Securities Purchase Agreement dated September 1, 2016 with RDW Capital, LLC~~ ⁽⁷⁾
~~10.17~~		~~Convertible Promissory Note dated September 1, 2016 held by RDW Capital, LLC~~ ⁽⁷⁾
~~10.18~~		~~Registration Rights Agreement dated September 1, 2016 with RDW Capital, LLC~~ ⁽⁷⁾
~~10.19~~		~~Convertible Promissory Note dated February 6, 2017 held by RDW Capital, LLC~~ ⁽⁹⁾
~~10.20~~		~~Securities Purchase Agreement dated March 31, 2017 with RDW Capital, LLC~~ ⁽⁸⁾
~~10.21~~		~~Convertible Promissory Note dated March 30, 2017 held by RDW Capital, LLC~~ ⁽⁸⁾
~~10.22~~		~~Convertible Promissory Note dated April 26, 2017 held by RDW Capital, LLC~~ ⁽⁹⁾
~~10.23~~		~~Convertible Promissory Note dated May 30, 2017 held by RDW Capital, LLC~~ ⁽⁹⁾
~~10.24~~		~~Securities Purchase Agreement dated August 8, 2017 with RDW Capital, LLC~~ ⁽¹⁰⁾
~~10.25~~		~~Convertible Promissory Note dated August 7, 2017 held by RDW Capital, LLC~~ ⁽¹⁰⁾
~~10.26~~		~~Securities Purchase Agreement dated October 20, 2017 with Power Up Lending Group, Ltd.~~ ⁽¹¹⁾
~~10.27~~		~~Convertible Promissory Note dated October 20, 2017 with Power Up Lending Group, Ltd.~~ ⁽¹¹⁾
~~10.29~~		~~Employment Agreement Paul Feldman~~ ⁽¹⁾
~~10.30~~		~~Shenzen AE Technology Purchase Order~~ ⁽¹⁾
~~10.31~~		~~Agreement with Carter, Terry & Company~~ ⁽¹⁾
~~10.32~~		~~Convertible Promissory Note dated November 16, 2017 with Power Up Lending Group, Ltd.~~ ⁽¹³⁾
~~10.33~~		~~Convertible Promissory Note dated January 5, 2018 with Power Up Lending Group, Ltd.~~ ⁽¹³⁾
~~10.34~~		~~Form of Adar Securities purchase Agreement dated March 5, 2018 with Adar bays , LLC~~ ⁽¹⁴⁾
~~10.35~~		~~Form of Convertible Promissory Note dated March 5, 2018 with Adar bays, LLC~~ ⁽¹⁴⁾
~~10.36~~		~~Form of Back end Note 1 dated March 5, 2018 with Adar bays, LLC~~ ⁽¹⁴⁾
~~10.37~~		~~Form of Back end Note 2 dated March 5, 2018 with Adar bays, LLC~~ ⁽¹⁴⁾
~~10.38~~		~~Form of Collateralized Secured Promissory Note 1 dated March 5, 2018 with Adar bays, LLC~~ ⁽¹⁴⁾
~~10.39~~		~~Form of Collateralized Secured Promissory Note 2 dated March 5, 2018 with Adar bays, LLC~~ ⁽¹⁴⁾
~~10.40~~		~~Securities Purchase Agreement dated March 5, 2018 with Power Up Lending Group, Ltd.~~ ⁽¹⁵⁾
~~10.41~~		~~Convertible Promissory Note dated October 20, 2017 with Power Up Lending Group, Ltd.~~ ⁽¹⁵⁾

~~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, 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.~~

~~Force Protection Video Equipment Corp.~~Florida		000-55519		45-1443512
~~(Exact name of registrant as specified in its charter)~~

~~Florida~~	~~45-1443512~~
(State ofor other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification ~~Number)~~

~~1249 Kildaire Farm Road Cary NC~~	~~1 27511~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~No.)

Title of Class		Trading Symbol		Name of Each Exchange on Which Registered
N/A		N/A		N/A

Large accelerated filer [ ]	☐	Accelerated filer	☐ [ ]
~~Non-Accelerated~~Non-accelerated filer [X]	☐	Smaller reporting company	☒ [X]
~~(Do not check if a smaller reporting company)~~ Emerging Growth Company [ ]

Part I

Item 1.	Business.	3
Item 1A.	Risk Factors.	10
Item 1B.	Unresolved Staff Comments.	28
Item 2.	Description of Property.	28
Item 3.	Legal Proceedings.	28
Item 4.	Mine Safety Disclosures.	28

			~~PAGE~~
~~PART I~~	Part II
~~Item 1.~~	~~Business~~		4
~~Item 1A.~~	~~Risk Factors~~		6
~~Item 2.~~	~~Properties~~		6
~~Item 3.~~	~~Legal Proceedings~~		6
~~Item 4.~~	~~Mine Safety Disclosures~~		6

~~PART II~~
Item 5.	Market for Registrant’s Common Equity, Related ~~Stockholders~~Stockholder Matters and Issuer Purchases of Equity ~~Securities~~Securities.		7	28
Item 6.	Selected Financial Data.	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.		7	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	42
Item 8.	Financial Statements and Supplementary Data.		13	42
Item 9.	Changes in and Disagreements ~~with~~With Accountants on Accounting and Financial ~~Disclosure~~Disclosure.		50	42
Item 9A.	Controls and ~~Procedures~~Procedures.		50	43
Item 9B.	Other ~~Information~~Information.		51	43

	~~PART~~Part III

Item 10.	Directors, Executive Officers and Corporate ~~Governance~~Governance.		52	43
Item 11.	Executive ~~Compensation~~Compensation.		55	43
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder ~~Matters~~Matters.		55	44
Item 13.	Certain Relationships and Related Transactions, and Director ~~Independence~~Independence.		56	44
Item 14.	Principal ~~Accountant~~Accounting Fees and ~~Services~~Services.		57	44

~~PART IV~~
~~Item 15.~~	~~Exhibits and Financial Statement Schedules~~		58

~~SIGNATURES~~			59

~~EXHIBIT INDEX~~			60

~~CERTIFICATIONS~~


2
Part IV

Item 15.	Exhibits, Financial Statement Schedules.	44
Item 16.	Form 10-K Summary.	44

	●	Data accuracy for research and ad targeting
	●	Manage reach and frequency with greater accuracy across multiple media platforms
	●	Access to consumers at scale for research, measurement, and attribution
	●	Speed of execution for research and new targeting cohorts
	●	Ability to target advertising to consumers based on identity without cookies

	●	Compensation
		Consumers earn when they opt-in to sharing their data and when that data is purchased.

	●	Choice
		Consumers decide what data is shared & who can buy it.

	●	Transparency
		Consumers are fully aware of how their data is used.

	●	The use of BIGtoken user surveys and the sale of such information received from surveys.

	●	The creation and management of targeted rewards and loyalty programs based on information and buying trends ascertained by data captured on our BIGtoken platform. We offer this solution both on and off the BIGtoken app.

	●	The ability to assist our customers in conducting market research based on analytics received from users of the BIGtoken platform.

	●	The ability to identify specific audiences for our customers and to target questions, surveys and data analytics geared toward our customers’ products / industries. Additionally, if we are unable to scale the needed information for a customer’s target audience, we may utilize our proprietary analytics to gain insight to further focus and refine user segments that need to be targeted in order to optimize data and media spend.

	●	The use of Lightning Insights that allow our customers to conduct research around specific audience groups through both long and short research studies.

	●	The creation of customized loyalty programs that utilize rewards to drive consumer purchasing habits.

	●	We plan to increasingly embrace crypto-currencies, including, but limited to, offering to reward our users with Bitcoin and other cryptocurrency, offering to pay our employees and vendors with such currency. offering our users digital wallets to store their crypto, enabling our users to store rewards in interest bearing stablecoins, holding cryptocurrency in our Treasury, developing our own Layer One Protocol optimized for users to own and monetize data, developing our own cryptocurrency to be used as rewards.

	●	develop and commercialize our technologies and proposed products;
	●	identify, hire and retain the needed personnel to implement our business plan;
	●	manage growth; or
	●	respond to competition.

	●	a decline in the rates that we can charge for advertising and promotional activities;

	●	our inability to create applications for our customers;

	●	Internet advertisements and promotions are, by their nature, limited in content relative to other media;

	●	companies may be reluctant or slow to adopt online advertising and promotional activities that replace, limit or compete with their existing direct marketing efforts;

	●	companies may prefer other forms of Internet advertising and promotions that we do not offer;

	●	the quality or placement of transactions, including the risk of non-screened, non-human inventory and traffic, could cause a loss in customers or revenue; and

	●	regulatory actions may negatively impact our business practices.

	●	actual or anticipated fluctuations in our results of operations or our competitors’ operating results;

	●	actual or anticipated changes in the growth rate of the connected lifestyle market, our growth rates or our competitors’ growth rates;

	●	conditions in the financial markets in general or changes in general economic conditions;

	●	changes in governmental regulation, including taxation and tariff policies;

	●	interest rate or currency rate fluctuations;

	●	our ability to forecast accurate financial results; and

	●	changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally

	●	the impact that operating or capital decisions (including the incurrence of indebtedness) relating to our business may have on SRAX’s consolidated financial statements and/or current or future indebtedness (including related covenants);

	●	business combinations involving us;

	●	our dividend and stock repurchase policies;

	●	compensation and benefit programs and other human resources policy decisions;

	●	management stock ownership;

	●	the intercompany agreements and services between us and SRAX, including the agreements relating to our separation from SRAX;

	●	the payment of dividends on our common stock; and

	●	determinations with respect to our tax returns.

	●	tax, employee benefit, indemnification and other matters arising from the separation;

	●	the nature, quality and pricing of services SRAX agrees to provide to us; and

	●	sales and other disposals by SRAX of all or a portion of its ownership interest in us.

		Page No.

	●	the failure of securities analysts to cover our common stock after this offering or changes in financial estimates by analysts;

	●	the inability to meet the financial estimates of securities analysts who follow our common stock or changes in earnings estimates by analysts;

	●	strategic actions by us or our competitors;

	●	announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;

	●	our quarterly or annual earnings, or those of other companies in our industry;

	●	actual or anticipated fluctuations in our operating results and those of our competitors;

	●	general economic and stock market conditions;

	●	the public reaction to our press releases, our other public announcements and our filings with the SEC;

	●	risks related to our business and our industry, including those discussed above;

	●	changes in conditions or trends in our industry, markets or customers;

	●	the trading volume of our common stock;

	●	future sales of our common stock or other securities;

	●	investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives.

· ITEM 2.	~~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~~ DESCRIPTION OF PROPERTY.

	As of April 30, 2020
Fiscal Year 2020	High		Low
First quarter ended July 31, 2019	$	0.0001	$	0.0001
Second quarter ended October 31, 2019	$	0.0001	$	0.0001
Third quarter ended January 31, 2020	$	0.0001	$	0.0001
Fourth quarter ended April 30, 2020	$	0.0001	$	0.0001

	As of April 30, 2019
Fiscal Year 2019	High		Low
First quarter ended July 31, 2018	$	0.0012	$	0.0002
Second quarter ended October 31, 2018	$	0.0003	$	0.0001
Third quarter ended January 31, 2019	$	0.0003	$	0.0001
Fourth quarter ended April 30, 2019	$	0.0002	$	0.0001

	●	a master separation agreement, or MSA;
	●	a transition services agreement, or TSA;

·	~~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.~~

	For the Years Ended December 31,
	2020			2019			$ CHG			% CHG
REVENUE
Total Revenue	$	2,168,000		$	3,228,000			(1,060,000	)		-33	%
Cost of revenue		800,000			1,613,000			(813,000	)		-50	%
GROSS PROFIT		1,368,000			1,615,000			(247,000	)		-15	%
Gross profit margin		63	%		50	%

OPERATING EXPENSES
Employee related costs		4,786,000			8,123,000			(3,337,000	)		-41	%
Marketing and selling expenses		1,167,000			2,515,000			(1,348,000	)		-54	%
Platform Costs		1,157,000			1,251,000			(94,000	)		-8	%
Depreciation and amortization		920,000			929,000			(9,000	)		-1	%
General and administrative		1,919,000			4,778,000			(2,859,000	)		-60	%
Total operating expenses		9,949,000			17,596,000			(7,647,000	)		-43	%
LOSS FROM OPERATIONS		(8,581,000	)		(15,981,000	)		7,400,000			-46	%

Other income (expense)
Financing Costs		(7,421,000	)		(694,000	)		(6,727,000	)		969	%
Interest income		-			8,000			(8,000	)		-100	%
Gains from marketable securities		305,000			50,000			255,000			510	%
Unrealized loss on marketable securities		-			(6,000	)
Change in fair value of derivative liabilities		196,000			1,000,000			(804,000	)		-80	%
Exchange gain		-			19,000
Total other income (loss)		(6,920,000	)		377,000			(7,297,000	)		-1936	%
Loss before provision for income taxes		(15,501,000	)		(15,604,000	)		103,000			-1	%
Provision for income taxes		(5,000	)		-			(5,000	)		n/a
Net loss	$	(15,506,000	)	$	(15,604,000	)		98,000			-1	%

	For the Year Ended April 30
	2020			2019			$ Change			% Change

Revenues	$	63,324		$	163,740		$	(100,416	)		-61	%	1
Gross profit (loss)	$	35,332		$	(20,668	)	$	56,000			-271	%	2
General and administrative expenses	$	46,135		$	222,217		$	(176,082	)		-79	%	3
Total other income (expense) - net	$	(21,414	)	$	(300,940	)	$	279,526			-93	%	4

1	~~Revenues~~Employee Related Costs. These are the costs we incur to employ our staff. For the year-ended December 31, 2020 employee related costs decreased ~~due~~ to ~~lack of expected sales and a reduction in marketing and advertising.~~

2	~~The gross loss in~~$4,786,000 from $8,123,000 for the full year period ending December 31, 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~~representing 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.~~$3,337,000 or approximately 41%. The decrease is primarily due to ~~decreased professional, personnel, and travel costs as business has slumped. Additionally,~~a reduction in employees in our sales and ~~marketing~~operations departments.

	Platform costs ~~include~~. Consist of the technology and content hosting. Platform costs for the full year ending December 31, 2020 were $1,157,000 as compared to ~~promote and sell our products. Sales and marketing costs during~~$1,251,000 for the year ended ~~April 30,~~December 31, 2019, representing a decrease of $94,000 or 8%. We expect these costs to continue to increase in absolute dollars as we continue to grow our user database but expect that they continue to decrease as a percentage of our revenues.

	Marketing, data services and sales. These are the costs for the full year ending December 31, 2020 were $1,167,000 as compared to $2,515,000 for the year ended December 31, 2019, representing a decrease of $1,348,000 or 54%. For the year-ended December 31, 2020 and 2019, ~~were $7,918~~the company incurred $364,000 and ~~$9,303, respectively. The~~$960,000, respectively, in expenses related to payments to users for point redemptions and accruals for future redemptions. This represents a decrease of ~~$1,385 coincides with the Company’s lack of available cash resources to maintain sufficient spending in this area.~~ $596,000 or 62%.

4	~~Other income~~General and administrative. General and administrative expense ~~during 2019,~~consists primarily ~~consisted~~ of ~~interest expense on~~human resources, information technology, professional fees, IT and facility overhead, and other general corporate expense. General and Administrative expenses were $1,919,000 and $4,778,000 for 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 forfull years ending December 31, 2020 and 2019, ~~was $77,774 and $103,992, respectively. During~~respectively, which represents a decrease of $2,859,000 or 60%. The decrease in expense in driven by a decrease in the ~~year ended April 30, 2020, the Company recognized a gain on ROU lease liability termination~~allocation of ~~$603 and a related impairment charge~~corporate overhead 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.~~ approximately $2,800,000.

	Full Year Ended December 31,
	2020			2019

Net cash used in operating activities	$	(4,322,000	)		(7,484,000	)
Net cash used in investing activities		(175,000	)		(748,000	)
Net cash provided by financing activities		4,497,000			8,194,000

	·	~~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 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.~~

	·	~~the recognition and measurement of current and deferred income taxes, which impact our provision for taxes~~
	·	~~Fair value measurements~~

~~Report of Independent Registered Public Accounting Firms~~		14

~~Consolidated Balance Sheets~~		15

~~Consolidated Statements of Operations~~		16

~~Consolidated Statements of Stockholders’ Deficit~~		17

~~Consolidated Statements of Cash Flows~~		18

~~Notes to Consolidated Financial Statements~~		19

	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

	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

					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	)

	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

·	~~Net loss from operations of $32,217~~
·	~~Net cash used in operations was $38,962~~