Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Apr. 14, 2021 | Oct. 31, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Force Protection Video Equipment Corp. | ||
Entity Central Index Key | 0001518720 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2,018,842 | ||
Entity Common Stock, Shares Outstanding | 158,244,935,162 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Carve-Out Balance Sheets
Carve-Out Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 1,000 | $ 1,000 |
Accounts receivable, net | 1,199,000 | 876,000 |
Prepaid expenses | 6,000 | 189,000 |
Marketable securities | 64,000 | |
Other current assets | 1,000 | 1,000 |
Total current assets | 1,207,000 | 1,131,000 |
Property and equipment, net | 1,000 | 3,000 |
Goodwill | 5,445,000 | 5,445,000 |
Intangible assets, net | 917,000 | 869,000 |
Total Assets | 7,570,000 | 7,448,000 |
Liabilities and Stockholders' Equity | ||
Accounts payable and accrued expenses | 853,000 | 1,225,000 |
Other current liabilities | 452,000 | 445,000 |
Total current liabilities | 1,305,000 | 1,670,000 |
Series A, redeemable preferred stock - related party - $0.0001, authorized 20,000,000 shares, 5,000,000 shares issued and outstanding | 5,000 | 5,000 |
Series B, redeemable preferred stock - stated value $100 per share, authorized 60,000 shares authorized, no shares issued and outstanding | ||
Total Liabilities | 1,310,000 | 1,675,000 |
Commitments and contingencies (see Note 7) | ||
Common stock, $0.00000001 par value, authorized 1,000,000,000,000 shares, 149,562,566,584 shares issued and outstanding | 1,000 | 1,000 |
Additional paid-in capital | 42,830,000 | 26,837,000 |
Accumulated deficit | (36,571,000) | (21,065,000) |
Total Equity | 6,260,000 | 5,773,000 |
Total Liabilities and Stockholders' Equity | $ 7,570,000 | $ 7,448,000 |
Carve-Out Balance Sheets (Paren
Carve-Out Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock, par value | $ 0.00 | $ 0.00 |
Common stock, shares authorized | 1,000,000,000,000 | 1,000,000,000,000 |
Common stock, shares issued | 149,562,566,584 | 149,562,566,584 |
Common stock, shares outstanding | 149,562,566,584 | 149,562,566,584 |
Series A, Redeemable Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 5,000,000 | 5,000,000 |
Series B, Redeemable Preferred Stock [Member] | ||
Preferred stock, par value | $ 100 | $ 100 |
Preferred stock, shares authorized | 60,000 | 60,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
Carve-Out Statements of Operati
Carve-Out Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 2,168,000 | $ 3,228,000 |
Cost of revenues | 800,000 | 1,613,000 |
Gross profit | 1,368,000 | 1,615,000 |
Operating expenses | ||
Employee related costs | 4,786,000 | 8,123,000 |
Marketing and selling expenses | 1,167,000 | 2,515,000 |
Platform costs | 1,157,000 | 1,251,000 |
Depreciation and amortization | 920,000 | 929,000 |
General and administrative expenses | 1,919,000 | 4,778,000 |
Total operating expenses | 9,949,000 | 17,596,000 |
Loss from operations | (8,581,000) | (15,981,000) |
Other income (expense) | ||
Financing costs | (7,421,000) | (694,000) |
Interest income | 8,000 | |
Change in fair value of derivative liabilities | 196,000 | 1,000,000 |
Realized gain on marketable securities | 305,000 | 50,000 |
Unrealized loss on marketable securities | (6,000) | |
Other | 19,000 | |
Total other income (expense) | (6,920,000) | 377,000 |
Loss before provision for income taxes | (15,501,000) | (15,604,000) |
Provision for income taxes | (5,000) | |
Net loss | $ (15,506,000) | $ (15,604,000) |
Net loss per share, basic and diluted | $ 0 | $ 0 |
Weighted average shares outstanding, basic and diluted | 149,562,566,584 | 149,562,566,584 |
Carve-Out Statements of Changes
Carve-Out Statements of Changes in Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 1,000 | $ 11,666,000 | $ (5,461,000) | $ 6,206,000 |
Balance, shares at Dec. 31, 2018 | 149,562,566,584 | |||
Net transfer from parent | 15,171,000 | 15,171,000 | ||
Net loss | (15,604,000) | (15,604,000) | ||
Balance at Dec. 31, 2019 | $ 1,000 | 26,837,000 | (21,065,000) | 5,773,000 |
Balance, shares at Dec. 31, 2019 | 149,562,566,584 | |||
Net transfer from parent | 15,993,000 | 15,993,000 | ||
Net loss | (15,506,000) | (15,506,000) | ||
Balance at Dec. 31, 2020 | $ 1,000 | $ 42,830,000 | $ (36,571,000) | $ 6,260,000 |
Balance, shares at Dec. 31, 2020 | 149,562,566,584 |
Carve-Out Statements of Cash Fl
Carve-Out Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows from Operating Activities | ||
Net loss | $ (15,506,000) | $ (15,604,000) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Allocations of corporate overhead | 11,259,000 | 6,510,000 |
Stock-based compensation expense | 237,000 | 467,000 |
Provision for bad debts | 47,000 | 440,000 |
Depreciation expense | 2,000 | 1,000 |
Amortization of intangibles | 524,000 | 348,000 |
Realized gain on marketable securities | (305,000) | (50,000) |
Unrealized loss on marketable securities | 6,000 | |
Changes in operating assets and liabilities | ||
Accounts receivable | (398,000) | (526,000) |
Prepaid expenses | 183,000 | (56,000) |
Other current assets | (1,000) | |
Accounts payable and accrued expenses | (372,000) | 536,000 |
Other current liabilities | 7,000 | 445,000 |
Net Cash Used in Operating Activities | (4,322,000) | (7,484,000) |
Cash Flows from Investing Activities | ||
Proceeds from the sale of marketable securities | 397,000 | |
Purchase of software | (572,000) | (748,000) |
Net Cash Used in Investing Activities | (175,000) | (748,000) |
Cash Flows from Financing Activities | ||
Cash transfer from parent, net | 4,497,000 | 8,194,000 |
Net Cash Provided by Financing Activities | 4,497,000 | 8,194,000 |
Net decrease in Cash | (38,000) | |
Cash, Beginning of Period | 1,000 | 39,000 |
Cash, End of Period | 1,000 | 1,000 |
Supplemental schedule of cash flow information | ||
Cash paid for interest | ||
Cash paid for taxes |
The Company, Basis of Presentat
The Company, Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company, Basis of Presentation and Summary of Significant Accounting Policies | NOTE 1 – THE COMPANY, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Force Protection Video Equipment Corp., (“Company”) was incorporated on March 11, 2011, under the laws of the State of Florida. On February 4, 2021, the Company entered into a Share Exchange Agreement with SRAX, Inc. (“SRAX”). Pursuant to the Share Exchange Agreement, the Company acquired all of the outstanding capital stock of BIG Token, Inc. (“BIGtoken”) a wholly owned subsidiary and an operating segment of SRAX. See Note – 11 Subsequent Events “Reverse Merger” for further information. BIGtoken is a data technology company offering tools and services to identify and reach consumers for the purpose of marketing and advertising communication. We are located in Westlake Village, California. 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 to maximize profits associated with advertising campaigns and (ii) gaining insight into the activities of their customers. We derive our revenues from the sale of proprietary consumer data and sales of digital advertising campaigns. BIGtoken currently operates as an operating segment of SRAX, Inc. (“SRAX”), as discussed in the Basis of Presentation, below. On October 1, 2020, SRAX entered into a share exchange agreement (the “Transaction”) with Force Protection Video Equipment Corp, a Florida corporation (“Force”). Prior to the Transactions, SRAX transferred the component of the BIGtoken operating segment, excluding the accounts receivable balance (as of the transfer date) that did not reside in BIGtoken, Inc. SRAX agreed to transfer 100% of the issued and outstanding common stock of BIGtoken, Inc, for 90% of the issued and outstanding shares of Force and 100% of the issued and outstanding shares of Force’s preferred stock. Basis of Presentation The Carve-Out Financial Statements of BIGtoken are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Throughout the periods covered by the Carve-Out Financial Statements, BIGtoken did not operate as a separate stand-alone entity but, rather as a business of SRAX. Consequently, stand-alone financial statements were not historically prepared for BIGtoken. The Carve-Out Financial Statements have been prepared in connection with the Transaction, and are derived from the accounting records of SRAX using the historical results of operations and the historical bases of assets and liabilities of BIGtoken, adjusted as necessary to conform to U.S. GAAP. The Carve-Out Financial Statements present the assets, liabilities, revenues, and expenses directly attributed to BIGtoken as well as certain allocations from SRAX. Intercompany balances and transactions between BIGtoken and SRAX have been presented in Net Parent investment within the Carve-Out Balance Sheets. SRAX’s debt, the related interest expense and derivative liabilities have not been allocated and reflected within the Carve-Out Financial Statements as BIGtoken is not the legal obligor of the debt and SRAX’s borrowings were not directly attributable BIGtoken’s business. The Carve-Out Financial Statements may, therefore, not reflect the results of operations, financial position or cash flows that would have resulted had BIGtoken been operated as a separate entity. Cash management Historically, BIGtoken received funding to cover any shortfalls on operating cash requirements through a centralized treasury function of SRAX. Net Parent investment As the Carve-Out Financial Statements are derived from the historical records of SRAX, the historical equity accounts are eliminated, and net parent investment is presented in lieu of shareholders’ equity on the Carve-Out Balance Sheets. The primary components of the net parent investment are intercompany balances other than related party payables and the allocation of shared costs. Balances between BIGtoken and SRAX that were not historically cash settled are included in net parent investment. Balances between BIGtoken and SRAX that would historically be cash settled are included in prepaid expenses and other current assets and accrued liabilities on the . Net parent investment represents SRAX’s interest in the recorded assets of BIGtoken and represents the cumulative investment by SRAX in BIGtoken through the dates presented, inclusive of operating results. 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. Cost allocation and attribution The Carve-Out Statements of Operations include all costs directly attributable to BIGtoken, as well as costs for certain functions and services used by BIGtoken that have been allocated from SRAX. Costs were allocated to the Carve-Out Financial Statements for certain operating, selling, governance and corporate functions such as direct labor, overhead, sales and marketing, administration, legal and information technology. The costs for these services and support functions were allocated to BIGtoken using either specific identification or a pro-rata allocation using operating expenses, labor allocations and other drivers. Management believes the methodology for cost allocations is a reasonable reflection of common expenses incurred by SRAX on BIGtoken’s behalf. Liquidity and Going Concern BIGtoken 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 achieved profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. These factors create substantial doubt about BIGtoken’s ability to continue as a going concern within one year after the date that the Carve-Out Financial Statements are issued. The Carve-Out Financial Statements do not include any adjustments that might be necessary if BIGtoken is unable to continue as a going concern. Accordingly, the Carve-Out Financial Statements have been prepared on a basis that assumes BIGtoken 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. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position as of December 31, 2020 our cash flow and cash usage forecasts for the period covering one-year from the issuance date of these Carve-Out Financial Statements and our current capital structure. We anticipate raising additional capital through alternative 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. As our operations have historically been funded through SRAX’s treasury program, BIGtoken has minimal cash and cash equivalents and minimal working capital. 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. Upon the close of our Share Exchange, we obtained access to approximately $1,000,000 in cash on hand and have raised an additional $4,700,000 through a private offering of our Series B Preferred Stock. Currently, we are dependent on SRAX for our continued support to fund our operations, without which we would need to curtail our operations. Use of Estimates The Carve-Out Financial Statements have been prepared in conformity with U.S. GAAP and requires management of BIGtoken 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 Carve-Out Financial Statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions. The most significant areas that require management judgment and which are susceptible to possible change in the near term include BIGtoken’s revenue recognition, provision for bad debts, BIGtoken point redemption liability, stock-based compensation, income taxes, goodwill and 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. Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on BIGtoken’s principal or, in absence of a principal, most advantageous market for the specific asset or liability. BIGtoken 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 BIGtoken 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 BIGtoken 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: estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. BIGtoken may also engage external advisors to assist us in determining fair value, as appropriate. Although BIGtoken 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. BIGtoken’s financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At December 31, 2020 and 2019, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. BIGtoken measures certain non-financial assets, liabilities, and equity issuances at fair value on a non-recurring basis. These non-recurring valuations include evaluating assets such as long-lived assets and goodwill for impairment; allocating value to assets in an acquired asset group; and applying accounting for business combinations. Accounts Receivable Credit is extended to customers based on an evaluation of their financial condition and other factors. Management periodically assesses BIGtoken’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. BIGtoken usually does not require collateral. Concentration of Credit Risk, Significant Customers and Supplier Risk Financial instruments that potentially subject BIGtoken to concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited with financial institutions within the United States. The balances maintained at these financial institutions are generally less than the Federal Deposit Insurance Corporation insurance limits. As of December 31, 2020, BIGtoken had five customers with accounts receivable balances of approximately 19.2%, 16.5%, 11.9%, 11.9%, and 10.1% of total accounts receivable. At December 31, 2019, BIGtoken had three customers with accounts receivable balances of approximately 25.9%, 16.4% and 15.0%. For the period ended December 31, 2020, BIGtoken had two customers that account for approximately 17.2% and 10.6% of total revenue. For the year ended December 31, 2019, BIGtoken had two customers that account for approximately 19.3% and 14.1% of total revenue. PREPAID EXPENSES Prepaid expenses are assets held by BIGtoken, which are expected to be realized and consumed within twelve months after the reporting period. MARKETABLE SECURITIES 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 shares, BIGtoken will record the gain (loss) in the carve-out statement of operations as a component of other income (expense). LONG-LIVED ASSETS Management evaluates the recoverability of BIGtoken’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. Events and circumstances considered by BIGtoken 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 BIGtoken’s stock price for a sustained period of time; and changes in BIGtoken’s business strategy. In determining if impairment exists, BIGtoken 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 years ended December 31, 2020 or 2019, respectively. Property and equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets 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 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. 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. For the years ended December 31, 2020, and 2019 there has been no impairment associated with internal use software. For the years ended December 31, 2020, and 2019, BIGtoken capitalized software development costs of $572,000 and $748,000, respectively. 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 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 December 31, 2020 and 2019. BIGtoken had historically performed its annual goodwill and impairment assessment on December 31 st 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 BIGtoken’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 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). 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. Revenue Recognition BIGtoken applies Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines. Recognition of revenue when, or as, we satisfy a performance obligation We recognize revenue at the point in time that the related performance obligation is satisfied by transferring the promised goods or services to our customer. Principal versus Agent Considerations When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators: We are primarily responsible for fulfilling the promise to provide the specified good or service. When we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without penalty or without permission from our customer. We have risk before the specified good or service have been transferred to a customer or after transfer of control to the customer. We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer. The entity has discretion in establishing the price for the specified good or service. We have discretion in establishing the price our customer pays for the specified goods or services. Contract Liabilities Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels the contract according to the contract terms. Contract liabilities have been low historically, and recorded as current liabilities on our 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. Practical Expedients and Exemptions We have elected certain practical expedients and policy elections as permitted under ASC Topic 606 as follows: ● We adopted the practical expedient related to not adjusting the promised amount of consideration for the effects of a significant financing component if the period between transfer of product and customer payment is expected to be less than one year at the time of contract inception. ● We made the accounting policy election to not assess promised goods or services as performance obligations if they are immaterial in the context of the contract with the customer. ● We made the accounting policy election to exclude any sales and similar taxes from the transaction price; and ● We adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Cost of Revenue Cost of 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 period the media is provided to us. Such expenses are classified as cost of revenue in the corresponding period in which the revenue is recognized in the accompanying Carve-Out Statements of Operations. Stock-Based Compensation 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 awards and terms previously granted to BIGtoken’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 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. Income taxes BIGtoken’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 BIGtoken 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, BIGtoken’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 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 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 BIGtoken will ultimately pay. BIGtoken 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. Earnings Per Share We use ASC 260, “Earnings Per Share” for calculating the basic and diluted earnings (loss) per share. We compute basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and warrants and stock awards. For periods with a net loss, basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. Recent Accounting Updates Not Yet Effective BIGtoken considers the applicability and impact of all Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board. ASU’s not listed below were assessed and determined to be either not applicable or expected to have minimal impact on BIGtoken’s consolidated financial results. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 (with amendments issued in 2018), which changes the accounti |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2020 | |
Credit Loss [Abstract] | |
Accounts Receivable | 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 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 3 – PROPERTY AND EQUIPMENT The components of property and 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 periods indicated: 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 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 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. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 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 |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | 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 platform of registered users, developed as a direct to consumer data marketplace where users are paid for their data. During the year ended 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, BIGtoken has estimated the future liability for point redemptions to be $452,000 and $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. 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. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. 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. |
Stock Options and Awards
Stock Options and Awards | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options and Awards | 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. 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, were summarized as follows: In March 2019, 388,500 common stock options for SRAX’s common stock having an exercise price of $3.42 per share with an option value as of the 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 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 with an option value as of the grant date of $325,000 calculated using the Black-Scholes option pricing model were granted to an employee. The expense associated with this option award will be recognized in operating expenses at date of grant. During the year ended December 31, 2020, 36,454 common stock options were terminated, and a total of 119,200 common stock options were issued to its employees. The options have a strike price of $2.70 and vest five years from their issue date or August 18, 2025. The options have a term of five years from their issue date. 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 table above includes $300,000 warrants issued on May 13, 2019 to a contractor for services related to BIGtoken. The following table sets forth the weighted-average assumptions used to estimate the fair value of option granted and warrants granted for the years ended December 31, 2020 and 2019: 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. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2020 | |
Investments, All Other Investments [Abstract] | |
Fair Value of Financial Instruments | NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of certain 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 December 31, 2020 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 $ − $ − |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 amounts related to BIGtoken’s tax positions are 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 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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 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 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 and 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 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 warrant holders as consideration for as a 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. BIGtoken’s statement of changes in stockholders’ equity, as presented in these financial statements, were restated to reflect the 149,562,566,584 common stock and 5,000,000 shares of Series A Preferred Stock received by SRAX as a result of the Share Exchange. Amendment to Share Exchange Agreement The Company entered into an Amendment to the Exchange Agreement on January 27, 2021. The Exchange Amendment amended the amount of securities each party thereto would receive in the Share Exchange and 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 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 which investors purchased 47,248.27 shares of Series B 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 Qualified Offering (“Qualified Offering Conversion Price”). The Offering meets the definition of a Qualified Offering as described in the COD and accordingly, all of the outstanding shares of Series B Stock will convert into Common Stock at eighty percent (80%) of the Standard Conversion Price. The Company has filed an amendment to its articles of incorporation decreasing the par value of its Common Stock in order to effect the conversion of all such Series B Stock into Common Stock. 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. Series C Offering On January 27, 2021, prior to the completion of the Share Exchange, Force Protection Video Equipment Corp. (“FPVD”) entered into a debt exchange agreement with Red Diamond Partners, LLC, whereby FPVD issued 8,313 shares of Series C Convertible Preferred Stock. Each share of Series C Preferred Stock is convertible into 1,546,576 shares of FPVD common stock. The aggregate number of 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. Amendments to the Articles of Incorporation On April 15, 2021, the Company filed an amendment to its articles of incorporation with the Secretary of State of Florida to change the par value of the Company’s common stock from $0.0001 to $0.00000001. As of the date hereof, the amendment is not yet effective. The change of par value is reflected in BIGtoken’s statements of changes in stockholders’ equity. |
The Company, Basis of Present_2
The Company, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Carve-Out Financial Statements of BIGtoken are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Throughout the periods covered by the Carve-Out Financial Statements, BIGtoken did not operate as a separate stand-alone entity but, rather as a business of SRAX. Consequently, stand-alone financial statements were not historically prepared for BIGtoken. The Carve-Out Financial Statements have been prepared in connection with the Transaction, and are derived from the accounting records of SRAX using the historical results of operations and the historical bases of assets and liabilities of BIGtoken, adjusted as necessary to conform to U.S. GAAP. The Carve-Out Financial Statements present the assets, liabilities, revenues, and expenses directly attributed to BIGtoken as well as certain allocations from SRAX. Intercompany balances and transactions between BIGtoken and SRAX have been presented in Net Parent investment within the Carve-Out Balance Sheets. SRAX’s debt, the related interest expense and derivative liabilities have not been allocated and reflected within the Carve-Out Financial Statements as BIGtoken is not the legal obligor of the debt and SRAX’s borrowings were not directly attributable BIGtoken’s business. The Carve-Out Financial Statements may, therefore, not reflect the results of operations, financial position or cash flows that would have resulted had BIGtoken been operated as a separate entity. |
Cash Management | Cash management Historically, BIGtoken received funding to cover any shortfalls on operating cash requirements through a centralized treasury function of SRAX. |
Net Parent Investment | Net Parent investment As the Carve-Out Financial Statements are derived from the historical records of SRAX, the historical equity accounts are eliminated, and net parent investment is presented in lieu of shareholders’ equity on the Carve-Out Balance Sheets. The primary components of the net parent investment are intercompany balances other than related party payables and the allocation of shared costs. Balances between BIGtoken and SRAX that were not historically cash settled are included in net parent investment. Balances between BIGtoken and SRAX that would historically be cash settled are included in prepaid expenses and other current assets and accrued liabilities on the . Net parent investment represents SRAX’s interest in the recorded assets of BIGtoken and represents the cumulative investment by SRAX in BIGtoken through the dates presented, inclusive of operating results. 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. |
Cost Allocation and Attribution | Cost allocation and attribution The Carve-Out Statements of Operations include all costs directly attributable to BIGtoken, as well as costs for certain functions and services used by BIGtoken that have been allocated from SRAX. Costs were allocated to the Carve-Out Financial Statements for certain operating, selling, governance and corporate functions such as direct labor, overhead, sales and marketing, administration, legal and information technology. The costs for these services and support functions were allocated to BIGtoken using either specific identification or a pro-rata allocation using operating expenses, labor allocations and other drivers. Management believes the methodology for cost allocations is a reasonable reflection of common expenses incurred by SRAX on BIGtoken’s behalf. |
Liquidity and Going Concern | Liquidity and Going Concern BIGtoken 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 achieved profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. These factors create substantial doubt about BIGtoken’s ability to continue as a going concern within one year after the date that the Carve-Out Financial Statements are issued. The Carve-Out Financial Statements do not include any adjustments that might be necessary if BIGtoken is unable to continue as a going concern. Accordingly, the Carve-Out Financial Statements have been prepared on a basis that assumes BIGtoken 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. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position as of December 31, 2020 our cash flow and cash usage forecasts for the period covering one-year from the issuance date of these Carve-Out Financial Statements and our current capital structure. We anticipate raising additional capital through alternative 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. As our operations have historically been funded through SRAX’s treasury program, BIGtoken has minimal cash and cash equivalents and minimal working capital. 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. Upon the close of our Share Exchange, we obtained access to approximately $1,000,000 in cash on hand and have raised an additional $4,700,000 through a private offering of our Series B Preferred Stock. Currently, we are dependent on SRAX for our continued support to fund our operations, without which we would need to curtail our operations. |
Use of Estimates | Use of Estimates The Carve-Out Financial Statements have been prepared in conformity with U.S. GAAP and requires management of BIGtoken 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 Carve-Out Financial Statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions. The most significant areas that require management judgment and which are susceptible to possible change in the near term include BIGtoken’s revenue recognition, provision for bad debts, BIGtoken point redemption liability, stock-based compensation, income taxes, goodwill and 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. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on BIGtoken’s principal or, in absence of a principal, most advantageous market for the specific asset or liability. BIGtoken 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 BIGtoken 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 BIGtoken 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: estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. BIGtoken may also engage external advisors to assist us in determining fair value, as appropriate. Although BIGtoken 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. BIGtoken’s financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At December 31, 2020 and 2019, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. BIGtoken measures certain non-financial assets, liabilities, and equity issuances at fair value on a non-recurring basis. These non-recurring valuations include evaluating assets such as long-lived assets and goodwill for impairment; allocating value to assets in an acquired asset group; and applying accounting for business combinations. |
Accounts Receivable | Accounts Receivable Credit is extended to customers based on an evaluation of their financial condition and other factors. Management periodically assesses BIGtoken’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. BIGtoken usually does not require collateral. |
Concentration of Credit Risk, Significant Customers and Supplier Risk | Concentration of Credit Risk, Significant Customers and Supplier Risk Financial instruments that potentially subject BIGtoken to concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited with financial institutions within the United States. The balances maintained at these financial institutions are generally less than the Federal Deposit Insurance Corporation insurance limits. As of December 31, 2020, BIGtoken had five customers with accounts receivable balances of approximately 19.2%, 16.5%, 11.9%, 11.9%, and 10.1% of total accounts receivable. At December 31, 2019, BIGtoken had three customers with accounts receivable balances of approximately 25.9%, 16.4% and 15.0%. For the period ended December 31, 2020, BIGtoken had two customers that account for approximately 17.2% and 10.6% of total revenue. For the year ended December 31, 2019, BIGtoken had two customers that account for approximately 19.3% and 14.1% of total revenue. |
Prepaid Expenses | PREPAID EXPENSES Prepaid expenses are assets held by BIGtoken, which are expected to be realized and consumed within twelve months after the reporting period. |
Marketable Securities | MARKETABLE SECURITIES 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 shares, BIGtoken will record the gain (loss) in the carve-out statement of operations as a component of other income (expense). |
Long-lived Assets | LONG-LIVED ASSETS Management evaluates the recoverability of BIGtoken’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. Events and circumstances considered by BIGtoken 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 BIGtoken’s stock price for a sustained period of time; and changes in BIGtoken’s business strategy. In determining if impairment exists, BIGtoken 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 years ended December 31, 2020 or 2019, respectively. |
Property and Equipment | Property and equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets 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 | Intangible assets 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. 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. For the years ended December 31, 2020, and 2019 there has been no impairment associated with internal use software. For the years ended December 31, 2020, and 2019, BIGtoken capitalized software development costs of $572,000 and $748,000, respectively. 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 | Goodwill 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 December 31, 2020 and 2019. BIGtoken had historically performed its annual goodwill and impairment assessment on December 31 st 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 BIGtoken’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 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). 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. |
Revenue Recognition | Revenue Recognition BIGtoken applies Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines. Recognition of revenue when, or as, we satisfy a performance obligation We recognize revenue at the point in time that the related performance obligation is satisfied by transferring the promised goods or services to our customer. Principal versus Agent Considerations When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators: We are primarily responsible for fulfilling the promise to provide the specified good or service. When we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without penalty or without permission from our customer. We have risk before the specified good or service have been transferred to a customer or after transfer of control to the customer. We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer. The entity has discretion in establishing the price for the specified good or service. We have discretion in establishing the price our customer pays for the specified goods or services. Contract Liabilities Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels the contract according to the contract terms. Contract liabilities have been low historically, and recorded as current liabilities on our 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. Practical Expedients and Exemptions We have elected certain practical expedients and policy elections as permitted under ASC Topic 606 as follows: ● We adopted the practical expedient related to not adjusting the promised amount of consideration for the effects of a significant financing component if the period between transfer of product and customer payment is expected to be less than one year at the time of contract inception. ● We made the accounting policy election to not assess promised goods or services as performance obligations if they are immaterial in the context of the contract with the customer. ● We made the accounting policy election to exclude any sales and similar taxes from the transaction price; and ● We adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. |
Cost of Revenue | Cost of Revenue Cost of 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 period the media is provided to us. Such expenses are classified as cost of revenue in the corresponding period in which the revenue is recognized in the accompanying Carve-Out Statements of Operations. |
Stock-based Compensation | Stock-Based Compensation 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 awards and terms previously granted to BIGtoken’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 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. |
Income Taxes | Income taxes BIGtoken’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 BIGtoken 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, BIGtoken’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 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 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 BIGtoken will ultimately pay. BIGtoken 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. |
Earnings Per Share | Earnings Per Share We use ASC 260, “Earnings Per Share” for calculating the basic and diluted earnings (loss) per share. We compute basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and warrants and stock awards. For periods with a net loss, basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. |
Recent Accounting Updates Not Yet Effective | Recent Accounting Updates Not Yet Effective BIGtoken considers the applicability and impact of all Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board. ASU’s not listed below were assessed and determined to be either not applicable or expected to have minimal impact on BIGtoken’s consolidated financial results. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 (with amendments issued in 2018), which changes the accounting for leases and requires expanded disclosures about leasing activities. This new guidance also requires lessees to recognize a ROU asset and a lease liability at the commencement date for all leases with terms greater than twelve months. Accounting by lessors is largely unchanged. ASU 2016-02 is effective for fiscal periods beginning after December 15, 2018. We adopted ASU 2016-02 on January 1, 2019, as BIGtoken is not an obligator on any lease agreements this standard did not have a material impact on our Carve-Out Financials Statements. In 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 to Non-employee Share-Based Payment Accounting.” This guidance expands the scope of Topic 718 “Compensation - Stock Compensation” to include share-based payment transactions for acquiring goods and services from non-employees, but excludes awards granted in conjunction with selling goods or services to a customer as part of a contract accounted for under ASC 606, “Revenue from Contracts with Customers.” The adoption of ASU 2018-07 did not have a material impact on our Carve-Out Financials Statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which amends ASC 350-40, “Intangibles - Goodwill and Other - Internal-Use Software.” The ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and requires the capitalized implementation costs to be expensed over the term of the hosting arrangement. The accounting for the service element of a hosting arrangement that is a service contract is not affected. ASU 2018-15 is effective for fiscal periods beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-15, effective January 1, 2019, did not have a material impact on our 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. Recent Accounting Updates Not Yet Effective In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this guidance. In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We are currently evaluating the impact of this guidance. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Credit Loss [Abstract] | |
Schedule of 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 |
Schedule of Provision for Bad Debts | 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 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | The components of property and 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 |
Schedule of Depreciation Expense | 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 periods indicated: 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 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Components of 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 |
Schedule of Amortization Expenses | 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 |
Schedule of Estimated Amortization Expense Related to Finite-lived Intangibles for Future Years | 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 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of 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 |
Stock Options and Awards (Table
Stock Options and Awards (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The options have a term of five years from their issue date. 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 |
Schedule of Estimate the Fair Value of Option Granted and Warrants Granted | The following table sets forth the weighted-average assumptions used to estimate the fair value of option granted and warrants granted for the years ended December 31, 2020 and 2019: 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 % |
Schedule of Stock-based Compensation Expense | 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 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, All Other Investments [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value On Recurring Basis | This determination requires significant judgments to be made. BIGtoken had the following financial assets as of December 31, 2020 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 $ − $ − |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Summary of Components of Income Tax Benefit | 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 $ − |
Summary of Deferred Tax Assets and Liabilities | 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 $ − $ − |
Reconciliation of Income Tax Benefit Computed Using the Federal Statutory Tax Rate | 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 % |
The Company, Basis of Present_3
The Company, Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Oct. 02, 2020 | |
Product Information [Line Items] | |||
Percentage of issued and outstanding stock | 90.00% | ||
Impairment loss | |||
Capitalized computer software, impairments | 572,000 | 748,000 | |
Internal Use Software [Member] | |||
Product Information [Line Items] | |||
Impairment loss | |||
Minimum [Member] | |||
Product Information [Line Items] | |||
Property and equipment estimated useful lives | P3Y | ||
Intangible assets estimated useful lives | 5 years | ||
Maximum [Member] | |||
Product Information [Line Items] | |||
Property and equipment estimated useful lives | P7Y | ||
Intangible assets estimated useful lives | 9 years | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer One [Member] | |||
Product Information [Line Items] | |||
Concentrations of risk, percentage | 19.20% | 25.90% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Two [Member] | |||
Product Information [Line Items] | |||
Concentrations of risk, percentage | 16.50% | 16.40% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Three [Member] | |||
Product Information [Line Items] | |||
Concentrations of risk, percentage | 11.90% | 15.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Four [Member] | |||
Product Information [Line Items] | |||
Concentrations of risk, percentage | 11.90% | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Five [Member] | |||
Product Information [Line Items] | |||
Concentrations of risk, percentage | 10.10% | ||
Customer Concentration Risk [Member] | Sales [Member] | Customer One [Member] | |||
Product Information [Line Items] | |||
Concentrations of risk, percentage | 17.20% | 19.30% | |
Customer Concentration Risk [Member] | Sales [Member] | Customer Two [Member] | |||
Product Information [Line Items] | |||
Concentrations of risk, percentage | 10.60% | 14.10% | |
Series B Preferred Stock [Member] | |||
Product Information [Line Items] | |||
Proceeds from private offering | $ 4,700,000 | ||
Close of Share Exchange [Member] | |||
Product Information [Line Items] | |||
Cash | $ 1,000,000 | ||
Preferred Stock [Member] | |||
Product Information [Line Items] | |||
Percentage of issued and outstanding stock | 100.00% | ||
BigToken Inc [Member] | Common Stock [Member] | |||
Product Information [Line Items] | |||
Percentage of issued and outstanding stock | 100.00% |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Credit Loss [Abstract] | ||
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 |
Accounts Receivable - Schedul_2
Accounts Receivable - Schedule of Provision for Bad Debts (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Credit Loss [Abstract] | ||
Directly identifiable as BIGtoken's | $ 47,000 | $ 440,000 |
Allocated from SRAX, Inc. | 4,000 | |
Provision for bad debts | $ 47,000 | $ 450,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Computer Equipment | $ 4,000 | $ 4,000 |
Accumulated depreciation | (3,000) | (1,000) |
Property and equipment, net | $ 1,000 | $ 3,000 |
Property and Equipment - Sche_2
Property and Equipment - Schedule of Depreciation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Directly identifiable as BIGtoken's | $ 2,000 | $ 1,000 |
Allocated from SRAX, Inc. | 43,000 | 70,000 |
Depreciation expense | $ 45,000 | $ 71,000 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 5,445,000 | $ 5,445,000 |
Goodwill, impairment loss |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Components of Intangible Assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Software | $ 1,980,000 | $ 1,408,000 |
Accumulated amortization | (1,063,000) | (539,000) |
Intangible assets, net | $ 917,000 | $ 869,000 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Amortization Expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Directly identifiable as BIGtoken's | $ 524,000 | $ 348,000 |
Allocated from SRAX, Inc. | 349,000 | 510,000 |
Amortization expense | $ 873,000 | $ 858,000 |
Intangible Assets - Schedule _3
Intangible Assets - Schedule of Estimated Amortization Expense Related to Finite-lived Intangibles for Future Years (Details) | Dec. 31, 2020USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2021 | $ 518,000 |
2022 | 312,000 |
2023 | 87,000 |
Total estimated amortization expense | $ 917,000 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
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 |
Other Current Liabilities (Deta
Other Current Liabilities (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Other current liabilities | $ 452,000 | $ 445,000 |
Stock Options and Awards (Detai
Stock Options and Awards (Details Narrative) - USD ($) | May 31, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Nov. 30, 2020 | Apr. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | May 13, 2019 | Feb. 23, 2016 | Nov. 05, 2014 | Jan. 31, 2012 |
Class of Stock [Line Items] | |||||||||||
Exercise price per share | $ 2.70 | ||||||||||
Expected term | 5 years 1 month 6 days | 3 years 9 months 18 days | |||||||||
Implied volatility rate | 102.00% | ||||||||||
Risk free interest rate | 1.30% | ||||||||||
Options terminated during the period | 36,454 | 28,951 | |||||||||
Warrants outstanding | 300,000 | ||||||||||
Compensation cost of unvested options unrecognized | $ 2,047,000 | ||||||||||
Weighted average period to vest | 2 years 9 months 18 days | ||||||||||
Employees [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock option vesting period description | The options have a strike price of $2.70 and vest five years from their issue date or August 18, 2025. The options have a term of five years from their issue date. | ||||||||||
Options terminated during the period | 119,200 | ||||||||||
Warrants [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Exercise price per share | $ 3.42 | ||||||||||
Fair value of shares issued | $ 858,000 | ||||||||||
Expected term | 3 years | ||||||||||
Implied volatility rate | 102.00% | ||||||||||
Risk free interest rate | 4.50% | ||||||||||
Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of common stock purchased | 150,000 | ||||||||||
Exercise price per share | $ 2.97 | ||||||||||
Fair value of shares issued | $ 325,000 | ||||||||||
Common Stock [Member] | Independent Directors [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock option vesting period description | 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. | ||||||||||
Common stock shares issued for services | 4,522 | ||||||||||
SRAX, Inc. [Member] | Warrants [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of common stock purchased | 300,000 | 5,626 | 388,500 | ||||||||
Exercise price per share | $ 4.99 | $ 5.49 | $ 3.42 | ||||||||
Fair value of shares issued | $ 1,407 | $ 858,000 | |||||||||
Expected term | 5 years | 7 years | |||||||||
Implied volatility rate | 101.00% | 102.00% | |||||||||
Risk free interest rate | 1.80% | 2.46% | |||||||||
Stock option vesting period description | Options that vest 1/4th quarterly over the next year with an expiration date of April 15, 2026. | ||||||||||
Option valued | $ 1,138,000 | $ 30,000 | |||||||||
2012 Plan [Member] | SRAX, Inc. [Member] | Class A Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares authorized | 600,000 | ||||||||||
2014 Plan [Member] | SRAX, Inc. [Member] | Class A Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares reserved | 600,000 | ||||||||||
2016 Plan [Member] | SRAX, Inc. [Member] | Class A Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares reserved | 600,000 | ||||||||||
2012, 2014 and 2016 Plan [Member] | SRAX, Inc. [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock option description | 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. | ||||||||||
Stock option terms of award | 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 | ||||||||||
2012, 2014 and 2016 Plan [Member] | SRAX, Inc. [Member] | Maximum [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Fair market value of common stock | $ 100,000 | ||||||||||
Stock option exercisable period | 10 years | ||||||||||
Common stock own percentage | 10.00% |
Stock Options and Awards - Sche
Stock Options and Awards - Schedule of Stock Option Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Number of Shares, Outstanding, Beginning | 1,013,280 | 348,105 |
Number of Shares, Granted | 287,286 | 694,126 |
Number of Shares, Exercised | ||
Number of Shares, Forfeited | (36,454) | (28,951) |
Number of Shares, Outstanding, Ending balance | 1,264,112 | 1,013,280 |
Number of Shares, Vested and exercisable | 553,250 | 229,162 |
Number of Shares, Unvested and non-exercisable | 710,862 | 784,118 |
Weighted Average Strike Price/Share, Outstanding, Beginning balance | $ 4.60 | $ 5.94 |
Weighted Average Strike Price/Share, Granted | 2.79 | 4.01 |
Weighted Average Strike Price/Share, Exercised | ||
Weighted Average Strike Price/Share, Forfeited | 5.85 | 6.60 |
Weighted Average Strike Price/Share, Outstanding, Ending balance | 4.15 | 4.60 |
Weighted Average Strike Price/Share, Vested and exercisable | 4.54 | 6.32 |
Weighted Average Strike Price/Share, Unvested and non-exercisable | $ 3.85 | $ 4.10 |
Weighted Average Remaining Contractual Term (Years), Outstanding Beginning | 2 years 7 months 17 days | 2 years 4 months 20 days |
Weighted Average Remaining Contractual Term (Years), Granted | 4 years 10 months 3 days | 3 years 4 months 17 days |
Weighted Average Remaining Contractual Term (Years), Outstanding Ending | 2 years 2 months 12 days | 2 years 7 months 17 days |
Weighted Average Remaining Contractual Term (Years), Vested and exercisable | 2 years 15 days | 1 year 8 months 5 days |
Weighted Average Remaining Contractual Term (Years), Unvested and non-exercisable | 2 years 9 months 14 days | 2 years 11 months 23 days |
Aggregate Intrinsic Value, Outstanding, Beginning | ||
Aggregate Intrinsic Value, Granted | ||
Aggregate Intrinsic Value, Exercised | ||
Aggregate Intrinsic Value, Forfeited | ||
Aggregate Intrinsic Value, Outstanding, Ending | ||
Aggregate Intrinsic Value, Vested and exercisable | ||
Aggregate Intrinsic Value, Unvested and non-exercisable | ||
Weighted Average Grant Date Fair Value, Granted | $ 1.24 | $ 1.14 |
Weighted Average Grant Date Fair Value, Forfeited | 4.60 | 2.79 |
Weighted Average Grant Date Fair Value, Vested and exercisable | 2.95 | 3.96 |
Weighted Average Grant Date Fair Value, Unvested and non-exercisable | $ 2.88 | $ 2.79 |
Stock Options and Awards - Sc_2
Stock Options and Awards - Schedule of Estimate the Fair Value of Option Granted and Warrants Granted (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Expected life (in years) | 5 years 1 month 6 days | 3 years 9 months 18 days |
Risk-free interest rate, minimum | 0.40% | |
Risk-free interest rate, maximum | 0.60% | |
Risk-free interest rate | 1.30% | |
Expected volatility, maximum | 98.00% | |
Expected volatility, minimum | 100.00% | |
Expected volatility | 102.00% | |
Dividend yield | 0.00% | 0.00% |
Stock Options and Awards - Sc_3
Stock Options and Awards - Schedule of Stock-based Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
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 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Assets and Liabilities Measured at Fair Value On Recurring Basis (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Total assets | $ 64,000 | |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level1) [Member] | ||
Total assets | 64,000 | |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Total assets | ||
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level3) [Member] | ||
Total assets | ||
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | ||
Total assets | 64,000 | |
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level1) [Member] | ||
Total assets | 64,000 | |
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Total assets | ||
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | Significant Unobservable Inputs (Level3) [Member] | ||
Total assets |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit | $ 5,000 |
Income Taxes - Summary of Compo
Income Taxes - Summary of Components of Income Tax Benefit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
The Federal, Current tax benefit | ||
State, Current tax benefit | 5,000 | |
Total, Current tax benefit | 5,000 | |
The Federal, Deferred tax benefit | ||
State, Deferred tax benefit | ||
Total, Deferred tax benefit | ||
Total income tax benefit | $ 5,000 |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
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 |
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 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Benefit Computed Using the Federal Statutory Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit calculated at The Federal statutory rate | 21.00% | 21.00% |
Fair market adjustment derivatives | 0.00% | 1.00% |
Amortization of debt discount | (7.00%) | 0.00% |
Current state income tax expense (net of federal benefit) | 0.00% | 0.00% |
Change in valuation allowance | (13.00%) | (21.00%) |
Other | (1.00%) | (1.00%) |
Total income tax benefit | (0.00%) | (0.00%) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Mar. 12, 2021 | Feb. 16, 2021 | Feb. 04, 2021 | Jan. 27, 2021 | Jan. 27, 2021 | Oct. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 15, 2021 | Oct. 02, 2020 |
Subsequent Event [Line Items] | ||||||||||
Percentage of issued and outstanding stock | 90.00% | |||||||||
Stock option granted | 287,286 | 694,126 | ||||||||
Common stock, par value | $ 0.00 | $ 0.00 | ||||||||
Series B Preferred Stock [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Proceeds from private offering | $ 4,700,000 | |||||||||
Securities Purchase Agreements [Member] | Series B Preferred Stock [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued during period, shares | 10,500 | |||||||||
Proceeds from private offering | $ 1,050,000 | |||||||||
Subsequent Event [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Pre-money valuation of equity securities | $ 10,000,000 | |||||||||
Voting power | 70.00% | 70.00% | ||||||||
Common stock, par value | $ 0.0001 | |||||||||
Subsequent Event [Member] | Series C Preferred Stock [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Convertible preferred stock, shares issued upon conversion | 12,864,419,313 | 12,864,419,313 | ||||||||
Subsequent Event [Member] | Share Exchange Agreement [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage of issued and outstanding stock | 100.00% | |||||||||
Subsequent Event [Member] | Share Exchange Agreement [Member] | Series A Preferred Stock [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of common stock received | 5,000,000 | |||||||||
Subsequent Event [Member] | Share Exchange Agreement [Member] | Series A Preferred Stock [Member] | Restated [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of common stock received | 5,000,000 | |||||||||
Subsequent Event [Member] | Share Exchange Agreement [Member] | Series C Convertible Preferred Stock | FPVD, Inc. [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Conversion of convertible securities | 8,313 | |||||||||
Subsequent Event [Member] | Employment Agreement [Member] | Mr. Kerner [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Warrant term | 10 years | |||||||||
Warrant description | 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. | |||||||||
Stock option granted | 400,000,000 | |||||||||
Subsequent Event [Member] | Employment Agreement [Member] | Mr. Kerner [Member] | Maximum [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of common stock to purcahse warrants | 15,824,493,516 | |||||||||
Subsequent Event [Member] | Securities Purchase Agreements [Member] | Series B Preferred Stock [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued during period, shares | 47,248 | |||||||||
Proceeds from private offering | $ 4,725,000 | |||||||||
Preferred stock, par value | $ 100 | |||||||||
Preferred stock, shares outstanding | 57,748 | |||||||||
Issuance of shares, description | 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 Qualified Offering ("Qualified Offering Conversion Price"). The Offering meets the definition of a Qualified Offering as described in the COD and accordingly, all of the outstanding shares of Series B Stock will convert into Common Stock at eighty percent (80%) of the Standard Conversion Price. The Company has filed an amendment to its articles of incorporation decreasing the par value of its Common Stock in order to effect the conversion of all such Series B Stock into Common Stock. | |||||||||
Subsequent Event [Member] | Common Stock [Member] | Share Exchange Agreement [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of common stock received | 149,562,566,584 | |||||||||
Subsequent Event [Member] | Common Stock [Member] | Share Exchange Agreement [Member] | Restated [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of common stock received | 149,562,566,584 | |||||||||
Subsequent Event [Member] | Common Stock [Member] | Securities Purchase Agreements [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued during period, shares | 82,343,910,014 | |||||||||
Subsequent Event [Member] | FPVD Warrants [Member] | Share Exchange Agreement [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of common stock to purcahse warrants | 25,568,064,462 | |||||||||
Warrant term | 3 years | |||||||||
Warrant exercise price | $ 0.00005844216 |