Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2020 | |
Cover [Abstract] | |
Entity Registrant Name | Force Protection Video Equipment Corp. |
Entity Central Index Key | 0001518720 |
Document Type | 8-K |
Document Period End Date | Sep. 30, 2020 |
Amendment Flag | false |
Entity Emerging Growth Company | false |
Carve-Out Balance Sheets
Carve-Out Balance Sheets - BigToken Inc [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 92,000 | $ 1,000 | $ 39,000 |
Accounts receivable, net | 682,000 | 876,000 | 790,000 |
Prepaid expenses | 21,000 | 189,000 | 133,000 |
Marketable securities | 64,000 | 20,000 | |
Other current assets | 1,000 | 1,000 | |
Total current assets | 796,000 | 1,131,000 | 982,000 |
Property and equipment, net | 1,000 | 3,000 | 4,000 |
Goodwill | 5,445,000 | 5,445,000 | 5,445,000 |
Intangible assets, net | 919,000 | 869,000 | 469,000 |
Total Assets | 7,161,000 | 7,448,000 | 6,900,000 |
Liabilities and Net Parent Investment | |||
Accounts payable and accrued expenses | 855,000 | 1,225,000 | 689,000 |
Other current liabilities | 263,000 | 445,000 | |
Total Liabilities | 1,118,000 | 1,670,000 | 689,000 |
Commitments and contingencies (see Note 7) | |||
Net parent investment | 6,043,000 | 5,778,000 | 6,211,000 |
Total Net Parent Investment | 6,043,000 | 5,778,000 | 6,211,000 |
Total Liabilities and Net Parent Investment | $ 7,161,000 | $ 7,448,000 | $ 6,900,000 |
Carve-Out Statements of Operati
Carve-Out Statements of Operations - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | $ 1,146,000 | $ 2,242,000 | $ 3,228,000 | $ 2,725,000 |
Cost of revenues | 491,000 | 1,013,000 | 1,613,000 | 1,605,000 |
Gross profit | 655,000 | 1,229,000 | 1,615,000 | 1,120,000 |
Operating expenses | ||||
Employee related costs | 3,630,000 | 6,322,000 | 8,123,000 | 5,470,000 |
Marketing and selling expenses | 725,000 | 2,144,000 | 2,515,000 | 514,000 |
Platform costs | 844,000 | 812,000 | 1,251,000 | 533,000 |
Depreciation and amortization | 714,000 | 631,000 | 929,000 | 379,000 |
General and administrative expenses | 1,593,000 | 3,590,000 | 4,778,000 | 3,140,000 |
Total operating expenses | 7,506,000 | 13,499,000 | 17,596,000 | 10,036,000 |
Loss from operations | (6,851,000) | (12,270,000) | (15,981,000) | (8,916,000) |
Other income (expense): | ||||
Financing costs | (3,624,000) | (677,000) | (694,000) | (4,346,000) |
Interest income | 8,000 | 8,000 | 34,000 | |
Gain (loss) on sale of assets | ||||
Change in fair value of derivative liabilities | 218,000 | 1,342,000 | 1,000,000 | 5,252,000 |
Realized gain on marketable securities | 333,000 | 50,000 | 50,000 | 23,000 |
Unrealized loss on marketable securities | (6,000) | (6,000) | (3,000) | |
Exchange Gain (loss) | 19,000 | 19,000 | (15,000) | |
Total other income (expense) | (3,073,000) | 736,000 | 377,000 | 945,000 |
Loss before provision for income taxes | (9,924,000) | (11,534,000) | (15,604,000) | (7,971,000) |
Provision for income tax benefit | 2,510,000 | |||
Net loss | $ (9,924,000) | $ (11,534,000) | $ (15,604,000) | $ (5,461,000) |
Carve-Out Statements of Changes
Carve-Out Statements of Changes in Net Parent Investment - Net Parent Investment [Member] - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Balance | $ 5,778,000 | $ 6,211,000 | $ 6,211,000 |
Net loss | (9,924,000) | (15,604,000) | (5,461,000) |
Net transfers from parent | 9,419,000 | 14,188,000 | 5,018,000 |
Stock-based compensation expense | 770,000 | 983,000 | 443,000 |
Balance | $ 6,043,000 | $ 5,778,000 | $ 6,211,000 |
Carve-Out Statements of Cash Fl
Carve-Out Statements of Cash Flows - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows From Operating Activities | ||||
Net loss | $ (9,924,000) | $ (11,534,000) | $ (15,604,000) | $ (5,461,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Allocations of corporate overhead | 6,423,000 | 4,525,000 | 6,510,000 | 3,460,000 |
Stock-based compensation expense | 237,000 | 278,000 | 467,000 | |
Provision for bad debts | 29,000 | 246,000 | 446,000 | 3,000 |
Depreciation expense | 2,000 | 1,000 | 1,000 | |
Amortization of intangibles | 385,000 | 240,000 | 348,000 | 143,000 |
Realized gain on marketable securities | (333,000) | (50,000) | (50,000) | (23,000) |
Unrealized loss on marketable securities | 6,000 | 6,000 | 3,000 | |
Changes in operating assets and liabilities | ||||
Accounts receivable | 165,000 | (353,000) | (532,000) | 82,000 |
Prepaid expenses | 168,000 | (122,000) | (56,000) | 9,000 |
Other current assets | (5,000) | (1,000) | ||
Accounts payable and accrued expenses | (370,000) | 23,000 | 536,000 | 263,000 |
Other current liabilities | (182,000) | 772,000 | 445,000 | |
Net Cash Used in Operating Activities | (3,400,000) | (5,973,000) | (7,484,000) | (1,521,000) |
Cash Flows From Investing Activities | ||||
Proceeds from the sale of marketable securities | 397,000 | |||
Purchase of property and equipment | (4,000) | |||
Purchase of software | (435,000) | (537,000) | (748,000) | (444,000) |
Net Cash Used by Investing Activities | (38,000) | (537,000) | (748,000) | (448,000) |
Cash Flows From Financing Activities | ||||
Cash transfer from parent, net | 3,529,000 | 6,492,000 | 8,194,000 | 2,001,000 |
Net Cash Provided by Financing Activities | 3,529,000 | 6,492,000 | 8,194,000 | 2,001,000 |
Net increase (decrease) in Cash | 91,000 | (18,000) | (38,000) | 32,000 |
Cash, Beginning of Period | 1,000 | 39,000 | 39,000 | 7,000 |
Cash, End of Period | $ 92,000 | $ 21,000 | $ 1,000 | $ 39,000 |
The Company, Basis of Presentat
The Company, Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
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 BIGToken (“We”, “Our”, or the “Company”) 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 Los Angeles, 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. The Company 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 the Company 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, the Company did not operate as a separate stand-alone entity but, rather as a business of the SRAX. Consequently, stand-alone financial statements were not historically prepared for the Company. 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 the Company, adjusted as necessary to conform to U.S. GAAP. The Carve-Out Financial Statements present the assets, liabilities, revenues, and expenses directly attributed to the Company as well as certain allocations from the SRAX. Intercompany balances and transactions between the Company 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 the Company is not the legal obligor of the debt and SRAX’s borrowings were not directly attributable to the Company’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 the Company been operated as a separate entity. Cash management Historically, the Company 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 the Company and SRAX that were not historically cash settled are included in net parent investment. Balances between the Company 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. Cost allocation and attribution The Carve-Out Statements of Operations include all costs directly attributable to the Company, as well as costs for certain functions and services used by the Company 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 the Company 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 the Company’s behalf. Liquidity and Going Concern The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its goods and services to 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 the Company’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 the Company is unable to continue as a going concern. Accordingly, the Carve-Out Financial Statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position at September 30, 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, the Company 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. 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 the Company to make estimates and assumptions in the preparation of these Carve-Out Financial Statements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the 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 the Company’s revenue recognition, provision for bad debts, BIGToken point redemption liability, stock-based compensation, income taxes, goodwill and intangible assets. As of September 30, 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 the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include: estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate. Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values. The Company’s financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At September 30, 2020 (unaudited), December 31, 2019 and 2018, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. The Company 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 the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Accounts determined to be uncollectible are charged to operations when that determination is made. The Company usually does not require collateral. Concentration of Credit Risk, Significant Customers and Supplier Risk Financial instruments that potentially subject the Company 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 more than the Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any loss on these accounts. As of September 30, 2020 (unaudited), the Company had three customers with accounts receivable balances of approximately 23.7%, 19.2% and 17.1% of total accounts receivable. At December 31, 2019, the Company had three customers with accounts receivable balances of approximately 25.9%, 16.4% and 15.0%. At December 31, 2018, the Company had two customers with accounts receivable balances of approximately 42.9% and 10.5%. For the period ended September 30, 2020 (unaudited), the Company had one customer that account for approximately 19.1% of total revenue. For the year ended December 31, 2019, the Company had two customers that account for approximately 19.3% and 14.1% of total revenue. For the year ended December 31, 2018, the Company had three customers that accounted for 21.0%, 14.1% and 10.3%. PREPAID EXPENSES Prepaid expenses are assets held by the Company, 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, the Company 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 the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in the Company’s stock price for a sustained period of time; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairments have been recorded regarding its identifiable intangible assets or other long-lived assets during nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) and the years ended December 31, 2019 or 2018, 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 the Company’s intellectual property of internally developed software and are stated at cost less accumulated amortization. Amortization is provided for on the straight-line basis over the estimated useful lives of the assets of five to nine years. Costs incurred to develop computer software for internal use are capitalized once: (1) the preliminary project stage is completed, (2) management authorizes and commits to funding a specific software project, and (3) it is probable that the project will be completed and the software will be used to perform the function intended. Costs incurred prior to meeting the qualifications are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Post-implementation costs related to the internal use computer software, are expensed as incurred. Internal use software development costs are amortized using the straight-line method over its estimated useful life which ranges up to three years. Software development costs may become impaired in situations where development efforts are abandoned due to the viability of the planned project becoming doubtful or due to technological obsolescence of the planned software product. For the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) there has been no impairment associated with internal use software. For the years ended December 31, 2019, and 2018 there has been no impairment associated with internal use software. For the nine months ended September 30, 2020 and years ended December 31, 2019, and 2018, the Company capitalized software development costs of $435,000 (unaudited) and $748,000 and $444,000, respectively. During 2016, the Company began capitalizing the costs of developing internal-use computer software, including directly related payroll costs. The Company amortizes costs associated with its internally developed software over periods up to three years, beginning when the software is ready for its intended use. The Company capitalizes costs incurred during the application development stage of internal-use software and amortize these costs over the estimated useful life. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred. Goodwill Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company tests goodwill for impairment for its reporting units on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that implied fair value of the goodwill within the reporting unit is less than its carrying value. The Company performed its most recent annual goodwill impairment test as of The Company had historically performed its annual goodwill and impairment assessment on 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 the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology primarily using the income approach (discounted cash flow method). We compare the carrying value of the goodwill, with its fair value, as determined by a combination of the market approach and income approach, its estimated discounted cash flows. If the carrying value of goodwill exceeds its fair value, then the amount of impairment to be recognized. 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 The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ASC Topic 606 is a comprehensive revenue recognition model that requires revenue to be recognized when control of the promised goods or services are transferred to our customers at an amount that reflects the consideration that we expect to receive. Application of ASC Topic 606 requires us to use more judgment and make more estimates than under former guidance. Application of ASC Topic 606 requires a five-step model applicable to all product offerings revenue streams as follows: Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. 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 historically low historically 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 applied the transitional guidance to contracts that were not complete at the date of our initial application of ASC Topic 606 on January 1, 2018. ● 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. The Company 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 The Company’s employees have historically participated in SRAX’s stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company’s employees as well as an allocation of SRAX’s corporate and shared functional employee expenses. We account for our stock-based compensation under ASC 718 “ Compensation – Stock Compensation 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 The Company’s operations have historically been included in SRAX’s combined U.S. income tax returns. Income tax expense included in the Carve-Out Financial Statements has been calculated following the separate return method, as if the Company was a stand-alone enterprise and a separate taxpayer for the periods presented. The calculation of income taxes on a separate return basis requires considerable judgment and the use of both estimates and allocations that affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and the Carve-Out Financial Statement recognition of revenues and expenses. As a result, the Company’s deferred income tax rate and deferred tax balances may differ from those in SRAX’s historical results. The provision for income taxes is determined using the asset and liability approach. Deferred taxes represent the future tax consequences expected when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes result from differences between the Carve-Out Financial Statement and tax bases of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In evaluating the Company’s ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of operations. Any tax carryforwards reflected in the Carve-Out Financial Statements have also been determined using the separate return method. Tax carryforwards include net operating losses. The complexity of tax regulations requires assessments of uncertainties in estimating taxes the Company will ultimately pay. The Company recognizes liabilities for anticipated tax audit uncertainties based on its estimate of whether, and the extent to which additional taxes would be due on a separate return basis. Tax liabilities are presented net of any related tax loss carryforwards. Recently Issued Accounting Standards Changes to accounting principles are established by the FASB in the form of ASUs to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations, cash flows, or presentation thereof. Described below are ASUs that are not yet effective, but may be applicable to our financial position, results of operations, cash flows, or presentation thereof. ASUs not listed below were assessed and determined to not be applicable to our financial position, results of operations, cash flows, or presentation thereof. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 (with amendments issued in 2018), which changes the accounting for leases and requires expanded disclosures about leasing activities. This new guidance also requires lessees to recognize a ROU asset and a lease liability at the commencement date for all leases with terms greater than twelve months. Accounting by lessors is largely unchanged. ASU 2016-02 is effective for fiscal periods beginning after December |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Accounts Receivable | NOTE 2 – ACCOUNTS RECEIVABLE September 30, December 31, December 31, Gross accounts receivable $ 1,168,000 $ 1,333,000 $ 801,000 Allowance for bad debts (486,000 ) (457,000 ) (11,000 ) Accounts receivable, net $ 682,000 $ 876,000 $ 790,000 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 the Company’s provision for bad debts for the periods indicated: Nine months ended Years ended September 30, September 30, December 31, December 31, Directly identifiable as BIGToken’s $ 29,000 $ 246,000 $ 446,000 $ 3,000 Allocated from SRAX, Inc. 32,000 - 4,000 3,000 Provision for bad debts $ 61,000 $ 246,000 $ 450,000 $ 6,000 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Property and Equipment | NOTE 3 – PROPERTY AND EQUIPMENT The components of property and equipment are as follows: September 30, December 31, December 31, Computer Equipment $ 4,000 $ 4,000 $ 4,000 Accumulated depreciation (3,000 ) (1,000 ) - Property and equipment, net $ 1,000 $ 3,000 $ 4,000 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 the Company’s depreciation expense for the periods indicated: Nine months ended Years ended September 30, September 30, December 31, December 31, Directly identifiable as BIGToken’s $ 2,000 $ 1,000 $ 1,000 $ - Allocated from SRAX, Inc. 37,000 50,000 70,000 26,000 Depreciation expense $ 39,000 $ 51,000 $ 71,000 $ 26,000 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Intangible Assets | NOTE 4 – INTANGIBLE ASSETS The components of intangible assets are as follows: September 30, December 31, December 31, Software $ 1,843,000 $ 1,408,000 $ 660,000 Accumulated amortization (924,000 ) (539,000 ) (191,000 ) Intangible assets, net $ 919,000 $ 869,000 $ 469,000 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 the Company’s amortization expense for the periods indicated: Nine months ended Years ended September 30, 2020 (Unaudited) September 30, 2019 (Unaudited) December 31, 2019 December 31, 2018 Directly identifiable as BIGToken’s $ 385,000 $ 240,000 $ 348,000 $ 143,000 Allocated from SRAX, Inc. 290,000 340,000 510,000 210,000 Amortization expense $ 675,000 $ 580,000 $ 858,000 $ 353,000 As of September 30, 2020 (unaudited), estimated amortization expense related to finite-lived intangibles for future years was as follows: 2020 (remaining three months) $ 137,000 2021 471,000 2022 263,000 2023 48,000 Total estimated amortization expense $ 919,000 As of September 30, 2020 (unaudited), December 31, 2019 and 2018, goodwill was $5,445,000 and there were no additions or impairments during the period ended September 30, 2020 (unaudited) and years ended December 31, 2019 and 2018. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Accounts Payable and Accrued Expenses | NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses are comprised of the following: September 30, December 31, December 31, Accounts payable, trade $ 659,000 $ 911,000 $ 584,000 Accrued expenses 19,000 20,000 - Accrued bonus 6,000 3,000 26,000 Accrued commissions 88,000 125,000 79,000 Other accruals 83,000 166,000 - Accounts payable and accrued liabilities $ 855,000 $ 1,225,000 $ 689,000 |
Other Current Liabilities
Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Other Current Liabilities | NOTE 6 – OTHER CURRENT LIABILITIES BIGToken Point liability In 2019, the Company 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 the Company 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 September 30, 2020 (unaudited) and December 31, 2019, the Company has estimated the future liability for point redemptions to be $263,000 (unaudited) and $445,000, respectively. The Company considered the total number of points outstanding, the conversion rate in which points are redeemable for cash, and each user’s redemption eligibility. The Company 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 | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Commitments and Contingencies | NOTE 7 – COMMITMENTS AND CONTINGENCIES Other Commitments In the ordinary course of business, the Company 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 the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered indemnification agreements with its directors and certain of its officers and employees that will require the Company to, among other things, indemnify them against certain liabilities that may arise due to their status or service as directors, officers or employees. The Company has also agreed to indemnify certain former officers, directors and employees of acquired companies in connection with the acquisition of such companies. The Company 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 We have entered 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, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably. Business Interruption The Company may be impacted by public health crises beyond its control. This could disrupt its operations and negatively impact sales of its products. The Company’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 the Company’s products may be negatively impacted. COVID-19 has also impacted the Company’s sales efforts as its ability to make sales calls is constrained. The Company’s ability to promote sales through promotional activities has also been constrained. Trade shows and sales conferences, major events used to introduce and sell the Company’s products, have been postponed indefinitely. The length and severity of the pandemic could also affect the Company’s regular sales, which could in turn result in reduced sales and a lower gross margin. |
Stock Options, Awards and Warra
Stock Options, Awards and Warrants | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Stock Options, Awards and Warrants | NOTE 8 – STOCK OPTIONS, AWARDS AND WARRANTS The Company’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 nine months ended September 30, 2020 (unaudited) and years ended December 31, 2019 and 2018, respectively, were summarized as follows: In September 2018, 125,000 common stock options for SRAX’s common stock, having an exercise price of $4.20 per share with an option value as of the grant date of $244,000 calculated using the Black-Scholes option pricing model were granted to Joseph P. Hannan, SRAX’s former chief financial officer. The options vested one third annually and expire three years after the vesting date. Upon Mr. Hannan’s termination in December of 2018, 117,188 options were terminated. In December 2018, 50,000 common stock options for SRAX’s common stock, having an exercise price of $2.56 per share with an option value as of the grant date of $84,000 calculated using the Black-Scholes option pricing model were granted to Michael Malone, SRAX’s chief financial officer. The expense associated with this option award will be recognized in operating expenses ratably over the vesting period. 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 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 the Company. The agreement provides for 300,000 warrants with vesting conditions based on the Company’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. During the nine months ended September 30, 2020, 31,454 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, 2017 218,384 $ 6.76 2.71 $ - $ - Granted 288,618 4.47 1.51 - 2.64 Exercised - - - - - Forfeited (158,897 ) 4.41 - - 0.56 Outstanding — December 31, 2018 348,105 5.94 2.39 - - Vested and exercisable - December 31. 2018 145,526 6.73 2.12 - 4.05 Unvested and non-exercisable - December 31, 2018 202,579 5.37 2.58 - 3.22 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 (unaudited) 137,286 2.60 5.05 - 2.60 Exercised (unaudited) - - - - - Forfeited (unaudited) (31,454 ) 6.31 - - 4.60 Outstanding — September 30, 2020 (unaudited) 1,119,112 4.31 2.19 - - Vested and exercisable — September 30, 2020 (unaudited) 462,977 5.04 1.75 - 3.33 Unvested and non-exercisable - September 30, 2020 (unaudited) 656,135 $ 3.79 2.81 $ - $ 2.78 The table above includes $300,000 warrants issued on May 13, 2019 to a contractor for services related to the Company. The following table sets forth the weighted-average assumptions used to estimate the fair value of option granted and warrants granted for the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) and the years ended December 31, 2019 and 2018: Nine Months Ended Years Ended 2020 2019 2019 2018 (unaudited) Expected life (in years) 7.0 3.8 3.8 3.2 Risk-free interest rate 0.5 % 1.3 % 1.3 % 1.0 % Expected volatility 101 % 102 % 102 % 85 % Dividend yield 0 % 0 % 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 Company’s Carve-Out Statements of Operations for the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) and years ended December 31, 2019 and 2018: Nine months ended Years ended September 30, September 30, December 31, December 31, Directly identifiable as BIGToken’s $ 237,000 $ 278,000 $ 467,000 $ - Allocated from SRAX, Inc. 533,000 442,000 516,000 443,000 Stock-based compensation expense $ 770,000 $ 720,000 $ 983,000 $ 443,000 As of September 30, 2020 (unaudited), compensation cost related to the unvested options not yet recognized was approximately $1,430,000. The weighted average period over which the $1,430,000 will vest is estimated to be 1.8 years. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
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 The Company 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. The Company had the following financial assets as of September 30, 2020 (unaudited), December 31, 2019 and 2018: Balance as of September 30, 2020 (unaudited) Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Marketable securities - - - - Total assets $ - $ - $ - $ - Balance as of December 31, 2019 Quoted Prices in Active Markets for Identical Significant Significant Marketable securities 64,000 64,000 - - Total assets $ 64,000 $ 64,000 $ - $ - Balance as of December 31, 2018 Quoted Prices in Active Markets for Identical Significant Significant Marketable securities 20,000 20,000 - - Total assets $ 20,000 $ 20,000 $ - $ - |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 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 September 30, 2020, all amounts related to the Company’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 e 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, 2019, and 2018, the income tax benefit of the Carve-out business amounting to $0, and $2,510,000, respectively, is included within movements in net transfers from parent, in the Carve Out Statements of Changes in Net Parent Investment. Income tax benefit consists of the following components for the years ended December 31: 2019 2018 Current tax benefit $ - $ The Federal - 1,926,000 State - 584,000 Total - 2,510,000 Deferred tax benefit The Federal - - State - - Total - - Total income tax benefit $ - $ 2,510,000 The following table summarizes the principal components of deferred tax assets and liabilities of the Company at December 31: 2019 2018 Deferred income tax assets: $ - $ Allowance for bad debts 126,000 3,000 Stock-based compensation expense 773,000 502,000 Interest expense limitation carryover 75,000 Contribution carryover 3,000 Accrued expenses 204,000 Net operating loss carry forwards 7,657,000 3,754,000 Total 8,838,000 4,259,000 Deferred income tax liabilities: Property and equipment (49,000 ) (29,000 ) Intangible assets (478,000 ) (219,000 ) Total (527,000 ) (248,000 ) Net deferred income tax assets 8,311,000 4,011,000 Valuation allowance (8,311,000 ) (4,011,000 ) Total income tax benefit $ - $ - A reconciliation of income tax benefit computed using The Federal statutory tax rate to the Company’s income tax benefit is as follows for the years ended December 31: 2019 2018 Income tax benefit calculated at The Federal statutory rate 21.00 % 21.00 % Fair market adjustment derivatives 1.35 % 13.84 % Amortization of debt discount 0.00 % (4.77 )% Current state income tax expense (net of federal benefit) 0.00 % 5.79 % Change in valuation allowance (21.19 )% (4.22 )% Other (1.16 )% (0.15 )% Total income tax benefit 0.00 % 31.49 % All percentages are calculated as a percentage of pretax income for each respective year. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Subsequent Events | NOTE 11 – SUBSEQUENT EVENTS On February 4, 2021, the “Company and SRAX completed the Share Exchange as described in the Exchange Agreement entered into by and between the Company, SRAX, and Paul Feldman (the Company’s CEO and sole director) on September 30, 2020. The Exchange Agreement and proposed Share Exchange was disclosed in our Current Report on Form 8-K that was filed with the Commission on October 5, 2020. Pursuant to the Share Exchange, we acquired all of the outstanding capital stock of BIG Token, a wholly owned subsidiary of SRAX. As a result, (i) we became a company majority owned by SRAX, (ii) BIG Token became our wholly owned subsidiary and (iii) the Company adopted BIG Token’s business plan. In connection with the Share Exchange, we entered into the following agreements: 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 the Company sell equity securities at a pre-money valuation of less than $10,000,000 resulting in SRAX owning less than 70% of the voting power of the Company. Transition Services Agreement On January 27, 2021 BIG Token and the Company entered into the TSA with SRAX. Pursuant to the TSA, SRAX agreed to provide us with certain operational and administrative services as needed. Master Separation Agreement On January 27, 2021, BIG Token and the Company entered into the MSAMSA with SRAX. The MSA describes our separation from SRAX. |
The Company, Basis of Present_2
The Company, Basis of Presentation and Summary of Significant Accounting Policies (Policies) - BigToken Inc [Member] | 9 Months Ended |
Sep. 30, 2020 | |
Basis of Presentation | Basis of Presentation The Carve-Out Financial Statements of the Company 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, the Company did not operate as a separate stand-alone entity but, rather as a business of the SRAX. Consequently, stand-alone financial statements were not historically prepared for the Company. 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 the Company, adjusted as necessary to conform to U.S. GAAP. The Carve-Out Financial Statements present the assets, liabilities, revenues, and expenses directly attributed to the Company as well as certain allocations from the SRAX. Intercompany balances and transactions between the Company 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 the Company is not the legal obligor of the debt and SRAX’s borrowings were not directly attributable to the Company’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 the Company been operated as a separate entity. |
Cash Management | Cash management Historically, the Company 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 the Company and SRAX that were not historically cash settled are included in net parent investment. Balances between the Company 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. |
Cost Allocation and Attribution | Cost allocation and attribution The Carve-Out Statements of Operations include all costs directly attributable to the Company, as well as costs for certain functions and services used by the Company 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 the Company 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 the Company’s behalf. |
Liquidity and Going Concern | Liquidity and Going Concern The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its goods and services to 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 the Company’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 the Company is unable to continue as a going concern. Accordingly, the Carve-Out Financial Statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position at September 30, 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, the Company 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. 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 the Company to make estimates and assumptions in the preparation of these Carve-Out Financial Statements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the 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 the Company’s revenue recognition, provision for bad debts, BIGToken point redemption liability, stock-based compensation, income taxes, goodwill and intangible assets. As of September 30, 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 the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include: estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate. Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values. The Company’s financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and accrued expenses, are carried at historical cost. At September 30, 2020 (unaudited), December 31, 2019 and 2018, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. The Company 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 the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Accounts determined to be uncollectible are charged to operations when that determination is made. The Company 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 the Company 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 more than the Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any loss on these accounts. As of September 30, 2020 (unaudited), the Company had three customers with accounts receivable balances of approximately 23.7%, 19.2% and 17.1% of total accounts receivable. At December 31, 2019, the Company had three customers with accounts receivable balances of approximately 25.9%, 16.4% and 15.0%. At December 31, 2018, the Company had two customers with accounts receivable balances of approximately 42.9% and 10.5%. For the period ended September 30, 2020 (unaudited), the Company had one customer that account for approximately 19.1% of total revenue. For the year ended December 31, 2019, the Company had two customers that account for approximately 19.3% and 14.1% of total revenue. For the year ended December 31, 2018, the Company had three customers that accounted for 21.0%, 14.1% and 10.3%. |
Prepaid Expenses | PREPAID EXPENSES Prepaid expenses are assets held by the Company, 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, the Company 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 the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in the Company’s stock price for a sustained period of time; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairments have been recorded regarding its identifiable intangible assets or other long-lived assets during nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) and the years ended December 31, 2019 or 2018, 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 the Company’s intellectual property of internally developed software and are stated at cost less accumulated amortization. Amortization is provided for on the straight-line basis over the estimated useful lives of the assets of five to nine years. Costs incurred to develop computer software for internal use are capitalized once: (1) the preliminary project stage is completed, (2) management authorizes and commits to funding a specific software project, and (3) it is probable that the project will be completed and the software will be used to perform the function intended. Costs incurred prior to meeting the qualifications are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Post-implementation costs related to the internal use computer software, are expensed as incurred. Internal use software development costs are amortized using the straight-line method over its estimated useful life which ranges up to three years. Software development costs may become impaired in situations where development efforts are abandoned due to the viability of the planned project becoming doubtful or due to technological obsolescence of the planned software product. For the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) there has been no impairment associated with internal use software. For the years ended December 31, 2019, and 2018 there has been no impairment associated with internal use software. For the nine months ended September 30, 2020 and years ended December 31, 2019, and 2018, the Company capitalized software development costs of $435,000 (unaudited) and $748,000 and $444,000, respectively. During 2016, the Company began capitalizing the costs of developing internal-use computer software, including directly related payroll costs. The Company amortizes costs associated with its internally developed software over periods up to three years, beginning when the software is ready for its intended use. The Company capitalizes costs incurred during the application development stage of internal-use software and amortize these costs over the estimated useful life. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred. |
Goodwill | 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. The Company tests goodwill for impairment for its reporting units on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that implied fair value of the goodwill within the reporting unit is less than its carrying value. The Company performed its most recent annual goodwill impairment test as of The Company had historically performed its annual goodwill and impairment assessment on 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 the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology primarily using the income approach (discounted cash flow method). We compare the carrying value of the goodwill, with its fair value, as determined by a combination of the market approach and income approach, its estimated discounted cash flows. If the carrying value of goodwill exceeds its fair value, then the amount of impairment to be recognized. 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 The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ASC Topic 606 is a comprehensive revenue recognition model that requires revenue to be recognized when control of the promised goods or services are transferred to our customers at an amount that reflects the consideration that we expect to receive. Application of ASC Topic 606 requires us to use more judgment and make more estimates than under former guidance. Application of ASC Topic 606 requires a five-step model applicable to all product offerings revenue streams as follows: Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. 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 historically low historically 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 applied the transitional guidance to contracts that were not complete at the date of our initial application of ASC Topic 606 on January 1, 2018. ● 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. The Company 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 The Company’s employees have historically participated in SRAX’s stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company’s employees as well as an allocation of SRAX’s corporate and shared functional employee expenses. We account for our stock-based compensation under ASC 718 “ Compensation – Stock Compensation 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 The Company’s operations have historically been included in SRAX’s combined U.S. income tax returns. Income tax expense included in the Carve-Out Financial Statements has been calculated following the separate return method, as if the Company was a stand-alone enterprise and a separate taxpayer for the periods presented. The calculation of income taxes on a separate return basis requires considerable judgment and the use of both estimates and allocations that affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and the Carve-Out Financial Statement recognition of revenues and expenses. As a result, the Company’s deferred income tax rate and deferred tax balances may differ from those in SRAX’s historical results. The provision for income taxes is determined using the asset and liability approach. Deferred taxes represent the future tax consequences expected when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes result from differences between the Carve-Out Financial Statement and tax bases of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In evaluating the Company’s ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of operations. Any tax carryforwards reflected in the Carve-Out Financial Statements have also been determined using the separate return method. Tax carryforwards include net operating losses. The complexity of tax regulations requires assessments of uncertainties in estimating taxes the Company will ultimately pay. The Company recognizes liabilities for anticipated tax audit uncertainties based on its estimate of whether, and the extent to which additional taxes would be due on a separate return basis. Tax liabilities are presented net of any related tax loss carryforwards. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Changes to accounting principles are established by the FASB in the form of ASUs to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations, cash flows, or presentation thereof. Described below are ASUs that are not yet effective, but may be applicable to our financial position, results of operations, cash flows, or presentation thereof. ASUs not listed below were assessed and determined to not be applicable to our financial position, results of operations, cash flows, or presentation thereof. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 (with amendments issued in 2018), which changes the accounting for leases and requires expanded disclosures about leasing activities. This new guidance also requires lessees to recognize a ROU asset and a lease liability at the commencement date for all leases with terms greater than twelve months. Accounting by lessors is largely unchanged. ASU 2016-02 is effective for fiscal periods beginning after December 15, 2018. We adopted ASU 2016-02 on January 1, 2019, as the Company is not a obligator on any lease agreements this standard 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 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. We do not expect the adoption of ASU 2016-13 will have a material impact on our Carve-Out Financials Statements. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) - BigToken Inc [Member] | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of Accounts Receivable | September 30, December 31, December 31, Gross accounts receivable $ 1,168,000 $ 1,333,000 $ 801,000 Allowance for bad debts (486,000 ) (457,000 ) (11,000 ) Accounts receivable, net $ 682,000 $ 876,000 $ 790,000 |
Schedule of Provision for Bad Debts for the Periods | The following table summarizes the Company’s provision for bad debts for the periods indicated: Nine months ended Years ended September 30, September 30, December 31, December 31, Directly identifiable as BIGToken’s $ 29,000 $ 246,000 $ 446,000 $ 3,000 Allocated from SRAX, Inc. 32,000 - 4,000 3,000 Provision for bad debts $ 61,000 $ 246,000 $ 450,000 $ 6,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) - BigToken Inc [Member] | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of Property and Equipment | The components of property and equipment are as follows: September 30, December 31, December 31, Computer Equipment $ 4,000 $ 4,000 $ 4,000 Accumulated depreciation (3,000 ) (1,000 ) - Property and equipment, net $ 1,000 $ 3,000 $ 4,000 |
Schedule of Depreciation Expense for the Periods | The following table summarizes the Company’s depreciation expense for the periods indicated: Nine months ended Years ended September 30, September 30, December 31, December 31, Directly identifiable as BIGToken’s $ 2,000 $ 1,000 $ 1,000 $ - Allocated from SRAX, Inc. 37,000 50,000 70,000 26,000 Depreciation expense $ 39,000 $ 51,000 $ 71,000 $ 26,000 |
Intangible Assets (Tables)
Intangible Assets (Tables) - BigToken Inc [Member] | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of Components of Intangible Assets | The components of intangible assets are as follows: September 30, December 31, December 31, Software $ 1,843,000 $ 1,408,000 $ 660,000 Accumulated amortization (924,000 ) (539,000 ) (191,000 ) Intangible assets, net $ 919,000 $ 869,000 $ 469,000 |
Schedule of Amortization Expense for the Periods | The following table summarizes the Company’s amortization expense for the periods indicated: Nine months ended Years ended September 30, 2020 (Unaudited) September 30, 2019 (Unaudited) December 31, 2019 December 31, 2018 Directly identifiable as BIGToken’s $ 385,000 $ 240,000 $ 348,000 $ 143,000 Allocated from SRAX, Inc. 290,000 340,000 510,000 210,000 Amortization expense $ 675,000 $ 580,000 $ 858,000 $ 353,000 |
Schedule of Estimated Amortization Expense Related to Finite-lived Intangibles for Future Years | As of September 30, 2020 (unaudited), estimated amortization expense related to finite-lived intangibles for future years was as follows: 2020 (remaining three months) $ 137,000 2021 471,000 2022 263,000 2023 48,000 Total estimated amortization expense $ 919,000 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses are comprised of the following: September 30, December 31, December 31, Accounts payable, trade $ 659,000 $ 911,000 $ 584,000 Accrued expenses 19,000 20,000 - Accrued bonus 6,000 3,000 26,000 Accrued commissions 88,000 125,000 79,000 Other accruals 83,000 166,000 - Accounts payable and accrued liabilities $ 855,000 $ 1,225,000 $ 689,000 |
Stock Options, Awards and War_2
Stock Options, Awards and Warrants (Tables) - BigToken Inc [Member] | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of Vested and Nonvested Stock Option | 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, 2017 218,384 $ 6.76 2.71 $ - $ - Granted 288,618 4.47 1.51 - 2.64 Exercised - - - - - Forfeited (158,897 ) 4.41 - - 0.56 Outstanding — December 31, 2018 348,105 5.94 2.39 - - Vested and exercisable - December 31. 2018 145,526 6.73 2.12 - 4.05 Unvested and non-exercisable - December 31, 2018 202,579 5.37 2.58 - 3.22 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 (unaudited) 137,286 2.60 5.05 - 2.60 Exercised (unaudited) - - - - - Forfeited (unaudited) (31,454 ) 6.31 - - 4.60 Outstanding — September 30, 2020 (unaudited) 1,119,112 4.31 2.19 - - Vested and exercisable — September 30, 2020 (unaudited) 462,977 5.04 1.75 - 3.33 Unvested and non-exercisable - September 30, 2020 (unaudited) 656,135 $ 3.79 2.81 $ - $ 2.78 The table above includes $300,000 warrants issued on May 13, 2019 to a contractor for services related to the Company. |
Schedule of Weighted-average Assumptions | The following table sets forth the weighted-average assumptions used to estimate the fair value of option granted and warrants granted for the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) and the years ended December 31, 2019 and 2018: Nine Months Ended Years Ended 2020 2019 2019 2018 (unaudited) Expected life (in years) 7.0 3.8 3.8 3.2 Risk-free interest rate 0.5 % 1.3 % 1.3 % 1.0 % Expected volatility 101 % 102 % 102 % 85 % Dividend yield 0 % 0 % 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 Company’s Carve-Out Statements of Operations for the nine months ended September 30, 2020 (unaudited) and 2019 (unaudited) and years ended December 31, 2019 and 2018: Nine months ended Years ended September 30, September 30, December 31, December 31, Directly identifiable as BIGToken’s $ 237,000 $ 278,000 $ 467,000 $ - Allocated from SRAX, Inc. 533,000 442,000 516,000 443,000 Stock-based compensation expense $ 770,000 $ 720,000 $ 983,000 $ 443,000 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
BigToken Inc [Member] | |
Schedule of Assets and Liabilities Measured at Fair Value On Recurring Basis | The Company 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. The Company had the following financial assets as of September 30, 2020 (unaudited), December 31, 2019 and 2018: Balance as of September 30, 2020 (unaudited) Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Marketable securities - - - - Total assets $ - $ - $ - $ - Balance as of December 31, 2019 Quoted Prices in Active Markets for Identical Significant Significant Marketable securities 64,000 64,000 - - Total assets $ 64,000 $ 64,000 $ - $ - Balance as of December 31, 2018 Quoted Prices in Active Markets for Identical Significant Significant Marketable securities 20,000 20,000 - - Total assets $ 20,000 $ 20,000 $ - $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 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: 2019 2018 Current tax benefit $ - $ The Federal - 1,926,000 State - 584,000 Total - 2,510,000 Deferred tax benefit The Federal - - State - - Total - - Total income tax benefit $ - $ 2,510,000 |
Summary of Deferred Tax Assets and Liabilities | The following table summarizes the principal components of deferred tax assets and liabilities of the Company at December 31: 2019 2018 Deferred income tax assets: $ - $ Allowance for bad debts 126,000 3,000 Stock-based compensation expense 773,000 502,000 Interest expense limitation carryover 75,000 Contribution carryover 3,000 Accrued expenses 204,000 Net operating loss carry forwards 7,657,000 3,754,000 Total 8,838,000 4,259,000 Deferred income tax liabilities: Property and equipment (49,000 ) (29,000 ) Intangible assets (478,000 ) (219,000 ) Total (527,000 ) (248,000 ) Net deferred income tax assets 8,311,000 4,011,000 Valuation allowance (8,311,000 ) (4,011,000 ) 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 the Company’s income tax benefit is as follows for the years ended December 31: 2019 2018 Income tax benefit calculated at The Federal statutory rate 21.00 % 21.00 % Fair market adjustment derivatives 1.35 % 13.84 % Amortization of debt discount 0.00 % (4.77 )% Current state income tax expense (net of federal benefit) 0.00 % 5.79 % Change in valuation allowance (21.19 )% (4.22 )% Other (1.16 )% (0.15 )% Total income tax benefit 0.00 % 31.49 % |
The Company, Basis of Present_3
The Company, Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Oct. 01, 2020 | |
Product Information [Line Items] | |||||
Percentage of issued and outstanding stock | 90.00% | ||||
Impairment loss | |||||
Capitalized computer software, impairments | $ 435,000 | 748,000 | 444,000 | ||
Minimum [Member] | |||||
Product Information [Line Items] | |||||
Property and equipment estimated useful lives | 3 years | ||||
Maximum [Member] | |||||
Product Information [Line Items] | |||||
Property and equipment estimated useful lives | 7 years | ||||
Internal Use Software [Member] | |||||
Product Information [Line Items] | |||||
Impairment loss | |||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer One [Member] | |||||
Product Information [Line Items] | |||||
Concentrations of risk, percentage | 23.70% | 25.90% | 42.90% | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Two [Member] | |||||
Product Information [Line Items] | |||||
Concentrations of risk, percentage | 19.20% | 16.40% | 10.50% | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Three [Member] | |||||
Product Information [Line Items] | |||||
Concentrations of risk, percentage | 17.10% | 15.00% | |||
Customer Concentration Risk [Member] | Sales [Member] | Customer One [Member] | |||||
Product Information [Line Items] | |||||
Concentrations of risk, percentage | 19.10% | 19.30% | 21.00% | ||
Customer Concentration Risk [Member] | Sales [Member] | Customer Two [Member] | |||||
Product Information [Line Items] | |||||
Concentrations of risk, percentage | 14.10% | 14.10% | |||
Customer Concentration Risk [Member] | Sales [Member] | Customer Three [Member] | |||||
Product Information [Line Items] | |||||
Concentrations of risk, percentage | 10.30% | ||||
Common Stock [Member] | |||||
Product Information [Line Items] | |||||
Percentage of issued and outstanding stock | 100.00% | ||||
Preferred Stock [Member] | |||||
Product Information [Line Items] | |||||
Percentage of issued and outstanding stock | 100.00% |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - BigToken Inc [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Gross accounts receivable | $ 1,168,000 | $ 1,333,000 | $ 801,000 |
Allowance for bad debts | (486,000) | (457,000) | (11,000) |
Accounts receivable, net | $ 682,000 | $ 876,000 | $ 790,000 |
Accounts Receivable - Schedul_2
Accounts Receivable - Schedule of Provision for Bad Debts for the Periods (Details) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Directly identifiable as BIGToken's | $ 29,000 | $ 246,000 | $ 446,000 | $ 3,000 |
Allocated from SRAX, Inc. | 32,000 | 4,000 | 3,000 | |
Provision for bad debts | $ 29,000 | $ 246,000 | $ 446,000 | $ 3,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - BigToken Inc [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Computer Equipment | $ 4,000 | $ 4,000 | $ 4,000 |
Accumulated depreciation | (3,000) | (1,000) | |
Property and equipment, net | $ 1,000 | $ 3,000 | $ 4,000 |
Property and Equipment - Sche_2
Property and Equipment - Schedule of Depreciation Expense for the Periods (Details) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Directly identifiable as BIGToken's | $ 2,000 | $ 1,000 | $ 1,000 | |
Allocated from SRAX, Inc. | 37,000 | 50,000 | 70,000 | 26,000 |
Depreciation expense | $ 2,000 | $ 1,000 | $ 1,000 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | $ 5,445,000 | $ 5,445,000 | $ 5,445,000 |
Goodwill, impairment loss |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Components of Intangible Assets (Details) - BigToken Inc [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Software | $ 1,843,000 | $ 1,408,000 | $ 660,000 |
Accumulated amortization | (924,000) | (539,000) | (191,000) |
Intangible assets, net | $ 919,000 | $ 869,000 | $ 469,000 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Amortization Expense for the Periods (Details) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Directly identifiable as BIGToken's | $ 385,000 | $ 240,000 | $ 348,000 | $ 143,000 |
Allocated from SRAX, Inc. | 290,000 | 340,000 | 510,000 | 210,000 |
Amortization expense | $ 385,000 | $ 240,000 | $ 348,000 | $ 143,000 |
Intangible Assets - Schedule _3
Intangible Assets - Schedule of Estimated Amortization Expense Related to Finite-lived Intangibles for Future Years (Details) - BigToken Inc [Member] | Sep. 30, 2020USD ($) |
2020 (remaining three months) | $ 137,000 |
2021 | 471,000 |
2022 | 263,000 |
2023 | 48,000 |
Total estimated amortization expense | $ 919,000 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - BigToken Inc [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts payable, trade | $ 659,000 | $ 911,000 | $ 584,000 |
Accrued expenses | 19,000 | 20,000 | |
Accrued bonus | 6,000 | 3,000 | 26,000 |
Accrued commissions | 88,000 | 125,000 | 79,000 |
Other accruals | 83,000 | 166,000 | |
Accounts payable and accrued liabilities | $ 855,000 | $ 1,225,000 | $ 689,000 |
Other Current Liabilities (Deta
Other Current Liabilities (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
BigToken Inc [Member] | |||
Other current liabilities | $ 263,000 | $ 445,000 |
Stock Options, Awards and War_3
Stock Options, Awards and Warrants (Details Narrative) - USD ($) | May 31, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | May 13, 2019 | Feb. 23, 2016 | Nov. 05, 2014 | Jan. 31, 2012 |
Class of Stock [Line Items] | |||||||||||||
Warrants outstanding | 300,000 | ||||||||||||
BigToken Inc [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Exercise price per share | $ 2.70 | ||||||||||||
Options terminated during the period | 31,454 | 28,951 | 158,897 | ||||||||||
Expected term | 7 years | 3 years 9 months 18 days | 3 years 9 months 18 days | 3 years 2 months 12 days | |||||||||
Implied volatility rate | 101.00% | 102.00% | 102.00% | 85.00% | |||||||||
Risk free interest rate | 0.50% | 1.30% | 1.30% | 1.00% | |||||||||
Compensation cost of unvested options unrecognized | $ 1,430,000 | ||||||||||||
Weighted average period to vest | 1 year 9 months 18 days | ||||||||||||
BigToken Inc [Member] | 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 | ||||||||||||
BigToken Inc [Member] | SRAX, Inc. [Member] | Warrants [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Stock option exercisable period | 3 years | ||||||||||||
Number of common stock purchased | 300,000 | 5,626 | 388,500 | 50,000 | 12,500 | ||||||||
Exercise price per share | $ 4.99 | $ 5.49 | $ 3.42 | $ 2.56 | $ 4.20 | $ 2.56 | |||||||
Fair value of shares issued | $ 1,407 | $ 858,000 | $ 84,000 | $ 244,000 | |||||||||
Stock option vesting period description | options that vest 1/4th quarterly over the next year with an expiration date of April 15, 2026. | vested one third annually | |||||||||||
Options terminated during the period | 117,188 | ||||||||||||
Option valued | $ 1,138,000 | $ 30,000 | |||||||||||
Expected term | 5 years | 7 years | |||||||||||
Implied volatility rate | 101.00% | 102.00% | |||||||||||
Risk free interest rate | 1.80% | 2.46% | |||||||||||
BigToken Inc [Member] | 2012 Plan [Member] | SRAX, Inc. [Member] | Class A Common Stock [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of shares authorized | 600,000 | ||||||||||||
BigToken Inc [Member] | 2014 Plan [Member] | SRAX, Inc. [Member] | Class A Common Stock [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of shares reserved | 600,000 | ||||||||||||
BigToken Inc [Member] | 2016 Plan [Member] | SRAX, Inc. [Member] | Class A Common Stock [Member] | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of shares reserved | 600,000 | ||||||||||||
BigToken Inc [Member] | 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 | ||||||||||||
BigToken Inc [Member] | 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, Awards and War_4
Stock Options, Awards and Warrants - Schedule of Stock Option and Common Stock Award Activities (Details) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Class of Stock [Line Items] | |||
Number of Shares, Outstanding, Beginning | 1,013,280 | 348,105 | 218,384 |
Number of Shares, Granted | 137,286 | 694,126 | 288,618 |
Number of Shares, Exercised | |||
Number of Shares, Forfeited | (31,454) | (28,951) | (158,897) |
Number of Shares, Outstanding, Ending balance | 1,119,112 | 1,013,280 | 348,105 |
Number of Shares, Vested and exercisable | 462,977 | 229,162 | 145,526 |
Number of Shares, Unvested and non-exercisable | 656,135 | 784,118 | 202,579 |
Weighted Average Strike Price/Share, Outstanding, Beginning balance | $ 4.6 | $ 5.94 | $ 6.76 |
Weighted Average Strike Price/Share, Granted | 2.6 | 4.01 | 4.47 |
Weighted Average Strike Price/Share, Exercised | |||
Weighted Average Strike Price/Share, Forfeited | 6.31 | 6.6 | 4.41 |
Weighted Average Strike Price/Share, Outstanding, Ending balance | 4.31 | 4.6 | 5.94 |
Weighted Average Strike Price/Share, Vested and exercisable | 5.04 | 6.32 | 6.73 |
Weighted Average Strike Price/Share, Unvested and non-exercisable | $ 3.79 | $ 4.1 | $ 5.37 |
Weighted Average Remaining Contractual Term (Years), Outstanding Beginning | 2 years 7 months 17 days | 2 years 4 months 20 days | 2 years 8 months 16 days |
Weighted Average Remaining Contractual Term (Years), Granted | 5 years 18 days | 3 years 4 months 17 days | 1 year 6 months 3 days |
Weighted Average Remaining Contractual Term (Years), Outstanding Ending | 2 years 2 months 8 days | 2 years 7 months 17 days | 2 years 4 months 20 days |
Weighted Average Remaining Contractual Term (Years), Vested and exercisable | 1 year 9 months | 1 year 8 months 5 days | 2 years 1 month 13 days |
Weighted Average Remaining Contractual Term (Years), Unvested and non-exercisable | 2 years 9 months 22 days | 2 years 11 months 23 days | 2 years 6 months 29 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 | $ 2.6 | $ 1.14 | $ 2.64 |
Weighted Average Grant Date Fair Value, Forfeited | 4.6 | 2.79 | 0.56 |
Weighted Average Grant Date Fair Value, Vested and exercisable | 3.33 | 3.96 | 4.05 |
Weighted Average Grant Date Fair Value, Unvested and non-exercisable | $ 2.78 | $ 2.79 | $ 3.22 |
Stock Options, Awards and War_5
Stock Options, Awards and Warrants - Schedule of Estimate the Fair Value of Option Granted and Warrants Granted (Details) - BigToken Inc [Member] | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Class of Stock [Line Items] | ||||
Expected life (in years) | 7 years | 3 years 9 months 18 days | 3 years 9 months 18 days | 3 years 2 months 12 days |
Risk-free interest rate | 0.50% | 1.30% | 1.30% | 1.00% |
Expected volatility | 101.00% | 102.00% | 102.00% | 85.00% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Stock Options, Awards and War_6
Stock Options, Awards and Warrants - Schedule of Stock-based Compensation Expense (Details) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Class of Stock [Line Items] | ||||
Directly identifiable as BIGToken's | $ 237,000 | $ 278,000 | $ 467,000 | |
Allocated from SRAX, Inc. | 533,000 | 442,000 | 516,000 | 443,000 |
Stock-based compensation expense | $ 237,000 | $ 278,000 | $ 467,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Assets and Liabilities Measured at Fair Value On Recurring Basis (Details) - BigToken Inc [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Total assets | $ 64,000 | $ 20,000 | |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level1) [Member] | |||
Total assets | 64,000 | 20,000 | |
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 | 20,000 | |
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level1) [Member] | |||
Total assets | 64,000 | 20,000 | |
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 ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
BigToken Inc [Member] | ||||
Income tax benefit | $ 2,510,000 |
Income Taxes - Summary of Compo
Income Taxes - Summary of Components of Income Tax Benefit (Details) - BigToken Inc [Member] - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
The Federal, Current tax benefit | $ 1,926,000 | |||
State, Current tax benefit | 584,000 | |||
Total, Current tax benefit | 2,510,000 | |||
The Federal, Deferred tax benefit | ||||
State, Deferred tax benefit | ||||
Total, Deferred tax benefit | ||||
Total income tax benefit | $ 2,510,000 |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - BigToken Inc [Member] - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Allowance for bad debts | $ 126,000 | $ 3,000 |
Stock-based compensation expense | 773,000 | 502,000 |
Interest expense limitation carryover | 75,000 | |
Contribution carryover | 3,000 | |
Accrued expenses | 204,000 | |
Net operating loss carry forwards | 7,657,000 | 3,754,000 |
Total | 8,838,000 | 4,259,000 |
Property and equipment | (49,000) | (29,000) |
Intangible assets | (478,000) | (219,000) |
Total | (527,000) | (248,000) |
Net deferred income tax assets | 8,311,000 | 4,011,000 |
Valuation allowance | (8,311,000) | (4,011,000) |
Total income tax benefit |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Benefit Computed Using the Federal Statutory Tax Rate (Details) - BigToken Inc [Member] | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income tax benefit calculated at The Federal statutory rate | 21.00% | 21.00% |
Fair market adjustment derivatives | 0.0135 | 0.1384 |
Amortization of debt discount | 0.00% | (477.00%) |
Current state income tax expense (net of federal benefit) | 0.00% | 5.79% |
Change in valuation allowance | (21.19%) | (4.22%) |
Other | (116.00%) | (15.00%) |
Total income tax benefit | 0.00% | 31.49% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - BigToken Inc [Member] - SRAX, Inc. [Member] | Jan. 27, 2021USD ($) |
Subsequent Event [Line Items] | |
Pre-money valuation of equity securities | $ 10,000,000 |
Voting power | 70.00% |