What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-31 compared with 2020-03-30 · 399 added, 563 removed, 67 unchanged (93% of the section changed)

Market for Registrant’s Common Equity,

Related Stockholder Matters and Issuer Purchases of Equity Securities.

MARKET FOR REGISTRANT’S

COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the OTCQB Venture Market

under the symbol “JMDA”.

Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up,

mark-down or commission and may not necessarily represent actual transactions.

Holders of Common Equity

As of March 30, 2020, there were approximately 278 stockholders

An additional number of stockholders are beneficial holders of our common stock in “street name”

banks, brokers and other financial institutions that are the record holders.

Dividend Information

We have not paid any cash dividends to our holders

of common stock.

The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our

earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions.

It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in

our business operations.

Securities Authorized for Issuance under Equity

Compensation Plans

The following

table summarizes information about our equity compensation plans as of December 31, 2019.

upon exercise of

outstanding options,

warrants and rights

average exercise

remaining available for

future issuance under

equity compensation plans

(excluding securities

reflected in column

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Our Common Stock is listed on The Nasdaq

Capital Market under the symbol “CRTD”.

As of March 31, 2021, there were approximately

222 registered holders of record of our Common Stock, and approximately 12 holders of record of our Series E Convertible Preferred Stock.

Since certain shares of our Common Stock are held by brokers and other institutions on behalf of stockholders, the foregoing number of

holders of our Common Stock is not representative of the number of beneficial holders of our Common Stock.

To date, we have not paid cash dividends

on our Common Stock and do not plan to pay such dividends in the foreseeable future.

Our Board will determine our future dividend

policy on the basis of many factors, including results of operations, capital requirements, and general business conditions.

under the Nevada Revised Statutes, may only be paid from our net profits or surplus.

To date, we have not had a fiscal year with

net profits and, subject to a valuation by the Board of the present value of the Company’s assets, do not have surplus.

Unregistered Sales of Equity Securities

The October 2019 Frommer Loan Agreement

On October 7, 2019, the Company entered into a loan agreement

(the “October 2019 Frommer Loan Agreement”) with Jeremy Frommer, whereby the Company issued Frommer a promissory note

in the principal amount of $10,000 (the “October 2019 Frommer Note”).

As additional consideration for entering in the

October 2019 Frommer Loan Agreement, the Company issued Frommer a five-year warrant to purchase 150 shares of the Company’s

common stock at a purchase price of $6.00 per share.

October 2019 Warrant Issuance

On October 8, 2019, we issued a five-year warrant to an accredited

investor to purchase 30,000 shares of the Company’s common stock at a purchase price of $5.00 per share in consideration

for converting outstanding promissory notes.

The November 2019 Convertible Note Offering

During the year ended December 31, 2019, the Company conducted

a private placement to accredited investors (the “November 2019 Convertible Note Offering”) of units of the Company’s

securities by entering into subscription agreements with accredited investors (the “November 2019 Investors”) for aggregate

gross proceeds of $479,500.

Each unit in the November 2019 Convertible Note Offering

consisted of (a) a 10% Convertible Promissory Note, convertible into shares of the Company’s common stock, at a fixed conversion

price equal to $4.50 per share;

and a warrant to purchase common stock.

During the twelve months ended December 31, 2020, we issued

securities that were not registered under the Securities Act and were not previously disclosed in a Current Report on Form 8-K

or Quarterly Report on Form 10-Q as listed below.

All of the securities discussed in this Item 2 were issued in reliance on the

exemption under Section 4(a)(2) of the Securities Act.

Consultant Shares

During the 3 months ended December 31,

2020 the Company issued 20,762 shares to consultants.

Employee Shares

During the 3 months ended December 31, 2020 the Company issued

14,897 shares to consultants.

The foregoing offers, sales and issuances were exempt from registration

under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D thereunder.

Selected Financial Data.

We are not required to provide the information required

by this Item we are a “smaller reporting company,”

as defined in Rule 229.10(f)(1).

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

The following discussion of our plan of operation

and results of operations should be read in conjunction with the financial statements and related notes to the financial statements

included elsewhere in this Annual Report on Form 10-K.

This discussion contains forward-looking statements that relate to future

events or our future financial performance.

These statements involve known and unknown risks, uncertainties and other factors that

may cause our actual results, levels of activity, performance or achievements to be materially different from any future results,

levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These risks and other

factors include, among others, those listed under “Forward-Looking Statements”

and “Risk Factors”

included elsewhere in this report.

Jerrick Media Holdings, Inc.

provides technology

solutions for content creators, brands and their respective audiences with its flagship digital media platform Vocal.

We believe that Jerrick’s agile business framework and

Vocal’s design and development process provide a sustainable, capital light operational infrastructure.

Our technology is

built to scale, while the rate of growth can be modulated up or down based on available capital and the relative tightness of the

capital markets.

Vocal is a user-generated long-form digital publishing platform.

The platform primarily focuses on providing storytelling tools, monetization features and engaged communities for content creators

to get discovered and fund their creativity.

There are over 4.5 billion internet

of that, 83% publish some form of content on a monthly basis (photos, writing, reviews), and 3.8 billion of them are active

on social media (according to data by GlobalWebIndex and Reddit).

In 2020, the internet has become the linchpin of the modern information

society, as well as the modern social society.

We believe digital platforms, such as Vocal, exist to help the world find order

in this vast ocean of opportunity.

A global crisis, like the 2020 COVID-19

pandemic, only further emphasizes how critical a role digital platforms play in society, as government bodies are encouraging social

distancing and restricting travel, and employers are widely implementing work-from-home policies.

These factors aside, Vocal exists

in an environment where the total addressable market (TAM) of the platform was growing exponentially, and in the current environment,

may see even more rapid growth.

The Vocal platform is home to content creators and brands of

all shapes and sizes, and attracts audiences across a network of the Company’s 100% owned-and-operated communities.

The platform’s

unique canvas-style editor supports content creation utilizing a wide range of rich-media assets including streaming

content, photos, videos, podcasts, product links, written word, and more.

Vocal makes it easy for creators to produce well-constructed,

search engine optimized, and engaging content.

Additionally, creators can upgrade to Vocal+, and pay a premium subscription fee

to access a suite of additional features such as an increased rate of CPM monetization, brand collaborations, rewards, and early

access to new features.

Given Vocal’s built-in monetization capabilities, topic-specific

structure, and adaptability to a wide range of uses and industries, we believe that it is the ideal platform to help users adapt

to evolving social, professional, and societal realities of a new digital world.

Moderation and compliance are more important in

a world where ambiguity can systematically damage value.

Vocal’s enforcement of community guidelines and content moderation

creates a secure environment for users.

Vocal provides its stakeholders a trustworthy environment that people look for, especially

in periods of uncertainty.

In 2018, the Company launched its in-house creative studio,

Vocal for Brands.

Vocal for Brands partners brands with authentic, like-minded Vocal

creators to produce campaign-optimized branded experiences on the Vocal platform that build affinity, trust, and drive results.

Additionally, in 2018, Jerrick converted $13,896,233 in debt and preferred holdings into common stock, eliminating a significant

majority of debt from the Company’s balance sheet.

In the third quarter of 2019, Jerrick implemented

a $9.99 monthly renewal option for Vocal+ subscribers, in addition to the $99 annual renewal option introduced in May 2019.

Additionally,

following Jerrick’s acquisition of e-commerce agency Seller’s Choice, LLC (“Seller’s Choice”) in

September 2019, the Company successfully integrated Seller’s Choice into its sales team and operations.

The acquisition enabled

Vocal for Brands to further expand its client base in the direct-to-consumer (DTC) space, while providing an opportunity for the

Seller’s Choice team to leverage Vocal for Brand’s unique brand storytelling capabilities as a way to further support

its e-commerce clientele.

The Vocal platform’s unique underlying architecture generates scalable and sustainable revenues,

while at the same time providing an infrastructure for future acquisitions, as it did in regard to the Seller’s Choice acquisition.

Jerrick’s resources and Vocal’s technology

were designed to amplify creator subscriptions as well as convert on direct to consumer brand opportunities.

Today’s consumer

behavior and online environment is ideal for brand marketing and product awareness, and creators are looking for further monetization

opportunities.

Both brands and creators, as well as their respective audiences, will continue to grow on Jerrick’s safe and

secure platform, Vocal.

7,871 shares in lieu of compensation to employees.

SELECTED FINANCIAL

Not applicable.

MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis

should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report.

In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties,

and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result

of certain factors, including but not limited to those set forth in “Part I –

Risk Factors.”

This Form 10-K and other reports filed

by Creatd, Inc., formerly Jerrick Media Holdings, Inc.

(the “Company”), from time to time with the SEC (collectively,

the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and

information currently available to, the Company’s management as well as estimates and assumptions made by Company’s

Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and

speak only as of the date hereof.

When used in the Filings, the words “anticipate,”

“believe,”

“estimate,”

“expect,”

“future,”

“intend,”

“plan,”

or the negative of these terms and similar

expressions as they relate to the Company or the Company’s management identify forward-looking statements.

Such statements

reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and

other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results

of operations.

Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect,

actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the

expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of

activity, performance, or achievements.

Except as required by applicable law, including the securities laws of the United States,

the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in

accordance with accounting principles generally accepted in the United States (“GAAP”).

These accounting principles

require us to make certain estimates, judgments and assumptions.

We believe that the estimates, judgments and assumptions upon

which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of

the financial statements as well as the reported amounts of revenues and expenses during the periods presented.

Our financial statements

would be affected to the extent there are material differences between these estimates and actual results.

In many cases, the accounting

treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its

There are also areas in which management’s judgment in selecting any available alternative would not produce

a materially different result.

The following discussion should be read in conjunction with our financial statements and notes thereto

appearing elsewhere in this Form 10-K.

We intend for this discussion to provide

information that will assist in understanding our financial statements, the changes in certain key items in those financial statements,

and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements.

Creatd is the parent company and creator

of Vocal, a robust and proprietary technology platform that uniquely serves creators, brands, and audiences by providing long-form

storytelling tools, advanced social features, and monetization opportunities.

Since launching in December 2016, Vocal has become

home to nearly one million content creators, over 20,000 paid subscribers of its Vocal+ premium membership program and attracts

over 10 million monthly visitors across its network of 36 wholly owned and operated niche communities as well as various social

media channels.

At December 31, 2020, the Company had

cash and marketable securities of approximately $8 million, and accounts receivable of $90,000.

The Company’s healthy

cash position is principally due to the net cash proceeds of $7.0 million secured at year end 2020 from the successful completion

of the Company’s Series E Convertible Preferred private placement.

a positioning year for the Company.

Expenses during

Fiscal Year 2020 encompassed numerous charges related to financing activities which are described as non-recurring.

is the case that the Company may require additional financing in 2021, the financings that occurred this year positioned the Company

for ease and relative affordability of future financings.

Restatement of Previously Issued Interim Financial

On March 13, 2021, our audit committee concluded,

after consultation with management and the Company’s financial consulting firm, that our previously issued unaudited financial

statements for the period ended September 30, 2020, included in the Company’s Quarterly Reports of Form 10-Q for the period ended

September 30, 2020, should no longer be relied upon as a result of the change in accounting for a make-whole provision.

that a derivative liability of $3,041,688 should have been recorded as of September 30, 2020.

The adjustments resulting therefrom, which

are non-cash in nature, but has no impact on previously reported cash, total assets, and revenues.

Results of Operations

Liquidity and Capital Resources

The following table summarizes total current assets,

liabilities and working capital at December 31, 2019 compared to December 31, 2018:

The following table summarizes total current assets, liabilities

and working capital (deficit) at December 31, 2020 compared to December 31, 2019:

Current Assets

Current Liabilities

Working Capital Deficit

$ (5,960,403 )

$ (2,563,084 )

Working Capital (Deficit)

$ (10,850,767 )

At December 31, 2019, we had a working capital deficit of $10,745,004

as compared to a working capital deficit of $2,563,084 at December 31, 2018, an increase of $8,181,920.

The increase is primarily

attributable to an increase in notes payable related party, convertible notes payable, and the current portion of operating lease

Net cash used in operating activities for the years ended December

At December 31, 2020, we had a working

capital of $3,115,299 as compared to a working capital deficit of $(10,850,767) at December 31, 2019, an increase in working capital

of $13,966,066.

The increase is primarily attributable to an increase in cash as a result of the completion of the September 2020

$7.7 million Equity Raise, the Sale of $7.8 million of Series E Convertible Preferred Stock in December of 2020, an increase in

marketable securities of $62,733, and promissory note increase of $561,539.

This was offset by a decrease in demand loans, convertible

notes, and related party debentures totaling $7,373,638.

Net cash used in operating activities for the

year ended December 31, 2020 and 2019, was $7,340,487 and $5,957,027, respectively.

The net loss for the year ended December 31, 2020

and 2019 was $24,162,783 and $8,035,372, respectively.

The net loss for the years ended December 31, 2019 and 2018 was

$8,035,372 and $12,013,542, respectively.

This change is primarily attributable to the net loss for the current period offset by

share-based payments in the amount of $437,106 to employees and consultants for services rendered, the accretion of debt discount

and debt issuance costs of $348,665 due to the incentives given with debentures, and a gain on extinguishment of debt of $162,860

This change is primarily attributable to the net loss for the current period offset

by share-based payments in the amount of $6,861,163 to employees and consultants for services rendered, the accretion of debt discount

and debt issuance costs of $4,303,072 due to the incentives given with debentures, and a loss on extinguishment of debt of $5,586,012

in addition to a change in accounts payable and accrued expenses of $2,880,392.

These increases were offset by a change in accounts

receivable and unrecognized tax benefit during the year ended December 31, 2019.

Net cash used in investing activities for the years ended December

31, 2019 and 2018 was $363,288 and $27,605, respectively.

This change is attributable to the cash paid for property and equipment

and the cash consideration for the acquisition.

Net cash provided by financing activities for the years

These increases were offset by a change in fair value

of derivative liabilities and a change in fair value of derivative liabilities and a change in accounts receivable during the year ended

December 31, 2020.

Net cash used in investing activities for

the year ended December 31, 2020 and 2019 was $547,212 and $363,288, respectively.

This change is attributable to the cash used

to purchase marketable securities, property and equipment, and deposits for investments.

Net cash provided by financing activities for the year

ended December 31, 2020 and 2019 was $15,814,083 and $6,337,947.

During the year ended December 31, 2019 period, the Company was

predominantly financed by issuance of common stock, debt and related party notes of $649,829, $2,722,525 and $4,186,500, respectively

to fund operations.

These increases were offset by repayment of notes and related party notes of $50,000 and $501,500, respectively.

Summary of Statements of Operations for the Years

Ended December 31, 2019 and 2018:

During the year ended December 31, the Company was predominantly

financed by net proceeds from the issuance of preferred series E, common stock, debt and related party notes of $6,670,417, $6,662,015

and $5,152,496, respectively to fund operations.

These increases were offset by repayment of notes and related party notes of $2,150,666

and $983,752, respectively.

Summary of Statements of Operations

for the Year Ended December 31, 2020 and 2019:

Year Ended December 31,

Operating Expenses

10 unchanged sentences

basic and diluted

Revenue was $453,006 for the year ended December 31, 2019, as

compared to $80,898 for the comparable year ended December 31, 2018, an increase of $372,108.

The increase in revenue is primarily

attributable to the launch and steady growth of Vocal+ paid subscribers, the rising price points for Vocal for Brands campaigns,

and the integration of Seller’s Choice into Jerrick following the Company’s successful acquisition of Seller’s

Choice in late third quarter.

Over $400,000 of the $453,006 was generated in the second half of the year with approximately $300,000

generated in the fourth quarter alone.

Net Revenue was $1,212,870 for the year ended December 31, 2020, as compared to $453,006 for the comparable

year ended December 31, 2019, an increase of $759,864.

The increase in net revenue is primarily attributable to the launch and

growth of Vocal+ paid subscribers, the rising price points for Vocal for Brands campaigns, and the integration of Seller’s

Choice into Creatd following the Company’s successful acquisition in late third quarter 2019.

During 2020, management

completed its corporate positioning to support its goal of reaching profitable revenue growth by securing funds necessary to eliminate

its debt, attracting a marquee board and executive management talent, engaging a strategic senior marketing and sales effort, and

uplisting to Nasdaq.

Creatd’s 2020 Creator Subscription revenues are reported net of the amounts paid to subscribers

as cash prizes for winning Vocal Challenges and earnings through reads.

As Vocal+ was commercially launched early 2020, with

Vocal Challenges following soon after, both progressively grew during the year.

As Creatd Challenges increased in frequency,

in conjunction with an increase in readership, payments to Vocal+ subscribers totaled $213,182 in 2020.

Gross revenues (including

payments to Vocal+ subscribers) were $1,426,052.

Going forward, with the continued release of advancements and

new offerings to its Vocal technology platform and the resulting growth of vocal subscribers, unique monthly visitors and brand

relationships, management anticipates reporting accelerated revenue growth for the foreseeable future.

Operating Expenses

Operating expenses for the year ended December 31, 2019 were

$7,669,984 as compared to $5,767,153 for the year ended December 31, 2018.

The increase of $1,902,831 in operating expenses is

the result of an increase in general and administrative expenses and consulting fees.

The increase to these expenses is mainly

related to the acquisition of Seller’s Choice and the implementation of the Company’s future business plans.

Operating expenses for the year ended December

31, 2020 were $17,496,205 as compared to $7,669,984 for the year ended December 31, 2019.

The increase of $9,826,221 in operating expenses

is mainly related to non-recurring expenses totaling approximately $1,320,000 attributed to the Nasdaq up-listing and financing activities

during the year, which included two offerings.

In addition, the Company incurred $1,100,000 of non-cash charges related

to employee option exchange for stock during second quarter, $4,100,000 in stock options granted for previously performed services to

13 members of the management team during the third quarter, and in fourth quarter $107,000 was expensed due to reimbursements from Covid-related

pay cuts enacted for several weeks during 2020.

The remainder of the increase in expenses is attributed to an increase in marketing totaling

roughly $2,000,000, and a significant increase in personnel to 42 full time and 12 part-time, including the addition of a Chief Operating

Officer and additions to the sales team with senior-level experience and long-standing brand relationships.

Going forward, the Company

expects operating expenses to materially decrease, potentially offset by a measured increase in support staff and consultants focused

on revenue growth.

During 2020, the Company’s average monthly cash burn was approximately $658,000, slightly elevated from

last year as the Company accommodated its growth strategy.

Loss from Operations

Loss from operations for the year ended December 31, 2019 was

$7,216,978 as compared to $5,686,255 for the year ended December 31, 2018.

The increase in the loss from operations is primarily

due to increased expenses due to the continued development of the Vocal platform and the acquisition of Seller’s Choice and

the implementation of the Company’s future business plans.

The Company incurred a loss from operations

for the year ended December 31, 2020 of $16,283,335 as compared to $7,216,978 for the year ended December 31, 2019.

in the loss from operations is primarily due to non-cash stock-based payments to consultants and employees, one-time charges related

to the Nasdaq up-listing, increase in personnel and the launch of the company’s first significant marketing campaign.

Other Expenses

Other expenses for the year ended December 31, 2019 was $818,394

as compared to $6,327,287 for the year ended December 31, 2018.

Other expenses during the year ended December 31, 2019 was comprised

of interest expense of $612,830 on notes and related party notes, accretion of debt discount and issuance cost of $348,665 due

to the incentives given with debentures, a loss on extinguishment of debt of $162,860.

These expenses were offset by other income

from an Australian tax credit for research and development of $292,387.

During the year ended December 31, 2018, other expenses

were comprised of interest expense of $923,008 on notes and related party notes and accretion of debt discount and issuance cost

of $2,090,286 due to the incentives given with debentures, loss on extinguishment of liabilities of $3,453,137 for the incentives

given to amend or convert debt.

Net loss attributable to common shareholder for the year ended

December 31, 2019, was $8,035,372, or loss per share of $0.98, as compared to a net loss of $14,204,408, or loss per share of $4.16,

for the year ended December 31, 2018.

Inflation did not have a material impact on the Company’s

operations for the applicable period.

Other than the foregoing, management knows of no trends, demands, or uncertainties that are

reasonably likely to have a material impact on the Company’s results of operations.

Other expenses

for the year ended December 31, 2020 totaled $7,929,448 as compared to $818,394 for the year ended December 31, 2019.

Other expenses

during the year ended December 31, 2020 was comprised of interest expense of $1,376,902 on notes and related party notes as well

as a non-cash change in derivative liability of 3,019,457.

Additionally, other expenses included the non-cash, non-recurring accretion

of debt discount and issuance cost of $(4,303,072) due to the incentives given with debentures and loss on extinguishment of liabilities

of $(5,586,012) for incentives given to convert debt.

During the year ended December 31, 2019, other expenses were comprised of

interest expense of $612,830 on notes and related party notes and accretion of debt discount and issuance cost of $348,665 due

to the incentives given with debentures, loss on extinguishment of liabilities of $162,860 for the incentives given to amend or

convert debt.

Net loss attributable to common shareholders

for the year ended December 31, 2020, was $27,348,485, or loss per share of $5.68, which included a non-cash deemed dividend charge

of $3,135,702 related to fair value assigned to the series E preferred and warrants granted in financings during the year.

This compares to a net loss of $8,035,372, or loss per share of $2.93, for the year ended December 31, 2019.

Inflation did not have a material impact

on the Company’s operations for the applicable period.

Other than the foregoing, management knows of no trends, demands,

or uncertainties that are reasonably likely to have a material impact on the Company’s results of operations.

Off-Balance Sheet Arrangements

As of December 31, 2019, we had no off-balance sheet

arrangements.

As of December 31, 2020, we had no off-balance sheet arrangements.

Critical Accounting Policies

We believe that the following accounting policies

are the most critical to aid you in fully understanding and evaluating this “Management’s Discussion and Analysis of

Financial Condition and Results of Operation.”

Use of Estimates and Assumptions and Critical

Accounting Estimates and Assumptions

The preparation of financial statements in conformity

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues

and expenses during the reporting periods.

Critical accounting estimates are estimates for which

(a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain

matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating

performance is material.

The Company’s critical accounting estimates and assumptions affecting the financial statements were:

Assumption as a going concern :

Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

Fair value of long-lived assets:

Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

The Company considers the following to be some examples of important indicators that may trigger an impairment review:

(i) significant under-performance or losses of assets relative to expected historical or projected future operating results;

(ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy;

(iii) significant negative industry or economic trends;

(iv) increased competitive pressures;

(v) a significant decline in the Company’s stock price for a sustained period of time;

and (vi) regulatory changes.

The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

Valuation allowance for deferred tax assets :

Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance.

Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

Estimates and assumptions used in valuation of equity instruments :

Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk-free rate(s) to value share options and similar instruments.

Operating lease Estimates and assumptions:

These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date.

We estimate the incremental borrowing rate for each lease based on an evaluation of our credit ratings and the prevailing market rates for collateralized debt in a similar economic environment with similar payment terms and maturity dates commensurate with the terms of the lease.

These significant accounting estimates or assumptions

bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates

or assumptions are difficult to measure or value.

Management bases its estimates on historical experience

and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the

circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that

are not readily apparent from other sources.

Management regularly evaluates the key factors and

assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical

experience and reasonable assumptions.

After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

are the most critical to aid you in fully understanding and evaluating this “Management’s Discussion and Analysis of Financial

Condition and Results of Operation.”

Use of Estimates

The preparation

of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities, valuation of equity issuances

and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of

revenue and expenses during the reporting period.

The Company uses estimates in accounting for, among other items, revenue recognition,

allowance for doubtful accounts, stock-based compensation, income tax provisions, excess and obsolete inventory reserve and impairment

of intellectual property.

Actual results could differ from those estimates.

Principles of consolidation

The Company consolidates all majority-owned subsidiaries,

if any, in which the parent’s power to control exists.

As of December 31, 2019, the Company’s consolidated

subsidiaries and/or entities are as follows:

Name of combined affiliate

State or other

jurisdiction of

incorporation or

Company Ownership Interest

Jerrick Ventures LLC

Abacus Tech Pty Ltd

Seller’s Choice, LLC

Jerrick Global, LLC

Jerrick Investment Advisors LLC

Jerrick Partners LLC

Maven Tech LLC

OG Collection LLC

Vocal For Brands, LLC

Vocal Ventures LLC

What to Buy, LLC

All inter-company balances and transactions have been

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the

FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37

of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial

Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S.

GAAP and expands disclosures about

fair value measurements.

To increase consistency and comparability in fair value measurements and related disclosures, Paragraph

820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value

into three (3) broad levels.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets

for identical assets or liabilities and the lowest priority to unobservable inputs.

The three (3) levels of fair value hierarchy

defined by Paragraph 820-10-35-37 are described below:

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their

fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant

model assumption or input is unobservable.

The fair value hierarchy gives the highest priority

to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization

is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s financial

assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities and accrued liquidating damages

approximate their fair value because of the short maturity of those instruments.

Transactions involving related parties cannot

be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings

may not exist.

Representations about transactions with related parties, if made, shall not imply that the related party transactions

were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be

substantiated.

Cash Equivalents

The Company considers all highly liquid investments

with a maturity of three months or less when purchased to be cash equivalents.

The Company minimizes its credit risk associated with

cash by periodically evaluating the credit quality of its primary financial institution.

The balance at times may exceed federally

insured limits.

Property and Equipment

Property and equipment are recorded at cost.

for major additions and betterments are capitalized.

Maintenance and repairs are charged to operations as incurred.

is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated

useful lives of the respective assets as follows:

Estimated Useful

Computer equipment and software

Furniture and fixture

Upon sale or retirement of property and equipment,

the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated

statements of operations.

In February 2016, the FASB issued ASU 2016-02

Leases”

(Topic 842) which amended guidance for lease arrangements to increase transparency and comparability

by providing additional information to users of financial statements regarding an entity’s leasing activities.

to the issuance of Topic 842, the FASB clarified the guidance through several ASUs;

hereinafter the collection of lease guidance

is referred to as ASC 842.

The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease

assets and lease liabilities on the balance sheet for substantially all lease arrangements.

On January 1, 2019, the Company adopted

ASC 842 using the modified retrospective approach and recognized a right of use (“ROU”) asset and liability in the

condensed consolidated balance sheet in the amount of $ 289,167 related to the operating lease for office and warehouse space.

Results for the year ended December 31, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue

to be reported in accordance with the legacy accounting guidance under ASC Topic 840, Leases .

As part of the adoption the Company elected

the practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the

Not separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component.

Not to apply the recognition requirements in ASC 842 to short-term leases.

Not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial.

Long-lived Assets Including Goodwill and Other

Acquired Intangibles Assets

We evaluate the recoverability of property and equipment

and acquired finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying

amount of such assets may not be recoverable.

The evaluation is performed at the lowest level for which identifiable cash flows

are largely independent of the cash flows of other assets and liabilities.

Recoverability of these assets is measured by a comparison

of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition.

If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying

amount of such assets is reduced to fair value.

We have not recorded any significant impairment charges during the years presented.

We review goodwill for impairment at least annually

or more frequently if events or changes in circumstances would more likely than not reduce the fair value of our single reporting

unit below its carrying value.

As of December 31, 2019, no impairment of goodwill has been identified.

Acquired finite-lived intangible assets are amortized on a straight-line

basis over the estimated useful lives of the assets.

We routinely review the remaining estimated useful lives of property and

equipment and finite-lived intangible assets.

If we change the estimated useful life assumption for any asset, the remaining unamortized

balance is amortized or depreciated over the revised estimated useful life.

Commitments and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting

Standards Codification to report accounting for contingencies.

Certain conditions may exist as of the date the consolidated financial

statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events

occur or fail to occur.

The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of

In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims

that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims

as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that

it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability

would be accrued in the Company’s consolidated financial statements.

If the assessment indicates that a potential material

loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent

liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally

not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

value measurement disclosures are grouped into three levels based on valuation factors:

quoted prices in active markets for identical investments

other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

significant unobservable inputs (including our own assumptions in determining the fair value of investments)

The Company’s Level 1 assets/liabilities

include cash, accounts receivable, marketable trading securities, accounts payable, prepaid and other current assets, line of credit and

due to related parties.

Management believes the estimated fair value of these accounts at December 31, 2020 approximate their carrying

value as reflected in the balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt

The Company’s Level 2 assets/liabilities

include certain of the Company’s notes payable and capital lease obligations.

Their carrying value approximates their fair values

based upon a comparison of the interest rate and terms of such debt given the level of risk to the rates and terms of similar debt currently

available to the Company in the marketplace.

The Company’s Level 3 assets/liabilities

include goodwill, intangible assets, marketable debt securities, equity investments at cost, and derivative liabilities, when they are

recorded at fair value due to an impairment charge.

Inputs to determine fair value are generally unobservable and typically reflect management’s

estimates of assumptions that market participants would use in pricing the asset or liability.

The fair values are therefore determined

using model-based techniques, including option pricing models and discounted cash flow models.

Unobservable inputs used in the models

are significant to the fair values of the assets and liabilities.

Long-lived Assets Including Goodwill

and Other Acquired Intangibles Assets

We evaluate the recoverability of property

and equipment and acquired finite-lived intangible assets for possible impairment whenever events or circumstances indicate that

the carrying amount of such assets may not be recoverable.

The evaluation is performed at the lowest level for which identifiable

cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability of these assets is measured

by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use

and eventual disposition.

If such review indicates that the carrying amount of property and equipment and intangible assets is

not recoverable, the carrying amount of such assets is reduced to fair value.

We have not recorded any significant impairment charges

during the year ended December 31, 2020.

Acquired finite-lived intangible assets

are amortized on a straight-line basis over the estimated useful lives of the assets.

We routinely review the remaining estimated

useful lives of property and equipment and finite-lived intangible assets.

If we change the estimated useful life assumption for

any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life.

the year ended December 31, 2020 the Company completed its annual impairment test of goodwill.

The Company performed the qualitative

assessment as permitted by ASC 350-20 and determined

that the fair value of the reporting unit was more likely than not equal or greater than the carrying value, including Goodwill.

Based on completion of this annual impairment test, no impairment was indicated.

The Company accounts for its investments

in available-for-sale debt securities, in accordance with sub-topic 320-10 of the FASB ASC (“Sub-Topic 320-10”).

interest on these securities is included in fair value and amortized cost.

Pursuant to Paragraph 320-10-35, investments

in debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial

Unrealized holding gains and losses for available-for-sale securities (including those classified as current assets)

shall be excluded from earnings and reported in other comprehensive income until realized.

The Company follows FASB ASC 320-10-35 to assess whether an

investment in debt securities is impaired in each reporting period.

An investment in debt securities is impaired if the fair value

of the investment is less than its amortized cost.

If the Company intends to sell the debt security (that is, it has decided to

sell the security), an other-than-temporary impairment shall be considered to have occurred.

If the Company more likely than not

will be required to sell the security before recovery of its amortized cost basis or it otherwise does not expect to recover the

entire amortized cost basis of the security, an other-than-temporary impairment shall be considered to have occurred.

considers the expected cash flows from the investment based on reasonable and supportable forecasts as well as several other factors

to estimate whether a credit loss exists.

If the Company intends to sell the security or more likely than not will be required

to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary

impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and

its fair value at the balance sheet date.

Derivative Liability

The Company evaluates its debt and equity

issuances to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted

for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification.

The result of

this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded

as either an asset or a liability.

In the event that the fair value is recorded as a liability, the change in fair value is recorded

in the consolidated statement of operations as other income or expense.

Upon conversion, exercise or cancellation of a derivative

instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair

value is reclassified to equity.

In circumstances where the embedded conversion

option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the

convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single,

compound derivative instrument.

The classification of derivative instruments,

including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting

Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to

liability at the fair value of the instrument on the reclassification date.

Derivative instrument liabilities will be classified

in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected

within 12 months of the balance sheet date.

The Company adopted Section 815-40-15 of

the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded

feature) is indexed to the Company’s own stock.

Section 815-40-15 provides that an entity should use a two-step approach

to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating

the instrument’s contingent exercise and settlement provisions.

The Company changed its method of accounting for

the debt and warrants through the early adoption of ASU 2017-11 during the three months ended December 31, 2017 on a retrospective

The Company utilizes an option pricing model to compute the

fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.

The Company records

the change in the fair value of the derivative as other income or expense in the consolidated statements of operations.

Revenue Recognition

On January 1, 2018, we adopted Accounting Standards

2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements

in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605), using the modified retrospective transition

method applied to those contracts which were not completed as of January 1, 2018.

Results for reporting periods beginning after

January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in

accordance with our historic accounting under Topic 605.

The impact of adopting the new revenue standard was not material

to our consolidated financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.

Under Topic 606, revenue is recognized when control

of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be

entitled to in exchange for those goods or services.

We determine revenue recognition through the following

Under Topic 606, revenue is recognized

when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we

expect to be entitled to in exchange for those goods or services.

We determine revenue recognition through

the following steps:

identification of the contract, or contracts, with a customer;

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determination of the transaction price.

The transaction price for any given subscriber could decrease based on any payments made to that subscriber.

A subscriber may be eligible for payment through one or more of the monetization features offered to Vocal creators, including earnings through reads (on a cost per mille basis) and cash prizes offered to Challenge winners;

allocation of the transaction price to the performance obligations in the contract;

recognition of revenue when, or as, we satisfy a performance obligation.

Revenue disaggregated by revenue source for the years

ended December 31, 2019 and 2018 consists of the following

Branded Content

Creator Subscriptions

Managed Services

Affiliate Sales

Other Revenue

Branded Content

Revenues from branded content in 2019 increased 78%

as compared to the previous year.

Onboarding of additional brand clients as well as greater pricing strength contributed to a large

part of the gain.

The increased pricing strength was attributable to improved features and data analytics.

Clients are increasing

their spend on Vocal for Brands campaigns with the company’s improved marketing strategies.

The continued development of

Vocal’s technology translates into a higher value proposition for brands.

Revenue recognized from these tactical improvements

occurred in the fourth quarter and have created a foundation for scale, future platform improvements, and continued pricing strength.

Branded content revenue is recognized when the Company

fulfills its obligation to create and publish branded articles for clients on the Vocal platform, promote said stories, and meet

any required promotional milestones as per the contract with the client.

The revenue is recognized over time as the services are

performed, with any payments received in advance being deferred until they are earned.

Below are the significant components of a typical agreement pertaining

to branded content revenue:

● The Company typically

collects fixed fees ranging from $5,000 to $45,000, depending on duration and scope of third-party marketing spend.

pays 50% at contract signing and 50% upon campaign completion

● The articles are created

and published within three months of the signed agreement, or as previously negotiated with the client

● The articles are promoted

on Vocal as well as on third-party platforms, and engagement reports are provided to the client throughout the campaign.

Creator Subscriptions

Vocal+ is a premium subscription offering.

The Company initially

offered the subscription to a Founding Member beta group starting in May 2019, utilizing our first-party data from the 450,000+

‘Vocal Free’

creators we had onboarded onto Vocal up until that point.

During the beta period, we analyzed the behaviors

and data of the Vocal+ Founding Members, refining the product and ultimately releasing it to the public in September 2019 alongside

the Vocal 2.0 re-platform.

Vocal+ subscribers receive access to value-added features

such as increased rate of CPM cost per mille (thousand) (“CPM”) monetization, a decreased minimum withdrawal threshold,

a discount on platform processing fees, member badges for their profiles, participation in exclusive Challenges with monetary rewards,

and early access to new Vocal features.

Subscription revenues stem from both monthly and annual

subscriptions, which cost $9.99 per month and $99 per year, respectively, the latter of which is amortized over a twelve-month

Any customer payments received are recognized over the subscription period, with any payments received in advance being

deferred until they are earned.

The continued development of Vocal’s technology

and targeting efficiencies translates into a decreasing cost of acquisition per creator, a scalable onboarding process, and an

increasing rate of subscription signups.

Managed Services

Managed Services are provided by Seller’s Choice,

and encompass a suite of digital marketing solutions for e-commerce brands.

Services offered include listing and storefront optimization

on e-commerce platforms like Amazon and Shopify, the setup and ongoing management of clients’

websites, search engine optimization,

digital advertising, and other various tactics for sales growth and customer retention.

Additionally, Seller’s Choice draws

upon Vocal for Brand’s storytelling capabilities to provide Seller’s Choice additional value and maximize their success.

The average Seller’s Choice client generates revenues of between $3,500-$5,000 per month.

Affiliate Sales

Affiliate sales represent the commission the Company

receives when a purchase is made through affiliate links placed within content hosted on the Vocal platform.

Affiliate revenue

is earned on a “click through”

basis, upon referring visitors, via said links, to an affiliate’s site and having

them complete a specific outcome, most commonly a product purchase.

The Company maintains multiple affiliate relationships,

with platforms such as Skimlinks, Amazon, and Tune, to form and maintain thousands of vendor relationships.

Each vendor establishes

their own commission percentage payout, which typically range from 5-15%.

The revenue is recognized upon receipt of commission

For more information see Note 2 within the consolidated financial statements.

Deferred Revenue

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in advance of revenue recognition.

As of December 31, 2019 and 2018, the Company had deferred revenue of $50,691 and $9,005, respectively.

Accounts Receivable and Allowances

Accounts receivable are recorded and carried

when the Company uploads the articles and reaches the required number of views on the platform.

We make estimates for the allowance

for doubtful accounts and allowance for unbilled receivables based upon our assessment of various factors, including historical

experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other

factors that may affect our ability to collect from customers.

During the year ended December 31, 2019 the Company recorded $33,503

as reserve doubtful accounts.

As of December 31, 2019 and 2018 the Company has an allowance for doubtful accounts of $33,503 and

As of December 31, 2020 and 2019, the Company had deferred revenue of $88,637 and $50,691,

respectively.

Stock-Based Compensation

The Company recognizes compensation expense for all

equity–based payments granted in accordance with ASC 718 “Compensation –

The Company recognizes compensation expense

for all equity–based payments granted in accordance with Accounting Standards Codification (“ASC”) 718 “Compensation

Stock Compensation”.

fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and

recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

Restricted stock awards are granted at the discretion

of the Company.

These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods,

typically over a five-year period (vesting on a straight–line basis).

The fair value of a stock award is equal to the fair

market value of a share of Company stock on the grant date.

The fair value of an option award is estimated on

the date of grant using the Black–Scholes option valuation model.

Under fair value recognition provisions, the Company recognizes equity–based

compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the

requisite service period of the award.

Restricted stock awards are granted at

the discretion of the Company.

These awards are restricted as to the transfer of ownership and generally vest over the requisite

service periods, typically over a five-year period (vesting on a straight–line basis).

The fair value of a stock award is

equal to the fair market value of a share of Company stock on the grant date.

The fair value of an option award is estimated

on the date of grant using the Black–Scholes option valuation model.

The Black–Scholes option valuation model requires

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rate is estimated based on management’s best estimate.

Determining the appropriate fair value model and calculating

the fair value of equity–based payment awards requires the input of the subjective assumptions described above.

The assumptions

used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve

inherent uncertainties and the application of management’s judgment.

As a result, if factors change and the Company uses

different assumptions, our equity–based compensation could be materially different in the future.

In addition, the Company

is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest.

If the Company’s

actual forfeiture rate is materially different from its estimate, the equity–based compensation could be significantly different

from what the Company has recorded in the current period.

Loss Per Share

Basic net loss per common share is computed by dividing

net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted

for the dilutive effect of common stock equivalents.

In periods when losses are reported, which is the case for the years ended

December 31, 2019 and 2018 presented in these consolidated financial statements, the weighted-average number of common shares outstanding

excludes common stock equivalents because their inclusion would be anti-dilutive.

The Company had the following common stock equivalents

at December 31, 2019 and 2018:

Convertible notes - related party

Convertible notes

Reclassifications

Certain prior year amounts in the consolidated financial

statements and the notes thereto have been reclassified where necessary to conform to the current year presentation.

These reclassifications

did not affect the prior period total assets, total liabilities, stockholders’

deficit, net loss or net cash used in operating

Determining the appropriate

fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions

described above.

The assumptions used in calculating the fair value of equity–based payment awards represent management’s

best estimates, which involve inherent uncertainties and the application of management’s judgment.

As a result, if factors

change and the Company uses different assumptions, our equity–based compensation could be materially different in the future.

The Company issues awards of equity instruments, such as stock options and restricted stock units, to employees and certain non-employee

Compensation expense related to these awards is based on the fair value of the underlying stock on the award date and

is amortized over the service period, defined as the vesting period, using the straight-line method.

The vesting period is generally

A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s

common stock at the date of grant is used for restricted stock units.

Compensation expense is reduced for actual forfeitures as

Recently Adopted Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, “Leases

(Topic 842).”

Under ASU 2016-02, lessees will, among other things, require lessees to recognize a lease liability, which

is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis;

and a right-of-use

asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease

ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors;

however, certain changes were

made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, “Revenue from Contracts

with Customers.”

ASU 2016-02 became effective for us on January 1, 2019 and initially required transition using a modified

retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented

in the financial statements.

In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842) - Targeted Improvements,”

which, among other things, provides an additional transition method that would allow entities to not apply the guidance in ASU

2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to

the opening balance of retained earnings in the period of adoption.

In December 2018, the FASB also issued ASU 2018-20, “Leases

(Topic 842) - Narrow-Scope Improvements for Lessors,”

which provides for certain policy elections and changes lessor accounting

for sales and similar taxes and certain lessor costs.

As of January 1, 2019, the Company adopted ASU 2016-02 and has recorded a

right-of-use asset and lease liability on the balance sheet for its operating leases.

We elected to apply certain practical expedients

provided under ASU 2016-02 whereby we will not reassess (i) whether any expired or existing contracts are or contain leases, (ii)

the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases.

not expect to apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance).

We expect to account for lease and non-lease components separately because such amounts are readily determinable under our lease

contracts and because we expect this election will result in a lower impact on our balance sheet.

Recent Accounting Guidance Not Yet Adopted

The Company invests in equity and debt

The Company’s investments in debt securities are classified at the date of purchase as available-for-sale securities.

Debt securities are reported at fair value with unrealized gains and losses, net of the related tax effect, reflected as an accumulated

other comprehensive income component of stockholder’s equity until such gains or losses are realized.

In accordance with

Accounting Standards Update (“ASU”) 2016-01, Equity securities are now reported at fair value with unrealized gains

and losses, net of the related tax effect, reflected as a gain or loss on the statement of operations.

In October 2016, the FASB issued ASU 2016-16, “Income

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Early adoption of the update is permitted.

The Company is currently evaluating

the impact of the new standard.

Management does not believe that any recently issued,

but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial

Quantitative and Qualitative Disclosures

About Market Risk.

We are not required to provide the information required by this

Item we are a “smaller reporting company,”

as defined in Rule 229.10(f)(1).

The adoption of ASU 2016-16 did

not have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill

and Other (Topic 350):

Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied

fair value of goodwill (i.e., Step 2 of the current goodwill impairment test) to measure a goodwill impairment charge.

entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e.,

measure the charge based on the current Step 1).

The updated guidance, which became effective for fiscal years beginning after

December 15, 2019, did not have a material impact on the Company’s consolidated financial statements.

In August 2018,

the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820) .

The updated guidance improves

the disclosure requirements for fair value measurements.

The adoption of ASU 2018-13 did not have a material impact on the

Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill

and Other - Internal Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing

Arrangement That is a Service Contrac t.

This guidance requires companies to apply the internal-use software guidance in ASC

350-40 to implementation costs incurred in a hosting arrangement that is a service contract to determine whether to capitalize

certain implementation costs or expense them as incurred.

The adoption of ASU 2018-15 did not have a material impact on the Company’s

consolidated financial statements.

In November 2019, the FASB issued ASU No.

2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

The mandatory effective dates for Credit Losses in this Update (ASU 2019-10) are as follows:

Public business entities that meet

the definition of an SEC filer, excluding entities eligible to be SRCs as defined by the SEC, for fiscal years beginning after

December 15, 2019, including interim periods within those 2.

All other entities for fiscal years beginning after December 15, 2022,

including interim periods within those fiscal years.

The adoption of ASU 2019-10 had a material impact on the Company’s Consolidated

Financial Statements because it deferred the adoption of ASU 2016-13.

Management does not believe that any recently issued, but not

yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity