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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Commission file number 333-139045

ENIGMA-BULWARK, LTD.

(Exact name of registrant as specified in its charter)

Nevada	46-4733512
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3415 South Sepulveda Blvd., Suite 1100-#1234, Los Angeles, CA	90034
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:	(888) 287-9994

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

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 90 days.	Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration statement was required to submit such files).	Yes ☐ No ☒

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.	☐

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

Large accelerated filer	□	Accelerated filer	□
Non-accelerated filer	□	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.	☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.	☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).	☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).	☐

The aggregate market value of Common Stock held by non-affiliates of the Registrant as of June 30, 2022, was $6,462 based on a closing price of $0.0002 for Common Stock on June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this computation, all executive officers and directors have been deemed to be affiliates. Such determination should not be deemed to be an admission that such executive officers and directors are, in fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the registrant’s

classes of Common Stock as of the latest practicable date.

136,591,547 common shares issued and outstanding as of May 31, 2023

TABLE OF CONTENTS

ITEM 1.	BUSINESS	1

ITEM 1A.	RISK FACTORS	29

ITEM 2.	PROPERTIES	29

ITEM 3.	LEGAL PROCEEDINGS	29

ITEM 4.	MINE SAFETY STANDARDS	29

ITEM 5 .	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	30

ITEM 6.	SELECTED FINANCIAL DATA	32

ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39

ITEM 8.	FINA N CIAL STATEMENTS AND SUPPLEMENTARY DATA	40

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	4 1

ITEM 9A.	CONTROLS AND PROCEDURES	41

ITEM 9B.	OTHER INFORMATION	41

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	42

ITEM 11.	EXECUTIVE COMPENSATION	48

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	54

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	56

ITEM 14.	PRINCIPAL ACCOUNTANTS FEES AND SERVICES	63

ITEM 15.	EXHIBITS, FINANCIAL STATEMENTS SCHEDULES	64

PART I

ITEM 1.

BUSINESS

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it 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.

The Company’s financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in United States Dollars, and all references to “Common Stock” refer to the Company’s common stock.

As used in this Annual Report, the terms "we", "us", "our," “the Company” and "Enigma" mean Enigma-Bulwark, Ltd., and its wholly-owned subsidiaries, Enigma-Bulwark Risk Management, Inc., PearTrack Systems Group, Ltd., Ecologic Car Rentals, Inc. and Ecologic Products, Inc., unless otherwise indicated.

CORPORATE OVERVIEW

The Company’s principal executive office is located at 3415 S. Sepulveda Blvd., Suite 1100-#1234, Los Angeles, California 90034. The Company’s telephone number is (888) 287-9994, and fax is (888) 899-1443.

The Company’s website is www.enigma-bulwark.com.

The Company’s Common Stock is quoted on the OTC Pink under the symbol “EBWK”.

CORPORATE HISTORY

Formation and Development

The Company was incorporated in Nevada on September 30, 2005, and is headquartered in Los Angeles, California. Formerly PearTrack Security Systems, Inc., the Company’s name was changed to Enigma-Bulwark, Ltd., on October 9, 2019, pursuant to a majority of the Company’s shareholders and unanimous resolution of the board of directors.

Enigma-Bulwark, Ltd. (“Enigma” or “Company”) is a security and risk management company that provides physical security, technology-systems integration, and risk management advisory services. Services offered to assess and mitigate risk include security guards, risk management analysis, and proprietary and third-party technology and software. Target markets include corporations, governments and individuals across the globe.

During 2016 through 2018, the Company sought financing for the further development of its intellectual property, including the finalization of the PearLoxx container locking and tracking prototype, and the commercialization of an updated PearTrack platform and tracking system. In addition, strategic acquisitions were pursued to expand the Company’s intellectual property portfolio.

Due to the Company’s inability to successfully commercialize the PearTrack intellectual property acquired in 2013 (the “PearTrack IP”), all rights, title and interest in the PearTrack IP reverted to the former licensees on December 31, 2018, and, pursuant to the terms of the Security Agreement, the related Note issued to the licensors (the “Note Holders”) was canceled. In addition, all rights to future royalties collectible under any sub-license previously issued by the Company for the PearTrack IP reverted to the Note Holders. As a result, in 2018, the Company recognized a gain on the extinguishment of debt of $2,000,000.

Although the PearTrack IP commercialization was unsuccessful, the Company continued to focus on security and risk management, and acquired intellectual property that is based on a patent-pending ¹ interactive spontaneous video security technology (the “Safer IP”). On October 11, 2018, the Company executed an Intellectual Property Purchase Agreement (the “Safer Agreement”) with Safer, Inc., a Florida corporation (the “Seller”), for the acquisition of the Safer IP. Pursuant to the Safer Agreement, in exchange for all rights, title and interest in the Safer IP, among other things, the Company delivered to Seller:

1.Common Stock Purchase Agreement providing for the Seller the right to purchase 3,500,000 shares of the Company’s restricted Common Stock at a price of $0.001 per share, for $3,500 cash; and

2.Revenue Sharing Agreement providing for a cash earn-out of 3% to be paid to the Seller, up to $1,000,000 paid to Seller, derived from the Adjusted Gross Revenue generated by the Company in connection with the Safer IP; and

3.Royalty Agreement providing for a royalty of 1.5% of the Adjusted Gross Revenue generated by the Company in connection with the Safer IP.

¹ On July 21, 2021, the Company received a Notice of Allowance from the United States Patent and Trademark Office that its Patent Application 16/618,038 “Network Based Video Surveillance and Logistics for Multiple Users” was granted and would be issued to the Company. For additional information on the patent application, see “Intellectual Property”

Table of Contents

In 2019, the Company was presented with an opportunity to start a security and risk management business headquartered in Cape Town, South Africa, and identified key management to operate the business unit. On August 30, 2019, the Company formed Enigma-Bulwark Risk Management, Inc., a Delaware corporation and wholly-owned subsidiary (“EBRM”), to maintain the Company’s security and risk management operations and assets.

In addition, EBRM acquired 100% of the shares of Enigma-Bulwark Security, Inc., a Delaware corporation formed by the Company in May 2019 (“EBS”). The Company attracted key senior management talent with backgrounds in structured finance, insurance, management, and M&A. On August 8, 2019, EBS received its license to provide physical security officers from the Florida Department of Agriculture and Consumer Services, and commenced its security protection operations in southern Florida, providing security services to the hospitality industry, as well as large events and VIPs/celebrities.

As part of the development of the South African business unit, the Company, through EBRM, entered into a Joint Venture Agreement (the “JV Agreement”) on September 8, 2020, with Prime African Security, Ltd., a South African corporation (“Prime”), to provide security and risk management services in South Africa. The joint venture formed Prime Enigma Africa (Pty) Ltd., a South African corporation (the “Joint Venture”), for which Prime owns 51% of the Common Stock and the Company owns 49%. The JV Agreement is for an initial term of three (3) years, and automatically renews unless canceled in writing by either party.

COVID-19 Pandemic

In December 2019, an outbreak of the COVID-19 virus was reported in Wuhan, China. On March 11, 2020, the World Health Organization (“WHO”) declared the COVID-19 virus a global pandemic, and on March 13, 2020, former President Donald J. Trump declared the virus a national emergency in the United States. As of the date of the filing of this Annual Report, the WHO reports over 757 million confirmed COVID-19 cases and over 6.8 million deaths worldwide, including over 1.1 million in the U.S. This highly contagious disease has spread to most of the countries in the world and throughout the United States, creating a serious impact on customers, workforces and suppliers, disrupting economies and financial markets, and potentially leading to a world-wide economic downturn. It has caused a disruption of the normal operations of many businesses, including the temporary closure or scale-back of business operations and/or the imposition of either quarantine or remote work or meeting requirements for employees, either by government order or on a voluntary basis.

The COVID-19 pandemic may adversely affect the Company’s clients’ operations, its employees and its employee productivity. It may also impact the ability of the Company’s subcontractors, partners, and suppliers to operate and fulfill their contractual obligations, and result in an increase in costs, delays or disruptions in performance. These effects, and the direct effect of the virus and the disruption on the Company’s employees and operations, may negatively impact both the Company’s ability to meet customer demand and its revenue and profit margins. The Company’s employees, in many cases, are working remotely and using various technologies to perform their functions. The Company might experience delays or changes in customer demand, particularly if customer funding priorities change. Further, in reaction to the spread of COVID-19 in the United States, many businesses have instituted social distancing policies, including the closure of offices and worksites and deferring planned business activity. Additionally, the disruption and volatility in the global and domestic capital markets may increase the cost of capital and limit the Company’s ability to access capital. Both the health and economic aspects of the COVID-19 virus are highly fluid and the future course of each is uncertain. For these reasons and other reasons that may come to light if the coronavirus pandemic and associated protective or preventative measures expand, the Company may experience a material adverse effect on its business operations, revenues and financial condition; however, its ultimate impact is highly uncertain and subject to change.

Management Changes

On January 20, 2017, Mr. David M. Engert resigned as a member of the board of directors. This resignation did not involve any disagreement with the Company.

On September 19, 2018, Mr. E. William Withrow Jr. resigned as President and Chief Executive Officer. This resignation did not involve any disagreement with the Company. Mr. Kyle W. Withrow, succeeded him to serve as President and Chief Executive Officer until the next annual meeting of the shareholders and/or until he, or his successor is duly appointed.

On October 4, 2019, Mr. Clive Oosthuizen, Mr. David M. Rocke and Ms. Calli R. Bucci were appointed to the Board, to serve until the next annual meeting of the shareholders. Mr. John D. Macy was not re-elected to the board of directors.

On October 8, 2019, Ms. Calli R. Bucci resigned as Corporate Secretary. This resignation did not involve any disagreement with the Company. Ms. Yinuo “Rachel” Jiang succeeded her to serve as Corporate Secretary until the next annual meeting of the shareholders and/or until she, or her successor is duly appointed.

On January 12, 2021, Mr. John L. Ogden resigned as a Board member. This resignation did not involve any disagreement with the Company. Mr. Kyle W. Withrow, the Company’s President and Chief Executive Officer, succeeded him as a director until the next annual meeting of the shareholders and/or until he, or his successor is duly appointed.

On April 6, 2021, Mr. E. William Withrow Jr. resigned as Executive Chairman of the Board. His resignation did not involve any disagreement with the Company. Mr. Clive Oosthuizen, a Board member, and the President of the Company’s subsidiary, Enigma-Bulwark Risk Management, Inc., succeeded him.

On April 6, 2021, Mr. Kyle W. Withrow resigned as the Company President and Chief Executive Officer, and as a Board member. His resignation did not involve any disagreement with the Company. Mr. Oosthuizen succeeded him as President and Chief Executive Officer until the next annual meeting of the shareholders and/or until he, or his successor, is duly appointed. The vacant Board member seat resulting from Mr. Withrow’s resignation will remain open until a new member is elected at the next annual meeting of the shareholders, or is duly appointed by the Board.

On April 12, 2021, Mr. David Rocke resigned as a Board member, and consultant. His resignation was preceded by the Company’s inquiry into Mr. Rocke’s performance in connection with his Consulting Agreement dated May 1, 2019. The vacant Board member seat resulting from Mr. Rocke’s resignation will remain open until a new member is elected at the next annual meeting of the shareholders, or is duly appointed by the Board.

On April 12, 2021, Mr. Michael Gabriele resigned as President of Enigma-Bulwark Risk Management, Inc. and its subsidiaries9. His resignation did not involve any disagreement with the Company.

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DESCRIPTION OF BUSINESS

Overview

The Company is currently structured with four wholly-owned subsidiaries: Enigma-Bulwark Risk Management, Inc., a Delaware corporation (“EBRM”), and PearTrack Systems Group, Ltd. (“PTSG”), Ecologic Products, Inc.{“EPI”), and Ecologic Car Rentals, Inc. (“ECR”), all Nevada corporations. The Company’s current business activities are diversified into two specific markets: security and risk management, and remote/mobile asset tracking products.

Enigma-Bulwark, Ltd. Los Angeles, California		Parent Corporation Patented EnigmaLok Locking Technology
Enigma-Bulwark Risk Management, Inc. Cape Town, South Africa		Network-Based Video Surveillance (Patent-Pending) Security and Risk Management / Intelligence Security Guard Operations Hotels, Events, VIPs
	·Enigma-Bulwark Security, Inc. Miami, Florida
	·Prime-Enigma Africa Pvt. Joint Venture
Ecologic Products, Inc. / Ecologic Car Rentals, Inc. Los Angeles, California		Environmental Transportation and Products Seeking Strategic Opportunities

Through its wholly-owned subsidiary, EBRM, the Company is operating a security and risk management business, and developing its proprietary, patent-pending and patented technology. EBRM is focused on providing security guards, both armed and unarmed, as well as security consulting and systems integration of security technology and software through the development of its patent-pending intellectual property (see “Intellectual Property”), along with third-party Plug-N-Play products.

In August 2019, the Company, through EBRM’s subsidiary, Enigma-Bulwark Security, Inc. (“EBS”), a Delaware corporation, established and operates a full-service security business targeting hospitality, corporate/executives, and petroleum assets. in Miami, Florida. EBS services include security guards, both armed and unarmed, as well as CCTV and video capture technology and security consulting services. As of October 2022, EBS maintains a staff of approximately forty-five (45) employees, including over forty (40) fully licensed security personnel, serving eleven (11) luxury and boutique hotels, restaurants and resorts in the greater Miami Beach, Florida, area.

In August 2020, EBRM formed a joint venture with Prime African Security, Ltd. Pty, a Pretoria, South Africa based full-service security company, accredited under the Private Security Industry Regulation Act 56 of 2001 (PSIRA), called Prime-Enigma Africa Ltd. Pty (“Prime-Enigma”) headquartered in Pretoria, South Africa. Prime-Enigma is currently bidding on security tenders from large international corporations operating in South Africa.

The Company also intends to provide a unique solution to security issues in the intermodal shipping container marketplace, with its patented container tracking and locking system, EnigmaLok (formerly PearLoxx), the rights of which were licensed to the Company in perpetuity in 2015 (see “Intellectual Property”).

Through the subsidiaries, Ecologic Car Rentals, Inc. and Ecologic Products, Inc., the Company continues its pursuits for strategic opportunities for its shareholders, as management believes that the brands have value for companies with environmentally-friendly consumer-related products and services.

Business Strategy

In today’s complex and connected world, the Company believes that a holistic approach to risk management analysis is an essential component of business and life. The traditional idea of simply placing a guard at a post and using pen-and-paper systems has proven to simply be inadequate in this advanced and fast-paced society, and is precisely why technology needs to be adopted in private security.

The Company’s goal is to establish a worldwide security firm that provides the highest level of security protocols, capabilities and solutions to individuals, companies, and governments. The Company’s initial security operations service luxury hotels and resorts, events, and celebrities in the Miami Beach, Florida, area. The remaining operations are at various stages of development, ranging from commercial stage technology testing to early and mid-development stage, with about 25% of Enigma’s value proposition at the research and development stage. As such, the Company will require additional investment capital to successfully implement its business strategy and fund the completion of its product development. There can be no assurance that such financing will become available or, if it does, that it will be offered to the Company on favorable terms.

The Company believes that the Miami, Florida, operations will be an ideal market entry point for its other security offerings, such as its Smart Video products. Management intends to utilize the Miami operations as a test market for these security technologies, of which the resulting data will prove invaluable in the Company’s larger scale marketing endeavors. Enigma is targeting a wide range of industries, and is positioned to grow its business through the exploitation of its intellectual property and integrated solutions.

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The Company’s strategy is a multi-pronged approach that includes a combination of:

·enhancing and expanding existing products and services;

·expanding intellectual property through licensing;

·identifying potential business acquisitions and strategic partnerships;

·expanding nationwide security operations and customer base;

·establishing security operations on a global scale; and

·continuing to upgrade technologies and training personnel.

With the integration of experience, awareness, preparation, capability, innovation, and execution, the Company can design solutions that are threat-focused, intelligence-led, innovative and scalable – solutions that will reflect a clients’ specific risks and objectives.

Client Benefits

·Sector-Leading Expertise – Former military personnel with security expertise and intelligence capability, both domestic and international.

·Client-Focused Approach – Security risk assessment and solutions specific to threats to employees and associates, assets, and investments.

·Localized Solutions – Services include training and managing local security resources.

·Introduce/Upgrade Technology – Augment and enhance the human workflow and make it more effective by the integration of technology solutions.

From forward-threat and asset-extraction professionals to armed and non-armed security officers with multiple certification levels, the Company’s security solutions include threat assessment/analysis, mitigation planning and technology. In addition, with field-tested and field-selected software analytics, and improved communication protocols, clients and end-users are also demanding ancillary offerings for their security systems. The Company intends to include a variety of pre- and post- project services, such as:

·project planning and advisory

·hosted and remotely managed access-control and video

·maintenance contracts

·software licensing

·internal or third-party monitoring

·non-security services:

§training

§configuration

§programming

Management

Management experience and insight translates into best practices and proven strategies that will help anticipate and respond to myriad facility, operational, and safety challenges with confidence. Enigma’s management has extensive knowledge and experience in many fields requiring security and risk management protocols, such as multinational corporations, mining houses, telecommunication providers, transportation and energy companies.

Enigma’s team is at the core of its value, with decades of intelligence and military experience, as well as technology expertise and specialized experience in:

·advanced training techniques

·new and innovative technology applications

·intelligence and reconnaissance

·risk assessment and threat identification.

The Enigma team includes individuals with backgrounds from U.S. and South African Special Forces and military intelligence, and applies its experience to deliver measured and effective security management, regardless of adversary or operating environment. Additionally, Enigma is sensitive and experienced at managing low-profile, security operations in challenging environments.

The Company works with a core management team to remain flexible during times of non-engagement. With over forty years of professional military service, the Enigma team has established a large network of security professionals that can be deployed on a global basis. The Company will continue to identify diverse and skilled security personnel, and develop innovative solutions across the full spectrum of security needs.

Technology and Software

In today’s environment, there is a high demand for companies to become more efficient, secure and operationally aware. That, in turn, is driving the need for real-time data capturing and processing for every part of their business, including security.

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Physical security refers to restricting physical access of unauthorized people in controlled facilities to prevent damage to valuable hardware, software, network infrastructure, and other assets. Physical security includes security layers that protect personnel, network, and data in physical facilities, such as campuses, buildings, banks, and offices, from internal or external physical threats, such as natural disasters, fire, theft, burglary, vandalism, and terrorist attacks.²

The physical security segment of the security industry is undergoing the most rapid technological change in its history. Today, a combination of technologies and services are transforming the delivery of physical security services, such as:

·rising Internet Protocol (IP) adoption

·declining legacy sales

·emerging communication standards from broadband to 5G to Wi-Max

·acceptance of security technologies as a service.

While physical security will always be an important barrier against enterprise theft, vandalism, and violence, cybersecurity continues to be the top security concern businesses face today, with a persistent and ever-growing threats. With the developments of cyber hacking, and recent global hijacking of major corporations’ infrastructures, the need for advanced security systems and technologies is at its greatest. To meet these demands, emerging technologies and concepts, such as artificial intelligence (“AI”), cloud computing, intelligent video analytics, and cybersecurity are at the forefront of the security industry. As companies plan to meet the threats of the future, budgets for security systems of all sizes are increasing, and are focused on innovative solutions.

The Company has a developed a strategic plan that will initially incorporate (i) a hybrid systems-integration business model, based on third-party products and services, and (ii) a recurring revenue subscription model, based on the exploitation of its proprietary intermodal container products and services. As the Company moves from equipment sales to consultative solution sales, the unique business problems of clients in target markets will be a primary focus. The Company is identifying vertical market initiatives that will concentrate its expertise.

System Integration

The Company is developing a business unit focused on providing technology-based security solutions through systems integration. System integration is defined simply as the process of bringing together the component sub-stems into one system.³ Through system integration, the Company can provide a platform for both third-party technology as well as proprietary products, to be sold to clients through multiple business models, ranging from Security as a Service (SaaS) to direct product sales.

Integration between video and access control is the most sought-after combination. This leads to integration issues, as most manufacturers offer integrations with a variety of video and other security components but not with their fellow access control competitors. Additionally, vendors use their own unique application program interfaces and their own databases with reporting methods that make the integration process challenging. Having qualified System Integrators is essential to solving these issues.

System Integrators

A “System Integrator” is an individual or (company) that specializes in bringing together component subsystems into a whole, ensuring that those subsystems function together.⁴ A security system integrators (“SSI”), for example, can configure a central command-and-control center with a common user interface that shares data. SSIs can also solve issues such as joining disparate security and non-security components so they communicate with each other properly.

Even as technology changes, the main objective of system integration remains the same: to seamlessly coordinate and link various security sub-systems to impede ever-increasing security threats. To meet these objectives, the SSIs engaged by the Company will have expertise installing and managing access control elements like gates, doors, and locks, video surveillance systems, emergency notification systems, lighting, network security and more.

The Company will initially outsource its system integration needs by contracting with SSIs on a per project basis. An experienced SSI can help oversee the full lifecycle of a client’s security systems. Additionally, SSIs can custom-design a security plans, as well as install, implement, test, manage and maintain it. Through the development of relationships with select SSIs, and proven success on multiple projects, the Company will recruit key SSIs that have the qualifications and competencies that best suit the Company’s needs on an exclusive and permanent basis.

With the advent of AI, remote and sensor video analytics, cloud computing, and cybersecurity new opportunities open for the Company’s system integration model. The Company believes that it is not whether technology will have a significant impact on the physical security industry in the next few years; it is which technology will prove the most valuable. With the rapid pace of change in technology, there is no simple answer to this question. The business challenges of yesterday may no longer be the challenges of tomorrow. The Company realizes the need to understand what the unique challenges are for each vertical it focuses on, and work with manufacturers to develop proprietary initiatives and provide proven solutions for specific markets.

² https://www.marketsandmarkets.com/Market-Reports/physical-security-market-1014.html

³ https://en.wikipedia.org

⁴ https://en.wikipedia.org

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The Company’s focus is on the following areas:

Security and Protection		Risk Management Advisory Services
·Security Officers ·Global and Executive Protection ·Transportation Facilitators ·Extraction Teams ·Event/VIP/Celebrity Protection ·COVID-19 Safety Protection		·Advisory ·Risk Assessment ·Intelligence ·Surveillance ·Threat Assessment ·Cybersecurity ·COVID-19 Safety Protection
Technology and Software
·Video Intelligence, Data and Smart Sensors ·Video Analytics ·Spontaneous Video Technology ·Data Collection and Management ·Intelligence ·Analytics ·Tracking, Monitoring and Securing of Assets ·EnigmaLok ·EnigmaTrak ·EnigmaCode		·Intelligence as a Service IoT Connectivity ·Sensor Networks ·API Connected Wearables ·5G Connectivity ·Zigbee Mesh ·RF ·Inaudible Tones

The Company is primarily focused on the development of its patent-pending video surveillance technology, as well as the EnigmaLok prototype container security, tracking and locking system (see “Intellectual Property”).

Future Technology Concepts and Strategies

The shifts in technologies identify opportunities to generate new business through the introduction of value-added applications, or new services capable of generating recurring monthly revenue. The Company’s goal is to have the following technologies installed either separately or collectively, as part of an integrated offering:

·Artificial Intelligence and Analytics

Clients are looking to AI and data analytics to gain better insight into their operations. These offerings can provide security-related intelligence or operational and customer insights. The key to AI is a self-learning algorithm that, over time, gets better at identifying certain targeted behaviors or transactions, and reduces false positives. The challenge for clients will be clearly defining which data is most valuable to them, who will have access to it, and how to best manage it. The Company can play a key role in this process by having those discussions with clients up front and encouraging a proof-of-concept phase before full rollouts are undertaken.

·Facial Recognition

Facial recognition is growing in popularity among biometric forms of authentication. Microsoft has enabled it for access with Hello for Windows 10 users, major credit card companies have stated their interest in using facial recognition to verify payments and other financial institutions are using it to authenticate customers on mobile devices. Still, it’s use spotting suspects in crowds and protecting airports and borders remains the brass ring for security professionals.

·Security as a Service (SaaS)

The security market has seen an increased demand for Security-as-a-Service (SaaS) offerings. The combination of low, upfront capital costs, along with outsourced services, has made cloud-based video and access-control popular, especially in the hospitality and small-to-medium enterprise markets. As technology developers add more sophisticated applications and services to expand client insights and efficiencies, enterprise retail clients will seek SaaS more and more. Developed as a subscription business model, SaaS generates a recurring revenue stream.

·Cybersecurity

The sheer scope and size of the data breaches the Company has witnessed over the past decade is a daunting reality. The breach of Equifax, one of the most notable examples, has heightened concerns over cyber-preparedness. In turn, clients are increasingly evaluating their level of cybersecurity preparedness, as well as that of their suppliers. The Company’s initial strategy in the cybersecurity market will be to partner with an established cybersecurity company that provides leading-edge tools and solutions.

The execution of the Company’s business strategy will be contingent upon and require significant financing. There can be no assurance that such financing will become available or, if it does, that it will be offered to the Company on favorable terms.

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PRODUCTS AND SERVICES

The Company’s wide, but integrated, product and service offerings include security and protection services, intelligence and risk management advisory services, and security technologies. Because security must be addressed on several levels, the most productive approach requires the kind of broad expertise found with the Company’s security professionals. The Company’s team can determine the likelihood of a particular threat, prioritize action plans, recommend appropriate security measures, and implement solutions when necessary.

SECURITY AND PROTECTION SERVICES

Physical Security Services

Physical security includes security measures that are designed to deny unauthorized access to facilities, equipment and resources, and to protect personnel and property from damage or harm (such as espionage, theft, or terrorist attacks). Physical security involves the use of multiple layers of interdependent systems which include CCTV surveillance, security guards, protective barriers, locks, access control protocols and many other techniques.

The Company has retained security professionals with various skill levels, from basic security guards (agents and managers) to advanced professionals with backgrounds in military Special Forces. The Company currently provides security agents and security managers for onsite security-related services to hotels and resorts in Miami Beach, FL, as well as for special events and VIPs / celebrities. Its security operations maintains a staff of approximately forty-five (45) employees, including over forty (40) fully licensed security personnel, of which thirty (30) are full-time and ten (10) are part-time. The Company also has a team of experienced security professionals.

Security Agents

The Company’s Miami-based security operations, Enigma-Bulwark Security, Inc., provides both armed and unarmed Security Agents (“Agents”) to its hotel/resort clients to ensure the premises are a safe and secure space for colleagues, clients, and staff. The duties involve controlling who enters and exits the building, inspecting existing CCTV footage for unusual activity, and detaining trespassers until the police arrive. This is typically a shift-based job, and overnight and weekend hours are common. Training is usually carried out on the job, but people in this role often need first aid knowledge and some basic self-defense skills. Candidates for this job should be in good physical health and have the stamina to work long shifts of standing and walking. They should also have keen observational skills and the ability to work independently for extended periods of time.

Skills and Qualifications

The Company requires all of its Agents to be licensed. In the state of Florida, where the Company’s primary security guard operations are located, the Florida Department of Agriculture and Consumer Services (FDACS) licenses and regulates the private security industry. All Agents must be licensed as follows:

·Security Agent-Unarmed	Class “D” License
·Security Agent-Armed	Class “G” License
·Manager of a Security Business	Class “M” or “MB” License.

The Company also requires Agents to have a calm disposition, the ability to act quickly and efficiently in stressful situations, and possess keen observation skills to spot anything that may pose a threat. The Company employs Agents with the following abilities:

·Communication skills – Communicate clearly and calmly in all situations, making points heard without losing temper or professional manner.

·Attention to detail – Quickly spots threats and other issues that could pose danger but might otherwise be overlooked.

·Patience – Shifts can involve many hours spent standing and observing a designated area, so patience and stamina are vital.

·Good judgment – Quickly assess situations and decide whether further action needs to be taken.

·Problem-solving skills – Difficult situations require the ability to troubleshoot and find solutions.

Duties and Responsibilities

Although the jobsite an Agent is assigned to will determine the exact duties to be carried out, duties typically involve:

·Enforce Laws	The Agent’s primary responsibility is to enforce laws and safety regulations. Agents patrol designated areas to ensure there are no violations.
·Respond to Emergencies and Threats	If an incident occurs, Agents respond quickly and calmly, while ensuring that all persons in the building, including themselves, are safe. If something arises that is dangerous or breaks security regulations, Agents immediately contact the police.
·Monitor CCTV Cameras	Agents have access to alarms and CCTV footage, which they monitor closely to look out for anything that might pose a security threat.
·Conduct Checks on the Premises	Agents regularly patrol their designated area to conduct security checks, control building access, and identify anything unusual.
·Prepare Daily Incident Reports	Agents prepare daily reports to detail what occurred during their shift, highlighting any threats or unusual activities that were identified, and inform Agent carrying out next shift of anything that needs further attention.

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Security Managers

The Company’s Miami-based security operations, Enigma-Bulwark Security, Inc., provides Security Managers (“Managers”) that monitor the day-to-day security operations, and implement security policies, regulations, and rules. Managers are required to hire new Agents and delegate tasks and duties to them. One of their main duties is to check and monitor the access control for visitors on the property. Security Managers also perform many of the following tasks:

·Monitor events

·Implement security protocols

·Create emergency response procedures

·Conduct security evaluations

·Supervise Security Agents

Duties and Responsibilities

·Ensure Agents are conducting routine patrols of the jobsite

·Ensure Agents are groomed and in proper uniform

·Ensure Daily Incident Reports are being completed

·Perform Daily Incident Report writing training, if needed

·Complete walk throughs with Agents while on site, and note any discrepancies, issues or hazards

·Ensure Agents are acting in accordance with the jobsite’s requirements and guidelines

·Ensure Agents are inspecting fire alarm panels and exterior doors

·Monitor Agent overtime

·Ensure offices are clean and clear of debris

·Ensure no food is in offices

·Periodically review Safety Committee Guidelines with the jobsite Manager

·Check in with the jobsite’s Director of Security (DOS), Property Manager on Duty (MOD) and/or Front Desk Manager and address any concerns related to the jobsite

·Document any discrepancies and/or issues found and provide to the jobsite Manager

·Work closely with the jobsite Manager to ensure any concerns or issues are being addressed

·Prepare weekly scheduling of Agents to ensure proper coverage is in place

Executive Protection / Journey Management

Executives face threats that vary widely depending on the industry, size of the company, geopolitical locations, and the individual’s profile. The Company’s aim is to establish and maintain a safe working and living environment for its clients while continually minimizing risk. The Company achieves this by providing executive protection operatives to support its clients on a global basis.

The Company’s expert security consultants and advisors will accompany high-net-worth senior executives, private individuals and their families to the most challenging environments. The Company’s on-the-ground knowledge of risky locales, together with its expansive intelligence networks and proven methodologies means that the services recommended and provided by the Company are specially calibrated to the unique risks its clients face. The Company’s executive protection services enable clients to carry out their business with confidence and peace of mind.

In addition to discreet close protection, Enigma’s teams offer advice, liaison and coordination. The Company delivers comprehensive security from the moment a traveler arrives in country until their return flight is safely in the air. The Company’s executive protection officers are formally trained and licensed to Security Industry Authority (SIA) standards or country equivalent. Their backgrounds are typically within the military, law enforcement or Special Forces. Both male and female officers can be deployed rapidly worldwide. The Company’s officers are widely experienced in providing a discreet, efficient protection service, subject to visas and introduction letters if necessary.

Maritime Security Services

Clients can commission customized threat assessments and security plans on marine facilities and operations to assist with planning, training, and implementing all aspects of maritime security and crisis management. Depending on a client’s needs, the Company can assess and advise on risk mitigation for specific routes and areas, vessel security plans, counter-piracy support, regulatory compliance and supply chain assessment.

The Company has the skills and qualifications to consult on counter-piracy security design and vessel hardening, depending on the risks faced. The Company regularly undertakes vessel security reviews and audits to ensure compliance with BMP standards.

The Company also has experience in the security design of ports, warehouses and offshore maritime operations to reinforce key assets. The Company can provide specialized security teams and consultants who can coordinate a host nation’s security personnel for complex, offshore security projects.

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In-Sourcing

Many clients worldwide seek support to manage security-related projects on a temporary or permanent basis. Companies often lack the in-house capability to satisfy all security requirements. Enigma can fill this shortfall by deploying embedded consultants for a specific task, and passing on sector-specific knowledge that clients may not possess in-house. These consultants provide professional advice, tailoring strategies and tactics based on the Company’s intimate understanding of the Company’s clients’ operating environments.

Out-Sourcing

Enigma is well positioned to provide a global solution for corporations that require occasional support or longer-term solutions in several areas:

·Close protection details

·Armed protection teams in high-risk environments

·Security awareness training

·Intrusion testing

·Technical surveillance countermeasures

·Major event security

The Company’s experienced professionals can provide security and peace of mind for those traveling in hostile, unfamiliar environments. By providing specialty security services, the Company can help to keep clients’ most valuable assets safe and secure.

Project Management in Hostile Environments

The Company’s team Project Managers (“PMs”) have spent years in their respective fields, deployed primarily in hostile areas such as the Middle East and West Africa. PMs will handle projects from inception to execution stage, and approach each project as a unique opportunity. To fulfill a client’s requirements, PMs will harness on industry best practices and personal experience, augmenting a client’s needs by satisfying the following project requirements:

·Initiate a project in a very hostile environment with seemingly no budgets and resources.

·Prioritize problems and focus slender resources on the most critical tasks.

·Carefully organize individuals into groups that can work on specific activities based on their skill sets and create a unified high performance project team.

·Enable in-built agility to survive interruptions and attempts to shut it down.

·Utilize knowledge areas (integration, scope, time, cost, quality, human resource, communications, risk, procurement) to intuitively initiate, plan and execute project.

Security System Audits

Security measures are of little use if they are not enforced. A security audit assesses how effectively an organization’s security policies are being implemented. The Company can perform audits that will show a client where gaps and vulnerabilities might exist in their current systems and procedures.

Over these years, the Company’s experienced team of security specialists have seen countless reasons for non-compliance with existing security procedures. Some protocols may be bypassed for the sake of convenience, or a perception of increased productivity. Other times, there is a resistance to change, or merely forgetfulness or carelessness. Multinational companies and those with multiple facilities can find it especially challenging to institute system-wide compliance with security procedures.

With the Company’s anticipated global footprint, it will have the resources to not only uncover where weaknesses and security gaps exist throughout an organization, but also what issues are driving non-compliance. The Company can then help establish a balanced and effective security risk management program that a client can be comfortable and confident with. This exercise can be especially beneficial after an acquisition for standardizing policies and procedures.

The Company’s security audits can also play an important role in internal investigations when anomalies are discovered, or wrongdoing is suspected. The Company’s findings can be used for not only potential litigation/legal proceedings, but also to strengthen an organization’s internal controls to mitigate future problems.

Security and Emergency Programs

An effective security program must cover many scenarios and clearly define the duties and expectations for everyone in an organization – from the security department to management and employees, as well as third parties like local emergency responders and business continuity partners. By taking a multidisciplinary approach, the Company can review current security policies to ensure they cover current risks and vulnerabilities, and offer the best way to handle security and surveillance systems.

The Company can develop security policies tailored to the exact risks a client or organization faces – all within the framework of laws and regulations of each country in which it operates. Depending on specific needs, the Company can assist with either comprehensive security programs or individual components, such as access control, workplace violence prevention, or executive protection.

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Security Equipment Sourcing

The Company can recommend and help individuals and organizations source any needed security equipment. The Company has industry partners both within and outside its countries of operation with whom it can collaborate with for security equipment sourcing services.

Fraud Prevention and Ethics Programs

Regardless of size, all organizations are vulnerable to workplace fraud. Fraud can take many forms—including embezzlement, forgery, theft of inventory and other assets, and computer crime—and can continue unchecked for years. The financial impact can be devastating.

Although the Company believes preventing fraud is a good starting point for companies that want to improve or review their loss prevention strategies, it is not a substitute for expert advice. The Company encourages clients to seek appropriate professional advice for any specific issues that may arise when designing, implementing or reviewing loss prevention strategies.

RISK MANAGEMENT ADVISORY SERVICES

Since all threats are dynamic, the intelligence cycle never truly ends, and new or evolving threats must continually be identified and investigated. As criminal trends and geopolitical developments continue to pose physical security threats to organizations in a wide range of sectors, the intelligence cycle reinforces the critical, yet often overlooked, importance of context and subject matter expertise in addressing these challenges. The convergence of the digital and physical world is increasingly being tested to manage a diverse range of incidents ranging from extreme weather, malicious cyber-attacks, terrorist attacks, facility invasions, theft, vandalism, and many additional applications. Enigma uses a holistic approach to address all aspects of a client’s security and operational risks for the most effective protection. Diverse skill sets and global resource relationships enable the Company’s experts to manage projects from inception to completion. From securing counterfeit goods along the supply chain, to running drills to perfect executive protection in unstable locations, the Company’s prompt response capabilities will deliver quality services across the entire security risk management continuum.

Because security risks are interconnected and ever-evolving, the Company can provide up-to-date advice on a wide range of security services to effectively manage risks. In addition, the Company can identify physical security weaknesses, focus on defined threats that could compromise a company’s ability to provide adequate services to its clients, and provide a roadmap for remediating security vulnerabilities.

Corporate and Industrial

Bomb threats, workplace violence, stalkers, corporate espionage, supply chain disruption, and extortion. These dangers and more can arise without warning. The Company has the resources and expertise to analyze risks, identify suspects, develop intervention strategies, mitigate threats, and ultimately help you manage and resolve a wide variety of corporate and private client corporate security issues.

Risk, Threat Assessments and Defensive Strategy Development

Comprehensive threat and vulnerability assessments are essential to securing an organization. The security risk assessment process can help to identify all critical assets, assess the likelihood of known threats, evaluate existing countermeasures, and develop a prioritized plan to reduce risk. Through the Company’s multidisciplinary approach, security is measured from every angle to mitigate risks – from the physical environment to the human element, and the role of technology.

Effective security starts with a clear understanding of vulnerabilities. The Company can help gauge strengths and weaknesses in a wide variety of scenarios, and help anticipate potential sources of new threats. The Company’s vulnerability assessment methodology begins with an in-depth security review. No matter the focus of the assessment, the Company applies a time-tested methodology where:

·current areas of exposure and any past security incidents are reviewed in order to identify potential vulnerabilities.

·employees and other key individuals are interviewed for critical insights and information about situations, policies, and procedures.

·a gap analysis is prepared to isolate areas where security protocols do not meet industry best practices.

·recommendations are made and measures are implemented to mitigate any areas of vulnerability.

Security Awareness and Training Activities

Companies are realizing that an ethical and fiduciary responsibility exists to protect employees, customers, and others from physical harm. Demonstrating a commitment to security and the employee experience also reduces costs, maintains employee morale and retention, and improves customer perception.

All employers have both an ethical and legal duty of care towards their employees. The Company offers a wide range of training solutions that can assist employers in fulfilling this duty by preparing their staff for possible security issues, especially while travelling to or working in unfamiliar, medium or high-risk countries.

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Training is tailored to reflect each employers countries and areas of travel, and provides insights into potential threats and risks as well as operating procedures in the country. The training courses are taught by highly qualified and experienced instructors, and offer a wide range of training modules, such as working with private security details, defensive and evasive driving skills, basic medical skills, and surveillance awareness. Wherever possible, courses are blended with interactive lectures, discussion exercises and scenarios, as well as realistic practical training to test key learning points. Courses last from two to five days and content is enhanced by up-to-date country-specific briefings from the Company’s analyst team. An example of the courses offered are:

·Hostile environment and security awareness training

·Security management and consultancy

·Contractors on deployed operations training

·Defensive and offensive driver training (Tony Scotti Vehicle Dynamic Institute, South Africa).

International Intelligence and Threat Reports

Threat assessments by country provide in-depth information on both peaceful and the most troubled regions of the world. Country assessments include firsthand knowledge of in-country customs, environment, infrastructure, and a variety of circumstances encountered, with an emphasis on safety. Country threat assessments are compiled by a network of the Company’s on-the-ground, in-country experts with hands-on experience and knowledge of local conditions. The Company’s country threat assessments meet the necessary criteria mandates on corporate due diligence for overseas travel, which should not be compromised.

Secure Cloud and Server Data Storage and Services

In today’s information economy, data can be an organization’s most valuable asset. However, with the rise of mobile technology, cloud computing, and an exponentially growing volume of digital information, keeping that data secure also becomes one of today’s greatest challenges.

Information security issues, such as data breaches or employee misconduct, are a constant worry for C-Suite leaders and front-line managers. Enigma provides secure off-site servers in a bomb-proof environment through third-party venders, as well as cloud-based services for its clients.

TECHNOLOGY AND SOFTWARE

Enigma is driven by innovation and the continual pursuit of mitigating risks faced by its clients. The Company combines technology and human intelligence to deliver “Smart Intelligence.” The technologies are at various level of development, ranging from those ready-for-market to those in multiple stages of the development process. These technologies include patented and patent-pending proprietary and third-party software, as well as patented and proprietary hardware. The Company’s technical systems include the design, installation, and service of network-based security systems, video surveillance, access control, systems integration, and electrified locking hardware. Throughout its technical system engagements, the Company’s team also works to develop a holistic understanding of the security issues and challenges facing the client. These insights are gathered and analyzed so the Company can ensure security hardware provides optimal coverage and effectiveness.

Enigma’s areas of focus for its technology and software are comprised of:

·Safer Security System

▪Spontaneous Video Surveillance (SVS)

▪IoT ground-based video analytics with sensor-based communication and activation system

▪Video cap/glasses application networks

▪Multiple Mobile App products

·EnigmaTrak Security Systems

▪EnigmaLok: Patented container locking system

▪EnigmaCode: Cargo validation with IoT connected remote locking and unlocking system

▪EnigmaTracker: GPS tracking and remote asset management

Safer Security System

Spontaneous Network Surveillance

The Company acquired a patent-pending interactive spontaneous video security technology, patent application 16/618,038 “Network Based Video Surveillance and Logistics for Multiple Users,” ⁵ that can perform surveillance utilizing multiple devices and users on a networked security system. The Company has branded the technology, “Safer Security System,” to be integrated as part of its security platform.

⁵ On July 21, 2021, the Company received a Notice of Allowance from the United States Patent and Trademark Office that its patent application 16/618,038 “Network Based Video Surveillance and Logistics for Multiple Users” was granted and would be issued to the Company. For additional information on the patent application, see “Intellectual Property”

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Mobile Apps in Physical Security Sector

Technology helps support security, safety, and emergency management programs at every level of society. Safety and security risks are virtually everywhere, including office, school, social events, retail establishments and hospitals. However, security professionals tasked with protecting the public can’t always be everywhere, so they require timely information to prevent potential incidents.

Security professionals are trained to know when a person, or group of people are acting suspicious. They see, hear, and learn things every day that could help prevent a safety or security incident from happening. In fact, many incidents have early-warning predicators that are observable and these incidents can help be prevented with the right technology tools and techniques.

While well-trained security professionals will always remain the steadfast foundation of security programs, advancements in technology that are accessing easy-to-use apps can enhance their ability to gather intelligence and protect the facility. Blending personnel and technology can create solution efficiencies, target security efforts, and give security directors the power to make informed decisions that deliver even greater return on their security investment.

Safer Security System Mobile Application

Today’s security professional can now access high-performance apps from their mobile phone or tablet, which enhances productivity, accountability, and access to vital information. The Safer Security System Mobile Application (“Safer Mobile App”) allows for an unlimited number of persons to connect to a centralized location, and the person or persons at a centralized location can have real-time visibility to events occurring and assess the current situation. The Safer Mobile App and security system provides real-time information, including:

·Data collection. The Safer Mobile App allow security officers to capture data in real time. Automated instructions and questions can be set up for security professionals to answer at each checkpoint, such as entrances, escalators, and emergency callboxes. For example, a security professional on daily tours can be prompted monthly to document fire extinguishers’ inspection dates, essentially combining two tasks, and providing additional value.

·Streamlined reporting. Data obtained at checkpoints can be visually analyzed to identify operational risks in addition to written reports from the security guard. These risks might include policy issues, such as specific doors repeatedly being left unlocked; safety issues, such as recurring hazards at specific elevators; or maintenance needs, such as inoperative callboxes.

·Actionable information. Safer supports security strategy and enables optimized security officer deployments, precise post orders, directives for specific threats and countermeasure deployment to enhance security in areas where it is needed most. For example, incident management systems can identify sites and time ranges of incident volume based on historical data in the system. This can help determine security staffing levels and result in safer facilities and improved risk mitigation, reducing costs to the facility.

The Company’s business ecosystems today include monitoring and response centers that provide an abundance of tools and technologies including threat intelligence platforms, remote video and alarm and event monitoring to traditional alarms and remote audio and positioning based patrol route management. Effective communication is critical to maximizing the efficiency and productivity of cutting-edge ecosystems to achieve optimum outcome that ensures enhanced safety and security.

Mass Notification Capabilities

For vital, time-sensitive messages, security professionals rely on mass notification apps to allow them to communicate real-time with any number of people using a text alert, voice message, or email message with digital signage and other customized channels so that the message can be shared instantly.

Mass notification alerts are also used to protect people from any number of hazards and emergencies, such as a flash flood warning for people traveling near a suddenly dangerous roadway, or a wildfire alert where flames could be creeping dangerously close to a road or housing community. These mass notification apps go beyond two-way communication to provide a full critical communications cycle that initiates an organization’s emergency response plan’s predefined crisis communication plan.

Security professionals and administrators can send notifications to thousands of people within seconds. They can initiate requests for help, reply to messages and actively monitor the well-being of their clients from a front-line perspective.

Integrating Safer into a mass notification Mobile App network affords centralized reverse real-time situational analysis that will allow professional to get out their messages and conversely be able to geo locate and identify persons in an area of interest and communicate the need to have the individual capture real-time video of their surroundings

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EnigmaTrak

Security, Tracking Monitoring, and Remote Asset Management Systems

The Company licensed in perpetuity a patented container locking technology from PearLoxx Ltd., a United Kingdom company. The secure locking technology, branded EnigmaLok, has a built-in GPS tracking system that enables a shipping container to be both sealed securely and tracked using the same device. The EnigmaLok unit can be fitted in less than a minute with no drilling.

As part of Enigma’s globally integrated security, monitoring, and remote asset management system, the Company has developed EnigmaTrak, a security system that includes a market-leading battery life enhancement that will provide end-to-end real-time intermodal container and rail car cargo transport access, and intrusion tracking using its proprietary container security tracking technologies. The EnigmaTrak security system includes the following components:

·EnigmaLok: Secure locking technology comprised of a patented steel container lock.

·EnigmaCode: Proprietary remote communication platform that allows remote access and control of the locking and unlocking of the EnigmaLok.

·EnigmaTracker: GPS tracking and monitoring component.

Key components of EnigmaTrak:

·Electronically operated secure locking system using patented design.

·Tamper and drill resistant design.

·Local 5-digit code emergency access, and emergency power options.

·GPS global tracking with GSM 2G/3G communication.

·Automatic notification of lock operation and unlocking/locking events.

·Sensors of movement, unit internal temperature, and low battery alarm options.

·Local user one-touch re-locking.

·Can be removed and refitted in less than 1 minute.

·Up to 10-year operating life from primary battery pack (subject to frequency of report).

Tracking Process

While the EnigmaTracker Asset Tracking Unit (“ATU”) is in operation, geographical and operational data is periodically monitored and recorded within the unit’s memory. At predetermined intervals, or upon an alert condition occurring, the ATU will transmit data to the EnigmaTrak cloud servers, normally via GSM 4G and 5G mobile phone network using General Packet Radio Service (“GPRS”) or Short Message Service (“SMS”).

All data received from the ATU is securely held within the EnigmaTrak cloud servers, and is accessible through the EnigmaTrak web portal using a standard internet connection and web browser application, providing maximum flexibility and ease of use, with minimal IT services and equipment.

The EnigmaTrak web portal provides access to secure cloud data, system functions, ATU configurations, asset locations (individually or by groups), alert method configuration, asset history, reports and data export, and much more.

Figure 1. EnigmaTrak Platform Configuration

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Data Transmission and Connectivity

Data is normally sent via the GSM 4G and 5G network. In areas with no or limited GSM infrastructure, the EnigmaTracker can rely on satellite communications and hybrid GSM / Satellite systems to ensure the tracking units are able to communicate with back-office systems. In an event where GSM signals are not available, the GPS satellites send radio signals from their orbit in space, the GPS receivers then use the signals to calculate the position of the EnigmaTracker to within 10 meters, almost anywhere on the planet.

To maximize battery life and minimize communication costs, the EnigmaTracker can store several positions and send them in a single report; otherwise, clients can customize the communication interval of their assets depending on their needs.

EnigmaLok: Patented Container Locking System

The EnigmaLok locking system integrates elements from the Sweloxx patents physical container locking system, with proprietary electronic control and deadlock system. The system provides an electronically operated security lock for shipping containers. The locking unit can be fitted in less than a minute with no drilling, which provides significant value to the Company’s proposition.

Figure 2. EnigmaLok Assembly

Figure 3. EnigmaLok Placement on Door

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EnigmaCode: Cargo validation with IoT connected remote locking and unlocking system

The EnigmaLok lock assembly is operated by EnigmaCode, a remote access microcontroller-based lock control circuit. This electronic circuit can accept either remote open commands or a 5-digit local code input via a single button and LED combination. The deadlock bolt is operated using a motor driven gear/rack, and once the deadbolt is retracted a user can manually operate the lock. Lock open status can be signaled and re-locking is automatically inhibited while the lock bolt is open to prevent jamming.

EnigmaTracker: GPS Tracking and Remote Asset Management

The EnigmaTracker brings together satellite-based GPS technology, low-power electronic systems, high-capacity battery design, and the international Global System for Mobile Communication (“GSM”) infrastructure, to realize a range of extended-life autonomous positioning and communication devices for a variety of location-based services, telematics and communication services.

The EnigmaTracker product line is designed to combat serious global issues such as theft, damages of goods, illegal immigration, transport of dangerous goods and drug, and contraband smuggling. Some of the primary features of the EnigmaTracker include:

·GPS-enabled units that can be ﬁtted discretely to each asset to monitor alarms, gather data, and communicate to the EnigmaTrak web portal via the GSM 4G and 5G mobile networks and/or Iridium platform (CDMA optional).

·units in various sizes and footprints powered by non-rechargeable batteries that provide operating durations of 3, 5, 7, and 10 years. Rechargeable miniature devices are also available in 30, 90, and 180-day durations, targeting short-term hire and consignment applications.

·fully self-contained units with no external wires or connections that can be easily installed onto assets in minutes, or concealed inside an asset or its contents.

·unique antenna conversion kit for the EnigmaTracker-700 or EnigmaTracker-1000 that can be concealed within a shipping container to provide information about its location, temperature, movement and door opening.

Figure 4. EnigmaTracker-30R Concealed inside Shipping Container Vent

EnigmaTracker-30R

·Dimensions: 64x42x22mm

·Power: Internal Rechargeable Lithium Battery Pack; Up to 30-day battery life

·Communications Options: GSM 4G and 5G

·Positioning: GPS receiver, 12 Channel, L1 frequency, C/A Code; Position to 10m, velocity to 0.2m/s, time 0.2ns

·Alarm Inputs: 4 digital inputs

·Protection: Normally IP45, up to IP65 (weatherproof and dust resistant) on request

·Features: Configurable on-board Geofence; Movement Sensor

·Options: External GPS antennae; Mounting Bracket; 12/24-volt Vehicle Power supply; Recharge from standard mini-USB 5v charger.

EnigmaTracker-90R

·Dimensions: Concealed inside standard container vent housing.

·Power: Internal Rechargeable Lithium Battery Pack; Up to 90-day battery life

·Communications Options: GSM 4G and 5G

·Positioning: GPS receiver, 12 Channel, L1 frequency, C/A Code; Position to 10m, velocity to 0.2m/s, time 0.2ns

·Alarm Inputs: N/A

·Protection: IP65 (weatherproof and dust resistant)

·Features: Configurable on-board Geofence; Unit removal/Tamper detection; Movement Sensor; Magnetic mounting

·Options: Recharge from standard mini-USB 5v charger

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EnigmaTracker-180R

·Dimensions: 130x80x35mm

·Power: Rechargeable Internal Lithium Battery Pack; Up to 6-month battery life

·Communications Options: GSM 4G and 5G

·Positioning: GPS receiver, 12 Channel, L1 frequency, C/A Code; Position to 10m, velocity to 0.2m/s, time 0.2ns

·Alarm Inputs: 2 digital inputs

·Protection: IP65 (weatherproof and dust resistant)

·Features: Configurable on-board Geofence; Movement Sensor

·Options: Maximization; Tamper detection; External alarm reporting

EnigmaTracker-500

·Dimensions: 150x80x57mm

·Power: Internal Lithium Battery Pack; Up to 5-year battery life

·Communications Options: GSM 4G and 5G, Iridium, and CDMA (optional)

·Positioning: GPS receiver, 12 Channel, L1 frequency, C/A Code; Position to 10m, velocity to 0.2m/s, time 0.2ns

·Alarm Inputs: 4 digital inputs

·Protection: IP65 (weatherproof and dust resistant)

·Features: Configurable on-board Geofence; Movement Sensor

·Options: Alarm event reporting; External Antenna Kit; Tamper detection

EnigmaTracker-700(C/E)

·Dimensions: 150x150x57mm

·Power: Internal Lithium Battery Pack; Up to 7-year battery life

·Communications Options: GSM 4G and 5G, Iridium, and CDMA (optional)

·Positioning: GPS receiver, 12 Channel, L1 frequency, C/A Code; Position to 10m, velocity to 0.2m/s, time 0.2ns

·Alarm Inputs: 4 digital inputs

·Protection: IP65 (weatherproof and dust resistant)

·Features: Configurable on-board Geofence; Movement Sensor; External Vent Antenna Kit

·Options: External Alarm Reporting; Tamper detection

EnigmaTracker-1000C

·Dimensions: 150x150x57mm

·Power: Internal Rechargeable Lithium Battery Pack; Up to 10-year battery life

·Communications Options: GSM 4G and 5G, Iridium, and CDMA (optional)

·Positioning: GPS receiver, 12 Channel, L1 frequency, C/A Code; Position to 10m, velocity to 0.2m/s, time 0.2ns

·Alarm Inputs: 4 digital inputs

·Protection: IP65 (weatherproof and dust resistant)

·Features: Configurable on-board Geofence; Movement Sensor; External Vent Antenna Kit

·Options: External Alarm Reporting; Tamper detection

Figure 5. EnigmaTracker Units

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EnigmaTracker Battery Management

A number of factors can affect battery life, e.g., ambient temperature, GPS availability, communication method (and availability), reporting frequency, external monitoring, and the period over which the units are actually operating (longer operating periods will result in greater quiescent power usage and be impacted by losses within the battery chemistry). In order to standardize performance figures, the EnigmaTracker products have quoted expected battery life based on normal conditions and reporting four (4) events per day at typical room temperature. The Company is able to provide end users with suggestions to maximize battery life, if indications arise that a particular installation is not performing at optimal operating conditions.

Intelligent Monitoring and Reporting Software

The EnigmaTrak web-portal software centrally manages asset data, processes alarms, and alerts authorized users of critical information regarding their assets. Clients can access the EnigmaTrak platform through its web portal using any PC, Tablet, or handheld device. The services provided include customization, hosting and system integration to provide tailored solutions to meet customers’ specific needs.

Through the web portal, EnigmaTrak clients can locate assets using multiple map styles, edit personal and asset details, set up system alerts via email and/or SMS, generate reports, and change the operating parameters of each unit, including reporting intervals, geo-fence settings, and alarm periods.

Shipping Container Tracking Solutions

Container tracking solutions used for security purposes are often focused on monitoring the location and the integrity of the loading units to prevent criminal or other incidents. EnigmaTrak’s container security solutions not only provide the necessary tracking and monitoring functions to global companies, but also provide an extra layer of security to their assets with other advanced technologies that allow the shippers to gain more control throughout the supply chain.

·In-Transit Data:

EnigmaTrak provides shipping companies and container ﬂeet operators with in-transit data and information to help them better monitor their containers. And further increase the visibility and utilization of their supply chain networks. This allows clients to measure their supply chain performance, reduce bottlenecks and optimize routes, while they monitor containers and reduce the number of empty loading units.

·Crime and Terrorism Prevention:

EnigmaTrak devices can provide valuable information about the container and cargo to customs authorities to help them determine high risks containers for inspections, preventing terrorist activities. Location data can show where the container has travelled and intrusion detection sensors can ensure the integrity of the cargo. Advanced sensors can provide other information such as whether a shipment contains illegal or dangerous goods, or if there are moving objects inside a container.

·Insurance:

Containers equipped with intelligent tracking and monitoring devices such as EnigmaTrak or EnigmaLok are less exposed to transportation risks, including loss, tampering and damages. Even in events of unplanned human interventions, clients will receive alerts immediately and take actions accordingly. Reduced transportation risk can, in turn, decrease cargo shipping insurance premiums by 15%. ⁶

·Ease of Use:

The minimum required hardware for security purposes are a GPS data transmitter and a door status sensor. Additional sensors can monitor both the integrity of the trailer or container as well as the condition of the cargo.

·Reduced Costs:

With better visibility and utilization throughout the supply chain, shipping companies and container ﬂeet operators can greatly reduce their transportation and other related costs, such as:

▪transportation costs due to shipping empty containers around or taking longer routes

▪storage costs due to stocking up unnecessary inventory

▪human working capital costs due to container and inventory management

·Transit Reports:

Throughout the transit process, EnigmaTrak’s detailed transit reports provide information on container responsibility throughout the supply chain. Every activity and location of the asset is recorded to ensure the assets are being handled properly by proper people. In addition, any unplanned incident is recorded to help determine accountability. In the event of lost assets, the data recorded by EnigmaTrak can help increase recovery rates. By reducing the number of insurance claims submitted for losses, premiums and excess costs can also be reduced.

⁶ https://www.gpsinsight.com/gps-tracking-benefits/how-gps-fleet-tracking-can-help-lower-insurance-costs/

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Non-Powered Stationary Asset Monitoring

The EnigmaTrak security system can also be used to provide real-time location and status reports for stationary assets, under any weather conditions, to increase the visibility of the supply chain. By monitoring stationary assets, the EnigmaTrak system can:

·monitor equipment from mobile devices and receive alerts to maximize management and control;

·verify arrivals and departures of the shipments from various checkpoints including warehouses, ports and delivery location;

·decrease transportation costs and operating expenses by reducing the time, mileage and human working capital wasted from supply chain inefficiency;

·lower operating expenses by decreasing the instances of having to send operators to verify the status of each asset;

·cut operating expenses by reducing unnecessary idling;

·reduce equipment downtime and unforeseen repairs by providing real-time reports and efficiently identify and rectify any issues;

·reduce potential losses by locating equipment on worksites;

·track valuable assets in remote areas with dual-network coverage to improve the security of their assets; and

·increase insurance safety ratings and reduce expensive premiums.

In Development

2nd Generation EnigmaLok

·Geo-location code unlocks to restrict use of override code outside specified areas.

·Remotely authorized unlock code changes via secure system and proprietary protocol.

·Door open/close detection and reporting to alert users of attempts to ‘trick’ the system.

·Detection and reporting of dropped and shunted containers, which could result in load damage.

·Detection and reporting of internal ambient temperature. Secondary internal system to provided intelligent monitoring and reporting of container status and content.

·Load scans when doors are sealed & locked, causing verification of content and benchmark levels.

·Breaches to outer fabric of container cause tamper alert/reporting and load to be rescanned.

·Consignees and forwarders of refrigerated goods such as fish, shrimp and flowers must know whether the refrigerator stopped working for a period and started after goods had thawed and then refrozen.

·Sensor options including:

§Contraband, explosives, and hazardous materials (subject to use additional sensors)

§Critical atmospheric and climatic levels (subject to use additional sensors)

§CO2 levels & detection of human cargo (subject to use additional sensors)

§Attack and breaches to fabric of container (this is aspirational & will require new R&D, so is subject to risk).

§Nuclear-radioactive material

§Biological warfare compounds and materials.

EnigmaData

EnigmaTrak uses increasingly sophisticated IT infrastructures that are capable of processing ever larger amounts of data with valuable and meaningful information. The Company is developing EnigmaData, a data management system, to provide these analytics to its clients to improve their business performance.

Data from each of the private databases will be stored on the EnigmaData cloud. EnigmaData will be able to normalize the data from the different databases, apply EnigmaData analytics and present the data in various formats to the clients. The EnigmaData client will have complete control of what data is shared, and with whom it is shared with. The EnigmaData platform will be provided to all EnigmaTrak clients on a trial basis:

·Data will be collected from each EnigmaTracker through an integrated data repository, information-collecting and correlation-generating software system.

·EnigmaData will include data such as goods being shipped by category, fees and taxes, harbor turnaround times, insurance rates, and other financial data.

·All data from EnigmaTrak devices or tests will be collected and mandatorily reposited.

·Related data will be acquired through WebCrawler-like applications.

·Access to private databases will be made available (commercial partners, government agencies, port authorities, NGO regulatory authorities, etc.)

The Company intends on initially offering EnigmaData to its clients for a trial period, and then offering it as a fee-based subscription.

Cloud-Based Software as a Service (SaaS)

A unique billing structure is being developed based on a cloud-based SaaS model that will allow clients to choose when to deploy certain features, be billed when the service is activated, and suspend billing when the service is deactivated. Services include account and system upgrades, on demand features, and integration of new applications and services capabilities.

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MARKET OPPORTUNITIES

Security Market: Defined

Physical security is defined as the protection of personnel, hardware, software, networks, and data from physical actions and events that could cause serious loss or damage to an enterprise, agency or institution. It comprises of access control, surveillance, and testing. With the help of access control, physical sites are secured against attacks, accidents, or environmental disasters using locks, fencing, biometric access control systems, access control cards, and fire suppression systems. Physical locations are monitored by installing surveillance cameras and notification systems, including heat sensors, intrusion detection sensors, and smoke detectors.

With the advent of technology, there have been various advancements in wireless technology, and the launch of new wireless hardware components such as wireless locks and wireless controllers are being developed. The mass adoption of wireless technology in control systems reduces the cable required for the functioning of circuits and, with the adoption of cloud solutions, removes the need for server and software, which reduces the overall cost. Due to these advancements, cost of these systems in long run is reduced. There are many uses of wireless technology but not limited to secured transmission of data and wireless door control for access control systems to communicate in real-time.

Wireless video surveillance offers various advantages such as video capture, the transmission of video through wireless sensor networks, and video analysis. These wireless surveillance systems are cost-effective, as they eliminate the use of cables, which is ultimately more beneficial in the long term. Furthermore, the rising incidences of terror attacks are increasing, resulting in higher demand for physical security solutions. To reduce the crime rate, governments across the globe are employing physical security solutions. The corporate sector is also adopting physical security solutions to protect business assets, employees, and customers. ⁷

The demand for security continues to expand into areas beyond that of traditional security. Currently, the security market can be broken down into the following categories:

Services:	Systems:
·Access Control as a Service (AcaaS)	·Physical Access Control System (PACS)
·Video Surveillance as a Service (VsaaS)	·Video Surveillance System
·Remote Monitoring Services	·Physical Security Information Management (PSIM)
·Security System Integration and Consulting	·Physical Identity and Access Management (PIAM)
·Managed Security Services	·Security Scanning, Imaging, and Metal Detection
·Risk Assessment and Analysis	·Perimeter Intrusion Detection and Prevention
·Maintenance and Support	·Fire and Life Safety

Services

·Access Control as a Service (AcaaS)

Combines the benefits of Software as a Service (SaaS) with on-premises access control devices. Cloud-based solutions that control access remotely and backup and store data securely, providing permanent records of who accessed controlled areas or systems.

·Video Surveillance as a Service (VsaaS)

Hosted cloud-based video surveillance, typically including video recording, storage, remote viewing, management alerts, cyber security and more. Over 93 percent of businesses have now adopted cloud solutions.

·Remote Monitoring Services

Secure, real-time web-based service that functions as a second set of eyes into the health and status of a company’s physical infrastructure.

·Security Systems Integration and Consulting Services

Combining different security equipment to work together, achieving greater efficiency and safety. Security components that are integrated to work together will communicate and share information with one another, strengthening the entire system.

·Managed Security Services (MSS)

Includes outsourced monitoring and management of security systems and devices. Through an MSS provider manages Security Incident and Event Management (SIEM) tools, Intrusion Detection Systems/Intrusion Prevention Systems, firewalls, anti-virus, vulnerability and compliance management, and more.

·Risk Assessment and Analysis

Identifies, assesses, and implements key security controls. Focuses on preventing security defects and vulnerabilities. Includes the approach to the assessment of risk holistically – from an attacker’s perspective.

⁷ https://www.verifiedmarketresearch.com/product/physical-security-market/

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Systems

·Physical Access Control System (PACS)

A type of physical security designed to restrict or allow access to a certain area or building. Often, PACS are installed in order to protect businesses and property from vandalism, theft, and trespassing, and are especially useful in facilities that require higher levels of security and protection.

·Video Surveillance System

A system of cameras, monitors/display units, and recorders. Cameras may be either analog or digital with a host of possible design features. These systems can be applied to both interior and exterior areas of a building or property.

·Physical Security Information Management (PSIM)

Software platform that integrates security applications and devices, and controls them through one interface. PSIM provides a platform and applications that collect and correlate events from existing disparate security devices and information systems (video, access control, sensors, analytics, networks, building systems, etc.) to identify and resolve situations.

·Physical Identity and Access Management (PIAM)

Software that integrates physical access control systems and badging with various business applications, such as HR and IT. PIAM solutions provide organizations with the ability to use policy-based tools and technology to link organizational roles and responsibilities with structured access to business systems, logical assets, and building services.

·Security Scanning, Imaging, and Metal Detection

Includes full-body scanning devices and handheld units with a sensor probe, for the detection of objects on or inside a person’s body for security screening purposes, without physically removing clothes or making physical contact full-body scanner. Most commonly used in airports and government buildings.

·Perimeter Intrusion Detection and Prevention

Device or sensor that detects the presence of an intruder attempting to breach the physical perimeter of a property, building, or other secured area. Often found in high-security environments such as correctional facilities, airports, military bases, and nuclear plants.

·Fire and Life Safety

Includes fire detection devices and fire alarm systems, as well as automatic fire sprinkler systems that, when activated, will control and contain the spread of the fire until appropriate fire agency arrives.

Source: www.grandviewresearch.com

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Security Market Analytics

The security market continues to expand in the 21st century, requiring a constant upgrade in security protocols and technologies. According to a report by FutureWise, the global security market is projected to grow at an CAGR of 7.5% between 2020 and 2027 to an estimated $270 billion, with North America expected to reach earnings of $53.15 billion by 2025.⁸

The adoption of high-quality surveillance security systems with optimized distortion is increasing. In addition, a growing number of infrastructures across the globe has resulted in an increased demand for safety systems such as access control systems and video surveillance system for real-time monitoring. As a result, the demand for security systems is anticipated to continue to rise.

The drivers factoring the growth in the security market include:

Positive Drivers	Negative Drivers
·IP based cameras / video surveillance	·Growing crime rates
·Increased use of wireless technology	·Increasing terrorist activities
·Technological advancements	·Cargo and cyber theft
·Increase in “as a Service” offerings	·Piracy and hijacking

A rise in illegal activities across the globe, coupled with stringent government regulations, has led to a surge in the adoption of security systems. The crime of piracy, once merely a historical phenomenon on ships sailing the seven seas, resurfaced in the 1990’s and, according to an expert risk article by Allianz (July 2020), continues to be a major modern-day security risk.⁹ In May 2021, a major U.S. oil pipeline was cyber-hijacked for a $4.4 million ransom, shutting down 45% of the East Coast’s supply of diesel, petrol and jet fuel. ¹⁰

The video surveillance systems segment continues to lead the market. The increasing use of cameras in various locations for security purposes, along with wireless technologies, is driving the demand for high-quality video cameras that enable effective monitoring. An increasing number of advancements in video capturing is encouraging providers to introduce new updates in minimal time with better quality. This is further creating an opportunity for growth of the security market.

In addition, the emergence of “as a service” model enables businesses to effectively manage the security of their people and assets. The traditional way of securing premises with an on-site access control and video surveillance system has been upgraded with the advent of the Access Control as a Service (AcaaS) and Video Surveillance as a Service VsaaS. ¹¹

Government initiatives, fund support, and R&D have aided in developing physical security solutions and services in the United States, which are additional factors driving the growth of the market. The U.S. government is investing in a significant number of federal budgets for developing its physical security framework.

With a healthy growth trajectory, both nationally and globally, the Company is targeting a market that has both early adoption and enormous need, driven by fundamental market factors.

Security Guard Industry ¹²

While some might think that the security guard industry has remained relatively the same over the years, worldwide trends and technological innovations can affect this industry just as much as any other industry.

One of the largest emerging trends is the increased use of smart technology for monitoring and managing security workforces. The implementation of GPS tracking and real time incident reporting have led to significant improvements in accountability while integrating apps with employee smartphones has allowed for improved communication and efficiency.

Management tools have also made a difference, helping back-office teams reduce human error and cut down on time spent managing vital tasks such as scheduling and payroll. The use of these technologies can improve profitability while also delivering better results to clients.

Another trend is global connectivity, which has led to a higher demand for security services. Increased reporting of terrorism and other violent incidents has made security operations of paramount importance for many companies and municipalities. As a result, the security guard industry is expected to grow as services are requested for more locations and events. In many situations, assessing potential security risks and taking steps to mitigate them has become a top priority when planning an event or opening a new facility, rather than just an afterthought.

The rising developments in security-oriented technology, as well as an increased demand for security services in general, presents significant growth opportunities to companies large and small. Those who are able to demonstrate to potential clients how they use technology to ensure a safe environment and a rapid response to on-site incidents will be in a much better position to land new contracts in the year ahead.

⁸ https://www.futurewiseresearch.com/information-technology-market-research/Physical-Security-Market/53

⁹ https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/shipping-2020-piracy.html

¹⁰ https://www.bbc.com/news/business-57050690

¹¹ https://www.marketsandmarkets.com/Market-Reports/physical-security-market-1014.html

¹² https://www.tracktik.com/blog/security-guard-industry-current-trends/

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Video Security Market ¹³

The rising demand for wireless and spy cameras has fueled the increase in the global video security market, which is expected to reach $74.6 billion in by 2025 at a CAGR of 10.4%, according to a report by Markets and Markets. Some of the factors driving the growth include increasing concerns for public safety and security, a growing usage of IP cameras, and a demand for wireless and spy cameras.

Video security has primarily been used by manufacturing, banking/financial, transportation, retail and media/entertainment industries for applications such as crime prevention, industrial processes monitoring. And traffic management. In addition, trends show that governments worldwide are providing funding for the development of “smart” cities, for the implementation of city-wide video surveillance. An increase in technological advancements in IoT, “Big Data”, cloud-based services, and an overall demand for VsaaS services, as well as advances in artificial intelligence and deep learning for video security systems are expanding the opportunities in the video surveillance market.

The Company anticipates three key distribution markets for the Safer technology:

·Law enforcement/Fire Disaster Relief

With the adoption of the Safer Mobile App by the public, Safer would allow individuals who witness a crime in progress, a terrorist attack or a natural disaster, such as a flood or fire, to turn on the Safer Mobile App and be connected to law enforcement or the fire department and provide them with live, real-time video of the incident. Having this type of live captured events in real time will afford law enforcement/disaster response to make decisions on the situation as though they were at the location being videoed.

·Private Industry

With the usage of the Safer Mobile App by a business’s security guards, Safer would allow a centralized command-and-control center to pull up live video from the Safer Mobile App. In this scenario, security guards will have a concealed video camera integrated into their uniform, that will be activated by the guard, or remotely from command-and-control center. The camera will connect to the security guard’s mobile phone via Bluetooth® and capture events in real-time. The advantage of this system is that it will allow a senior person to analyze and assess a situation with more competency than a patrol security guard that does not have a background in situational analysis and assessment of dynamic environmental risk.

The Company is currently testing concealed video cameras integrated into a security guards’ uniform in their caps, lapel pins and badges.

·Government Agencies

The Company defines its government agencies to include schools, hospitals, etc. Safety and security risks are everywhere, including the office, schools, concerts, retail malls and hospitals. However, security professionals tasked with protecting the public are not always available on-site, and require timely information to prevent potential incidents.

Container Tracking Market

The global container security market is segmented by Offering (Hardware, Software, Connectivity Devices, Telematics and Telemetry Devices, and Services), by Technology (GPS, Cellular, BLE, LoRa, WAN, and Others), and by Region. Intermodal containers that are equipment with GPS and have end-to-end visibility and traceability are commonly referred to as “smart” containers. Through an increased demand for security, and the implementation of revolutionary technologies, smart containers are quickly becoming a driving force in the shipping market. A 2020 study by Research and Markets on tracking and security of intermodal shipping containers projects that the base tracking units for remote tracking systems will grow at a CAGR of 25.4% to reach 23.2 million units by 2024. The study concluded that the overall market value for trailer and cargo container tracking solutions reached approximately 1.1 billion in 2019, and expected to grow at a CAGR of 16.2% to 2.2 billion by 2024. ¹⁴

With reliability of standard containers at only 50%, delays and losses in intermodal shipments have a significant negative impact on global economics and productivity. Key stakeholders in the market have adopted and implemented solutions to upgrade conventional containers. Initiatives towards simplification standardization of processes and procedures on an international level will eliminate inefficiencies, transforming maritime trade and boosting supply-chain performance. ¹⁵

Enigma Target Market

The Enigma business plan focuses on security across the spectrum, with an emphasis on system integration. The Company’s target market includes both corporate and personal security, surveillance for the protection of high value assets, remote locations, and intermodal containers, as well as data protection. Organic sales growth and proprietary research and development, as well as acquisitions of companies and/or intellectual property deemed strategic to its business, are key elements to differentiate Enigma among its competitors. The primary target markets can be summarized as follows:

·Physical Security Guard Market

·Risk Management Market

·Security Intelligence Services

¹³ https://www.marketsandmarkets.com/Market-Reports/video-surveillance-market-645.html

¹⁴ https://www.prnewswire.com/news-releases/world-market-for-trailer-and-cargo-container-tracking-2020-2024---growing-at-a-cagr-of-16-2-the-total-market-size-is-forecast-to-reach-2-2-billion-in-2024--301097101.html

¹⁵ https://www.maritimekr.com/2021/03/23/maritime-insight-42/

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Physical Security Guard Market

The Physical Security Guard Market is composed of operators that provide guard and patrol services, in-transit cash and valuables protection and investigation and detective services. These services are provided to a variety of clients including individuals, businesses, and government agencies.

Risk Management Market

Risk Management is the ongoing process of identifying security risks and implementing plans to address them. Risk is determined by considering the likelihood that known threats will exploit vulnerabilities and the impact they have on valuable assets.

RISK MANAGEMENT LIFECYCLE

Threat Intelligence

Threat intelligence is evidence-based knowledge an organization uses to understand the threats that have, will, or are currently targeting the organization. This information is used to prepare, prevent, and identify cyber threats looking to take advantage of valuable resources.

THREAT INTELLIGENCE LIFECYCLE

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The Company views the market for providing threat intelligence consulting services to be in demand for the next decade. Whether the threats come from external or internal sources or cyber or physical property or persons, the evolving dynamics of the threat’s companies face will continue and the Company’s need to protect itself against these threats will grow in relationship to the growth of the threats.

The ever-growing number of threats targeting organizations is straining security teams and has resulted in the introduction of numerous security solutions attempting to alleviate the problem. But there is not a single solution that provides complete protection from or visibility into all threats, leaving organizations to evaluate and implement a combination of security tools and services to protect their organizations from threats.

Cross Pollination:

The Physical Security Guard service has the ability to cross pollinate with security consulting and technology services. An example of this cross pollination is:

·The Company performs its initial security audit for security guard services for a hotel client;

·The hotel management/owners seek to expand their understanding of the risks to their facility, their guests and their employees and request additional advice;

·The Company enters into a second agreement for security advisory services;

·The Company’s audit and advisory services lead to additional products and service offerings to the customer, such as dynamic CCTV, AI, and other security technologies.

BARRIERS TO MARKET

COVID-19 Impact on Security Market ¹⁶

The physical security market includes major Tier I and II suppliers like ADT, Cisco, Bosch Building Technologies, Honeywell, and Johnson Controls. These suppliers provide service offerings across various countries in the Asia Pacific, Europe, North America, Latin America, and MEA regions. COVID-19 has impacted their businesses as well:

·ADT is utilizing its 9 monitoring centers and backup facilities across the US to ensure that its critical monitoring and customer care services continue uninterrupted 24/7 during the COVID-19 pandemic.

·ADT has successfully tested its ability to equip its monitoring professionals with company-secured hardware, and respond to alarms while working remotely if it becomes necessary in a severe situation during the pandemic.

·As of April 2020, Cisco continued its commitment to customers during the COVID-19 pandemic and partnered with $2.5 billion in financing to support business resiliency.

·The adaptability of Bosch’s standard access card readers provides contactless access control, such as contactless door entry. The readers will also provide advantages in buildings, with the ability to map precisely who is where, who can enter certain areas and if the occupancy of a building is conforming with physical distancing.

·In April 2020, Genetec released an access control feature to help stop the transmission of COVID-19. A new reporting function for its Synergis access control system has been designed to help organizations identify persons that came in close proximity to someone thought to be contagious.

Physical Security Market Challenges

The major hindrance in the growth of physical security market is privacy. With the increasing adoption of video surveillance, concerns have been raised as to the misuse of video and privacy violations. Various civil liberties groups and activists are opposed to video surveillance. It has been suggested that organizations take necessary steps to lower the impact of video surveillance systems on the privacy of people, by issuing guidelines such as the General Data Protection Regulation (GDPR). With the introduction of GDPR in Europe, any public or private organization using CCTV to monitor public accessible areas must adhere to the regulatory requirements.

Unlawful surveillance continues to be a major concern in the United States, and the federal government and most states have enacted legislation that criminalizes recording communications without obtaining consent from either one or all of the parties, depending on statute. A number of states, including California, Massachusetts, New York, and Illinois have enacted discrete laws pertaining to surveillance, including location tracking, drone photography, and even smart TV “snooping” features. ¹⁷

Security Guard Industry Challenges

One of the largest challenges of the security guard industry is hiring qualified security guards and back-office staff who understand how to use technology effectively. While not all companies are in a position to hire new workers, technology training is essential for ultimate success and competitive edge. The use of real time activity feeds, live metrics, tracking devices, and other technological advances will spread quickly through the security guard industry. Companies that implement it properly will thrive, while those who are unprepared for the changes technology brings – or simply refuse to implement it – will struggle.

By implementing high-quality technology and offering training and learning resources to their employees, companies can make the transition go more smoothly so that their team is better able to adapt to the new system and deliver better results.

An increased demand for security guard companies also means that more companies will need to look for new workers as they expand their business. Finding the best employees is a challenge, especially in an environment where workers are in high demand. Although expanding companies should not delay the process of increasing staff, the should also thoroughly vet potential employees before adding them to a security guard team.

¹⁶ https://www.marketsandmarkets.com/Market-Reports/physical-security-market-1014.html

¹⁷ https://iclg.com/practice-areas/data-protection-laws-and-regulations/usa

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Video Security Challenges ¹⁸

Despite the high growth rate of the video security market, there are significant challenges, including price erosion, cyber-security attacks on video surveillance equipment, component shortages and increased barriers to international trade to some countries. Increased tariffs and the banning of large vendors in the international market have contributed to the market barriers. In fact, the US government banned the use of products from two of the largest global manufacturers, Hikvision and Dahua.

Other challenges facing the video security market include the need for a skilled workforce, and concerns about privacy.

Shipping Container Industry Challenges

There are several key challenges facing the cargo shipping market. It is expected that over 860 million shipping containers will be transported throughout the globe in 2021¹⁹, transporting raw materials and manufactured goods across the continents. The overwhelming amount of shipping containers has resulted in a more complex and less transparent supply chain network, leading to:

·Increased dwell-time of containers at each location.

·Increased labor-costs and human interventions.

·Increased risks for delay, damage, spoilage and theft.

Cargo thefts is a global issue. Unmonitored containers maybe be subjected to hostile human interventions throughout the shipping process. In the United States alone, there were an estimated 870 cargo thefts in 2020 worth over $145 billion, representing an increase in volume of 23%, and an increase in value of 41%, from 2019, and the highest increases since 2015. A significant cause of the 2020 increases was the COVID pandemic, accounting for an estimated 43% of total thefts. ²⁰ These stolen goods are then resold back to the market or used for counterfeiting and other purposes, resulting in:

·Increased financial loss

·Increased insurance rate

·Increased risk for of damages to brand-image

·Increased risk of market disturbance

Despite the heavy ﬂow of containers ﬂooding into ports every day, only 3% of these containers are physically inspected before entering the country ²¹. Since 9/11, concerns have been raised that terrorists can potentially take advantage of the ﬂaws in supply chains, utilizing unmonitored containers against national interests. In addition to suspecting the threat of a weapon of mass destruction arriving in a shipping container at a port, many also suspect that the money generated by organized cargo theft is being funneled back to fund terrorists activities, causing:

·Increased risks of terrorists smuggling mass destruction weapons and illegal dangerous goods

·Increased risk of bombs threatening the port security

·Increased the vulnerability of national security

COMPETITIVE LANDSCAPE

Increasing competition in the market, owing to the introduction of advanced technologies, is driving the need for automation in organizations at various levels. The following represent the key players in the security market:

·ADT Inc. (US)	·Allied Universal Security Services LLC (US)	·Anixter International, Inc. (US)
·Axis Communications (Sweden)	·Bosch Building Technologies (Germany)	·Cisco Systems, Inc. (US)
·G4S PLC (UK)	·Genetec Inc. (Canada)	·Hikvision Digital Technology Co., Ltd. (China)
·Honeywell International, Inc. (US)	·Johnson Controls International PLC (US)	·Secom Co., Ltd. (Japan)
·Senstar Corporation	·Stanley Convergent Security Solutions, Inc. (US)	·Zhejiang

The companies holding the largest market share in the U.S include G4S PLC and Allied Universal Security Services LLC, with North America being one of the most developed countries in terms of technology. Physical security is necessary in this region due to factors such as the need for safety against terrorist activities, government regulations, illegal immigration, technological developments, increasing criminal activities, and the requirement to reduce the cost of security workforce. These threats have led to the need for physical security systems, such as access control, perimeter intrusion detection, and video surveillance. Moreover, the presence of some of the key players in the market are expected to drive the growth of the market in the North American region. ²²

¹⁸ https://www.bizbahrain.com/what-are-the-challenges-in-the-video-surveillance-market/

¹⁹ https://www.statista.com/markets/419/topic/489/water-transport/#overview

²⁰ https://www.ccjdigital.com/business/article/15064734/recorded-cargo-theft-incidents-average-values-increased-in-2020

²¹ https://www.greenworldwide.com/the-difference-between-cargo-screening-vs-inspection/

²² https://www.marketsandmarkets.com/Market-Reports/physical-security-market-1014.html

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Video Security Competitive Landscape ²³

Due to an increasing demand for video surveillance in public places such as cities, schools, colleges, religious places, airports and stations, government initiatives are fueling the growth of the video security market. Asia Pacific is predicted to be the largest and fastest-growing region due to an increasing number of security threats and concerns in China, Japan, India, and South Korea, among others. A rising incidence of theft, terrorist attacks and other crimes has increased the demand for video security. The key players in the video surveillance market are:

·Hikvision (China)	·Dahua Technology (China)	·Axis Communications (Sweden)
·Bosch Security and Safety Systems (Germany)	·Hanwha Techwin (South Korea)	·Avigilon (Canada)
·FLIR Systems Inc. (US)	·Honeywell Commercial Security (US)	·Panasonic i-PRO Sensing Solutions (US)
·Pelco (US)	·Agent Video Intelligence (US)	·CP Plus (India)
·Genetec (Canada)	·Huawei Technologies (China)	·NEC (Japan)
·Nice Systems (Israel)	·Qognify Inc. (US)	·Tiandy Technologies (China)
·VIVOTEK (Taiwan)	·Zhejiang Uniview Technologies (China)	·Infinova Corporation (US)

To maintain a leadership position in the video security market, key players maintain a broad product line in hardware and software, with customers in a wide variety of market segments such as public security, transportation, education, healthcare financial institutions, energy and intelligent buildings. With the development of innovative products and security solutions that include technologies such as AI cloud software and facial recognition, along with the integration of IoT with information networks, a key player can maintain a leadership position in the market, and remain at the forefront of advancements in technology.

Smart Container Competitive Landscape ²⁴

With the rise in need for monitoring solutions by various cargo shipping companies for the container transportation process, the development of mobile-based applications is essential for providing real-time throughout the supply chain. The major players in the smart container market include:

·Orbcomm (US)	·Smart Containers Group AG (Switzerland)	·Nexiot AG (Switzerland)
·Traxens (France)	·Globe Tracker (Denmark)	·Phillips Connect Technologies (Division of Phillips Industries) (US)
·SeaLand (Maersk) (Denmark)	·Robert Bosch Manufacturing Solutions (Robert Bosch GmbH) (Germany)	·Ambrosus (Switzerland)
·ZillionSource Technologies Co., Ltd. (Cisco) (China)

Currently, a major dependence is extensively on the US market. To maintain its leadership in the smart container market, key players need to find consistent revenue pockets in Europe and APAC, which are likely to offer exciting opportunities.

GOVERNMENT REGULATIONS

The Company’s operations will be subject to various federal, state and local laws, regulations, and controls. The Company believes it is in compliance with any such regulations affecting its business.

While the United States has no plenary data protection regulator, the U.S. Federal Trade Commission (FTC) authority is very broad, and often sets the tone on federal privacy and data security issues. In addition, a variety of other agencies regulate data protection through sectoral laws, including the Office of the Comptroller of the Currency, the Department of Health and Human Services, the Federal Communications Commission, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, and the Department of Commerce.

Federal Trade Commission Act ²⁵

The Federal Trade Commission Act (15 U.S Code §41 et seq.) broadly empowers the FTC to bring enforcement actions to protect consumers against unfair or deceptive practices and to enforce federal privacy and data protection regulations. The FTC has taken the position that “deceptive practices” include a company’s failure to comply with its published privacy promises and its failure to provide adequate security of personal information, in addition to its use of deceptive advertising or marketing methods.

²³ https://www.marketsandmarkets.com/Market-Reports/video-surveillance-market-645.html

²⁴ https://www.marketsandmarkets.com/Market-Reports/smart-container-market-194648249.html

²⁵ https://iclg.com/practice-areas/data-protection-laws-and-regulations/usa

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General Data Protection Regulation (GDPR)

The increasing adoption of video surveillance has come with some opposition with regards to personal privacy rights. To address these concerns, the European Union (EU) and the European Economic Area (EEA) adopted the General Data Protection Regulation on April 27, 2016 (formerly Data Protection Directive 95/46/EC), “on the protection of natural persons with regard to the processing of personal data and on the free movement of such data…” The regulation became enforceable on May 25, 2018, and contains provisions and requirements related to the processing of personal data of individuals (formally called data subjects in the GDPR) who are located in the EEA, and applies to any enterprise—regardless of its location and the data subjects’ citizenship or residence—that is processing the personal information of individuals inside the EEA. It has been suggested that U.S. organizations and individuals with video surveillance services issue similar guidelines. In fact, the California Consumer Privacy Act (CCPA), adopted on June 28, 2918, has many similarities with the GDPR. However, there is no single principal data protection legislation in the United States. Rather, various laws enacted at both federal and state levels serve to protect the personal data of U.S. residents.

Security and Accountability For Every (SAFE) Port Act of 2006

The SAFE Port Act of 2006 was an Act of Congress in the United States covering port security. The bill calls for, among other thing, 100% of U.S.-bound Ocean containers to be scanned at the foreign port of origin. The bill was enacted and signed by former President George W. Bush on Oct 13, 2006. The bill became the law numbered Public Law 109-347. The DHS delayed the implementation of key sections of the SAFE Port Act of 2006 until 2016.

Container Security Initiative

The Container Security Initiative (the “CSI”) was launched in 2002 by the U.S. Bureau of Customs and Border Protection (“CBP”), an agency of the DHS. Its purpose was to increase security for container cargo shipped to the United States. The CSI allows Customs and Border protection (CBP”), working along with host government Customs Services, to examine high-risk maritime containerized cargo at foreign seaports, prior to being loaded on board vessels destined for the United States.

The CSI consists of four core elements:

·Using intelligence and automated information, identify and target containers that pose a risk for terrorism.

·Pre-screen containers that pose a risk at the port of departure before they arrive at U.S. ports.

·Using detection technology, such as gamma ray detectors, quickly pre-screen containers that pose a risk.

·Use smarter, tamper-evident containers.

The initial CSI program has focused on implementation at the top 20 ports that ship approximately two-thirds of the container volume to the United States. CSI is now operational at ports in North America, Europe, Asia, Africa, the Middle East, and Latin and Central America. CBP’s 58 operational CSI ports now prescreen over 80 percent of all maritime containerized cargo imported into the United States. Smaller ports have been added to the program at their instigation, and participation is open to any port meeting certain volume, equipment, procedural, and information-sharing requirements. Future plans include expansion to additional ports based on volume, location, and strategic concerns.

MANUFACTURING

In addition to system integration of third-party technologies for its security service offerings, the Company will identify third-party manufacturers to outsource the manufacturing for its hardware (EnigmaLok), and software (Safer Systems) products and technologies.

The Company will internally develop prototypes of its proprietary technology, and test features at prototype levels through the retention of independent contractors.

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INTELLECTUAL PROPERTY

The Company is developing a proprietary system of secure and encrypted communication that will allow the Enigma systems to be delivered through a web portal in an audio format with multiple linguistic capabilities. In addition, Enigma has plans to develop an audio technology in conjunction with AudioEye, Inc., that will allow the end user to interact with the security and tracking device vocally, and will enable the end user to ask specific questions aloud, in sequential or non-sequential order, and accelerate the gathering and assimilation of information and collection of data.

Patents, Patent Applications, Exclusive Licenses and Patent Portfolio Overview

I.On June 30, 2014, the Company entered into a non-exclusive License Agreement, in perpetuity, with AudioEye Communications, Inc., a communications and technology company that owns a family of patents in the area of audio technology. Proprietary materials consist of the following licensor-produced intellectual property used in the development of the technology and implementation of product:

1.Patent 7,653,544 and 8,046,229 (US) – Method and apparatus for website navigation by the visually impaired

The present invention is a server-side method and apparatus that enables visually-impaired users to navigate websites and hear high-quality streaming audio of narration and descriptions of each website. The system involves creating an audible website corresponding to an original website by utilizing voice talent to read and describe web content and create audio files for each section within an original website, then assigning a hierarchy and navigation system based on the original website design.

ApplicationCountryDate FiledStatusDate GrantedPatent Number

1.10/637,970United States08/08/2003Provisional01/26/20107,653,544

1a.12/637,512United States12/14/2009Granted10/25/20118,046,229

2.Patent 8,296,150 (US) – System and method for audio content navigation

A system and method for communicating one or more audio files through a network. One or more original files of an original web site are converted into one or more audio files. An indication is provided to a user that the one or more original files are available as the one or more audio files in response to the user navigating the one or more original files. The one or more audio files are delivered to a computing device of the user through the network in response to a request to access the one or more audio files.

ApplicationCountryDate FiledStatusDate GrantedPatent Number

2.13/214,347United States08/22/2011Granted10/23/20128,296,150

3.Patent 7,966,184 (US) – System and method for audible web site navigation

Systems and methods for an audio-based content management, navigation and retrieval system are provided. The system translates and organizes content, for example text, Podcasts, RSS, pictures, video, into audio output, and provides intelligent access to the content for use on the internet, mobile phones, MP3 devices, or other digital devices. A user may listen to and navigate content by listening to streaming audio and performing simple keystroke or audio commands from an Internet enabled or other digital device.

ApplicationCountryDate FiledStatusDate GrantedPatent Number

3.13/280,184United States10/24/2011AbandonedN/AN/A – continued under 3a

3a11/682,843United States03/06/2007Granted06/21/20117,966,184

3b.WO2013063066A1Worldwide10/24/2012Pending

3c.JP2014538913AJapan10/24/2012Pending

4.Patent 8,260,616 (US) – System and method for audio content generation

A system and method for generating audio content. Content is automatically retrieved from an original website according to a predetermined schedule to generate retrieved content. The retrieved content is converted to one or more audio file. A hierarchy is assigned to the one or more audio files to provide an audible website that mimics a hierarch of the retrieved content as represented at the original website. The audible website is stored in a database for retrieval by one or more users. A first user input is received indicating an attempt to access the original website. The audible website is indicated as being associated with the original website in response to the user selection. Portion of the audible website are played in response to a second user input.

ApplicationCountryDate FiledStatusDate GrantedPatent Number

4.13/483,758United States05/30/2012AbandonedN/AN/A – continued under 4a.

4a.13/098,677United States05/02/2011Granted09/04/20128,260,616

5.Patent 8,589,169 (US) – System and method for creating audio files

A system and method for creating one or more audio files. One or more original files are converted into the one or more audio files. A hierarchy associated with the one or more original files is assigned to the one or more audio files. An indication is given that the one or more audio files are associated with the one or more original files. The one or more audio files are communicated through an audio interface in response to a request to access the one or more audio files.

ApplicationCountryDate FiledStatusDate GrantedPatent Number

5.14/055,366United States10/16/2013Abandoned N/AN/A – continued under 5a

5a.13/545,417United States07/10/2012Granted11/19/20138,589,169

For further information on the non-exclusive license of the Patents and Patent Applications above, and the complete text of the License Agreements, please refer to Exhibits 10.1 to the Company’s Quarterly Report filed June 6, 2023 on Form 10-Q.

II.On March 9, 2015, the Company completed the assignment and license in perpetuity to the following container locking system intellectual property (“EnigmaLok IP”):

1.Patent 8,245,546 (US) – Container lock and method for locking of container door

The present invention relates to a container lock, and a method for locking of at least one door of a standardized container. The door has a frame edge portion, and further is a thereto adjacent frame edge portion provided, which frame edge portions are used to lock the door in a closed position.

ApplicationCountryDate FiledStatusDate GrantedPatent Number

1.12/226,228United States04/13/2006Granted08/21/20128,245,546

1a.EP20060112631Europe04/13/2006Granted01/07/2009EP1,845,225

For further information on the exclusive license of the Patents and Patent Applications above, and the complete text of the Assignment and Licensed Rights Agreement and subsequent Modification, please refer to Exhibit 10.24 to the Company’s Current Report filed January 21, 2015, on Form 8-K, and Exhibit 10.25 to the Company’s Quarterly Report filed May 20, 2015, on Form 10-Q, respectively.

III.On October 11, 2018, the Company executed an Intellectual Property Purchase Agreement (the “Safer Agreement”) with Safer, Inc., for the assignment and license to the following intellectual property in the area of security and risk management (“Safer IP”).

On July 21, 2021, the Company received a Notice of Allowance from the United States Patent and Trademark Office that its Patent Application 16/618,038 “Network Based Video Surveillance and Logistics for Multiple Users” was granted and would be issued to the Company.

1.Patent Application 16/618,038 (US) – Network Based Video Surveillance and Logistics for Multiple Users

A security system, method, device and network. The system includes one or more communications networks including at least one wireless network. The system further includes a network storage device operatively connected to the one or more communications networks for storing feeds. The system further includes a number of mobile devices communicating with the network storage device through the one or more communications networks. The mobile devices capture feeds that are sent to the network storage device.

ApplicationCountryDate FiledStatusDate GrantedPatent Number

1.62,513,315United States05/31/2017AssignedN/AN/A – continued under 1a

1a.16/618,038United States05/30/2018Pending

1b.PCT/US18/35185International11/27/2019Pending

For further information on the acquisition of the Patent above, and the complete text of the Intellectual Property Purchase Agreement, please refer to Exhibit 10.26 filed October 10, 2019 on form 8-K.

There can be no assurance that the Company will be granted patents for any of the patent applications it has filed with the USPTO or other patent organization worldwide.

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Facilities

At December 31, 2019, the Company’s principal executive office was located at 1327 Ocean Avenue, Suite B, Santa Monica, California, 90401.

As of the date of filing of this Annual Report, the Company’s principal executive office is located at 3415 S. Sepulveda Blvd., Suite 1100-#1234, Los Angeles, California 90034. The office located at 1327 Ocean Avenue, Suite B, Santa Monica, California, 90401, was vacated in January 2021.

The Company’s telephone number is (888) 287-9994, and fax number (888) 899-1443.

The Company’s website is www.enigma-bulwark.com.

The Company’s security guard website is www.enigma-bulwarksecurity.com.

Personnel

As of December 31, 2019, the Company engaged ²⁶ six (6) individuals, inclusive of two (2) executive officers / directors. All personnel were full-time.

As of the date of filing of this Annual Report, the Company engages five (5) individuals, inclusive of three (3) executive officers / directors. All five (5) personnel are full-time. In addition, the Company’s security operations, Enigma-Bulwark Security, Inc. maintains a staff of approximately forty-five (45) employees, of which thirty-five (35) are full-time and ten (10) are part-time.

Research and Development

During the years ended December 31, 2019 and 2018, the Company spent no funds on research and development of its product line, due to cash flow restraints.

During the years ended December 31, 2020, through December 31, 2022, the most recent fiscal year immediately preceding the filing of this Annual Report, the Company spent no funds on research and development of its product line, due to cash flow restraints.

Reports to Security Holders

The Company is not required to deliver an Annual Report to its stockholders, but will voluntarily send an Annual Report, together with the Company’s annual consolidated audited financial statements upon request. The Company is required to file annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission. The Company’s Securities and Exchange Commission filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov.

The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company is an electronic filer. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address of the site is http://www.sec.gov.

ITEM 1A.

RISK FACTORS

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

ITEM 2.

PROPERTIES

The Company’s former corporate headquarters, located at 1327 Ocean Avenue Suite B, Santa Monica, California 90401, were vacated in January 2021. The Company’s current corporate headquarters are located at 3415 S. Sepulveda Blvd, Suite 1100-#1234, Los Angeles, California 90034.

The Company believes its current premises are adequate for the Company’s current operations, and the Company does not anticipate that it will require any additional premises in the immediate future. When, and if, the Company requires additional space, the Company intends to move at that time. The Company does not foresee any significant difficulties in obtaining any required facilities. The Company currently does not rent or own any real property.

ITEM 3.

LEGAL PROCEEDINGS

The Company knows of no material existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to the Company.

ITEM 4.

MINE SAFETY STANDARDS

Not applicable.

²⁶ The majority of the Company’s management are engaged as consultants under consulting agreements.

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PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

In the United States, the Company’s common shares are traded on the OTC Pink under the symbol “EBWK.” The following table sets forth the high and low bid prices for its Common Stock per quarter as reported by the OTC Pink. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

The high and low prices of the Company’s common shares for the periods indicated below are as follows:

Quarter Ended	High	Low
December 31, 2022	$0.0001	$0.0001
September 30, 2022	$0.0002	$0.0002
June 30, 2022	$0.0002	$0.0002
March 31, 2022	$0.0100	$0.0100
December 31, 2021	$0.0015	$0.0015
September 30, 2021	$0.0073	$0.0073
June 30, 2021	$0.0500	$0.0500
March 31, 2021	$0.0500	$0.0500
December 31, 2020	$0.0300	$0.0300
September 30, 2020	$0.0300	$0.0300
June 30, 2020	$0.0900	$0.0900
March 31, 2020	$0.0800	$0.0800
December 31, 2019	$0.0800	$0.0800
September 30, 2019	$0.0100	$0.0100
June 30, 2019	$0.0100	$0.0100
March 31, 2019	$0.0100	$0.0100
December 31, 2018	$0.0100	$0.0100
September 30, 2018	$0.0100	$0.0100
June 30, 2018	$0.0400	$0.0400
March 31, 2018	$0.0200	$0.0200

The Company’s Common Stock is subject to rules adopted by the Commission regulating broker dealer practices in connection with transactions in “penny stocks.” Those disclosure rules applicable to “penny stocks” require a broker dealer, prior to a transaction in a “penny stock” not otherwise exempt from the rules, to deliver a standardized list disclosure document prepared by the Securities and Exchange Commission. That disclosure document advises an investor that investment in “penny stocks” can be very risky and that the investor’s salesperson or broker is not an impartial advisor but rather paid to sell the shares. The disclosure contains further warnings for the investor to exercise caution in connection with an investment in “penny stocks,” to independently investigate the security, as well as the salesperson with whom the investor is working and to understand the risky nature of an investment in this security. The broker dealer must also provide the customer with certain other information and must make a special written determination that the “penny stock” is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Further, the rules require that, following the proposed transaction, the broker provide the customer with monthly account statements containing market information about the prices of the securities.

Record Holders

The Company’s common shares are issued in registered form. Securities Transfer Corporation (formerly Island Stock Transfer) (“STC”), 2901 Dallas Parkway, Suite 380, Plano, TX 75093 (Telephone (469) 633-0101) is the registrar and transfer agent for the Company’s common shares.

On December 31, 2019, the shareholders’ list of the Company’s common shares pursuant to STC showed 115 registered shareholders and 99,165,873 shares outstanding. The total number of shares outstanding stated in the STC list of 99,165,873 includes 34 shares issued due to rounding, and does not include 9,073,478 shares issued to various consultants for services provided.

As of the date of filing of this Annual Report, the shareholders’ list of the Company’s common shares pursuant to STC showed 117 registered shareholders and 134,091,547 shares outstanding. The total number of shares outstanding stated in the STC list of 134,091,547 does not include 2,500,000 shares issued for consulting services provided.

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Dividends

The Company has not declared any dividends on its Common Stock since the Company’s inception. There is no restriction in the Company’s Articles of Incorporation and Bylaws that limit the Company’s ability to pay dividends on its Common Stock. However, the Company does not anticipate declaring and paying dividends to its shareholders in the near future.

Equity Compensation Plan Information

The Company maintains the 2009 Stock Option Plan (the “2009 Plan”), wherein 20,000,000 restricted shares of Common Stock were reserved for issuance. The 2009 Plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company’s ownership and growth through the grant of incentive and non-qualified stock options. Under the 2009 Plan, the Company may grant incentive stock options only to employees, and non-qualified stock options to employees, officers, directors and consultants. Subject to the provisions of the 2009 Plan, the Board will administer the plan, and determine grants. In 2019, the 2009 Plan expired.

On October 1, 2018, pursuant to a Board resolution, the 2018 Stock Incentive Plan (“the 2018 Plan”) was established, wherein 20,000,000 restricted shares of Common Stock were reserved for issuance. The 2018 Plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company’s ownership and growth through the grant of incentive and non-qualified stock options. Under the 2018 Plan, the Company may grant incentive stock options to employees and non-qualified stock options and restricted stock awards to employees, officers, directors and consultants. Subject to the provisions of the 2018 Plan, the Board will administer the plan, and determine grants. As of the date of filing of this Annual Report, 18,544,000 restricted stock awards and 500,000 stock options were granted under the 2018 Plan, and 956,000 shares remain reserved.

On September 20, 2019, pursuant to a Board resolution, the 2019 Stock Incentive Plan (“the 2019 Plan”) was established, wherein 20,000,000 restricted shares of Common Stock were reserved for issuance. The 2019 Plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company’s ownership and growth through the grant of incentive and non-qualified stock options. Under the 2019 Plan, the Company may grant incentive stock options to employees and non-qualified stock options and restricted stock awards to employees, officers, directors and consultants. Subject to the provisions of the 2019 Plan, the Board will administer the plan, and determine grants. As of the date of filing of this Annual Report, 7,000,000 restricted stock awards and 10,875,133 stock options were granted under the 2019 Plan, and 2,124,867 shares remain reserved.

On October 1, 2021, pursuant to a Board resolution, the 2021 Stock Incentive Plan (“the 2021 Plan”) was established, wherein 20,000,000 restricted shares of Common Stock were reserved for issuance. The 2021 Plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company’s ownership and growth through the grant of incentive and non-qualified stock options. Under the 2021 Plan, the Company may grant incentive stock options to employees and non-qualified stock options and restricted stock awards to employees, officers, directors and consultants. Subject to the provisions of the 2021 Plan, the Board will administer the plan, and determine grants. As of the date of filing of this Annual Report, 2,500,000 restricted stock awards and 5,000,000 stock options were granted under the 2021 Plan, and 12,500,000 shares remain reserved.

Plan Name	Plan Reserve	RSAs Granted	Options Granted	Reserve Balance
2009 Stock Option Plan*	*	--	724,755	*
2018 Stock Incentive Plan	20,000,000	18,544,000	500,000	956,000
2019 Stock Incentive Plan	20,000,000	7,000,000	10,875,133	2,124,867
2021 Stock Incentive Plan	20,000,000	2,500,000	5,000,000	12,500,000
	60,000,000	28,044,000	17,099,888	15,580,867

* Plan expired 2019

During the year ended December 31, 2019, 10,875,133 stock options were granted, for which $56,450 in deferred stock option compensation was recorded, and $28,017 was expensed. There remained $28,433 deferred stock option compensation at December 31, 2019, to be expensed over the next thirty (30) months.

As of December 31, 2019, the Company had granted options to purchase a total of 12,099,888 shares of the Company’s restricted Common Stock, of which 4,812,564 were exercised, 492,255 have expired and 130,000 were forfeited/canceled. There were 6,665,069 stock options outstanding at December 31, 2019.

During the years subsequent to December 31, 2019, through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report, the Company expensed a total of $1,821 in stock option compensation. There remained $33,112 in deferred stock option compensation as of December 31, 2022.

As of the date of filing of this Annual Report, the Company has granted options to purchase a total of 17,099,888 shares of the Company’s restricted Common Stock, of which 4,812,564 were exercised, 594,755 have expired, 130,000 were forfeited/canceled, and 11,562,569 were outstanding.

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Purchase of Equity Securities by the Issuer and Affiliated Purchasers

The Company did not purchase any of its shares of Common Stock or other securities during the year ended December 31, 2019.

The Company did not purchase any of its shares of Common Stock or other securities subsequent to December 31, 2019, through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report.

Recent Sales of Unregistered Securities

The following represents all unregistered securities issued by the registrant during the year ended December 31, 2019, including sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities:

On August 29, 2019, in connection with certain non-compete non-dilution agreements, the Company issued 13,334,000 shares of its restricted Common Stock at $0.001 per share to related parties for cash in the amount of $13,334, plus 210,000 shares under the non-dilution provision at $0.001 per share for cash in the amount of $210.

On October 6, 2019, pursuant to a resolution of the board of directors, the Company issued an aggregate of 6,000,000 shares of its restricted Common Stock to seven (7) of its officers and directors, at $0.001 per share, for cash in the amount of $6,000.

On October 8, 2019, in connection with a certain consulting agreement, the Company issued 1,000,000 shares of its restricted Common Stock at $0.001 per share to a related party, for cash in the amount of $1,000.

On October 10, 2019, in connection with a certain non-compete non-dilution agreement, the Company issued 4,000,000 shares of its restricted Common Stock at $0.001 per share for cash in the amount of $4,000.

On November 13, 2019, in connection with services provided, the Company issued 1,500,000 shares of its restricted Common Stock at $0.001 per share for cash in the amount of $1,500.

The following represents all unregistered securities issued by the registrant subsequent to December 31, 2019, through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report, including sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities:

On August 31, 2021, in connection with the conversion of related party debt in the amount of $1,238,251, the Company issued an aggregate of 23,066,991 shares of its restricted Common Stock to six (6) related parties, including three (3) officers, of which $941,096 was at a conversion price of $0.05 per share, and $297,155 was at a conversion price of $0.07 per share.

On November 5, 2021, in connection with the conversion of debt in the amount of $696,301, the Company issued 2,785,205 shares of its restricted Common Stock at a conversion price of $0.25 per share.

On January 1, 2022, in connection with a consulting agreement, the Company issued 2,500,000 shares of restricted Common Stock at $0.001 per share for cash in the amount of $2,500.

Exemption From Registration. None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D or Regulation S promulgated thereunder) as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.

ITEM 6.

SELECTED FINANCIAL DATA

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

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ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Annual Report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, forward-looking statements can be identified by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause the Company’s or the Company’s industry’s 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. 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.

The Company’s consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with the Company’s consolidated audited financial statements and the related notes for the years ended December 31, 2019 and 2018, that appear elsewhere in this Annual Report.

As used in this Annual Report, the terms “we”, “us”, “our,” “the Company” and “Enigma” mean Enigma-Bulwark, Ltd., and its wholly-owned subsidiaries, Enigma-Bulwark Risk Management, Inc., PearTrack Systems Group, Ltd., Ecologic Car Rentals, Inc. and Ecologic Products, Inc., unless otherwise indicated.

Corporate History

The Company was incorporated in Nevada on September 30, 2005, and is a headquartered in Los Angeles, California. Formerly PearTrack Security Systems, Inc., the Company’s name was changed to Enigma-Bulwark, Ltd., on October 9, 2019, pursuant to a majority of the Company’s shareholders and unanimous resolution of the board of directors.

The Company is a security and risk management company that provides physical security, technology-systems integration, and risk management advisory services. Services offered to assess and mitigate risk include security guards, risk management analysis, and proprietary and third-party technology and software. Target markets include corporations, governments and individuals across the globe.

During 2016 through 2018, the Company sought financing for the finalization of the PearLoxx container locking and tracking prototype. In addition, strategic acquisitions were pursued to expand the Company’s intellectual property portfolio.

Due to the Company’s inability to successfully commercialize the PearTrack IP tracking platform acquired in 2013, all rights, title and interest in the PearTrack IP reverted to the former licensees on December 31, 2018, and, pursuant to the terms of the Security Agreement, the related Note issued to the licensors (the “Note Holders”) was canceled. In addition, all rights to future royalties collectible under any sub-license previously issued by the Company for the PearTrack IP reverted to the Note Holders. As a result, in 2018, the Company recognized a gain on the extinguishment of debt of $2,000,000.

Although the PearTrack IP commercialization was unsuccessful, the Company continued to focus on security and risk management, and acquired intellectual property that is based on a patent-pending ²⁷ interactive spontaneous video security technology (the “Safer IP”). On October 11, 2018, the Company executed an Intellectual Property Purchase Agreement (the “Safer Agreement”) with Safer, Inc., a Florida corporation (the “Seller”), for the acquisition of the Safer IP. Pursuant to the Safer Agreement, in exchange for all rights, title and interest in the Safer IP, among other things, the Company delivered to Seller:

1.Common Stock Purchase Agreement providing for the Seller the right to purchase 3,500,000 shares of the Company’s restricted Common Stock at a price of $0.001 per share, for $3,500 cash; and

3.Royalty Agreement providing for a royalty of 1.5% of the Adjusted Gross Revenue generated by the Company in connection with the Safer IP.

²⁷ On July 21, 2021, the Company received a Notice of Allowance from the United States Patent and Trademark Office that its Patent Application 16/618,038 “Network Based Video Surveillance and Logistics for Multiple Users” was granted and would be issued to the Company. For additional information on the patent application, see “Intellectual Property”

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COVID-19 Pandemic

Current Business

Enigma-Bulwark, Ltd. Los Angeles, California		Parent Corporation Patented EnigmaLok Locking Technology
Enigma-Bulwark Risk Management, Inc. Cape Town, South Africa		Tethered Drone System (Patent-Pending) Network-Based Video Surveillance (Patent-Pending) Security and Risk Management / Intelligence Security Guard Operations Hotels, Events, VIPs
	·Enigma-Bulwark Security, Inc. Miami, Florida
	·Prime-Enigma Africa Pvt. Joint Venture
Ecologic Products, Inc. / Ecologic Car Rentals, Inc. Los Angeles, California		Environmental Transportation and Products Seeking Strategic Opportunities

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In August 2019, the Company, through EBRM’s subsidiary, Enigma-Bulwark Security, Inc. (“EBS”), a Delaware corporation, established and operates a full-service security business targeting hospitality, corporate/executives, and petroleum assets. In Miami, Florida. EBS services include security guards, both armed and unarmed, as well as CCTV and video capture technology and security consulting services. As of October 2022, EBS maintains a staff of approximately forty-five (45) employees, including over forty (40) fully licensed security personnel, serving eleven (11) luxury and boutique hotels, restaurants and resorts in the greater Miami Beach, Florida, area.

Management

Enigma’s team is at the core of its value, with decades of intelligence and military experience, as well as technology expertise and specialized experience in:

·advanced training techniques

·new and innovative technology applications

·intelligence and reconnaissance

·risk assessment and threat identification.

The following summary of the Company’s financial condition and results of operations should be read in conjunction with the Company’s audited consolidated financial statements for the years ended December 31, 2019 and 2018, which are included herein. The financial information of Enigma-Bulwark, Ltd., and its wholly-owned subsidiaries as of December 31, 2019, Enigma-Bulwark Risk Management, Inc., PearTrack Systems Group, Ltd., Ecologic Car Rentals, Inc. and Ecologic Products, Inc. is provided below on a consolidated basis, unless otherwise indicated. All significant intercompany accounts and transactions have been eliminated.

Balance Sheet

As of December 31, 2019, the Company had total assets of $339,481,compared with total assets of $40,089 at December 31, 2018. The increase in total assets of $299,382 is attributable to an increase in cash of $102,585, an increase in accounts receivable of $194,701, an increase in prepaid expenses of $5,384, a decrease in investment in securities of $1,206, depreciation of $472, an increase in intellectual property of $31,500, and amortization of $1,600.

As of December 31, 2019, the Company had total liabilities of $6,977,128 compared with total liabilities of $6,333,317 at December 31, 2018. The increase in total liabilities of $643,811 is attributable to an increase in accounts payable and accrued expenses of $351,804, a decrease in related party payables of $511,295, an increase in related party notes payable, net of unamortized discount, of $20,204, and an increase in related party convertible notes payable, net of unamortized discount, of $783,098.

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Results of Operations

The year ended December 31, 2019, compared to the year ended December 31, 2018

	For the year ended
	December 31, 2019			December 31, 2018
Revenue	$	580,574		$	––

Cost of sales	$	442,161		$	––

Gross profit	$	138,413		$	––

General and administrative expenses	$	1,632,481		$	617,497

Operating loss	$	(1,494,068	)	$	(617,497	)

Gain on canceled promissory note	$	––		$	2,000,000

Interest expense	$	(228,428	)	$	(207,168	)

Discount amortization	$	(394	)	$	(81,469	)

Net income (loss)	$	(1,722,890	)	$	1,093,866

Net comprehensive loss	$	(1,206	)	$	(2,412	)

Net income (loss) and comprehensive loss	$	(1,724,096	)	$	1,091,454

Revenue

For the year ending December 31, 2019, revenue in the amount of $580,574 consisted of sales resulting from the Company’s security services activities that commenced in August 2019.

For the year ending December 31, 2018, no revenue was generated.

At December 31, 2019, the Company had not yet generated revenues from the commercialization of its intellectual properties.

Cost of sales

For the year ending December 31, 2019, cost of sales in the amount of $442,161 consisted of staffing and related labor costs resulting from the Company’s security services activities that commenced in August 2019.

For the year ending December 31, 2018, no cost of sales was incurred.

At December 31, 2019, the Company had not yet incurred costs related to revenues from the commercialization of its intellectual properties.

General and Administrative Expenses

	For the year ended
	December 31, 2019		December 31, 2018			Variance
Legal and accounting fees	$	32,000	$	32,000		$	––
Management fees		977,582		583,240			394,342
Other staff and outside services		4,956		––			4,956
Stock compensation/amortization of deferred compensation		582,913		1,750			581,163
Depreciation and amortization		2,072		806			1,266
Office supplies and miscellaneous expenses		32,958		(299	)		33,257
Total general and administrative expenses	$	1,632,481	$	617,497		$	1,014,984

General and administrative expenses in the amount of $1,632,481 for the year ended December 31, 2019, were comprised of $32,000 of legal and accounting fees, $977,582 of management fees, $4,956 of other staff and outside services, $582,913 of stock compensation/amortization of deferred compensation, $2,072 of depreciation and amortization, and $32,958 of office overhead and other general and administrative expenses.

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General and administrative expenses in the amount of $617,497 for the year ended December 31, 2018, were comprised of $32,000 of legal and accounting fees, $583,240 of management fees, $1,750 of stock compensation/amortization of deferred compensation, $806 of depreciation and amortization, and ($299) of office overhead and other general and administrative expenses.

General and administrative expenses of $1,632,481 for the year ended December 31, 2019, as compared to $617,497 for the year ended December 31, 2018, resulted in an increase in general and administrative expenses of $1,014,984. The increase in general and administrative expenses of $1,014,984 was attributable to the following items:

·an increase in management fees of $394,342, due to additional management retained for security operations; and

·an increase in other staff and outside services of $4,956, due to administrative staff retained for security operations; and

·an increase in stock compensation/amortization of deferred compensation of $581,163, due to stock and stock options granted in connection with additional management retained for security operations, resulting in an increase in stock compensation of $551,896 and stock option amortization of $28,017; and a stock grant in the prior year, resulting in an increase in deferred stock compensation amortization of $1,250; and

·an increase in depreciation and amortization expense, due to the acquisition of intellectual property, resulting in amortization expense of $1,266; and

·an increase in other general and administrative expenses of $33,257, due to increases in bank charges of $1,676, insurance expense of $20,559, licenses and permits of $4,388, travel of $3,783, and other general expenses of $2,851.

General and administrative expenses for the years ended December 31, 2019 and 2018, were incurred primarily for the purpose of advancing the Company closer to its financing and operating goals.

Net Loss

During the year ended December 31, 2019, the Company incurred a net loss of $1,722,890 compared with net income of $1,093,866 for the year ended December 31, 2018. The decrease in net income of $2,816,756 is attributable to an increase in gross revenue of $580,574, an increase in costs of goods sold of $442,161, an increase in general and administrative expenses of $1,014,984, a decrease in gain on extinguished debt of $2,000,000, an increase in interest expense of $21,260, and a decrease in discount amortization of $81,075.

During the year ended December 31, 2019, the Company incurred a net comprehensive loss of $1,206, compared with a net comprehensive loss of $2,412 for the year ended December 31, 2018. The decrease in net comprehensive loss of $1,206 is attributable to a decrease in unrealized loss on securities of $1,206.

Liquidity and Capital Resources

Working Capital
	December 31, 2019			December 31, 2018			Increase (decrease)
Current assets	$	302,670		$	––		$	302,670
Current liabilities		4,120,572			3,889,597			230,975
Working capital (deficit)	$	(3,817,902	)	$	(3,889,597	)	$	(71,695	)

As of December 31, 2019 the Company had $102,585 in cash compared to no cash at December 31, 2018.

The Company had a working capital deficit of $3,817,902 as of December 31, 2019, compared to a working capital deficit of $3,889,597 at December 31, 2018. The decrease in working capital deficit of $71,695 is attributable to increases in cash of $102,585, accounts receivable of $194,701, prepaid expenses of $5,384, accounts payable and accrued expenses of $351,804, related party notes payable of $20,204, and related party convertible notes payable of $370,262, and a decrease in related party payable of $511,295.

Cash Flows	For the year ended
	December 31, 2019		December 31, 2018		Increase (decrease)
Net cash provided by operating activities	$	72,478	$	––	$	72,478
Net cash provided by investing activities		––		––		––
Net cash provided by financing activities		30,107		––		30,107
Net increase in cash	$	102,585	$	––	$	102,585

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Cash Flows from Operating Activities

During the year ended December 31, 2019, the Company was provided with $72,478 in cash flows from operating activities, compared to $0 for the year ended December 31, 2018. The increase in cash provided by operating activities of $72,478 is primarily attributable to a decrease in net income from operations of $2,816,756; increases in stock compensation/amortization of deferred compensation of $581,163, accruals converted to related party loans of $1,045,585, and depreciation and amortization of $1,266; decreases in discount amortization of $81,075, and gain on extinguished debt of $2,000,000; increases in the changes in accounts receivable of $194,701, prepaid expenses of $5,384, and accounts payable and accrued expenses of $186,739; and a decrease in the change in related party payables of $644,359.

Cash Flows from Investing Activities

During the years ended December 31, 2019 and 2018, the Company was provided with no cash flows from investing activities.

Cash Flows from Financing Activities

During the year ended December 31, 2019, the Company was provided with $30,107 in cash flows from financing activities, compared to $0 for the year ended December 31, 2018. The increase in cash provided by financing activities is primarily attributable to an increase in repayments of related party notes payable of $11,000, and an increase in proceeds from the issuance of stock of $41,107.

As of December 31, 2019, affiliates and related parties are due a total of $4,262,974, which is comprised of promissory notes to related parties, net of unamortized discounts, in the amount of $3,976,008, accrued compensation in the amount of $134,566, and reimbursed expenses/cash advances to the Company in the amount of $152,400; for a net increase of $262,008. During the year ended December 31, 2019, promissory notes to related parties, net of unamortized discounts, increased by $803,303, accrued compensation decreased by $510,989, and reimbursable expenses/cash advances decreased by $306. All outstanding related party promissory notes bear interest at a rate of 5 to 7 percent per annum, are due and payable between one (1) year of written demand and by December 31, 2024, or upon certain equity funding, and are convertible into the Company’s Common Stock at a price of between $0.05 and $0.25 per share, or the 20-day average trading price.

The Company’s principal sources of funds have been from sales of the Company’s Common Stock and loans from related parties.

Future Financings

The Company has suffered recurring losses from operations. The continuation of the Company’s operations is dependent upon the Company’s attaining and maintaining profitable operations and raising additional capital as needed. The Company anticipates that it will have to raise additional funds through private placements of the Company’s equity securities and/or debt financing to complete its business plan.

The Company will require additional financing in the amount of approximately $5,000,000 in order to enable the Company to proceed with the Company’s plan of operations, as discussed above, including an estimated $2,000,000 over the next 12 months, to pay for the Company’s current and ongoing expenses and product development. These cash requirements include working capital, selling, general and administrative expenses, expansion of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay the Company’s liabilities. There is no assurance that any party will advance additional funds to the Company in order to enable the Company to sustain its plan of operations or to repay the Company’s liabilities. There is no assurance that the financing will be completed as planned or at all. If the Company is unable to secure adequate capital to continue the Company’s planned operations, the Company’s shareholders may lose some or all of their investment and the Company’s business may fail.

The Company anticipates continuing to rely on equity sales of the Company’s Common Stock to fund the Company’s business operations and product development. Issuances of additional shares will result in dilution to the Company’s existing stockholders. There is no assurance that the Company will achieve any additional sales of its equity securities or arrange for debt or other financing to fund the Company’s planned business activities.

Personnel

The majority of personnel working with the Company are engaged as consultants under consulting agreements.

As of December 31, 2019, the Company engaged six (6) individuals, inclusive of two (2) and executive officers and directors. All personnel were full-time.

As of the date of filing of this Annual Report, the Company engages five (5) individuals, inclusive of three (3) executive officers and directors. All five (5) personnel are full-time. In addition, the Company’s security operations, Enigma-Bulwark Security, Inc., maintains a staff of approximately forty-five (45) employees, of which thirty-five (35) are full-time and ten (10) are part-time.

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Contractual Obligations

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

Going Concern

The Company has incurred losses since inception resulting in a current year net loss of $1,724,096, an accumulated deficit of $19,140,924, and a working capital deficit of $3,817,902, and further losses are anticipated in the development of its business. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated audited financial statements included with this Annual Report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the consolidated audited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s audited consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. The Company believes that understanding the basis and nature of the estimates and assumptions involved with the following aspects of the Company’s consolidated financial statements is critical to an understanding of its consolidated financial statements. The following should be read in conjunction with Note 2 to the Company’s consolidated financial statements, “Summary of Significant Accounting Policies”:

Impairment reviews

Management is required to perform tests annually, or more often if necessary, for impairment of its finite lived and indefinite lived assets, to determine if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters, including management’s expectations of:

·growth in EBITDA, calculated as adjusted operating profit before depreciation and amortization;

·long term growth rates; and

·the selection of discount rates to reflect the risks involved.

The Company may prepare financial projections to use as the basis for its impairment reviews. Changing the assumptions selected by management, in particular the discount rate and growth rate assumptions used in the projections, could significantly affect the Company’s impairment evaluation and, hence, results.

The Company’s review for impairment may also include the evaluation of key assumptions related to sensitivity in the projections, including estimates for varying levels of growth, such as aggressive, median, and conservative. In the Company’s evaluation for impairment, the conservative level of growth would be utilized. For additional information, see Impairment of Long-Lived Assets under Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements contained within this Annual Report.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

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ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company’s consolidated audited financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following consolidated audited financial statements are filed as part of this Annual Report:

Reports of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets as at December 31, 2019 and 2018	F-3

Consolidated Statements of Operations for the years ended December 31, 2019 and 2018	F-4

Consolidated Statements of Stockholders ’ D eficit for the years ended December 31, 2018 and December 31, 2019	F -5

Consolidated Statement s of Cash Flows for the years ended December 31, 2019 and 2018	F-6

Notes to the Consolidated Financial Statements for the years ended December 31, 2019 and 2018	F-7

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Enigma-Bulwark, Ltd.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Enigma-Bulwark, Ltd. (the Company) as of December 31, 2019 and 2018, and the related statements of operations, stockholders’ deficit, and cash flows for each of the two years ended in the period ended December 31, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years ended December 31, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a net loss of $1,724,096 for the year ended December 31, 2019, an accumulated deficit of $19,140,924, and a working capital deficit of $3,817,902, as of December 31, 2019 and further losses are anticipated. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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

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

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

No critical matters were identified during the audit

We have served as the Company’s auditor since 2021.

Margate, Florida

June 8, 2023

ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES

also d/b/a McNAMARA and ASSOCIATES, PLLC

TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053

JACKSONVILLE: 4720 Salisbury Road, Suite 223 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053

ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053

SOUTH FLORIDA: 2000 Banks Road, Suite 218 | Margate, FL 33063 | Office: 754.800.3400 | Fax: 813.443.5053

www.assurancedimensions.com

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F-1

ENIGMA-BULWARK, LTD.

CONSOLIDATED BALANCE SHEETS

	December 31, 2019			December 31, 2018
ASSETS

Current assets
Cash and cash equivalents	$	102,585		$	--
Accounts receivable		194,701			--
Prepaid expenses		5,384			--
Total current assets		302,670			--

Non-current assets
Investment in securities		1,207			2,413
Property and equipment, net		238			710
Intangible assets, net		29,566			31,166
Other assets		5,800			5,800
Total non-current assets		36,811			40,089

TOTAL ASSETS	$	339,481		$	40,089

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued expenses	$	2,044,550		$	1,692,746
Notes and loans payable		169,605			169,605
Notes payable, related party, net of unamortized discount		20,204			--
Notes payable, convertible		500,000			500,000
Notes payable, convertible, related party, net of unamortized discount		1,099,247			728,985
Related party payables		286,966			798,261
Total current liabilities		4,120,572			3,889,597

Long-term liabilities
Notes and convertible notes payable, related party, net of unamortized discount		2,856,556			2,443,720
Total long-term liabilities		2,856,556			2,443,720
Total liabilities		6,977,128			6,333,317

Stockholders’ deficit
Preferred stock, $0.001 par value, 25,000,000 shares authorized, none issued and outstanding		--			--
Common stock, $0.001 par value, 250,000,000 shares authorized, 108,239,317 and 77,382,753 issued and outstanding as of December 31, 2019, and 2018, respectively		108,239			77,382
Additional paid in capital		12,404,190			11,057,370
Subscriptions receivable		(5,000	)		(7,000	)
Accumulated deficit		(19,140,924	)		(17,418,034	)
Accumulated comprehensive losses		(4,152	)		(2,946	)
Total stockholders’ deficit		(6,637,647	)		(6,293,228	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	339,481		$	40,089

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

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F-2

ENIGMA-BULWARK, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the years ended
	December 31, 2019			December 31, 2018

Revenue	$	580,574		$	--
Cost of sales		442,161			--
Gross profit		138,413			--

General and administrative expenses		1,632,481			617,497

Operating loss		(1,494,068	)		(617,497	)

Other income (expenses)
Gain on canceled promissory note		--			2,000,000
Interest expense		(228,428	)		(207,168	)
Discount amortization		(394	)		(81,469	)
Total other income (expenses)		(228,822	)		1,711,363

Net income (loss)		(1,722,890	)		1,093,866

Comprehensive loss
Unrealized loss on securities		(1,206	)		(2,412	)

Net comprehensive loss		(1,206	)		(2,412	)

Net income (loss) and comprehensive loss		(1,724,096	)		1,091,454

Net income (loss) per share - basic and diluted	$	(0.020	)	$	0.016

Weighted average common shares outstanding – basic and diluted		86,160,416			70,507,411

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

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F-3

ENIGMA-BULWARK, LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	Common Stock			Additional		Subscriptions			Accumulated			Accumulated Other Comprehensive
	Shares	Amount		Paid In Capital		Receivable			Deficit			Income (Loss)			Total

Equity Balance, December 31, 2017	69,382,753	$	69,382	$	11,025,120	$	--		$	(18,511,900	)	$	534		$	(7,417,932	)

Issuance of stock award to officer	1,000,000		1,000													1,000

Issuance of common stock for intellectual property acquisition	7,000,000		7,000		31,500		(7,000	)								31,500

Amortization of restricted stock award					750											750

Net income (loss)										1,093,866			(2,412	)		1,091,454

Equity Balance, December 31, 2018	77,382,753		77,382		11,057,620		(7,000	)		(17,418,034	)		(2,946	)		(6,293,228	)

Grant of stock award for services-officers/directors	20,044,000		20,044		486,896		(1,710	)								505,230

Grant of stock award to officers/directors	6,000,000		6,000		54,000											60,000

Beneficial conversion feature on related party convertible debt					755,657											755,657

Exercise of stock options-officers/directors	4,812,564		4,813		19,250											24,063

Amortization of restricted stock award					3,000											3,000

Amortization of stock options					28,017											28,017

Subscriptions received							3,710									3,710

Net loss										(1,722,890	)		(1,206	)		(1,724,096	)

Equity Balance, December 31, 2019	108,239,317	$	108,239	$	12,404,190	$	(5,000	)	$	(19,140,924	)	$	(4,152	)	$	(6,637,647	)

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

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F-4

ENIGMA-BULWARK, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended
	December 31, 2019			December 31, 2018
Cash flow from operating activities:
Net income (loss) and comprehensive loss	$	(1,724,096	)	$	1,091,454
Comprehensive loss		(1,206	)		(2,412	)
Net income (loss)		(1,722,890	)		1,093,866

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock compensation/amortization of deferred compensation		582,913			1,750
Accruals converted to related party loans		1,465,261			419,676
Depreciation and amortization		2,072			806
Discount amortization		394			81,469
Gain on canceled promissory note		--			(2,000,000	)
Changes in operating assets and liabilities:
Increase in accounts receivable		(194,701	)		--
Increase in prepaid expenses		(5,384	)		--
Increase in accounts payable and accrued expenses		461,608			274,869
Increase (decrease) in related party payables		(516,795	)		127,564
Net cash provided by operating activities		72,478			--

Cash flow from financing activities:
Proceeds from promissory note, related party		50,000			--
Repayment of promissory note, related party		(50,000	)		--
Repayment of convertible promissory note, related party		(11,000	)		--
Proceeds from the issuance of common stock		41,107			--
Net cash provided by financing activities		30,107			--

Net increase in cash		102,585			--

Cash – beginning of period		--			--

Cash – end of period	$	102,585		$	--

NONCASH ACTIVITIES
Fair value of beneficial conversion feature of convertible promissory notes	$	755,657		$	--
Imputed interest on related party promissory note	$	1,190		$	--
Reduction of related party promissory note for payment of common stock	$	4,000		$	--
Reduction of related party convertible promissory note for payment of common stock	$	1,500		$	--
Reduction of related party payable for payment of common stock	$	5,500		$	--
Issuance of common stock for intellectual property	$	--		$	31,500
Conversion of convertible promissory note to related party convertible promissory note	$	--		$	188,755
Conversion of related party payable to related party convertible promissory note	$	1,465,261		$	419,676

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	15,339		$	--
Income taxes paid	$	--		$	--

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

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F-5

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 1. OVERVIEW AND NATURE OF BUSINESS

On October 11, 2018, the Company executed an Intellectual Property Agreement (the “Safer Agreement”) with Safer, Inc., a Florida corporation (the “Seller”), for the acquisition of certain intellectual property, as defined within the Safer Agreement, in the area of security and risk management (“Intellectual Property”). Pursuant to the Safer Agreement, in exchange for all rights, title and interest in the Intellectual Property, among other things, the Company shall deliver to Seller:

1.Common Stock Purchase Agreement providing for the Seller the right to purchase 3,500,000 shares of the Company’s restricted Common Stock at a price of $0.001 per share, for $3,500 cash; and

3.Royalty Agreement providing for a royalty of 1.5% of the Adjusted Gross Revenue generated by the Company in connection with the Intellectual Property.

As of December 31, 2019, the Company was structured with four wholly-owned subsidiaries: Enigma-Bulwark Risk Management, Inc., a Delaware corporation, and PearTrack Systems Group, Ltd. (“PTSG”), Ecologic Products, Inc.{“EPI”), and Ecologic Car Rentals, Inc. (“ECR”), all Nevada corporations. The Company’s current business activities are diversified into two specific markets: security and risk management, and remote/mobile asset tracking products.

The Company intends to provide a unique solution to security issues in the intermodal shipping container marketplace, with its patented container tracking and locking system, EnigmaLok (formerly PearLoxx), the rights of which were licensed to the Company in perpetuity in 2015.

Going Concern

The Company has incurred losses since inception resulting in a current year net loss of $1,724,096, an accumulated deficit of $19,140,924, and a working capital deficit of $3,817,902, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.

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F-6

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

This summary of significant accounting policies is presented to assist in understanding the Company’s consolidated financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the consolidated financial statements.

The Company’s fiscal year end is December 31.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, PearTrack Systems Group, Ltd., Ecologic Products, Inc. and Ecologic Car Rentals, Inc. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. Estimates that are critical to the accompanying consolidated financial statements include the estimates related to asset impairments of long-lived assets and investments, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable 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. Estimates and assumptions are revised periodically, and the effects of revisions are reflected in the consolidated financial statements in the period it is determined to be necessary. Actual results could differ from these estimates.

Fair Value Hierarchy

The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2: Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.

Level 3: Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.

The Company’s investment in securities are classified as Level 1 assets, and were valued using the quoted prices in the active market (Note 3).

Fair Value of Financial Instruments

As of December 31, 2019 and 2018, respectively, the carrying values of Company’s Level 1 financial instruments including cash and cash equivalents, investments in securities, accounts receivable, accounts payable, and short-term debt approximate fair value. The fair value of Level 3 instruments is calculated as the net present value of expected cash flows based on externally provided or obtained inputs. Certain Level 3 instruments may also be based on sales prices of similar assets. The Company’s fair value calculations take into consideration the credit risk of both the Company and its counterparties as of the date of valuation.

Cash and Cash Equivalents

The Company considers cash in banks, deposits in transit, and highly-liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents. As of December 31, 2019 and 2018, the Company had no cash equivalents.

Investments in Securities

Investments in securities are accounted for using the equity method if the investment provides the Company the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors, such as representation on the investee’s board of directors, are considered in determining whether the equity method is appropriate. All other equity investments, which consist of investments for which the Company does not possess the ability to exercise significant influence, are accounted for under the mark to market method. Under the mark to market method of accounting, investments are marked to market, with unrealized gains and losses being excluded from earnings and reflected as a component of other comprehensive income.

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F-7

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

Property and Equipment

Property and equipment is carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repairs and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of the Company’s property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 5 to 7 years.

Intangible Assets

Product processes, patents and customer lists are amortized on a straight-line basis over their estimated useful lives between 4 to 20 years. Application development stage costs for significant internally developed software projects are capitalized and amortized on a straight-line basis over the useful life, between 2 to 5 years. Costs to extend and maintain patents and trademarks are charged directly to expense as incurred.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.

Due to the Company’s recurring losses and lack of revenue from its intellectual properties, its intellectual properties were evaluated for impairment, and it was determined that expected future cash flows were sufficient for recoverability of the assets at December 31, 2019, and 2018.

Convertible Debt

The Company recognizes the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert debt into Common Stock at a price per share that is less than the trading price to the public on the date of the debt. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of the debt, and is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the straight-line method.

Revenue Recognition

Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.

The Company’s revenue is generated from limited customer contracts for its security services operations. As of December 31, 2019, the Company has not generated revenues from the commercialization of its intellectual properties.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

The Company has net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established.

As of December 31, 2019, the Company has not yet filed its 2013 through 2018 annual corporate income tax returns, which were filed in April 2022. Due to the Company’s recurring losses, no corporate income taxes were due for these periods.

Net Income (Loss) Per Common Share

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when anti-dilutive, Common Stock equivalents, if any, are not considered in the computation.

F-8

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

Other Comprehensive Income (Loss)

Other comprehensive income includes unrealized gains and losses on securities available for sale, and unrealized gains and losses resulting from foreign exchange differences. During the years ended December 31, 2019 and 2018, other comprehensive losses of $1,206 and $2,412 have been recognized. As of December 31, 2019 and 2018, respectively, other comprehensive losses of $4,152 and $2,946 have been accumulated. The following represents the accumulated comprehensive income activity:

	Unrealized Foreign Currency Exchange		Unrealized Securities Gains (Losses)			Total Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2017	$	6,703	$	(7,237	)	$	(534	)
Gain (loss)		--		(2,412	)		(2,412	)
Balance, December 31, 2018		6,703		(9,649	)		(2,946	)
Gain (loss)		--		(1,206	)		(1,206	)
Balance, December 31, 2019	$	6,703		(10,855	)	$	(4,152	)

Stock Based Compensation

The Company records stock-based compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Recent Accounting Pronouncements

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the U.S. Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on U.S. GAAP and the impact on the Company. The Company has recently adopted the following new accounting standards:

Adopted:

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10: Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. Among other changes, there will no longer be an available-for-sale classification for which changes in fair value are currently reported in other comprehensive income for equity securities with readily determinable fair values. Equity investments with readily determinable fair values will be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for the Company beginning January 1, 2018, with early adoption not permitted.

In February 2016, the FASB issued ASU No. 2016-02, Leases. Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) 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 term. The ASU is effective for the Company beginning January 1, 2019, with early adoption permitted.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on eight specific cash flow issues, for which specific guidance had not previously been provided, with the objective of reducing the existing diversity in practice. The amendments in this update are effective for the Company for fiscal years beginning after December 15, 2017, and interim periods. Early adoption is permitted.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. As part of the Board’s initiative to reduce complexity in accounting standards. The amendments in this update are effective for the Company for annual reporting periods beginning after December 15, 2017, and interim periods. Early adoption is permitted for interim or annual reporting periods for which financial statements have not been issued or made available for issuance.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. ASU 2017-01 is effective for the Company for annual periods beginning after December 15, 2017, and interim periods. Early adoption is permitted under certain conditions.

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F-9

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test, which should reduce the cost and complexity of evaluating goodwill for impairment. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 is effective for the Company for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted for testing performed after January 1, 2017.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. ASU 2017-09 clarifies and reduces both the (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for the Company for annual periods beginning after December 15, 2017, and interim periods. Early adoption is permitted.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. ASU 2017-11 also addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. ASU 2017-11 is effective for the Company for annual periods beginning after December 15, 2018, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.

In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 is effective for the Company for annual periods beginning after December 15, 2018, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements. ASU 2018-11 addresses certain issues in implementing ASU 2016-02, Leases, which was issued to increase transparency ad comparability by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing transaction. ASU 2018-11 clarifies 1) comparative reporting requirements for initial adoption; and 2) for lessors only, separating lease and non-lease components in a contract and allocating the consideration in the contract to the separate components. The amendments in this Update related to separating components of a contract affect the amendments in Update 2016-02, which is effective for the Company for annual periods beginning after December 15, 2018, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.

Not Yet Adopted:

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. ASU 2018-13 is effective for the Company for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other Internal-Use Software (Subtopic 350-40). ASU 2018-15 was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. ASU 2018-15 is effective for the Company for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments to Topic 326 and other Topics in ASU 2019-04 clarify or address stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13. The amendments to Topic 815 in ASU 2019-04 include items related to Update 2017- 12 and clarify certain aspects of Topic 815. The amendments to Topic 321 and other Topics in ASU 2019-04 relate to the amendments in Update 2016-01 and clarify certain aspects of the amendments in Update 2016-01. ASU 2019-04 is effective for the Company for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

F-10

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

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), Effective Dates. ASU 2019-10 was issued to apply changes in how to determine the effective dates for ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Credit Losses); ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (Hedging); and ASU No. 2016-02, Leases (Topic 842) (Leases). Following ASU-2019-10, ASU 2016-13 is effective for the Company for annual periods beginning after December 15, 2019, and interim periods; and ASU 2017-12 and ASU 2016-01 is effective for the Company for annual periods beginning after December 15, 2018, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740). ASU 2019-12 was issued to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for the Company for annual periods beginning after December 15, 2020, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

Recently Issued Accounting Standards Update

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 3. INVESTMENT IN SECURITIES

As of December 31, 2019 and 2018, the Company held 12,061,854 shares of Amazonas Florestal, Ltd. (OTC:AZFL) Common Stock. The securities are classified as Level 1 investments (Note 2, Fair Value Hierarchy), and are valued using the quoted market prices. During the years ended December 31, 2019 and 2018, respectively, $1,206 and $2,412 in unrealized losses were recognized and included as part of comprehensive income (loss). As of December 31, 2019 and 2018, respectively, $10,855 and $9,649 in cumulative unrealized losses were recognized, and the securities held a fair value of $1,207 and $2,413.

Management’s intent is to distribute the AZFL Shares in the form of a dividend, to the Company’s shareholders of record on March 16, 2012, once AZFL has filed an S1 Registration and registers the AZFL Shares. The date by which the Form S1 was to be filed was extended by mutual agreement to January 31, 2013. AZFL has not, to the Company’s knowledge, caused to register the AZFL shares by filing a Form S1, and is in default of its agreement with the Company. The Company has requested that AZFL complete the registration so the stock distribution can be completed.

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	December 31, 2019			December 31, 2018
Office equipment	$	2,362		$	2,362
Accumulated depreciation		(2,124	)		(1,652	)
Property and equipment, net	$	238		$	710

During the years ended December 31, 2019 and 2018, respectively, $472 and $472 in depreciation was expensed.

NOTE 5. INTANGIBLE ASSETS

Intangible assets consists of the following:

	December 31, 2019			December 31, 2018
Intellectual property	$	31,500		$	31,500
Accumulated amortization		(1,934	)		(334	)
Intellectual property, net		29,566			31,166

During the years ended December 31, 2019 and 2018, respectively, $1,600 and $334 in amortization was expensed.

NOTE 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of:

	December 31, 2019		December 31, 2018
Accounts payable-vendors	$	745,469	$	713,581
Accrued payroll and taxes		151,096		80,995
Accrued interest		1,110,480		897,391
Sales tax payable		36,726		--
Other liabilities		779		779

Total accounts payable and accrued expenses	$	2,044,550	$	1,692,746

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F-11

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 7. NOTES AND LOANS PAYABLE

Notes and loans payable consists of the following:

	December 31, 2019		December 31, 2018
Loans payable	$	44,605	$	44,605
Notes payable, short term		125,000		125,000
Total notes and loans payable		169,605		169,605

Notes payable, short-term, convertible		500,000		500,000
Total	$	669,605	$	669,605

Notes payable includes the following convertible promissory notes at December 31, 2019 and 2018:

Description	Principal		Interest Rate (%)	Conversion Price	Maturity Date

Matrix Advisors, Inc.	$	500,000	5	$0.25	12/31/2015	[1]

Total convertible notes payable	$	500,000

[1] No change in terms of promissory note due to breach. The debt was converted in November 2021.

Loans payable consists of monies loaned to the Company by a third-party for the purpose of overhead advances and product development. The loan is unsecured, bears no interest, and is payable upon demand. As of December 31, 2019 and 2018, respectively, $44,605 and $44,605 is outstanding, and no demand has been made.

As of December 31, 2019 and 2018, respectively, notes payable consists of unsecured promissory notes issued in the principal sum of $125,000 and $125,000, and unsecured convertible promissory notes issued in the principal sum of $500,000 and $500,000. The notes bear interest at a rate of between 5 to 25 percent per annum, and are due within one (1) year of written demand or by December 31, 2015. The convertible promissory notes are convertible into restricted shares of the Company’s Common Stock at a conversion price of between $0.05 to $0.25 per share.

During the years ended December 31, 2019 and 2018, respectively, interest in the amount of $52,000 and $60,797 was expensed; and $0 and $68,726 was reclassified to related party interest. As of December 31, 2019 and 2018, respectively, interest in the amount of $403,066 and $351,066 has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.

NOTE 8. RELATED PARTY TRANSACTIONS

Related party transactions consists of the following:

	December 31, 2019			December 31, 2018

Note payable, short term	$	21,000		$	--
Less: unamortized discount		(796	)		--
		20,204			--

Notes payable, convertible, short-term		1,234,151			728,985
Less: unamortized discounts		(134,903	)		--
		1,099,248			728,985

Notes payable, convertible, long-term		3,477,310			2,443,720
Less: unamortized discounts		(620,754	)		--
		2,856,556			2,443,720
Total notes payable, net of unamortized discounts		3,976,008			3,172,705

Accrued compensation		134,566			645,555
Reimbursable expenses/cash advances payable		152,400			152,706
Total related party payable		289,068			798,261

Total related party transactions	$	4,262,974		$	3,970,966

F-12

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

Related party notes payable consists of the following convertible notes payable at December 31, 2019 and 2018:

Description	Principal		Interest Rate	Conversion Price		Maturity Date

Short-term:
Huntington Chase Financial Group	$	402,913	7	$0.05		1 year from demand	[1]
Huntington Chase LLC		280,000	5	$0.05		12/31/2023
William Nesbitt		85,817	5	$0.05		Funding	[2]
Kasper Group, Ltd.		188,755	7	$0.05		1 year from demand
David Rocke		100,000	5	20-day average	[3]	Funding	[2]
Michael Gabriele		116,666	5	20-day average	[3]	Funding	[2]
Clive Oosthuizen		60,000	5	$0.05		Funding	[2]
Total short-term		1,234,151

Long-term:
Huntington Chase Financial Group		1,123,000	5	$0.05		12/31/2021
E. William Withrow Jr.		893,256	5	$0.05		12/31/2021
John Macey		426,464	4	$0.25		12/31/2023
Calli R. Bucci		700,170	5	$0.05		12/31/2024
Kyle W. Withrow		199,425	5	$0.05		12/31/2024
Yinuo Jiang		134,995	5	$0.05		12/31/2024
Total long-term		3,477,310

Total convertible notes payable	$	4,711,461

[1] No demand has been made

[2] The requisite funding goals for repayment have not been met.

[3] Shares issuable upon conversion not to exceed one percent (1%) of the Company’s issued and outstanding shares of Common Stock. Effective conversion price at 12/31/2019 is $0.09-$0.11 per share.

All outstanding related party notes payable bear interest at a rate of 5 to 7 percent per annum, are due and payable within between one (1) year of written demand to December 31, 2024, or upon certain equity funding, and are convertible into the Company’s Common Stock at a price of between $0.05 to $0.25 per share, or the 20-day average trading price [3].

As of December 31, 2019 and 2018, respectively, affiliates and related parties are due a total of $4,262,974 and $3,970,966, which is comprised of promissory notes to related parties, net of unamortized discounts of $756,453 and $0, in the amount of $3,976,008 and $3,172,705, accrued compensation in the amount of $134,566 and $645,555, and reimbursed expenses/cash advances to the Company in the amount of $152,400 and $152,706; for a net increase (decrease) of $292,008 and ($1,182,536). During the years ended December 31, 2019 and 2018, respectively, promissory notes to related parties increased (decreased) by $1,559,756 and ($1,391,569), unamortized discounts increased (decreased) by $756,453 and ($81,469), accrued compensation increased (decreased) by ($510,989) and $127,564, and reimbursable expenses/cash advances decreased by $306 and $0.

The following table summarizes the net changes to related party debt during the years ended December 31, 2018 and 2019:

	Total			Promissory Notes				Unamortized Discounts			Accrued Compensation			Expenses/Cash Advances

Balance, 12/31/2017	$	5,153,502		$	4,564,274			$	(81,469	)	$	571,991		$	152,706

Increases		736,995			188,755				--			548,240			--
Decreases		(1,919,531	)		(2,000,000	)	[1]		81,469			(1,000	)		--
Conversions		--			419,676				--			(419,676	)		--
Net change		(1,182,536	)		(1,391,569	)			81,469			127,564			--

Balance, 12/31/2018		3,970,966			3,172,705				--			645,555			152,706

Increases		367,201			160,995				(756,847	)		959,772			3,281
Decreases		(75,193	)		(66,500	)			394			(5,500	)		(3,587	)
Conversions		--			1,465,261				--			(1,465,261	)		--
Net change		292,008			1,559,756				(756,453	)		(510,989	)		(306	)

Balance, 12/31/2019	$	4,262,974		$	4,732,461			$	(756,453	)	$	134,566		$	152,400

[1] Secured promissory note canceled, and underlying intellectual property rights returned to note holder.

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F-13

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

During the years ended December 31, 2019 and 2018, respectively, promissory notes to related parties, net of unamortized discounts, increased (decreased) by $803,303 and ($1,310,100) as a result of an increase in accrued compensation owed to related parties in the amount of $1,465,261 and $419,676 converted to convertible promissory notes; $50,000 and $0 in cash loans to the Company; $0 and $188,755 reclassified from non-related party promissory notes; $110,995 and $0 converted from non-related party accrued compensation; $0 and $2,000,000 in secured promissory notes canceled [1]; $66,500 and $0 in cash repayments; and an increase (decrease) in unamortized discount in the amount of $756,453 and ($81,469).

During the years ended December 31, 2019 and 2018, respectively, $959,772 and $548,240 in related party compensation was accrued; $1,465,261 and $419,676 was converted into convertible promissory notes; and $5,500 and $1,000 in cash payments were made; for a net increase (decrease) in accrued compensation in the amount of ($510,989) and $127,564.

During the years ended December 31, 2019 and 2018, respectively, reimbursable expenses/cash advances owed to related parties decreased by $306 and $0 as a result of an increase in cash loans to the Company and expenses paid by related parties on behalf of the Company in the amount of $3,281 and $0; and repayments to related parties in the amount of $3,587 and $0.

During the years ended December 31, 2019 and 2018, respectively, $175,428 and $215,096 in interest on related party loans was expensed; and $15,339 and $0 was paid to the note holder. As of December 31, 2019 and 2018, respectively, $707,414 and $546,325 in interest on related party loans was accrued, and is included as part of accrued expenses on the accompanying consolidated balance sheets.

Promissory Notes

On December 31, 2010, the Company issued a convertible promissory note to Huntington Chase Financial Group, an entity controlled by Mr. Edward W. Withrow III, a related party, in the modified principal sum of $260,000. The note bears interest at a rate of seven percent (7%) per annum, is due within one (1) year of written demand, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. During the years ended December 31, 2019 and 2018, respectively, $18,200 and $18,200 in interest was expensed, and $11,000 and $0 in principal and $15,339 and $0 in interest payments were made. As of December 31, 2019 and 2018, respectively, $249,000 and $260,000 in principal remains; and $81,899 and $79,192 in interest has been accrued. No demand for repayment has been made.

On December 31, 2011, the Company issued a senior convertible promissory note to Mr. William B. Nesbitt, a related party, for unpaid compensation in the modified principal sum of $86,317. The note bears interest at a rate of five percent (5%) per annum, is payable when the Company reaches certain funding goals, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. During the years ended December 31, 2019 and 2018, respectively, $4,312 and $4,315 in interest was expensed, and $500 and $0 in principal repayments were made. As of December 31, 2019 and 2018, respectively, $85,817 and $86,317 in principal remains; and $32,959 and $28,647 in interest has been accrued. The requisite funding goals for repayment have not been met.

On December 9, 2013, the Company, through its wholly-owned subsidiary, PTSG, issued a Zero Coupon Senior Secured Promissory Note (the “PTSG Note”) to seven (7) shareholders (the “Note Holders”), of which two (2) shareholders are also directors of the Company, in the aggregate sum of $2,000,000. The PTSG Note holds senior position above all other debt, bears no interest, is due within five (5) years, or by December 9, 2018, and is secured by an Intellectual Property Pledge and Security Agreement (the “Security Agreement”), which pledges the licensed intellectual property (the “PTSG IP”), the rights of which shall revert to the Note Holders in the event of the Company’s default. The non-interest bearing note was recorded at its present value on the date of issuance, using an imputed interest rate of 5%. The difference between the face value and its present value was recorded as a discount of $432,940, to be amortized over the term of the note. During the year ended December 31, 2018,$81,469 in discount amortization was expensed. As of December 31, 2018, no unamortized discount remained. On December 31, 2018, in connection with the Company’s inability to successfully commercialize the PearTrack IP, all rights, title and interest in the PearTrack IP reverted to the Note Holders and, pursuant to the terms of the Security Agreement, the PTSG Note is canceled. In addition, all rights to future royalties collectible under any sub-license previously issued by the Company for the PearTrack IP reverts to the Note Holders. As a result, in 2018, the Company recognized a gain on the extinguishment of debt of $2,000,000.

On December 31, 2013, the Company, through its wholly-owned subsidiary, Ecologic Products, Inc., issued a convertible promissory note to Huntington Chase Financial Group, an entity controlled by Mr. Edward W. Withrow III, a related party, for cash loans made to the Company in the aggregate principal sum of $153,913. The note bears interest at a rate of seven percent (7%) per annum, is due within one (1) year of written demand, and is convertible into the Company’s Common Stock at a conversion price of $0.07 per share. During the years ended December 31, 2019 and 2018, respectively, $10,773 and $10,774 in interest was expensed. As of December 31, 2019 and 2018, respectively, $92,041 and $81,268 in interest has been accrued. No demand for repayment has been made.

On December 31, 2014, the Company issued a convertible promissory note in the amount of $189,583 for unpaid compensation owed to Mr. E.William Withrow Jr. Modifications to the note have been made through December 31, 2018, to adjust the principal balance owed to $894,256. The note bears interest at a rate of five percent (5%) per annum, is due December 31, 2021, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. During the years ended December 31, 2019 and 2018, respectively, $44,706 and $40,928 in interest was expensed, and $1,000 and $0 in principal repayments were made. As of December 31, 2019 and 2018, respectively, $893,256 and $894,256 in principal remains; and $150,275 and $105,570 in interest was accrued.

F-14

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

On December 31, 2014, the Company issued a convertible promissory note in the amount of $260,000 for unpaid compensation owed to Huntington Chase Financial Group, an entity controlled by Mr. Edward W. Withrow III, a related party. Modifications to the note have been made through December 31, 2018, to adjust the principal balance owed to $1,123,000. The note bears interest at a rate of five percent (5%) per annum, is due December 31, 2021, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. During the years ended December 31, 2019 and 2018, respectively, $56,149 and $50,679 in interest, was expensed. As of December 31, 2019 and 2018, respectively, $188,833 and $132,684 in interest was accrued.

On December 31, 2015, the Company issued a convertible promissory note in the principal amount of $214,500 for unpaid compensation owed to Mr. John Macey. Modifications to the note have been made through December 31, 2017, to adjust the principal balance owed to $426,424. The note bears interest at a rate of four percent (4%) per annum, is due December 31, 2023, and is convertible into the Company’s Common Stock at a conversion price of $0.25 per share. During the years ended December 31, 2019 and 2018, respectively, $17,058 and $17,058 in interest was expensed. As of December 31, 2019 and 2018, respectively, $62,880 and $45,822 in interest was accrued. On October 4, 2019, Mr. Macey was not reelected to the Board, and the note and $62,880 in accrued interest was reclassified to non-related party debt.

On December 31, 2018, the Company issued a convertible promissory note in the principal amount of $40,000 for unpaid compensation owed to Huntington Chase LLC, an entity controlled by Mr. Edward W. Withrow III, a related party. Modifications to the note have been made through December 31, 2019, to adjust the principal balance to $280,000. The note bears interest at a rate of five percent (5%) per annum, is due December 31, 2023, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. A portion of the principal in the amount of $60,000, if converted at the applicable conversion price of $0.05, would result in a beneficial conversion feature. As a result, the difference between the conversion price and the market price was recorded as a discount on the note in the amount of $36,000, to be expensed over the term of the note. During the year ended December 31, 2019 and 2018, respectively, no discount amortization, and $6,529 and $0 interest, was expensed. As of December 31, 2019 and 2018, respectively, $36,000 and $0 in unamortized discount, and $6,529 and $0 in interest, was accrued.

On July 10, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Security, Inc., issued a promissory note in the principal amount of $50,000 for cash loans made by Mr. David Rocke and Mr. Michael Gabriele, related parties. The note bears interest at a rate of twelve percent (12%) per annum. During the year ended December 31, 2019, the principal portion of $50,000 was repaid, and $5,642 in interest was expensed. As of December 31, 2019, $5,642 in interest was accrued.

On September 1, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., issued a promissory note in the principal amount of $25,000 for unpaid compensation owed to Mr. Clive Oosthuizen. The non-interest-bearing note is due December 31, 2020, and was recorded at its present value on the date of issuance, using an imputed interest rate of 5%. The difference between the face value and its present value was recorded as a discount of $1,190, to be amortized over the term of the note. During the year ended December 31, 2019, $394 in discount amortization was expensed, and $4,000 in principal repayments were made. As of December 31, 2019, $21,000 in principal and $796 in unamortized discount remained.

On December 31, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., issued a convertible promissory note in the principal amount of $60,000 for unpaid compensation owed to Mr. Clive Oosthuizen. The note bears interest at a rate of five percent (5%) per annum, is payable when the Company reaches certain funding goals, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. The note, if converted at the applicable conversion price of $0.05, would result in a beneficial conversion feature. As a result, the difference between the conversion price and the market price was recorded as a discount on the note in the amount of $36,000, to be amortized over the term of the note. During the year ended December 31, 2019, no discount amortization and no interest was expensed. As of December 31, 2019, $36,000 in unamortized discount remained, and no interest was accrued. The requisite funding goals for repayment have not been met.

On December 31, 2019, the Company issued a convertible promissory note in the principal amount of $100,000 for unpaid compensation owed to Mr. David Rocke. The note bears interest at a rate of five percent (5%) per annum, is payable when the Company reaches certain funding goals, and is convertible into the Company’s Common Stock at a conversion price equal to the 20-day average trading price on the date of conversion, not to exceed 1% of the Company’s issued and outstanding stock. The note, if converted at the applicable conversion price of $0.062 at December 31, 2019, would result in a beneficial conversion feature. As a result, the difference between the conversion price and the market price was recorded as a discount on the note in the amount of $29,032, to be amortized over the term of the note. During the year ended December 31, 2019, no discount amortization and no interest was expensed. As of December 31, 2019, $29,032 in unamortized discount remained, and no interest was accrued. The requisite funding goals for repayment have not been met.

On December 31, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., issued a convertible promissory note in the principal amount of $116,666 for unpaid compensation owed to Mr. Michael Gabriele. The note bears interest at a rate of five percent (5%) per annum, is payable when the Company reaches certain funding goals, and is convertible into the Company’s Common Stock at a conversion price equal to the 20-day average trading price on the date of conversion, not to exceed 1% of the Company’s issued and outstanding stock. The note, if converted at the applicable conversion price of $0.062 at December 31, 2019, would result in a beneficial conversion feature. As a result, the difference between the conversion price and the market price was recorded as a discount on the note in the amount of $33,871, to be amortized over the term of the note. During the year ended December 31, 2019, no discount amortization and no interest was expensed. As of December 31, 2019, $33,871 in unamortized discount remained, and no interest was accrued. The requisite funding goals for repayment have not been met.

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F-15

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

On December 31, 2019, the Company issued a convertible promissory note in the principal amount of $199,425 for unpaid compensation owed to Mr. Kyle W. Withrow. The note bears interest at a rate of five percent (5%) per annum, is due December 31, 2024, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. The note, if converted at the applicable conversion price of $0.05, would result in a beneficial conversion feature. As a result, the difference between the conversion price and the market price was recorded as a discount on the note in the amount of $119,655, to be amortized over the term of the note. During the year ended December 31, 2019, no discount amortization and no interest was expensed. As of December 31, 2019, $119,655 in unamortized discount remained, and no interest was accrued.

On December 31, 2019, the Company issued a convertible promissory note in the principal amount of $700,170 for unpaid compensation owed to MJ Management Services, Inc., for the services of Ms. Calli R. Bucci. The note bears interest at a rate of five percent (5%) per annum, is due December 31, 2024, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. The note, if converted at the applicable conversion price of $0.05, would result in a beneficial conversion feature. As a result, the difference between the conversion price and the market price was recorded as a discount on the note in the amount of $420,102, to be amortized over the term of the note. During the year ended December 31, 2019, no discount amortization and no interest was expensed. As of December 31, 2019, $420,102 in unamortized discount remained, and no interest was accrued.

On December 31, 2019, the Company issued a convertible promissory note in the principal amount of $134,995 for unpaid compensation owed to Ms. Yinuo Jiang. The note bears interest at a rate of five percent (5%) per annum, is due December, 31, 2024, and is convertible into the Company’s Common Stock at a conversion price of $0.05 per share. The note, if converted at the applicable conversion price of $0.05, would result in a beneficial conversion feature. As a result, the difference between the conversion price and the market price was recorded as a discount on the note in the amount of $80,997, to be amortized over the term of the note. During the year ended December 31, 2019, no discount amortization and no interest was expensed. As of December 31, 2019, $80,997 in unamortized discount remained, and no interest was accrued.

Agreements

On December 4, 2013, the Company, through its wholly-owned subsidiary, PTSG, entered into an Employment Agreement with Mr. E. William Withrow Jr., for his services as President and Chief Executive Officer of the Company (the “Agreement”). The Agreement is for an initial term of two (2) years, extending annually thereafter, and provides for compensation of $175,000 per year, as well as customary employee benefits and a bonus plan contingent upon the Company’s performance. In addition, the Agreement includes a grant to purchase 1,000,000 restricted shares of the Company’s Common Stock, valued at $250,000, at a price of $0.001 per share. On September 19, 2018, Mr. Withrow Jr. resigned, and the agreement was terminated.

On December 4, 2013, the Company, through its wholly-owned subsidiary, PTSG, entered into a consulting agreement with Huntington Chase Financial Group, for the services of Mr. Edward W. Withrow III, a related party. The consulting agreement provides for compensation in the amount of $240,000 per annum for an initial term of four (4) years, and was renewed for an additional year, expiring October 31, 2018. On November 1, 2018, the Company entered into a new Consulting Agreement with Huntington Chase LLC for the services of Mr. Withrow III. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $240,000 per year.

On December 1, 2014, the Company entered into a consulting agreement with MJ Management Services Inc., for the services of Ms. Calli R. Bucci to serve as Chief Financial Officer. The agreement is for an initial term of three (3) years, and provides for compensation of $120,000 per year, as well as expense reimbursements, and an initial stock award of 500,000 restricted shares of the Company’s Common Stock, valued at $149,500, at a price of $0.001 per share. The agreement was renewed for an additional year, expiring October 31, 2018. On November 1, 2018, the Company entered into a new consulting agreement with MJ Management Services, Inc., for the services of Ms. Bucci. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a grant of 500,000 options to purchase shares of the Company’s Common Stock at an exercise price of $0.10 per share. The options are exercisable for a period of five (5) years, vest quarterly over a period of twenty-four (24) months, and were valued at $0 using the Black-Scholes method. The assumptions used in valuing the options were: expected term 4.75 years, expected volatility 35.59%, risk free interest rate 2.96%, and dividend yield 0%.

On October 1, 2018, the Company entered into an Employment Agreement with Mr. Kyle W. Withrow to serve as the Company’s Chief Executive Officer. The agreement is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, as well as customary bonuses and employee benefits. In addition, the agreement includes a grant to purchase 1,000,000 shares of the Company’s restricted Common Stock, valued at $10,000, for $0.001 per share.

On May 1, 2019, the Company entered into Consulting Agreement with Mr. David Rocke. The agreement is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, to be deferred until the Company reaches certain funding goals, as well as 12.5% of Enigma-Bulwark Security, Inc. adjusted gross earnings, as defined within the agreement. In addition, the agreement includes a grant of 6,875,093 options to purchase shares of the Company’s Common Stock, valued at $39,875 using the Black-Scholes method, at an exercise price of $0.005 per share. The options are exercisable for a period of five (5) years, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

F-16

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

On May 1, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., entered into Consulting Agreement with Mr. Michael Gabriele, to serve as its President, and the President of its subsidiary, Enigma-Bulwark Security, Inc. The agreement is for an initial term of three (3) years, and provides a base compensation of $175,000 per year, to be deferred until the Company reaches certain funding goals, as well as 12.5% of Enigma-Bulwark Security, Inc. adjusted gross earnings, as defined within the agreement. In addition, the agreement includes a grant of 2,750,040 options to purchase shares of the Company’s Common Stock, valued at $15,950 using the Black-Scholes method, at an exercise price of $0.005 per share. The options are exercisable for a period of five (5) years, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

On August 29, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. David Rocke. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 6,667,000 shares of the Company’s restricted Common Stock, valued at $66,670, for $0.001 per share, plus the issuance of shares of the Company’s restricted Common Stock equal to seven percent (7%) of any issuance of Common Stock through May 15, 2019, originating from any financial instrument issued by the Company or its subsidiaries, in exchange for certain restrictions placed upon Mr. Rocke’s business activities.

On August 29, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. Michael Gabriele. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 6,667,000 shares of the Company’s restricted Common Stock, valued at $66,670, for $0.001 per share, plus the issuance of shares of the Company’s restricted Common Stock equal to seven percent (7%) of any issuance of Common Stock through May 15, 2019, originating from any financial instrument issued by the Company or its subsidiaries, in exchange for certain restrictions placed upon Mr. Gabriele’s business activities.

On September 1, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., entered into Consulting Agreement with Mr. Clive Oosthuizen to serve as its Chief Executive Officer. The agreement is for an initial term of three (3) years, and provides a base compensation of $180,000 year one, $210,000 year two, and $240,000 year three, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a $25,000 signing bonus, and a grant of 1,250,000 options to purchase shares of the Company’s Common Stock, valued at $625 using the Black-Scholes method, at an exercise price of $0.05 per share. The options are exercisable for a period of five (5) years, and vest periodically over a period of thirty-six (36) months. The assumptions used in valuing the options were: expected term 5.75 years, expected volatility 41.3%, risk free interest rate 1.84%, and dividend yield 0%.

On October 1, 2019, the Company entered into a Consulting Agreement with Ms. Yinuo Jiang to serve as the Company’s Corporate Secretary effective October 8, 2019, among other duties. The agreement is for an initial term of three (3) years, and provides a base compensation of $100,000 per year, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a grant to purchase 1,000,000 shares of the Company’s restricted Common Stock, valued at $10,000, for $0.001 per share.

On October 10, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. Clive Oosthuizen. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 4,000,000 shares of the Company’s restricted Common Stock, valued at $360,000, for $0.001 per share, plus the issuance of shares of the Company’s restricted Common Stock equal to four and one-half percent (4.5%) of any issuance of Common Stock originating from any financial instrument issued by the Company or its subsidiaries during the term, in exchange for certain restrictions placed upon Mr. Oosthuizen’s business activities.

Stock Issuances

On October 1, 2018, in connection with the Employment Agreement with Mr. Kyle W. Withrow, the Company issued 1,000,000 shares of its restricted Common Stock, valued at $10,000, at $0.001 per share for cash in the amount of $1,000.

On August 29, 2019, in connection with the Rocke and Gabriele NC Agreement, the Company issued 13,334,000 shares of its restricted Common Stock at $0.001 per share for cash in the amount of $13,334, plus 210,000 shares under the non-dilution provision at $0.001 per share for cash in the amount of $210.

On September 20, 2019, in connection with the exercise of certain stock options, the Company issued 4,010,470 shares of its restricted Common Stock to related parties at an exercise price of $0.005, for cash in the amount of $20,052. Of these shares, 2,864,620 shares were issued to Mr. David Rocke, and 1,145,850 shares were issued to Mr. Michael Gabriele.

On October 1, 2019, in connection with the Consulting Agreement with Ms. Yinuo Jiang, the Company issued 1,000,000 shares of its restricted Common Stock at $0.001 per share, for cash in the amount of $1,000.

On October 6, 2019, pursuant to a resolution of the board of directors, the Company issued an aggregate of 6,000,000 shares of its restricted Common Stock, valued at $60,000, to its officers and directors at $0.001 per share, for cash in the amount of $6,000. Of these shares, 1,500,000 shares were issued to Mr. Kyle W. Withrow, 1,000,000 shares each were issued to Mr. E. William Withrow, Jr., Ms. Calli Bucci, and Mr. John Ogden, and 500,000 shares each were issued to Mr. William B. Nesbitt, Dr. Martin Blake and Mr. Philip Woolas.

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F-17

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

On October 10, 2019, in connection with the Oosthuizen NC Agreement, the Company issued 4,000,000 shares of its restricted Common Stock at $0.001 per share for cash in the amount of $4,000.

On December 20, 2019, in connection with the exercise of certain stock options, the Company issued 802,094 shares of its restricted Common Stock to related parties at an exercise price of $0.005 for cash in the amount of $4,010. Of these shares, 572,924 shares were issued to Mr. David Rocke and 229,170 shares were issued to Mr. Michael Gabriele.

NOTE 9. COMMITMENTS AND CONTINGENCIES

On December 9, 2013, the Company, through its wholly-owned subsidiary, PTSG, issued a Zero Coupon Senior Secured Promissory Note (the “Secured Note”) in the aggregate sum of $2,000,000. Pursuant to terms and conditions of the Secured Note, principal payments may be made prior to maturity without penalty when/if the Company meets certain funding and earnings goals. Payments are defined as follows: 1) 10% of any equity investment of $2,100,000 or more; or 2) $250,000 each year the Company’s retained earnings reaches or exceeds $1,500,000; or 3) $250,000 each year the Company’s EBITDA reaches or exceeds $3,000,000. As of December 31, 2018, no contingent payments have been made. Due to the Company’s inability to successfully commercialize the PearTrack IP, all rights, title and interest in the PearTrack IP reverted to the former licensees on December 31, 2018. Pursuant to the terms of the Security Agreement, the Secured Note was canceled, and any contingent payments are no longer required.

On June 30, 2014, the Company entered into two (2) License Agreements (“License Agreements”) for the non-exclusive license to the Company in perpetuity of certain patented technology (the “Licensed Product”) in the private sector corporate and enterprise markets, and the public sector government markets. In accordance with the License Agreements, an initial licensing fee of $450,000, or $225,000 per agreement, was made upon execution. In addition, royalty payments equal to 12% of gross revenues generated from the sale, lease or licensing of the Licensed Product are payable to the licensor. As of December 31, 2019, the Company has not commenced sales of the Licensed Product.

NOTE 10. CAPITAL STOCK

The total number of authorized shares of Common Stock that may be issued by the Company is 250,000,000 shares with a par value of $0.001; and the total number of authorized preferred stock is 25,000,000 shares with a par value of $0.001.

During the years ended December 31, 2019 and 2018, respectively, 18,544,000 and 1,000,000 shares of restricted Common Stock were issued in connection with certain related party consulting agreements, valued at $505,440 and $10,000, for cash in the amount of $18,544 and $1,000.

As a result, $486,896 and $9,000 was recorded to additional paid in capital, and $0 and $9,000 was recorded as deferred compensation, to be amortized over the next thirty-three (33) months.

During the years ended December 31, 2019 and 2018, respectively, 6,000,000 and 0 shares of restricted Common Stock were issued in connection with stock awards to related parties, valued at $60,000 and $0, for cash in the amount of $6,000 and $0. As a result, $54,000 and $0 was recorded to additional paid in capital.

During the years ended December 31, 2019 and 2018, respectively, 4,812,564 and 0 shares of restricted Common Stock were issued in connection with the exercise of related party stock options, for cash in the amount of $24,063 and $0. As a result, $19,250 and $0 was recorded to additional paid in capital.

During the years ended December 31, 2019 and 2018, respectively, 0 and 3,500.000 shares of restricted Common Stock were issued in connection with the acquisition of intellectual property, valued at $0 and $35,000, for cash in the amount of $0 and $3,500. As a result, $0 and $31,500 was recorded to additional paid in capital.

During the years ended December 31, 2019 and 2018, respectively, 1,500,000 and 3,500,000 shares of restricted Common Stock were issued in connection with an intellectual property acquisition pending cancelation.

During the years ended December 31, 2019 and 2018, respectively, a total of $0 and $9,000 in deferred stock compensation was recorded, and $3,000 and $750 was expensed. As of December 31, 2019 and 2018, respectively, $5,250 and $8,250 in deferred stock compensation remained, to be expensed over the next twenty-one (21) months.

During the years ended December 31, 2019 and 2018, respectively, a total of 30,856,564 and 8,000,000 shares of restricted Common Stock were issued. As of December 31, 2019 and 2018, respectively, the Company had 108,239,317 and 77,382,753 shares of Common Stock issued and outstanding.

F-18

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 11. STOCK OPTIONS AND AWARDS

Stock Options

As of December 31, 2019 and 2018, respectively, the Company had 6,665,069 and 602,500 stock options issued and outstanding.

During the years ended December 31, 2019 and 2018, respectively, 10,875,133 and 500,000 stock options were granted, valued at $56,450 and $0, using the Black-Scholes method. The assumptions used in valuing the options were: expected term between 4.00 to 5.75 years; expected volatility between 35.59% to 41.30%; risk free interest rate between 1.84% to 2.96%; and dividend yield 0%.

Outstanding and Exercisable Options
		Remaining	Exercise Price
	Number	Contractual Life	times Number		Weighted Average
Exercise Price	of Shares	(in years)	of Shares		Exercise Price

$0.005	4,812,569	4.60	$	24,063		$0.16
$0.05	1,250,000	4.65		62,500		$0.04
$0.10	500,000	4.05		50,000		$0.63
$3.20	102,500	1.30		328,000		$3.20
	6,665,069		$	464,563		$1.20

Options Activity	Number		Weighted Average
	of Shares		Exercise Price
Outstanding at December 31, 2017	102,500			$3.20
Granted	500,000			$0.63
Exercised	--			--
Expired / Cancelled	--			--
Outstanding at December 31, 2018	602,500			$2.34
Granted	10,875,133			$0.20
Exercised	(4,812,564	)		($0.16)
Expired / Cancelled	--			--
Outstanding at December 31, 2019	6,665,069			$1.20

During the years ended December 31, 2019 and 2018, respectively, 10,875,133 and 500,000 stock options were granted, for which $56,450 and $0 in deferred stock option compensation was recorded, and $28,017 and $0 was expensed. There remained $28,433 and $0 deferred stock option compensation at December 31, 2019 and 2018, respectively, to be expensed over the next thirty (30) months.

Restricted Stock Awards

During the years ended December 31, 2019 and 2018, respectively, 0 and 1,000,000 deferred restricted stock awards were granted, valued at $0 and $10,000, for cash in the amount of $0 and $1,000; and 333,334 and 83,333 vested. As a result, $0 and $9,000 in deferred stock compensation was recorded; of which $3,000 and $750 in deferred stock compensation was expensed. As of December 31, 2019 and 2018, respectively, there remained 583,333 and 916,667 shares to be vested, and $5,250 and $8,250 deferred stock compensation to be expensed over the next twenty-one (21) months.

Restricted Stock Awards Activity	Number		Deferred
	of Shares		Compensation
Outstanding at December 31, 2017	--		$	--
Granted	1,000,000			9,000
Vested	(83,333	)		(750	)
Forfeited/Canceled	--			--
Outstanding at December 31, 2018	916,667			8,250
Granted	--			--
Vested	(333,334	)		(3,000	)
Forfeited/Canceled	--			--
Outstanding at December 31, 2019	583,333		$	5,250

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F-19

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 12. INCOME TAXES

A reconciliation of the expected statutory federal and state taxes and the total income tax expense (benefit) at December 31, 2019 and 2018, was as follows:

	December 31, 2019			December 31, 2018

Income (loss) and comprehensive loss before taxes	$	(1,724,096	)	$	1,091,454
Comprehensive loss		(1,206	)		(2,412	)
Income (loss) before taxes		(1,722,890	)		1,093,866
Statutory rate (Fed & State(s))		30%			30%

Computed expected tax payable (recovery)		(482,700	)		141,500

Effect of the U.S. tax law change		--			1,890,600

Tax effect of non-deductible expenses:
Stock compensation/amortization of stock options		8.400			--
Discount amortization		100			24,300
Total tax effect of non-deductible expenses		8,500			24,300

Change in valuation allowance		474,200			(2,056,400	)

Income tax expense	$	--		$	--

Reported income taxes:
Federal	$	--		$	--
State		--			--
Total	$	--		$	--

The significant components of deferred income tax assets and liabilities at December 31, 2019 and 2018, are as follows:

	December 31, 2019			December 31, 2018
Net operating loss carried forward	$	3,053,000		$	2,818,800
Officers’ accrued compensation		997,000			784,000
Accrued related party interest		140,600			113,600
Valuation allowance		(4,190,600	)		(3,716,400	)
Net deferred income tax asset	$	--		$	--

During the year ended December 31, 2018, the Company realized extinguishment of debt principal in the amount of $2,000,000. Per Internal Revenue Code (“IRC”) Section 108(a) (1) (A) the extinguishment of debt principal is excluded from taxable income for the Company. However, any available tax attributes must be released up and to the amount of the extinguishment. Therefore, net operating loss carryforwards were released for the amount of income excluded from taxable income.

The remaining net operating losses available to use toward future taxable income are as follows:

Tax Year	Net Operating Loss		Expires
2010	$	1,586,900	2030
2011		2,403,700	2031
2012		746,200	2032
2013		767,900	2033
2014		2,096,500	2034
2015		1,543,900	2035
2016		349,300	2036
2017		443,400	2037
2018		222,300	No expiration
2019		836,700	No expiration
Total	$	10,996,800

As of December 31, 2019, the Company had approximately $10,996,800 of federal net operating losses. The Company is open to examinations for the tax year 2013 through the current tax year.

F-20

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 13. SEGMENT REPORTING

The Company currently operates with two (2) business segments: Security Services and Corporate/Intellectual Property. The following table is a reconciliation of the Company’s business segments to the consolidated financial statements:

	Security Services [1]		Corporate/ Intellectual Property			Consolidated Totals
December 31, 2019
Revenue	$	580,574	$	--		$	580,574
Gross profit		138,413		--			138,413
Operating income (loss)		73,514		(1,567,582	)		(1,494,068	)
Depreciation and amortization		--		2,072			2,072
Interest expense		5,642		222,786			228,428
Discount amortization		--		394			394
Unrealized losses		--		(1,206	)		(1,206	)
Total assets		295,939		43,542			339,481

December 31, 2018
Revenue	$	--	$	--		$	--
Gross profit		--		--			--
Operating loss		--		(617,497	)		(617,497	)
Depreciation and amortization		--		806			806
Gain on canceled promissory note				2,000,000			2,000,000
Interest expense		--		207,168			207,168
Discount amortization		--		81,469			81,469
Unrealized losses		--		(2,412	)		(2,412	)
Total assets		--		40,089			40,089

[1] Security Services Segment commenced August 2019.

NOTE 14. SUBSEQUENT EVENTS

The Company has evaluated the events and transactions for recognition or disclosure subsequent to December 31, 2019, and has determined that there have been no events that would require disclosure, with the exception of the following:

During the period January 1, 2020, to December 31, 2022, the Company increased its loans from related parties by $1,741,894, from a total of $4,262,974 at December 31, 2019, to $6,004,868 at December 31, 2022. The increase represents (a) an increase in promissory notes in the amount of $1,513,163, as a result of (i) $426,464 reclassified to non-related party transactions, (ii) $2,504,584 converted from accrued compensation, (iii) an increase in discounts resulting from beneficial conversion features of $295,647, (iv) a decrease in unamortized discount of $741,222, (v) $521,557 converted to Common Stock, and (vi) payments to related parties in the amount of $488,975; (b) an increase in accrued compensation of $344,157 as a result of (i) $2,959,713 in accrued compensation, of which $2,504,584 was converted into promissory notes, (ii) $55,000 in accrued compensation reclassified to non-related party transactions, and (iii) payments to related parties in the amount of $55,972; and (c) a decrease in reimbursable expenses and cash advances to the Company of $115,426. All outstanding related party notes payable bear interest at the rate of 5 to 7 percent per annum, are due and payable between one (1) year of written demand and December 31, 2024, or upon certain equity funding, and are convertible into the Company’s Common Stock at a price of between $0.05 to $0.25 per share, or the 20-day average trading price.

On September 8, 2020, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., entered into a Joint Venture Agreement (the “JV Agreement”) with Prime African Security, Ltd., a South African corporation (“Prime”), to provide security and risk management services in South Africa. The joint venture formed Prime Enigma Africa (Pty) Ltd., a South African corporation (the “Joint Venture”), for which Prime owns 51% of the Common Stock and the Company owns 49%. The JV Agreement is for an initial term of three (3) years, and automatically renews unless canceled in writing by either party.

On November 5, 2021, in connection with the conversion of debt in the amount of $696,301, the Company issued 2,785,205 shares of its restricted Common Stock at a conversion price of $0.25 per share.

On January 1, 2022, in connection with a consulting agreement, the Company issued 2,500,000 shares of restricted common stock at $0.001 per share for cash in the amount of $2,500.

Management Changes:

On April 12, 2021, Mr. Michael Gabriele resigned as President of Enigma-Bulwark Risk Management, Inc. and its subsidiaries. His resignation did not involve any disagreement with the Company.

* * * * *

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F-21

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

(b)Engagement of Independent Certifying Accountant

Effective August 3, 2021, the Company engaged Assurance Dimensions Certified Public Accountants & Associates (“Assurance”) as its independent registered public accounting firm, and to audit the Company’s financial statements for each respective year ended December 31, 2016 to 2022, pursuant to the approval of the Company’s Board of Directors.

During each of the Company’s two most recent fiscal years and through the interim periods preceding the engagement of Assurance, the Company (a) has not engaged Assurance as either the principal accountant to audit the Company’s financial statements, or as an independent accountant to audit a significant subsidiary of the Company and on whom the principal accountant is expected to express reliance in its report; and (b) has not consulted with Assurance regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by Assurance concluding there was an important factor to be considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event, as that term is described in Item 304(a)(1)(v) of Regulation S-K.

ITEM 9A.

CONTROLS AND PROCEDURES

Management’s Report on Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s president, chief executive officer and chief financial officer to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of December 31, 2019, the end of the Company’s fiscal year covered by this report, and through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s president, chief executive officer and chief financial officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s president, chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Annual Report.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Responsibility, estimates, and judgments by management are required to assess the expected benefits and related costs of the Company’s control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, and through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. The Company’s management has concluded that, as of December 31, 2019, and through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report, the Company’s internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Company generally accepted accounting principles. The Company’s management reviewed the results of their assessment with the Company’s board of directors.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

Inherent limitations on effectiveness of controls

Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that occurred during the year ended December 31, 2019, and through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report, that have materially or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

ITEM 9B.

OTHER INFORMATION

None

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PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors and Executive Officers

The following table represents the directors and executive officers of the Company as of December 31, 2019:

Name	Position Held with the Company	Age [1]	Date First Elected or Appointed
E. William Withrow Jr.	Director Chairman of the Board	82	July 2, 2009 November 5, 2015
Kyle W. Withrow	President and Chief Executive Officer	45	September 19, 2018
Clive Oosthuizen	Director	45	October 4, 2019
Calli R. Bucci	Chief Financial Officer Director	55	August 16, 2011 October 4, 2019
Yinuo Jiang	Secretary	30	October 8, 2019
John L. Ogden	Director	66	March 3, 2008
William B. Nesbitt	Director	80	November 6, 2011
Dr. Martin A. Blake	Director	63	August 12, 2010
Philip J. Woolas	Director	60	February 20, 2015
David M. Rocke	Director	50	October 4, 2019
[1] As of December 31, 2019.

The following table represents the directors and executive officers of the Company as of the date of filing of this Annual Report:

Name	Position Held with the Company	Age [2]	Date First Elected or Appointed
Clive Oosthuizen	President and Chief Executive Officer Director	47	April 6, 2021 October 4, 2019
Calli R. Bucci	Chief Financial Officer Director	58	August 16, 2011 October 4, 2019
Yinuo Jiang	Secretary	32	October 8, 2019
William B. Nesbitt	Director	82	November 6, 2011
Dr. Martin A. Blake	Director	65	August 12, 2010
Philip J. Woolas	Director	62	February 20, 2015
[2] As of the date of filing of this Annual Report.

Term of Office

The board of directors (the “Board”) elects officers and their terms of office are at the discretion of the Board. Each officer serves until the earlier occurrence of the election of his or her successor at the next meeting of stockholders, death, resignation or removal by the Board. Each director shall hold office until the next annual meeting of stockholders and until his/her successor shall have been duly elected and qualified, or his/her resignation.

Recent Changes in Directors and Executive Officers

On October 4, 2019, Mr. Clive Oosthuizen, Mr. David M. Rocke and Ms. Calli R. Bucci were appointed to the Board, to serve until the next annual meeting of the shareholders or his/her resignation. Mr. John D. Macy was not re-elected to the board of directors.

On January 12, 2021, Mr. John L. Ogden resigned as a Board member. This resignation did not involve any disagreement with the Company. Mr. Kyle W. Withrow, the Company’s President and Chief Executive Officer, succeeded him as a director until the next annual meeting of the shareholders, or his successor is duly appointed or his resignation.

On April 12, 2021, Mr. David M. Rocke resigned as a Board member and consultant. His resignation was preceded by the Company’s inquiry into Mr. Rocke’s performance in connection with his Consulting Agreement dated May 1, 2019.

On April 12, 2021, Mr. Michael Gabriele resigned as President of Enigma-Bulwark Risk Management, Inc., and its subsidiaries. His resignation did not involve any disagreement with the Company

There are currently nine (9) total seats on the Company’s Board, of which four (4) are vacant and shall remain open until new members are elected at the next annual meeting of the shareholders, or they are duly appointed by the Board.

Background and Business Experience

The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person’s principal occupation during the period, and the name and principal business of the organization by which he was employed.

Clive Oosthuizen, President & CEO, Director

Mr. Oosthuizen is a principal and founder and CEO of Triskelion Risk Solutions, Inc., a Cape Town, South African based security firm serving the African market since 2015 serving international clients Vodacom Group, South Africa, a mobile operator majority owned by British telecom firm Vodafone, PLC, with principal responsibilities for the Corporate Security function for all of Vodacom’s African markets. He has provided clients in the African market ranging from gold and diamond mines to serving Siemens Nigeria as its Country Security Manager. His broad experience in security ranges from the analysis of risk and development of planning and drafting risk protocols to the implementation of risk management strategies, including the deployment of security technologies and physical security forces. Between 2003-to-2015, he held management positions in Janusian Risk Management, G4S Security Services, Sanitech and Enviroserv in South Africa, Nigeria and Liberia.

Prior to his forming Triskelion Risk Solutions Mr. Oosthuizen served, with distinction, for 11 years in the South African National Defense Force, retiring as a Captain. He was a member of the Special Forces Regimen, South Africa’s principal special operations unit and counter-insurgency elite, specializing in long-range combat reconnaissance as well as unconventional airborne operations. Only about 8% of recruits who undergo South African Special Forces training pass the course. He was recruited to the Intelligence corps and became a member of the Overt Collection Team. He was promoted to Lieutenant and put in charge of the Counterintelligence Officer at 5 SFR. He then joined the Covert Collection team at 5SFR and was the liaison officer between American, British and Russian Special Forces on training missions. He left the Special forces after 8 years when he was offered the role of establishing an Intelligence office at 4 SAI Battalion in Middleburg. He completed his military service at the Defense Intelligence Headquarters in Pretoria, where he managed a 16-member team that collected and analyzed information and made assessments and predictions and did presentations to the General Staff of the South African National Defense Force on the possible threats facing the country.

Mr. Oosthuizen left the military with a Secret Security Level Clearance, Intelligence Battle Handling, Overt and Covert Intelligence Gathering I, II, III, Sub –Unit Commanders Course, Integration training for Non-Statuary Forces, Free fall Parachuting, Survival, Small Team Tactics, Defensive and Offensive driving tactics, Advanced Covert Collection (SASS). He received his MBA from Management College of South Africa.

The Company believes Mr. Oosthuizen is qualified to serve as a member of the Company’s Board because of his extensive experience in the risk management and security, including military covert and intelligence operations, as well as a diverse background in a multitude of different capacities in throughout Africa and South America.

Calli R. Bucci, Chief Financial Officer, Director

Ms. Bucci, has over thirty years of experience in the field of finance and business management. She joined Enigma in 2010 as its controller, and has served as its Chief Financial Officer since August 2011. Before joining the Company, Ms. Bucci held the position of Chief Financial Officer at InstaSave, Inc., a promotional incentive company, from December 2007 to January 2010, where she was responsible for financial reporting, capital structure strategy and modeling, financial transactions with consumers, consumer product goods companies and retailers, investor relations, audits, payroll and corporate income taxes.

In addition to her public accounting background, Ms. Bucci held the position of Manager/Senior Accountant at Gelfand, Rennert & Feldman, a division of PriceWaterhouseCoopers, from April 1993 to August 1999, where she was responsible for all financial transactions for high net-worth clientele, was liaison for annual audits, general ledger reviews and annual tax preparation.

Ms. Bucci held the position of Director of Accounting and Contract Administration at Intercontinental Releasing Corporation (IRC), a Los Angeles based Motion Picture Distribution Company, from April 1989 to April 1993. Ms. Bucci was responsible for all functions within the company’s accounting department, from financial statements and forecasting, to annual audits and corporate taxes. During her tenure with IRC, Ms. Bucci also designed and implemented a custom computerized availabilities system for the film rights of over 35 film properties distributed to foreign territories throughout the world. She was also responsible for the administration and facilitation of all client contracts, dealing heavily in foreign currencies and international import regulations.

Ms. Bucci concurrently holds the position of Chief Financial Officer of Data Health Partners, Inc., a Delaware corporation, and Parallax Health Sciences, Inc., a Nevada corporation.

Ms. Bucci attended Santa Monica College and the University of California at Berkley, majoring in Accounting.

The Company believes Ms. Bucci is qualified to be the Company’s Chief Financial Officer and director because of her knowledge of and extensive experience in a multitude of different capacities in corporate finance, business affairs, and public markets.

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Yinuo Jiang, Secretary

Ms. Jiang joined the Company in 2013 as a financial analyst, and has served as the Corporate Secretary since October 2019. Dynamic and results-oriented, Ms. Jiang has developed extensive skills and experience in financial modeling, data analysis and business strategy. Before joining the company, Ms. Jiang was part of Citibank’s Young Talent Program from June to August in 2011.

Ms. Jiang graduated from the Capital University of Economics and Business, China, in 2012, with a Bachelor of Business Administration, in 2013 received a Master’s in Applied Finance from Pepperdine University, and in 2019 received a Master’s in Analytics from Georgia Institute of Technology.

The Company believes Ms. Jiang is qualified to be the Company’s Secretary, because of her knowledge and experience in corporate finance and international business affairs.

William B. Nesbitt, Director

Mr. Nesbitt is a graduated from Cornell University with a BS degree in Hotel and Service Industry Management from the School of Hotel Administration. He started a car rental company in New York City called Olin’s Rent A Car which grew into a major presence in New York and subsequently opened branches in Florida to utilize its off season fleet and serve its vacationing New York customers. Olin’s strategy was as a market niche company avoiding the airports and focusing on local neighborhoods and businesses.

Mr. Nesbitt left Olin’s for an opportunity to work for Walter Wriston at Citibank where he participated in the development of the Automatic Teller Machine and a major reduction on branch cost and footprint, with a very substantial increase in customer convenience and deposits.

Mr. Nesbitt rejoined his old company in Florida which had changed its name to Alamo Rent A Car. He was initially responsible for branches and for fleet utilization. He developed a capacity planning system to help predict the numbers of reservations, pricing potential and no show expectations. This allowed the company to achieve fleet utilization far above the competition. He later led the expansion of Alamo across the country and into foreign markets. With expansion complete, Bill focused on marketing and sales to major wholesale suppliers and partners such as the airlines, travel consortiums, cruise lines and large corporations.

Since the sale of Alamo, Mr. Nesbitt has focused on several successful company startup and acquisition projects as well as developing customer loyalty retail marketing programs for Harley Davidson dealerships and marine products companies.

Mr. Nesbitt resigned his position as President and Chief Executive Officer of PearTrack Security Systems, Inc., on October 17, 2014, but remained as President and Chief Executive Officer of the Company’s subsidiaries, Ecologic Car Rentals, Inc. and Ecologic Products, Inc.

The Company believes Mr. Nesbitt is qualified to be a director because of his extensive experience in corporate expansion and controls, corporate finance, and business affairs.

Dr. Martin A. Blake, Director

Dr. Blake is a sustainability expert with over 25 years’ experience developing strategic plans and influencing high profile stakeholders within governments, NGOs as well as the postal, construction, healthcare, oil and gas and charity sectors.

From 2004 to the present, Dr. Blake has been the Head of CSR, Sustainability and Social Policy for the Royal Mail Group plc, London, UK’s postal service company and largest single employer, with more than 195,000 employees, 14,000 retail outlets and a fleet of 35,000 vehicles.

From 2001 to 2004, Dr. Blake was Director of Change, Performance and Risk Management of local authority proving public services for Suffolk Coastal District Council, Suffolk, UK. He successfully designed and directed the implementation of a major transformational change management program.

Since 1988, Dr. Blake has also held the positions of Interim Managing Director of InterVest Group (BVI) Limited, Bahrain, an international financial services and venture capital provider and Director of Community Infrastructure Development for Saudi Arabian Oil Company, KSA, Saudi Arabia, the largest oil producing, refining and shipping company in the world.

The Company believes Dr. Blake is qualified to be a director because of his extensive experience in corporate development and management.

Philip J. Woolas, Director

Mr. Woolas is a principal and co-founder of Wellington Street Partners, Ltd., a political and business consultancy firm headquartered in the United Kingdom. Prior to his position with Wellington, Mr. Woolas was the Labor Member of Parliament for 13 years, holding the seat of Oldham East & Saddleworth. He also served as Parliamentary Private Secretary to the Minister of State for Transport, Lord Commissioner of the Treasury, deputy leader of the House of Commons, Minister of State for Local Government and Regeneration, Minister of State for Civil Contingency, Minister of State for Environment, and Minister of State for Immigration and Customs. Mr. Woolas also served as Minister for the North West of England, and was a leading member of the Tony Blair and Gordon Brown Governments.

Prior to his time in Parliament, in 1984 Mr. Woolas was President of the United Kingdom National Union of Students and went on to a successful career in television where he worked initially as a researcher and investigative journalist for ITV and subsequently as a producer for BBC Newsnight and Channel Four News. He then entered politics as Head of Communications and Campaigns for the GMB trade union. He has also published numerous articles and essays and is a Fellow of the Royal Society of Arts.

The Company believes Mr. Woolas is qualified to be a director because of his extensive experience in international business affairs and management.

Former Officers and Directors

Kyle Withrow, Former President & CEO, Director (2018-2021)

Mr. Withrow has over 20 years’ experience in business development, marketing and management. With a strong affinity towards entrepreneurial endeavors, Mr. Withrow has been an investor and founding member of five start-up businesses in various industries, including environmental transportation and sustainable auto supply products, VOIP telecommunications, digital marketing, and global security tracking and monitoring technology, as well as top-shelf distilled spirit brands and medical diagnostics. He has worked closely with senior management on regulatory and compliance matters, and the development of small cap public companies. As a senior member of a security technology company, he was instrumental in developing its marketing plan and worked with the development team to introduce new products into the pipeline. Mr. Withrow was a founding investor for a company dedicated to environmentally friendly transportation products, and from 2008 to 2013, developed and implemented the business plan, leaving the company as its president. From 2005 to 2007, Mr. Withrow held the position of VP of Marketing for a healthcare company focused on diagnostics.

Mr. Withrow studied at San Diego State University focusing on psychology and business. As an avid traveler, he has traveled throughout more than 50 countries and 5 Continents, learning as much as possible concerning different people and their cultures.

E. William Withrow Jr., Former President & CEO, Chairman of the Board, Director (2009-2021)

Mr. Withrow earned his Master’s in Business Administration from Harvard University, with a concentration in Investment Banking. He has a bachelor’s degree in Business, with a concentration in Finance and Accounting, from the University of Colorado. He served twenty-four years on active duty in the U.S. Navy as a professional logistician, retiring with the rank of Captain. He spent approximately 20 years as a financial professional with Drexel Burnham Lambert, Paine Webber, Merrill Lynch and Wells Fargo.

Mr. Withrow has been very active in civic leadership for the past 20 years serving in a number of elected and appointed positions, including Mayor of Alameda, California. He is currently serving as the regionally elected President of the Governing Board of the Peralta Colleges, an institution consisting of 2,000 faculty and staff and approximately 30,000 students.

Edward W. Withrow III, Former Executive Chairman (2009-2015)

Mr. Withrow III has over 30 years of experience as a financier. He is responsible for leading the creative team and implementing the Company’s business plan, raising capital and forming strategic alliances with industry partners.

From 2002 to 2005, Mr. Withrow III served as the CEO for Addison-Davis Diagnostics, Inc. a leading-edge point-of-care diagnostic company offering point-of-care screening tests to the global health care market. As CEO, Mr. Withrow III was responsible for corporate governance, strategic planning, capitalization, and business development. From 2002 to 2004, Mr. Withrow III served as the CEO for Reward Enterprises, Inc., a diversified financial services company specializing in subprime consumer lending. As CEO, Mr. Withrow III was responsible for developing and implementing the overall business plan of the company. He is the author of several patents in the life sciences space, and has co-authored a patent-pending non-hormonal treatment for women in menopause and post cancer treatments.

Mr. Withrow III graduated from Alameda High School in Alameda California in 1982 and attended Santa Barbara City College from 1982 to 1985 where he majored in Business.

John L. Ogden, Former Director (2008-2021)

Mr. Ogden has more than 30 years’ experience in energy corporate finance, international negotiations, corporate and asset acquisition, business development and energy company management. Since 1995 he has been a principal and managing director of Wood Roberts, LLC, an energy corporate financial advisory firm based in Houston, Texas. Between 1985 and 1995, he managed an independent corporate financial consulting business specializing in domestic and international energy issues, providing M&A advice, and strategic corporate financial consulting services. Mr. Ogden graduated from the University of Leeds, England, with a Bachelor of Laws (honors) and is qualified as a Barrister-at-Law in England.

John D. Macey, Former Director (2014-2019)

Mr. Macey’s career started in electronic engineering, and although still an engineer at heart he has for the past 20 years been a Senior Executive specializing in technology and solution delivery. He has worked in both new businesses and public entities, and in recent years provided specialist technology management consultancy to such clients as Vodafone and Promethean Plc.

As CTO and founding Executive Board Member of Minorplanet Systems Plc, Mr. Macey was responsible for development, manufacturing and operational aspects of the business from inception until 2004. MPS are considered to be one of the industry forebears and soon after forming became listed on the London Stock Exchange with an international business which grew to employ some 1,200 staff globally.

Mr. Macey has a proven track record in Product Development, NPI, and Manufacturing, and has extensive experience in Hardware, Firmware, and Software Design, Mechanical Engineering, Systems Integration, and Vendor/Supply Chain management.

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David M. Engert, Former Director (2016-2017)

Mr. Engert has served as the President and Chief Executive Officer of NightHawk Radiology Holdings, Inc. since November 2008 and as a member of its Board since April 30, 2008. Mr. Engert also sits on the board of directors of Healthation, Inc., a healthcare information technology company. Mr. Engert was the founder and owner of ES3, a strategic consulting and investment company since 2007. From 2002 to 2006, Mr. Engert served as the president, chief executive officer and director of Quality Care Solutions, Inc., one of the nation’s leading providers of advanced healthcare payer enterprise application solutions, which was acquired by Trizetto, Inc. in January 2007. Prior to 2002, Mr. Engert held a number of senior level management positions in the healthcare industry over the previous 10 years, including senior vice president & general manager at McKesson Corporation’s Managed Care Division.

David M. Rocke, Former Director (2019-2021)

Mr. Rocke is a retired insurance executive, investor and entrepreneur with a strong background in accounting, insurance and reinsurance, as well as mergers and acquisitions. Between 1996 to 2017, Mr. Rocke was engaged by Enstar Group Limited (“Enstar”), a premier acquirer and operator of insurance and reinsurance businesses. Beginning in 2006, while at Enstar, he worked almost exclusively in mergers and acquisitions, and was responsible for the whole of Enstar’s acquisition process. His duties included managing deal due diligence, including the oversight of internal and external claims analysts, financial modeling, actuarial work, supervising internal and external counsel, and liaising with funding sources and regulatory bodies to ensure timely deal completion. During Mr. Rocke’s tenure, Enstar grew from a dozen employees to approximately 1,300 employees, with annual revenues and total assets growing to $343.8 million and $13.6 billion, respectively. Prior to his retirement in 2017, he held the title of Executive Vice President of Mergers and Acquisition at Enstar. From 1993 to 1996 Mr. Rocke worked Deloitte & Touche in Bermuda, where he began as an Audit Senior and rose to Insolvency Manager, covering investment funds and reinsurance companies. From 1990 to 1993, he trained as a Chartered Accountant at Touche Ross in the United Kingdom.

Mr. Rocke received his MA in Mathematics at Merton College, Oxford in the United Kingdom.

Michael Gabriele, Former President, Enigma-Bulwark Risk Management, Inc. (2019-2021)

Mr. Gabriele served as the President of the Company’s wholly owned subsidiary, Enigma-Bulwark Risk Management, Inc., since its inception in August 2019, as well as EBRM’s subsidiary, Enigma-Bulwark Security, Inc. His professional experience includes business development and operations management, as well as an acute background in insurance and risk management. Mr. Gabriele is currently a Director of Business Development and Analytics at Pro Health Care MGA, and is responsible for business development for specialty MGA policies. From 2010 to 2017, Mr. Gabriele held the position of Reinsurance Executive for ProSight Specialty Insurance Company. From 2004 to 2010, he held the position of Executive Vice President and Chief Operating Officer, responsible for all business operations overseeing a staff of 85 employees. Mr. Gabriele’s career began in 1991, amassing a wealth of skills and experience that has strengthened over 30 years.

Mr. Gabriele attended the City University of New York, receiving his AAS degree in Accounting. He has also received his paralegal certification and is an ARIAS US Certified Arbitrator.

Identification of Significant Consultants

Mr. Edward W. Withrow III, a beneficial shareholder and the Company’s former executive chairman (2009-2015), has been retained by the Company to provide business advisory and strategic planning services. On December 4, 2013, the Company, through its wholly-owned subsidiary, PTSG, entered into a consulting agreement with Huntington Chase Financial Group, through which Mr. Withrow III’s services are being provided. The consulting agreement provides a base compensation of $240,000 per year for a period of four (4) years, and was renewed for an additional year, expiring October 31, 2018. On November 1, 2018, the Company entered into a new Consulting Agreement with Huntington Chase LLC for the services of Mr. Withrow III. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $240,000 per year.

Family Relationships

Mr. E. William Withrow, Jr., former President, CEO and Board member (2009-2021) is the father of Mr. Edward W. Withrow III, a beneficial shareholder and former executive chairman (2009-2015), and Mr. Kyle W. Withrow, former President, CEO and Board member (2018-2021). See “Identification of Directors and Executive Officers,” above, for each party’s term.

There are no family relationships among its directors or executive officers as of the date of filing of this Annual Report.

Involvement in Certain Legal Proceedings

On May 14, 2018, RoxSan Pharmacy, Inc. {“RoxSan”) a wholly-owned subsidiary of Parallax Health Sciences, Inc., (“Parallax”) filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California (the “Court”). Mr. Timothy Yoo was appointed trustee (“Trustee”) on May 15, 2018. In connection with this filing, RoxSan sought to discharge approximately $5 million of liabilities owed to various parties, and intercompany loans in excess of $1 million owed to Parallax. The Chapter 7 bankruptcy proceeding by RoxSan was fully discharged, and the case was closed on March 13, 2019, in U.S. Bankruptcy Court, Central District of California.

Ms. Calli R. Bucci, the Company’s Chief Financial Officer and Board member, is Chief Financial Officer of Parallax Health Sciences, Inc., and a member of its board. Mr. E. William Withrow Jr., former Board member (2009-2021), and Mr. David M. Engert, former Board member (2016-2017), were also Board members of Parallax during this period. Mr. John L. Ogden, a former Board member (2008-2021), is currently a Board member of Parallax. Mr. Edward W. Withrow III, a beneficial shareholder and former executive chairman, is also a beneficial shareholder of Parallax, and its former executive chairman.

On December 18, 2018, the Company’s founder and former executive chairman (2009-2015), Mr. Edward W. Withrow III (“Withrow III”), pled guilty to one count of making false statements during a deposition with a Federal Prosecutor while he was the Chairman of the Company. Withrow III was sentenced to six (6) months house arrest, five-year supervised probation, and a $10,000 fine. After 18 months, Mr. Withrow’s probation was terminated. Subsequently, on March 12, 2019, Withrow III entered into a non-admission/non-denial agreement with the Securities and Exchange Commission, and was barred from investing in a “Penny Stock” offering of a public company, and from acting as an officer or director of a public company for five years. In the written Order, Hon. Judge Saris of the United States Court District of Massachusetts, stated that “Withrow is not a repeat offender and is remorseful. He was a legitimate businessman prior to his involvement in the at-issue scheme, and there is little likelihood of recidivism.” The Company’s Board and executives concur with Judge Saris.

The Company knows of no other directors, executive officers or control persons involved in any of the following events during the past five years:

1.any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

3.being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Audit Committee

At December 31, 2019, the Company’s audit committee consisted of Mr. John L. Ogden, chairperson, and Ms. Calli R Bucci. During the calendar year 2019, the business of the audit committee was conducted though teleconferences. Formal communications to the Board were made during meetings held by the Board and in writing via email.

As of the date of filing of this Annual Report, the Company does not have an audit committee. The Board as a whole addresses any audit related matters.

Code of Ethics

The Company has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K of the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of change in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely upon a review of Forms 3 and 4, and amendments thereto, furnished to the Company under Rule 16a-3€ during the year ended December 31, 2019, Forms 5, and any amendments thereto, furnished to the Company with respect to the year ended December 31, 2019, and the representations made by the reporting persons to the Company, the Company believes that during the year ended December 31, 2019, its executive officers and directors and all persons who own more than ten percent of a registered class of the Company’s equity securities complied with all Section 16(a) filing requirements.

Table of Contents

ITEM 11.

EXECUTIVE COMPENSATION

Summary Compensation Table

The table below summarizes the compensation paid by the Company to the following persons:

(a)its principal executive officer;

(b)each of the Company’s two most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 2019 and 2018; and

(c)up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as the Company’s executive officer at the end of the years ended December 31, 2019 and 2018.

No disclosure is provided for any named executive officer, other than the Company’s principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:

SUMMARY COMPENSATION TABLE

Salary

Bonus

Stock Award

Option Awards

Non-Equity Incentive Plan Compensation

Change in Pension Value and Nonqualified Deferred Compensation Earnings

All Other Compensation

Total

Name and Principal Position

Year

($)

E. William Withrow Jr.

2019

None

10,000

[1]

None

10,000

Chairman of the Board, Former President, CEO

2018

125,837

[1]

None

10,094

[10]

135,931

Kyle W. Withrow

2019

150,000

[2]

None

15,000

[2]

None

11,540

[10]

176,540

President, CEO

2018

36,500

[2]

None

10,000

[2]

None

2,885

[10]

49,385

Calli R. Bucci

2019

150,000

[3]

None

10,000

[3]

None

160,000

Chief Financial Officer, Secretary

2018

125,000

[3]

None

[3]

None

6,924

[10]

131,924

Clive Oosthuizen

2019

60,000

[4]

25,000

[4]

360,000

[4]

625

[4]

None

3,462

[10]

449,087

President, CEO, Director (2019 – Present)

2018

None

Yinuo Jiang

2019

55,000

[5]

None

10,000

[5]

None

65,000

Secretary (2019 – Present)

2018

36,000

None

36,000

Edward W. Withrow III

2019

240,000

[6]

None

240,000

Key Consultant, Former Executive Chairman (2009-2015)

2018

240,000

[6]

None

240,000

David Rocke

2019

100,000

[7]

None

67,720

[7]

39,875

[7]

None

20,187

[9] [10]

227,782

Former Consultant, Director (2019 – 2021)

2018

None

Michael Gabriele

2019

116,666

[8]

None

67,720

[8]

15,950

[8]

None

20,667

[9] [10]

221,003

Former subsidiary President (2019 – 2021)

2018

None

[1]	Pursuant to employment agreement dated December 4, 2013. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. Executive granted stock award in 2019 of 1,000,000 shares, with an aggregate grant date fair value of $10,000, at a cost of $0.001 per share, 100% of which vested immediately. As of December 31, 2019, $894,256 has been converted into a convertible promissory note, accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share.

[2]	Pursuant to employment agreement dated October 1, 2018. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. Employment agreement also includes stock award of 1,000,000 shares, with an aggregate grant date fair value of $10,000, 100% of which vested immediately, at a cost of $0.001 per share.

[3]	Pursuant to consulting agreement with MJ Management Services, Inc. dated December 1, 2014, and subsequent agreement dated November 1, 2018. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. The November 2018 consulting agreement includes 500,000 options granted, which are exercisable at a price of $0.10 per share, vest quarterly over a period of 24 months, and were valued at $0 using the Black-Scholes method. The assumptions used in valuing the options were: expected term 4.75 years, expected volatility 35.59%, risk free interest rate 2.96%, and dividend yield 0%.

[4]	Pursuant to consulting agreement dated September 1, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. Consulting agreement includes signing bonus of $25,000; stock award of 4,000,000 shares, with an aggregate grant date fair value of $360,000, at a cost of $0.001 per share, 100% of which vested immediately; and 1,250,000 options granted, which are exercisable at a price of $0.05 per share, vest quarterly over a period of 36 months, and were valued at $625 using the Black-Scholes method. The assumptions used in valuing the options were: expected term 5.75 years, expected volatility 41.3%, risk free interest rate 1.84%, and dividend yield 0%. As of December 31, 2019, $60,000 in accrued compensation has been converted into a convertible promissory note, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share.

[5]	Pursuant to consulting agreement dated October 8, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. Consulting agreement also includes stock award of 1,000,000 shares, with an aggregate grant date fair value of $10,000, at a cost of $0.001 per share, 100% of which vested immediately. As of December 31, 2019, $134,995 in accrued compensation has been converted into a convertible promissory note, net of conversions, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share.

[6]	Pursuant to consulting agreement with Huntington Chase Financial Group dated December 4, 2013. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2019, $1,123,000 has been converted into a convertible promissory note, accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share.

[7]	Pursuant to consulting agreement dated May 1, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. Consulting agreement includes 6,875,093 options granted, with an exercise price of $0.005 per share, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met, and were valued at $39,875 using the Black-Scholes method. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%. Executive also granted stock award in connection with Non-Compete, Non-Dilution and Registration Rights Agreement dated August 29, 2019, of 6,772,000 shares, with an aggregate grant date fair value of $67,720, at a cost of $0.001 per share, 100% of which vested immediately. As of December 31, 2019, $100,000 in accrued compensation has been converted into a convertible promissory note, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at the average trading price for the twenty (20) days immediately preceding the conversion.

[8]	Pursuant to consulting agreement dated May 1, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. Consulting agreement includes 2,750,040 options granted, with an exercise price of $0.005 per share, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met, and were valued at $15,950 using the Black-Scholes method. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%. Executive also granted stock award in connection with Non-Compete, Non-Dilution and Registration Rights Agreement dated August 29, 2019, of 6,772,000 shares, with an aggregate grant date fair value of $67,720, at a cost of $0.001 per share, 100% of which vested immediately. As of December 31, 2019, $116,666 in accrued compensation has been converted into a convertible promissory note, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at the average trading price for the twenty (20) days immediately preceding the conversion.

[9]	Includes profit participation of $17,302.

[10]	Accrued vacation.

Table of Contents

The table below summarizes the compensation paid by the Company subsequent to December 31, 2019, through December 31, 2022, the most recent fiscal year immediately preceding the filing of this Annual Report:

SUMMARY COMPENSATION TABLE

Salary

Bonus

Stock Award

Option Awards

Non-Equity Incentive Plan Compensation

Change in Pension Value and Nonqualified Deferred Compensation Earnings

All Other Compensation

Total

Name and Principal Position

Year

($)

Clive Oosthuizen

2022

160,000

[1]

None

3,463

[9]

163,463

President, CEO, Director (2019 – Present)

2021

220,000

[1]

None

8,653

[9]

228,653

2020

190,000

[1]

None

8,652

[9]

198,652

Calli R. Bucci

2022

150,000

[2]

None

150,000

Chief Financial Officer, Director (2011 – Present)

2021

150,000

[2]

None

150,000

2020

150,000

[2]

None

150,000

Yinuo Jiang

2022

100,000

[3]

None

100,000

Secretary (2019 – Present)

2021

100,000

[3]

None

100,000

2020

100,000

[3]

None

100,000

Kyle Withrow

2021

39,966

[4]

None

2,885

[9]

42,851

Former President, CEO, Director (2018 – 2021)

2020

150,000

[4]

None

11,540

[9]

161,540

Edward W. Withrow III

2022

240,000

[5]

None

240,000

Key Consultant (2016 – Present) Former Executive Chairman (2009 – 2015)

2021

240,000

[5]

None

240,000

2020

240,000

[5]

None

240,000

David Rocke

2021

None

17,336

[8]

17,336

Former Consultant, Director (2019 – 2021)

2020

50,000

[6]

None

39,527

[8] [9]

89,527

Michael Gabriele

2021

49,503

[7]

None

17,336

[8]

66,839

Former subsidiary President (2019 – 2021)

2020

175,000

[7]

None

40,487

[8] [9]

215,487

[1]	Pursuant to consulting agreement dated September 1, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2022, $554,230 in accrued compensation has been converted into a convertible promissory note, net of conversions, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share. On August 31, 2021, $100,000 in principal and $16,442 in accrued interest was converted into 2,328,833 shares of the Company’s restricted Common Stock.

[2]	Pursuant to consulting agreement with MJ Management Services, Inc. dated November 1, 2018. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2022, $945,170 in accrued compensation has been converted into a convertible promissory note, net of conversions, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share. On August 31, 2021, $150,000 in principal and $67,340 in accrued interest was converted into 4,346,790 shares of the Company’s restricted Common Stock.

[3]	Pursuant to consulting agreement dated October 8, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2022, $342,193 in accrued compensation has been converted into a convertible promissory note, net of conversions, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share. On August 31, 2021, $82,802 in principal and $17,198 in accrued interest was converted into 2,000,000 shares of the Company’s restricted Common Stock.

[4]	Pursuant to employment agreement dated October 1, 2018. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2022, $403,816 in accrued compensation has been converted into a convertible promissory note, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share.

[5]	Pursuant to consulting agreement with Huntington Chase LLC dated November 1, 2018. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2022, $1,000,000 in accrued compensation has been converted into a convertible promissory note, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at $0.05 per share. On August 31, 2021, $282,519 in accrued interest was converted into 5,650,384 shares of the Company’s restricted Common Stock.

[6]	Pursuant to consulting agreement dated May 1, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2022, $100,000 in accrued compensation has been converted into a convertible promissory note, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at the average trading price for the twenty (20) days immediately preceding the conversion.

[7]	Pursuant to consulting agreement dated May 1, 2019. All compensation earned under this agreement is deferred until the Company reaches certain funding goals. As of December 31, 2022, $324,629 in accrued compensation has been converted into a convertible promissory note, which accrues interest at 5% per annum, and is convertible into the Company’s Common Stock at the average trading price for the twenty (20) days immediately preceding the conversion.

[8]	Includes profit participation of $17,336 and $33,757 for 2021 and 2020, respectively.

[9]	Accrued vacation.

Table of Contents

Employment Contracts and Termination of Employment and Change in Control Arrangements

On December 4, 2013, the Company, through its wholly-owned subsidiary, PTSG, entered into an employment agreement with Mr. E. William Withrow Jr., for his services as President and Chief Executive Officer of the Company. The agreement is for an initial term of two (2) years, extending annually thereafter, and provides for compensation of $175,000 per year as well as customary employee benefits and a bonus plan contingent upon the Company’s performance. In addition, the Agreement includes a grant to purchase 1,000,000 restricted shares of the Company’s Common Stock, valued at $250,000, at a price of $0.001 per share. On September 19, 2018, Mr. Withrow Jr. resigned, and the agreement was terminated.

On December 4, 2013, the Company, through its wholly-owned subsidiary, PTSG, entered into a consulting agreement with Huntington Chase Financial Group, for the services of Mr. Edward W. Withrow III, former Executive Chairman (2009-2015). The consulting agreement provides for compensation in the amount of $20,000 per month for an initial term of four (4) years, and was renewed for an additional year, expiring October 31, 2018. On November 1, 2018, the Company entered into a new consulting agreement with Huntington Chase LLC for the services of Mr. Withrow III. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $240,000 per year.

On December 1, 2014, the Company entered into a consulting agreement with MJ Management Services Inc., for the services of Ms. Calli R. Bucci to serve as Chief Financial Officer. The agreement is for a period of three (3) years, and provides for compensation of $120,000 per year, as well as expense reimbursements, and an initial stock award of 500,000 restricted shares of the Company’s Common Stock, valued at $149,500, at a price of $0.001 per share. The agreement was renewed for an additional year, expiring October 31, 2018. On November 1, 2018, the Company entered into a new consulting agreement with MJ Management Services Inc. for the services of Ms. Bucci. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a grant of 500,000 options to purchase shares of the Company’s Common Stock at an exercise price of $0.10 per share. The options are exercisable for a period of five (5) years, vest quarterly over a period of twenty-four (24) months, and were valued at $0 using the Black-Scholes method. The assumptions used in valuing the options were: expected term 4.75 years, expected volatility 35.59%, risk free interest rate 2.96%, and dividend yield 0%.

On October 1, 2018, the Company entered into an Employment Agreement with Mr. Kyle W. Withrow to serve as the Company’s President and Chief Executive Officer. The agreement is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, as well as customary bonuses and employee benefits. In addition, the agreement includes a grant to purchase 1,000,000 shares of the Company’s restricted Common Stock, valued at $10,000, for $0.001 per share. On April 6, 2021, Mr. Withrow resigned, and the agreement was terminated.

On May 1, 2019, the Company entered into a Consulting Agreement with Mr. David Rocke. The agreement is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, to be deferred until the Company reaches certain funding goals, as well as 12.5% of Enigma-Bulwark Security, Inc. adjusted gross earnings, as defined within the agreement. In addition, the agreement includes a grant of 6,875,093 options to purchase shares of the Company’s Common Stock, valued at $39,875 using the Black-Scholes method, at an exercise price of $0.005 per share. The options are exercisable for a period of five (5) years, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%. On April 12, 2021, Mr. Rocke resigned, and the agreement was terminated.

On August 29, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. Michael Gabriele, the President of the Company’s subsidiary, Enigma-Bulwark Security, Inc. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 6,667,000 shares of the Company’s restricted Common Stock, valued at $66,670, for $0.001 per share, plus the issuance of shares of the Company’s restricted Common Stock equal to seven percent (7%) of any issuance of Common Stock through May 15, 2019, originating from any financial instrument issued by the Company or its subsidiaries, in exchange for certain restrictions placed upon Mr. Gabriele’s business activities.

Table of Contents

On October 10, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. Clive Oosthuizen. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 4,000,000 shares of the Company’s restricted Common Stock, valued at $360,000, at $0.001 per share, plus the issuance of shares of the Company’s restricted Common Stock equal to four and one-half percent (4.5%) of any issuance of Common Stock originating from any financial instrument issued by the Company or its subsidiaries during the term, in exchange for certain restrictions placed upon Mr. Oosthuizen’s business activities.

There are no other employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

There are no agreements or understandings for any executive officer to resign at the request of another person. None of the Company’s executive officers acts or will act on behalf of or at the direction of any other person.

Equity Compensation Plan

Plan Name	Plan Reserve	RSAs Granted	Options Granted	Reserve Balance
2009 Stock Option Plan*	*	--	724,755	*
2018 Stock Incentive Plan	20,000,000	18,544,000	500,000	956,000
2019 Stock Incentive Plan	20,000,000	7,000,000	10,875,133	2,124,867
2021 Stock Incentive Plan	20,000,000	2,500,000	5,000,000	12,500,000
	60,000,000	28,044,000	17,099,888	15,580,867

* Plan expired 2019

As of December 31, 2019, the Company had granted options to purchase a total of 12,099,888 shares of the Company’s restricted Common Stock, of which 4,812,564 were exercised, 492,255 have expired and 130,000 were forfeited/canceled. There were 6,665.069 stock options outstanding at December 31, 2019.

Table of Contents

Stock Options/SAR Grants

The following options were granted to the Company’s directors and officers during the years ended December 31, 2019 and 2018.

On November 1, 2018, in connection with her consulting agreement, Ms. Calli R. Bucci, the Company’s CFO, was granted options to purchase 500,000 shares of the Company’s restricted Common Stock at an exercise price of $0.10 per share. The shares, valued at $0 using the Black-Scholes method, vest quarterly over a period of two (2) years, and are exercisable for a period of five (5) years. The assumptions used in valuing the options were: expected term 4.75 years, expected volatility 35.59%, risk free interest rate 2.96%, and dividend yield 0%.

On May 15, 2019, in connection with his consulting agreement, Mr. David Rocke, a former member of the Board (2019-2021), was granted options to purchase 6,875,093 shares of the Company’s restricted Common Stock at an exercise price of $0.005 per share. The shares, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met, were valued at $39,875 using the Black-Scholes method, and are exercisable for a period of five (5) years. The assumptions used in valuing the options were: expected term 4 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

On May 15, 2019, in connection with his consulting agreement, Mr. Michael Gabriele, former president (2019-2021) of the Company’s subsidiary, EBS, was granted options to purchase 2,750,040 shares of the Company’s restricted Common Stock at an exercise price of $0.005 per share. The shares, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met, were valued at $15,950 using the Black-Scholes method, and are exercisable for a period of five (5) years. The assumptions used in valuing the options were: expected term 4 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

On September 1, 2019, in connection with his consulting agreement, Mr. Clive Oosthuizen, the Company’s President and CEO, was granted options to purchase 1,250,000 shares of the Company’s restricted Common Stock at an exercise price of $0.05 per share. The shares, valued at $625 using the Black-Scholes method, vest periodically over a period of thirty-six (36) months, and are exercisable for a period of five (5) years. The assumptions used in valuing the options were: expected term 5.75 years, expected volatility 41.30%, risk free interest rate 1.84%, and dividend yield 0%.

There were no options granted to the Company’s directors and officers subsequent to December 31, 2019, through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report.

Aggregated Option Exercised in Last Fiscal Year and Fiscal Year-End Values

The following options were exercised by officers and directors of the Company during the Company’s fiscal years ended December 31, 2019 and 2018:

On September 20, 2019, the Company issued 2,864,620 shares of the Company’s restricted Common Stock to Mr. David Rocke, a former Board member (2019-2021), in connection with the exercise of stock options at an exercise price of $0.005, for cash in the amount of $14,323.

On September 20, 2019, the Company issued 1,145,850 shares of the Company’s restricted Common Stock to Mr. Michael Gabriele, former president (2019-2021) of the Company’s subsidiary, EBRM, in connection with the exercise of stock options at an exercise price of $0.005, for cash in the amount of $14,323.

On December 20, 2019, the Company issued 572,924 shares of the Company’s restricted Common Stock to Mr. David Rocke, a former Board member (2019-2021), in connection with the exercise of stock options at an exercise price of $0.005, for cash in the amount of $2,864.

On December 20, 2019, the Company issued 229,170 shares of the Company’s restricted Common Stock to Mr. Michael Gabriele, former president (2019-2021) of the Company’s subsidiary, EBRM, in connection with the exercise of stock options at an exercise price of $0.005, for cash in the amount of $1,146.

There were no options exercised by officers or directors of the Company subsequent to December 31, 2019, through December 31, 2022, the most recent fiscal year end immediately preceding the filing of this Annual Report:

Outstanding Equity Awards at Fiscal Year End

The following table represents the outstanding equity awards as of December 31, 2019:

	Number of Options
Name	Granted	Non-Exercisable	Exercisable	Exercise Price	Expiration Date
Kyle Withrow	25,000	––	25,000	$3.20	04/19/2021
John Ogden	15,000	––	15,000	$3.20	04/19/2021
Edward W. Withrow Jr.	15,000	––	15,000	$3.20	04/19/2021
Shelley Meyers	15,000	––	15,000	$3.20	04/19/2021
Myles Lambert	10,000	––	10,000	$3.20	04/19/2021
Paul Christensen	10,000	––	10,000	$3.20	04/19/2021
Calli Bucci	5,000	––	5,000	$3.20	04/19/2021
Martin Blake	5,000

ENIGMA-BULWARK, LTD 10-K