Company Quick10K Filing
Bravatek Solutions
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 14 $0
10-Q 2019-11-15 Quarter: 2019-09-30
10-Q 2019-07-24 Quarter: 2019-06-30
10-Q 2019-06-25 Quarter: 2019-03-31
10-K 2019-06-11 Annual: 2018-12-31
S-1 2018-10-26 Public Filing
10-Q 2018-12-04 Quarter: 2018-09-30
10-Q 2018-08-14 Quarter: 2018-06-30
10-Q 2018-05-18 Quarter: 2018-03-31
10-Q 2017-10-30 Quarter: 2017-09-30
10-Q 2017-10-06 Quarter: 2017-06-30
10-K 2017-09-27 Annual: 2017-03-31
10-Q 2017-08-29 Quarter: 2016-12-31
10-Q 2017-08-23 Quarter: 2016-09-30
10-Q 2017-08-10 Quarter: 2016-06-30
10-K 2017-07-21 Annual: 2016-03-31
10-Q 2016-02-22 Quarter: 2015-12-31
10-Q 2015-11-20 Quarter: 2015-09-30
10-Q 2015-08-24 Quarter: 2015-06-30
10-K 2015-08-05 Annual: 2015-03-31
10-Q 2015-02-25 Quarter: 2014-12-31
10-Q 2014-11-14 Quarter: 2014-09-30
10-Q 2014-08-20 Quarter: 2014-06-30
10-K 2014-07-14 Annual: 2014-03-31
10-Q 2014-02-18 Quarter: 2013-12-31
10-Q 2013-11-18 Quarter: 2013-09-30
10-Q 2013-08-15 Quarter: 2013-06-30
10-K 2013-07-15 Annual: 2013-03-31
10-Q 2013-02-19 Quarter: 2012-12-31
10-Q 2012-11-19 Quarter: 2012-09-30
10-Q 2012-08-20 Quarter: 2012-06-30
10-K 2012-06-11 Annual: 2012-03-31
10-Q 2012-02-21 Quarter: 2011-12-31
10-Q 2011-11-18 Quarter: 2011-09-30
10-Q 2011-08-15 Quarter: 2011-06-30
10-K 2011-07-01 Annual: 2011-03-31
10-Q 2011-02-16 Quarter: 2010-12-31
10-Q 2010-11-19 Quarter: 2010-09-30
10-Q 2010-08-16 Quarter: 2010-06-30
10-K 2010-07-13 Annual: 2010-03-31
10-Q 2010-02-16 Quarter: 2009-12-31
8-K 2019-10-31 Other Events, Exhibits
8-K 2019-03-13 Enter Agreement, Exhibits
8-K 2019-03-02 Accountant
8-K 2019-02-18 Accountant, Exhibits
8-K 2019-01-25 Amendment, Exhibits
8-K 2018-11-13 Regulation FD
8-K 2018-08-31 Enter Agreement, Exhibits
8-K 2018-07-27 Amend Bylaw, Exhibits
8-K 2018-06-01 Sale of Shares, Amend Bylaw, Exhibits
8-K 2018-05-08 Enter Agreement, Exhibits
8-K 2018-03-28 Other Events, Exhibits
8-K 2018-03-14 Other Events, Exhibits
8-K 2018-02-15 Enter Agreement, Exhibits
8-K 2018-02-03 Amend Bylaw
8-K 2018-01-25 Enter Agreement, Exhibits
8-K 2018-01-12 Enter Agreement, M&A, Sale of Shares, Amend Bylaw, Exhibits
8-K 2018-01-10 Other Events, Exhibits
8-K 2018-01-05 Other Events, Exhibits
8-K 2018-01-05 Other Events, Exhibits
BVTK 2019-09-30
Note 1 - Organization and Basis of Presentation
Note 2 - Summary of Significant Accounting Policies
Note 3 - Related Party Transactions
Note 4 - Accrued Settlement
Note 5 - Notes Payable
Note 6 - Convertible Notes Payable
Note 7 - Derivative Liability
Note 8- Stockholders' Deficit
Note 9 - Commitments and Contingencies
Note 10 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 bvtk_ex311.htm
EX-31.2 bvtk_ex312.htm
EX-32.1 bvtk_ex321.htm
EX-32.2 bvtk_ex322.htm

Bravatek Solutions Earnings 2019-09-30

BVTK 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
WORK
TRWH
UGRO
VIR
XTEG
VERY
VIE
BLPG 0 2 5 3 1 -4 -4 -0 32% 0.0 -282%
DGTW 0 0 3 -0 -0 -6 -4 -0 12,618% 0.0 -16,557%
BHAT

10-Q 1 bvtk_10q.htm FORM 10-Q bvtk_10q.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission File Number: 000-53489

 

Bravatek Solutions, Inc.

(Exact name of registrant as specified in its charter)

 

Colorado

 

32-0201472

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification Number)

 

2028 E Ben White Blvd, #240-2835

Austin, TX 78741

(Address of principal executive offices)

 

866-204-6703

(Registrant’s telephone number, including area code)

 

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

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Not applicable

 

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 shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ¨ Yes     x 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 registrant was required to submit and post such files). ¨ Yes     x No

 

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

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

 

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes     x No

 

As of November 14, 2019, the Company had 3,826,520 issued and outstanding shares of common stock.

 

 
 
 
 

 

BRAVATEK SOLUTIONS, INC.

INDEX

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 (unaudited)

 

3

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019, and 2018 (unaudited)

 

4

 

Condensed Consolidated Statements of Stockholders’ Deficit for the nine months ended September 30, 2019, and 2018 (unaudited)

 

5

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019, and 2018 (unaudited)

 

6

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

7

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risks

 

23

 

Item 4.

Controls and Procedures

 

23

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

24

 

Item 1A.

Risk Factors

 

25

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

25

 

Item 3.

Defaults Upon Senior Securities

 

25

 

Item 4.

Mine Safety Disclosures

 

25

 

Item 5.

Other Information

 

25

 

Item 6.

Exhibits

 

26

 

SIGNATURES

 

27

 

 
2
 
 

 

BRAVATEK SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

ASSETS

 

CURRENT ASSETS

 

 

 

 

 

 

Cash

 

$1,509

 

 

$14,094

 

Accounts receivable, net

 

 

112,500

 

 

 

27,836

 

Prepaid expenses and other current assets

 

 

31,446

 

 

 

70,126

 

TOTAL CURRENT ASSETS

 

 

145,455

 

 

 

112,056

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

5,814

 

 

 

12,591

 

TOTAL ASSETS

 

$151,269

 

 

$124,647

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Convertible notes payable, net of discounts  

 

$1,869,746

 

 

$1,415,845

 

Notes payable

 

 

430,788

 

 

 

830,788

 

Accounts payable and accrued liabilities 

 

 

258,983

 

 

 

225,721

 

Accounts payable, related party 

 

 

500,529

 

 

 

367,432

 

Accrued interest 

 

 

550,807

 

 

 

416,646

 

Accrued settlement

 

 

385,000

 

 

 

-

 

Derivative liabilities 

 

 

4,440,863

 

 

 

5,540,889

 

TOTAL CURRENT LIABILITIES

 

 

8,436,716

 

 

 

8,797,321

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Series A convertible preferred stock (5,000,000 shares authorized; par value $0.0001, -0- shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)

 

 

-

 

 

 

-

 

Series B preferred stock (350,000 shares authorized; par value $0.0001, 264,503 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)

 

 

26

 

 

 

26

 

Series C preferred stock (1,000,000 shares authorized; par value $0.0001, 319,768 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)

 

 

32

 

 

 

32

 

Series D preferred stock (60,000 shares authorized; par value $0.0001, -0- shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)

 

 

-

 

 

 

-

 

Series E preferred stock (1 share authorized; par value $0.0001, 1 share issued and outstanding at September 30, 2019 and December 31, 2018, respectively)

 

 

-

 

 

 

-

 

Common stock (10,600,000,000 shares authorized; no par value; 2,451,271 and 986,667 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)

 

 

6,916,970

 

 

 

6,668,410

 

Common stock to be issued (1,221 shares issuable at September 30, 2019 and December 31, 2018, respectively)

 

 

66,917

 

 

 

66,917

 

Additional paid in capital

 

 

22,564,059

 

 

 

22,186,887

 

Accumulated deficit 

 

 

(37,833,451)

 

 

(37,594,946)

TOTAL STOCKHOLDERS' DEFICIT

 

 

(8,285,447)

 

 

(8,672,674)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$151,269

 

 

$124,647

 

 

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

 

 
3
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Sales, other

 

$112,912

 

 

$1,648

 

 

$113,532

 

 

$1,666

 

Sales, related party

 

 

-

 

 

 

-

 

 

 

85,750

 

 

 

24,837

 

Total sales

 

 

112,912

 

 

 

1,648

 

 

 

199,282

 

 

 

26,503

 

Cost of services

 

 

33,738

 

 

 

1,975

 

 

 

53,444

 

 

 

6,569

 

GROSS PROFIT (LOSS)

 

 

79,174

 

 

 

(327)

 

 

145,838

 

 

 

19,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

5,082

 

 

 

30,869

 

 

 

14,877

 

 

 

50,869

 

General and administrative 

 

 

174,912

 

 

 

204,934

 

 

 

529,062

 

 

 

2,959,357

 

Research and development

 

 

-

 

 

 

15,000

 

 

 

-

 

 

 

31,750

 

TOTAL OPERATING EXPENSES 

 

 

179,994

 

 

 

250,803

 

 

 

543,939

 

 

 

3,041,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS 

 

 

(100,820)

 

 

(251,130)

 

 

(398,101)

 

 

(3,022,042)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense 

 

 

(64,311)

 

 

(42,960)

 

 

(182,015)

 

 

(130,408)

Gain (loss) on investment in joint venture

 

 

-

 

 

 

8,519

 

 

 

-

 

 

 

(89,450)

Other income (expense)

 

 

-

 

 

 

1,500

 

 

 

(31,609)

 

 

4,505

 

Loss on rescinded acquisition

 

 

-

 

 

 

(110,522)

 

 

-

 

 

 

(370,947)

Loss on write down of asset

 

 

-

 

 

 

(51,640)

 

 

(22,900)

 

 

(51,640)

Gain (loss) on fair value of derivatives

 

 

(527,801)

 

 

844,505

 

 

 

1,082,874

 

 

 

1,022,907

 

Gain (loss) on extinguishment of debt 

 

 

(80,000)

 

 

-

 

 

 

(80,000)

 

 

(23,020)

Amortization of debt discount 

 

 

(94,287)

 

 

(256,494)

 

 

(606,754)

 

 

(1,322,676)

TOTAL OTHER INCOME (EXPENSE), NET

 

 

(766,399)

 

 

392,908

 

 

 

159,596

 

 

 

(960,729)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$(867,219)

 

$141,778

 

 

$(238,505)

 

$(3,982,771)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER SHARE BASIC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$(0.51)

 

$0.15

 

 

$(0.17)

 

$(4.46)

Diluted

 

$(0.51)

 

$0.09

 

 

$(0.17)

 

$(4.46)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

1,716,914

 

 

 

938,491

 

 

 

1,411,243

 

 

 

892,236

 

Diluted

 

 

1,716,914

 

 

 

1,542,319

 

 

 

1,411,243

 

 

 

892,236

 

 

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

 

 
4
 
Table of Contents

  

BRAVATEK SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

For the Three and Nine Months Ended September 30, 2019 and 2018

(unaudited)

 

 

 

Series B

 

 

Preferred Stock Series C

 

 

Series E

 

 

Common Stock 

 

 

Common Stock to be issued 

 

 

Additional

Paid

 

 

Retainted Deficit

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

in Capital

 

 

 

 

Deficit

 

Balance, December 31, 2018

 

 

264,503

 

 

$26

 

 

 

319,768

 

 

$32

 

 

 

1

 

 

$-

 

 

 

986,667

 

 

$6,668,410

 

 

 

1,221

 

 

$66,917

 

 

$22,186,887

 

 

$(37,594,946)

 

$(8,672,674)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible debt and accrued interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

328,909

 

 

 

88,900

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

88,900

 

Round up shares for reverse stock split

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,074

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Reclassification of derivative liabilities upon conversion of convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

230,845

 

 

 

-

 

 

 

230,845

 

Net income for the three months ended March 31, 2019

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,233,148

 

 

 

1,233,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

264,503

 

 

 

26

 

 

 

319,768

 

 

 

32

 

 

 

1

 

 

 

-

 

 

 

1,321,650

 

 

 

6,757,310

 

 

 

1,221

 

 

 

66,917

 

 

 

22,417,732

 

 

 

(36,361,798)

 

 

(7,119,781)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock retained by sellers of HelpComm

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

41,604

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Round up shares for reverse stock split

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net loss for the three months ended June 30, 2019

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(604,434)

 

 

(604,434)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2019

 

 

264,503

 

 

 

26

 

 

 

319,768

 

 

 

32

 

 

 

1

 

 

 

-

 

 

 

1,363,315

 

 

 

6,757,310

 

 

 

1,221

 

 

 

66,917

 

 

 

22,417,732

 

 

 

(36,966,232)

 

 

(7,724,215)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible debt and accrued interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

887,956

 

 

 

109,660

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

109,660

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

200,000

 

 

 

50,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

50,000

 

Reclassification of derivative liabilities upon conversion of convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

146,327

 

 

 

-

 

 

 

146,327

 

Net loss for the three months ended September 30, 2019

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(867,219)

 

 

(867,219)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

 

 

264,503

 

 

$26

 

 

 

319,768

 

 

$32

 

 

 

1

 

 

$-

 

 

 

2,451,271

 

 

$6,916,970

 

 

 

1,221

 

 

$66,917

 

 

$22,564,059

 

 

$(37,833,451)

 

$(8,285,447)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

 

264,503

 

 

$26

 

 

 

319,768

 

 

$32

 

 

 

-

 

 

$-

 

 

 

804,068

 

 

$5,385,977

 

 

 

1,221

 

 

$66,917

 

 

$18,291,657

 

 

$(29,600,801)

 

$(5,856,192)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible debt and accrued interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

71,739

 

 

 

711,663

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

711,663

 

Reclassification of derivative liabilities upon conversion of convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

894,632

 

 

 

-

 

 

 

894,632

 

Net loss for the three months ended March 31, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,066,315)

 

 

(1,066,315)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2018

 

 

264,503

 

 

 

26

 

 

 

319,768

 

 

 

32

 

 

 

-

 

 

 

-

 

 

 

875,807

 

 

 

6,097,640

 

 

 

1,221

 

 

 

66,917

 

 

 

19,186,289

 

 

 

(30,667,116)

 

 

(5,316,212)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible debt and accrued interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

48,389

 

 

 

333,420

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

333,420

 

Series E Preferred stock issued

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,333,140

 

 

 

-

 

 

 

2,333,140

 

Reclassification of derivative liabilities upon conversion of convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

357,695

 

 

 

-

 

 

 

357,695

 

Shares Issued for Donation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,500

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,000

 

 

 

-

 

 

 

25,000

 

Net loss for the three months ended June 30, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,058,234)

 

 

(3,058,234)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2018

 

 

264,503

 

 

 

26

 

 

 

319,768

 

 

 

32

 

 

 

1

 

 

 

-

 

 

 

926,696

 

 

 

6,431,060

 

 

 

1,221

 

 

 

66,917

 

 

 

21,902,124

 

 

 

(33,725,350)

 

 

(5,325,191)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible debt and accrued interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

22,471

 

 

 

132,350

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

132,350

 

Reclassification of derivative liabilities upon conversion of convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

84,763

 

 

 

-

 

 

 

84,763

 

Shares Issued for Donation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,500

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,000

 

 

 

-

 

 

 

25,000

 

Net income for the three months ended September 30, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

141,778

 

 

 

141,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2018

 

 

264,503

 

 

$26

 

 

 

319,768

 

 

$32

 

 

 

1

 

 

$-

 

 

 

951,667

 

 

$6,563,410

 

 

 

1,221

 

 

$66,917

 

 

$22,011,887

 

 

$(33,583,572)

 

$(4,941,300)
 

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

 

 

5
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

(restated)

 

CASH FLOWS FROM OPERATING ACTIVITIES 

 

 

 

 

 

 

Net income (loss)

 

$(238,505)

 

$(3,982,771)

Adjustments to reconcile net income (loss) to net cash used in operations: 

 

 

 

 

 

 

 

 

Amortization and depreciation 

 

 

6,777

 

 

 

85,066

 

Loss on rescinded acquisition

 

 

-

 

 

 

370,947

 

Loss on extinguishment of debt

 

 

80,000

 

 

 

23,020

 

Amortization of debt discounts

 

 

606,754

 

 

 

1,322,676

 

(Gain) on fair value of derivatives

 

 

(1,082,874)

 

 

(1,022,907)

Loss on write down of asset

 

 

22,900

 

 

 

51,640

 

Convertible debentures issued for penalty

 

 

10,500

 

 

 

-

 

Loss on investment in joint venture

 

 

-

 

 

 

89,450

 

Stock issued for donation

 

 

-

 

 

 

25,000

 

Stock issued for services

 

 

50,000

 

 

 

0

 

Voting control value of preferred stock issued

 

 

-

 

 

 

2,333,140

 

Changes in operating assets and liabilities: 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(84,664)

 

 

4,250

 

Prepaid expenses and other current assets

 

 

15,780

 

 

 

(87,822)

Accounts payable and accrued liabilities 

 

 

33,262

 

 

 

120,346

 

Accounts payable and accrued liabilities, related party

 

 

133,097

 

 

 

19,004

 

Accrued interest

 

 

181,068

 

 

 

142,908

 

NET CASH USED IN OPERATING ACTIVITIES 

 

 

(265,905)

 

 

(506,053)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES 

 

 

 

 

 

 

 

 

Cash paid in HelpComm acquisition

 

 

-

 

 

 

(394,446)

Investment in joint venture

 

 

-

 

 

 

(89,450)

Purchase of exclusivity rights

 

 

-

 

 

 

(30,380)

NET CASH USED IN INVESTING ACTIVITIES 

 

 

-

 

 

 

(514,276)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM BY FINANCING ACTIVITIES 

 

 

 

 

 

 

 

 

Payments of principal on convertible notes payable 

 

 

(11,700)

 

 

(95,111)

Proceeds from issuance of convertible debt , net

 

 

265,020

 

 

 

908,994

 

Bank overdraft

 

 

 

 

 

 

17,089

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 

 

 

253,320

 

 

 

830,972

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS 

 

 

(12,585)

 

 

(189,357)

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS 

 

 

 

 

 

 

 

 

Beginning of period

 

 

14,094

 

 

 

189,357

 

 

 

 

 

 

 

 

 

 

End of period

 

$1,509

 

 

$-

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

Cash paid for interest

 

 

47,854

 

 

$112,953

 

Cash paid for income taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Shares issued in settlement of debt and interest on convertible debt 

 

$198,560

 

 

$1,177,433

 

Original issue discounts 

 

$18,175

 

 

$92,000

 

Original debt discount against derivative liabilities

 

$360,020

 

 

$1,133,704

 

Initial value of derivative liabilities 

 

$654,205

 

 

$1,541,611

 

Reclassification of derivatives upon conversion of convertible debt

 

$377,172

 

 

$1,362,090

 

Convertible debenture issued with debt settlement

 

$95,000

 

 

$-

 

 

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

 

 
6
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

Note 1 - Organization and Basis of Presentation

 

Organization and Line of Business

 

Bravatek Solutions, Inc., a Colorado corporation (the “Company”), was incorporated on April 19, 2007, as eCrypt Technologies, Inc. Effective October 23, 2015, the Company changed its name to “Bravatek Solutions, Inc.” in order to better reflect the Company’s expanding operations and strategy. The Company’s business operations are oriented around the marketing and distribution of proprietary and allied security, defense and information security software, hardware and services (including telecom services). Products include software, hardware and services, and span a diverse variety of industries including, but not limited to, email security, user authentication, telecommunications and cyber breach protection. Bravatek is a security platform company offering services, software, tools and systems that it provides, develops, acquires or obtains through strategic marketing or other agreements. The Company began taking pre-orders of Tuitio, a consumer software product (protected by two issued patents and licensed by the Company) in the second quarter of 2018.

 

In December 2017, the Company entered into a Joint Venture Agreement (the “Agreement”) with DarkPulse Technologies, Inc. (“DarkPulse”), pursuant to which the parties formed a joint venture limited liability company in Delaware to develop, market and sell products and services based on DarkPulse’s patented BOTDA DarkPulse technology (the “Technology”) to be owned 40% by the Company and 60% by Dark Pulse (the “JV”). During the year ended December 31, 2018, the Company funded $89,450 to the JV which was written off in in its entirety at December 31, 2018.

 

In January of 2018, the Company acquired HelpComm, Inc., a Virginia corporation engaged in the provision of telecom services. These telecom services include cellular tower mapping and audits, ground audits, civil equipment installation, cellular site decommissioning, 3G/4G/5G installations, project/construction management, battery installation and maintenance, shelter and compound preventative maintenance, site cleanup, and other related services. On March 12, 2019, the Company and HelpComm entered into a Rescission, Settlement and Confidentiality Agreement with Mutual Releases; whereby the acquisition of HelpComm was fully rescinded as of January 1, 2018 resulting in a loss on rescinded acquisition of $150,000.

 

Basis of Presentation

 

The unaudited condensed consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America were omitted pursuant to such rules and regulations. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the results expected for the year ending December 31, 2019.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has recurring losses, an accumulated deficit of $37,833,451 and has a working capital deficit of $8,291,261 as of September 30, 2019, which raises substantial doubt about its ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

Stock Split

 

On January 16, 2019, the Company affected a 10,000 for 1 reverse stock split. All common stock share and per share information has been retroactively adjusted to reflect this reverse stock split.

 

 
7
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

Note 2 – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements include net realizable value of accounts receivable, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share-based payments and derivative liabilities, estimates of the valuation allowances on deferred tax assets and estimates of the probability and potential magnitude of contingent liabilities.

 

Advertising and Promotion

 

The Company expenses advertising costs as incurred. Advertising expenses for nine months ended September 30, 2019 and 2018 was $14,877 and $50,869, respectively.

 

Derivative Financial Instruments

 

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of September 30, 2019, and December 31, 2018, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion.

 

Fair Value of Financial Instruments

 

At September 30, 2019 and December 31, 2018, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value:

 

 

 

Fair Value

 

 

 

 

 

 

As of

 

 

Fair Value Measurements at

 

 

 

September 30,

 

 

September 30, 2019

 

Description

 

2019

 

 

Using Fair Value Hierarchy

 

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Conversion feature on convertible notes

 

$4,440,863

 

 

$-

 

 

$-

 

 

$4,440,863

 

 

 

 

Fair Value

 

 

 

 

 

 

As of

 

 

Fair Value Measurements at

 

 

 

December 31,

 

 

December 31, 2018

 

Description

 

2018

 

 

Using Fair Value Hierarchy

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Conversion feature on convertible notes

 

$5,540,889

 

 

$-

 

 

$-

 

 

$5,540,889

 

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ Topic 606 “), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. The Company had no significant post-delivery obligations; therefore, this new standard did not result in a material recognition of revenue on the Company’s accompanying financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

 
8
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

Revenue from licensing software is recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:

 

·

executed contracts with the Company’s customers that it believes are legally enforceable;

·

identification of performance obligations in the respective contract;

·

determination of the transaction price for each performance obligation in the respective contract;

·

allocation of the transaction price to each performance obligation; and

·

recognition of revenue only when the Company satisfies each performance obligation.

 

After applying these five elements the Company’s recognizes licensed software revenue at the time the software is delivered or available to the customer, at which time the Company has no further obligations related to the sales contract with its customers.

 

Basic and Diluted Earnings Per Share

 

As of September 30, 2019, and 2018, there were warrants and options to purchase 2 and 2 shares, respectively, of common stock and the Company’s outstanding convertible debt is convertible into approximately 22,599,284 and 603,828 shares, respectively, of common stock. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. The following table illustrates the computation of basic and diluted EPS for the three and nine months ended September 30, 2019 and 2018:

 

 

 

For the Three Months ended

September 30, 2019

 

 

For the Three Months ended

September 30, 2018

 

 

 

Net Income

(Loss)

 

 

Shares

 

 

Per Share

Amount

 

 

Net Income

(Loss)

 

 

Shares

 

 

Per Share

Amount

 

Basic EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) available to stockholders

 

$(867,219)

 

 

1,716,914

 

 

$(0.51)

 

$141,778

 

 

 

938,491

 

 

$0.15

 

Effect of Dilutive Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible debt

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

603,828

 

 

 

-

 

Dilute EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) available to stockholders plus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

assumed conversions

 

$(867,219)

 

 

1,716,914

 

 

$(0.51)

 

$141,778

 

 

 

1,542,319

 

 

$0.09

 

 

 

 

For the Nine Months ended

September 30, 2019

 

 

For the Nine Months ended

September 30, 2018

 

 

 

Net Income

(Loss)

 

 

Shares

 

 

Per Share

Amount

 

 

NetIncome

(Loss)

 

 

Shares

 

 

Per Share

Amount

 

Basic EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) available to stockholders

 

$(238,505)

 

 

1,411,243

 

 

$(0.17)

 

$(3,982,771)

 

 

892,236

 

 

$(4.46)

Effect of Dilutive Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible debt

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

-

 

Dilute EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) available to stockholders plus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

assumed conversions

 

$(238,505)

 

 

1,411,243

 

 

$(0.17)

 

$(3,982,771)

 

 

892,236

 

 

$(4.46)

  

 
9
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

Recent Accounting Pronouncements

 

In June 2018, the FASB issued Accounting Standards Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements as the Company did not have any lease arrangements that were subject to this new pronouncement.

 

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

 

Note 3 – Related Party Transactions

 

As of September 30, 2019, and December 31, 2018, included in accounts payable - related party is $500,529 and $367,432, respectively, for amounts owed to the Company’s CEO.

 

For the nine months ended September 30, 2019, the Company recognized revenue from DarkPulse Technology Holdings Inc., a former joint venture partner, of $85,750 which is included in Sales, related party on the financial statements. For the nine months ended September 30, 2018, the Company recognized revenue from Mile High Construction, a former joint venture partner, $24,837 which is included in Sales, related party on the financial statements.

 

Note 4 – Accrued Settlement

 

On July 3, 2019, the Company entered into a settlement agreement with Global in connection with the $400,000 note payable (See Note 5), whereby the Company agreed to pay $385,000 in cash and issue a convertible note payable for $95,000. The cash is to be paid $7,500 at the end of each calendar month with the unpaid balance accruing interest at 10% after one year. The convertible note accrues interest at 10% per annum after one year and is convertible into shares of common stock based on the average of the three lowest closing bid prices 10 days prior to conversion. If the Company does not make the required $7,500 monthly payments, it is required to issue a $5,000 convertible note, with term similar to the above, for each month the $7,500 payment is not made. As of September 30, 2019, the Company had not made any of the $7,500 monthly payments. In connection with this settlement, the Company recognized a loss on the settlement of debt of $80,000. The Company did not make any $7,500 payments for July and August of 2019 (making September’s $7,500 payment in October), and the Company is obligated to issue Global two $5,000 convertible notes for the July and August missed payments.

 

Note 5 – Notes Payable

 

Notes payable consisted of the following at September 30, 2019 and December 31, 2018:

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Notes issued from May 18, 2010 to June 27, 2013 (A)

 

$-

 

 

$400,000

 

Notes issued from December 18, 2012 to May 30, 2013 (B)

 

 

199,960

 

 

 

199,960

 

Notes issued from July 12, 2013 to June 16, 2014 (C)

 

 

230,828

 

 

 

230,828

 

Total notes payable

 

$430,788

 

 

$830,788

 

 

 
10
 
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BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

(A) From May 18, 2010 through June 27, 2013, the Company issued in the aggregate $558,500 of unsecured notes payable to a Nevada corporation, lender and preferred shareholder of the Company (“Global”). The notes bear interest at 10%, compounded annually and $553,000 and $5,500 matured on November 30, 2014, and June 27, 2015, respectively. On February 16, 2015, the Company secured extensions on all of the notes that matured on November 30, 2014 through April 1, 2015, with no change in original terms of the agreement.

 

On June 15, 2015, Company entered into a Settlement Agreement and Partial Waiver and Release (the “Settlement Agreement”) with Global. Global owned 2,377,500 shares of the Company’s Series A Convertible Preferred Stock and is the holder of outstanding promissory notes in the original principal amount of $558,500, with accrued interest thereon due to Global of approximately $267,960 (the “Global Notes”) immediately prior to the Settlement Agreement. Pursuant to the Settlement Agreement, Global agreed to (1) waive interest due of $267,960 under the Global Notes and $158,500 of principal, such that only $400,000 of principal and interest would be considered outstanding as of the settlement agreement date, and (2) immediately return all of the Preferred Stock to the Company for cancellation, in consideration for the Company issuing 856 shares of common stock to Global. As of June 15, 2015, the note is payable on demand as part of the Settlement Agreement. As of September 30, 2019, and December 31, 2018, the note balance was $0 and $400,000, respectively. See Note 4.

 

(B) The Company issued five notes from December 18, 2012 to May 30, 2013 totaling $199,960 in unsecured notes payable to a third party. The notes bear an interest rate of 10%, compounded annually and matured from December 18, 2014 through May 30, 2015. On February 16, 2015, the Company secured a notes payable extension through April 1, 2015, with no change in original terms of the agreements. The notes payable was again extended on August 6, 2015, through January 1, 2016, with no change in original terms of the agreement. As of September 30, 2019, and December 31, 2018, the note balance was $199,960 and the notes are currently in default.

 

(C) The Company issued six notes from July 12, 2013 to June 16, 2014, totaling $230,828 in unsecured notes payable to a third party. The notes bear an interest rate of 10%, compounded annually and matured from July 12, 2014 through June 16, 2015. On February 16, 2015, the Company secured a notes payable extension through April 1, 2015, with no other changes in original terms of the agreements. The notes payable was again extended on August 6, 2015, through January 1, 2016, with no other changes in original terms of the agreements. As of September 30, 2019, and December 31, 2018, the note balance was $230,828 and the notes are currently in default.

 

Note 6 – Convertible Notes Payable

 

Convertible notes payable consisted of the following at September 30, 2019 and December 31, 2018:

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Issued on December 19, 2014 for $156,000; accrues interest at 8% per annum; due December 19, 2015 (in default); convertible at 68% of the lowest closing price 20 days prior to conversion

 

$121,767

 

 

$135,371

 

Issued on May 1, 2017 for $50,000; accrues interest at 8% per annum; due May 1, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

50,000

 

 

 

50,000

 

Issued on May 1, 2017 for $50,000; accrues interest at 8% per annum; due May 1, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

50,000

 

 

 

50,000

 

Issued on May 1, 2017 for $17,500; accrues interest at 8% per annum; due May 1, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

17,500

 

 

 

17,500

 

Issued on May 1, 2017 for $25,000; accrues interest at 8% per annum; due May 1, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

25,000

 

 

 

25,000

 

Issued on May 3, 2017 for $29,700; accrues interest at 8% per annum; due May 3, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

-

 

 

 

29,700

 

Issued on May 3, 2017 for $25,300; accrues interest at 8% per annum; due May 3, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

-

 

 

 

25,300

 

Issued on May 3, 2017 for $22,000; accrues interest at 8% per annum; due May 3, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

-

 

 

 

22,000

 

Issued on June 8, 2017 for $140,750; accrues interest at 8% per annum; due June 8, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

140,750

 

 

 

140,750

 

Issued on June 8, 2017 for $140,750; accrues interest at 8% per annum; due June 8, 2018 (in default); convertible at 55% of the lowest closing price 20 days prior to conversion

 

 

140,750

 

 

 

140,750

 

Issued on December 26, 2017 for $120,750; accrues interest at 12% per annum; due June 26, 2018 (in default); convertible at 60% of the average of the three lowest closing price 20 days prior to conversion

 

 

-

 

 

 

8,750

 

Issued on January 26, 2018 for $184,000; accrues interest at 10% per annum; due January 26, 2019 (in default); convertible at 60% of the average of the three lowest closing price 20 days prior to conversion

 

 

130,567

 

 

 

150,000

 

Issued on April 2, 2018 for $45,000; accrues interest at 12% per annum; due October 2, 2018 (in default); convertible at 60% of the average of the three lowest closing price 20 days prior to conversion

 

 

45,000

 

 

 

45,000

 

Issued on May 11, 2018 for $215,000; accrues interest at 12% per annum; due May 11, 2019 (in default); convertible at 60% of the average of the three lowest closing price 20 days prior to conversion

 

 

215,000

 

 

 

215,000

 

 

 
11
 
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BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

Issued on June 21, 2018 for $184,000; accrues interest at 12% per annum; due June 21, 2019 (in default); convertible at 60% of the average of the three lowest closing price 20 days prior to conversion

 

 

163,000

 

 

 

163,000

 

Issued on November 9, 2018 for $241,500; accrues interest at 10% per annum; due May 9, 2019 (in default); convertible at 60% of the average of the three lowest closing price 20 days prior to conversion

 

 

202,800

 

 

 

214,500

 

Issued on December 4, 2018 for $54,500; accrues interest at 10% per annum; due June 4, 2019 (in default); convertible at 60% of the average of the three lowest closing price 20 days prior to conversion

 

 

54,500

 

 

 

54,500

 

Issued on November 7, 2017 for $120,750; accrues interest at 10% per annum; due May 1, 2018 (in default); convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

105,750

 

 

 

105,750

 

Issued on January 29, 2018 for $84,525; accrues interest at 10% per annum; due January 29, 2019 (in default); convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

52,159

 

 

 

84,525

 

Issued on April 8, 2018 for $34,500; accrues interest at 10% per annum; due April 8, 2019 (in default); convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

34,500

 

 

 

34,500

 

Issued on May 22, 2018 for $52,969; accrues interest at 10% per annum; due May 22, 2019 (in default); convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

52,969

 

 

 

52,969

 

Issued on June 15, 2018 for $63,000; accrues interest at 10% per annum; due June 15, 2019 (in default); convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

63,000

 

 

 

63,000

 

Issued on December 11, 2018 for $59,000; accrues interest at 12% per annum; due December 11, 2019; convertible at 60% of the lowest closing price 25 days prior to conversion

 

 

59,000

 

 

 

59,000

 

Issued on April 8, 2019 for $105,000; accrues interest at 8% per annum; due April 8, 2020; convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

105,000

 

 

 

-

 

Issued on April 22, 2019 for $41,345; accrues interest at 12% per annum; due April 22, 2020; convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

41,345

 

 

 

-

 

Issued on April 30, 2019 for $16,100; accrues interest at 10% per annum; due April 30, 2020; convertible at 60% of the lowest closing price 25 days prior to conversion

 

 

16,100

 

 

 

-

 

Issued on May 15, 2019 for $52,500; accrues interest at 8% per annum; due May 15, 2020; convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

52,500

 

 

 

-

 

Issued on June 27, 2019 for $68,250; accrues interest at 8% per annum; due June 27, 2020; convertible at 60% of the lowest closing price 20 days prior to conversion

 

 

68,250

 

 

 

-

 

Issued on July 3, 2019 for $95,000; accrues interest at 10% per annum after one year; due July 3, 2020; convertible at 100% of the average of the three lowest closing price 10 days prior to conversion

 

 

105,000

 

 

 

-

 

Total convertible notes payable

 

 

2,112,207

 

 

 

1,886,865

 

Unamortized debt discount

 

 

(242,461)

 

 

(471,020)

Convertible notes payable, net

 

$1,869,746

 

 

$1,415,845

 

 

 
12
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

The following is a roll-forward of the Company’s convertible notes and related discounts for the nine months ended September 30, 2019:

 

 

 

Principal

 

 

Debt

 

 

 

 

 

 

Balance

 

 

Discount

 

 

Total

 

Balance, December 31, 2018

 

$1,886,865

 

 

$(471,020)

 

$1,415,845

 

New issuances

 

 

378,195

 

 

 

(378,195)

 

 

-

 

Issuances for penalties

 

 

10,500

 

 

 

-

 

 

 

10,500

 

Conversions

 

 

(151,653)

 

 

-

 

 

 

(151,653)

Cash payment

 

 

(11,700)

 

 

-

 

 

 

(11,700)

Amortization

 

 

-

 

 

 

606,754

 

 

 

606,754

 

Balance, September 30, 2019

 

$2,112,207

 

 

$(242,461)

 

$1,869,746

 

 

Note 7 - Derivative Liability

 

The Company determined that the conversion features of the convertible notes represented embedded derivatives since the notes are convertible into a variable number of shares upon conversion. Accordingly, the notes are not considered to be conventional debt and the embedded conversion feature is bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of these derivative instruments is recorded as liabilities on the balance sheet with the corresponding amount recorded as a discount to each note, with any excess of the fair value of the derivative component over the face amount of the note recorded as an expense on the issue date. Such discounts are amortized from the date of issuance to the maturity dates of the notes. The change in the fair value of the derivative liabilities are recorded in other income or expenses in the statements of operations at the end of each period, with the offset to the derivative liabilities on the balance sheet.

 

The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the fair value of derivative liability at September 30, 2019 and December 31, 2018:

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Risk free rate

 

 

1.83%

 

 

2.56%

Volatility

 

 

304%

 

 

231%

Terms (years)

 

0.50 to 0.76

 

 

0.27 to 0.50

 

Dividend rate

 

 

0%

 

 

0%

 

The following table represents the Company’s derivative liability activity for the nine months ended September 30, 2019:

 

Derivative liability balance, December 31, 2018

 

$5,540,889

 

Issuance of derivative liability during the period

 

 

654,205

 

Fair value of beneficial conversion feature of debt converted

 

 

(377,172)

Change in derivative liability during the period

 

 

(1,377,059)

Derivative liability balance, September 30, 2019

 

$4,440,863

 

 

Loss on fair value of derivatives for the three and nine months ended September 30, 2019 and 2018 is comprised of:

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Initial derivative expense

 

$5,940

 

 

$20,393

 

 

$294,185

 

 

$518,704

 

Fair value change in derivatives

 

 

521,861

 

 

 

(864,898)

 

 

(1,377,059)

 

 

(1,541,611)

Loss (gain) on fair value of derivatives

 

$527,801

 

 

$(844,505)

 

$(1,082,874)

 

$(1,022,907)

 

 
13
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

Note 8- Stockholders’ Deficit

 

Common stock

 

On July 27, 2018, the Company amended its Articles of Incorporation in the State of Colorado to increase the authorized shares of common stock to 10,600,000,000 shares. During the nine months ended September 30, 2019, the Company issued:

 

 

·1,216,865 shares of common stock for conversion of $151,653 of principal and $46,907 of accrued interest, for a total of $198,560; and

 

 

 

 

·200,000 shares of common stock to a consultant valued at $50,000 for playing an instrumental part in assisting the Company with obtaining approval of contract vehicle on both the SEWP contract vehicle, as well as the GSA Schedule 70 IT contract vehicle. The value of the shares were based on the Company’s stock price on the grant date.

 

During the nine months ended September 30, 2018, the Company issued 145,099 shares of common stock for conversion of $1,121,691 of principal and $55,742 of accrued interest, for a total of $1,177,433, and the Company agreed to issue 2,500 shares of the Company’s common stock to Triton Funds, LP’s (“Triton”) affiliate, Triton Funds LLC. (See Note 9)

 

Stock Options

 

The following table summarizes activities related to stock options:

 

 

 

Number of Options

 

 

Weighted-Average Exercise Price per Share

 

 

Weighted-Average Remaining Life (Years)

 

Outstanding and exercisable at December 31, 2018

 

 

1

 

 

$11,030,000

 

 

 

6.19

 

Outstanding and exercisable at September 30, 2019

 

 

1

 

 

$11,030,000

 

 

 

5.79

 

 

The following table summarizes stock option information as of September 30, 2019:

 

Exercise Prices

 

 

Outstanding

 

 

Weighted Average

Contractual Life

 

Exercisable

 

$75,000,000

 

 

 

-

 

 

2.38 Years

 

 

0

 

$2,500,000

 

 

 

1

 

 

5.81 Years

 

 

1

 

Total

 

 

 

1

 

 

5.54 Years

 

 

1

 

 

Warrants

 

The following table summarizes the activity related to warrants:

 

 

 

Number of

Warrants

 

 

Weighted-Average

Exercise Price per

Share

 

 

Weighted-Average

Remaining Life

(Years)

 

Outstanding and exercisable at December 31, 2018

 

 

1

 

 

$4,470,000

 

 

 

1.49

 

Outstanding and exercisable at September 30, 2019

 

 

1

 

 

$4,470,000

 

 

 

0.99

 

 

 
14
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

Note 9 – Commitments and Contingencies

 

The Company is not a party to any significant pending legal proceedings other than as disclosed below, and no other such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

 

On or about March 27, 2018, Global Capital Partners, LLC (“Global”) sent a demand for payment of amounts allegedly owed by the Company to Global pursuant to several promissory notes and threatening legal action. The Company retained Texas litigation counsel and responded to the demand letter. On or about March 1, 2019, Global filed a breach of contract complaint (the “Action”) against the Company in Travis County, Texas district court (case no. D-1-GN-19-001078). On July 3, 2019, the Company entered into a settlement agreement with Global, whereby Global agreed to dismiss the Action, and the Company agreed to pay $385,000 in cash and issue a convertible note payable to Global for $95,000. The cash is to be paid $7,500 at the end of each calendar month with the unpaid balance accruing interest at 10% after one year. The convertible note, which was issued to Global on July 3, 2019, accrues interest at 10% per annum and is convertible into shares of common stock based on the average of the three lowest closing bid prices 10 days prior to conversion. On or about July 10, 2019, Global dismissed the Action.

 

On September 7, 2018, the Company filed a claim against Liberated Solutions, Inc. d/b/the Go Eco Group and Brian Conway for breach of contract and other causes of action in the County Court No. 2 for Travis County, Texas (case no. C-1-CV-18-008488), seeking approximately $55,000 in damages. On November 2, 2018, the court entered judgment against the defendants in favor of the Company for $55,000 in damages, plus $4,244 in attorney’s fees. To date the Company has not received any payments toward the judgement from Go Eco Group or Brian Conway, and has written the receivable off as a loss. On or about October 11, 2019, the Company received payment from Liberated to satisfy the judgement.

 

On October 1, 2018, the Company filed a lawsuit against Mile High Construction seeking $134,900 in damages plus interest and attorney’s fees. To date the company has not received any payments toward the judgement from Mile High Construction.

 

During October of 2018, Adar Bays, LLC (“Adar”), one of the Company’s lenders holding approximately $636,371 in convertible notes, sent two demand letters to the Company noting the Company in default for the Company’s failure to (i) repay the notes at maturity, (ii) honor a partial conversion of the notes, and (iii) reserve sufficient shares for issuance upon conversion of the notes. The Company retained litigation counsel, which responded to Adar’s counsel, and on or about November 9, 2018, Adar’s manager and the Company’s CEO agreed to headline settlement terms. The parties reached a settlement agreement on or about December 3, 2018, in which Bravatek agreed to reserve 100,000,000 shares of common stock for issuance to Adar upon Adar’s conversion of its convertible notes.

 

Strategic Alliance Agreements

 

On September 5, 2017, the Company entered into a Strategic Alliance Agreement with DarkPulse Technology Holdings Inc. (“DarkPulse”), a New York corporation engaged in manufacturing hardware and software based on its BOTDA (Brillouin Optical Time Domain Analysis) technology, designating the Company as DarkPulse’s project-based partnership channel for government and non-governmental departments, agencies and units, for the purpose of promoting DarkPulse’s products, and pursuant to which DarkPulse will cross-promote the Company’s products and services, and the Company will be paid sales commissions for clients introduces to DarkPulse by the Company. On October 19, 2017, the Company entered into an Addendum (the “Addendum”) to the Strategic Alliance Agreement with DarkPulse, pursuant to which Addendum the Company shall receive 20% of project revenue for DarkPulse’s “Five Deployments Eurasian Mining Project,” and 10% of project revenue for two additional DarkPulse agency agreements more specifically described in the Addendum. As of September 30, 2019, the Company has recognized $85,750 of revenue related to this agreement.

 

On January 5, 2018, the Company entered into a Strategic Alliance Agreement with QBRICS, Inc. (“QBRICS”), a corporation organized under the laws of Delaware engaged in providing customized private blockchain platforms and solutions for governmental and non-governmental departments / agencies / units for the purpose of promoting QBRICS’s relevant capabilities, products and/or service solutions, and pursuant to which QBRICS will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 10%-20% of project revenue for clients introduced by the Company, registered with QBRICS, and delivered through the Company or a QBRICS-designated distribution affiliate or sales channel. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

 
15
 
Table of Contents

 

BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

On January 4, 2018, the Company entered into a Strategic Alliance Agreement with AppGuard LLC (“AppGuard”), a corporation organized under the laws of Delaware engaged in providing anti-malware software for Windows devices, for the purpose of promoting AppGuard’s relevant capabilities, products and/or service solutions, and pursuant to which AppGuard will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 10%-20% of project revenue for clients introduced by the Company, registered with AppGuard, and delivered through the Company or a AppGuard-designated distribution affiliate or sales channel. As of September 30, 2019, the Company has recognized $1,666 in revenue and $738 in expenses related to the agreement.

 

On January 10, 2018, the Company entered into a Strategic Alliance Agreement with Fazync LLC (“Fazync”), a Colorado limited liability company engaged in providing energy-saving solutions and capabilities to the Critical Infrastructure/Key Resources arena, for the purpose of promoting Fazync’s relevant capabilities, products and/or service solutions, and pursuant to which Fazync will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 10%-20% of project revenue for clients introduced by the Company, registered with Fazync, and delivered through the Company or a Fazync-designated distribution affiliate or sales channel. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On February 15, 2018, the Company entered into a Strategic Alliance Agreement (the “DP Telecom Strategic Alliance Agreement”) with IEVOLV Ventures, Inc., a California corporation engaged in providing turnkey telecom services (“IEVOLV”), and with DP Telecom Inc., a Wyoming corporation engaged in providing telecommunications implementation support for turn-key vendors with a focus on electrical and ground-based projects while providing logistical management for strategic partners in the northern California market (“DP Telecom” and together with IEVOLV the “MAP Partners”), for the purpose of promoting the MAP Partners’ relevant capabilities, products and/or service solutions, and pursuant to which the MAP Partners will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 15%-20% of project net profit for clients introduced by the Company. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

Pursuant to the DP Telecom Strategic Alliance Agreement, the parties also agreed that the Company would make every reasonable effort to fund $200,000 to DP Telecom within 60 days pursuant to a Credit Agreement attached to the DP Telecom Strategic Alliance Agreement as Exhibit A (the “Credit Agreement”), which the MAP Partners and the Company would execute at closing of the funding (the “Closing”). At the Closing, (1) Bravatek was to fund DP Telecom $200,000, (2) DP Telecom was to execute a secured promissory note (the “Note”) and security agreement (the “Security Agreement”) in the forms attached as exhibits to the Credit Agreement, (3) IEVOLV was to execute a guaranty (the “Guaranty”) in the form attached as an exhibit to the Credit Agreement, (4) each of DP Telecom and IEVOLV were to pay Bravatek 20% of their net profits for a minimum of 6 months following the Closing, and (5) each of DP Telecom and IEVOLV were to grant the Company a right of first refusal to provide telecom services for all telecom projects that either DP Telecom or IEVOLV receive for a minimum of 6 months following Closing. On March 1, 2018, the Company remitted $25,000 to DP Telecom in exchange for a Promissory Note. Since the entire $200,000 was not funded, other than the issuance of the Promissory Note, the parties have not proceeded to Closing and executed the additional agreements that were to be executed at Closing. The Company and DP Telecom entered into a settlement agreement on October 8, 2018 whereby DP Telecom agreed to repay the $25,000 with weekly payments of $300. As of September 30, 2019, the company has received $2,100 of the outstanding settlement agreement.

 

On March 14, 2018, the Company entered into a Strategic Alliance Agreement with OrangeHook, Inc. (“OrangeHook”), a Florida corporation engaged in the business of providing identification authentication and credentialing software, for the purpose of promoting OrangeHook’s relevant capabilities, products and/or service solutions, and pursuant to which OrangeHook will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 10%-20% of project revenue for clients introduced by the Company, registered with OrangeHook, and delivered through the Company or a OrangeHook-designated distribution affiliate or sales channel. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On March 28, 2018, the Company entered into a Strategic Alliance Agreement with Center for Threat Intelligence, LLC (“Center”), a Washington limited liability company engaged in the business of providing critical threat intelligence training, for the purpose of promoting Center’s relevant capabilities, products and/or service solutions, and pursuant to which Center will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 10%-20% of project revenue for clients introduced by the Company, registered with Center, and delivered through the Company or a Center-designated distribution affiliate or sales channel. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

 
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BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

On May 11, 2018, the Company entered into a Strategic Alliance Agreement with KP Consulting, a Guam-based systems integration consulting services business. Pursuant to the agreement, the Company will offer a business advisory role to KP Consulting for prospective clients in the private and public sectors. KP Consulting will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 10%-20% of project revenue for clients introduced by the Company, registered with KP Consulting. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On June 26, 2018, the Company entered into a Strategic Alliance Agreement with AG Capital Management, LLP (“AG”), a Kazakhstan-based company engaged in the business of providing scalable integrated secure IT services focused on financial, security, commerce and other markets for the purpose to streamline secure low-cost transactions. Pursuant to the agreement, the Company will offer a business advisory role to KP Consulting for prospective clients in the private and public sectors. AG will cross-promote the Company’s products and services, and the Company will be paid sales commissions in the range of 10%-20% of project revenue for clients introduced by the Company, registered with AG. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On January 7, 2019, the Company entered into a Strategic Alliance Agreement with Optimized Fuel Technologies, a Wyoming corporation engaged in the business of manufacturing and distributing Electric Vehicles, for the purpose of developing a joint Product Solution and Application Strategy whereby targeted markets, potential clients, and types of applications can be developed. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On March 25, 2019, the Company entered into a Strategic Alliance Agreement with MC Smart Controls, a Utah corporation engaged in the business of providing engineering, design, manufacturing, sales, marketing, and installation of irrigation controls, water flow sensors and IIOT (Industrial Internet of Things) technology, for the purpose developing and implementing joint Product Solution and Application Strategy for targeted markets, potential clients, and applications. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On April 1, 2019, the Company entered into a Strategic Alliance Agreement with Cellcrypt, Inc, (Cellcrypt), a Delaware corporation engaged in the business of secure mobile communications for smartphones, tables, and desktop PCs and Macs that have and are being certified for US Government use for the purpose of promoting Cellcrypt’s products through Solutions for Enterprise-Wide Procurement (SEWP) Government-Wide Acquisition Contract (GWAC). As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On May 3, 2019, the Company entered into a Strategic Alliance Agreement with Neotericon, LLC, a New Hampshire corporation engaged in the business of providing novel materials for use in energy generation and storage, substance detection and analysis, chemical manufacture, and secure identification of materials, for the purpose of developing a project-based channel for governmental and non-governmental departments, agencies, or units to promote Neotricon’s capabilities, products and/or service solutions. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On May 10, 2019, the Company entered into a Strategic Alliance Agreement with HS Today, a nonprofit, nonpartisan media outlet dedicated to informing and supporting the efforts of public, private, nonprofit, and academic organizations and practitioners engaged in homeland security mission, for the purpose of regularly featuring advertisements from the Company related to its cybersecurity software enterprise and consumer solutions. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On May 21, 2019, the Company entered into a Strategic Alliance Agreement with Attacktica, Inc., a Virginia corporation, engaged in the business of providing top-tier cyber analysis services and cyber-security based products for both the public and private sectors—helping its clients maintain compliancy and improve their security posture in order to protect their valuable assets from unauthorized access and possible theft, modification, or destruction, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote Critical Power Group’s relevant products and/or service solutions. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On June 3, 2019, the Company entered into a Strategic Alliance Agreement with Emmet Harvest LLP, a corporation organized under the laws of Kazakhstan, engaged in the business of providing novel, higher yield metal-leaching processes, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote Emmet Harvest’s relevant products and/or service solutions. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

 
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BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

On June 12, 2019, the Company entered into a Strategic Alliance Agreement with Mani Group a Utah corporation, engaged in the business of providing engineering, design, manufacturing, sales, marketing and installation of irrigation controls and water flow sensor technology, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote the Mani Group’s relevant products and/or service solutions. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On June 12, 2019, the Company entered into a Strategic Alliance Agreement with Critical Power Group, a Virginia corporation, engaged in the business of providing sales, marketing, and servicing energy efficient solutions for buildings and off-grid projects to high performance and energy efficient data centers in the public and private sector, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote Critical Power Group’s relevant products and/or service solutions. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On June 14, 2019, the Company entered into a Strategic Alliance Agreement with RMA Armament, a Iowa corporation, engaged in the business of providing top-tier, fully-tested body armor and protection for applications in both the public and private sectors for helping its clients maintain the capability to perform their duties in harsh or dangerous environments, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote Critical Power Group’s relevant products and/or service solutions. As of September 30, 2019, the Company has not recognized any revenue or expenses related to this agreement.

 

On August 5, 2019, the Company entered into a Strategic Alliance Agreement with Easy Aerial, Inc., a Delaware corporation, a small business which designs, produces, deploys and supports IT network integrated and fully autonomous drone-based solutions for perimeter security, first responders and incident management applications. Easy Aerial products include patented and cutting-edge technologies which are all implemented to create a highly reliable, dependable and effective system to deliver improved security and surveillance communications for the purpose of early detection and identification of security threats, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote Easy Aerial’s relevant capabilities, products and/or service solutions.

 

On August 22, 2019, the Company entered into a Strategic Alliance Agreement with Attacktica, Inc.., a Delaware corporation, a firm engaged in the business of providing top-tier cyber analysis services and cyber-security based products for both the public and private sections—helping its clients maintain compliance and improve their security posture in order to protect their valuable assets from authorized access and possible theft, modification, or destruction, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote Attacktica’s relevant capabilities, products and/or service solutions. Attacktica notified the Company of its 90-day termination of the agreement on October 19, 2019

 

On September 16, 2019, the Company entered into a Strategic Alliance Agreement with Mani Group, LLC, a Utah corporation, a firm engaged in the business of providing engineering, design, manufacturing, sales, marking and installation of irrigation controls and water flow sensor technology, for the purpose of forming a project-based business partnership channel for governmental and non-governmental departments, agencies, or units to promote Mani Group’s relevant capabilities, products and/or service solutions. Mani Group issued a purchase order to Bravatek in the amount of $159,000 on July 18, 2019 under the agreement.

 

Joint Venture Agreements

 

Effective December 21, 2017, the Company entered into a Joint Venture Agreement (the “Agreement”) with DarkPulse Technologies, Inc. (“DarkPulse”), pursuant to which (1) the parties formed a joint venture limited liability company in Delaware to develop, market and sell products and services based on DarkPulse’s patented BOTDA DarkPulse technology (the “Technology”) to be owned 40% by the Company and 60% by Dark Pulse (the “JV”); (2) the Company would fund $10,000 in initial capital to the JV; and (3) and the JV would have a royalty-free non-exclusive license to use the Technology in the North America, Asia and European government, military and CI/KR (Critical Infrastructure / Key Resources) market segments. While DarkPulse has a controlling financial interest in the JV, the Company and DarkPulse jointly managed the JV, and any significant decisions and/or actions of the JV required the mutual consent of both parties. On January 25, 2018, our CEO was appointed to the Board of Directors of DarkPulse, and on February 5, 2018, he was also named Co-CEO of DarkPulse. Dr. Cellucci was terminated as co-CEO and Board Member of DarkPulse as of February 2019, which removes the significant influence aspect of the association with DarkPulse. Additionally, during the year ended December 31, 2018, the Company funded $89,450 to the JV and was the only party with a financial risk in the JV. Due to the termination of the relationship between our CEO and DarkPulse in 2019, the Company has recorded a loss for these funds in the amount of $89,450. On March 26, 2019, DarkPulse notified the JV that it was terminating the JV’s license to DarkPulse’s technology.

 

Other

 

On April 19, 2018, the Company entered into a three-year White Label Distribution and Marketing Agreement with a MAP partner, whereas, they developed a security application product that blocks the ability of malware to execute (the “Software”). The Company will market, distribute and sell the Software under the Company’s registered trademark “Tuitio”. The Company will amortize the $40,000 over the three-year term of the agreement beginning on the date that the product is delivered and by the vendor fulfilling all of their product delivery obligations of the agreement. Product delivery commenced in June 2018.

 

 
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BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

On May 9, 2018, the Company entered into an Equity Purchase Agreement (the “EPA”) with Triton Funds, LP (“Triton”) for $500,000, which EPA was amended effective as of August 30, 2018. Triton, a new fund launched by students at the University of California, San Diego (UCSD), is making the investment to drive the continued expansion of BVTK’s proprietary technology which assists corporate entities, governments, and individuals in protecting their organizations against errors, as well as cyber and physical attacks. Pursuant to the EPA, each closing for Capital Call Shares shall occur on the date that is 5 business days following the date that the Investor receives Capital Call Shares from the Company. The purchase price for the shares to be paid by Triton at each closing shall be 75% of the lowest daily volume-weighted average price of the Company’s common stock during the 5 trading days prior to a closing date. Triton’s obligation to purchase Capital Call Shares is subject to several conditions, including (i) that the Company has filed a registration statement with the SEC registering the Capital Call Shares within 130 days from the date of the amended EPA, and (ii) that the purchase of Capital Call Shares shall not cause Triton to own more than 4.99% of the outstanding shares of the Company’s common stock. On October 26, 2018, the Company filed the registration statement, but it has not been declared effective. In connection with the EPA, the Company issued 2,500 shares common stock to Triton’s affiliate, Triton Funds LLC, on May 18, 2018.

 

Management and the Board of Directors believes it is owed monies in the following amounts, by the following firms, for breaches of executed agreements of the given party. None of the amounts below are included in the assets of the Company reflected on its balance sheet. In April of 2018, the Company engaged a law firm to pursue collections of the following: (As of the date of this report, nothing has been collected.)

 

DTREDS, LLC

 

$1,376,167

 

YKTG LLC

 

 

4,857,441

 

TOTAL

 

$6,233,608

 

 

Note 10 – Subsequent Events

 

The Company has evaluated subsequent events from September 30, 2019, through the date of filing this Form 10-Q, and determined there are no other items to disclose other than those disclosed herein or below:

 

Subsequent to September 30, 2019, the Company issued 1,375,249 shares of common stock for conversion of $82,849 of principal and $1,042 of accrued interest, for a total of $84,121.

 

On October 1, 2019, the Board of Directors voted unanimously to grant an aggregate of 1,675,000 stock options to the board members, consultants, and attorney at an exercise price of $.20 per share with an authorized issuance of 6 months from date of execution.

 

On October 11, 2019, the Company received payment from LIBE for a judgment in the amount of $60,000.

 

On October 31, 2019, the Company entered into a binding letter of intent with RMA Armament, Inc., an Iowa company engaged in the development and manufacture of body armor (“RMA”), pursuant to which the parties would use their best efforts to negotiate and execute a definitive stock purchase agreement whereby the Company would issue RMA shares of non-convertible preferred stock entitling RMA to $1,900,000 in cash payments from the Company (the “Bravatek Payment Amount”), in consideration of RMA agreeing to make quarterly payments to BVTK consisting of 51% of the operating profits of RMA, with 39% of the 51% retained by RMA and credited against the Bravatek Payment Amount until the Bravatek Payment Amount has been deemed paid in full, and 10% of the 49% paid to Bravatek by RMA quarterly. On November 8, 2019, RMA released a press release that it viewed the letter of intent as terminated.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Certain statements in this report, including statements in the following discussion, are what are known as “forward looking statements,” which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as “plans,” “intends,” “will,” “hopes,” “seeks,” “anticipates,” “expects” and the like often identify such forward-looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward looking statements include statements concerning our plans and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. Numerous factors and future events could cause the Company to change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits. Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this report on Form 10-Q and in the Company’s other filings with the Securities and Exchange Commission. No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.

 

Overview and Plan of Operation

 

Bravatek Solutions, Inc., a Colorado corporation, was incorporated in the State of Colorado, on April 19, 2007. The Company provides security, defense, and information security solutions, which assist corporate entities, governments and individuals in protecting their organizations and/or critical infrastructures against error, and physical and cyber-attack. The Company’s business operations are oriented around the marketing and distribution of proprietary and allied security, defense and information security software, hardware and services, and telecom services. Products include software, hardware and services, and span a diverse variety of industries including, but not limited to, email security, user authentication, telecommunications and cyber breach protection.

 

The Company’s primary business operations are focused on establishing a strategic leadership position in cybersecurity enterprise and consumer solutions, a variety of security tools, and telecom services within the U.S. and abroad. In a general way, Bravatek should be referred to as a global security platform company that develops and/or distributes cybersecurity-based software, tools and systems (including, but not limited to telecom services). The Company has developed and plans to continue selling an enterprise-level secure email software appliance named Ecrypt One. Ecrypt One is a patent-pending email server with integrated security technology. It was designed to protect email and attachments in transit and at rest. It incorporates multiple security technologies and techniques, such as encryption, role-based access controls, server rules that enforce security, and multi-factor authentication. It was designed to assist organizations and governments to meet and maintain compliance with information security regulations such as HIPAA. The Company began taking pre-orders for Tuitio, a consumer software product (protected by two issued patents) in the second quarter of 2018. The Company has filed a patent application for multiple attributes and processes contained in Ecrypt One.

 

The Company has filed a patent application for multiple attributes and processes contained in Ecrypt One.

 

In addition to the foregoing, in an effort to advance the business operations of the Company, over the next twelve (12) months the Company plans to undertake the following actions:

 

1.

Distribution and sales of Ecrypt One software packages;

2.

Provide telecom services;

3.

Distribution and sales of allied products and services;

4.

Expand strategic marketing alliance program; and

5.

Develop and test additional Ecrypt One features and capabilities.

 

The foregoing business actions are goals of the Company. There is no assurance that the Company will be able to complete any, or all, of the foregoing actions.

 

On January 16, 2019, the Company affected a 10,000 for 1 reverse stock split. All common stock share and per share information has been retroactively adjusted to reflect this reverse stock split.

 

The procurement and use of commercially available security solutions, and similar products and services, by government and military agencies is controlled through various regulations. In order to provide or sell a service or product to a government or military agency, a vendor or provider can be approved by and listed with the United States General Services Administration (“GSA”) or other US government contract vehicles. As of May 23, 2019, many of the Company’s and its alliance partners’ products and services were made available to government customers via i3 Integrative Creative Solutions, LLC’s GSA IT 70 contract vehicle. The Company has continued to negotiate several alliance agreements with firms that may yield both short and longer-term sales in the fields of software, tools and systems (including telecom).

 

 
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Results of Operations

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto for the years ended September 30, 2019 and 2018 contained in this quarterly report on Form 10-Q.

 

Our financial statements are stated in U.S. Dollars and are prepared in accordance with generally accepted accounting principles of the United States (“GAAP”).

 

Results of Operation for the three and nine months ended September 30, 2019, compared to the three and nine months ended September 30, 2018.

 

Revenue

 

For the three and nine months ended September 30, 2019, the Company had revenues of $112,912 and $199,282, respectively, compared to $1,648 and $26,503, respectively, for the three and nine months ended September 30, 2018. The 2019 revenues were from and unrelated parties of $113,532 and related parties of $85,750 and included the sale of licensed software, hosting and support as well as the installation. The 2018 period included related party revenue of $24,837.

 

Cost of Services

 

For the three and nine months ended September 30, 2019, the Company had cost of services of $33,738 and $53,444, respectively, compared to $1,975 and $6,569, respectively, for the three and nine months ended September 30, 2018. Cost of services are comprised of materials, labor, sub-contractors and related expenses.

 

Operating Expenses

 

For the three and nine months ended September 30, 2019, the Company had operating expenses of $179,994 and $543,939, respectively, compared to $250,803 and $3,041,976, respectively, for the three and nine months ended September 30, 2018. The decrease in operating expenses was principally attributable to $2,333,140 related to the issuance of Series E Preferred Stock to the Company’s CEO in the second quarter of 2018.

 

Other Income (Expenses)

 

Other income (expense) for the three and nine months ended September 30, 2019, was ($766,399) and $159,596 compared to other (expense) of $392,908 and ($960,729), respectively for the three and nine months ended September 30, 2018. The change was primarily due to a decrease of amortization of debt discounts of $162,207 and $715,922, respectively, during the comparable three- and nine-month periods and an increase (decrease) in the change in fair value of derivative liability of ($1,372,306) and $59,967, respectively, during the comparable three- and nine- month periods.

 

Net Income / Loss

 

The Company had a net income (loss) of ($867,219) and $(238,505), respectively, for the three and nine months ended September 30, 2019 compared to a net income (loss) of $141,778 and ($3,982,771), respectively, for the three and nine months ended September 30, 2018. The changes in net loss for the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018, was predominantly due to the factors described above.

 

Liquidity and Capital Resources

 

Currently, we have limited operating capital. The Company anticipates that it will require approximately $4,000,000 of working capital to complete all of its desired business activity during the next year. The Company has earned limited revenue from its business operations. Our current capital and our other existing resources will be sufficient only to provide a limited amount of working capital, and, to date, the revenues generated from our business operations have not been sufficient to fund our operations or planned growth. We will likely require additional capital to continue to operate our business, and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our operations, business development and financial results.

 

During the past year, we primarily funded our business operations with proceeds from convertible notes. We may conduct a private placement offering to seek to raise the necessary working capital to continue to fund our business operations, or continue to rely on the issuance of convertible promissory notes to fund our business operations. We are also in discussions with Private Equity firms to obtain the proper capitalization the company never received at its inception.

 

As of September 30, 2019, we had cash on hand of $1,509 as compared to $14,094 at December 31, 2018. As of September 30, 2019, we had current liabilities of $8,436,716 (including $4,440,863 of non-cash derivative liabilities) compared to current assets of $145,455 which resulted in working capital deficit of $8,291,261. The current liabilities are comprised of accounts payable, accrued expenses, accrued interest, convertible debt, derivative liabilities, accounts payable related party and notes payable.

 

 
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Operating Activities

 

For the nine months ended September 30, 2019, net cash used in operating activities was $265,905 compared to $506,053 for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, our net cash used in operating activities was primarily attributable to the net loss adjusted by gain on the fair value of derivatives and amortization of debt discounts. Net changes of $278,543 in operating assets and liabilities decreased the cash used in operating activities. For the nine months ended September 30, 2018, our net cash used in operating activities was primarily attributable to the net loss adjusted by amortization and depreciation, amortization of debt discounts, loss on investment in joint venture, loss on rescinded acquisition of HelpComm and voting control value of preferred stock issued. Net changes of $198,686 in operating assets and liabilities decreased the cash used in operating activities.

 

Investing Activities

 

For the nine months ended September 30, 2019, the Company has no cash used in investing activities. For the nine months ended September 30, 2018, the Company invested $394,446 in the acquisition of HelpComm, $89,450 in a joint venture with DarkPulse, and $30,380 for purchase of exclusivity rights.

 

Financing Activities

 

For the nine months ended September 30, 2019, the net cash provided by financing activities was $253,320 compared to cash provided by financing activities of $830,972 for the nine months ended September 30, 2018. During the nine months ended September 30, 2019, we received proceeds of $265,020 from the issuance of convertible notes and repaid $11,700 of convertible notes. During the nine months ended September 30, 2018, we received proceeds of $908,994 from the issuance of convertible notes and repaid $95,111 of convertible notes.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has recurring losses, an accumulated deficit of $37,833,451 and has a working capital deficit of $8,291,261 as of September 30, 2019, which raises substantial doubt about its ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

Critical Accounting Policies

 

Our financial statements are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

Our significant accounting policies are summarized in Note 2 of our financial statements are included in this Quarterly Report on Form 10-Q. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our results of operations, financial position or liquidity for the periods presented in this report.

 

 
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Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements include net realizable value of accounts receivable, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share-based payments and derivative liabilities, estimates of the valuation allowances on deferred tax assets and estimates of the probability and potential magnitude of contingent liabilities.

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ Topic 606 “), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. The Company had no significant post-delivery obligations; therefore, this new standard did not result in a material recognition of revenue on the Company’s accompanying financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

Revenue from licensing software is recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:

 

·

executed contracts with the Company’s customers that it believes are legally enforceable;

·

identification of performance obligations in the respective contract;

·

determination of the transaction price for each performance obligation in the respective contract;

·

allocation the transaction price to each performance obligation; and

·

recognition of revenue only when the Company satisfies each performance obligation.

 

After applying these five elements the Company’s recognizes licensed software revenue at the time the software is delivered or available to the customer, at which time the Company has no further obligations related to the sales contract with its customers.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures

 

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean the company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO and chief financial officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures are not designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our CEO and CFO also concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.

 

During the period, we did not have additional personnel to allow segregation of duties to ensure the completeness or accuracy of our information. The Company does not have an Audit Committee to oversee management activities, and the Company is dependent on third party consultants for the financial reporting function.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the quarter ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

The Company is not a party to any significant pending legal proceedings other than as disclosed below, and no other such proceedings are known to be contemplated. No director, officer or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

 

On or about March 27, 2018, Global Capital Partners, LLC (“Global”) sent a demand for payment of amounts allegedly owed by the Company to Global pursuant to several promissory notes and threatening legal action. The Company retained Texas litigation counsel and responded to the demand letter. On or about March 1, 2019, Global filed a breach of contract complaint (the “Action”) against the Company in Travis County, Texas district court (case no. D-1-GN-19-001078). On July 3, 2019, the Company entered into a settlement agreement with Global, whereby Global agreed to dismiss the Action, and the Company agreed to pay $385,000 in cash and issue a convertible note payable to Global for $95,000. The cash is to be paid $7,500 at the end of each calendar month with the unpaid balance accruing interest at 10% after one year. The convertible note, which was issued to Global on July 3, 2019, accrues interest at 10% per annum and is convertible into shares of common stock based on the average of the three lowest closing bid prices 10 days prior to conversion. On or about July 10, 2019, Global dismissed the Action.

 

On September 7, 2018, the Company filed a claim against Liberated Solutions, Inc. d/b/a the Go Eco Group and Brian Conway for breach of contract and other causes of action in the County Court No. 2 for Travis County, Texas (case no. C-1-CV-18-008488), seeking approximately $55,000 in damages. On November 2, 2018, the court entered judgment against the defendants in favor of the Company for $55,000 in damages, plus $4,244 in attorney’s fees. The Company received full payment for the claim in the amount of $60,000 on October 11, 2019.

 

On October 1, 2018, the Company filed a lawsuit against Mile High Construction seeking $134,900 in damages plus interest and attorney’s fees. To date the company has not received any payments toward the judgement from Mile High Construction.

 

During October of 2018, Adar Bays, LLC (“Adar”), one of the Company’s lenders holding approximately $636,371 in convertible notes, sent two demand letters to the Company noting the Company in default for the Company’s failure to (i) repay the notes at maturity, (ii) honor a partial conversion of the notes, and (iii) reserve sufficient shares for issuance upon conversion of the notes. The Company retained litigation counsel, which responded to Adar’s counsel, and on or about November 9, 2018, Adar’s manager and the Company’s CEO agreed to headline settlement terms. The parties reached a settlement agreement on or about December 3, 2018, in which Bravatek agreed to reserve 10,000 shares of common stock for issuance to Adar upon Adar’s conversion of its convertible notes.

 

In January of 2018, the Company acquired HelpComm, Inc., a Virginia corporation engaged in the provision of telecom services (“HelpComm”), from Johnny Bolton and Jonathan A. Bolton (collectively the “Boltons”). On March 12, 2019, the Company and HelpComm entered into a Rescission, Settlement and Confidentiality Agreement with Mutual Releases with the Boltons, whereby the acquisition of HelpComm was fully rescinded as of January 1, 2018. Pursuant to that settlement agreement, the parties also agreed as follows: (i) the Boltons agreed to return their shares of Company capital stock to the Company; (ii) the Company agreed to return its shares of HelpComm to the Boltons; (iii) the Boltons agreed to deliver the Company’s property to Company; (iv) the Boltons agreed that HelpComm would provide the defense and responsibility for all actions pending against or relating to HelpComm; (v) the Boltons agreed to indemnify Bravatek for claims and damages relating to HelpComm, (vi) Bravatek agreed to indemnify the Boltons for claims and damages relating to Bravatek’s operations unrelated to HelpComm, and (vii) the Boltons agreed to ensure that the declaratory judgment action filed by the Boltons’ entity, 8760 LLC, against the Company on or about January 28, 2019, would be dismissed with prejudice. That action, 8760 LLC v. Bravatek Solutions, Inc. et al., filed in the Circuit Court for Prince William County, Virginia (case no. CL 19-00559) has now been dismissed with prejudice.

 

 
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ITEM 1A. RISK FACTORS.

 

Not applicable.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

On July 8, 2019, the Company issued 68,028 shares of common stock to Adar Bays in partial satisfaction of its obligations under, and the holder’s election to convert a $10,177 portion of the Company’s convertible promissory note issued to Adar on May 31, 2017.

 

On July 25, 2019, the Company issued 71,424 shares of common stock to Adar Bays in partial satisfaction of its obligations under, and the holder’s election to convert a $10,685 portion of the Company’s convertible promissory note issued to Adar on May 31, 2017.

 

On August 5, 2019, the Company issued 66,966 shares of common stock to Adar Bays in partial satisfaction of its obligations under, and the holder’s election to convert a $10,681 portion of the Company’s convertible promissory note issued to Adar on May 31, 2017.

 

On August 16, 2019, the Company issued 64,318 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $11,320 portion of the Company’s convertible promissory note issued to Carebourn on February 1, 2018.

 

On August 19, 2019, the Company issued 72,825 shares of common stock to Adar Bays in partial satisfaction of its obligations under, and the holder’s election to convert a $6,338 portion of principal and $5,288 of interest of the Company’s convertible promissory note issued to Adar on May 31, 2017.

 

On September 5, 2019, the Company issued 74,728 shares of common stock to More Capital in partial satisfaction of its obligations under, and the holder’s election to convert a $7,794 portion of the Company’s convertible promissory note issued to More Capital on January 29, 2018.

 

On September 5, 2019, the Company issued 85,171 shares of common stock to Adar Bays in partial satisfaction of its obligations under, and the holder’s election to convert a $8,104 portion of the Company’s convertible promissory note issued to Adar on December 19, 2014.

 

On September 5, 2019, the Company issued 200,000 shares of common stock to a consultant valued at $50,000 for playing an instrumental part in assisting the Company with obtaining approval of contract vehicle on both the SEWP contract vehicle, as well as the GSA Schedule 70 IT contract vehicle.

 

On September 5, 2019, the Company issued 82,569 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $8,614 portion of the Company’s convertible promissory note issued to Carebourn on February 1, 2018.

 

On September 23, 2019, the Company issued 90,209 shares of common stock to Adar Bays in partial satisfaction of its obligations under, and the holder’s election to convert a $3,934 portion of principal and $4,649 of interest, the Company’s convertible promissory note issued to Adar on May 31, 2017.

 

On September 27, 2019, the Company issued 211,718 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert $22,086 of interest of the Company’s convertible promissory note issued to Carebourn on February 1, 2018.

 

The issuances described above were made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(1) of the Securities Act as the common stock was issued in exchange for debt of the Company held by each shareholder, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, the shareholders were not affiliates, and they had held the underlying securities for the requisite holding period.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

None.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

 
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ITEM 6. EXHIBITS.

 

EXHIBIT INDEX

 

Number

 

Description

3.1

 

Articles of Incorporation (incorporated by reference to our General Form for Registration of Securities on Form 10 filed on November 10, 2008)

 

3.2

 

Bylaws (incorporated by reference to our General Form for Registration of Securities on Form 10 filed on November 10, 2008)

 

3.3

 

Articles of Amendment to Articles of Incorporation (incorporated by reference to our Current Report on Form 8-K filed on April 1, 2014)

 

3.4

 

Certificate of Designation of Series B Preferred Stock (incorporated by reference to our Current Report on Form 8-K filed on July 23, 2015)

 

3.5

 

Certificate of Designation of Series C Preferred Stock (incorporated by reference to our Current Report on Form 8-K filed on July 23, 2015)

 

3.6

 

Certificate of Designation of Series D Preferred Stock (incorporated by reference to our Form 8-K filed on January 24, 2018)

 

3.7

 

Articles of Amendment to Articles of Incorporation (changing the Company’s name) (incorporated by reference to our Current Report on Form 8-K filed on November 3, 2015)

 

3.8

 

Articles of Amendment to Articles of Incorporation (increasing the Company’s authorized common stock) (incorporated by reference to Registration Statement on Form S-1 filed on October 26, 2018)

 

3.9

 

Articles of Amendment to Articles of Incorporation (amending the Designation of the Series C Preferred Stock) (incorporated by reference to our Current Report on Form 8-K filed on November 3, 2015)

 

3.10

 

Certificate of Designation of Series E Preferred Stock (incorporated by reference to our Form 8-K filed on June 5, 2018)

 

10.1

 

Commodity Classification Document (incorporated by reference to our General Form for Registration of Securities on Form 10 filed on November 10, 2008)

 

10.2

 

Director Agreement and Restricted Shares Agreement dated March 27, 2014, with Thomas Cellucci (incorporated by reference to our Current Report on Form 8-K filed on April 1, 2014)

 

10.3

 

Employment Agreement and Restricted Shares Agreement dated June 16, 2014, with Thomas Cellucci (incorporated by reference to our Current Report on Form 8-K filed on June 18, 2014)

 

10.4

 

Amendments to Employment Agreement and Restricted Shares Agreement with Thomas Cellucci (incorporated by reference to our Quarterly Report on Form 10-Q filed on February 22, 2016)

 

10.5

 

Asset Purchase Agreement with Dependable Critical Infrastructure, Inc. dated June 2, 2015 (incorporated by reference to our Form 8-K filed on June 9, 2015)

 

10.6

 

Settlement Agreement with Global Capital Corporation dated June 10, 2015 (incorporated by reference to our Form 8-K filed on June 16, 2015)

 

10.7

 

Settlement Agreement with Micro-Tech Industries, Ltd., dated July 20, 2015 (incorporated by reference to our Form 8-K filed on July 23, 2015)

 

10.8

 

Settlement Agreement with Whonon Trading S.A., dated July 20, 2015 (incorporated by reference to our Form 8-K filed on July 23, 2015)

 

10.9

 

Consulting Agreement dated December 1, 2015, with Debbie King (incorporated by reference to our Annual Report on Form 10-K filed July 21, 2017)

 

10.10

 

Amendment to Consulting Agreement dated March 1, 2016, with Debbie King (incorporated by reference to our Annual Report on Form 10-K filed July 21, 2017)

 

10.11

 

Director Agreement and Nonqualified Stock Option Agreement dated July 23, 2015, with Debbie King (incorporated by reference to our Annual Report on Form 10-K filed July 21, 2017)

 

10.12

 

Director Agreement and Nonqualified Stock Option Agreement dated July 23, 2015, with Charles Brooks (incorporated by reference to our Annual Report on Form 10-K filed July 21, 2017)

 

10.13

 

Director Agreement and Nonqualified Stock Option Agreement dated August 26, 2015, with Hans Holmer (incorporated by reference to our Annual Report on Form 10-K filed July 21, 2017)

 

10.14

 

Reseller Agreement with i3 Integrative Creative Solutions, LLC, dated April 17, 2017 (incorporated by reference to our Form 8-K filed on April 18, 2017)

 

10.15

 

Strategic Alliance Agreement with AppGuard, LLC dated January 5, 2018 (incorporated by reference to our Form 8-K filed on January 5, 2018)

 

 

10.16

 

Joint Venture Agreement with IEVOLV Ventures, Inc. dated February 15, 2018 (incorporated by reference to our Form 8-K filed on February 16, 2018)

 

10.17

 

Strategic Alliance Agreement with OrangeHook, Inc. dated March 14, 2018 (incorporated by reference to our Form 8-K filed on March 15, 2018)

 

10.18

 

Equity Purchase Agreement with Triton Funds, LP dated May 7, 2018 (incorporated by reference to our Form 8-K filed on May 14, 2018)

 

10.19

 

Registration Rights Agreement with Triton Funds, LP dated May 7, 2018 (incorporated by reference to our Form 8-K filed on May 14, 2018)

 

10.20

 

Amendment No. 1 to Equity Purchase Agreement with Triton Funds, LP dated August 31, 2018 (incorporated by reference to our Form 8-K filed on September 4, 2018)

 

10.21

 

Strategic Alliance Agreement with MC Smart Controls, Inc. dated March 25, 2019 (incorporated by reference to our Form 10-Q filed on June 25, 2019)

 

10.22

 

Strategic Alliance Agreement with Mani Group LLC dated April 8, 2019 (incorporated by reference to our Form 10-Q filed on June 25, 2019)

 

31.1*

 

Certification of CEO required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

31.2*

 

Certification of CFO required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1*

 

Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

 

32.2*

 

Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

 

101.INS**

 

XBRL Instance Document

 

101.SCH**

 

XBRL Taxonomy Extension Schema Document

 

101.CAL**

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF**

 

XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB**

 

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE**

 

XBRL Taxonomy Extension Presentation Linkbase Document

____________

* Filed Herewith

 

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

BRAVATEK SOLUTIONS, INC.

 

Date: November 15, 2019

By:

/s/ Thomas A. Cellucci

 

Thomas A. Cellucci

 

CEO

 

 

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