Quarterly Report (10-q)

Date : 08/29/2017 @ 2:52PM
Source : Edgar (US Regulatory)
Stock : Bravatek Solutions, Inc. (PC) (BVTK)
Quote : 0.0028  0.0001 (3.70%) @ 3:46PM

Quarterly Report (10-q)

 

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  December 31, 2016

 

¨ 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)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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

(Do not check if a smaller reporting 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 Sectionn13(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 August 29, 2017, the Company had 7,504,753,526 issued and outstanding shares of common stock.

 

 
 
 
 

BRAVATEK SOLUTIONS, INC.

INDEX

 

 

 

Page

FORWARD-LOOKING STATEMENTS

 

 

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

Condensed Balance Sheets at December 31, 2016 and March 31, 2016 (Unaudited)

 

 

3

 

 

Condensed Statements of Operations for the three and nine months ended December 31, 2016 and 2015 (Unaudited)

 

 

4

 

 

Condensed Statements of Cash Flows for the nine months ended December 31, 2016 and 2015 (Unaudited)

 

 

5

 

 

Notes to Condensed Financial Statements (Unaudited)

 

 

6

 

Item 2.

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

 

 

24

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risks

 

 

27

 

Item 4.

Controls and Procedures

 

 

27

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

 

28

 

Item 1A.

Risk Factors

 

 

28

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

28

 

Item 3.

Defaults Upon Senior Securities

 

 

32

 

Item 4.

Mine Safety Disclosures

 

 

32

 

Item 5.

Other Information

 

 

32

 

Item 6.

Exhibits

 

 

32

 

 

 

 

 

SIGNATURES

 

 

34

 

 
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BRAVATEK SOLUTIONS, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

 

 

 

December 31,

 

 

March 31,

 

 

 

2016

 

 

2016

 

ASSETS

CURRENT ASSETS

 

 

 

 

 

 

Cash

 

$ 257

 

 

$ 15,244

 

Accounts receivable

 

 

-

 

 

 

46,898

 

Prepaid expenses

 

 

-

 

 

 

1,150

 

Other assets

 

 

-

 

 

 

9,952

 

TOTAL CURRENT ASSETS

 

 

257

 

 

 

73,244

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

30,988

 

 

 

37,631

 

Intangible assets, net

 

 

21,774

 

 

 

36,934

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 53,019

 

 

$ 147,809

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Convertible notes payable, net of discount  

 

$ 1,256,712

 

 

$ 854,396

 

Notes payable, net of discount

 

 

1,167,141

 

 

 

1,093,598

 

Notes payable related party 

 

 

131,850

 

 

 

105,000

 

Accounts payable and accrued liabilities 

 

 

204,571

 

 

 

136,831

 

Accounts payable-related party 

 

 

223,750

 

 

 

106,500

 

Accrued interest 

 

 

373,270

 

 

 

246,745

 

Accrued interest related party 

 

 

19,862

 

 

 

11,550

 

Derivative liabilities 

 

 

2,144,913

 

 

 

1,955,721

 

TOTAL CURRENT LIABILITIES

 

 

5,522,069

 

 

 

4,510,341

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Series A convertible preferred stock (5,000,000 Shares Authorized; Par Value $0.0001, -0- shares issued and outstanding at December 31, 2016 and March 31, 2016)

 

 

-

 

 

 

-

 

Series B preferred stock (350,000 Shares Authorized; Par Value $0.0001, 264,503 shares issued and outstanding at December 31, 2016 and March 31, 2016)

 

 

26

 

 

 

26

 

Series C preferred stock (1,000,000 Shares Authorized; Par Value $0.0001, 319,768 shares issued and outstanding at December 31, 2016 and March 31, 2016)

 

 

32

 

 

 

32

 

Common stock (10,000,000,000 Shares Authorized; No Par Value; 1,265,448,353 and 998,236 shares issued and outstanding at December 31, 2016 and March 31, 2016, respectively)

 

 

3,687,993

 

 

 

3,461,300

 

Common stock to be issued (1,221 shares issuable at December 31, 2016 and March 31, 2016)

 

 

66,917

 

 

 

66,917

 

Deferred stock compensation

 

 

-

 

 

 

(5,380 )

Additional paid in capital

 

 

10,138,482

 

 

 

9,880,912

 

Accumulated deficit 

 

 

(19,362,500 )

 

 

(17,766,338 )

TOTAL STOCKHOLDERS' DEFICIT

 

 

(5,469,050 )

 

 

(4,362,532 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$ 53,019

 

 

$ 147,809

 

 

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

 

 
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BRAVATEK SOLUTIONS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

For the Three Months
Ended
December 31,

 

 

For the Nine Months
Ended
December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Sales, related party

 

$ 50,534

 

 

$ 465

 

 

$ 145,362

 

 

$ 187,302

 

Sales, other

 

 

-

 

 

 

119,911

 

 

 

57,692

 

 

 

182,884

 

Total sales

 

 

50,534

 

 

 

120,376

 

 

 

203,054

 

 

 

370,186

 

Cost of services

 

 

54,259

 

 

 

26,011

 

 

 

154,348

 

 

 

109,798

 

GROSS PROFIT (LOSS)

 

 

(3,725 )

 

 

94,365

 

 

 

48,706

 

 

 

260,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees and expenses, related parties

 

 

57,000

 

 

 

92,500

 

 

 

155,500

 

 

 

235,500

 

Advertisement and promotion 

 

 

350

 

 

 

47,129

 

 

 

26,074

 

 

 

105,778

 

General and administrative 

 

 

5,333

 

 

 

159,340

 

 

 

35,032

 

 

 

274,329

 

Research and development

 

 

6,254

 

 

 

52,626

 

 

 

27,748

 

 

 

460,875

 

Professional fees 

 

 

36,200

 

 

 

79,780

 

 

 

206,873

 

 

 

248,051

 

Amortization and depreciation 

 

 

7,450

 

 

 

8,474

 

 

 

21,802

 

 

 

23,824

 

TOTAL OPERATING EXPENSES 

 

 

112,587

 

 

 

439,849

 

 

 

473,029

 

 

 

1,348,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS 

 

 

(116,312 )

 

 

(345,484 )

 

 

(424,323 )

 

 

(1,087,969 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense 

 

 

(61,062 )

 

 

(129,527 )

 

 

(177,555 )

 

 

(245,628 )

Interest expense related party 

 

 

(3,033 )

 

 

(20,420 )

 

 

(8,312 )

 

 

(30,393 )

Other income

 

 

2,400

 

 

 

-

 

 

 

14,400

 

 

 

-

 

Gain (loss) on fair value of derivatives

 

 

450,211

 

 

 

(754,392 )

 

 

(391,263 )

 

 

(184,969 )

Amortization of debt discount 

 

 

(141,035 )

 

 

(395,495 )

 

 

(609,109 )

 

 

(915,936 )

TOTAL OTHER INCOME (EXPENSES), NET

 

 

247,481

 

 

 

(1,299,834 )

 

 

(1,171,839 )

 

 

(1,376,926 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

131,169

 

 

 

(1,645,318 )

 

 

(1,596,162 )

 

 

(2,464,895 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$ 131,169

 

 

$ (1,645,318 )

 

$ (1,596,162 )

 

$ (2,464,895 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) PER SHARE BASIC

 

$ 0.00

 

 

$ (40.42 )

 

$ (0.01 )

 

$ (125.55 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) PER SHARE DILUTED

 

$ 0.00

 

 

$ (40.42 )

 

$ (0.01 )

 

$ (125.55 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

464,463,792

 

 

 

40,708

 

 

 

162,920,226

 

 

 

19,633

 

Diuted

 

 

21,110,892,579

 

 

 

40,708

 

 

 

162,920,226

 

 

 

19,633

 

 

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

 

 
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BRAVATEK SOLUTIONS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31,

(Unaudited)

 

 

 

2016

 

 

2015

 

CASH FLOWS FROM OPERATING ACTIVITIES 

 

 

 

 

 

 

Net loss

 

$ (1,596,162 )

 

$ (2,464,895 )

Adjustments to reconcile net loss to net cash used in operations: 

 

 

 

 

 

 

 

 

Amortization and depreciation 

 

 

21,803

 

 

 

23,824

 

Non-cash interest and fees

 

 

7,500

 

 

 

-

 

Bad debt expense

 

 

2,270

 

 

 

-

 

Common stock and options issued for interest

 

 

-

 

 

 

75,000

 

Common stock and options issued for compensation 

 

 

71,000

 

 

 

27,349

 

Common stock issued for services 

 

 

-

 

 

 

8,797

 

Non cash advertising expenses (barter)

 

 

23,625

 

 

 

-

 

Issuance of convertible notes for services

 

 

-

 

 

 

27,000

 

Options issued for services, related party

 

 

5,380

 

 

 

7,875

 

Amortization of debt discounts

 

 

609,109

 

 

 

915,936

 

Loss on fair value of derivatives

 

 

391,263

 

 

 

184,969

 

Changes in operating assets and liabilities: 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

21,002

 

 

 

(295,914 )

Prepaid expenses  and other recevables

 

 

11,102

 

 

 

50,136

 

Accounts payable and accrued liabilities 

 

 

228,934

 

 

 

213,032

 

Accounts payable and accrued liabilities, related party

 

 

125,562

 

 

 

-

 

Accrued interest on loan-related party 

 

 

-

 

 

 

30,137

 

Accounts payable-related party 

 

 

-

 

 

 

(13,200 )

NET CASH USED IN OPERATING ACTIVITIES 

 

 

(77,612 )

 

 

(1,209,954 )

 

 

 

 

 

 

 

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES 

 

 

 

 

 

 

 

 

Purchase of property and computer equipment 

 

 

-

 

 

 

(43,279 )

Investment in note receivable 

 

 

-

 

 

 

(30,000 )

NET CASH USED IN INVESTING ACTIVITIES 

 

 

-

 

 

 

(73,279 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES 

 

 

 

 

 

 

 

 

Proceeds used in related party asset transfer

 

 

-

 

 

 

(157,000 )

Proceeds from note payable

 

 

-

 

 

 

350,000

 

Payments of principal on notes payable

 

 

-

 

 

 

(63,613 )

Payments of principal on convertible notes payable 

 

 

(12,224 )

 

 

-

 

Payments to loan-related party

 

 

-

 

 

 

(51,512 )

Proceeds from issuance of convertible debt 

 

 

48,000

 

 

 

984,173

 

Proceeds from loan-related party 

 

 

26,850

 

 

 

51,512

 

NET CASH PROVIDED BY FINANCING ACTIVITIES 

 

 

62,626

 

 

 

1,113,560

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS 

 

 

(14,986 )

 

 

(169,673 )

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS 

 

 

 

 

 

 

 

 

Beginning of period

 

 

15,244

 

 

 

203,072

 

End of period

 

$ 258

 

 

$ 33,399

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ 15,239

 

 

$ -

 

Cash paid for income taxes

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Shares issued in settlement of debt and interest on convertible debt 

 

$ 155,693

 

 

$ 846,332

 

Original issue discounts 

 

$ 5,739

 

 

$ 1,016,508

 

Original debt discount against derivative liabilities

 

$ 55,500

 

 

$ -

 

Common stock issued to satisfy common stock to be issued

 

$ -

 

 

$ 3,496

 

Initial value of derivative liabilities 

 

$ 95,553

 

 

$ 2,029,932

 

Asset and intangibles purchased from related party with common stock

 

$ -

 

 

$ 740,000

 

Reclassification of derivatives upon conversion of convertible debt

 

$ 257,570

 

 

$ -

 

 

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

 

 
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BRAVATEK SOLUTIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

December 31, 2016

(UNAUDITED)

 

NOTE 1 - Nature of Operations 

 

Bravatek Solutions, Inc. a Colorado corporation (the “Company”), was incorporated on April 19, 2007. Effective September 29, 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, tools and systems, including telecom services. Solutions span a diverse variety of world-wide markets including, but not limited to, email security, user authentication, telecommunications and cyber breach protection.

 

NOTE 2 - Significant Accounting Policies

 

Basis of Presentation 

 

The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for the stated periods have been made. Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed unaudited financial statements should be read in conjunction with a reading of the Company’s consolidated financial statements and notes thereto included in Form 10-K for the year ended March 31, 2016, filed with the SEC on July 21, 2017. Interim results of operations for the three and nine months ended December 31, 2016 and 2015 are not necessarily indicative of future results for the full year. Certain amounts from the 2015 period have been reclassified to conform to the presentation used in the current period.

 

Use of Estimates 

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. 

 

Such estimates and assumptions impact both assets and liabilities, including but not limited to: 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 fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities. 

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near-term due to one or more future non-conforming events. Accordingly, actual results could differ significantly from estimates. 

 

Fiscal Year

 

The Company’s fiscal year-end is March 31. 

 

Cash and Cash Equivalents

 

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less. The Company had no cash equivalents.

 

 
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Sales Concentration and credit risk

 

Following is a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the three and nine months ended December 31, 2016, and 2015:

 

 

 

Sales % Three Months Ended December 31,
2016

 

 

Sales % Three Months Ended December 31,
2015

 

 

Sales % Nine Months Ended December 31,
2016

 

 

Sales % Nine Months Ended December 31,
2015

 

Customer A, related party

 

 

100.0 %

 

 

-

 

 

 

71.4 %

 

 

34.1 %

Customer B, related party

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16.0 %

Customer C

 

 

-

 

 

 

23.2 %

 

 

 

 

 

 

24.5 %

Customer D

 

 

100.0 %

 

 

76.5 %

 

 

11.9 %

 

 

24.9 %

 

There were no accounts receivable balances as of December 31, 2016.

 

Accounts Receivable/Allowance for Doubtful Accounts

 

The Company records its client receivables and unbilled services at their face amounts less allowances. On a periodic basis, the Company evaluates its receivables and unbilled services and establishes allowances based on historical experience and other currently available information. As of December 31, 2016, and March 31, 2016, management determined there was no need to establish an allowance for doubtful accounts because there had been little history of nonpayment or indicators of credit risk, such as bankruptcy.

 

Property and Equipment

 

Property and equipment is stated at cost, less accumulated depreciation and is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

 

Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives, ranging from 5-7 years of the respective assets. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations. 

 

Depreciation expense was $2,378 and $6,643 for the three and nine months December 31, 2016, respectively, and $3,403 and $8,666 for the three and nine months ended December 31, 2015, respectively.

 

Long-Lived Assets 

 

The Company reviews long-lived assets and certain identifiable intangible assets held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period. The Company recognizes an impairment loss if the carrying value of the asset exceeds the expected future cash flows.

 

Income Taxes 

 

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740. 

 

ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. 

 

 
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Software Development Costs

 

Costs for software developed for internal use are accounted for through the capitalization of those costs incurred in connection with developing or obtaining internal-use software. Capitalized costs for internal-use software are included in intangible assets in the consolidated balance sheet. Capitalized software development costs are amortized over three years.

 

Costs incurred during the preliminary project along with post-implementation stages of internal use computer software development and costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs require considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility and estimated economic life. During the nine months ended December 31, 2016, the Company incurred no capitalized software development costs. Capitalized software is amortized over the software’s estimated economic life of 3 years. For the three and nine months ended December 31, 2016, and 2015, amortization expense for capitalized software development was $5,072 and $15,159, respectively.

 

Research and Development

 

Costs and expenses that can be clearly identified as research and development (“R&D”) are charged to expense as incurred in accordance with GAAP. All research and development costs have been expensed as incurred, totaling $6,254 and $27,748 for the three and nine months ended December 31, 2016, respectively, and $52,626 and $460,875 for the three and nine months ended December 31, 2015, respectively. For the nine months ended December 31, 2016, the Company had no development costs required to be capitalized under ASC 985-20,  Costs of Software to be Sold, Leased or Marketed,  and under ASC 350-40,  Internal-Use Software.

 

Advertising and Promotions  

 

The Company expenses advertising costs as incurred. Advertising expenses for the three and nine months ended December 31, 2016, were $350 and $26,074, respectively, and for the three and nine months ended December 31, 2015, were $47,129 and $105,778, respectively. Advertising expenses of $23,625 for the nine months ended December 31, 2016 were the result of barter transactions, whereby, the Company received advertising and promotional services in exchange for sales of software.

 

Advertising and Revenue Barter Transactions

 

The Company recognized revenue and expense, in accordance with ASC 845 - Nonmonetary Transactions, at fair value only if the fair value of the advertising received is determinable based in the entity’s own historical practice of receiving cash or other consideration that is readily convertible to a known amount of cash for similar advertising from buyers unrelated to the Company. If the fair value of the advertising received is not determinable within these limits, the barter transaction would be recorded based on the carrying amount of the advertising received, which likely will be zero.

 

Uncertainty as a Going Concern 

 

The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations since inception (April 19, 2007) through December 31, 2016 of $19,362,500 and has a working capital deficit of $5,521,812 as of December 31, 2016, 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. 

 

Fair Value of Financial Instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. 

 

 
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The following are the hierarchical levels of inputs to measure fair value: 

 

 

·

Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

 

 

 

 

·

Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

 

 

·

Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. 

 

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2016, and March 31, 2016, for each fair value hierarchy level:

 

December 31, 2016

 

Derivative

Liability

 

 

Total

 

Level I

 

$ -

 

 

$ -

 

Level II

 

$ -

 

 

$ -

 

Level III

 

$ 2,144,913

 

 

$ 2,144,913

 

 

 

 

 

 

 

 

 

 

March 31, 2016

 

 

 

 

 

 

 

 

Level I

 

$ -

 

 

$ -

 

Level II

 

$ -

 

 

$ -

 

Level III

 

$ 1,955,721

 

 

$ 1,955,721

 

 

Embedded Conversion Features

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. 

 

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are 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 as charges or credits to income. 

 

For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. 

 

Debt Issue Costs and Debt Discount

 

The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. 

 

 
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Original Issue Discount

 

For certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. 

 

Extinguishments of Liabilities

 

The Company accounts for extinguishments of liabilities in accordance with ASC 860-10 (formerly SFAS 140) “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.” When the conditions are met for extinguishment accounting, the liabilities are derecognized and the gain or loss on the sale is recognized. 

 

Revenue Recognition

 

The Company recognizes revenue and gains when earned and related costs of sales and expenses when incurred. The Company recognizes revenue in accordance with Accounting Standards Codification Section 605-10-S99, Revenue Recognition, Overall, SEC Materials (“Section 605-10-S99”). Section 605-10-S99 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Cost of products sold consists of the cost of the purchased goods and labor related to the corresponding sales transaction. The Company recognizes revenue from services at the time the services are completed.

 

Stock-Based Compensation - Employees

 

The Company accounts for its stock based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows: 

 

 

·

Expected term of share options and similar instruments: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior into the fair value (or calculated value) of the instruments. Pursuant to paragraph 718-10-S99-1, it may be appropriate to use the simplified method, i.e., expected term = ((vesting term + original contractual term) / 2), if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the actual method to calculate expected term of share options and similar instruments as the company does have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

 

 

 

 

·

Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses its actual historical volatility over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 
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·

Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments. We expect and use zero rate.

 

 

 

 

·

Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

 

Generally, all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest. 

 

The expense resulting from share-based payments is recorded in general and administrative expense in the statements of operations. 

 

Stock-Based Compensation – Non-Employees

 

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

 

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”). 

 

Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows: 

 

 

·

Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior.

 

 

 

 

·

Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses its actual historical volatility over the expected contractual life of the share options or similar instruments as its expected volatility.

 

 

 

 

·

Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments. We expect and use zero rate.

 

 

 

 

·

Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

 

 
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Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic. 

 

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised. 

 

Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded. 

 

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. 

 

Pursuant to Section 850-10-20 the related parties include a) affiliates of the Company; b) Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. 

 

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. 

 

 
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Net Earnings (Loss) per Share 

 

The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share” ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. For the three and nine months ended December 31, 2015, and for the nine months ended December 31, 2016, all potential common shares were excluded from the computation of diluted EPS because their impact was anti-dilutive. The following table illustrates the computation of basic and diluted EPS for the three months ended December 31, 2016:

 

 

 

For the three months ended

December 31, 2016

 

 

 

Net Loss

 

 

Shares

 

 

Per 

Share 

Amount

 

Basic EPS

 

 

 

 

 

 

 

 

 

Income available to stockholders

 

$ 131,169

 

 

 

464,463,792

 

 

$ 0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of Dilutive Securities

 

 

 

 

 

 

 

 

 

 

 

 

Convertible debt

 

 

(415,015 )

 

 

20,646,428,787

 

 

 

 

Dilute EPS

 

 

 

 

 

 

 

 

 

 

 

 

Loss available to stockholders plus assumed conversions

 

$ (283,846 )

 

 

21,110,892,579

 

 

$ (0.00 )

 

Securities that could potentially dilute basic EPS in the future, that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following:

 

 

 

Three months
ended
December 31,
2016

 

 

Nine months
ended
December 31,
2016

 

Options

 

 

102

 

 

 

102

 

Warrants

 

 

3,263

 

 

 

3,263

 

Convertible debt

 

 

-

 

 

 

20,205,505,408

 

Total Anti-Dilutive Potential Common Shares

 

 

3,365

 

 

 

20,205,508,773

 

 

NOTE 3 - Recent Accounting Pronouncements

 

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard is effective for us in the first quarter of fiscal 2018. However, in April 2015, the FASB approved to defer the effective date by one year which we will evaluate if approved. Further, we have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

 

On August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and to provide related disclosures. ASU 2014-15 is effective for us for our fiscal year ending March 31, 2017 and for interim periods thereafter. We are currently evaluating the impact of this standard on our consolidated financial statements.

 

With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended September 30, 2016, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, that are of significance or potential significance to us.

 

 
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NOTE 4 - Related Party Activity

 

Revenues

 

For the three and nine months ended December 31, 2016, related party sales were $50,334 and $145,362, respectively, representing sales of 100% and 71%, respectively, for each period. The party was temporarily a related party based on the percentage of shares owned by management of the related, of the issued and outstanding common stock of the Company at the time of the sales. The party is no longer a related party. For the nine months ended December 31, 2015, the Company recorded sales to three related party companies in the amounts of $126,148, $59,404 and $1,750, respectively. The sales of $1,750 were to a limited liability company controlled by our chief executive officer (“CEO”). Total related party revenues for the three and nine months ended December 31, 2015 was $465 and $187,302, respectively.

 

Notes payable

 

The Company issued multiple unsecured notes payable from June 27, 2015 to December 31, 2016, to the Company’s CEO, for amounts advanced to the Company, or paid by the CEO, on behalf of the Company, totaling $183,608 and the Company has made repayments of $51,758. The notes carry interest at 10% per annum and are due on demand. As of December 31, 2016, and March 31, 2016, the principal balance of the notes was $131,850 and $105,000 (included in note payable related party in the balance sheets presented herein), and included in accrued interest related party is the accrued and unpaid interest as of December 31, 2016, and March 31, 2016, of $19,862 and $11,550, respectively. For the three and nine months ended December 31, 2016, the Company recorded interest expense related party of $3,033 and $8,312, respectively.

 

Management Fees

 

For the three and nine months ended December 31, 2016, and 2015, the Company recorded expenses to its officers in the following amounts:

 

 

 

Three months ended

December 31,

 

 

Nine months ended

December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

CEO

 

$ 42,000

 

 

$ 84,000

 

 

$ 98,000

 

 

$ 222,000

 

CFO

 

 

15,000

 

 

 

8,500

 

 

 

57,500

 

 

 

13,500

 

Total

 

$ 57,000

 

 

$ 92,500

 

 

$ 155,500

 

 

$ 235,500

 

 

Included in the CEO’s compensation for the nine months ended December 31, 2016, is a credit of $28,000, whereby the CEO agreed to reduce past amounts due. As of December 31, 2016, included in accounts payable - related party is $201,000 and $22,750, for amounts owed the Company’s CEO and CFO, respectively, for unpaid fees.

 

NOTE 5 - Notes Payable 

 

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 December 31, 2016, and March 31, 2016, the note balance was $400,000. As of June 15, 2015, the note is payable on demand as part of the Settlement Agreement. Accrued interest as of December 31, 2016 and March 31, 2016 was $40,110.

 

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 were again extended on August 6, 2015, through January 1, 2016, with no change in original terms of the agreement. As of December 31, 2016, and March 31, 2016, the note balance was $199,960 and the notes are currently in default. Accrued interest as of December 31, 2016, and March 31, 2016, was $72,786 and $62,788, respectively.

 

 
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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 change in original terms of the agreements. The notes payable were again extended on August 6, 2015, through January 1, 2016, with no change in original terms of the agreements. As of December 31, 2016, and March 31, 2016 the note balance was $230,828 and the notes are currently in default Accrued interest as of December 31, 2016, and March 31, 2016, was $68,994 and $51,682, respectively

 

On June 2, 2015, as part of the Asset Purchase Agreement with DCI, the Company assumed limited liabilities associated with Viking (loan payment for Chevrolet truck in the amount of $668 per month with a principal balance of $36,202, and a loan payment to Joshua Claybaugh of $5,000 per month for 11 months for a total of $55,000). The Chevrolet truck loan was paid off as of March 31, 2016. As of December 31, 2016, and March 31, 2016, the loan with Joshua Claybaugh had a remaining principal balance of $20,000. There was no accrued interest as of December 31, 2016, and March 31, 2016.

 

The Company entered into a Senior Secured Credit Facility Agreement (the “Credit Agreement”) dated June 30, 2015 with TCA Global Credit Master Fund, LP (“TCA”) that was executed on June 30, 2015 and made effective as of November 25, 2015, which was to allow the Company to borrow up to $3,000,000. The Credit Agreement bears interest at 18%, compounded annually, and matured on January 25, 2017. The loan is secured against all existing and after-acquired tangible and intangible assets of the Company. On November 25, 2015, the Company received $310,600, net of loan costs and fees of $39,400. In connection with the Credit Agreement, the Company issued 1,412 shares of common stock upon execution valued by TCA at $75,000 as an advisory fee payment. The Company recorded the advisory fee and loan cost and fees of $114,400 as a discount to the TCA note and is amortizing the costs over the maturity of the note. Accordingly, for the three and nine months ended December 31, 2016, the Company expensed $24,514 and $73,543, respectively, included in amortization of debt discount in the unaudited Condensed Consolidated Statement of Operations presented herein. As of December 31, 2016, and March 31, 2016, the TCA loan had a principal balance of $323,162. Interest expense for the three and nine months ended December 31, 2016 was $14,542 and $43,967, respectively. Accrued interest as of December 31, 2016, and March 31, 2016, was $29,085 and $0, respectively.

 

A summary of the notes payable balance as of December 31, 2016, is as follows:

 

Principal Balance

 

$ 1,173,950

 

Unamortized discount

 

 

(6,809 )

Ending Balance, net

 

$ 1,167,141

 

 

The following is a roll-forward of the Company’s notes payable and related discounts for the nine months ended December 31, 2016:

 

 

 

Principal
Balance

 

 

Debt
Discounts

 

 

Total

 

Balance March 31, 2016

 

$ 1,173,950

 

 

$ (80,352 )

 

$ 1,093,598

 

Amortization

 

 

-

 

 

 

73,543

 

 

 

73,543

 

Balance at December 31, 2016

 

$ 1,173,950

 

 

$ (6,809 )

 

$ 1,167,141

 

 

On September 6, 2016, TCA commenced an action against the Company and the Company’s CEO, Dr. Cellucci, as “validity guarantor,” filed in the Circuit Court of the 17 th  Judicial Circuit in and for Broward County, Florida, for amounts owed to TCA by the Company under their revolving credit agreement with the Company. On April 21, 2017, the Company, Dr. Cellucci and TCA executed a settlement agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company agreed to pay $2,500 by April 30, 2017, $2,500 by May 31, 2017 and $405,357 on or before June 16, 2017. The Company fully complied with its obligations under the settlement agreement, paying TCA all amounts owed thereunder within the times required, and the case has now been dismissed.

 

NOTE 6 - Convertible Notes Payable

 

The Company accounted for the following Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation are initially valued and classified as a derivative liability with an offset to discounts on convertible debt, 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. Discounts have been amortized to interest expense over the respective terms of the related notes.

 

 
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On December 19, 2014, the Company issued a convertible note payable, with a face value of $156,000 and stated interest of 8% to a third-party investor. The note is convertible, at any time following the funding of the note, into a variable number of the Company’s common stock, based on a conversion ratio of 68% of the lowest closing bid price for 20 days prior to conversion. For the nine months ended December 31, 2016, the investor converted a total of $12,380 of the face value and $2,332 of accrued interest into 6,593,919 shares of common stock. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $1,125 and $13,505, respectively.

 

On December 19, 2014, the Company issued a convertible back end note, with a face value of $156,000 and stated interest of 8% to a third-party investor. The note is convertible at any time following the funding of the note, convertible into a variable number of the Company’s common stock, based on a conversion ratio of 68% of the lowest closing bid price for 20 days prior to conversion. The note was funded on June 18, 2015, when the Company received proceeds of $143,333, net of $12,663 of OID and costs. For the nine months ended December 31, 2016, the investor converted a total of $18,500 of the face value and $3,070 of accrued interest into 248,836,126 shares of common stock. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $137,500 and $156,000, respectively.

 

On December 19, 2014, the Company issued a convertible note payable, with a face value of $156,000 and stated interest of 8% to a third-party investor. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 67% of the lowest closing bid price for 20 days prior to conversion. For the nine months ended December 31, 2016, the investor converted a total of $9,073 of the face value into 39,601,275 shares of common stock. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $49,427 and $58,500, respectively.

 

On December 19, 2014, the Company issued a convertible back end note, with a face value of $156,000 and stated interest of 8% to a third-party investor. The note is convertible at any time following the funding of the note, convertible into a variable number of the Company’s common stock, based on a conversion ratio of 68% of the lowest closing bid price for 20 days prior to conversion. The note was funded on June 18, 2015, when the Company received proceeds of $143,333, net of $12,663 of OID and costs. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $156,000.

 

On January 11, 2015, the Company issued two convertible promissory notes in the principal amount of $52,000 each. One of the notes was funded on January 13, 2015, with the Company receiving $47,500 of net proceeds after payment of legal and origination expenses. The note bears interest at the rate of 8% per annum, was due and payable on January 9, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion price equal to 67% of the lowest closing bid price on the OTCQB during the 15 prior trading days. The second note, which was funded on August 7, 2015, has the same interest and conversion terms as the first note, but may be offset by a secured promissory note issued to the Company for $50,000, due on September 9, 2015, and accruing interest at the rate of 8% per annum. For the nine months ended December 31, 2016, the investor converted a total of $25,040 of the face value and $2,815 of accrued interest into 183,304,767 shares of common stock. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the second note was $26,960 and $52,000, respectively.

 

On January 19, 2015, the Company issued a convertible promissory note in the face amount of $100,000, which bears interest at the rate of 12% per annum, was due and payable on July 16, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion price equal to the lesser of (a) 55% of the lowest trading price during the 20 days preceding the execution of the note, or (b) 55% of the of the lowest traded price during the 20 trading days preceding conversion. The note was funded on January 28, 2015, with the Company receiving $93,000 of net proceeds after payment of legal and origination expenses. For the nine months ended December 31, 2016, the investor converted a total of $20,528 of the face value into 210,312,824 shares of common stock. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $38,295 and $58,823, respectively.

 

On January 21, 2015, the Company issued a convertible promissory note in the face amount of $400,000, of which the Company is to assume $40,000 in original interest discount (“OID”), which together with any unpaid accrued interest is due two years after any funding of the note. The note is to be funded at the note holder’s discretion, and the initial tranche was funded on January 21, 2015, when the Company received cash in the amount of $50,000, and received an additional $25,000 on April 28, 2015. The note is pre-payable for 90 days without interest, and incurs a one-time interest charge of 12% thereafter. The note balance funded (plus a pro rata portion of the OID together with any unpaid accrued interest) is convertible into shares of Company common stock at a conversion price equal to the lesser of $0.08 or 60% of the lowest traded price during the 25 prior trading days. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $15,480.

 

On August 17, 2015, the Company issued a convertible promissory note in the face amount of $325,000, which bears interest at the rate of 10% per annum, was due and payable on August 17, 2016, and may be converted at any time after funding into shares of Company common stock at a conversion price equals the lesser of $.02 or 70% of the closing trading prices immediately preceding the conversion date. In conjunction with the convertible note issued by the Company, the Company issued 2,064 warrants valued at $412,698. The warrants have an exercise price of $270, subject to adjustment, and expire on August 17, 2020. For the nine months ended December 31, 2016, the investor converted a total of $18,642 of accrued and unpaid interest into 250,574,242 shares of common stock. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $325,000.

 

 
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On October 12, 2015, the Company issued a replacement convertible promissory note in the face amount of $110,351, to Carebourn Capital LP (“Carebourn”) that replaces the convertible promissory note issued on April 10, 2015, with a face value of $105,000, and accrued interest of $5,351. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The note also bears an interest rate of 10% per annum. For the nine months ended December 31, 2016, the investor converted a total of $24,308 of the face value into 86,266,028 shares of common stock. Additionally, Carebourn assigned $10,000 of the note to Carebourn Partners. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $-0- and $34,308, respectively.

 

Also on October 12, 2015, Carebourn and the Company assigned $15,000 of the replacement issued to Carebourn, to More Capital, LLC. (“More Capital”). The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The note also bears an interest rate of 10% per annum. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $2,050.

 

On October 26, 2015, the Company issued a convertible note, with a face value of $110,000 and stated interest of 10% to a third-party investor, of which the company was to assume an OID of $10,000. The outstanding balance of this note was convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the lowest average of the three lowest closing bid prices for 20 days prior to conversion. The investor sold $25,000 of the note on April 27, 2016, and the Company issued a replacement note to the buyer, as described below. On June 7, 2016, the Company and the third-party investor agreed to extend the maturity of the note from July 26, 2016 to October 26, 2016, and to require daily payments of $250 per day via ACH. For the nine months ended December 31, 2016, the Company paid $6,003 of the note. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $78,997 and $110,000, respectively.

 

On October 27, 2015, the Company issued a convertible note, with a face value of $110,000 and stated interest of 8% to a third-party investor, of which the company was to assume an OID of $10,000. The outstanding balance of this note was convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the lowest average of the three lowest closing bid prices for 20 days prior to conversion. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $110,000.

 

On November 12, 2015, the Company issued a replacement convertible promissory note in the face amount of $47,808, to Carebourn that replaces the collateralized secured convertible promissory issued on February 3, 2015, that had a remaining face value of $43,479 and accrued interest of $4,326. The replacement note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The note also bears an interest rate of 10% per annum. . For the nine months ended December 31, 2016, the investor converted a total of $1,724 of the face value into 28,741,200 shares of common stock. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $46,084 and $47,808, respectively.

 

On November 27, 2015, the Company issued a convertible note for legal services previously provided with a face value of $27,000 and stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 70% of the average of the three lowest closing bid prices for 10 days prior to conversion. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $27,000.

 

On January 5, 2016, the Company issued a convertible note for legal services previously provided with a face value of $20,000 and stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 70% of the average of the three lowest closing bid prices for 10 days prior to conversion. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $20,000.

 

On February 4, 2016, the Company issued a convertible note, with a face value of $82,500 and stated interest of 8% to a third-party investor, LG Capital Funding LLC (“LG”), of which the Company was to assume an OID of $7,500, and stated interest of 8% to a third-party investor. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $82,500. The Company’s CEO agreed to guarantee this note by pledging 111,884 shares of his Series C Preferred Stock.

 

On February 8, 2016, the Company issued a convertible note, with a face value of $80,000 and stated interest of 10% to a third-party investor, Carebourn, of which the Company was to assume an original issue discount of $5,000. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion and a maturity date of November 8, 2016. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $80,000. On March 23, 2016, as collateral security for this note and the $110,351 convertible promissory note entered into with Carebourn on October 12, 2015, the Company’s CEO agreed to pledge 111,884 shares of his Series C Preferred Stock.

 

 
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On March 24, 2016, the Company issued a convertible note, with a face value of $19,000 and stated interest of 10% to a third-party investor, Carebourn, of which the company received $16,000 in proceeds. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion and matured on December 24, 2016. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $19,000.

 

On March 24, 2016, the Company issued a convertible note, with a face value of $18,000 and stated interest of 10% to a third-party investor, of which the Company received $15,000 in proceeds. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion and a maturity date of December 24, 2016. As of December 31, 2016, and March 31, 2016, the outstanding principal amount of the note was $18,000.

 

On April 11, 2016, the Company issued a convertible note, with a face value of $18,889 and stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The Company received proceeds of $13,000 on April 28, 2016, of $13,000, after disbursements for the lender’s transaction costs, fees, and expenses. The embedded feature included in the note resulted in an initial debt discount of $17,000 an initial derivative liability expense of $11,880 and an initial derivative liability of $28,880. As of December 31, 2016, the outstanding principal amount of the note was $18,889.

 

On April 11, 2016, the Company issued a replacement convertible promissory note in the face amount of $26,123, to a third-party investor that replaces part of the convertible promissory note issued on October 26, 2015, with a face value of $25,000, and accrued interest of $1,123. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The note also bears an interest rate of 10% per annum. For the nine months ended December 31, 2016, the investor converted a total of $10,596 of the face value and $2,842 of accrued interest and fees into 200,215,238 shares of common stock. As of December 31, 2016, the outstanding principal amount of the replacement note was $15,527.

 

On June 3, 2016, the Company issued a convertible note, with a face value of $42,350 and stated interest of 12% to a third-party investor. The note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The Company received proceeds on June 3, 2016, of $35,000, after disbursements for the lender’s transaction costs, fees, and expenses. The embedded feature included in the note resulted in an initial debt discount of $38,500, an initial derivative liability expense of $28,173 and an initial derivative liability of $66,673. The note also requires 177 daily payments of $239 per day via ACH. For the nine months ended December 31, 2016, the Company paid $6,003 of the note. The balance of the note as of December 31, 2016 was $36,129.

 

A summary of the convertible notes payable balance as of December 31, 2016 and March 31, 2016 is as follows:

 

 

 

December 31,
2016

 

 

March 31,
2016

 

Principal Balance

 

$ 1,313,962

 

 

$ 1,385,975

 

Unamortized discount

 

 

(57,250 )

 

 

(531,578 )

Ending Balance, net

 

$ 1,256,712

 

 

$ 854,396

 

 

The following is a roll-forward of the Company’s convertible notes and related discounts for the nine months ended December 31, 2016:

 

 

 

Principal
Balance

 

 

Debt
Discounts

 

 

Total

 

Balance March 31, 2016

 

$ 1,385,974

 

 

$ (531,578 )

 

$ 854,396

 

New issuances

 

 

62,362

 

 

 

(61,239 )

 

 

1,123

 

Conversions

 

 

(122,150 )

 

 

-

 

 

 

(122,150 )

Cash payments

 

 

(12,224 )

 

 

-

 

 

 

(12,224 )

Amortization

 

 

-

 

 

 

535,567

 

 

 

535,567

 

Balance at December 31, 2016

 

$ 1,313,962

 

 

$ (57,250 )

 

$ 1,256,712

 

 

 
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NOTE 7 - Derivative Liabilities

 

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 under EITF 00-19 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 are recorded as liabilities on the consolidated 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 condensed consolidated statements of operations at the end of each period, with the offset to the derivative liabilities on the balance sheet.

 

The Company valued the derivative liabilities at December 31, 2016, and March 31, 2016, at $2,144,913 and $1,955,721, respectively. The Company used the Monte Carlo simulation valuation model with the following assumptions for the nine months ended December 31, 2016; a risk-free interest rates from 0.51% to 0.63% and volatility of 317% to 327%, trading prices.

 

A summary of the activity related to derivative liabilities for the nine months ended on December 31, 2016 is as follows:

 

 

 

December 31,
2016

 

Beginning Balance

 

$ 1,955,721

 

Initial Derivative Liability

 

 

95,553

 

Reclassification for note conversions

 

 

(257,570 )

Fair Value Change

 

 

351,209

 

Ending Balance

 

$ 2,144,913

 

 

Derivative liability expense of $391,263 for the nine months ended December 31, 2016, consisted of the initial derivative expense of $40,053 and the above fair value change of $351,209.

 

NOTE 8 - Stockholders’ Deficit

 

Common stock

 

On June 17, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced the registrant’s 1:2,500 reverse stock split of the registrant’s common stock. The reverse stock split took effect on June 20, 2016. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the stock split as if such stock split occurred on the first day of the first period presented. Certain amounts in the notes to the financial statements may be slightly different than previously reported due to rounding of fractional shares as a result of the reverse stock split.

 

During the nine months ended December 31, 2016, the Company issued 1,254,445,618 shares of common stock for conversion of $122,150 of principal and $33,573 of accrued interest, for a total of $155,693 (see Note 6).

 

On August 1, 2016, the Company entered into a consulting agreement with YKTG, LLC (“YKTG”), pursuant to which YKTG would, in consideration of the issuance of 10,000,000 shares of Company common stock, assist in the selection and management of subcontractors for new and forthcoming POs from major telecom carries (Verizon, Sprint, AT&T, etc.), offer PMO skills, systems, tools, and advice to the Company and the Company’s strategic alliance partners, provide sales personnel and management to assist the Company with obtaining additional telecom purchase orders, provide sales leads for government telecom applications, assist the Company to drive sales for its existing indefinite delivery/indefinite quantity (“IDIQ”) contracts, and assist the Company in updating its five-year strategic business plan. On August 3, 2016, the Company issued the 10,000,000 shares to YKTG. The Company valued the shares at $0.0071 per share (the market price on the date of the consulting agreement), and recorded stock compensation expense of $71,000 for the nine months ended December 31, 2016.

 

As of December 31, 2016, there are 1,265,448,353 shares of common stock issued and outstanding and 1,221 shares of common stock to be issued.

 

Preferred Stock

 

10,000,000 shares of preferred stock, $0.0001 par value have been authorized.

 

Series A Convertible Preferred Stock .

 

5,000,000 shares of preferred stock are designated as Series A Convertible Preferred Stock (Series A Preferred Stock”). Each share of Series A Convertible Preferred Stock is convertible at the election of the holder into 0.004 shares of common stock, subject to a 4.9% beneficial ownership limitation, but has no voting rights until converted into common stock. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the outstanding shares of Series A Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, whether from capital, surplus funds or earnings, and before any payment is made in respect of the shares of Common Stock, an amount equal to $2.50 per share of Series A Convertible Preferred Stock, subject to adjustment for stock dividends, combinations, splits, recapitalizations and the like with respect to the Series A Convertible Preferred Stock, plus any and all accrued but unpaid dividends. The holders of Series A Convertible Preferred Stock are entitled to dividends when declared by the board of directors. As of December 31, 2016, there are no shares of Series A Preferred Stock outstanding.

 

 
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Series B Preferred Stock

 

350,000 shares of preferred stock are designated as Series B Preferred Stock. Each share of Series B Preferred Stock is convertible at the election of the holder into .004 shares of common stock, subject to a 4.9% beneficial ownership limitation. Series B Preferred Stock has no voting rights until converted into common stock. The holders of the Series B Preferred Stock do not have any rights to dividends or any liquidation preferences. As of December 31, 2016, there are 264,503 shares of Series B Preferred Stock outstanding.

 

Series C Preferred Stock

 

1,000,000 shares of preferred stock are designated as Series C Preferred Stock. Each share of Series C Preferred Stock, as amended, is convertible at the election of the holder into 100 shares of common stock, and entitles the holder thereof to 10,000 votes on all matters submitted to a vote of the stockholders of the Company. The holders of the Series C Preferred Stock do not have any rights to dividends or any liquidation preferences. As of December 31, 2016, there are 319,768 shares of Series C preferred stock outstanding, of which 223,768 shares are owned by our Chairman and CEO, Dr. Cellucci. As collateral security on certain obligations of the Company, Dr. Cellucci has pledged all of his shares of Series C Preferred Stock to holders of certain convertible promissory notes (see Note 6).

 

Stock Options

 

For the nine months ended December 31, 2016, the Company did not issue any stock options, and there were no exercises of any existing stock options. For the nine months ended December 31, 2016, the Company recorded an expense of $5,380 for the vesting of previously issued options. All option grants are 100% vested. The following table summarizes activities related to stock options of the Company for the nine months ended December 31, 2016:

 

 

 

Number
of Options

 

 

Weighted-Average Exercise
Price per share

 

 

Weighted-Average Remaining Life (Years)

 

Outstanding at March 31, 2016

 

 

102

 

 

$ 1,102.94

 

 

 

-

 

Outstanding and exercisable at December 31, 2016

 

 

102

 

 

$ 1,102.94

 

 

 

8.19

 

 

The following table summarizes stock option information as of December 31, 2016:

 

Exercise Prices

 

 

Outstanding

 

 

Weighted
Average Contractual
Life

 

Exercisable

 

$7,500.00

 

 

 

12

 

 

5.13 Years

 

 

12

 

$250.00

 

 

 

90

 

 

8.60 Years

 

 

90

 

Total

 

 

 

102

 

 

8.19 Years

 

 

102

 

 

 
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Warrants

 

For the nine months ended December 31, 2016, the Company did not grant any warrants, and there were no exercises of any existing warrants. The following table summarizes the activity related to warrants of the Company for the nine months ended December 31, 2016:

 

 

 

Number of Warrants

 

 

Weighted-Average Exercise Price per share

 

 

Weighted-Average Remaining Life (Years)

 

Outstanding at March 31, 2016

 

 

3,263

 

 

$ 446.52

 

 

 

-

 

Outstanding and exercisable at December 31, 2016

 

 

3,263

 

 

$ 446.52

 

 

 

3.49

 

 

NOTE 9 - Commitments and Contingencies

 

Legal Matters

 

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 January 27, 2016, one of the Company’s creditors, JSJ Investments Inc. (“JSJ”), sent a demand for payment of amounts allegedly owed by the Company to JSJ pursuant to a convertible note dated January 19, 2015, in the original principal amount of $100,000, and threatening potential legal action against the Company. Since that time, JSJ has continued to convert the note into shares of common stock and the parties are currently negotiating a settlement of the remaining amounts due under the note.

 

On September 6, 2016, TCA commenced an action against the Company and the Company’s CEO, Dr. Cellucci, as “validity guarantor,” filed in the Circuit Court of the 17 th  Judicial Circuit in and for Broward County, Florida, for amounts owed to TCA by the Company under their revolving credit agreement with the Company. On April 21, 2017, the Company, Dr. Cellucci and TCA executed a settlement agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company agreed to pay $2,500 by April 30, 2017, $2,500 by May 31, 2017 and $405,357 on or before June 16, 2017. The Company fully complied with its obligations under the settlement agreement, paying TCA all amounts owed thereunder within the times required, and the case has now been dismissed.

 

Other

 

On August 8, 2016, the Company entered into a Master Subcontract Agreement (the “MSA”) and $8,400,000 purchase order with YKTG for decommissioning tower services for major telecom carriers.

 

On August 11, 2016, the Company received a $438,000 purchase order from JWH Telecommunications Inc. (“JWH”) relating to radio-swap tower services in Ohio. The purchase order remains open as the Company is capable of fulfilling this order and is awaiting detailed instructions from JWH on scheduling our crews for designated locations during specified dates within the USA. The Company cannot give any assurances that it will receive the detailed instructions regarding the purchase order.

 

On August 11, 2016, the Company received a $2,109,942 purchase order from JWH relating to LTE (Long-Term Evolution) tower services. The purchase order remains open as the Company is capable of fulfilling this order and is awaiting detailed instructions from JWH on scheduling our crews for designated locations during specified dates within the USA. The Company cannot give any assurances that it will receive the detailed instructions regarding the purchase order.

 

NOTE 10 - Subsequent Events 

 

From January 1, 2017 through August 21, 2017 (the date the last conversion notice has been received), the Company has issued 6,239,305,173 shares of common stock in satisfaction of $1,125,409 and $185,184 of principal and accrued interest, respectively, pursuant to conversion notices received by the Company from convertible debt holders.

 

From January 1, 2017 through August 21, 2017, our CEO has advanced to the Company, or made payments directly to vendors of the Company, in the aggregate $22,801. On May 4, 2017, and August 11, 2017, the Company repaid our CEO $38,151 and $11,500, respectively, of amounts previously advanced.

 

 
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On April 21, 2017, the Company, Dr. Cellucci and TCA executed a settlement agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company agreed to pay $2,500 by April 30, 2017, $2,500 by May 31, 2017, and $405,357 on or before June 16, 2017. The Company fully complied with its obligations under the settlement agreement, paying TCA all amounts owed thereunder within the times required, and the case has now been dismissed.

 

On May 1, 2017, the Company issued to a third-party investor, three convertible notes, two of which were for $50,000 each and one for $17,500, and three back-end convertible notes, two of which were for $50,000 each and one for $25,000. All of the notes have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the lowest traded price for 20 days prior to conversion. Beginning on the six-month anniversary of the note the conversion price shall have ceiling of $0.0005. The three convertible notes were funded on May 1, 2017, when the Company received proceeds of $111,625, after disbursements for the lender’s transaction costs, fees and expenses. On August 8, 2017, the investor funded the $25,000 back end note when the Company received $23,750 after disbursements for the lender’s transaction costs, fees and expenses.

 

On May 1, 2017, the Company issued to a third-party investor, three convertible notes, two of which were for $50,000 each and one for $17,500, and three back-end convertible notes, two of which were for $50,000 each and one for $25,000. All of the notes have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the lowest traded price for 20 days prior to conversion. Beginning on the six-month anniversary of the note the conversion price shall have ceiling of $0.0005.The three convertible notes were funded on April 28, 2017 and May 3, 2017, when the Company received proceeds of $85,000 and $26,625, respectively, after disbursements for the lender’s transaction costs, fees and expenses. On August 8, 2017, the investor funded the $25,000 back end note when the Company received $23,750 after disbursements for the lender’s transaction costs, fees and expenses.

 

On May 2, 2017, the Company issued a convertible note for legal services previously provided with a face value of $23,000 and stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 70% of the average of the three lowest closing bid prices for 10 days prior to conversion.

 

On May 3, 2017, the Company issued a convertible promissory note, with a face value of $124,775 and stated interest of 10% to Carebourn. The note is convertible at any time after ninety days following the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The note was funded on May 4, 2017, when the Company received proceeds of $100,000, after disbursements for the lender’s transaction costs, fees and expenses. The note also requires 240 daily payments of $520 per day via ACH.

 

On May 3, 2017, the Company issued three replacement convertible promissory notes in the amounts of $29,700, $25,300 and $22,000, respectively, which replaced three convertible promissory notes issued on November 27, 2015, with a face value of $27,000, January 5, 2016, with a face value of $23,000 and May 2, 2017, with a face value of $20,000, respectively. Each of the replacement convertible notes have a stated interest of 8% and each note is convertible at any time, into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the lowest traded price for 20 days prior to conversion. Beginning on the six-month anniversary of the note the conversion price shall have a ceiling of $0.0005.

 

On June 6, 2017, the Company entered into a Strategic Alliance Agreement with HelpComm, Inc. (“HelpComm”), a telecom construction services corporation located in Manassas, Virginia, pursuant to which (i) the Company will provide at least $200,000 in business expansion funding to HelpComm within ten (10) business days of execution of the agreement, and 40% of profits from services performed by HelpComm pursuant to receipt of the expansion funding from the Company will be allotted to the Company, (ii) the Company will provide HelpComm up to an additional $100,000 of expansion funding per fiscal quarter, (ii) HelpComm will provide job-related purchase orders to the Company for administration, accounting and fund distribution, (iii) the Company will provide project management and sales services to HelpComm, and (iv) the parties will support each other’s marketing and promotional efforts. The Company remitted the $200,000 to HelpComm on June 26, 2017.

 

On June 8, 2017, the Company issued to a third-party investor a convertible promissory note for $140,750 and a back-end convertible note for $140,750. The notes have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the lowest traded price for 20 days prior to conversion. Beginning on the six-month anniversary of the note the conversion price shall have ceiling of $0.0005. The note was funded on June 15, 2017, when the Company received proceeds of $135,000, after disbursements for the lender’s transaction costs, fees and expenses.

 

On June 8, 2017, the Company issued to a third-party investor a convertible promissory note for $140,750 and a back-end convertible note for $140,750. The notes have a stated interest of 8% and each note is convertible at any time following the funding of such note, convertible into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the lowest traded price for 20 days prior to conversion. Beginning on the six-month anniversary of the note the conversion price shall have ceiling of $0.0005. The note was funded on June 15, 2017, when the Company received proceeds of $135,000, after disbursements for the lender’s transaction costs, fees and expenses. On August 8, 2017, the investor funded the back end note when the Company received proceeds of $135,000, after disbursements for the lender’s transaction costs, fees and expenses.

 

 
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On June 9, 2017, the Company issued a convertible promissory note, with a face value of $165,025 and stated interest of 10% to Carebourn. The note is convertible at any time after ninety days following the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The note was funded on May 12, 2017, when the Company received proceeds of $135,000, after disbursements for the lender’s transaction costs, fees and expenses. The note also requires 240 daily payments of $680 per day via ACH.

 

On June 23, 2017, the Company issued a convertible promissory note, with a face value of $262,775 and stated interest of 10% to Carebourn. The note is convertible at any time after ninety days following the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion. The note was funded on June 23, 2017, when the Company received proceeds of $220,000, after disbursements for the lender’s transaction costs, fees and expenses. The note also requires 180 daily payments of $1,460 per day via ACH.

 

On July 10, 2017, the Company filed an Affidavit of Claim in the amount of $552,444 with The Hanover Insurance Company as surety for YKTG, related to YKTG’s alleged breaches of contract and failure to cure.

 

On July 12, 2017, the Company entered into a Settlement Agreement and Mutual Release with a holder of a note payable. The Company paid $9,000 and mutual releases between the parties, in full settlement of the note payable of $20,000.

 

On July 25, 2017, the Company entered into a Settlement Agreement with a vendor regarding previous services provided by the vendor to the Company. The parties agreed to settle the outstanding liability of $6,545 for $1,348, which the Company remitted to the vendor on July 25, 2017.

 

On August 1, 2017, Dr. Cellucci as collateral security, pledged 111,884 shares of his Series C Preferred Stock to the convertible promissory notes issued to Carebourn on the following dates and amounts; February 8, 2016 $80,000, March 24, 2016, $19,000, June 3, 2016, $42,350, May 3, 2017, $124,775, June 9, 2017, $165,025 and June 23, 2017, $262,775. This pledge replaces the pledge dated March 23, 2016.

 

On August 1, 2017, the Company issued a convertible promissory note, with a face value of $181,700, maturing on February 1, 2018 (the “Maturity Date”) and stated interest of 10% to More Capital. The note is convertible at any time following the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on August 3, 2017, when the Company received proceeds of $150,000, after disbursements for the lender’s transaction costs, fees and expenses. The note also requires daily ACH payments beginning on September 5, 2017, in the amount equal to the remaining balance on September 5, 2017, divided by the remaining days to the Maturity Date. As of August 11, 2017, the lender has converted $130,351 of the note in exchange for 141,330,143 restricted shares of common stock. As of August 11, 2017, the note balance is $51,349.

 

On August 2, 2017, the Company entered into a Strategic Alliance Agreement, dated August 3, 2017, with ProActive IT (“ProActive”), an Illinois corporation that provides information technology products and services, designating ProActive as the Company’s sales agent for government departments/agencies/units and privately owned and publicly traded companies within the State of Illinois, and providing for the cross-promotion of the parties’ products and services.

 

On August 7, 2017, the Company issued a convertible promissory note, with a face value of $223,422 and stated interest of 10% to Carebourn. The note is convertible at any time following the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest trading prices for the 20 days prior to conversion. The note was funded on August 9, 2017, when the Company received proceeds of $186,280, after disbursements for the lender’s transaction costs, fees and expenses. The note also requires 240 daily payments of $931 per day via ACH.

 

On August 10, 2017, the Company entered into a Strategic Alliance Agreement, dated August 10, 2017, with CrucialTrak Inc. (“CrucialTrak”), a Texas corporation engaged in providing identification technology that delivers improved security with effective use of servers and workstations for the purpose of identifying those entering a building, office or other secured space. The Strategic Alliance Agreement designates the Company as the project- based business partnership channel for government departments, agencies and units for the purpose of promoting CrucialTrak’s relevant products and service solutions delivered through CrucialTrak’s designated distribution affiliate(s) or channel(s).

 

In August 2017, the Company entered into three Settlement Agreements with vendors that were owed in the aggregate $94,524. Pursuant to the three Settlement Agreements, in August 2017, the Company remitted $48,113 in the aggregate to the three vendors.

 

On August 25, 2017, the Company entered into a Strategic Alliance Agreement, dated August 24, 2017, with AmbiCom Holdings Inc. (“AMBICOM”), a Nevada corporation engaged in acquiring and investing in technology, designating the Company as AMBICOM’s non-exclusive sales lead finder and project-based business partnership channel for governmental and non-governmental departments, agencies and units, for the purpose of promoting AMBICOM’S technologies, and pursuant to which AMBICOM will cross-promote the Company’s products and services, the Company will investigate and propose new joint investment opportunities for AMBICOM and the Company, and the Company will be paid sales commissions for clients introduced to AMBICOM by the Company.

 

 
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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-K 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 & Plan of Operation 

 

Bravatek Solutions, Inc., a Colorado corporation, was incorporated in the State of Colorado, on April 19, 2007. The Company is a security platform company that provides security, defense, and information security solutions, which assist corporate entities, governments and individuals in protecting their organizations and/or critical infrastructure against error, as well as 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, tools and systems.

 

Currently, the Company’s primary business operations are focused on establishing a strategic leadership position in cybersecurity email solutions and telecom services within the U.S. and abroad. The Company also has a “Market Alliance Program” (“MAP”) that enables Bravatek to rapidly introduce additional allied software, tools and systems to the worldwide marketplace through “win-win” contracts offering Bravatek, in virtually all cases, exclusive distribution rights in specified markets.

 

Additionally, the Company has developed and plans to continue selling an enterprise-level secure email software appliance named  Ecrypt One. Ecrypt One  is an email security solution (software) with integrated 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, as well as 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 has filed patent applications 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 in the order in which they are listed:

 

1.

Continue distribution on  Ecrypt One  Software packages;

2.

Continue fulfilling Viking services backlog;

3.

Continue distribution of allied products and services;

4.

Continue developing strategic marketing alliance program; and

5.

Continue development and testing of 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.

 

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 March 31, 2016 and 2015, and filed by the Company on Form 10-K with the Securities and Exchange Commission on July 21, 2017.

 

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 Bravatek Solutions, Inc. for the three and nine months ended December 31, 2016 compared to the three and nine months ended December 31, 2015.

 

 
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Revenue

 

During the three and nine months ended December 31, 2016, the Company had revenues of $50,534 and $203,054, respectively, compared to $120,376 and $370,186, respectively, for the three and nine months ended December 31, 2015. Related party revenue (YKTG) for the three and nine months ended December 31, 2016, was $50,534 and $145,362, compared to related party revenue for the three and nine months ended December 31, 2015 of $465 and $187,302. For the nine months ended December 31, 2016, revenues of $23,625 were recorded in barter transactions in exchange for advertising and promotional expenses.

 

Operating Expenses 

 

For the three and nine months ended December 31, 2016, the Company had operating expenses of $112,587 and $473,029, respectively, compared to $439,849 and $1,348,357 for the three and nine months ended December 31, 2015. The decrease in operating expenses experienced by the Company was attributable to decreases in research and development, professional fees, advertising and promotional costs and general and administrative costs.

 

Other Income (Expenses)

 

Other income for the three months ended December 31, 2016 was $247,481 compared to other expenses of $1,299,834 for the three months ended December 31, 2015. The 2016 result is primarily attributable to the decrease in the fair value of derivatives of $450,211, partially offset by other expenses including the amortization of debt discount and interest expense. Other expenses were $1,171,839 and $1,376,926 for the nine months ended December 31, 2016 and 2015, respectively. The decrease was primarily due to decreases on the amortization expense of debt discount and interest expense, partially offset by an increase in the change in the fair value of derivatives.

 

Net Income (Loss)

 

The Company had net income of $131,169 for the three months ended December 31, 2016, compared to a net loss of $1,645,318 for the three months ended December 31, 2015 and net losses of $1,596,162 and $2,464,895 for the nine months ended December 31, 2016 and 2015, respectively. The three month change was primarily attributable to a gain of $450,211 on the fair value change in derivatives for the three months ended December 31, 2016, compared to a loss on the fair value change in derivatives of $754,392 for the three months ended December 31, 2015. The decrease in net loss for the nine months ended December 31, 2016, compared to the nine months ended December 31, 2015, was due to the decreases in operating expenses and other expenses, reduced by the lower gross profit realized for the nine months ended December 31, 2016, compared to the nine months ended December 31, 2015.

 

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 twelve months. 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. As noted above, 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.

 

For the nine months ended December 31, 2016, we primarily funded our business operations with $223,726 of cash collected from accounts receivable and $48,000 from the proceeds from convertible note financing. From January 1, 2017, through August 31, 2017, we received proceeds of $1,467,030 from the issuance of $1,664,947 of convertible promissory notes. These activities funded our business operations since December 31, 2016, and were also used to pay off existing debt of approximately $754,000, and to fund $200,000 for our Strategic Alliance Agreement with Helpcomm. 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.

 

As of December 31, 2016, we had cash of $257, as compared to $15,244 at March 31, 2016. The Company did not have any accounts receivable as of December 31, 2016, compared to $46,898 as of March 31, 2016. As of December 31, 2016, we had current liabilities of $5,522,069 (including $2,144,913 of non-cash derivative liabilities) compared to current assets of $257 which resulted in working capital deficit of $5,521,812. The current liabilities are comprised of accounts payable, accrued expenses, convertible debt, derivative liabilities, note payable-related party and notes payable.

 

 
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Operating Activities  

 

For the nine months ended December 31, 2016, net cash used in operating activities was $77,613 compared to $1,209,954 for the nine months ended December 31, 2015. For the nine months ended December 31, 2016, our net cash used in operating activities was primarily attributable to the net loss adjusted by amortization of debt discounts, derivative liability expenses non-cash interest and fees related to convertible promissory notes and depreciation. Net changes of $386,601 in operating assets and liabilities positively impacted the cash used in operating activities. The 2015 results were primarily attributable to net loss adjusted by the fair value change of derivative liabilities, amortization and depreciation, and net changes of $15,809 in operating assets and liabilities negatively impacted the cash used in operating activities.

 

Investing Activities  

 

There was no investing activity for the nine months ended December 31, 2016, compared to net cash used in investing activities of $73,279 during the nine months ended December 31, 2015. In the 2015 period, cash used in investing activities was attributable to the Company purchasing assets from a related party of $43,279 and an investment in a note receivable of $30,000.

 

Financing Activities  

 

For the nine months ended December 31, 2016, the net cash provided by financing activities was $62,626 compared to $1,113,560 for the nine months ended December 31, 2015. The results for the 2016 period was the result of proceeds received of $48,000 from the issuance of $61,239 of convertible promissory notes, receipt of $26,850 of proceeds from a related party loan and the repayment of $12,224 against convertible promissory notes. The 2015 activity was the result of proceeds from notes payable of $350,000, convertible promissory notes of $984,173 and proceeds received from a related party of $51,512 and payments of $157,000 in a related party asset transaction, $51,512 related party loan repayments and $63,613 note repayment.

 

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 the Company’s Current Report on Form 10-K filed on July 21, 2017. 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.

 

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are 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 as charges or credits to income.

 

For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

 

Revenue Recognition

 

Product revenue and miscellaneous income are recognized as earned.

 

The Company recognizes revenue and gains when earned and related costs of sales and expenses when incurred. The Company recognizes revenue in accordance with Accounting Standards Codification Section 605-10-599, Revenue Recognition, Overall, SEC Materials (“Section 605-10-599”). Section 605-10-599 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Cost of products sold consists of the cost of the purchased goods and labor related to the corresponding sales transaction. When a right of return exists, the Company defers revenues until the right of return expires. The Company recognizes revenue from services at the time the services are completed.

 

 
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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 December 31, 2016, 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 January 27, 2016, one of the Company’s creditors, JSJ Investments Inc. (“JSJ”), sent a demand for payment of amounts allegedly owed by the Company to JSJ pursuant to a convertible note dated January 19, 2015, in the original principal amount of $100,000, and threatening potential legal action against the Company. Since that time, JSJ has continued to convert the note into shares of common stock and the parties are currently negotiating a settlement of the remaining amounts due under the note.

 

On September 6, 2016, TCA commenced an action against the Company and the Company’s CEO, Dr. Cellucci, as “validity guarantor,” filed in the Circuit Court of the 17 th  Judicial Circuit in and for Broward County, Florida, for amounts owed to TCA by the Company under their revolving credit agreement with the Company. On April 21, 2017, the Company, Dr. Cellucci and TCA executed a settlement agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company agreed to pay $2,500 by April 30, 2017, $2,500 by May 31, 2017, and $405,357 on or before June 16, 2017. The Company fully complied with its obligations under the settlement agreement, paying TCA all amounts owed thereunder within the times required, and the case has now been dismissed.

 

ITEM 1A. RISK FACTORS.

 

Not applicable.

 

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

 

On October 6, 2016, the Company issued 3,838,330 shares of common stock to Carebourn Capital L.P. (“Carebourn”) in partial satisfaction of its obligations under, and the holder’s election to convert a $690 portion of, the Company’s convertible promissory note, issued to Carebourn on October 12, 2015.

 

On October 6, 2016, the Company issued 7,748,955 shares of common stock to LG Capital Funding LLC. (“LG”) in partial satisfaction of its obligations under, and the holder’s election to convert a $1,558 portion of, the Company’s convertible promissory back-end note, which included $1,380 in principal, and a $178 portion of accrued interest issued to LG on January 9, 2015.

 

On October 6, 2016, the Company issued 3,916,000 shares of common stock to YP Holdings, LLC (“YP Holdings”) in partial satisfaction of its obligations under, and the holder’s election to convert a $704 portion of, the Company’s convertible promissory notes accrued interest issued to YP Holdings on August 17, 2015.

 

On October 10, 2016, the Company issued 3,838,330 shares of common stock to JSJ Investments, Inc. (“JSJ”) in partial satisfaction of its obligations under, and the holder’s election to convert a $422 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On October 13, 2016, the Company issued 3,838,300 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $614 portion of, the Company’s convertible promissory note, issued to Carebourn on October 12, 2015.

 

On October 17, 2016, the Company issued 4,786,069 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $526 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On October 19, 2016, the Company issued 5,208,644 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $573 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On October 24, 2016, the Company issued 3,838,330 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $461 portion of, the Company’s convertible promissory note, issued to Carebourn on October 12, 2015.

 

 
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On October 24, 2016, the Company issued 5,463,888 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $601 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On October 27, 2016, the Company issued 5,919,697 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $651 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On October 28, 2016, the Company issued 12,056,852 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $723 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On November 1, 2016, the Company issued 6,209,761 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $673 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On November 2, 2016, the Company issued 3,838,330 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $307 portion of, the Company’s convertible promissory note, issued to Carebourn on October 12, 2015.

 

On November 2, 2016, the Company issued 13,128,432 shares of common stock to LG in partial satisfaction of its obligations under, and the holder’s election to convert a $1,759 portion of, the Company’s convertible promissory back-end note, which included $1,600 in principal, and a $159 portion of accrued interest issued to LG on January 9, 2015.

 

On November 4, 2016, the Company issued 7,292,905 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $583 portion of, the Company’s convertible promissory note, which included $170 in principal, and a $413 portion of accrued interest issued to Carebourn on October 12, 2015.

 

On November 4, 2016, the Company issued 7,292,904 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $790 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On November 7, 2016, the Company issued 14,868,595 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $1,784 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On November 8, 2016, the Company issued 7,292,900 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $583 portion of, the Company’s convertible promissory note’s accrued interest issued to Carebourn on October 12, 2015.

 

On November 8, 2016, the Company issued 8,650,902 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $904 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On November 9, 2016, the Company issued 16,000,000 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $960 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On November 10, 2016, the Company issued 17,657,636 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $1,059 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On November 11, 2016, the Company issued 10,160,709 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $559 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On November 11, 2016, the Company issued 13,152,014 shares of common stock to LG in partial satisfaction of its obligations under, and the holder’s election to convert a $1,762 portion of, the Company’s convertible promissory back-end note, which included $1,600 in principal, and a $162 portion of accrued interest issued to LG on January 9, 2015.

 

 
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On November 11, 2016, the Company issued 20,174,545 shares of common stock to Union Capital, LLC (“Union”) in partial satisfaction of its obligations under, and the holder’s election to convert a $2,219 portion of, the Company’s convertible promissory note, which included $1,900 in principal, and $319 in accrued interest, issued to Union on December 19, 2014.

 

On November 15, 2016, the Company issued 20,736,121 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $1,244 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On November 17, 2016, the Company issued 13,075,585 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $719 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On November 17, 2016, the Company issued 22,751,321 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $1,365 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On November 18, 2016, the Company issued 7,292,905 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $438 portion of, the Company’s convertible promissory note’s accrued interest issued to Carebourn on October 12, 2015.

 

On November 21, 2016, the Company issued 14,938,865 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert an $822 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On November 23, 2016, the Company issued 15,240,000 shares of common stock to Rock Capital, LLC (“Rock”) in partial satisfaction of its obligations under, and the holder’s election to convert a $914 portion of, the Company’s replacement convertible promissory note’s accrued interest note issued to Rock on April 27, 2016.

 

On November 29, 2016, the Company issued 16,686,940 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $917 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On November 30, 2016, the Company issued 30,000,000 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $1,800 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On December 1, 2016, the Company issued 19,366,174 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $1,065 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On December 1, 2016, the Company issued 19,700,000 shares of common stock to Rock in partial satisfaction of its obligations under, and the holder’s election to convert a $1,182 portion of, the Company’s replacement convertible promissory note, which included $728 in principal, and a $454 portion of accrued interest issued to Rock on April 27, 2016.

 

On December 5, 2016, the Company issued 20,315,117 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $1,117 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On December 5, 2016, the Company issued 15,184,477 shares of common stock to LG in partial satisfaction of its obligations under, and the holder’s election to convert a $2,357 portion of, the Company’s convertible promissory back-end note, which included $2,130 in principal, and a $227 portion of accrued interest issued to LG on January 9, 2015.

 

On December 5, 2016, the Company issued 19,700,000 shares of common stock to Rock in partial satisfaction of its obligations under, and the holder’s election to convert a $1,182 portion of, the Company’s replacement convertible promissory note, which included $1,005 in principal, and a $177 portion of accrued interest issued to Rock on April 27, 2016.

 

On December 5, 2016, the Company issued 20,600,000 shares of common stock to Rock in partial satisfaction of its obligations under, and the holder’s election to convert a $1,236 portion of, the Company’s replacement convertible promissory note, which included $1,080 in principal, and a $156 portion of accrued interest issued to Rock on April 27, 2016.

 

 
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On December 7, 2016, the Company issued 47,062,000 shares of common stock to Union in partial satisfaction of its obligations under, and the holder’s election to convert a $2,588 portion of, the Company’s convertible promissory note, which included $2,200 in principal and $388 in accrued interest, issued to Union on December 19, 2014.

 

On December 8, 2016, the Company issued 24,711,158 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $1,359 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On December 8, 2016, the Company issued 47,075,091 shares of common stock to Union in partial satisfaction of its obligations under, and the holder’s election to convert a $2,589 portion of, the Company’s convertible promissory note, which included $2,200 in principal, and $389 in accrued interest, issued to Union on December 19, 2014.

 

On December 8, 2016, the Company issued 45,000,000 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $2,700 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On December 12, 2016, the Company issued 28,741,326 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $1,724 portion of, the Company’s convertible promissory note’s accrued interest issued to Carebourn on October 12, 2015.

 

On December 12, 2016, the Company issued 35,220,746 shares of common stock to LG in partial satisfaction of its obligations under, and the holder’s election to convert a $2,360 portion of, the Company’s convertible promissory back-end note, which included $2,010 in principal, and a $350 portion of accrued interest issued to LG on January 9, 2015.

 

On December 13, 2016, the Company issued 33,879,091 shares of common stock to Adar Bays, LLC (“Adar Bays”) in partial satisfaction of its obligations under, and the holder’s election to convert a $1,863 portion of, the Company’s convertible promissory note issued to Adar Bays on December 19, 2014.

 

On December 13, 2016, the Company issued 11,400,333 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $684 portion of, the Company’s convertible promissory note’s accrued interest issued to Carebourn on October 12, 2015.

 

On December 13, 2016, the Company issued 33,900,000 shares of common stock to Rock in partial satisfaction of its obligations under, and the holder’s election to convert a $2,034 portion of, the Company’s replacement convertible promissory note, which included $1,840 in principal, and a $194 portion of accrued interest issued to Rock on April 27, 2016.

 

On December 13, 2016, the Company issued 47,140,909 shares of common stock to Union in partial satisfaction of its obligations under, and the holder’s election to convert a $2,593 portion of, the Company’s convertible promissory note, which included $2,200 in principal, and $393 in accrued interest, issued to Union on December 19, 2014.

 

On December 13, 2016, the Company issued 65,000,000 shares of common stock to YP Holdings in partial satisfaction of its obligations under, and the holder’s election to convert a $3,900 portion of, the Company’s convertible promissory note’s accrued interest issued to YP Holdings on August 17, 2015.

 

On December 14, 2016, the Company issued 34,993,929 shares of common stock to JSJ in partial satisfaction of its obligations under, and the holder’s election to convert a $1,886 portion of, the Company’s replacement convertible promissory note issued to JSJ on January 19, 2015.

 

On December 14, 2016, the Company issued 67,187,462 shares of common stock to LG in partial satisfaction of its obligations under, and the holder’s election to convert a $4,502 portion of, the Company’s convertible promissory back end note, which included $3,830 in principal, and a $672 portion of accrued interest issued to LG on January 9, 2015.

 

On December 14, 2016, the Company issued 39,000,000 shares of common stock to Rock in partial satisfaction of its obligations under, and the holder’s election to convert a $2,340 portion of, the Company’s replacement convertible promissory note, which included $2,184 in principal, and a $156 portion of accrued interest issued to Rock on April 27, 2016.

 

On December 14, 2016, the Company issued 64,300,000 shares of common stock to Union in partial satisfaction of its obligations under, and the holder’s election to convert a $3,537 portion of, the Company’s convertible promissory note, which included $3,000 in principal, and $537 in accrued interest, issued to Union on December 19, 2014.

 

 
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On December 16, 2016, the Company issued 28,741,200 shares of common stock to Carebourn in partial satisfaction of its obligations under, and the holder’s election to convert a $1,724 portion of, the Company’s convertible promissory note’s accrued interest issued to Carebourn on October 12, 2015.

 

On December 20, 2016, the Company issued 52,000,000 shares of common stock to Rock in partial satisfaction of its obligations under, and the holder’s election to convert a $3,120 portion of, the Company’s replacement convertible promissory note, which included $2,944 in principal, and a $176 portion of accrued interest issued to Rock on April 27, 2016.

 

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 securities 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 debt securities for a long time. The holders provided legal opinions pursuant to Section 4(a)(1) of Securities Act, or Rule 144 promulgated thereunder.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

  ITEM 4. MINE SAFETY DISCLOSURES.

 

None.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

 

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

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)

3.7

Articles of Amendment to Articles of Incorporation (increasing the Company’s authorized common stock) (incorporated by reference to our Current Report on Form 8-K filed on June 6, 2016)

3.8

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)

 

10.1

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

 

 
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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 Mile High Construction dated June 2, 2017 (incorporated by reference to our Form 8-K filed on June 2, 2017)

 

10.16

 

Strategic Alliance Agreement with HelpComm dated June 6, 2017 (incorporated by reference to our Form 8-K filed on June 7, 2017)

 

14.1

Code of Ethics (incorporated by reference to our Annual Report on Form 10-K filed July 13, 2010)

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.

 

 
33
 
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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: August 29, 2017

By:

/s/ Thomas A. Cellucci

Thomas A. Cellucci

CEO

 

 

34

 

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