NOTE 10 - Restatement of Previously Issued Financial Statements | Effective January 1, 2018, the Company acquired all of the issued and outstanding shares of HELPCOmm. Inc. (“HelpComm”), a telecom construction and services corporation located in Manassas, Virginia, in exchange for $25,000 of cash and 100,000 shares of Series D Convertible Preferred Stock (the “Acquisition”). On March 12, 2019, the Company and HelpComm entered into a Rescission, Settlement and Confidentiality Agreement with Mutual Releases, whereby the acquisition of HelpComm was fully rescinded effective retroactive to January 1, 2018. The Company has restated its previously issued September 30, 2018 financial statements. The adjustments to the previously issued financial statements reflect the following: a) remove all transactions related to HelpComm b) remove interest accrued in error on a settlement amount that was non-interest bearing c) change value of derivative liability based on the Black-Scholes model The Company has restated its 2018 financial statements and numbers therein; the 2017 financial statements and numbers therein have not been modified from the historical filings. BRAVATEK SOLUTIONS, INC. BALANCE SHEET As of September 30, 2018 As Previously Filed Adjustments As Restated CURRENT ASSETS Cash $ 8,713 $ (8,713 ) a $ - Accounts receivable 261,164 (255,414 ) a 5,750 Prepaid expenses and other current assets 252,671 (193,428 ) a 59,243 Work in process 351,730 (351,730 ) a - TOTAL CURRENT ASSETS 874,278 (809,285 ) a 64,993 a Property and equipment, net 252,253 (237,403 ) a 14,850 Intangible assets, net 1,685,705 (1,685,705 ) a - Goodwill 1,339,259 (1,339,259 ) a - TOTAL ASSETS $ 4,151,495 $ (4,071,652 ) $ 79,843 CURRENT LIABILITIES Convertible notes payable, net of discounts $ 1,201,584 $ - a $ 1,201,584 Notes payable 903,000 (72,212 ) a 830,788 Revolving line of credit 385,667 (385,667 ) a - Bank term loans 98,848 (98,848 ) a - Bank overdraft 17,089 - 17,089 Accounts payable and accrued liabilities 1,003,796 (819,906 ) a 183,890 Accounts payable, related party 463,372 (126,189 ) a 337,183 Accrued interest 418,505 (40,110 ) b 378,395 Capital leases payable 6,816 (6,816 ) a - Derivative liabilities 1,823,178 249,036 c 2,072,214 Contract liability 86,232 (86,232 ) a - TOTAL CURRENT LIABILITIES 6,408,087 (1,386,944 ) 5,021,143 LONG-TERM LIABILITIES Notes payable 115,173 (115,173 ) a - Bank term loans 155,944 (155,944 ) a - Series D convertible preferred stock 1,440,000 (1,440,000 ) a - TOTAL LIABILITIES 8,119,204 (3,098,061 ) 5,021,143 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIT Series B preferred stock 26 - 26 Series C preferred stock 32 - 32 Common stock 7,523,410 (960,000 ) a 6,563,410 Common stock to be issued 66,917 - 66,917 Additional paid in capital 21,192,728 819,159 c 22,011,887 Accumulated deficit (32,748,933 ) (834,639 ) abc (33,583,572 ) TOTAL STOCKHOLDERS' DEFICIT (3,965,820 ) (975,480 ) (4,941,300 ) Noncontrolling interest (1,889 ) 1,889 - TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 4,151,495 $ (4,073,541 ) $ 79,843 BRAVATEK SOLUTIONS, INC. STATEMENTS OF OPERATIONS For the Three Months Ended September 30, 2018 As Previously Filed Adjustments As Restated REVENUES Sales, other $ 662,199 $ (660,551 ) a $ 1,648 Sales, related party - - - Total sales 662,199 (660,551 ) 1,648 Cost of services 474,469 (472,494 ) 1,975 GROSS PROFIT (LOSS) 187,730 (188,057 ) (327 ) OPERATING EXPENSES Selling expenses 52,188 (21,319 ) a 30,869 General and administrative 698,338 (493,404 ) a 204,934 Research and development 15,000 - 15,000 TOTAL OPERATING EXPENSES 765,526 (514,723 ) 250,803 OPERATING LOSS (577,796 ) 326,666 (251,130 ) OTHER INCOME (EXPENSES) Interest expense (67,379 ) 24,419 a (42,960 ) Gain on investment in joint venture - 8,519 a 8,519 Other income 33,015 (31,515 ) a 1,500 Loss on rescinded acquisition - (110,522 ) a (110,522 ) Write-down of assets - (51,640 ) a (51,640 ) Gain (loss) on fair value of derivatives 428,696 415,809 c 844,505 Amortization of debt discount (370,809 ) 114,315 c (256,494 ) TOTAL OTHER INCOME (EXPENSE), NET 23,523 369,385 392,908 NET INCOME (LOSS) $ (554,273 ) $ 696,051 $ 141,778 EARNINGS (LOSS) PER SHARE BASIC $ (0.59 ) $ 0.15 BRAVATEK SOLUTIONS, INC. STATEMENTS OF OPERATIONS For the Nine Months Ended September 30, 2018 As Previously Filed Adjustments As Restated REVENUES Sales, other $ 2,480,559 $ (2,478,893 ) a $ 1,666 Sales, related party 24,837 - 24,837 Total sales 2,505,396 (2,478,893 ) 26,503 Cost of services 1,923,000 (1,916,431 ) 6,569 GROSS PROFIT (LOSS) 582,396 (562,462 ) 19,934 OPERATING EXPENSES Selling expenses 52,888 (2,019 ) a 50,869 General and administrative 4,272,758 (1,313,401 ) a 2,959,357 Research and development 31,750 - 31,750 TOTAL OPERATING EXPENSES 4,357,396 (1,315,420 ) 3,041,976 OPERATING LOSS (3,775,000 ) 752,958 (3,022,042 ) OTHER INCOME (EXPENSES) Interest expense (185,230 ) 54,822 a (130,408 ) Loss on investment in joint venture - (89,450 ) a (89,450 ) Other income 45,963 (41,458 ) a 4,505 Loss on rescinded acquisition - (370,946 ) a (370,946 ) Write-down of assets - (51,640 ) a (51,640 ) Gain (loss) on fair value of derivatives 3,037,949 (2,015,042 ) c 1,022,907 Gain (loss) on extinguishment of debt (23,021 ) - (23,021 ) Amortization of debt discount (1,768,134 ) 445,458 c (1,322,676 ) TOTAL OTHER INCOME (EXPENSE), NET 1,107,527 (2,068,256 ) (960,729 ) NET INCOME (LOSS) $ (2,667,473 ) $ (1,315,298 ) $ (3,982,771 ) EARNINGS (LOSS) PER SHARE BASIC $ (2.98 ) $ (4.44 ) BRAVATEK SOLUTIONS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2018 As Previously Filed Adjustments As Restated CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (2,667,473 ) $ (1,315,298 ) $ (3,982,771 ) Adjustments to reconcile net loss to net cash used in operations: Amortization and depreciation 496,364 (411,298 ) a 85,066 Loss on rescinded acquisition - 370,946 a 370,946 Write-down of assets - 51,640 a 51,640 (Gain) loss on extinguishment of debt 23,021 - a 23,021 Amortization of debt discounts 1,768,134 (445,458 ) c 1,322,676 (Gain) loss on fair value of derivatives (3,037,949 ) 2,015,042 c (1,022,907 ) Loss on investment in joint venture - 89,450 a 89,450 Stock issued for donation - 25,000 a 25,000 Voting control value of preferred stock issued 2,333,140 - a 2,333,140 Changes in operating assets and liabilities: Accounts receivable, related party - - a - Accounts receivable 150,697 (146,447 ) a 4,250 Prepaid expenses and other current assets (201,838 ) 114,016 a (87,822 ) Work in progress (61,489 ) 61,489 a - Accounts payable and accrued liabilities 267,860 (147,514 ) a,b 120,346 Accounts payable and accrued liabilities, related party 145,193 (126,189 ) a 19,004 Contract liability 61,476 81,432 142,908 NET CASH USED IN OPERATING ACTIVITIES (722,864 ) 216,811 (506,053 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash paid in HelpComm acquisition 46,910 (441,356 ) a (394,446 ) Purchase of property and equipment (10,193 ) 10,193 a - Investment in joint venture - (89,450 ) a (89,450 ) Purchase of note receivable - - a - Purchase of exclusivity (90,742 ) 60,362 a (30,380 ) NET CASH USED IN INVESTING ACTIVITIES (54,025 ) (460,251 ) (514,276 ) CASH FLOWS FROM BY FINANCING ACTIVITIES Payments of principal on notes and leases payable (69,961 ) 69,961 a - Payments of principal on convertible notes payable (95,111 ) - a (95,111 ) Payments of principal on bank term notes payable (67,952 ) 67,952 a - Proceeds from issuance of convertible debt, net 842,002 66,992 a 908,994 Proceeds from revolving line of credit 626,600 (626,600 ) a - Payments on revolving line of credit (656,422 ) 656,422 a - Bank overdraft 17,089 - a 17,089 NET CASH PROVIDED BY FINANCING ACTIVITIES 596,245 234,727 830,972 NET INCREASE IN CASH AND CASH EQUIVALENTS (180,644 ) (8,713 ) (189,357 ) CASH AND CASH EQUIVALENTS Beginning of period 189,357 - 189,357 End of period 8,713 (8,713 ) - |