Let’s look at all BVTK has disclosed regarding this “Deal” because it at the very least making some contradictory and confusing statements about it.
I am only going to deal with what BVTK has said publicly and disclosed publicly. They are the publicly traded entity and subject to the reporting and disclosure requirements of US Securities Laws and Regulations. Darkpulse is a private company not subject to those same requirements, so to the degree they may have said something that contradicts BVTK, the SEC will go by what BVTK has said, so that is what I will deal with and what investors should rely on.
So let’s start with the Strategic Alliance Agreement (SA Agreement) announced on September 5, 2017
On September 5, 2017, Bravatek Solutions, Inc. (the “Company”) entered into a Strategic Alliance Agreement with DarkPulse Technology Holdings, Inc. (“DarkPulse”), a New York corporation engaged in manufacturing hardware and software based on its BOTDA (Brillouin Optical Time Domain Analysis) technology, designating the Company as DarkPulse’s project-based business partnership channel for governmental and non-governmental departments, agencies and units, for the purpose of promoting DarkPulse’s products, and pursuant to which DarkPulse will cross-promote the Company’s products and services, and the Company will be paid sales commissions for clients introduced to DarkPulse by the Company.
The key section in the agreement insofar as it relates to this deal would be the compensation section which says:
When custom Products are designed, developed and to be delivered to Bravatek-identified perspective clients, the parties shall agree to a proposed sales price for use during the project in writing prior to the commencement of each project.
For any Product or Solution sold to any perspective clients introduced by Bravatek registered with DARKPULSE via email to DARKPULSE’s CEO, Dennis O’Leary, and delivered through Bravatek or a DARKPULSE-designated distribution affiliate(s) or sales channel(s), Bravatek will receive a lead-finder fee, to be mutually discussed and finally decided by DARKPULSE at the range of minimum of 10% to maximum of 20% of project revenue, with an exact fee to be determined, depending upon the overall project sales margin and cost of development and delivery of each project, payable NET 30 days after each client payment on delivered products received at DARKPULSE’s bank account.
So, according to the SA Agreement Darkpulse pays Bravatek NET 30 days after Darkpulse gets paid. AKA “Paid when Paid"
Subsequently an 8K was filed to announce the signing of a non-binding Letter of Intent for the formation of a Joint Venture. I include the links to that disclosure however this LOI has no apparent impact on the Deal announced Sept 11 which occurred under the previously disclosed SA Agreement discussed above.
The Letter of Intent:
Then on October 11, 2017 the following 8K was filed announcing that a Purchase Order had been received and signed by Bravatek for its 20% Commission on a $107 million project that Darkpulse was going to perform that would amount to approximately $21.4 million to Bravatek.
On October 11, 2017, Bravatek Solutions, Inc. (the “Company”) entered into a Purchase Order with DarkPulse Technology Holdings, Inc. (“DarkPulse”), a New York corporation engaged in manufacturing hardware and software based on its BOTDA (Brillouin Optical Time Domain Analysis) technology, for services to be provided by the Company and DarkPulse pursuant to the parties’ Strategic Alliance Agreement, and pursuant to which the Company will receive a 20% commission for DarkPulse’s project to monitor the structural health of a third party’s critical infrastructure and key resources.
The Purchase Order to BVTK from DarkPulse:
The body of which is as follows:
Effective date: 10 October 2017
Project: Iron Ore Mining Facilities
Owner: Undisclosed - NDA
Purchase Order to Bravatek Solutions, Inc.: BVTK-PO-001-1017A
Purchase Order not to exceed $21,500,000
Dr. Thomas A. Cellucci:
This Purchase ORDER (“PURCHASE ORDER”) is issued by DarkPulse technology Holdings, Inc. (“DPT”) for Services provided by Bravatek Solutions, Inc. (“BVTK”) under the Marketing Alliance Program (“MAP”) Agreement whereby both BVTK and DPT (“Parties”) having mutually agreed to enter into a strategic alliance dated 6 September 2017. BVTK will receive 20% commission for the project, estimated to be $21.4M on a total project value of $107M.
DPT will provide the installation of their patented BOTDA system into Owner’s facilities to monitor the structural health of Owner’s Critical Infrastructure/Key Resources (“CI/KR”). The first deployments will include: Oil&Gas pipeline, foundation and structure of pumping station, hydro power facility including dam structure, pressurized water pipe of pumping station and return line, and pressurized water pipe of a pumping station of circulating water supply (underground portion).
BVTK will invoice monthly for payment on completed projects. BVTK will submit the invoice with DPT within the first week of each month for milestones completed the previous month. DPT shall review with BVTK and approve each invoiced amount.
For purposes of this section “completed site” means those sites for which DarkPulse has installed its BOTDA sensor technology and upon DarkPulse’s completion of a final system analysis with Owner’s engineers, whereby Owner has signed a work order completion document.
For those completed projects, DPT will pay undisputed amounts within NET 30 days after each client payment on delivered products received at DARKPULSE’s bank account.
Subject to successful demonstration/installation of DPT’s BOTDA system(s) at Owners facility.
The term of this Agreement is twelve (12) months from the date hereof, and will be automatically renewed for one (1) additional twelve month period unless either party shall notify the other in writing of its intention not to renew. Such notice must be given ninety (90) days prior to expiration of the original term. This Agreement may also be terminated by either party upon ninety (90) days written notice. Any unpaid invoices for work obtained or work to be completed in the Project by DPT through the MAP shall be paid to BVTK immediately by termination by DPT.
This Agreement shall not be assignable by either party without the prior written consent of the other party.
This Purchase Order shall not be considered accepted, approved or otherwise effective until signed by the appropriate parties.
So working backwards, what does the PO state regarding PAYMENT?
“DPT will pay undisputed amounts within NET 30 days after each client payment on delivered products received at DARKPULSE’s bank account”.
That is clear and consistent with the SA Agreement. BVTK does not get paid until the money from the client shows up in Darkpulse’s Bank account for a completed project that BVTK has invoiced and DP agrees with.
What constitutes a completed project?
Well they don’t define completed project, but they define completed “site”.
“For purposes of this section “completed site” means those sites for which DarkPulse has installed its BOTDA sensor technology and upon DarkPulse’s completion of a final system analysis with Owner’s engineers, whereby Owner has signed a work order completion document.”
Since that is the only definition under “completion” and the only completion referred to prior is “completed project” we are left to have to use the words site and project interchangeably but the lack consistency and lack of a more detailed explanation leaves this open to intepretation.
And what is Darkpulse paying against?
An invoice -
“BVTK will invoice monthly for payment on completed projects. BVTK will submit the invoice with DPT within the first week of each month for milestones completed the previous month. DPT shall review with BVTK and approve each invoiced amount”
This is a little confusing because all indications are that BVTK is being paid a commission on work completed and payment received by Darkpulse from the client. This is DarkPulse’s client. The wording of the invoicing is weird because it sounds like BVTK is doing something then submits an invoice to DP and DP then approves or disputes some part (or all) of it. But wouldn’t DP be telling BVTK what they completed? BVTK could then generate an invoice for the amount DP tells them...so the dispute clause seems odd given the abbreviated nature of the PO. But there is nothing that contradicts the “Paid when Paid” condition of this PO.
And lastly, the issue of termination is pretty straightforward. BVTK gets paid for UNPAID invoices through the point of termination. That’s it. There is nothing that suggests BVTK is going to get paid for work that Darkpulse has NOT DONE and NOT BEEN PAID for. That is not what the SA Agreement OR the Purchase Order allow for with DIRECT wording.
I might also note that they refer to the “MAP”…but that is not what the Agreement with Darkpulse was called. It was called a Strategic Alliance Agreement, so they may want, again, to try and get their terminology consistent.
That 8K and the PO did not contain any clear language that Darkpulse had not yet signed or otherwise closed the deal for the $107 million project other than perhaps the reference to:
“Subject to successful demonstration/installation of DPT’s BOTDA system(s) at Owners facility.”
But other than that there were no other conditions referred to. And certainly the view here and elsewhere suggested most looked at the $21 million commission as a sure thing.
But then this morning the following PR shows up from Bravatek
The Press Release
The key parts of which are:
To that end, Bravatek has received a PO from DPT related to a project DPT is currently negotiating to bring DPT’s technology to Eastern Europe. DPT’s project, if successful, should represent the first segment of a multi-year monitoring agreement totalling more than $106 million for DPT and using DPT’s patented distributed fiber-optic sensing technology.
There is no guarantee that DPT’s efforts will be successful, or that BVTK will earn any revenue as a result of the PO, and BVTK invites shareholders to review the Current Report on Form 8-K filed with the SEC on October 11, 2017, for additional details regarding the PO.
The language and meaning of that PR could not be clearer. The $21 million commission is not a sure thing and Darkpulse is STILL negotiating and BVTK may not see ANYTHING from the PO.
That leads to a whole host of questions about why did they rush the 8K as opposed to waiting to see if DP closed a deal?, why was the 8K deficient and required a clarification today?, etc.
Whether BVTK can ever realize any revenue and get paid its commission is still dependant on many things happening. And since we don’t know Darkpulse’s client, the country it is in or the timing of it all, at the VERY LEAST it could be a long time (if ever) before any money is received by BVTK under this PO