Thursday, October 12, 2017 8:20:48 PM
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
The 8K:
https://www.sec.gov/Archives/edgar/data/1449574/000147793217004343/bvtk_8k.htm
The Agreement:
https://www.sec.gov/Archives/edgar/data/1449574/000147793217004343/bvtk_ex991.htm
The key section in the agreement insofar as it relates to this deal would be the compensation section which says:
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 8K:
https://www.sec.gov/Archives/edgar/data/1449574/000147793217004761/bvtk_8k.htm
The Letter of Intent:
https://www.sec.gov/Archives/edgar/data/1449574/000147793217004761/bvtk_ex991.htm
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.
The 8K:
https://www.sec.gov/Archives/edgar/data/1449574/000147793217004981/bvtk_8k.htm
The Purchase Order to BVTK from DarkPulse:
https://www.sec.gov/Archives/edgar/data/1449574/000147793217004981/bvtk_ex991.htm
The body of which is as follows:
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
https://globenewswire.com/news-release/2017/10/12/1144935/0/en/Bravatek-and-DarkPulse-Forging-Tighter-Business-Relationship.html
The key parts of which are:
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
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