ITEM 1. BUSINESS
GENERAL
The following should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Our Company, Bravo Enterprises Ltd., was formed under the laws of the State of Nevada on November 29, 1983 under the name Venture Group, Inc. On February 11, 1986, an amendment to the Articles of Incorporation was filed changing the corporate name to Asdar Corporation. On December 10, 1987, another amendment to the Articles of Incorporation was filed changing the corporate name to Asdar Group. On February 18, 2001, Asdar Group filed a Certificate of Reinstatement with the Secretary of State of Nevada. On April 30, 2002, another amendment to the Articles of Incorporation was filed changing the corporate name to Precise Life Sciences Ltd. Additional amendments to the Articles of Incorporation were filed changing the corporate name as follows:
February 18, 2003 -
Iceberg Brands Corporation
August 28, 2003 -
Avalon Gold Corporation
March 22, 2005 -
Avalon Energy Corporation
September 25, 2007 -
Shotgun Energy Corporation
April 7, 2009 -
Organa Gardens International Inc.
June 8, 2012 -
Bravo Enterprises Ltd.
Air to Water Harvesting Units Project.
On November 23, 2012, the Company signed an exclusive licensing agreement with Water-For-The-World-Manufacturing Inc, a Company incorporated in Washington State with respect to its commercial atmospheric water harvester system.
Water-For-The-World-Manufacturing Inc is the legal and beneficial owner of all right, title, intellectual property and patent interest in with respect to certain Water Harvesting Equipment.
Water-For-The-World-Manufacturing Inc is the legal and beneficial owner of Water Harvesting Equipment and has developed packaging, accessories and promotional materials for the purposes of its sale. The Product is described as Air-to-Water Harvesters.
The harvesters feature innovative technology that operates by:
* Pulling air through a filter and coil.
* This cools the incoming air, thus producing condensation.
* It then captures the water.
* The water is pumped through a series of filtration systems and germicidal ultraviolet reactors for purification.
Water-For-The-World-Manufacturing Inc. is a leader in the design, manufacture and distribution of water from air systems known as Air-to-Water Harvesters that extracts moisture from the air through a dehumidification process then filters and purifies the water for consumption. The company has developed a unique air drive system that will enable the machine not only to be powered through a conventional power source but also in emergency situations the machine can be powered directly from an engine using its patented drive system. The atmospheric water harvester can produce up to 3000 gallons of drinking water under optimum conditions.
Bravo Enterprises Ltd. (“Bravo”) requested and Water For The World Manufacturing Inc. has agreed to grant Bravo, the exclusive manufacturing, distribution and marketing rights for the Water Harvesting Equipment. The term of this agreement is for a period of nine (9) years and is renewable for an additional nine (9) years.
Water For The World Manufacturing Inc. appointed Bravo its exclusive world wide manufacturing and sales representative (the "Territory") for consideration of 120,000,000 restricted common shares of Bravo to be issued to Water For The World Manufacturing Inc. and/or its nominees Bravo will use its best efforts to advertise and promote the sale of the Product and to make regular and sufficient contact with the present and prospective customers of the Company in the Territory.
A portion of the 120,000,000 restricted common share consideration is being received by certain shareholders that also owned shares in Bravo Enterprises Ltd. prior to the November 23, 2012 agreement. The value of these shares considered a related party portion is $67,257 and as such, this amount has been eliminated from the transaction.
Intangible assets include the following:
For additional information, refer to the Company’s website, www.splashwatersolutions.org or www.bravoenterprises.ws
Vertical Hydroponic Farming Project
On March 6, 2009, the Company signed an agreement to acquire all of the assets of Organa Gardens Inc.(OGI), a Nevada Corporation in the business of hydroponics vertical farming. These assets include, but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E). Both the OGS-D and OGS-E are a rotary hydroponics vertical farming system designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.
The Company was to issue up to 1,250,000 post-reverse split Rule 144 shares of its common stock to OGI, to be held in trust and released based on the following terms and gross revenue requirements:
(a) Release of 500,000 shares of the Company upon signing this Agreement.
(b) Release of 250,000 shares of the Company upon attaining $1,000,000 US in gross revenue.
(c) Release of 250,000 shares of the Company upon attaining $2,500,000 US in gross revenue.
(d) Release of 250,000 shares of the Company upon attaining $4,000,000 US in gross revenue.
The Company was to raise up to $500,000 US to market and fulfill the required obligations of OGI as outlined in the supplemental agreement(s) to follow. The Company and Organa Gardens Inc. agree to allow the shares to sit in trust for a period of 5 years in order for OGI to meet its sales goals. Should the requirements not be met in all or part, then all of the remaining shares will be returned back to the treasury of the Company.
However, On June 9, 2009, the Company signed an amended agreement to acquire all of the assets of Organa Gardens Inc., a Nevada Corporation in the business of hydroponics vertical farming. These assets include but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E).
Under the terms of the acquisition, the Company will issue 175,000 post-reverse split restricted 144 shares to Organa Gardens Inc. and/or its nominees (issued) and render a cash commitment of up to $250,000 (not paid) to complete the final steps of taking the OGS-D and OGS-E to market. This agreement replaces the agreement dated March 9, 2009.
All research and development costs are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company. For the years ended December 30, 2012 and 2011, the Company incurred $Nil in research and development costs. The Company has determined that it will no longer be proceeding with this project.
Ownership Interests.
The following chart specifies our stock ownership at December 31, 2012.
* 3,384,945 of these shares are restricted common shares
Employees.
At December 31, 2012, Bravo Enterprises Ltd. had 2 full time employee/consultants and 5 part time consultants other than its Officers and Directors.
Change in Directors
On February 1, 2012, the Registrant accepted the resignation of Sharon Deutsch as Secretary, Treasurer, Director and Chief Financial Officer of the Registrant. The resignation was not motivated by a disagreement with the Registrant on any matter relating to the Registrant's operations, policies or practices.
On February 1, 2012 Matt Kelly, an American businessman, based in New York U.S.A., joined the Board of Directors and was appointed Secretary, Treasurer and Chief Financial Officer of the Registrant.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not applicable to smaller reporting companies
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES
As of the dates specified in the following table, Bravo Enterprises Ltd. held the following property in the following amounts:
Bravo Enterprises Ltd. defines cash equivalents as all highly liquid investments with a maturity of 3 months or less when purchased. Bravo Enterprises Ltd. does not presently own any interests in real estate. Bravo Enterprises Ltd. does not presently own any inventory or equipment.
We do not own any real property. As of August 1, 2012, Bravo Enterprises Ltd. has leased 1250 sq. ft of office space from Holm Investments Ltd. at $2,500 per month for a period of 3 years.
Bravo Enterprises Ltd.’s principal corporate offices are located at 35 South Ocean Avenue
Patchogue, NY, 11772 Fax - 1 888 265 0498 Phone - 1 888 488 6882
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to Empire Sterling Corporation for services to be rendered with respect to the acquisition of ACGT Corporation. The shares were to be held in trust and not sold until all necessary financing was in place to complete the ACGT acquisition. Empire Sterling Corporation breached the trust agreement and the Company placed a stop transfer on these shares and requested they be returned to the Company. Empire Sterling Corporation failed to return the share certificate and as such, the Company commenced court proceedings against the principals of Empire Sterling Corporation. The Company argued for an interim injunction against all parties and was successful. On May 9, 2002, the Court ordered Empire Sterling Corporation to deposit the shares with the Court pending judicial disposition. The Company continued to file legal process claiming ownership of the shares and breach of trust inter alia. The Company was successful and has now applied to have the share certificate released and subsequently cancelled. As of December 31, 2012, the Company is still in the legal process of having the certificate released.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
As at December 31, 2012 there were approximately 2,000 holders of the outstanding shares of the Bravo Enterprises Ltd. $0.001 par value common stock. Bravo Enterprises Ltd. participates in the OTC Bulletin Board Electronic Quotation System maintained by the National Association of Securities Dealers, Inc., under the most recent trading symbol "OGNG". According to quotes provided by quotemedia.com, the Bravo Enterprises Ltd.'s common stock has closed at:
Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.
Common Stock. Bravo Enterprises Ltd. is authorized to issue 500,000,000 shares of common stock, $.001 par value, each share of common stock having equal rights and preferences, including voting privileges. The shares of $.001 par value common stock of Bravo Enterprises Ltd. constitute equity interests in Bravo Enterprises Ltd. entitling each shareholder to a pro rata share of cash distributions made to shareholders, including dividend payments. As of December 31, 2012, 147,178,530 shares of the Bravo Enterprises Ltd. common stock were issued and outstanding.
The holders of Bravo Enterprises Ltd.'s common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of directors of Bravo Enterprises Ltd. or any other matter, with the result that the holders of more than 50% of the shares voted for the election of those directors can elect all of the Directors.
The holders of Bravo Enterprises Ltd.'s common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to Bravo Enterprises Ltd.'s common stock. All of the outstanding shares of Bravo Enterprises Ltd.'s common stock are duly authorized, validly issued, fully paid and non-assessable.
Dividends. The holders of the Bravo Enterprises Ltd. 's common stock are entitled to receive dividends when, as and if declared by Bravo Enterprises Ltd. 's Board of Directors from funds legally available therefore; provided, however, that cash dividends are at the sole discretion of Bravo Enterprises Ltd. 's Board of Directors. In the event of liquidation, dissolution or winding up of Bravo Enterprises Ltd. the shareholders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities of Bravo Enterprises Ltd. and after provision has been made for each class of stock, if any, having preference in relation to Bravo Enterprises Ltd.'s common stock. Bravo Enterprises Ltd. has never declared or paid any dividends on its common stock. Bravo Enterprises Ltd. does not intend to declare or pay any dividends in the foreseeable future.
Sales of Securities
In April, 2012, a majority of the shareholders entitled to vote on such matters approved a change of name from Organa Gardens International Inc. to “Bravo Enterprises Ltd.” and a one-for-twenty (1:20) stock split of all of this Company’s outstanding common stock, without any change in par value for the shares of common stock of this Company. The stock split did not include a change in the authorized capital of the Company. On April 23, 2012, a Certificate of Amendment to its Articles of Incorporation was filed with the State of Nevada changing the name to Bravo Enterprises Ltd., effective June 1, 2012. As advised on May 9, 2012, the Company’s CUSIP Number changed from 68618Y 10 6 to 10567L 10 7. On June 8, 2012, the Company began to trade as Bravo Enterprises Ltd. under the same trading symbol being “OGNG”. Pre-split the total shares outstanding was 61,796,467 and post-split the total shares outstanding was 3,089,823.
(1)
2012 Stock Transactions- During the year ended December 31, 2012:
(a)
The Company issued 4,500,000 restricted common shares valued at $99,450 pursuant to deferred compensation agreements.
(b)
The Company issued 120,000,000 restricted common shares valued at $1,492,743 pursuant to the exclusive licensing agreement acquiring the manufacturing and distribution rights for the air to water harvester units.
(c)
The Company issued a total of 19,000,000 common shares pursuant to the exercise of options under the Company’s 2012 Stock Incentive and Option Plan. These shares were issued at $0.013 per share for cash in the amount of $50,000 and to satisfy debt to related parties in the amount of $197,000.
(d)
The Company issued 625,000 restricted common shares for cash in the amount of $50,000 pursuant to a private placement subscription agreement. The Company received an additional $5,000 pursuant to a private placement subscription agreement and issued the 62,500 restricted common shares to the subscriber subsequent to year end.
(2)
2011 Stock Transactions -During the year ended December 31, 2011:
(a)
The Company issued 25,000 restricted common shares valued at $125 to a new director for his services.
(b)
The Company issued 6,950,000 restricted common shares valued at $99,300 pursuant to deferred compensation agreements.
(c)
The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services totaling $6,950.
(d)
The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
(3)
2012 Stock Options
The Company issued a total of 19,000,000 common shares pursuant to the exercise of options under the Company’s 2012 Stock Incentive and Option Plan. These shares were issued at $0.013 per share for cash in the amount of $50,000 and to satisfy debt to related parties in the amount of $197,000.
The Company’s stock option activity is as follows:
On December 7, 2012 the Company filed Registration Statements on Form S-8 to register 26,000,000 to be issue pursuant to the Company’s 2012 Stock. Incentive and Option Plan. All 26,000,000 shares have been granted and 19,000,000 have been exercised under the December 2012 Stock Option Plan.
The fair value of 7,000,000 of the common stock options granted during the year was measured at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:
The Company recognized stock-based compensation of $70,000 in accordance with SFAS 123R which represented the fair value of stock options granted to consultants in exchange for services rendered to the Company.
(4)
2011 Stock Options
The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services.
The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
The Company’s stock option activity is as follows:
On June 30, 2011 the Company filed Registration Statements on Form S-8 to register 9,800,000 to be issue pursuant to the Company’s 2011 Stock. Incentive and Option Plan. All 9,800,000 shares have been granted and exercised under the June 2011 Stock Option Plan.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "will", "could", "expect", "estimate","anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
Liquidity and Capital Resources.
For the year ended December 31, 2012, we had total assets of $1,587,141, compared to total assets in 2011 of $8,331. This includes a cash balance of $86,781, compared to $90 in 2011. We also have taxes recoverable of $1,233, accounts receivable of $3,354, available for sale securities with a fair value of $3,030 as at December 31, 2012 and intangible assets of $1,492,743 representing the exclusive license agreement to manufacture and distribute the air to water harvester units worldwide. The increase in assets was due the acquisition of the licensing agreement.
At December 31, 2012, we had current liabilities of $496,199, which was represented by accounts payable and accrued liabilities of $494,057 and $2,142 due to related parties. At December 31, 2011 we had current liabilities of $562,705. The decrease in liabilities was due to a decrease in amounts due to related parties. At December 31, 2012, we had a working capital deficiency of $(404,831) (2011 - $(560,493).
We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time. We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule. No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. We have not identified any alternative sources of financing.
Results of Operations
We realized $2,995 in income in 2012 from the sale of water harvester units ($Nil - 2011). During the year ended December 31, 2012 the loss is $302,218 (2011 - $202,130). This increase in loss was due to a increase in management and consulting fees and stock based compensation.
From inception to December 31, 2011 Bravo Enterprises Ltd. has incurred cumulative net losses of $25,201,690 resulting primarily from the write-down of $3,815,655 in its interests in oil and gas properties, write-down of $1,406,000 in its interest in ACGT Corporation, write-down of $258,580 of its investment in Legacy Platinum Group Inc., write-down of its investment in Terralene Fuels Corporation of $15,768 and also as a result of selling, general and administrative expenses including a litigation settlement of $2,291,070; management and consulting fees of $5,014,218, stock based compensation of $1,989,869; office and general expenses of $2,928,361; professional fees of $1,217,981; interest expense of $98,282, research & development costs of $278,231 and software development costs of $737,300. In addition, we received $130,000 in property option income as a recorded value of certain restricted shares in Terralene Fuels Corporation
The cash and equivalents constitute our present internal sources of liquidity. Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.
Our Plan of Operation for the Next Twelve Months
We do anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern. We will need to fund the manufacturing and distribution of the air to water harvester units. To the extent that additional capital is raised through the sale of equity or equity- related securities, the issuance of such securities could result in dilution of our stockholders. There can be no assurance that additional funding will be available on favorable terms, if at all. If adequate funds are not available within the next 12 months, we may be required to curtail our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our assets that we would not otherwise relinquish.
Bravo Enterprises Ltd. does not anticipate some expenditures within the next 12 months for further development of the air to water harvester units .The Company may elect to raise funds for further research and development through equity financing or possible joint venture partnerships. Bravo Enterprises Ltd. does not anticipate any significant exploration costs within the next 12 months, nor does the Bravo Enterprises Ltd. anticipate that it will lease or purchase any significant equipment within the next 12 months. Bravo Enterprises Ltd. does not anticipate a significant change in the number of its employees within the next 12 months.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Securities held in our equity and other investments portfolio and equity derivatives are subject to price risk, and generally are not hedged.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Bravo Enterprises Ltd.
New York, USA
We have audited the accompanying balance sheets of Bravo Enterprises Ltd. (formerly Organa Gardens International Inc.) (a development stage company) as of December 31, 2012 and 2011, and the related statements of operations, stockholders’ (deficit), cash flows and other comprehensive loss for each of the years in the two-year period ended December 31, 2012 and for the cumulative period from January 1, 1996 (inception of development stage) through to December 31, 2012. Bravo Enterprises Ltd.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bravo Enterprises Ltd. as of December 31, 2012 and 2011, and the results of its activities and cash flows for each of the years in the two-year period ended 2012 and for the cumulative period from January 1, 1996 (inception) to December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s current liabilities exceed current assets, has incurred significant losses since inception and further losses are anticipated, all of which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ L.L. Bradford & Company, LLC
Las Vegas, Nevada
April 15, 2013
BRAVO ENTERPRISES LTD.
(formerly Organa Gardens International Inc.)
(A Development Stage Company)
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements
BRAVO ENTERPRISES LTD.
(formerly Organa Gardens International Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these financial statements
BRAVO ENTRPISES LTD.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE PERIOD FROM JANUARY 1, 1996 (INCEPTION OF EXPLORATION STAGE) TO DECEMBER 31, 2012
The accompanying notes are an integral part of these financial statements
BRAVO ENTERPRISES LTD.
(formerly Organa Gardens International Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements
BRAVO ENTERPRISES LTD.
(formerly Organa Gardens International Inc.)
(A development stage company)
STATEMENTS OF OTHER COMPREHENSIVE (LOSS)
The accompanying notes are an integral part of these financial statements
BRAVO ENTERPRISES LTD.
(formerly Organa Gardens International Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2012 AND 2011
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
The Company was incorporated as Venture Investments Inc. under the Laws of the State of Nevada on November 29, 1983. The Company underwent a name change to Asdar Group on December 10, 1987, a name change to Precise Life Sciences Ltd. on April 30, 2002, a name change to Iceberg Brands Corporation on February 18, 2003, a name change to Avalon Gold Corporation on August 28, 2003, a name change to Avalon Energy Corporation on March 22, 2005, a name change to Shotgun Energy Corporation on September 25, 2007 and a name change to Organa Gardens International Inc. on February 26, 2009 and a name change to Bravo Enterprises Ltd. on June 1, 2012. The Company was dormant from 1991 to 1996 and currently has no revenue generating operations. The Company was considered a development stage company since January 1, 1996 and as a result of changing its business focus to air to water harvesting units is considered to be a development stage company. Expected operations will consist of manufacturing and distributing air to water harvesting units worldwide.
Going Concern
The financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues or completed development of any commercially acceptable products or services to date and has incurred losses of $25,201,690 since inception. The Company will depend almost exclusively on outside capital through the issuance of common shares to finance ongoing operating losses and to fund the manufacture and distribution of the air to water harvesting units. The ability of the Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations. There can be no assurance that the Company will be able to raise the necessary funds when needed to finance its ongoing costs. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements are presented in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States.
Use of Estimates and Assumptions
Preparation of the Company’s financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration of Credit Risk
Cash in bank accounts is at risk to the extent that it exceeds U.S.Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation insured amounts. To minimize risk, the Company places its cash with high credit quality institutions. All cash is deposited in one prominent Canadian financial institution.
Fair Value of Financial Instruments
The Company’s financial instruments include cash, receivables, available-for-sale securities and due to related parties. Management believes the fair values of these financial instruments approximate their carrying values due to their short-term nature.
The Company adopted ASC Topic 820-10 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Topic 820-10 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements Topic 820-10 defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining fair value, Topic 820-10 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
*
Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
*
Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
*
Level 3 - inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
In general, and where applicable, we use quoted prices in an active market for identical derivative assets and liabilities that are traded on exchanges. These derivative assets and liabilities are included in Level 1.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities are described below:
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with ASC Topic 830 “Foreign Currency Matters”, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates that prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.
Available For Sale Securities - related parties
The Company holds marketable equity securities which are available-for-sale and as such, their carrying value is adjusted to market at the end of each reporting period. As required by ASC Topic 220 (formerly SFAS 130),, unrealized gains and losses on these investments are recorded as a component of accumulated other comprehensive income (loss) and are recorded as a component of net income (loss) when realized. However, if there is a permanent decline in the market value of available-for-sale securities, this permanent market value adjustment is taken into income in the period.
Stock-Based Compensation
On January 1, 2006, the Company adopted the fair value recognition provisions of ASC Topic 718 & 505. Prior to January 1, 2006, the Company accounted for share-based payments under the recognition and measurement provisions of ASC Topic 718. In accordance with ASC Topic 718 no compensation cost was required to be recognized for options granted that had an exercise price equal to the market value of the underlying common stock on the date of grant. . The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.
In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital. The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC Topic 718 & 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable.
Research and Development Costs
Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge and understandings are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible Assets
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350 , “Intangibles-Goodwill and Other” requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of ASC 350. This standard also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. The Company's intangible assets consist of the acquisition of the license to import and distribute wine & liquor products and various brands and labels. The Company determined that the intangibles have an estimated useful life of 18 years and will be reviewed annually for impairment. Amortization will be recorded over the estimated useful life of the assets using the straight-line method for financial statement purposes. The Company will commence amortization when the economic benefits of the assets begin to be consumed in January, 2013. Other intangibles are carried at acquisition cost less accumulated amortization. Amortization is provided over the estimated useful lives of the assets on straight line basis per annum.
Definite life intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. These tests involve the use of estimates and assumptions appropriate in the circumstances. In assessing fair value, valuation models are used that include discounted cash flows. The models use assumptions that include levels of growth in assets under management from net sales and market, pricing and margin changes, synergies achieved on acquisition, discount rates, and observable data for comparable transactions. As of December 31, 2012, the Company believed there was no impairment of its intangible assets and recorded the value of the intangible in the amount of $1,492,743 (2011- $Nil).
Income Taxes
The Company follows the liability method of accounting for income taxes as set forth in ASC Topic 740-10. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize the future benefit, or if the future deductibility is uncertain. In accordance with ASC 740-10. This interpretation introduces a new approach that changes how enterprises recognize and measure tax benefits associated with tax positions and how enterprises disclose uncertainties related to income tax positions in their financial statements.
Revenue Recognition
Sales are recognized upon purchase by customers at our product facility. All sales at our product facility are final, allowing for no sales returns.
As at December 31, 2012, $3,354 (2011 - $Nil) is in accounts receivable from the sale of water units.
Recent Accounting Pronouncements
There have been no recent accounting pronouncements not yet adopted by the Company which would have a material impact on our financial statements.
The Company adopted certain amendments to Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements,” effective January 1, 2012. These amendments include a consistent definition of fair value, enhanced disclosure requirements for “Level 3” fair value adjustments and other changes to required disclosures. Their adoption did not have a material impact on the Company’s consolidated financial statements.
The Company adopted the amendments to ASC 220, “Comprehensive Income,” effective January 1, 2012. The amendments pertained to presentation and disclosure only.
The Company adopted the amendments to ASC 350, “Intangibles-Goodwill and Others,” effective January 1, 2012. The amended guidance allows us to do an initial qualitative assessment of relevant events and circumstances to determine if fair value of a reporting unit is more likely than not to be less than its carrying value, prior to performing the two-step quantitative goodwill impairment test. The adoption of these amendments did not have a material impact on the Company’s financial statements.
NOTE 3 - AVAILABLE FOR SALE SECURITIES - RELATED PARTIES
Terralene Fuels
During 2004, the Company received 111,111 restricted Rule 144 shares of Terralene Fuels Corporation (“Terralene Fuels”), a public company with directors and significant shareholders in common. The restricted shares were received as non-refundable consideration pursuant to agreements with Terralene Fuels dated November 10, 2004 and December 10, 2004 to acquire certain mineral property interests from the Company. These agreements were subsequently terminated.
Effective December 31, 2004 the Company recorded, as other comprehensive loss for the year, a $10,000 unrealized loss in the carrying value of its shares of Terralene Fuels. During the years ended December 31, 2005 and 2006 the Company recorded additional unrealized losses in the carrying value of its shares of Terralene Fuels totalling $90,000 and $8,889 respectively, which were recorded as other comprehensive loss for those years. During the year ended December 31, 2007, the Company sold 2,500 shares resulting in a realized gain of $165 and recorded an additional unrealized loss of $473 in 2007. During the year ended December 31, 2008, the Company sold 10,000 shares resulting in a realized loss of $800 and recorded an additional unrealized loss of $15,026 to December 31, 2008. As a result, the carrying value of the available for sale shares of Terralene Fuels is $2,712 as at December 31, 2008.
During the year ended December 31, 2009, the Company recorded an unrealized gain of $1,232. As a result, the carrying value of the available for sale shares of Terralene Fuels is $3,945 as at December 31, 2009.
During the year ended December 31, 2010, the Company sold Nil Terralene Fuels shares and recorded an unrealized gain of $11,774. As a result, the carrying value of the available for sale shares of Terralene Fuels is $2,860 as at December 31, 2010. Effective December 31, 2010, the Company recorded a $12,859 write-down of its investment in Golden due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2011, the Company sold Nil Terralene Fuels shares and recorded an unrealized loss of $2,623. As a result, the carrying value of the available for sale shares of Terralene Fuels is $237 as at December 31, 2011. Effective December 31, 2011, the Company recorded a $2,909 write-down of its investment in Golden due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2012, the Company sold Nil Terralene Fuels shares and recorded an unrealized loss of $148. As a result, the carrying value of the available for sale shares of Terralene Fuels is $89 as at December 31, 2012.
Legacy Platinum
During 2003 the Company settled an outstanding debt receivable of $122,988 from Legacy Mining Ltd. (“Legacy”) for the issue of 1,229,880 restricted shares of Legacy representing a then 9.8% interest in Legacy. During 2004, the Company wrote this investment down to $1 because management determined that it was not recoverable within a reasonable period of time.
Effective December 31, 2007, the Company recorded, as other comprehensive income for the year, a $604,440 unrealized gain in the carrying value of its shares of Legacy.
During the year ended December 31, 2008, the Company sold 150,000 Legacy shares resulting in a realized gain of $26,100 and recorded an additional unrealized gain of $270,562 to December 31, 2008. As a result, the carrying value of the available for sale shares of Legacy was $885,502 as at December 31, 2008.
During the year ended December 31, 2009, the Company sold 30,985 Legacy shares resulting in a realized loss of $2,987 (net of commissions of $595) and recorded an additional unrealized loss of $797,161 to December 31, 2009. As a result, the carrying value of the available for sale shares of Legacy is $ 62,934 as at December 31, 2009.
NOTE 3 - AVAILABLE FOR SALE SECURITIES - RELATED PARTIES
During the year ended December 31, 2010, the Company the Company received 2,627,440 restricted shares of Legacy valued to $131,372 pursuant to a debt settlement and sold Nil Legacy shares. The Company recorded an unrealized gain in the carrying value of its available-for-sale securities totaling $35,021, which was recorded as other comprehensive income (loss). As a result, the carrying value of the available for sale shares of Legacy is $58,822 as at December 31, 2010. Effective December 31, 2010, the Company recorded a $78,823 write-down of its investment in Legacy due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2011, the Company sold Nil Legacy shares and recorded an unrealized loss of $52,939. As a result, the carrying value of the available for sale shares of Legacy is $5,882 as at December 31, 2011. Effective December 31, 2011, the Company recorded a $51,469 write-down of its investment in Legacy due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2012, the Company sold Nil Legacy shares and recorded an unrealized loss of $2,941. As a result, the carrying value of the available for sale shares of Legacy is $2,941 as at December 31, 2011
Available for sale securities - related parties include the following:
NOTE 4 - INTANGIBLE ASSETS
On November 23, 2012, the Company signed an Exclusive Licensing Agreement with Water-For-The-World-Manufacturing Inc. of Wellpinit, Washington with respect to its commercial atmospheric water harvester system.
﻿
Water-For-The-World-Manufacturing Inc. is a leader in the design, manufacture and distribution of water from air systems known as Air-to-Water Harvesters that extracts moisture from the air through a dehumidification process then filters and purifies the water for consumption. The company has developed a unique air drive system that will enable the machine not only to be powered through a conventional power source but also in emergency situations the machine can be powered directly from an engine using its patented drive system. The atmospheric water harvester can produce up to 3000 gallons of drinking water under optimum conditions.
﻿
Water-For-The-World-Manufacturing Inc. has appointed Bravo Enterprises Ltd. as its exclusive worldwide manufacturing and sales representative for the consideration of 120,000,000 restricted common shares of Bravo Enterprises Ltd. The company has proven concept and developed a production model exclusively for the generation of water for human consumption.
﻿
A portion of the 120,000,000 restricted common share consideration is being received by certain shareholders that also owned shares in Bravo Enterprises Ltd. prior to the November 23, 2012 agreement. The value of these shares considered a related party portion is $67,257 and as such, this amount has been eliminated from the transaction.
Intangible assets include the following:
NOTE 5 - ACQUISITIONS
(a). On March 6, 2009, the Company signed an agreement to acquire all of the assets of Organa Gardens Inc.(OGI), a Nevada Corporation in the business of hydroponics vertical farming. These assets include, but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E). Both the OGS-D and OGS-E are a rotary hydroponics vertical farming system designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.
The Company was to issue up to 1,250,000 post-reverse split Rule 144 shares of its common stock to OGI, to be held in trust and released based on the following terms and gross revenue requirements:
(a) Release of 500,000 shares of the Company upon signing this Agreement.
(b) Release of 250,000 shares of the Company upon attaining $1,000,000 US in gross revenue.
(c) Release of 250,000 shares of the Company upon attaining $2,500,000 US in gross revenue.
(d) Release of 250,000 shares of the Company upon attaining $4,000,000 US in gross revenue.
The Company was to raise up to $500,000 US to market and fulfill the required obligations of OGI as outlined in the supplemental agreement(s) to follow. The Company and Organa Gardens Inc. agree to allow the shares to sit in trust for a period of 5 years in order for OGI to meet its sales goals. Should the requirements not be met in all or part, then all of the remaining shares will be returned back to the treasury of the Company.
However, On June 9, 2009, the Company signed an amended agreement to acquire all of the assets of Organa Gardens Inc., a Nevada Corporation in the business of hydroponics vertical farming. These assets include but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E).
Under the terms of the acquisition, the Company will issue 175,000 post-reverse split restricted 144 shares to Organa Gardens Inc. and/or its nominees (issued) and render a cash commitment of up to $250,000 to complete the final steps of taking the OGS-D and OGS-E to market. This agreement replaces the agreement dated March 9, 2009.
All research and development costs are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company. For the years ended December 30, 2012 and 2011, the Company incurred $Nil in research and development costs. The Company has determined that it will no longer be proceeding with this project.
(b). On July 29, 2011, the Company has signed a Letter of Intent with Integrated Green Technologies LLC (IGT), of Fort Lauderdale, Florida to merge the two companies. A definitive agreement of the merger will be an exchange of restricted shares of the Company’s stock to IGT shareholders effecting a change of business which will still follow the Company’s green mandate. On August 17, 2011 the Company entered into a formal agreement with IGT and is currently conducting its due diligence. IGT is an industrial tools, machinery & equipment manufacturer including consumable supplies & materials. IGT is a distributor of heavy-duty blasting equipment and “green” environmentally safe mobile powder coating systems featuring the pending patent, Triplex Electrostatic/Electrostatic Thermal Spray/Non Electrostatic Thermal Spray and Powder Coating Spray and Conversion Device. The Company had advanced $8,000 to IGT for prepaid expenses as of December 31, 2011. The Company has written off this amount as of December 31, 2011. Upon completion of the due diligence process, the Company will issue a structured release of 3,000,000 post-reverse split restricted shares to be transferred under the Agreement. The structure shall be as follows: upon execution of the Agreement, 1,500,000 post-reverse split shares shall be issued immediately thereafter, an additional 750,000 post-reverse split shares shall be issued 120 days following the execution date and the balance of 750,000 post-reverse split shares shall be issued 240 days following the execution date. The Company is required to provide $250,000 in funding to IGT over a period of one year. As a result of the due diligence process, the Company is not proceeding with this acquisition due to complications with the current patent filed by IGT. Should IGT move forward and correct the deficiencies with the patent, the Company will re-consider the project.
NOTE 6 - DEFERRED COMPENSATION
On July 1, 2011 the Company entered into an agreement with Compte de Sierge Accomodative Corp. (“Compte”), a private company controlled by a significant shareholder, with an eighteen month term, whereby Compte provides investor relations services to the Company specific to the hydroponic vertical farming project (valued at $22,500) in exchange for 75,000 restricted shares of the Company’s common stock.
On July 1, 2011, the Company entered into an agreement with Charlton Investments Ltd. (“Charlton”), a private company controlled by a significant shareholder, with a two-year term, whereby Charlton provides investment-banking services to the Company (valued at $30,000) in exchange for 100,000 restricted shares of the Company’s common stock.
On July 1, 2011, the Company entered into agreements with three consultants, for a twelve month term, whereby the consultants provide consulting services to the Company (valued at $45,000) in exchange for 150,000 shares of the Company’s common stock.
On December 1, 2011, the Company entered into an agreement with a consultant, for a twelve month term, whereby the consultant will provide consulting services to the Company (valued at $1,800) in exchange for 22,500 shares of the Company’s common stock.
On July 16, 2012 the Company entered into an agreement with Palisades Financial Ltd. (“Palisades”), a private company controlled by a significant shareholder, with a two year term, whereby Palisades provides investor relations services to the Company (valued at $27,625) in exchange for 1,250,000 restricted shares of the Company’s common stock.
On July 16, 2012, the Company entered into an agreement with 1063244 Alberta Ltd. (“1063244”), a private company controlled by a significant shareholder, with a two-year term, whereby 1063244 provides investment-banking services to the Company (valued at $33,150) in exchange for 1,500,000 restricted shares of the Company’s common stock.
On July 16, 2012, the Company entered into agreements with two consultants, for a two year term, whereby the consultants provide consulting services to the Company (valued at $38,675) in exchange for 1,750,000 shares of the Company’s common stock.
The Company amortizes the costs of these services over the respective terms of the contracts. During the years ended December 31, 2012 and 2011, the Company recorded amortization of deferred compensation totaling $77,880 and $42,838 respectively. As of December 31, 2012 the unamortized portion of the deferred compensation totaled $84,160. (December 31, 2011 - $62,590).
NOTE 7 - STOCKHOLDERS’EQUITY
In April, 2012, a majority of the shareholders entitled to vote on such matters approved a change of name from Organa Gardens International Inc. to “Bravo Enterprises Ltd.” and a one-for-twenty (1:20) stock split of all of this Company’s outstanding common stock, without any change in par value for the shares of common stock of this Company. The stock split did not include a change in the authorized capital of the Company. On April 23, 2012, a Certificate of Amendment to its Articles of Incorporation was filed with the State of Nevada changing the name to Bravo Enterprises Ltd., effective June 1, 2012. As advised on May 9, 2012, the Company’s CUSIP Number changed from 68618Y 10 6 to 10567L 10 7. On June 8, 2012, the Company began to trade as Bravo Enterprises Ltd. under the same trading symbol being “OGNG”. Pre-split the total shares outstanding was 61,796,467 and post-split the total shares outstanding was 3,089,823.
(1)
2012 Stock Transactions- During the year ended December 31, 2012:
(a)
The Company issued 4,500,000 restricted common shares valued at $99,450 pursuant to deferred compensation agreements. (See Note 6)
(b)
The Company issued 120,000,000 restricted common shares valued at $1,492,743 pursuant to the exclusive licensing agreement acquiring the manufacturing and distribution rights for the air to water harvester units. (See Note 4)
(c)
The Company issued a total of 19,000,000 common shares pursuant to the exercise of options under the Company’s 2012 Stock Incentive and Option Plan. These shares were issued at $0.013 per share for cash in the amount of $50,000 and to satisfy debt to related parties in the amount of $197,000 for a total of $247,000
(d)
The Company issued 625,000 restricted common shares for cash in the amount of $50,000 pursuant to a private placement subscription agreement. The Company received an additional $5,000 pursuant to a private placement subscription agreement and issued the 62,500 restricted common shares to the subscriber subsequent to year end. (See Note 12)
(2)
2011 Stock Transactions -During the year ended December 31, 2011:
(a)
The Company issued 25,000 restricted common shares valued at $125 to a new director for his services.
(b)
The Company issued 6,950,000 restricted common shares valued at $99,300 pursuant to deferred compensation agreements. (See Note 6)
(c)
The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services totaling $6,950.
(d)
The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
(3)
2012 Stock Options
The Company issued a total of 19,000,000 common shares pursuant to the exercise of options under the Company’s 2012 Stock Incentive and Option Plan. These shares were issued at $0.013 per share for cash in the amount of $50,000 and to satisfy debt to related parties in the amount of $197,000, for a total of 247,000.
The Company’s stock option activity is as follows:
On December 7, 2012 the Company filed Registration Statements on Form S-8 to register 26,000,000 to be issue pursuant to the Company’s 2012 Stock. Incentive and Option Plan. All 26,000,000 shares have been granted and 19,000,000 have been exercised under the December 2012 Stock Option Plan.
The fair value of 7,000,000 of the common stock options granted during the year was measured at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:
The Company recognized stock-based compensation of $70,000 in accordance with SFAS 123R which represented the fair value of stock options granted to consultants in exchange for services rendered to the Company.
(4)
2011 Stock Options
The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services.
The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
The Company’s stock option activity is as follows:
As of December 31, 2010, there were no stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.
As of December 31, 2010, there were no stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.
As of December 31, 2010, there were no stock options available for grant under the Company’s two 2009 Stock Incentive and Option Plan.
As of December 31, 2010, there were no stock options available for grant under the Company’s 2011 Stock Incentive and Option Plan.
On June 30, 2011 the Company filed Registration Statements on Form S-8 to register 9,800,000 to be issue pursuant to the Company’s 2011 Stock Incentive and Option Plan. All 9,800,000 shares have been granted and exercised under the June 2011 Stock Option Plan.
NOTE 8- RELATED PARTY TRANSACTIONS
During the year ended December 31, 2012, the Company incurred $4,000 (2011 -$6,125) in management fees to directors.
During the year ended December 31, 2012 the Company incurred $32,507 (2011 - $31,572) in rent and office expenses to a private company controlled by a shareholder.
During the year ended December 31, 2012, significant shareholders and companies controlled by significant shareholders earned $77,880 (2011 - $42,838) pursuant to prepaid services agreements.
During the year ended December 31, 2012, the Company acquired a exclusive license to manufacture and distribute air-to-water harvester units for consideration of 120,000,000 restricted common shares of the Company valued at $1,560,000. A portion of the 120,000,000 restricted common share consideration is being received by certain shareholders that also owned shares in Bravo Enterprises Ltd. prior to the November 23, 2012 agreement. The value of these shares considered a related party portion is $67,257 and as such, this amount has been eliminated from the transaction, leaving a net value of $1,492,743 for the license.
During the year ended December 31, 2012, the Company had sales of water units to related parties in the amount of $2,396 (2011 - $Nil).
As at December 31, 2012, accounts receivable include $2,683 (2011 - $Nil) due from related parties from the sale of water units.
The following amounts are due to related parties at:
All related party transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. During the year, the Company issued shares pursuant to the exercise of stock options at $0.013 per share to satisfy debt to related parties in the amount of $197,000.
NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended December 31, 2012 the Company issued:
*
4,500,000 restricted common shares valued at $99,450 pursuant to deferred compensation agreements. (See Note 6)
*
120,000,000 restricted common shares valued at $1,492,743 pursuant to the exclusive licensing agreement acquiringthe manufacturing and distribution rights for the air to water harvester units. (See Note 4)
*
19,000,000 common shares pursuant to the exercise of options under the Company’s 2012 Stock Incentive and Option Plan. These shares were issued at $0.013 per share for cash in the amount of $50,000 and to satisfy debt to related parties in the amount of $197,000.
*
625,000 restricted common shares valued at $50,000 pursuant to a private placement subscription agreement.
*
An additional $5,000 pursuant to a private placement subscription agreement and issued the 62,500 restricted common shares to the subscriber subsequent to year end.
During the year ended December 31, 2011 the Company issued:
·
25,000 restricted common shares valued at $125 to a new director for his services.
·
6,950,000 restricted common shares valued at $99,300 pursuant to deferred compensation agreements. (See Note 6)
·
9,800,000 common shares at $0.012 per share pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
·
2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to Empire Sterling Corporation for services to be rendered with respect to the acquisition of ACGT Corporation (“ACGT”). The shares were to be held in trust and not sold until all necessary financing was in place to complete the ACGT acquisition. Empire Sterling Corporation breached the trust agreement and the Company placed a stop transfer on these shares and requested they be returned to the Company. Empire Sterling Corporation failed to return the share certificate and as such, the Company commenced court proceedings against the principals of Empire Sterling Corporation. The Company argued for an interim injunction against all parties and was successful. On May 9, 2002, the Court ordered Empire Sterling Corporation to deposit the shares with the Court pending judicial disposition. The Company continued to file legal process claiming ownership of the shares and breach of trust inter alia. The Company was successful and has now applied to have the share certificates released and subsequently cancelled. As of December 31, 2012, the Company is still in the process of having the certificates released.
In February, 2008, the Company received a demand notice from CGG Veritas for failure to pay an outstanding balance of $317,380 pursuant to a Master Agreement and Job Supplement for the Shotgun Draw 2D Seismic Program in Utah. In accordance with Section 15.3 of the Master Agreement and Job Supplement dated March 21, 2007, CGG has demanded payment by April 25, 2008. If CGG Veritas is forced to proceed with litigation of this matter, it will seek reimbursement of its attorneys’ fees and expenses related to the litigation. The Company is currently examining various alternatives to resolve this matter. CGG Veritas has not proceeded with litigation as of December 31, 2012.
As of August 1, 2012, the Company has leased 1250 sq. ft of office space from Holm Investments Ltd. at $2,500 per month for a period of 3 years.
NOTE 11 - INCOME TAXES
Potential benefits of United States Federal income tax losses are not recognized in the accounts until realization is more likely than not. As of December 31, 2012, the Company has combined net operating losses carried forward totaling approximately $25,200,000 for tax purposes which expire through 2030. Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382 for 2002 and prior year’s losses. Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry forwards.
A reconciliation of income tax computed at the federal and state statutory tax rates is as follows:
The actual income tax provisions differ from the expected amounts calculated by applying the federal income tax statutory rate to the Company’s loss before income taxes. The components of these differences are as follows:
The Company’s tax-effected deferred income tax assets and liabilities are estimated as follows:
NOTE 12 - SUBSEQUENT EVENTS
The Company issued 80,000 restricted common shares valued at $8,000 pursuant to a consulting services agreement.
The Company issued 862,500 restricted common shares for cash in the amount of $85,000 ($5,000 received prior to December 31, 2012 and $80,000 received in January, 2013) pursuant to private placement subscription agreements.
In March, 2012, a majority of the shareholders entitled to vote on such matters approved an increase in the authorized common stock, $.001 par value from 200,000,000 authorized to 500,000,000 authorized.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management's Report on Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed by, or under the supervision of, a public company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”) including those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management, with the participation of the Chief Executive and Chief Financial Officers, believes that, as of December 31, 2012, we did not maintain effective internal control over financial reporting.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Code of Ethics
We intend to adopt a code of ethics in 2013 that applies to our principle executive officer, principal financial officer, principle accounting officer or controller, other persons performing similar functions. We intend to post the text of our code of ethics on our website in connection with our "Investor Relations" materials. In addition, we intend to promptly disclose (1) the nature of any amendment to our code of ethics that applies to our principle executive officer principal financial officer, principle accounting officer or controller, other persons performing similar functions (2) the nature of any wavier, including an implicit wavier, from a provision of our code of ethics that is granted to one of these specific officers, the name of such person who is granted the waiver and the date of the waiver on our web site in the future.
We do not currently have a code of ethics as this is a new regulatory requirement and we are examining the various form and contents of other companies written code of ethics, discussing the merits and meaning of a code of ethics to determine the best form for our Company.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors. We are dependent on the efforts and abilities of certain of our senior management. The interruption of the services of key management could have a material adverse effect on our operations, profits and future development, if suitable replacements are not promptly obtained. We anticipate that we will enter into employment agreements with each of our key executives; however, no assurance can be given that each executive will remain with us during or after the term of his or her employment agreement. In addition, our success depends, in part, upon our ability to attract and retain other talented personnel. Although we believe that our relations with our personnel are good and that we will continue to be successful in attracting and retaining qualified personnel, there can be no assurance that we will be able to continue to do so. Our officers and directors will hold office until their resignation or removal.
Our directors and principal executive officers are as specified on the following table:
The chart above specifies Bravo Enterprises Ltd. current officers and directors. All directors of the Company hold office until the next annual meeting or until their successors have been elected and qualified. All officers serve at the discretion of the Board of Directors. There are no familial relationships between our officers and directors.
Section 16(a) Beneficial Ownership Reporting Compliance. Not all of our officers, directors, and principal shareholders have filed all reports required to be filed by those persons on, respectively, a Form 3 (Initial Statement of Beneficial Ownership of Securities), a Form 4 (Statement of Changes of Beneficial Ownership of Securities), or a Form 5 (Annual Statement of Beneficial Ownership of Securities).
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us for the last three fiscal years ending December 31, 2012 for each or our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to named officers.
SUMMARY COMPENSATION TABLE
** Sharon Deutch resigned as Secretary, Treasurer and Director on February 1, 2012. Her resignation was not the result of any disputes with Bravo Enterprises Ltd.
We have no employment agreements with any of our director and sole officer. We do not contemplate entering into any employment agreements until such time as we begin profitable operations. There is no assurance that we will ever generate revenues from our operations. The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer. There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.
Stock-based Compensation. During the year ended December 31, 2012, $70,000 (2011-$Nil) in stock-based compensation was recorded in our financial statements. Stock-based compensation is an estimate of the intrinsic value placed in respect to stock options granted to officers, directors, employees and an estimate of the fair value of stock options granted to consultants using the Black-Scholes option pricing model. We do not expect further stock-based compensation in 2013.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the beneficial ownership of our common stock as of December 31, 2012, by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group.
(1) The beneficial owners of these shares are not known to Bravo Enterprises Ltd. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.
No changes in the Company's internal controls over financial reporting occurred during the year ended December 31, 2012 and 2011 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During the year ended December 31, 2012, the Company incurred $4,000 (2011 -$6,125) in management fees to directors.
During the year ended December 31, 2012 the Company incurred $32,507 (2011 - $31,572) in rent and office expenses to a private company controlled by a shareholder.
During the year ended December 31, 2012, significant shareholders and companies controlled by significant shareholders earned $77,880 (2011 - $42,838) pursuant to prepaid services agreements.
During the year ended December 31, 2012, the Company acquired a exclusive license to manufacture and distribute air-to-water harvester units for consideration of 120,000,000 restricted common shares of the Company valued at $1,560,000. A portion of the 120,000,000 restricted common share consideration is being received by certain shareholders that also owned shares in Bravo Enterprises Ltd. prior to the November 23, 2012 agreement. The value of these shares considered a related party portion is $67,257 and as such, this amount has been eliminated from the transaction, leaving a net value of $1,492,743 for the license.
During the year ended December 31, 2012, the Company had sales of water units to related parties in the amount of $2,396 (2011 - $Nil).
As at December 31, 2012, accounts receivable include $2,683 (2011 - $Nil) due from related parties from the sale of water units.
The following amounts are due to related parties at:
All related party transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
1. Audit Fees: Aggregate fees billed for each of the last two (2) fiscal years for professional services rendered by the principal accountant for the audit of the annual financial statements and review of financial statements included on Form 10-Q:
2. Audit-Related Fees: Aggregate fees billed in each of the last two (2) fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements and are not reported previously.
3. Tax Fees: Aggregate fees billed in each of the last two (2) fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
4. All Other Fees: Aggregate fees billed in each of the last two (2) fiscal years for products and services provided by the principal accountant, other than the services previously reported.
5. Audit Committee Pre-Approval Procedures. The Board of Directors has not, to date, appointed an Audit Committee.
PART IV
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
** 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.
b) Form 8-K
8-K filed February 3, 2012 with respect with respect to a change in Directors.
8-K filed May 15, 2012 with respect to announcing name change and 1:20 reverse split.
8-K filed May 15, 2012 with respect to approval of name change and 1:20 reverse split.
8-K filed November 30, 2012 with respect to entering into a material definitive agreement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused to be signed on its behalf by the undersigned, whereunto duly authorized.
Pursuant to the requirements of the Securities and Exchange Act of 1934, this amended report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates included.
By: /s/ Jaclyn Cruz
Date: April 15, 2013
Jaclyn Cruz, Director and President
By: /s/ Matt Kelly
Date: April 15, 2013
Matt Kelly, Secretary and Treasury