Bravatek Solutions, Inc. - FORM 10-Q/A

Attached files

file	filename
EX-32.2 - CERTIFICATION - Bravatek Solutions, Inc.	ecry_ex322.htm
EX-31.1 - CERTIFICATION - Bravatek Solutions, Inc.	ecry_ex311.htm
EX-32.1 - CERTIFICATION - Bravatek Solutions, Inc.	ecry_ex321.htm
EX-31.2 - CERTIFICATION - Bravatek Solutions, Inc.	ecry_ex312.htm
EXCEL - IDEA: XBRL DOCUMENT - Bravatek Solutions, Inc.	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________

Commission File Number: 000-53489

eCrypt Technologies, Inc.

(Exact name of registrant as specified in its charter)

Colorado		32-0201472
(State or other jurisdiction of incorporation)		(IRS Employer Identification Number)

4004 Sugarloaf Drive,
Austin, TX 78738

(Address of principal executive offices)

1.866.204.6703

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of February 24, 2015, the Company had 137,674,899 shares issued and outstanding.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Quarterly Report of eCrypt Technologies, Inc. (the “Company”) on Form 10-Q for the three months ended December 31, 2014 (the “Form 10-Q”), is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language). This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date of the Form 10-Q, and does not modify or update in any way disclosures made in the Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

PART I-FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The financial statements of Ecrypt Technologies, Inc. (the "Company" or “Ecrypt”), a Colorado corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company in the Company's Form 10-K for the fiscal year ended March 31, 2014, and all amendments thereto.

ECRYPT TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

PERIOD ENDED DECEMBER 31, 2014

INDEX TO FINANCIAL STATEMENTS:	Page
Balance Sheets		3
Statements of Operations		4
Statements of Cash Flows		5
Notes to Unaudited Financial Statements		6 – 14

ECRYPT TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)

	December 31,			March 31,
	2014			2014
ASSETS

CURRENT ASSETS
Cash	$	58,468		$	15,504
TOTAL CURRENT ASSETS		58,468			15,504

Property and equipment, net		8,703			7,826

TOTAL ASSETS	$	67,171		$	23,330

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	136,948		$	26,180
Accounts payable-related party		13,200			13,200
Accrued interest on loan		60,286			85,816
Accrued interest on loan-related party		249,252			193,764
Notes payable-related party		558,500			553,000
Notes payable		430,788			659,854
Convertible notes payable (net of unamortized discount of $775,708)		35,285			-
Derivative liabilities		894,334			-
TOTAL CURRENT LIABILITIES		2,378,593			1,531,814

LONG TERM LIABILITIES
Notes payable		-			100,000
Notes payable-related party		-			5,500
Accrued Interest on loan		-			8,913
Accrued Interest on loan-related party		-			417
TOTAL LONG TERM LIABILITIES		-			114,830

TOTAL LIABILITIES		2,378,593			1,646,644

STOCKHOLDERS' DEFICIT

Preferred stock (10,000,000 Shares Authorized; Par Value $.0001 5,000,000 and 5,000,000 shares issued and outstanding as at December 31, 2014 and March 31, 2014)		500			500
Common stock (500,000,000 Shares Authorized; No Par Value; 130,178,513 and 135,979,802 shares issued and outstanding as at December 31, 2014 and March 31, 2014)		1,471,162			1,029,161
Additional paid in capital		6,429,500			6,429,500
Stock subscription receivable		(300,000	)		-
Stock subscription payable		62,031			8,812
Accumulated deficit		(9,974,615	)		(9,091,287	)
TOTAL STOCKHOLDERS' DEFICIT		(2,311,422	)		(1,623,314	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	67,171		$	23,330

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

ECRYPT TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)

		For the three months ended December 31,			For the three months ended December 31,			For the nine months ended December 31,			For the nine months ended December 31,
		2014			2013			2014			2013

REVENUES
	Sales	$	-		$	-		$	-		$	1,270

OPERATING EXPENSES
	Amortization and depreciation		935			1,023			2,804			3,076
	Advertisement and promotion		4,129			1,976			11,218			19,401
	General and administrative		41,891			38,350			75,645			246,411
	Professional fees		246,052			20,478			556,480			65,025
	TOTAL OPERATING EXPENSES		293,007			61,827			646,147			333,913

OPERATING LOSS			(293,007	)		(61,827	)		(646,147	)		(332,643	)

OTHER INCOME (EXPENSES)
	Interest expense		(18,707	)		(17,907	)		(59,327	)		(44,788	)
	Interest expense related party		(20,936	)		(17,444	)		(56,525	)		(51,242	)
	Loss on derivative liabilities		(94,340	)		-			(94,340	)		-
	Amortization of debt discount		(36,285	)		-			(36,285	)		-
	Debt Forgiveness		9,297			-			9,297			-
	TOTAL OTHER INCOME (EXPENSES)		(160,971	)		(35,351	)		(237,180	)		(96,030	)

NET LOSS		$	(453,978	)	$	(97,178	)	$	(883,327	)	$	(428,673	)

WEIGHTED AVERAGE SHARES OUTSTANDING
	Basic		126,968,654			135,953,511			130,424,607			135,900,575

Loss per share
	Basic		(0.00	)		(0.00	)		(0.01	)		(0.00	)

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

ECRYPT TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the nine months ended December 31,			For the nine months ended December 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(883,327	)	$	(428,673	)
Adjustments for non-cash items:
Amortization and depreciation		2,804			3,076
Stock issued for compensation		347,350			15,000
Interest on loans		60,781			44,783
Interest on loans-related party		55,071			51,248
Change in derivative value		94,340			-
Amortization of debt discount		36,285			-
Debt forgiveness		(9,297	)		-
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		110,767			12,092
Accounts payable-related party		-			8,700
NET CASH USED IN OPERATING ACTIVITIES		(185,226	)		(293,774	)

CASH FLOWS FROM INVESTING ACTIVITIES
Computer equipment		(3,680	)		-
NET CASH USED IN INVESTING ACTIVITIES		(3,680	)		-

CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance		146,870			-
Proceeds from loans		85,000			280,000
Proceeds from loan-related party		-			5,500
NET CASH PROVIDED BY FINANCING ACTIVITIES		231,870			285,500

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		42,964			(8,274	)

CASH AND CASH EQUIVALENTS
Beginning of year		15,504			10,863
End of year	$	58,468		$	2,589

Supplemental disclosures of cash flow information:
Common stock issued to satisfy common stock payable	$	8,812		$	14,625
Notes payable and accrued interest settled by issuing convertible notes	$	(499,993	)	$	-
Convertible notes issued in settlement of notes payable	$	499,993		$	-
Conversion of note payable	$	1,000		$	-

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

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. Nature of Operations

Ecrypt Technologies Inc., a Colorado corporation (“the Company”), was incorporated on April 19, 2007. The Company’s business operations are oriented around the marketing and distribution of proprietary and allied security, defense and information security software, hardware and services. Products include software, hardware and services, and span a diverse variety of industries including, but not limited to, email security, user authentication, robotics, and cyber breach protection.

2. Significant Accounting Policies

Basis of Presentation

The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles of the United States of America (“US GAAP”).

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of December 31, 2014, and the results of operations and cash flows presented herein have been included in the financial statements. The financial statements should be read in conjunction with the Form 10-K for the year ended March 31, 2014, filed with the SEC on July 14, 2014.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Uncertainty as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations since inception (April 19, 2007) up to December 31, 2014 of $9,974,615 which raises substantial doubt about its ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

Revenue Recognition

Product revenue and miscellaneous income are recognized as earned.

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

Stock-Based Compensation

The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

Related Parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

Foreign Currency Translation

The measurement currency of the Company is the U.S. dollar. Transactions in foreign currencies are translated at the exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in other than the measurement currency are translated at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in earnings.

Net Earnings (Loss) per Share

Basic and diluted net loss per share information is presented under the requirements of ASC Topic 260, Earnings per Share. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, less shares subject to repurchase. Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible notes in the weighted-average number of common shares outstanding for a period, if dilutive.

3. Recent Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

4. Stockholders’ Deficit

a) Authorized:

500,000,000 Common shares with no par value; 130,178,513 Common shares issued and outstanding;

10,000,000 Preferred shares with $0.0001 par value; 5,000,000 Preferred shares issued and outstanding:

During the period ended December 31, 2014, the Company effected the following stock transactions:

On October 16, 2014, the Company issued 1,185,338 shares of common stock for officer compensation for a value of $148,167. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.125 per share. The compensation agreement calls for a total of 9,482,704 shares to be issued during a 28-month period. As of December 31, 2014, a total of 2,370,676 were issued under this agreement.

On October 18, 2014, the Company issued 18,750 shares of common stock for compensation for a value of $2,625. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.143 per share. The compensation agreement calls for a total of 75,000 shares to be issued during a twelve-month period. As of December 31, 2014, a total of 75,000 have been issued under this agreement.

On October 24, 2014, the Company issued 18,750 shares of common stock for compensation for a value of $2,250 out of stock payable. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.12 per share. The compensation agreement calls for a total of 75,000 shares to be issued during a twelve-month period. As of December 31, 2014, a total of 75,000 shares have been issued under this agreement.

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

On November 27, 2014, the Company issued 37,500 shares of common stock for director compensation for a value of $7,125. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.189. The compensation agreement calls for a total of 150,000 shares to be issued during a twelve month period. These shares were recorded as stock payable as of December 31, 2014. As of December 31, 2014, a total of 112,500 shares have been issued under this agreement.

On October 24, 2014, the Company issued 171,875 shares of common stock for compensation for a value of $20,625. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.121 per share. The compensation agreement calls for a total of 2,750,000 shares to be issued during a 21 month period. Pursuant to the Restricted Shares Agreement, the remaining shares will be issued as follows: 171,875 on the six, nine, twelve, fifteen, eighteen and twenty one month anniversaries of the grant date, respectively. As of December 31, 2014, a total of 343,750 shares have vested under this agreement.

On December 25, 2014, the Company issued 171,875 shares of common stock for compensation for a value of $18,906. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.11 per share. The compensation agreement calls for a total of 2,750,000 shares to be issued during a 21 month period. Pursuant to the Restricted Shares Agreement, the remaining shares will be issued as follows: 171,875 on the six, nine, twelve, fifteen, eighteen and twenty one month anniversaries of the grant date, respectively. The 171,875 shares were recorded as stock payable as of December 31, 2014. As of December 31, 2014, a total of 343,750 shares have vested under this agreement.

On December 30, 2014 the Company issued 14,910 shares of common stock for the conversion of $1,000 of a $250,000 convertible note payable. The discounted share price of $0.067067 is based on a conversion ratio of 67% of the lowest closing bid prices for 20 days prior to conversion. The fair market value of these shares was $1,506. As of December 31, 2014, the outstanding principal amount of the note was $249,000.

During the quarter ended December 31, 2014, the Company entered into a private placement subscription agreement that offers a total of 890,000 units for a value of $89,000, or $0.10 per unit. Each unit consists of one (1) share of the Company’s common stock, and one-half (1/2) common stock purchase Warrant. One full warrant entitles the holder to purchase one (1) share of the Corporation’s common stock at a price of $0.15 per share at any time within a 12 month period from the date of closing. As of December 31, 2014, 360,000 of these shares were recorded as stock payable.

During the three months ended December 31, 2014, the Company issued a total of 1,939,623 shares valued at $228,173.

5. Stock options

On February 16, 2012 the Company granted a non-qualified stock option to its newly appointed director, Thomas Trkla as compensation for his services. The director is entitled to purchase a total of three hundred thousand (300,000) shares of restricted common stock for a price equal to $0.30 per share (Exercise Price), exercisable over a ten-year period thereafter. The option shall be vested during the 12 month period. As to the total number of Shares with respect to which the Option is granted, the Option shall be exercisable as follows: (i) 25% of the Option in the aggregate may be exercised upon the mutual execution of this Agreement (ii) 50% of the Option in the aggregate may be exercised on or after the four month anniversary of the Grant Date; (iii) 75% of the Option in the aggregate may be exercised on or after the eight month anniversary of the Grant Date; and (iv) 100% of the Option in the aggregate may be exercised on or after the twelve month anniversary of the Grant Date (the twelve month period commencing on the Grant Date and ending on the twelve month anniversary of the Grant Date being referred to as the “Vesting Period”). As of December 31, 2014, the director has not exercised any rights. The total fair value of these options at the date of grant was estimated to be $180,000 and was determined using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 1.99%, a dividend yield of 0% and expected volatility of 419%. Out of this $180,000 was recorded as stock based compensation expense through December 31, 2014 based on three hundred thousand (300,000) options vested.

	Number of Options		Weighted-Average Exercise Price per share		Weighted- Average Remaining Life (Years)
Outstanding at as at 12/31/2013		300,000	$	0.30		8.88
Granted		-	$	-		-
Exercised		-	$	NA		NA
Cancelled		-	$	NA		NA
Outstanding as at 12/31/2014		300,000	$	0.30		7.88
Exercisable at 12/31/2014		300,000	$	0.30		-

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

6. Loan-Related Party

As of December 31, 2014 and March 31, 2014, the balance of loans due to a related party was $558,500 and $553,000, respectively.

The Company issued on May 18, 2010 a $215,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on April 29, 2011 a $15,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on May 9, 2011 a $36,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on June 24, 2011 a $100,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on July 7, 2011 a $40,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on August 5, 2011 a $24,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on September 2, 2011 a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on September 30, 2011 a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on October 19, 2011 a $25,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on December 6, 2011 a $20,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on January 11, 2012 a $38,000 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and matured on November 30, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

The Company issued on June 27, 2013 a $5,500 unsecured note payable to a shareholder. The note bears interest at 10%, compounded annually and will mature on June 27, 2015.

Interest expense for the three months ended December 31, 2014, and 2013, was $20,936 and $17,444, respectively. Interest expense for the nine months ended December 31, 2014, and 2013, was $56,525 and $51,242, respectively.

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

7. Note Payable

As of December 31, 2014 and March 31, 2014, the balance of loans due to third parties was $430,788 and $659,854, respectively. During the quarter ended December 31, 2014 the loan balance was reduced by the issuance of convertible debt of $500,000 and the forgiveness of debt and interest payable of $18,594.

The Company issued on December 18, 2012 a $49,980 unsecured note payable to a third party. The note bears interest at 10%, compounded annually and matured on December 18, 2014. On February 16, 2015 the Company secured a note payable extension through April 1, 2015 with no change in original terms of the agreement.

Interest expense for the three months ended December 31, 2014, and 2013, was $18,707 and $17,907, respectively. Interest expense for the nine months ended December 31, 2014, and 2013, was $59,327 and $44,788, respectively.

8. Convertible Debt and Derivative liabilities

On December 21, 2014, the Company entered into a securities purchase agreement providing for the purchase of two convertible promissory notes in the aggregate principal amount of $156,000 each. One of the notes was funded on January 7, 2015, with the Company receiving $130,704 of net proceeds after payment of legal and origination expenses and a finders’ fee. The note bears interest at the rate of 8% per annum, is due and payable on December 19, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion price equal to 68% of the lowest closing bid price on the OTCQB during the 20 prior trading days. The second note, which has not been funded, has the same interest and conversion terms as the first note, but may be offset by a secured promissory note issued to the Company for $150,000, due on August 19, 2015, and accruing interest at the rate of 8% per annum.

On December 24, 2014, the Company entered into a securities purchase agreement providing for the purchase of two convertible promissory notes in the aggregate principal amount of $156,000 each. One of the notes was funded on January 14, 2015, with the Company receiving $130,704 of net proceeds after payment of legal and origination expenses and a finders’ fee. The note bears interest at the rate of 8% per annum, is due and payable on December 19, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion price equal to 68% of the lowest closing bid price on the OTCQB during the 20 prior trading days. The second note, which has not been funded, has the same interest and conversion terms as the first note, but may be offset by a secured promissory note issued by Union Capital to the Company for $150,000, due on August 19, 2015, and accruing interest at the rate of 8% per annum.

The combined amount of the unfunded notes is $300,000. Due to their variable conversion the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation are initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts have being amortized to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued, the Company used the Black Scholes Option Model with a risk-free interest rate of .025%, volatility 204.17%, trading prices of $.10 per share and a conversion price $.07 per share.

The balance of the convertible note at December 31, 2014 net of the discount and net of the receivable amounted to $0.

A recap of the balance of outstanding convertible debt at December 31, 2014 is as follows:

Principal balance	$	300,000
Receivable-reflected in equity		(300,000	)
Balance maturing for the period ending:
December 31, 2014	$	0

The Company has extinguished debt totaling $499,994 through the issuances of three 8% convertible promissory notes. The outstanding balances of these notes are convertible into a variable number of the Company’s common stock, based on a conversion ratio of 68% of the lowest closing bid prices for 20 days prior to conversion. Therefore the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation are initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts have being amortized to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued, the Company used the Black Scholes Option Model with a risk-free interest rate of .025%, volatility 204.17%, trading prices of $.10 per share and a conversion price $.07 per share.

Amortization of the discounts for the nine months ended December 31, 2014 totaled $36,285, which was charged to interest expense.

The Company valued the derivative liabilities at December 31, 2014 at $894,333. The Company recognized a change in the fair value of derivative liabilities for the three months ended December 31, 2014 of $249,424, which was charged to operations. The Company used the Black Scholes Option Model with a risk-free interest rate of .025%, volatility 204.17%, trading prices of $.10 per share and a conversion price $.07 per share.

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

9. Deferred Revenue, Commitments, and Contingencies

On November 4, 2014 the Company entered into a 5 year agreement to provide a third party client “Ecrypt One” secure email services and website hosting services. The agreement calls for the payment of a one-time fee of $25,000, and an annually recurring fee of $5,015. The invoicing terms specify a pre-payment of $7,500 at the placement of order, a payment of $15,000 upon delivery of the product, and $2,500 at customer sign-off. As of December 31, 2014 the $7,500 pre-payment was due but has not been received and therefore was recorded as both deferred revenue and accounts receivable.

10. Subsequent Events

During the month of January 2015 the company issued four convertible notes payable, two notes with a total face value of $312,000 and two notes with a total face value of $104,000 and stated interest of 8%. The outstanding balances of these notes are convertible into a variable number of the Company’s common stock. Based on a conversion ratio of 68% of the lowest closing bid prices for 20 days prior to conversion, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation are initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts will be amortized to interest expense over the respective term of the related note.

On December 24, 2014, the Company issued a replacement convertible note payable, with a face value of $128,069.74 and stated interest of 8% to a third party investor, who had jut purchased $128,069.74 of debt from one of the Company’s other third party creditors. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 67% of the lowest closing bid prices for 20 days prior to conversion. From January 5, 2015 through February 19, 2015, the investor converted a total of $109,235.91 of the face value into 4,120,930 shares of common stock as itemized in the table below. As of February 23, 2015 the outstanding face value of the note was $18,833.83.

Conversion Date	Converted Principal Amount		Discounted Conversion Price		Number of Common Shares Issued		Closing Stock Price		Fair Market Value of Shares		Outstanding Face Value
Jan 5, 2015	$	5,000.00		0.051054		97,936	$	0.077	$	7,541.07	$	123,069.74
Jan 6, 2015	$	4,600.00		0.051054		90,101	$	0.086	$	7,748.69	$	118,469.74
Jan 7, 2015	$	7,200.00		0.051054		141,027	$	0.081	$	11,423.19	$	111,269.74
Jan 8, 2015	$	4,300.00		0.051054		84,225	$	0.08	$	6,738.00	$	106,969.74
Jan 9, 2015	$	3,400.00		0.051054		66,596	$	0.082	$	5,460.87	$	103,569.74
Jan 12, 2015	$	2,000.00		0.05025		39,801	$	0.08	$	3,184.08	$	101,569.74
Jan 14, 2015	$	2,300.00		0.0469		49,041	$	0.075	$	3,678.08	$	99,269.74
Jan 15, 2015	$	2,100.00		0.0469		44,776	$	0.0725	$	3,246.26	$	97,169.74
Jan 21, 2015	$	9,200.00		0.03015		305,141	$	0.0455	$	13,883.92	$	87,969.74
Jan 22, 2015	$	11,000.00		0.02211		497,512	$	0.0342	$	17,014.91	$	76,969.74
Jan 26, 2015	$	8,486.80		0.02211		383,844	$	0.0485	$	18,616.43	$	68,482.94
Jan 28, 2015	$	8,500.00		0.02211		384,441	$	0.045	$	17,299.85	$	59,982.94
Jan 29, 2015	$	3,400.00		0.02211		153,777	$	0.0475	$	7,304.41	$	56,582.94
Jan 30, 2015	$	1,000.00		0.02211		45,228	$	0.053	$	2,397.08	$	55,582.94
Feb 2, 2015	$	1,800.00		0.02211		81,411	$	0.0455	$	3,704.20	$	53,782.94
Feb 3, 2015	$	4,800.00		0.02211		217,096	$	0.045	$	9,769.32	$	48,982.94
Feb 4, 2015	$	5,000.00		0.02211		226,142	$	0.043	$	9,724.11	$	43,982.94
Feb 5, 2015	$	8,000.00		0.02211		361,827	$	0.042	$	15,196.73	$	35,982.94
Feb 9, 2015	$	4,700.00		0.02077		226,288	$	0.031	$	7,014.93	$	31,282.94
Feb 10, 2015	$	3,300.00		0.02077		158,883	$	0.036	$	5,719.79	$	27,982.94
Feb 12, 2015	$	1,049.11		0.02077		50,511	$	0.037	$	1,868.91	$	26,933.83
Feb 17, 2015	$	2,100.00		0.02077		101,107	$	0.0315	$	3,184.87	$	24,833.83
Feb 18, 2015	$	1,900.00		0.019095		99,502	$	0.031	$	3,084.56	$	22,933.83
Feb 19, 2015	$	4,100.00		0.019095		214,716	$	0.033	$	7,085.63	$	18,833.83

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

On December 12, 2014, the Company issued a replacement convertible note payable, with a face value of $250,000 and stated interest of 8% to a third party investor, who had just purchased $250,000 of debt from one of the Company’s other third party creditors. The outstanding balance of this note is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 67% of the lowest closing bid prices for 20 days prior to conversion. From January 5, 2015 through February 19, 2015, the investor converted a total $78,720 of the face value and $445.70 of accrued interest into 2,843,580 shares of common stock as itemized in the table below. As of February 23, 2015 the outstanding face value of the note was $170,280.

Conversion Date	Converted Principal Amount		Converted Interest		Discounted Conversion Price		Number of Common Shares Issued		Closing Stock Price		Fair Market Value of Shares		Outstanding Face Value
Jan 5, 2015	$	5,390.00	$	7.09	$	0.051054		105,713	$	0.077	$	8,139.90	$	243,610.00
Jan 6, 2015	$	3,370.00	$	5.17	$	0.051054		66,110	$	0.086	$	5,685.46	$	240,240.00
Jan 7, 2015	$	3,055.00	$	5.36	$	0.051054		59,944	$	0.081	$	4,855.46	$	237,185.00
Jan 8, 2015	$	3,225.00	$	6.36	$	0.051054		63,293	$	0.08	$	5,063.44	$	233,960.00
Jan 9, 2015	$	1,925.00	$	4.22	$	0.051054		37,788	$	0.082	$	3,098.62	$	232,035.00
Jan 12, 2015	$	2,405.00	$	6.85	$	0.05025		47,997	$	0.08	$	3,839.76	$	229,630.00
Jan 13, 2015	$	1,055.00	$	3.24	$	0.05025		21,060	$	0.0755	$	1,590.03	$	228,575.00
Jan 14, 2015	$	3,140.00	$	10.32	$	0.0469		67,171	$	0.075	$	5,037.83	$	225,435.00
Jan 15, 2015	$	1,545.00	$	5.42	$	0.0469		33,058	$	0.0725	$	2,396.71	$	223,890.00
Jan 16, 2015	$	175.00	$	0.65	$	0.0469		3,745	$	0.0701	$	262.52	$	223,715.00
Jan 20, 2015	$	3,725.00	$	17.15	$	0.041942		89,222	$	0.0639	$	5,701.29	$	219,990.00
Jan 21, 2015	$	6,605.00	$	31.85	$	0.03015		220,128	$	0.0455	$	10,015.82	$	213,385.00
Jan 22, 2015	$	1,100.00	$	5.55	$	0.02211		50,002	$	0.0342	$	1,710.07	$	212,285.00
Jan 23, 2015	$	2,050.00	$	10.78	$	0.02211		93,206	$	0.0342	$	4,194.27	$	210,235.00
Jan 26, 2015	$	4,065.00	$	24.06	$	0.02211		184,942	$	0.0485	$	8,969.69	$	206,170.00
Jan 27, 2015	$	3,300.00	$	20.25	$	0.02211		150,170	$	0.065	$	9,761.05	$	202,870.00
Jan 28, 2015	$	1,415.00	$	8.99	$	0.02211		64,405	$	0.045	$	2,898.23	$	201,455.00
Jan 29, 2015	$	2,450.00	$	16.11	$	0.02211		111,538	$	0.0475	$	5,298.06	$	199,005.00
Jan 30, 2015	$	1,760.00	$	11.96	$	0.02211		80,143	$	0.053	$	4,247.58	$	197,245.00
Feb 2, 2015	$	1,475.00	$	10.99	$	0.02211		67,209	$	0.0455	$	3,058.01	$	195,770.00
Feb 3, 2015	$	2,085.00	$	15.99	$	0.02211		95,024	$	0.045	$	4,276.08	$	193,685.00
Feb 4, 2015	$	1,400.00	$	11.05	$	0.02211		63,820	$	0.043	$	2,744.26	$	192,285.00
Feb 5, 2015	$	2,140.00	$	17.35	$	0.02211		97,573	$	0.042	$	4,098.07	$	190,145.00
Feb 6, 2015	$	2,615.00	$	21.78	$	0.02211		119,257	$	0.0418	$	4,984.94	$	187,530.00
Feb 9, 2015	$	5,930.00	$	53.29	$	0.02077		288,074	$	0.031	$	8,930.29	$	181,600.00
Feb 10, 2015	$	2,590.00	$	23.84	$	0.02077		125,847	$	0.036	$	4,530.49	$	179,010.00
Feb 11, 2015	$	1,510.00	$	14.23	$	0.02077		73,386	$	0.033	$	2,421.74	$	177,500.00
Feb 12, 2015	$	1,120.00	$	10.80	$	0.02077		54,444	$	0.037	$	2,014.43	$	176,380.00
Feb 13, 2015	$	1,735.00	$	17.11	$	0.02077		84,358	$	0.037	$	3,121.25	$	174,645.00
Feb 17, 2015	$	1,440.00	$	15.47	$	0.02077		70,076	$	0.0315	$	2,207.39	$	173,205.00
Feb 18, 2015	$	1,245.00	$	13.64	$	0.019095		65,915	$	0.031	$	2,043.37	$	171,960.00
Feb 19, 2015	$	1,680.00	$	18.78	$	0.019095		88,965	$	0.033	$	2,935.85	$	170,280.00

On December 25, 2014, the Company issued 171,875 shares of common stock for compensation for a value of $18,906. The share price is valued at the adjusted closing price on the date of vesting of the shares which was $0.121 per share. The compensation agreement calls for a total of 2,750,000 shares to be issued during a 21 month period. Pursuant to the Restricted Shares Agreement, the remaining shares will be issued as follows: 171,875 on the six, nine, twelve, fifteen, eighteen and twenty one month anniversaries of the grant date, respectively. On January 6, 2015, the 171,875 shares were issued out of stock payable.

During the quarter ended December 31, 2014, the Company entered into a private placement subscription agreement that offers a total of 890,000 units for a value of $89,000, or $0.10 per unit. Each unit consists of one (1) share of the Company’s common stock, and one-half (1/2) common stock purchase Warrant. One full warrant entitles the holder to purchase one (1) share of the Corporation’s common stock at a price of $0.15 per share at any time within a 12 month period from the date of closing. On January 7, 2015, the Company issued 360,000 shares of common stock out of stock payable.

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

The note issued on January 15, 2015 has a face amount of $400,000 and stated interest rate of 12%. The outstanding balance of this note is convertible into a variable number of the Company’s common stock. Based on a conversion ratio of 60% of the lowest closing bid prices for 25 days prior to conversion or $.08 per share.

The note issued on January 16, 2015 has a face amount of $100,000 and stated interest rate of 12%. The outstanding balance of this note is convertible into a variable number of the Company’s common stock. Based on a conversion ratio of 45% of the lowest closing bid prices for 20 days prior to conversion or issue date.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $215,000 unsecured note payable issued on May 18, 2010 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $15,000 unsecured note payable issued on April 29, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $36,000 unsecured note payable issued on May 9, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $100,000 unsecured note payable issued on June 24, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $40,000 unsecured note payable issued on July 7, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $24,000 unsecured note payable issued on August 5, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $20,000 unsecured note payable issued on September 2, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $25,000 unsecured note payable issued on October 19, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $20,000 unsecured note payable issued on December 6, 2011 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $38,000 unsecured note payable issued on January 11, 2012 to a shareholder.

On February 16, 2015 the Company secured an extension through April 1, 2015 with no change in original terms of the agreement for a $49,980 unsecured note payable issued on December 18, 2012 to a third party.

On January 11, 2015, the Company entered into a securities purchase agreement providing for the purchase of two convertible promissory notes in the aggregate principal amount of $52,000 each. One of the notes was funded on January 13, 2015, with the Company receiving $47,500 of net proceeds after payment of legal and origination expenses. The note bears interest at the rate of 8% per annum, is due and payable on January 9, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion price equal to 67% of the lowest closing bid price on the OTCQB during the 15 prior trading days. The second note, which has not been funded, has the same interest and conversion terms as the first note, but may be offset by a secured promissory note issued to the Company for $50,000, due on September 9, 2015, and accruing interest at the rate of 8% per annum.

ECRYPT TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

On January 19, 2015, the Company issued a convertible promissory note in the face amount of $100,000, which bears interest at the rate of 12% per annum, is due and payable on July 16, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion price equal to the lesser of (a) 55% of the lowest trading price during the 20 days preceding the execution of the note, or (b) 55% of the of the lowest traded price during the 20 trading days preceding conversion. The note was funded on January 28, 2015, with the Company receiving $93,000 of net proceeds after payment of legal and origination expenses.

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

On February 3, 2015, the Company issued a collateralized secured convertible promissory for a 10% convertible promissory note with an aggregate principal amount of $252,500, of which the company is to assume an original issue discount of $22,500 (the “OID”) and legal fees and other expenses totaling $5,000, which together with any unpaid accrued interest is due on November 3, 2015. The note is to be issued in tranches with an initial tranche of $87,500, of which the company received $75,000 on February 6, 2015, with the remaining $5,000 being used for legal and other expenses and the Company assuming $7,500 of the OID. This convertible note together with any unpaid accrued interest is convertible into shares of Company common stock at a conversion price equal to the 60% of the average of the lowest three closing bid prices during the 20 prior trading days. The remaining three tranches, which have not yet been funded, of $55,000 under the note will consist of $50,000 in principal and $5,000 of the OID, and may be offset by three $50,000 promissory notes issued in favor of the Company, accruing interest at 8% per annum and maturing on November 3, 2015. In conjunction with the convertible note issued by the Company and the three promissory notes issued to the Company for the three additional tranches of funding to the Company, the Company issued four warrants for a total number of shares equal to $123,750 ($41,250 for the first warrant corresponding to funding on February 6, 2015, and $27,500 for the other three warrants corresponding to the future tranches of funding to the Company) divided by the conversion market price in the convertible note. The warrants have an exercise price of $0.10, subject to adjustment, and expire on January 3, 2020. Each of the warrants are only exercisable after the corresponding tranche of funding to the Company has been paid. Therefore, the first warrant is currently exercisable, but the other three warrants are not.

On February 10, 2015, the Company entered into an equity purchase agreement with a third party investor dated February 6, 2015, whereby the third party agreed to purchase up to $1,800,000 of the Company’s common stock, to be registered in a Form S-1 registration statement. The agreement will have a one-year term unless sooner terminated because $1,800,000 of the Company’s common stock has already been sold to the investor. During the term, the Company will have the right to deliver up to two put notices per month requiring it to purchase up to a maximum of $75,000 of shares for a specific amount. The purchase price for the shares covered by the put notice shall be equal to 75% of the lowest closing bid price for the ten trading days immediately preceding clearing of the estimated put shares (defined below). The Company will deliver to the investor, simultaneously with delivery of a put notice, a number of shares equal to 120% of the investment amount divided by the closing price of the Company’s common stock on the day preceding the put notice date. The actual number of shares purchased by the investor for the investment amount shall then be calculated by dividing the investment amount by the put purchase price. Any excess estimated put shares shall then be returned to the Company. The number of Shares sold to the investor at any time shall not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by the investor, would result in the investor owning more than 9.99% of all of the Company’s common stock then outstanding. Finally, as part of the equity purchase agreement, the investor is prohibited from executing any short sales of the Company’s common stock during the term of the equity purchase agreement.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report, including statements in the following discussion, are what are known as "forward looking statements", which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as "plans," "intends," "will," "hopes," "seeks," "anticipates," "expects "and the like often identify such forward looking statements, but are not the only indication that a statement is a forward looking statement. Such forward looking statements include statements concerning our plans and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. Numerous factors and future events could cause the Company to change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits. Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this report on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission. No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.

Overview & Plan of Operation

Ecrypt Technologies, Inc., a Colorado corporation, was incorporated in the State of Colorado, on April 19, 2007. The Company provides security, defense, and information security solutions, which assist corporate entities, governments and individuals in protecting their organizations and/or critical infrastructures against error, and physical and cyber attack. The Company’s business operations are oriented around the marketing and distribution of proprietary and allied security, defense and information security software, hardware and services.

Currently, the Company’s primary business operations are focused on expanding its strategic marketing program of allied products and services of which the Company is designated as the exclusive, or non-exclusive, marketing and distribution agent within the USA and abroad.

Additionally, the Company has developed and plans to continue selling an enterprise-level secure email software appliance named Ecrypt One. Ecrypt One is an email server with integrated security technology. It was designed to protect email and attachments in transit and at rest. It incorporates multiple security technologies and techniques, such as encryption, role based access controls, server rules that enforce security, and multi-factor authentication. It was designed to assist organizations and governments to meet and maintain compliance with information security regulations such as HIPAA.

The Company filed a patent application for multiple processes in Ecrypt One, with a request for non-publication, on April 22, 2014.

In addition to the foregoing, in an effort to advance the business operations of the Company, over the next twelve (12) months the Company plans to undertake the following actions in the order in which they are listed:

1. Continue distribution on Ecrypt One Light edition;

2. Continue developing strategic marketing alliance program;

3. Commence distribution of allied products and services;

4. Continue development of other Ecrypt One editions;

5. Complete testing of other Ecrypt One editions;

6. Commence distribution of other Ecrypt One editions.

The foregoing business actions are goals of the Company. There is no assurance that the Company will be able to complete any, or all, of the foregoing actions.

Results of Operations

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the three and nine months ended December 31, 2014, as compared to the three and nine months ended December 31, 2013. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-Q.

Our financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principles of the United States (“GAAP”).

Results of Operations for Ecrypt Technologies, Inc. for the Three Months Ended December 31, 2014 Compared to the Three Months Ended December 31, 2013.

Revenue

During the three months ended December 31, 2014 and the three months ended December 31, 2013 the Company had revenues of $nil.

Operating Expenses

During the three months ended December 31, 2014 the Company had operating expenses of $293,007 as compared to operating expenses of $61,827 during the three months ended December 31, 2013, an increase of $231,180 or approximately 373.914%. The increase in operating expenses experienced by the Company was primarily attributable to an increase in advertisement and promotion expenses, general and administrative expenses, and professional fees.

Net Loss

The Company had a net loss of $(453,978) for the three months ended December 31, 2014, as compared to a net loss of $(97,178) for the three months ended December 31, 2013, a change of $356,800 or approximately 367.161%. The change in net loss experienced by the Company was primarily attributable to the fact that the Company experienced an increase in operating expenses, an increase in loss on derivative liabilities, and an increase in amortization of debt discount during the three months ended December 31, 2014.

Results of Operations for Ecrypt Technologies, Inc. for the Nine Months Ended December 31, 2014 Compared to the Nine Months Ended December 31, 2013.

Revenue

During the nine months ended December 31, 2014, the Company had revenues of $0 as compared to revenues of $1,270 during the nine months ended December 31, 2013, a decrease of $1,270, or approximately 100%. The decrease in revenue experienced by the Company was primarily attributable to the fact that the Company discontinued sales of One on One and Ecrypt Me on June 30, 2013.

Operating Expenses

During the nine months ended December 31, 2014, the Company had operating expenses of $646,147 as compared to operating expenses of $333,913 during the nine months ended December 31, 2013, an increase of $312,234 or approximately 93.508%. The increase in operating expenses experienced by the Company was primarily attributable to an increase in professional fees.

Net Loss

The Company had a net loss of $(883,327) for the nine months ended December 31, 2014, as compared to a net loss of $(428,673) for the nine months ended December 31, 2013, a change of $454,654 or approximately 106.061%. The change in net loss experienced by the Company was primarily attributable to the fact that the Company experienced an increase in operating expenses, an increase in interest expenses, and increase in loss on derivative liabilities, and an increase in amortization of debt discount during the nine months ended December 31, 2014.

Liquidity and Capital Resources

Currently, we have limited operating capital. The Company anticipates that it will require approximately $5,000,000 of working capital to complete all of its desired business activity during the next twelve months. The Company has earned limited revenue from its business operations. Our current capital and our other existing resources will be sufficient only to provide a limited amount of working capital, and, to date, the revenues generated from our business operations have not been sufficient to fund our operations or planned growth. As noted above, we will likely require additional capital to continue to operate our business, and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our operations, business development and financial results.

During the three months ended December 31, 2014, the Company conducted a private placement offering pursuant to which it sold a total of 890,000 units for a total of $89,000, or $0.10 per unit. Each unit consists of one (1) share of the Company’s common stock, and one-half (1/2) common stock purchase Warrant. One full warrant entitles the holder to purchase one (1) share of the Corporation’s common stock at a price of $0.15 per share at any time within a 12 month period from the date of closing. The securities were sold to a total of five (5) different purchasers as part of a private placement offering being conducted by the Company. The proceeds raised in the offering will be used to fund the Company’s operating expenses.

During the three months ended December 31, 2014, the Company entered into a securities purchase agreement with Adar Bays, LLC, a Florida limited liability company (“Adar Bays”) providing for the purchase of two convertible promissory notes in the aggregate principal amount of $156,000 each. One of the notes was funded on or about January 7, 2015, with the Company receiving $130,704 of net proceeds after payment of Adar Bays’ legal and origination expenses and payment of a finders’ fee to Anubis Capital Partners. The note bears interest at the rate of 8% per annum, is due and payable on December 19, 2015, and may be converted by Adar Bays at any time after funding into shares of Company common stock at a conversion price equal to 68% of the lowest closing bid price on the OTCQB during the 20 prior trading days. The second Adar Bays note, which has not been funded, has the same interest and conversion terms as the first Adar Bays note, but may be offset by a secured promissory note issued by Adar Bays to the Company for $150,000, due on August 19, 2015, and accruing interest at the rate of 8% per annum.

During the three months ended December 31, 2014, the Company entered into a securities purchase agreement with Union Capital, LLC, a New York limited liability company (“Union Capital”) providing for the purchase of two convertible promissory notes in the aggregate principal amount of $156,000 each. One of the notes was funded on or about January 14, 2015, with the Company receiving $130,704 of net proceeds after payment of Union Capital’s legal and origination expenses and payment of a finders’ fee to Anubis Capital Partners. The note bears interest at the rate of 8% per annum, is due and payable on December 19, 2015, and may be converted by Union Capital at any time after funding into shares of Company common stock at a conversion price equal to 68% of the lowest closing bid price on the OTCQB during the 20 prior trading days. The second Union Capital note, which has not been funded, has the same interest and conversion terms as the first Adar Bays note, but may be offset by a secured promissory note issued by Union Capital to the Company for $150,000, due on August 19, 2015, and accruing interest at the rate of 8% per annum.

During the next twelve months, we plan to seek to generate the necessary capital to fund our business operations and complete our desired business activity through sales of Ecrypt One and strategic marketing affiliate products and services. If we are unable to generate the necessary capital through the sales of these products, we may need to raise more capital from investors to fund our business operations.

The following discussion outlines the state of our liquidity and capital resources as of December 31, 2014:

Total Current Assets & Total Assets

Our unaudited balance sheet reflects that: i) as of December 31, 2014, we have total current assets of $58,468 as compared to total current assets of $15,504 at March 31, 2014, an increase of $42,964, or approximately 277.116%; and ii) as of December 31, 2014, we have total assets of $67,171, compared to total assets of $23,330 as of March 31, 2014, an increase of $43,841, or approximately 187.917%. The increase in the Company’s total current assets and total assets from December 31, 2014 to March 31, 2014 was primarily attributable to the fact that the Company obtained cash via a private placement offering and convertible notes during the period ended December 31, 2014.

Cash: As of December 31, 2014, our unaudited balance sheet reflects that we have cash of $58,468 as compared to $15,504 at March 31, 2014, an increase of $42,964, or approximately 277.116%. The increase in the Company’s total current assets and total assets from December 31, 2014 to March 31, 2014 was primarily attributable to the fact that the Company obtained cash via a private placement offering and convertible notes during the period ended December 31, 2014.

Total Current Liabilities

Our unaudited balance sheet reflects that: i) as of December 31, 2014, we have total current liabilities of $2,378,593 as compared to total current liabilities of $1,531,814 at March 31, 2014, an increase of $846,779 or approximately 55.279%; and ii) as of December 31, 2014, we have total liabilities of $2,378,593 as compared to total liabilities of $1,646,644 at March 31, 2014, an increase of $731,949 or approximately 44.451%. The increase in the Company’s total current liabilities and total liabilities from December 31, 2014 to March 31, 2014 was primarily attributable to the fact that the Company obtained cash via convertible notes.

Cash Flow for the Company for the Nine Month Period Ended December 31, 2014 as Compared to the Nine Month Period Ended December 31, 2013.

Operating Activities During the nine month period ended December 31, 2014, the net cash used by the Company in operating activities was $(185,226) as compared to net cash used in operating activities of $(293,774) during the nine month period ended December 31, 2013, a change of $108,548 or approximately 36.949%. The decrease in our net cash used in operating activities was primarily attributable to net loss adjusted by an increase in stock issued for compensation, and a decrease in accounts payable due to a related party.

Financing Activities During the nine month period ended December 31, 2014, the net cash provided by financing activities was $231,870 as compared to net cash provided by financing activities of $285,500 during the nine month period ended December 31, 2013, a decrease of $53,630 or approximately 18.785%. The change in net cash provided by financing activities was primarily attributable to the fact that the Company received less cash via loans from third parties.

Investing Activities During the nine month period ended December 31, 2014, the net cash used by the Company in investing activities was $(3,680) as compared to net cash used in investing activities of $nil during the nine month period ended December 31, 2013.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Subsequent Events

On or about January 11, 2015, the Company entered into a securities purchase agreement with LG Capital Funding, LLC, a New York limited liability company (“LG Capital”) providing for the purchase of two convertible promissory notes in the aggregate principal amount of $52,000 each. One of the notes was funded on or about January 13, 2015, with the Company receiving $47,500 of net proceeds after payment of LG Capital’s legal and origination expenses. The note bears interest at the rate of 8% per annum, is due and payable on January 9, 2015, and may be converted by LG Capital at any time after funding into shares of Company common stock at a conversion price equal to 67% of the lowest closing bid price on the OTCQB during the 15 prior trading days. The second LG Capital note, which has not been funded, has the same interest and conversion terms as the first LG Capital note, but may be offset by a secured promissory note issued by LG Capital Note to the Company for $50,000, due on September 9, 2015, and accruing interest at the rate of 8% per annum.

On or about January 19, 2015, the Company entered into a convertible promissory note with JSJ Investments Inc., a Texas corporation (“JSJ”), in the face amount of $100,000, which bears interest at the rate of 12% per annum, is due and payable on July 16, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion price equal to the lesser of (a) 55% of the lowest trading price during the 20 days preceding the execution of the note, or (b) 55% of the of the lowest traded price during the 20 trading days preceding conversion. The note was funded on or about January 28, 2015, with the Company receiving $93,000 of net proceeds after payment of JSJ’s legal and origination expenses.

On or about January 21, 2015, the Company entered into a convertible promissory note with JMJ Financial, a Nevada sole proprietorship (“JMJ”), in the face amount of $400,000, of which the Company is to assume $40,000 in original interest discount (“OID”), which together with any unpaid accrued interest is due two years after any funding of the note. The note is to be funded by JMJ at its discretion, and the initial tranche was funded on or about January 21, 2015, when the Company received cash in the amount of $50,000. The note is prepayable for 90 days without interest, and incurs a one-time interest charge of 12% thereafter. The note balance funded (plus a pro rata portion of the OID together with any unpaid accrued interest) is convertible into shares of Company common stock at a conversion price equal to the lesser of $0.08 or 60% of the lowest traded price during the 25 prior trading days.

On or about February 3, 2015, the Company entered into a collateralized secured convertible promissory note with Typenex CoInvestment, LLC (“Typenex”), a Utah limited liability company, for a 10% convertible promissory note with an aggregate principal amount of $252,500, of which the company is to assume an original issue discount of $22,500 (the “OID”) and legal fees and other expenses of Typenex totaling $5,000, which together with any unpaid accrued interest is due on November 3, 2015. The note is to be issued in tranches with an initial tranche of $87,500, of which the company received $75,000 on or about February 6, 2015, with the remaining $5,000 being used for legal and other expenses of Typenex and the Company assuming $7,500 of the OID. This convertible note together with any unpaid accrued interest is convertible into shares of Company common stock at a conversion price equal to the 60% of the average of the lowest three closing bid prices during the 20 prior trading days. The remaining three tranches, which have not yet been funded, of $55,000 under the note will consist of $50,000 in principal and $5,000 of the OID, and may be offset by three $50,000 promissory notes issued by Typenex in favor of the Company, accruing interest at 8% per annum and maturing on November 3, 2015. In conjunction with the Company’s convertible note issued to Typenex and Typenex’s three promissory notes issued to the Company for the three additional tranches of funding to the Company, the Company issued four warrants for a total number of shares equal to $123,750 ($41,250 for the first warrant corresponding to funding on or about February 6, 2015, and $27,500 for the other three warrants corresponding to the future tranches of funding by Typenex to the Company) divided by the conversion market price in the Typenex convertible note. The warrants have an exercise price of $0.10, subject to adjustment, and expire on January 3, 2020. Each of the warrants are only exerciseable after the corresponding tranche of funding by Typenex to the Company has been paid. Therefore, the first warrant is currently exerciseable, but the other three warrants are not.

The notes and warrants described above were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act as there was no general solicitation, and the transactions did not involve a public offering.

On February 10, 2015, the Company entered into an equity purchase agreement with LG Capital, dated February 6, 2015, whereby LG Capital agreed to purchase up to $1,800,000 of the Company’s common stock, to be registered in a Form S-1 registration statement (the “Shares”). The agreement will have a one-year term unless sooner terminated because $1,800,000 of the Company’s common stock has already been sold to LG Capital.

During the term, the Company will have the right to deliver up to two put notices per month (each a “Put Notice”) to LG Capital requiring it to purchase up to a maximum of $75,000 of Shares for a specific amount (the “Investment Amount”). The purchase price for the Shares covered by the Put Notice shall be equal to 75% of the lowest closing bid price for the ten trading days immediately preceding clearing of the Estimated Put Shares (defined below) (such purchase price the “Put Purchase Price”). The Company will deliver to LG Capital, simultaneously with delivery of a Put Notice, a number of Shares equal to 120% of the Investment Amount divided by the closing price of the Company’s common stock on the day preceding the Put Notice date (the “Estimated Put Shares”). The actual number of Shares purchased by LG Capital for the Investment Amount shall then be calculated by dividing the Investment Amount by the Put Purchase Price. Any excess Estimated Put Shares shall then be returned to the Company.

The number of Shares sold to LG Capital at any time shall not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by LG Capital, would result in LG Capital owning more than 9.99% of all of the Company’s common stock then outstanding. Finally, as part of the equity purchase agreement, LG Capital is prohibited from executing any short sales of the Company’s common stock during the term of the equity purchase agreement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean the company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives. Based on that evaluation, our management has concluded that, as of December 31, 2014, the Company's internal control over financial reporting contained a material weakness due to a failure by the Company to properly value a stock transaction issued by the Company, and as a result of such material weakness, our internal controls over financial reporting were not effective as of December 31, 2014. To remediate the weakness in our internal controls over financial reporting, we intend to: i) reconcile stock issuance transactions against the agreements underlying such stock issuance transactions to ensure that equity issuances are properly accounted for; and ii) implement a review board to review the stock issuance transactions to ensure that they are properly valued and accounted for.

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended December 31, 2014, that has materially affected, or is likely to materially affect, the Company's internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 1A. RISK FACTORS.

Not Applicable.

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

As previously disclosed on Form 8-K filed on April 1, 2014, on March 27, 2014, the Registrant entered into a Director Agreement with Mr. Cellucci. Pursuant to the terms of the Director Agreement, as consideration for Mr. Cellucci’s services as a Director, Mr. Cellucci was granted a total of up to one hundred and fifty thousand (150,000) shares of common stock in the Registrant, which shares shall be issued pursuant to the terms and conditions of a Restricted Shares Agreement attached to the Director Agreement as Exhibit A. As of December 31, 2014, the Registrant had issued a total of seventy five thousand (75,000) shares of restricted common stock to Mr. Cellucci and recorded an additional thirty seven thousand and five hundred (37,500) shares of restricted common stock payable to Mr. Cellucci as stock payable under this agreement.

As previously disclosed on Form 8-K filed on June 18, 2014, in conjunction with the Registrant’s engagement of Mr. Thomas Cellucci as the Chief Executive Officer of the Company, on June 16, 2014, the Registrant entered into an employment agreement (the “Employment Agreement”) with Mr. Cellucci for an unfixed term, pursuant to which the Registrant agreed to employ Mr. Cellucci as the Chief Executive Officer of the Registrant. Pursuant to the terms of the Employment Agreement, as consideration for Mr. Cellucci’s services as the Chief Executive Officer, Mr. Cellucci was granted up to a total of up to eighteen million nine hundred and sixty five thousand and four hundred and eight (18,965,408) shares of common stock in the Registrant, which shares shall be issued as follows: (i) nine million four hundred and eighty two thousand and seven hundred and four (9,482,704) shares of common stock pursuant to the terms and conditions of a Restricted Shares Agreement attached to the Employment Agreement as Exhibit A; and (ii) nine million four hundred and eighty two thousand and seven hundred and four (9,482,704) of common stock pursuant to a restricted shares agreement once the Registrant either (a) amends its existing Stock Compensation Program (the “Program”) to increase the number of maximum authorized shares which may be issued under the Program, or (b) adopts a new stock compensation program. As of December 31, 2014, the Registrant had issued a total of two million three hundred and seventy thousand and six hundred seventy six (2,370,676) shares of restricted common stock to Mr. Cellucci under this agreement.

On September 26, 2014 the Registrant entered into an Employment Agreement (the “Employment Agreement”) with Urvashi Mehra for an unfixed term, pursuant to which the Registrant agreed to employ Ms. Mehra as VP of Global Healthcare Solutions of the Registrant. Pursuant to the terms of the Employment Agreement, as consideration for Ms. Mehra’s services as VP of Global Healthcare Solutions, Ms. Mehra was granted up to a total of two million seven hundred and fifty thousand (2,750,000) shares of common stock in the Registrant, which shares shall be issued as follows: (i) one million three hundred and seventy five thousand (1,375,000) shares of common stock pursuant to the terms and conditions of the Restricted Shares Agreement attached to the Employment Agreement as Exhibit A; and (ii) one million three hundred and seventy five thousand (1,375,000) of common stock pursuant to a restricted shares agreement once the Company either (a) amends its existing Stock Compensation Program (the “Program”) to increase the number of maximum authorized shares which may be issued under the Program, or (b) adopts a new stock compensation program. As of December 31, 2014, the Registrant issued one hundred seventy one thousand eight hundred and seventy five (171,875) shares of restricted common to Ms. Mehra and had recorded an additional one hundred seventy one thousand eight hundred and seventy five (171,875) shares of restricted common stock payable to Ms. Mehra as stock payable under this agreement.

For the above share issuances, the shares were not registered under the Securities Act of 1933 (the “Securities Act”) in reliance upon the exemptions from registration contained in Section 4(2) of the Securities Act.

During the three months ended September 30, 2014, the Company sold a total of 890,000 units for a total of $89,000, or $0.10 per unit. Each unit consists of one (1) share of the Company’s common stock, and one-half (1/2) common stock purchase Warrant. One full warrant entitles the holder to purchase one (1) share of the Corporation’s common stock at a price of $0.15 per share at any time within a 12 month period from the date of closing. The securities were sold to a total of five (5) different purchasers as part of a private placement offering being conducted by the Company. The sales of securities were made in reliance upon exemptions for registration provided by Regulation S under the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

(a) The following exhibits are filed herewith:

31.1	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Label Linkbase Document

101.PRE	XBRL Taxonomy Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ECRYPT TECHNOLOGIES, INC.

February 25, 2015	By:	/s/ Thomas A. Cellucci
		Thomas A. Cellucci
		Chief Executive Officer

February 25, 2015	By:	/s/ Brad Lever
		Brad Lever
		Chief Financial Officer

Bravatek Solutions, Inc. - FORM 10-Q/A - February 26, 2015

Attached files

Bravatek Solutions, Inc. Reports