NEVADA
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20-1282850
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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5390 Kietzke Lane, Suite 104, Reno, Nevada
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89511
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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¨
(Do not check if a smaller
reporting company
)
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Smaller reporting
company
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☒
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Emerging growth company
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☒ |
PAGE
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||
PART I
|
||
Item 1.
|
Business
|
4 |
Item 1A.
|
Risk Factors
|
10 |
Item 1B.
|
Unresolved Staff Comments
|
24 |
Item 2.
|
Properties
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24 |
Item 3.
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Legal Proceedings
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24 |
Item 4.
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Mine Safety Disclosures
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24 |
PART II
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||
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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25 |
Item 6.
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Selected Financial Data
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28 |
Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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28 |
Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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34 |
Item 8.
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Financial Statements and Supplementary Data
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34 |
Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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34 |
Item 9A.
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Controls and Procedures
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35 |
Item 9B.
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Other Information
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35 |
PART III
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||
Item 10.
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Directors, Executive Officers and Corporate Governance
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36 |
Item 11.
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Executive Compensation
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38 |
Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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40 |
Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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41 |
Item 14.
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Principal Accounting Fees and Services
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42 |
Item 15.
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Exhibits, Financial Statement Schedules
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43 |
Item 16.
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Form 10-K Summary
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43 |
SIGNATURES
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44 |
·
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1U rack-mountable 1GbE or 10GbE network appliance
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·
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1GbE fanless desktop appliance
|
·
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VMware ESXi™ virtual appliance
|
·
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IBM z Systems™ LPAR and IBM z/VM® software appliances
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·
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Amazon Web Services appliances
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·
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Windows and Linux software endpoints
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·
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significantly greater name recognition;
|
·
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established distribution networks;
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·
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more advanced technologies and product development;
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·
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additional lines of products, and the ability to offer rebates, higher discounts or incentives; and
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·
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greater experience in conducting research and development, manufacturing, obtaining regulatory approval for products
|
•
|
a loss of existing or potential customers or channel partners;
|
•
|
delayed or lost revenue;
|
•
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a delay in attaining, or the failure to attain, market acceptance;
|
•
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the expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate, or work around errors or defects, to address and eliminate vulnerabilities, or to identify and ramp up production with alternative third-party manufacturers;
|
•
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an increase in warranty claims, or an increase in the cost of servicing warranty claims, either of which would adversely affect our gross margins;
|
•
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harm to our reputation or brand; and
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•
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litigation, regulatory inquiries, or investigations that may be costly and further harm our reputation.
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•
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our ability to attract and retain new customers;
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•
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the budgeting cycles, seasonal buying patterns and purchasing practices of customers;
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•
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the timing of shipments of our products and length of our sales cycles;
|
•
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changes in customer or reseller requirements or market needs;
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•
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changes in the growth rate of the IT security market, particularly the market for threat protection solutions like ours that target next-generation advanced cyber-attacks;
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•
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the timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape of the IT security market, including consolidation among our customers or competitors;
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•
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the level of awareness of IT security threats, particularly advanced cyber-attacks, and the market adoption of our software;
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•
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deferral of orders from customers in anticipation of new products or product enhancements announced by us or our competitors;
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•
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our ability to successfully expand our business domestically and internationally;
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•
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reductions in customer renewal rates for our subscriptions;
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•
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decisions by organizations to purchase IT security solutions from larger, more established security vendors or from their primary IT equipment vendors;
|
•
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changes in our pricing policies or those of our competitors;
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•
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any disruption in, or termination of, our relationship with channel partners;
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•
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decreases in our customers' subscription renewal rates;
|
•
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our inability to fulfill our customers' orders due to supply chain delays or events that impact our manufacturers or their suppliers;
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•
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insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our products, subscriptions and services, or confronting our key suppliers, particularly our sole source suppliers, which could disrupt our supply chain;
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•
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the cost and potential outcomes of existing and future litigation;
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•
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seasonality in our business;
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•
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general economic conditions, both domestic and in our foreign markets;
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•
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future accounting pronouncements or changes in our accounting policies or practices;
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•
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the amount and timing of operating costs and capital expenditures related to the expansion of our business;
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•
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a change in our mix of products, subscriptions and services; and
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•
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increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
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•
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greater name recognition, longer operating histories and larger customer bases;
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•
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larger sales and marketing budgets and resources;
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•
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broader distribution and established relationships with channel and distribution partners and customers;
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•
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greater customer support resources;
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•
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greater resources to make acquisitions;
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•
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lower labor and research and development costs;
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•
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larger and more mature intellectual property portfolios; and
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•
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substantially greater financial, technical and other resources.
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•
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increased purchasing power and leverage held by large customers in negotiating contractual arrangements with us;
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•
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more stringent or costly requirements imposed upon us in our support service contracts with such customers, including stricter support response times and penalties for any failure to meet support requirements;
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•
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more complicated implementation processes;
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•
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longer sales cycles and the associated risk that substantial time and resources may be spent on a potential customer that ultimately elects not to purchase our platform or purchases less than we hoped;
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•
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closer relationships with, and dependence upon, large technology companies who offer competitive products; and
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•
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more pressure for discounts and write-offs.
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•
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selling to governmental agencies can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale;
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•
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government certification requirements applicable to our products may change and in doing so restrict our ability to sell into the U.S. federal government sector until we have attained the revised certification;
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•
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government demand and payment for our products and services may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products and services;
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•
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we sell our software to governmental agencies through our indirect channel partners, and these agencies may have statutory, contractual or other legal rights to terminate contracts with our distributors and resellers for convenience or due to a default, and any such termination may adversely impact our future results of operations; and
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•
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governments routinely investigate and audit government contractors' administrative processes, and any unfavorable audit could result in the government refusing to continue buying our platform, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit uncovers improper or illegal activities.
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•
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develop or enhance our products and subscriptions;
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•
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continue to expand our sales and marketing and research and development organizations;
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•
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acquire complementary technologies, products or businesses;
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•
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expand operations, in the United States or internationally;
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•
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hire, train and retain employees; or
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•
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respond to competitive pressures or unanticipated working capital requirements.
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•
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announcements of new products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;
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•
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changes in how customers perceive the effectiveness of our platform in protecting against advanced cyber-attacks or other reputational harm;
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•
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price and volume fluctuations in the overall stock market from time to time;
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•
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significant volatility in the market price and trading volume of technology companies in general and of companies in the IT security industry in particular;
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•
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fluctuations in the trading volume of our shares or the size of our public float;
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•
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actual or anticipated changes or fluctuations in our results of operations;
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•
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whether our results of operations meet the expectations of securities analysts or investors;
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•
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actual or anticipated changes in the expectations of investors or securities analysts;
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•
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litigation involving us, our industry, or both;
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•
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regulatory developments in the United States, foreign countries or both;
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•
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general economic conditions and trends;
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•
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major catastrophic events;
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•
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sales of large blocks of our common stock; or
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•
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departures of key personnel.
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|
Closing Bid
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|||||||
|
High
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Low
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||||||
2016
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||||||||
January 1 – March 31
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-
|
-
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||||||
April 1 – June 30
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-
|
-
|
||||||
July 1 - September 30
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-
|
-
|
||||||
October 1 – December 31
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-
|
-
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||||||
|
||||||||
2017
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||||||||
January 1 - March 31
|
-
|
-
|
||||||
April 1 – June 30
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-
|
-
|
||||||
July 1- September 30
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4.00
|
0.59
|
||||||
October 1 – December 31
|
0.90
|
0.45
|
Property and Equipment
|
Estimated Useful Life
|
Building improvements
|
15 years
|
Furniture, fixtures and equipment
|
7 years
|
Computer equipment
|
5 years
|
Useful Life
|
|
Patent Costs
|
20 years
|
Software Licenses
|
7 years
|
Software Development Costs
|
15 years
|
PAGE
|
||
Report of Independent Registered Public Accounting Firm
|
F - 2 | |
Consolidated Balance Sheets as of December 31, 2017 and 2016
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F - 4 | |
Consolidated Statements of Operations for the years ended December 31, 2017 and 2016
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F - 5 | |
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2017 and 2016
|
F - 6 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016
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F - 7 | |
Notes to Consolidated Financial Statements
|
F - 8 |
Name
|
Age
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Titles
|
Directors and Officers
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||
Robert Graham
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68
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Chairman, Chief Executive Officer, and President
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John Bluher
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59
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Chief Financial Officer, Treasurer and Secretary
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John Hayes
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50
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Chief Technology Officer and Director
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Robert Lentz
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65
|
Director
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Thomas Bruderman
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48
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Director
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J. Allen Kosowsky
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69
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Director
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Robert Zahm
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55
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Director
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Name and principal position
|
Year |
Salary
|
Bonus
|
Equity
Compensation
|
All other
compensation
|
Total
|
|||||||||||||||
Robert Graham, CEO and President
|
2017 |
$
|
225,000
|
$
|
100,000
|
(1)
|
-
|
-
|
$
|
325,000
|
|||||||||||
|
2016 |
$
|
225,000
|
-
|
-
|
-
|
$
|
225,000
|
|||||||||||||
|
2015 |
$
|
225,000
|
-
|
-
|
-
|
$
|
225,000
|
|||||||||||||
John Hayes, CTO
|
2017 |
$
|
180,000
|
(2)
|
$
|
100,000
|
(3)
|
-
|
-
|
$
|
280,000
|
||||||||||
|
2016 |
$
|
180,000
|
-
|
-
|
-
|
$
|
180,000
|
|||||||||||||
|
2015 |
$
|
180,000
|
-
|
-
|
-
|
-
|
||||||||||||||
John Bluher, CFO
|
2017 |
$
|
275,000
|
$
|
38,280
|
(4)
|
$
|
900,000
|
(5)
|
$
|
30,000
|
(6)
|
$
|
1,243,280
|
|||||||
|
2016 |
$
|
13,867
|
-
|
-
|
$
|
108,000
|
(7)
|
$
|
121,867
|
|||||||||||
|
2015 |
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
John B. Hofman, Former President (8) | 2017 | - | - | - | - | - | |||||||||||||||
2016 |
-
|
-
|
-
|
$
|
171,573
|
$
|
171,573
|
||||||||||||||
|
2015 |
-
|
-
|
-
|
$
|
174,695
|
$
|
174,695
|
|||||||||||||
Bruce P. Crane, Former Vice President (9) | 2017 | - | - | - | - | - | |||||||||||||||
|
2016 |
-
|
-
|
-
|
$
|
6,114
|
$
|
6,114
|
|||||||||||||
|
2015 |
-
|
-
|
-
|
$
|
5,076
|
$
|
5,076
|
(1)
|
Payment of Mr. Graham's 2017 bonus has been deferred as of this filing
|
(2)
|
$73,360 of Mr. Hayes' 2017 salary has been deferred as of this filing
|
(3)
|
Payment of Mr. Hayes' 2017 bonus has been deferred as of this filing
|
(4)
|
Represents performance bonuses paid to Mr. Bluher
|
(5)
|
Represents 1,500,000 shares of restricted common stock granted to Mr. Bluher
|
(6)
|
Represents a car allowance and cost of living adjustment of $2,500 per month
|
(7)
|
Represents 1099 payments to Mr. Bluher
|
(8)
|
All Other Compensation consists of: (i) payments made to Big John's Store LLC, a company managed and owned by John Hofman, under an Idaho Management Agreement with Big John's Store LLC for the provision of management services and office and warehouse space in the amount of $150,000 during 2016 and 2015, and $132,000 during 2014; (ii) medical insurance premiums in the amount of $13,823 during 2016, $16,045 during 2015 and $17,455 during 2014; and (iii) contributions to a Health Savings Account for the benefit of Mr. Hofman in the amount of $7,750 during 2016, $8,650 during 2015 and $6,550 during 2014.
|
(9)
|
All Other Compensation consists of: (i) expense reimbursement of $1,800 during 2016, 2015 and 2014 and (ii) medical insurance premiums in the amount of $4,314 during 2016, $3,276 during 2015 and $6,873 during 2014.
|
Director
|
Board Fees
(1)
|
Other ($)
|
Total ($)
|
|||||||||||
J. Allen Kosowsky
|
$
|
60,000
|
(2)
|
$
|
59,000
|
(6)
|
$
|
119,000
|
||||||
Thomas Bruderman
|
$
|
58,000
|
(3)
|
$
|
-
|
$
|
58,000
|
|||||||
Robert Lentz
|
$
|
56,000
|
(4)
|
$
|
-
|
$
|
56,000
|
|||||||
Robert Zahm
|
$
|
58,000
|
(5)
|
$
|
-
|
$
|
58,000
|
(1)
|
Amounts reported in this column represent the aggregate grant date fair value of restricted stock issued as payment of amounts owed
|
(2)
|
Amount paid through the issuance of 100,000 restricted shares of the Company's common stock at $0.60 per share. The common stock has a 10 month vesting period
|
(3)
|
Amount paid through the issuance of 96,666 restricted shares of the Company's common stock at $0.60 per share. The common stock has a 10 month vesting period
|
(4)
|
Amount paid through the issuance of 93,333 restricted shares of the Company's common stock at $0.60 per share. The common stock has a 10 month vesting period
|
(5)
|
Amount paid through the issuance of 96,666 restricted shares of the Company's common stock at $0.60 per share. The common stock has a 10 month vesting period
|
(6)
|
Represents fees paid for consulting services performed outside the scope of Mr. Kosowsky's board duties. Amount paid through the issuance of 98,334 restricted shares of the Company's common stock at $0.60 per share. The common stock has a 10 month vesting period
|
Name and Address of Beneficial Owner
(1)
|
Number of
Shares of
Common Stock
|
Amount of
Number of
Share
Equivalents
(2)
|
Total Beneficial Ownership
|
Percentage
of Class
|
||||||||||||
Principal Stockholders
|
||||||||||||||||
AltEnergy Cyber, LLC
(3)
137 Rowayton Ave
Norwalk, CT 06853
|
-
|
8,941,316
|
(4)
|
8,941,316
|
10.40
|
%
|
||||||||||
Conyers Investments, LLC
(5)
Phillips Point East #1001
777 S. Flagler Drive
West Palm Beach, FL 33401
|
6,311,006
|
704,178
|
(6)
|
7,015,184
|
9.02
|
%
|
||||||||||
Officers and Directors
(13)
|
||||||||||||||||
John Hayes
|
17,951,611
|
6,984,935
|
(7)
|
24,936,546
|
29,67
|
%
|
||||||||||
Robert Graham
|
4,545,716
|
637,950
|
(8)
|
5,183,666
|
6.67
|
%
|
||||||||||
John Bluher
|
1,500,000
|
-
|
-
|
1.95
|
%
|
|||||||||||
Robert Lentz
|
486,074
|
-
|
486,074
|
*
|
%
|
|||||||||||
Thomas Bruderman
(9)
|
366,667
|
4,350,397
|
(10)
|
4,717,064
|
5.79
|
%
|
||||||||||
Robert Zahm
|
96,667
|
5,022,207
|
(11)
|
5,118,874
|
6.24
|
%
|
||||||||||
J. Allen Kosowsky
|
326,109
|
294,448
|
(12)
|
620,557
|
*
|
%
|
||||||||||
All Officers and Directors
As Group (7 Persons)
|
25,272,844
|
17,289,937
|
42,562,781
|
55.24
|
%
|
(1)
|
The address for each named executive officer and director is the same address as the Company
|
(2)
|
Represents number of commons shares issuable upon exercise of warrants, options, and conversion of preferred stock
|
(3)
|
Russ Stidolph is the Managing Member of AltEnergy Cyber, LLC
|
(4)
|
Represents 4,026,020 shares of common stock issuable upon conversion of 402,602 shares of preferred stock and 4,915,304 shares of common stock issuable upon exercise of warrants
|
(5)
|
Christopher Uzpen is the Managing Member of Conyers Investments, LLC
|
(6)
|
Represents shares of common stock issuable upon exercise of warrants
|
(7)
|
Represents 417,650 shares of common stock issuable upon conversion of 41,765 shares of preferred stock and 6,567,285 shares of common stock issuable upon exercise of warrants
|
(8)
|
Represents 637,950 shares of common stock issuable upon conversion of 63,795 shares of preferred stock
|
(9)
|
Includes shares owned by Mr. Bruderman and Mag Ventures, LLC of which Mr. Bruderman is the Managing Member
|
(10)
|
Represents 3,154,710 shares of common stock issuable upon conversion of 315,471 shares of preferred stock and 1,195,687 shares of common stock issuable upon exercise of warrants
|
(11)
|
Represents 4,855,540 shares of common stock issuable upon conversion of 485,554 shares of preferred stock and 166,667 shares of common stock issuable upon exercise of warrants
|
(12)
|
Represents 83,340 shares of common stock issuable upon conversion of 8,334 shares of preferred stock and 211,108 shares of common stock issuable upon exercise of warrants
|
(13)
|
Addresses of Directors and Officers is the Company address
|
Year Ended
|
||||||||
December 31,
|
||||||||
2017
|
2016
|
|||||||
Audit Fees
|
$
|
104,312
|
$
|
40,000
|
||||
Audit-Related Fees
|
-
|
-
|
||||||
Tax Fees
|
-
|
-
|
||||||
All Other Fees
|
-
|
-
|
||||||
|
||||||||
Total
|
$
|
104,312
|
$
|
40,000
|
Exhibit
Number
|
Title of Document
|
|
3.1
|
||
3.2
|
||
4.1
|
||
4.2
|
||
10.1
|
||
10.2
|
||
10.3
|
||
10.4
|
||
10.5
|
||
10.6
|
||
10.7
|
||
10.8
|
||
10.9
|
||
10.10
|
||
10.11
|
||
10.12
|
Form of convertible note issued December 21, 2017 and December 22, 2017 *
|
|
31.1
|
Section 302 Certification of Chief Executive and Chief Executive Officer *
|
|
31.2
|
Section 302 Certification of Chief Executive and Chief Financial Officer *
|
|
32.1
|
Section 1350 Certification of Chief Executive and Chief Executive Officer *
|
|
32.2
|
Section 1350 Certification of Chief Executive and Chief Financial Officer *
|
|
101 INS
|
XBRL Instance Document**
|
|
101 SCH
|
XBRL Schema Document **
|
|
101 CAL
|
XBRL Calculation Linkbase Document **
|
|
101 DEF
|
XBRL Definition Linkbase Document **
|
|
101 LAB
|
XBRL Labels Linkbase Document **
|
|
101 PRE
|
XBRL Presentation Linkbase Document **
|
(1)
|
Incorporated by reference to the Company's June 30, 2017 Report on Form 10-Q filed August 14, 2017.
|
(2)
|
Incorporated by reference to Exhibit Numbers 3.1 and 3.2 of the Company's registration statement on Form 10 filed with the SEC on May 14, 2010.
|
(3)
|
Incorporated by reference to the Company's September 30, 2016 Report on Form 10-Q filed November 14, 2016.
|
(4)
|
Incorporated by reference to Exhibit Number 10.1 of the current report on Form 8-K filed with the SEC on September 7, 2016 and amended on Form 8-K filed with the SEC on February 24, 2017.
|
(5)
|
Incorporated by reference to the Company's March 31, 2017 Report on Form 10-Q filed May 15, 2017.
|
BlackRidge Technology International, Inc.
|
|
Dated: April 2, 2018
|
By /s/ Robert Graham
|
Robert Graham
|
|
Chief Executive Officer and President
|
Dated: April 2, 2018
|
By
/s/ Robert Graham
|
|
Robert Graham
|
||
Chief Executive Officer and President
|
||
Dated: April 2, 2018
|
By
/s/ John Bluher
|
|
John Bluher
|
||
Financial Officer
|
||
Dated: April 2, 2018
|
By
/s/ J. Allen Kosowsky
|
|
J. Allen Kosowsky
|
||
Dated: April 2, 2018
|
By
/s/ Thomas Bruderman
|
|
Thomas Bruderman
|
||
Director
|
||
Dated: April 2, 2018
|
By
/s/ Robert Zahm
|
|
Robert Zahm
|
||
Director
|
||
Dated: April 2, 2018
|
By
/s/ Robert Lentz
|
|
Robert Lentz
|
||
Director
|
Report of Independent Registered Public Accounting Firms
|
F-2
|
Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016
|
F-4
|
Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2016
|
F-5
|
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2017 and 2016
|
F-6
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and 2016
|
F-7
|
Notes to Consolidated Financial Statements
|
F-8
|
Haynie & Company
We have served as the Company's auditor since 2018.
|
|
Salt Lake City, Utah
April 2, 2018
|
December 31,
|
December 31,
|
|||||||
2017
|
2016
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash
|
$
|
421,869
|
$
|
57,033
|
||||
Accounts receivable
|
217,380
|
-
|
||||||
Inventory
|
40,408
|
-
|
||||||
Prepaid expenses
|
361,642
|
100,954
|
||||||
Total Current Assets
|
1,041,299
|
157,987
|
||||||
Property and equipment, net
|
87,628
|
-
|
||||||
Intangible assets, net
|
7,043,644
|
5,923,543
|
||||||
Total Assets
|
$
|
8,172,571
|
$
|
6,081,530
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
2,633,610
|
$
|
2,038,273
|
||||
Accounts payable and accrued expenses – related party
|
68,060
|
709,725
|
||||||
Accrued interest
|
59,545
|
52,888
|
||||||
Accrued interest – related party
|
180,066
|
1,241,911
|
||||||
Advances – related party
|
65,000
|
110,000
|
||||||
Wages payable
|
2,133,210
|
10,696,311
|
||||||
Deferred revenue
|
8,760
|
19,988
|
||||||
Short-term notes payable
|
50,232
|
89,221
|
||||||
Current portion of long term debt
|
400,000
|
400,000
|
||||||
Convertible notes, short term – related party
|
521,172
|
284,172
|
||||||
Total Current Liabilities
|
6,119,655
|
15,642,489
|
||||||
Noncurrent Liabilities
|
||||||||
Contingent liability
|
37,500
|
37,500
|
||||||
Notes payable
|
366,658
|
800,000
|
||||||
Convertible notes, long term, net of discounts
|
80,404
|
-
|
||||||
Convertible notes payable, long term – related party
|
-
|
3,712,638
|
||||||
Total Liabilities
|
6,604,217
|
20,192,627
|
||||||
Stockholders' Equity (Deficit)
|
||||||||
Preferred Stock, Par Value $0.0001, 10,000,000 shares authorized; 3,639,783 and 3,671,316 issued and outstanding at December 31, 2017 and 2016, respectively
|
3,640
|
3,671
|
||||||
Common Stock, Par Value $0.0001, 200,000,000 shares authorized; 77,063,171 and 13,325,681 issued and outstanding at December 31, 2017 and 2016, respectively
|
77,063
|
13,326
|
||||||
Additional paid-in capital
|
51,384,027
|
20,287,638
|
||||||
Accumulated deficit
|
(49,896,376
|
)
|
(34,550,732
|
)
|
||||
Subscription payable
|
-
|
135,000
|
||||||
Total Stockholders' Equity (Deficit)
|
1,568,354
|
(14,111,097
|
)
|
|||||
Total Liabilities and Stockholders' Equity (Deficit)
|
$
|
8,172,571
|
$
|
6,081,530
|
|
For the Year Ended
December 31,
|
|||||||
|
2017
|
2016
|
||||||
|
||||||||
Revenues
|
$
|
81,968
|
$
|
84,023
|
||||
Cost of Goods Sold
|
10,260
|
-
|
||||||
Gross Profit
|
70,708
|
84,023
|
||||||
Operating Expenses:
|
||||||||
Engineering
|
304,605
|
37,282
|
||||||
Sales and marketing
|
21,888
|
25,740
|
||||||
General and administrative
|
12,996,967
|
5,172,238
|
||||||
Total operating expenses
|
13,323,460
|
5,235,260
|
||||||
|
||||||||
Loss From Operations
|
(13,251,752
|
)
|
(5,151,237
|
)
|
||||
Other Income (Expense)
|
||||||||
Interest income
|
-
|
205
|
||||||
Loss on extinguishment of debt
|
(913,238
|
)
|
-
|
|||||
Interest expense
|
(82,845
|
)
|
(1,415,426
|
)
|
||||
Interest expense – related party
|
(604,145
|
)
|
(649,362
|
)
|
||||
Total other income (expense)
|
(1,600,228
|
)
|
(2,064,583
|
)
|
||||
Net Loss Before Income Taxes
|
(14,851,980
|
)
|
(7,215,820
|
)
|
||||
Income Tax
|
-
|
-
|
||||||
Net Loss From Continuing Operations
|
(14,851,980
|
)
|
(7,215,820
|
)
|
||||
Discontinued Operations
|
||||||||
Loss on disposal of discontinued operations
|
(484,927
|
)
|
-
|
|||||
Loss from discontinued operations
|
(8,737
|
)
|
-
|
|||||
Loss on discontinued operations
|
(493,664
|
)
|
-
|
|||||
|
||||||||
Net Loss
|
$
|
(15,345,644
|
)
|
$
|
(7,215,820
|
)
|
||
Loss From Continuing Operations per Common Share - Basic and Diluted
|
$
|
(0.37
|
)
|
$
|
(0.54
|
)
|
||
Loss From Discontinued Operations per Common Share - Basic and Diluted
|
$
|
(0.01
|
)
|
$
|
-
|
|||
Weighted Average Shares Outstanding - Basic and Diluted
|
40,212,024
|
13,325,681
|
Shares
Outstanding - Preferred
|
Preferred Stock
|
Shares
Outstanding - Common
|
Common Stock
|
Additional
Paid-in
Capital
|
Subscriptions
Payable
|
Accumulated
Deficit
|
Total
Stockholders'
Deficit
|
|||||||||||||||||||||||||
Balance as of December 31, 2015
|
9,804
|
$
|
10
|
13,325,681
|
$
|
13,326
|
$
|
3,110,821
|
$
|
-
|
$
|
(27,334,912
|
)
|
$
|
(24,210,755
|
)
|
||||||||||||||||
Issuance of preferred stock
|
608,922
|
609
|
-
|
-
|
3,130,395
|
135,000
|
-
|
3,266,004
|
||||||||||||||||||||||||
Note conversions
|
3,052,590
|
3,052
|
-
|
-
|
14,046,422
|
-
|
-
|
14,049,474
|
||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(7,215,820
|
)
|
(7,215,820
|
)
|
||||||||||||||||||||||
Balance as of December 31, 2016
|
3,671,316
|
3,671
|
13,325,681
|
13,326
|
20,287,638
|
135,000
|
(34,550,732
|
)
|
(14,111,097
|
)
|
||||||||||||||||||||||
Common share conversion
|
50,000
|
50
|
(500,000
|
)
|
(500
|
)
|
450
|
-
|
-
|
-
|
||||||||||||||||||||||
Preferred share conversion
|
(144,035
|
)
|
(144
|
)
|
1,586,862
|
1,587
|
(1,443
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||
Issuance of preferred stock
|
62,502
|
63
|
-
|
-
|
374,937
|
(100,000
|
)
|
-
|
275,000
|
|||||||||||||||||||||||
Issuance of common stock
|
-
|
-
|
18,289,121
|
18,289
|
8,499,161
|
(35,000
|
)
|
-
|
8,842,450
|
|||||||||||||||||||||||
Issuance of restricted common stock in settlement of wages payable
|
-
|
-
|
22,064,105
|
22,064
|
13,216,389
|
-
|
-
|
13,238,453
|
||||||||||||||||||||||||
Issuance of restricted common stock in settlement of accounts payable
|
-
|
-
|
396,726
|
396
|
237,639
|
-
|
-
|
238,035
|
||||||||||||||||||||||||
Issuance of stock in conjunction with contracts
|
-
|
-
|
1,122,866
|
1,123
|
691,247
|
-
|
-
|
692,370
|
||||||||||||||||||||||||
Issuance of stock for warrant exercise
|
-
|
-
|
1,055,556
|
1,056
|
42,278
|
-
|
-
|
43,334
|
||||||||||||||||||||||||
Issuance of stock for debt conversion
|
-
|
-
|
10,757,254
|
10,757
|
5,367,871
|
-
|
-
|
5,378,628
|
||||||||||||||||||||||||
Business acquisition
|
-
|
-
|
8,965,000
|
8,965
|
485,551
|
-
|
-
|
494,516
|
||||||||||||||||||||||||
Issuance of warrants in conjunction with debt conversion
|
-
|
-
|
-
|
-
|
913,238
|
-
|
-
|
913,238
|
||||||||||||||||||||||||
Beneficial conversion feature on convertible debt
|
-
|
-
|
-
|
-
|
536,165
|
-
|
-
|
536,165
|
||||||||||||||||||||||||
Issuance of warrants in conjunction with debt
|
-
|
-
|
-
|
-
|
567,166
|
-
|
-
|
567,166
|
||||||||||||||||||||||||
Issuance of warrants in conjunction with advances
|
-
|
-
|
-
|
-
|
27,945
|
-
|
-
|
27,945
|
||||||||||||||||||||||||
Issuance of warrants in conjunction with contracts
|
-
|
-
|
-
|
-
|
27,695
|
-
|
-
|
27,695
|
||||||||||||||||||||||||
Share based compensation
|
-
|
-
|
-
|
-
|
110,100
|
-
|
-
|
110,100
|
||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(15,345,644
|
)
|
(15,345,644
|
)
|
||||||||||||||||||||||
Balance as of December 31, 2017
|
3,639,783
|
$
|
3,640
|
77,063,171
|
$
|
77,063
|
$
|
51,384,027
|
$
|
-
|
$
|
(49,896,376
|
)
|
$
|
1,568,354
|
Year Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Cash Flows From Operating Activities
|
||||||||
Net loss
|
$
|
(15,345,644
|
)
|
$
|
(7,215,820
|
)
|
||
Net loss from discontinued operations
|
493,664
|
-
|
||||||
Net loss from continuing operations
|
(14,851,980
|
)
|
(7,215,820
|
)
|
||||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
443,811
|
365,134
|
||||||
Amortization of debt discounts
|
33,735
|
10,424
|
||||||
Common stock issued in conjunction with contracts
|
692,370
|
-
|
||||||
Warrants issued in conjunction with advances
|
27,945
|
-
|
||||||
Warrants issued in conjunction with contracts
|
27,695
|
-
|
||||||
Share based compensation
|
110,100
|
-
|
||||||
Loss on extinguishment
|
913,238
|
-
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(205,380
|
)
|
50,000
|
|||||
Inventory
|
(40,408
|
)
|
-
|
|||||
Prepaid expenses
|
(260,688
|
)
|
(9,017
|
)
|
||||
Accounts payable and accrued expenses
|
833,372
|
854,306
|
||||||
Accounts payable and accrued expenses – related party
|
(564,665
|
)
|
270,489
|
|||||
Accrued interest
|
6,657
|
1,404,691
|
||||||
Accrued interest – related party
|
604,145
|
649,362
|
||||||
Deferred revenue
|
(11,228
|
)
|
(7,132
|
)
|
||||
Wages payable
|
4,447,647
|
1,471,942
|
||||||
Net Cash Used in Operating Activities, Continuing Operations
|
(7,793,634
|
)
|
(2,155,621
|
)
|
||||
Net Cash Provided by Operating Activities, Discontinued Operations
|
45,028
|
-
|
||||||
Net Cash Used in Operating Activities
|
(7,748,806
|
)
|
(2,155,621
|
)
|
||||
Cash Flows From Investing Activities
|
||||||||
Proceeds from business acquisition
|
10,559
|
-
|
||||||
Purchase of property and equipment
|
(88,418
|
)
|
-
|
|||||
Purchases of intangible assets
|
(1,347,417
|
)
|
(1,056,370
|
)
|
||||
Net Cash Used in Investing Activities, Continuing Operations
|
(1,425,276
|
)
|
(1,056,370
|
)
|
||||
Net Cash Used in Investing Activities, Discontinued Operations
|
-
|
-
|
||||||
Net Cash Used in Investing Activities
|
(1,425,276
|
)
|
(1,056,370
|
)
|
||||
Cash Flows From Financing Activities
|
||||||||
Proceeds from sale of common stock
|
8,482,450
|
-
|
||||||
Proceeds from sale of preferred stock
|
275,000
|
3,131,004
|
||||||
Proceeds from warrant exercise
|
43,334
|
-
|
||||||
Proceeds from subscriptions payable
|
-
|
135,000
|
||||||
Proceeds from issuance of short term convertible notes
|
1,250,000
|
-
|
||||||
Proceeds from advances – related party
|
115,000
|
-
|
||||||
Repayments of short term notes
|
(38,989
|
)
|
-
|
|||||
Repayments of short term convertible notes
|
(100,000
|
)
|
-
|
|||||
Repayments on long term debt
|
(433,342
|
)
|
-
|
|||||
Net Cash Provided by Financing Activities, Continuing Operations
|
9,593,453
|
3,266,004
|
||||||
Net Cash Used in Financing Activities, Discontinued Operations
|
(54,735
|
)
|
-
|
|||||
Net Cash Provided by Financing Activities
|
9,538,718
|
3,266,004
|
Net Increase In Cash
|
364,836
|
54,013
|
||||||
Cash, Beginning of Period
|
57,033
|
3,020
|
||||||
Cash, End of Period
|
$
|
421,869
|
$
|
57,033
|
Non-Cash Investing and Financing Activities
|
||||||||
Wages payable included in capitalized intangible assets
|
$
|
215,705
|
$
|
532,324
|
||||
Wages payable settled with common stock
|
$
|
13,238,453
|
$
|
-
|
||||
Accounts payable settled with common stock
|
$
|
238,035
|
$
|
-
|
||||
Common stock converted to preferred stock
|
$
|
500
|
$
|
-
|
||||
Common stock issued for debt and interest conversion
|
$
|
5,378,628
|
$
|
-
|
||||
$
|
483,957
|
$
|
-
|
|||||
Warrants issued in conjunction with debt agreements
|
$
|
567,166
|
$
|
-
|
||||
Beneficial conversion feature on convertible debt
|
$
|
536,165
|
$
|
-
|
||||
Warrants issued and expensed in conjunction with advances
|
$
|
27,945
|
$
|
-
|
||||
Notes payable issued to settle liabilities
|
$
|
-
|
$
|
1,200,000
|
||||
Preferred stock issued for accrued interest
|
$
|
-
|
$
|
4,097,831
|
||||
Preferred stock issued for accrued interest – related party
|
$
|
-
|
$
|
268,880
|
||||
Preferred stock issued for convertible notes
|
$
|
-
|
$
|
9,452,000
|
||||
Preferred stock issued for convertible notes – related party
|
$
|
-
|
$
|
230,763
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid for interest
|
$
|
16,654
|
$
|
311
|
||||
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
|
Revenue
|
Accounts Receivable
|
||||||||||||||
Year Ended December 31,
|
December 31,
|
|||||||||||||||
Customers
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Customer A
|
41
|
%
|
33
|
%
|
-
|
-
|
||||||||||
Customer B
|
34
|
%
|
-
|
%
|
-
|
-
|
||||||||||
Customer C
|
12
|
%
|
55
|
%
|
15
|
%
|
-
|
|
As of
December 31,
2017
|
As of
December 31,
2016
|
||||||
Inventory
|
$
|
376,063
|
$
|
335,655
|
||||
Less: allowance for obsolescence
|
(335,655
|
)
|
(335,655
|
)
|
||||
|
$
|
40,408
|
$
|
-
|
Property and Equipment
|
Estimated Useful Life
|
Building improvements
|
15 years
|
Furniture, fixtures and equipment
|
7 years
|
Computer equipment
|
5 years
|
|
Useful Life
|
Patent Costs
|
20 years
|
Software Licenses
|
7 years
|
Software Development Costs
|
15 years
|
|
As of
December 31,
2017
|
As of
December 31,
2016
|
Estimated
Useful
Life
|
||||||
Building improvements
|
55,390
|
-
|
15 years
|
||||||
Furniture, fixtures and equipment
|
26,101
|
-
|
7 years
|
||||||
Computer equipment
|
8,927
|
-
|
5 years
|
||||||
Less: accumulated depreciation
|
(790
|
)
|
-
|
|
|||||
|
$
|
87,628
|
$
|
-
|
|
|
As of
December 31,
2017
|
As of
December 31,
2016
|
Estimated
Useful Life
|
||||||
Patent Costs
|
397,417
|
422,995
|
15 years
|
||||||
Software Licenses
|
58,260
|
58,260
|
7 years
|
||||||
Software Development Costs
|
8,020,775
|
6,432,075
|
5 years
|
||||||
Less: accumulated amortization
|
(1,432,808
|
)
|
(989,787
|
)
|
|
||||
|
$
|
7,043,644
|
$
|
5,923,543
|
|
December 31,
2017
|
December 31,
2016
|
|||||||
Beginning Balance
|
$
|
89,221
|
$
|
89,221
|
||||
Notes acquired in business acquisition
|
208,811
|
-
|
||||||
Repayments – continuing operations
|
(38,989
|
)
|
-
|
|||||
Repayments – discontinued operations
|
(53,132
|
)
|
-
|
|||||
Notes divested in disposal of discontinued operations
|
(155,679
|
)
|
-
|
|||||
Ending Balance
|
$
|
50,232
|
$
|
89,221
|
December 31,
2017
|
December 31,
2016
|
|||||||
Beginning Balance
|
$
|
1,200,000
|
$
|
-
|
||||
Notes acquired in business acquisition
|
136,830
|
1,200,000
|
||||||
Repayments – continuing operations
|
(433,342
|
)
|
-
|
|||||
Repayments – discontinued operations
|
(1,603
|
)
|
-
|
|||||
Notes divested in disposal of discontinued operations
|
(135,227
|
)
|
-
|
|||||
Ending Balance
|
$
|
766,658
|
$
|
1,200,000
|
||||
Short Term Portion of Long Term Debt
|
$
|
400,000
|
$
|
400,000
|
||||
Long Term Debt
|
$
|
366,658
|
$
|
800,000
|
December 31,
2017
|
December 31,
2016
|
|||||||
Beginning Balance
|
$
|
3,996,810
|
$
|
13,815,094
|
||||
Proceeds from issuance of convertible notes, net of issuance discounts
|
146,669
|
-
|
||||||
Proceeds from issuance of convertible notes – related party
|
237,000
|
|||||||
Repayments
|
(100,000
|
)
|
-
|
|||||
Conversion of notes payable into common stock
|
(3,712,638
|
)
|
||||||
Conversion of notes payable into preferred stock
|
-
|
(9,452,000
|
)
|
|||||
Conversion of related party notes payable into preferred stock
|
-
|
(230,763
|
)
|
|||||
Settlement agreements
|
-
|
(145,945
|
)
|
|||||
Amortization of discounts
|
33,735
|
10,424
|
||||||
Ending Balance
|
$
|
601,576
|
$
|
3,996,810
|
||||
Convertible notes, short term
|
$
|
1,150,000
|
$
|
-
|
||||
Convertible notes, short term – related party
|
$
|
521,172
|
$
|
284,172
|
||||
convertible notes, long term – related party
|
$
|
-
|
$
|
3,712,638
|
||||
Debt discounts
|
$
|
1,069,596
|
$
|
-
|
Year Ending December 31,
|
||||
2018
|
$
|
281,646
|
||
2019
|
259,851
|
|||
2020
|
209,559
|
|||
2021
|
214,107
|
|||
2022
|
218,654
|
|||
2023 and thereafter
|
18,569
|
|||
Total minimum lease payments
|
$
|
1,202,386
|
December 31,
|
December 31,
|
|||||||||
Party Name:
|
Relationship:
|
Nature of transactions:
|
2017
|
2016
|
||||||
Jay Wright
|
Corporate Counsel
|
Consulting fees
|
$
|
-
|
$
|
355,795
|
||||
John Hayes
|
Chief Technology Officer
|
Expense reimbursement
|
55,254
|
308,485
|
||||||
Robert Graham
|
Chairman and Chief Executive Officer
|
Expense reimbursement
|
6,806
|
45,445
|
||||||
Robert Graham
|
Chairman and Chief Executive Officer
|
Rent
|
6,000
|
-
|
||||||
|
|
|
$
|
68,060
|
$
|
709,725
|
December 31,
|
December 31,
|
||||||||
Party Name:
|
Relationship:
|
2017
|
2016
|
||||||
John Hayes
|
Chief Technology Officer
|
$
|
-
|
$
|
110,000
|
||||
Thomas Bruderman
|
Director and significant shareholder
|
65,000
|
-
|
||||||
|
|
$
|
65,000
|
$
|
110,000
|
Stock price on the valuation date
|
$
|
0.32 – 0.50
|
||
Warrant exercise price
|
$
|
0.10 - 0.70
|
||
Dividend yield
|
0.00
|
%
|
||
Years to maturity
|
5.0
|
|||
Risk free rate
|
1.50 – 2.16
|
%
|
||
Expected volatility
|
51.35 - 55.43
|
%
|
Employee and Director Options Outstanding
|
Weighted
Average
Exercise
Price
|
Weighted Average
Remaining Life
|
Weighted
Average
Grant Date
Fair Value
|
||||||||||
Beginning Balance – December 31, 2016
|
-
|
||||||||||||
Granted
|
5,570,000
|
$
|
0.60
|
5 years
|
$
|
0.28
|
|||||||
Exercised
|
-
|
||||||||||||
Cancelled
|
-
|
||||||||||||
Ending Balance – December 31, 2017
|
5,570,000
|
$
|
0.60
|
4.65 years
|
$
|
0.28
|
|||||||
Exercisable options
|
392,958
|
$
|
0.60
|
4.65 years
|
$
|
0.28
|
Options Outstanding
|
Option Exercisable
|
|||||||||||||||||||||||||
Exercise Price Range |
Number
Outstanding |
Weighted Average
Remaining Contractual Life (in years) |
Weighted Average
Exercise Price |
Number
Exercisable |
Weighted
Average Exercise Price |
Intrinsic Value
|
||||||||||||||||||||
$
|
0.60
|
5,177,042
|
4.65
|
$
|
0.60
|
392,958
|
$
|
0.60
|
19,648
|
Assets
|
||||
Accounts receivable
|
$
|
40,044
|
||
Deposits and prepaid expenses
|
90,559
|
|||
Inventory
|
1,157,555
|
|||
Property and equipment
|
117,254
|
|||
Intangible assets
|
62,820
|
|||
Total Assets
|
1,468,232
|
|||
Liabilities
|
||||
Accounts payable and accrued expenses
|
692,399
|
|||
Notes payable – short term
|
64,000
|
|||
Notes payable – short term, related party
|
91,679
|
|||
Line of credit
|
135,227
|
|||
Total Liabilities
|
983,305
|
|||
Loss on disposal
|
$
|
484,927
|
December 31,
2017
|
December 31,
2016
|
|||||||
Net operating loss & credit carry forwards
|
$
|
7,897,392
|
$
|
10,315,734
|
||||
Inventory obsolescence reserve
|
77,993
|
117,616
|
||||||
Accrued wages, related party
|
1,216,954
|
867,078
|
||||||
Accrued interest – convertible debt, related party
|
290,845
|
438,606
|
||||||
Depreciation and amortization
|
(125,749
|
)
|
3,687
|
|||||
Other tax adjustments
|
3,566
|
4,527
|
||||||
Deferred Revenue
|
(4,626 | ) | - | |||||
Valuation allowance
|
(9,356,375
|
)
|
(11,747,248
|
)
|
||||
|
$
|
-
|
$
|
-
|
|
2017
|
2016
|
||||||
Tax (benefit) at the US statutory rate of 22%
|
$
|
2,390,872
|
$
|
(2,453,379
|
)
|
|||
Change in valuation allowance
|
(2,390,872
|
)
|
2,453,379
|
|||||
|
$
|
-
|
$
|
-
|
a.
|
Events of Default
. "Event of Default," wherever used herein, means any one of the following events:
|
i.
|
default in the payment of the principal of this Note at its maturity or any interest payment; or
|
ii.
|
the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Obligor in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Obligor a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Obligor under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Obligor or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or
|
iii.
|
the commencement by The Obligor of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of The Obligor in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of The Obligor or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by The Obligor in furtherance of any such action; or
|
iv.
|
The dissolution of The Obligor; or
|
v.
|
Any representation or warranty made to the Holder by The Obligor pursuant to this Note is false or misleading in any material respect; or
|
vi.
|
The Obligor fails to observe or perform any material covenant or agreement made by the Obligor to the Holder pursuant to this Note.
|
b.
|
Acceleration of Maturity
. If any Event of Default occurs and is continuing, then and in every such case the Holder may declare the principal on this Note to be due and payable immediately, by a notice in writing to the Obligor, and upon any such declaration such principal shall become immediately due and payable.
|
c.
|
Payment of Expenses
. If any part of the Aggregate Balance is not paid when due, or if the Obligor fails to perform any obligation required hereunder, the Obligor shall pay any and all reasonable costs of collection or enforcement of all outstanding obligations under this Note incurred by the Holder, including reasonable attorneys' fees and expenses.
|
a.
|
This Note may be amended only by a writing signed by the Obligor and the Holder. All covenants and agreements in this Note by the Obligor shall bind its successors and assigns.
|
b.
|
In case any provision in this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Specifically, if the interest rate on this Note is deemed to exceed some statutory maximum, the interest rate will be reduced to the legal maximum.
|
c.
|
The Obligor shall pay any stamp, transfer or other taxes or regulatory fees that may be imposed on any transaction contemplated by this Note.
|
d.
|
This Note shall be governed by and construed in accordance with the laws of the State of Nevada without regard to the principles of conflicts of laws thereof.
|
e.
|
This Note constitute the full and entire understanding between the Obligor and the Holder with respect to the subject matter hereof and thereof.
|
f.
|
This Note is binding on the Obligor, and the Obligor, and all sureties, guarantors and endorsers hereby waive presentment, demand, notice and protest and any defense by reason of an extension of time for payment or other indulgences. Failure of, or delay by, the Holder to assert any right herein shall not be deemed to be a waiver thereof, nor shall any such failure or delay on any one or more occasions be deemed to prohibit or waive the same or any other right on any future occasion.
|
1. |
I have reviewed this report on Form 10-K of BlackRidge Technology International, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: April 2, 2018
|
/s/ Robert Graham
|
Robert Graham
|
|
Executive Officer and President
|
1. |
I have reviewed this report on Form 10-K of BlackRidge Technology International, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: April 2, 2018
|
/s/ John Bluher
|
John Bluher
|
|
Chief Financial Officer
|
April 2, 2018
|
/s/ Robert Graham
|
Robert Graham
|
|
Chief Executive Officer and President
|
April 2, 2018
|
/s/ John Bluher
|
John Bluher
|
|
Chief Financial Officer
|