Quarterly Report (10-q)

Date : 09/13/2016 @ 4:37PM
Source : Edgar (US Regulatory)
Stock : Brk (PC) (BRKK)
Quote : 0.27  0.01 (3.85%) @ 4:04PM
Brk share price Chart

Quarterly Report (10-q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended July 31, 2016

 

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

 

From transition period from ____________  to ____________

 

Commission File No.: ______________

 

BRK, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

26-2840468

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

3871 S. Valley View Blvd, Unit 70 Las Vegas, Nevada

 

89103

(Address of principal executive offices)

 

(Zip Code)

 

(702) 572-8050

(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 such 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.  Yes  x 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). Yes  ¨ No x

 

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

 

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

 

As of September 13, 2016 the registrant had 48,083,200 shares of common stock outstanding.

 

 
 
 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

 

Item 1:

Financial Statements

4

 

Balance Sheets (Unaudited) as of July 31, 2016 and April 30, 2016

5

 

Statements of Operations (Unaudited) for the Three Months Ended July 31, 2016 and 2015

6

 

Statements of Cash Flows (Unaudited) for the Three Months Ended July 31, 2016 and 2015

7

 

Notes to Financial Statements (Unaudited)

8

 

 

 

 

 

 

Item 2:

Management's Discussion and Analysis of Financial Condition and Results of Operations

10

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

11

Item 4T:

Controls and Procedures

11

   

 

PART II – OTHER INFORMATION

   

 

Item 1:

Legal Proceedings

12

Item 1A:

Risk Factors

12

Item 2:

Unregistered Sales of Securities and Use of Proceeds

12

Item 3:

Default upon Senior Securities

12

Item 4:

Mine Safety Information

12

Item 5:

Other information

12

Item 6:

Exhibits

13

 

 

 

Signatures

14

 

 
2
 

 

Reference in this report to "BRK" "we," "us," and "our" refer to BRK, Inc.

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as "may," "expect," "believe," "anticipate," "estimate," "project," or "continue" or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

 

 
3
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1:  FINANCIAL STATEMENTS

 

The financial information set forth below with respect to our statements of operations for the three months ended July 31, 2016 and 2015 is unaudited. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the three months ended July 31, 2016, are not necessarily indicative of results to be expected for any subsequent period. Our year end is April 30.

 

 
4
 

 

BRK, INC.

BALANCE SHEETS

(Unaudited)

 

 

 

July 31,

 

 

April 30,

 

 

 

2016

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 2,832

 

 

$ 4,612

 

Inventory

 

 

808

 

 

 

808

 

Total current assets

 

 

3,640

 

 

 

5,420

 

 

 

 

 

 

 

 

 

 

Fixed assets

 

 

 

 

 

 

 

 

Production equipment, net of accumulated depreciation of $20,853 and $18,835, respectively

 

 

3,037

 

 

 

5,055

 

Other asset

 

 

 

 

 

 

 

 

Patent application, net of accumulated amortization of $25,132 and $0, respectively

 

 

1,574,868

 

 

 

--

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 1,581,545

 

 

$ 10,475

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expense

 

$ 17,584

 

 

$ 18,264

 

Accrued compensation - related party

 

 

106,690

 

 

 

99,950

 

Convertible notes payable - related party

 

 

7,089

 

 

 

7,089

 

Convertible notes payable

 

 

115,500

 

 

 

115,500

 

Short term debt - related party

 

 

104,415

 

 

 

86,540

 

Short term debt

 

 

44,900

 

 

 

44,900

 

Total current liabilities

 

 

396,178

 

 

 

372,243

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

 

Preferred shares, par value $0.001, 1,000,000 shares authorized;

 

 

 

 

 

 

 

 

none issued and outstanding as of July 31, 2016 and April 30, 2016

 

 

-

 

 

 

-

 

Common stock, par value $0.001, 100,000,000 shares authorized,

 

 

 

 

 

 

 

 

48,083,200 and 43,083,200 issued and outstanding as of July 31, 2016 and April 30, 2016 respectively

 

 

48,083

 

 

 

43,083

 

Additional paid-in capital

 

 

1,585,967

 

 

 

(9,033 )

Accumulated deficit

 

 

(448,683 )

 

 

(395,818 )

Total stockholders' deficit

 

 

1,185,367

 

 

 

(361,768 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

 

$ 1,581,545

 

 

$ 10,475

 

 

The accompanying notes are an integral part of the unaudited financial statements.

 

 
5
 

 

BRK, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

   

 

 

Three Months Ended July 31,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

Revenue

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

24,258

 

 

 

19,686

 

Depreciation and amortization

 

 

27,150

 

 

 

1,317

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(51,408 )

 

 

(21,003 )

 

 

 

 

 

 

 

 

 

Other expense

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,457 )

 

 

(1,020 )

 

 

 

 

 

 

 

 

 

Net loss

 

$ (52,865 )

 

$ (22,023 )

 

 

 

 

 

 

 

 

 

Net loss per common share basic and diluted

 

$ (0.00 )

 

$ (0.00 )

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding: basic and diluted

 

 

47,757,113

 

 

 

43,083,200

 

 

The accompanying notes are an integral part of the unaudited financial statements.

 

 
6
 

 

BRK, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended July 31,

 

 

 

2016

 

 

2015

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net loss

 

$ (52,865 )

 

$ (22,023 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,150

 

 

 

1,317

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase (decrease) in accounts payable and accrued expense

 

 

(680 )

 

 

2,170

 

Increase in accrued compensation - related party

 

 

6,740

 

 

 

7,060

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(19,655 )

 

 

(11,476 )

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from notes payable - related party

 

 

18,000

 

 

 

18,000

 

Principal payments on debt - related party

 

 

(125 )

 

 

--

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

17,875

 

 

 

18,000

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(1,780 )

 

 

6,524

 

Cash at beginning of period

 

 

4,612

 

 

 

1,047

 

Cash at end of period

 

$ 2,832

 

 

$ 7,571

 

 

 

 

 

 

 

 

 

 

SUPPLEMENT DISCLOSURE

 

 

 

 

 

 

 

 

Interest paid

 

$ --

 

 

$ -

 

Income taxes paid

 

 

--

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NON CASH TRANSACTIONS

 

 

 

 

 

 

 

 

Common stock issued for patent application

 

$ 1,600,000

 

 

$ -

 

 

The accompanying notes are an integral part of the unaudited financial statements.

 

 
7

 

   

BRK, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

  

NOTE 1 – BASIS OF PRESENTATION AND ORGANIZATION

 

BRK, Inc. ("BRK" or the "Company") was incorporated on May 22, 2008 as a Nevada corporation. The Company has developed a product for the repair of hanging venetian blinds. As part of this development the Company has completed the development and is building a machine to make the parts for blind repair that it is selling. The development and testing of the machine is near completion with production and marketing of the product to begin in the very near future.

 

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended July 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2016. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company's 2016 Annual Report filed with the SEC on July 29, 2016.

 

Forward Stock Split

 

On December 21, 2015, the Company filed, with the Secretary of State of the State of Nevada, a Certificate of Change, effecting a ten-for-one (10:1) forward split of the Company's issued and outstanding shares of common. The forward split took effect on the over-the counter markets on January 12, 2016. The number of shares, issued and outstanding and the weighted average for 2015 has been adjusted to reflect the forward stock split.

 

Property, Equipment and Intangible Assets

 

Property and equipment are carried at cost, less accumulated depreciation. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Intangible assets consist of a patent application purchased and is carried at cost, less accumulated amortization. Depreciation and amortization is provided principally on the straight-line basis method over the estimated useful lives of the assets. Patent applications submitted after June 8, 1995 have duration of 20 years. Due to the potential changes in technology the Company has elected to amortize the patent application over 15 years.

 

 
8
 

   

NOTE 2 – GOING CONCERN

 

As shown in the accompanying financial statements, BRK has an accumulated deficit of $448,683 and negative working capital of $392,538 as of July 31, 2016. Unless profitability and increases in stockholders' equity continues, these conditions raise substantial doubt as to BRK's ability to continue as a going concern. The July 31, 2016 financial statements do not include any adjustments that might be necessary if BRK is unable to continue as a going concern.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

During the three months ended July 31, 2016, the Company recorded $7,500 in compensation payable to the President. As of July 31, 2016, $106,690 was due to the President.

 

On May 6, 2016 the Company acquired a patent from ISee Automation for 5,000,000 shares of common stock with a value of $1,600,000. Upon the issuance of the shares ISee became a related party.

 

On May 18, 2016 the Company issued a note for $10,000 in cash to a related party. The note is due on demand and bears an interest rate of 8% per annum.

 

On June 24, 2016, the Company repaid $125 on a note payable issued to a related party.

 

On July 1, 2016 the Company issued a note for $3,000 in cash to a related party. The note is due on demand and bears no interest.

 

On July 22, 2016 the Company issued a note for $5,000 in cash to a related party. The note is due on October 20, 2016 and bears no interest.

 

As of July 31, 2016, the balance of notes payable due to related party was $104,415.

 

NOTE 4 – EQUITY

 

On May 6, 2016 the Company acquired a patent from ISee Automation for 5,000,000 shares of common stock with a fair market value of $1,600,000 based on the Company's stock price at the date of issuance.

 

The patent is carried at cost, less accumulated amortization. Amortization is provided principally on the straight-line basis method over the estimated useful lives of 15 years. For the three months ended July 31, 2016 the Company recorded amortization of $25,132.

 

NOTE 5 – COMMITMENTS AND CONTINGENCIES

 

On February 21, 2016 the Company signed a worldwide license agreement to manufacture and distribute the O2Trainer. The product is used by individuals in physical training. The Company will pay a 10% royalty on all sales through February 21, 2026.  As of July 31, 2016, there have been no sales of the product.

 

 
9
 

   

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Executive Overview

 

BRK Inc. ("BRK" or the "Company") was incorporated on May 22, 2008 as a Nevada corporation. The Company has developed a product for the repair of hanging venetian blinds. As part of this development the Company has completed the development and is building a machine to make the parts for blind repair that it is selling. The development and testing of the machine is near completion with production and marketing of the product to begin in the very near future.

 

As of the date of this filing we have minimal operations and have recorded minimal revenues for the past two years.  Our focus for the next twelve months will be to obtain additional funding to develop and expand our operations and new projects.Our success will depend on our ability to obtain funding through equity and/or debt transactions.  However, with the downturn of the United States and world economies, we will encounter substantial competition for the limited financing that will be available in the market place. If we are unable to obtain financing, then we will likely delay further business development and marketing of our product. 

 

In summary, management continues to position the company in a way to best benefit from worldwide economic conditions, trends, events, and demand for new technologies.

 

Liquidity and Capital Resources

 

As of July 31, 2016, we had an accumulated deficit of $448,683. We recorded a net loss of $52,865 for the three months ended July 31, 2016. The net loss was $22,023 for the same period during 2015. Unless profitability and increases in stockholders' equity continues, these conditions raise substantial doubt as to BRK's ability to continue as a going concern. Management plans to continue limited operations until we obtain additional funding to expand our operations.

 

Working capital was negative $392,538 as of July 31, 2016 compared to negative $366,823 as of April 30, 2016. Cash used in operations totaled $19,655 during the three months ended July 31, 2016 compared to $11,476 during the same period in 2015. Funds provided from financing activities was $17,875 in 2016 compared with funds provided from financing activity of $18,000 in 2015.

 

Management expects to continue to issue common stock to pay for the marketing of the product once the machine is in production. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock. 

 

We intend to rely on debt and equity financing, capital contributions from management and sales of our common stock to pay for costs, services, operating leases, litigation expense and future development of our business opportunities. Accordingly, our focus for the next twelve months will be to obtain additional funding through debt or equity financing. Our success in obtaining funding will depend upon our ability to sell our common stock or borrow on terms that are financially advantageous to us. If we are unable to obtain financing, then expansion of our operations will be delayed.

 

 
10
 

  

Results of Operations

 

The Company recorded zero revenue during the three months periods ended July 31, 2016 and 2015.

 

General and administrative expenses for the three months ended July 31, 2016 totaled $24,258 compared to $19,686 for the same period in 2015. The increase for three months period in 2016 over 2015 was due to variance in accounting, legal and consulting payments.

 

Depreciation and amortization was $27,150 for the three months ended July 31, 2016 compared to $1,317 for the same period ended July 31, 2015. The depreciation was related to fixed assets consisting of a machine and molds with the mold fully depreciated in 2016 plus amortization of $25,132 for a patent application [LG1] purchased during the quarter ended July 31, 2016.

 

The Company incurred a net loss of $52,865 in the three months period ended July 31, 2016 compared to $22,023 in the same period in 2015. The variance in net loss was due to varying general and administrative cost in the three months ended July 31, 2016 compared to the same period in 2015.

 

Off-Balance Sheet Arrangements

 

None

 

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4: CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO/CFO does not possess accounting expertise and our company does not have an audit committee. This weakness is due to the company's lack of working capital to hire additional staff.  To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.

 

Changes in Internal Control over Financial Reporting

 

Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
11
 

   

PART II – OTHER INFORMATION

 

ITEM 1: LEGAL PROCEEDINGS .

 

None     

 

ITEM 1A: RISK FACTORS .

 

There have been no material changes to BRK, Inc.'s risk factors as previously disclosed in our most recent 10-K filing for the year ending April 30, 2016.

 

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

 

None

 

ITEM 3: DEFAULTS UPON SENIOR SECURITIES .

 

None

 

ITEM 4: MINE SAFETY INFORMATION .

 

None

 

ITEM 5: OTHER INFORMATION .

 

None

 

 
12
 

   

ITEM 6: EXHIBITS .

 

No.

Description

 

 

 

31

Chief Executive Officer Certification

 

 

 

32

Section 1350 Certification

 

 

 

101

 

XBRL Interactive Data Files

 

 
13
 

 

 

SIGNATURES

 

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

 

 

 

BRK, INC.

 

 

 

 

 

Date: September 13, 2016

By:

/s/ Brian Keasberry

 

 

 

Brian Keasberry

 

 

 

President

 

 

 

Chief Executive Officer

 

 

 

Principal Financial and Accounting Officer

 

 

 

14

 

 

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