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