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EX-31 - CERTIFICATION - BRK, Inc.brk_ex31.htm
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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, 2015

 

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

 

From transition period from ____ to ____

 

Commission File No.: 000-54956

 

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)

 

(800) 253-1013

(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 11, 2015 the registrant had 4,308,320 shares of common stock outstanding.

 

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

Item 1:

Financial Statements

4

Balance Sheets (Unaudited) as of July 31, 2015 and April 30, 2015

5

Statements of Operations (Unaudited) for the Three Months Ended July 31, 2015 and 2014

6

Statements of Cash Flows (Unaudited) for the Three Months Ended July 31, 2015 and 2014

7

Notes to Financial Statements (Unaudited)

8

Item 2:

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

9

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

10

Item 4T:

Controls and Procedures

10

PART II – OTHER INFORMATION

 

Item 1: Legal Proceedings

11

Item 1A: Risk Factors

11

Item 2: Unregistered Sales of Securities and Use of Proceeds

11

Item 3: Default upon Senior Securities

11

Item 4: Mine Safety Information

11

Item 5: Other information

11

Item 6: Exhibits

12

Signatures

13

 

 
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 periods ended July 31, 2015 and 2014 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 month periods ended July 31, 2015, 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,

 

 

 

2015

 

 

2015

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 7,571

 

 

$ 1,047

 

Inventory

 

 

808

 

 

 

808

 

Total current assets

 

 

8,379

 

 

 

1,855

 

 

 

 

 

 

 

 

 

 

Fixed assets

 

 

 

 

 

 

 

 

Production equipment, net of accumulated depreciation of $17,121 and $15,804, respectively

 

 

6,769

 

 

 

8,086

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 15,148

 

 

$ 9,941

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expense

 

$ 10,432

 

 

$ 8,262

 

Accrued compensation - related party

 

 

79,250

 

 

 

72,190

 

Convertible notes payable - related party

 

 

7,089

 

 

 

7,089

 

Convertible notes payable

 

 

115,500

 

 

 

115,500

 

Short term debt - related party

 

 

68,540

 

 

 

50,540

 

Short term debt

 

 

46,900

 

 

 

46,900

 

Total current liabilities

 

 

327,711

 

 

 

300,481

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

none issued and outstanding as of July 31, 2015 and April 30, 2015

 

 

-

 

 

 

-

 

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

 

 

 

 

 

 

 

 

4,308,320 issued and outstanding as of July 31, 2015 and April

 

 

 

 

 

 

 

 

30, 2015

 

 

4,308

 

 

 

4,308

 

Additional paid-in capital

 

 

29,742

 

 

 

29,742

 

Accumulated deficit

 

 

(346,613 )

 

 

(324,590 )

Total stockholders’ deficit

 

 

(312,563 )

 

 

(290,540 )
 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$ 15,148

 

 

$ 9,941

 

 

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

 

 
5
 

 

BRK, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended July 31,

 

 

2015

 

 

2014

 

Revenue

 

$ -

 

 

$ 161

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

19,686

 

 

 

16,447

 

Depreciation

 

 

1,317

 

 

 

1,317

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(21,003 )

 

 

(17,603 )
 

 

 

 

 

 

 

 

 

Other expense

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,020 )

 

 

-

 

Other expense

 

 

(1,020 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (22,023 )

 

$ (17,603 )
 

 

 

 

 

 

 

 

 

Net loss per common share basic and diluted

 

$ (0.01 )

 

$ (0.00 )
 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding: basic and

 

 

 

 

 

 

 

 

diluted

 

 

4,308,320

 

 

 

4,308,320

 

 

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,

 

 

 

2015

 

 

2014

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net loss

 

$ (22,023 )

 

$ (17,603 )

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

 

 

 

 

 

 

 

 

Depreciation

 

 

1,317

 

 

 

1,317

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expense

 

 

2,170

 

 

 

1,270

 

Accrued compensation - related party

 

 

7,060

 

 

 

7,215

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(11,476 )

 

 

(7,801 )
 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from notes payable - related party

 

 

18,000

 

 

 

-

 

Principal payments on debt - related party

 

 

-

 

 

 

(150 )
 

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

 

18,000

 

 

 

(150 )
 

 

 

 

 

 

 

 

 

Net change in cash

 

 

6,524

 

 

 

(7,951 )

Cash at beginning of period

 

 

1,047

 

 

 

10,196

 

Cash at end of period

 

$ 7,571

 

 

$ 2,245

 

 

 

 

 

 

 

 

 

 

SUPPLEMENT DISCLOSURE

 

 

 

 

 

 

 

 

Interest paid

 

$ -

 

 

$ -

 

Income taxes paid

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Non-Cash Transactions

 

 

 

 

 

 

 

 

Payment of accounts payable by third party

 

$ -

 

 

$ 3,700

 

 

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, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2015. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2015 Annual Report filed with the SEC on July 29, 2015.

 

In the year ending April 30, 2014, the Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to exploration stage.

 

NOTE 2 – GOING CONCERN

 

As shown in the accompanying financial statements, BRK has an accumulated deficit of $346,613 and negative working capital of $319,332 as of July 31, 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. The July 31, 2015 financial statements do not include any adjustments that might be necessary if BRK is unable to continue as a going concern.

 

BRK continues to review its expense structure reviewing costs and their reduction to move towards profitability. The Company’s expenses are planned to decrease resulting in profitability and increased shareholders’ equity.

 

NOTE 3 – RELATED PARTY

 

During the three months ended July 31, 2015, the Company recorded $7,060 in compensation payable to the President. As of July 31, 2015, $79,250 was due to the President.

 

As of July 31, 2015, the balance of notes payable due to related party was $68,540 and convertible notes payable was $7,089. $18,000 was borrowed under a note payable to related party during the three months ended July 31, 2015 which is unsecured, due on demand and bears interest at 12% per annum.

 

 
8
 

 

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, 2015, we had an accumulated deficit of $346,613. We recorded a net loss of $22,023 for the three months ending July 31, 2015. The net loss was $17,603 for the same period during 2014. Based on these numbers there is substantial doubt that we can continue as a going concern unless we obtain external funding. Management plans to continue limited operations until we obtain additional funding to expand our operations.

 

Working capital was negative $319,332 as of July 31, 2015 compared to negative $298,626 as of April 30, 2015. Cash used in operations totaled $11,476 during the three months ending July 31, 2015 compared to $7,801 during the same period in 2014. Funds provided from financing activities was $18,000 in 2015 compared with funds used in financing activity due to repayment on notes payable of $150 in 2014.

 

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.

 

Results of Operations

 

The Company recorded revenue of $161 during the three months periods ended July 31, 2014 and none for the same periods in 2015.

 

 
9
 

 

General and administrative expenses for the three months ended July 31, 2015 totaled $19,686 compared to $16,447 for the same periods in 2014. The increase for three months periods in 2015 over 2014 was due to higher accounting, legal and consulting payments.

 

Depreciation was $1,317 and $1,317 for the three months periods ended July 31, 2015 and July 31, 2014. The depreciation was related to fixed assets consisting of a machine and molds.

 

The Company incurred a net loss of $22,203 in the three months period ended July 31, 2015 compared to $17,603 in the same periods in 2014. The higher net loss was due to higher general and administrative cost in the three month period ended July 31, 2015 compared to the same period in 2014.

 

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.

 

 
10
 

 

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, 2015.

 

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

 

 
11
 

 

ITEM 6: EXHIBITS

 

No.

 

Description

 

 

 

31

 

Chief Executive Officer Certification

 

 

 

32

 

Section 1350 Certification

 

 

 

101

 

XBRL Interactive Data Files

 

 
12
 

 

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 11, 2015

By: /s/ Brian Keasberry

 

 

 

Brian Keasberry

 

 

 

President

 

 

 

Chief Executive Officer

Principal Financial and Accounting Officer

 

 

 

13