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 was completed with limited production following and the Company reduced its work in the blind repair kit market space.
On May 6, 2016, the Company acquired intangible assets 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 intangible assets consist of a patent application and related know-how technology and plan for commercialization related to the placement of video cameras and supporting equipment into helmets used by various athletics such as hockey. Life video can then be transmitted from the player’s helmet in real time for display on sports events broadcasts. The Company is in the process of receiving models produced by a third party and developing a marketing strategy for the devise.
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 six months ended October 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2017. 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.
Inventory
Inventories are stated at the lower of cost of market using the first-in, first-out (FIFO) cost method of accounting. As of October 31, 2016, the Company had $100,000 of inventory consisting of parts and finished helmet with video cameras.
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
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GOING CONCERN
As shown in the accompanying financial statements, BRK has an accumulated deficit of $1,163,085 and negative working capital of $419,264 as of October 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 October 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 six months ended October 31, 2016, the Company recorded $15,325 in compensation payable to the President. As of October 31, 2016, $113,390 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 fair 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 demand and bears no interest.
On August 26, 2016, the Company issued a note for $25,000 in cash to a related party. The note is due on demand and bears no interest.
On August 31, 2016, the Company issued a note for $16,500 in cash to a related party. The note is due on demand and bears no interest.
On September 14, 2016, the Company issued a note for $37,000 in cash to a related party. The note is due on demand and bears no interest.
On September 14, 2016, the Company issued a note for $29,000 in cash to a related party. The note is due on demand and bears no interest
On September 27, 2016, the Company issued a note for $4,650 in cash to a related party. The note is due on demand and bears no interest
On October 3, 2016, the Company issued a note for $1,000 in cash to a related party. The note is due on demand and bears no interest.
As of October 31, 2016, the balance of notes payable due to related party was $217,565.
NOTE 4
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EQUITY
On May 6, 2016, the Company acquired intangible assets 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 assets are 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 six months ended October 31, 2016 the Company recorded amortization of $51,799.
On October 20, 2016, the Company completed two separate consulting agreement with two entities. Both agreements are for a term of one year with the combined compensation being 2,000,000 shares of common stock issued at fair value of $0.33 per share for a total value of $660,000. Per the agreements, the shares were deemed earned at the date of the agreement and thus expensed in the period ended October 31, 2016
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 October 31, 2016, there have been no sales of the product.
NOTE 6
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SUBSEQUENT EVENTS
On November 10, 2016, the Company issued a secured promissory note to an individual for $50,000 with net proceeds after cost of $45,256 in cash. The note matures on February 10, 2017 with an 8% per month interest rate with interest payments of $4,000 payable on December 10, 2016, January 10, 2017, and February 10, 2017. As part of the note agreement the Company will issue 125,000 shares of common stock with a value of $40,000 to the note holder. The note is secured by 2,500,000 shares of common stock in book entry with the Transfer Agent to be cancelled if the note is paid back per the agreement.
On November 10, 2016, the Company issued a secured promissory note to an individual for $50,000 with net proceeds after cost of $45,256 cash. The note matures on February 10, 2017 with an 8% per month interest rate with interest payments of $4,000 payable on December 10, 2016, January 10, 2017, and February 10, 2017. As part of the note agreement the Company will issue 125,000 shares of common stock with a value of $40,000 to the note holder. The note is secured by 2,500,000 shares of common stock in book entry with the Transfer Agent to be cancelled if the note is paid back per the agreement.
On November 28, 2016, the Company issued a convertible promissory note to an entity with a face value of $53,000 and bearing interest at 12% per annum. The note matures on August 28, 2017. The net proceeds to the company was $46,000 net of legal fees of $2,000 and due diligence fees of $5,000. The note and accrued interest is convertible into common stock of the company at 50% discount to lowest trading price during the 20 days prior to the date of the conversion. The note is secured by 10,000,000 shares of common stock in book entry with the Transfer Agent to be cancelled if the note is paid back per the agreement.
On December 1, 2016, the Company issued a convertible note to an entity with a face value of $75,000 bearing interest at 10%. The net proceeds to the Company was $69,000 with legal and due diligence fees of $6,000. The note is due on December 1, 2017 and is convertible at lower of closing price of the common on the trading day preceding the closing date or 55% of the lowest sales price during the 20 preceding days to conversion with a floor of $.00001. The holder of the note can convert the note up to 4.9% of Company’s outstanding common stock. The note is secured by 3,250,000 shares of common stock in book entry with the Transfer Agent to be cancelled if the note is paid back per the agreement. The reserve amount will be increase by a factor of 2 each time the Company enters into a subsequent convertible note.