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 October 31, 20162017

 

o¨ 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.)

 

 

5313 Corbett Street, Las Vegas,411 Eastgate Rd, Suite A, Henderson, Nevada

8913089011

(Address of principal executive offices)

(Zip Code)

(702) 572-8050

(Registrant’s telephone number, including area code)

(702) 572-8050

(Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

 

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 o¨

 

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 ox 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

¨x

Smaller reporting company

x

Emerging growth company

x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

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

 

As of December 20, 2016,April 27, 2020, the registrant had 50,333,2002,914,983,307 shares of common stock and one share of Series A preferred outstanding.

  

 
 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

Item 1:

Consolidated Financial Statements

 

4

 

Consolidated Balance Sheets (Unaudited) as of October 31, 2016,2017, and April 30, 20162017

 

54

 

Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended October 31, 20162017 and 20152016

 

65

 

Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended October 31, 20162017 and 20152016

 

7

 

Consolidated Notes to Financial Statements (Unaudited)

 

8

Item 2:

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

 

1117

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

 

1218

Item 4T:4:

Controls and Procedures

 

1218

 

PART II – OTHER INFORMATION

Item 1:

Legal Proceedings

13

Item 1A:

Risk Factors

13

Item 2:

Unregistered Sales of Securities and Use of Proceeds

13

Item 3:

Default upon Senior Securities

13

Item 4:

Mine Safety Information

13

Item 5:

Other information

13

Item 6:

Exhibits

14

 

 

 

SignaturesItem 1:

Legal Proceedings

 

1519

Item 1A:

Risk Factors

19

Item 2:

Unregistered Sales of Securities and Use of Proceeds

19

Item 3:

Default upon Senior Securities

19

Item 4:

Mine Safety Disclosures

19

Item 5:

Other information

19

Item 6:

Exhibits

20

Signatures

21

 

 

2

 

 

ReferenceReferences in this report to “BRK” “we,” “us,”, the ���Company”, “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.

 

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

3

Table of Contents

PART I – FINANCIAL INFORMATION

 

ITEM 1: FINANCIAL STATEMENTS

 

The financial information set forth below with respect to our statements of operations for the three and six months ended October 31, 20162017 and 20152016 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 and six months ended October 31, 2016,2017, are not necessarily indicative of results to be expected for any subsequent period. Our fiscal year end is April 30.

  

4
Table of Contents


BRK, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

October 31,

 

 

April 30,

 

 

 

2016

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$1,634

 

 

$4,612

 

Inventory

 

 

100,000

 

 

 

808

 

Prepaid

 

 

7,000

 

 

 

-

 

Total current assets

 

 

108,634

 

 

 

5,420

 

 

 

 

 

 

 

 

 

 

Fixed assets

 

 

 

 

 

 

 

 

Production equipment, net of accumulated depreciation of $21,862 and $18,835, respectively

 

 

2,028

 

 

 

5,055

 

Other asset

 

 

 

 

 

 

 

 

Intangible assets, net of accumulated amortization of $51,799 and $0, respectively

 

 

1,548,201

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total assets

 

$1,658,863

 

 

$10,475

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expense

 

$29,454

 

 

$18,264

 

Accrued compensation - related party

 

 

113,390

 

 

 

99,950

 

Convertible notes payable - related party

 

 

7,089

 

 

 

7,089

 

Convertible notes payable

 

 

115,500

 

 

 

115,500

 

Short term debt - related party

 

 

217,565

 

 

 

86,540

 

Short term debt

 

 

44,900

 

 

 

44,900

 

Total current liabilities

 

 

527,898

 

 

 

372,243

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares, par value $0.001, 1,000,000 shares authorized; none issued and outstanding as of October 31, 2016, and April 30, 2016

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

Common stock, par value $0.001, 100,000,000 shares authorized, 50,083,200 and 43,083,200 issued and outstanding as of October 31, 2016, and April 30, 2016 respectively

 

 

50,083

 

 

 

43,083

 

Additional paid-in capital

 

 

2,243,967

 

 

 

(9,033)

Accumulated deficit

 

 

(1,163,085)

 

 

(395,818)

Total stockholders’ equity (deficit)

 

 

1,130,965

 

 

 

(361,768)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity (deficit)

 

$1,658,863

 

 

$10,475

 

 

 

October 31,

 

 

April 30,

 

 

 

2017

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$33,504

 

 

$32,860

 

Advance receivable

 

 

--

 

 

 

2,000

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

33,504

 

 

 

34,860

 

 

 

 

 

 

 

 

 

 

Total assets

 

$33,504

 

 

$34,860

 

 

 

 

 

 

 

 

 

 

TOAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expense

 

$106,308

 

 

$55,626

 

Accrued compensation - related party

 

 

224,540

 

 

 

125,340

 

Convertible notes payable - related party

 

 

7,089

 

 

 

7,089

 

Convertible notes payable - net of discounts

 

 

229,298

 

 

 

292,433

 

Short term debt - related party

 

 

46,815

 

 

 

75,690

 

Short term debt - net of discount

 

 

152,053

 

 

 

126,095

 

Derivative liabilities

 

 

285,312

 

 

 

2,444,137

 

Deferred revenue - related party

 

 

-

 

 

 

10,000

 

Total current liabilities

 

 

1,051,415

 

 

 

3,139,410

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

one Series A and none issued and outstanding as of October 31, 2017, and April 30, 2017

 

 

 

 

 

 

-

 

Common stock, par value $0.001, 100,000,000 shares authorized, 69,495,793 and 50,383,200 issued and outstanding as of October 31, 2017, and

April 30, 2017 respectively

 

 

69,496

 

 

 

50,383

 

Additional paid-in capital

 

 

(1,178,330)

 

 

(1,786,532)

Retained earnings (accumulated deficit)

 

 

90,923

 

 

 

(1,368,401)

Total stockholders’ (deficit)

 

 

(1,017,911)

 

 

(3,104,550)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity (deficit)

 

$33,504

 

 

$34,860

 

 

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

 

 
5
4

Table of Contents


BRK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR PERIODS ENDED OCTOBER 31,

(Unaudited)

 

 

Three Months

 

 

Six Months

 

 

Three Months

 

Six Months

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

685,269

 

 

 

14,146

 

 

 

709,527

 

 

 

33,832

 

 

$104,794

 

$685,269

 

$397,772

 

$709,527

 

Depreciation and amortization

 

 

27,676

 

 

 

705

 

 

 

54,826

 

 

 

2,022

 

 

 

--

 

 

 

27,150

 

 

 

--

 

 

 

54,826

 

Total operating expense

 

 

104,794

 

 

 

712,945

 

 

 

397,772

 

 

 

764,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(712,945)

 

 

(14,851)

 

 

(764,353)

 

 

(35,854)

 

(104,794)

 

(712,945)

 

(397,772)

 

(764,353)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Other income (expense)

 

10,000

 

--

 

10,000

 

--

 

Change in fair value of derivative liabilities

 

5,722

 

--

 

1,957,554

 

--

 

Currency

 

1,033

 

--

 

1,034

 

--

 

Interest expense

 

 

(1,457)

 

 

(1,020)

 

 

(2,914)

 

 

(2,040)

 

 

(15,835)

 

 

(1,457)

 

 

(111,492)

 

 

(2,914)

Total other income (expense)

 

 

920

 

 

 

(1,457)

 

 

1,857,096

 

 

 

(2,914)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(714,402)

 

$(15,871)

 

$(767,267)

 

$(37,894)

Net income (loss)

 

$(103,872)

 

$(714,402)

 

$1,459,324

 

 

 

(767,267)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share basic and diluted

 

$(0.01)

 

$(0.00)

 

$(0.02)

 

$(0.00)

Net loss per common share basic

 

$(0.00)

 

$(0.01)

 

$0.02

 

 

$(0.02)

Net loss per common share diluted

 

$(0.00)

 

$(0.01)

 

$0.00

 

 

$(0.02)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding: basic and diluted

 

 

48,202,765

 

 

 

43,083,200

 

 

 

48,039,722

 

 

 

43,083,200

 

Weighted average number of common shares outstanding: basic

 

 

59,117,385

 

 

 

48,202,765

 

 

 

59,004,965

 

 

 

48,039,722

 

Weighted average number of common shares outstanding: diluted

 

 

59,117,385

 

 

 

48,202,765

 

 

 

225,906,190

 

 

 

48,039,722

 

 

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

 

 
6
5

Table of Contents

 

BRK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)For the Six Months Ended October 31, 2017 and 2016

 

 

 

Six Months Ended October 31,

 

 

 

2016

 

 

2015

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net loss

 

$(767,267)

 

$(37,894)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

54,826

 

 

 

2,022

 

Stock based compensation

 

 

660,000

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in inventory

 

 

(99,192)

 

 

-

 

Increase in prepaid

 

 

(7,000)

 

 

-

 

Increase in accounts payable and accrued expense

 

 

11,190

 

 

 

3,990

 

Increase in accrued compensation - related party

 

 

13,440

 

 

 

13,960

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(134,003)

 

 

(17,922)

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from notes payable - related party

 

 

131,150

 

 

 

18,000

 

Principal payments on debt - related party

 

 

(150)

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

131,025

 

 

 

18,000

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(2,978)

 

 

78

 

Cash at beginning of period

 

 

4,612

 

 

 

1,047

 

Cash at end of period

 

$1,634

 

 

$1,125

 

 

 

 

 

 

 

 

 

 

SUPPLEMENT DISCLOSURE

 

 

 

 

 

 

 

 

Interest paid

 

$-

 

 

$-

 

Income taxes paid

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NON CASH TRANSACTIONS

 

 

 

 

 

 

 

 

Common stock issued for intangible assets

 

$1,600,000

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

Additional

 

 

 

 

Stockholders’

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Equity

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at April 30, 2016

 

 

43,083,200

 

 

 

43,083

 

 

 

(9,033)

 

 

(395,818)

 

 

(361,768)

Common stock issued for services

 

 

2,000,000

 

 

 

2,000

 

 

 

639,445

 

 

 

--

 

 

 

641,445

 

Common stock issued for acquisition of patent application

 

 

5,000,000

 

 

 

5,000

 

 

 

1,595,000

 

 

 

--

 

 

 

1,600,000

 

Debt discount

 

 

 

 

 

 

 

 

 

 

18,555

 

 

 

 

 

 

 

18,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(767,267)

 

 

(767,267)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at October 31, 2016

 

 

50,383,200

 

 

$50,383

 

 

$(2,243,967

 

$(1,163,085)

 

$1,130,965

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at April 30, 2017

 

 

50,083,200

 

 

 

50,083

 

 

 

(1,786,532)

 

 

(1,368,401)

 

 

(3,104,550)

Common stock issued for debt conversion

 

 

19,112,593

 

 

 

19,113

 

 

 

53,553

 

 

 

--

 

 

 

72,666

 

Issuance of series A preferred shares

 

 

--

 

 

 

--

 

 

 

237,630

 

 

 

--

 

 

 

237,630

 

Change due to conversion of debt

 

 

--

 

 

 

--

 

 

 

317,020

 

 

 

--

 

 

 

317,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

1,459,324

 

 

 

1,459,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at October 31, 2017

 

 

69,495,793

 

 

$69,496

 

 

$(1,178,330)

 

 

90,923

 

 

$(1,017,911)

 

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

 
6

Table of Contents

BRK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six Months Ended October 31,

 

 

 

2017

 

 

2016

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net income (loss)

 

$1,459,324

 

 

$(767,267)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

--

 

 

 

54,826

 

Amortization of debt discount

 

 

116,112

 

 

 

--

 

Gain on derivative liabilities

 

 

(1,957,554)

 

 

--

 

Stock based compensation

 

 

237,630

 

 

 

660,000

 

Legal fees related to debt conversion

 

 

1,500

 

 

 

--

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in inventory

 

 

--

 

 

 

(99,192)

Increase in accounts payable and accrued expense

 

 

(77,658)

 

 

11,190

 

Prepaid expense

 

 

2,000

 

 

 

(7,000)

Deferred revenue

 

 

(10,000)

 

 

 

 

Increase in accrued compensation - related party

 

 

224,540

 

 

 

13,440

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(4,106)

 

 

(134,003)

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from notes payable - related party

 

 

4,750

 

 

 

131,150

 

Repayments of notes- related parties

 

 

(26,000)

 

 

(150)

Proceeds from notes payable

 

 

26,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by financing activities

 

 

4,750

 

 

 

131,025

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

644

 

 

 

(2,978)

Cash at beginning of period

 

 

32,860

 

 

 

4,612

 

Cash at end of period

 

$33,504

 

 

$1,634

 

 

 

 

 

 

 

 

 

 

SUPPLEMENT DISCLOSURE

 

 

 

 

 

 

 

 

Interest paid

 

$--

 

 

$-

 

Income taxes paid

 

 

--

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NON-CASH TRANSACTIONS

 

 

 

 

 

 

 

 

Common stock issued for intangible assets

 

$--

 

 

$1,600,000

 

Common stock issued for debt conversion

 

$72,666

 

 

$-

 

New derivatives charged to debt discount

 

$66,000

 

 

$--

 

Reclass derivative to equity due to conversion of debt

 

$317,019

 

 

$--

 

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

 
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BRK, INC.

CONSOLIDATED 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. During the year ended April 30, 2017, the Company terminated the blind repair business and wrote off the equipment related to the line of business.

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. All share and per share amounts herein have been retroactively adjusted to reflect the forward stock split.

 

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 forplans to commercialization related to covers 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 inreceived the process of receiving modelsRefCam helmets produced by a third party and developing a marketing strategyused the devises to broadcast various hockey events.

On or about February 27, 2017, Christopher Stramacchia, President of iSee Automation, notified the Company that it believes that iSee Automation terminated the Agreement for Services. The Company believes that there is no basis in law or equity for iSee Automation to unilaterally decide to terminate the Agreement for Services and plans to enforce its rights thereunder. Since their usage the helmets and their transmitting devices have been held without permission by ISee Automation.

As of April 30, 2017, ISee Automation was holding the Helmets and transmission equipment. Based on the lack of access to the Equipment the Company has elected to impair the assets related to the ISee Automation agreement resulting is an amortization charge of $105,133 and impairment of intangible assets of $1,494,867 for the devise.intellectual property.

 

On September 28, 2016, the Company incorporated, in the state of Washington, a wholly owned subsidiary ISEE Sports Inc. Since inception, the subsidiary has not been operational or financially active.

On July 7, 2017, the Company incorporated a wholly owned subsidiary 10337188 Canada, Inc.

Basis of Presentation

 

The accompanying unauditedThese consolidated financial statements have been prepared pursuant toin accordance with accounting principles generally accepted in the rules and regulations of the Securities and Exchange Commission forUnited States. The Company’s fiscal year end is April 30.

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The 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 ofconsolidated financial statements have been prepared without audit in accordance with accounting principles generally accepted in the United States of America. Infor interim financial information and with the opinion of management,instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all adjustments (consisting of normal recurring adjustments) considered necessarythe information and footnotes required by generally accepted accounting principles 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 accompanyingcomplete financial statements. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes thereto for the year ended April 30, 2017 included in the Company’s 2016its Annual Report on Form 10-K filed with the SEC on July 29, 2016.SEC.

 

Forward Stock Split

On December 21, 2015,The interim consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the Company filed, withopinion of management, are necessary to present fairly 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. AsCompany’s consolidated financial position as of October 31, 2016,2017, the consolidated results of its operations and its consolidated cash flows for the three and six months ended October 31, 2017 and 2016. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements of the Company had $100,000 of inventory consisting of partsinclude the Company and finished helmet with video cameras.its wholly-owned subsidiary ISee Sports, Inc. All material intercompany balances and transactions have been eliminated.

 

Cash and Cash Equivalents

BRK considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

The Company receives revenue though a related party for the use of the Company’s equipment on the broadcasting of hockey games from the ref cam, a camera worn on the helmet of the referees. The revenue is recognized first by a related party which holds the initial agreement with the broadcaster when the event being broadcasted is completed. The related party pays the Company upon receipt of payment from the broadcaster. The revenues are reported on a net basis with the deductions for directs costs being deducted from the revenue.

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.assets which is estimated at 36 months. 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.

 

 
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Impairment of long-lived assets

 

The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Fair value is estimated based upon either discounted cash flow analysis or estimated salvage value.

Basic and diluted net income per share

Basic and diluted net income per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. They include the dilutive effect of common stock equivalents in years with net income. Basic and diluted net income per share is the same due to a net loss for the three and six month period ended October 31, 2016. Basic shares are 59,117,385 and 59,004,965 for the three and six months periods ended October 31, 2017. Diluted shares include the number of shares that may result from the conversion of debt and is measured as of October 31, 2017 at 59,117,385 shares or a total of 225,906,190 for the weighted average, respectively.

Income Taxes

BRK recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. BRK provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Financial assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

Level 1— Quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2— Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

Level 3— Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company analyzed the conversion option for derivative accounting and beneficial conversion features consideration and noted one variable convertible note qualified as a derivative and thus tainted the fixed conversion notes requiring the notes to accounted for as derivative liabilities

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Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of April 30, 2017 and October 31, 2017:

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

As of April 30, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

 

$-

 

 

$-

 

 

$2,444,137

 

 

$2,444,137

 

As of October 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

 

$-

 

 

$-

 

 

$285,312

 

 

$285,312

 

Beneficial Conversion Features

The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

Recently Issued Accounting Pronouncements

In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”. The ASU was issued to address the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The amendments are effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the implementation date and the impact of this amendment on its financial statements.

NOTE 2 - GOING CONCERN

 

As shown in the accompanying financial statements, BRK has an accumulated deficitretained earnings of $1,163,085 and$90,923 with negative working capital of $419,264$1,017,911 as of October 31, 2016.2017. 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, 20162017 financial statements do not include any adjustments that might be necessary if BRK is unable to continue as a going concern. Management plans to continue to raise funds through debt and equity financing to grow the business to profitability.

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NOTE 3 – RELATED PARTY TRANSACTIONS

 

During the sixthree months ended OctoberJuly 31, 2016,2017, the Company recorded $15,325$31,700 in compensation payable to the President, Chief Technology Officer and former President. As of OctoberJuly 31, 2016, $113,3902017, $157,040 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 demandOctober 20, 2016 and bears no interest.

 

On August 26, 2016,May 17, 2017, the Company paid one related party $26,000 reducing its note to $37,815.

On July 5, 2017, 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 noteparty for $1,000 in cash to a related party. The note is due on demand and bears no interest.cash.

 

As of October 31, 2016,2017, the balance of notes payable due to related partyparties was $217,565.$46,815 and convertible notes payable of $7,089.

 

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On June 16, 2017 Brian Keasberry resigned as President of the Company, continued as the Secretary and Treasurer. On June 16, 2017 Danie Serruya was elected President, CEO and a Director of the Company.

 

NOTE 4 4- 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, 2016On May 18, 2017, 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 2,000,000issued 3,000,000 shares of common stock at $0.0005 to the convertible note holder 0832322 BC, Ltd. for $1,500 of convertible debt. Per the note agreement 300,000 shares were to be issued at $0.005 per share for the $1,500 conversion, however 3,000,000 shares were issued due to the forward 10:1 split of the Company common stock on December 21, 2015 which occurred subsequent to date of the note issuance.

On May 18, 2017, the Company issued 1,451,905 shares of common stock at $0.013775 to the convertible note holder JSJ for $20,000 of convertible debt.

On June 8, 2017, the Company issued 2,660,000 shares of common stock at $0.01102 to the convertible note holder EMA Financial for $28,563 of convertible debt plus $750 for professional fees.

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From August 25, 2017 through October 31, 2017 the Company issued 12,000,228 shares of common stock to three entities with a value of $21,853 for the conversion of debt.

On June 15, 2017, the Company increased its number of authorized shares to 2,001,000,000 with 1,000,000 designated as preferred shares with a par value of $0.001 and 2,000,000,000 designated as common stock with a par value of $0.001.

On June 15, 2017, the Company designated one share of preferred stock as Series A preferred at a par value of $0.001. The series A preferred carries a voting right equal to 110% of the total voting rights of the outstanding common stocks. In addition, the series A shareholders can elect a director. The Series A director must approve any future amendments of the Company’s articles and other activities of the Company. Brian Keasberry was granted one share of Series A preferred stock on June 15, 2017. The fair value of $0.33 perthe series A preferred share was independently valued at $237,630 and was accounted 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, 2016as stock based compensation.

 

NOTE 5 – COMMITMENTS AND CONTINGENCIESNOTES PAYABLE

 

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 sales2017, the Company had outstanding notes payable, net of the product.discount of $152,053 to third parties and $46,815 to related parties.

 

NOTE 6 SUBSEQUENT EVENTSCONVERTIBLE NOTES

The Company analyzed the conversion option for derivative accounting and beneficial conversion features consideration under ASC 815-15 “Derivatives and Hedging” and ASC 470-20 “Convertible Securities with Beneficial Conversion Features” and noted one variable convertible note qualified plus tainted the fixed conversion notes requiring the notes to accounted for as derivative liabilities. (See Note 8 - Fair Value Measurement)

 

On November 10, 2016,July 5, 2017, ISee Sports Inc., a wholly owned subsidiary of 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$20,000 convertible note to an entity with a face value of $75,000 bearingone individual for cash. The convertible note bears interest at 10%. The net proceeds to the Company was $69,000 with legal and due diligence fees of $6,000. The note is due8% per annum, matures on December 1, 2017July 4, 2019 and is convertible at lowerthe note holders option into shares of the subsidiary ISee sports, Inc at $1.00 per share or into shares of the parent BRK, Inc., at 60% of the average closing price of the common stock of BRK for 10 days immediately prior to conversion.

As of October 31, 2017, and April 30, 2017 the Company owes $7,089 in convertible related party notes. The notes bear interest at 0%, are due on demand and are unsecured. The notes are convertible at $0.005 into the Company’s common stock

As of October 31, 2017, and April 30, 2017 the Company owed net of unamortized discount of $229,298 and $292,433 respectively, in non-related party convertible promissory notes.

NOTE 7 – FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES

As defined in (Financial Accounting Standards Board ASC 820), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the trading day precedingobservability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the closing dateinputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or 55%liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

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The three levels of the lowest sales pricefair value hierarchy are as follows:

Level 1    –

Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2    –

Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Level 3    –

Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The Company analyzed the conversion option for derivative accounting and beneficial conversion features consideration and noted one variable convertible note qualified as a derivative and thus tainted the fixed conversion notes requiring the notes to accounted for as derivative liabilities

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as April 30, 2017 and 2016.

Recurring Fair Value Measures

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities as of April 30,2017

 

$--

 

 

$--

 

 

$2,444,137

 

 

$2,444,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities as of October 31, 2017

 

$--

 

 

$-

 

 

$285,312

 

 

$285,312

 

As of October 31, 2017, and April 30, 2017, the aggregate fair value of the outstanding derivative liabilities was $285,312 and $2,444,137, respectively. For the six months period ended October, 31 2017 and 2016, the net gain on the change of fair value was $1,957,554 and zero, respectively.

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The Company estimated the fair value of the derivative liabilities using the Black Scholes option pricing model using the following key assumptions during the 20 preceding days to conversion with a floor of $.00001. three months period ended October 31, 2017:

Expected Dividend

0%

Expected terms

.26-1.00

Volatility

215.38% -283.89

%

Risk free rate

.94% -1.09

%

The holderfollowing table represents the change in the fair value of the note can convertderivative liabilities during the note upthree months period ended July 31, 2017,

Fair value of derivative liabilities as of April 30, 2017

 

$2,444,137

 

New derivative charged to debt discount

 

 

66,000

 

Reclassification of derivative to equity due to conversion

 

 

(267,271)

Change in fair value of derivatives

 

 

(1,957,554)

Fair value of derivative liabilities as of October 31, 2017

 

$285,312

 

NOTE 8– COMMITMENTS AND CONTINGENCIES

On July 25, 2016, the Company filed with the Securities and Exchange Commission a Current Report on Form 8-K, disclosing, among other things, that pursuant to 4.9%the terms and conditions that certain Patent Assignment and Technology Transfer Agreement (the “Patent Assignment and Technology Transfer Agreement”), dated May 6, 2016, by and between BRK, Inc., a Nevada corporation (the “Company”) and iSee Automation Inc., a federal Canada corporation (“iSee Automation”), the Company purchased U.S. Patent Application No. 15/079,847, “Helmet System” (the “Patent”) and related technology for a helmet camera system, including intellectual property covered by the Patent. The Patent covers technology designed to wirelessly transmit video images from a small, mobile camera to live broadcast (the “Helmet Camera and Broadcast Technology”).

Pursuant to the terms and conditions of Company’s outstanding common stock. The note is secured by 3,250,000the Patent Assignment and Technology Transfer Agreement, the Company issued 5,000,000 shares of common stock in book entryto iSee Automation.

The U.S. U.S. Patent and Trademark Office subsequently published an Assignment of Abstract of Title, date record July 13, 2017, for conveyance of the Patent from iSee Automation Inc. to BRK, Inc.

In connection with the Transfer Agent to be cancelled ifacquisition of the note is paid back per the agreement. The reserve amount will be increase by a factor of 2 each timePatent, the Company entersalso entered into a subsequent convertible note.that certain Revenue Assignment and Benefit Transfer Agreement, dated September 16, 2016, by and between the Company and iSee Automation (the “Revenue Assignment Agreement”). Under the Revenue Assignment Agreement, iSee Automation is obligated to “deliver to the Company any and all revenues obtained by iSee Automation based on the Helmet Camera patent application previously purchased by BRK from iSee Automation under the Patent Assignment and Technology Transfer Agreement via wire transfer or via direct delivery from customers.

 

 
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Although we have clear title to and no restrictions to use our intellectual property, disputes may arise regarding the Revenue Transfer Agreement, including but not limited to, the scope and duration of payment of royalties’ other interpretation-related issues.

On May 17, 2016, the Company entered into that certain Agreement for Services, dated May 17, 2016, by and among the Company, iSee Automation Inc. (Ontario), and Christopher Stramacchia. Pursuant to the terms and conditions of the Agreement for Services, “[any patents derived from the research done jointly and severally by all the above named parties shall be the property of BRK, Inc.,” in consideration for the Company paying $10,000 to iSee Automation (Michigan), which $10,000 the Company paid to iSee Automation (Michigan) on or about May 17, 2016.

On or about February 27, 2017, Christopher Stramacchia, President of iSee Automation, notified the Company that it believes that iSee Automation terminated the Agreement for Services. The Company believes that there is no basis in law or equity for iSee Automation to unilaterally decide to terminate the Agreement for Services and plans to enforce its rights thereunder.

On or about February 28, 2017, Christopher Stramacchia, President of iSee Automation, notified the Company that it believes that iSee Automation terminated the Revenue Assignment Agreement. The Company believes that there is no basis in law or equity for iSee Automation to unilaterally decide to terminate the Revenue Assignment Agreement and plans to enforce its rights thereunder.

NOTE 9– SUBSEQUENT EVENTS

During the period from November 1, 2017 through April 24, 2020 the Company issued 44,000,000 shares of common stock with value for $22,000 for service.

During the period from November 1, 2017 through April 24, 2020 the Company issued 2,801,487,514 shares of common stock with value for $ 888,550 for the conversion of debt.

During the period from November 1, 2017 through April 24, 2020 the Company issued $887,300 in convertible debt and notes.

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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 was completed with limited production following and the Company reduced its work in the blind repair kit market space.

On September 28, 2016, the Company incorporated, in the state of Washington, a wholly owned subsidiary ISEE Sports Inc. Since inception, the Subsidiary has not been operational or financially active.

 

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.

 

As ofOn July 7, 2017 the date of this filing we have minimal operations and have no 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.Company incorporated a wholly owned subsidiary 10337188 Canada, Inc.

 

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 OctoberJuly 31, 2016,2017, we had an accumulated deficitretained earnings of $1,163,085.$90,923. We recorded a net loss of $767,267$103,872 and net income of $1,495,324 for the three and six month period ended October 31, 2016.2017. The net loss was $37,894$714,402 and $767,267 for the same periodperiods during 2015. Unless profitability2016. The net income incurred in 2017 was primarily due to a change in fair value of the derivative liability of $1,957,554831 offset by interest of $111,492 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.general and administrative expense of $397,772.

 

Working capital was negative $419,264$1,017,911 as of October 31, 2016,2017, compared to negative $366,823$3,104,550 as of April 30, 2016.2017. Cash used in operations totaled $134,003$4,106 during the six-monthsix months period ended October 31, 20162017 compared to $17,922$134,003 during the same period in 2015. 2016.

Funds provided fromused in financing activities was $131,025$4,750 in 20162017 compared with funds provided from financing activity of $18,000$131,025 in 2015.2016. The Company received $26,000 from third parties and $4,750 from related parties in loans and repaid notes to related parties totaling $26,000.

 

Management expects to continue to issue debt to finance the Company. The purchasers and manner of issuance will be determined per 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.

 

 
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Results of Operations

 

The Company recorded zerodid not record revenue during the three and six month periods ended October 31, 20162017 and 2015.

for the same period in 2016. General and administrative expenses for the three and six-monthsix months period ended October 31, 20162017 totaled $685,269$104,794 and $709,527$397,772 compared to $14,146$712,945 and $33,832$764,353 for the same periods in 2015.2016. The increasedecrease for six-monththree and six months period in 20162017 over 20152016 was due to variancelower expense in accounting, legal and consulting payments.stock based compensation.

 

Depreciation and amortization was $27,676 and $54,826zero for the three and six month periods ended October 31, 20162017 compared to $705$27,150 and $2,022$54,826 for the same periods ended October 31, 2015.2016. The depreciation was related to fixed assets consistingconsisted of a machine and molds withdepreciation of the mold fully depreciatedassets used in 2016live streaming the hockey games plus amortization for a patent purchasedpurchased. In 2016, the assets were impaired during the year ended OctoberApril 30, 2017 causing no depreciation during the three and six months ended July 31, 2016.2017.

 

The Company incurred a net loss of $714,402$103,872 and $767,267 in the three and six-month period ended October 31, 2016 compared to $15,871 and $37,894 in the same periods in 2015. The variance in net loss was due to higher amortization costincome of $1,495,323 in the three and six month periods ended October 31, 20162017 compared to a net loss of $714,402 and $767,267 in the same periods in 2016. The variance was due primarily to a gain in fair value of $1,957,554 during the six months ended October 31, 2017 compared to none in the same period in 2015.2016.

 

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.

 

 
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PART II – OTHER INFORMATION

 

ITEM 1: LEGAL PROCEEDINGS.

 

NoneNone.

 

ITEM 1A: RISK FACTORS.FACTORS

 

There have been no material changesAs a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to BRK, Inc.’s risk factors as previously disclosed in our most recent 10-K filingprovide the information called for the year ending April 30, 2016.by this Item 1A.

 

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

 

NoneOn May 18, 2017, the Company issued 3,000,000 shares of common stock at $0.0005 to the convertible note holder 0832322 BC, Ltd. for $1,500 of convertible debt. Per the note agreement 300,000 shares were to be issued at $0.005 per share for the $1,500 conversion, however 3,000,000 shares were issued due to the forward 10:1 split of the Company common stock on December 21, 2015 which occurred subsequent to date of the note issuance.

On May 18, 2017, the Company issued 1,451,905 shares of common stock at $0.013775 to the convertible note holder JSJ for $20,000 of convertible debt.

On June 8, 2017, the Company issued 2,660,000 shares of common stock at $0.01102 to the convertible note holder EMA Financial for $29,313 of Convertible debt.

From August 25, 2017 through October 31, 2017 the Company issued 12,000,228 shares of common stock to three entities with a value of $21,853 for the conversion of debt.

 

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

 

NoneNone.

 

ITEM 4: MINE SAFETY INFORMATION.INFORMATION

 

NoneNone.

 

ITEM 5: OTHER INFORMATION.

 

NoneNone.

 

 
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ITEM 6: EXHIBITS

No.

Description

19

 

Table of Contents

ITEM 6: EXHIBITS

Description

 

Filed

3.1

 

Certificate of Incorporation

 

11/8/2011

3.2

 

Bylaws

 

11/8/2011

3.3

 

Articles of Amendment (Increase Authorized)

 

11/8/2011

3.4

 

Articles of Amendment (Stock Split)

 

1/14/2016

3.5

 

Articles of Amendment (Designation of Series A Preferred)

 

8/15/2017

3.6

 

Articles of Amendment (Increase in Authorized)

 

8/15/2017

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

(1)

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

(1)

32.1

 

Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

(1)

101.INS *

XBRL Instance Document

 
101.SCH *

XBRL Taxonomy Extension Schema Document

 
101.CAL *

XBRL Taxonomy Extension Calculation Linkbase Document

 
101.DEF *

XBRL Taxonomy Extension Definition Linkbase Document

 
101.LAB *

XBRL Taxonomy Extension Label Linkbase Document

 
101.PRE *

XBRL Taxonomy Extension Presentation Linkbase Document

 

* XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

(1) Filed herewith.

 

20

 

31

Chief Executive Officer Certification

32

Section 1350 Certification

101

XBRL Interactive Data Files

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SIGNATURES

 

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

 

 

BRK, INC.

 

  

 

Date: December 20, 2016April 27, 2020

By :By:

/s/ Brian KeasberryDaniel Serruya

 

 

Brian KeasberryDaniel Serruya

President and Chief Executive Officer, Chief Financial Officer, (principal executive officer, principal financial officer, and principal accounting officer)

 

President

Chief Executive Officer

Principal Financial and Accounting Officer

21

 

15