Gen 2 Technologies Inc. - Quarter Report: 2013 January (Form 10-Q)

brk_10q.htm

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 January 31, 2013

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.: ___________

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 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 o 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	o	Accelerated filer	o
Non-accelerated filer	o	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). o Yes x No

As of March 4, 2013, 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 January 31, 2013 and April 30, 2012	5
	Statements of Operations (Unaudited) for the Three And Nine Months Ended January 31, 2013 and 2012 and from inception (May 22, 2008) to January 31, 2013	6
	Statements of Cash Flows (Unaudited) for the Nine Months Ended January 31, 2013 and 2012 and from inception (May 22, 2008) to January 31, 2013	7
	Notes to Financial Statements (Unaudited)	8
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	11
Item 4T:	Controls and Procedures	11

PART II – OTHER INFORMATION

Item 1:	Legal Proceedings	12
Item 1A:	Risk Factors	12
Item 2:	Unregistered Sales of Securities and Use of Proceeds	12
Item 3:	Default upon Senior Securities	12
Item 4:	Mine Safety Information	12
Item 5:	Other information	12
Item 6:	Exhibits	12
Signatures		13

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.

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 nine months periods ended January 31, 2013 and 2012 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 nine month periods ended January 31, 2013, are not necessarily indicative of results to be expected for any subsequent period. Our year end is April 30.

BRK, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

(Unaudited)

	January 31			April 30,
	2013			2012
ASSETS

Current assets
Cash	$	12,093		$	15,594
Prepaid expense		-			3,050
Deposit		4,730			-
Total current assets		16,823			18,644
Fixed assets
Equipment, net of accumulated depreciation of $3,951 and $0, respectively		19,939			23,890

Total assets	$	36,762		$	42,534

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable	$	9,828		$	7,392
Compensation payable-related party		9,155			5,930
Convertible notes-related party		7,089			7,089
Convertible notes payable		68,000			68,000
Short term debt-related party		27,590			8,430
Short term debt		51,220			36,200
Total liabilities		172,882			133,041

Stockholders’ deficit
Preferred shares, par value $0.001
1,000,000 authorized; none issued and outstanding		-			-
Common stock, par value $0.001 authorized 100,000,000 shares,
issued and outstanding 4,308,320 and 4,165,920 as of January 31, 2013 and April 30, 2012, respectively		4,308			4,166
Additional paid-in capital		29,742			12,084
Accumulated deficit during development stage		(170,170	)		(106,757	)
Total stockholders’ deficit		(136,120	)		(90,507	)

Total liabilities and stockholders’ deficit	$	36,762		$	42,534

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

BRK, INC.

(A DEVELOPMENT-STAGE COMPANY)

STATEMENTS OF OPERATIONS

(Unaudited)

													From
													Inception
													(May 22, 2008)
	Three Months						Nine Months						to
	Ended January 31,						Ended January 31,						January 31,
	2013			2012			2013			2012			2013

Sales	$	48		$			$	205		$	-		$	205

Operating expenses:
Selling, general and administrative expenses		3,425			14,606			59,667			55,495			166,509
Depreciation		1,317			-			3,951			-			3,951

Loss from operations		(4,694	)		(14,606	)		(63,413	)		(55,495	)		(170,255	)

Other income (expense)
Other Income		-			-			-			80			85

Net loss	$	(4,694	)	$	(14,606	)	$	(63,413	)	$	(55,415	)	$	(170,170	)
Net loss per common share
basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.02	)

Weighted average number
of common shares outstanding		4,308,320			3,960,797			4,240,856			2,986,932

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

BRK, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months						From inception (May 22, 2008) to
	Ended January 31,						January 31,
	2013			2012			2013
Cash Flows From Operating Activities:
Net loss	$	(63,413	)	$	(55,415	)	$	(170,170	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		3,951			-			3,951
Changes in operating assets and liabilities:
Accounts payable		2,436			2.500			9,828
Prepaid expense		2,350			5,542			(700	)
Accrued compensation-related parties		3,225						9,155
Deposit		(4,030	)		-			(4,030	)

Net cash used in operating activities		(55,481	)		(47,373	)		(151,966	)

Cash Flows From Investing Activities:
Payment for construction in progress		-			-			(23,890	)

Net cash used in investing activities		-			-			(23,890	)

Cash Flows From Financing Activities:
Sale of common stock		17,800			-			26,050
Borrowings on convertible notes payable		-			30,000			76,000
Borrowings on convertible notes payable-related party		-			-			7,089
Borrowing on notes payable-related party		20,480			-			39,700
Borrowings on notes payable		16,020			31,500			52,479
Repayments on debt		(1,000	)		-			(1,259	)
Repayments on notes payable-related party		(1,320	)		(8,910	)		(12,110	)

Net cash provided by financing activities		51,980			52,590			187,949

Net increase in cash		(3,501	)		5,217			12,093
Cash at beginning of period		15,594			437			-
Cash at end of period	$	12,093		$	5,654		$	12,093

Non-Cash Transactions
Conversion of notes payable to common stock	$	-	$	8,000	$	8,000
Reclassification of long term debt to short-term debt	$	-	$	-	$	45,275
Reclassification of construction in progress
To fixed assets	$	-	$	-	$	20,190

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

BRK, INC.

(A DEVELOPMENT STAGE COMPANY)

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 nine months ended January 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2013. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2012 Annual Report filed with the SEC on July 31, 2012.

NOTE 2 – GOING CONCERN

As shown in the accompanying financial statements, BRK has an accumulated deficit of $170,170 as of January 31, 2013. 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 January 31, 2013 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 – CONVERTIBLE NOTES PAYABLE

As of January 31, 2013 the Company owes $68,000 to multiple convertible promissory note holders for proceeds received during fiscal year April 30, 2012. These notes bear interest at 0%, are due two years from issuance and are unsecured. The notes are convertible at $0.005 into the Company’s common stock.

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 none.

NOTE 4 – NOTES PAYABLE

During the nine months ended January 31, 2013, the Company borrowed $10,000 from a non-related party. The Note is due on demand and bears an interest rate of 8% per annum. Also during the nine months the Company borrowed $6,020 from a non-related party and repaid $1,000. The amount is non-interest bearing and due on demand. The total due to non-related party note holders is $51,220 as of January 31, 2013. Other than the $10,000 note dated January 29, 2013, these advances are non-interest bearing and due on demand.

NOTE 5 – CONVERTIBLE NOTES PAYABLE - RELATED PARTY

As of January 31, 2013, the Company has $7,089 in convertible notes outstanding to one related party. The convertible notes bear 0% interest and are convertible at $0.005 into the Company’s common stock.

NOTE 6 – RELATED PARTY

During the nine months ended January 31, 2013, the Company borrowed $20,480 from related parties and repaid $1,320. These advances are non interest bearing and due on demand. The total due to related parties as of January 31, 2013 is $27,590.

During the nine months ended January 31, 2013, the Company expensed $16,815 for services provided by CEO and a shareholder of which $9,155 is due as of January 31, 2013.

NOTE 7 – EQUITY

During August and September 2012 the Company issued 142,400 shares of common stock at $0.125 per share to nine entities for $17,800 in cash.

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

From inception (May 22, 2008) to January 31, 2013, we had an accumulated deficit of $170,170. We recorded a net loss of $4,694 and $63,413 for the three and nine months ending January 31, 2013. The net loss was $14,606 and $55,415 for the same periods during 2012. 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 is a negative $156,059 as of January 31, 2013 compared to negative $114,397 as of April 30, 2012. Cash used in operations totaled $58,706 during the period ending January 31, 2013 compared to $47,373 during the same period in 2012. Funds provided from financing activities were $51,980 in 2013 compared to $52,590 in 2012.

Management expects to continue to issue common stock to pay for the marketing of the product once the machine is complete and 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 $48 of revenue during the three months and $205 for the nine months periods ended January 31, 2013 and zero revenue for the same periods in 2012.

General and administrative expenses for the three and nine months ended totaled $3,425 and $59,667 at January 31, 2013 compared to $14,606 and $55,495 for the same periods in 2012. The increase for the nine months was due to higher accounting, legal and consulting costs.

Depreciation was $1,317 and $3,951 for the three and nine month periods ended January 31, 2013 compared to zero in the same period in 2012. The increase was due purchase of equipment during fiscal year April 31, 2013.

Other income of zero was recorded in the three month and nine period ended January 31, 2013 and $80 during the nine month period in 2012.

The Company incurred a net loss of $4,694 and $63,413 in the three and nine months period ended January 31, 2013 compared to $14,606 and $55,415 in the same periods in 2012.

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 do 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.

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, 2012.

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

During August and September, 2012 the Company issued 142,400 shares of common stock at $0.125 per share to nine entities for $17,800 in cash.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4: MINE SAFETY INFORMATION

None

ITEM 5: OTHER INFORMATION.

None

ITEM 6: EXHIBITS

No.		Description

31		Chief Executive Officer Certification

32		Section 1350 Certification

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.

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: March 4, 2013	By:	/s/ Brian Keasberry
		Brian Keasberry
		President
		Chief Executive Officer
		Principal Financial and Accounting Officer