Gen 2 Technologies Inc. - Quarter Report: 2014 January (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended January 31, 2014
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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From transition period from __________ to __________
Commission File No.: ________
BRK, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 26-2840468 | |
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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| 3871 S. Valley View Blvd, Unit 70 Las Vegas, Nevada | 89103 | |
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(Address of principal executive offices)
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(Zip Code)
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(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). Yes o No x
As of March 11, 2014, the registrant had 4,308,320 shares of common stock outstanding.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | |||||
| Item 1. |
Financial Statements
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4 | |||
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Balance Sheets (Unaudited) as of January 31, 2014 and April 30, 2013
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4 | ||||
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Statements of Operations (Unaudited) for the Three And Nine Months Ended January 31, 2014 and 2013 and from inception (May 22, 2008) to January 31, 2014
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5 | ||||
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Statements of Cash Flows (Unaudited) for the Nine Months Ended January 31, 2014 and 2013 and from inception (May 22, 2008) to January 31, 2014
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6 | ||||
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Notes to Financial Statements (Unaudited)
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7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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8 | |||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk
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9 | |||
| Item 4T. |
Controls and Procedures
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9 | |||
| PART II – OTHER INFORMATION | |||||
| Item 1. |
Legal Proceedings
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10 | |||
| Item 1A. |
Risk Factors
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10 | |||
| Item 2. |
Unregistered Sales of Securities and Use of Proceeds
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10 | |||
| Item 3. |
Default upon Senior Securities
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10 | |||
| Item 4. |
Mine Safety Information
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10 | |||
| Item 5. |
Other information
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10 | |||
| Item 6. |
Exhibits
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11 | |||
| Signatures | 12 | ||||
2
Reference in this report to “BRK” “we,” “us,” and “our” refer to BRK, Inc.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
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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, 2014 and 2013 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 here and nine month periods ended January 31, 2014, 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)
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January 31,
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April 30,
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2014
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2013
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ASSETS
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Current assets
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Cash
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$ | 3,862 | $ | 4,202 | ||||
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Deposits
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4,116 | 4,730 | ||||||
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Total current assets
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8,678 | 8,932 | ||||||
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Fixed assets
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Equipment, net of accumulated depreciation of $9,219 and $5,268, respectively
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14,671 | 18,622 | ||||||
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Total assets
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$ | 22,649 | $ | 27,544 | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current liabilities
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Accounts payable
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$ | 8,179 | $ | 10,143 | ||||
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Compensation payable-related party
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36,685 | 15,105 | ||||||
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Convertible notes-related party
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7,089 | 7,089 | ||||||
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Convertible notes payable
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68,000 | 68,000 | ||||||
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Short term debt-related party
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39,690 | 28,820 | ||||||
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Short term debt
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69,400 | 51,220 | ||||||
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Total liabilities
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229,043 | 180,377 | ||||||
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Stockholders’ deficit
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Preferred shares, par value $0.001
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1,000,000 authorized; none issued and outstanding
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- | - | ||||||
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Common stock, par value $0.001
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authorized 100,000,000 shares,
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issued and outstanding 4,308,320 as of
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January 31, 2014 and April 30, 2013, respectively
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4,308 | 4,308 | ||||||
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Additional paid-in capital
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29,742 | 29,742 | ||||||
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Accumulated deficit during development stage
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(240,444 | ) | (186,873 | ) | ||||
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Total stockholders’ deficit
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(206,394 | ) | (152,823 | ) | ||||
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Total liabilities and stockholders’ deficit
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$ | 22,649 | $ | 27,554 | ||||
The accompanying notes are an integral part of the unaudited financial statements.
4
BRK, INC.
(A DEVELOPMENT-STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
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From
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Inception
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(May 22, 2008)
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Three Months Ended
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Nine Months Ended
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to
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January 31,
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January 31,
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January 31,
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2014
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2013
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2014
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2013
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2014
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Sales
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- | $ | 48 | $ | - | $ | 205 | $ | - | |||||||||||
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Operating expenses:
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Selling, general and administrative expenses
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14,264 | 3,425 | 49,620 | 59,667 | 231,515 | |||||||||||||||
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Depreciation
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1,317 | 1,317 | 3,951 | 3,951 | 9,219 | |||||||||||||||
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Loss from operations
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(15,581 | ) | (4,694 | ) | (53,571 | ) | (63,413 | ) | (240,734 | ) | ||||||||||
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Other income (expense)
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Other Income
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- | - | 290 | |||||||||||||||||
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Net loss
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$ | (15,581 | ) | $ | (4,694 | ) | $ | (53,571 | ) | $ | (63,413 | ) | $ | (240,444 | ) | |||||
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Net loss per common share
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basic and diluted
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||
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Weighted average number
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of common shares outstanding
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4,308,320 | 4,308,320 | 4,308,320 | 4,240,856 | ||||||||||||||||
The accompanying notes are an integral part of the unaudited financial statements.
5
BRK, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
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From inception
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Nine Months Ended
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(May 22, 2008) to
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| January 31, | January 31, | |||||||||||
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2014
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2013
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2014
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Cash Flows From Operating Activities:
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Net loss
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$ | (53,571 | ) | $ | (63,413 | ) | $ | (240,444 | ) | |||
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Adjustments to reconcile net loss to
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net cash used in operating activities:
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Depreciation
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3,951 | 3,951 | 9,219 | |||||||||
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Changes in operating assets and liabilities:
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Accounts payable
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1,736 | 2,436 | 11,879 | |||||||||
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Advances from related parties
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21,580 | -- | 36,685 | |||||||||
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Prepaid expense
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614 | 2,350 | (86 | ) | ||||||||
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Accrued compensation – related party
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- | 3,225 | - | |||||||||
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Deposits
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- | (4,030 | ) | (4,030 | ) | |||||||
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Net cash used in operating activities
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(25,690 | ) | (55,481 | ) | (186,777 | ) | ||||||
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Cash Flows From Investing Activities:
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Payment for fixed assets
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- | - | (23,890 | ) | ||||||||
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Net cash used in investing activities
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- | - | (23,890 | ) | ||||||||
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Cash Flows From Financing Activities:
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Sale of common stock
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- | 17,800 | 26,050 | |||||||||
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Borrowings on convertible notes payable
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- | - | 75,000 | |||||||||
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Borrowings on convertible notes payable-related party
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- | - | 8,089 | |||||||||
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Borrowing on notes payable-related party
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10,870 | 20,480 | 51,850 | |||||||||
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Borrowings on notes payable
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14,480 | 16,020 | 66,959 | |||||||||
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Repayments on debt
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- | (1,000 | ) | (1,259 | ) | |||||||
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Repayments on notes payable-related party
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- | (1,320 | ) | (12,160 | ) | |||||||
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Net cash provided by financing activities
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25,350 | 51,980 | 214,529 | |||||||||
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Net increase in cash
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(340 | ) | (3,501 | ) | 3,862 | |||||||
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Cash at beginning of period
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4,202 | 15,594 | - | |||||||||
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Cash at end of period
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$ | 3,862 | $ | 12,093 | $ | 3,862 | ||||||
Non-Cash Transactions
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Payment of accounts payable by third parties
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$ | 3,700 | $ | - | $ | 3,700 | ||||||
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Conversion of notes payable to common stock
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$ | - | $ | - | $ | 8,000 | ||||||
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Reclassification of convertible debt from long term debt to short-term debt
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$ | - | $ | - | $ | 45,275 | ||||||
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Reclassification of construction in progress to fixed assets
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$ | - | $ | - | $ | 20,190 |
The accompanying notes are an integral part of the unaudited financial statements.
6
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, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2014. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2013 Annual Report filed with the SEC on August 14, 2013.
NOTE 2 – GOING CONCERN
As shown in the accompanying financial statements, BRK has an accumulated deficit of $240,444 and negative working capital of $220,365 as of January 31, 2014. 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, 2014 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 – NOTES PAYABLE
During the nine months ended January 31, 2014, the Company borrowed $18,180 from a non-related party. Of this amount, $3,700 was for expenses paid on behalf of the Company. The notes are due on demand and bear no interest. The total due to non-related party note holders is $69,400 as of January 31, 2014.
NOTE 4 – RELATED PARTY
During the nine months ended January 31, 2014, the Company borrowed $10,870 from related parties. These advances are non interest bearing and due on demand. The total due to related parties as of January 31, 2014 is $39,690 in notes payable and $7,089 in convertible notes payable.
During the nine months ended January 31, 2014, the Company recorded $21,580 in compensation payable to the President. As of January 31, 2014, $36,685 was due to him.
7
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, 2014, we had an accumulated deficit of $240,444. We recorded a net loss of $15,581 and $53,571 for the three and nine months ending January 31, 2014. The net loss was $4,694 and $63,413 for the same periods during 2013. 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 $221,065 as of January 31, 2014 compared to negative $171,445 as of April 30, 2013. Cash used in operations totaled $25,690 during the period ending January 31, 2014 compared to $55,481 during the same period in 2013. Funds provided from financing activities were $25,350 in 2014 compared to $51,980 in 2013. All funds provided in 2014 were from notes payable.
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.
8
Results of Operations
The Company recorded no revenues during the three and nine months periods ended January 31, 2014 and $205 revenue for the same period in 2013.
General and administrative expenses for the three and nine months ended January 31, 2014 totaled $15,581 and $53,571 compared to $4,694 and $63,413 for the same periods in 2013. The decrease for nine months was due to lower accounting, legal and consulting costs.
Depreciation was $1,317 and $3,951 for the three and nine month periods ended January 31, 2014 and January 31, 2013. The depreciation was related to the purchase of equipment during fiscal year April 30, 2013.
The Company incurred a net loss of $15,581 and $53,571 in the three and nine months period ended January 31, 2014 compared to $4,694 and $63,413 in the same periods in 2013. The lower net loss was due to lower general and administrative cost in the nine month period ended January 31, 2014 compared to the same period in 2013.
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.
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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, 2013.
ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4: MINE SAFETY INFORMATION.
None
ITEM 5: OTHER INFORMATION.
None
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ITEM 6. EXHIBITS
| No. | Description | |
| 31 | Chief Executive Officer Certification | |
| 32 | Section 1350 Certification |
11
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. | |||
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Date: March 11, 2014
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By:
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/s/ Brian Keasberry | |
| Brian Keasberry | |||
| President | |||
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Chief Executive Officer
Principal Financial and Accounting Officer
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12