Power Americas Resource Group Ltd. - Quarter Report: 2018 February (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended February 28, 2018

OR

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

For the transition period from _____________ to _____________

Commission File Number: 000-54452

BRISSET BEER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

370 Guy Street, Suite G9, Montreal, Quebec, Canada H3J 1S6

(Address of principal executive offices) (Zip Code)

514-906-6851

(Registrant's telephone number, including area code)

_____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[ ] Yes [X] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 9,863,000 shares of common stock, $0.0001 par value, were issued and outstanding as of October 5, 2018.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

BRISSET BEER INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to interim condensed consolidated financial statements

 BRISSET BEER INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

See accompanying notes to interim condensed consolidated financial statements

BRISSET BEER INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

See accompanying notes to interim condensed consolidated financial statements

BRISSET BEER INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2018

(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND OPERATIONS

Organization and Basis of Presentation

Brisset Beer International, Inc. (the “Company”) was incorporated in the State of Florida on May 11, 2010 under the name Benefit Solutions Outsourcing Corp.

The accompanying financial statements have been prepared in U.S. dollars and in accordance with accounting principles generally accepted in the United States on a going concern basis.

Nature of Operations

As a result of the Company's management having experience in the brewing business, the Company has acquired the rights to Broken 7 which is a craft beer brewed in the province of Quebec, Canada.  The Company is engaged principally in the marketing of Broken 7 and is contracting all brewing and distribution activities to a third-party service provider.  We operate in a single segment which is the craft beer market.  Our craft beer consists of single brand known as Broken 7 and is currently brewed, distributed, and marketed solely in Quebec, Canada.

Interim Reporting

In the opinion of management, the unaudited condensed consolidated financial information furnished herein reflects all adjustments, consisting of normal and recurring adjustments that are necessary to fairly state the financial position of Brisset Beer International. Inc. and the results of its operations for the periods presented.  This report on Form 10-Q should be read in conjunction with the Company's financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended May 31, 2017.  The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context.  Accordingly, footnote disclosures, which would substantially duplicate the disclosure contained in the Company's Form 10-K for the fiscal year ended May 31, 2017 has been omitted.  The results of operations for the nine-month period ended February 28, 2018 are not necessarily indicative of results for the fiscal year ending May 31, 2018 or for any future annual or interim period.

NOTE 2 – ABILITY TO CONTINUE AS A GOING CONCERN

The accompanying financial statements have been prepared in US dollars and in accordance with accounting principles generally accepted in the United States (“GAAP”) on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.  The Company commenced its craft brewing activities in September 2014.  During the nine months ended February 28, 2018 the Company has incurred net losses of $111,836 and the Company expects losses to continue until it can achieve profitable operations from its craft beer operations.  These conditions raise substantial doubt about the Company's ability to continue as a going concern.

We will be required to expend substantial amounts of working capital in order to brew, distribute and market our Broken 7 brand of craft beer.  Our current operations have been funded entirely from capital raised from our private offering of securities from February 2014 through December 2015, as well as additional funding received in 2017 through the issuance of convertible notes and stock issuances. We are entirely dependent on our ability to attract and receive additional funding from either the sale of securities or outside sources such as private investment or a strategic partner. We currently have no firm agreements or arrangements with respect to any such financing and there can be no assurance that any needed funds will be available to us on acceptable terms or at all. The inability to obtain sufficient funding of our operations in the future will restrict our ability to grow and reduce our ability to continue to conduct business operations. Our failure to raise additional funds will adversely affect our business operations, and may require us to suspend our operations, which in turn may result in a loss to the purchasers of our common stock.  If we are unable to obtain necessary financing, we will likely be required to curtail our development plans which could cause us to become dormant. Any additional equity financing may involve substantial dilution to our then existing stockholders.

The Company's ability to continue as a going concern is dependent on its ability to brew, distribute, and market our craft beer and ultimately achieve profitable operations and to generate sufficient cash flow from financing and operations to meet its obligations as they become payable.  Management may seek additional capital through a private placement and public offering of its common stock.  Although there are no assurances that management's plans will be realized, management believes that the Company will be able to continue operations in the future.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management's Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the amounts reported in these financial statements and notes. Significant areas requiring the use of estimates relate to accrued liabilities and the impairment of goodwill.  Management believes the estimates utilized in preparing these financial statements are reasonable and prudent and are based on management's best knowledge of current events and actions the Company may undertake in the future. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Foreign Currency

The functional currency of the Company at February 28, 2018 and May 31, 2017 is the Canadian dollar. Transactions that are denominated in a foreign currency are re-measured into the functional currency at the current exchange rate on the date of the transaction. Any foreign currency denominated monetary assets and liabilities are subsequently re-measured at current exchange rates, with gains or losses recognized as foreign exchange losses or gains in the statement of operations. Nonmonetary assets and liabilities are translated at historical exchange rates. Expenses are translated at average exchange rates during the period. Exchange gains and losses are included in statement of operations for the period.

Adjustments arising from the translation of the Company's financial statements to United States dollars for presentation purposes due to differences between average rates and balance sheet rates are recorded in other comprehensive income.

Concentration of Credit Risk

The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains all of its cash balances with two financial institutions in the form of demand deposits.

Loss per Share

Income or loss per share is calculated based on the weighted average number of common shares outstanding. Diluted loss per share does not differ from basic loss per share since the effect of the Company's warrants are anti-dilutive. Diluted income per share is calculated using the treasury stock method which uses the weighted average number of common shares outstanding during the period and also includes the dilutive effect of potentially issuable common shares from outstanding and warrants. At February 28, 2018, potential common shares of 12,317,500 related to outstanding share purchase warrants were excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive.

Comprehensive Income

In accordance with ASC 220, “Comprehensive Income” (“ASC 220”) all components of comprehensive income, including net loss, are reported in the financial statements in the period in which they are recognized. Comprehensive income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Net loss and other comprehensive (income) loss, including foreign currency translation adjustments, are reported, net of any related tax effect, to arrive at comprehensive income. No taxes were recorded on items of other comprehensive income.

Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Uncertain Tax Positions

The Company adopted the provisions of ASC 740-10-50, formerly FIN 48, Accounting for Uncertainty in Income Taxes. The Company had no material unrecognized income tax assets or liabilities for the year ended May 31, 2017. The Company's policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the years ended May 31, 2017, and 2016 there was no income tax, or related interest and penalty items in the income statement, or liability on the balance sheet. The Company files income tax returns in the U.S. federal jurisdiction and Nevada State.  Tax years 2011 to present remain open to income tax examination.  The Company is not currently involved in any income tax examinations.

Fair Value of Financial Instruments

The book values of cash, prepaid expenses, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The hierarchy consists of three levels: 

Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.

Beneficial Conversion Feature of Convertible Debt

The Company accounts for convertible debt in accordance with the guidelines established by FASB ASC 470-20, “Debt with Conversion and Other Options”. The Beneficial Conversion Feature (“BCF”) of convertible debt is normally characterized as the convertible portion or feature of certain debt that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of convertible debt when issued, and also records the estimated fair value. Beneficial Conversion Features that are contingent upon the occurrence of a future event are recorded when the event is resolved.

Impairment of Long-lived Assets

In accordance with ASC 360, Property, Plant and Equipment, long lived assets such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.  Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of fair value less costs to sell and are no longer depreciated.  The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

In accordance with ASC 350 Intangibles – Goodwill and Other the Company performs a qualitative assessment at the end of each reporting period to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Revenue recognition

Revenue from the Company's craft beer business is received in the form of commissions.  The Company has contracted out services to a single supplier for brewing, labeling and distribution.  The Company recognizes commission revenue based on a percentage of sales with fixed margins as negotiated with the contract brewer.  Revenue is recorded at the time of delivery to the customer.

Any receivables remaining unpaid forty-five days after invoicing by an unrelated party business will be charged to the Company.  The unrelated party business undertakes to pay the said receivable account to the Company without delay once recovered, less the costs of collection and late penalty fees.

Recent Accounting Pronouncements 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

ASU 2014-09 - Topic 606 - Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual and interim periods beginning on or after December 15, 2016, and early adoption is not permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in the ASU. The Company does not expect any impact of adopting this guidance.

ASU 2014-12 - Topic 718 - Compensation - Stock Compensation

In June 2014, the FASB issued ASU 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period.” This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the financial statements.

NOTE 4 - CONTRACT BREWING AGREEMENT

On December 2, 2014, Biere Brisset International Inc., a company incorporated under the Canada Business Corporations Act which is a wholly owned subsidiary of the Company, entered into a Manufacturing and Distribution Agreement with a company incorporated in Quebec which does business under the name “Breuvages Blue Spike” (“Blue Spike”). The agreement sets forth minimum quantities which Blue Spike will manufacture for the Company, manufacturing costs and a gross margin upon which the Company will earn its commission.

Blue Spike is responsible for brewing, labeling and distributing Broken 7 beer for the Company. The Company, with the approval of Blue Spike, can continue selling products manufactured by Blue Spike in the Company's own distribution network. Products sold within the Company's own distribution network are subject to higher margins for the Company.  The Company is responsible, at its expense, for the marketing and promotion of Broken 7, and has agreed to invest 25% of the gross margin of its products for marketing and advertising.

The Company granted Blue Spike a right of first refusal if the Company sells or transfers all or a portion of its rights in its brands. If the Company is sold during the term of the agreement, the Company is obligated to pay Blue Spike 2.5% of the purchase price for every $250,000 of product sales, up to $5 million. The agreement also provides for various payment returns to Blue Spike if the Company is sold when the agreement is no longer in effect, depending on when and why the agreement is no longer in effect. The agreement is for an initial term of five years and is automatically renewed for five years unless either party notifies the other of its intention not to renew 180 days prior to the expiration of the term. The Company granted Blue Spike a right of first refusal to manufacture or act as exclusive agent for the distribution and sale of its products in other territories other than Quebec.

On April 1, 2016, BBII amended the manufacturing and distribution agreement (the “Amendment”) with Blue Spike to clarify sections 2.1.6 “BBII Margin”, 5.1.4 Limitation, 5.2.1 Price, 6.2 Distribution Network, 6.7 Price of Products, and 6.8 BBII Sales Network.  The Amendment also lists new Broken 7 products under Schedules A and D, and includes the updated BBII Margins for new Broken 7 products into Schedule F.  For all the terms of the Manufacturing and Distribution Agreement, reference is hereby made to such Agreement annexed hereto as Exhibit 10.32. All statements made herein concerning such document are qualified by references to said exhibit.

NOTE 5 – ACQUISITION OF BROKEN 7 ASSETS

Broken 7

On April 4, 2014, the Company entered into an Asset Purchase Agreement with Scenario A, a private Quebec corporation, to purchase all assets relating to the product known as “Broken 7”, a craft beer locally brewed in Montreal, Quebec, Canada.  Under the Asset Purchase Agreement, the Company agreed to acquire Broken 7 for $25,000 payable in two installments to Scenario A with $12,500 to be paid at closing and $12,500 to be paid 60 business days after the closing date of April 7, 2014 (second installment payment was completed July 2014).  The purchase was of the Broken 7 trademark and recipe only.  No other assets were acquired.  The Company's principal executive officer, Stephane Pilon, also serves as Scenario A's President.  The Corporation's Secretary and director, Pol Brisset, also serves as Scenario A's Vice-President.  Mr. Pilon and Mr. Brisset are majority owners of Scenario A.  The Company made the first payment of $12,500 on closing.  The Company and Scenario A have amended the original agreement such that the due date of the second payment of $12,500 has been extended an additional 30 business days to August 15, 2014.  On August 14, 2014 the Company made the second payment. The fair value of Broken 7 is measured by level three hierarchy of fair value of financial instruments.

The Company recorded an expense of $25,000 on April 4, 2014 related to the acquisition of the assets, based on a qualitative and quantitative analysis.

NOTE 6 – CONVERTIBLE PROMISSORY NOTES

Convertible notes payable at February 28, 2018 and May 31, 2017 consists of the following:

On February 17, 2017, the Company issued a convertible note for $7,500 proceeds.  The Company recorded a debt discount related to the beneficial conversion feature of the note for $7,500.  The note is convertible in common stock at 50% discount to the lowest average 20-day trading price and was due on August 17, 2017.  At the Company's election, the convertible promissory note can also be settled by cash payment.  The note has not yet been paid and is currently in default.

On June 6, 2017, the Company issued a convertible promissory note for proceeds of $11,000.  The note matures on December 6, 2017 and accrues interest at 8% per annum.  The note is convertible in common stock at 50% discount to the lowest average 20-day trading price.  At the Company's election, the convertible promissory note can also be settled by cash payment.  The note has not yet been paid and is currently in default.

On August 4, 2017, the Company issued a convertible promissory note for proceeds of $7,500.  The note matures on February 4, 2018 and accrues interest at 8% per annum.  The note is convertible in common stock at 50% discount to the lowest average 20-day trading price.  At the Company's election, the convertible promissory note can also be settled by cash payment.  The note has not yet been paid and is currently in default.

On October 6, 2017, the Company issued a convertible promissory note for proceeds of $15,000. The note matures on April 6, 2018 and accrues interest at 8% per annum. The note is convertible in common stock at 50% discount to the lowest average 20-day trading price. At the Company's election, the convertible promissory note can also be settled by cash payment.  The note has not yet been paid and is currently in default.

During the nine months ended February 28, 2018 and 2017, the Company recorded $33,683 and $456, respectively, related to the amortization of the discount as interest expense.

NOTE 7 – STOCKHOLDERS’ EQUITY

COMMON STOCK

Issuance of Units

On August 22, 2016, we sold a total of 6,000,000 shares of common stock to Stephane Pilon and Pol Bisset for an aggregate of $3,000.  Messrs. Pilon and Brisset also received Class A warrants to purchase an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.05 per share and Class B warrants to purchase an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.10 per share.  Such warrants expire in five years from the date of issuance and are immediately exercisable on a cashless basis.  The entire proceeds have been allocated to common shares.

On September 12, 2016, a private investor exercised warrants to purchase 105,000 shares of common stock for cash at an exercise price of $0.15 per share.  The Company received proceeds of $15,750 from this exercise.  The entire proceeds have been allocated to common shares.

Issuance of Units for Service

On November 8, 2016, the Company issued 150,000 units of the Company’s Common stock in payment for services rendered. The units were valued at a price of $0.10 per unit.

During the year ended May 31, 2017, the Company issued 150,000 shares of common stock for services provided to the company.

WARRANTS

The Company has the following warrants outstanding as of February 28, 2018:

NOTE 8 – RELATED PARTY TRANSACTIONS

On November 30, 2014, the Company entered into a service agreement with its current principal executive officer, Stephane Pilon.  The service agreement was subsequently amended. Pursuant to the Amendment, Mr. Pilon shall be eligible to receive a quarterly discretionary performance bonus up to CDN$6,000 (US$4,500) payable at the beginning of each three-month period beginning on September 1, 2015.  The amount of the bonus, if any, will be decided by the Board of Directors in their sole discretion. 

The Company's Asset Purchase Agreement was executed with Scenario A. The Company's principal executive officer and director, Stephane Pilon, also serves as Scenario A's President.  The Corporation's Secretary and director, Pol Brisset, also serves as Scenario A's Vice-President.  Mr. Pilon and Mr. Brisset are majority owners of Scenario A.  The Company has made total payments of $25,000 to Scenario A under the Asset Purchase Agreement. 

On March 1, 2015, Biere Brisset International, Inc. entered into a 5-year Manufacturing and Distribution Agreement with La Compagnie de Biere Brisset, Inc. (“CBB”), a specialty brewer, to help bring to market and test new line extensions for beer brands owned by the Company.  CBB undertakes to sell the Products, while complying with policies, procedures, methods and conditions of promotion, of advertising and sales described in the agreement.  Proceeds, if any, from the sale of the Products are retained by CBB as compensation for its services. The Company's President, Chief Executive Officer, Chief Financial Officer, Treasurer and a director, Stephane Pilon, serves as CBB's Vice President and the Company's Secretary and director, Pol Brisset, serves as CBB's President. Pol Brisset and Stephane Pilon are majority owners of CBB. 

On August 22, 2016, the Company sold a total of 6,000,000 shares of common stock to each Stephane Pilon and Pol Bisset for an aggregate of $3,000.  Messrs. Pilon and Brisset also each received Class A warrants to purchase an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.05 per share and Class B warrants to purchase an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.10 per share.  Such warrants expire in five years from the date of issuance and are immediately exercisable on a cashless basis.

During the year ended May 31, 2017, the Company recorded $45,579 Management and Director’s fees, related to services provided by Stephane Pilon.

During the nine months ended February 28, 2018, the Company recorded $33,750 Management and Director’s fees, related to services provided by Stephane Pilon.

As of February 28, 2018, the Company had a payable to Stephane Pilon of $50,481 for accrued salary, and expenses paid on behalf of the Company.

NOTE 9 – SUBSEQUENT EVENTS

On March 2, 2018, the Company and Blue Spike entered into a Mutual Discharge Agreement (the “Termination Agreement”), pursuant to which the parties mutually agreed to terminate the Manufacturing and Distribution Agreement. The effective date of the Termination Agreement was March 2, 2018.

The parties chose to terminate the Manufacturing and Distribution Agreement due to the Company's lack of sufficient sales Broken 7.

Pursuant to the Termination Agreement, the Company agreed to pay Blue Spike an aggregate of $5,979, including Blue Spike's outstanding invoices aggregating $3,700, sales commissions from September to December 2017 and applicable taxes.

There were no material early termination penalties incurred by the Company in connection with the termination of the Manufacturing and Distribution Agreement.

On March 23, 2018, the Company issued a convertible promissory note for proceeds of $20,000. The note matures on September 23, 2018, and accrues interest at 8% per annum. The note is convertible in common stock at 50% discount to the lowest average 20-day trading price. The note has not yet been paid, the default interest rate is 15% per annum and is currently in default.

On March 31, 2018, the Company issued a promissory note for proceeds of $2,500. The note matures on September 23, 2018 and accrues interest at 1.5% per quarter. The note has not yet been paid, the default interest rate is 2% per month and is currently in default.

On March 31, 2018, the Company issued a promissory note for proceeds of $6,500. The note matures on September 23, 2018 and accrues interest at 1.5% per quarter. The note has not yet been paid, the default interest rate is 2% per month and is currently in default.

On March 31, 2018, the Company issued a promissory note for proceeds of $7,338. The note matures on September 23, 2018 and accrues interest at 1.5% per quarter. The note has not yet been paid, the default interest rate is 2% per month and is currently in default.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial statements of Brisset Beer International, Inc. (the “Company”), which are included elsewhere in this Form 10-Q.  Certain statements contained in this report, including statements regarding the anticipated development and expansion of the Company's business, the intent, belief or current expectations of the Company, its directors or its officers, primarily with respect to the future operating performance of the Company and the products it expects to offer and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements.  Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by or with the approval of the Company, which are not statements of historical fact, may contain forward-looking statements. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. For a more detailed listing of some of the risks and uncertainties facing the Company, please see the Form 10-K for the year ended May 31, 2017 filed by the Company with the Securities and Exchange Commission.

All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

Plan of Operations

Until April 2014, we were engaged in the acquisition and exploration of oil and gas properties.  We are currently engaged in developing our business to brew, distribute, market and sell a single brand of craft beer called Broken 7.

Our initial plan was to brew, market and sell the craft beer in Quebec, Canada. 

On December 2, 2014 the Company entered into a five-year manufacturing and distribution agreement (the “Manufacturing and Distribution Agreement”) with Breuvages Blue Spike (“Blue Spike”) pursuant to which Blue Spike has the exclusive right to manufacture, distribute and sell BBII's Broken7 beer in certain designated networks in the following Canadian provinces and U.S. states: Newfoundland, Prince- Edward Island, New Brunswick, Nova Scotia, Quebec, Ontario, Maine, New Hampshire, Vermont, New York, Massachusetts, Connecticut, Rhode Island, New Jersey, Pennsylvania, Ohio, Michigan, Illinois, Indiana, Kentucky, West Virginia, Virginia, Washington DC, Delaware, Maryland. The Company granted Blue Spike a right of first refusal to act as exclusive agent for the distribution and sale of its products in other new territories.

On April 1, 2016, BBII amended the manufacturing and distribution agreement with Blue Spike to clarify certain of the business terms regarding the margins, pricing and distribution networks.

On November 8, 2016, BBII issued an addendum to the manufacturing and distribution agreement with Blue Spike to offer shares of the Company in return for services rendered.

Subsequent Event

On March 2, 2018, the Company and Blue Spike entered into a Mutual Discharge Agreement (the “Termination Agreement”), pursuant to which the parties mutually agreed to terminate the Manufacturing and Distribution Agreement. The effective date of the Termination Agreement was March 2, 2018.

The parties chose to terminate the Manufacturing and Distribution Agreement due to the Company's lack of sufficient sales Broken 7.

Pursuant to the Termination Agreement, the Company agreed to pay Blue Spike an aggregate of $5,979, including Blue Spike's outstanding invoices aggregating $3,700, sales commissions from September to December 2017 and applicable taxes.

There were no material early termination penalties incurred by the Company in connection with the termination of the Manufacturing and Distribution Agreement.

Results of Operations

Three months ended February 28, 2018 compared to the three months ended February 28, 2017

Revenues

The Company recognized $0 of commission revenue during the three months ended February 28, 2018 compared to $8,415 for the three months ended February 28, 2017, which represented commissions paid to the Company under the Blue Spike manufacturing and distribution agreement, and from sales of craft beer at festivals. The decrease in commissions was due to the finalization manufacturing and distribution agreement with Blue Spike.

Net Loss

For the three months ended February 28, 2018 our net loss was $41,005 compared to $26,898 for the three months ended February 28, 2017.

Operating Expenses

Total operating expenses for the three months ended February 28, 2018 were $27,532 compared to $34,834 for the three months ended February 28, 2017.  This decrease in operating expenses was due to a decrease in (i) General and Administration expenses from $3,052 to $171 for the three-month periods ended February 28, 2017 and February 28, 2018, respectively, (ii) Management and Director’s $28,292 to $11,250 for the three-month periods ended February 28, 2017 and February 28, 2018, respectively, and (iii) Office and Sundry expenses from $3,068 to $650 for the three-month periods ended February 28, 2017 and February 28, 2018, respectively. The decrease was partially offset due to an increase in Professional Fees from $422 to $15,461 for the three-month periods ended February 28, 2017 and February 28, 2018, respectively, primarily due to professional fees incurred by the Company in connection with the preparation and filing of periodic and annual reports under the Securities Exchange Act of 1934, as amended.

Nine months ended February 28, 2018 compared to the nine months ended February 28, 2017

Revenues

The Company earned $1,430 of commission revenue from the sale of craft beer during the nine months ended February 28, 2018 compared to $26,020 during the three months ended February 28, 2017.  The decrease in commissions was due to the finalization manufacturing and distribution agreement with Blue Spike.

Operating Expenses and Net Loss

Total operating expenses for the nine months ended February 28, 2018 were $77,209 compared to $502,918 for the nine months ended February 28, 2017.  This decrease in operating expenses was due to a decrease in (i) General and Administration expenses from $54,652 to $6,601 for the nine-month periods ended February 28, 2017 and February 28, 2018, respectively, (ii) Office and Sundry expenses from $29,472 to $1,850 for the nine-month periods ended February 28, 2017 and February 28, 2018, respectively, (iii) Rent from $900 to $0 for the nine-month periods ended February 28, 2017 and February 28, 2018, respectively, and (iv) Stock-based compensation costs from $371,263 to $0 during the for the nine-month periods ended February 28, 2017 and February 28, 2018, respectively, associated with the issuance of 6,000,000 warrants on August 22, 2016 to the executive officers and directors of the Company. The decrease was partially offset due to an increase in (i) Management and Director’s $30,579 to $33,750 for the nine-month periods ended February 28, 2017 and February 28, 2018, respectively, and (ii) Professional Fees from $16,052 to $35,008 for the nine-month periods ended February 28, 2017 and February 28, 2018, respectively, primarily due to professional fees incurred by the Company in connection with the preparation and filing of periodic and annual reports under the Securities Exchange Act of 1934, as amended.

Liquidity and Capital Resources

At February 28, 2018, we had $1,235 in cash and cash equivalents. During the nine months ended February 28, 2018, we incurred a net loss of $111,836.  Since inception on May 11, 2010, we have an accumulated deficit of $2,093,022 to February 28, 2018.  These conditions raise substantial doubt about our ability to continue as a going concern.

We do not currently have enough capital to fund our operations. To date, we have funded our operations primarily through the sale of equity and debt securities. We may seek to raise additional funding that we require in the form of equity financing from the sale of our common stock.  However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our operations.  We currently do not have any agreements or arrangements in place for any future financing.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Smaller reporting companies are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the Company conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of February 28, 2018. Based on this evaluation, our principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that the Company's disclosure and controls are designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during our last fiscal 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

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company's property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information required by this Item 1A.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None not previously reported.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mining Safety Disclosures

Not applicable.

Item 5. Other information

SUBSEQUENT EVENTS

Termination of Blue Spike Manufacturing and Distribution Agreement

On March 2, 2018, the Company and Blue Spike entered into a Mutual Discharge Agreement (the “Termination Agreement”), pursuant to which the parties mutually agreed to terminate the Manufacturing and Distribution Agreement. The effective date of the Termination Agreement was March 2, 2018.

The parties chose to terminate the Manufacturing and Distribution Agreement due to the Company's lack of sufficient sales Broken 7.

Pursuant to the Termination Agreement, the Company agreed to pay Blue Spike an aggregate of $5,979, including Blue Spike's outstanding invoices aggregating $3,700, sales commissions from September to December 2017 and applicable taxes.

There were no material early termination penalties incurred by the Company in connection with the termination of the Manufacturing and Distribution Agreement.

Sale of Unregistered Securities

The Company issued the securities below pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, due to the fact that they were private issuances not involving a public offering of securities:

Item 6. Exhibits

* 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 has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.