10-Q 1 r91117010q.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 
(Mark one)
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 31, 2017

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: 000-55018
 
Bare Metal Standard, Inc.
(Exact name of registrant as specified in its charter)
 
Idaho
 
47-5572388
(State or Other Jurisdiction
 
(I.R.S. Employer
of Incorporation or Organization)
 
Identification No.)
 
3604 S. Banner Street, Boise, Idaho
 
    83709
    (Address of principal executive offices)
 
(Zip Code)
 
(208) 898-9379
(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 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐ Not Applicable
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company, defined in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer ☐
 
Accelerated filer ☐
Non-accelerated filer ☐
 
Smaller Reporting Company
(Do not check if a smaller reporting company
 
Emerging growth company 
   
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 o No
 
There were 31,625,000 shares of Common Stock outstanding as of September 6, 2017.
 

 

 
Table of Contents
Bare Metal Standard, Inc.
Index to Form 10-Q
For the Quarterly Period Ended July 31, 2017
 
PART I
  3
 
 
 
ITEM 1.
  3
 
  3
 
  4
 
  5
 
  6
 
 
 
ITEM 2. 
10
 
 
 
ITEM 3.
17
 
 
 
ITEM 4T.
17
 
 
 
PART II
19
 
 
 
ITEM 1.
19
 
 
 
ITEM 1A.
19
 
 
 
ITEM 2.
19
 
 
 
ITEM 3.
19
 
 
 
ITEM 4.
19
 
 
 
ITEM 5.
19
 
 
 
ITEM 6.
20
 
 
 
 
21
 
 
 
 
2

 
Part I. Financial Information
Item 1. Financial Statements
 
Bare Metal Standards, Inc.
Balance Sheets
(unaudited)

   
July 31
   
October 31
 
   
2017
   
2016
 
             
Assets
 
Current assets
           
Cash
 
$
3,204
   
$
87,488
 
Accounts receivable
   
39,465
     
-
 
Accounts receivable - related parties
   
49,765
     
-
 
Inventory
   
12,876
     
-
 
Total current assets
   
105,310
     
87,488
 
                 
Total assets
 
$
105,310
   
$
87,488
 
                 
Liabilities and Stockholders' Equity
 
                 
Current liabilities
               
Accounts payable and accrued liabilities
 
$
45,708
   
$
16,249
 
                 
Total current liabilities
   
45,708
     
16,249
 
                 
Stockholders' equity
               
Preferred stock, $0.001 par value;  20,000,000 shares authorized;
               
none issued and outstanding as of July 31 , 2017 and October 31, 2016
           
-
 
Common stock, $0.001 par value; 80,000,000 shares authorized;
               
31,515,000 and 31,475,000  shares issued and outstanding as of
               
July 31, 2017 and October 31, 2016
   
31,515
     
31,475
 
Additional paid-in capital
   
257,035
     
237,075
 
Accumulated deficit
   
(228,948
)
   
(197,311
)
Total stockholders' equity
   
59,602
     
71,239
 
                 
Total liabilities and stockholders' equity
 
$
105,310
   
$
87,488
 

(see accompanying notes to unaudited  financial statements)
 
3

 
Bare Metal Standard, Inc.
Statements of Operations
(unaudited)

                     
From Inception
 
   
For the Three Months
   
For the Nine Months
   
(November 12, 2015)
 
   
Ended July 31,
   
Ended July 31,
   
thru July 31,
 
   
2017
   
2016
   
2017
   
2016
 
Revenue
                       
Product sales and services
 
$
100,420
   
$
-
   
$
220,282
   
$
-
 
Product sales and services - related parties
   
89,592
     
-
     
148,418
     
-
 
Total revenue
   
190,012
     
-
     
368,700
     
-
 
Cost of revenue
   
(23,884
)
   
-
     
(80,756
)
   
-
 
Gross  income
   
166,128
     
-
     
287,944
     
-
 
                                 
Operating expenses
                               
General and administrative expenses
   
163,857
     
28,892
     
319,581
     
150,450
 
Total operating expenses
   
163,857
     
28,892
     
319,581
     
150,450
 
                                 
Profit (Loss) from operations
   
2,270
     
(28,892
)
   
(31,637
)
   
(150,450
)
                                 
Net profit (loss) for the period
 
$
2,270
   
$
(28,892
)
 
$
(31,637
)
 
$
(150,450
)
                                 
Basic and diluted net loss per common share
 
$
0.00
   
$
(0.00
)
 
$
(0.00
)
 
$
(0.01
)
                                 
Weighted average common shares outstanding
                               
Basic and diluted
   
31,515,000
     
31,159,348
     
31,508,993
     
22,800,305
 

(see accompanying notes to  unaudited financial statements)
 
4

 
Bare Metal Standard, Inc.
Statement of Cash Flows
(unaudited)

         
From Inception
 
      
For the Nine Months
   
(November 12, 2015)
 
      
Ended July 31,
   
thru July 31,
 
   
2017
   
2016
 
Cash flows from operating activities
           
Net loss
 
$
(31,637
)
 
$
(150,450
)
Adjustments to reconcile net loss to net cash used
               
in operating activites
               
Common stock issued for services
   
-
     
31,000
 
Changes in operating assets and liabilities:
               
Increase in accounts receivable
   
(39,465
)
   
-
 
Increase in accounts receivable - related parties
   
(49,765
)
   
-
 
Increase in inventory
   
(12,876
)
   
-
 
Increase in accounts payable
   
29,459
     
44,085
 
Net cash used in operating activities
   
(104,284
)
   
(75,365
)
                 
Cash flows from financing activities
               
Loan from related party
   
-
     
50
 
Cash received from sale of common stock
   
20,000
     
120,000
 
Net cash provided by financing activities
   
20,000
     
120,050
 
                 
Increase in cash and cash equivalents
   
(84,284
)
   
44,685
 
                 
Cash, beginning balance
   
87,488
     
-
 
                 
Cash, ending balance
 
$
3,204
   
$
44,685
 
                 
Non-cash financing and investing activities
               
Forgiveness of related party loan payable
 
$
-
   
$
50
 

(see accompanying notes to unaudited  financial statements)
 
5

 
Bare Metal Standards, Inc.
Notes to Unaudited Financial Statements
For the Nine Months Ended July 31, 2017
 
NOTE 1 - ORGANIZATION AND OPERATIONS
 
The Company was incorporated, as Bare Metal Standard, Inc., on November 12, 2015 under the laws of the State of Idaho.  The Company plans to engage in the business of kitchen exhaust cleaning.

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
The accompanying unaudited interim financial statements of Bare Metal Standard, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the period  ended October 31, 2016 contained in the Company’s Form S 1/A  originally filed with the Securities and Exchange Commission on January 9, 2017.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the period ended October 31, 2016 as reported in the Company’s Form S 1/A have been omitted.

Earnings (Loss) per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period.  Diluted earnings (loss) per share is computed by dividing net income (loss), adjusted for changes in income or loss that resulted from the assumed conversion of convertible shares, by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of July 31, 2017, there were no potentially dilutive securities included in the calculation as their effect was anti-dilutive.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
 Recently Adopted Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.
 
6

 
Bare Metal Standards, Inc.
Notes to Unaudited Financial Statements
For the Nine Months Ended July 31, 2017
 
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding balances.  Accounts receivable as of July 31, 2017 consists of amounts owing by franchisees for monthly royalty commitments and for product sales to customers, including the cost of freight incurred to ship the product.  An allowance for doubtful accounts will be provided for those accounts receivable considered to be uncollectable based on historical experience and management’s evaluation of outstanding accounts receivable at the end of the period. Bad debts will be written off against the allowance when identified. The Company determined that no allowance was required at July 31, 2017.

Inventory
As at, July 31, 2017 the Company had $12,876 worth of inventory, valued on an average cost basis.  The inventory is reviewed at least quarterly and adjusted for obsolescence and discrepancies.

Revenue Recognition
The Company derives revenue from the sale of franchises, and products, services and training to support the franchisees.

The Company recognizes revenue when it is realized or realizable and earned, and therefore only recognizes revenue when a franchise agreement has been entered into and the franchise fee received.  The Company recognizes revenue from the sale of products and services when the product has been shipped or the services have been provided in accordance with the contract entered into with the customer.
 
The Company must meet all of the following four criteria in order to recognize revenue:

·
Persuasive evidence of an arrangement exists
·
Delivery has occurred
·
The sales price is fixed or determinable
·
Collection is reasonably assured

Payments received in advance of satisfaction of the relevant criteria for revenue recognition are recorded as advances from customers.

NOTE 3 - GOING CONCERN

The accompanying unaudited interim financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, during the nine months ended July 31, 2017, the Company incurred a net loss of $31,637 and an accumulated deficit of $228,948 as of the same date.  If the Company is unable to generate profits and is unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustment relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company is taking certain steps to provide the necessary capital to continue its operations. These steps included, but are not limited to: 1) focus on sales to minimize the need for capital at this stage; 2) raising equity financing; 3) continuous focus on reductions in cost where possible.
 
7

 
Bare Metal Standards, Inc.
Notes to Unaudited Financial Statements
For the Nine Months Ended July 31, 2017

NOTE 4 – RELATED PARTY TRANSACTIONS
 
During the three months and nine months ended July 31, 2017 the Company shipped $89,592 and $148,418, respectively, worth of product and freight to one related company.

We have entered into a verbal agreement with Taylor Brothers to use two of their offices until we raise 66% of our offering. At that time we will begin paying $5,000 per month to Taylor Brothers.



NOTE 5 - STOCKHOLDERS' EQUITY

Common Stock
As of July 31, 2017, there were 80,000,000 shares of common stock authorized having a par value of $0.001 and there were 31,515,000 issued and outstanding.

During the nine months ended July 31, 2017 the Company sold, for cash, 40,000 restricted common shares units to three investors at a cost of $0.50 per share unit for total proceeds of $20,000. Each unit consists of one share of our common stock, and one warrant to purchase one share of common stock within 24 months of issuance, for $2.00

Preferred Stock
As of July 31, 2017, there were 20,000,000 preferred shares authorized having a par value of $0.001, and none issued.

Common Stock Warrants
During the nine months ended July 31, 2017 the Company sold, for cash, 40,000 restricted common shares units to three investors at a cost of $0.50 per share unit for total proceeds of $20,000. Each unit consists of one share of our common stock, and one warrant to purchase one share of common stock within 24 months of issuance, for $2.00

NOTE 6 – MAJOR CUSTOMERS AND ACCOUNTS RECEIVABLE

The Company has unrelated customers and one related party customer, whose revenue, during the nine months ended July 31, 2017 represented in excess of 10% of the total revenue and in excess of 10% of total accounts receivable.

Concentration of Revenue-
During the nine months ended July 31, 2017 the Company collected royalties and sold product, including freight, totaling $148,418 or 40.5% of its total revenue, to one related company and $70,927 or 19.4% to one non-related party.

Concentration of Accounts Receivable-
As of July 31, 2017, one related party accounted for $49,765 or 55.8% of total accounts receivable. One non-related party accounted for $16,718 or 18.7% of total accounts receivable; a second non-related party accounted for $11,154 or 12.5% of total accounts receivable.
 
8

 
Bare Metal Standards, Inc.
Notes to Unaudited Financial Statements
For the Nine Months Ended July 31, 2017

NOTE 7 – SUBSEQUENT EVENTS

On August 9, 2017 the Company sold 40,000 common shares to an investor at a cost of $0.50 per share for total proceeds of $20,000. In addition, the Company, on August 9, 2017, also issued 70,000 shares, to two vendors, at a cost of $0.50 per share for a total cost of $35,000.
 
9

 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Forward-Looking Information
 
This Quarterly Report on Form 10-Q contains forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words "anticipate," "believe," "estimate," "will," "plan," "seeks," "intend," and "expect" and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Quarterly Report on Form 10-Q All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Quarterly Report on Form 10-Q. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.
 
Critical Accounting Policies
 
There have been no material changes to our critical accounting policies and estimates from the information provided in, "Management's Discussion and Analysis and Results of Operations", included in our Annual Report on Form S-1/A for the period ended October 31, 2016.
 
Results of Operations
 
Overview of Current Operations
 
Bare Metal Standard, Inc. was incorporated in the State of Idaho on November 12, 2015, under the name Bare Metal Standard, Inc. We consider ourselves to be an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. From our inception to date, we have generated no revenues, and our operations have been limited to organizational, start-up, and capital formation activities. Our plan of operation is to engage in the business of commercial kitchen grease exhaust system cleaning.
 
10

 
 Our Business
 
Bare Metal Standard provides franchise opportunities in the services of commercial kitchen grease exhaust systems (GES).

Bare Metal Standard intends to support all its franchises through a centralized workflow system named Shifts Software that the company created and owns. This application will be capable of managing hundreds of franchisees and thousands of customer locations. The workflow system exists on redundant servers throughout the USA to ensure connectivity. The company intends to purchase consumables to leverage its buying power and maintain its uniformity. Our franchisees will purchase from us directly the same quality products to maintain uniformity in our cleaning process.

The Company’s business model comes from the traditional franchise model that has proven to be successful for many service focused offerings. The primary value of our business model is to leverage the knowledge, capital and passion, equipment and processes to build a national brand to deliver a consistent level of services throughout the United States and beyond. Once we are operational with clients the business model is secure with recurring revenue from the required service (by code NFPA 96) on a quarterly basis (quarterly is typical, some potential customers are monthly, every 2, 4, 6 months to a few who go annually). The NFPA (National Fire Protection Associations) guidelines are adopted by insurance companies and local fire departments for the safety of the public. It has become mandatory for industrial kitchens maintain a monthly, quarterly or semiannual cleaning schedule depending on what they cook. A barbecue restaurant would be required to clean their hoods monthly compared to a nursing homes semiannual cleaning Local authority departments monitor these schedules with onsite inspections. Our mission is to transform this business sector into a rationalized national brand that will have the strength to expand throughout the United States and beyond.

Our principal service is providing support and training for our franchisees helping them to become successful with our proven track record. We do not own any patents or trademarks but we are licensed in the appropriate states that we offer under the franchising laws of that State.
We are registered in all the States in the United States to sell and operate our franchises except the following 10 States; California, Hawaii, Illinois, Maryland, Michigan, New York, North Dakota, South Dakota, Rhode Island, and Wisconsin. We intend to register in the remaining States as needed.

We have entered into a verbal agreement with Taylor Brothers to use two of their offices until we raise 66% of our offering. At that time we will begin paying $5,000 a month to Taylor Brothers. We have no intention to acquire or carry on Taylor Brothers operations as they have been in business for over 25 years very successfully. We intend to be in the business of selling and supporting our own franchises in the same industry. Our Franchisees will never be involved with Taylor Brothers.

The officers and directors of Bare Metal Standard are currently officers and directors of Taylor Brothers. James Bedal and Mike Taylor will resign their positions with Taylor Brothers and work full time for Bare Metal Standard. Bare Metal Standard will rely upon the business network and relationships built by Mr. Bedal and Mr. Taylor over their many years in business. It is the intention of Bare Metal Standard to assume the support and maintenance of the existing franchise agreements of the current Taylor Brothers franchisees from Taylor Brothers, as Taylor Brothers has ceased selling franchises. At that point Bare Metal Standard will inherit franchises in Kansas City, Wichita Kansas, Tulsa Oklahoma, East Texas, Des Moines Iowa, Portland Oregon, Boise Idaho and Salt Lake City Utah. All discussions leading to the propose transaction has been with the principals of Taylor Brothers and Bare Metal Standard only. We will be exercising “14.1 General Provision” in all the franchisee contracts our franchisees have with Taylor Brothers;
 
11


14.1.1 This Agreement shall inure to the benefit of the successors and assigns of Franchisor. Franchisor shall have the right to transfer or assign this Agreement to any person or legal entity who assumes its terms and agrees to comply with Franchisor’s obligations contained herein, but who meets the qualifications and requirements of Franchisor. Any transfer must be approved in writing by Franchisor. Franchisor shall have no liability for the performance of any obligations contained in this Agreement after the effective date of such transfer or assignment. As of this date there are no written or verbal agreements between Taylor Brothers and Bare Metal, Inc. Additionally there is no agreement with the franchisees between Taylor Brothers and Bare Metal Standard, Inc. and one is not needed to execute this transaction because of General Provision 14.1. Taylor Brothers and Bare Metal Standard will retain legal counsel to seamlessly execute this transaction not to affect franchisee operations. In exchange Bare Metal Standard, Inc. will continue to support their franchisees and receive their 10% royalty for continued support. Thus, there is, in the opinion of management, limited chance of Taylor Brothers competing with Bare Metal Standard’s potential franchisees.

We believe that our potential customers understand the financial and reputational risks associated with inadequate maintenance of their kitchen hoods and that our high quality, professional services are low-cost expenditures when compared to the alternative of failing to perform essential maintenance. We strive to be the service provider of choice and believe our customers have recognized our value proposition, as evidenced by our long-standing customer relationships our management team has and the high rate at which our potential customers renew their contracts from year to year.

Our focus on attracting and retaining new customers for our franchisees begins with our associates in the field, who interact with prospective customers every day. Our associates bring a strong level of passion and commitment to the Bare Metal brand. We have extensive experience to bring to our new company. Our field organization is supported by dedicated customer service and call center personnel. Our culture of continuous improvement drives an intense focus on the quality of the services delivered, which we believe produces high levels of customer satisfaction and, ultimately, customer retention and referrals.

Our expansion, both in existing markets of potential franchisees, where we have capacity to increase our local market position with franchises, and in new markets through detailed assessments of local economic conditions and demographics, we have identified target markets where we see opportunities. We intend to grow our presence through strategic franchise expansions and additional licensing agreements
 
12

 
 COMPETITION
 
We may not have the resources to compete with our existing competitors or with any new competitors. We intend to compete with many other competitors who perform wheelchair repairs, all of which have significantly greater personnel, financial, and managerial resources than we do. This competition from other companies with greater resources and reputations may result in our failure to maintain or expand our business.
 
Moreover, as the demand for the servicing of commercial kitchen grease exhaust systems increases, new companies may enter the market and the influx of added competition will pose an increased risk to our Company. Increased competition may lead to price wars, which would harm us since we would be unable to compete with companies with greater resources. In addition, increased competition and increased demand may create a stress on the wheelchair manufacturers, output capabilities, which may lead to increased prices, which would also harm our ability to compete in the wheelchair market.
 
INTELLECTUAL PROPERTY
 
We rely or plan to rely on a combination of trademark, copyright, trade secret and patent laws in the United States, as well as confidentiality procedures and contractual provisions to protect our commercial kitchen grease exhaust system maintenance methodologies and any new methodologies we might develop in the future. We currently have no pending patents nor trademarks.
 
From time to time, we expect that we may encounter disputes over rights and obligations concerning intellectual property. Also, the efforts management has taken to protect its proprietary rights may not be sufficient or effective. Any significant impairment of its intellectual property rights could harm the existing business, the brand and reputation, and the ability of the business to compete on a going forward basis. Also, protecting our intellectual property rights could be costly and time consuming.
 
Employees
 
We currently have six employees. Our CEO performs all duties related to the operations of this business. We also plan to utilize additional independent contractors on a part-time/as needed basis.
 
Property
 
Our corporate headquarters are located at: 3604 S. Banner Street, Boise, Idaho 83709. We do not own any real property. Management believes that its current facilities are adequate for its needs through the next twelve months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard.
 
13

 
Results of Operations for the nine months ended July 31, 2017 compared to the period from November 12, 2015 (Inception) through July 31, 2017 and the three months ended July 31, 2017 compared to the three months ended July 31, 2016.

During the nine month period ended July 31, 2017, the Company generated total revenues of $368,700, of which $148,418 is from services and products sold to a related party. In addition, the Company does not expect to generate cumulative profit for the year ended October 31, 2017.  During the three months ended July 31, 2017, the Company generated total revenues of $190,012 compared to 0 revenue generated during the same three months of 2016.
    
For the nine months ending July 31, 2017, we experienced a net loss of $31,637, as compared to a net loss of $150,450 for the period from November 12, 2015 (Inception) through July 31, 2016. The net loss for the nine months ending July 31, 2017 was attributed to $319,581 in general & administrative expenses, as compared to $150,450 in general & administrative expenses for the period from November 12, 2015 (Inception) through July 31, 2016.  The $150,450 included the cost of issuing 30,000,000 common restricted shares to founders for services previously rendered and services to be rendered during the start-up period, plus the cost of issuing 1,000,000 common restricted shares to a consultant for services provided during the S-1 approval process.  The $319,582 includes $89,212 for officer salaries; $81,861 for administrative payroll; and $148,509 of the other general and administrative costs necessary to perform daily operating functions.  During the three months ended July 31, 2017, the Company generated total revenues of $190,012 compared to 0 revenue generated during the same three months of 2016.  As a result of the increased revenue, operating expenses, during the three months, increased to $163,857 from $28,892, generating a profit of $2,271 after cost of sales of $23,884, compared to a loss of $28,892 for the three months ended July 31, 2016.
    
Revenue
 
The Company has generated total revenues of $368,700 for the nine months ended July 31, 2017 of which $148,418 was for products sold to Taylor Brothers, a Company owned by the Company’s President. As of July 31, 2017, the Company had an accumulated deficit of $228,948. There can be no assurances that the Company can achieve or sustain profitability or that the Company's operating losses will not increase in the future.  During the three months ended July 31, 2017, the Company generated total revenues of $190,012 compared to 0 revenue generated during the same three months of 2016, as the Company had not yet commenced business activity as of July 31, 2016.
 
Plan of Operation
 
The Company’s plan of operation is to provide franchise opportunities in the services of commercial kitchen grease exhaust systems (GES). As of July 31, 2017, we had $3,204 cash on hand and unrelated accounts receivable of $39,465 plus $49,765 due from a related party for products and services provided to two entities controlled by Taylor Brothers, a Company owned by Bare Metal’s President. Although the Company generated net income of $2,271 for the three months ended July 31, 2017, before an allowance for potential income taxes, Management believes, without any additional funding or revenues, the Company has to continue to sell equity securities to finance its operations and continued growth. We will apply any proceeds from future revenues to help cover our expenditures. At this time, management anticipates, it will be required to seek outside funding to keep its business operational for the next twelve months, and will continue its efforts to seek additional funding.
 
14

 
If we experience losses in our first year of business operations, we do not believe such losses would prevent us from continuing our operations for our first year, based on our current cash position and ability to generate funds. If and when the time comes that we seek funding, we plan to rely on equity sales of our common shares in order to continue to fund our business operations. And, we would have to issue equity or enter into a strategic arrangement with a third party. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any of additional sales of our equity securities or other financing to fund our business operations. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
 
Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company's business, results of operations and financial condition. Any future acquisitions of other businesses, technologies, services or product(s) might require the Company to obtain additional equity or debt financing, which might not be available on terms favorable to the Company, or at all, and such financing, if available, might be dilutive.
 
Going Concern
 
Our independent auditors included an explanatory paragraph in their report on the October 31, 2016 audited financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations.
 
Therefore, management plans to raise equity capital to finance the operating and capital requirements of the Company. While the Company is devoting its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
 
Summary of any product research and development that we will perform for the term of our plan of operation.
 
We do not anticipate performing any product research and development under our current plan of operation.
 
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Expected purchase or sale of plant and significant equipment.
 
We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.
 
Significant changes in the number of employees.
 
As of July 31, 2017, we had four full time employees and two officers. We are dependent upon our two officers for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.
 
Liquidity and Capital Resources
 
The Company is authorized to issue 80,000,000 shares of its $0.001 par value common stock. As of July 31, 2017, the Company has 31,515,000 shares of common stock issued and outstanding. As of July 31, 2017, the Company had current assets of $105,310 and current liabilities of $45,708.
 
The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. In order for the Company to remain a Going Concern it will need to find additional capital or generate revenues. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders),or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.
 
Management believes the Company has sufficient cash assets, coupled with Managements’ ability to provide additional funds through the sale of equity securities, to fund its operations and keep the Company fully reporting for the next twelve (12) months.
 
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Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
 
 
Critical Accounting Policies and Estimates
 
Revenue Recognition: We recognize revenue from product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.
 
 
New Accounting Standards
 
The Company's management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company's financial position and results of operations.
 
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
 
Not applicable.
 
 
Item 4. Controls and Procedures
 
Disclosure Controls and Procedures
 
Our disclosure controls and procedures, as defined in Rule 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
 
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Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of material weaknesses.
 
 
Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal 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
 
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
 
We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.
 
Item 1A - Risk Factors
 
See Risk Factors set forth in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2016 and the discussion in Item 1, above, under "Liquidity and Capital Resources."
 
Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3 -- Defaults upon Senior Securities
 
None.
 
Item 4 -- Submission of Matters to a Vote of Security Holders
 
None.
 
Item 5 -- Other Information
 
None.
 
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Item 6 -- Exhibits
 
 
 
 
Incorporated by reference
Exhibit
Exhibit Description
Filed
herewith
Form
Period Ending
Exhibit
Filing Date
 
 
 
 
 
 
 
3.1
 
S-1
 
3.1
03/22/2016
3.2
 
S-1
 
3.1
03/22/2016
             
31.1
X
 
 
 
 
32.1
X
 
 
 
 
 
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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 hereunto duly authorized.
 
 
 
Bare Metal Standard, Inc.
Registrant
 
 
 
 
Date: September 12, 2017
/s/ James Bedal
 
Name: James Bedal
 
Its: Principal Executive Officer
Principal Financial Officer
Principal Accounting Officer
 
 
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