Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED JULY 31, 2020

OR

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

Commission file number 000-1658880

BARE METAL STANDARD, INC.

(Exact name of registrant as specified in its charter)

IDAHO

(State or other jurisdiction of incorporation or organization)

3604 S. Banner Street
Boise, ID 83709

(Address of principal executive offices, including zip code.)

208-898-9379

(telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. YES x NO o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 x NO o

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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company x
	Emerging growth company x

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

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 31,195,000 shares of common stock as of September 14, 2020.

Securities registered pursuant to Section 12(b) of the Act: None

TABLE OF CONTENTS

PART I. - FINANCIAL INFORMATION
		Page

ITEM 1	CONSOLIDATED FINANCIAL STATEMENTS	3

	Consolidated Balance Sheets as of July 31, 2020 (unaudited) and October 31, 2019	3

	Unaudited Consolidated Statements of Operations for the three and nine months ended July 31, 2020 and 2019	4

	Unaudited Consolidated Statements of Stockholders’ Equity for the three and nine months ended July 31, 2020 and 2019	5

	Unaudited Consolidated Statements of Cash Flows for the nine months ended July 31, 2020 and 2019	6

	Notes to Interim Consolidated Financial Statements (unaudited)	7

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	16

ITEM 4	Controls and Procedures	17

PART II	OTHER INFORMATION	18

ITEM 1A	Risk Factors	18

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	18

ITEM 6	Exhibits	18

INDEX TO EXHIBITS		18

SIGNATURES		19

PART I. - FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS

Bare Metal Standard, Inc.

Consolidated Balance Sheets

(UNAUDITED)

	July 31,			October 31
	2020			2019
Current Assets:
Cash	$	216,641		$	10,079
Accounts receivable		39,381			50,645
Accounts receivable - related parties		100,417			86,319
Inventory		10,613			14,337
Prepaid expenses		23,678			16,972

Total current assets		390,730			178,352

Total assets	$	390,730		$	178,352

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	21,144		$	23,764
Accounts payable related party		4,000			5,375
Deferred revenue		500			-
Bank line of credit		23,065			27,308
Related party note payable - current portion		6,260			12,444
Promissory note payable - current portion		57,341			11,822

Total current liabilities		112,310			80,713
Long term liabilities
Deferred revenue		3,625			4,000
Related party note payable		-			3,067
Promissory note payable, net of discount		242,111			42,970

Total long term liabilities		245,736			50,037

Total liabilities		358,046			130,750

Shareholders' equity
Preferred stock, $0.001 par value, 20,000,000 shares authorized;
None issued and outstanding as of July 31, 2020 and October 31, 2019, respectively		-			-
Common stock, $0.001 par value, 80,000,000 shares authorized;
31,195,000 and 31,845,000 shares issued and outstanding as of July 31, 2020 and October 31, 2019, respectively		31,195			31,845
Additional paid-in capital		372,355			371,705
Accumulated deficit		(370,866	)		(355,948	)

Total stockholders' equity		32,684			47,602

Total liabilities and stockholders' equity	$	390,730		$	178,352

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

Bare Metal Standard, Inc.

Consolidated Statements of Operations

For the three and nine months ended July 31, 2020 and 2019

(Unaudited)

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	July 31, 2020			July 31, 2019			July 31, 2020			July 31, 2019
Revenue
Product sales and services	$	66,009		$	111,007		$	269,589		$	357,290
Product sales and services - related parties		151,579			130,770			412,826			489,153
Total revenue		217,588			241,777			682,415			846,443
Cost of revenue		26,069			45,780			129,680			196,729
Gross income		191,519			195,997			552,735			649,714

Operating expenses
General and administrative expenses		54,826			70,678			194,161			212,508
Administrative and officer compensation		120,882			121,894			363,421			357,386
Total operating expenses		175,708			192,572			557,582			569,894

Income (loss) from operations		15,811			3,425			(4,847	)		79,820

Other income (expense)
Other income		-			-			6,250			1,250
Interest expense		(5,994	)		(5,513	)		(16,321	)		(16,645	)
Total other income (expense)		(5,994	)		(5,513	)		(10,071	)		(15,395	)

Net income (loss)	$	9,817		$	(2,088	)	$	(14,918	)	$	64,425

Basic and diluted net income (loss) per common share	$	0.00		$	(0.00	)	$	(0.00	)	$	0.00

Weighted average shares outstanding - basic and dilutive		31,195,000			31,845,000			31,358,686			31,845,000

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

Bare Metal Standard, Inc.

Consolidated Statements of Stockholders' Equity (Deficit)

(Unaudited)

											Additional					Total
	Series A Preferred Stock				Common Stock						Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares			Amount			Capital		Deficit			Equity (Deficit)

Balance October 31, 2019		-	$	-		31,845,000		$	31,845		$	371,705	$	(355,948	)	$	47,602

Cancellation of shares		-		-		(650,000	)		(650	)		650		-			-
Net income		-		-		-			-			-		725			725

Balance January 31, 2020		-	$	-		31,195,000		$	31,195		$	372,355	$	(355,223	)	$	48,327

Net loss		-		-		-			-			-		(25,460	)		(25,460	)

Balance April 30, 2020		-	$	-		31,195,000		$	31,195		$	372,355	$	(380,683	)	$	22,867

Net loss		-		-		-			-			-		9,817			9,817

Balance July 31, 2020		-	$	-		31,195,000		$	31,195		$	372,355	$	(370,866	)	$	32,684


Balance October 31, 2018		-	$	-		31,845,000		$	31,845		$	371,705	$	(439,532	)	$	(35,982	)

Net income		-		-		-			-			-		91,598			91,598

Balance January 31, 2019		-	$	-		31,845,000		$	31,845		$	371,705	$	(347,934	)	$	55,616

Net loss														(25,085	)		(25,085	)

Balance April 30, 2019		-	$	-		31,845,000		$	31,845		$	371,705	$	(373,019	)	$	30,531

Net loss														(2,088	)		(2,088	)

Balance July 31, 2019		-	$	-		31,845,000		$	31,845		$	371,705	$	(375,107	)	$	28,443

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

Bare Metal Standard, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended
	July 31
	2020			2019

Cash flows from operating activities
Net income (loss)	$	(14,918	)	$	64,425
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
Amortization of debt discount		3,736			3,750
Changes in operating assets and liabilities:
Accounts receivable		11,264			(6,719	)
Accounts receivable - related parties		(14,098	)		(27,422	)
Prepaid expenses		6,401			(18,153	)
Inventory		3,724			(5,581	)
Accounts payable and accrued liabilities		(2,620	)		692
Accounts payable - related parties		(1,375	)		(15,625	)
Deferred revenue		125			4,125
Net cash used in operating activities		(7,761	)		(508	)

Cash flows from financing activities
Proceeds received from notes payable - related party		-			21,000
Repayment of note payable - related party		(9,251	)		(7,006	)
Repayment of line of credit		(4,243	)		(3,811	)
Proceeds from notes payable		242,500			-
Repayment of note payable		(14,683	)		(4,238	)
Net cash provided by financing activities		214,323			5,945

Increase in cash and cash equivalents		206,562			5,437
Cash, beginning balance		10,079			11,643
Cash, ending balance	$	216,641		$	17,080

Supplementary information
Cash paid during the nine months:
Interest	$	11,424		$	12,896
Income taxes	$	-		$	-

Non-cash investing and financing activities
Note payable issued for financed insurance	$	13,107		$	-

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

BARE METAL STANDARD, INC.

Notes to Consolidated Financial Statements

(unaudited)

NOTE 1 - ORGANIZATION AND OPERATIONS

The Company was incorporated, as Bare Metal Standard, Inc., (the Company) on November 12, 2015 under the laws of the State of Idaho. Bare Metal Standard provides management services for franchisees who perform fire prevention and mitigation services to commercial kitchens by cleaning their exhaust systems on a mandated schedule enforced by insurance and fire and safety prevention codes.

On March 1, 2017, Bare Metal Standard, Inc. entered into a Management Agreement with Taylor Brothers Holdings, Inc. which is an operating company and has common majority shareholders and directors. The officers and directors of Bare Metal Standard were officers and directors of Taylor Brothers. James Bedal and Mike Taylor have resigned their positions with Taylor Brothers and work full time for Bare Metal Standard. The agreement term has no expiration and can be terminated by the Company at any time with written notice to the other partner. As a result of the management agreement, Bare Metal is to provide, on behalf of Taylor Brothers, certain management services, having full authorization, on behalf of Taylor Brothers to provide all the services and all the activities, normally provided by Taylor Brothers, under the Taylor Brothers franchise agreements, previously entered into by Taylor Brothers and the franchisees Bare Metal became responsible for servicing franchisee agreements and receiving 100% of the revenues associated with those agreements assumed for the support and maintenance of the preexisting franchise agreements of Taylor Brothers Holdings franchisees as Taylor Brothers Holdings has ceased selling franchises. Bare Metal is due all collections from franchisees. Bare Metal Standard assumed the business operations of the existing franchise agreements while potential liabilities arising from said agreements will remain with Taylor Brothers. Additionally, on November 1, 2017 Bare Metal, entered into a royalty fee license agreement with Taylor Brothers Holdings Inc. with the right to sublease, the use of Trade Name Bare Metal Standard and related industry know-how including proprietary software in exchange for a monthly fee of $2,000 paid in arrears.

Bare Metal Standard is currently seeking the same management opportunities in other industries. The Company intends to sell franchises in the commercial kitchen fire prevention and mitigation services environment, but, in addition, is looking for the same opportunities in other discipline.

In March 2020, the COVID-19 outbreak was declared a national public health emergency resulting in a significant reduction in activity at restaurants and related facilities, which are the Company’s primary customer group, due to changes in consumer behavior as public health officials encouraged social distancing and state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant seating capacity, table spacing requirements, bar closures and additional physical barriers. As a result, the Company experienced a decline in revenues. Further, the Company offered a 50% reduction in royalties to be paid to the Company to its customers for the period from April 1, 2020 through May 31, 2020, which resulted in an impact to revenue of approximately $18,000 and $33,000 during the three and nine months ended July 31, 2020, respectively. As discussed in Note 5, the Company received certain loan proceeds from the United States Small Business Administration (“U.S. SBA”) in May 2020.

In July 2020, the Board of Directors unanimously adopted a resolution approving the proposed sale of the Company’s assets to Code 96 LLC, a Nevada limited liability company controlled by James Bedal and Michael Taylor. Code 96 LLC would receive all of the Company’s operating assets in exchange for the assumption of all of the Company’s liabilities. The sale of the Company’s assets was subject to a shareholder vote took place at a Special Meeting of stockholders on September 5, 2020. This transaction closed on September 8, 2020.

On September 9, 2020, John Karatzaferis, acquired control of 28,500,000 restricted shares of the Company’s issued and outstanding common stock, representing approximately 91.3% of the Company’s total issued and outstanding common stock, from James Bedal, Michael Taylor and Jeffrey Taylor in exchange for $300,000 per the terms of a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and amongst Mr. Karatzaferis, Mr. Bedal, Mr. J.Taylor and Mr. M.Taylor.

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated 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 year ended October 31, 2019 contained in the Company’s Form 10K originally filed with the Securities and Exchange Commission on January 22, 2020. 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 period presented have been reflected herein. The results of operations for the interim period 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, 2019, as reported in the Company’s Form 10K, have been omitted.

Principles of Consolidation

The Company prepares its consolidated financial statements on the accrual basis of accounting based on an October 31 fiscal year end. The accompanying consolidated financial statements include the accounts of the Company and its single subsidiary which has a fiscal year end of December 31. All intercompany accounts, balances and transactions have been eliminated in the consolidation. In March 2018, the Company formed BRMT Franchising, LLC, a Texas limited liability company that is a wholly-owned subsidiary of the Company.

Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. The more significant estimates and assumptions made by management include allowance for doubtful accounts, inventory valuation, and provision for excess or expired inventory, depreciation of property and equipment, realization of long-lived assets and fair market value of equity instruments issued for goods or services.

Inventories and Provision for Excess or Expired Inventory

Inventory consists of finished goods and consumables held for resale to franchisees and is valued on an average cost basis. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial but adequate to provide for losses. Inventory is reviewed, at least, quarterly. The Company has determined that there was no need to reserve for obsolescence as of July 31, 2020 and October 31, 2019.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which was adopted on November 1, 2018 using the modified retrospective method, with no impact to the Company’s comparative financial statements.

Revenue is recognized in accordance with a five-step revenue model, as follows: identifying the contract with the customer; identifying the performance obligations in the contract; determining the transaction price; allocating the transaction price to the performance obligations; and recognizing revenue when (or as) the entity satisfies a performance obligation.

A contract with commercial substance exists once the Company executes a franchise agreement with the franchisee. The initial license fee is due at the execution of the agreement. If collectability is not probable, the sale is deferred and not recognized until collection is probable or payment is received. Net revenues comprise gross revenues less customer discounts and allowances, actual and expected returns. Shipping charges billed to members are included in net sales. Various taxes on the sale of products and enrollment packages to members are collected by the Company as an agent and remitted to the respective taxing authority. These taxes are presented on a net basis and recorded as a liability until remitted to the respective taxing authority.

The Company generates revenue from franchise fees and royalty income, advertising fees and sales of supplies and other products as follows:

Franchise fees and royalty income

The Company sells individual franchises as well as territory agreements in the form of franchise agreements that grant the right to develop the business in designated areas. The franchise agreements typically require the franchisee to pay initial nonrefundable franchise fees prior to opening the business and continuing fees, or royalty income, on a monthly basis based upon a percentage of franchisee gross sales. The initial term of domestic franchise agreements is typically 10 years. Prior to the end of the franchise term or as otherwise provided by the Company, The Company may offer a renewal term of a franchise agreement and, if approved, the franchisee will typically pay a renewal fee upon execution of the renewal term. If approved, a franchisee may transfer a franchise agreement to a new or existing franchisee, at which point a transfer fee is paid.

Generally, the franchise license granted for each individual restaurant within an arrangement represents a single performance obligation. Therefore, initial franchise fees and market entry fees for each arrangement are allocated to each individual business and recognized over the term of the respective franchise agreement from the date of the restaurant opening. Royalty income is also recognized over the term of the respective franchise agreement based on the royalties earned each period as the underlying sales occur. Renewal fees are generally recognized over the renewal term for the respective restaurant from the start of the renewal period. Transfer fees are recognized over the remaining term of the franchise agreement beginning at the time of transfer.

Advertising fees

Franchise agreements typically require the franchisee to pay continuing advertising fees on a monthly basis based on a percentage of franchisee gross sales, which represents a portion of the consideration received for the single performance obligation of the franchise license. Continuing advertising fees are recognized over the term of the respective franchise agreement based on the fees earned each period as the underlying sales occur. Advertising fees are included in Other Service Revenue in the presentation of disaggregated revenue data below.

Sales of supplies and other products

We distribute supplies and other products to franchisees and licensees. Revenue from the sale of supplies and other products is recognized when title and risk of loss transfers to the buyer, which is generally upon delivery. Payment for supplies and other products is generally due within a relatively short period of time subsequent to delivery.

The following table presents disaggregated revenue for the three and nine months ended July 31, 2020:

	Three months ended July 31, 2020		Three months ended July 31, 2019		Nine months ended July 31, 2020		Nine months ended July 31, 2019

Royalty revenue	$	109,448	$	142,578	$	353,982	$	427,640
Training and consulting		69,476		47,418		150,171		231,953
Equipment and truck sales		20,917		32,576		124,391		129,889
Other service revenue		17,747		19,205		53,871		56,961
Total revenue	$	217,588	$	241,777	$	682,415	$	846,443

Contract Costs

Costs incurred to obtain a customer contract are not material to the Company. The Company elected to apply the practical expedient to not capitalize contract costs to obtain contracts with a duration of one year or less, which are expensed and included within cost of goods and services.

Contract Liabilities

The Company receives payment up front for the sale of a franchise. The franchise fee is considered to be a contract liability to provide support and services over the period of the license agreement, and are recorded as deferred revenue, with the revenue being recognized ratably over the license period. Additionally, the Company recognizes a contract liability related to any other unsatisfied performance obligations. As of July 31, 2020, the Company had a total of $4,125 in deferred revenue, with $500 expected to be recognized in revenue over the next 12 months, and $3,625 expected to be recognized beyond 12 months over the remaining license period of approximately nine years.

Cost of Revenues

Cost of sales includes all of the costs to service the franchise agreements, and costs to purchase the supplies and products sold to franchisees. Additionally, shipping costs are included in Cost of Revenues in the Unaudited Consolidated Statements of Operations.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average common shares outstanding. Diluted net income per share is calculated by dividing net income by the weighted-average common shares outstanding during the period using the treasury stock method. No potentially dilutive securities, consisting of 200,000 outstanding common stock warrants, were included in the calculation of diluted earnings per share as the impact would have been anti-dilutive for the three and nine months ended July 31, 2020 and 2019. Therefore, basic and dilutive net income (loss) per share were the same.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under ASU No. 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The Company adopted this guidance on November 1, 2019 with no effect to the Company’s consolidated financial statements, due to the Company not being party to any lease agreements. The new standard provides a number of optional practical expedients in transition. The Company elected the ‘package of practical expedients’, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs; and all of the new standard’s available transition practical expedients. The new standard also provides practical expedients for a company’s ongoing accounting. The Company elected the short-term lease recognition exemption for its leases. For those leases with a lease term of 12 months or less, the Company will not recognize ROU assets or lease liabilities. The Company also made an accounting policy election to combine lease and non-lease components of operating leases for all asset classes.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The Company adopted this guidance on November 1, 2019 with no impact to its consolidated financial statements.

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.

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit. These matters, among others, raise substantial doubt about the Company's ability to continue as a going concern.

While the Company is attempting to increase sales and generate additional revenues, the Company's cash position may not be significant enough to support the Company's daily operations. If the Company is unable to obtain additional financing through the issuance of debt or equity, the Company may be unable to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 4 – MAJOR CUSTOMERS AND ACCOUNTS RECEIVABLE

Bare Metal Standard has unrelated customers and one related party customer, whose revenue, during the three and nine months ended July 31, 2020 and 2019 represented in excess of 10% of the total revenue and in excess of 10% of total accounts receivable.

Concentration of revenue and related party revenue

During the three months ended July 31, 2020, Bare Metal Standard invoiced royalties and sold product and services, including freight, totaling $151,579 or 70% of total revenue to one related company, Taylor Brothers, Inc. (a company with common officers and shareholders) and had five non-related parties that accounted for 35%, 19%, 17%, 14%, and 10% of non-related party revenue. One non-related party through the Taylor Brothers revenue represents approximately 61% of related party revenue for the three months ended July 31, 2020. During the nine months ended July 31, 2020, Bare Metal Standard invoiced royalties and sold product and services, including freight, totaling $412,826 or 60% of total revenue to one related company, Taylor Brothers, Inc. and had five non-related parties that accounted for 38%, 15%, 15%, 15%, and 13% of non-related party revenue. One non-related party through the Taylor Brothers revenue represents approximately 45% of related party revenue for the nine months ended July 31, 2020.

During the three months ended July 31, 2019, Bare Metal Standard invoiced royalties and sold product and services, including freight, totaling $130,770 or 54% of total revenue to one related company, Taylor Brothers, Inc. and had five non-related parties that accounted for 42%, 16%, 14%, 14%, and 12% of non-related party revenue. One non-related party through the Taylor Brothers revenue represents approximately 41% of related party revenue for the three months ended July 31, 2019. During the nine months ended July 31, 2019, Bare Metal Standard invoiced royalties and sold product and services, including freight, totaling $489,153 or 58% of total revenue to one related company, Taylor Brothers, Inc. and had five non-related parties that accounted for 38%, 15%, 13%, 11% and 10% of non-related party revenue. One non-related party through the Taylor Brothers revenue represents approximately 51% of related party revenue for the nine months ended July 31, 2019.

Concentration of accounts receivable and related party accounts receivable-

Receivables arising from sales of the Company's products are not collateralized. As of July 31, 2020, total accounts receivable was $139,798 of which $100,417 or 72% was owed by a related party, and five customers represented 27%, 25%, 18% and 15% of non-related party accounts receivable. As of October 31, 2019, total accounts receivable was $136,964 of which $86,319 or 63% was owed by a related party, and five customers represented 37%, 20%, 14%, 11% and 10% of non-related party accounts receivable.

NOTE 5 – NOTES AND LOAN PAYABLE

The Company has the following notes payable outstanding as of July 31, 2020 and October 31, 2019:

	July 31, 2020			October 31, 2019
Note payable dated June 13, 2018 in the original principal amount of $100,000, maturing June 13, 2028, bearing interest at 12% per year, collateralized by 200,000 units of the Company’s common stock, which have been issued. Each common stock unit includes one common share and the right, to purchase, for up to two years, at a cost of $2, one common share.	$	87,722		$	92,498

Note payable dated June 20, 2019 in the original principal amount of $10,812, maturing April 1, 2020, bearing interest at 16.24% per year, related to prepaid insurance premium, with monthly payments of $932.		-			5,357

Note payable with a related party dated July 10, 2018 in the original principal amount of $5,000, maturing July 10, 2021, bearing interest at 7% per year, unsecured, with monthly payments of principal and interest of $154.		1,640			2,906

Note payable with a related party dated December 24, 2018 in the original principal amount of $21,000, maturing December 20, 2020, bearing interest at 7% per year, unsecured, with monthly payments of principal and interest of $940.		4,620			12,605

Note payable dated June 20, 2020 in the original principal amount of $13,107, maturing April 2021, bearing interest at 15% per year, related to prepaid insurance premium, with monthly payments of $1,131.		8,557			-

U.S. SBA Paycheck Protection Program, bearing interest at 1% , maturing May 4, 2022 if not forgiven under the terms of the program, unsecured		92,500			-

U.S. SBA EIDL, bearing interest at 3.75% , maturing May 21, 2050 with payments of $731 beginning one year from the date of issuance through maturity, secured by all assets of the Company.		150,000			-

Total notes payable		345,039			113,366
Less: current portion		(63,601	)		(24,266	)
Less: unamortized discount		(39,327	)		(43,063	)
Total notes payable, net of discount and current portion	$	242,111		$	46,037

On November 14, 2017, the Company opened an unsecured line of credit with a bank in the amount of $40,000 bearing interest at the bank prime rate plus 8.5%. The Company is required to make monthly minimum payments based on the current balance outstanding on the line of credit. On July 31, 2020 and October 31, 2019, there was $23,065 and $27,308 outstanding, respectively.

NOTE 6 - RELATED PARTY TRANSACTIONS

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

The Company has revenue transactions with related parties, and accounts receivable balances from those related parties, and notes payable with related parties. See Notes 4 and 5. Additionally, the Company has no written employee agreement with its officers or directors. From time to time, the Company may award bonuses to those officers or directors for performance.

We entered into an agreement with Taylor Brothers Inc. (a company with common officers and shareholders) to use three of their offices. The rent will be $5,000 per month, when Bare Metal Standard completes required funding to support ongoing operations.

NOTE 7 – STOCKHOLDER'S EQUITY

Preferred Stock

The Company is authorized to issue 20,000,000 shares of preferred stock, par value of $0.001. There are none issued.

Common Stock

The Company is authorized to issue 80,000,000 shares of common stock, $0.001 par value. None were issued during the nine months ended July 31, 2020. On July 13, 2018, the Company issued 200,000 non-convertible common share units, which included warrants, as collateral, to be exercised upon uncured default of the note payable described in Note 5.

On January 8, 2020, 650,000 shares of common stock of the Company were returned to the Company and cancelled for no consideration from one shareholder.

NOTE 8 – COMMON STOCK WARRANTS

On July 13, 2018, the Company issued 200,000 common share units, which included common shares and warrants to be exercised within two years, as collateral for a $100,000 loan.

A summary of our stock warrant activity for the nine months ended July 31, 2020 is as follows:

	Warrants			Weighted Average Exercise Price		Weighted Average Remaining Life

Outstanding at beginning of period – October 31, 2019		200,000		$	2.00		0.62
Expired during the nine months ended July 31, 2020		(200,000	)		2.00		-
Outstanding at end of period – July 31, 2020		-		$	-		-

Exercisable at end of period – July 31, 2020		-		$	-		-

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Management agreement

On March 1, 2017, the Company entered into a management agreement with Taylor Brothers Holdings, Inc. (“Taylor Brothers”) to provide all of the services and to conduct all of the activities that were agreed to be undertaken by Taylor Brothers under the Franchise Agreements for providing certain administrative support, including Franchisee training, development of operations manuals and other materials for use by Taylor Brothers’ franchisees; and develop and establish support infrastructures that the Company determines are necessary and appropriate to satisfy Taylor Brothers obligations under the Franchise Agreements. In consideration of the services provided Bare Metal shall be responsible to invoice and collect, per the terms of the Franchise Agreements, under management. All fees so collected will constitute the fees owing under the management agreement. The Agreement does not have a termination date but may be cancelled by either party with appropriate notice.

NOTE 10 – SUBSEQUENT EVENTS

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

This section of this report includes a number of forward- looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Results of Operations

On March 1, 2017, we entered into a management agreement with Taylor Brothers Holdings Inc., which is an operating company and has common majority shareholders and directors. The officers and directors of Bare Metal Standard were officers and directors of Taylor Brothers. James Bedal and Mike Taylor have resigned their positions with Taylor Brothers and work full time for Bare Metal Standard. The agreement term has no expiration and can be terminated by the Company at any time with written notice to the other partner. As a result of the management agreement, Bare Metal is to provide, on behalf of Taylor Brothers, certain management services, having full authorization, on behalf of Taylor Brothers to provide all the services and all the activities, normally provided by Taylor Brothers, under the Taylor Brothers franchise agreements, previously entered into by Taylor Brothers and the franchisees. Bare Metal became responsible for servicing franchisee agreements and receiving 100% of the revenues associated with those agreements assumed for the support and maintenance of the preexisting franchise agreements of Taylor Brothers Holdings franchisees as Taylor Brothers Holdings has ceased selling franchises. Bare Metal is due all collections from franchisees. Bare Metal Standard assumed the business operations of the existing franchise agreements while potential liabilities arising from said agreements will remain with Taylor Brothers. Additionally, on November 1, 2017 Bare Metal, entered into a royalty free license agreement with Taylor Brothers Holdings Inc. with the right to sublease, the use of Trade Name Bare Metal Standard and related industry know-how including proprietary software in exchange for a monthly fee of $2,000 paid in arrears.

Revenue and Gross Income

During the three months ended July 31, 2020 total revenue from services and product sales, from all franchisees declined by $24,189 or 10% compared to the three months ended July 31, 2019, primarily driven by a decrease in nonrelated party revenue of $44,998 or 41%, partially offset by an increase in related party revenue of $20,809, or 16%. The overall decrease in all revenue was primarily due to the economic slowdown associated with COVID during the current quarter. The decline in revenue led to a decline in gross income of $4,478 or 2%.

During the nine months ended July 31, 2020, total revenue from services and product sales, from all franchisees, decreased by $164,028 or 19% compared to the nine months ended July 31, 2019. This was driven by a decrease in related party revenue from Taylor Brothers of $76,327 and a decrease in non-related party revenue of $87,701. The decrease in revenue was primarily due to less project work in the current period, primarily from Taylor Brothers, and the economic slowdown associated with COVID-19 during the past six months. This decrease in revenue generated a decrease of $96,979 or 15% in gross income compared to the prior year.

Expenses

For the three months ended July 31, 2020, the Company’s total operating expenses decreased by $16,864 or 9%, and interest expense increased by $481 due to increased debt. Net income was $9,817 during the three months ended July 31, 2020 compared to $2,088 net loss in the comparable period last year.

For the nine months ended July 31, 2020, the Company’s total operating expenses decreased by $12,312 or 2%, and interest expense decreased by $324, The Company also received a $5,000 grant from the US SBA as part of government economic relief efforts during the nine months ended July 31, 2020. Net loss was $14,918 during the nine months ended July 31, 2020 compared to a net income of $64,425 in the comparable period last year.

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, 2020, the Company had 31,195,000 shares of common stock issued and outstanding. As of July 31, 2020, the Company had current assets of $390,730 and current liabilities of $112,310.

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 and possible new debt financing, to fund its operations and keep the Company fully reporting for the next twelve (12) months.

Working Capital

Bare Metal as of July 31, 2020, had current assets of $390,730 and current liabilities of $112,310 or working capital of $278,420 compared to current assets of $178,352 and current liabilities of $80,713 or working capital of $97,639, at October 31, 2019.

Cash Flows - Operating Activities

During the nine months ended July 31, 2020, the Company used cash in the amount of $7,761 from operating activities, compared to $508 of cash used in the nine months ended July 31, 2019.

Cash Flows - Investing Activities

The Company did not generate any funds from investing activities during the nine months ended July 31, 2020 or 2019.

Cash Flows - Financing Activities

During the nine months ended July 31, 2020 the Company received $214,323 of cash from financing activities, consisting of proceeds from the SBA EIDL and Paycheck Protection Program of $242,500, partially offset by payments on the Company’s various notes payable of $28,177, compared to $5,945 of cash proceeds during the nine months ended July 31, 2019. The Company received a loan from related party of $21,000 and made total repayments on debt of $15,055 during the nine months ended July 31, 2019.

Plan of Operation

Bare Metal’s plan of operation is to provide franchise opportunities in the services of commercial kitchen grease exhaust systems (GES) as well as providing franchisee management systems in other industries. As of July 31, 2020, we had $216,641 cash on hand and accounts receivable of $39,381 plus $100,417 accounts receivable from a related party. Management believes, without any additional funding or revenues, the Company has to continue to sell equity securities and use additional debt 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.

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, 2019 audited consolidated financial statements regarding concerns about our ability to continue as a going concern. Our consolidated 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 or additional debt 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.

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, 2020, Bare Metal had three 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.

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

The Company generates revenue from franchise fees and royalty income, advertising fees and sales of supplies and other products as follows:

Franchise fees and royalty income

Advertising fees

Sales of supplies and other products

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.

Summary of Significant Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our consolidated financial statements.

Our significant accounting policies are summarized in Note 2 of our unaudited consolidated financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our unaudited consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.

CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures during such period were not effective.

Changes in Internal Control over Financial Reporting

Other than as set forth above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1A.

RISK FACTORS

The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, which has affected and could continue to materially affect our operations, financial condition and results of operations for an extended period of time.

The COVID-19 pandemic, federal, state and local government responses to COVID-19 and our Company’s responses to the outbreak have all disrupted and will continue to disrupt our business. In the United States, individuals are being encouraged to practice social distancing, restricted from gathering in groups and for portions of fiscal 2020, placed on complete restriction from non-essential movements outside of their homes in some areas. In response to the COVID-19 pandemic and these changing conditions, restaurants closed the dining rooms and and operated in a To Go or To Go plus delivery format only, which reduced the need for kitchen cleaning services from the franchisees that generate our revenue. As the COVID-19 pandemic continues to spike in certain areas of the country, there could be additional federal, state or local responses that restrict or otherwise impact our business. The COVID-19 pandemic and these responses have affected and will continue to adversely affect our revenue and we cannot predict how long the outbreak will last or what other government responses may impact us.

We received U.S. SBA loans totaling $242,500, including $92,500 under the Paycheck Protection Program that we expect to be forgiven under the program’s regulations. There can be no assurances that we will be able to maintain significant liquidity to continue operations during the COVID-19 pandemic.

Our operations could be further disrupted if our employees or our franchisee’s employees are diagnosed with COVID-19. If a significant percentage of that workforce is unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted, potentially materially adversely affecting our liquidity, financial condition or results of operations.

Our suppliers could be adversely impacted by the COVID-19 outbreak. If our suppliers’ employees are unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, we could face shortages of supplies and our franchise operations and sales could be adversely impacted by such supply interruptions.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 6.

EXHIBITS.

The following documents are included herein:

Exhibit No.	Document Description

31.1	Certification of Principal Executive, Financial and Accounting Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002

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

101*	Interactive data files pursuant to Rule 405 of Regulation S-T

*Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 15^th day of September, 2020.

	BARE METAL STANDARD INC.


	BY:	John Karatzaferis

	/s/	John Karatzaferis
		Principal Executive Officer
		Principal Financial Officer and
		Principal Accounting Officer