Notes to Financial Statements
(unaudited)
NOTE 1 - ORGANIZATION BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES
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 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. As a result of the above transactions with Taylor Brothers Holdings Inc., under Regulation
S-X for reporting purposes Taylor Brother Holdings, Inc. is considered a business. Thus, Taylor Brothers Holdings, Inc. is viewed
as Predecessor entity for reporting purposes, and Bare Metal is viewed as a Successor entity.
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.
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, 2017 contained in the Company’s Form 10K originally filed with
the Securities and Exchange Commission on September 26, 2018. 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, 2017, as reported in the Company’s
Form 10K, have been omitted.
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
For periods after
the commencement of the Management Agreement (March 1, 2017), the Company is referred to as the Successor and its results of operations
includes, the results of operations from Bare Metal Standard for the six months subsequent to October 31, 2017. For periods
previous to the inception of the Management Agreement
,
the Company is referred
to as the Predecessor and its results of operations includes only Taylor Brothers Holdings Inc.
operations
.
A black line separates the six months ended April 30, 2018 successor results from the two months successor plus the one and four
months February 28, 2017 (predecessor) for the comparable six month period ended April 30, 2017, to highlight the lack of comparability
between these periods.
Principles of Consolidation
The Company prepares its consolidated financial statements
on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which have a fiscal year end of October 31, 2017. 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.
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. As of April 30, 2018 the Company had accumulated
losses and a net shareholder 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.
Restatement
During the year ended October 31, 2018, the Company determined
that as a result of the above transactions with Taylor Brothers Holdings Inc., under Regulation S-X for reporting purposes Taylor
Brother Holdings, Inc. is considered a business. Thus, Taylor Brothers Holdings, Inc. is viewed as Predecessor entity for reporting
purposes, and Bare Metal is viewed as a Successor entity. Therefore, the previously reported results of operations and cash flows
for the three and six months ended April 30, 2017 must be separated between Successor and Predecessor periods. The table below
summarizes previously reported amounts and the restated presentation of the statement of operations and statement of cash flows:
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
|
|
As Previously Reported
|
|
|
As Restated
|
|
|
As Restated
|
|
|
|
Three Months
|
|
|
Two Months
|
|
|
One Month
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
April 30, 2017
|
|
|
April 30, 2017
|
|
|
February 28, 2017
|
|
Statement of Operations
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
|
|
|
Restated
|
|
|
Restated
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
117,201
|
|
|
$
|
53,447
|
|
|
$
|
-
|
|
Product sales and services
|
|
|
52,748
|
|
|
|
34,702
|
|
|
|
-
|
|
Product sales and services - related parties
|
|
|
169,949
|
|
|
|
88,149
|
|
|
|
-
|
|
|
|
|
49,647
|
|
|
|
8,020
|
|
|
|
-
|
|
Cost of revenue
|
|
|
120,302
|
|
|
|
80,129
|
|
|
|
-
|
|
Gross income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
129,202
|
|
|
|
36,424
|
|
|
|
2,706
|
|
Administrative and officer compensation
|
|
|
-
|
|
|
|
76,402
|
|
|
|
13,954
|
|
Total operating expenses
|
|
|
129,202
|
|
|
|
112,826
|
|
|
|
16,660
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Loss from operations
|
|
|
(8,900
|
)
|
|
|
(32,697
|
)
|
|
|
(16,660
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(731
|
)
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(8,900
|
)
|
|
$
|
(32,697
|
)
|
|
$
|
(17,391
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(14.49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
Basic and diluted
|
|
|
31,515,000
|
|
|
|
31,515,000
|
|
|
|
1,200
|
|
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
|
|
As Previously Reported
|
|
|
As Restated
|
|
|
As Restated
|
|
|
|
Six Months
|
|
|
Two Months
|
|
|
Four Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
April 30, 2017
|
|
|
April 30, 2017
|
|
|
February 28, 2017
|
|
Statement of Operations
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
|
|
|
Restated
|
|
|
Restated
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
119,862
|
|
|
$
|
53,447
|
|
|
$
|
87,925
|
|
Product sales and services
|
|
|
58,826
|
|
|
|
34,702
|
|
|
|
59,363
|
|
Product sales and services - related parties
|
|
|
178,688
|
|
|
|
88,149
|
|
|
|
147,288
|
|
|
|
|
56,872
|
|
|
|
8,020
|
|
|
|
-
|
|
Cost of revenue
|
|
|
121,816
|
|
|
|
80,129
|
|
|
|
147,288
|
|
Gross income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
155,724
|
|
|
|
36,424
|
|
|
|
81,543
|
|
Administrative and officer compensation
|
|
|
-
|
|
|
|
76,402
|
|
|
|
129,819
|
|
Total operating expenses
|
|
|
155,724
|
|
|
|
112,826
|
|
|
|
211,362
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Loss from operations
|
|
|
(33,908
|
)
|
|
|
(32,697
|
)
|
|
|
(64,074
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,867
|
)
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,867
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(33,908
|
)
|
|
$
|
(32,697
|
)
|
|
$
|
(66,941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(55.78
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
Basic and diluted
|
|
|
31,505,939
|
|
|
|
31,515,000
|
|
|
|
1,200
|
|
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
|
|
As Previously Reported
|
|
|
As Restated
|
|
|
As Restated
|
|
|
|
Six Months
|
|
|
Two Months
|
|
|
Four Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
April 30, 2017
|
|
|
April 30, 2017
|
|
|
February 28, 2017
|
|
|
|
Successor
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
|
|
|
Restated
|
|
|
Restated
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(33,908
|
)
|
|
$
|
(32,697
|
)
|
|
$
|
(66,941
|
)
|
Adjustments to reconcile net loss to net cash (used
|
|
|
|
|
|
|
|
|
|
|
|
|
in) operating activites
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
-
|
|
|
|
4,639
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
|
(60,210
|
)
|
|
|
(15,727
|
)
|
|
|
14,580
|
|
Decrease (increase) in accounts receivable - related parties
|
|
|
(19,872
|
)
|
|
|
(19,872
|
)
|
|
|
177
|
|
(Increase) in prepaid expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(Increase) decrease in inventory
|
|
|
(15,301
|
)
|
|
|
(3,734
|
)
|
|
|
-
|
|
Increase (decrease) in accounts payable
|
|
|
48,465
|
|
|
|
47,145
|
|
|
|
26,154
|
|
Increase (decrease) in related party accounts payable
|
|
|
-
|
|
|
|
-
|
|
|
|
3,438
|
|
Net cash used in operating activities
|
|
|
(80,826
|
)
|
|
|
(24,885
|
)
|
|
|
(17,953
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of related party note payable
|
|
|
-
|
|
|
|
-
|
|
|
|
(34,587
|
)
|
Proceeds received from related party note payable
|
|
|
-
|
|
|
|
-
|
|
|
|
2,250
|
|
Bank line of credit
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Repayment of note payable
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,839
|
)
|
Cash received from sale of common stock
|
|
|
20,000
|
|
|
|
-
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
20,000
|
|
|
|
-
|
|
|
|
(35,176
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
(60,826
|
)
|
|
|
(24,885
|
)
|
|
|
(53,129
|
)
|
Cash, beginning balance
|
|
|
87,488
|
|
|
|
51,547
|
|
|
|
55,456
|
|
Cash, ending balance
|
|
$
|
26,662
|
|
|
$
|
26,662
|
|
|
$
|
2,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary information
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the nine months:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,867
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented
to assist the reader in understanding and evaluating the Company's financial statements. These accounting policies conform
to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
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.
Accounts Receivable and Allowance for Doubtful
Accounts
The Company's accounts receivable 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 and other services provided by virtue of the management agreement with Taylor Brothers. Accounts receivable are stated
at the amount
management expects to collect from the outstanding balances. Accounts receivable as of April 30, 2018,
(successor) consists of $54,754 due from non-related parties and $15,618 due from Taylor Brothers, Inc. a related party. Receivables
at October 31, 2017 successor consists of $31,004 due from non-related parties and $16,335 from Taylor Brothers, Inc. a related
party.
An allowance for doubtful accounts will be provided for
those accounts receivable considered to be uncollectable based on historical experience, and management's evaluation at the end
of the period. Bad debts are written off against the allowance when identified. Bare Metal (successor) determined that no
allowance was necessary for the six months ended April 30, 2018 (successor), nor the year ended October 31, 2017.
Revenue Recognition
The Company's revenue is derived from the sale of products,
services and training to support the franchisees under its Management agreement with Taylor Brothers, as a percentage of franchisees’
revenue invoiced to their clients, plus specific charges for software usage, sale of consumables and consulting services.
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, royalties,
and services when the product has been shipped or the services have been provided in accordance with the contract entered into
with the customer. Payments received in advance of satisfaction of the relevant criteria for revenue recognition are recorded as
advances from customers. The Company has no responsibility for collections, of trade debt, owed to a franchisee by the franchisees’
clients and therefore will not create an allowance for potential uncollectable obligations owing to it by the franchisee, unless
it is determined that the franchisee will default on its obligation the Company. In accordance with the guidance in FASB Topic
ASC 605,
Revenue Recognition
, the Company recognizes revenue when (a) persuasive evidence of an arrangement exists,
(b) delivery has occurred or services have been rendered, (c) the fee is fixed or determinable, and (d) collectability is reasonable
assured.
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
New Accounting Pronouncements
The Financial Accounting Standards Board, or FASB, has
issued Accounting Standards Update No. 2014-09, Revenue from contracts with Customers (Topic 606), or ASU 606. ASU 606 provides
guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers
in an amount that supersedes most current revenue recognition guidance. This guidance requires us to recognize revenue when we
transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. We are required to adopt ASU 606 at the beginning of our first quarter of fiscal
2019. The new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations
to customers and significant judgments in measurement and recognition. The new guidance may be applied retrospectively to each
prior period presented or retrospectively with the cumulative effect recognized as of the date of the adoption. The Company adopted
this guidance on November 1, 2018. The primary impact expected on the Company’s financial statements at adoption is that
future franchise license fees received will initial be deferred and revenue recognized ratably over the expected license period. The
Company expects to utilize the cumulative effect approach of adopting ASC 606, but does not expect a material impact to the Company’s
financial statements due to the Company currently earning revenues from the products, services and training to support the franchisees
under its Management agreement with Taylor Brothers, as a percentage of franchisees’ revenue invoiced to their clients, plus
specific charges for software usage, sale of consumables and consulting services. These revenue streams are not expected to have
a material change in accounting method from adopting ASC 606.
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. For public companies, ASU No. 2016-02 is effective for annual reporting periods beginning after
December 15, 2018, including interim reporting periods within that reporting period, and requires a modified retrospective adoption,
with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s
consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, “Compensation
- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The amendments in this update
simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes,
forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted
the new guidance on November 1, 2017, with no material impact to the Company’s financial statements.
In January 2017, the FASB issued ASU No. 2017-01, Business
Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and
provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when
substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset
or a group of similar identifiable assets, the set is not a business. The Company adopted this standard on November 1, 2018 and
there was no material impact to the Company’s financial statements.
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
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. This standard will be effective for the Company on November 1, 2019, and the
Company is currently evaluating the potential impact on its financial statements.
NOTE 2 – MAJOR CUSTOMERS AND ACCOUNTS
RECEIVABLE
Concentration of revenue and related party revenue-
During the three months ended
April 30, 2018 Bare Metal Standard (successor) invoiced royalties and sold product and services, including freight, totaling $51,543
or 29% of its total revenue, to one related company, Taylor Brothers Inc. and $127,554 of non-related party revenue or 41%, 28%,
11% to three non-related parties. During the two months ended April 30, 2017, Bare Metal recognized $53,447 of non-related party
revenue with 42%, 18%, 17% and 16% to four non-related parties, and $34,702 to one related party, Taylor Brothers, Inc.
During the six months ended April 30, 2018 Bare Metal Standard (successor)
invoiced royalties and sold product and services, including freight, totaling $118,539 or 27% of its total revenue, to one related
company, Taylor Brothers Inc. and $322,711 of non-related party revenue or 41% 18%, 14% and 11%, to four non-related parties. During
the one month ended February 28, 2017, Taylor Brothers, Inc. (predecessor) had no revenue. During the four months ended February
28, 2017, Taylor Brothers Holdings (Predecessor) invoiced $58,741 of nonrelated party revenue, or (34%,21%,19% and 18%), respectively,
to four unrelated parties, and $59,363 or 41% to one related party.
Concentration of accounts
receivable and related party accounts receivable-
Receivables arising from sales
of the Company's products are not collateralized. As of April 30, 2018, total accounts receivable were $70,372 of which $15,618
was owed by a related party. As of April 30, 2018, two customers represented approximately $26,114 and 13,893, or 48%, and 25%,
respectively of non-related accounts receivable. As of October 31, 2017, total accounts receivable were $47,359 of which
$16,355 was owed by a related party.
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
NOTE 5 – LOANS PAYABLE
On November 14, 2017 the Company opened a 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 April 30, 2018 there was $34,753 outstanding.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company has revenue transactions with related parties,
and accounts receivable balances from those related parties. See Note 2 and 4. 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 have 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.
The related party payable, in the amount of $1,924, Taylor
Brothers Holdings, (Predecessor) resulted from the acquisition of supplies and products from two related companies. A total of
$1,760 owing to Taylor Brothers Distributing, Inc. was repaid in two installments on November 11 and November 16, 2016. The remaining
total, of $164, was repaid to a Taylor Brothers, Inc. a franchisee on November 14, 2016.
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 six months ended April 30, 2018.
NOTE 8 – COMMON STOCK WARRANTS
Between March 1, 2017 and October
31, 2017 the Company did not sell any commons stock units. Each unit outstanding as of October 31, 2017 consists of one share of
our common stock, and one warrant to purchase, for $2.00 one share of common stock within 24 months of issuance. The warrants
vested upon grant date and will expire between February 8, 2018 and October 31, 2018. 120,000 expired during the three months ended
April 30, 2018.
BARE METAL STANDARD, INC.
Notes to Financial Statements
(unaudited)
A summary of our stock warrant activity for the period
from November 1, 2017 through April 30, 2018 is as follows:
|
|
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Life
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of period - October 31, 2017
|
|
515,000
|
|
|
2.00
|
|
|
0.65
|
|
Expired during the six months ended April 30, 2018
|
|
(120,000)
|
|
|
2.00
|
|
|
-
|
|
Outstanding at end of period - April 30 2018
|
|
395,000
|
|
|
2.00
|
|
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of period - April 30, 2018
|
|
395,000
|
|
|
2.00
|
|
|
0.29
|
|
The warrants outstanding and exercisable as of April 30, 2018 had no intrinsic
value..
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Management agreement
On March 1, 2017, the Company entered into a management
agreement with Taylor Brothers Holdings, Inc. 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
On June 13, 2018 the Company borrowed $100,000
from a non-related investor. The note is repayable over 10 years with payments of $1,434 at an interest cost of 12%. The note is
collateralized by 200,000 units of the Company’s common stock, which consist of one share of common stock and one warrant
to purchase a share of common stock at $2 per share with a term of two years. On July 31, 2018 the note had been reduced by $435.
On July 10, 2018 the Company borrowed $5,000 from a related
party. The note is unsecured, bears interest at 7%, and is repayable by 36 equal monthly payments of $154 principal and interest.
On July 31, 2018 the balance was reduced by $125.
On December 24, 2018, our chief executive officer loaned
the Company $21,000. The loan has a maturity date of December 20, 2020, and bears interest at 7%, with monthly payments of $940.
The Company has made payments of $4,117 against this note payable to date.