PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONTENTS

BEMAX INC

Balance Sheets

The accompanying notes are an integral part of these unaudited condensed financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the period presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These interim financial statements should be read in conjunction with the annual financial statements and notes thereto included in our annual Report on Form 10-K filed therewith the U.S. Securities and Exchange Commission (SEC) on July 6, 2016 and amended on July 14, 2016, and can be found on the SEC website at www.sec.gov.

BEMAX INC.

Condensed Statements of Operations

(Unaudited)

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

BEMAX INC.

FinancialCondensed Statements of Cash Flows

(Expressed in US dollars)(Unaudited)

(Unaudited)The accompanying notes are an integral part of these unaudited condensed financial statements.

BEMAX INC.

Notes to the Financial Statements

November 30, 2017

(Unaudited)

BEMAX INC.

Balance Sheets (Stated in U.S. Dollars)

February 28, 2017 and May 31, 2016NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

See Notes to Financial Statements

BEMAX INC.

Statements of Operations

(Stated in U.S. Dollars) Unaudited

See Notes to Financial Statements

BEMAX INC.

Statements of Cash Flows

(Stated in U.S. Dollars)

For the Six Months Ended February 28, 2017 and February 29, 2016

(Unaudited)

See Notes to Financial Statement

1. NATURE OF OPERATIONS

BEMAX INC. (“The Company”) was incorporated in the State of Nevada on November 28, 2012 to engage in the business of exporting disposable baby diapers manufactured in the United States and then distributing them throughout Europe and South Africa.

NOTE 2 - GOING CONCERN

The Company is in the development stage with limited revenues and very limited operating history.

Theseaccompanying unaudited financial statements have been prepared on a going concern basis, which assumescontemplates the Company will be able to realize itsrealization of assets and discharge itsthe satisfaction of liabilities in the normal course of businessbusiness. The Company has had minimal revenue and has an accumulated a deficit of $2,669,597 as of November 30, 2017. The Company requires capital for its contemplated operational and marketing activities. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the foreseeable future. The Company anticipates future losses into continue operations. These conditions and the development of its business raisingability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or issuance of common shares.

2. GOING CONCERN

These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business one year from May 31, 2016. The Company has incurred a loss since inception resulting in an accumulated deficit of $1,427,971 as of February 28, 2017 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or the existing cash on hand, loans from officers/directors and/or private placement of common stock. Obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with personal cash, outside loans, or equity issuances.

There is no guarantee thatThe unaudited financial statements of the Company will be able to raisedo not include any capital through any typeadjustments that may result from the outcome of offering.these uncertainties.

3.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted accounting principles in the United States of America (GAAP)(“U.S. GAAP”). 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 may differ from those estimates. The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are presented in US dollars. The Company’s Year End is May 31.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturitynot necessarily indicative of three months or lessthe results to be cash equivalents.expected for the full year ending May 31, 2018. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2017.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with 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 revenues and expenses during the period. Actual results could differ from those estimates.

Inventory

The Company’s inventory consists of finished goods ready for resale. Inventories are stated at the lower of cost or market. Cost is principally determined using the last-in, first-out (LIFO) method. The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions.

Derivative Financial Instruments

Derivative liabilities are recognized in the balance sheets at fair value based on the criteria specified in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815-15– Derivatives and Hedging – Embedded Derivatives(“ASC 815-15”). Pursuant to ASC Topic 815-15 an evaluation of the embedded conversion feature of convertible debt is evaluated to determine if the bifurcated debt conversion feature is required to be classified as a derivative liability. Since the terms of the embedded conversion features of the Company’s convertible debt provides for the issuance of shares of common stock at the election of the holders and the number of shares is subject to adjustment for a decline in the price of the Company’s common stock, the Company determined that the embedded conversion option met the criteria of a derivative liability. The estimated fair value of the embedded conversion feature of debt classified as derivative liabilities are determined using the Black-Scholes option pricing model. The model utilizes Level 3 unobservable inputs to calculate the fair value of the derivative liabilities at each reporting period. The Company determined that using an alternative valuation model such as a Binomial-Lattice model would result in minimal differences. The fair value of the embedded conversion feature of debt classified as derivative liabilities are adjusted for changes in fair value at each reporting period, and the corresponding non-cash gain or loss is recorded as other income or expense in the statement of operations. As of November 30, 2017, and May 31, 2017, the embedded conversion feature of $1,008,011 and $449,975, respectively, of convertible notes payable was classified as a derivative liability. Each reporting period the embedded conversion feature is re-valued and adjusted through the caption “change in fair value of derivative liabilities” on the statements of operations.

Fair Valuevalue of Financial Instrumentsfinancial instruments

The Company follows paragraph 825-10-50-10 of the FASBFinancial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 825-10-50-10,Financial Instruments—Overall—Disclosure, for disclosures about fair value of itsour financial instruments and paragraphASC 820-10-35-37, of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”)Fair Value Measurement—Overall—Subsequent Measure—Fair Value Hierarchy, to measure the fair value of itsour financial instruments. ParagraphASC 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP),GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ParagraphASC 820-10-35-37 establishes a fair value hierarchy whichthat prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by ParagraphASC 820-10-35-37 are described below:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at February 28, 2017.

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of:

February 28,

November 30, 2017:

May 31, 2016:2017:

Income TaxesRevenue Recognition

The Company follows the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At February 28, 2017, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.

Basic and Diluted Net (Loss) per Share

The Company computes net (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (EPS) on the face 605-10-S99-1,Revenue Recognition,of the income statement. Basic EPSFASB Accounting Standards Codification for revenue recognition, which has four basic criteria that must be met before revenue is computed by dividing net (loss) available to common shareholders (numerator) byrecognized: 1) existence of persuasive evidence that an arrangement exists; 2) delivery has occurred or services have been rendered; 3) the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stockseller’s price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. The Company has losses for the nine months ended February 28, 2017; therefore basic EPS equals diluted EPS. As of February 28, 2017 18,724,924 shares of common stock were not included in the calculations and the common shares are for convertible notes outstanding.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have any significant impact on the Company’s results of operations, financial position or cash flow.

As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

4. RELATED PARTY TRANSACTIONS 

The President of the Company provides management fees and office premises to the Company for a fee of $1,500 per month, the right to which the President has agreed to assign to the Company until such a time as the Company closes on an Equity or Debt financing of not less than $750,000. The assigned rights are valued at $1,000 per month for rentbuyer is fixed and $500 for executive compensation. A total of $13,500 for donated management fees was charged to Shareholder Loan for the nine months ended February 28, 2017.

As of February 28, 2017, there are loans from the majority shareholderdeterminable; and related party totalling $51,736.These loans were made in order to assist in meeting general and administrative expenses. These advances are unsecured, due on demand and carry no interest or collateral.

5. STOCKHOLDER’S EQUITY4) collection is reasonably assured.

 On June 5, 2015, the Company decided to increase the authorized amount of common shares that can be issued from 70,000,000 to 500,000,000 with the same par value of $0.0001 per share. The Company also declared a Fifty (50) to One (1) forward stock split effective immediately.

During fiscal year 2016, the Company issued 42,500 Common Shares at $0.0001 par value to an attorney for legal services rendered.

At February 28, 2017, there are 450,000,000 shares of common stock at a par value of $0.0001 and 50,000,000 preferred shares at $0.0001 per share authorized. There are 301,640,836 common and 50,000,000 preferred shares issued and outstanding. 

The 50-1 stock split has been shown retroactively. 

On December 5, 2016, the Company entered into an initial one year consulting agreement with Adebayo Ladipo. He has been compensated by receiving 7,500,000 shares of common stock valued at $75,000 based on the market price of the common stock on this date. This was valued at $0.01 per share. At no time is he considered an employee of the Company. He is an Independent Contractor and able to pursue other interests.

On January 24, 2017, The Company allowed Taiwo Aimasiko, its CEO to retire 150,000,000 shares of common stock in exchange for 50,000,000 Series B preferred shares.

6. REVENUE RECOGNITION 

The Company’s revenue recognition policy is on a sales-basis method. The Company recognizes and records revenue once payment has been received and disposable baby diapers are delivered to the buyer.

Pre-payment Policy: All sales to our customers will be solely on a pre-payment basis. Once the order is completed and payment is received, we will place an order with the North American supplier of disposable baby diapers and arrange shipping directly to our customers. The process is expected to take three weeks to complete. The pre-payment will be recorded as deferred revenue until the delivery is executed.

7. CONVERTIBLE LOANS

 On February 16, 2016, the Company issued a Convertible Promissory Note in favor of Crown Bridge Partners, LLC. The principal amount of the loan was $40,000 (forty thousand dollars) with an original issue discount of $4,000 (four thousand dollars) and carries an interest rate of 8% per annum. It became due and payable with accrued interest on February 16, 2017. The Company had the right to prepay any part of the loan plus accrued interest up to 90 days from the issue date, subject to a cash payment of the principal plus 130% interest and 91 days through 180 for a cash payment of the principal plus 150% interest. On July 14, 2016, the Company repaid the $40,000 of principal, $1,307 of accrued interest and a $20,965 early payment penalty. As a result of repayment of the note the Company recognized the remaining debt discount of $2,833. The Company repaid the note prior to when the convertible feature was effective; therefore there are no derivatives relatedReclassifications

Certain reclassifications have been made to the embedded conversion feature.prior year financial information to conform to the presentation used in the unaudited financial statements for the six months ended November 30, 2017.

Recent Accounting Pronouncements

5. STOCKHOLDER’S EQUITYIn August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its statements of cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.

The Company does not expect the adoption of recently issued accounting pronouncements to have any significant impact on the Company’s results of operations, financial position or cash flow. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

NOTE 4 - PROPERTY AND EQUIPMENT

Furniture, fixtures, and equipment, stated at cost, less accumulated depreciation consisted of the following at:

Depreciation Expense

Depreciation expense for the six months ended November 30, 2017 and 2016, was $1,631 and $0, respectively.

NOTE 5 - OTHER ASSETS

On June 5, 2015,March 27, 2017, the Company decidedentered into an Option to increase obtain a Property Lease Agreement (“the authorized amountlease”) with Simfox Enterprises aka Achievers Nursery School. This is a development property situated in Lagos, Nigeria. The lease is for 30 years with two successive five-year extensions at the option of common shares that canthe Company. Consideration for the Option is $300,000 with $110,000 due immediately and the balance by installments by August 30, 2017. As of November 30, 2017, the Company has paid the full $300,000. In addition, the Company has agreed, subject to the signing of the Definitive Document, to pay Simfox Enterprises, a $390,000 refundable good faith deposit, of which $106,000 has been paid. The definitive document is currently under negotiation. The deposit will be issued from 70,000,000held by Simfox in an interest-bearing account to 500,000,000 withbe returned to Bemax plus interest, on completion of the same par valuedevelopment of $0.0001 per share. the property by the Company. 

The Company also declaredintends to develop the property for its intended purpose over a Fifty (50)two to One (1) forward stock split effective immediately.five-year period, as mutually agreed upon. The option payment of $300,000 will be amortized over this period once development begins.

During fiscal year 2016,

NOTE 6 - RELATED PARTY TRANSACTIONS

The President of the Company issued 42,500 Common Sharesprovides management services and office premises to the Company for a fee of $1,500 per month, the right to which the President has agreed to assign to the Company until such a time as the Company closes on an equity or debt financing of not less than $750,000. The assigned rights are valued at $0.0001 par value to an attorney$1,000 per month for legal services rendered.rent and $500 for executive compensation. As of November 30, 2017, and May 31, 2017, there is $54,000 and $45,000, respectively, accrued for these fees.

At February 28,

As of November 30, 2017, and May 31, 2017, there are 450,000,000 sharesloans from the majority shareholder of common stock at a par value of $0.0001$11,438 and 50,000,000 preferred shares at $0.0001 per share authorized. There$11,438, respectively. These loans were made in order to assist in meeting general and administrative expenses. These advances are 301,640,836 commonunsecured, due on demand and 50,000,000 preferred shares issued and outstanding.non-interest bearing.

The 50-1 stock split has been shown retroactively.

NOTE 7 - STOCKHOLDERS’ EQUITY

On December 5, 2016, the Company entered into an initial one year consulting agreement with Adebayo Ladipo. He has been compensated by receivingissued 7,500,000 shares of common stock valued at $75,000 based onper the market priceterms of the common stock on this date. This wasa one-year consulting agreement. The shares were valued at $0.01 per share. At no timeshare for total non-cash expense of $75,000. The expense is he considered an employeebeing amortized over the term of the Company. He is an Independent Contractor and ableagreement. As of November 30, 2017, the full $75,000 has been debited to pursue other interests.consulting expense.

On January 24, 2017, Thethe Company allowed Taiwo Aimasiko, its CEO to retire 150,000,000 shares of common stock in exchange for 50,000,000 Series B preferred shares.

6. REVENUE RECOGNITIONOn October 24, 2017, the Company amended its Articles of Incorporation increasing the authorized issue of common stock from 850,000,000 to 950,000,000. The par value remains the same at $0.0001 per share. 

The Company’s revenue recognition policy is on a sales-basis method. TheDuring the year ended May 31, 2017, the Company recognizesconverted $318,631 of principal and records revenue once payment has been received and disposable baby diapers are deliveredaccrued interest into 185,348,336 shares of common stock. All conversions were completed pursuant to the buyer.terms of their respective convertible promissory notes. No gains or losses were recognized as a result of the conversions.

Pre-payment Policy: All sales to our customers will be solely on a pre-payment basis. Once

During the order is completedsix months ended November 30, 2017, the Company converted $46,947 and payment is received, we will place an order with the North American supplier$7,087 of disposable baby diapersprincipal and arrange shipping directly to our customers. The process is expected to take three weeks to complete. The pre-payment will be recorded as deferred revenue until the delivery is executed.

7. CONVERTIBLE LOANSinterest, respectively, into 51,043,233 shares of common stock.

On February 16, 2016,October 10, 2017, the Company issuedexecuted an Agreement for IR Services. The agreement is for six months and requires a Convertible Promissory Note in favorfee of Crown Bridge Partners, LLC.10 million shares of common stock. The principal amountfirst 5,000,000 shares of common stock are required upon the execution of the loan was $40,000 (forty thousand dollars) with an original issue discountagreement and were granted by the Board of $4,000 (four thousand dollars) and carries an interest rate of 8% per annum. It became due and payable with accrued interestDirectors on February 16,October 10, 2017. The Company had the right to prepay any part of the loan plus accrued interest up to 90next 2.5 million shares are due in thirty days from the issue date, subject to a cash payment of the principal plus 130% interest and 91 days through 180 for a cash payment of the principal plus 150% interest. On July 14, 2016, the Company repaid the $40,000 of principal, $1,307 of accrued interest and a $20,965 early payment penalty. As a result of repayment of the note the Company recognized the remaining debt discount of $2,833.2.5 million, thirty days after that. The Company repaidissued the note prior to when the convertible feature was effective; therefore there are no derivatives related to the embedded conversion feature.

 On May 10, 2016, the Company issued a Convertible Promissory Note in favor5,000,000 shares valued at $0.0023 per share for total non-cash expense of Auctus Fund, LLC.$11,500. The principal amount of the loan was $77,750 (seventy-seven thousand, seven hundred and fifty dollars) with an original issue discount of $6,750 (six thousand, seven hundred and fifty dollars) and carried an interest rate of 8% per annum. It becomes due and payable with accrued interest on May 10, 2017. Auctus Fund, LLC. had the option to convert the Note plus accrued interest into common shares of the Company, at any time. The conversion rate will be at a discount of 48% of the lowest trading price for ten days prior to the actual date of conversion. The Company cannot prepay any amount outstanding after 180 days. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $261,774 based on the Black Scholes Merton pricing model and a corresponding debt discount of $77,750 to beexpense is being amortized utilizing the interest method of accretion over the term of the note. Duringagreement. As of November 30, 2017, $3,205 has been debited to consulting expense. On November 10, 2017, the third quarter principal and accrued interest of $77,750 and $605, respectively, were fully converted into 43,741,990Company issued another 2,500,000 shares of common stock resulting invalued at $0.0022 per share for total non-cash expense of $5,500. The expense is being amortized over the immediate amortization of the remaining debt discount of $20,282, a $295,729 loss on the change in fair value of the derivative and a $467,591 credit to additional paid in capital.

On June 2, 2016, the Company issued a Convertible Promissory Note in favor of JSJ Investments Inc. The principal amount of the loan was $55,000 (fifty-five thousand dollars), with an original issue discount of $3,000 three thousand dollars), a payment of $2,000 (two thousand dollars) in loan fees and it carried an interest rate of 8% per annum. It becomes due and payable with accrued interest on June 2, 2017. JSJ Investments, Inc. has the option to convert the Note plus accrued interest into common shares of the Company, at any time. The conversion rate will be at a discount of 48% applied to the lowest trading price for ten days prior to the actual date of conversion. The Company cannot prepay any amount outstanding after 180 days. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $167,895 based on the Black Scholes Merton pricing model and a corresponding debt discount of $55,000 to be amortized utilizing the interest method of accretion over the term of the note. Duringagreement. As of November 30, 2017, $601 has been debited to consulting expense. As of November 30, 2017, 2,500,000 of shares have not yet been issued by the third quarter principaltransfer agent; therefore, they have been credited to the stock payable account.

NOTE 8 - PREFERRED STOCK 

On January 23, 2017, the Board of Directors designated a series of preferred stock titled Series B Preferred Stock consisting of 50,000,000 shares with a $0.0001 par value. Each share of Series B preferred stock has voting rights of 10 votes per share, and accrued interestwill vote alongside the common stock, not as a separate class. Each share of $55,000 and $2,395, respectively, were fullypreferred stock can be converted into 32,463,378three shares of common stock resulting in the immediate amortization of the remaining debt discount of $34,554,at any time after a $65,510 loss on the change in fair value of the derivative and a $190,914 creditone-year anniversary. Holders are entitled to additional paid in capital.dividends, if declared, equivalent to if they had converted to common stock. The Series B preferred stock have no liquidation rights.

On June 14, 2016,October 24, 2017, the Company issued a Convertible Promissory Note in favoramended its Articles of Black Forest Capital LLC.Incorporation increasing the authorized issue of preferred stock from 50,000,000 to 100,000,000. The principal amount ofpar value remains the loan was $80,000 (eighty thousand dollars), with an original issue discount of $8,000 (eight thousand dollars), a payment of $2,000 (two thousand dollars) for loan fees and it carried an interest rate of 8%same at $0.0001 per annum. It becomes due and payable with accrued interest on June 14, 2017. Black Forest Capital, LLC. has the option to convert the Note plus accrued interest into common shares ofshare. 

On January 24, 2017, the Company at any time. The conversion rate will be at a discount of 48% appliedallowed Taiwo Aimasiko, its CEO to the lowest trading price for ten days prior to the actual date of conversion. The Company cannot prepay any amount outstanding after 180 days. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $228,110 based on the Black Scholes Merton pricing model and a corresponding debt discount of $80,000 to be amortized utilizing the interest method of accretion over the term of the note. During the third quarter principal and accrued interest of $80,000 and $3,254, respectively, were fully converted into 55,208,045retire 150,000,000 shares of common stock resulting in the immediate amortization of the remaining debt discount of $42,959, a $203,588 loss on the change in fair value of the derivative and a $396,470 credit to additional paid in capital.exchange for 50,000,000 Series B preferred shares.

NOTE 9 - CONVERTIBLE LOANS

On December 28, 2016, the Company issued a Convertible Promissory Note in favor of Crown Bridge Partners, LLC. The principal amount of the loan is $46,000 (forty-six thousand dollars) with an original issue discount of $4,500 (four thousand five hundred dollars)$6,000 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on December 28, 2017. Crown Bridge Partners, LLC. has the option to convert the Note plus accrued interest into common shares of the Company, after 180 days. The conversion rate will be at a discount of 45% applied to the lowest trading price for fifteen days prior to the actual date of conversion. On June 8, 2017, the Company repaid the $46,000 of principal, $1,575 of accrued interest and a $23,925 early payment penalty. As a result of repayment of the note the Company recognized the remaining debt discount. The Company hasrepaid the rightnote prior to prepay any partwhen the convertible feature was effective; therefore, there are no derivatives related to the embedded conversion feature.

On March 20, 2017, the Company issued a Convertible Promissory Note in favor of Crown Bridge Partners, LLC. The principal amount of the loan is $114,000 with an original issue discount of $14,000 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on March 20, 2018. Crown Bridge Partners, LLC. has the option to convert the Note plus accrued interest up to 90 days from the issue date, subject to a cash paymentinto common shares of the principal plus 130%Company, after 180 days. The conversion rate will be at a discount of 43% applied to the lowest trading price for ten days prior to the actual date of conversion. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $170,236 based on the Black Scholes Merton pricing model and a corresponding debt discount of $114,000 to be amortized utilizing the interest and 91 days through 180 for a cash paymentmethod of accretion over the term of the note. During the three months ended November 30, 2017, the Company converted $12,380 of principal plus 150% interest. The Company cannot prepay any amount outstanding after 180.into 15,000,000 shares of common stock. As of February 28,November 30, 2017, $752the Company fair valued the derivative at $199,551. In addition, $56,841 of the debt discount has been amortized to interest expense.

On March 27, 2017, the Company issued a Convertible Promissory Note in favor of JSJ Investments, Inc. The principal amount of the loan is $125,000 with an original issue discount of $9,250 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on December 22, 2017. JSJ Investments, Inc. has the option to convert the Note plus accrued interest into common shares of the Company at any time. The conversion rate will be at a discount of 40% applied to the average of the three lowest trading prices for ten days prior to the actual date of conversion. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $204,373 based on the Black Scholes Merton pricing model and a corresponding debt discount of $125,000 to be amortized utilizing the interest method of accretion over the term of the note. During the three months ended November 30, 2017, the Company converted $34,374 of principal into 22,043,233 shares of common stock. As of November 30, 2017, the Company fair valued the derivative at $131,560. In addition, $112,727 of the debt discount has been amortized to interest expense.

On April 4, 2017, the Company issued a Convertible Promissory Note in favor of Auctus, Fund, LLC. The principal amount of the loan is $145,000 with an original issue discount of $15,000 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on December 22, 2017. Auctus Fund, LLC. has the option to convert the Note plus accrued interest into common shares of the Company, at any time. The conversion rate will be at a discount of 40% applied to the lowest trading price for ten days prior to the actual date of conversion. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $257,720 based on the Black Scholes Merton pricing model and a corresponding debt discount of $145,000 to be amortized utilizing the interest method of accretion over the term of the note. During the three months ended November 30, 2017, the Company converted $193 and $7,078 of principal and interest, respectively into 9,500,000 shares of common stock. As of November 30, 2017, the Company fair valued the derivative at $266,764. In addition, $130,337 of the debt discount has been amortized to interest expense.

On August 3, 2017, the Company issued a Convertible Promissory Note in favor of JSJ Investments, Inc. The principal amount of the loan is $60,000 with an original issue discount of $5,000 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on May 3, 2018. JSJ Investments, Inc. has the option to convert the Note plus accrued interest into common shares of the Company at any time. The conversion rate will be at a discount of 40% applied to the average of the three lowest trading prices for ten days prior to the actual date of conversion. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $73,676 based on the Black Scholes Merton pricing model and a corresponding debt discount of $60,000 to be amortized utilizing the interest method of accretion over the term of the note. As of November 30, 2017, the Company fair valued the derivative at $90,037. In addition, $26,154 of the debt discount has been amortized to interest expense.

On June 2, 2017, the Company issued a Convertible Promissory Note in favor of GS Capital Partners, LLC. The principal amount of the loan is $132,000 with an original issue discount of $6,600 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on June 2, 2018. GS Capital Partners, LLC. has the option to convert the Note plus accrued interest into common shares of the Company, after 180 days. The conversion rate will be at a discount of 36% applied to the lowest trading price for ten days prior to the actual date of conversion. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $172,690 based on the Black Scholes Merton pricing model and a corresponding debt discount of $132,000 to be amortized utilizing the interest method of accretion over the term of the note. As of November 30, 2017, the Company fair valued the derivative at $242,554. In addition, $4,633 of the debt discount has been amortized to interest expense.

On July 18, 2017, the Company issued a Convertible Promissory Note in favor of GS Capital Partners, LLC. The principal amount of the loan is $105,000 with an original issue discount of $5,000 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on July 18, 2018. GS Capital Partners, LLC. has the option to convert the Note plus accrued interest into common shares of the Company, after 180 days. The conversion rate will be at a discount of 36% applied to the lowest trading price for ten days prior to the actual date of conversion. As of November 30, 2017, $1,853 of the debt discount has been amortized to interest expense.

On October 19, 2017, the Company issued a Convertible Promissory Note in favor of Einstein Investments. The principal amount of the loan is $36,200 with an original issue discount of $5,200 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on July 19, 2018. Einstein Investments has the option to convert the Note plus accrued interest into common shares of the Company, at any time. The conversion rate will be at a discount of 43% applied to the lowest trading price for 15 days prior to the actual date of conversion. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $86,715 based on the Black Scholes Merton pricing model and a corresponding debt discount of $36,200 to be amortized utilizing the interest method of accretion over the term of the note. As of November 30, 2017, the Company fair valued the derivative at $77,546. In addition, $6,739 of the debt discount has been amortized to interest expense.

On October 26, 2017, the Company issued a Convertible Promissory Note in favor of GS Capital Partners, LLC. The principal amount of the loan is $125,000 with an original issue discount of $6,250,000 and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on October 26, 2018. GS Capital Partners, LLC. has the option to convert the Note plus accrued interest into common shares of the Company, after 180 days. The conversion rate will be at a discount of 36% applied to the lowest trading price for ten days prior to the actual date of conversion. As of November 30, 2017, $521 of the debt discount has been amortized to interest expense.

A summary of outstanding convertible notes as of February 28,November 30, 2017 and May 31, 2017 is as follows:

All other reductions were conversions toDuring the year ended May 31, 2017, the Company converted $318,631 of principal and accrued interest into 185,348,336 shares of common stock. During the six months ended November 30, 2017, the Company converted $46,947 and $7,087 of principal and interest, respectively, 51,043,233 shares of common stock.

A summary of the activity of the derivative liability for the notes above is as follows:

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the ninesix months ended February 28,November 30, 2017 is as follows:

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management

8.NOTE 10 - CORRECTION OF ERRORS

The Company has discovered that there were errors in prior periods regarding revenue, expense and derivative recognition for derivatives related to the embedded conversion features of convertible notes. As a result, the prior periods in these financial statements have been adjusted. On April 6, 2017, the company filed an 8-K referencing the errors.restated.

9.

NOTE 11 - SUBSEQUENT EVENTS

The Company has evaluated all events and transactions that occurred after February 28,

In accordance with ASC 855-10,Subsequent Events, we have analyzed our operations subsequent to November 30, 2017, up through the date thesethe unaudited financial statements were available for issuance. It has beento be issued, and have determined that we do not have any material subsequent events to disclose in these unaudited financial statements other than the following events need to be reported.following.

On March 20,December 1, 2017, the Company authorized and issued a Convertible Promissory Note in favor of Crown Bridge Partners for $114,000

On March 27, 2017, the Company authorized and issued a Convertible Promissory Note in favor of JSJ Investments, Inc. for $125,000. 

On April 4, 2017, the Company authorized and issued a Convertible Promissory Note in favor of Auctus Fund, LLC converted $5,676 and $444 of principal and interest, respectively, into 17,000,0000 shares of common stock.

On December 4, 2017, GS Capital Partners, LLC converted $7,000 and $284 of principal and interest, respectively into 12,645,555 shares of common stock.

On December 21, 2017, Auctus Fund, LLC converted $4,680 and $640 of principal and interest, respectively into 19,000,0000 shares of common stock.

 On January 3, 2018, JSJ Investments converted $8,050 of principal into 22,360,151 shares of common stock.

On January 8, 2018, the Board of Directors consented to increase the Company’s authorized common shares to 1,700,000,000 from 950,000,000, par value to remain at $0.0001 and to designate 40,000,000 of the 100,000,000 shares of Preferred Stock as Series C Preferred Stock. The Company amended and restated its Articles of Incorporation for $145,000.these changes effective January 8, 2018.

ITEM 2. MANAGEMENT'SMANAGEMENT’S DISCUSSION ANDND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements"“forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

Business Overview

Bemax Inc. is a Nevada –basedbased company focusing on the distribution of disposable baby diapers, made in North America and Asia by quality producers, to wholesalers and retailers in Europe and the emerging markets. Our business is focused on expanding current distribution networks for our private labels. We are awill attract more distributors for our products with competitive pricing through lower overhead cost. We continue to invest in the ecommerce space to attract loyal customers and expand within our markets.

The Company is working on several business development stage corporationprojects to increase business and have generated or realized minimalrevenue generation in 2017 and beyond, including but not limited to: product licensing of private labels in some of our African markets, production, and extended distribution of new and existing Bemax private label disposable baby diaper products. There can be no assurance that these will be successful in generating increased revenues from our business operations.in 2017.

Results of Operations for the Three Months Ended November 30, 2017 and 2016

Revenue

Revenue for the three months ended November 30, 2017 and 2016 was $1,083 and $23,031, respectively. The decrease is due to the Company’s temporary focus on plant development.

Operating Expenses

Consulting fees were $21,250 and $0 for the three months ended November 30, 2017 and 2016, respectively. The increase can be attributed to fees associated with acquiring the property lease with Simfox and the recognition of expense for stock for services issued in the prior period.

Professional fees were $16,423 and $1,100 for the three months ended November 30, 2017 and 2016, respectively, an increase of $15,323, or 139.3%, in 2017. The increase in 2017, as compared to 2016, can be largely attributed to increased legal, audit, and/or accounting fees related to required SEC quarterly filings.

General and administrative expense was $42,341 and $4,025 for the three months ended November 30, 2017 and 2016, respectively, an increase of $38,316, or 951.9%, in the current period. The increase in 2017 can be attributed to increased operational costs including $5,003 for travel, office expense as well as additional filing fees to amend some of our SEC filings.

Other Income and Expense

For the three months ended November 30, 2017, we had total other expense of $646,553, compared to $53,135 for the three months ended November 30, 2016. For the three months ended November 30, 2017, we recorded interest expense of $13,692, compared to $6,079 in the prior period. In addition, as a result of the convertible promissory notes, we recorded amortization of debt discount of $172,990, compared to $82,115 for the prior period, a loss on the issuance of convertible debt of $173,240 compared to $12,086 for the prior period, a loss on settlement of debt of $23,925, and a loss in the change in the fair value of our derivatives of $286,631 compared to a gain of $47,145 in the prior year.

Net Loss

For the three months ended November 30, 2017 and 2016, we incurred a net loss of $727,684 and $42,026, respectively.

Results of Operations for the Six Months Ended November 30, 2017 and 2016

Revenue

Revenue for the six months ended November 30, 2017 and 2016 was $2,725 and $115,153, respectively. The decrease is due to the Company’s temporary focus on plant development.

Operating Expenses

Consulting fees were $48,000 and $0 for the six months ended November 30, 2017 and 2016, respectively. The increase can be attributed to fees associated with acquiring the property lease with Simfox and the recognition of expense for stock for services issued in the prior period.

Professional fees were $28,788 and $9,400 for the six months ended November 30, 2017 and 2016, respectively, an increase of $19,388, or 206%, in 2017. The increase in 2017, as compared to 2016, can be largely attributed to increased legal, audit, and/or accounting fees related to required SEC quarterly filings.

General and administrative expense was $86,211 and $10,584 for the six months ended November 30, 2017 and 2016, respectively, an increase of $75,627, or 714.5%, in the current period. The increase in 2017 can be attributed to increased operational costs including $5,003 for travel, office expense as well as additional filing fees to amend some of our SEC filings.

Other Income and Expense

For the six months ended November 30, 2017, we had total other expense of $691,693, compared to $111,826 for the six months ended November 30, 2016. For the six months ended November 30, 2017, we recorded interest expense of $25,421, compared to $49,289 in the prior period. In addition, as a result of the convertible promissory notes, we recorded amortization of debt discount of $279,387, compared to $162,368 for the prior period, a loss on the issuance of convertible debt of $191,916 compared to $284,091 for the prior period, a loss on settlement of debt of $23,925, and a loss in the change in the fair value of our derivatives of $171,044 compared to a gain of $383,922 in the prior year.

Net Loss

For the six months ended November 30, 2017 and 2016, we incurred a net loss of $856,477 and $135,834, respectively.

Liquidity and Capital Resources

Cash FlowsDuring the six months ended November 30, 2017, we used cash of $368,044 in operating activities, as compared to $205,284 for the six months ended November 30, 2016. Financing activities provided net cash of $384,150 during the six months ended November 30, 2017, as compared to $104,000 for the six months ended November 30, 2016.

As of November 30, 2017, we have the following convertible notes outstanding.