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Bemax (BMXC)

Filed: 1 Nov 17, 8:00pm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10K

 

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

 

For the fiscal year ended May 31, 2016

 

Or

 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF TH E SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____ to August ____

 

Commission File Number 333-197756

 

BEMAX INC.

(Exact name of registrant as specified in its charter)

 

Nevada 5190 46-554081
(State or other jurisdiction
of Organization)
 (Primary Standard Industrial
Classification Code)
 (Number IRS Employer
Identification Number)

 

 

625 Silver Oak Drive

Dallas, GA 30132.

Tel: (770) 401-1809

(Address and telephone number of registrant’s executive office)

 

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock

 

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒   No ☐

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Yes ☒  No ☐

 

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

 

Large accelerated filerAccelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐No ☒

 

Number of common shares outstanding as of May 31, 2016: 258,750,000

 

 

 

 

 

Explanatory Note: The balance sheet as of May 31, 2016 and Statements of Operations and Cash Flows were restated to reflected corrections, as purchases made for resale were recorded on the cash basis, embedded feature and debt discounts related to convertible notes were not recorded and there were other clerical errors. There was no significant effect on EPS.

 

 

 

 

 

  

 

 

TABLE OF CONTENTS

 

  Page
PART I
   
Item 1.Business1
   
Item 1A.Risk Factors3
   
Item 2.Property3
   
Item 3.Legal Proceedings3
   
Item 4.Mine Safety Disclosures3
   
PART II
   
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities4
   
Item 6.Selected Financial Data4
   
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operation4
   
Item 7A.Quantitative and Qualitative Disclosure About Market Risk6
   
Item 8.Financial Statements and Supplementary Data7
   
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure8
   
Item 9A.Controls and Procedures8
   
Item 9B.Other Information8
   
PART III
   
Item 10.Directors, Executive Officers and Corporate Governance9
   
Item 11.Executive Compensation9
   
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters10
   
Item 13.Certain Relationships and Related Transactions, and Director Independence11
   
Item 14.Principal Accountant Fees and Services11
 
Item 15.Exhibits, and Financial Statement Schedules11
   
 Signatures12

 

 

 

ITEM 1. Business

 

We were incorporated in the State of Nevada on November 28, 2012. We export Disposable Baby Diapers from U.S. and Canada and distribute them in London, and South Africa. We also export from manufacturers from Asia and distribute to other parts of Africa. We have generated minimal revenues. We maintain our statutory registered agent’s office at 5348 Vegas Drive, Las Vegas, NV 89108. Our telephone number is 770-401-1809.

 

Product

 

We distribute Disposable Baby Diapers from North America to distributors and wholesalers in England and Africa. Disposable baby diapers have become a widely used alternative disposable material for parents of babies and children not toilet trained. Disposable baby diapers is a kind of underwear that allows one to defecate or urinate in a discreet manner. Diapers are made of synthetic disposable materials. Disposable diapers contain absorbent chemicals and are thrown away after use. Disposable diapers are primarily worn by children who are not yet potty trained or experience bed wetting. Disposable baby diapers are constructed in three layers, an inner layer that sits against baby’s skin is designed to be soft, stay relatively dry, and wick away moisture into the core. The absorbent core is designed to pull moisture in and trap it to keep wetness away from the baby to avoid rashes. The outer layer is waterproof to prevent leaks.

 

Below is a list of advantages of Disposable Baby Diapers compared to cloth diapers. (Cloth diapers are composed of layers of fabrics such as cotton, hemp, or microfiber and can be washed and reused multiple times)

 

- Disposable Baby Diapers are ultra-absorbent. The disposable diapers will hold over 3 times their weight in water. The inner layer keep wetness from the skin, and prevent leaks.

 

- Convenient and easy to change. Disposable baby diapers come with straps attached to the back panel that fasten in front. Disposable diapers have built in ready to use straps made of Velcro that make securing the diapers much easier and quicker. They come also, in variety of sizes which fit babies as they grow and mature. Furthermore, disposable diapers are more convenient when travelling and when used in a group setting.

 

- Color change indicators. Disposable baby diapers are not only functional, they include advanced features such as special sizing and coloring for specific gender and age, color indicators to show when the child is wet, and re-attachable Velcro-type closures.

 

Sizes

 

Disposable diapers range in size from Newborn to Size 6, which accommodates an over 35 lbs child. The normal size weight ranges are: -Up to ten pounds: newborn, 8 to 15 pounds: Size 1-2, 16 to 28 pounds: Size 3, 22 to 37 pounds: Size 4, 27 plus pounds: Size 5, Over 35 pounds: Size 6.

 

Suppliers of Disposable Baby Diapers

 

North America producers are leaders in disposable baby diapers manufacturing. There are many manufacturers across North America with different type of disposable baby diapers and services. Disposable baby diapers suppliers can be found by Internet search or through direct contact to disposable diapers manufacturer.

 

The price range of our private label brands is from $0.11 USD to $0.30 USD per unit depending on size, design and thickness. However, we do not have any written agreements with the manufacturers, and the actual price can be different at the time of purchase.

 

 1 

 

 

Business Strategy

 

The company strategy is to win and maintain customers by providing products that add value in terms of price, quality, safety, availability and functionality, and are supported by a dedicated, well-trained team. This shall be important to the successful implementation of our overall strategy and hence the need to ensure we are focused and working harmoniously towards attainment of these goals and objectives. We initially intend to be focusing on satisfying our core markets in London, East, South and West Africa.

 

We intend to focus on delivering quality products at affordable prices that in turn will produce good referrals, which can then generate revenue. We continue to build image and awareness through consistency and distinctiveness in our order fulfillment.

 

Sales and Marketing

 

We plan to market our product in Europe and Africa. Most of Europe and, especially all parts of Africa experiences extremely high cost for disposable baby diapers. As there are few disposable baby diapers manufacturers in Africa, they are mostly imported from other countries. We intend to supply our clients with disposable baby diapers from manufacturers in North America where quality is superior. We request pre-payment from our clients and ask them to provide delivery instructions when they order our products. Once the order is completed, and payment is received, we place an order with our supplier of disposable baby diapers and arrange shipping directly to our client. Prepayment reduce the amount of cash we will need to have on hand. Also by delivering the product directly to the client, will eliminate the need for a warehouse facility. It is likely that some of our clients will not be willing to prepay and wait for the product, potentially resulting in a loss of sales for us. Also it is likely that some of our clients will attempt to circumvent our services by purchasing directly from our suppliers. To discourage this practice, we negotiate wholesale discounts with our suppliers so that we can offer our customers a lower price than if they would purchase directly from our suppliers. However, there is no guarantee that we will be able to negotiate such lower prices and we may lose business. In the future, we may establish a warehouse facility in Europe so that we can attract more customers that prefer to inspect and pick up their order at the time of payment. The prices will charge our clients for such product will be substantially higher reflecting the added convenience to the customer and the added cost to us.

 

Revenue

 

The Company’s revenues will be the difference between what we charge our clients for our products and what we pay for our Disposable Baby Diapers suppliers and/or manufacturers. In the case where our clients buy directly from the manufacturers we will try to negotiate a commission from the sellers. However there is no guarantee that we will receive such commission payment in every case or at all, resulting in loss of profits. The commissions and the spread that we earn are different each time and negotiated on a case by case basis.

 

Employees

 

We have one employee, involved in management.

 

Research and Development Expenditures

 

We have not incurred any research or development expenses.

 

Government Regulation

 

We are currently not subject to any government regulations

 

Subsidiaries

 

We do not have any subsidiaries.

 

Intellectual Property

 

We have no intellectual property except we own our own domain address which signifies our online presence. Our trade name is our company name which is legally incorporated in the state of Nevada. Our company name is also our trade name.

 

 2 

 

 

ITEM 1A. RISK FACTORS

 

As a “smaller reporting company” we are not required to provide the information required by this Item.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None

 

ITEM 2. PROPERTIES

 

Our executive and administrative offices are located at 625, Silver Oak Drive, Dallas, Georgia 30132. Our corporate mailing address is 5348 Vegas Drive, Las Vegas, NV 89108.

 

ITEM 3. LEGAL PROCEEDINGS

 

No officer, director or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:

 

Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and

 

Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

 3 

 

 

PART II

 

ITEM 5. Market for Common Equity and Related Stockholder Matters

 

Our common stock is not traded on any exchange. Our common stock is quoted on the OTC Bulletin Board, under the trading symbol “BMXC.BB”. The market for our stock is highly volatile. We cannot assure you that there will be a market in the future for our common stock. The OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

 

Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. We currently have no plans, proposals, arrangements or understandings with any person with regard to the development of a trading market in any of our securities.

 

The following table shows the high and low prices of our common shares on the OTC Bulletin Board for each quarter within the most recent fiscal year.  The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

 

Fiscal Year Ending May 31, 2016 HIGH  LOW 
Quarter Ending August 31, 2015  0.69   0.60 
Quarter Ending November 30, 2015  0.29   0.29 
Quarter Ending February 29, 2016  0.15   0.114 
Quarter Ending May 31, 2016  0.76   0.68 

  

Holders

 

As of May 31, 2016, there were 38 stockholders of record, including CEDE & Co., which holds shares for the beneficial interest of an unknown number of stockholders in brokerage accounts.

 

Dividends

 

We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.

 

Stock Option Grants

 

As of May 31, 2016, we had not granted any stock options.

 

Stock Repurchases

 

The Company did not make any stock repurchases.

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not applicable

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward Looking Statements

 

This report on Form 10-K contains certain forward-looking statements. All statements other than statements of historical fact are “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.

 

 4 

 

 

Business Overview

 

Bemax Inc. is new Nevada –based company focusing on the distribution of disposable baby diapers made in North America by quality producers to wholesalers and retailers in Europe and South, East and West Africa. We are a development stage corporation and have generated minimal revenues from our business operations. The company completed offering of 1,175,000 shares of common stock on a self-underwritten basis in February of 2015. The offering price is $0.05 per share.

 

Liquidity and Capital Resources

 

  Fiscal Year Ended May 31, 2016  Fiscal Year Ended May 31, 2015 
Net Cash Used in Operating Activities $(128,799) $(4,113)
Net Cash Used by Investing Activities $-  $(500)
Net Cash Provided by Financing Activities $186,400  $58,750 

  

Through May 31, 2016, the Company’s operations had generated limited revenues.

 

We currently have minimal cash reserves. To date, the Company has covered operating deficits primarily through loans from the sole director, and third parties loans which if not paid with interest as at when due are convertible to the Company’s common stock. Accordingly, our ability to pursue our plan of operations is contingent on our being able to obtain funding for the development, marketing and commercialization of our products and services. However, as a result of its lack of operating success, the Company may not be able to raise additional funding to cover operating deficits.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has accumulated deficit of $221,417 since inception (November 28, 2012) to the period ended May 31, 2016 and is dependent on its ability to raise capital from shareholders or other sources to sustain operations. However, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We anticipate that we may only generate any limited revenues in the near future and we will not have enough positive internal operating cash flow until we can generate substantial revenues, which may take the next two years to fully realize.  There is no assurance we will achieve profitable operations.

 

Business Development 

 

Our business is focus on expanding current distribution network for our private labels. We will 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.

 

We continue to develop new channels of distribution as the company grows. Bemax plan to become a globally known brand may be pushed forward by entering into contracts with the numerous major wholesale distributors throughout our growing markets.

 

On September 8, 2015, the Company announced to launch an exclusive private-label of disposable diapers and wipes, called Mother’s Hugs and Mother’s Choice, to be sold and distributed through existing Bemax distribution channels of wholesalers and retailers in Europe and emerging African markets as well as to buyers online through Bemax ecommerce website.

 

 5 

 

 

On October 15, 2015, the Companyannounced the launch of its new ecommerce website bemaxinc.com/webstore. Bemax new site provides quick and intuitive access to our private-labels and enhances the quality and availability of our Mother’s Choice and Mother’s Touch labels to our customers.

 

On November 13, 2015, the Company entered into an exclusive supplier agreement with Bethel Imports Marketing Limited, whereby Bethel Imports shall purchase exclusively from Bemax Inc. Under the terms of the Agreement, Bemax shall provide, without limitation, consulting, and support services necessary for Bethel Imports to sell, operate and manage the distribution of Bemax private label Disposable Baby Diaper. Pursuant to the Agreement, when Bethel Imports is in need of supply of Disposable Baby Diapers or Services to be provided by Bemax under the terms of this agreement, Bethel Imports shall issue purchase order to the Company specifying the type and amount of Disposable Baby Diaper, and Services to be purchased from Bemax Inc. During the term of this Agreement, Bethel will not purchase Disposable Baby Diapers or Services specified in this Agreement from any vendor, other than from Bemax, unless Bemax consents in writing to such purchase. The purchase price for the Disposable Baby Diapers and Services shall be Bemax direct wholesale price listing in effect at the time Bethel Imports issues a purchase order.

 

On November 16, the Company announced the receipt of $260,000 purchase order from Bethel Imports Marketing Limited, for distribution of Bemax private label disposable Baby Diapers Diaper in the emerging South and East African markets.

 

On May 17, 2016, the Company received additional purchase order of $710,000 from Bethel Imports Limited pursuant to the supplier agreement entered into with Bemax Inc.

 

The Company is working on several business development and projects to increase business and revenue generation in 2016 and beyond, including but not limited to: product licensing of private label 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 revenues in 2016.

  

Results of Operations for the Period Ended May 31, 2016 and 2015

 

Revenues

 

Revenues for the year ended May 31, 2016 totaled $573,838 compared to $100,000 in revenue for the year ended May 31, 2015.

 

Gross Profit

 

The company generated gross profit of $97,041 for the period ended May 31, 2016 compared to $5,000 for the period ended May 31, 2015.

 

Operating Cost

 

Our total operating costs for the year ended May 31, 2016 were $40,150 compared to $26,619 for the year ended May 31, 2015, which consisted mostly of general and administrative expense.

 

Other Income and Expense

 

For the year ended May 31, 2016, we had total other expense of $254,187 compared to $0 for the year ended May 31, 2015. For the year ended May 31, 2016, we recorded interest and loan fee expense of $13,044. In addition, as a result of the convertible promissory notes, we recorded interest expense on debt discount of $11,102, a loss on the issuance of convertible debt of $358,374 for the prior year, and a gain of $128,333 in the prior year.

 

Net Loss

 

For the year ended May 31, 2016 we incurred net loss of $197,296 compared to $21,619 in net loss for the year ended May 31, 2015.

 

Off-Balance Sheet Arrangements

 

As of May 31, 2016, we had no off balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

 6 

 

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

BEMAX INC.

FINANCIAL STATEMENTS

MAY 31, 2016 and 2015

 

CONTENTS

 

Report of Independent Registered Public Accounting FirmF-1
Balance Sheets for the years ended May 2016 and 2015F-2
Statements of Operations for the years ended May 2016 and 2015F-3
Statements of Stockholders’ Equity/(Deficit) for the years ended May 2016 and 2015F-4
Statements of Cash Flows for the years ended May 2016 and 2015F-5
Notes to Financial StatementsF-6

 

 7 

 

 

GEORGE STEWART, CPA

 

316 17TH AVENUE SOUTH

SEATTLE, WASHINGTON 98144

(206) 328-8554 FAX (206) 328-0383

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

 

Bemax Inc.

 

I have audited the accompanying balance sheets of Bemax Inc. as of May 31, 2016 and 2015, and the related statements of operations, stockholders’ equity and cash flows for each of the years in the two year period ended May 31, 2016. Bemax Inc.’s management is responsible for these financial statements. My responsibility is to express an opinion on these financial statements based on my audit.

 

I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

 

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bemax Inc., as of May 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two year period ended May 31, 2016 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note # 2 to the financial statements, the Company has had minimal operations. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note # 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

  

/S/ George Stewart

 

Seattle, Washington

June 2, 2017

 

 F-1 

 

 

BEMAX INC.
Balance Sheets

 

  May 31,
2016
  May 31,
2015
 
  (Restated)  (Restated) 
ASSETS      
Current Assets:      
Cash $115,738  $58,137 
Inventory  189,823   - 
Total current assets  305,561   58,137 
         
Property and Equipment  500   500 
         
Total Assets $306,061  $58,637 
         
LIABILITIES & STOCKHOLDERS’ EQUITY        
         
Current Liabilities:        
Accounts payable $-  $2,672 
Accrued interest on convertible loans  1,845   - 
Derivative liability  351,041   - 
Debt discount  (134,148)  - 
Convertible Loans  207,750   - 
Loan from shareholder and related party  38,236   17,336 
Total current liabilities  464,724   20,008 
         
STOCKHOLDERS’ EQUITY (DEFICIT):        
Common stock, $0.0001 par value, 500,000,000 shares authorized; 258,792,500 and 258,750,000 shares issued and outstanding, respectively  25,879   25,875 
Additional paid-in capital  36,875   36,875 
Accumulated deficit  (221,417)  (24,121)
Total Stockholders’ Equity (Deficit)  (158,663)  38,629 
         
Total Liabilities and Stockholders’ Equity $306,061  $58,637 

 

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

 

 F-2 

 

 

BEMAX INC.
Statements of Operations

 

  For the Years Ended
May 31,
 
  2016  2015 
  (Restated)  (Restated) 
Revenue $573,838  $100,000 
Cost of goods sold  476,797   (95,000)
Gross Margin  97,041   5,000 
         
Operating Expenses:        
Professional fees  12,304   - 
Management fees  6,000   - 
General and administrative  21,846   26,619 
         
Total Operating Expenses  40,150   26,619 
         
Income (loss) from operations  56,891   (21,619)
         
Other Income (Expense):        
Interest expense and loan fees  (13,044)  - 
Interest expense – debt discount  (11,102)  - 
Change in fair value of derivative  128,333   - 
Loss on issuance of convertible debt  (358,374)  - 
Total other expense  (254,187)  - 
         
Net loss $(197,296) $(21,619)
         
Basic and diluted loss per share $(0.00) $(0.00)
         
Weighted average number of shares outstanding – basic and diluted  258,792,500   258,750,000 

 

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

 

 F-3 

 

 

BEMAX INC
Statement of Stockholders’ Equity (Deficit)
(Restated)

 

  Common Stock  Additional Paid in  Accumulated    
  Shares  Amount  Capital  Deficit  Total 
Balance at May 31, 2014  200,000,000   20,000  $(16,000) $(2,502) $1,498 
                     
Stock issued for cash  58,750,000   5,875   52,875   -   58,750 
                     
Net loss for the year ended   May 31, 2015  -   -   -   (21,619)  (21,619)
                     
Balance at May 31, 2015  258,750,000   25,875   36,875   (24,121)  38,629 
                     
Stock issued for services  42,500   4   -   -   4 
                     
Net loss for the year ended May 31, 2016  -   -   -   (197,296)  (197,296)
                     
Balance at May 31, 2016  258,792,500  $25,879  $36,875  $(221,417) $(158,663)

 

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

 

 F-4 

 

 

BEMAX INC.
Statements of Cash Flows

 

  For the Years Ended
May 31,
 
  2016  2015 
  (Restated)  (Restated) 
CASH FLOW FROM OPERATING ACTIVITIES:      
Net loss $(197,296) $(21,619)
Adjustments to reconcile net loss to net cash used in operating activities:        
Common stock issued for services  4   - 
Change in fair value of derivative  (128,333)  - 
Loss on issuance of convertible debt  358,374   - 
Amortization of debt discount  11,102   - 
Changes in Operating Assets and Liabilities:        
Prepaids  -     
Inventory  (189,823)  - 
Accounts payable  (2,672)  2,672 
Accrued interest on convertible loans  1,845   - 
Accruals, related party  18,000   - 
Net Cash Used in Operating Activities  (128,799)  (18,947)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchase of equipment  -   (500)
Net Cash Used in Investing Activities  -   (500)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from convertible loans  183,500   - 
Proceeds from the sale of common stock  -   58,750 
Loan from shareholder and related party  2,900   14,834 
Net Cash Provided by Financing Activities  186,400   73,584 
         
NET INCREASE IN CASH  57,601   54,137 
CASH AT BEGINNING OF YEAR  58,137   4,000 
CASH AT END OF YEAR $115,738  $58,137 
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION        
Cash paid during period for:        
Interest $-  $- 
Income Taxes $-  $- 
Non-Cash Financing Activities:        
Common stock issued for debt $302,750  $- 

 

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

 

 F-5 

 

 

BEMAX INC.

Notes to the Financial Statements

May 31, 2016

 

NOTE 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. The Company is in the development stage with no revenues and very limited operating history.

 

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 for the foreseeable future. The Company anticipates future losses 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 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.

 

NOTE 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 $221,417 as of May 31, 2016 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 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 existing cash on hand, loans from directors and/or private placement of common stock.

There is no guarantee that the Company will be able to raise any capital through any type of offering.

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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 could differ from those estimates.

 

The Company’s Year End is May 31.

 

Use of estimates

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 reporting period.  Significant estimates include the estimated useful lives of property and equipment.  Actual results could differ from those estimates.

 

Concentrations of Credit Risk

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

 

 F-6 

 

 

Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the year ended May 31, 2016 or 2015.

 

Inventories

Inventories are valued at the lower of cost or market. Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower.

 

Property and Equipment

Property and equipment are carried at the lower of cost or net realizable value. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method over the asset’s useful life.

 

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 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), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which 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 Paragraph 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 May 31, 2016.

 

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

 

May 31, 2016: 

 

Description Level 1  Level 2  Level 3  Total Gains and (Losses) 
Derivative $       -  $-  $351,041  $128,333 

 

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.

 

 F-7 

 

 

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 May 31, 2016, the embedded conversion feature of $351,041 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.

 

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

 

Revenue Recognition

We follow ASC 605-10-S99-1,Revenue Recognition, for revenue recognition. We will recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) the product has been shipped or the services have been rendered to the customer; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured.

 

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.

 

Stock-Based Compensation

We account for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50,Equity-Based Payments to Non-Employees (“ASC 505-50”). ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.

 

We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718,Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

 

 F-8 

 

 

Basic and Diluted Net (Loss) per Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period.  The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.

 

The Company’s diluted loss per share is the same as the basic loss per share for the years ended May 31, 2016 and 2015, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

 

Recent Accounting Pronouncements

In November 2015, the FASB issued ASU 2015-17—Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We do not anticipate the adoption of this ASU will have a significant impact on our financial position, results of operations, or cash flows.

 

In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC 840,Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect this standard will have on our financial statements.

 

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

NOTE 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 rent and $500 for executive compensation. A total of $9,000 for donated management fees was charged to Shareholder Loan for the year ended May 31, 2016.

 

As of May 31, 2016, there are loans from the majority shareholder and related party totalling $38,236. 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.

 

NOTE 5 - STOCKHOLDER’S EQUITY

 

Between October 14 and 24, 2014, the Company authorized and issued 58,750,000 shares of common stock at $0.05 per share to various investors for net proceeds to the Company of $58,750.

 

On June 5, 2015, the Company decided to increase the authorized number 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.

 

At May 31, 2016, there are 500,000,000 shares of common stock at a par value of $0.0001 per share authorized and 258,792,500 issued and outstanding.

 

The 50-1 stock split has been shown retroactively.

 

 F-9 

 

 

NOTE 6 - INCOME TAXES

 

The Company follows ASC 740. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax

 

reporting purposes, and (b) net operating loss carry-forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward has been recognized, as it is not deemed likely to be realized.

 

The provision for refundable federal income tax consists of the following for the periods ending:

 

  May 2016 
Federal income tax benefit attributable to:   
Current Operations $221,417 
Less: valuation allowance  (221,417)
Net provision for Federal income taxes $ 

 

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows at May 31:

 

  2016  2015 
Deferred tax asset attributable to:      
Net operating loss carryover $221,417  $165,264 
Less: valuation allowance  (221,417)  (165,264)
Net deferred tax asset $  $ 

 

NOTE 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 is $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 becomes due and payable with accrued interest on February 16, 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 48% of the lowest price for ten days prior to the actual date of conversion. The Company has 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. The Company cannot prepay any amount outstanding after 180 days. The conversion feature was not effective as of yearend; therefore, there are no derivatives related to the embedded conversion feature.

 

On April 19, 2016, the Company issued a Convertible Promissory Note in favor of Crown Bridge Partners, LLC. The principal amount of the loan is $30,000 (thirty thousand dollars) with an original issue discount of $3,500 (three thousand five hundred dollars) and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on April 19, 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 48% of the lowest price for ten days prior to the actual date of conversion. The Company has 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. 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 conversion feature was not effective as of yearend; therefore, there are no derivatives related to the embedded conversion feature.

  

On May 9, 2016, the Company issued a Convertible Redeemable Note in favor of Adar Bays, LLC. The principal amount of the loan is $30,000 (thirty thousand dollars) and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on May 9, 2017 Eagle Equities 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 48% of the lowest price for fifteen days prior to the actual date of conversion. The Company has 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. 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 $108,800 based on the Black Scholes Merton pricing model and a corresponding debt discount of $30,000 to be amortized utilizing the interest method of accretion over the term of the note. As of May 31, 2016, the Company fair valued the derivative at $84,716 resulting in a gain on the change in the fair value of $24,085. In addition, $1,808 of the debt discount has been amortized to interest expense.

 

 F-10 

 

 

On May 9, 2016, the Company issued a Convertible Redeemable Note in favor of Eagle Equities, LLC. The principal amount of the loan is $30,000 (thirty thousand dollars) and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on May 9, 2017. Eagle Equities 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 48% of the lowest price for fifteen days prior to the actual date of conversion. The Company has 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. 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 $108,800 based on the Black Scholes Merton pricing model and a corresponding debt discount of $30,000 to be amortized utilizing the interest method of accretion over the term of the note. As of May 31, 2016, the Company fair valued the derivative at $84,716 resulting in a gain on the change in the fair value of $24,085. In addition, $1,808 of the debt discount has been amortized to interest expense.

 

On May 10, 2016, the Company issued a Convertible Promissory Note in favor of Auctus Fund, LLC. The principal amount of the loan is $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 carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on May 10, 2017. Auctus Fund 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 48% of the lowest average price for ten days prior to the actual date of conversion. The Company has 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 135% interest and 91 days through 120 for a cash payment of the principal plus 140% interest. From 121 through 150 days, prepaying the principal plus accrued interest plus 145% interest and day 151 through 180 days plus interest of 150%. 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 be amortized utilizing the interest method of accretion over the term of the note. As of May 31, 2016, the Company fair valued the derivative at $181,611 resulting in a gain on the change in the fair value of $80,164. In addition, $5,916 of the debt discount has been amortized to interest expense.

 

A summary of outstanding convertible notes as of May 31, 2016, is as follows:

 

Note Holder Issue Date Maturity Date Stated Interest Rate  Principal Balance 5/31/2016 
Crown Bridge Partners, LLC 2/16/2016 2/16/2017       8% $40,000 
Crown Bridge Partners, LLC 4/19/2016 4/19/2017  8%  30,000 
Adar Bays, LLC 5/9/2016 5/9/2017  8%  30,000 
Eagle Equities, LLC 5/9/2016 5/9/2017  8%  30,000 
Auctus Fund, LLC 5/10/2016 2/10/2017  8%  77,750 
Total         $207,750 

 

A summary of the activity of the debt discount as of May 31, 2016 is as follows:

 

Note Holder Issue Date Maturity Date Stated Interest Rate  Amount of Note  Debt Discount  Net Principal Balance 5/31/2016 
Crown Bridge Partners, LLC 2/16/2016 2/16/2017  8% $40,000  $(2,850) $37,150 
Crown Bridge Partners, LLC 4/19/2016 4/19/2017  8%  30,000   (3,080)  26,920 
Adar Bays, LLC 5/9/2016 5/9/2017  8%  30,000   (28,192)  1,808 
Eagle Equities, LLC 5/9/2016 5/9/2017  8%  30,000   (28,192)  1,808 
Auctus Fund, LLC 5/10/2016 2/10/2017  8%  77,750   (71,834)  5,916 
Total         $207,750  $(134,148) $73,602 

 

A summary of the activity of the derivative liability for the year ended May 31, 2016 is as follows:

 

Balance at May 31, 2015 $- 
Increase to derivative due to new issuances  479,374 
Derivative (gain) due to mark to market adjustment  (128,333)
Balance at May 31, 2016 $351,041 

 

 F-11 

 

 

NOTE 8 – RESTATEMENT

 

The balance sheet as of May 31, 2016 and Statements of Operations and Cash Flows were restated to reflected corrections, as purchases made for resale were recorded on the cash basis, embedded feature and debt discounts related to convertible notes were not recorded and there were other clerical errors. There was no significant effect on EPS.

 

The following table summarizes changes made to the May 31, 2016 financial statements.

 

  May 31, 2016 
Balance Sheet: As Reported  Adjustment  As Restated 
Accounts receivable $372,622  $(372,622) $- 
Inventory  -   189,823   189,823 
Total Current Assets  488,360   (182,799)  305,561 
Total Assets  488,860   (182,799)  306,061 
Accounts payable  319,795   (319,795)  - 
Derivative liability  -   351,041   351,041 
Debt discount  -   (134,148)  (134,148)
Deferred revenue  507,722   (507,722)  - 
Total current liabilities  1,075,348   (610,624)  464,724 
Total liabilities  1,075,348   (610,624)  464,724 
Accumulated deficit  (649,241)  427,824   (221,417)
             
Statement of Operations:            
Purchase – Resale items  629,440   (152,643)  476,797 
Gross profit (loss)  (90,702)  187,473   97,041 
Operating expenses  72,469   (32,319)  40,150 
Non-operating expenses  -   254,287   254,287 
Net loss  (163,171)  (34,125)  (197,296)

 

For the year ended May 31, 2015, accounts receivable, accounts payable, deferred revenue, sales and purchases were adjusted as the errors related to the COGS and sales that occurred in 2015. As a result, the net loss decreased by approximately $450,000 and the loss per shares remained below $0.01.

 

NOTE 9 - SUBSEQUENT EVENTS

 

The Company has evaluated all events and transactions that occurred after May 31, 2016 up through the date these financial statements were available for issuance. It has been determined that the following events are material:

 

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 at a par value of $0.0001 per share. At no time is he considered an employee of the Company. He is an Independent Contractor and able to pursue other interests.

 

As of January 11, 2017, the six loans outstanding including accrued interest, have all been converted to common shares. There are currently no loans outstanding. The total number of shares issued regarding these conversions totals 184,748,966.

 

On March 20, 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 for $145,000.

 

On May 18, 2017, Bemax Inc. (the “Company”) filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby it amended its Articles of Incorporation by increasing the Company’s authorized number of shares of common stock from 500,000,000 million to 850,000,000 million.

  

Refer to amended filings for the quarters and year end subsequent to May 31, 2016 for additional subsequent activity.

 

 F-12 

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There were no disagreements with accountants on accounting and financial disclosure during the relevant period.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our sole officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our sole officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2016.

 

Based on the evaluation of these disclosure controls and procedures, our Chief Executive and Chief Financial Officer concluded that as of the end of the periods covered by this report, we have identified the following material weakness of our internal controls:

 

Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control.

 

ITEM 9B. OTHER INFORMATION

 

Management’s Annual Report on Internal Control over Financial Reporting.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

 8 

 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 

Identification of Directors and Executive Officers of the Company:

 

As of May 31, 2016, our officers and directors were as follows:

 

NAME AGE OFFICE SINCE
Taiwo Aimasiko 41 Director, CEO, CFO 2012

 

The Directors named above will serve until a new officer is appointed. Officers will hold their positions at the pleasure of the Board of Directors. There is no arrangement or understanding between the Directors and Officers of the Company and any other person pursuant to which any Director or Officer was or is to be selected as a Director or Officer of the Company.

 

Ms. Aimasiko has been working as the Company CEO since November 2012. Ms. Aimasiko will serve as Director and officer until her duly elected successor is appointed or she resigns. There are no arrangements or understandings between Ms. Aimasiko and any other person pursuant to which she was selected as an officer or director. There are no family relationship between Ms. Aimasiko and any of our officers or directors. During the past five years, Ms. Aimasiko has not held any other directorships in a company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

 

We have no audit committee. The Company has no compensation committee.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

 

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended May 31, 2016, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with.

 

ITEM 11. EXECUTIVE COMPENSATION

 

The table below summarizes all compensation awarded to, earned by, or paid to our Principal Executive Officer, for all services rendered in all capacities to us for the latest fiscal year ended May 31, 2016 and 2015.

 

Name Title Year  Salary  Bonus  Stock awards  Option awards  Non-Equity incentive plan compensation  Non-qualified deferred compensation  All other compensation  Total 
Taiwo Aimasiko CEO  2015       0       0       0       0       0       0   9,000   9,000 
Taiwo Aimasiko CEO  2016   0   0   0   0   0   0   18,000   18,000 

 

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Stock Option Grants

 

We have not granted any stock options to the executive officers since our inception.

 

Compensation Agreements

 

We do not have employment agreements with our sole officer. Members of our Board of Directors do not receive compensation for their services as Directors.

 

Audit Committee Financial Expert

 

Our board of directors does not have a member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.

  

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following tables set forth the ownership, as of the date of this Prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.

 

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own

 

beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The mailing address for all persons is 625 Silver Oak Drive, Dallas, GA 30132.

 

SHAREHOLDERS # OF SHARES  PERCENTAGE 
Taiwo Aimasiko  200,000,000   77.29%
All directors and executive officers as a group [1 person]  200,000,000   77.29%

 

This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 258,750,000 shares of common stock outstanding as of the date of this report.

 

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Our president has orally agreed to provide us necessary funding to maintain minimal operations at interest of 0%, payable upon demand. The anticipated amount of this loan will be not be known at until the time a loan is determined to be needed. The amount will be based on the amount of funding needed to maintain minimal operation. She is not obligated to make any further advances. We have no agreement, commitment or understanding to secure any such funding from any other source.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The aggregate fees billed for the most recently completed fiscal year ended May 31, 2016 and for fiscal year ended May 31, 2015 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

 

  YEAR END 
  May 31,
2016
  May 31,
2015
 
Audit Fees $4,000  $3,000 
Audit Related Fees $9,900  $6,000 
Tax Fees  -   - 
All Other Fees  -   - 
Total $13,900  $9,000 

 

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

 

Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.

 

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

The following documents are filed as part of this Form 10-K:

 

(1) Financial Statements: Balance Sheets, Statements of Operations, Statement of Stockholders’ Equity, Statements of Cash Flows, and Notes to Financial Statements.

 

(2) Financial Statement Schedules: Financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the financial statements or notes described in Item 15(1).

 

(3) Exhibits

 

The exhibits listed in the Exhibit Index are incorporated herein by reference and/or are filed as part of this Form 10-K.

 

Exhibit Exhibit
Number Description
   
10.1 Supplier Agreement
10.2 Convertible Promissory Note dated June 14, 2016 issued to Black Forest Capital
10.3 Convertible Promissory Note dated June 1, 2016 issued to JSJ Investments Inc.
10.4 Convertible Promissory Note dated May 10, 2016 issued to Auctus Fund, LLC.
10.5 Convertible Promissory Note dated May 9, 2016 issued to Eagle Equities, LLC.
10.6 Convertible Promissory Note dated May 9, 2016 issued to Adar Bays, LLC.
10.7 Convertible Promissory Note dated April 19, 2016 issued to Crown Bridge Partners
10.8 Convertible Promissory Note dated February 16, 2016 issued to Crown Bridge Partners
23.1 Consent of Independent Registered Public Accounting Firm, George Stewart, CPA
31.1 Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.2 Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.

  

Date: November 1, 2017

 

 /s/ Taiwo Aimasiko
 Taiwo Aimasiko
 Chief Executive Officer,
Chief Financial Officer,
 President, Treasurer and Director

 

 

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