BEMAX INC.
Balance Sheets
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May
31,
2016
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May
31,
2015
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(Restated)
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(Restated)
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|
ASSETS
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|
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Current Assets:
|
|
|
|
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|
|
Cash
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|
$
|
115,738
|
|
|
$
|
58,137
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|
Inventory
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|
|
189,823
|
|
|
|
-
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|
Total current assets
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|
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305,561
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|
|
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58,137
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|
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|
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Property and Equipment
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|
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500
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|
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|
500
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|
|
|
|
|
|
|
|
|
|
Total Assets
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|
$
|
306,061
|
|
|
$
|
58,637
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LIABILITIES & STOCKHOLDERS’ EQUITY
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Current Liabilities:
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Accounts payable
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$
|
-
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|
$
|
2,672
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|
Accrued interest on convertible loans
|
|
|
1,845
|
|
|
|
-
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|
Derivative liability
|
|
|
351,041
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|
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|
-
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|
Debt discount
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(134,148
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)
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|
|
-
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Convertible Loans
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|
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207,750
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|
|
|
-
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Loan from shareholder and related party
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38,236
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|
|
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17,336
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|
Total current liabilities
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464,724
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|
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20,008
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STOCKHOLDERS’ EQUITY (DEFICIT):
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Common stock, $0.0001 par value, 500,000,000 shares authorized;
258,792,500 and 258,750,000 shares issued and outstanding, respectively
|
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25,879
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|
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25,875
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Additional paid-in capital
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36,875
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36,875
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|
Accumulated deficit
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(221,417
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)
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|
(24,121
|
)
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Total Stockholders’ Equity (Deficit)
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(158,663
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)
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38,629
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|
|
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Total Liabilities and Stockholders’ Equity
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$
|
306,061
|
|
|
$
|
58,637
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|
The accompanying notes are an integral part of these financial statements.
BEMAX INC.
Statements of Operations
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For the Years Ended
May 31,
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2016
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2015
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(Restated)
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(Restated)
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Revenue
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|
$
|
573,838
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|
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$
|
100,000
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|
Cost of goods sold
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476,797
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(95,000
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)
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Gross Margin
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97,041
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5,000
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Operating Expenses:
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Professional fees
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12,304
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|
-
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Management fees
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6,000
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-
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General and administrative
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21,846
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26,619
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|
|
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Total Operating Expenses
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40,150
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|
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26,619
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Income (loss) from operations
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56,891
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(21,619
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)
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Other Income (Expense):
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Interest expense and loan fees
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(13,044
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)
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-
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Interest expense – debt discount
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(11,102
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)
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-
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Change in fair value of derivative
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128,333
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|
|
-
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Loss on issuance of convertible debt
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(358,374
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)
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-
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Total other expense
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|
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(254,187
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)
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|
|
-
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|
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|
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|
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Net loss
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|
$
|
(197,296
|
)
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|
$
|
(21,619
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)
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|
|
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|
|
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Basic and diluted loss per share
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|
$
|
(0.00
|
)
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$
|
(0.00
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)
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|
|
|
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Weighted average number of shares outstanding – basic and diluted
|
|
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258,792,500
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|
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258,750,000
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|
The accompanying
notes are an integral part of these financial statements.
BEMAX
INC
Statement of Stockholders’ Equity (Deficit)
(Restated)
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Common Stock
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Additional Paid in
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Accumulated
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Shares
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Amount
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Capital
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Deficit
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Total
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Balance at May 31, 2014
|
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200,000,000
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|
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20,000
|
|
|
$
|
(16,000
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)
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$
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(2,502
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)
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$
|
1,498
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|
|
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Stock issued for cash
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58,750,000
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5,875
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52,875
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|
-
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58,750
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Net loss for the year ended May 31, 2015
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-
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|
-
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|
-
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(21,619
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)
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(21,619
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)
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Balance at May 31, 2015
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258,750,000
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|
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25,875
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|
36,875
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(24,121
|
)
|
|
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38,629
|
|
|
|
|
|
|
|
|
|
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|
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Stock issued for services
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42,500
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|
|
4
|
|
|
|
-
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-
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4
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Net loss for the year ended May 31, 2016
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-
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|
-
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|
-
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(197,296
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)
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|
(197,296
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)
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|
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|
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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
.
BEMAX INC.
Statements of Cash Flows
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For the Years Ended
May 31,
|
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|
|
2016
|
|
|
2015
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|
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|
(Restated)
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|
|
(Restated)
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|
CASH FLOW FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(197,296
|
)
|
|
$
|
(21,619
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
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Common stock issued for services
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|
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:
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|
|
|
|
|
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|
|
Prepaids
|
|
|
-
|
|
|
|
|
|
Inventory
|
|
|
(189,823
|
)
|
|
|
-
|
|
Accounts payable
|
|
|
(2,672
|
)
|
|
|
2,672
|
|
Accrued interest on convertible loans
|
|
|
1,845
|
|
|
|
-
|
|
Accruals, related party
|
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|
18,000
|
|
|
|
-
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|
Net Cash Used in Operating Activities
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|
|
(128,799
|
)
|
|
|
(18,947
|
)
|
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|
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CASH FLOWS FROM INVESTING ACTIVITIES:
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|
|
|
|
|
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|
|
Purchase of equipment
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|
|
-
|
|
|
|
(500
|
)
|
Net Cash Used in Investing Activities
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|
|
-
|
|
|
|
(500
|
)
|
|
|
|
|
|
|
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|
CASH FLOWS FROM FINANCING ACTIVITIES:
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|
|
|
|
|
|
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Proceeds from convertible loans
|
|
|
183,500
|
|
|
|
-
|
|
Proceeds from the sale of common stock
|
|
|
-
|
|
|
|
58,750
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|
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
|
|
|
|
|
|
|
|
|
|
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
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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
.
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.
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.
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.
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.
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.
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
|
|
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.