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.
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
Cash Flows
Fiscal Year Fiscal Year
Ended Ended
May 31, 2016 May 31, 2015
$ $
Net Cash Provided By (Used In) Operating Activities (150,154) 93,476
Net Cash Used by Investing Activities - (500)
Net Cash Provided By (Used In) Financing Activities 207,754 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 $649,241 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
.
On October 15, 2015, the Company
announced the launch of its new ecommerce website
bemaxinc.com/store. 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
Revenues
Revenues for the year ended May 31, 2016 totaled $538,738 compared to $0 in revenue for the year ended May 31, 2015.
Net Loss
For the year ended May 31, 2016 we incurred net loss of $163,171 compared to $477,081 in net loss for the year ended May 31, 2015.
Expenses
Our total expenses for the year ended May 31 2016 were $72,469 which consisted of general and administrative expenses.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BEMAX INC.
FINANCIAL STATEMENT
MAY 31, 2016
CONTENTS
Report of Independent Registered Public Accounting Firm
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F1
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Balance Sheets
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F2
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Statements of Operations
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F3
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Statements of Cash Flows
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F4
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Statements of Stockholders' Equity/(Deficit)
|
F5
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Notes to Financial Statements
|
F6
|
GEORGE STEWART
316 17rn 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
July 1, 2016
BEMAX INC.
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Balance Sheets
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(Stated in U.S.Dollars)
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|
|
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|
|
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|
|
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|
|
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Year Ended
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Year Ended
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May 31, 2016
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May 31, 2015
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ASSETS
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Current Assets
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|
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|
|
|
|
Cash and cash equivalents
|
|
$
|
115,738
|
|
|
$
|
58,137
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|
Accounts receivable
|
|
|
372,622
|
|
|
|
407,722
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
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488,360
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465,859
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Fixed Assets
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|
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Furniture and Equipment
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|
500
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|
|
|
500
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|
|
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|
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|
Total fixed assets
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500
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|
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500
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|
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TOTAL ASSETS
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$
|
488,860
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$
|
466,360
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LIABILITIES & STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
|
|
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|
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Deferred revenue
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507,722
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|
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|
507,722
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Convertible Loans
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|
207,750
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|
|
|
-
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|
Accrued interest on convertible loans
|
|
|
1,845
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|
|
|
-
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Loan from shareholder and related party
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|
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38,236
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17,336
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Accounts payable
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|
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319,795
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|
|
|
364,622
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|
Total current liabilities
|
|
|
1,075,348
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|
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889,680
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STOCKHOLDERS' EQUITY
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Common stock, ($0.0001 par value, 500,000,000 shares
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authorized; 258,792,500 shares issued and outstanding at
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May 31, 2016 and 5,175,000 at May 31, 2015 respectively
|
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25,879
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|
518
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Additional paid-in capital
|
|
|
36,876
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|
62,232
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|
Deficit accumulated during development stage
|
|
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(649,241
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)
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|
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(486,070
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)
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TOTAL STOCKHOLDERS' EQUITY
|
|
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(586,487
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)
|
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|
(423,320
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)
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|
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|
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TOTAL LIABILITITES AND STOCKHOLDERS' EQUITY
|
|
$
|
488,861
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|
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|
466,360
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Statements of Operations
(Stated in U.S.Dollars)
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Year Ended
|
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|
Year Ended
|
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|
May 31, 2016
|
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|
May 31, 2015
|
|
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|
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|
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|
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|
|
REVENUES
|
|
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Revenues
|
|
|
538,738
|
|
|
|
-
|
|
|
|
|
|
|
|
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|
TOTAL REVENUES
|
|
$
|
538,738
|
|
|
$
|
-
|
|
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|
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|
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Cost of good sold
|
|
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Purchases-resale items
|
|
|
629,440
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|
(456,950
|
)
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TOTAL COGS
|
|
$
|
629,440
|
|
|
$
|
(456,950
|
)
|
|
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Gross profit
|
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|
(90,702
|
)
|
|
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|
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|
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|
Operating costs
|
|
|
65,967
|
|
|
|
15,266
|
|
|
|
|
|
|
|
|
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|
General and administrative expenses
|
|
|
6,502
|
|
|
|
4,864
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING COSTS
|
|
$
|
72,469
|
|
|
$
|
20,130
|
|
|
|
|
|
|
|
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|
NET ORDINARY INCOME (LOSS)
|
|
$
|
(163,171
|
)
|
|
$
|
(477,081
|
)
|
|
|
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BASIC AND DILUTED EARNINGS (LOSS)
|
|
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PER SHARE
|
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$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
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|
WEIGHTED AVERAGE NUMBER OF
|
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COMMON SHARES OUTSTANDING
|
|
|
258,792,500
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|
5.175,000
|
|
BEMAX INC.
|
|
Statements of Cash Flows
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(Stated in U.S.Dollars)
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|
Year Ended
|
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|
Year Ended
|
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|
May 31, 2016
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|
May 31, 2015
|
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CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
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|
Net income (loss)
|
|
$
|
(163,171
|
)
|
|
$
|
(483,569
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)
|
Adjustments to reconcile net loss to net cash
|
|
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|
provided by (used in) operating activities:
|
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Loan from shareholder and related party
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20,900
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14,834
|
|
Accounts payable
|
|
|
(44,828
|
)
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|
364,622
|
|
Accounts receivable
|
|
|
35,100
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|
|
|
(407,722
|
)
|
Accrued intereston convertible loans
|
|
|
1,845
|
|
|
|
-
|
|
Deferred revenue
|
|
|
-
|
|
|
|
507,722
|
|
Changes in operating assets and liabilities:
|
|
|
(150,154
|
)
|
|
|
93,476
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|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
(150,154
|
)
|
|
|
93,476
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|
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|
|
|
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INVESTING ACTIVITIES
|
|
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Furniture and equipment
|
|
|
-
|
|
|
|
(500
|
)
|
Net cash provided by investing activities
|
|
|
-
|
|
|
|
(500
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
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|
|
|
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Issuance of common stock
|
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|
4
|
|
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|
58,750
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Loans from convertible promissory notes
|
|
|
207,750
|
|
|
|
-
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
207,754
|
|
|
|
58,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
NET INCREASE IN CASH
|
|
|
57,601
|
|
|
|
54,137
|
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CASH AT BEGINNING OF PERIOD
|
|
|
58,137
|
|
|
|
4,000
|
|
|
|
|
|
|
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CASH AT END OF PERIOD
|
|
$
|
115,738
|
|
|
$
|
58,137
|
|
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|
|
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|
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
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|
|
|
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|
|
Cash paid during year for :
|
|
|
|
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|
|
|
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Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
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|
Income Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
BEMAX INC.
Statements of Stockholder's Equity
(Stated in U.S.Dollars)
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Common
|
|
|
Stock
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
Stock
|
|
|
Amount
|
|
|
Paid-in Capital
|
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Development Stage
|
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Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for cash at May 31, 2013
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net loss May 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(502
|
)
|
|
|
(502
|
)
|
Balance May 31, 2013
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(502
|
)
|
|
|
(502
|
)
|
Common stock issued for cash on May
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16, 2014.4,000,000 shares at a par
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value of $0.0001 per share
|
|
|
200,000,000
|
|
|
|
20,000
|
|
|
|
62,232
|
|
|
|
-
|
|
|
|
82,232
|
|
Net loss May 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,000
|
)
|
|
|
(2,000
|
)
|
Balance May 31, 2014
|
|
|
200,000,000
|
|
|
$
|
20,000
|
|
|
$
|
62,233
|
|
|
$
|
(2,502
|
)
|
|
$
|
79,730
|
|
Common stock issued for cash between
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
between October 14 and 24, 2014 at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.05 per share
|
|
|
58,750,000
|
|
|
|
5,875
|
|
|
|
(25,357
|
)
|
|
|
|
|
|
|
(19,482
|
)
|
Net loss May 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(483,568
|
)
|
|
|
(483,568
|
)
|
Balance May 31, 2015
|
|
|
258,750,000
|
|
|
$
|
25,875
|
|
|
$
|
36,876
|
|
|
$
|
(486,070
|
)
|
|
$
|
(423,320
|
)
|
On February 24, 2016, Common stock
|
|
|
|
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|
|
|
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|
|
|
|
|
|
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|
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|
was issued for services rendered at
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|
|
|
|
|
|
|
|
|
|
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|
|
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par value of $0.0001 per share
|
|
|
42,500
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.00
|
|
Net loss May 31, 2016
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
(163,171
|
)
|
|
|
(163,171
|
)
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Balance May 31, 2016
|
|
|
258,792,500
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|
|
|
25,879
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|
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|
36,876
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|
|
|
(649,241
|
)
|
|
|
(586,487
|
)
|
BEMAX INC.
Notes to the Financial Statements
May 31, 2015
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 Asia then distributing them to England, East, West, and South Africa. The Company is in the development stage with limited 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.
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 $649,241 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.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and are presented in US dollars. The Company's Year End is May 31.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturity of three months or less to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
BEMAX INC.
Notes to the financial Statements
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with ASC 830, "Foreign Currency Matters", foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.
Development Stage Company
The Company has elected to adopt application of Accounting Standards Update No. 2014-10,Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements; it no longer presents or discloses inception-to-date information and other disclosure requirements of Topic 915.
Impairment of Long-lived Assets
The Company reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the review indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cash flow method using a discount rate that is considered to be commensurate with the risk inherent in the Company's current business model. For purposes of recognition and measurement of an impairment loss, a long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets.
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Fair Value of Financial Instrument
The Company's financial instruments consisted of cash, accounts payable, related party advances and convertible notes. Unless otherwise noted, it is management's opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Because of the short maturity of such assets and liabilities the fair value of these financial instruments approximate their carrying values, unless otherwise noted.
Derivative Instruments
In connection with the sale of debt or equity instruments, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
The Company's derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income in the period in which the changes occur. For bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, the Company estimates fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the option. Because of the limited trading history for our common stock, the Company estimates the future volatility of its common stock price based on not only the history of its stock price but also the experience of other entities considered comparable to the Company.
BEMAX INC.
Notes to the financial Statements
The Company estimates fair value of derivative instrument liabilities using the Black-Scholes-Merton option-pricing formula ("Black-Scholes model"). This model requires the Company to estimate expected volatility and expected life, which are highly complex and subjective variables. The Company estimates expected term using the safe-harbor provisions of FASB ASC 718. The Company estimated its expected volatility by taking the average volatility determined for a peer group of similar publicly-traded companies.
Income Taxes
The Company follows the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At May 31, 2016, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.
Basic and Diluted Net (Loss) per Share
The Company computes net (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have any significant impact on the Company's results of operations, financial position or cash flow.
As new accounting
pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
4. RELATED PARTY TRANSACTIONS
The President of the Company provides management fees and office premises to the Company for a fee of $1,500 per month, the right to which the President has agreed to assign to the Company until such a time as the Company closes on an Equity or Debt financing of not less than $750,000. The assigned rights are valued at $1,000 per month for 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.
BEMAX INC.
Notes to the financial Statements
5. STOCKHOLDER'S EQUITY
On May 16, 2014, the Company authorized the issue of 4,000,000 shares of common stock at a par value of $0.0001 per share, to the President of the Company for total net proceeds of $4,000.
Between October 14 and 24, 2014, the Company authorized and issued 1,175,000 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 amount of common shares that can be issued from 70,000,000 to 500,000,000 with the same par value of $0.0001 per share. The Company also declared a Fifty (50) to One (1) forward stock split effective immediately.
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.
6. REVENUE RECOGNITION
The Company revenue recognition policy is on a sales-basis method. The Company recognizes and records revenue at the time of sales once payment has been received and disposable baby diapers are delivered to the buyer.
Pre-payment Policy: All sales to our customers will be solely on a pre-payment basis. Once the order is completed and payment is received, we will place an order with the North American supplier of disposable baby diapers and arrange shipping directly to our customers. The process is expected to take three weeks to complete. The pre-payment will be recorded as deferred revenue until the delivery is executed.
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.
BEMAX INC.
Notes to the financial Statements
The provision for refundable federal income tax consists of the following for the periods ending
:
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May 31, 2016
|
|
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May 31, 2015
|
|
|
|
|
|
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|
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Federal income tax benefit attributed to:
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|
|
|
|
|
|
Net operating loss
|
|
|
649,241
|
|
|
|
486,070
|
|
Valuation allowance
|
|
|
(649,251
|
)
|
|
|
(486,070
|
)
|
Net benefit
|
|
|
-
|
|
|
|
-
|
|
The cumulative tax effect at the expected rate of 34% of significant
|
|
May 31, 2016
|
|
|
May 31, 2015
|
|
items comprising our net deferred tax amount is as follows:
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|
|
|
|
|
|
Deferred tax attributed:
|
|
|
|
|
|
|
Net operating loss carryover
|
|
|
220,742
|
|
|
|
165,264
|
|
Less change in valuation allowance
|
|
|
(220,742
|
)
|
|
|
(165,264
|
)
|
Net deferred tax asset
|
|
|
-
|
|
|
|
|
|
At May 31, 2016, the Company had an unused net operating loss carry-forward approximating $220,742 that is available to offset future taxable income; the loss carry-forward will start to expire in 2034.
NOTE 8 CONVERTIBLE LOANS
On February 16, 2016, the Company issued a Convertible Promissory Note in favor of Crown Bridge Partners, LLC. The principle 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 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 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.
On April 19, 2016, the Company issued a Convertible Promissory Note in favor of Crown Bridge Partners, LLC. The principle 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 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 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.
BEMAX INC.
Notes to the financial Statements
On May 9, 2016, the Company issued a Convertible Redeemable Note in favor of Adar Bays, LLC. The principle 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 average 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.
On May 9, 2016, the Company issued a Convertible Redeemable Note in favor of Eagle Equities, LLC. The principle 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 average 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.
On May 10, 2016, the Company issued a Convertible Promissory Note in favor of Auctus Fund, LLC. The principle 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 principle 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.
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. During this period, the Company is reporting the following;
On June 2, 2016
, the Company issued a Convertible Promissory Note in favor of JSJ Investment Inc.
The principle amount of the loan is $55,000 (fifty five thousand dollars) with an original issue discount of $3,000 (three thousand dollars) and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on February 26, 2017.
On June 20, 2016, the Company issued Convertible Promissory Note in favor of Black Forest Capital, LLC.
the principle amount of the loan is $80,000 (Eighty thousand dollars) with an original issue discount of $8,000 (Eight thousand dollars) and carries an interest rate of 8% per annum. It becomes due and payable with accrued interest on June 14, 2017.