0001684508 --08-31 false 2019 Q3 0001684508 2018-09-01 2019-05-31 0001684508 2019-05-31 0001684508 2019-07-10 0001684508 2019-05-31 2019-05-31 0001684508 2018-08-31 2018-08-31 0001684508 2018-08-31 0001684508 2019-03-01 2019-05-31 0001684508 2018-03-01 2018-05-31 0001684508 2017-09-01 2018-05-31 0001684508 us-gaap:PreferredStockMember 2018-09-01 2019-05-31 0001684508 us-gaap:CommonStockMember 2018-09-01 2019-05-31 0001684508 us-gaap:AdditionalPaidInCapitalMember 2018-09-01 2019-05-31 0001684508 us-gaap:RetainedEarningsMember 2018-09-01 2019-05-31 0001684508 2017-08-31 0001684508 us-gaap:PreferredStockMember 2017-08-31 0001684508 us-gaap:CommonStockMember 2017-08-31 0001684508 us-gaap:AdditionalPaidInCapitalMember 2017-08-31 0001684508 us-gaap:RetainedEarningsMember 2017-08-31 0001684508 2017-09-01 2018-08-31 0001684508 us-gaap:PreferredStockMember 2017-09-01 2018-08-31 0001684508 us-gaap:CommonStockMember 2017-09-01 2018-08-31 0001684508 us-gaap:AdditionalPaidInCapitalMember 2017-09-01 2018-08-31 0001684508 us-gaap:RetainedEarningsMember 2017-09-01 2018-08-31 0001684508 us-gaap:PreferredStockMember 2018-08-31 0001684508 us-gaap:CommonStockMember 2018-08-31 0001684508 us-gaap:AdditionalPaidInCapitalMember 2018-08-31 0001684508 us-gaap:RetainedEarningsMember 2018-08-31 0001684508 us-gaap:PreferredStockMember 2019-05-31 0001684508 us-gaap:CommonStockMember 2019-05-31 0001684508 us-gaap:AdditionalPaidInCapitalMember 2019-05-31 0001684508 us-gaap:RetainedEarningsMember 2019-05-31 0001684508 2018-05-31 0001684508 fil:ZartexIncMember 2018-09-01 2019-05-31 0001684508 fil:ComputerAndEquipmentMember 2019-05-31 0001684508 fil:ComputerAndEquipmentMember 2018-08-31 0001684508 fil:ComputerSoftwareMember 2019-05-31 0001684508 fil:ComputerSoftwareMember 2018-08-31 0001684508 fil:ComputerSoftwareMember 2018-09-01 2019-05-31 0001684508 fil:ComputerSoftwareMember 2017-09-01 2018-05-31 0001684508 us-gaap:PreferredClassAMember 2019-05-31 0001684508 2016-09-12 2016-09-12 0001684508 2016-09-12 0001684508 2017-08-31 2017-08-31 0001684508 2019-04-24 0001684508 us-gaap:PreferredClassAMember 2019-04-24 0001684508 us-gaap:PreferredClassAMember 2018-09-01 2019-05-31 0001684508 fil:MrEuBoonChingMember 2018-11-14 0001684508 fil:MrEuBoonChingMember 2019-02-28 0001684508 fil:MrEuBoonChingMember 2019-05-31 0001684508 fil:MrZausaevMember 2018-09-01 2019-05-31 0001684508 fil:CannisappSdnBhdMember 2018-09-01 2019-05-31 0001684508 fil:CannisappSdnBhdMember 2019-05-31 0001684508 fil:FormerMember 2018-01-01 2018-01-01 0001684508 fil:RevisedMember 2018-01-01 2018-01-01 xbrli:pure iso4217:USD xbrli:shares iso4217:USD xbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended May 31, 2019

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number: 333-214122

CANNIS, INC.

(Exact name of small business issuer as specified in its charter)

Nevada (NV)		98-1322537
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

20, Jalan 51A/225A, Section 51A

Zone Perindustrian PTJC,

46100 Petaling Jaya,

Selangor, Malaysia

(Address of principal executive offices)

Level 9, Melilea Tower, No. 6, Avenue 3

The Horizon, Bangsar South, No. 8, Jalan Kerinchi

59200, Kuala Lumpur, Malaysia

(Former Address if changed from last report)

+603 2242 0484

(Issuer's telephone number)

Securities registered pursuant to Section 12(b) of the Act: N/A

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

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated Filer ☐ Smaller reporting company ☒

Emerging growth company ☒

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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [ ]

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. ☐

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 6,340,000 common shares issued and outstanding as of July 10, 2019.

CANNIS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION:

Item 1.	Financial Statements (Unaudited)	3

	Condensed Balance Sheets as of May 31, 2019 (unaudited) and August 31, 2018	4

	Condensed Statements of Operations for the three and nine months period ended May 31, 2019 and 2018 (unaudited)	5

	Condensed Statements of Changes in Stockholders’ Equity as of May 31, 2019 (unaudited) and August 31, 2018	6

	Condensed Statements of Cash Flows for the nine months period ended May 31, 2019 and 2018 (unaudited)	7

	Notes to the Condensed Unaudited Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

PART II	OTHER INFORMATION:

Item 1.	Legal Proceedings	18

Item 1A	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Mining Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	18

	Signatures

PART 1. FINANCIAL INFORMATION Cannis, Inc.

(F/K/A: Zartex, Inc.)

Balance Sheets

As of May 31, 2019 and August 31, 2018

	*As of* *May 31,* *2019*	*As of* *August 31,* *2018*
	*(Unaudited)*	*(Audited)*
Assets
Current assets
Cash and cash equivalents	$ -	$ 17,439
Total current assets	-	17,439

Non-current assets
Property and equipment, net	-	8,204
Intangible assets, net	-	3,468
Total non-current assets	-	11,672

Total Assets	$ -	$ 29,111

Liabilities and Shareholders’ Equity

Liabilities
Current liabilities
Accounts payable	$ -	$ 14,610
Loan from related parties	22,550	32,379
Total current liabilities	22,550	46,989

Total Liabilities	$ 22,550	$ 46,989

Shareholders' Equity
Class A Preferred Stock ($0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding)	-	-
Common stock ($0.001 par value, 1,500,000,000shares authorized; 6,340,000 shares issued and outstanding)	$ 6,340	$ 6,340
Additional paid-in-capital	25,460	25,460
Deficit accumulated	(54,350)	(49,678)
Total shareholders' equity	(22,550)	(17,878)
Total Liabilities and Shareholders' Equity	$ -	$ 29,111

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

Cannis, Inc.

(F/K/A: Zartex, Inc.)

Statements of Operations and Comprehensive Income

For the three and nine months ended May 31, 2019 and 2018

(Unaudited)

	*Three Months* *Ended* *May 31,* *2019*	*Three Months* *Ended* *May 31,* *2018*	*Nine Months* *Ended* *May 31,* *2019*	*Nine Months* *Ended* *May 31,* *2018*
Revenue
Revenue	$ -	$ -	$ -	$ -
Cost of revenue	-	-	-	-
Gross margin	-	-	-	-

Operating expenses
General and administrative expense	8,850	13,311	39,908	24,073
Total operating expenses	8,850	13,311	39,908	24,073

Loss from operations	(8,850)	(13,311)	(39,908)	(24,073)

Other income
Forgiveness of debt	-	-	35,236	-
Total other income	-	-	35,236	-

Operating loss before income taxes	(8,850)	(13,311)	(4,672)	(24,073)

Provision for income taxes	-	-	-	-

Net loss	$ (8,850)	$ (13,311)	$ (4,672)	$ (24,073)

Loss Per Share:
Basic and Diluted	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)


Weighted Average Shares Outstanding:Basic and Diluted	6,340,000	6,340,000	6,340,000	6,340,000

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

Cannis, Inc.

(F/K/A: Zartex, Inc.)

Statements of Changes in Stockholders’ Equity

For the year ended May 31, 2019 and nine months ended August 31, 2018

(Unaudited)

	Number of	Class A	Common	Additional Paid	Retained
	Shares	Preferred Stock	Stock	In Capital	Earnings	Total
Balance at September 1, 2017	6,340,000	$ -	$ 6,340	$ 25,460	$ (18,696)	$ 13,104
Net loss	-	-	-	-	(30,982)	(30,982)
Balance at August 31, 2018	6,340,000	$ -	$ 6,340	$ 25,460	$ (49,678)	$ (17,878)
Net loss	-	-	-	-	(4,672)	(4,672)
Balance at May 31, 2019	6,340,000	$ -	$ 6,340	$ 25,460	$ (54,350)	$ (22,550)

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

Cannis, Inc.

(F/K/A: Zartex, Inc.)

Statements of Cash Flows

For the nine months ended May 31, 2019 and 2018

(Unaudited)

	*Nine Months* *Ended* *May 31,* *2019*	*Nine Months* *Ended* *May 31,* *2018*
Cash flows from operating activities
Net Loss	$ (4,672)	$ (24,073)
Adjustments to reconcile net loss to net cash from operations:
Depreciation and amortization	-	2,928
Write-off of fixed assets	11,672	-
Forgiveness of debt	(35,236)	-
Changes in operating assets and liabilities:
Accounts payable	(4,853)	1,997
Net cash used in operating activities	(33,089)	(19,148)

Cash flows from financing activities
Proceeds of related party loans	22,550	12,038
Repayment of related party loans	(6,900)	-
Net cash provided by financing activities	15,650	12,038

Net change in cash and cash equivalents	(17,439)	(7,110)

Cash and cash equivalents, beginning	17,439	24,549

Cash and cash equivalents, end	$ -	$ 17,439

Supplementary cash flows information:
Tax paid	$ -	$ -
Interest paid	$ -	$ -

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

Cannis, Inc.

(F/K/A Zartex, Inc)

Notes to Financial Statements

(Unaudited)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Cannis, Inc. formerly Zartex, Inc. (“the Company”) was incorporated under the corporation laws in the State of Nevada on August 17, 2016. The Company changed its name from Zartex, Inc. to Cannis, Inc. on December 6, 2018. The Company was in the business of software development which sought to deliver services for the garment distribution industry.

Effective November 14, 2018, a change of control occurred with respect to the Company. In connection with the change of control transaction, the Company has ceased its operations, transferred its assets and became a “shell company”.

The Company’s activities are subject to significant risks and uncertainties including failure to secure additional funding to properly execute its business plan.

NOTE 2 – 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. As the Company has no other comprehensive income, the income is equal to the Company’s total comprehensive income.

Interim Financial Information

The unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included.

These financial statements should be read in conjunction with the audited financial statements as of and for the year ended August 31, 2018, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements as of and for the year ended August 31, 2018.

Use of Estimates

Preparing 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, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.

Fair Values of Financial Instruments

The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follow:


	·	Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.


	·	Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.


	·	Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value.

As of the balance sheet date, the estimated fair values of the financial instruments were not materially different from their carrying values as presented due to the short maturities of these instruments and that the interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective period-ends. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates the hierarchy disclosures each quarter.

Cash and Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Basic and Diluted Earnings (Loss) Per Share

Basic earnings or loss per share is computed by dividing net income or loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted earnings or loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings or loss per share excludes all potential common shares if their effect is anti-dilutive.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. The updated guidance, and subsequent clarifications, collectively referred to as ASC 606, require an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

There was no significant impact to the statement of operations and comprehensive income (loss) as the Company’s existing revenue policies are in line with ASC 606.

Prior to the change of control that occurred on November 14, 2018, the Company’s revenue consisted of service revenue from “Match Me” software programming code with customization service. The Company recognized revenue when performance obligations identified under the terms of the contracts with its customers were satisfied, which generally occurs when the programming code of the software and the customization services were delivered to the customer when completed in accordance with the contractual terms and conditions of the sale.

Software Development Costs

Prior to the change of control that occurred on November 14, 2018, the Company’s cost of revenue consisted of costs incurred in researching and developing a computer software product. Such costs were charged to expense until technological feasibility had been established for the product. Judgment was required in determining when technological feasibility of a product was established and the Company had determined that technological feasibility for its software products was reached after all high-risk development issues had been resolved through coding and testing. Generally, that occurred shortly before the products were available to the public for sale.

The “Match Me” software programming code was developed by the Company’s former sole officer and director, Aleksandr Zausaev. Software development and customization expenses included Mr. Zausaev’s labor cost.

Cost of Revenue

Cost of revenue included: software development costs and software customization costs. Capitalized software development costs were amortized over the estimated lives of the software.

Income Taxes

Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

New Accounting Pronouncements

There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company’s results of operations, financial position or cash flows.

Property and Equipment & Depreciation

Property and equipment are stated at cost less accumulated depreciation comprised of computer equipment and are depreciated on the straight-line method over the estimated life of the asset, which is 5 years.

Intangible Assets & Amortization

The Company’s intangible assets are stated at cost less accumulated amortization comprised of computer software and are amortized on the straight-line method over the estimated life of the asset which is 3 years.

Impairment of Long-Lived Assets

The Company accounts for impairment of plant and equipment and amortizable intangible assets in accordance with ASC 360, “Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which requires the Company to evaluate a long-lived asset for recoverability when there is event or circumstance that indicate the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value.

NOTE 3 – GOING CONCERN

The Company’s financial statements as of May 31, 2019, been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has not yet established an ongoing source of revenues and cash flows sufficient to cover its operating costs and allow it to continue as a going concern. The Company has accumulated net loss of $54,350 since inception. These factors among others raise substantial doubt about the ability of the company to continue as a going concern for a reasonable period of time.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 4 – PROPERTY & EQUIPMENT

Property and equipment, net, is comprised of the following:

	May 31, 2019	August 31, 2018
Computer and Equipment	$ -	$ 10,850
Total	-	10,850
Accumulated Depreciation	-	(2,646)
Net	$ -	$ 8,204

Depreciation expenses were $0 and $2,103 for the nine months ended May 31, 2019 and 2018.

On November 14, 2018, the Company had a change of control. Property and equipment in the amounts of $8,204 were transferred to the former sole officer of the Company for the nine months ended May 31, 2019. Refer to Note 7 - Change of Control.

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consisted of the following:

	May 31, 2019	August 31, 2018
Computer Software	$ -	$ 5,200
Total	-	5,200
Accumulated Amortization	-	(1,732)
Net	$ -	$ 3,468

Amortization expenses were $0 and $1,299 for the nine months ended May 31, 2019 and 2018.

On November 14, 2018, the Company had a change of control. Intangible assets in the balance of $3,468 have been written off and recorded for the nine months ended May 31, 2019. Refer to Note 7 - Change of Control.

NOTE 6 – CAPITAL STOCK

The Company has 1,500,000,000 shares of common stock authorized with a par value of $0.001 per share, and 10,000,000 shares of Class A preferred stock authorized with a par value of $0.001 per share.

On September 12, 2016, the Company issued 5,000,000 shares of common stock at $0.001 per share for a proceed of $5,000.

For the year period ended August 31, 2017, the Company issued 1,340,000 shares of common stock at $0.02 per share for a proceed of $26,800.

On April 24, 2019, the Company amended its Articles of Incorporation by filing a Certificate of Amendment with the Nevada Secretary of State which increased the authorized shares of its common stock, $0.001 par value, from 75,000,000 to 1,500,000,000 shares, and created a class of preferred stock, $0.001 par value, called the Class A Preferred Stock in the amount of 10,000,000 authorized shares, with each share of Class A Preferred Stock having 100 votes to be cast with respect to any and all matters presented to shareholders for a vote whether at a meeting of shareholders or by written consent.

As of May 31, 2019, the Company had 6,340,000 shares of common stock issued and outstanding.

NOTE 7 – CHANGE OF CONTROL

Effective November 14, 2018, the Company, Mr. Aleksandr Zausaev (“Seller”) and Mr. Eu Boon Ching (“Buyer”) entered into a Security Purchase Agreement (“SPA”). Pursuant to the SPA, Buyer acquired from Seller 5,000,000 shares of common stock of the Company.

In addition, Mr. Ching acquired an additional 1,335,000 shares of common stock of the Company from certain other shareholders of the Company pursuant to a separate stock purchase agreement. The total number of shares of common stock acquired by Mr. Ching is 6,335,000, and all such shares now held by Mr. Ching are “restricted” and/or “control” securities.

Simultaneously, Mr. Zausaev forgave $35,236 of related party debt. The Company relinquished all its assets to settle all its liabilities during the change of control transaction. In connection with these transactions, the Company has ceased its prior operations and is now a “shell company.”

NOTE 8 – RELATED PARTY LOANS

With respect to the change of control, Mr. Zausaev, resigned in all officer and director capacities from the Company and Mr. Ching was appointed the sole officer and sole director of the Company. Mr. Zausaev forgave $35,236 of related party debt owed to him.

In support of the Company’s cash requirements, CannisApp Sdn Bhd, an entity which Mr. Ching, the Company’s officer and director, is a majority owner, advanced $22,550 to support the Company’s operations. There was no formal written commitment for continued support by Mr. Ching. The advances were considered temporary in nature and have not been formalized by a promissory note. The outstanding payable owed to CannisApp Sdn Bhd was $22,550 as of May 31, 2019. The amount is non-interest bearing and due on demand without maturity date.

NOTE 9 – INCOME TAX

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“Tax Reform Act”). The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a transition tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, the Company revalued its ending net deferred tax assets. In addition, net operating losses (NOL) arising after December 31, 2017 can be carryforward indefinitely while limiting the NOL deduction for a given year to 80% of taxable income.

As of May 31, 2019, the Company had net operating loss carry forwards of $54,350 that may be available to reduce future years’ taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a full valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

NOTE 10 - SUBSEQUENT EVENT

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. Based on this evaluation, the Company concluded that subsequent to May 31, 2019 but prior to July 10, 2019, the date the financial statements were available to be issued, there was no subsequent event that would require disclosure to or adjustment in the financial statements.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENT NOTICE

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

GENERAL

We were incorporated in the State of Nevada on August 17, 2016 under the name Zartex, Inc. On December 6, 2018, we changed our name to Cannis, Inc. From inception until November 14, 2018, the Company’s principal business consisted of software development.

Effective November 14, 2018, a change of control occurred with respect to Zartex, Inc. (“Company”). Pursuant to a Securities Purchase Agreement entered into by and among the Company, Mr. Aleksandr Zausaev (“Seller”) and Mr. Eu Boon Ching (“Buyer”), Buyer acquired from Seller 5,000,000 shares of common stock of Company. In addition, pursuant to a separate Stock Purchase Agreement by and among Mr. Ching, as buyer, and certain other shareholders of the Company, Mr. Ching acquired an additional 1,335,000 shares of common stock of the Company. The total number of shares of common stock acquired by Mr. Ching is 6,335,000, and all such shares now held by Mr. Ching are “restricted” and/or “control” securities.

On the closing of the above transaction, Mr. Zausaev, the then sole officer and director of the Company, resigned in all officer and director capacities from the Company and Mr. Ching was appointed the sole officer of the Company (Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer) and a sole Director of the Company. At closing, the Company assigned all of its assets to Mr. Zausaev in exchange for certain considerations including his cancellation and waiver of all outstanding liabilities of the Company in favor of the former sole officer and director.

Effective immediately at closing, the Company permanently ceased its previous operating activities of software development. Consequently, the Company is now a shell company seeking to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders.

As mentioned above, on December 6, 2018, the Company amended its Articles of Incorporation with the Nevada Secretary of State to affect the name change of the Company to Cannis, Inc. (“Corporate Action”). On November 29, 2018, our majority stockholder, holding 99% of our outstanding voting securities approved the Corporate Action.

RESULTS OF OPERATIONS

THREE MONTHS PERIOD ENDED MAY 31, 2019 COMPARED TO THREE MONTHS PERIOD ENDED MAY 31, 2018

Revenues

During the three months ended May 31, 2019 and 2018, respectively, we did not have any revenue from operations.

Operating Expenses

During the three months ended May 31, 2019, we incurred general and administrative expenses of $8,850 as compared to $13,311 for the three months ended May 31, 2018.

Our loss from operations for the three months ended May 31, 2019 and 2018 were $8,850 and $13,311, respectively.

Net Loss

For the three months ended May 31, 2019, we had a net loss of $8,850 as compared to $13,311 for the same respective period last year.

NINE MONTHS PERIOD ENDED MAY 31, 2019 COMPARED TO NINE MONTHS PERIOD ENDED MAY 31, 2018

Revenues

During the nine months ended May 31, 2019 and 2018, respectively, we did not have any revenue from operations.

Operating Expenses

During the nine months ended May 31, 2019, we incurred general and administrative expenses of $39,908 compared to $24,073 for the nine months ended May 31, 2018.

The increase in general and administrative expenses were due to increase in professional fees and $11,672 in property and equipment write-off for the control change during the nine months ended May 31, 2019. General and administrative expenses mainly consist legal, accounting and other professional fees.

Our loss from operations for the nine months ended May 31, 2019 and 2018 were $39,908 and $24,073, respectively.

Other Income

During the nine months ended May 31, 2019, we had a forgiveness of debt by the Company’s former sole officer and director and controlling shareholder in the amount of $35,236 in connection with the change of control, which occurred on November 14, 2018. We did not have a similar forgiveness of related party debt for any other period.

Net Loss

For the nine months ended May 31, 2019, we had a net loss of $4,672 as compared to a net loss of $24,073 for the same respective period last year.

LIQUIDITY AND CAPITAL RESOURCES

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Existing working capital, further advances by related party and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

As at May 31, 2019, our working capital deficit was $22,550 as compared with a working capital deficit of $29,550 as at August 31, 2018. The decrease for the current period is due to the forgiveness of related party debt by the Company’s former sole officer, director and controlling shareholder.

As at May 31, 2019, we had related party loans of $22,550, as compared with $32,379 as at August 31, 2018.

Cash and cash equivalents at May 31, 2019 was $0 compared with $17,439 at August 31, 2018.

There were 6,340,000 shares of common stock issued and outstanding as of May 31, 2019 and August 31, 2018, respectively.

The Company has net cash used in operating activities of $33,089 for the nine months ended May 31, 2019 which resulted from related party debt forgiven of $35,236 due to change of control.

The Company has generated net cash provided by financing activities of $15,650 for the nine months ended May 31, 2019 as the Company received net proceeds from related party advances.

GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company 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 currently has no assets, no business or recurring income which raises substantial doubt about its ability to continue as a going concern.

The ability to continue as a going concern is dependent upon the Company’s ability to merger with or acquire 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. There is no assurance that this series of events will be satisfactorily completed.

OFF-BALANCE SHEET ARANGEMENTS

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 4.

CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is 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 Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2019. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Management also confirmed that there was no change in our internal control over financial reporting during the nine months period ended May 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A.

RISK FACTORS

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable to our Company.

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS

The following exhibits are included as part of this report by reference:


31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).

31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).

32.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

32.2		Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 10, 2019

Cannis Inc.

/s/ Eu Boon Ching

Eu Boon Ching

Chief Executive Officer and

Chief Financial officer

(Principal Executive, Financial

and Accounting Officer)

Cannis, Inc. 10-Q