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

We recognized revenue of $0 and cost of sales of $0 for the three months ended May 31, 2018, compared to $16,600 and $3,044 for the three months ended May 31, 2017. During the three months ended May 31, 2018, the Company underwent a change of control and the Company was currently evaluating its future strategic business plans.

Operating expenses were $12,749 for the three months ended May 31, 2018, compared to $15,078 for the three months ended May 31, 2017.

We incurred a net loss in the amount of $12,749 and $1,522 for the three months ended May 31, 2018 and 2017, respectively.

We recognized revenue of $25,766 and cost of sales of $13,511 for the nine months ended May 31, 2018, compared to $21,900 and $3,874 for the nine months ended May 31, 2017.

Operating expenses were $48,412 for the nine months ended May 31, 2018, compared to $24,509 for the nine months ended May 31, 2017, due to an increase in professional fees.

We incurred a net loss in the amount of $36,157 and $6,483 for the nine months ended May 31, 2018 and 2017, respectively.

As of May 31, 2018, we had a working capital deficit of $10,247 compared to a working capital of $5,819 as of August 31, 2017.

As of May 31, 2018, we had no current assets with all assets being written off upon the change of control of the Company on May 4, 2018, as the assets were returned to the previous owner. As of August 31, 2017, we had current assets of $27,272 composed of cash and cash equivalents of $4,021, prepaid expense of $10,343 and inventory of $12,908.

As of May 31, 2018, we had current liabilities of $10,247 for accounts payable and accrued liabilities, as compared to current liabilities of $21,453 as of August 31, 2017, for advances from director of $21,453.

Cash Flow from Operating Activities

For the nine months ended May 31, 2018, net cash used in operating activities was $3,571, related to our net loss of $36,157, offset by the depreciation expense of $2,081, a decrease in prepaid expenses of $5,321, a decrease in inventory of $12,877 and an increase in accounts payable and accrued liabilities of $10,607 and an increase in customer deposits of $1,700.

For the nine months ended May 31, 2017, net cash used in operating activities was $9,371, related to our net loss of $6,483 which was increased by an increase in inventory of $5709 and was offset by the depreciation expense of $516, a decrease in prepaid expenses of $705 and an increase in accounts payable and accrued liabilities of $1,600.

Cash Flow from Investing Activities

For the nine months ended May 31, 2018, net cash provided by investing activities was $0, as compared to net cash used in investing activities of $3,436 for the nine months ended May 31, 2017 from the purchase of equipment.

Cash Flow from Financing Activities

For the nine months ended May 31, 2018, net cash used in financing activities was $450, attributed to the repayment to the director of $950 offset by the proceeds from the sale of issuance of common stock of $500.

For the nine months ended May 31, 2017, net cash provided from the financing activities was $14,942 attributed to the advancement from the director of $7,600 and the proceeds from the issuance of common stock of $7,342.

Going Concern

There is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have not generated sufficient revenues to cover operating costs or raised enough funds. There is no assurance we will ever reach this point. Accordingly, we must raise sufficient capital from sources. We must raise cash to stay in business. In response to these problems, management intends to raise additional funds through public or private placement offerings. At this time, however, our company does not have definitive plans to raise additional funds by way of the sale of additional securities.

Critical Accounting Policies

Basis of presentation

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended May 31, 2018 are not necessarily indicative of the results that may be expected for the year ending August 31, 2018. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2017 have been omitted. These interim financial statements are condensed should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended August 31, 2017 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on December 6, 2017.

Cash and Cash Equivalents

All of the cash is maintained with the Bank of America, one of the major financial institutions in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments with the original maturities of three months or less at the date of acquisition to be cash equivalents.

Use of Estimates

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

Inventories

Inventories are stated at the lower of cost or market. Cost is principally determined using the first-in, first out (“FIFO”) method. Inventory of $31 was written off upon the change of control of the Company on May 4, 2018, as the assets were returned to the previous owner.

Depreciation, Amortization, and Capitalization

The Company records depreciation and amortization when appropriate using the straight-line method over the assets estimated useful life of five years. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriate accounts and the resulting gain or loss is included in net income. Property and Equipment of $12,573 was transferred upon the change of control of the Company on May 4, 2018, as the assets were returned to the previous owner.

Fair Value of Financial Instruments

The carrying value of cash and the Company’s loan from shareholder approximates its fair value due to their short-term maturity.

Advertising

Advertising expenses consisted of marketing expenses and promotional activity expenses, and are recognized when incurred. Total advertising expense was $4,600 and $6,900 for the nine months ended May 31, 2018 and 2017, respectively.

Revenue Recognition

The Company recognizes revenue when the four basic criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

Earnings (Loss) Per Share

Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of May 31, 2018 and 2017, there were no potentially dilutive debt or equity instruments issued or outstanding.

Currencies

The Company’s reporting and functional currencies are both the U.S. dollar. Foreign currency transaction gains and losses are included in other income (expense).

Recent Accounting Pronouncements

The Company will adopt Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” as of September 1, 2018. ASU 2014-09 will replace most existing revenue recognition guidance in US GAAP when it becomes effective. Management has evaluated the impact of the Company’s adoption of ASU 2014-09 on its financial statements and does not expect the new standard to have a significant impact on its financial position, results of operations and related disclosures. To make this determination, management has identified the contract with its customer, identified the performance obligations, determined the transaction price, allocated the transaction price to the performance obligations in the contract, and recognized revenue when the Company satisfies the performance obligation.