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.
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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.
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
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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
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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.