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EX-32.1 - Zartex Inc.f10k321.htm
EX-31.1 - Zartex Inc.f10k311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K



[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934


For the fiscal year ended August 31, 2017


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934


For the transition period from ___________ to ___________


COMMISSION FILE NO. 333-214122


ZARTEX INC.


 (Exact name of registrant as specified in its charter)


Nevada

(State or Other Jurisdiction of Incorporation or Organization)

98-1322537

IRS Employer Identification Number

7371

Primary Standard Industrial Classification Code Number


4760 South Pecos Rd. Suite 103

Las Vegas, NV 89121

Tel.  (775) 391-8588



 (Address and telephone number of registrant's executive office)     



Securities registered pursuant to Section 12(b) of the Act: None


Securities registered pursuant to Section 12(g) of the Act: None



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Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]


Indicate by check mark if the registrant  is not  required  to file  reports  pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]


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 shorter period that the registrant as 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K  is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X]


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


Large accelerated filer [ ]                     Accelerated filer [ ]

Non-accelerated filer [ ]                       Smaller reporting company [X]


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


As of December 13, 2017, the registrant had 6,340,000 shares of common stock issued and outstanding. No market value has been computed based upon the fact that no active trading market has been established as of December 13, 2017.



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Table Of Contents




 

Part I

 


Item 1

Description Of Business

4

   

   

 

Item 1a    

Risk Factors

5

 

  

 

Item 1b

Unresolved Staff Comments                                     

5

 

 

 

Item 2   

Properties

5

      

 

 

Item 3   

Legal Proceedings                                             

5

      

 

 

Item 4

Submission Of Matters To A Vote Of Security Holders           

5

 

Part II

 


Item  5   

Market For Common Equity And Related Stockholder Matters      

5

 

 

 

Item  6  

Selected Financial Data                                       

6

 

 

 

Item  7 

Management's Discussion And Analysis Or Results Of Operations

6

      

 

 

Item 7a 

Quantitative And Qualitative Disclosures About Market Risk   

8

 

 

 

Item 8

Financial Statements And Supplementary Data                  

8

      

 

 

Item 9    

Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

20

      

 

 

Item 9a

Controls And Procedures

20

 

 

 

Item 9b

Other Information                                            

20


Part III

 

Item 10

Directors, Executive Officers, Promoters And Control Persons; Compliance With Section 16(A) Of The Exchange Act

20

 

 

 

Item 11

Executive Compensation

22

 

 

 

Item 12

Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters

22

 

 

 

Item 13

Certain Relationships, Related Transactions And Director Independence

23

 

 

 

Item 14

Principal Accountant Fees And Services                       

23


Part IV

 


Item 15

Exhibits And Financial Statement Schedules                   

24




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PART I


ITEM 1. DESCRIPTION OF BUSINESS


FORWARD-LOOKING STATEMENTS


This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. 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.


As used in this annual report, the terms "we", "us", "our", "the Company", mean ZARTEX INC., unless otherwise indicated.


All dollar amounts refer to US dollars unless otherwise indicated.


DESCRIPTION OF BUSINESS

 

We are a software company and deliver the services for garment distribution industry. Our main service is the IT product for garment retailers. We deliver a software product (to which we may refer as a program, a web-engine or an application), the visible part of which we plan to design in a form of a web catalogue. With many offers in the garment industry producers and retailers might experience difficulties in delivering their offer to their potential customers. Customers might feel insecure about how their actual size matches to the size of clothing displayed on the retailer’s or producer’s website. We expect that employment of our program can make it easier to advertise and sell garment items, for retailers, select and buy, for garment buyers.

Our main customers are online and real stores involved in clothing distribution to whom we plan to sell our software and customize precisely to their needs. The users of the application who are the retailers’ customers are our indirect customers whom we do not charge for using the software. We deliver our software together with the buyers aligned website which holds a catalogue of various brands clothing items listed in it. For the users, our application within the website will perform only informing functions with the possibility to reserve the items chosen in the most convenient outlet, with the most reasonable price (to the user’s mind). Our software has programming engine which can be used many times for our customers. We sell the software and the service of software customization for every potential client. The software cannot be used separately from software customization because of garment retailers have their individual products, prices, service etc. Our software is an application which can be used in our customers’ web-catalogs or on any supported devices. We retain the rights to use our software with to use the “Match Me” software and its feature in our future product offerings.

In order to gain our customer’s awareness, we come to the market with highly adaptive web engine which might be tweaked to the needs of the end user. We expect that coding a mobile application might give our software wider popularity among customers. The mobile application might be used as both a mobile version of the web catalogue and a measuring device. The mobile application will use the algorithm of the Rule of Perspective to compare clothing sizes on the store to those of the customers. Provided that a customer takes a photo of a real size object, adjusts it to fit the marked frame in the application it displays if the chosen garment can fit the customer.



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Our application users may also enable “Match Me” feature which we plan to deliver within the application. “Match Me” is expected to use the algorithm of analyzing the data provided by user in order to make lists of clothing styles (with actual items from the stores that we plan to partner up with), and the information concerning the price, the brand, the store to be on display. It is quite obvious that people stick to a clothing style due to the preferences in music (for instance, rock listeners are likely to wear leather), movies (some people might copy the styles of the favorite actors in certain films) healthstyle (people involved in yoga might prefer natural materials to synthetic ones) and other preferences. Enabling “Match Me” feature, a user goes through a simple multiple choice questionnaire including the questions about the preferences, actual season and mood in order to receive the possible clothing combinations.  The engine of our web catalogue is supposed to be built in the way that it displays garment items regardless the brand awareness, which may help small brands and individual designers to make their way to general public. We expect that our program can also inspire the competition between retailers, which may result in a number of various offers for clothing buyers, thus helping us to receive awareness and to involve as many retailers in our project as possible.

Provided that retailers show their interest in our program, we may come to a certain retailer outlet with an additional item - “Match Me Box”, a computerized installment. We plan to configure the “Match Me Box” in a similar way that “Match Me” feature of the application works. This “Match Me Box” is schemed to be installed in shopping centres for the customers, who have a certain idea (or no ideas) of of what to acquire, but feel disoriented by the overwhelming number of outlets in a store.


ITEM 1A. RISK FACTORS


Not applicable.



ITEM 1B. UNRESOLVED STAFF COMMENTS


None.


ITEM 2. PROPERTIES


We do not own any property.


ITEM 3. LEGAL PROCEEDINGS


We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


No report required.



PART II


ITEM 5. MARKET FOR EQUITY SECURITIES AND OTHER SHAREHOLDER MATTERS


MARKET INFORMATION


As of December 13, 2017, the 6,340,000 issued and outstanding shares of common stock were held by a total of 31 shareholders of record.




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DIVIDENDS

 

We have never paid or declared any dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future.


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS


We currently do not have any equity compensation plans.


ITEM 6. SELECTED FINANCIAL DATA


Not Applicable.


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS


The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in the forward- looking statements.  Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report.  Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.


RESULTS OF OPERATIONS


As of August 31, 2017, we have accumulated a deficit of $18,696. We anticipate that we will continue to incur losses in the next 12 months. Our financial statements have been prepared assuming that we will continue as a going concern.  We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.


Year Ended August 31, 2017


Revenue


During the year ended August 31, 2017, the Company generated $35,100 in revenue. For the period from Inception (August 17, 2016) to August 31, 2016 the Company did not generated revenue.


Costs of revenues


Costs of revenues for the year ended August 31, 2017 and 2016 were $29,257 and $nil. Costs of revenues mainly consisted of cost of labor for development and outsource development services.


Gross Profit/Margin


Gross profit for the year ended August 31, 2017 were $5,843 or 16.6%; and for the period the period from Inception (August 17, 2016) to August 31, 2016 was $nil or nil%. Our gross margin varies based on each project due to the customization sold with our “Match Me” software


The Company completed “Match Me” algorithm and release for sale to the public during the year then ended August 31, 2017 and started limited operations by selling the software developed along with customization services.




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Operating Expenses


During the year ended August 31, 2017 and for the period from Inception (August 17, 2016) to August 31, 2016, we incurred $24,375 and $$164 in general and administrative expenses. General and administrative and professional fee expenses incurred generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting services.


Income Taxes


The Company has net deferred tax assets as NOL carryforward which would reduce taxable income taxes in the future. However due to the uncertainty of the benefits of such deferred tax assets, the Company take a full allowance to offset the benefits.


Net Loss


Our net loss for the year ended August 31, 2017 and 2016 were $18,532 and $164, respectively.


LIQUIDITY AND CAPITAL RESOURCES


As at August 31, 2017 our total assets were $40,125 compared to $0 in total assets at August 31, 2016.  The increase in assets was due to proceeds from the sale of common stock and revenue, purchase of computer software and equipment.


As at August 31, 2017, our current liabilities were $27,021 compared to $164 as of August 31, 2016.


Our working capital deficit as of August 31, 2017 and 2016 was $(2,472) and $0, respectively.


Stockholders’ deficit was $13,104 as of August 31, 2017 compared to stockholders’ equity of $164 as of August 31, 2016.


The Company has relied on related party advances or loans for expenses and funding to support the operation of the Company. Outstanding payables to related party was $17,264, and $164 as of August 31, 2017 and 2016, respectively.


Cash Flows from Operating Activities


For the year ended August 31, 2017, net cash flows used in operating activities was $8,301 consisting of net loss of $18,532, accounts payable of $9,757 and amortization of $474.


Cash Flows from Investing Activities


For the year ended August 31, 2017, net cash flows used in investing activities was $16,050. The Company acquired computer equipment and software for its operations


Cash Flows from Financing Activities


Cash flows provided by financing activities during the nine-months period ended August 31, 2017 were $34,900, consisting of $17,100 loan from shareholder and $31,800 from proceeds from sale of common stock.





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PLAN OF OPERATION AND FUNDING


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.


MATERIAL COMMITMENTS


As of the date of this Annual Report, we do not have any material commitments.


PURCHASE OF SIGNIFICANT EQUIPMENT


We do not intend to purchase any significant equipment during the next twelve months.


OFF-BALANCE SHEET ARRANGEMENTS


As of the date of this Annual 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not applicable.


 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                


Report of Independent Registered Public Accounting Firm

F-1


Balance Sheets as of August 31, 2017 and August 31, 2016

F-2


Statements of Operations for the year ended August 31, 2017; and for the period from Inception (August 17, 2016) to August 31, 2016

F-3


Statement of Changes in Stockholders’ Equity for the period from Inception (August 17, 2016) to August 31, 2017

F-4


Statements of Cash Flows for the year ended August 31, 2017; and for the period from Inception (August 17, 2016) to August 31, 2016

F-5


Notes to the Financial Statements

F-6 -F-11




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Report of Independent Registered Public Accounting Firm


To the Board of Directors and
Stockholders of Zartex Inc.

We have audited the accompanying balance sheets of Zartex Inc. as of August 31, 2017, and 2016, and the related statements of operation, stockholders’ equity, and cash flows for the year then ended August 31, 2017, and for the period from Inception (August 17, 2016) to August 31, 2017. Zartex Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Zartex, Inc. as of August 31, 2017 and 2016, and the results of its operations and its cash flows for the year then ended August 31, 2017, and for the period from Inception (August 17, 2016) to August 31, 2017., in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to examine management’s assertion about the effectiveness of Zartex, Inc.’s internal control over financial reporting and, accordingly, we do not express an opinion thereon.

The accompanying financial statements have been prepared assuming that Zartex Inc will continue as a going concern. As discussed in Note 2 to the financial statements, the conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

 

/s/ Jimmy P. Lee, CPA P.C.

Jimmy P. Lee, CPA P.C.

Flushing, NY

December 13, 2017




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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

(AUDITED)

 

AUGUST 31, 2017

AUGUST 31, 2016

ASSETS

 

 

Current Assets

 

 

 

Cash

$           24,549

$        -

 

Total current assets

24,549

-

 

 

 

Property & equipment, net

10,376

 

Intangible asset, net

5,200

 

Total Assets                                                         

$           40,125

$        -

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

 

Accounts payable

9,757

 

 

 Loan from related parties

      17,264

     164

 

Total current liabilities

27,021

164


 

 

Total Liabilities

27,021

164

 

Commitments & Contingencies

 

Stockholders’ Equity (Deficit)

  

Common stock, $0.001 par value, 75,000,000 shares authorized;

 

 

6,340,000 shares issued and outstanding at August 31, 2017; 0 shares issued and outstanding at August 31, 2016

6,340

-

 

Additional paid-in-capital

25,460

-

 

Deficit accumulated during the development stage

(18,696)

(164)

Total Stockholders’ Equity (Deficit)

13,104

(164)

 

 

 

Total Liabilities and Stockholders’ Equity (Deficit)

$    40,125

$        -



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

F-2



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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATION

(AUDITED)

 

 

 

Year ended August 31, 2017

For the period from Inception (August 17, 2016) to August 31, 2016

 

 

 

Revenues

$              35,100

$          -

Cost of revenues

29,257

-

Gross margin

5,843

-

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

General and administrative expenses

24,375

164

Income (loss) from operations

(18,532)

(164)

Income (loss) before taxes

(18,532)

(164)

 

 

 

Provision for taxes

-

 

 

 

 

Net income (loss)

$         (18,532)

$        (164)

 

 

 

Loss per common share:

 Basic and Diluted

$              (0.00)

$           -*

 

 

 

Weighted Average Number of Common Shares Outstanding:

Basic and Diluted

5,557,178

-*


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


*No shares of common stock issued and outstanding during this period

F-3



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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE PERIOD FROM INCEPTION (AUGUST 17, 2016) TO AUGUST 31, 2017

(AUDITED)

 

Number of

Common

Shares


Amount

Additional

Paid-in-

Capital

Deficit

accumulated

during development stage



Total


Balances at August 17, 2016, Inception  

-

$        -  

$     -  

$               -  

$         -  

Net loss for the period

-

-

-

(164)

(164)


Balances as of August 31, 2016

-

-

-

(164)

(164)

Shares issued at $0.001

5,000,000

5,000

-

-

5,000

Shares issued at $0.02

1,340,000

1,340

25,460

-

26,800

Net loss for the period

 

 

 

(18,532)

(18,532)

Balances as of August 31, 2017

6,340,000

$   6,340

$  25,460

$    (18,696)

$    13,104



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

F-4



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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CASH FLOWS

(AUDITED)

 

 

Year ended

August 31, 2017

For the period from Inception (August 17, 2016) to August 31, 2016

Operating Activities

 

 

 

 

Net loss

 

$      (18,532)

$           (164)

 

Depreciation and amortization

 

474

 

 

Accounts payable

 

9,757

-

 

Net cash used in operating activities

 

(8,301)

(164)

 

 

 

 

Investing Activities

 

 

 

        Purchase of Equipment and intangible assets

 

(16,050)

-

        Net cash used in investing activities

 

(16,050)

-

 

 

 

 

Financing Activities

 

 

 

 

Proceeds from sale of common stock

 

31,800

-

 

Proceeds from loan from shareholder

 

17,100

164

 

Net cash provided by financing activities

 

48,900

164

 

 

 

 

Net increase in cash and equivalents

 

24,549

0

Cash and equivalents at beginning of the period

 

-

-

Cash and equivalents at end of the period

 

$        24,549

$               0

 

Supplemental cash flow information:

 

 

 

 

Cash paid for:

 

 

 

 

Interest                                                                                               

 

$             -

$              -

 

Taxes                                                                                           

 

$             -

$              -



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

F-5



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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE AUDITED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2017


NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

 

ZARTEX INC. (the “Company”) is a corporation established under the corporation laws in the State of Nevada on August 17, 2016.


The company commences operations in the business of software development. The company seeks to deliver services for garment distribution industry. The main service is the IT product for garment retailers.


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


The Company has adopted August 31 fiscal year end.


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.



Development Stage Company


The Company is a development stage company as defined in ASC 915 “Development Stage Entities.”. The Company is devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced.  All losses accumulated since inception have been considered as part of the Company's development stage activities.


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.  Upon adoption, the Company no longer presents or discloses inception-to-date information and other remaining disclosure requirements of Topic 915.


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.


F-6



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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 Loss Per Share


Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted 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.


Revenue Recognition


The Company follows the guidance of the Accounting Standards Codification ("ASC") Topic 605, "Revenue Recognition." It records revenue when persuasive evidence of an arrangement exists, services have been rendered, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured.


The Company records revenue when realizable and earned and when developed software and customization services has been delivered to the customer.


The Company determined that our software arrangements fall within scope of ASC 985-605, paragraph 985-605-15-3 states, “The guidance in the Subtopic applies to the following transactions and activities: (a) Licensing, selling, leasing, or otherwise marketing computer software; (b) superseded; (c) The software and software-related elements of arrangements that include software that is more-than-incidental to the products or services in the arrangement as a whole.”


F-7



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The Company determined that the predominant element in our multiple element arrangements is software that is sold via a rights of use license and resides at customer sites. The other elements in our arrangements are bundled with the software and the bundle is sold as one unit as explained below. These arrangements are within the scope of 985-605 because our software is sold and delivered to our customers, meeting the guidance in clause (a) of ASC 985-605-15-3. Additionally, as required by clause (c) of ASC 985-605-15-3, our software is more-than-incidental to the services in the arrangement as a whole due to its predominant role in delivering the value of the service further explained below.


Our software arrangements are sold as a single unit consisting of the following multiple elements: (i) “Match Me” software delivered to the customer, (ii) customization service. “Match Me” software is an algorithm helping users to create their individual fashion look (style of clothes). Customization service is the development of individual software design, functionality, CRM System (Customer relationship management system) and programming criteria.

The company doesn’t have any plans to sell “Match Me” software (algorithm) separate from the customization service.

We have estimated our “Match Me” software (algorithm) and charge our customers with the estimated price. The customization service price is based on the estimated labor costs the Company spend on the customization. The final price for the customer consists both elements.


We use the residual method to recognize revenues when a customer agreement includes one or more elements to be delivered at a future date and vendor specific objective evidence (VSOE) of the fair value of all undelivered elements exists. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the contract fee is recognized as product revenues. If evidence of the fair value of one or more undelivered elements does not exist, all revenues are deferred and recognized when delivery of those elements occurs or when fair value can be established.


Residual Method Accounting


In software arrangements that include multiple elements (such as license rights and technical support services), total fees are allocated among each of the elements using the “residual” method of accounting.  Under this method, revenue allocated to undelivered elements is based on vendor-specific objective evidence of fair value of such undelivered elements, and the residual revenue is allocated to the delivered elements.  Vendor specific objective evidence of fair value for such undelivered elements is based upon the price charged for such product or service when it is sold separately.  The Company’s pricing practices may be modified in the future, which would result in changes to the Company’s vendor specific objective evidence.  As a result, future revenue associated with multiple element arrangements could differ significantly from our historical results.


Percentage of Completion Accounting


Fees from licenses sold together with consulting services are generally recognized upon shipment of the licenses, provided (i) the criteria described in subparagraphs (a) through (d) in the second paragraph under “Revenue Recognition” above are met; (ii) payment of the license fee is not dependent upon performance of the consulting services; and (iii) the consulting services are not essential to the functionality of the licensed software.  If the services are essential to the functionality of the software, or performance of services is a condition to payment of license fees, both the software license and consulting fees are recognized under the “percentage of completion” method of contract accounting.  Under this method, the Company is required to estimate the number of total hours needed to complete a project, and revenues and profits are recognized based on the percentage of total contract hours as they are completed.  Due to the complexity involved in the estimating process, revenues and profits recognized under the percentage of completion method of accounting are subject to revision as contract phases are actually completed.  Historically, these revisions have not been material.


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Software Revenue and Service Revenue


Software revenue includes sales from “Match Me” software.

Service revenue includes sales from “Match Me” software customization service.


Software Development Costs


Costs incurred in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product. Judgment is required in determining when technological feasibility of a product is established and the Company have determined that technological feasibility for our software products is reached after all high-risk development issues have been resolved through coding and testing. Generally, this occurs shortly before the products are available to the public for sale.


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


Cost of Revenue


Cost of revenue includes: software development costs and software customization costs. Capitalized software development costs are 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 our financial position, operations 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.


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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 August 31, 2017, 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 $18,696 since inception and incurred net loss of $18,532 for the year ended August 31, 2017. 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 – PROEPRTY & EQUIPMENTS


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


 

August 31, 2017

 

August 31, 2016

Computer and Equipment

$                                             10,850

 

$                                                       -

Total

                                               10,850

 

                                                         -

Accumulated Depreciation

                                                  (474)

 

                                                         -

Net

$                                             10,376

 

$                                                       -


Depreciation expenses were $474 and $nil for the years ended August 31, 2017



NOTE 5 – INTANGIBLE ASSETS


Intangible assets consisted of the following:

 

August 31, 2017

 

August 31, 2016

Computer Sowtware

 $                                                5,200

 

$                                                       -

Total

                                               5,200

 

                                                         -

Accumulated Amortization

-                                                  

 

                                                         -

Net

$                                               5,200

 

$                                                       -


Amortization expenses were $nil and $nil for the years ended August 31, 2017


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NOTE 6 – CAPTIAL STOCK


The Company has 75,000,000 shares of common 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.


As of August 31, 2017, the Company had 6,340,000 shares issued and outstanding.


NOTE 7 – RELATED PARTY TRANSACTIONS

 

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by officers, directors, or shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.  


Since August 17, 2016 (Inception) through August 31, 2017 the Company’s sole officer and director, Mr. Aleksandr Zausaev, has loaned the Company from time to time to pay for incorporation costs and operating expenses. Mr. Zausaev also provides services to the Company for which he was compensated $14,000 and $nil for the years ended August 31, 2017 and 2016, respectively. As of August 31, 2017, the outstanding payable amount was $17,264. The loan is non-interest bearing, due upon demand and unsecured.

 

NOTE 8– INCOME TAX


As of August 31, 2017, the Company had net operating loss carry forwards of $18,696 and resulted in deferred tax assets of $6,357 at an income tax rate of 34% that may be available to reduce future years’ taxable income through 2037. 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 valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.


NOTE 9 - CONCENTRATIONS


For the year ended August 31, 2017, the Company has only one supplier who is the sole officer and majority shareholder of the Company with outstanding accounts payable of $9,757 (100%) at August 31, 2017.


For the year ended August 31, 2017, the Company has generated revenues from six customers with Customer A representing 30.8%, Customer B representing 29.1%, and Customer C representing 25.9% of total revenues without any outstanding accounts receivable at August 31, 2017.


NOTE 10 - SUBSEQUENT EVENTS


The Company has evaluated subsequent events from August 31, 2017 to the date the financial statements were issued and has determined that there are no items to disclose.



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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


None.


ITEM 9A. CONTROLS AND PROCEDURES


Disclosure Controls and Procedures


Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our principal executive officer and principal financial and accounting officer have reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13(a)-15(e) and 15(d)-15(e)) within the end of the period covered by this Annual Report on Form 10-K and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner.


Changes in Internal Controls over Financial Reporting


There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

  

ITEM 9B. OTHER INFORMATION


None.


PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE COMPANY


Name and Address of Executive

Officer and/or Director

Age

Position

Aleksandr Zausaev

4760 South Pecos Rd. Suite 103, Las Vegas, NV 89121

31

President, Treasurer, Secretary and Director

(Principal Executive, Financial and Accounting Officer)


Aleksandr Zausaev has acted as our President, Treasurer, Secretary and sole Director since we incorporated on August 17, 2016. Mr. Zausaev owns 78.86% of the outstanding shares of our common stock. As such, it was unilaterally decided that Mr. Zausaev was going to be our sole President, Chief Executive Officer, Treasurer, and Chief Financial Officer, Chief Accounting Officer, Secretary and sole member of our board of directors. Mr. Zausaev graduated from Moscow State University in 2009 as Master of Information Technology Management. Since 2008 he has been working as the freelance software developer and website developer. He has been working on an outsource basis with entyties and individuals from around the world. We believe that Mr. Zausaev’s specific experience, qualifications and skills will enable to develop our business.




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During the past ten years, Mr. Zausaev has not been the subject to any of the following events:


1.

Any bankruptcy petition filed by or against any business of which Mr. Zausaev was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

2.

Any conviction in a criminal proceeding or being subject to a pending criminal proceeding.

3.

An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Mr. Zausaev’s involvement in any type of business, securities or banking activities.

4.

Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

5.

Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;

6.

Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

7.

Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

i.

Any Federal or State securities or commodities law or regulation; or

ii.

Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

iii.

Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

1.

Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.




AUDIT COMMITTEE


We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we have no operations, at the present time, we believe the services of a financial expert are not warranted.


SIGNIFICANT EMPLOYEES


Other than our director, we do not expect any other individuals to make a significant contribution to our business.




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ITEM 11. EXECUTIVE COMPENSATION


The following tables set forth certain information about compensation paid, earned or accrued for services by our Executive Officer from inception on August 17, 2016 until August 31, 2016, and for the year ended August 31, 2017:


Summary Compensation Table


Name and

Principal

Position

Year

Salary

($)

Bonus

($)

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

All Other

Compensation

($)

All Other

Compensation

($)

Total

($)

Aleksandr Zausaev, Director, President, Secretary and Treasurer

August 17, 2016 to August 31, 2016


-0-


-0-


-0-


-0-


-0-


-0-


-0-


-0-

September 1, 2016 to August 31, 2017


-0-


-0-


-0-


-0-


-0-


-0-


-0-


-0-




There are no current employment agreements between the company and its officer or director.


There are no annuity, pension or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the company or any of its subsidiaries, if any.


CHANGE OF CONTROL


As of August 31, 2017, we had no pension plans or compensatory plans or other arrangements which provide compensation in the event of a termination of employment or a change in our control.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


The following table sets forth information as of August 31, 2017 regarding the ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent of our outstanding shares of common stock, each director and all executive officers and directors as a group. Except as otherwise indicated, each of the shareholders has sole voting and investment power with respect to the shares of common stock beneficially owned.


Title of Class

 

Name and Address of

Beneficial Owner

 

Amount and Nature of 

Beneficial Ownership

 

Percentage

 

Common Stock

 

Aleksandr Zausaev

4760 South Pecos Rd. Suite 103, Las Vegas, NV 89121

 

5,000,000 shares of common stock (direct)

 

 

78.86

%



 

The percent of class is based on 6,340,000 shares of common stock issued and outstanding as of the date of this annual report.




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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



On September 12, 2016, we issued a total of 5,000,000 shares of restricted common stock to Aleksandr Zausaev, our sole officer and director in consideration of $5,000. Further, Mr. Zausaev has advanced funds to us. As of August 31, 2017, Mr. Zausaev has advanced to us $17,264. There is no due date for the repayment of the funds advanced by Mr. Zausaev. Mr. Zausaev will be repaid from revenues of operations. The obligation to Mr. Zausaev does not bear interest. There is no written agreement evidencing the advancement of funds by Mr. Zausaev or the repayment of the funds to Mr. Zausaev.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES


The following table shows the fees paid or accrued for the audit and other services provided by our principal accountant.

 

 

 

August 31, 2017

 

 

August 31, 2016

 

 

 

 

 

 

 

 

Audit fees

 

$

9,000

 

 

 

4,000

 

Audit related fees

 

 

-0-

 

 

 

-0-

 

Tax fees

 

 

500

 

 

 

-0-

 

All other fees

 

 

-0-

 

 

 

-0-

 

 

Audit Fees

 

Audit fees represent the professional services rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports, along with services normally provided by the accountant in connection with statutory and regulatory filings or engagements.

 

Audit Related Fees

 

Audit-related fees represent professional services rendered for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.

 

Tax Fees

 

Tax fees represent professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

All other fees represent fees billed for products and services provided by the principal accountant, other than the services reported for the other categories.

 




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ITEM 15. EXHIBITS


The following exhibits are filed as part of this Annual Report.



Exhibits:


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

32.1 Certifications 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

101.INS  XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document


SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


                                          

                    

 


ZARTEX INC.


Dated: December 13, 2017


By: /s/ Aleksandr Zausaev

 

Aleksandr Zausaev, President and

Chief Executive Officer and Chief Financial Officer






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