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EX-32 - Cannis, Inc.f10q321.htm
EX-31 - Cannis, Inc.f10q311.htm


 

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


Mark One

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


For the quarterly period ended November 30, 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

Email: zartexinc@yandex.com


(Address and telephone number of principal executive offices)




Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer [  ]

Accelerated filer [   ]

Non-accelerated filer [   ]

Smaller reporting company [X]


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

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years. N/A

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.  Yes [   ] No [   ]

Applicable Only to Corporate Registrants

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:


 

 

Class

Outstanding as of January 16, 2018

Common Stock, $0.001

6,340,000




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ZARTEX INC.

 

Part I   

FINANCIAL INFORMATION

 

Item 1

FINANCIAL STATEMENTS (UNAUDITED)

3

Item 2   

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

11

Item 3  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

13

Item 4

CONTROLS AND PROCEDURES

13


PART II


OTHER INFORMATION

 

Item 1   

LEGAL PROCEEDINGS

13

Item 2 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

13

Item 3   

DEFAULTS UPON SENIOR SECURITIES

13

Item 4      

MINE SAFETY DISCLOSURES

14

Item 5  

OTHER INFORMATION

14

Item 6

EXHIBITS

14

 

SIGNATURES

14




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PART I. FINANCIAL INFORMATION


ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

 

NOVEMBER 30, 2017

(UNAUDITED)

AUGUST 31, 2017

(AUDITED)

ASSETS

 

 

Current Assets

 

 

 

Cash

$           19,429

$        24,549

 

Total current assets

19,429

24,549

 

 

 

Property & equipment, net

9,833

10,376

Intangible asset, net

4,767

5,200

Total Assets                                                         

$           34,029

$       40,125

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

 

Accounts payable and accrued expenses

11,457

9,757

 

Loan from related parties

      17,264

     17,264

 

Total current liabilities

28,721

27,021


 

 

Total Liabilities

28,721

27,021

 

Commitments & Contingencies

 

Stockholders’ Equity (Deficit)

  

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

 

 

6,340,000 shares issued and outstanding

6,340

6,340

 

Additional paid-in-capital

25,460

25,460

 

Deficit accumulated during the development stage

(26,492)

(18,696)

Total Stockholders’ Equity

5,308

13,104

 

 

 

Total Liabilities and Stockholders’ Equity

$    34,029

$       40,125



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



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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATION

(UNAUDITED)

 

 

 

Three months ended November 30, 2017

Three months ended November 30, 2016

 

 

 

Revenues

$              -

$         5,000

Cost of revenues

-

-

Gross margin

-

5,000

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

General and administrative expenses

7,796

6,733

Income (loss) from operations

(7,796)

(1,733)

Income (loss) before taxes

(7,796)

(1,733)

 

 

 

Provision for taxes

-

 

 

 

 

Net income (loss)

$         (7,796)

$        (1,733)

 

 

 

Loss per common share:

 Basic and Diluted

$              (0.00)

$               (0.00)

 

 

 

Weighted Average Number of Common Shares Outstanding:

Basic and Diluted

6,340,000

4,395,604


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




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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CASH FLOWS

(UNAUDITED)

 

 

Three months ended November 30, 2017

Three months ended November 30, 2016

Operating Activities

 

 

 

 

Net loss

 

$      (7,796)

$           (1,733)

 

Increase in prepaid expenses

 

-

(30)

 

Depreciation and amortization

 

976

-

 

Accounts payable and accrued expenses

 

1,700

-

 

Net cash used in operating activities

 

(5,120)

(1,763)

 

 

 

 

Investing Activities

 

 

 

        Purchase of Equipment and intangible assets

 

-

-

        Net cash used in investing activities

 

-

-

 

 

 

 

Financing Activities

 

 

 

 

Proceeds from sale of common stock

 

-

5,000

 

Proceeds from loan from shareholder

 

-

2,950

 

Net cash provided by financing activities

 

-

7,950

 

 

 

 

Net increase (decrease) in cash and equivalents

 

(5,120)

6,187

Cash and equivalents at beginning of the period

 

24,549

-

Cash and equivalents at end of the period

 

$        19,429

$               6,187

 

Supplemental cash flow information:

 

 

 

 

Cash paid for:

 

 

 

 

Interest                                                                                               

 

$             -

$              -

 

Taxes                                                                                           

 

$             -

$              -



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



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ZARTEX INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE AUDITED FINANCIAL STATEMENTS

THREE MONTHS ENDED NOVEMBER 30, 2017

(UNAUDITED)


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.


Interim Financial Information

 

The unaudited consolidated 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, 2017, 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, 2017.


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.


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.”




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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 November 30, 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 $26,492 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 – PROEPRTY & EQUIPMENTS


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


 

November 30, 2017

 

August 31, 2017

Computer and Equipment

$                                             10,850

 

$                                             10,850

Total

                                               10,850

 

                                               10,850

Accumulated Depreciation

                                                  (1,017)

 

(474)

Net

$                                             9,833

 

$                                             10,376


Depreciation expenses were $543 and $0 for the three months ended November 30, 2017 and 2016



NOTE 5 – INTANGIBLE ASSETS


Intangible assets consisted of the following:

 

November 30, 2017

 

August 31, 2017

Computer Sowtware

 $                                                5,200

 

 $                                                5,200

Total

                                               5,200

 

                                               5,200

Accumulated Amortization

(433)

 

-

Net

$                                               4,767

 

$                                                 5,200


Amortization expenses were $433 and $0 for the three months ended November 30, 2017 and 2016




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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.


As of November 30, 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 November 30, 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. As of November 30, 2017, the outstanding payable amount to Mr Zausaev was $17,264.


Mr. Zausaev also provides services to the Company for which he was compensated. As of November 30, 2017, the outstanding accounts payable amount to Mr. Zausaev was $9,757 The amounts above are non-interest bearing, due upon demand and unsecured.


NOTE 8 – INCOME TAX


The Company was incorporated under the law the United States of America laws, the statutory income tax rate is 34%.


As of November 30, 2017, the Company had net operating loss carry forwards of $24,792 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


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 November 30, 2017.


NOTE 10 - SUBSEQUENT EVENTS


The Company has evaluated subsequent events from November 30, 2017 to the date the financial statements were issued and has determined that there are no items to disclose.



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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION


FORWARD LOOKING STATEMENTS


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.




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.


RESULTS OF OPERATION


As of November 30, 2017, we have accumulated a deficit of $24,792. 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.


Three Month Period Ended November 30, 2017 compared to Three Month Period Ended November 30, 2016  


Revenue

During the three months ended November 30, 2017, the Company has not generated any revenue compared to $5,000 during three-month period ended November 30, 2016.

Operating Expenses


During the three-months period ended November 30, 2017, we incurred $7,796 in general and administrative expenses compared to $6,733 during three-month period ended November 30, 2016. General and administrative and professional fee expenses incurred generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting and developmental costs.


Our net loss for the three-months period ended November 30, 2017 was $7,796 compared to $1,733 during three-month period ended November 30, 2016.


LIQUIDITY AND CAPITAL RESOURCES


As at November 30, 2017 our total assets were $34,029 compared to $40,125 in total assets at August 31, 2017.  The decrease in total assets was due to decrease in cash. As at November 30, 2017, our current liabilities were $28,721.


Stockholders’ equity was $13,104 as of August 31, 2017 compared to stockholders’ equity of $5,308 as of November 30, 2017.


Cash Flows from Operating Activities


For the three-months period ended November 30, 2017, net cash flows used in operating activities was $5,120 consisting of net loss of $6,096 and increase in depreciation expenses of $976.


Cash Flows from Investing Activities


For the three-months period ended November 30, 2017 cash flows used in investing activities was $0.



Cash Flows from Financing Activities


Cash flows provided by financing activities during the three-months period ended November 30, 2017 was $0.


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 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) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) 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.


OFF-BALANCE SHEET ARRANGEMENTS


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.




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GOING CONCERN


The independent auditors' report accompanying our August 31, 2016 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


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


ITEM 4. 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 Quarterly Report on Form 10-Q 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.


PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


No equity securities were sold during the three-month period ended November 30, 2017.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


No senior securities were issued and outstanding during the three-month period ended November 30, 2017.



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ITEM 4. MINE SAFETY DISCLOSURES


Not applicable to our Company.


ITEM 5. OTHER INFORMATION


None.


ITEM 6. EXHIBITS


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: January 16, 2018

By: /s/ Aleksandr Zausaev

 

Aleksandr Zausaev, President and Chief Executive Officer and Chief Financial Officer










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