Mark One

[X] QUARTERLY REPORT PURSUANT TO SECTIONUNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report pursuant to Section 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OFof the Securities Exchange Act of 1934

For the quarterly period ended November 30, 20172019

[   ] TRANSITION REPORT PURSUANT TO SECTION¨ Transition Report pursuant to Section 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OFof the Securities Exchange Act of 1934

For the transition period from ________________ to _________________

Commission file number: COMMISSION FILE NO. 333-214122

ZARTEX INC.

 (Exact name of registrant as specified in its charter)

Nevada		2750
(State or Other Jurisdictionother jurisdiction of Incorporation incorporation or Organization)organization)	98-1322537 IRS Employer Identification Number	7371 (Primary Standard Industrial Classification Code NumberNumber)

4760 South Pecos Rd. Suite 103Securities registered pursuant to Section 12(b) of the Act: None

Las Vegas, NV 89121

Tel.  (775) 391-8588

Email: zartexinc@yandex.com

(Address and telephone number of principal executive offices)

Indicate by checkmarkcheck mark whether the issuer:registrant (1) has filed all reports required to be filed by Section 13 or 15(d)15 (d) of the Securities Exchange Act of 1934 during the pastpreceding 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]   x No [  ]¨

Indicate by check mark whether the registrant is a large accelerated filed,filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large See the definitions of “large accelerated filer, [  ]” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Accelerated filer [   ]

Non-accelerated filer [   ]

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	x	Smaller Reporting Company	x
		Emerging Growth Company	¨

Smaller reporting

If an emerging growth company, [X]indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by checkmarkcheck mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] x 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

IndicateState the number of shares outstanding of each of the issuer’s classes of common stock,equity, as of the mostlatest practicable date: 1,488,932,800 shares of common stock, $0.0001 par value, issued and outstanding as of February 3, 2020.

CANNIS, INC.

QUARTERLY REPORT ON FORM 10-Q

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ITEM 1. FINANCIAL STATEMENTS

Cannis, Inc. and Subsidiaries
Consolidated Balance Sheets
Unaudited
		November 30,				August 31,
		2019				2019
ASSETS
Current assets
Cash and cash equivalents		$	106,013			$	118,128
Inventories			24,322				18,476
Due from related parties			29,153				24,530
Prepayment and other current assets, net			72,776				97,044
Total current assets			232,264				258,178
Non-current assets
Property, plant and equipment, net			193,095				731,539
Operating lease right of use asset, net			41,638				283,084
Deposits			10,830				42,261
Total non-current assets			245,563				1,056,884
Total Assets		$	477,827			$	1,315,062
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Operating lease liabilities - current			10,873				10,671
Accounts payable and accrued liabilities		$	1,998,484			$	1,983,745
Customer deposit			674				165,749
Due to related parties			3,774,148				3,388,039
Other payables			54,407				64,916
Total current liabilities			5,838,586				5,613,120
Non-current liabilities
Operating lease liabilities - noncurrent			30,765				272,413
Total liabilities			5,869,351				5,885,533
Shareholders’ equity
Class A Preferred Stock ($0.001 par value, 10,000,000 shares authorized, 8,500,000 shares issued and outstanding as of November 30, 2019 and August 31, 2019)			8,500				8,500
Common Stock ($0.001 par value, 1,500,000,000 shares authorized; 1.488,832,800 shares issued and outstanding as of November 30, 2019 and August 31, 2019)			1,488,833				1,488,833
Additional paid-in capital			(1,289,533	)		(1,289,533		)
Accumulated deficit			(5,716,280	)		(4,954,178		)
Accumulated other comprehensive income			116,956				175,907
Total shareholders’ equity			(5,391,524	)		(4,570,471		)
Total Liabilities and Shareholders’ Equity		$	477,827			$	1,315,062
			-				-

PART I. FINANCIAL INFORMATION

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

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Cannis, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
Unaudited
		For the Three Months Ended November 30,
		2019				2018
Net revenues		$	370,567			$	310,081
Cost of revenues			263,968				259,871
Gross margin			106,599				50,210
Operating expenses:
Selling, General and administrative			868,713				480,188
Total operating expenses			868,713				480,188
Loss from operations			(762,114	)			(429,978	)
Other income/(loss)
Gain from extinguishment of related party debt			-				35,236
Other income			12				465
Total other income(loss)			12				35,701
Operating loss before income taxes			(762,102	)			(394,277	)
Provision for income taxes			-				-
Net loss			(762,102	)			(394,277	)
Other comprehensive income (loss)
Net loss			(762,102	)			(394,277	)
Foreign currency translation adjustment			(58,951	)			24,073
Total comprehensive income		$	(821,053	)		$	(370,204	)
Loss per share
Basic and Diluted		$	0.00			$	0.00
Weighted average shares outstanding
Basic and Diluted			1,488,832,800				1,488,832,800

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

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Cannis, Inc. and Subsidiaries

Statements of Changes in Stockholders’ Equity

Unaudited

		No. of Class A Preferred Stock				Class A Preferred Stock				No. of Common Shares				Ordinary Shares				Additional Paid In Capital				Accumulated Deficit				Accumulated other Comprehensive Income				Total
Balance at August 31, 2018			8,500,000			$	8,500				1,488,832,800			$	1,488,833			$	(1,465,533	)		$	(1,341,636	)		$	21,876			$	(1,287,960	)
Conversion of related party debt into ordinary shares															179,169																179,169
Issue of Common Shares to new shareholders															(179,169	)			176,000												(3,169	)
Net Loss																							(3,612,542	)							(3,612,542	)
Foreign Currency Translation Adjustment																											154,031				154,031
Balance at August 31, 2019			8,500,000				8,500				1,488,832,800				1,488,833				(1,289,533	)			(4,954,178	)			175,907				(4,570,471	)
Net Loss																							(762,102	)							(762,102	)
Foreign Currency Translation Adjustment																											(58,951	)			(58,951	)
Balance at November 30, 2019			8,500,000			$	8,500				1,488,832,800			$	1,488,833			$	(1,289,533	)		$	(5,716,280	)		$	116,956			$	(5,391,524	)

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

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Cannis, Inc. and Subsidiaries
Consolidated statements of cashflows
Unaudited
		For the Three Months Ended November 30,
		2019				2018
Cash flows from operating activities
Net Loss		$	(762,102	)		$	(394,277	)
Adjustments to reconcile net loss to net cash from operations:
Depreciation			10,724				6,391
Extinguishment of related party debt			-				(35,236	)
Fixed asset written-off			537,484				11,672
Changes in assets and liabilities:
Accounts receivable			-				(2,019	)
Inventories			(5,606	)			(12,220	)
Prepaid expenses			23,832				(32,188	)
Deposit			31,995				(6,731	)
Other receivables			1,275				-
Other receivables - related party			(3,867	)			8,325
Accounts payable			(10,540	)			(162,723	)
Customer deposits			(167,304	)			-
Accrued Liabilities							21,454
Other payables			(11,360	)
Net cash used in operating activities		$	(355,469	)		$	(597,552	)
Cash flows from investing activities
Disposal (Acquisition) of fixed assets			-				(26,946	)
Acquisition of intangible assets			-				(88,222	)
Net cash used in investing activities		$	-			$	(115,168	)
Cash flows from financing activities
Proceeds from related parties			342,050				1,235,045
Net cash provided by financing activities		$	342,050			$	1,235,045
Net increase in cash, and cash equivalents			(13,419	)			522,325
Effect on changes in foreign exchange rate			1,304				(2,641	)
Cash, and cash equivalents, beginning of period			118,128				17,439
Cash, and cash equivalents, end of period		$	106,013			$	537,123
			-				-
Supplementary non-cash investing and financing activities:
Recognized ROU assets through lease liabilities		$	-			$	292,728
Supplemental cash flow information
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-

The accompanying footnotes are an integral part of these consolidated financial statements

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NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

ZARTEX INC. (the “Company”Cannis, Inc. (“Cannis”) is a corporation established, formerly Zartex, Inc. was incorporated under the corporation laws inof the State of Nevada on August 17, 2016.

The company commencesEffective November 14, 2018, a change of control occurred with respect to Cannis, Inc. where Mr. Eu Boon Ching acquired 99.9% of Cannis’s issued and outstanding common stock from former shareholders of Cannis. Simultaneously, Cannis ceased its operations, transferred its assets and became a “shell company.” Mr. Ching also became sole officer and director of Cannis following the change of control.

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

On August 5, 2019, Cannis, Inc., Cannisapp Sdn Bhd (“Cannisapp”), and Mr. Ching entered into a Stock Exchange Agreement. Pursuant to the terms of the Stock Exchange Agreement, Cannis, Inc. issued an aggregate of 1,482,492,800 shares of common stock and 8,500,000 shares of Class A Preferred Stock for all of the outstanding capital stock of Cannisapp. As a result, Cannisapp became a wholly owned subsidiary of Cannis, Inc. Immediately following the Share Exchange, the business of Cannisapp became the business of Cannis, Inc. and the executive officers of Cannisapp became executive officers of the Company.

Cannisapp Sdn Bhd, formerly known as Antara Rimbun Sdn Bhd, was incorporated in Malaysia on April 2, 2018 and Mr. Ching owned 100% of the issued and outstanding stock of Cannisapp. Cannis entered into a share exchange agreement with Cannisapp whereas the acquisition was accounted under US GAAP as a business combination under common control with Cannis being the acquirer and Cannisapp being the acquiree as both entities were owned by the same controlling shareholder prior to the business combination. Accordingly, historical cost is the basis for transfer of assets and liabilities in the business combination in accordance with ASC 805-50-30-5. Cannis, Inc. and its consolidated subsidiary is collectively referred to herein as the “Company”, “we” and “us”, unless specific reference is made to an entity.

On April 24, 2019, the Company (i) increased the authorized shares of software development. The company seeksits common stock, $0.001 par value, from 75,000,000 to deliver services1,500,000,000 shares, and (ii) created a class of preferred stock, $0.001 par value, called the Class A Preferred Stock in the amount of 10,000,000 authorized shares, with each share of Class A Preferred Stock having 100 votes to be cast with respect to any and all matters presented to shareholders for garment distribution industry. The main service isa vote whether at a meeting of shareholders or by written consent. Apart from the IT product for garment retailers.voting rights stated in the preceding sentence, the Class A Preferred Stock shall have no other rights, privileges or preferences.

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 Presentationpresentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.America (“US GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its subsidiary. Significant inter-company transactions have been eliminated in consolidation. In accordance with ASC 805-50-45-5, for transactions between entities under common control, financial statements and financial information presented for prior periods have been be retroactively adjusted to furnish comparative information. The accompanying consolidated financial statements are presented retrospectively as though the share exchange agreement between the Cannis, Inc. and Cannisapp Sdn Bhd occurred at the beginning of the first period presented. Cannisapp Sdn Bhd did not have any activities for the period from April 2, 2018 (Inception) and May 31, 2018, therefore it was not presented in the financial statements.

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, 2017,2019, 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, 2017.2019.

Development Stage CompanyUse of estimates

The Company is a development stage company as defined in ASC 915 “Development Stage Entities.”. The Company is devoting substantially allpreparation 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.

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Functional and presentation currency

The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company.

The functional currency of Cannis Inc. is United States dollar.

The functional currency of Cannisapp is the currency of the primary economic environment in which Cannisapp operates which is Malaysia Ringgit (“MYR”).

Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting periods. Exchange differences arising on the settlement of monetary items and on translation of monetary items at period-end are included in income statement of the period.

For the purpose of presenting these financial statements, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

Exchange rate used for the translation as follows:

US$ to MYR

Fair valuesvalues of financial instrumentsfinancial 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:

As of the balance sheet date, the estimated fair values of the financial instruments were not materially different fromapproximated their carryingfair values as presented due to the short maturitiesshort-term nature 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.instruments. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates the hierarchy disclosures each quarter.year.

Related parties

The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

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Cash and Equivalentscash equivalents

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

BasicAccounts Receivable

Accounts receivable is recorded at the net value of less estimates for doubtful accounts. Management regularly reviews outstanding accounts and Diluted Loss Per Shareprovides an allowance for doubtful accounts. When collection of the original invoice amounts is no longer probable, the Company will either partially or fully write-off the balance against the allowance for doubtful accounts.

Basic loss per share is computed by dividing net loss available to common shareholders byBad debt expenses were $nil and $nil for 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.three months ended November 30, 2019 and 2018, respectively.

Revenue Recognition

The Company followsadopted ASC 606 requires the guidanceuse of a new five-step model to recognize revenue from customer contracts. The five-step model requires entities to exercise judgment when considering the Accounting Standards Codification ("ASC") Topic 605, "Revenue Recognition." It records revenue when persuasive evidenceterms of an arrangement exists, services have been rendered,contracts, which includes (1) identifying the sellingcontracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.

The Company’s revenues mainly consist of offline products sales. The Company generally recognizes product sales revenue when the performance obligation have been satisfied pursuant to Malaysia law, including such factors as contract existed with the customer, delivery and acceptance of products by customer has occurred, the sales price is fixed or determinable and collectability ofallocated to the revenueproducts sold, sales and value-added tax laws have been complied with, and collectability is reasonably assured.

The Company estimates potential returns and records such estimates against its gross revenue whento arrive at its reported net sales revenue. The Company has not experienced any sales returns.

Inventory

Inventories, which are primarily comprised of finished goods for sale, are stated at the lower of cost or net realizable value, using the first-in first-out (FIFO) method. The Company evaluates the need for reserves associated with obsolete, slow-moving and earned and when developed software and customization services has been deliverednon-salable inventory by reviewing net realizable values on a periodic basis. Only defects products can be return to the customer.our suppliers.

Customer Deposits

The Company determined that our software arrangements fall within scope of ASC 985-605, paragraph 985-605-15-3 states, “The guidance incharges deposits when customers rent the Subtopic applies topower bank. The deposits will be fully refunded after 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 thatpower bank is more-than-incidental to the products or services in the arrangement as a whole.”returned.

Advertising

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The Company determined that the predominant elementexpenses advertising costs as incurred and includes it in our multiple element arrangements is software that is sold via a rights of use licenseselling expenses. The Company recorded $0 and resides at customer sites. The other elements in our arrangements are bundled with the software$208,868 for advertising 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 pricepromotions expenses for the customer consists both elements.three months ended November 30, 2019 and 2018, respectively.

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.

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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 PronouncementsA tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that the relevant taxing authority that has full knowledge of all relevant information will examine each uncertain tax position. Although the Company believes the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals.

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 consist of computer, office furniture and equipment, and leasehold improvement. All property and equipment are stated at historical cost lessnet of accumulated depreciation comprised of computerdepreciation. Repairs and maintenance are expensed as incurred. Property and equipment and are depreciated on thea straight-line methodbasis over the following periods:

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated liferate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset whichalso includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is 5 years.

Intangible Assets & Amortization

The Company’s intangible assets are stated at cost less accumulated amortization comprised of computer software and are amortizedreasonably certain that we will exercise that option. Lease expense for lease payments is recognized on thea straight-line methodbasis over the estimated life of the asset which is 3 years.lease term.

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Impairment of Long-lived assets

The Company accounts for impairment of plantproperty 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.

Research & development expenses

Product development expenses consist primarily of third-party development and programming costs and other expenses that are directly attributable to the development of mobile applications, databases, software for the businesses of the Company.

The Company expenses all costs that are incurred in connection with the planning and implementation phases of development and costs that are associated with repair or maintenance of the existing mobile applications or the development of software and content.

Costs incurred in the development phase can be capitalized and amortized over the estimated product life when technological feasibility is reached. However, since the inception of the Company, the amount of costs qualifying for capitalization has been insignificant. As a result, all development costs have been expensed as incurred.

The Company did not record any research and development expenses for the three months ended November 30, 2019 and 2018.

New Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02) “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted.

For finance leases, a lessee is required to do the following:

	·	Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position
	·	Recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income
	·	Classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows.

For operating leases, a lessee is required to do the following:  

	·	Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position
	·	Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis
	·	Classify all cash payments within operating activities in the statement of cash flows.

In July 2018, the FASB issued Accounting Standards Update No. 2018-11 (ASU 2018-11), which amends ASC 842 so that entities may elect not to recast their comparative periods in transition (the “Comparatives Under 840 Option”). ASU 2018-11 allows entities to change their date of initial application to the beginning of the period of adoption. In doing so, entities would:

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In addition, the FASB also issued a series of amendments to ASU 2016-02 that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new lease standard.

The management has reviewed the accounting pronouncements and adopted the new standard on January 1, 2019 using the modified retrospective method of adoption. The transition method expedient which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, prior periods have not been restated. The adoption of this ASU resulted in the recording of additional lease assets and liabilities $41,638 and $41,638 with no effect to opening balance of retained earnings as the Company did not have any leases prior to the adoption of this ASU.

NOTE 3 – GOING CONCERN

The Company’s financial statements as of November 30, 2017,2019, been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

Thebusiness.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.$5,716,280 as of November 30, 2019. 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 sManagement’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 – PROEPRTYPROPERTY & EQUIPMENTSEQUIPMENT

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

As of November 30, 2019
						Accumulated
Category		Cost				Depreciation				Net
Computer & Electronics		$	31,037			$	5,121			$	25,916
Furniture & Fixture			177,974				17,845				160,129
Office Equipment			6,397				621				5,776
Leasehold Improvement			1,294				20				1,274
		$	216,702			$	23,607			$	193,095

Depreciation expenses were $543expense was $10,724 and $0$6,391 for the three months ended November 30, 20172019 and 20162018, respectively.

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consisted of the following:

Amortization expenses were $433Fixed asset written-off was $537,484 and $0$11,672 for the three months ended November 30, 20172019 and 20162018, respectively.

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NOTE 5 – RELATED PARTY TRANSACTIONS

The related parties consisted of the following:

Related Party Receivable

As of November 30, 2019, total balance due from related party was $29,153, and the balances due from Cannis Group Indonesia and Mr. Mohd Mustaqim bin Abdullah were $28,716 and $437 respectively.

During the three months ended November 30, 2019, Cannis Group Indonesia borrowed $4,305 from the Company and repaid $0.

As of August 31, 2019, total balance due from related party was $24,530, and the balances due from Cannis Group Indonesia and Mr. Mohd Mustaqim bin Abdullah were $24,098 and $432 respectively.

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Related Party Payable

For the three months ended November 30, 2019, Mr.Ching Eu Boon advanced $383,287 to the Company as working capital for its operation and received $34,220 from the Company.

As of November 30, 2019, the balance due to Mr.Ching Eu Boon was $3,774,148.

As of August 31, 2019, the outstanding balance due to Mr. Ching was $3,381,115, and the outstanding balance due to World Speed Notion Sdn Bhd was $6,924.

Ms Lim Mei Fong leased the employee accommodation to the Company from April 25,2019 to April 24, 2021, with monthly rent of $770. The total rent expense for the three months ended November 30, 2019 was $2,310 and the rent deposit was $nil as of November 30, 2019.

NOTE 6 – CAPTIAL STOCKLEASES

The Company has 75,000,000 sharesoperating leases for corporate offices and employees’ accommodation. These leases have remaining lease terms of common stock1 year to 3 years. The Company has elected to not recognize lease assets and liabilities for leases with a term less than twelve months.

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term in Malaysia which is approximately 5%.

Operating lease expenses were $27,507 and $17,294 for the three months ended November 30, 2019 and 2018.

The undiscounted future minimum lease payment schedule as follows:

For the three months ended November 30, 2019,
2020			80,729
2021			11,627
2022			-
Thereafter			-
Total		$	92,236

NOTE 7 – STOCKHOLDERS’ EQUITY

The Company is authorized with ato issue 10,000,000 numbers of Class A Preferred Stock at par value of $0.001 per share.share and 1,500,000,000 shares of common stock.

In December 2018, Mr. Ching converted $177,164 (MYR 732,640) of the outstanding amount into 732,640 shares of ordinary shares of the Company.

On August 5, 2019, the Company, Cannisapp, and Mr. Ching entered into the Stock Exchange Agreement, where the Company issued an aggregate of 1,482,492,800 shares of common stock and 8,500,000 shares of Class A Preferred Stock in exchange for all of the outstanding capital stock of Cannisapp.

As of November 30, 2017,2019, the Company had 6,340,000has 1,488,832,800 shares of common shares issued and outstanding, and 8,500,000 shares of Class A Preferred Stock 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.  

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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,

Cannis, Inc. is incoporated in the statutoryState of Nevada and is subject to Nevada state and US Federal tax laws. Cannis Inc. has not recognized an income tax benefit for its operating losses based on uncertainties concerning its ability to generate taxable in future period.

The components of deferred tax assets and liabilities as follows:

		November 30, 2019				August 31, 2019
Deferred tax asset		$				$
Net operating losses carry forwards			29,549				27,545
Valuation allowance			(29,549	)			(27,545	)
Deferred tax asset, net		$	-			$	-

Malaysia

Cannisapp Sdn Bhd is subject to Malaysia income tax laws. The standard corporate tax rate is 34%.24%, while the rate for resident small and medium-sized companies (i.e. companies incorporated in Malaysia with paid-up capital of MYR 2.5 million or less and that are not part of a group containing a companying exceeding this capitalization threshold) is 17% (reduced from 18%, effective 2019) on the first MYR 500,000 (approximately $120,907), with the balance being tax at the 24% rate.

As ofFor the three months ended November 30, 2017,2019 and 2018, Cannisapp Sdn Bhd did not record income tax expenses because it reported operating losses.

The components of deferred tax assets and liabilities as follows:

		November 30,				August 31,
		2019				2019
Deferred tax asset
Capital allowance			19,991				15,971
Net operating loss carryover			240,037				191,427
Valuation allowance			(260,028	)			(207,398	)
Deferred tax assets, net		$	-			$	-

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NOTE 9 – SEGMENT INFORMATION

The Company believes that it operates in two business segments offline sales distribution and online commerce and services; and operates in one geographical segment Malaysia.

The Company’s operating segments are as follows:

Online commerce and services which is comprised of platforms operating in retail and wholesale commerce, retail and wholesale commerce — cross-border and global, local consumer services and others.

Offline sales distribution which is comprised of sales and distributions of nutritional supplements which will be integrated with the Company had net operating loss carry forwards of $24,792 that may be availableCompany’s mobile application platform.

		Three Months Ended November 30,				Three Months Ended November 30,
		2019				2018
Sales Revenues
Online commerce and services		$	-			$	-
Offline sales distribution			370,567				310,081
Total sales revenues		$	370,567			$	310,081
Income (loss) from operations
Online commerce and services		$				$
Offline sales distribution			(762,114	)			(429,978	)
Total income (loss) from operations		$	(762,114	)		$	(429,978	)

NOTE 10 – CONCENTRATIONS, RISKS AND UNCERTAINTIES

Credit risk

Cash deposits with banks are held in financial institutions in Malaysia, which are federally insured with deposit protection up 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,MYR250,000 (approximately $59,899). Accordingly, the Company has recorded a valuation allowance forconcentration of credit risk related to the deferred tax asset relatinguninsured part of bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to these tax loss carry-forwards.significant credit risk.

NOTE 9 - CONCENTRATIONSConcentration

The Company offer limited varieties of products for sale while depends on few suppliers for these products. Accordingly, The Company has only one supplier who isa concentration risk related to these products and suppliers. Failure to maintain existing relationships with the sole officer and majority shareholder ofsuppliers or to establish new relationships in the future could negatively affect the Company’s ability to obtain products sold to customers in a timely manner. If the Company with outstanding accounts payableis unable to obtain ample supply of $9,757 (100%) at November 30, 2017.products from existing suppliers or alternative sources of supply, the Company may be unable to satisfy the orders from its customers, which could materially and adversely affect revenues.

The concentration on products sales revenues is as follows:

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The concentration on suppliers’ purchases is as follows:

The concentration on customers’ sales revenues is as follows:

NOTE 1011 - SUBSEQUENT EVENTS

The Company has evaluatedevaluates subsequent events fromthat have occurred after the balance sheet date but before the financial statements are issued. Based on this evaluation, the Company concluded that subsequent to November 30, 20172019 but prior to January 21, 2020, the date the financial statements were available to be issued, and has determinedthere was no subsequent event that there are no itemswould require disclosure to disclose.or adjustment to the financial statements other than the ones disclosed above.

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ITEM 2. MANAGEMENT'SMANAGEMENT’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONOPERATIONS

FORWARD LOOKING STATEMENTSSTATEMENT NOTICE

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements"“forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act"“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"“may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or "continue,"“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'smanagement’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

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

DESCRIPTION OF BUSINESS

GENERAL

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

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

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

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

On December 6, 2018, the servicesCompany amended its Articles of Incorporation with the Nevada Secretary of State to effect the name change of the Company to Cannis, Inc.

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Acquisition of Cannisapp

On August 5, 2019 (the “Closing Date”), we closed a share exchange under a Share Exchange Agreement (the “Stock Exchange Agreement”), with Cannisapp. Sdn. Bhd, a Malaysian company (“Cannisapp”) and Mr. Ching, its sole stockholder, who is our majority shareholder and officer and director. Mr. Ching held 100% of the issued and outstanding stock of Cannisapp. Pursuant to the Stock Exchange Agreement and upon the closing of the Share Exchange, in exchange for garment distribution industry. all of the issued and outstanding capital stock of Cannisapp, we issued to Mr. Ching an aggregate amount of 1,482,492,800 shares of our common stock and 8,500,000 shares of Class A Preferred Stock, $0.001 par value, which has 100 for 1 voting rights per share. As a result of the Share Exchange, Mr. Ching remains the controlling shareholder of the Company, owning a total of 99.99% of our outstanding common stock and 100% of our outstanding Class A Preferred Stock. The Share Exchange was accounted for under the business combination under common control of accounting. As a result of the Share Exchange, we ceased to be a “shell company.”

We conduct our operations through our consolidated subsidiary, Cannisapp. The subsidiary was incorporated under the corporation laws in Malaysia on April 2, 2018 under the name Antara Rimbun Sdn Bhd. It affected a name changed to Nimpmos Sdn Bhd on July 5, 2018, and then to Cannisapp Sdn. Bhd. on September 12, 2018.

Cannisapp has two distinct, business segments. One is developing proprietary mobile applications and the other is acting as an offline sales distributor for nutritional supplements manufactured by third parties. We began selling nutritional supplements in September 2018. We commenced the development of our mobile applications operating on Android and iOS operating systems in June 2018.

Our main serviceoffices are located at Level 11-2, Tower 4, Puchong Financial Corporate Centre (PFCC), Jalan Puteri 1/2, Bandar Puteri,47100 Purchhong, Selangor, Malaysia and our website is www.cannis.app.

On April 24, 2019, the IT productCompany amended its Articles of Incorporation by filing a Certificate of Amendment with the Nevada Secretary of State which (i) increased the authorized shares of its common stock, $0.001 par value, from 75,000,000 to 1,500,000,000 shares, and (ii) created a class of preferred stock, $0.001 par value, called the Class A Preferred Stock in the amount of 10,000,000 authorized shares, with each share of Class A Preferred Stock having 100 votes to be cast with respect to any and all matters presented to shareholders for garment retailers.a vote whether at a meeting of shareholders or by written consent. Apart from the voting rights stated in the preceding sentence, the Class A Preferred Stock shall have no other rights, privileges or preferences.

Translation of amounts from the local currency of Cannisapp (Malaysian Ringett “MYR”) into US$1 has been made at the following exchange rates for the respective years:

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RESULTS OF OPERATIONS

THREE MONTHS PERIOD ENDED NOVEMBER 30, 2019 COMPARED TO THE THREE MONTHS PERIOD ENDED NOVEMBER 30, 2018

The following table sets forth key components of the Company’s results of operations for the three months ended November 30, 2019 compared to the three months ended November 30, 2018. The discussion following the table addresses these results.

		For the Three Months Ended November 30,
		2019				2018
Net revenues		$	370,567			$	310,081
Cost of revenues			263,968				259,871
Gross margin			106,599				50,210
Operating expenses:
Selling expenses			191				208,868
General and administrative			868,522				271,320
Total operating expenses			868,713				480,188
Loss from operations			(762,114	)			(429,978	)
Other income/(loss)
Other income			12				35,701
Total other income(loss)			12				35,701
Operating loss before income taxes			(762,102	)			(394,277	)
Provision for income taxes			-				-
Net loss			(762,102	)			(394,277	)
Other comprehensive income (loss)
Net loss			(762,102	)			(394,277	)
Foreign currency translation adjustment			(58,951	)			24,073
Total comprehensive income		$	(821,053	)		$	(370,204	)

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Revenues. During the three months ended November 30, 2019, we had revenue of $370,567, which were derived entirely from offline sales of nutritional supplements. For the same period last year, we had revenues of $310,081 also from sales of nutritional supplements. We deliver a software product (to which we may referact as a program, a web-engine or an application),distributor for two different manufacturers and we began selling these supplements in September 2018. The increase in revenues for the visiblecurrent quarterly period is due to product expansion into new markets coupled with the impact of the Christmas season.

We began developing our proprietary mobile applications in June 2018. We have not generated revenues from these applications for the quarters ended November 30, 2019 and 2018. We intend to integrate our offline sales with our mobile applications platform as part of whichour marketing strategy. We expect to generate sale of our mobile applications beginning in November 2020.

Cost of Revenue. For the three months ended November 30, 2019, we plan to designhad cost of revenue of $263,968 compared with $259,871 in a formcost of a web catalogue. With many offers inrevenue for 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 matchessame period last year. The slight increase for the current period correlates to the sizeincrease in sales for the same period. Cost of clothing displayed onrevenue represents our costs for the retailer’s or producer’s website. We expect that employmentnutritional supplements sold.

Operating expenses. Operating expenses consist of selling, general and administrative expenses, and research and development expense.

For the quarter ended November 30, 2019, we had selling, general and administrative expenses of $868,713 compared with selling, general and administrative expenses of $480,188 for the quarter ended November 30, 2018, representing an 81% increase from the prior period.

Selling expenses include marketing and advertising costs related to the operations and development of Cannisapp. These expenses were $191 and $208,868 for the quarters ended November 30, 2019 and 2018, respectively. The significant decrease for the current period was due to a reduction of our program can make it easier to advertise and sell garment items,the advertising expenditures for retailers, select and buy,the current period. During the current quarter, we ceased our advertising 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 usersall of the application who arebusiness.

General and administrative expenses mainly consist of salaries and related employee benefits, office expenses, professional service fees, depreciation expenses, rent, and related costs. These expenses were $868,522 and $271,320 for the retailers’ customers are our indirect customers whom we do not chargequarter ended November 30, 2019 and 2018, respectively, representing an increase of $597,202. The significant increase 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 stylecurrent period was due to the preferences in music (for instance, rock listeners are likely to wear leather), movies (some people might copyfixed assets written-off of $537,484 for the stylesthree months ended November 30, 2019.

We did not incur any research and development expenses for three months ended November 30, 2019 and 2018.

Loss from Operations. For the quarter ended November 30, 2019, we had loss from operations of $762,114 compared with loss from operations of $429,978 for 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 includingquarter ended November 30, 2018 for the questions aboutreasons discussed above.

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Total Comprehensive Loss. For the preferences, actual season and mood in order to receive the possible clothing combinations.  The engine of our web catalogue is supposed to be builtquarter ended November 30, 2019, we had loss from foreign currency translation adjustment in the way that it displays garment items regardless the brand awareness,amount of $58,952 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 resultresulted in a numbercomprehensive loss of various offers$821,053 for clothing buyers, thus helping us to receive awareness and to involve as many retailersthe 2019 quarterly period. For the quarter ended November 30, 2018, we had gain from foreign currency translation adjustment 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”amount of $24,073 which resulted in a similar way that “Match Me” featurecomprehensive loss of the application works. This “Match Me Box” is schemed to be installed in shopping centres$370,204 for the customers, who have a certain idea (or no ideas) of of what to acquire, but feel disoriented by2018 quarterly period. Foreign currency translation adjustments reflects the overwhelming number of outletsfluctuations in a store.the two currencies (USD and MYR).

RESULTS OF OPERATIONLIQUIDITY AND CAPITAL RESOURCES

Working Capital Deficit. As of November 30, 2017, we have accumulated a2019, the Company had working capital deficit of $24,792.$5,606,322, compared to a working capital deficit of $5,354,942 as of August 31, 2019. The increase in working capital deficit is a result of a slight increase in accounts payable and a slight increase in related party payables as of November 30, 2019.

Cash Flows.

The following is a summary of the Company’s cash flows from operating, investing and financing activities for the quarter ended November 30, 2019 and 2018, respectively:

		Quarter ended November 30, 2019				Quarter ended November 30, 2018
Net cash used in operating activities		$	(355,470	)		$	(597,552	)
Net cash used in investing activities			-				(115,168	)
Net cash provided by financing activities			342,050				1,235,045
Net change in cash and cash equivalents		$	(13,420	)		$	522,325