Electronic (XESP) 10-Q for FY2020 Q1, filed May 14, 2020

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended MARCH 31, 2020

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

Commission file number: 000-55809

CANNASSIST INTERNATIONAL CORP.

(Exact name of registrant as specified in its charter)

Delaware	82-1873116
(State or Other Jurisdiction of Incorporation or<br><br>Organization)	(I.R.S. Employer Identification No.)
1548 Loch Ness Dr., Fallbrook, CA 92028	82834
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (760) 990-3091

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller Reporting Company	x
Emerging growth company	x

If an emerging growth company, 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(1) of the Exchange Act. ¨

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which<br><br>registered
Common Stock	CNSC	N/A

As of May 14, 2020, the Company had 18,435,000 shares of its common stock, par value $.0001 per share, issued and outstanding.

TABLE OF CONTENTS

PART I
Item 1.	Condensed Unaudited Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of<br><br>Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
PART II		16
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mining Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	17
	Signatures	18
2
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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CANNASSIST INTERNATIONAL CORP.

INDEX TO FINANCIAL STATEMENTS

Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	4
Statements of Operations for the three months ended March 31, 2020 and 2019	5
Statements of Changes in Stockholders’ Equity (Deficit)<br>for the three months ended March 31, 2020<br><br>and 2019 (unaudited)	6
Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)	7
Notes to Condensed Financial Statements (Unaudited)	8
3
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CannAssist International Corp.<br><br>Balance Sheets
---
	March 31, 2020		December 31, 2019
---	---	---	---	---
ASSETS	(unaudited)
Current assets:
Cash	19,649		80,021
Accounts receivable	47,731		1,135
Prepaid expenses	974		4,145
Other asset	1,567		1,567
Inventory	68,811		50,592
Total assets	138,732		137,460
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accruals	165,237		124,796
Accounts payable – related party	11,843		9,857
Accrued liabilities	-		-
Customer deposits	23,400		54,660
Due to a related party	9,722		9,498
Loan payable	1,000		1,000
Accrual for income taxes	-		-
Total current liabilities	211,202		199,811
Commitments and contingencies	-		-
Stockholders’ Deficit:
Preferred stock, $0.0001 par value 20,000,000 shares<br>authorized; none issued and outstanding	-		-
Common Stock, $0.0001 par value, 100,000,000 shares<br>authorized; 18,435,000 issued and<br>outstanding	1,844		1,844
Additional paid in capital	3,123,567		358,317
Accumulated deficit	(3,197,881	)	(422,512	)
Total Stockholders’ deficit	(72,470	)	(62,351	)
Total Liabilities and Stockholders’ Deficit	138,732		137,460

All values are in US Dollars.

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

4
CannAssist International Corp.<br><br>Statements of Operations<br><br>(Unaudited)
---
	For the three months ended March 31,
---	---	---	---	---
	2020		2019
Revenue	210,087		272,813
Cost of revenue	99,005		209,870
Gross margin	111,082		62,943
Operating expenses:
General and administrative	82,377		51,124
General and administrative– related party	-		500
Commissions – related party	4,373		12,253
Professional fees	32,610		35,216
Preferred stock issued for change of control	2,765,250		-
Total operating expenses	2,884,610		99,093
Loss from operations	(2,773,528	)	(36,150	)
Other expense:
Interest expense	(1,841	)	-
Total other expense	(1,841	)	-
Loss before provision for income taxes	(2,775,369	)	(36,150	)
Provision for income taxes	-		-
Net loss	(2,775,369	)	(36,150	)
Loss per share, basic and diluted	(0.15	)	(0.00	)
Weighted average shares outstanding, basic and<br>diluted	18,435,000		12,410,000

All values are in US Dollars.

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

5
CannAssist International Corp.<br><br>Statements of Changes in Stockholders’<br>Equity<br><br>For the Three Months Ended March 31, 2019
---
				Additional	Stock				Total
---	---	---	---	---	---	---	---	---	---	---
	Common Stock			Paid-in	Subscription		Retained		Stockholders'
	Shares		Amount	Capital	Receivable		Earnings		Deficit
Balance, December 31,<br>2018		12,410,000	1,241	13,920	(30	)	20,294		35,425
Cash collected on receivable					30		-		30
Net loss		-	-	-	-		(36,150	)	(36,150	)
Balance, March 31, 2019		12,410,000	1,241	13,920	-		(15,856	)	(695	)

All values are in US Dollars.

CannAssist International Corp.<br><br>Statements of Changes in Stockholders’<br>Equity<br><br>For the Three Months Ended March 31,<br>2020
							Additional			Total
---	---	---	---	---	---	---	---	---	---	---	---
	Preferred Stock			Common Stock			Paid-in	Retained		Stockholders'
	Shares		Amount	Shares		Amount	Capital	Earnings		Deficit
Balance, December 31,<br><br>2019		-	-		18,435,000	1,844	358,317	(422,512	)	(62,351	)
Preferred stock issued for<br><br>change of control		1,000	-		-	-	2,765,250	-		2,765,250
Net loss		-	-		-	-	-	(2,775,369	)	(2,775,369	)
Balance, March 31, 2020		1,000	-		18,435,000	1,844	3,123,567	(3,197,881	)	(72,470	)

All values are in US Dollars.

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

6

CannAssist International Corp.

Statements of Cash Flows

	For the three months ended March 31,
	2020		2019
Cash flows from operating activities:
Net loss	(2,775,369	)	(36,150	)
Adjustments to reconcile net loss to net cash<br>used in operating activities:
Preferred stock issued for change of control	2,765,250
Changes in Operating Assets and Liabilities:
Accounts receivable	(46,595	)	(53,957	)
Inventory	(18,220	)	(22,688	)
Prepaid expenses and other assets	3,171		(608	)
Accounts payable and accrued liabilities	42,428		24,827
Customer deposits	(31,260	)	44,770
Net cash provided by operating activities	(60,595	)	(43,806	)
Cash flows from Investing activities:	-		-
Cash flows from Financing activities:
Proceeds from loans - related party	223		604
Proceeds from stock subscription receivable	-		30
Net cash provided by financing activities	223		634
Net increase in cash	(60,372	)	(43,172	)
Cash, beginning of period	80,021		67,351
Cash, end of period	19,649		24,179
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	-		-
Cash paid for taxes	-		-

All values are in US Dollars.

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

7

CANNASSIST INTERNATIONAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 1 - DESCRIPTION OF BUSINESS AND HISTORY

Description of business

CannAssist International Corp. (the “Company” or “CannAssist”) was incorporated on May 17, 2017 under the laws of the state of Delaware under the name Iris Grove Acquisition Corporation to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. On May 23, 2018 the Company changed its name to CannAssist International Corporation.

On June 18, 2018, the Company cancelled all 20,000,000 shares of its issued and outstanding stock and issued 3,000,000 shares of common stock pursuant to Section 4(a)(2) of the Securities Act of 1933 at par representing 100% of the total outstanding common stock at the time. With the issuance of the stock and the redemption of the 20,000,000 shares of stock, the Company effected a change in its control and the new majority shareholder was elected as the new management of the Company.

On July 12, 2018, the “Company, entered into a share exchange acquisition agreement with Xceptor LLC, a private company organized under the laws of Wyoming (“Xceptor”). The Acquisition was effected by the Company through the exchange of all the outstanding membership interests of Xceptor for 3,000,000 shares of common stock of the Company, valued at $0.0001 per share. At the time of the Acquisition, there was one shareholder of the Company who was also a shareholder and manager of Xceptor. Xceptor has become a wholly owned subsidiary of the Company and the Company has taken over its operations and business plan. Prior to the Acquisition, the Company had no ongoing business or operations. Since the Company and Xceptor were entities under common control prior to the Acquisition, the transaction is accounted for as a restructuring transaction. The Company has recast prior period financial statements to reflect the conveyance of Xceptor’s common shares as if the restructuring transaction had occurred as of the earliest date of the financial statements.

CannAssist produces and sells its cannabidiol ("CBD") product, “Cibidinol,” which is formulated based on a process developed by its founder Mark Palumbo (US Provisional Patent Number 62/581,605). CBD is a non-psychoactive compound found in hemp. CannAssist’s initial research and development work, aimed at enhancing the bioavailability of desired molecular structures, resulted in the creation of a line of CBD products, most notably its CBD product, Cibidinol. Cibidinol will be available in a line of consumable and topical products that the Company believes will make enhanced CBD products more available and accessible to consumers.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value when needed. The allowance for uncollectible amounts is evaluated quarterly.

8

CANNASSIST INTERNATIONAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery.

The Company recognizes revenue when product is shipped. The Company will often receive payment and/or pay for the cost of goods prior to shipping. When this occurs, the result is both a prepaid for the supplies to be used in their product and a customer deposit. As of March 31, 2020, the Company has customer deposits of $23,400, for orders to be shipped in Q2, 2020. As of December 31, 2019, the Company has a prepaid expense of $4,145 and customer deposits of $54,660, for orders to be shipped in Q1, 2020.

Cost of Sales

Cost of sales is determined on the basis of the cost of production or the purchase of goods, adjusted for the variation of inventory Cost of sale is recognized as the direct cost of products or services sold during the period.

Recently issued accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 - GOING CONCERN

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated revenues of $210,087 during the three months ended March 31, 2020 and had a net loss of $2,775,369 for three months ended March 31, 2020, which consisted of a $2,765,250 non-cash expense for the issuance of preferred stock. The Company has an accumulated deficit of $3,197,881 as of March 31, 2020. The Company requires capital for its contemplated operational and marketing activities. The obtainment of additional financing, through an initial capital raise, the successful development of the Company’s contemplated plan of operations, and its transition to the attainment of continued profitable operations are necessary for the Company to continue operations. There is no guarantee that the Company will be able to obtain the necessary financing or profitable operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

9

CANNASSIST INTERNATIONAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 4 – LOAN PAYABLE

On October 11, 2017, the Company received a $1,000 loan from a third party. The loan is unsecured, due on demand and non-interest bearing.

NOTE 5 – RELATED PARTY TRANSACTIONS

Marla Palumbo has advanced the Company a limited amount of funds to cover some general operating expenses and travel costs. These advances are unsecured, due on demand and non-interest bearing. As of March 31, 2020 and December 31, 2019, the balance due to Ms. Palumbo for cash advances is $9,722 and $9,498, respectively. Ms. Palumbo is the President of the Company and wife of the CEO, Mark Palumbo.

During the three months ended March 31, 2020 and 2019, the Company paid sales commissions of $4,373 and $12,253, respectively, to EME Ltd.

During the three months ended March 31, 2020 and 2019, respectively, the Company incurred $0 and $500 of expense for Matthew Palumbo for product design services. Matthew Palumbo is the son of Mark Palumbo, CEO.

On April 29, 2019, the Company entered into a Technology License Agreement with Mark Palumbo (“Licensor”) whereby the Licensor granted to the Company an exclusive worldwide license (the “License”) to use, market, promote and distribute certain technology related to a provisional patent application for a “Process for creating Carbohydrate Complexes with Cannabinoids and other Hydrophobic Molecules in large scale,” related patent applications, related trade-secrets and associated knowhow, including methods, techniques, specifications, procedures, information, systems, knowledge and business processes required to practice and carry on business in the field of data collection, security and management (the “Technology”). The initial term of the License is 5-years (the “Initial Term”) and shall automatically be renewed for successive 1-year terms (each, a “Renewal Term”) unless the Company elects to terminate the License by giving 30 days’ written notice prior to commencement of a Renewal Term. In exchange for the License of the Technology, the Company shall issue to the Licensor 5,000,000 restricted shares of its common stock, valued at par value per share, at the effective date of the agreement, and shall issue to the Licensor an additional 1,000,000 restricted shares of its common stock, valued at par value per share, at the commencement of each Renewal Term.

On March 30, 2020, the Company issued 1,000 shares of its Series A Preferred Stock to Mark Palumbo, an officer and director of the Company. Based on the rights of the designation the shares of preferred stock were value at 60% of the value of the total common stock outstanding. The shares od common stock have a current fair value of $0.25 per shares resulting in total non-cash expense of $2,765,250.

NOTE 6 – COMMON STOCK

During the year ended December 31, 2018, the Company sold 5,005,000 shares of common stock to third parties for total cash proceeds of $10,500. As of December 31, 2018, $30 had not been collected and has been debited to stock subscription receivable. The $30 was collected during the year ended December 31, 2019.

Pursuant to the terms of the licensing agreement with Mark Palumbo (Note 5) the Company issued 5,000,000 shares of common stock. The shares were valued at $0.03, the average price that common stock has recently been sold for, for total non-cash expense of $150,000.

During year ended December 31, 2019, the Company granted 175,000 shares of common stock for services. The shares were valued at $0.25 for total non-cash expense of $43,750.

During the year ended December 31, 2019, the Company sold 850,000 shares of common stock for total cash proceeds of $150,000.

10

CANNASSIST INTERNATIONAL CORP.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 7 – PREFERRED STOCK

The Company has designated 1,000 shares of Series A Preferred Stock. The shares of Series A Preferred Stock have a par value of $0.0001 per share. The Series A Preferred Shares do not have a dividend rate or liquidation preference and are not convertible into shares of common stock. Series A Preferred Stock, voting together as a class, have the right to vote 60% of the Company’s voting shares on any and all shareholder matters (the “Majority Voting Rights”). Additionally, the Company shall not adopt any amendments to the Company’s Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least a majority of the outstanding shares of Series A Preferred Stock. However, the Company may, by any means authorized by law and without any vote of the holders of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designations that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A Preferred Stock. Other than the Majority Voting Rights, the Series A Preferred Stock does not have any other dividend, liquidation, conversion, or redemption rights, whatsoever.

NOTE 8 – SUBSEQUENT EVENTS

On April 30, 2020, the Company entered into an agreement with an independent consultant pursuant to which the consultant shall be paid a cash monthly retainer of $5,000 a month and shall be issued 110,000 warrants to purchase shares of the common stock of the Company at an exercise price equal to $0.25 per share, subject to certain conditions regarding vesting, in reliance on the exemption from registration under Section 4(a)(2). This agreement amended the previous agreement entered into by and between the Company and the independent consultant dated April 1, 2020 to increase the exercise price of the referenced warrants from $0.0001 per share to $0.25 per share. This agreement has a term of 12 months and shall be automatically renewed on a month to month basis unless terminated upon 30 days’ written notice.

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the foregoing.

11

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

The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above.

Forward Looking Statements

Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:

·our future strategic plans

·our future operating results;

·our business prospects;

·our contractual arrangements and relationships with third parties;

·the dependence of our future success on the general economy;

·our possible future financings; and

·the adequacy of our cash resources and working capital.

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Executive Overview

CannAssist International Corp. (formerly Iris Grove Acquisition Corporation) (the “Company”) was incorporated on May 17, 2017 under the laws of the State of Delaware. The business purpose of the Company is to produce, sell and market its CBD based products. The Company's corporate offices are located at 1548 Loch Ness Dr., Fallbrook, CA 92028. The Company's email address is info@xceptorllc.com, and its website is xceptorcbd.com. The Company’s telephone number is 760-990-3091.

In July 2017, Iris Grove Acquisition Corporation filed a registration statement with the Securities and Exchange Commission on Form 10-12g pursuant to Securities Exchange Act of 1934 and became a public reporting company. In June 2018, the Company effected a change in control of Iris Grove Acquisition Corporation. As part of that change in control, the then officers and directors of Iris Grove resigned, the Company cancelled 20,000,000 shares of the then 20,000,000 shares of common stock outstanding, which were contributed by the Company’s then shareholders at no cost to the Company. Mark Palumbo was appointed the sole officer and director of the Company and the Company issued an aggregate of 3,000,000 shares of common stock to Mr. Palumbo. In addition, the Company changed its name to CannAssist International Corp.

On July 12, 2018, CannAssist International Corp., a Delaware corporation (the “Company”), entered into a share exchange acquisition agreement (the “Acquisition Agreement”) with Xceptor LLC, a private company organized under the laws of Wyoming (“Xceptor”). Under the Acquisition Agreement, the Company issued to the members of Xceptor a total amount of 3,000,000 shares of its common stock, valued at $0.0001 per share, in exchange for all of the issued and outstanding membership interests of Xceptor. Mr. Mark Palumbo, who is the officer, director and majority shareholder of the Company, was an officer and member of Xceptor LLC prior to the Acquisition. As a result of the Acquisition, Xceptor became a wholly owned subsidiary of the Company and the Company had taken over its operations and business plan. Prior to the Acquisition, the Company had no ongoing business or operations. Just prior to the business combination on July 12, 2018, Mark Palumbo, the Company’s sole officer and director currently and just prior to the business combination, was the owner of 60% of the outstanding membership interests of Xceptor LLC and also was the owner of 3,000,000 shares of the common stock of the Company, which constituted a majority of the issued and outstanding shares at that time. Since the Company and Xceptor were entities under common control prior to the Acquisition, the transaction is accounted for as a restructuring transaction.

12

For the period ended December 31, 2019, the Company’s independent auditors issued a report raising substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon financial support from its principal stockholders, its ability to obtain necessary equity financing, or its ability to sell its services to generate consistent profitability.

Results of Operation for the Three Months Ended March 31, 2020 and 2019

Revenues

For the three months ended March 31, 2020, the Company had revenues of $210,087, and costs of revenue of $99,005. In comparison, for the three months ended March 31, 2019, the Company had revenue of $272,813, and cost of revenue of $209,870. The decrease in revenue and the decrease in cost of revenue is a result of changes in general economic conditions.

For the three months ended March 31, 2020, the Company had a gross margin of $111,082. In comparison, for the three months ended March 31, 2019, the Company had a gross margin of $62,943. The increase in gross margin is a result of the decrease in cost of revenue.

General and administrative expenses

General and administrative expenses were $82,377 for the three months ended March 31, 2020 compared to $51,124 for the three months ended March 31, 2019. General and administrative expenses have increased with the recent increase in business activity.

General and administrative expenses to EME, LLC, a related party, were $0 for the three months ended March 31, 2020 compared to $500 for the three months ended March 31, 2019. The decrease in general and administrative expenses to a related are immaterial for the purposes of comparison.

Commissions

Commission expense was $4,373 for the three months ended March 31, 2020 compared to $12,253 for the three months ended March 31, 2019. Commission expense was paid to EME, LLC, a related party

Professional fees

Professional fees were $32,610 for the three months ended March 31, 2020 compared to $35,216 for the three months ended March 31, 2019. Professional fees consist of audit, accounting and legal fees. The decrease in professional fees are immaterial for the purposes of comparison.

Preferred Stock

Preferred Stock expense was $2,765,250 for the three months ended March 31, 2020 compared to $0 for the three months ended March 31, 2019. The preferred stock was issued to Mark Palumbo, a related party.

Net Loss

For the three months ended March 31, 2020, we realized net loss of $2,775,369 as compared to a net loss of $36,150 for three months ended March 31, 2019. The increase in net loss in the current period is primarily due to the expense incurred in connection with the issuance of preferred stock.

Liquidity and Capital Resources

The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated revenues of $210,087 during the three months ended March 31, 2020 and had a net loss of $2,775,369 for the three months ended March 31, 2020. The Company has an accumulated deficit of $3,197,881 as of March 31, 2020. The Company requires capital for its contemplated operational and marketing activities. The obtainment of additional financing, through an initial capital raise, the successful development of the Company’s contemplated plan of operations, and its transition to the attainment of continued profitable operations are necessary for the Company to continue operations.

13

The Company used $60,595 of cash from operations for the three months ended March 31, 2020. Net cash provided by financing activities for the three months ended March 31, 2020 was $223.

As of March 31, 2020, the Company had $19,649 in cash.

Critical Accounting Estimates and Policies

The preparation of 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 and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

Off-Balance Sheet Arrangements

We have not entered into 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 and would be considered material to investors.

Recent Accounting Pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were not effective for the quarterly period ended March 31, 2020.

The following aspects of the Company were noted as potential material weaknesses:

·	timely and accurate reconciliation of accounts
·	lack of segregation of duties
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In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Changes in Internal Controls

Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended March 31, 2020, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

15

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

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

On March 30, 2020, the Company issued 1,000 shares of its Series A Preferred Stock to Mark Palumbo, an officer and director of the Company, for $0.0001 per share in reliance on the exemption from registration under Section 4(a)(2). Series A Preferred Stock, voting together as a class, have the right to vote 60% of the Company’s voting shares on any and all shareholder matters (the “Majority Voting Rights”). Additionally, the Company shall not adopt any amendments to the Company’s Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least a majority of the outstanding shares of Series A Preferred Stock. However, the Company may, by any means authorized by law and without any vote of the holders of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designations that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A Preferred Stock. Other than the Majority Voting Rights, the Series A Preferred Stock does not have any other dividend, liquidation, conversion, or redemption rights, whatsoever.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINING SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None

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ITEM 6. EXHIBITS

No.	Description
31.1	Chief Executive Officer Section 302 Certification
31.2	Chief Financial Officer Section 302 Certification
32.1	Section 906 Certification
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document
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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.

CANNASSIST INTERNATIONAL CORPORATION

Dated: May 14, 2020	By: /s/ Mark Palumbo<br><br>Mark Palumbo<br><br>Chief Executive Officer
	By: /s/ Mark Palumbo<br><br>Mark Palumbo<br><br>Chief Financial Officer

Exhibit 31.1

CHIEF EXECUTIVE OFFICER

I, Mark Palumbo, hereby certify that:

(1) I have reviewed this Quarterly Report on Form 10-Q for the period ending March 31, 2020 of CannAssist International Corporation;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: May 14, 2020	/s/ Mark Palumbo<br><br>Mark Palumbo<br><br>Chief Executive Officer

Exhibit 31.2

CHIEF FINANCIAL OFFICER

I, Mark Palumbo, hereby certify that:

(1) I have reviewed this Quarterly Report on Form 10-Q for the period ending March 31, 2020 of CannAssist International Corporation;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: May 14, 2020	/s/ Mark Palumbo<br><br>Mark Palumbo<br><br>Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officers of CannAssist International Corporation., a Delaware corporation (the "Company"), do hereby certify, to the best of their knowledge, that:

The Quarterly Report on Form 10-Q for the period ending March 31, 2020 (the "Report") of the Company complies in all material respects with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 14, 2020	/s/ Mark Palumbo<br><br>Mark Palumbo<br><br>Chief Executive Officer
Dated: May 14, 2020	/s/ Mark Palumbo<br><br>Mark Palumbo<br><br>Chief Financial Officer
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Electronic Servitor Publication Network, Inc 10-Q for FY2020 Q1

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