UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

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

 

For the quarterly period ended September 30, 2018

 

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

 

For the transition period from ______________ to _______________

 

Commission file number 000-30563

 

CANNAWAKE CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware		14-1818394
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

 

HC1 Box 360, 107355 Nipton Rd., Nipton, CA		92364
(Address of principal executive offices)		(Zip Code)

 

(760) 664-2200

(Registrant’s Telephone Number, Including Area Code)

 

 

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

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 ☐  No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes ☐ No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 ☐		Smaller reporting company ☒
Emerging growth company ☒

 

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(a) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒

 

The number of shares outstanding of the issuer’s common stock, $0.0001 par value per share, was 43,915,132 as of December 4, 2018.

 

 

 

CANNAWAKE CORPORATION

INDEX

 

	Page
Part I.  Financial Information	1
Item 1. Financial Statements.	1
Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2018.	2
Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017 (Unaudited)	3
Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 (Unaudited)	4
Notes to Unaudited Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	17
Item 4. Controls and Procedures.	17
Part II. Other Information	18
Item 6.  Exhibits.	19
Signatures	20

 

  

PART I. FINANCIAL INFORMATION

  

Item 1. Financial Statements

 

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all material adjustments that are necessary for a fair presentation for the periods presented have been reflected.

  

The results of operations for the three and nine months ended September 30, 2018 and 2017 are not necessarily indicative of the results for the entire fiscal year or for any other period.

 

 

CANNAWAKE CORPORATION

(FORMERLY DELTA INTERNATIONAL OIL & GAS INC)

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		September 30,				December 31,
		2018				2017
ASSETS
Current Assets:
Cash		$	97,043			$	14,886
Line of credit - related party, net			425,357
Total current assets			522,400				14,886
Vehicles, net			25,639				-
Land and Improvements, net			5,743,879				-
TOTAL ASSETS		$	6,291,918			$	14,886
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	80,165			$	3,543
Accrued expenses			7,188				-
Current portion of Mortgage Loans Payable			562,476				-
Mortgage Loans Payable (Related Party)			1,043,563
Accrued interest on Mortgage Loans Payable			32,451				-
Accrued interest on Mortgage Loans Payable (Related Party)			26,089				-
Notes payable			15,000				25
Deposit toward T&M Sale			500,000				-
Total current liabilities			2,266,932				3,568
Convertible Notes Payable, net of discount			1,044,500				-
Mortgage Loans Payable, net of current portion			2,033,633				-
Total liabilities			5,345,065				3,568
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock $0.0001 par value-authorized, not designated 9,840,000 shares; no shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
Preferred stock Series A $0.0001 par value-authorized 160,000 shares; 160,000 shares and no shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively			16				-
Common stock $0.0001 par value - authorized 250,000,000 shares; 43,915,132 shares and 34,838,826 shares, issued and outstanding at September 30, 2018 and December 31, 2017, respectively			4,391				-
Additional paid-in capital			2,040,634				-
Retained Earnings (Accumulated Deficit)			(1,098,188	)			11,318
Total stockholders’ equity			946,853				11,318
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	6,291,918			$	14,886

 

The accompanying notes are an integral part of the unaudited consolidated financial statements

 

 

CANNAWAKE CORPORATION

(FORMERLY DELTA INTERNATIONAL OIL & GAS INC)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

		Three months ended September 30,				From September 6 (inception) through September 30,				Nine months ended September 30,				From September 6 (inception) through September 30,
		2018				2017				2018				2017
Sales		$	-			$	-			$	-			$	-
Costs and Expenses:
General and administrative			335,831				-				977,265				-
Impairment loss on oil and gas properties						$	-				44,703			$	-
Loss from operations		$	(335,831	)		$	-			$	(1,021,968	)		$	-
Other Income (Expense):
Other Income			-								6,658
Interest Expense			(46,996	)							(94,196	)
Other Income (Expense)			(46,996	)			-				(87,538	)			-
Loss before income taxes			(382,827	)			-				(1,109,506	)			-
Provision (benefit) for income taxes			-				-				-				-
NET LOSS		$	(382,827	)		$	-			$	(1,109,506	)		$	-
Dividends on Series A Convertible Preferred Stock		$	(47,778	)		$	-			$	(95,556	)		$	-
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS		$	(430,605	)		$	-			$	(1,205,062	)		$	-
Basic and Diluted Net Loss per common share		$	(0.01	)		$	-			$	(0.05	)		$	-
Weighted average common shares - Basic and Diluted			43,114,842				-				25,515,473				-

 

The accompanying notes are an integral part of the unaudited consolidated financial statements

 

 

CANNAWAKE CORPORATION

(FORMERLY DELTA INTERNATIONAL OIL & GAS INC)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Nine Months Ended September 30, 2018				From September 6 (inception) through September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss			(1,109,506	)			-
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense			34,948				-
Provision for bad debts			275,490				-
Impairment loss on oil and gas properties			44,703				-
Accounts payable			218,456				-
Accrued expense			(19,242	)			-
Accrued interest			45,496				-
Amortization of debt discount			1,500				-
CASH USED IN OPERATING ACTIVITIES			(508,155	)			-
CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from reverse merger			1,292				-
Advances to related party			(751,713	)			-
CASH USED IN INVESTING ACTIVITIES			(750,421	)			-
CASH FLOWS FROM FINANCING ACTIVITIES
Cash exercise of warrants			3,640				-
Cash sales of common stock			315,000
Mortgage principal repayments			(136,307	)
Proceeds from convertible debt			1,068,000				-
Payment on convertible debt			(25,000	)			-
Proceeds from line of credit - related party			115,400				-
CASH PROVIDED BY FINANCING ACTIVITIES			1,340,733				-
NET INCREASE IN CASH			82,157				-
CASH AT BEGINNING OF YEAR			14,886				-
CASH AT YEAR END			97,043				-
Supplemental disclosure of cash flow information:
Cash paid for interest		$	34,155			$	-
Cash paid for income taxes		$	-			$	-
Non Cash investing and financing activities
Recapitalization Adjustment			303,599				-
Transfer of properties from American Green to Nipton			5,775,979				-
Forgiveness of mortgage loan treated as a capital contribution from American Green			2,000,000				-
Expenses paid directly by line of credit - related party			182,469				-
Asset acquired paid directly by line of credit - related party			28,487				-
Discount due to BCF			30,000				-
Cashless Warrant Exercises			3				-

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

CANNAWAKE CORPORATION

(FORMERLY DELTA INTERNATIONAL OIL & GAS INC.)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

  

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 

 

The accompanying unaudited interim consolidated financial statements of CannAwake Corporation (formerly Delta International Oil & Gas Inc.) (“we”, “our”, “CannAwake” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

 

On September 12, 2017 American Green, Inc. (“American Green”) entered into a Purchase Agreement with Roxanne Lang as Trustee for the Freeman-Lang Revocable Trust, et al, Roxanne M. Lang, individually, N.T.P., Inc., and Provident Corporation to purchase all of the real estate and buildings (together, with the associated land and fixtures) comprising the unincorporated township of Nipton, California for $5,012,888. American Green subsequently made improvements to the Nipton Properties.

 

On March 6, 2018 American Green entered into a Purchase Agreement with Nipton, Inc. (“Nipton”), its wholly owned subsidiary, to purchase all of the real estate and buildings (together, with the associated land and fixtures) comprising the unincorporated township of Nipton, California in consideration for the assumption of the first and second deeds of trust and the acceptance of the third and fourth deeds of trust.

 

On March 14, 2018 the Company entered into a Securities Exchange Agreement with American Green and its wholly owned subsidiary Nipton. On April 5, 2018, CannAwake and American Green closed the Nipton acquisition. At the closing of the Agreement, CannAwake issued 160,000 shares of its Series A Convertible Preferred Stock, convertible into 160,000,000 shares of its common stock, to American Green, the former stockholder of Nipton, in exchange for all the outstanding shares of capital stock of Nipton. The shares accrue dividends at the rate of five percent per annum on the stated value of $25 per share. Following the closing of the acquisition, Nipton. became a wholly-owned subsidiary of the Company, with American Green, the former stockholder of Nipton, owning a controlling interest of approximately 82% of the outstanding shares of common stock of CannAwake. The transaction was accounted for as a reverse merger with Nipton as the accounting acquirer. The net liabilities of CannAwake as of March 31, 2018, as set forth below, were assumed by Nipton as a result of the reverse merger.

 

Description		Amount
Cash		$	1,292
Other Assets			320,193
Accounts Payable			(40,610	)
Other Current Liabilities			(554,474	)
Long Term Liabilities			(30,000	)
Total		$	(303,599	)

 

On June 13, 2018, our Board approved changing the Company’s name to CannAwake Corporation, and authorized the filing by the Company in Delaware on June 13, 2018, of a Certificate of Amendment to the Company’s Certificate of Incorporation providing for changing the name of the Company from Delta International Oil & Gas Inc. (“Delta”) to CannAwake Corporation. The change of the Company’s name became effective August 9, 2018 following approval by the Financial Industry Regulatory Authority as effective for trading purposes in the OTC markets. The change of the Company’s name required only Board of Directors approval under the Delaware General Corporation Law; stockholder approval of the Company’s stockholders was not required. Our new trading symbol is “CANX” following the name change.

 

 

Principles of Consolidation

 

The Company’s financial statements include the accounts of all majority-owned subsidiaries where its ownership is more than 50 percent of the common stock.  All material intercompany transactions and balances have been eliminated.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with accepted accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.  On an ongoing basis, the Company evaluates its estimates including, but not limited to, those related to such items as impairments of assets, income tax exposures, accruals, depreciable/useful lives, allowance for doubtful accounts, and valuation allowances.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results could differ from those estimates.

 

Revenue Recognition

 

In May, 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605) and requires entities to recognize revenues when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018. The adoption of Topic 606 did not have a material impact to the Company’s financial statements.

 

Impairment of long lived assets

 

Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. If, impairment exists, the resulting write-down would be the difference between fair market value of the long-lived asset and the related net book value.

 

Property and Equipment

 

Property and equipment are stated at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Property and equipment at September 30, 2018 consist of:

 

Property & Equipment		Book Value				Accumulated Depreciation				Net Book Value				Estimated Useful Life (years)
Land		$	3,850,000			$	-			$	3,850,000			N/A
Buildings			1,050,000				(17,500	)			1,032,500			30
Other Improvements			875,979				(14,600	)			861,379			30
Vehicles			28,487				(2,848	)			25,639			5
Total		$	5,804,466			$	(34,948	)		$	5,769,518

 

Income Taxes

 

The Company accounts for income taxes in accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. The Company establishes a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.

 

 

Uncertain Tax Positions

 

The Company evaluates uncertain tax positions pursuant to ASC Topic 740-10-25 “Accounting for Uncertainty in Income Taxes,” which allows companies to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

 

At September 30, 2018 and December 31, 2017, the Company has approximately $0 and $0, respectively, of liabilities for uncertain tax positions. Interpretation of taxation rules relating to investments in Argentina concessions may give rise to uncertain positions.  In connection with the uncertain tax position, there was no interest or penalties recorded.

 

The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact operating results.

 

The number of years with open tax audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable states).

 

Earnings (Loss) Per Share

 

Basic earnings per share are computed by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed by dividing net earnings by the weighted average number of common share and potential common share outstanding during the period. Potential common shares consist of outstanding common stock purchase warrants, convertible notes, and convertible preferred stock. For the nine months ended September 30, 2018, there were 171,041,543 potentially dilutive common shares outstanding. These potentially dilutive common shares are anti-dilutive during the nine months ended September 30, 2018, due to our operating losses, and therefore, have not been included in the calculation of earnings per share.

 

Stock-based Compensation 

 

The Company accounts for non-employee share-based awards based upon ASC 505-50, “Equity-Based Payments to Non-Employees.”  ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete.  Generally, our awards do not entail performance commitments.  When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date.  When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.

 

We account for stock-based compensation to employees in accordance with FASB ASC 718 which requires companies to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

 

 

Fair Value of Financial Measurements

 

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:

 

The Company utilizes the accounting guidance for fair value measurements and discloses for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis during the reporting period.

 

The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability.  ASC 820, “Fair Value Measurements and Disclosures”, establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers are defined as follows:  

 

Level 1 - Observable inputs such as quoted market prices in active markets.

 

Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable.

 

Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

As of September 30, 2018 and December 31, 2017, there were no financial assets or liabilities that require to be fair valued on a recurring basis.

 

Recent Accounting Pronouncements

 

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company has chosen to adopt ASU 2017-11 as of April 1, 2018.

 

 

2. GOING CONCERN

 

Financial Condition

 

The Company’s financial statements for the nine months ended September 30, 2018 have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company has incurred net losses and as of September 30, 2018 has an accumulated deficit of $1,098,188 which raises substantial doubt about the Company’s ability to continue as a going concern. 

 

Management Plans to Continue as a Going Concern

   

CannAwake closed a reverse merger in April 2018. In the nine months ended September 30, 2018, CannAwake received $1,068,000 from investors via convertible notes. The Company’s continued existence is dependent upon management’s ability to develop profitable operations and its ability to obtain additional funding sources to provide capital and other resources for the further development of the Company’s business. The Company’s financial statements as of September 30, 2018 do not include any adjustments that might result from the outcome of this uncertainty.

  

3. DEPOSIT TOWARD T&M SALE

 

On January 3, 2017, Delta received the acceptance of its offer for the sale of SAHF’s interest in the Tartagal and Morillo (“T&M”) concessions from High Luck Group (“High Luck”). The consideration for 18% of Tartagal and Morillo will be $2,000,000 upon the transfer of the concessions, and 3% of gross revenues from the production of oil or gas of either concession up to an additional $2,000,000. Once the transfer occurs, the companies will sign a mutual release. The release of funds is also contingent on other external factors detailed on a Consulting Agreement signed between a third party (Consultant”) and High Luck. After speaking with the Consultant to High Luck on various occasions, Delta has taken the position that most of the Consultant’s duties have been fulfilled and the ones that have not require High Luck to present paperwork to the province and fulfill its commitments to the Province. On February 10, 2017, High Luck Group deposited the initial $2,000,000 in an Escrow account. On April 4, 2017, the Escrow Agent released $500,000 to Delta as a deposit towards the initial $2,000,000 payment which is reported as a “Deposit toward T&M sale” in the consolidated balance sheet as of September 30, 2018 pending closing of the sale. Management does not expect to collect the balance of the purchase price. This deposit was assumed by Nipton as part of the reverse merger.

 

4. NOTES RECEIVABLE

 

On May 25, 2017, Delta loaned $250,000 to SCO for the development of a gas field in northern California. SCO is using the funds provided to work over 2 wells and puncture in different pay zones, expecting close to virgin pressures.

 

The note carries a 9% interest, an 18-month maturity, and has an equity kicker of 3.5% in SCO which we determined to have a value of zero. The note will also be prepaid from 25% of the production in the new wells.

 

On July 26, 2017, Delta made a $50,000 loan to Landmaster for a term of 18 months and annual interest of 9% for the re-entry of two oil wells in Haskell County, Texas. The Company was also granted a 3.75% carried interest in the two wells with the option to participate at the same interest in future wells on the property. The 3.75% carried interest (3% NRI) in the two wells in the Kieke Lease with a fair value of $44,703 was recorded as an oil and gas property and a discount to the loan made to Landmaster and amortized over the term of the note.

 

During the nine months ended September 30, 2018 the Company recorded a provision for bad debts of $275,490 related to the loans to SCO & Landmaster, and an impairment loss of $44,703 related to the Kieke Lease.

 

 

5. MORTGAGE NOTES PAYABLE

 

On September 12, 2017 American Green entered into a Purchase Agreement with Roxanne Lang as Trustee for the Freeman-Lang Revocable Trust, et al, Roxanne M. Lang, individually, N.T.P., Inc., and Provident Corporation to purchase all of the real estate and buildings (together, with the associated land and fixtures) comprising the unincorporated township of Nipton, California for $5,012,888. In connection with the acquisition, American Green paid $2,012,888, in cash and issued two promissory notes to Freeman-Lang Revocable Trust and Provident Corporation for $2,630,000 and $370,000, respectively. American Green subsequently made improvements to the Nipton Properties.

 

On March 6, 2018 American Green entered into a Purchase Agreement with Nipton, its wholly owned subsidiary, to purchase all of the real estate and buildings (together, with the associated land and fixtures) comprising the unincorporated township of Nipton, California in consideration for the assumption of the first and second deeds of trust and the acceptance of the third and fourth deeds of trust.

 

On March 14, 2018 the Company entered into a Securities Exchange Agreement with American Green and its wholly owned subsidiary Nipton. The Agreement was consummated on April 5, 2018 whereby the Company acquired 100% of the issued and outstanding common shares of Nipton. The Company acquired all of the assets comprised of land and improvements and assumed $5,775,979 of mortgage notes payable secured by four recorded deeds of trust within Nipton. At the consummation of the Securities Exchange Agreement, the Third Deed of Trust was canceled, and the Fourth Deed of Trust was created.

 

In connection with the acquisition, Nipton recognized the carrying value of the assets of $5,775,979 and assumed mortgage notes totaling $5,775,979, as follows:

 

Note		Amount
First Deed of Trust		$	2,395,418
Second Deed of Trust			336,998
Third Deed of Trust (Related Party - American Green)			2,000,000
Fourth Deed of Trust (Related Party - American Green)			1,043,563
Total		$	5,775,979

 

As disclosed above, the $2,000,000 related to the third deed of trust was cancelled upon closing of the reverse merger and was recognized as a capital contribution from American Green.

 

Mortgage notes payable at September 30, 2018 consist of the following:

 

Description		Current Principal Balance at September 30, 2018				Long Term Principal Balance at September 30, 2018				Accrued Interest				Total Balance at September 30, 2018
First Deed of Trust		$	493,104			$	1,782,818			$	28,449			$	2,304,371
Second Deed of Trust			69,372				250,815				4,002				324,189
Subtotal (Third Party)			562,476				2,033,633				32,451				2,628,560
Fourth Deed of Trust (Related Party – American Green)			1,043,563				-				26,089				1,069,652
Total		$	1,606,039			$	2,033,633			$	58,540			$	3,698,212

 

The First Deed of Trust accrues annual interest at 5% and requires quarterly payments of principal and interest of $149,438 until its maturity on October 1, 2022.

 

 

The Second Deed of Trust accrues annual interest at 5% and requires quarterly payments of principal and interest of $21,023 until its maturity on October 1, 2022.

 

The Fourth Deed of Trust accrues interest at 5% annually and matures on April 1, 2019. It requires quarterly interest payments until its maturity date.

 

All Trust Deeds are secured by the land and improvements at Nipton, California as shown on the consolidated balance sheet with a net book value of $5,759,929.

 

The following table schedules the principal payments on the mortgage notes payable for the next five years as of September 30, 2018

 

Year		Amount
2018		$	138,010
2019			1,613,070
2020			598,521
2021			629,013
2022			661,058
Total		$	3,639,672

 

6. LINE OF CREDIT – RELATED PARTY

 

On March 14, 2018, the Company entered into a non-interest bearing $2,000,000 Revolving Line of Credit Agreement with American Green, Inc. The Line of Credit matures in one year with the Company retaining an option to extend the maturity six months, as long as it is not in default.

 

On November 6, 2018 and made effective as of September 26, 2018, the Company entered into a non-interest bearing $2,000,000 Revolving Line of Credit Agreement with American Green, Inc. The Line of Credit matures in two years with American Green, Inc. retaining an option to extend the maturity six months, as long as it is not in default.

 

During the quarter ended June 30, 2018, American Green advanced $323,007 to the Company and Nipton. Of this amount, $179,120 was in the form of expenses paid by American Green on behalf of the Company, $115,400 was received in cash, and $28,487 was in the form of an asset acquired for the Company paid directly by American Green.

 

During the quarter ended September 30, 2018, American Green advanced $3,349 to the Company and Nipton. Of this amount, $3,349 was in the form of expenses paid by American Green on behalf of the Company.

 

During the quarter ended September 30, 2018, the Company advanced $751,713 to American Green. Of this amount, $143,906 was in the form of expenses paid by the Company on behalf of American Green and $607,807 was paid in cash. Per the Agreement, there is a right of offset and as such the amount shown in the consolidated balance sheet of $425,357 is net of advances made by American Green to the Company and Nipton.

 

7. CONVERTIBLE NOTES

 

At March 31, 2018 Delta had $30,000 in outstanding convertible notes to two investors for $15,000 each. Each note has the same terms which are subject to annual interest of 6% maturing on March 20, 2021 and are convertible to common shares any time after 180 days from the issuance date at a price of $.02 per share. The notes include an antidilution provision when certain conditions are met, and each investor can’t convert into a certain number of common shares that would result in them owning more than 4.9% of the outstanding shares of the Company. These convertible notes were assumed by Nipton as part of the reverse merger. The notes became convertible on August 13, 2018 and therefore the Company considered the Beneficial Conversion Feature and recorded a total of $30,000 debt discount and amortized $1,500 during the nine months ended September 30, 2018.

 

 

During the quarter ended June 30, 2018, the Company issued notes to certain investors totaling to $165,000. The notes bear an annual interest rate of 6% maturing on June 26, 2021 and are convertible to common shares any time after 180 days from the issuance date at a price of $.02 per share. The notes include an antidilution provision when certain conditions are met, and the investor can’t convert into a certain number of common shares that would result in owning more than 4.9% of the outstanding shares of the Company.

 

During the quarter ended September 30, 2018, the Company issued notes to certain investors totaling to $903,000. The notes bear an annual interest rate of 6% maturing in 2021 and are convertible to common shares any time after 180 days from the issuance date at a price of $.02 per share. The notes include an antidilution provision when certain conditions are met, and the investor can’t convert into a certain number of common shares that would result in owning more than 4.9% of the outstanding shares of the Company. During the period ended September 30, 2018 the Company made payments of $25,000 towards the note balance.

 

As a result of the Company’s early adoption of ASU 2017-11, the anti-dilution provisions in the notes did not qualify for derivative accounting.

 

8. WARRANTS

 

Below is a table with a summary of warrant activity for the nine months ended September 30, 2018.

 

During the quarter ended June 30, 2018, the Company issued 52,000 common shares and received $3,640 as part of a cash basis exercise of warrants.

 

During the quarter ended September 30, 2018, the Company issued 24,306 common shares as part of a cashless exercise of 106,583 warrants.

 

		Warrants				Weighted Average Exercise Price				Weighted Average Contractual Term (years)				Aggregated Intrinsic Value
Outstanding, December 31, 2017			9,700,126			$	0.20				0.84			$	-
Granted			-				-				-				-
Exercised			(158,583	)			0.07				-				-
Outstanding, September 30, 2018			9,541,543			$	0.20				0.60			$	-
Vested, September 30, 2018			9,541,543			$	0.20				0.60			$	-

  

9. NOTES PAYABLE

 

Notes payable at September 30, 2018 and December 31, 2017 consist of:

 

		September 30, 2018				December 31, 2017
Note payable to third party, interest at 6%, due August 10, 2011			15,000				-
Total		$	15,000			$	-

 

The note is currently past due and is unsecured.

 

 

10. STOCKHOLDERS’ EQUITY

 

In April 2018, CannAwake designated 160,000 shares of Series A preferred stock with a par value of $0.0001 per share. Each share is convertible 1,000 to 1 into common stock, carries a dividend rate of 5% per annum on the face value, and is secured by Nipton’s properties. During the quarter ended June 30, 2018 the Company recognized $47,778 in dividends. During the quarter ended September 30, 2018 the Company recognized $47,778 in dividends.

 

The Company recognized a capital contribution of $2,000,000 in connection with the transfer of assets from American Green in March, 2018 and subsequent cancellation of the Third Deed of Trust for the same amount resulting from the reverse merger of the Company and Nipton. See Notes 1 and 5.

 

During the nine months ended September 30, 2018, the Company issued 9 million common shares at a price of $0.035 per share for a total cash consideration of $315,000.

 

During the quarter ended September 30, 2018, the Company issued 24,306 common shares as part of a cashless exercise of 106,583 warrants.

 

11. SUBSEQUENT EVENTS

  

Subsequent to September 30, 2018, the Company issued notes to certain investors totaling to $496,000. The notes bear an annual interest rate of 6% maturing in 2021 and are convertible to common shares any time after 180 days from the issuance date at a price of $0.02 per share. The notes include an antidilution provision when certain conditions are met, and the investor can’t convert into a certain number of common shares that would result in owning more than 4.9% of the outstanding shares of the Company.

 

 

ITEM 2.

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

 

The following discussion of our consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto and the other financial information included elsewhere in this report.

 

Certain statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

 

GENERAL

 

CannAwake Corporation (“CannAwake” or “the Company”) was incorporated in Delaware on November 17, 1999, under the name Delta Mutual, Inc. Our name was changed from Delta Mutual Inc. to Delta International Oil & Gas Inc. on October 29, 2013, and to our present name effective August 9, 2018.

 

In 2003, we established business operations focused on providing environmental and construction technologies and services. Our operations in the Far East (Indonesia) and our construction operations in Puerto Rico were discontinued in 2008.

 

Effective March 4, 2008, we acquired 100% of the issued and outstanding membership interests in the parent of South American Hedge Fund LLC, a Delaware limited liability company (sometimes herein referred to as “SAHF”). For accounting purposes, the transaction was treated as a recapitalization of the Company, as of March 4, 2008, with the parent of SAHF as the acquirer. We have disposed of SAHF in September 2017 and no longer maintain a branch office in Argentina. We have made oil and gas investments in the United States, in addition to an investment in a technology company.

 

On March 19, 2018, the Company entered into a Purchase Agreement, dated as of March 14, 2018 (the “Agreement”) with American Green, Inc., a Wyoming corporation (“American Green”), and Nipton, Inc., a California corporation, a wholly-owned subsidiary of American Green. Pursuant to the Agreement, the Company agreed to acquire 100% of the issued and outstanding equity securities of Nipton, Inc. from American Green (the “Nipton Acquisition”) in exchange for shares of convertible preferred stock, convertible into 160,000,000 shares of the Company’s Common Stock, par value $0.0001 per share.

 

On April 5, 2018 the Company and American Green closed the Nipton Acquisition. At the closing under the Agreement, the Company assumed $3,775,979 of debt in Nipton and issued 160,000 shares of its Series A Convertible Preferred Stock, convertible into 160,000,000 shares of its common stock, to American Green, the former stockholder of Nipton, Inc., in exchange for all the outstanding shares of capital stock of Nipton, Inc. The assets of Nipton Inc are comprised of all of the real estate properties included in the unincorporated township of Nipton, California (“Nipton”). Following the closing of the Nipton Acquisition, Nipton, Inc. became a wholly-owned subsidiary of the Company, with American Green, the former stockholder of Nipton, Inc., owning a controlling interest of approximately 82% of the outstanding shares of common stock of the Company.

 

On June 13, 2018, our Board approved changing the Company’s name to CannAwake Corporation and authorized the filing by the Company in Delaware on June 13, 2018, of a Certificate of Amendment to the Company’s Certificate of Incorporation providing for changing the name of the Company from Delta International Oil & Gas Inc. to CannAwake Corporation. The change of the Company’s name became effective August 9, 2018 following approval by the Financial Industry Regulatory Authority as effective for trading purposes in the OTC markets. Our new trading symbol is “CANX” following the name change.

 

 

Overview

 

As a result of the review by our management team and our board of directors of oil and gas exploration and production operations in Argentina and the United States, the Company has shifted its attention away from energy investments, and into real estate development in the western United States. In 2017, the Company disposed of its Argentine oil and gas investments and is currently in the process of disposing its US-based energy assets and liabilities.

 

The US investments include: a $250,000 Note to a gas exploration company in California, $50,000 Note to an oil production company in Texas, a 70% NRI in an oil lease, and 1,343,750 shares in a Technology company in its research and development phase. Most investments are believed to be safe, but they are expected to take longer than one year to return the capital investment. The investments are being disposed of to put the shareholders in a better position to receive higher returns from the real estate development projects.

 

Our Oil and Gas Investments

 

As of September 30, 2018, the Company retained several US-based oil and gas investments.

 

We hold a $250,000 note receivable from SCO and a 3.75% interest in SCO- a gas exploration company in California. SCO holds the right to rework and explore the Petersen estate which has 31 wells. SCO has drilled 2 workover wells in the Petersen ranch in 2017-2018. One of the wells was successful and it was producing around 450 mcfd as of late March 2018. The SCO note receivable was fully impaired as of September 30, 2018 and has a carrying value of $0.

 

We also hold a $50,000 note receivable from Landmaster- an oil exploration and production company in Texas. The note receivable comes with a 3% NRI in the Kieke Lease. Landmaster holds the majority interest in the Swenson, Kieke and Cannon leases in Texas. Landmaster used the $50,000 to drill two re-entry wells in the Kieke lease. The wells have produced between 12 and 15 bopd, but are currently offline due to tank repairs that are needed. The Landmaster note receivable and the Kieke Lease NRI were both fully impaired as of September 30, 2018 and have carrying values of $0.

 

We also hold a 70% NRI interest in the KEC lease in Texas. Crestmont is the current operator in the lease, but that is expected to switch to Neptune Industries, LLC in the fourth quarter of 2018. This investment has been impaired since the Company does not have the capital sufficient to drill the needed workover.

 

RESULTS OF OPERATIONS

 

THREE MONTHS ENDED SEPTEMBER 30, 2018 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2017

 

During the three months ended September 30, 2018, we incurred a net loss of approximately $382,827 compared to a net loss of approximately $0 for the three months ended September 30, 2017. The net loss for the three months ended September 30, 2018 compared to the net loss for three months ended September 30, 2017 is higher due to the fact that Nipton was not operating during the three months ended September 30, 2017.

 

NINE MONTHS ENDED SEPTEMBER 30, 2018 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2017

 

During the nine months ended September 30, 2018, we incurred a net loss of approximately $1,109,506 compared to a net loss of approximately $0 for the nine months ended September 30, 2017. Nipton, Inc was incorporated on September 6, 2017, thus there are no operations for the nine months ended September 30, 2017.

 

 

LIQUIDITY AND CAPITAL REQUIREMENTS

 

At September 30, 2018, we had a working capital deficit of $1,744,532 compared with a working capital surplus of $11,318 at December 31, 2017.

 

At September 30, 2018, we had total assets of $6,291,918 compared to total assets of $14,886 at December 31, 2017. Net cash used in operating activities in the nine months ended September 30, 2018 was $508,155, as compared with net cash used in operating activities of $0 in 2017; net cash used in investing activities was $750,421 in 2018 and net cash provided was $0 in 2017; and net cash generated from financing activities was $1,340,733 in 2018 and $0 in 2017.

 

Estimated 2018 Capital Requirements

 

The purchase of the town of Nipton, which we plan to develop so that it offers a variety of commercial and recreational attractions including: cannabidiol (CBD) and mineral baths, retail outposts, artists-in-residence programs, culinary events, and bed-and-breakfasts. Development of Nipton in 2018 will require in excess of $5,000,000 of additional capital.

 

USE OF ESTIMATES

 

The preparation of the financial statements requires the Company to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to oil and gas properties, intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in these financial statements. Certain amounts for prior periods have been reclassified to conform to the current presentation. 

 

Critical Accounting Policies and Estimates

 

The Securities and Exchange Commission recently issued “Financial Reporting Release No. 60 Cautionary Advice About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosures, discussion and commentary on their accounting policies considered most critical to its business and financial reporting requirements. FRR 60 considers an accounting policy to be critical if it is important to the Company’s financial condition and results of operations, and requires significant judgment and estimates on the part of management in the application of the policy.

 

The Company assesses potential impairment of its long-lived assets under the guidance of ASC 360 “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Company must continually determine if a permanent impairment of its long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment.

  

The Company accounts for stock-based compensation to non-employees under ASC 718, “Compensation-Stock Compensation” (“ASC 718”).  The compensation cost of the awards is based on the grant date fair-value of these awards and recognized over the requisite service period, which is typically the vesting period.  The Company uses the Black-Scholes Option Pricing Model to determine the fair-value of stock options issued for compensation.

 

The Company accounts for non-employee share-based awards based upon ASC 505-50, “Equity-Based Payments to Non-Employees.”  ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete.  Generally, our awards do not entail performance commitments.  When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date.  When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.

 

 

OFF BALANCE SHEET ARRANGEMENTS

 

The Company has performed an analysis of the loan balance to SCO under ASC 810-10, and has determined that the loan represents a variable interest in SCO. SCO is a variable interest entity (“VIE”) and depends on the Company, as well as additional parties, for continuing financial support in order to maintain operations. However, the Company cannot make key operating decisions considered to be most significant to the VIE, and is therefore not considered to be the primary beneficiary. Our maximum exposure to loss approximates to the carrying value of due from the SCO loan balance on the Consolidated Balance Sheet at September 30, 2018. 

 

The Company has performed an analysis of the loan balance to Landmaster under ASC 810-10, and has determined that Landmaster is not a variable interest entity (“VIE”) and does not depend on the Company, as well as additional parties, for continuing financial support in order to maintain operations. Our maximum exposure to loss approximates to the carrying value of the due from the Landmaster loan balance on the Consolidated Balance Sheet at September 30, 2018.

 

Other than noted above, we have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

 

Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable to smaller reporting companies.

 

Item 4.   CONTROLS AND PROCEDURES

 

Evaluation of Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive and financial officer, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost- benefit relationship of possible controls and procedures.

  

As of September 30, 2018, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.

 

Changes in Internal Controls

 

There have been no changes in the Company’s internal controls over financial reporting that occurred during the Company’s last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Limitations on the Effectiveness of Controls

 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

   

 

PART II—OTHER INFORMATION

 

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

 

Date		Title and Amount (1) (2)		Purchaser		Principal Underwriter		Total Offering Price/ Underwriting Discounts
September 5, 2018		Issuance of 76,306 shares of common stock upon exercise of a common stock purchase warrant.		Private investor.		NA			$ 0.07 per share/NA
September 24, 2018		Issuance of 9,000,000 shares of common stock.		Private investor.		NA			$0.035 per share/NA
June 26, 2018		6% Convertible Note in the principal amount of $115,000 due three years from date of issuance.		Private Investor		NA		$	115,000/NA
June 26, 2018		6% Convertible Note in the principal amount of $50,000 due three years from date of issuance.		Private Investor		NA		$	50,000/NA
July 12, 2018		6% Convertible Note in the principal amount of $25,000 due three years from date of issuance.		Private investor.		NA		$	25,000/NA
July 12, 2018		6% Convertible Note in the principal amount of $25,000 due three years from date of issuance.		Private Investor		NA		$	25,000/NA
July 31, 2018		6% Convertible Note in the principal amount of $50,000 due three years from date of issuance.		Private Investor		NA		$	50,000/NA
July 31, 2018		$6% Convertible Note in the principal amount of $50,000 due three years from date of issuance.		Private Investor		NA		$	50,000
August 14, 2018		6% Convertible Note in the principal amount of $15,000 due three years from date of issuance.		Private Investor		NA		$	15,000
August 14, 2018		6% Convertible Note in the principal amount of $15,000 due three years from date of issuance.		Private Investor		NA		$	30,000
August 15, 2018		6% Convertible Note in the principal amount of $83,000 due three years from date of issuance.		Private Investor		NA		$	83,000
August 23, 2018		6% Convertible Note in the principal amount of $20,000 due three years from date of issuance.		Private Investor		NA		$	20,000
August 28, 2018		6% Convertible Note in the principal amount of $20,000 due three years from date of issuance.		Private Investor		NA		$	20,000
September 4, 2018		6% Convertible Note in the principal amount of $150,000 due three years from date of issuance.		Private Investor		NA		$	150,000
September 13, 2018		6% Convertible Note in the principal amount of $50,000 due three years from date of issuance.		Private Investor		NA		$	50,000
September 14, 2018		6% Convertible Note in the principal amount of $130,000 due three years from date of issuance.		Private Investor		NA		$	130,000
September 20, 2018		6% Convertible Note in the principal amount of $20,000 due three years from date of issuance.		Private Investor		NA		$	20,000
September 25, 2018		6% Convertible Note in the principal amount of $20,000 due three years from the date of issuance.		Private Investor		NA		$	20,000
September 28, 2018		6% Convertible Note in the principal amount of $165,000 due three years from date of issuance.		Private Investor		NA		$	165,000
October 9, 2018		6% Convertible Note in the principal amount of $5,000 due three years from date of issuance.		Private Investor		NA		$	5,000
October 15, 2018		6% Convertible Note in the principal amount of $80,000 due three years from date of issuance.		Private Investor		NA		$	80,000
October 22, 2018		6% Convertible Note in the principal amount of $57,000 due three years from date of issuance.		Private Investor		NA		$	57,000
October 31, 2018		6% Convertible Note in the principal amount of $50,000 due three years from date of issuance.		Private Investor		NA		$	50,000
November 5, 2018		6% Convertible Note in the principal amount of $37,000 due three years from date of issuance.		Private Investor		NA		$	37,000
November 7, 2018		6% Convertible Note in the principal amount of $184,000 due three years from date of issuance.		Private Investor		NA		$	184,000
November 14, 2018		6% Convertible Note in the principal amount of $48,000 due three years from date of issuance.		Private Investor		NA		$	48,000
November 15, 2018		6% Convertible Note in the principal amount of $35,000 due three years from date of issuance.		Private Investor		NA		$	35,000

 

(1)

All convertible notes shown in the above table are convertible at $0.02 per share. With the exception of the principal amount, date of the note and identity of the investor, all notes are in the same format with non-substantive variations in several cases.

(2)

The issuances to lenders and investors are viewed by the Company as exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), alternatively, as transactions either not involving any public offering, or as exempt under the provisions of Regulation D or Regulation S promulgated by the SEC under the Securities Act.

 

ITEM 6.  EXHIBITS.

 

10.68		Convertible Note, dated June 26, 2018, issued to Libra PJI, LLC 1273.*
10.69		Convertible Note, dated September 4, 2018, issued to 10th Planet Partners Limited Partners.*
10.70		Convertible Note, dated September 14, 2018, issued to Sunrise Communications, LLC.*
10.71		Convertible Note, dated November 7, 2018, issued to Sunrise Communications, LLC.*
31		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

 

* Filed herewith

** Furnished herewith

 

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.

 

SEC Ref. No.		Title of Document
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

 

The XBRL related information in Exhibits 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” or a part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections. 

 

 

SIGNATURES

 

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

 

	CANNAWAKE CORPORATION
Dated: December 6, 2018	BY:	/s/ Scott Stoegbauer
		Scott Stoegbauer
		President and Chief Executive Officer, Principal Executive Officer and Principal Financial Officer

 

 

EXHIBIT INDEX

 

10.68		Convertible Note, dated June 26, 2018, issued to Libra PJI, LLC 1273.
10.69		Convertible Note, dated September 4, 2018, issued to 10th Planet Partners Limited Partners.
10.70		Convertible Note, dated September 14, 2018, issued to Sunrise Communications, LLC.
10.71		Convertible Note, dated November 7, 2018, issued to Sunrise Communications, LLC.
31		Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

SEC Ref. No.		Title of Document
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