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.
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.