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Form 10-Q Cannonau Corp. For: Jun 30

August 11, 2022 9:41 AM EDT

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

Form 10-Q

 

Mark One

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

 

For the quarterly period ended June 30, 2022

 

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

 

For the transition period from ______ to _______

 

Commission File No. 333-145876

 

 

CANNONAU CORP.

(Exact name of registrant as specified in its charter)

 

Nevada   84-2870437
(State or other jurisdiction of incorporation or organization)   (IR.S. Employer Identification No.)
     
937 Old Seneca Turnpike Road    
Skaneateles, NY   13252-9318
(Address of principal executive offices)   (Zip Code)

315-558-3702 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 

 

Large accelerated filer

 

Accelerated filer

 

Non-accelerated Filer  (Do not check if a smaller reporting company)

 

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

At June 30, 2022, the number of shares of the Registrant’s common stock outstanding was 241,815,632

 
 

 

       
PART I      
Item 1 Financial Statements   4  
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations   14  
Item 3 Quantitative and Qualitative Disclosures About Market Risks   16  
Item 4 Controls and Procedures   16  
         
PART II        
Item 1 Legal Proceedings   16  
Item 1A. Risk Factors   16  
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds   16  
Item 3 Default Upon Senior Securities   16  
Item 4 Mine Safety Disclosure   16  
Item 5 Other Information   17  
Item 6 Exhibits   17  
         
SIGNATURES   17  

 

 

 

 

 

 

 

 
 

 

PART 1: FINANCIAL STATEMENTS 

 

 

CANNONAU CORP.

FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTER ENDED JUNE 30, 2022

 

C O N T E N T S

 

 

Balance Sheets as of June 30, 2022 (Unaudited) & December 31, 2021(Audited)     5
       
Statements of Operations for three- and six-months period ended June 30, 2022 & June 30, 2021 (Unaudited)     6
       
Statements of Stockholders' Equity (Deficit) for the period ended June 30, 2022 & June 30, 2021 (Unaudited)     7
       
Statements of Cash Flows for the period ended June 30, 2022 & June 30, 2021 (Unaudited)     8
       
Notes to the Unaudited Financial Statements for the period ended June 30, 2022     9

 

 

  

 

 

 

 
 

 

 

CANNONAU CORP.

Balance Sheets

 

       
    

June 30,

2022

(Unaudited)

    

December 31,

2021

(Audited)

 
ASSETS          
           
Current Assets          
Cash  $3,460   $143 
Accounts Receivable   5,032    5,032 
Inventory   3,492    3,582 
Total Current Assets   11,984    8,757 
Total Assets  $11,984   $8,757 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
Current liabilities          
Accounts payable and accrued liabilities   16,644    18,681 
Due to related party   294,698    242,362 
Total current liabilities   311,342    261,043 
           
Stockholders' deficit          
Preferred stock (Authorized) 10,000,000 at Par Value $.001, issued and outstanding nil as of June 30, 2022 and December 31, 2021.            
Common stock (Authorized) 290,000,000 at Par Value $.001 issued and outstanding 241,815,632 as of June 30, 2022 and December 31, 2021.   241,815    241,815 
Common stock issuable   27,000    27,000 
Additional paid in capital   3,181,117    3,181,117 
Accumulated deficit   (3,749,291)   (3,702,218)
Total stockholders' deficit   (299,358)   (252,286)
           
Total liabilities and stockholders' deficit  $11,984   $8,757 
           
           

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

 

5


 
 

 

 

CANNONAU CORP.

Statement of Operations (Unaudited)

 

             
             
   Three months ended June 30,  Six months ended June 30,
   2022  2021  2022  2021
             
Sales  $122   $5,582   $227   $5,612 
Cost of sales   (195)   (443)   (249)   (508)
Gross Profit   (73)   5,139    (22)   5,104 
                     
Operating expenses                    
General and administrative   3,331    9,877    5,911    24,941 
Compensation and benefits   13,460    5,654    26,066    21,120 
Professional fees   11,291    8,745    15,074    9,073 
Consultancy services                      
Total operating expenses   28,082    24,276    47,051    55,134 
                     
Loss from Operations  $(28,155)  $(19,137)  $(47,073)  $(50,030)
                     
Other expenses (income)                      
                     
Net loss  $(28,155)  $(19,137)  $(47,073)  $(50,030)
                     
Net loss per share (basic and diluted)   (0)   (0)   (0)   (0)
                     
Weighted average shares outstanding   241,815,632    241,377,179    241,815,632    241,377,179 
                     

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

 

6


 
 

 

 

CANNONAU CORP.

Statement of Cashflows (Unaudited)

 

     
    

June 30,

2022

    

June 30,

2021

 
Cash flows from operating activities          
Net loss  $(47,073)  $(50,030)
Adjustment for non-cash items;   —      —   
           
Changes in operating assets and liabilities:          
Accounts receivable         (5,032)
Inventory   91       
Accounts payable and accrued liabilities   (2,037)   (3,154)
Net cash used in operating activities   (49,019)   (58,216)
           
Cash flows from investing activities          
Purchase of equipment            
Net cash used in investing activities            
           
Cash flows from financing activities          
Proceeds from related party   52,336    58,690 
Repayment to related party            
Shares issued against consulting services  $—     $—   
Net cash provided by financing activities   52,336    58,690 
Increase (decrease) in cash   3,317    474 
Cash at beginning of period   143    164 
Cash at end of period  $3,460   $638 
           
Supplemental cash flows disclosures:          
Cash paid for interest            
Cash paid for income taxes            
           
Supplemental non-cash financing activities          
Shares issued to convert amounts due to related party            
Shares issued to non-employees against consulting services            

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

 

 

7


 
 

 

 

  

CANNONAU CORP.

Statement of Stockholders’ Deficit (Unaudited)

For the Period Ended June 30, 2022 & 2021

 

 

                                                                     
   Preferred Stock  Common Stock  Additional Paid in Capital  Common Stock Issuable  Accumulated Deficit  Total
   Shares  Amount  Shares  Amount         
Balances, December 31, 2021               241,815,632         241,815    3,181,117    27,000   $(3,702,218)  $(252,286)
Net loss for six-months ended June 30, 2022   —            —            —                  (47,073)  (47,073)
Balances, June 30, 2022               241,815,632         241,815    3,181,117    27,000    (3,749,291)  (299,358)
                                         
Balances, December 31, 2020        $      241,377,178   $241,377        $3,136,382   $27,000   $(3,553,580)  $(148,821)
Net loss for six-months ended June 30, 2021   —            —            —                  (50,030)  (50,030)
Balances, June 30, 2021        $      241,377,178   $241,377        $3,136,382   $27,000   $(3,603,609)  $(198,850)
                                         

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

 

8


 
 
 

 

CANNONAU CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED JUNE 30, 2022

 

 

1. Nature of Operations and Continuance of Business

Cannonau Corp. (the “Company”) was incorporated under the laws of the State of Nevada on April 3, 2007 as Pacific Blue Energy Corp.  On April 5, 2010, the Company acquired a 100% interest of Ship Ahoy LLC, a limited liability company in Arizona, in exchange for $300,000 and 1,000,000 common shares of the Company.  This investment was subsequently abandoned by the Company and therefore no longer reflecting in these financial statements. The Company is currently developing CBD based products. On August 22, 2019, the Company changed its' name to Cannonau Corp. to reflect its' focus on its new CBD based products.

 

Going Concern

 

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated sufficient revenues to date to cover its operating cost and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As of June 30, 2022, the Company had minimal revenues and an accumulated deficit of $3,749,291. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. Summary of Significant Accounting Policies

 

a)  Basis of Presentation and Principles of Consolidation 

 

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are expressed in US dollars. The Company’s fiscal year-end is December 31.

 

b)  Use of Estimates 

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of its long-lived assets, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

c)  Cash and Cash Equivalents  

 

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

 

 

9


 
 

 

CANNONAU CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED JUNE 30, 2022

d)  Revenue Recognition   

 

Management uses the 5 steps framework of ASC 606 to recognize revenue, as follows:

1.Identify contract with customer
a.Approval (in writing, orally, or in accordance with other customary business practices) and commitment of the parties;
b.Identification of the rights of the parties;
c.Identification of the payment terms;
d.Contract has commercial substance; and
e.Probable that the entity will collect the consideration to which it will be entitled in exchange for the product that will be transferred to the customer.
2.Identify performance obligations
a.At contract inception, management assesses the product promised in a contract with a customer and identifies each promise as a performance obligation to transfer to the customer either: a) A product (or a bundle of products) that is distinct b) A series of distinct products that are substantially the same and that have the same pattern of transfer to the customer
3.Determined expected transaction price
a.The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods to a customer
4.Allocate to performance obligations
a.Once the separate performance obligations are identified and the transaction price has been determined, management allocates the transaction price to the performance obligations in proportion to their standalone selling prices
5.Recognize revenue upon transfer of control over goods
a.management recognizes revenue only when it satisfies a performance obligation by transferring a promised good to a customer. A good or service is considered to be transferred when the customer obtains control.
b.The standard defines control as an entity’s ability to direct the use of, and obtain substantially all of the remaining benefits from, an asset.
c.Control is assessed primarily from the customer’s perspective.  

 

e)  Cost of Sales 

 

Amounts that will be recorded as cost of sales relate to direct expenses incurred in order to fulfill orders of our customers. Such costs are recorded and allocated as incurred. Our cost of sales will consist primarily of the cost of material consumed to make that product.

 

f)  Basic and Diluted Net Loss Per Share  

 

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

 

 

10


 
 

 

CANNONAU CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED JUNE 30, 2022

 

g)  Financial Instruments   

 

ASC 820, “Fair Value Measurements”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, accounts payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. 

 

h)  Inventory  

 

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first in first out method and net realizable value is the estimated selling price less costs of disposal in the ordinary course of business. The cost of inventories includes direct costs plus shipping and packaging materials.  

 

i)   Stock-based compensation 

 

In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), the Company measures the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services.

 

During the period ended June 30, 2022 there were no stock based awards issued or outstanding.

 

 

11


 
 

 

CANNONAU CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED JUNE 30, 2022

 

 

l)  Income taxes

 

Income taxes are determined in accordance with the provisions of ASC 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

For the period ended June 30, 2022, the Company did not have any interest and penalties associated with tax positions. As of June 30, 2022, the Company did not have any significant unrecognized uncertain tax positions.

 

k)  Commitments and contingencies  

 

The Company follows ASC 440 & ASC 450, subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies and commitments respectively. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

 

12


 
 

 

 

CANNONAU CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED JUNE 30, 2022

 

l)  Reclassification 

Certain prior period amounts have been reclassified to conform to current presentation.

 

m)  Recently Issued Accounting Guidance 

The Company has evaluated all the recent accounting pronouncements through the date the financial statements were issued and filed with the Securities and Exchange Commission and believe that none of them will have a material effect on the company’s financial statements.

 

3. Share Capital

 

The Company is authorized to issue 10,000,000 shares of Preferred Stock, par value $.001 per share. As of June 30, 2022 and December 31, 2021, no shares of Preferred Stock were issued and outstanding.

 

Common stock

The company is authorized to issue 290,000,000 shares at par value of $.001 per share.

 

On May 21, 2019, the Company issued 100,000,000 shares of common stock to settle $5,000 in debt with a related party.

 

On November 5, 2019, the Company purchased and retired into treasury 15,000,000 Common Shares from Luniel De Beer for $2,000.

 

On January 23, 2020, the Company executed a 2,000 to 1 reverse stock split.  All shares and per share information has been retroactively adjusted to reflect this reverse stock split.

 

On February 25, 2020, convertible notes to related parties of $3,260 were converted into 9,055,556 shares of common stock.

 

On May 29, 2020, convertible notes to related parties of $1,142 were converted into 30,000,000 shares of common stock.

 

On July 6, 2020, convertible notes to related parties of $6,858 were converted into 180,473,684 shares of common stock.

 

On July 21, 2020, convertible notes to related parties of $362 were converted into 9,526,316 shares of common stock.

 

On October 06, 2020, convertible notes of $4,370 were assumed to be converted into 12,138,888 shares of common stock. Subsequently, these shares issuance was cancelled by board of directors on October 12, 2020 on the ground of error.

 

On October 2020, the Company issued 10,597,222 to the legal custodian in a private placement for $5,299.

During the year 2021, the Company issued 438,454 shares of common stock to its consultants against the consulting services rendered during the year.

As of June 30, 2022 and December 31, 2021, the Company had 241,815,632 shares of common stock issued and outstanding.

 

 

13


 
 

CANNONAU CORP.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED JUNE 30, 2022

 

4. Income Taxes

The Company has a net operating loss carried forward of approximately $3,749,291 available to offset taxable income in future years which commence expiring in fiscal 2027.  The Company is subject to United States federal and state income taxes at an approximate rate of 21%.  

 

There was no income tax expense for the period ended June 30, 2022 and December 31, 2021. The reconciliation and the tax effects of temporary differences that give rise to significant portions of the net deferred tax assets at the U.S. statutory rate of 21% at June 30, 2022 and December 31, 2021 are as follows:

 

   June 30, 2022  December 31, 2021
       
Deferred tax assets          
Net operating losses   (3,749,291)  $(3,702,218)
           
Deferred tax liability          
Net deferred tax assets   787,351    777,466 
Less valuation allowance   (787,351)   (777,466)
Deferred tax asset - net valuation allowance        $   

  

 

5. Related Party Transaction

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by officers, directors, or shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities and related parties consist of officers, shareholders and associated entities.

 

During the six-months period ended June 30, 2022 and twelve-months period ended December 31, 2021, related parties loaned the company $52,336 and $91,529 respectively to pay for operating expenses. As at June 30, 2022 and December 31, 2021, the company owed its related parties $294,698 and $242,362 respectively. The loan is non-interest bearing, due upon demand and unsecured. 

 

6. Commitments and Contingencies

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Corporate taxpayers may carryback net operating losses (NOLs) originating between 2018 and 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.

 

In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision.

 

7. Subsequent Events

The company has evaluated subsequent events for recognition and disclosure through August 11, 2022 which is the date the financial statements were available to be issued and has determined that except as given below, there are no items to disclose.

 

As on July 20, 2022, 11,848,966 shares of common stock were issued to Mr. Joseph C. Passalaqua, a Related Party of the Company in exchange for promissory note bearing debt of $11,848.96 due to him.

 

14


 
 

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

 

FORWARD LOOKING STATEMENTS

This section and other parts of this Form 10-Q quarterly report includes "forward-looking statements", that involves risks and uncertainties. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which are beyond our control.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.

 

OVERVIEW

Cannonau Corp. (the "Company", "we", or "us") was incorporated under the laws of the State of Nevada on April 3, 2007.

 

Certain statements contained below are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

 

Our auditors have issued a going concern opinion in the audited financial statements for the year ended December 31, 2021.

 

RESULTS OF OPERATIONS

 

WORKING CAPITAL

 

   June 30,  December 31,
   2022  2021
       
Current Assets   11,983    8,757 
Current Liabilities   311,342    261,043 
Working Capital (Deficit)  $(299,359)  $(252,286)

 

CASH FLOWS

   June 30,  December 31,
   2022  2021
       
Cash Flows from (used in) Operating Activities  $(49,019)  $(136,724)
Cash Flows from (used in) Financing Activities   52,336    136,702 
Net Increase (decrease) in Cash During Period  $3,317   $(21)

 

 OPERATING REVENUES

 

We have generated revenues of $122 and $5,582 for three-months ended June 30, 2022 & June 30, 2021 respectively.

 

We have generated revenues of $227 and $5,612 for six-months ended June 30, 2022 & June 30, 2021 respectively. 

 

15


 

 

OPERATING EXPENSES AND NET LOSS 

Operating expenses for the three months ended June 30, 2022 were $28,082 compared with $24,276 for the three months ended June 30, 2021.  Operating expenses for the three months ended June 30, 2022 consisted of general and administrative expenses of $3,331 compared to $9,877 for the three months ended June 30, 2021, compensation expense of $13,460 compared to $5,654 for the three months ended June 30, 2021, and professional fees of $11,291 compared to $8,745 for the three months ended June 30, 2021.

 

Operating expenses for the six months ended June 30, 2022 were $47,051 compared with $55,134 for the six months ended June 30, 2021.  Operating expenses for the six months ended June 30, 2022 consisted of general and administrative expenses of $5,911 compared to $24,941 for the six months ended June 30, 2021, compensation expense of $26,066 compared to $21,120 for the six months ended June 30, 2021, and professional fees of $15,074 compared to $9,073 for the six months ended June 30, 2021.

 

During the three months ended June 30, 2022, the Company recorded a net loss of ($28,155) compared with net loss of $(19,137) for the three months ended June 30, 2021.

 

During the six months ended June 30, 2022, the Company recorded a net loss of ($47,073) compared with net loss of $(50,030) for the six months ended June 30, 2021.

 

LIQUIDITY AND CAPITAL RESOURCES  

As of June 30, 2022, the Company's cash balance was $3,460 compared to cash balance of $143 at December 31, 2021. As of June 30, 2022, the Company's total assets were $11,984 compared to total assets of $8,757 as at December 31, 2021.

 

As of June 30, 2022, the Company had total liabilities of $311,342 compared with total liabilities of $261,043 as of December 31, 2021.  Liabilities as of June 30, 2022 consisted of accounts payable and accrued liabilities of $16,644 compared to $18,681 as of December 31, 2021; and due to related party of $294,698 compared to $242,362 as of December 31, 2021.

 

CASHFLOW FROM OPERATING ACTIVITIES

During the six months ended June 30, 2022 the Company used ($49,019) of cash for operating activities compared to the use of ($58,216) of cash for operating activities during the six months ended June 30, 2021.

 

CASHFLOW FROM FINANCING ACTIVITIES

During the six months ended June 30, 2022 the Company received cash from financing activities of $52,336 as compared to $58,690 during the six months ended June 30, 2021.

 

SUBSEQUENT DEVELOPMENTS

None.

 

GOING CONCERN

We have not attained profitable operations and are dependent upon the continued financial support from our shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from our future business. These factors raise substantial doubt regarding our ability to continue as a going concern.

OFF-BALANCE SHEET ARRANGEMENTS

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

 

FUTURE FINANCING

The Company will consider selling securities in the future to fund operations.  There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

 

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the notes to our consolidated financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. 

16


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

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

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Market risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises primarily from the fact that the area in which we do business is highly competitive and constantly evolving. The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies, from companies that have greater resources, including but not limited to, more money, and greater ability to expand their markets also cut into our potential customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO/CFO does not possess accounting expertise and our company does not have an audit committee. This weakness is due to the company's lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.

 

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter and may have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

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

 

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

 

No report required.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

No report required.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

No report required.  

17


ITEM 6. EXHIBITS

 

Exhibit 31.1 Certification of the Principal Executive Officer Pursuant to Rule 13A-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
Exhibit 31.2 Certification of the Principal Financial Officer Pursuant to Rule 13A-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
Exhibit 32.1 Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
Exhibit 32.2 Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 
 

 

SIGNATURES

 

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

 

 

Dated: August 11, 2022   Cannonau Corp.
     
    By: /s/Carmen J. Carbona
    Carmen J. Carbona, Chief Executive Officer and President
     
     
Dated: August 11, 2022   Cannonau Corp.
    By: /s/Carmen J. Carbona
    Carmen J. Carbona, Chief Financial Officer and President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 31.1

 

CERTIFICATION PURSUANT TO RULE 13A-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES OXLEY ACT OF 2002

 

I, Carmen J. Carbona, certify that:

 

1.I have reviewed this Form 10-Q for the period ended June 30, 2022 of Cannonau Corp. 

 

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

 

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

 

4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Date: August 11, 2022

 

/S/Carmen J. Carbona

Carmen J. Carbona

Certification of Principal Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES OXLEY ACT OF 2002

 

I, Carmen J. Carbona, certify that:

 

1.I have reviewed this Form 10-Q for the period ended June 30, 2022 of Cannonau Corp. 

 

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

 

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

 

4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Date: August 11, 2022

 

/S/Carmen J. Carbona

Carmen J. Carbona

Certification of Principal Financial Officer

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Cannonau Corp. (the "Company") on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "report"), I, Carmen J. Carbona, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

 

2.The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

 

Dated this 11th day of August 2022.

 

/S/Carmen J. Carbona

Carmen J. Carbona

Certification of Principal Executive Officer

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 ("Section 906"), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cannonau Corp., and will be retained Cannonau Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

xhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Cannonau Corp. (the "Company") on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "report"), I, Carmen J. Carbona, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

 

2.The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

 

Dated this 11th day of August 2022.

 

/S/Carmen J. Carbona

Carmen J. Carbona

Certification of Principal Financial Officer

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 ("Section 906"), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cannonau Corp., and will be retained Cannonau Corp. and furnished to the Securities and Exchange Commission or its staff upon request.



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