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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
March 31, 2023
[ ]
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 itscharter)
Nevada 84-2870437
(State or other jurisdiction of incorporation or organization) (IR.S. Employer Identification No.)
937 Old Seneca Turnpike Road
Skaneateles 13252-9318
,
NY
(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 suchshorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past90 days
Yes
No
Indicate by check mark whether the registrant hassubmitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and postedpursuant to Rule 405 of Regulation S-T ((s)232.405
of this chapter) during the preceding 12 months (or for such shorter period
thatthe registrant was required to submit and post such files)
Yes
No
Indicate by check mark whether the registrant isa large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "largeaccelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated Filer Smaller reporting company
(Do not check if a smaller reporting company)
Emerging Growth Company
If an emerging growth company, indicate bycheck mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accountingstandards provided pursuant to Section 13(a) of
the Exchange Act.
Indicate by check mark whether the registrant isa shell company (as defined in
Rule 12b-2 of the Exchange Act): Yes
No
At March 31, 2023, the number of shares of the Registrant'scommon 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 15
Item 3 Quantitative and Qualitative Disclosures About Market Risks 17
Item 4 Controls and Procedures 17
PART II
Item 1 Legal Proceedings 18
Item 1A. Risk Factors 18
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3 Default Upon Senior Securities 18
Item 4 Mine Safety Disclosure 18
Item 5 Other Information 18
Item 6 Exhibits 19
SIGNATURES 20
PART 1: FINANCIAL STATEMENTS
CANNONAU CORP.
FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 2023
C O N T E N T S
Balance Sheets as of March 31, 2023 (Unaudited) & December 31, 2022(Audited) 5
Statements of Operations for three months period ended March 31, 2023 & March 31, 2022 (Unaudited) 6
Statements of Stockholders' Equity (Deficit) for the period ended March 31, 2023 & March 31, 2022 (Unaudited) 7
Statements of Cash Flows for the period ended March 31, 2023 & March 31, 2022 (Unaudited) 8
Notes to the Unaudited Financial Statements for the period ended March 31, 2023 9
CANNONAU CORP.
Balance Sheets
March 31, December 31,
2023 2022
(Unaudited) (Audited)
ASSETS
Current Assets
Cash $ 7 $ 157
Accounts Receivable 5,032 5,032
Inventory 3,836 3,836
Total Current Assets 8,875 9,025
Total Assets $ 8,875 $ 9,025
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities 26,971 17,436
Due to related party 330,872 329,824
Total current liabilities 357,843 347,260
Stockholders' deficit
Preferred stock (Authorized) - -
10,000,000
at Par Value
$
.001
, issued and outstanding nil as of March 31, 2023 and December 31, 2022.
Common stock (Authorized) 241,815 241,815
290,000,000
at Par Value
$
.001
issued and outstanding
241,815,632
as of March 31, 2023 and December 31, 2022.
Common stock issuable 27,000 27,000
Additional paid in capital 3,181,117 3,181,117
Accumulated deficit ( ) ( )
3,798,900 3,788,168
Total stockholders' deficit ( ) ( )
348,968 338,236
Total liabilities and stockholders' deficit $ 8,875 $ 9,025
The accompanying notes are an integral partof these financial statements.
5
-------------------------------------------------------------------------------
CANNONAU CORP.
Statement of Operations (Unaudited)
March 31, March 31,
2023 2022
Sales $ - $ 105
Cost of sales - ( )
54
Gross Profit - 51
Operating expenses
General and administrative 1,409 2,580
Compensation and benefits - 12,606
Professional fees 9,323 3,783
Consultancy services - -
Total operating expenses 10,732 ( )
18,969
Loss from Operations ( ) ( )
10,732 18,918
Other expenses (income) - -
Net loss ( ) $ ( )
10,732 18,918
Net loss per share (basic and diluted) ( ) ( )
0 0
Weighted average shares outstanding 241,815,632 241,377,178
The accompanying notes are an integral partof these financial statements.
6
-------------------------------------------------------------------------------
CANNONAU CORP.
Statement of Cashflows (Unaudited)
March 31, March 31,
2023 2022
Cash flows from operating activities
Net loss $ ( ) $ ( )
10,732 18,918
Adjustment for non-cash items; - -
Changes in operating assets and liabilities:
Accounts receivable - -
Inventory - 54
Accounts payable and accrued liabilities 9,534 ( )
2,777
Net cash used in operating activities ( ) ( )
1,198 21,641
Cash flows from investing activities
Purchase of equipment - -
Net cash used in investing activities - -
Cash flows from financing activities
Proceeds from related party 1,048 21,855
Repayment to related party - -
Shares issued against debt $ - $ -
Net cash provided by financing activities 1,048 21,855
Increase (decrease) in cash ( ) 214
150
Cash at beginning of period 157 143
Cash at end of period $ 7 $ 357
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 partof these financial statements.
7
-------------------------------------------------------------------------------
CANNONAU CORP.
Statement of Stockholders' Deficit (Unaudited)
For the Period Ended March 31, 2023 & 2022
Preferred Common Additional Common Accumulated Total
Stock Stock Paid Stock Deficit
in Capital Issuable
Shares Amount Shares Amount
Balances, - - 241,815,632 241,815 3,181,117 27,000 $ ( ) $(
December 3,788,168 338,236
31, 2022 )
Net loss for - - - - - - ( ) (
three-months 10,732 10,732
ended March )
31, 2023
Balances, - - 241,815,632 241,815 3,181,117 27,000 ( ) (
March 3,798,900 348,968
31, )
2023
Balances, - $ - 241,815,632 $ 241,815 $ 3,181,117 $ 27,000 $ ( ) $(
December 3,702,218 252,286
31, 2021 )
Net loss for - - - - - - ( ) (
three -months 18,918 18,918
ended March )
30, 2022
Balances, - $ - 241,815,632 $ 241,815 $ 3,181,117 $ 27,000 $ ( ) $(
March 3,721,136 271,204
31, )
2022
The accompanying notes are an integral partof these financial statements.
8
-------------------------------------------------------------------------------
CANNONAU CORP.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2023
1. Nature of Operations and Continuanceof Business
Cannonau Corp. (the "Company")was incorporated under the laws of the State of
Nevada on April 3, 2007
as Pacific Blue EnergyCorp
. On April 5, 2010, the Company acquired a 100% interest of Ship Ahoy LLC, a
limited liability company in Arizona, inexchange for
$
300,000
and
1,000,000
common shares of the Company. This investment was subsequently abandoned by
the Company andtherefore no longer reflecting in these financial statements.
The Company is currently developingCBD 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 preparedon a going concern basis, which
implies that the Company will continue to realize its assets and discharge its
liabilities in the normalcourse of business. The Company has not generated
sufficient revenues to date to cover its operating cost and has never paid any
dividendsand is unlikely to pay dividends or generate significant earnings in
the immediate or foreseeable future. As of March 31, 2023 & December31, 2022,
the Company had minimal revenues and an accumulated deficit of $
3,798,900
&
3,788,168
respectively. The continuation ofthe Company as a going concern is dependent
upon the continued financial support from its shareholders, the ability to
raise equity ordebt financing, and the attainment of profitable operations
from the Company's future business. These factors raise substantial
doubtregarding 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 classificationof 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 relatednotes 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 statementsin conformity with generally accepted
accounting principles in the United States requires management to make
estimates and assumptionsthat affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financialstatements and the reported amounts of revenues and expenses
during the reporting period. The Company regularly evaluates estimates
andassumptions related to the recoverability of its long-lived assets,
stock-based compensation, and deferred income tax asset valuationallowances.
The Company bases its estimates and assumptions on current facts, historical
experience and various other factors that itbelieves to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying valuesof assets and liabilities and the accrual of costs
and expenses that are not readily apparent from other sources. The actual
results experiencedby the Company may differ materially and adversely from the
Company's estimates. To the extent there are material differences betweenthe
estimates and the actual results, future results of operations will be
affected.
c) Cash and Cash Equivalents
The Company considers all highly liquidinstruments 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 MARCH 31, 2023
d) Revenue Recognition
Management uses the 5 steps framework ofASC 606 to recognize revenue, as
follows:
1. Identify contract with customer
a. Approval (in writing, orally, or in accordance with other customary businesspractices) 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 willbe
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 contractwith a customer
and identifies each promise as a performance obligation to transfer to the customer either:
a) A product (or a bundleof products) that is distinct b) A series of distinct products
that are substantially the same and that have the same pattern of transferto the customer
3. Determined expected transaction price
a. The transaction price is the amount of consideration to which an entityexpects
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 transactionprice has been determined, management
allocates the transaction price to the performance obligations in proportion to their standaloneselling prices
5. Recognize revenue upon transfer of control over goods
a. management recognizes revenue only when it satisfies a performance obligationby 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 theuse 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 ofsales 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 sharein 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) bythe weighted average
number of shares outstanding (denominator) during the period. Diluted EPS
gives effect to all dilutive potentialcommon 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
fromthe 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 MARCH 31, 2023
g) Financial Instruments
ASC 820,
"Fair Value Measurements",
requiresan entity to maximize the use of observable inputs and minimize the
use of unobservable inputs when measuring fair value. It establishesa fair
value hierarchy based on the level of independent, objective evidence
surrounding the inputs used to measure fair value. A financialinstrument's
categorization within the fair value hierarchy is based upon the lowest level
of input that is significant to the fairvalue measurement. It prioritizes the
inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilitiesfor which there are quoted prices in
active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilitiesfor which there are inputs other than
quoted prices that are observable for the asset or liability such as quoted
prices for similar assetsor liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume or
infrequenttransactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived principallyfrom, or
corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilitiesfor which there are unobservable
inputs to the valuation methodology that are significant to the measurement of
the fair value of theassets or liabilities.
The Company'sfinancial instruments consist principally of cash, accounts
payable, and amounts due to related parties. Pursuant to ASC 820, the
fairvalue of our cash is determined based on "Level 1" inputs, which consist
of quoted prices in active markets for identicalassets. We believe that the
recorded values of all of our other financial instruments approximate their
current fair values because oftheir nature and respective maturity dates or
durations.
h) Inventory
Inventoriesare stated at the lower of cost and net realizable value. Cost is
determined using the first in first out method and net realizable valueis the
estimated selling price less costs of disposal in the ordinary course of
business. The cost of inventories includes direct costsplus shipping and
packaging materials.
i) Stock-based compensation
Inaccordance with ASC No. 718, Compensation - Stock Compensation ("ASC 718"),
the Company measures the compensation costsof share-based compensation
arrangements based on the grant-date fair value and recognize the costs in the
financial statements over theperiod during which employees are required to
provide services.
Duringthe period ended March 31, 2023 there were no stock based awards issued
or outstanding.
11
-------------------------------------------------------------------------------
CANNONAU CORP.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH31, 2023
l) Incometaxes
Income taxes are determined in accordancewith the provisions of ASC 740,
"Income Taxes" ("
ASC 740
"). Under this method, deferred tax assets andliabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amountsof existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted incometax 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 enactmentdate.
ASC 740 prescribes a comprehensive modelfor how companies should recognize,
measure, present, and disclose in their financial statements uncertain tax
positions taken or expectedto be taken on a tax return. Under ASC 740, tax
positions must initially be recognized in the financial statements when it is
more likelythan not the position will be sustained upon examination by the tax
authorities. Such tax positions must initially and subsequently bemeasured as
the largest amount of tax benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement with thetax authority assuming full
knowledge of the position and relevant facts.
For the period ended March 31, 2023, theCompany did not have any interest and
penalties associated with tax positions. As of March 31, 2023, the Company did
not have any significantunrecognized 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. Certainconditions may exist as of the date the financial
statements are issued, which may result in a loss to the Company, but which
will onlybe resolved when one or more future events occur or fail to occur.
The Company assesses such contingent liabilities, and such assessmentinherently
involves an exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against theCompany or un-asserted claims
that may result in such proceedings, the Company evaluates the perceived
merits of any legal proceedingsor 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 indicatesthat it is probable that a
material loss has been incurred and the amount of the liability can be
estimated, then the estimated liabilitywould be accrued in the Company's
financial statements. If the assessment indicates that a potentially material
loss contingencyis not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability, and
anestimate of the range of possible losses, if determinable and material,
would be disclosed.
Loss contingencies considered remote aregenerally 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
financialposition, results of operations or cash flows. However, there is no
assurance that such matters will not materially and adversely affectthe
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 MARCH 31, 2023
l) Reclassification
Certain prior period amounts havebeen reclassified to conform to current
presentation.
m) Recently Issued Accounting Guidance
The Company has evaluated all the recentaccounting pronouncements through the
date the financial statements were issued and filed with the Securities and
Exchange Commissionand believe that none of them will have a material effect
on the company's financial statements.
3. Share Capital
Preferred stock
The Company is authorized to issue
10,000,000
shares of Preferred Stock, par value
$
.001
per share. As of March 31, 2023 and December 31, 2022,
no
shares of Preferred Stock were issuedand outstanding.
Common stock
Thecompany is authorized to issue
290,000,000
shares at par value of
$
.001
per share.
OnMay 21, 2019, the Company issued
100,000,000
shares of common stock to settle $
5,000
in debt with a related party.
OnNovember 5, 2019, the Company purchased and retired into treasury
15,000,000
Common Shares from Luniel De Beer for
$
2,000
.
OnJanuary 23, 2020, the Company executed a
2,000 to 1
reverse stock split. All share and per share information has been
retroactivelyadjusted to reflect this reverse stock split.
OnFebruary 25, 2020, convertible notes to related parties of $
3,260
were converted into
9,055,556
shares of common stock.
OnMarch 20, 2020, convertible notes of
$
4,370
were converted into
12,138,888
shares of common stock.
OnMay 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.
OnJuly 21, 2020, convertible notes to related parties of
$
362
were converted into
9,526,316
shares of common stock.
OnOctober 06, 2020, convertible notes of $
4,370
were assumed to be converted into
12,138,888
shares of common stock. Subsequently, theseshares issuance was cancelled by
board of directors on October 12, 2020 on the ground of error.
On October 2020,
theCompany 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 March 31, 2022 and December 31,2021, the Company had
241,815,632
shares of common stock issued and outstanding respectively.
4. Income Taxes
The Company has a net operating loss carriedforward of approximately
$3,798,900 available to offset taxable income in future years which commence
expiring in fiscal 2027. TheCompany is subject to United States federal and
state income taxes at an approximate rate of
21
%
.
There was no income tax expense for theperiod ended March 31, 2023 and
December 31, 2022. The reconciliation and the tax effects of temporary
differences that give rise to significantportions of the net deferred tax
assets at the U.S. statutory rate of 21% at March 31, 2023 and December 31,
2022 are as follows:
March 31, 2023 December 31, 2022
Deferred tax assets
Net operating losses ( ) $ ( )
3,798,900 3,788,168
Deferred tax liability
Net deferred tax assets 797,769 795,515
Less valuation allowance ( ) ( )
797,769 795,515
Deferred tax asset - net valuation allowance - $ -
5. Related Party Transaction
In support of the Company's effortsand cash requirements, it may rely on
advances from related parties until such time that the Company can support its
operations or attainsadequate financing through sales of its equity or
traditional debt financing. There is no formal written commitment for
continued supportby officers, directors, or shareholders. Amounts represent
advances or amounts paid in satisfaction of liabilities and related
partiesconsist of officers, shareholders and associated entities.
During the three-months period ended March31, 2023 and twelve-months period
ended December 31, 2022, related parties loaned the company
$
1,048
and
$
87,462
respectively to pay foroperating expenses. As at March 31, 2023 and December
31, 2022, the company owed its related parties
$
330,872
and
$
329,824
respectively.The loan is non-interest bearing, due upon demand and unsecured.
6. Commitments and Contingencies
In response to the COVID-19 pandemic, theCoronavirus Aid, Relief and Economic
Security Act ("CARES Act") was signed into law in March 2020. The CARES Act
lifts certaindeduction limitations originally imposed by the Tax Cuts and Jobs
Act of 2017 ("2017 Tax Act"). Corporate taxpayers may carrybacknet operating
losses (NOLs) originating between 2018 and 2020 for up to five years, which
was not previously allowed under the 2017 TaxAct. The CARES Act also
eliminates the 80% of taxable income limitations by allowing corporate
entities to fully utilize NOL carryforwardsto offset taxable income in 2018,
2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of
adjusted taxable incomeplus business interest income (30% limit under the 2017
Tax Act) for 2019 and 2020. The CARES Act allows taxpayers with alternative
minimumtax credits to claim a refund in 2020 for the entire amount of the
credits instead of recovering the credits through refunds over a periodof
years, as originally enacted by the 2017 Tax Act.
In addition, the CARES Act raises the corporatecharitable deduction limit to
25% of taxable income and makes qualified improvement property generally
eligible for 15-year cost-recoveryand 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 eventsfor recognition and disclosure
through May 10, 2023 which is the date the financial statements were available
to be issued and has determinedthat there are no items to disclose.
14
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS
OF OPERATION
FORWARD LOOKING STATEMENTS
This section and other parts of this Form 10-Q quarterlyreport includes
"forward-looking statements", that involves risks and uncertainties. All
statements other than statements ofhistorical facts, included in this Form
10-Q that address activities, events, or developments that we expect or
anticipate will or mayoccur in the future, including such things as future
capital expenditures (including the amount and nature thereof), business
strategyand measures to implement strategy, competitive strength, goals,
expansion and growth of our business and operations, plans, referencesto
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. Actualevents or results
may differ materially. These statements are based upon certain assumptions and
analyses made by us in light of our experienceand our perception of historical
trends, current conditions and expected future developments as well as other
factors that we believeare appropriate in the circumstances. However, whether
actual results and developments will conform to our expectations and
predictionsis subject to a number of risks, uncertainties, and other factors,
many of which are beyond our control.
Although we believe that the expectations reflectedin 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 toupdate 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-lookingstatements (rather than
historical facts) that are subject to risks and uncertainties that could cause
actual results to differ materiallyfrom those described in the forward-looking
statements.
Our auditors have issued a going concern opinion inthe audited financial
statements for the year ended December 31, 2022.
RESULTS OF OPERATIONS
WORKING CAPITAL
March 31, December 31,
2023 2022
Current Assets 8,875 9,025
Current Liabilities 357,842 347,260
Working Capital (Deficit) $ (348,967 ) $ (338,236 )
CASH FLOWS
March 31, December 31,
2023 2022
Cash Flows from (used in) Operating Activities $ (1,198 ) $ (87,448 )
Cash Flows from (used in) Financing Activities 1,048 87,462
Net Increase (decrease) in Cash During Period $ (150 ) $ 14
OPERATING REVENUES
We have generated revenues of $0 and $105 for three-months ended March31, 2023
& March 31, 2022 respectively.
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OPERATING EXPENSES AND NET LOSS
Operating expenses for the three months ended March31, 2023 were $10,732
compared with $18,969 for the three months ended March 31, 2022. Operating
expenses for the three months endedMarch 31, 2023 consisted of general and
administrative expenses of $1,409 compared to $2,580 for the three months
ended March 31, 2022,compensation expense of $0 compared to $12,606 for the
three months ended March 31, 2022, and professional fees of $9,323 compared
to$3,783 for the three months ended March 31, 2022.
During the three months ended March 31, 2023, theCompany recorded a net loss
of ($10,732) compared with net loss of ($18,918) for the three months ended
March 31, 2022.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2023, the Company's cash balance was$7 compared to cash
balance of $157 at December 31, 2022. As of March 31, 2023, the Company's
total assets were $8,875 compared to totalassets of $9,025 as at December 31,
2022.
As of March 31, 2023, the Company had total liabilitiesof $357,842 compared
with total liabilities of $347,260 as of December 31, 2022. Liabilities as of
March 31, 2023 consisted of accountspayable and accrued liabilities of $26,971
compared to $17,436 as of December 31, 2022; and due to related party of
$330,872 comparedto $329,824 as of December 31, 2022.
CASHFLOW FROM OPERATING ACTIVITIES
During the three months ended March 31, 2023 the Companyused ($1,198) of cash
for operating activities compared to the use of ($21,641) of cash for
operating activities during the three monthsended March 31, 2022.
CASHFLOW FROM FINANCING ACTIVITIES
During the three months ended March 31, 2023 the Companyreceived cash from
financing activities of $1,048 as compared to $21,855 during the three months
ended March 31, 2022.
SUBSEQUENT DEVELOPMENTS
None.
GOING CONCERN
We have not attained profitable operations and aredependent upon the continued
financial support from our shareholders, the ability to raise equity or debt
financing, and the attainmentof profitable operations from our future
business. These factors raise substantial doubt regarding our ability to
continue as a goingconcern.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangementsthat have or are
reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenuesor expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to stockholders.
FUTURE FINANCING
The Company will consider selling securities in thefuture to fund operations.
There is no assurance that we will achieve any additional sales of the equity
securities or arrange fordebt or other financing to fund our operations and
other activities.
CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes havebeen prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis. The preparationof financial statements in conformity
with U.S. generally accepted accounting principles requires management to make
estimates and assumptionsthat affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financialstatements and the reported amounts of revenues and expenses
during the reporting periods.
We regularly evaluate the accounting policies andestimates that we use to
prepare our financial statements. A complete summary of these policies is
included in the notes to our financialstatements. In general, management's
estimates are based on historical experience, on information from third party
professionals, andon various other assumptions that are believed to be
reasonable under the facts and circumstances. Actual results could differ from
thoseestimates made by management.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Company has implemented all new accounting pronouncementsthat are in
effect. These pronouncements did not have any material impact on the financial
statements unless otherwise disclosed, andthe Company does not believe that
there are any other new accounting pronouncements that have been issued that
might have a materialimpact on its financial position or results of operations.
16
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK.
Market risk is the risk of loss from adverse changesin market prices and
rates. The Company's market risk arises primarily from the fact that the area
in which we do business is highly competitiveand constantly evolving. The
market in which we do business is highly competitive and constantly evolving.
We face competition from thelarger and more established companies, from
companies that have greater resources, including but not limited to, more
money, and greaterability to expand their markets also cut into our potential
customers. Many of our competitors have longer operating histories,
significantlygreater 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 controlsand procedures(as defined
in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"),
our principal executiveofficer and principal financial officer have concluded
that as of the end of the period covered by this quarterly report on Form
10-Qsuch disclosure controls and procedures were not effective due to the lack
of segregation of duties and lack of a formal review processthat includes
multiple levels of review to ensure that information required to be disclosed
by us in reports that we file or submit underthe Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commissionrules and forms because of the identification
of a material weakness in our internal control over financial reporting which
we view asan integral part of our disclosure controls and procedures. The
material weakness relates to the lack of segregation of duties in
financialreporting, as our financial reporting and all accounting functions
are performed by an external consultant with no oversight by a professionalwith
accounting expertise. Our CEO/CFO does not possess accounting expertise and
our company does not have an audit committee. This weaknessis due to the
company's lack of working capital to hire additional staff. To remedy this
material weakness, we intend to engage anotheraccountant 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 controlover financial reporting
identified in connection with the evaluation required by paragraph (d) of
Exchange Act Rules 13a-15 or 15d-15that occurred during our first quarter and
may have materially affected, or are reasonably likely to materially affect,
our internal controlover financial reporting.
17
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplatedby 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 SECURITIESAND 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.
18
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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.
19
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SIGNATURES
In accordance with the requirements of the ExchangeAct, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: May 12, 2023 Cannonau Corp.
By: /s/Carmen J. Carbona
Carmen J. Carbona, Chief Executive Officer and President
Dated: May 12, 2023 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 PURSUANTTO SECTION
302 OF THE SARBANES OXLEY ACT OF 2002
I, Carmen J. Carbona, certify that:
1.I have reviewed this Form 10-Q forthe period ended March 31, 2023 of
Cannonau Corp.
2.Based on my knowledge, this reportdoes not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in lightof 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 financialstatements, 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 establishingand maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control overfinancial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controlsand procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material informationrelating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularlyduring the period in which this report is being prepared;
b.Designed such internal control overfinancial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonableassurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordancewith generally accepted accounting principles;
c.Evaluated the effectiveness of theregistrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosurecontrols and procedures, as of the end of the
period covered by this report based on such evaluation; and,
d.Disclosed in this report any changein the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant'sfourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, theregistrant's internal control over financial reporting; and
5.I have disclosed, based on my mostrecent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
the registrant'sboard of directors (or persons performing the equivalent
functions):
a.All significant deficiencies andmaterial weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affectthe 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: May 12, 2023
/S/Carmen J. Carbona
Carmen J. Carbona
Certification of Principal ExecutiveOfficer
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13A-14(a)OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANTTO SECTION
302 OF THE SARBANES OXLEY ACT OF 2002
I, Carmen J. Carbona, certify that:
1.I have reviewed this Form 10-Q forthe period ended March 31, 2023 of
Cannonau Corp.
2.Based on my knowledge, this reportdoes not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in lightof 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 financialstatements, 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 establishingand maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control overfinancial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controlsand procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material informationrelating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularlyduring the period in which this report is being prepared;
b.Designed such internal control overfinancial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonableassurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordancewith generally accepted accounting principles;
c.Evaluated the effectiveness of theregistrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosurecontrols and procedures, as of the end of the
period covered by this report based on such evaluation; and,
d.Disclosed in this report any changein the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant'sfourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, theregistrant's internal control over financial reporting; and
5.I have disclosed, based on my mostrecent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
the registrant'sboard of directors (or persons performing the equivalent
functions):
a.All significant deficiencies andmaterial weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affectthe 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: May 12, 2023
/S/Carmen J. Carbona
Carmen J. Carbona
Certification of PrincipalFinancial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C.SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACTOF 2002
In connectionwith the Quarterly Report of Cannonau Corp. (the "Company") on
Form 10-Q for the period ended March 31, 2023 as filed with theSecurities and
Exchange Commission on the date hereof (the "report"), I, Carmen J. Carbona,
Principal Executive Officer of theCompany, 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 therequirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2.The information contained in thisReport fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Dated this 12
th
day ofMay 2023.
/S/Carmen J. Carbona
Carmen J. Carbona
Certification of Principal ExecutiveOfficer
A signed original of this writtenstatement 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
Section906, has been provided to Cannonau Corp., and will be retained Cannonau
Corp. and furnished to the Securities and Exchange Commissionor its staff upon
request.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C.SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACTOF 2002
In connectionwith the Quarterly Report of Cannonau Corp. (the "Company") on
Form 10-Q for the period ended March 31, 2023 as filed with theSecurities and
Exchange Commission on the date hereof (the "report"), I, Carmen J. Carbona,
Principal Financial Officer of theCompany, 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 therequirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2.The information contained in thisReport fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Dated this 12
th
day ofMay 2023.
/S/Carmen J. Carbona
Carmen J. Carbona
Certification of Principal FinancialOfficer
A signed original of this writtenstatement 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
Section906, has been provided to Cannonau Corp., and will be retained Cannonau
Corp. and furnished to the Securities and Exchange Commissionor its staff upon
request.
{graphic omitted}
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