UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)
  
[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
          
For the quarterly period ended SeptemberJune 30, 20182019
          
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
          

For the transition period from _____ to ______to____

 

          
Commission file number: 333-199452000-55788
          
MINING POWER. GROUP,INC.CANNA CORPORATION
(Exact name of registrant as specified in its charter)
          
Colorado    46-3289369
(State of Incorporation)    (IRS Employer ID Number)
          

20200 Dixie Highway,8358 West Oakland Park Blvd., Suite 906300, Sunrise, Florida 33323,Miami,FL  33180

(Address of principal executive offices)
          
(800954)304-2657406-0750
(Registrant's Telephone number)
          
18851 NE 29th Avenue,Suite 700,Aventura,FL 33180_________________________
(Former Address and phone of principal executive offices)
          

Securities registered pursuant to Section 12(b) of the Act:None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.

Yes[ ]x]      No[x] ]
          
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 for 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[x]      No[  ]
 
 
 

 

Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" andfiler," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer[  ] Accelerated filer[  ]
Non-accelerated filer[  ]x] Smaller reporting company[x]
(Do not check if a smaller reporting company)
Emerging growth company[x]     
          
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(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[x]

 

 

Indicate the number of share outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of March 4, 2019,May 14, 2020 there were 136,965,896239,062,949 shares of the registrant’s common stock issued and outstanding.

 

 

 

 

 

 

 
 

 

TABLE OF CONTENTS
PART I – FINANCIAL INFORMATIONPage
   
Item 1Condensed Consolidated Financial Statements (Unaudited)41
 Condensed Consolidated Balance Sheets – SeptemberJune 30, 20182019 and December 31, 20172018 (Unaudited)52
 Condensed Consolidated Statements of Operations – Three and Ninesix months ended SeptemberJune 30, 20182019 and 20172018 (Unaudited)7

3

Condensed Consolidated Statements of Changes in Shareholders’ Deficit – Six months ended June 30, 2019 and 2018 (Unaudited)4
 Condensed Consolidated Statements of Cash Flows -Nine-Six months ended SeptemberJune 30, 20182019 and 20172018 (Unaudited)85
 Notes to the Condensed Consolidated Financial Statements (Unaudited)106
Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations2321
Item 3Quantitative and Qualitative Disclosures about Market Risk-Risk-Not Applicable2523
Item 4Controls and Procedures2523
   
 PART II- OTHER INFORMATION 
Item 1Legal Proceeding2524
Item 1ARisk Factors -Not Applicable2624
Item 2Unregistered Sales of Equity. Securities and Use of Proceeds2624
Item 3Defaults on Senior Securities -Not Applicable2625
Item 4Mine Safety. Disclosure -Not Applicable2625
Item 5Other Information2625
Item 6Exhibits2726
 Signatures2827

 

 

 

 

 

 

 

 

3 
 Table of Contents

 

 

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table of Contents

Canna Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
  June 30, 2019 December 31, 2018
         
ASSETS        
Current assets        
Cash and cash equivalents $4,439  $7,034 
Assets held-for-sale  1,455,047   1,590,992 
Total current assets  1,459,486   1,598,026 
         
Total assets $1,459,486  $1,598,026 
         
LIABILITIES AND SHAREHOLDERS' DEFICIT        
Current liabilities:        
Accrued interest $40,607  $28,595 
Accrued interest - related party  18,783   14,798 
Derivative liability  3,316,596   2,296,080 
Convertible notes payable, net of discounts of $266,197 and $418,314  502,885   291,686 
Convertible notes payable - related party, net of discounts of $0 and $12,126  57,154   45,028 
Related party loans  349,254   340,527 
Liabilities held-for-sale  2,345,861   1,534,235 
Total current liabilities  6,631,140   4,550,949 
         
Total liabilities  6,631,140   4,550,949 
         
Mezzanine Equity        
Series A Convertible Preferred stock:  $0.0001 par value: 1,000,000 shares authorized:803,000 and 953,000 shares issued and outstanding at June 30, 2019 and at December 31, 2018 respectively  105,300   120,300 
Shareholders’ deficit        
Preferred stock other designations: $0.0001 par value: 10,000,000 shares authorized: 0 and 0 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively  —     —   
Common stock: $0.0001 par value: 350,000,000 shares authorized:226,965,896 and 59,803,654 shares issued and outstanding at June 30, 2019 and December 31, 2018 respectively  22,696   5,980 
         
Additional paid-in Capital  2,713,159   1,131,837 
Accumulated deficit  (7,281,193)  (3,905,831)
Total Canna Corporation shareholders' deficit  (4,545,338)  (2,768,014)
Non-controlling interest  (731,616)  (305,209)
Total shareholders' deficit  (5,276,954)  (3,073,223)
Total liabilities and shareholders’ deficit $1,459,486  $1,598,026 

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Canna Corporation
Condensed Consolidated Statements of Operation
(Unaudited)
         
  For the three months ended For the six months ended
  June 30, June 30,
  2019 2018 2019 2018
         
OPERATING EXPENSE                
General and administrative expenses $116,756  $15,648  $136,317  $53,948 
Total operating expense  116,756   15,648   136,317   53,948 
Loss from operations  (116,756)  (15,648)  (136,317)  (53,948)
OTHER INCOME (EXPENSES)                
Interest expense and amortization of debt discount  (431,982)  (68,359)  (1,059,113)  (349,143)
Change in fair value of derivative liability  (1,145,795)  (557,463)  (1,460,364)  3,614,566 
Fixed assets write-off  —     —     —     (498)
Gain (loss) on extinguishment of debt  —     —     (198,403)  137,054 
Subscription receivable write-off  —     (250)  —     (250)
Total other income (expense)  (1,577,777)  (626,072)  (2,717,880)  3,401,729 
                 
Income (loss) from continuing operation  (1,694,533)  (641,720)  (2,854,197)  3,347,781 
Loss from discontinued operation  (8,962)  —     (947,572)  —   
                 
NET INCOME (LOSS) $(1,703,495) $(641,720) $(3,801,769) $3,347,781 
                 
Less: loss attributable to non-controlling interest  (4,032)  —     (426,407)  —   
                 
Net income (loss) attributable to Canna Corporation shareholders  (1,699,463)  (641,720)  (3,375,362)  3,347,781 
                 
Net income (loss) per share applicable to common stockholders - basic $(0.01) $(0.01) $(0.02) $0.10 
Income (loss) from continuing operation per share applicable to common stockholders - basic $(0.01) $(0.01) $(0.02) $0.10 
Loss from discontinued operation per share applicable to common stockholders - basic $(0.00) $0.00  $(0.00) $0.00 
                 
Net income (loss) per share applicable to common stockholders - diluted $(0.01) $(0.01) $(0.02) $0.00 
Income (loss) from continuing operation per share applicable to common stockholders - diluted $(0.01) $(0.01) $(0.02) $0.00 
Loss from discontinued operation per share applicable to common stockholders - diluted $(0.00) $0.00  $(0.01) $0.00 
                 
Weighted average number of common shares outstanding - basic  226,965,896   42,787,728   175,835,076   33,852,073 
                 
Weighted average number of common shares outstanding - diluted  226,965,896   42,787,728   175,835,076   1,000,914,420 

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Canna Corporation
Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit)
             
  Common Stock        
  Shares Amount Additional Paid in Capital Accumulated Deficit Non-Controlling Interest Total Shareholders' Deficit
BALANCE, DECEMBER 21, 2017  3,915,769  $392  $605,615  $(5,222,959) $—    $(4,616,952)
Cancellation of common shares  (156,000)  (16)  (2,324)          (2,340)
Issuance of common shares for conversion of debt  265,902   27   47,320           47,347 
Issuance of common shares for conversion of preferred stock  37,000,000   3,700               3,700 
Net income              3,989,500       3,989,500 
BALANCE, MARCH 31, 2018  41,025,671  $4,103  $650,611  $(1,233,459) $—    $(578,745)
Issuance of common shares for conversion of debt  232,533   23   17,627           17,650 
Subscription receivable write-off  2,500,000   250               250 
Net loss              (641,720)      (641,720)
BALANCE, JUNE 30, 2018  43,758,204  $4,376  $668,238  $(1,875,179) $—    $(1,202,565)
                         
BALANCE, December 31, 2018  59,803,654  $5,980  $1,131,837  $(3,905,831) $(305,209) $(3,073,223)
Issuance of common shares for convertible debt and resolution of derivative liabilities  17,162,242   1,716   1,581,322           1,583,038 
Issuance of common shares for preferred stock  150,000,000   15,000               15,000 
Net loss              (1,675,899)  (422,375)  (2,098,274)
BALANCE, March 31, 2019  226,965,896  $22,696  $2,713,159  $(5,581,730) $(727,584) $(3,573,459)
                         
Net loss              (1,699,463)  (4,032)  (1,703,495)
BALANCE, June 30, 2019  226,965,896  $22,696  $2,713,159  $(7,281,193) $(731,616) $(5,276,954)

See accompanying notes to the unaudited condensed consolidated financial statements.

 Table of Contents 

 

Mining Power Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
  September 30, 2018 December 31, 2017
     
ASSETS        
Current assets        
Cash and cash equivalents $235,843  $—   
Accounts receivable, net  38,890   —   
Prepaid expenses  12,200   4,500 
Other assets - cryptocurrencies  239,016   —   
Assets of discontinued operations  —     498 
Total current assets  525,949   4,998 
PROPERTY & EQUIPMENT, NET  1,469,537   —   
Total assets  1,995,486  $4,998 
         
LIABILITES AND SHAREHOLDERS' EQUITY (DEFICIT)        
Current liabilities        
Accounts payable $51,387  $—   
Accrued expenses  5,080   —   
Accrued interest  27,755   11,917 
Payroll liabilities  25,888   —   
Derivative liability  1,862,832   4,454,993 
Convertible notes payable, net of discounts of $615,110 and $190,634  94,890   30,040 
         
Convertible notes payable - related party, net of discounts of $ 43,481 and $0  13,673   —   
         
Related party loans  325,527   —   
Auto loans, current portion  42,223   —   
Loans payable  714,900   —   
Deferred revenue  599,238   —   
Total current liabilities  3,763,393   4,496,950 
Long Term Liabilities        
Auto loans, non-current portion  86,582   —   
Total Long-Term Liabilities  86,582   —   
Total liabilities  3,849,975   4,496,950 
         
Canna Corporation
Condensed Consolidated Statements of Cash-Flows
(Unaudited)
  Six Month Ended
  June 30,
  2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) $(3,801,769) $3,347,781 
Loss from dicontinued operations  947,572   —   
Loss from continuing operations  (2,854,197)  3,347,781 
Adjustments to reconcile net income (loss) to net cash used in operating activities:        
Fixed assets written off  —     498 
(Gain) loss on extinguishment of debt  198,403   (137,054)
Amortization of debt discount  1,011,433   216,472 
Change in fair value of derivative liability  1,460,364   (3,614,566)
Subscription receivable write-off  —     250 
Change in operating assets and liabilities:        
Accrued interest  47,675   132,671 
Net cash used in operating activities - continuing operations  (136,322)  (53,948)
Net cash used in operating activities - discontinued operations  (322,902)  —   
Net cash used in operating activities  (459,224)  (53,948)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Net cash used in investing activities  - continuing operations  —     —   
Net cash used in investing activities - discontinued operations  (103,805)  —   
Net cash used in investing activities  (103,805)  —   
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from convertible notes payable  125,000   —   
Proceeds from related party loans  28,727   54,401 
Repayment of related party loans  (20,000)  —   
Net cash provided by financing activities - continuing operations  133,727   54,401 
Net cash provided by financing activities  - discontinued operations  250,394   —   
Net cash provided by financing activities  384,121   54,401 
         
NET CHANGE IN CASH  (178,908)  453 
Cash, beginning of period - continuing operation  7,034   —   
Cash, beginning of period - discontinued operation  176,313   —   
Cash, end of period - continuing operation $4,439  $453 
         
NON-CASH INVESTING AND FINANCING ACTIVITIES        
Issuance of shares of common stock for conversion of debt $1,583,038  $64,997 
Issuance of shares of common stock for conversion of preferred stock $15,000  $3,700 
Derivative liabilities recognized as debt discounts $847,190  $—   
Cancellation of common shares $—    $2,340 
         
SUPPLEMENTAL DISCLOSURES:        
Cash paid for income taxes $—    $—   
Cash paid for interest $—    $—   

See accompanying notes to the unaudited condensed consolidated financial statements.

 Table of Contents 

Commitments and Contingencies    
Shareholders’ equity (deficit)    
Series A Convertible Preferred stock:  $0.0001 par value: 1,000,000 shares authorized: 953,000 and 1,000,000 shares issued and outstanding at September 30, 2018 and at December 31, 2017 respectively  95   100 
         
         
Non-Controlling interest  (179,126)  —   
Preferred stock other designations: $0.0001 par value: 10,000,000 shares authorized: 0 and 0 shares issued and outstanding at September 30, 2018 and December 31,2017 respectively  —     —   
         
Common stock: $0.0001 par value: 100,000,000 shares authorized:59,303,654 and 3,915,769 shares issued and outstanding at September 30, 2018 and December 31, 2017 respectively  5,930   392 
         
Additional paid-in capital  1,130,642   730,515 
Accumulated deficit  (2,812,030)  (5,222,959)
Total shareholders’ equity (deficit)  (1,854,489)  (4,491,952)
Total liabilities and shareholders’ equity (deficit) $1,995,486  $4,998 
         

See accompanying notes to the condensed consolidated unaudited financial statements.

Table of Contents

Mining Power Group, Inc.
Condensed Consolidated Statements of Operation
(Unaudited)
 
  For the three months ended For the nine months ended
  September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
       
         
REVENUES $185,869  $—    $185,869  $—   
COST OF SALES  145,428   —     145,428   —   
GROSS PROFIT  40,441   —     40,441   —   
General and administrative expenses  484,085   —     538,033   —   
Depreciation expense  7,734   —     7,734   —   
Total operating expense  491,819   —     545,767   —   
Loss from operations  (451,378)  —     (505,326)  —   
OTHER INCOME (EXPENSES)                
Interest expense and amortization of debt discount  (331,270)  (19,012)  (680,413)  (27,278)
Change in fair value of derivative liability  1,101,759   (370,306)  8,398,544   (443,917)
Beneficial conversion feature and derivative interest  (1,409,311)  —     (5,091,530)  —   
Gain (loss) on cryptocurrency  (26,028)  —     (26,028)  —   
Fixed asset write-off  —     —     (498)  —   
Gain on extinguishment of debt  —     —     137,054   —   
Subscription receivable write-off  250   —     —     —   
                 
Total other income (expense)  (664,600)  (389,318)  2,737,129   (471,195)
Income (Loss) from continuing operations  (1,115,978)  (389,318)  2,231,803   (471,195)
                 
Income (Loss) from discontinued operations  —     (46,977)  —     (314,575)
                 
NET INCOME (LOSS) $(1,115,978) $(436,295) $2,231,803  $(785,770)
Less: Income (loss) attributable to non-controlling interest  (179,126)  —     (179,126)  —   
                 
Net income (loss) attributable to Mining Power shareholders $(936,852) $(436,295) $2,410,929 $(785,770)
Net income (loss) per share applicable to common stockholders - basic (continuing operations) $(0.02) $(0.16) $0.06  $(0.17)
                 
Net income (loss) per share applicable to common stockholders - basic (discontinued operations) $0.00  $(0.02) $0.00  $(0.12)
                 
Net income (loss) per share applicable to common stockholders - diluted (continuing operations) $(0.02) $(0.16) $0.06  $(0.17)
                 
Net income (loss) per share applicable to common stockholders - diluted (discontinued operations) $(0.02) $(0.02) $0.00  $(0.12)
                 
Weighted average number of common shares outstanding - basic  55,215,525   2,789,067   41,328,152   2,722,751 
                 
Weighted average number of common shares outstanding - diluted  1,1016,954,348   2,789,067   1,003,066,976   2,722,751 
                 

See accompanying notes to the condensed consolidated unaudited financial statements.

Table of Contents

Mining Power Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
   
  Nine months ended
  September 30, 2018 September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net Income $2,231,803  $(471,195)
Adjustment to reconcile net income to net cash provided by operating activities:        
Change in fair value of derivative liability  (8,398,544)  (68,486)
Beneficial conversion feature and derivative interest  5,091,530   512,403 
Stock issued for services  15   —   
Fixed assets written off  498   —   
Gain on extinguishment of debt  (137,054)  —   
Amortization of debt discount  425,885   18,410 
Depreciation and amortization expense  7,734   —   
Loss on cryptocurrency  26,028   —   
Default penalty interest on convertible notes  213,414   —   
Change in operating assets and liabilities:        
Accounts receivable  (38,890)  —   
Prepaid expenses  (7,700)  —   
Other current assets  (265,044)  —   
Accounts payable and accrued expenses  92,582   —   
Payroll liability  25,888   —   
Deferred revenue  599,238   —   
Net cash provided by operating activities - continuing operations  (132,617)  (8,868)
Net cash provided by operating activities - discontinued operations  —     (241,682)
Net cash provided by operating activities  (132,617)  (250,550)
         
         
Table of Contents

CASH FLOWS FROM INVESTING ACTIVITIES:    
Cash paid for asset acquisitions  (633,567)  —   
Net cash used in investing activities - continuing operations  (633,567)  —   
Net cash used in investing activities - discontinued operations  —     —   
Net cash used in investing activities  (633,567)  —   
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from related party loans  344,401   —   
Repayment of related party loans  (18,874)  —   
Proceeds from convertible debt  676,500   192,500 
Net cash provided by financing activities - continuing operations  1,002,027   192,500 
Net cash provided by financing activities - discontinued operations  —     53,790 
Net Cash provided by financing activities  1,002,027   246,290 
         
NET CHANGE IN CASH  235,843   (4,260)
Cash, beginning of period  —     4,260 
Cash, end of period $235,843  $—   
         
NON-CASH INVESTING AND FINANCING ACTIVITIES        
Issuance of shares of common stock  for convertible debt $407,985  $—   
Issuance of shares of common stock  for conversion of preferred stock $4,700  $—   
Cancellation of common shares $2,340  $—   
Loans issued to acquire fixed assets $843,705  $—   
Derivative liabilities recognized as debt discount $716,500  $—   
Replacement of convertible note to convertible note - related parties $74,084  $—   
         
SUPPLEMENTAL DISCLOSURES:        
Cash paid for income taxes $—    $—   
Cash paid for interest $—    $—   
         

 See accompanying notes to the condensed consolidated unaudited financial statements.

Table of Contents

Canna Corporation

Notes to the Condensed Consolidated Financial Statements

SeptemberJune 30, 2018 2019

(Unaudited)

NOTE l: NATURE OF ORGANIZATION

Mining Power Group, Inc. formerly known as Rich Cigars, Inc.Canna Corporation (the "Company") was initially a Florida Corporation incorporated on July 29, 2013, and was established to manufacture and distribute high-quality, hand rolled, premium cigars under the Rich Cigars brand name. The Company had branded custom cigars to be sold via the internet and through retail locations. The Company's primary operations are currently through Northway Mining, LLC (a New York limited liability corporation) as a data center for third parties’ cryptomining processes located in New York State, in which the Company has a majority interest (55%) acquired on August 1, 2018. Management intends to conduct our business principally in the U.S.

Northway Mining, LLC’s (“NWM”), core business is providing hosting and security services for third parties’ cryptomining processes. These third parties offer security servicesprocesses, including continuous camera recording, night-vision, motion activation, and automatic text notification to onsite staff.

In November 2017, the Company underwent a change in control and became a Colorado corporation. As a result of this change, the Company changed the business name to Intercontinental Technology, Inc. in order to reflect a change in the Company's direction and overall strategy. The Company's strategic direction was to focus on the acquisition, development, and marketing of proprietary patented products that are readily marketable internationally, and at the same time, enterentering the business of cryptocurrency mining by the ownership of multiple cryptocurrency mining machines.

On December 26, 2017, the Company completed a reorganization. Rich Cigars, Inc., having been renamed to RCGR SUB, Inc., became a direct, wholly-owned subsidiary of a newly-formednewly formed Delaware corporation, First Intercontinental Technology, Inc., which. First Intercontinental Technology, Inc. was then considered the parent and is now the public entity. Additionally, another Delaware corporation was formed, Intercontinental Services, Inc. As of the effective date of the reorganization,merger, all outstanding shares of common stock and preferred stock of Rich Cigars, Inc. were automatically converted into identical shares of common stock or preferred stock in the parent on a one-for-one basis.

On February 16, 2018, the Company's Board of Directors voted to annul and vitiate the series of transactions in Delaware by filing certificates of correction with Delaware's Secretary of State. As a result, Intercontinental Technology, Inc. and First Intercontinental Technology, Inc. were dissolved and all ownership reverted back to equity shares in RCGR SUB, Inc. On February 21, 2018, the Company amended and restated itsthe Articles of Incorporationincorporation in order to change the Company's name from RCGR SUB, Inc. to Mining Power Group, Inc.

On April 4, 2019, the Company effected a name change in the State of Colorado from Mining Power Group, Inc. to “Canna Corporation” in preparation for a refocus of its business plan.  Similarly, the name change was filed in the State of Florida, where the Company’s headquarters are located.

NOTE 2: GOING CONCERN

These condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future. As of SeptemberJune 30, 2018,2019, the Company has an accumulated deficit of $ 2,812,030$7,281,193 since inception. This raises substantial doubt about the Company's ability to continue as a going concern.

The extent of the impact of the coronavirus ("COVID-19") outbreak on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions, and the impact of COVID-19 on the overall economy, all of which are highly uncertain and cannot be predicted. If the overall economy is impacted for an extended period, the Company’s future operating results may be materially adversely affected.

Management's plans include raising capital through the equity markets to fund operations and eventually generate revenue through its business; however, there can be no assurance that the Company will be successful in such activities. These condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classifications of the liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3: DISCONTINUED OPERATIONS

On November 27, 2017,As of June 30, 2019, the Company was under ongoing negotiation to transfer Northway Mining, LLC to a related party, who at the time of filing this 10Q was no longer a related party. Due to the foregoing, on July 1, 2019, the Company entered into certain Membership Interest Transfer Agreement and announced a Subscription Agreement with Mr. Dror Svorai,change in the current CEO ofstrategic focus by not continuing the Company, for the purchase of 1,000,000 shares of restricted Series A Convertible Preferred Supermajoritycryptocurrency business unit.

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voting stock. Pursuant toAs a result of this agreement, the Company announced a shift, in the strategic focus by which the Company has recognizeddisclosed in the financials as Assets held-for-sale the amount of $1,455,047 and Liabilities held-for-sale in the amount of $ 2,345,861 reorganizing a cessation of itits business operations of Rich Cigarsfor Northway Mining, LLC, in accordance with Accounting Standards Codification (ASC) 205-20,Discontinued Operations.Operations. As such, the historical results of the CompanyNorthway Mining, LLC, have been classified as discontinued operations. As of the year ended December 31, 2017,2018, assets of discontinued operations consisted of property and equipment, of $498.cash and other assets, totals $1,590,992. As of December 31, 2018, liabilities of discontinued operations consisted of accounts payable and loans total $1,534,235.

Assets and liabilities held-for-sale as of June 30, 2019 and December 31,2018 consisted of the period ended September 30, 2018 all property and equipment was written off.following:

  June 30, December 31,
  2019 2018
Assets held-for-sale        
Cash and cash equivalents $—    $176,313 
Cryptocurrency  —     6,189 
Property and equipment, net  1,455,047   1,408,490 
Total $1,455,047  $1,590,992 
         
Liabilities held-for-sale        
Current liabilities:        
Accounts payable $301,548  $58,628 
Checks drawn in excess of bank balance  9,139   27,793 
Accrued expenses  5,080   5,080 
Payroll liabilities  7,519   7,707 
Related party loans  359,114   20,001 
Auto loans  44,256   45,950 
Loans payable - net of discounts $0 and $180,085  1,363,843   1,010,714 
Deferred revenue  255,362   275,362 
Contingent liability  —     83,000 
Total $2,345,861  $1,534,235 

Results of the discontinued operations for the ninethree months and six months ended SeptemberJune 30, 2019 and 2018 and 2017 are as follows:are:

  Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
         
REVENUES $—    $—    $—    $4,606 
COST OF SALES  —     —     —     2,382 
                 
GROSS PROFIT  —     —     —     2,224 
                 
OPERATING EXPENSES                
Amortization Expense  —     425   —     1,275 
Depreciation Expenses  —     106   —     320 
Marketing Expense  —     —     —     32,095 
Other General and Administrative  —     46,446   —     283,109 
Total operating income (expenses)  —     46,977   —     316,799 
Income (loss) from operations $—    $(46,977) $—    $(314,575)

  Nine Months Ended September 30, 2018 

Nine Months

Ended September 30, 2017

CASH FLOWS FROM OPERATING ACTIVITIES        
Net Loss from operations $—    $(314,575)
Adjustments to reconcile net loss to net cash        
Depreciation and Amortization  —     1,595 
Stock issued for services  —     20,000 
Change in assets and liabilities:        
Prepaid expenses  —     (7,861)
Inventory  —     13,338 
Accounts payable and accrued expenses  —     45,821 
Net cash used in operating activities $—    $(241,682)
CASH FLOWS FROM FINANCING ACTIVITIES        
Shareholder Contributions $—    $53,790 
Net cash used in financing activities $—    $53,790 
  Three months ended Six months ended
  June 30, June 30,
  2019 2018 2019 2018
REVENUES $—    $—    $10,392  $—   
COST OF SALES  —     —     436,403   —   
GROSS PROFIT  —     —     (426,011)  —   
General and administrative expenses  40,416   —     124,068   —   
Depreciation expense  28,783   —     57,248   —   
Total operating expense  69,199   —     181,316   —   
Loss from operations  (69,199)  —     (607,327)  —   
OTHER INCOME (EXPENSES)                
Interest expense and amortization of debt discount  (83,667)  —     (477,960)  —   
Impairment loss on cryptocurrency  —     —     (6,189)  —   
Gain on extinguishment of debt  143,904   —     143,904   —   
Total other income (expense)  60,237   —     (340,245)  —   
Loss from discontinued operations $(8,962) $—    $(947,572) $—   

 

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The following table provides supplemental cash flow information related to discontinued operations:

  Six Month Ended
  June 30,
  2019
CASH FLOWS FROM OPERATING ACTIVITIES:    
Loss from discontinued operation $(947,572)
Adjustments to reconcile loss from discontinued operation to net cash used in operating activities - discontinued operation:    
Gain on extinguishment of debt  (143,904)
Amortization of debt discount  207,040 
Depreciation expense  57,248 
Impairment loss on cryptocurrency  6,189 
Default penalty interest  270,920 
Change in operating assets and liabilities:    
Accounts payable and accrued expenses  247,365 
Payroll liability  (188)
Deferred revenue  (20,000)
Net cash used in operating activities - discontinued operations  (322,902)
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Cash paid for fixed assets acquisition  (103,805)
Net cash used in investing activities - discontinued operations  (103,805)
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Bank overdraft  (18,654)
Proceeds from notes payable  112,400 
Repayment of notes payable  (65,506)
Proceeds from related party loans  307,134 
Repayment of related party loans  (83,286)
Repayment of auto loan  (1,694)
Net cash provided by financing activities  - discontinued operations  250,394 

 

NOTE 4: SUMMARY OF SIGNIFICANT ACCOUNT POLICIES

Principles of Consolidation

The accompanying consolidated financial statements of Canna Corporation include its majority owned subsidiary Northway Mining, Power Group, Inc. (formerly Rich Cigars, Inc.) includesLLC. All significant intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements include the accounts of Mining Power GroupCanna Corporation and its subsidiary Northway Mining, LLC, which isare controlled and owned 55% by Mining Power Group, Inc.Canna Corporation.

All of the equity interests in Northway Mining not held by the Company are reflected as non-controlling interests. In the consolidated statements of operations, we allocate net income (loss) attributable to non-controlling interests to arrive at net income (loss) attributable to the Company.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. This change in classification does not materially affect previously reported cash flows from operations or from financing activities in the Statement of Cash Flows and had no effect on the previously reported Statement of Operations for any period. Currently, the Company presents the convertible Series A preferred stock as part of permanent equity instead of the mezzanine section of the balance sheet.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles ("GAAP")accounting principles generally accepted in the United States of America. America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.

In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments (which includenecessary (consisting only of normal recurring adjustments) necessaryaccruals) to present fairly the financial position of the Company as of June 30, 2019 and the

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results of operations and cash flows have been made for the periods ended September 30, 2018 and 2017. Certain information and footnote disclosures normally included in financial statements are prepared in accordance with U.S. generally accepted accounting principles. The Company suggests these condensed financial statements be read in conjunction with the December 31, 2017 audited financial statements and notes thereto included in the Company's Form 10-K.presented. The results of operations for the periodsix months ended SeptemberJune 30, 20182019 are not necessarily indicative of the operating results for the full year.fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on June 17, 2019.

The Company has elected a December 31 fiscal year-end.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAPGenerally Accepted Accounting Principles ("GAAP") in the United States of America requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements.

Carrying Value, Recoverability and Impairment of Long-Lived Assets

The Company’s long-lived assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Cash and Cash Equivalents

The Company considers all investments with a maturity date of three months or less when purchased to be cash equivalents. The Company had cash in the amount of $235,843$4,439 and $0 at September$183,347 as of June 30, 20182019 and December 31, 2017,2018, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer-specificcustomer specific facts and general economic conditions that may affect a client’s ability to pay.

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Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company determines when receivables are past due or delinquent based on how recently payments have been received. The Company set up an allowance for doubtfulhas net $0 in accounts receivable at June 30, 2019 and recorded $57,246 as bad debt expense.

December 31, 2018.

Cryptocurrencies

The Company receives cryptocurrencies from its customers as a form of payment and converts them into cash in less than 3 months from receipt. The Company accounts for its cryptocurrencies as indefinite-lived intangible assets at historical losscost less impairment in accordance with ASC 350Intangibles - Goodwill and Other. AsOther. During the six months ended June 30, 2019 and 2018, the Company recorded impairment losses of September$6,189 and $0, respectively, resulting in cryptocurrency balances of $0 and $6,189 as of June 30, 20182019 and December 31, 2017, the fair value of cryptocurrencies was $239,016 and $0, respectively, which resulted in impairment loss of $26,028 and $0 for the nine months ended September 30, 2018, and 2017, respectively.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized.

Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values shown in the table below) over the estimated useful lives of the respective assets.

Fixed Asset Estimated Useful Life (Years)
Building 39
Improvements 5
Furniture and office equipment 5
Computer Equipment 5
Vehicles 5
 5 

Upon the sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations. During the six months ended June 30, 2019 and 2018, the Company purchased $103,805 and $0, respectively, of fixed assets, wrote off $0 and $498, respectively, of fixed assets, and recorded $57,248 and $0, respectively, of depreciation expense, resulting in net fixed assets of $1,455,047 and $1,408,490 at June 30, 2019 and December 31, 2018, respectively, which are reflected as assets held-for-sale and discontinued operations (Note 3) in the accompanying financial statements as follows:

Description Total Acquisition Cost Span of Life (years) Depreciation Expense
   
       
Real Estate  - Land $102,218   —    $—   
Real Estate - Building  982,682   39   424 
Improvements  171,382   5   2,907 
Office Equipment & Furnitures  80,133   5   805 
Computer Equipment  8,840   5   97 
Vehicles  132,016   5   3,501 
TOTAL: $1,477,271      $7,734 

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Description Total Acquisition Cost Span of Life (years) Depreciation Net Value June 30, 2019
    Accumulated as of December 31, 2018 Dep Exp 2019 Q1 Dep Exp 2019 Q2 Accumulated as of June 30, 2019  
               
Computer Equipment $8,990   5   543   480   487  $1,510  $7,480 
Improvements  196,390   5   11,676   9,685   9,793  $31,154  $165,236 
Office Equipment & Furniture  2,882   5   90   142   144  $376  $2,506 
Pods  185,996   5   5,289   9,172   9,274  $23,735  $162,261 
Real Estate - Land  102,218   —     —     —     —    $—    $102,218 
Real Estate - Building  982,682   39   968   6,203   6,272  $13,443  $969,239 
Vehicle  56,435   5   4,731   2,783   2,814  $10,328  $46,107 
Total $1,535,592      $23,297  $28,465  $28,783  $80,545  $1,455,047 

 

Deferred revenue

The Company recognizes revenue for subscription hosting service sales over the subscription period. Deferredperiod and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date, for which cash has already been received.date. As of SeptemberJune 30, 20182019 and December 31, 2017,2018, the amountbalances of deferred revenue was $599,238were $255,362 and $0, respectively.

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Loans Payable

The Company within the acquisition of Northway Mining LLC in August 1, 2018, acquired also certain real estate and vehicles, the unpaid balances on the two propertiesareguaranteed by mortgages having basic payment terms and conditions as follows: 707 Flats Road payable after 180 days from August 15, 2018, no interest and 2 Flint Mine Road with a 12 months payment period, and a maturity date on September 1, 2019, 5% interest rate. The unpaid balances on vehicles are guaranteed with a lien 72 month maturity since August 24, 2018 and October 5, 2018$275,362, respectively. The decreased amount is a result of mortgages as of September$20,000 refunded to a customer. No services were performed to clients during the six months ended June 30, 2018 is $714,9002019 related to the deferred revenue, which is payable over a twelve month period. The debt on vehicles is deferred as follows: (a) $42,223 payable within a 12-month period following September 30, 2018 (current portion), and (b) $86,582 payable during 2020 through 2023 (non-current portion), as detailedincluded in the following chart. These loans have a lien on the vehicles, and the interest rate for Community Bank is 5.79% and 1st Bank of Scotia is 7.29%liabilities held-for-sale (Note 3).

LENDER CURRENT  LIABILITIES LONG TERM LIABILITIES TOTAL DEBT
  2018 2019 2020 2021 2022 2023
Community Bank $13,656  $14,366  $13,656  $13,656  $13,656  $13,657  $82,648 
1st Scotia Bank  6,920   7,280   7,989   7,989   7,989   7,989   46,157 
707 Flats Rd.  —     134,900   —     —     —     —     134,900 
Marsan Properties  97,500   482,500   —     —     —     —     580,000 
Total: $118,077  $639,046  $21,645  $21,645  $21,645  $21,646  $843,705 

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature ("BCF"). A Beneficial Conversion FeatureBCF is recorded by the Company as a debt discount pursuant to ASC 470-20Debt with Conversion and Other Options.In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

Embedded Conversion Features

The Company evaluates embedded conversion features within convertible debt under ASC 815Derivatives and Hedging to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20Debt with Conversion and Other Optionsfor consideration of any beneficial conversion features.

Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black ScholesBlack-Scholes option-pricing model. In assessing the convertible debt instruments,

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management determines if the convertible debt host instrument is conventional convertible debt and, further, if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black Scholes option-pricing model.

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Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on our principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

U.S. generally accepted accounting principles provide for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:

Level 1: Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

● quoted prices for similar assets or liabilities in active markets;

● quoted prices for identical or similar assets or liabilities in markets that are not active;

● inputs other than quoted prices that are observable for the asset or liability; and

● inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3: Inputs that are unobservable and reflect management’s own assumptions about the inputs market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows).

Our financial instruments consist of cash, accounts receivable, accounts payable, and debt. We have determined that the book value of our outstanding financial instruments as of SeptemberJune 30, 20182019 and December 31, 2017,2018, approximates the fair value due to their short-term nature.

Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of SeptemberDecember 31, 2018 and June 30, 2018:2019:

  

  Level 1 Level 2 Level 3 Total
        September 30, 2018 December 31, 2017
Derivative Liabilities $—    $—    $1,862,832  $1,862,832  $4,454,993 
  Level 1 Level 2 Level 3 Total
Derivative Liability                
December 31, 2018 $—    $—    $2,296,080  $2,296,080 
June 30, 2019 $—    $—    $3,316,596  $3,316,596 

 

The Company reflects the fair value of derivativefor liabilities using the Black Scholes pricing model. The following chart arediscloses the estimated fair values for the Company’s derivative financial instruments and based on the parameters disclosed in our Notes 5 and 6 hereto:

Lenders September 30, 2018 December 31, 2017
Power Up Lending Group, Ltd $6,261  $553,851 
Power Up Lending Group, Ltd [2] $—    $353,071 
Crown Bridge Partners, LLC $—    $1,679,176 
Kodiak Capital Group, LLC $—    $680,625 
D&D Capital, Inc $20,817  $—   
S&E Capital, Inc $117,050  $—   
Firstfire Global Opportunities Funds, LLC $390,009  $—   
Eagle Equities $1,328,695  $1,188,270 
Total $1,862,832  $4,454,993 
Derivative Liability Reconciliation 

June 30,

2019

 

December 31,

2018

     
 Balance beginning of the period $2,296,080  $4,454,993 
 Derivative liability additions associated with convertible debt  847,190   5,840,449 
 Derivative liability reductions due to conversions or settlement of underlying debt  (1,287,038)  560,945 
 Change in Fair Value  1,460,364   (8,560,307)
 Ending Balance $3,316,596  $2,296,080 

 

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Revenue Recognition

Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) standard update ASU 2014-09,Revenue “Revenue from Contracts with Customers, (“Topic 606”) which provides a principles-based, five-step approach to measure and recognize revenue from contracts with customers. Revenue is recognized when the following criteria are met:

Identification of the contract, or contracts, with a customer;
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when, or as, we satisfy performance obligationsobligation.

The adoption of this guidance did not have a material impact on the Company’s consolidated statementstatements of operations, cash flows, andshareholders’ equity (deficit), or balance sheetsheets as of the adoption date or fordate.

The Company did not generate any revenues during the ninesix months ended SeptemberJune 30, 2019. Revenues generated during the six months ended June 30, 2018 or 2017.

The Company's revenues have been generated primarily through hosting services to third parties. The termstotaled $10,392 and were included in net loss from discontinued operations in the accompanying statements of these agreements generally consist of a deposit and monthly billing cycles covering our services.  

For the nine months ended September 30, 2018, all agreements met the above criteria, or in exceptional cases only, our involvement was to sell to some of the end users at pricing that is consistent with market transactions, thereby allowing for the recognition of revenue on such transactions upon receipt. operations (Note 3).

We periodically review for any expected period of substantial involvement under the agreements that provide for non-refundable up-front payments and fees. If applicable, we will adjust the amortization periods when appropriate to reflect changes in assumptions relating to the duration of our expected involvement.

Revenue is recognized in the month the service (mostly hosting) is provided. Deferred Revenues on the Company’s balance sheet reflects the part of invoiced services (mostly hosting) that will be provided after September 30, 2018 for which cash payments have been received.

Income Taxes

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 bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

The Company files income tax returns in the United States, New York and Florida, States, which are subject to examination by the tax authorities in these jurisdictions. Generally, the statute of limitations related to the Company's federal and state income tax return is three years. The state impact of any federal changes for prior years remains subject to examination for a period up to five years after formal notification to the states.

Management has evaluated tax positions in accordance with ASC 740,Income Taxes,and has not identified any significant tax positions, other than those disclosed. All of the Company's tax years since inception remain subject to examination by Federal and State jurisdictions.

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Earnings Per Share

Basic net income per common share("Basic EPS'')excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share("Diluted EPS'')reflects the potential dilution that could occur if stock options or other contracts to issue shares of common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share.

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Three Months Ended 

September 30,

 

Nine Months Ended

September 30,

  2018 2017 2018 2017
Numerator        
Net income (loss) applicable to common shareholders $(936,853) $(436,295) $2,410,929  $(785,770)
                 
Denominator                
Weighted average common shares outstanding, basic  55,215,525   2,789,067   41,328,152   2,722,751 
Convertible preferred stock  953,000,000   —     953,000,000   —   
Convertible promissory notes  8,738,824   —     8,738,824   —   
Weighted average common shares outstanding, diluted  1,016,954,348   2,789,067   1,003,066,976   2,722,751 
Net Income per share - Basic $(0.02) $(0.16) $0.06  $(0.29)
Net Income per shares - Diluted $(0.02) $(0.16) $0.00  $(0.29)

  Six Months Ended June 30
  2019 2018 
Continuing Operations        
Numerator        
Net income (loss) from continuing operations, net of tax $(2,854,197) $3,347,781 
         
Denominator        
Weighted average common shares outstanding, basic  175,835,076   33,852,073 
Convertible preferred stock  —     963,000,000 
Convertible promissory notes  —     4,062,347 
Weighted average common shares outstanding, diluted  175,835,076   1,000,914,420 
Basic EPS from continuing operations $(0.02) $0.10 
Diluted EPS from continuing operations $(0.02) $0.00 
         
Discontinued Operations        
Numerator        
Income (loss) from discountinued operations, net of tax  (947,572)  —   
Less: Income (loss) attributable to noncontrolling interest, net of tax  (426,407)  —   
Income (loss) available to common stockholders  (521,165)  —   
         
Denominator        
Weighted average common shares outstanding, basic  175,835,076   33,852,073 
Convertible preferred stock  —     963,000,000 
Convertible promissory notes  —     4,062,347 
Weighted average common shares outstanding, diluted  175,835,076   1,000,914,420 
Basic EPS from discontinued operations $(0.00) $0.00 
Diluted EPS from discontinued operations $(0.00) $0.00 

For the three and six months ended June 30, 2019 and three months ended June 30, 2018, the convertible instruments, consisting of 173,835,076 and 1,000,914,420 common shares into which our outstanding convertible preferred stock and convertible promissory notes, respectively, are convertible, are anti-dilutive and therefore, have been excluded from earnings (loss) per share.

 

NOTE 5: CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable

Power Up Lending Group, LTD

On July 3, 2018,May 30, 2017, the Company entered into a potentially dilutive convertible noteadvance with Eagle Equities LLC.Power Up Lending Group, LTD. The advance, with a face value of $100,000, bears$38,000, bore interest at 8%12% per annum and iswas payable on July 3, 2019.March 5, 2018. The note was issued at a 7% discount, resulting in net proceeds received after issuance costs and fees was $96,500. In accordance with ASC 835-30-45, Interest, the Company records the fees, costs, and original issue discount as reduction of the carrying amount of the debt and amortizes the balances over the life of the debt instrument.$35,000. Additionally, the note iswas convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 60% multiplied by the lowest price of the common shares for the 15 day trading period prior to which the Notice of Conversion iswas received. InDuring the eventyear ended December 31, 2018, the Company experiences a DTC Chill on its shares, the Conversion Price shall be decreased to 50% insteadnoteholder converted $50,858 of 60% while that chill isprincipal and interest into common stock, resulting in effect, DTC Chill is a limitation$0 and $2,387 in principal and interest as of certain services available for a security on deposit at the Depository Trust Company (DTC). A chill is a restriction placed by DTC on one or more of DTC’s services, such as limiting a DTC participant’s ability to make a deposit or withdrawalJune 30, 2019 and December 31, 2018, respectively. The value of the security at DTC. A chill may remain imposed on a security for just a few days or for an extended period of time depending uponconversion feature was assigned to the reasons for the chill and whether the issuer or transfer agent corrects the problem.If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. The conversion formula created an embedded derivative conversion feature.

liability. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of SeptemberJune 30, 2018:2019: dividend yield of zero, 2770 days term to maturity, risk free interest rate of 2.59%0% and annualized volatility of 0%, valued at $9,252.

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annualized volatility of 431%, valued at $268,683 The value of the conversion feature was assigned to the derivative liability and created a loss and debt discount to be amortized over the life of the convertible debt.

On August 10,Eagle Equities LLC

During 2018, the Company entered into a potentially dilutive convertible notethree notes with Eagle Equities LLC. The advance, with a face value of $300,000, bears interest at 8% per annum and is payable on August 10, 2019. The net proceeds received after issuance costs and fees was $285,000. In accordance with ASC 835-30-45, Interest, the Company records the fees, costs, and original issue discount as reduction of the carrying amount of the debt and amortizes the balances over the life of the debt instrument. Additionally, the note isnotes are convertible at the holder'sholder’s discretion into shares of the Company'sCompany’s common stock based on a conversion formula of 60% multiplied by the lowest price of the common shares for the 15 day trading period prior to which the Notice of Conversion is received. In the event the Company experiences a DTC Chill on its shares, the Conversion Price shall be decreased to 50% instead of 60% while that chill is in effect. In accordance with ASC 835-30-45, Interest, the Company records the fees, costs, and original issue discount as reduction of the carrying amount of the debt and amortizes the balances over the life of the debt instrument. If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. The conversion formula created an embedded derivative conversion feature.feature for each note. The notes are summarized as follows:

On July 3, 2018, the Company entered into a convertible note with Eagle Equities LLC. The note, with a face value of $100,000, bears interest at 8% per annum and is payable on July 3, 2019. The net proceeds received after issuance costs and fees was $96,500. On January 22, 2019, Eagle Equities LLC declared a default of the convertible note payable to them resulting in fees and penalties equal to $32,108 due to the Company’s delinquent SEC filings. Also on January 22, 2019 Eagle Equities LLC, sold all of its potentially dilutive convertible note to M Svorai Investment, Inc, a related party, included $7,600 in accrued interest. On February 2, 2019 M Svorai Investments, Inc exercised the convertible option, resulting in 5,162,242 shares issued; at a price of $0.02712 per share issued for $132,108 in principal and $7,892 in interest accrued to the conversion date. The remaining balance principal and interest as of June 30, 2019 was $0. As of December 31, 2018, principal and interest balances were $100,000 and $7,118, respectively.

On August 10, 2018, the Company entered into a convertible note with Eagle Equities LLC. The note, with a face value of $300,000, bears interest at 8% per annum and is payable on August 10, 2019. The net proceeds received after issuance costs and fees was $285,000. On March 14, 2019 Eagle Equities LLC declared a default of the convertible note payable to them resulting in fees and penalties equal to $142,884 due to the Company’s delinquent SEC filings, and in same date, sold all of its potentially dilutive convertible note to Back Nine Capital, LLC $147,628, to One Investment Capital, Inc $147,628 and to Sign N Drive Auto Mall, Inc $147,628. As of June 30, 2019 the following chart show the balances on principal and interest as of June 30, 2019:

Lender June 30, 2019
  Principal  Interest 
Back Nine Capital, LLC (Eagle 2) $147,628  $7,859 
One Investment Capital, Inc (Eagle 2)  147,628   7,859 
Sign N Drive Auto Mall, Inc (Eagle 2)  147,628   7,859 
Total: $442,884  $23,577 

On March 14, 2019, Back Nine Capital LLC, purchased one third of a potentially dilutive convertible note held by Eagle Equities, LLC, issued on August 10, 2018 with a face value of $300,000 and $142,884 as Default Charges, therefore Back Nine Capital, LLC, now held $147,628. The Company valued thisthe related conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of SeptemberJune 30, 2018:2019: dividend yield of zero, 31441 days term to maturity, risk free interest rate of 2.59%2.18% and annualized volatility of 432%348%, valued at $795,326.$398,329. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt. The principal and interest balances as of June 30, 2019 were $147,628 and $7,859 respectively.

On March 14, 2019, One Investment Capital, Inc, purchased one third of a potentially dilutive convertible note held by Eagle Equities, LLC, issued on August 10, 2018 with a face value of $300,000 and $142,884 as Default Charges, therefore One Investment Capital, Inc, now held $147,628. The Company valued the related conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of June 30, 2019: dividend yield of zero, 41 days to maturity, risk free interest rate of 2.18% and annualized volatility of 348%, valued at $398,329. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to amortized over the life of the convertible debt. The principal and interest balances as of June 30, 2019 were $147,628 and $7,859 respectively.

On March 14, 2019, Sign N Drive Auto Mall, Inc, purchased one third of a potentially dilutive convertible note held by Eagle Equities, LLC, issued on August 10, 2018 with a face value of $300,000 and $142,884 as Default Charges, therefore Sign N Drive Auto Mall, Inc, now held $147,628. The Company valued the related conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of June 30, 2019: dividend yield of zero, 41 days to maturity, risk free interest rate of 2.18% and annualized volatility of 348%, valued at $398,329. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to amortized over the life of the convertible debt. The principal and interest balances as of June 30, 2019 were $147,628 and $7,859 respectively.

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On August 10, 2018, the Company entered into a potentially dilutive convertible note with Eagle Equities LLC. The advance,note, with a face value of $100,000, bears interest at 8% per annum and is payable on August 10, 2019. The net proceeds received after issuance costs and fees was $95,000. In accordance with ASC 835-30-45, Interest, the Company records the fees, costs,The principal and original issue discountinterest balances as reductionof March 14, 2019 were $100,000 and $ 5,384, respectively. As of December 31, 2018, principal and interest balances were $100,000 and $3,784, respectively. On March 14, 2019 Eagle Equities LLC declared a default of the carryingconvertible note payable to them in the amount of $47,198 due to the debtCompany’s SEC delinquent filings, and amortizes the balances over the lifein same date Eagle Equities LLC, sold all of the debt instrument. Additionally, theits potentially dilutive convertible note is convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 60% multiplied by the lowest price of the common shares for the 15 day trading period prior to which the Notice of Conversion is received. In the event the Company experiences a DTC Chill on its shares, the Conversion Price shall be decreased to 50% instead of 60% while that chill isGary Berlly, an individual, included $47,198 in effect. If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. The conversion formula created an embedded derivative conversion feature.

accrued interest and penalties. The Company valued thisthe related conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of SeptemberJune 30, 2018:2019: dividend yield of zero, 31441 days term to maturity, risk free interest rate of 2.59%2.18% and annualized volatility of 432%348%, valued at $264,686.$397,179. The value of the conversion feature was assigned to the derivative liability and created a loss and debt discount to be amortized over the life of the convertible debt. The principal and interest balances as of June 30, 2019 were $147,198 and $7,840 respectively.

Firstfire Global Opportunity Fund, LLC

On September 11, 2018, the Company entered into a potentially dilutive convertible note with Firstfire Global Opportunities Fund, LLC. The advance,note, with a face value of $210,000, bears interest at 5% per annum and iswas payable on JulyJune 11, 2018.2019. The note was issued at a $10,000 (“OID”) discount. The net proceeds received after issuance costs and fees was $195,000. In accordance with ASC 835-30-45, Interest, the Company records the fees, costs, and original issue discount as reduction of the carrying amount of the debt and amortizes the balances over the life of the debt instrument. Additionally, the note is convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 65% multiplied by the lowest price of the common shares for the 20 consecutive trading days period immediately preceding the Trading Day that the Company receives a Notice of Conversion. The conversion formula created an embedded derivative conversion feature.

On January 16, 2019, Firstfire Global Opportunities Fund, LLC sold all of its potentially dilutive convertible note of $210,000 issued on September 11, 2018 to: (i) twenty five percent (25%) of its potentially dilutive convertible note to Back Nine Capital LLC, or $52,500; (ii) twenty five percent (25%) of its potentially dilutive convertible note to Gary Berlly, or $52,500; (iii) twenty five percent (25%) of its potentially dilutive convertible note to One Investment Capital, or $52,500 and (iv) twenty five percent (25%) of its potentially dilutive convertible note to Sig N Drive Auto Mall, Inc, or $52,500.

On January 22, 2019, Back Nine Capital, LLC exercised the convertible option, resulting in 3,000,000 shares issued; at a price of $0.0130 per share issued for $39,000 in principal. The balance on the note as of June 30, 2019 was $13,500 and $766 in accrued interest. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of SeptemberJune 30, 2018:2019: dividend yield of zero, 256 day0 days term to maturity, risk free interest rate of 2.36%0% and annualized volatility of 193%0%, valued at $390,009.$51,040. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt.

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NOTE 6: RELATED PARTY LOANS:

Convertible Notes Payable

On February 21, 2018 Crown Bridge Partners LLC, sold partJanuary 23, 2019, Gary Berlly exercised the convertible option, resulting in 3,000,000 shares issued; at a price of its potentially dilutive convertible$0.0130 per share issued for $39,000 in principal. The balance on the note to D&D Capital, Inc, a related party. Accrued interest related to this advanceas of June 30, 2019 was $392$13,500 and $0 at September 30, 2018 and December 31, 2017, respectively, and is included$766 in accrued interest on the condensed consolidated Balance Sheets.interest. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of SeptemberJune 30, 20182019: dividend yield of zero, 1790 days term to maturity, risk free interest rate of 2.36%0% and annualized volatility of 200%0%, valued at $20,817.$51,040. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt.

During the nine months ended September 30, 2018, D&DOn January 23, 2019, One Investment Capital, Inc.,Inc exercised the convertible option, resulting in 2,298,2123,000,000 shares issued; at a price of $0.04134$0.0130 per share issued for $95,008$39,000 in principal. The balance on the note as of June 30, 2019 was $13,500 and $766 in accrued interest. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of June 30, 2019: dividend yield of zero, 0 days term to maturity, risk free interest rate of 0% and annualized volatility of 0%, valued at $51,040. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt.

On January 23, 2019, Sign N Drive Auto Mall, Inc exercised the convertible option, resulting in 3,000,000 shares issued; at a price of $0.0130 per share issued for $39,000 in principal. The balance on the note as of June 30, 2019 was $13,500 and $766 in accrued interest. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of June 30, 2019: dividend yield of zero, 0 days term to maturity, risk free interest rate of 0% and annualized volatility of 0%, valued at $51,040. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt.

On April 9, 2019, the Company entered into a convertible note with Sign N Drive Auto Mall, Inc. The note, with a face value of $15,000, bears interest at 12% per annum and is payable on April 9, 2020, net of proceeds was $15,000. The conversion price (the "Conversion

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Price") shall be a sixty percent (60%) discount to the lowest closing bid price of the common stock of the Company during the thirty (30) trading days before the Conversion Date, as reported by OTC Markets or a comparable reporting agency. The conversion formula created an embedded derivative conversion feature. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of June 30, 2019: dividend yield of zero, 284 days term to maturity, risk free interest rate of 1.92% and annualized volatility of 376%, valued at $133,720. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt. The principal and $2,387interest balances as of June 30, 2019 were $15,000 and $448 respectively.

On April 26, 2019, the Company entered into a convertible note with Sign N Drive Auto Mall, Inc. The note, with a face value of $100,000, bears interest at 12% per annum and is payable on April 26, 2020, net of proceeds was $100,000. The conversion price (the "Conversion Price") shall be a sixty percent (60%) discount to the lowest closing bid price of the common stock of the Company during the thirty (30) trading days before the Conversion Date, as reported by OTC Markets or a comparable reporting agency. The conversion formula created an embedded derivative conversion feature. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of June 30, 2019: dividend yield of zero, 300 days term to maturity, risk free interest rate of 1.92% and annualized volatility of 368%, valued at $892,009. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt. The principal and interest balances as of June 30, 2019 were $100,000 and $2,992 respectively.

On June 28, 2019, the Company entered into a convertible note with Sunny Isles Capital, Inc. The note, with a face value of $10,000, bears interest at 12% per annum and is payable on June 28, 2020, net of proceeds was $10,000. The conversion price (the "Conversion Price") shall be a sixty percent (60%) discount to the lowest closing bid price of the common stock of the Company during the thirty (30) trading days before the Conversion Date, as reported by OTC Markets or a comparable reporting agency. The conversion formula created an embedded derivative conversion feature. The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i) as of June 30, 2019: dividend yield of zero, 364 days term to maturity, risk free interest rate of 1.92% and annualized volatility of 345%, valued at $89,450. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt. The principal and interest balances as of June 30, 2019 were $10,000 and $299 respectively.

At December 31, 2018, the above loans had an aggregate outstanding principal balance of $710,000 and unamortized debt discount of $418,314, resulting in accrued interest.net principal of $291,686.

June 30, 2019 Convertible Notes Payable Summary - Third Parties
Lender Principal Interest Unamortized debt discount Net
Power Up Lending, LTD $—    $2,387  $—    $2,387 
Back Nine Capital, LLC  13,500   766   —     14,266 
Gary Berlly  13,500   766   —     14,266 
One Investment Capital, Inc  13,500   766   —     14,266 
Sign N Drive Auto Mall, Inc  13,500   766   —     14,266 
Gary Berlly(Eagle 3)  147,198   7,840   (40,504)  114,534 
Back Nine Capital, LLC (Eagle 2)  147,628   7,859   (40,623)  114,864 
One Investment Capital, Inc (Eagle 2)  147,628   7,859   (40,623)  114,864 
Sign N Drive Auto Mall, Inc (Eagle 2)  147,628   7,859   (40,623)  116,864 
Sign N Drive Auto Mall, Inc  15,000   449   (11,639)  3,810 
Sign N Drive Auto Mall, Inc  100,000   2,992   (82,240)  20,752 
Sunny Isles Capital, LLC  10,000   299   (9,945)  354 
Total $769,082  $40,606  $(226,197) $545,493 

Loans Payable

The remainingCompany acquired certain real estate and vehicles, [the unpaid balance is guaranteed by mortgages with a 12 months maturity 5% interest rate, along with a lien and 72 month maturity on the vehicles], all outstanding liabilities are held for sale included in (Note 3).

The total mortgage balance with 707 Flats Rd. and Marsan Properties as of December 31, 2018 was $617,400 and $532,487 as of June 30, 2019, which is payable in December 2019 (no default terms).

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The Company also has loan agreements with:

(i)Ultegra Partner, based on an agreement executed as of December 20, 2018 and payable in weekly payments $11,583, last installment due on January 6, 2020, net proceeds of $339,500. This debt was settled as of February 22, 2019 for no gain or loss, and included a prospective payment schedule based on the future sale of certain assets.
(ii)Atlas Advanced, based on an agreement executed as of December 10, 2018, the Company received net proceeds of $67,450, payable in 90 daily payments of $1,216, last installment due on April 23, 2019. This debt was settled as of June 11, 2019 for one payment of $25,000 (Note 9).
(iii)The 1st Scotia Bank vehicle loan is deferred as follows: (a) within 12 month period: $8,239 (included in the balance sheet as Auto loan, current), and (b) thereafter: $36,017 (included in the balance sheet as Auto loan, non-current) in payments of $9,887 in each of the years 2020 through 2022, and $6,356 in the year 2023. The interest rate for 1st Scotia Bank is 7.29%. This loan is not presented in the following chart, as there is no associated debt discount.
(iv)Grand Capital based on an agreement executed as of January 3, 2019, this loan was payable in 72 daily payments of $922 with the last installment due on June 11, 2019. This debt was settled and refinanced on May 2, 2019, and the original note was replaced with a new note for $55,175, resulting in a gain of $1,216

At December 31, 2018, the aggregate principal balance and unamortized debt discount on these loans totaled $1,190,799 and $180,085, respectively, at December 31, 2018. During the six months ended June 30, 2019 and 2018, the Company received, in aggregate, total proceeds of $112,400 and $0, respectively. The principal balance as of SeptemberJune 30, 2019 was $1,363,843, and $0 in unamortized debt discount.

LENDER LOAN AMOUNTNET OF PROCEEDS DEBT DISC. & ORIGIN. FEES INT RATE TERMS OF PAYMENT BALANCE AS OF JUNE 30, 2019
Grand Capital Settlement  55,174  —     —     —     monthly 51,174
Ultegra - Settlement  680,000  —     —     —     Assets Sale 608,582
Marsan - Settlement  551,087  —     —     5%  monthly 539,087
Marsan - Settlement - Escrow Taxes  34,400  —     —     —     monthly 30,100
707 Flats Rd. - Premier  134,900  —              134,900
  $1,455,562 $—    $—          $1,363,843

NOTE 6: RELATED PARTY LOANS

Convertible Notes Payable

On February 21, 2018 Crown Bridge Partners LLC, sold part of its potentially dilutive convertible note to D&D Capital, Inc, a related party. The Company valued this conversion feature using the Black Scholes valuation model; as of June 30, 2019, due to the note is in default there are no assumptions, therefore the note has a conversion option’s value of $38,072. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt. The remaining principal balance as of June 30, 2019 is $ 7,379. Accrued interest related to this note was $833 and $541 at June 30, 2019 and December 31, 2018, respectively

During the three months ended March 31, 2018, Kodiak Capital declared a default of the convertible note payable to them invoking 22% retroactive interest and also put into effect a penalty of $2,000 per day for non-delivery of the shares according to the note agreement, which led to increasing the balance of the note to $142,633 (including $2,630 accrued interest on the Kodiak note) at March 31, 2018. On February 15, 2018, S&E Capital, LLC, a related party to Mining Power Group Inc., reached an agreement with Kodiak Capital to purchase the note. As a result, the Company recognized a gain of $137,054.

During the nine months ended September 30, 2018, S&E Capital, Inc., exercised the convertible option, resulting in 2,450,000 shares issued; at a price of $0.04134 per share issued for $101,283 in principal and $11,497 in accrued interest.

The Company valued this conversion feature using the Black Scholes valuation model with the following assumptions: (i)model; as of SeptemberJune 30, 2018 dividend yield2019 due to the note is in default there are no assumptions, therefore the note has a conversion option’s value of zero, 15 days term to maturity, risk free interest rate of 2.12% and annualized volatility of 183%, valued at $117,049.$357,767. The value of the conversion feature was assigned to the derivative liability and created a loss and a debt discount to be amortized over the life of the convertible debt.

The remaining principal balance as of SeptemberJune 30, 2019 was $ 49,775 and $17,950 in accrued interest.

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Lender Principal Unamortized Debt Discount Net
D&D Capital, Inc $7,379  $—    $7,379 
S&E Capital, LLC  49,775   —     49,775 
Notes Related Parties $57,154  $—    $57,154 

At June 30, 2019 and December 31, 2018, was $49,775.the principal amount and interest on these loans totaled $57,154 and $18,784, and $57,154 and $14,798, respectively.

Other Related Party Loans

Other thanThe Company has non-interest bearing demand loans with various related parties. During the above convertible notes,six months ended June 30, 2019 and 2018, the followingCompany received $335,862 and $54,401, respectively, in proceeds from these loans, and made repayments of $103,286 and $0, respectively, resulting in principal balances of $708,367 and $360,528 as of June 30, 2019 and December 31, 2018, respectively. As of June 30, 2019 $359,114 are related party loans to fund operations that bear no interest and are due on demand:

Consultant Capital Group, Inc $114,527 
D&D Capital, Inc  211,000 
Total Related Party no interest due on demand Loans $325,527 

included as Liabilities held for sale (Note 3)

NOTE 7: EQUITY

Transactions for the six months ended June 30, 2018

On November 27, 2017, the Company issued 1,000,000 sharesJanuary 4, 2018 Power Up cancelled a conversion of Series A Convertible preferred stock for $125,000. The Preferred Stock is convertible to the Company's common stock. Each share of the Company's Series A Convertible preferred stock is convertible into 1,000 shares of the Company's common stock at a cost basis equivalent to par value per share,$2,340 or $0.0001. Each share of the Series A Convertible preferred stock votes at the equivalent of 20,000156,000 shares of common stock. Conversion of all Series A preferred stock is dependent upon increasing the number of authorized shares to a quantity large enough to cover the conversion, therefore conversion isn’t triggered unless the Company increases its authorized shares to a quantity large enough to cover conversion.

On January 10, 2018 the Company issued 37,000,000 common stock restricted shares, $0.0001 par value per share,

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converting 37,000 shares of the one million (1,000,000) Series A Preferred Stock,

On February 28, 2018 the Company issued 156,333 shares of common stock valued at the conversion price of $0.18. The shares were issued to convert $28,140 of the principal amount of the note dated May 30, 2017 to Power Up Lending Group Ltd.

On March 6, 2018 the Company issued 109,569 shares of common stock valued at the conversion price of $0.1753.$0.18. The shares were issued to convert $16,928 of the principal amount and $2,280 of accrued and unpaid interest of the Note dated as of May 30, 2017 to Power Up Lending Group Ltd.

On April 25, 2018 the Company issued 45,000 shares of common stock value at the conversion price of $0.078.$0.08. The shares were issued to convert $3,510 of the principal amount of the Note dated as of May 30, 2017, to Power Up Lending Group Ltd.

On April 25, 2018 the Company issued 187,533 shares of common stock value at the conversion price of $0.0754.$0.08. The shares were issued to convert $14,140 of the principal amount of the Note dated as of September 27, 2017, to Power Up Lending Group Ltd.

On May 3, 2018 the Company issued 2,500,000 shares of common stock at $0.0001par$0.0001 par value to Shelby White, which were subsequently cancelled in July 2018.

Transactions for the six months ended June 30, 2019:

On July 6, 2018January 28, 2019 the Company issued 1,715,961 shares of common stock at the conversion price of $0.03897. The shares were issued to convert $59,200 of principal amount and $7,761 of interest, on the Note dated as of March 24, 2017, to Eagle Equities, LLC.

On July 7, 2018 the Company issued 10,000,00060,000,000 common stock restricted shares, $ 0.0001 par value per share, converting 10,00060,000 shares of the one million (1,000,000) Series A Preferred Stock.

On August 3, 2018February 1, 2019 the Company issued 2,298,2123,000,000 shares of common stock at the conversion price of $0.04134.$0.0130. The shares were issued to convert $ 95,008; $92,621$39,000 of principal amount, and $2,387 of interest, on the Notenote dated as of March 27, 2017,September 11, 2018 to D&D Capital, Inc.Gary Berlly.

On August 6, 2018February 1, 2019 the Company issued 150,000 shares of restricted common stock, $0.0001 par value per share for payment of services to individuals for a total value of $15.

On September 12, 2018 the Company issued 812,0003,000,000 shares of common stock at the conversion price of $0.06.$$0.0130. The shares were issued to convert $44,016$39,000 of principal amount, and $4,704 of interest, on the Notenote dated as of March 27, 2017,September 11, 2018 to Crown Bridge PartnersBack Nine Capital, LLC.

On September 12, 2018February 1, 2019 the Company issued 2,450,0003,000,000 shares of common stock at the conversion price of $0.04134.$$0.0130. The shares were issued to convert $101,283$39,000 of principal amount, on the Notenote dated as of March 27, 2017,September 11, 2018 to S&EOne Investment Capital, Inc.

On September 28, 2018February 1, 2019 the Company issued 619,2773,000,000 shares of common stock at the conversion price of $0.05023.$$0.0130. The shares were issued to convert $27,860$39,000 of principal amount, on the note dated September 11, 2018 to Sing N Drive Auto Mall, Inc.

On February 4, 2019 the Company issued 5,162,242 shares issued; at a price of $0.02712. The shares were issued to convert $132,108 in principal and $3,246 of$7,892 in interest, on the note dated May 15, 2017July 3, 2018, to M Svorai Investment, Inc.

On September 30, 2018 the Company signedInvestments, Inc a Common Stock Purchase Agreement with Triton Funds LP, who was committed to purchase from time to time and the Company issue and sell One Million Dollars ($1,000,000) of the Company’s Common Stock. The purchase price was established at 18% discount to lowest closing price five days prior to the Closing Date.

On September 30, 2018 the Company signed a Registration Rights Agreement to Triton Funds LP, related to the Common Stock Purchase Agreement.party.

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In connection with the above debt conversions occurring in February 2019, derivative liabilities totaling $1,287,038 were eliminated, with the offset recorded as an increase to additional paid-in capital.

On March 15, 2019 the Company issued 40,000,000 common stock restricted shares, $ 0.0001 par value per share, converting 40,000 shares of the one million (1,000,000) Series A Preferred Stock.

On March 22, 2019 the Company issued 50,000,000 common stock restricted shares, $ 0.0001 par value per share, converting 50,000 shares of the one million (1,000,000) Series A Preferred Stock.

NOTE 8: COMMITMENTS AND CONTINGENCIES;

During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450-20-50,Contingencies.The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of SeptemberJune 30, 2019 and December 31, 2018, the Company is not aware of anyhad $0 and $83,000 in contingent liabilities, that should be reflectedand the below outstanding lawsuits against the Company:

As of December 31, 2018, the Company recognized $83,000 in contingent liabilities, as per the accompanying consolidated financial statements.lawsuit Atlas Funding vs. Northway Mining, which resulted in an initial judgment amount of $109,512, and Grand Capital vs. Northway Mining, which resulted in an initial judgment amount of $75,225, initiated against the Company. On May 2, 2019, the Company settled the lawsuit of Grand Capital vs. Northway Mining. Based on the settlement agreement, the Company issued a new note for $55,175 to replace the original note and made a commitment to make a weekly payment of $1,000 against the new note. On June 11, 2019, the Company settled the lawsuit of Atlas Funding vs. Northway Mining for one payment of $25,000. As a result of the settlement of both debts, the Company recognized a gain on settlement of $60,904 in addition to $83,000 due to the elimination of the contingent liability associated with the lawsuits. The total gain of $143,904 has been included in net loss from discontinued operations (Note 3).

NOTE 9: ACQUISITION NORTHWAY MINING, LLC

On August 1, 2018, the Company entered into an acquisition agreement (the “Acquisition Agreement”) to acquire the majority ownership interest of Northway Mining, LLC (“Northway”), a New York limited liability company, located at 707 Flats Road, Athens, New York. Northway is a cryptomining data center hosting third-party owned and operated cryptomining machines within its 5000 square feet facility. It currently is hosting over 1,100 machines in its facilities at Flats Road under individual service agreements with third-party machine owners.

Pursuant to the Acquisition Agreement the Company acquired fifty-five percent (55%) of the ownership units of Northway in return for an investment of $1,100,000 for the purposes of providing working capital and funds to Northway for improvements to, and expansion of, its facilities, and the purchase of 30-acres of flat land and buildings at its Athens, New York address owned by a third party per a separate “Agreement for Purchase of Property between Northway Mining, LLC and CSX4236 Motorcycle Salvage LLC” (the “Land Purchase Agreement”). (The “Acquisition”) Under the terms and conditions of the Acquisition, Northway has amended and restated its New York State limited liability company Operating Agreement, under which it is stated that it will maintain its current management.

NOTE 10: SUBSEQUENT EVENTS AFTER SEPTEMBERJUNE 30, 20182019

The Company has evaluated subsequent events that occurred through the date of the filing of the Company's third quarter 2018 Form 10-Qthese financial statements were issued and has determined there are the following subsequent events requiring disclosure:as follows:

Acquisition and Change in Control

On October 16, 2018,July 1, 2019 the Company issued 500,000 sharessold any and all interest of restrictedNorthway Mining, LLC to Dror Svorai, under common stock for $125,000 donated to Triton Funds LLC.control and all its operations on behalf of Canna Corporation have been discontinued.

On January 2, 2019, Eagle Equities, LLC declared16, 2020, the Company entered into an agreement (the "Acquisition Agreement"), to acquire the majority ownership interest of Agra Nutraceuticals Corporation ("Agra"), a defaultColorado corporation, having a registered business address of 67 SW 12th Ave, Ste 500, Deerfield Beach, Florida 33442. Pursuant to the Acquisition Agreement the Company will acquire 77.5% of the convertible promissory note issued and outstanding shares of common stock of Agra to them on July 3, 2018 bybe transferred from the Company as a resultmajority shareholder of Agra, SBS Eco Trust. In consideration for the acquisition of the Agra shares, Dror Svorai, the Company's majority shareholder, President, CEO and sole officer and director, transferred his 803,000 shares of the Company’s failure to file on time its quarterly report on Form 10-Q for the period ended September 30, 2018. In doing so, Eagle Equities invoked retroactive 22% default interestSeries A Preferred Stock and also put into effect certain penalties under to the note, which led to their increasing the outstanding balance of the note to $140,000 (including $12,236 accrued interest) at January 22, 2019, the date at which M Svorai Investments, Inc., a related party to the Company, reached an agreement with Eagle Equities, LLC to purchase the note from Eagle Equities, LLC in order to avoid further actions that may be taken by Eagle Equities, LLC as a result of the default.

On January 24, 2019, the Company issued 60,000,000197,000,000 shares of its common stock by converting 60,000 Series A Preferred Stock held by Dror Svorai,to SBS Eco.

In connection with the Acquisition Agreement, the Company underwent a change of control. As a result of the Acquisition, the SBS Eco Trust, whose trustee is Esther Bittelman, an individual, and sole DirectorSecretary of Agra, became controlling and Presidentmajority shareholder of the Registrant (the "Change of Control").

As a result of entry into the Acquisition Agreement, Mr. Svorai resigned at the end of the business day on January 17, 2020, following the appointments and acceptances by the new officers and directors of the Company, Agra will be operated as a majority-owned subsidiary of the Company. The Acquisition will become effective 20 days following the mailing of the Information Statement to shareholders pursuant to Schedule 14. The mailing has not occurred yet.

Promissory Note Conversions

On February 1 2019,January 16, 2020, Back Nine Capital, LLC, irrevocably elected to exercise the Company issued 12,000,000 restricted shares of common stock valued at the conversion price of $0.013. The shares were issued to four unrelated parties which in aggregate purchased and converted $210,000 of the principal amount not including accrued and unpaid interest of aright granted under certain Convertible Promissory Note dated September 11, 2018 which was issuedand assigned to FirstFire Global Opportunities Fund, LLCthe current holder per that certain Note Purchase and Assignment Agreement, dated January 16, 2019, to convert $15,744 including principal together with any unpaid regular and penalty interest accrued, into 832,351 shares of the Company’s common stock at a price of $0.018915

On February 4,January 16, 2020 D&D Capital Inc., irrevocably elected to exercise the rights granted under that certain Convertible Promissory Note date July 1, 2019 the Company issued 5,162,242 restrictedto convert $125,712 into 9,600,000 shares of the Company’s common stock valued at the conversiona price of $0.02712. The shares were issued to convert $100,000 of the principal amount and $40,000 of accrued and unpaid interest and penalties on the Note dated as of July 3, 2018 to Eagle Equities, LLC, which Note was purchased from$0.013095.

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Eagle Equities, LLC by a related party onOn January 22,16, 2020 Gary Berlly irrevocably elected to exercise the right granted under certain Convertible Promissory Note dated September 11, 2018 and assigned to the current holder per that certain Note Purchase and Assignment Agreement, dated January 16, 2019, which converted the Note in full.

On December 14, 2018, the Company was served on a litigation filed by Salcido Enterprises LLC, Index No. 18-01082 at the Supreme Courtto convert $15,744 including principal together with any unpaid regular and penalty interest accrued, into 832,351 shares of the StateCompany’s common stock at a price of New York, County of Greene. On November 15, 2018 Northway Mining, LLC sold to Plaintiff certain number of cryptomining computers for $238,700. The Plaintiff sued the Company for failure to deliver the computers on time. On January 10, 2019 the Company received from the Plaintiff a Notice of Discontinuance of the litigation Without Prejudice.  No further actions is expected.

On December 24, 2018, the Company, through Northway Mining, LLC, borrowed $486,500 from Ultegra Financial Partners, Inc., under weekly payments starting on December 28, 2018. The Company failed to make certain payments on time. As a result, on February 11, 2019, Ultegra Financial Partners, Inc. filed a lawsuit against the Company demanding payment of the loan in addition to default charges.  At the time of filing of this 2018 Q3, a settlement has been reached and the withdrawal of the litigation is anticipated.$0.018915

On January 16, 2020 Sign N Drive Auto Mall, Inc., irrevocably elected to exercise the right granted under certain Convertible Promissory Note dated September 11, 2018 and assigned to the current holder per that certain Note Purchase and Assignment Agreement, dated January 16, 2019, The Company through Northway Mining, LLC, borrowed $45,000 from Grand Capital Funding, under daily payments starting on January 7, 2019. The Company failed to make certain payments on time. As a result, on February 20, 2019, Grand Capital filed a lawsuit against the Company demanding paymentconvert $15,744 including principal together with any unpaid regular and penalty interest accrued, into 832,351 shares of the loan in addition to default charges.  A settlement has been reached and the litigation is expected to be resolved.

Company’s common stock at a price of $0.018915

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements and Associated Risks.

This formForm 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate,” or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

Going Concern

Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. As reflected in the accompanying financial restated statements, as of SeptemberJune 30, 2018,2019, we had an accumulated deficit totaling $2,812,030.$7,281,192. This raises substantial doubts about our ability to continue as a going concern.

The extent of the impact of the coronavirus ("COVID-19") outbreak on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions, and the impact of COVID-19 on the overall economy, all of which are highly uncertain and cannot be predicted. If the overall economy is impacted for an extended period, the Company’s future operating results may be materially adversely affected.

Plan of Operation

The Company was incorporated under the laws of the State of Florida on July 29, 2013. The Company was established to manufacture and distribute high-quality, hand rolled, premium cigars under the Rich Cigars brand name. Beginning on January 1, 2018in December 2017, the Company wound down and discontinued its operations pertaining to the manufacture and distribution of cigars. Effective at the same date, the Company began the process of re-focusing its operations to become a holding company wherein its primary focus would be to own and operate subsidiary companies in the cryptocurrency business, principally companies either engaged in cryptocurrency mining directly, data center operations for cryptomining, or the development of proprietary products and services for the cryptocurrency business sector itself. The Company is confident that it will be able to implement its new focus and strategy in the fourth quarter of 2018.

On August 1, 2018 the Company had entered into an agreement (the "Acquisition Agreement") to acquire the majority ownership interest of Northway Mining, LLC., a New York limited liability company, located at 707 Flats Road, Athens, New York. Based on the Acquisition Agreement, the Company was granted by the membership a fifty-five percent (55%) ownership in Northway, free and clear of all encumbrances, liens and other obligations, and the remaining forty-five percent (45%) shall remain owned by the previous members. As a result of the Company acquiring thethis acquisition, Northway ownership interest, Northway isbecame a majority-owned subsidiary of the Company.

On July 1, 2019 the Company sold any and all interest of Northway Mining, LLC to Dror Svorai, under common control and all its operations on behalf of Canna Corporation have been discontinued.

On January 16, 2020, the Company entered into an agreement (the "Acquisition Agreement"), to acquire the majority ownership interest of Agra Nutraceuticals Corporation ("Agra"), a Colorado corporation, having a registered business address of 67 SW 12th Ave, Ste 500, Deerfield Beach, Florida 33442. Pursuant to the Acquisition Agreement the Company will acquire 77.5% of the issued and outstanding shares of common stock of Agra to be transferred from the majority shareholder of Agra, SBS Eco Trust. In consideration for the acquisition of the Agra shares, Dror Svorai, the Company's majority shareholder, President, CEO and sole officer and director, transferred his 803,000 shares of the Company’s Series A Preferred Stock and 197,000,000 shares of its common stock to SBS Eco.

In connection with the Acquisition Agreement, the Company underwent a change of control. As a result of the Acquisition, the SBS Eco Trust, whose trustee is Esther Bittelman, an individual, and Secretary of Agra, became controlling and majority shareholder of the Registrant (the "Change of Control").

As a result of entry into the Acquisition Agreement, Mr. Svorai resigned at the end of the business day on January 17, 2020, following the appointments and acceptances by the new officers and directors of the Company, Agra will be operated as a majority-owned subsidiary of the Company. The Acquisition will become effective 20 days following the mailing of the Information Statement to shareholders pursuant to Schedule 14. The mailing has not occurred yet.

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Results of Operations

Three Months Ended SeptemberJune 30, 20182019 Compared to SeptemberJune 30, 20172018

For the three months ended SeptemberJune 30, 2019, we had $0 in revenues from continuing operations and $0 in cost of goods sold from continuing operations compared to $0 and $0, respectively, for the same period in 2018. For the three months ended June 30, 2019, our total operating expenses from continuing operations were $116,756, as compared to $15,648 for the three months ended June 30, 2018, the increase in operating expenses was mainly due to an increase in legal fees related to lawsuits initiated against the Company in the current period.

For the three months ended June 30, 2019, we had $185,869$431,982 in interest expense and amortization of debt discounts related to convertible promissory notes, compared to $68,359 for the same period in 2018. The increase in interest expense is due to the issuance of new convertible notes. For the three months ended June 30, 2019, we had a loss of $1,145,795 from change in fair value of derivative liability, and $557,463 for the same period in 2018. The issuance of new convertible loans and penalties incurred during the period and the changes in the assumptions used to value the derivative liability are the main sources for such increases.

For the three months ended June 30, 2019, we had a loss from discontinued operation of $8,692 related to the disposal of our subsidiary, Northway Mining LLC on July 1, 2019, as compared to $0 for the three months ended June 30, 2018. The loss of $8,962 represents the results of operations of the subsidiary for the three months ended June 30, 2019. The subsidiary was acquired on August 11, 2018, so no results of operations of the subsidiary are presented for the three months ended June 30, 2018.

For the three months ended June 30, 2019, we had a net loss of $1,703,495 from continuing operations, compared to a loss of $641,720 for the same period in 2018. The main reasons for this increase in losses was the lack of income from operations due to the fall in the cryptocurrencies market, the lawsuits, penalties and increase in interest expense related to issuance of new convertible debts.

Six Months Ended June 30, 2019 Compared to June 30, 2018

For the six months ended June 30, 2019, we had $0 in revenues from continuing operations and $145,428$0 in cost of goods sold compared to $0 and $0, respectively, for the same period one year earlier.in 2018. For the threesix months ended SeptemberJune 30, 2018,2019, our total operating expenses were $ 491,819was $136,317, as compared to $46,977$53,948 for the threesix months ended SeptemberJune 30, 2017. 2018. The increase in operating expenses was due to an increase in professional fees.

For the threesix months ended SeptemberJune 30, 2018,2019, we incurred $484,085 for other generalhad $1,059,113 in interest expense and administrative expenses,amortization of debt discount, compared to $46,446 of general administrative expenses for discontinued operations$349,143 for the same period in 20172018. The increase is due to change in control and acquisitionthe issuance of Northway Mining.

new convertible notes. For the threesix months ended SeptemberJune 30, 2018,2019, we had $331,270 in interest expense compared to $19,012 for the same period one year earlier. For the three months ended September 30, 2018, we had $1,101,759 increasea loss of $1,460,364 from change in fair value of derivative liability, and a $370,306 decreasegain of $3,614,566 for the same period one year earlier.in 2018. The increase in debt and certain penalties from previous debt and the changes in the assumptions used to value the derivative liability are the main reasons for the increase. For the threesix months ended SeptemberJune 30, 2019, we had a loss on extinguishment of debt of $198,403, compared to a gain of $137,054 for the six months ended June 30, 2018 due to the modification and extinguishment of certain convertible notes.

For the six months ended June 30, 2019, we had $1,409,311 in beneficial conversion feature and derivative interesta loss from discontinued operation of $927,572 related to the disposal of our subsidiary, Northway Mining LLC on July 1, 2019, as compared to $0 for the six months ended June 30, 2018.

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same period one year earlier. For the threesix months ended SeptemberJune 30, 2018 we had $250 in subscription receivable write off, compared to $0 as for the same period one year earlier. For the three months ended September 30, 2018 we had a $26,028 loss on cryptocurrency compared to $0 as for the same period one year earlier. For the three months ended September 30, 20182019, we had a net loss of $936,853$3,801,769 compared to $436,295a net income of $3,347,781 for the same period one year earlier.

Nine Months Ended September 30, 2018 Compared to September 30, 2017

For2018. the nine months ended September 30, 2018, we had $185,869main reason of this fluctuation is the change in revenues and $145,428 in cost of goods sold compared to $4,606 and $2,382, respectively, for the same period one year earlier from discontinued operations. For the nine months ended September 30, 2018, our total operating expenses was $545,767 as compared to $314,575 for the nine months ended September 30, 2017. For the nine months ended September 30, 2018, we incurred $538,033 for other general and administrative expenses, compared to $238,109 for the same period in 2017. The changes in these categories and the reduction in total operating expenses were due to the wind down and discontinuation of the prior cigar business. Northway Mining, LLC, otherwise has increased revenues and expenses as well.

For the nine months ended September 30, 2018, we had $680,413 in interest expenses compared to $27,278 for the same period one year earlier. For the nine months ended September 30, 2018, we had an $8,398,544 increase in fair value of the derivative liability and a decrease of $443,917 for the same period one year earlier. For the nine months ended September 30, 2018 we had $498 in Fixed Asset Write-off and $0 for the same period one year earlier. For the nine months ended September 30, 2018 we had $5,091,530 in Beneficial conversion feature and derivative interest compared to $0 for the same period one year earlier. For the nine months ended September 30, 2018 we had a $26,028 loss on cryptocurrency compared to $0 as for the same period one year earlier. For the nine months ended September 30, 2018 we had a $137,054 gain on extinguishment of debt compared to $0 as for the same period one year earlier. For the nine months ended September 30, 2018 we had a net income (loss) of $2,410,929 compared to ($785,770) for the same period one year earlier.liability.

Liquidity and Capital Resources

As of SeptemberJune 30, 2018,2019, our cash balance was $235,843$4,439 as compared to $0$7,034 at December 31, 2017.2018. Our plan for satisfying our cash requirements for the next twelve months is through the sale of shares of our common stock, third party financing, and/or traditional bank financing. We do not anticipate generating sufficient amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to insureensure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.

The Company must raise additional funds in order to fund our continuing operations. We may not be successful in our efforts to raise additional funds or achieve profitable operations. Even if we are able to raise additional funds through the sale of our securities or through the issuance of debt securities, or loans from our directors or financial institutions our cash needs could be greater than anticipated in which case we could be forced to raise additional capital. At the present time, we have no commitments for any additional financing, and there can be no assurance that, if needed, additional capital will be available to us on commercially acceptable terms or

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at all. These conditions raise substantial doubt as to our ability to continue as a going concern, which may make it more difficult for us to raise additional capital when needed. If we cannot get the needed capital, we may not be able to become profitable and may have to curtail or cease our operations.

Operating Activities

During the ninesix months ended SeptemberJune 30, 2018,2019, the Company used cash in the amount of $132,617$459,226 in operating activities, compared to $250,550$53,948 over the same period in 2017.2018. This increase is mainly related to the increase in operating activities from discontinued operations of Northway Mining LLC, which did not exist as of June 30, 2018.

Investing Activities

During the ninesix months ended SeptemberJune 30, 2018,2019, the Company used cash in the amount of $633,567$103,805 in investing activities of discontinued operation, compared to $0 over the same period in 2017. Acquisition2018. During the six months of building and equipment for the business

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operation of2019, Northway Mining LLC, required such investments.acquired equipment to use in its crypto currency mining activity.

Financing Activities

During the ninesix months ended SeptemberJune 30, 2018, $1,002,0272019, $384,121 in net cash was provided to the Company from its financing activities, compared to $246,290$54,401 over the same period in 2017.2018. The increase in net cash provided by financing activities from continuing operation for the six months ended June 30, 2019 was mainly due to the issuance of new convertible notes payable for $125,000 compared to $0 for the same period June 30, 2018. The increase in financing activities from discontinued operation was related to new debts issued by Northway Mining LLC , which did not exist as of June 30, 2018.

We intendThe Company intends to seek additional funding through public or private financings to fund our operations through fiscal 20182019 and beyond. However, if we are unable to raise additional capital when required or on acceptable terms, or achieve cash flow positive operations, we may have to significantly delay product development and scale back operations both of which may affect our ability to continue as a going concern.

Off Balance Sheet Arrangements

None

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

Management has carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. Due to the lack of personnel and outside directors, management acknowledges that there are deficiencies in these controls and procedures. Thus, the results of this evaluation determined that our disclosure controls and procedures, as well as our internal control over financial reporting, waswere ineffective as of SeptemberJune 30, 2018.2019.

Changes in Internal Control Over Financial Reporting

There were no changes, other than the acquisition of Northway Mining, LLC, in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended SeptemberJune 30, 20182019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. The acquisition of a majority interest in Northway Mining, LLC, was supervised by Northway’s top officer, based on permanent overseen over all transactions to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.

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PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Northway Mining,Salcido Enterprises LLC, was served on September 17, 2018, in connection with a foreclosure action against CSX4236 Motorcycle Salvage LLC, initiated by Premier Properties, Inc, in thev Northway. Supreme Court of the State of New York, County of Greene, Case Index No. 18-0825.18-01082, filed January 10, 2019. Case was dismissed against the Company by the court without prejudice.

Atlas Funding v Northway. The Company accrued a liability of $55,000 based on the Company’s positions is that this action is totally without merit underattorney’s assessment. This lawsuit was filed due to default debt. This lawsuit was settled by the termsmanaging member of Northway. On June 11, 2019, the Company settled the lawsuit of Atlas Funding vs. Northway Mining for one payment of $25,000. As result of the purchase contract. Assettlement of both debts, the Company recognized a gain on settlement of $55,245

Northway Mining, LLC vs. Marsan Properties, Inc. vs. Northway Mining, Supreme Court of the dateState of New York, County of Greene, Case Index No. 2019-269 filed April 11, 2019. The parties agreed to sign a Stipulation of Settlement wherein the debt on the property will be refinanced.

Premier Properties, Inc vs CSX4236 and Northway Mining, LLC. Supreme Court of the State of New York, County of Greene, Case Index No. 18-0825, pertaining to foreclosure on property located at 707 Flats Road, Athens, NY. At this filing,time there is an ongoing negotiation with a potential outcome of selling this property and therefore paying off the litigation remains open.debt. This property is no longer used by Northway.

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Ultegra Financial Partners, Inc vs Northway Mining LLC. District Court of the District of Colorado, was settled in the amount of $680,000 on which the Company paid $30,000 and the remaining amount shall be paid with the sale of some of the Company’s assets, accordingly the Settlement Agreement and Releases executed on February 22, 2019. The aforementioned payment was recorded in the account Ultegra Financial Partners, Inc, deducting the $30,000 from the settled debt.

9384-2557 Quebec Inc, Minedmap, Inc and Serenity Alpha, LLC - Husk Mining, LLC vs Northway Mining LLC and others. United States District Court for the Eastern District of New York, Case No. 1:19-CV-1994, filed on April 7, 2019. Case involves several causes of action and open-ended claims. The Company was never served, and searching on PACER (Public Access to Court Electronic Records) no results were obtained, therefore it is the Company understanding that such lawsuit doesn’t exist.

Grand Capital vs. Northway Mining LLC and others. Supreme Court of the State of New York County of Steuben, Index No. E2019-0138CV, filed on February 5, 2019. Claim is for $75,225, case is pending. According to the Company’s attorney’s legal opinion, the Company accrued a contingency liability of $28,000. On May 2, 2019, the Company settled the lawsuit Grand Capital vs. Northway Mining on $55,175 payable in successive payments thereon, as consequence of the settlement, the Company issued a new note for $55,175 to replace the original note and made a commitment to make a weekly payment of $1,000 against the new note. During the period ended June 30, 2019, the managing member of Northway Mining, assumed responsibility for settlement payments. After the first payment Grand Capital agrees to forebear from enforcing any UCC liens, judgment levies, and/or restraints on the Company account.

As the Company disposed of all of its interests in Northway Mining effective July 1, 2019, the Company does not believe that it has any liability or other exposure with regard to any of the above lawsuits.

 

ITEM 1A. RISK FACTORS

Not Applicable to Smaller Reporting Companies.

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

On February 8, 2018January 16, 2020, the Company issued 37,000,000832,351 common stock shares, $0,0001 par value per share converting 37,000 shares of the 1,000,000 Series A Preferred Stock, based on the Articles of Incorporation of Power Mining Group, Inc, filed with the State of Colorado.

On July 6, 2018 the Company issued 10,000,000 common stock restricted shares, $0.0001 par value per share, converting 10,000 shares of the 963,000 Series A Preferred Stock, based on the Articles of Incorporation of Power Mining Group, Inc, filed with the State of Colorado.

On July 6, 2018 the Company issued 1,715,961 shares of common stock value at the conversiona price of $0.3897.$ 0.018915. The shares were issued to convert $59,200 of$15,744 including principal together with any unpaid regular and penalty interest accrued, on the principal amountnote dated September 11, 2018 and $7,671 interest of theassigned to Back Nine Capital, LLC per that certain Note Purchase and Assignment Agreement, dated as of March 24, 2017, to Eagle Equities LLC.January 16, 2019.

On August 3, 2018January 16, 2020 the Company issued 2,298,212 shares of9,600,000 common stock valueshares at the conversiona price of $0.04134.$0.013095. The shares were issued to convert $92,621 of$125,712 including principal together with any unpaid regular and penalty interest including penalty charge ofaccrued, on the Notenote dated as of March 27, 2017,date July 1, 2019 to D&D Capital Inc.Inc stock.

On August 6, 2018January 16, 2020 the Company issued 150,000832,351 common stock restricted shares, $0.0001 par value per share, to each of three persons, 150,000 shares total, for services rendered.

On September 12, 2018 the Company issued 812,000 shares of common stock at the conversiona price of $0.04134.$ 0.018915. The shares were issued to convert $44,016 of$15,744 including principal amounttogether with any unpaid regular and $4,704 ofpenalty interest accrued, on the note dated September 11, 2018 and assigned to Gary Berlly per that certain Note Purchase and Assignment Agreement, dated as of March 27, 2017, to Crown Bridge Partners LLC.January 16, 2019.

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On September 12, 2018January 16, 2020 the Company issued 2,450,000 shares of832,351 common stock shares, at the conversiona price of $0.04134.$ 0.018915. The shares were issued to convert $101,283 of$15,744 including principal amount,together with any unpaid regular and penalty interest accrued, on the note dated September 11, 2018 and assigned to Sign N Drive Auto Mall, Inc., per that certain Note Purchase and Assignment Agreement, dated as of March 27, 2017, to S&E Capital, Inc.January 16, 2019. 

On September 28, 2018 the Company issued 619,277 shares of common stock at the conversion price of $0.05023. The shares were issued to convert $27,860 of principal amount and $3,246 of interest, on the Note dated as of May 15, 2017 to M Svorai Investment, Inc.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable.

ITEM 5. OTHER INFORMATION

Amendment to Articles of Incorporation Changing Name of the Company

On April 4, 2019, the Company filed an amendment to its Articles of Incorporation whereby it changed its name to “Canna Corporation.”

Acquisition and Change of Control of the Company

On January 16, 2020, the Company entered into an agreement (the "Acquisition Agreement"), to acquire the majority ownership interest of Agra Nutraceuticals Corporation ("Agra"), a Colorado corporation, having a registered business address of 67 SW 12th Ave, Ste 500, Deerfield Beach, Florida 33442. Pursuant to the Acquisition Agreement the Company will acquire 77.5% of the issued and outstanding shares of common stock of Agra to be transferred from the majority shareholder of Agra, SBS Eco Trust. In consideration for the acquisition of the Agra shares, Dror Svorai, the Company's majority shareholder, President, CEO and sole officer and director, transferred his 803,000 shares of the Company’s Series A Preferred Stock and 197,000,000 shares of its common stock to SBS Eco.

In connection with the Acquisition Agreement, the Company underwent a change of control. As a result of the Acquisition, the SBS Eco Trust, whose trustee is Esther Bittelman, an individual, and Secretary of Agra, became controlling and majority shareholder of the Registrant (the "Change of Control").

As a result of entry into the Acquisition Agreement, Mr. Svorai resigned at the end of the business day on January 17, 2020, following the appointments and acceptances by the new officers and directors of the Company, Agra will be operated as a majority-owned subsidiary of the Company. The Acquisition will become effective 20 days following the mailing of the Information Statement to shareholders pursuant to Schedule 14. The mailing has not occurred yet.

Change in Officers and Directors.

On August 1, 2018,January 16, 2020, as a result of the Company’s entry into that certain Acquisition Agreement effecting a change of control of the Company, appointed Dror Svorai to its Board of Directors. Following Mr. Svorai's appointment and acceptance as a memberthe following persons became new members of the Board of Directors the Board of Directors accepted the resignation of Yaniv Nahon as the President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and a member of the Board of Directors. Immediately following the resignation of Mr. Nahon, the Board of Directors appointed Dror Svorai, a member of the Board of Directors, as the Corporation's President/Chief Executive Officer, Secretary, Treasurer and Chief Financial Officer of the Company. Therefore, as of August 1, 2018, the sole member of the Board of Directors and sole officer of the Company isand its officers (the “New Members and Officers”):

NamePosition
Sacha Alessandro CerutiPresident and CEO, Director
Devin AveryTreasurer, Director
Esther BittelmanSecretary, Director
Daniel RodgersDirector
Syed RizviDirector
David LillyDirector

Following the acceptance of the six new members to the board of directors, and their appointment of the new officers and directors, Dror Svorai.Svorai, President and CEO, and sole Director, resigned effective end of the business day on January 17, 2020.

Mr. NahonSvorai did not resign as a result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices.

The Company has not adopted, nor has it ever had in place, any procedures by which security holders may recommend nominees to the Company's board of directors.

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ITEM 6. EXHIBITS

Exhibits.The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

EXHIBIT NO. DESCRIPTION
3.1Amendment to Articles of Incorporation, dated April 4, 2019
31.1 Certification of Chief Executive Officer and Acting Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
32.1 Certification of Chief Executive Officer and Acting Chief Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-101.INS XBRL INSTANCE DOCUMENT*
EX-101.SCH XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT*
EX-101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE*
EX-101.DEF XBRL TAXONOMY EXTENSION DEFINITION LINKBASE*
EX-101.LAB XBRL TAXONOMY EXTENSION LABELS LINKBASE*
EX-101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE*

 

* Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections. 

 

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

MINING POWER GROUP, INC.CANNA CORPORATION

(Registrant)

 

Dated: March 13, 2019May 14, 2020

 

 

By:/s/ Dror SvoraiSacha Alessandro Ceruti ________

Dror SvoraiSacha Alessandro Ceruti

(Chief Executive Officer, Principal Executive

Officer, Acting Chief Financial Officer

and Principal Accounting Officer)

 

 

 

 

 

 

 

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