| BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SIGNIFICANT
ACCOUNTING POLICIES The accompanying unaudited interim consolidated
financial statements of CannAwake Corporation (formerly Delta International Oil & Gas Inc.) (“we”, “our”,
“CannAwake” or the “Company”) have been prepared in accordance with accounting principles generally accepted
in the United States of America and the rules of the Securities and Exchange Commission. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations
for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. On September 12, 2017 American Green, Inc.
(“American Green”) entered into a Purchase Agreement with Roxanne Lang as Trustee for the Freeman-Lang Revocable Trust,
et al, Roxanne M. Lang, individually, N.T.P., Inc., and Provident Corporation to purchase all of the real estate and buildings
(together, with the associated land and fixtures) comprising the unincorporated township of Nipton, California for $5,012,888.
American Green subsequently made improvements to the Nipton Properties. On March 6, 2018 American Green entered
into a Purchase Agreement with Nipton, Inc. (“Nipton”), its wholly owned subsidiary, to purchase all of the real estate
and buildings (together, with the associated land and fixtures) comprising the unincorporated township of Nipton, California in
consideration for the assumption of the first and second deeds of trust and the acceptance of the third and fourth deeds of trust. On March 14, 2018 the Company entered into
a Securities Exchange Agreement with American Green and its wholly owned subsidiary Nipton. On April 5, 2018, CannAwake and American
Green closed the Nipton acquisition. At the closing of the Agreement, CannAwake issued 160,000 shares of its Series A Convertible
Preferred Stock, convertible into 160,000,000 shares of its common stock, to American Green, the former stockholder of Nipton,
in exchange for all the outstanding shares of capital stock of Nipton. The shares accrue dividends at the rate of five percent
per annum on the stated value of $25 per share. Following the closing of the acquisition, Nipton. became a wholly-owned subsidiary
of the Company, with American Green, the former stockholder of Nipton, owning a controlling interest of approximately 82% of the
outstanding shares of common stock of CannAwake. The transaction was accounted for as a reverse merger with Nipton as the accounting
acquirer. The net liabilities of CannAwake as of March 31, 2018, as set forth below, were assumed by Nipton as a result of the
reverse merger.
Description Amount
Cash $ 1,292
Other Assets 320,193
Accounts Payable (40,610 )
Other Current Liabilities (554,474 )
Long Term Liabilities (30,000 )
Total $ (303,599 ) On June 13, 2018, our Board approved changing
the Company’s name to CannAwake Corporation, and authorized the filing by the Company in Delaware on June 13, 2018, of a
Certificate of Amendment to the Company’s Certificate of Incorporation providing for changing the name of the Company from
Delta International Oil & Gas Inc. (“Delta”) to CannAwake Corporation. The change of the Company’s name became
effective August 9, 2018 following approval by the Financial Industry Regulatory Authority as effective for trading purposes in
the OTC markets. The change of the Company’s name required only Board of Directors approval under the Delaware General Corporation
Law; stockholder approval of the Company’s stockholders was not required. Our new trading symbol is “CANX” following
the name change. Principles of Consolidation The Company’s financial statements
include the accounts of all majority-owned subsidiaries where its ownership is more than 50 percent of the common stock. All
material intercompany transactions and balances have been eliminated. Use of Estimates The preparation of the consolidated financial
statements in conformity with accepted accounting principles generally accepted in the United States of America requires the Company
to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure
of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates including, but not limited
to, those related to such items as impairments of assets, income tax exposures, accruals, depreciable/useful lives, allowance for
doubtful accounts, and valuation allowances. The Company bases its estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results
could differ from those estimates. Revenue Recognition In May, 2014, the FASB issued Accounting
Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue
recognition requirements in Topic 605 “Revenue Recognition” (Topic 605) and requires entities to recognize revenues
when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which
the entity expects to be entitled to in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018. As a
consequence of the adoption of Topic 606, we did not recognize lease income related to Nipton in the second quarter of 2018 since
collectability was not probable. Impairment of long lived assets Management reviews long-lived assets for
potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair
value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows
expected to result from the use and eventual disposition of the asset. If, impairment exists, the resulting write-down would be
the difference between fair market value of the long-lived asset and the related net book value. Property and Equipment Property and equipment are stated at cost.
Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Property and equipment
at June 30, 2018 consist of:
Property & Equipment Book Accumulated Net Book Estimated
Land $ 3,850,000 $ - $ 3,850,000 N/A
Buildings 1,050,000 (8,750 ) 1,041,250 30
Other Improvements 875,979 (7,300 ) 868,679 30
Vehicles 28,487 (1,424 ) 27,063 5
Total $ 5,804,466 $ (17,474 ) $ 5,786,992 Income Taxes The Company accounts for income taxes in
accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized based upon anticipated
future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and
their respective tax bases. The Company establishes a valuation allowance to the extent that it is more likely than not that deferred
tax assets will not be utilized against future taxable income. Uncertain Tax Positions The Company evaluates uncertain tax positions
pursuant to ASC Topic 740-10-25 “Accounting for Uncertainty in Income Taxes,” which allows companies to recognize a
tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify for initial recognition
are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation
or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that
was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than
not threshold of being sustained. At June 30, 2018 and December 31, 2017,
the Company has approximately $0 and $0, respectively, of liabilities for uncertain tax positions. Interpretation of taxation
rules relating to investments in Argentina concessions may give rise to uncertain positions. In connection with the
uncertain tax position, there was no interest or penalties recorded. The Company is subject to ongoing tax exposures,
examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the
outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing
assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact
operating results. The number of years with open tax audits
varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including
applicable states). Earnings (Loss) Per Share Basic earnings per share are computed by
dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings
per common share are computed by dividing net earnings by the weighted average number of common share and potential common share
outstanding during the period. Potential common shares consist of outstanding common stock purchase warrants and convertible
preferred stock. For the six months ended June 30, 2018, there were 169,648,126 potentially dilutive common shares outstanding.
These potentially dilutive common shares are anti-dilutive during the six months ended June 30, 2018, due to our operating losses,
and therefore, have not been included in the calculation of earnings per share. Stock-based Compensation The Company accounts for non-employee share-based
awards based upon ASC 505-50, “Equity-Based Payments to Non-Employees.” ASC 505-50 requires the costs of
goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and
services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined
on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance
is complete. Generally, our awards do not entail performance commitments. When an award vests over time such
that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting
period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests,
we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the
performance is complete. We account for stock-based compensation
to employees in accordance with FASB ASC 718 which requires companies to measure the cost of employee services received in exchange
for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense is recognized
on a straight-line basis over the requisite service period. Fair Value of Financial Measurements FASB ASC 820, Fair Value Measurements and
Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. FASB ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of
inputs that may be used to measure fair value: The Company utilizes the accounting guidance
for fair value measurements and discloses for all financial assets and liabilities that are recognized or disclosed at fair value
in the consolidated financial statements on a recurring basis during the reporting period. The fair value is an exit price, representing
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing
the asset or liability. ASC 820, “Fair Value Measurements and Disclosures”, establishes a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: Level 1 - Observable inputs such as quoted
market prices in active markets. Level 2 - Inputs other than quoted prices
in active markets that are either directly or indirectly observable. Level 3 - Unobservable inputs about which
little or no market data exists, therefore requiring an entity to develop its own assumptions. As of June 30, 2018 and December 31, 2017,
there were no financial assets or liabilities that require to be fair valued on a recurring basis. Recent Accounting Pronouncements In July 2017, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic
260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this
Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round
features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down
round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own
stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding
equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at
fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the
amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down
round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders
in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized
guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options),
including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral
of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments
do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities,
including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should
be reflected as of the beginning of the fiscal year that includes that interim period. The Company has chosen to adopt ASU 2017-11
as of April 1, 2018. |
