UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2020

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

EXCHANGE ACT

 

Commission File Number: 333-145876

 

 

CANNONAU CORP

(Exact name of registrant as specified in its charter)

 

Nevada

 

84-2870437

(State or other jurisdiction of incorporation or organization)

 

(IR.S. Employer Identification No.)

 

 

 

937 Old Seneca Turnpike Road

 

 

Skaneateles, N.Y.

 

13252-9318

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

(315) 558-3702

 

Registrant’s telephone number Including area code

 

 

 

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

 

 

 

Securities registered pursuant to Section 12(g) of the Act.

 

 

 

 

Common Stock, $0.001 Par Value

 

 

(Title of class)

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ YES  ☑ NO

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ YES  ☑ NO

 

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

 

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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ YES ☐ NO

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☐ YES ☑ NO

1

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer ☐

 

Accelerated filer ☐

 

Non-accelerated filer ☐

 

Smaller reporting company ☒

 

 

 

Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

 

Note. If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold as of May 12, 2020, was $12,721.

 

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ YES  ☐ NO

 

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.241,377,178 shares of common stock are outstanding as of April 14, 2021.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).  None

2

TABLE OF CONTENTS

 

 

 

 

 

PART I

 

 

 

 

 

 

 

Item 1

Business

 

4

 

Item 1A

Risk Factors

 

4

 

Item 1B

Unresolved Staff Comments

 

5

 

Item 2

Properties

 

5

 

Item 3

Legal Proceedings

 

5

 

Item 4

Mine Safety Disclosures

 

5

 

 

 

 

 

 

PART II

 

 

 

 

 

 

 

 

 

Item 5

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

5

 

Item 6.

Selected Financial Data

 

6

 

Item 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

7

 

Item 7A

Quantitative and Qualitative Disclosures About Market Risk`

 

10

 

Item 8

Financial Statements and Supplementary Data

 

10

 

Item 9

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 

19

 

Item 9A

Controls and Procedures

 

20

 

Item 9B

Other Information

 

22

 

 

 

 

 

 

PART III

 

 

 

 

 

 

 

 

 

Item 10

Directors, Executive Officers and Corporate Governance

 

22

 

Item 11

Executive Compensation

 

21

 

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

22

 

Item 13

Certain Relationships and Related Transactions, and Director Independence

 

23

 

Item 14

Principal Accounting Fees and Services

 

23

 

 

 

 

 

 

PART IV

 

 

 

 

 

 

 

 

 

Item 15

Exhibits, Financial Statement Schedules

 

24

 

 

 

 

 

 

SIGNATURES

 

24

 

3

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

 

Information included in this Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Pacific Blue Energy Corp. (the "Company"), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

PART I

 

ITEM 1. BUSINESS. 

 

CORPORATE HISTORY

 

The Company was incorporated in the State of Nevada on April 3, 2007 under the name Descanso Agency, Inc. We originally incorporated to enter into the travel industry by establishing a specialized service travel company that serves the needs of Mexican and United States wedding planners, travel agents, and clients seeking upscale personal attention at unique hotels and spas located in Mexico. Our core business plan was intended to focus on the wedding and party destination travel. However, due to a lack of available financing, the Company ceased its current operations in September 2009 relating to the travel industry and began seeking out viable alternatives.

 

On October 16, 2009, we filed a Certificate of Amendment with the Nevada Secretary of State to change our name to Pacific Blue Energy Corp. The name change reflected the Company's refocused business at that time as an independent alternative energy company.  We began the process of approaching potential investment partners and have also began seeking out potential opportunities, including joint venture opportunities. We attempted to finance our operations through a combination of privately placed debt and/or equity. With the alignment started time of a number of positive factors including technical advances, tax incentives, rising environmental awareness and the state of the economy, the availability of clean, affordable, solar and wind powered electricity to power homes and small businesses then become a reality.

 

Effective November 6, 2009, the Company implemented a 4-for-1 forward split of its issued and outstanding shares of common stock, whereby every share of common stock held was exchanged for 4 shares of common stock. As a result, the issued and outstanding shares of common stock were increased from 9,250,000 prior to the forward split to 37,000,000 immediately following the forward split.

 

On April 5, 2010, the Company acquired a 100% interest of Ship Ahoy LLC, a limited liability company in Arizona, in exchange for $300,000 and 1,000,000 common shares of the Company. This investment was subsequently abandoned by the Company and the Company is currently a non-operating shell company.

 

OUR BUSINESS

The Company using cutting edge nanotechnology plans to offer the most advanced Cannabidiol (CBD) for improved bioavailability and maximum benefit.  We believe that our unique formulas can be easily incorporated into a wide array of products, offering customers an advantage when it counts.

 

EMPLOYEES

As of the date of this Annual Report, we have 4 employees.

 

4

ITEM 1A. RISK FACTORS. 

 

We are a smaller reporting company and therefore not required to provide this information in our Form 10-K.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS. 

 

As of the date of this Annual Report, there are no unresolved SEC Staff comments.

 

ITEM 2. DESCRIPTION OF PROPERTY 

 

We do not own or lease any property.

 

ITEM 3. LEGAL PROCEEDINGS. 

 

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

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not Applicable.

 

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASERS OF EQUITY SECURITIES. 

 

MARKET INFORMATION

 

Our common stock trades on the over the counter under the symbol "CNNC". The following table sets forth the high and low price information of the Company's common stock for the periods indicated.

 

 

FISCAL YEAR ENDED DECEMBER 31, 2020:

 

High

 

 

Low

 

December 31, 2020

 

$

0.01

 

 

$

0.00

 

September 30. 2020

 

$

0.01

 

 

$

0.00

 

June 30, 2020

 

$

0.01

 

 

$

0.00

 

March 31, 2020

 

$

0.01

 

 

$

0.00

 

 

 

 

 

 

 

 

 

 

FISCAL YEAR ENDED DECEMBER 31, 2019:

 

 

 

 

 

 

 

 

December 31, 2019

 

$

0.01

 

 

 

0.00

 

September 30, 2019

 

$

0.01

 

 

$

0.00

 

June 30, 2019

 

$

0.01

 

 

$

0.00

 

March 31, 2019

 

$

0.01

 

 

$

0.00

 

 

SHAREHOLDERS OF RECORD

 

As of April 14, 2021, there were approximately 241,377,178 holders of record of our common stock, not including holders who hold their shares in street name.

5

DIVIDENDS

 

We have never declared or paid a cash dividend. At this time, we do not anticipate paying dividends in the future. We are under no legal or contractual obligation to declare or to pay dividends, and the timing and amount of any future cash dividends and distributions is at the discretion of our Board of Directors and will depend, among other things, on our future after-tax earnings, operations, capital requirements, borrowing capacity, financial condition and general business conditions. We plan to retain any earnings for use in the operation of our business and to fund future growth. You should not purchase our Shares on the expectation of future dividends.

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

 

Equity Compensation Plan Information

Plan Category

 

Number of

securities to be issued

upon exercise

of outstanding

options,

warrants and rights

 

 

Weighted-

average exercise

price of

outstanding

options, warrants

and rights

 

 

Number of securities

remaining available for

future issuance

under equity compensation plans

(excluding securities

reflected in column (a))

 

Equity compensation plans approved by security holders

 

 

None

 

 

 

-

 

 

 

None

 

Equity compensation plans not approved by security holders

 

 

None

 

 

 

-

 

 

 

None

 

Total

 

 

None

 

 

 

-

 

 

 

None

 

 

INFORMATION RELATING TO OUTSTANDING SHARES

 

As of December 31, 2019, there were 182,735 shares of our common stock issued and outstanding.

 

All of our issued and outstanding common shares (of which none shares are owned by officers, directors and principal stock holders) were issued and have been held for a period in excess of six months and are eligible to be resold pursuant to Rule 144 promulgated under the Securities Act.

 

The resale of our shares of common stock owned by officers, directors and affiliates is subject to the volume limitations of Rule 144. In general, Rule 144 permits our affiliate shareholders who have beneficially-owned restricted shares of common stock for at least six months to sell without registration, within a three-month period, a number of shares not exceeding one percent of the then outstanding shares of common stock. Furthermore, if such shares are held for at least six months by a person not affiliated with the company (in general, a person who is not one of our executive officers, directors or principal shareholders during the three month period prior to resale), such restricted shares can be sold without any volume limitation, provided all of the other requirements for resale under Rule 144 are applicable.

 

RECENT SALES OF UNREGISTERED SECURITIES

 

During the year ended December 31, 2019, the Registrant had the following sale of unregistered securities:

 

None

 

ISSUER PURCHASE OF SECURITIES

 

None.

 

ITEM 6. SELECTED FINANCIAL DATA. 

 

Not Applicable.

6

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 

 

Forward Looking Statements

 

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

 

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

 

Overview

 

 

 

 

Pacific Blue Energy Corp. (the "Company", "we", or "us") was incorporated under the laws of the State of Nevada on April 3, 2007. The purpose of the Company is to serve as a vehicle to effect a merger, exchange of capital stock, asset acquisition, or other business combination with a domestic or foreign private business.  The company has not commenced a planned principal operation. The Company has a December 31 year end. As of December 31, 2020, the issued and outstanding shares of common stock totaled 182,735.

 

 

 

 

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

 

 

 

 

We are considered a start-up corporation. Our auditors have issued a going concern opinion in the financial statements for the year ended December 31, 2020.

 

RESULTS OF OPERATIOMS

 

Working Capital

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

Current Assets

 

 

$       19,338

 

 

 

$       11,114

 

Current Liabilities

 

 

168,160

 

 

 

89,102

 

Working Capital (Deficit)

 

$

(148,822

)

 

$

(78279

)

7

Cash Flows

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

Cash Flows from (used in) Operating Activities

 

 

$    (64,367)

 

 

 

$     (89,032)

 

Cash Flows from (used in) Financing Activities

 

 

64,462

 

 

 

89,102

 

Net Increase (decrease) in Cash During Period

 

$

95

 

 

$

70

 

 

 

YEAR ENDED DECEMBER 31, 2020 COMPARED TO YEAR ENDED DECEMBER 31, 2019

 

REVENUES

 

We have generated revenues of $1,835and $0 for the years ended December 31, 2020 and 2019.

 

OPERATIONS AND ADMINISTRATIVE EXPENSES

 

Operating expenses for the year ended December 31, 2020 were $86,788 compared with $74,279 for the year ended December 31, 2019.  The increase in operating expenses for 2020 consisted of an increase in general and administrative expenses for the year ended December 31, 2020 of $18,991 from $14,241 for the year ended December 31, 2019; a decrease in compensation expenses for the year ended December 31, 2020 of $4,120 from $37,260 for the year ended December 31, 2019; and a decrease in professional expenses for the year ended December 31, 2020 of $10,602 from $22,778 for the year ended December 31, 2019.

 

During the year ended December 31, 2020, the Company recorded a net loss of $86,533, compared with net loss of $74,279 for the year ended December 31, 2019.

 

LIQUIDITY AND CAPITAL RESOURCES  

 

As of December 31, 2020, the Company's cash balance was $164 compared to cash balance of $70 as at December 31, 2019. As of December 31, 2020, the Company's total assets were $19,338 compared to total assets of $11,114 as at December 31, 2019.  The increase in total assets for the year ended December 31, 2020 as compared to the year ended December 31, 2019 consisted in addition to the $95 in cash balance, a decrease in inventory for the year ended December 31, 2020 of $8,130 from $11,044 for the year ended December 31, 2019.

 

As of December 31, 2020, the Company had total liabilities of $168,160 compared with total liabilities of $89,393 as at December 31, 2019.  The increase in total liabilities for the year ended December 31, 2020 consisted of an increase in accounts payable for the year ended December 31, 2020 of $14,036 from $3,291 for the year ended December 31, 2019; and a decrease in due to related party for the year ended December 31, 2020 of $64,731 from $86,102 for the year ended December 31, 2019.

 

As of December 31, 2020, the Company has a working capital of ($148,822) compared with working capital of ($78,279) at December 31, 2019.

 

Cashflow from Operating Activities

 

During the year ended December 31, 2020 the Company used $($80,627) of cash for operating activities compared to ($89,032) of cash used by operating activities during the year ended December 31, 2019.  The increase in net cash used in operating activity for the year ended December 31, 2020 consisted of a increase in net loss for the year ended December 31, 2020 of $($86,533) from ($74,279) for the year ended December 31, 2019; a decrease in inventory party for the year ended December 31, 2020 of $(8,130) from $(11,044) for the year ended December 31, 2019; and an increase in accounts payable and accrued liabilities for the year ended December 31, 2020 of $14,036 from ($3,709) for the year ended December 31, 2019.

8

Cashflow from Financing Activities

 

During the years ended December 31, 2020 the Company's net cash provided by financing activity was $80,722 compared to $89,102 cash provided by financing for year ended December31, 2019. The decrease net cash provided by financing activity for the year ended December 31, 2020 consisted of a decrease in proceeds from related party for the year ended December 31, 2020 of $70,731 from $91,102 for the year ended December 31, 2019; an increase due to repurchase of common stock for the year ended December 31, 2020 of $(6,000) from $(2,000/0 for the year ended December 31, 2019 and an increase in cash proceeds from common stock for the year ended December 31, 2020 of $15,991 from $0 for the year ended December 31, 2019 .

 

Subsequent Developments

 

None

 

Going Concern

 

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

 

OFF BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

CONTRACTUAL OBLIGATIONS

 

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide this information.

 

CRITICAL ACCOUNTING POLICIES

 

We have one main products, namely the concealed weapons detection system. In all cases revenue is considered earned when the product is shipped to the customer, installed (if necessary) and accepted by the customer as a completed sale. Each product has an unconditional 30-day warranty, during which time the product can be returned for a complete refund. Customers can purchase extended warranties, which provide for replacement or repair of the unit beyond the period provided by the unconditional warranty. Warranties can be purchased for various periods but generally they are for one-year period that begins after any other warranties expire. The revenue from warranties is recognized on a straight-line bases over the period covered by the warranty. Prior to the issuance of financial statements management reviews any returns subsequent to the end of the accounting period which are from sales recognized during the accounting period and makes appropriate adjustments as necessary. Product prices are fixed or determinable and products are only shipped when collectability is reasonably assured.

 

Stock Based Compensation

 

We account for share-based compensation at fair value. Stock based compensation cost for stock options granted to employees, board members and service providers is determined at the grant date using an option pricing model. The value of the award that is ultimately expected to vest is recognized as expensed on a straight-line basis over the requisite service period.

 

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 

 

As a "smaller reporting company", the Company is not required to provide this information.

9

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 

 

 

CANNONAU CORP.

(FORMERLY PACIFIC BLUE ENERGY CORP.)

FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2020

 

C O N T E N T S

 

Report of Independent Registered Public Accounting Firm

 

 

11

 

 

 

 

 

 

Balance Sheets

 

 

12

 

 

 

 

 

 

Statements of Operations

 

 

13

 

 

 

 

 

 

Statements of Stockholders' Deficit

 

 

14

 

 

 

 

 

 

Statements of Cash Flows

 

 

15

 

 

 

 

 

 

Notes to the Financial Statements

 

 

16

 

10

Cannonau Corp.

 

 

 

 

(formerly Pacific Blue Energy Corp.)

 

 

 

 

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash

 

$                   164

 

$                  70

 

Inventory

 

19,174

 

11,044

 

 

Total current assets

 

19,338

 

11,114

 

 

 

 

 

 

 

Total assets

 

$             19,338

 

$          11,114

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

 

$             17,327

 

$             3,291

 

Due to related party

 

150,833

 

86,102

 

 

Total current liabilities

 

168,160

 

89,393

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

Preferred stock- authorized 10,000,000 shares,

 

 

 

 

 

 

par value $0.001, issued and outstanding

 

 

 

 

 

 

nil shares

 

                          -   

 

                      -   

 

Common stock- authorized 290,000,000 shares,

 

 

 

 

 

 

par value $0.001, issued and outstanding 241,377,178

 

 

 

 

 

 

and 182,735 shares as o December 31, 2020 and 2019

 

241,377

 

183

 

Common stock issuable

 

27,000

 

27,000

 

Additional paid-in capital

 

3,136,382

 

3,361,585

 

Accumulated deficit

 

(3,553,581)

 

(3,467,047)

 

 

Total stockholders' deficit

 

(148,822)

 

(78,279)

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

 

$             19,338

 

$          11,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

11

Cannonau Corp.

 

 

 

 

(formerly Pacific Blue Energy Corp.)

 

 

 

 

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended

 

 

 

 

December 31,

 

 

 

 

2020

 

2019

 

 

 

 

 

 

 

Revenues

 

$               1,835

 

$                       -   

Cost of Sales

 

1,580

 

-

 

Gross Profit

 

255

 

-

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

General and administrative

 

33,232

 

14,241

 

Compensation

 

41,380

 

37,260

 

Professional fees

 

12,176

 

22,778

 

 

Total operating expenses

 

86,788

 

74,279

 

 

 

 

 

 

 

Loss from operations

 

(86,788)

 

(74,279)

 

 

 

 

 

 

 

Other expense (income)

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$           (86,533)

 

$          (74,279)

 

 

 

 

 

 

 

Net loss per share (basic and diluted)

 

$                       -

 

$              (1.48)

 

 

 

 

 

 

 

Weighted average shares outstanding

 

241,377,179

 

               50,049

 

 

 

 

 

 

 

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

12

Cannonau Corp.

 

 

 

 

(formerly Pacific Blue Energy Corp.)

 

 

 

 

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

For the Years Ended

 

 

 

 

December 31,

 

 

 

 

2020

 

2019

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTVITIES:

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$        (86,533)

 

$              (74,279)

Adjustments to reconcile net loss to net

 

 

 

 

 

loss from operating activities

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

Inventory

 

  (8,130)

 

          (11,044)

 

Accounts payable and accrued liabilities

 

14,036

 

            (3,709)

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

 

          (80,627)

 

          (89,032)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTVITIES:

 

 

 

 

 

Purchase of equipment

 

                        -   

 

                            -   

 

 

 

 

 

 

 

Net Cash Provided by (Used in) Investing Activities

 

                        -   

 

                            -   

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTVITIES:

 

 

 

 

 

Proceeds from related party

 

70,731

 

             91,102

 

Repurchase of common stock

 

            (6,000)

 

            (2,000)

 

Cash proceeds from common stocks

 

15,991

 

 

 

 

 

 

 

 

 

Net Cash Provided by  Financing Activities

 

80,722

 

            89,102

 

 

 

 

 

 

 

Increase (decrease) in cash

 

95

 

                    70

 

 

 

 

 

 

 

Cash, beginning of year

 

70

 

                            -   

 

 

 

 

 

 

 

Cash, end of year

 

       165

 

                    70

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

Cash paid for interest

 

$                     -   

 

$                          -   

 

 

 

 

 

 

 

 

Cash paid for taxes

 

$                     -   

 

$                          -   

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES

 

 

 

 

 

Shares issued to convert amounts due related party

 

$                     -

 

$                  5,000   

 

 

 

 

 

 

 

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

13

Cannonau Corp.

 

 

 

 

 

 

 

 

 

 

 

 

(formerly Pacific Blue Energy Corp.)

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Stockholders' Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Common

 

 

 

 

 

 

Common Stock

 

Paid-in

 

Stock

 

Accumulated

 

 

 

 

Shares

 

Amount

 

Capital

 

Issuable

 

Deficit

 

Total

Balance, December 31, 2019

 

 182,735

 

$     183

 

$ 3,361,585

 

$27,000

 

$ (3,467,047)

 

$   (78,279)

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Debt

 

241,194,444

 

241,194

 

(225,203)

 

 

 

 

 

15,991

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

      -   

 

           -   

 

                   -   

 

              -   

 

       (74,279)

 

 (86,534)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

241,377,179

 

$241,377

 

$ 3,136,382

 

$27,000

 

$ (3,553,581)

 

$  (148,822)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 140,235

 

       140

 

   3,358,628

 

   27,000

 

   (3,392,768)

 

$      (7,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of related party debt

 

   50,000

 

        50

 

          4,950

 

             -   

 

                     -   

 

      5,000

Repurchase and retirement of shares

 

   (7,500)

 

         (7)

 

        (1,993)

 

              -   

 

                     -   

 

   (2,000)

Net loss

 

              -   

 

           -   

 

                   -   

 

              -   

 

       (74,279)

 

 (74,279)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 182,735

 

$     183

 

$ 3,361,585

 

$27,000

 

$ (3,467,047)

 

$    (78,279)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

14

CANNONAU CORP.

Notes to the Consolidated Financial Statements

December 31, 2020 and 2019

 

 

1.Nature of Operations and Continuance of Business 

 

Cannonau Corp. (the “Company”) was incorporated under the laws of the State of Nevada on April 3, 2007 as Pacific Blue Energy Corp.  On April 5, 2010, the Company acquired a 100% interest of Ship Ahoy LLC, a limited liability company in Arizona, in exchange for $300,000 and 1,000,000 common shares of the Company.  This investment was subsequently abandoned by the Company. The Company is currently developing CBD based products. On August 22, 2019, the Company changed its' name to Cannonau Corp. to reflect its' focus on its new CBD based products.

 

Going Concern

 

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated no revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As of December 31, 2020, the Company had no revenues and an accumulated deficit of $3,553,581. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these consolidated financial statements. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. Summary of Significant Accounting Policies 

 

a)Basis of Presentation and Principles of Consolidation 

 

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are expressed in US dollars. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Ship Ahoy LLC. All intercompany transactions have been eliminated. The Company’s fiscal year-end is December 31.

 

b)Use of Estimates 

 

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

 

c)Cash and Cash Equivalents 

 

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

15

CANNONAU CORP.

Notes to the Consolidated Financial Statements

December 31, 2020 and 2019

 

 

2. Summary of Significant Accounting Policies (Continued) 

 

d)Revenue Recognition 

 

During the year ended December 31, 2020 our revenue recognition policy was in accordance with ASC 605, “Revenue Recognition”, which requires the recognition of sales when there is evidence of a sales agreement, the delivery of goods has occurred, the sales price is fixed or determined, and the collectability of revenue is reasonably assured.

 

On January 1, 2019, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” and all the related amendments, which are also codified into ASC 606. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows.

 

The Company does not have material contract assets or liabilities that fall under the scope of ASC 606.

 

e)Basic and Diluted Net Loss Per Share 

 

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

 

f)Financial Instruments  

 

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

 

Level 1

 

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

 

Level 2

 

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

 

Level 3

 

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

 

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

16

CANNONAU CORP.

Notes to the Consolidated Financial Statements

December 31, 2020 and 2019

 

 

g)Inventory 

 

Inventories, which are comprised of finished goods, are stated at the lower of cost (based on the first in, first out method) or market.  Inventories consist of CBD based products.

 

h)Reclassification 

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

 

3.Stockholders’ Deficit 

 

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

 

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

 

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

 

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

 

On March 20, 2020, convertible notes of $4,370 were converted into 12,138,888 shares of common stock.

 

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

 

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

 

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

 

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

4. Income Taxes 

 

The Company has a net operating loss carried forward of approximately $3,553,581 available to offset taxable income in future years which commence expiring in fiscal 2027.  The Company is subject to United States federal and state income taxes at an approximate rate of 21%.  As of December 31, 2020, and 2019, the Company had no uncertain tax positions.

 

The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of December 31, 2020 and 2019 are as follows:

 

The significant components of deferred income tax assets and liabilities at December 31, 2020 and 2019 are as follows:

 

 

 

 

 

 

 

2020

 

2019

 

 

 

 

 

Net operating loss carried forward

 

746,200

 

728,500

 

 

 

 

 

Valuation allowance

 

(746,200)

 

(728,500)

 

 

 

 

 

Net deferred income tax asset

 

–

 

–

17

CANNONAU CORP.

Notes to the Consolidated Financial Statements

December 31, 2020 and 2019

 

5. Related Party Transaction 

 

On February 18, 2020, the Company executed a promissory note of $1,500 with the legal custodian of the Company.  The note is due August 18, 2020.  If the Company defaults on the due date, the promissory note shall be convertible into shares of common stock at the conversion price of $.00036 per share.

 

On February 25, 2020, the Company executed a promissory note of $1,760 with the legal custodian of the Company.  The note is due August 25, 2020.  If the Company defaults on the due date, the promissory note shall be convertible into shares of common stock at the conversion price of $.00036 per share.

 

On March 13, 2020, the Company executed a promissory note of $2,610 with the legal custodian of the Company.  The note is due September 13, 2020.  If the Company defaults on the due date, the promissory note shall be convertible into shares of common stock at the conversion price of $.00036 per share.

 

On March 20, 2020, the Company executed a promissory note of $1,760 with the legal custodian of the Company.  The note is due September 25, 2020.  If the Company defaults on the due date, the promissory note shall be convertible into shares of common stock at the conversion price of $.00036 per share.

 

During the year ended December 31, 2020, the legal custodian additionally advanced the Company $27,117 to pay operating expenses.  These advances are non-interest bearing and payable upon demand, the Company repaid $6,000 of advances to the legal custodian of the Company.

 

On July 2, 2020, the Company executed a promissory note of $3,000 with the Chief Executive Officer of the Company.  The note is due August 18, 2020.  If the Company defaults on the due date, the promissory note shall be convertible into shares of common stock at the conversion price of $.00038 per share.

 

During the year ended December 31, 2020, the Chief Executive Officer additionally advanced the Company $33,813 to pay operating expenses.  These advances are non-interest bearing and payable upon demand.  

 

At December 31, 2020, the Company owed its legal custodian $109,018 and its Chief Executive Officer $26,651.

 

6. Commitments and Contingencies 

 

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

 

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

 

7. Subsequent Events 

 

The company has evaluated subsequent events for recognition and disclosure through April 13, 2021 which is the date the financial statements were available to be issued. No other matters were identified affecting the accompanying financial statements and related disclosures.

18

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 

 

BOYLE CPA, LLC

 

This decision to engage Boyle CPA, LLC was approved by our full Board of Directors. Because we have no standing audit committee, our full Board of Directors participated in and approved the decision to change independent accountants. Presently, the Board of Directors acts as the audit committee.

 

ITEM 9A. CONTROLS AND PROCEDURES. 

 

Evaluation of Disclosure Controls and Procedures

 

We have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer/Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of December 31, 2020. Based on such evaluation, we have concluded that, as of such date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer/Principal Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining internal control over financial reporting for our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over our financial reporting includes those policies and procedures that:

 

(1)

pertain to the maintenance of records that in reasonable detail accurately and fairy reflect our transactions.

 

(2)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and

 

(3)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

 

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error or circumvention through collusion of improper overriding of controls. Therefore, even those internal control systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

 

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO 2013") in Internal-Control-Integrated Framework and implemented a process to monitor and assess both the design and operating effectiveness of our internal controls. Based on this assessment, management believes that as of December 31, 2020, our internal control over financial reporting was not effective.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2020, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

 

19

(1)

We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management's view that such a committee, including a financial expert member, is an utmost important entity level control over the Company's financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management's activities

 

(2)

We did not maintain enough skilled accounting resources supporting the financial close and reporting processes to ensure (i) changes and entry to spreadsheets utilized in the financial reporting process were properly reviewed, (ii) significant estimates and judgments were adequately supported, reviewed, approved and evaluated against actual experiences, (iii) effective and timely analysis and reconciliation of significant accounts, and (iv) a proper review of period close entries and procedures

 

We have instituted remediation plan which involves reeducating our management, the accounting staff, and the administrative staff as to the elements of a completed sale. We increased the oversight of the process by increasing the frequency of involvement of outside accounting consultants. Internal systems are being put into place to track and document significant dates, such as delivery, installation and customer acceptance. In addition, the bookkeeping system has been modified so that all sales of extended warranties are automatically recorded as deferred revenue and that the amount of revenue that is ultimately recognized as warranty revenue is as the result of an analysis of the significant aspects of the warranty such as coverage and period.

 

Changes in Internal Control Over Financial Reporting

 

Our management has evaluated, with the participation of our Chief Executive Officer/Chief Financial Officer, changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the fourth quarter of 2020. In connection with such evaluation, there have been no changes to our internal control over financial reporting that occurred since the beginning of our fourth quarter of 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. While there have been no changes, we have assessed our internal controls as being deficient and will be taking steps beginning in 2021 to remedy such deficiencies.

 

ITEM 9B. OTHER INFORMATION. 

 

There are no further disclosures.

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 

 

Directors and Executive Officers

 

The following table includes the names and positions held of our executive officers and directors who served during the years ended December 31, 2019 and/or December 31, 2020 and their current ages:

 

 

 

 

 

 

 

 

NAME

 

AGE

 

POSITION

 

DIRECTOR SINCE

 

 

 

 

 

 

 

 

 

Carman J. Carbona

 

58

 

Chief Executive & Chief Financial Officer and Director

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carmen Joseph Carbona

 

Carmen Joseph Carbona, 56, has been employed by Health Direct, a division of Kinney Drugs, since 2005 as a Pharmaceutical Representative providing hospitals, nursing homes, group homes and clinics with pharmaceutical supplies.

 

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

 

None of our directors, executive officers or control persons has been involved in any of the legal proceedings required to be disclosed in Item 401 of Regulation S-K, during the past five years.

20

CORPORATE GOVERNANCE MATTERS

 

Audit Committee

 

The board of directors does not have an audit committee, and the functions of the audit committee are currently performed by our Corporate Secretary, with assistance by expert independent accounting personnel and oversight by the entire board of directors. We are not currently subject to any law, rule or regulation requiring that we establish or maintain an audit committee.

 

Board of Directors Independence. Our board of directors currently consists of one member. We are not currently subject to any law, rule or regulation requiring that all or any portion of our board of directors include "independent" directors.

 

Audit Committee Financial Expert. Our board of directors has determined that we do not have an audit committee financial expert serving on our audit committee within the meaning of Item 407(d)(5) of Regulation S-K. In general, an "audit committee financial expert" is an individual member of the audit committee who (a) understands generally accepted accounting principles and financial statements, (b) is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves, (c) has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to the Company's financial statements, (d) understands internal controls over financial reporting and (e) understands audit committee functions.

 

We have not yet replaced our former audit committee financial expert, but we are engaged in finding a suitable replacement.

 

Code of Ethics

 

We have not adopted a code of ethics for our executive officers, directors and employees. However, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations.

 

Nominating Committee

 

We have not yet established a nominating committee. Our board of directors, sitting as a board, performs the role of a nominating committee. We are not currently subject to any law, rule or regulation requiring that we establish a nominating committee.

 

Compensation Committee

 

We have not established a compensation committee. Our board of directors, sitting as a board, performs the role of a compensation committee. We are not currently subject to any law, rule or regulation requiring that we establish a compensation committee.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Commission. Officers, directors and greater than ten percent beneficial owners are required by Commission regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on our review of the copies of such forms received and written representations from reporting persons required to file reports under Section 16(a), all of the Section 16(a) filing requirements applicable to such persons, with respect to fiscal year 2020, appear not to have been complied with to the best of our knowledge.

 

ITEM 11. EXECUTIVE COMPENSATION. 

 

None.

 

Name

 

Salary

 

Position

 

 

 

 

 

 

 

 

 

Carman J. Carbona

 

$

0

 

 

 

As Chief Executive & Chief Financial Officer and Director

 

 

 

 

 

 

 

 

 

 

21

 

SUMMARY COMPENSATION TABLE ‡

 

Name and Principal Position

Fiscal

Year

 

Salary

($)

 

Bonus

($)

 

Stock

Awards

($)

 

Option

Awards

($)

 

Nonequity

Incentive

Plan

Compen-

sation ($)

 

Non-

Qualified

Deferred

Compen-

sation

Earnings

($)

 

All

Other

Compen-

sation

($)

 

Total

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carman J. Carbona

2019

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

(Chief Executive & Chief Financial Officer and Director

2020

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS

 

None

 

Directors Compensation

 

No director received compensation for services rendered in any capacity to us during the fiscal years ended December 31, 2019 and December 31, 2020.

 

Indemnification of Directors and Officers

 

Our Articles of Incorporation, as amended and restated, and our Bylaws provide for mandatory indemnification of our officers and directors, except where such person has been adjudicated liable by reason of his negligence or willful misconduct toward the Company or such other corporation in the performance of his duties as such officer or director. Our Bylaws also authorize the purchase of director and officer liability insurance to insure them against any liability asserted against or incurred by such person in that capacity or arising from such person's status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have the power to indemnify such person under the applicable law.

 

Compensation Committee Interlocks and Insider Participation

 

We have not established a compensation committee. We are not currently subject to any law, rule or regulation requiring that we establish a compensation committee.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

The following tables set forth information as of December 31, 2020 regarding the beneficial ownership of our common stock each stockholder who is known by the Company to own beneficially in excess of 5% of our outstanding common stock; each director known to hold common or preferred stock;  the Company's chief executive officer; and the executive officers and directors as a group. Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares of stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their shares of stock.

22

 

 

 

 

 

NUMBER OF
SHARES

 

PERCENT OF
SHARES

NAME AND ADDRESS OF

 

TITLE

 

BENEFICIALLY

 

BENEFICIALLY

BENEFICIAL OWNER

 

OF CLASS

 

OWNED

 

OWNED

 

 

 

 

 

 

 

 

 

 

 

 

 

Carman J. Carbona

 

 

Common

 

 

 

0

 

 

 

0

 

937 Old Seneca Turnpike

 

 

 

 

 

 

 

 

 

 

 

 

Skaneateles, NY 13152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Directors and officers as a group (1 member)

 

 

Common

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The above table reflects share ownership as of the most recent date. Each share of common stock has one vote per share on all matters submitted to a vote of our shareholders.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 

 

We do not have a specific policy or procedure for the review, approval, or ratification of any transaction involving related persons. We historically have sought and obtained funding from officers, directors, and family members as these categories of persons are familiar with our management and often provide better terms and conditions than we can obtain from unassociated sources. Also, we are so small that having specific policies or procedures of this type would be unworkable.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 

The following table shows the fees paid or accrued for the audit and other services provided by our independent registered public accounting firm.

 

 

 

 

2020

 

 

 

2019

 

Audit fees

 

$

2,500

 

 

$

2,500

 

Audit related fees

 

 

0

 

 

 

0

 

Tax fees

 

 

0

 

 

 

0

 

All other fees

 

 

0

 

 

 

0

 

 

Audit Fees

 

Audit fees represent the professional services rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports, along with services normally provided by the accountant in connection with statutory and regulatory filings or engagements.

 

Audit Related Fees

 

Audit-related fees represent professional services rendered for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.

 

Tax Fees

 

Tax fees represent professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

All other fees represent fees billed for products and services provided by the principal accountant, other than the services reported for the other categories.

23

PRE-APPROVAL POLICIES

 

Our audit committee does not rely on pre-approval policies and procedures. Typically, Management has sought out audit firm candidates and presented them to the audit committee. Before the auditor renders audit and non-audit services our board of directors approves the engagement.

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

The following exhibits are filed as part of this Form 10-K:

 

31.1

Rule 13a-15(e)/15d-15(e) Certification by the Chief Executive Officer *

 

 

31.2

Rule 13a-15(e)/15d-15(e) Certification by the Chief Financial Officer *

 

 

32.1

Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

 

 

32.2

Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

 

 

*Filed herewith

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 14, 2021.

 

 

Cannonau Corp.

 

 

 

 

 

 

By:

/ s/ Carmen J. Carbona

 

 

 

Carmen J. Carbona

 

 

 

Chief Executive Officer

 

 

 

(Principal executive officer)

 

24

 

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