CANNA Corp - Annual Report: 2018 (Form 10-K)

PART I

FORWARD LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a “safe harbor” for “forward-looking statements” to encourage companies to provide prospective information, so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the forward looking statement(s). Canna Corporation (formerly Mining Power Group, Inc.) (the “Company” or its OTC Pink Sheet stock symbol “MPGR”) desires to take advantage of the safe harbor provisions of the Act.

In addition, representatives of the Company, from time to time, participate in speeches and calls with market analysts, conferences with investors and potential investors in the Company’s securities, and other meetings and conferences. Some of the information presented in such speeches, calls, meetings and conferences may be forward-looking within the meaning of the Act. The Company’s policies are in compliance with Regulation FD.

It is not reasonably possible to itemize all of the many factors and specific events that could affect the Company and/or the data center industry as a whole. Specific risk factors may also be communicated at the time forward-looking statements are made. The following additional factors could affect the Company’s actual results and cause such results to differ materially from those projected, forecasted, estimated, budgeted or otherwise expressed in forward-looking statements.

These statements can be identified by the fact that they do not relate strictly to historical or current facts. Such statements include information regarding our current beliefs, plans and expectations, including, statements regarding our future revenues, the timing and entry into new license agreements and other arrangements, partnerships and transactions in accordance with our strategy, the timing of the development of and markets for our technologies and the outcome of current legal proceedings. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” “believe,” “continue to,” “work to,” variations of any such words or similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are subject to risks and uncertainties. Actual outcomes could differ materially from those expressed in or anticipated by such forward-looking statements due to a variety of factors, including, without limitation, the risks and uncertainties detailed in Part I, Item 1A. “Risk Factors,” in this company’s Annual Report on Form 10-K and in MPGR’s other filings made from time to time with the SEC (copies of which may be obtained through the Investors section of this website under “SEC Filings”).

We undertake no duty to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.

Although there are no guarantees about the stock market or Canna Corporation common stock, before you invest in any security, you can help protect yourself by being an educated investor. If you are interested in MPGR stock, we recommend that, at a minimum, you read the company’s latest proxy statement, annual report and SEC Forms 10-K, 10-Q and 8-K for the past year. It is also advisable to learn more about MPGR and its industry through a variety of public materials. The Company’s recent annual reports, 10-K and 10-Q reports and other materials are accessible through this website. Other materials the Company has filed with the SEC are available at: https://www.otcmarkets.com/stock/MPGR/security.

ITEM 1. BUSINESS.

GENERAL

The following is a summary of some of the information contained in this document. Unless the context requires otherwise, references in this document to “our Company,” “us,” “we,” “our,” “Canna Corporation (formerly Mining Power Group, Inc),” “Northway Mining” or the “Company” are to Canna Corporation.

CORPORATE OVERVIEW AND HISTORY OF CANNA CORPORATION (FORMERLY MINING POWER GROUP, INC.)

We were incorporated on July 29, 2013 under the laws of the state of Florida. Originally Rich Cigars, Inc. was established to manufacture and distribute cigars under the Rich Cigars brand name. The Company continually sought to create cigars that appealed to aficionados of high-quality, hand-rolled, premium cigars. One of the founders, Alfred Rushing, has been involved with the cigar industry for more than 20 years. The Company intended to introduce new styles of premium cigars, contracted with a Nicaraguan supplier for the manufacture of hand rolled cigars, which would be distributed and sold principally in the U.S. However, as the consolidated financial statements of the Company for fiscal year 2017 demonstrated, the Company has not been successful in generating adequate revenues in order to generate a net profit or a positive cashflow.

As the result of a change of control of the Company on November 27, 2017, it was decided to wind down the cigar business over the following months and have the Company enter into new, unrelated business areas. Until the new business strategies are ready for implementation, and a new management team engaged, Richard Davis, sole officer and director of the Company, was retained on an interim basis.

On May 10, 2018, Yaniv Nahon assumed the CEO position and Richard Davis resigned. On July 31, 2018, Dror Svorai, controlling shareholder assumed the CEO position from Yaniv Nahon and Yaniv Nahon resigned.

As a result of the change in business, the Company redomiciled from Florida to Colorado and in doing so, changed its name to “Intercontinental Technology, Inc.” Under advice of counsel, on December 26, 2017, the Company, re-domiciled to Delaware under the terms and conditions of a Section 251(g) reorganization under Delaware General Corporation law (the “Reorganization”), and future adjusted its name to “First Intercontinental Technology, Inc.” due the unavailability of the name “Intercontinental Technology, Inc.” in the State of Delaware. The Reorganization was subsequently annulled and vitiated by the Company in February 2018, and the Company returned to Colorado under the name “Mining Power Group, Inc.” and filed amended and restated Articles of Incorporation (collectively, the “February Corporate Changes”). The February Corporate Changes were filed with the Securities and Exchange Commission on Form 8-K on February 26, 2018.

On February 2018, the Company announced that it would enter into cryptomining business. “Cryptomining” is the fundamental methodology of earning and/or creating digital currencies such as Bitcoin, Litecoin and others, through the use of dedicated, specialized mining machines that perform complex mathematical functions to mine a cryptocurrency and also process cryptocurrency transactions. These machines operate 24-hours per day, 7-days per week within mining-dedicated, temperature-controlled server centers that provide complete end-to-end technical and other support for “peace of mind” and uninterrupted operation.

As a result of this change, the Company renamed itself “Mining Power Group, Inc.” to accentuate the strategy. At the time of this filing 2018 on Form 10-K, the Company is exploring additional revenue-generating opportunities.

As the Company entered 2018, its legacy cigar business was discontinued as it focused its efforts in the new areas with its remaining inventory being liquidated.

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 several hundred machines in its facilities at 2 Flint Mine Rd., 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 (U.S.) 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 that 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.

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.

EMPLOYEES

During 2018, the Company had up to three consultants including our current officer and sole director Dror Svorai, under hourly oral consulting agreements. The existing personnel in Northway Mining, LLC., was laid-off and there are no employees at this time.

Other than the current officer and director, the Company does not have a written employment agreement with its officer and director at this time.

Our officer and director is responsible for planning, development and operational duties. The Company has no intention of hiring additional employees until it has sufficient, reliable revenue from our operations or supplemental third-party financing to support its new business direction.

REPORT TO SECURITIES HOLDERS

We provide an annual report that includes audited financial information to our shareholders. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements including filing Form 10K annually and Form 10Q quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

ITEM 1A. RISK FACTORS.

FORWARD LOOKING STATEMENTS.

THIS DOCUMENT INCLUDES FORWARD-LOOKING STATEMENTS, INCLUDING, WITHOUT LIMITATION, STATEMENTS RELATING TO CANNA CORPORATION’S PLANS, STRATEGIES, OBJECTIVES, EXPECTATIONS, INTENTIONS AND ADEQUACY OF RESOURCES. THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS THAT MAY CAUSE OUR COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: OUR ABILITY OF TO IMPLEMENT OUR BUSINESS STRATEGY; ABILITY TO OBTAIN ADDITIONAL FINANCING; CANNA CORPORATION’S LIMITED OPERATING HISTORY; UNKNOWN LIABILITIES ASSOCIATED WITH FUTURE ACQUISITIONS; ABILITY TO MANAGE GROWTH; SIGNIFICANT COMPETITION; ABILITY TO ATTRACT AND RETAIN TALENTED EMPLOYEES; AND FUTURE GOVERNMENT REGULATIONS; AND OTHER FACTORS DESCRIBED IN THIS FILING OR IN OTHER OF CANNA CORPORATION’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. CANNA CORPORATION IS UNDER NO OBLIGATION, TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

RISKS RELATED TO OUR COMPANY AND THE BUSINESS

OUR MANAGEMENT TEAM HAS A LIMITED OPERATING HISTORY

There can be no assurance that our management will be successful in its attempts to implement the our business plan, build the corporate infrastructure required to support operations at the levels called for by our business plan or that we will generate sufficient revenues to meet expenses or to achieve or maintain profitability. We will encounter risks and difficulties that companies at a similar stage of development frequently experience, including the potential failure to:

OUR MANAGEMENT TEAM HAS LIMITED EXPERIENCE OPERATING A PUBLIC COMPANY. ANY FAILURE TO COMPLY OR ADEQUATELY COMPLY WITH FEDERAL AND STATE SECURITIES LAWS, RULES OR REGULATIONS COULD SUBJECT US TO FINES OR REGULATORY ACTIONS, WHICH MAY MATERIALLY ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Members of our management team have limited experience managing and operating a public company and may rely in many instances on the professional experience and advice of third parties including its attorneys and accountants. Failure to comply or adequately comply with any federal or state securities laws, rules, or regulations may result in fines or regulatory actions, which may materially adversely affect our business, results of operation, or financial condition and could result in delays in achieving either the effectiveness of a registration statement relating to the Securities being sold in this Offering or the development of an active and liquid trading market for our common stock.

WE ARE SUBJECT TO INTENSE COMPETITION

The Company operates in a highly competitive environment, in the United States and if the case may be, internationally. The data-center industry is characterized by intense competition, based primarily on energy availability, credit availability, price, reliability of permanent operation, ability to tailor specific solutions to customer needs, safety, security measures, service and support.

Weakness in demand, especially due to the fall in price on cryptocurrencies intensifies the competitive environment in which the Company operates. The Company competes with a variety of regional, national and international data-centers, some of which have greater financial resources than the Company. The Company also faces competition from companies entering or expanding worldwide installations based on less expensive energy and human resources costs.

OUR PROFIT MARGINS ARE NARROW

As a result of intense price competition in the industry, the Company has narrow gross profit and operating profit margins. These narrow margins magnify the impact on operating results of variations in sales and operating costs. Future gross profit and operating margins may be adversely affected by changes in product mix, vendor pricing actions and competitive and economic pressures. In addition, failure to attract new sources of business from expansion of products or services or entry into new markets may adversely affect future gross profit and operating margins.

WE ARE SUBJECT TO A VOLATILE, FLUCTUATING CRYPTOCURRENCY MARKET

After the highs of 2017, which saw the benchmark standard, Bitcoin, surge to $20,000, the world's most valuable cryptocurrency is currently trading close to its lowest point in 16 months. Bitcoin has fallen by almost 80% over the last year.

There have been five major price spikes in Bitcoin's 10-year history, and after each previous crash the market has managed to recover to even higher levels. But the scale of the 2018 losses have left some cryptocurrency experts questioning whether Bitcoin will once again see a market turn-around.

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN.

The audited consolidated financial statements included in this 10-K have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern.

We have incurred significant losses since our inception. We have funded these losses primarily through the sale of securities. Based on our financial history since inception, in their report on the consolidated financial statements for the year ended December 31, 2018, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that had decreasing revenue. There is no assurance that any revenue will be realized in the future.

There can be no assurance that we will have adequate capital resources to fund planned operations or that any additional funds will be available to us when needed or at all, or, if available, will be available on favorable terms or in amounts required by us.

If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern.

IF WE NEED ADDITIONAL CAPITAL TO FUND OUR FUTURE OPERATIONS, WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR OPERATIONS.

If adequate additional financing is not available on reasonable terms, we may not be able to undertake sufficient sales and business development efforts required to identify clients and assist them with asset acquisitions, development of their real estate projects or management of existing stabilized assets, which may result in a negative impact to our cash flow and we would have to modify our business plans accordingly. There is no assurance that additional financing will be available to us.

In connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the development of similar products undertaken by our competition; (iii) the level of our investment in sales and marketing; and (iv) the amount of our capital expenditures, including corporate acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

In recent years, the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, our common stock can also be expected to be subject to volatility resulting from purely market forces over which we will have no control.

If we are not able to obtain additional funding, we may be required to: (i) limit our expansion; (ii) limit our marketing efforts; and (iii) decrease or eliminate capital expenditures. Such reductions could materially adversely affect our business and our ability to compete.

Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are favorable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to the Shares. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

SHAREHOLDERS WILL EXPERIENCE DILUTION OF THEIR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK.

If we raise additional capital subsequent to hereto through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, we may also have to issue securities that may have rights, preferences and privileges senior to our common stock. In the event we seek to raise additional capital through the issuance of debt or its equivalents, this will result in increased interest expense.

WE WILL DEPEND UPON MANAGEMENT BUT WE MAY AT TIMES HAVE LIMITED PARTICIPATION OF MANAGEMENT.

Our sole director, Mr. Dror Svorai, is also acting as our sole officer of Canna Corporation, and Mr. Michael Maranda is acting as a sole officer of our subsidiary, Northway Mining. During 2018 Mr. Maranda was accompanied by Mr. Ryan Lehmann as CFO of Northway, but Mr. Lehmann resigned in September 2018. We will be heavily dependent upon Mr. Svorai’s and Mr. Maranda’s skills, talents, and abilities, as well as several consultants, to implement our business plan. It is possible that our officers and consultants may not be able to devote their full-time attention to our business, which may result in a delay in the progress toward implementing our business plan. Consultants may be employed on a part-time basis under a contract to be determined.

Our officers may become, in thier individual capacity, officers, directors, controlling shareholders and/or partner sof other entities engaged in a variety of businesses. Thus, our officers may have potential conflicts including their time and efforts involved in participation with other business entities.

We do not know of any reason other than outside business interests that would prevent our officers

from devoting full-time to our Company, when the business may demand such full-time participation.

WE WILL BE DEPENDENT UPON KEY PERSONNEL FOR THE FORESEEABLE FUTURE.

We will be dependent on several key members of its management and operations teams for the foreseeable future. In particular, we have been and remain dependent on Dror Svorai as our President. The loss of his services could have a material adverse effect on our operations and prospects. At this time, we have no employment agreements with any individuals, though it is contemplated that the Company may in the future enter into such agreements with certain of its key employees on terms and conditions usual and customary for its industry. We do not currently have any "key man" life insurance on any employees or our officer.

WE MAY REQUIRE ADDITIONAL FUNDING.

We are highly dependent on the infusion of additional capital through other private placements or loans supporting ongoing operations and expansion. If we are not successful in obtaining additional capital it could be necessary to seek additional financing elsewhere or to materially curtail our expansion plans. There can be no assurance that such other financing would be available to us on satisfactory terms or at all. Failure to obtain such financing could materially impair our ability to increase sales and achieve profitability.

WE ARE AN “EMERGING GROWTH COMPANY,” AND ANY DECISION ON OUR PART TO COMPLY ONLY WITH CERTAIN REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO “EMERGING GROWTH COMPANIES” COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.

We are an “emerging growth company,” as defined in the JOBS Act, and, for as long as we continue to be an “emerging growth company,” we expect and fully intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)2(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to opt in to the extended transition period for complying with the revised accounting standards. We have elected to rely on these exemptions and reduced disclosure requirements applicable to “emerging growth companies” and expect to continue to do so.

THE JOBS ACT ALLOWS US TO DELAY THE ADOPTION OF NEW OR REVISED ACCOUNTING STANDARDS THAT HAVE DIFFERENT EFFECTIVE DATES FOR PUBLIC AND PRIVATE COMPANIES.

Since, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act, this election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our consolidated financial statements may not be comparable to companies that comply with public company effective dates.

BECAUSE OUR COMMON STOCK IS NOT REGISTERED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OUR REPORTING OBLIGATIONS UNDER SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, MAY BE SUSPENDED AUTOMATICALLY IF WE HAVE FEWER THAN 300 SHAREHOLDERS OF RECORD ON THE FIRST DAY OF OUR FISCAL YEAR.

Our common stock is not registered under the Exchange Act, and we do not intend to register our common stock under the Exchange Act for the foreseeable future (provided that, we will register our common stock under the Exchange Act if we have, after the last day of our fiscal year, $10,000,000 in total assets and either more than 2,000 shareholders of record or 500 shareholders of record who are not accredited investors (as such term is defined by the Securities and Exchange Commission), in accordance with Section 12(g) of the Exchange Act). As long as our common stock is not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations.

OUR BYLAWS PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS.

Our Bylaws include provisions that eliminate the personal liability of the directors of the Company for monetary damages to the fullest extent possible under the laws of the State of Florida or other applicable law. These provisions eliminate the liability of directors to the Company and its stockholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care. Under Florida law, however, such provisions do not eliminate the personal liability of a director for (i) breach of the director’s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the director derived an improper benefit. These provisions do not affect a director’s liabilities under the federal securities laws or the recovery of damages by third parties.

REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT AND COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002, INCLUDING ESTABLISHING AND MAINTAINING ACCEPTABLE INTERNAL CONTROLS OVER FINANCIAL REPORTING, ARE COSTLY AND MAY INCREASE SUBSTANTIALLY.

The rules and regulations of the SEC require a public company to prepare and file periodic reports under the Exchange Act, which will require that the Company engage legal, accounting, auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires, among other things, that we design, implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel we have may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in loss of investor confidence and a decline in our share price.

We are working with our legal, accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, we anticipate that the expenses that will be required in order to adequately prepare for being a public company could be material. We estimate that the aggregate cost of increased legal services; accounting and audit functions; personnel, such as a chief financial officer familiar with the obligations of public company reporting; consultants to design and implement internal controls; and financial printing alone will be a few hundred thousand dollars per year and could be several hundred thousand dollars per year. In addition, if and when we retain independent directors and/or additional members of senior management, we may incur additional expenses related to director compensation and/or premiums for directors’ and officers’ liability insurance, the costs of which we cannot estimate at this time. We may also incur additional expenses associated with investor relations and similar functions, the cost of which we also cannot estimate at this time. However, these additional expenses individually, or in the aggregate, may also be material.

In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

The increased costs associated with operating as a public company may decrease our net income or increase our net loss and may cause us to reduce costs in other areas of our business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if these requirements divert our management’s attention from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations.

WE MAY BE SUBJECT TO LITIGATION IN THE FUTURE WHICH COULD IMPACT THE FINANCIAL HEALTH OF THE COMPANY.

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Litigation is subject to uncertainty and it is possible that there could be adverse developments in future cases.

OUR INSURANCE COVERAGE OR THIRD-PARTY INDEMNIFICATION RIGHTS MAY NOT BE SUFFICIENT TO COVER OUR LEGAL CLAIMS OR OTHER LOSSES THAT WE MAY INCUR IN THE FUTURE.

In the future, insurance coverage may not be available at adequate levels or on adequate terms to cover potential losses, including on terms that meet our customer’s requirements. If insurance coverage is inadequate or unavailable, we may face claims that exceed coverage limits or that are not covered, which could increase our costs and adversely affect our operating results.

IF DEVELOPED, OUR BRANDS MAY BECOME VALUABLE, AND ANY INABILITY TO PROTECT THEM COULD REDUCE THE VALUE OF OUR BRANDS, PRODUCTS AND SERVICES.

We may invest significant resources to build and protect our brands, products and services. However, we may be unable or unwilling to strictly enforce our intellectual property rights from infringement. Our failure to enforce such rights could diminish the value of our brands, products and services and harm our business and future growth prospects.

A SHORTAGE IN THE SUPPLY OF KEY DIRECT COST COMPONENTS AND SERVICES COULD INCREASE OUR COSTS OR ADVERSELY AFFECT OUR SALES AND REVENUES.

Going forward, all of our direct cost components and services are obtained from third-party suppliers. Shortages in energy supply or price increases, or difficulties on purchasing materials used in the mining equipment could result in materially higher prices or adversely affect our ability to have our services rendered.

Price increases from a supplier would directly affect our profitability if we are not able to pass price increases on to customers.

Our inability to obtain adequate energy in a timely manner or a material increase in the price of energy could have a material adverse effect on our business, financial condition and results of operations.

CONFLICTS OF INTEREST.

Certain conflicts of interest may exist between our Company and our officer and director. He may have other business interests to which he devotes attention and may be expected to continue to do so although management time should be devoted to the business of our Company. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to our Company.

LIMITED REVENUE HISTORY.

Our Company is considered in development stage. Our Company must be regarded as a new or development venture with all of the unforeseen costs, expenses, problems, risks and difficulties to which such ventures are subject.

NO ASSURANCE OF SUCCESS OR PROFITABILITY.

There is no assurance that our Company will ever operate profitably. There is no assurance that we will generate profits, or that the value of our Company’s Shares will be increased thereby.

LACK OF DIVERSIFICATION.

Because of the limited financial resources that we have, it is unlikely that we will be able to diversify our operations. Our probable inability to diversify our activities into more than one area will subject us to economic fluctuations within our business or industry and therefore increase the risks associated with our operations.

DEPENDENCE UPON OUTSIDE ADVISORS.

To supplement the business experience of our officer and director, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. Our Company’s management, without any input from stockholders, will make the selection of any such advisors. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to our Company. In the event our Company considers it necessary to hire outside advisors, they may elect to hire persons who are affiliates, if they are able to provide the required services.

Based on our current cash reserves, we will have relatively small operational budget for the operations that we cannot expand without additional raising capital.

If we are unable to begin to generate enough revenue to cover our operational costs, we will need to seek additional sources of funds. Currently, we have no committed source for any funds as of date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of these uncertainties.

We cannot give any assurances that we will be able to raise enough capital to fund acquisitions and product development.

We will need to raise additional funds to support not only our budget, but also our expansion operations. We cannot make any assurances that we will be able to raise such funds or whether we would be able to raise such funds with terms that are favorable to us. We may seek to borrow monies from lenders at commercial rates, but such lenders will probably be at higher than bank rates, which higher rates could, depending on the amount borrowed, make the net operating income insufficient to cover the interest.

RISKS RELATED TO OUR COMMON STOCK

WE MAY IN THE FUTURE ISSUE MORE SHARES WHICH COULD CAUSE A LOSS OF CONTROL BY OUR PRESENT MANAGEMENT AND CURRENT STOCKHOLDERS.

We may issue further shares as consideration for the cash or assets or services out of our authorized but unissued common stock that would, upon issuance, represent a majority of the voting power and equity of our Company. The result of such an issuance would be those new stockholders and management would control our Company, and persons unknown could replace our management at this time. Such an occurrence would result in a greatly reduced percentage of ownership of our Company by our current shareholders, which could present significant risks to investors.

WE HAVE NOT AND MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS.

We have not paid dividends on our common stock. We currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not expect to pay any dividends in the foreseeable future but will review this policy as circumstances dictate.

A LIMITED PUBLIC MARKET EXISTS FOR OUR COMMON STOCK AT THIS TIME, AND THERE IS NO ASSURANCE OF A FUTURE MARKET.

Our common stock has been quoted on the OTC Pink since November 16, 2016, under the symbol “MPGR.” There is a limited public market for our common stock, and no assurance can be given that a market will continue or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Factors such as those discussed in the “Risk Factors” section may have a significant impact upon the market price of the shares offered hereby. Due to the low price of our securities, many brokerage firms may not be willing to effect transactions in our securities. Even if a purchaser finds a broker willing to effect a transaction in our shares, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of our shares as collateral for any loans.

OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.

We may be subject now and in the future to the SEC’s “penny stock” rules if our shares of common stock sell below $5.00 per share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s confirmation.

In addition, the penny stock rules require that prior to a transaction, the broker dealer must make a special written

determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our common stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common stock may find it more difficult to sell their securities.

In addition, the Securities and Exchange Commission has adopted a number of rules to regulate “penny stocks”.

Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute “penny stocks” within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions.

Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses.

Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market,

management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.

Our shareholders may be able to use Rule 144 as an exemption for resale, but resales under Rule 144 could have a depressive effect on the market-trading price, if any. Investors will have no effective way to combat this.

OUR SHARES ARE THINLY TRADED.

The shares of our common stock may continue to be thinly-traded on the OTC Markets under the symbol MPGR, meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as ours or purchase or recommend the purchase of any of our Securities until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our Securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on Securities price.

We cannot give you any assurance that an active public trading market for our common Securities will ever develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we can give investors no assurance that they will be able to sell their shares at or any prices or at all if they need money or otherwise desire to liquidate their securities of our Company. Our common stock may not be able to be liquidated at or near ask prices in any volume in the markets.

OUR COMMON STOCK MARKET PRICES MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT INVESTORS MAY NOT BE ABLE TO SELL THEIR SECURITIES AT OR ABOVE THE PRICE THAT WAS PAID FOR THE SECURITY.

Because of the limited trading market for our common stock and because of the possible price volatility, shareholders may not be able to sell their shares of common stock when desired. The inability to sell common stock in a rapidly declining market may substantially increase the risk of loss because of such illiquidity and because the price for our common stock may suffer greater declines because of our price volatility. Certain factors, some of which are beyond our control, that may cause our share price to fluctuate significantly include, but are not limited to the following:

Additionally, in recent years the stock market in general has experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market factors may materially and adversely affect our stock price, regardless of our operating performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on shareholders’ investments in our stock.

FUTURE DILUTION MAY OCCUR DUE TO ISSUANCES OF SHARES FOR VARIOUS CONSIDERATION IN THE FUTURE.

There may be substantial dilution to our shareholders as a result of future decisions of the Board to issue shares without shareholder approval for cash, services, acquisitions, or pursuant to any future Employee/Consultant Stock Option Plan.

OUR NEW INVESTORS WILL SUFFER A DISPROPORTIONATE RISK AND THERE WILL BE IMMEDIATE DILUTION OF PURCHASERS’ INVESTMENTS.

Our present shareholders have acquired their securities at a cost that may be significantly less than that which future investors will pay for their stock holdings, or at which future purchasers in the market may pay. Therefore, new investors may bear most of the risk of loss.

OUR BUSINESS IS HIGHLY SPECULATIVE AND THE INVESTMENT IS THEREFORE HIGHLY RISKY.

Due to the speculative nature of our business, it is probable that the investment in shares offered hereby will result in a total loss to the investor. Investors should be able to financially bear the loss of their entire investment. Investment should, therefore, be limited to that portion of discretionary funds not needed for normal living purposes or for reserves for disability and retirement.

POTENTIAL CHANGES IN ACCOUNTING PRACTICES AND/OR TAXATION MAY ADVERSELY AFFECT OUR FINANCIAL RESULTS.

We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after tax income. Equally, increases in indirect taxes could affect our products affordability and reduce our sales.

WE WILL RELY ON THIRD PARTIES FOR SERVICES IN CONDUCTING OUR BUSINESS AND ANY DISRUPTION OF THESE RELATIONSHIPS COULD ADVERSELY AFFECT OUR BUSINESS.

We will have contracts with third parties. If these relationships are disrupted for any reason our results of operation and financial condition could be adversely affected.

REPORTING INFORMATION.

Our Company is subject to the reporting requirements under the Securities and Exchange Act of 1934. As a result, shareholders will have ready access to the information required to be reported by publicly held companies under the Securities and Exchange Act and the regulations thereunder. Our Company intends to provide our shareholders with annual reports containing financial information prepared in accordance with Generally Accepted Accounting Principles as required by Sec. 13 of the Securities Exchange Act of 1934.

LIMITED FINANCING – LACK OF LOAN AVAILABILITY.

The monies currently on hand may not be sufficient for the continued expanded operations of our Company. There is no assurance that additional monies or financing will be available in the future or, if available, will be at terms favorable to our Company. (See “Business Summary”)

Our Company may borrow money to finance its operations on terms to be determined. Any such borrowing will increase the risk of loss to the investor in the event our Company is unsuccessful in repaying such loans.

CAPITAL RESOURCES.

The only capital resources of our Company are our shares.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

REAL ESTATE.

Property located at 707 Flats Road, Coxsackie, Greene County, New York. Map No. 87.00-4-22. The property includes, residence, accessory building, septic systems, wells, piping, all land, water streets and roads annexed to and on all sides of the property, which was acquired by Northway Mining, LLC in 2018 in the amount of $134,900, with a mortgage in same value.

Property located at 2 Flint Mine Road, Coxsackie, Greene County, New York. Map No. 71.00-1-3.112 / 71.00-1-20, Swis code 192889. The property includes buildings, all land, streets and roads annexed to and on all sides of the property described as follows. The property was acquired by Northway Mining, LLC in 2018 for a price of $950,000 recognizing a mortgage of $600,000.

OIL AND GAS.

None.

PATENTS.

None.

ITEM 3. LEGAL PROCEEDINGS.

As of December 31, 2018 the Company was involved in one litigation that we believe could have a material adverse effect on our financial condition or results of operations, the action was filed by Salcido Enterprises LLC, Index No. 18-01082 at the Supreme Court of the State of New York, County of Greene, on January 10, 2019 the Company received from the Plaintiff the Notice of Discontinuance Without Prejudice.

Notwithstanding the foregoing, the following litigations were filed in 2019, before the date’s filing for this 10-K:

Atlas Funding v Northway. The Company accrued a liability of $55,000 based on the Company’s attorney’s assessment. This lawsuit was filed due to default debt.

Northway Mining, LLC vs. Marsan Properties, Inc. vs. Northway Mining, Supreme Court of the State 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 is 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 time there is an ongoing negotiation with a potential outcome of selling this property and therefore paying off the debt. This property is no longer used by Northway.

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.

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. Case is pending.

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 liability of $28,000.

We anticipate that we (including current and any future subsidiaries) will, from time to time, become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and we cannot assure that their ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows or results of operations.

ITEM 4. MINE SAFETY DISCLOSURE.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is currently quoted on the OTC Pink. Our common stock was approved for quotation on the OTC Pink on November 16, 2016, under the symbol “RCGR” and currently under the symbol “MPGR.” Because we are quoted on the OTC Pink, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.

The following table sets forth the high and low bid quotations for our common stock as reported on the OTC Pink for the periods indicated.

Holders.

As of December 31, 2018, there are approximately 35 record holders of 59,803,654 shares of our common stock, and 1 record holder of 953,000 shares of our Series A Preferred Stock.

Dividends.

We have not paid any cash dividends to date and do not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of our business.

Securities Authorized for Issuance Under Equity Compensation Plans.

None.

Recent Sales of Unregistered Securities.

During the fiscal year ended December 31, 2018 and 2017, we made the following sales of our unregistered shares.

EXEMPTION FROM REGISTRATION CLAIMED

The above sale by our Company of our unregistered securities were made by us in reliance upon Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"). The individual that purchased the unregistered securities was a sophisticated investor known to us and our management, through pre-existing business relationships, who were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of our Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to us. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

ISSUER PURCHASES OF EQUITY SECURITIES

We did not repurchase any shares of our common stock during the year ended December 31, 2018.

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable.

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

Forward-Looking Statements and Associated Risks

Forward-Looking Statements and Associated Risks. This form 10-K 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-K 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.

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 consolidated financial statements, as of December 31, 2018, we had an accumulated deficit totaling $3,905,831. This raises substantial doubts about our ability to continue as a going concern.

Plan of Operation

Originally the Company was established to manufacture and distribute high-quality, hand rolled, premium cigars under the Rich Cigars brand name. Effective on January 1, 2018, the Company chose to wind down and discontinue the cigar business over the period of the first quarter 2018 in favor of pursuing on a long-term basis the development and manufacture of its proprietary patent-protected Simple Cork™ line of products, which was also wound down due to heavy capital requirements, and on a short-term basis generating revenues through cryptomining by the purchase of cryptomining machines to be based in data center facilities.

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, now not confident that it will be able to implement its new focus and strategy in 2019.

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%) remains owned by the previous members. As a result of the Company acquiring the Northway ownership interest, Northway is a majority-owned subsidiary of the Company, which are in the Miami, Florida area, and management intends to conduct our business principally in the U.S.

Results of Operations

For the year ended December 31, 2018, we had $1,075,153 in revenues and $731,530 in Cost of Sales from continuing operations compared to $4,606 in revenues and $2,382 in Cost of Sales from discountinued operations for the year ended December 31, 2017. Operating expenses increased from $357,565 in 2017 from discontinued operations to $1,265,428 from continuing operations in 2018. The reasons of the increase in revenue, cost of goods sold and operating expenses are the change in control, the discontinuance of the cigar business, and the acquisition of Northway Mining, LLC.

Details of operating expenses for 2018 and 2017 are presented as follows:

Depreciation Expenses increased by $21,496 during the year ended December 31, 2018 compared to the same period in 2017. The reason for such increases was the acquisition of Northway Mining, LLC and the fixed assets involved in that transaction.

Payroll Expenses increased by $231,655 during the year ended December 31, 2018 compared to the same period in 2017. The employess working in Northway Mining until laid-off made such increase.

Bad Debt Expenses increased by $181, 003 during the year ended December 31, 2018 compared to the same period in 2017. The fall in the price of cryptocurrency caused a sensitive default in our clients.

Bank and Finance charges increased by $39,914 during the year ended December 31, 2018 compared to the same period in 2017. One of the reasons for such increase was the activity growth due to Northway Mining, LLC acquisition.

Insurance Expenses increased by $40,399 during the year ended December 31, 2018 compared to the same period in 2017. This is due to the Company obtaining insurance on the the third parties’ cryptomining equipment, pursuant to the service agreements.

Professional Expenses increased by $125,466 during the year ended December 31, 2018 compared to the same period in 2017, due to legal expenses affected by the lawsuits and agreements deployment for the core business.

For the year ended December 31, 2018, we incurred a net income of $1,011,919 from continuing operations compared to a net loss of $4,670,373 from discountinued and continuing operations for the year ended December 31, 2017. During the period ended December 31, 2018, the Company wrote off inventory in the amount of $0 Compared to $24,625 during the year ended December 31, 2017.

Our auditor has expressed substantial doubt as to whether we will be able to continue to operate as a “going concern” due to the fact that the Company has an accumulated deficit of $3,905,831 as of December 31, 2018 and has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining the adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

Liquidity and Capital Resources

As of December 31, 2018, our cash balance was $183,347 as compared to $0 at December 31, 2017. Our plan for satisfying our cash requirements for the next twelve months is through third party financing. We do not anticipate generating sufficient amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to insure 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 continued 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 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 year ended December 31, 2018, the Company used cash in the amount of $444,862 in operating activities, which is an increase of $129,367 over the previous year, $315,495.

Investing Activities

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 net assets of $299,770 and an investment of $1,100,000 (U.S.) 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 that 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.

During 2018, we also acquired $55,464 in Cryptocurrency, and Fixed Assets consisting of vehicles, pods, improvements in the plant, etc. for total cost of $663,663.

The Company had no investing activities for the year ended December 31, 2017.

Financing Activities

During the years ended December 31, 2018 and 2017, the Company entered into the following financing activities:

Convertible Debt:

On July 3, 2018, the Company entered into a convertible note with Eagle Equities LLC. The advance, 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 August 10, 2018, the Company entered into a convertible note 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.

On August 10, 2018, the Company entered into a convertible note with Eagle Equities LLC. The advance, 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.

On September 11, 2018, the Company entered into a convertible note with Firstfire Global Opportunities Fund, LLC. The advance, with a face value of $210,000, bears interest at 5% per annum and is payable on July 11, 2018. The note was issued at a $10,000 (“OID”) discount. The net proceeds received after issuance costs and fees was $200,000.

On March 27, 2017, the Company entered into a convertible advance with Crown Bridge Partners, LLC. The agreement provided that the Company may have borrowed up to $675,000. Borrowings under the line bore interest at 8% upon maturity and included a 10% issue discount. The maturity date for each tranche funded was 12 months from the effective date of each tranche. Additionally, the note was convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 45% multiplied by the lowest price of the common shares for the 20 trading prior to which the Notice of Conversion was received. As of December 31, 2017, the Company had drawn a $75,000 credit line, resulting in net proceeds received after discount of $63,750. During the year ended December 31, 2018, the noteholder converted $48,720 of principal and interest into common stock, and transferred the remaining $40,000 to a related party, resulting in a $0 balance owed at December 31, 2018.

On March 24, 2017, the Company entered into a convertible advance with Eagle Equities, LLC. The advance, with a face value of $75,000, bore interest at 8% per annum and was payable on March 24, 2018. The note was issued at a

10% discount, resulting in net proceeds received after issuance costs and fees of $63,750. Additionally, the note wass convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 55% multiplied by the lowest price of the common shares for the 20 trading prior to which the Notice of Conversion was received. During the year ended December 31, 2018, the noteholder converted $66,871 of principal and interest into common stock, resulting in a $0 balance owed at December 31, 2018.

On May 30, 2017, the Company entered into a convertible advance with Power Up Lending Group, LTD. The advance, with a face value of $38,000, bore interest at 12% per annum and was payable on March 5, 2018. The note was issued at a 7% discount, resulting in net proceeds received after issuance costs and fees of $35,000. Additionally, the note was 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 20 trading prior to which the Notice of Conversion was received. During the year ended December 31, 2018, the noteholder converted $50,858 of principal and interest into common stock, resulting in $0 and $2,387 in principal and interest, respectively, owed at December 31, 2018.

On May 15, 2017, the Company entered into a convertible advance with Kodiak Capital Group, LLC. The agreement provided that the Company may have borrowed up to $337,500. Borrowings under the line bore interest at 8% per annum and included a 10% issue discount. The maturity date for each tranche funded was 12 months from the effective date of each tranche. Additionally, the note was convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 55% multiplied by the lowest price of the common shares for the 20 trading prior to which the Notice of Conversion was received. As of December 31, 2017, the Company had drawn a $37,500 credit line, resulting in net proceeds received after discount of $30,000. During the year ended December 31, 2018, the noteholder transferred $37,401 principal and accrued interest to a related party, resulting in a $0 balance owed at December 31, 2018.

On September 27, 2017, the Company entered into a convertible advance with PowerUp Lending Group, LTD. The advance with a face value of $28,000, bore interest at 12% per annum and was payable on July 10, 2018. The note was issued at a 10% discount, resulting in net proceeds received after issuance cost and fees of $25,000. Additionally, the note was convertible at the holder's discretion into shares of the Company's common stock based on a conversion formula of 58% multiplied by the lowest price of the common shares for the 20 trading days prior to which the Notice of Conversion was received. During the year ended December 31, 2018, the noteholder converted $56,000 of principal and interest into common stock, resulting in a $0 balance owed at December 31, 2018.

The conversion formula of each of the above notes created an embedded derivative conversion feature the with values of $2,296,080 and $4,454,993 at December 31, 2018 and 2017, respectively.

Equity Transactions:

On November 27, 2017, the Company issued 1,000,000 shares of Series A Convertible preferred stock for $125,000. 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, or $0.0001. Each share of the Series A Convertible preferred stock votes at the equivalent of 20,000 shares of common stock.

During the year ended December 31, 2017, the Company received net shareholder contributions of $40,405 and purchased treasury stock for $71,670.

During the year ended December 31, 2017, the Company received net shareholder contributions of $40,405 and purchased treasury stock for $71,670.  We also issued 200,000 shares to contractors for services rendered valued at $20,000.

Transactions with Related Parties:

On February 21, 2018, Crown Bridge Partners LLC, sold part of its potentially dilutive convertible note to D&D Capital, Inc, a related party. Accrued interest related to this advance was $14,257 and $0 at December 31, 2018 and December 31, 2017, respectively, and is included in accrued interest on the Balance Sheets.

During the twelve months ended December 31, 2018, D&D Capital, Inc., exercised the convertible option, resulting in 2,298,212 shares issued; at a price of $0.04 per share issued for $95,008 (including $2,387 in accrued interest).

The remaining balance as of December 31, 2018 is $7,379.

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 Canna Corporation, reached an agreement with Kodiak Capital to purchase the note.

During the twelve months ended December 31, 2018, S&E Capital, Inc., exercised the convertible option, resulting in 2,450,000 shares issued; at a price of $0.04 per share issued for $101,283 (including default interest).

The remaining balance as of December 31, 2018 was $49,775.

Related party convertible note balance totaled $45,028 (net of unamortized debt discount of $12,126) at December 31, 2018.

Other Related Parties Loans:

The following loans with original principal of $379,401 in the aggregate upon issuance in 2018 bear no interest, are due on demand, and are shown net of $18,874 of current year repayments:

We didn’t engage in any related party debt activities during the year ended December 31, 2017.

Loans Payable:

The Company 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]. The total mortgage balance with 707 Flats Rd. and Marsan Properties as of December 31, 2018 is $617,400, which is payable in the year 2019. The Company also signed loans agreement with: (i) Ultegra Partner, net proceeds of $339,500, payable in weekly payments of $11,583, (ii) Atlas Advanced, net proceeds of $67,450, payable in working daily payments of $1,216. The 1^st Scotia Bank vehicle loan is deferred as follows: (a) within 12 month period: $9,933 (included in the balance sheet as Auto loan, current), and (b) thereafter: $36,017 (included in the balance sheet as Auto loan, non-current) as detailed in the following chart. The interest rate for Community Bank is 5.79%, and 1^st Scotia Bank is 7.29%. We received, in aggregate, total proceeds of $406,950 and $217,500 on these loans, and made repayments totaling $124,434 and $0 during the years ended December 31, 2017 and 2018, respectively.

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 December 31, 2018 and December 31, 2017, 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 December 31, 2018 and 2017:

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

Off Balance Sheet Arrangements

None

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

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Canna Corporation

(FORMERLY MINING POWER GROUP, INC.)

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Pinnacle Accountancy Group of Utah

(a DBA of Heaton & Co., PLLC)

1438 N. Hwy 89, Ste. 120

Farmington, UT 84025

Ph. 801-447-9572

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Canna Corporation (formerly Mining Power Group, Inc.)

Miami, FL

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Canna Corporation (formerly Mining Power Group, Inc.) (the Company) as of December 31, 2018, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Consideration of the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses and has working capital and stockholders' equity deficits, which raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Pinnacle Accountancy Group of Utah

We have served as the Company’s auditor since 2019.

Pinnacle Accountancy Group of Utah

Farmington, Utah

June 12, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Canna Corporation (formerly known as Mining Power Group, Inc.)

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Canna Corporation, (formerly known as Mining Power Group, Inc.) (the Company) as of December 31, 2017, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the year ended December 31, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Consideration of the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred losses since inception, has negative cash flows from operations, and has negative working capital. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Haynie & Company

  Salt Lake City, Utah April 24, 2018

We have served as the Company’s auditor since 2017.

See accompanying notes to the consolidated financial statements.

See accompanying notes to the consolidated financial statements.

See accompanying notes to the consolidated unaudited financial statements.

See accompanying notes to the consolidated financial statements.

Canna Corporation

(formerly Mining Power Group, Inc.)

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2018 and 2017

NOTE l: NATURE OF ORGANIZATION

Canna Corporation (formerly Mining Power Group, Inc.) (the "Company") is a Florida Corporation incorporated on July 29, 2013, and was initially 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 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, 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, entering 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 formed Delaware corporation, First Intercontinental Technology, Inc. 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 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. On February 21, 2018, the Company amended and restated the Articles of incorporation in order to change the Company's name 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 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 December 31, 2018, the Company has an accumulated deficit of $3,905,831 since inception. This raises substantial doubt about the Company's ability to continue as a going concern.

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 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, the Company entered into a Subscription Agreement with Mr. Dror Svorai, the current CEO of the Company, for the purchase of 1,000,000 shares of restricted Series A Convertible Preferred Supermajority voting stock. Pursuant to this agreement, the Company announced a shift in the strategic focus by which the Company has recognized a cessation of it business operations of Rich Cigars in accordance with Accounting Standards Codification (ASC) 205-20 Discontinued Operations. As such, the historical results of the Company have been classified as discontinued operations. As of the year ended December 31, 2017, assets of discontinued operations consisted of property and equipment of $498. During the year ended December 31, 2018 all property and equipment was written off.

Results of the discontinued operations for the twelve months ended December 31, 2018 and 2017 are as follows:

NOTE 4: SUMMARY OF SIGNIFICANT ACCOUNT POLICIES 

Principles of Consolidation

The accompanying consolidated financial statements of Canna Corporation (formerly Mining Power Group, Inc.) includes its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

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

Basis of Presentation

The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America. The Company has elected a December 31 fiscal year-end.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP 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 $183,347 and $0 as of December 31, 2018 and December 31, 2017, 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 specific facts and general economic conditions that may affect a client’s ability to pay.

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. As of December 31, 2018, the balances of accounts receivable and allowance for doubtful accounts were $181,003 and $181,003, respectively, resulting in net $0 accounts receivable. During the years ended December 31, 2018 and 2017, the Company incurred bad debt expense of $181,003 and $0, respectively. The Company had no accounts receivable as of December 31, 2017

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 cost less impairment in accordance with ASC 350 Intangibles - Goodwill and Other. The Company recognized an impairment loss on its cryptocurrencies of $49,275 and $0 during the years ended December 31, 2018 and 2017. As of December 31, 2018 and December 31, 2017, the fair value of cryptocurrencies was $6,189 and $0, 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.

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 2018, the Company acquired $1,507,368 of fixed asests via financing ($843,705 - NOTE 5) or purchase ($663,663). The Company recorded $28,722 of depreciation expense during 2018 and disposed of a vehicle with original cost of $75,581 and accumulated depreciation of $5,425, resulting in net fixed assets of $1,408,490 at December 31, 2018 as follows:

The Company had no fixed assets during the year ended December 31, 2017.

Deferred revenue

The Company recognizes revenue for subscription hosting service sales over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date. As of December 31, 2018 and December 31, 2017, the balances of deferred revenue were $275,362 and $0, respectively.

Loans Payable

The Company 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]. The total mortgage balance with 707 Flats Rd. and Marsan Properties as of December 31, 2018 is $617,400, which is payable in the year 2019. The Company also signed loans agreement with: (i) Ultegra Partner, net proceeds of $339,500, payable in weekly payments of $11,583, (ii) Atlas Advanced, net proceeds of $67,450, payable in working daily payments of $1,216. The 1^st Scotia Bank vehicle loan is deferred as follows: (a) within 12 month period: $9,933 (included in the balance sheet as Auto loan, current), and (b) thereafter: $36,017 (included in the balance sheet as Auto loan, non-current) as detailed in the following chart. The interest rate for Community Bank is 5.79%, and 1^st Scotia Bank is 7.29%. The Company received, in aggregate, total proceeds of $406,950 and $217,500 on these loans, and made repayments totaling $124,434 and $0 during the years ended December 31, 2018 and 2017, respectively.

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 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 815 Derivatives 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 470-20 Debt with Conversion and Other Options for 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-Scholes option-pricing model. In assessing the convertible debt instruments, 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.

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 December 31, 2018 and December 31, 2017, 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 December 31, 2018 and 2017:

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