10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-26027

CANNA POWDER, INC.

(Exact Name Of Registrant As Specified In Its Charter)

Nevada		68-0080601
(State of Incorporation)		(I.R.S. Employer Identification No.)

2170 Century Park East #210

Los Angeles CA 90067

6971916

(Address of Principal Executive Offices)

(ZIP Code)

Registrant’s Telephone Number, Including Area Code: +(972) 54-222-9702

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

Title of Each Class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] [ ] No

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

Large accelerated filer [ ]	Accelerated filer [ ]	Non-Accelerated filer [ ]	Smaller reporting company [X]
		Emerging growth company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

On November 14, 2019 the Registrant had 12,403,052 shares of common stock outstanding.

TABLE OF CONTENTS

Item	Description	Page

	PART I - FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS - UNAUDITED.	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive loss	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	17
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	20
ITEM 4.	CONTROLS AND PROCEDURES.	20

	PART II - OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS.	21
ITEM 1A.	RISK FACTORS.	21
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	21
ITEM 3.	DEFAULT UPON SENIOR SECURITIES.	22
ITEM 4.	MINE SAFETY DISCLOSURE.	22
ITEM 5.	OTHER INFORMATION.	22
ITEM 6.	EXHIBITS.	22

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Canna Powder, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2019			December 31, 2018
	(unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	68,855		$	606,245
Marketable Securities		-			108,164
Prepaid expenses		17,256			12,847
Total current assets		86,111			727,256

Total assets	$	86,111		$	727,256

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued liabilities	$	-		$	25,159
Accounts payable to related party		-			-
Total current liabilities		-			25,159

Total liabilities	$	-		$	25,159

Stockholders’ equity

Common stock, par value $0.00001 per share, 495,000,000 common shares authorized, 5,000,000 preferred shares authorized; 12,403,052 and 10,518,226 shares issued and outstanding at September 30, 2019 and December 31, 2018 respectively.	$	124		$	105
Accumulated other comprehensive income (loss)		5,338			(173,832	)
Non-controlling interest		(96,447	)		(37,893	)
Stock Payable		-			15,000
Additional paid in capital		5,944,356			4,472,095
Accumulated deficit		(5,767,260	)		(3,573,378	)

Total stockholders’ equity		86,111			702,097

Total liabilities and stockholders’ equity	$	86,111		$	727,256

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

Canna Powder, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the three months ended						For the nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018

Revenues	$	-		$	-		$	-		$	-

Expenses:
Research and Development expenses		(37,865	)		(45,321	)		(120,307	)		(102,202	)
General and Administrative expenses		(447,490	)		(57,300	)		(2,104,260	)		(295,183	)

Total operating expenses		(485,355	)		(102,621	)		(2,224,567	)		(397,385	)

OTHER EXPENSE:
Loss on sale of marketable securities		(251	)		-			(27,869	)		-
Total other expense		(485,606	)		-			(27,869	)		-

Net (Loss)		(485,606	)		(102,621	)		(2,252,436	)		(397,385	)

Provision for income taxes		-			-			-			-

Net loss		(485,606	)		(102,621	)		(2,252,436	)		(397,385	)
Less: loss attributable to non-controlling Interest		21,462			6,685			58,554			21,872
Net loss attributable to Canna Powder, Inc.		(464,144	)		(95,936	)	$	(2,193,882	)	$	(375,513	)

Loss per share – basic and diluted		(0.04	)		(0.01	)	$	(0.19	)	$	(0.04	)
Weighted average shares outstanding Basic and diluted		12,301,559			9,948,077			11,737,185			9,372,940

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

Canna Powder, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

	For the three months ended						For the nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018

Net loss	$	(485,606	)	$	(102,621	)	$	(2,252,436	)	$	(397,385	)
Less: Non-controlling interest		21,462			6,685			58,554			21,872

Total (loss) attributable to Canna Powder, Inc. ordinary shareholders.		(464,144	)		(95,936	)		(2,193,882	)		(375,513	)

Other comprehensives (loss) income:
- Foreign currency translation		5,990			(874	)		12,802			(8,023	)
- Unrealized holding gains (losses)		-			-			138,499			-
- Reclassification adjustments for realized losses (gains) on marketable securities.		-			-			27,869			-
Net comprehensive (loss) attributable to Canna Powder, Inc. ordinary shareholders.		(458,154	)		(97,810	)		(2,015,712	)		(383,536	)

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

Canna Powder, Inc.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

	Common stock				Additional Paid-In		Stock		Non- Controlling			Accumulated Other Comprehensive			Accumulated
	Shares		Amount		Capital		Payable		Interest			Income (Loss)			Deficit			Totals
Balance as of June 30, 2018		9,948,077		99	$	1,261,051	$		$	(15,187	)	$	(3,794	)	$	(402,741	)	$	839,428
Translation adjustments		-		-		-		-					(876	)		-			(876	)
Net loss for the three months ended September 30, 2018		-		-		-		-		(6,685	)		-			(95,936	)		(375,513	)
Balance as of September 30, 2018		9,948,077		99	$	1,261,051	$		$	(21,872	)	$	(4,670	)	$	(498,677	)	$	735,931

Balance as of June 30, 2019		12,156,177	$	120	$	5,832,996	$	-		(74,985	)	$	(650	)	$	(5,303,116	)	$	454,365
Cashless exercise of warrants		246,875		3		(3)		-		-			-			-			-
Warrants issued for services		-		-		111,363													111,363
Translation adjustments		-		-		-		-		-			5,988			-			5,988
Net loss for the three months ended September 30, 2019		-		-		-		-		(21,462	)		-			(464,144	)		(485,606	)
Balance as of September 30, 2019		12,403,052	$	124	$	5,944,356	$	-		(96,447	)	$	5,338		$	(5,767,260	)	$	86,111

	Common stock				Additional Paid-In			Stock			Non- Controlling			Accumulated Other Comprehensive			Accumulated
	Shares		Amount		Capital			Payable			Interest			Income (Loss)			Deficit			Totals
Balance as of December 31, 2017		8,591,577		86	$	447,164			-			-		$	3,353		$	(123,164	)	$	327,439
Shares Issued for Cash		1,356,500		13		813,887			-			-			-			-			813,900
Translation adjustments		-		-		-			-			-			(8,023	)		-			(8,023	)
Net loss for the nine months ended December 31, 2018		-		-		-			-			(21,872	)		-			(375,513	)		(397,385	)
Balance as of September 30, 2018		9,948,077	$	99	$	1,261,051		$			$	(21,872	)	$	(4,670	)	$	(498,677	)	$	735,931

Balance as of December 31, 2018		10,518,226	$	105	$	4,472,095		$	15,000			(37,893	)	$	(173,832	)	$	(3,573,378	)	$	702,097
Shares Issued for Cash		334,000		3		333,997			-			-			-			-			334,000
Cashless exercise of warrants		1,538,326		16		(16	)		-			-			-			-			-
Warrants issued for services		-		-		1,123,280			-			-			-			-			1,123,280
Stock payable issued		12,500				15,000			(15,000	)		-			-			-			-
Translation adjustments		-		-		-			-			-			12,802			-			13,852
Realized loss on marketable securities		-		-		-			-			-			166,368			-			165,318
Net loss for the nine months ended September 30, 2019		-		-		-			-			(58,554	)		-			(2,193,882	)		(2,252,436	)
Balance as of September 30, 2019		12,403,052	$	124	$	5,944,356		$	-			(96,447	)	$	5,338		$	(5,767,260	)	$	86,111

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

Canna Powder, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the nine months			For the nine months
	ended			ended
	September 30, 2019			September 30, 2018

Operating Activities:
Net (loss) attributable to Canna Powder, Inc.	$	(2,193,882	)	$	(375,513	)
Non –controlling interest in loss of consolidated subsidiary		(58,554	)		(21,872	)
Non-cash compensation		1,123,281			-
Loss on sale of marketable securities		27,869			-
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Changes in net assets and liabilities:
Decrease (increase) in prepaid expenses		8,141			(10,321	)
(Decrease) increase in Accounts payable and accrued liabilities		(25,159	)		(800	)

Net Cash (used in) operating activities		(1,118,304	)		(408,506	)

Investing Activities:
Cash received for sale of marketable securities		234,112			-
Net Cash provided by investing activities		234,112			-

Financing Activities:
Principal payment on debt		-			(2,687	)
Proceeds from sale of common stock (net of issuance expenses)		334,000			813,900
Net Cash provided by financing activities		334,000			811,213
Effect of currency on cash		12,802			(8,023	)

Net increase (decrease) in cash		(537,390	)		394,684

Cash and cash equivalents - beginning of period	$	606,245		$	326,730

Cash and cash equivalents - end of period	$	68,855		$	721,414

Non Cash items:
Common shares issued from stock payable	$	15,000		$	-
Cashless exercise of warrants	$	16		$	-

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

CANNA POWDER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Summary of Significant Accounting Policies

Basis of Presentation and Organization

The Company was incorporated in 1999 in the state of Utah under the name Datigen.com, Inc. On August 25, 2005, the Company changed its state of incorporation from Utah to Nevada by the merger of the Company with and into its wholly-owned subsidiary, Canna Powder, Inc., a Nevada corporation. As a result of such merger, the Company’s name was changed to Canna Powder, Inc. in order to better reflect the Company’s business operations.

On August 30, 2017, a new wholly-owned subsidiary was registered in Israel under the name of Canna Powder Ltd. (“CannaPowder Israel” or the “Subsidiary”), with 100 common shares outstanding, 0.01 NIS par value (the “Subsidiary Shares”), all of which were held in escrow on behalf of the Company by Israel attorney, Alon Nave. On September 27, 2017, pursuant to board resolution, the 100 Subsidiary Shares held in escrow were transferred to the Company.

On December 27, 2017, a board-resolution was adopted to issue an additional: (i) 800 Subsidiary Shares to the Company; and an additional 100 Subsidiary Shares to Rafi Ezra and, as a result, effective December 27, 2017, Canna Powder Ltd became a 90% owned subsidiary of the Company and a minority interest of 10% owned by Rafi Ezra.

The Subsidiary’s management consists of Ariel Dor, its General Manger, and Rafi Ezra, its CTO.

Research is being conducted at the Hebrew University pursuant to the terms of a Feasibility Study and Option Agreement under the supervision of the inventor of the technology, Professor Shlomo Magdassi (the “Development Program”).

The Company currently expects that the Development Program will be completed within three years from its start, with commercial sales starting in 2021. However, there can be no assurance that the Development Program will, in fact, be successful, nor can there be any assurance that the Company may not require additional capital to fully implement its business plan and complete production of commercially viable products based on its technology which is the subject of the Feasibility Study discussed below under “Planned Research and Development and Current Trends.”

In the commercial stage, the Company’s plan is to establish and operate several production facilities, each located in separate territories determined by the Company according to their size and regulatory environment that permits studies applicable to other activities prerequisite to commercial exploitation of medical cannabis generally and the Company’s plan to develop cannabis-based powders for medical uses. While there can be no assurance, at present the Company believes that it will be able to produce cannabis powders for medical uses at a significant cost advantage.

The accompanying unaudited condensed consolidated financial statements of the Company are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for an air presentation have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2018 and the notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2019.

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. As of September 30, 2019, and December 31, 2018, we had cash and cash equivalents of $68,855 and $606,245 respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings, financial position or cash flows.

Revenue Recognition

The Company recognizes revenue ratably over the term of the contract in accordance with ASC 606. In 2018, we implemented new internal controls as part of our efforts to adopt the new revenue recognition standard and perform risk assessment processes related to the new revenue standard. These internal controls include providing global training to our finance team and holding regular meetings with management to address risks associated with applying the five-step model for recognizing revenues. Additionally, we established monitoring controls to identify new sales arrangements and changes in our business environment that could impact risks associated with the new revenue standard and our current accounting assessment process.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the period of the change in estimate.

Fair Value of Financial Instruments

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2019 and December 31 2018, the carrying value of accounts payable and accrued liabilities approximated fair value due to the short-term nature and maturity of these instruments.

Deferred Offering Costs

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. As of September 30, 2019 and December 31, 2018, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

Use of Estimates

The financial statements are prepared on the basis of US GAAP. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported expenses during the reporting period. Actual results could differ from those estimates made by management. There are no leases in the Company, thus the financial statements do not include estimates to recognize assets and liabilities related to implementing the new leases standard ASC 842.

Impact of Recently Issued Accounting Standards

On December 15, 2018 the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) issued on February 25, 2016 became effective. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: Financing leases, similar to capital leases, will require the recognition of an asset and liability, measured at the present value of the lease payments or Interest on the liability will be recognized separately from amortization of the asset. Principal repayments will be classified as financing outflows and payments of interest as operating outflows on the statement of cash flows. Operating leases will also require the recognition of an asset and liability measured at the present value of the lease payments. A single lease cost, consisting of interest on the obligation and amortization of the asset, calculated such that the amortization of the asset will increase as the interest amount decreases resulting in a straight-line recognition of lease expense. All cash outflows have been classified as operating on the statement of cash flows.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this Update modify certain disclosure requirements of fair value measurements and are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact on its financial statements of the adoption of this new accounting pronouncement.

In June 2018, the FASB issued Accounting Standards Update, or ASU 2018-07, Compensation - Stock Compensation (Topic 718), which simplifies the accounting for non-employee share-based payment transactions. The new standard expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018 (including interim periods within that fiscal year), with early adoption permitted. The Company adopted the new standard in the second quarter of 2018 and the new standard is applied share-based payment transactions as reflected in the Company’s unaudited condensed consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Public business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

In March 2017, the FASB issued Update 2017-08—Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. The Company adopted the new standard and the new standard is reflected in the Company’s unaudited condensed consolidated financial statements.

In March 2017, the FASB issued Update 2017-07—Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For other entities, the amendments in this Update are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The Company adopted the new standard and the new standard is reflected in the Company’s unaudited condensed consolidated financial statements.

Note (2) Going Concern

The Company has limited operations its current deficit amount is $5,767,260 as of September 30, 2019. The accompanying financial statements have been prepared in conformity with US GAAP, which contemplate continuation of the Company as a going concern. The Company has not yet generated any revenue to cover its operating costs, and as such, has incurred an operating loss since inception. These negative cash flows from operations, limited business operations and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

Note (3) Prepaid expenses

Prepaid expenses of $17,256 at September 30, 2019 and $12,847 at December 31, 2018, consist of tax whithld at asource by VAT paid to be refunded from the Israel VAT authority and income tax withheld related to sale of marketable securities.

Note (4) Common Stock

Between March 20, 2018 and March 29, 2018, the Company sold a total of 206,000 units for cash consideration of $123,600 at a price of $.60 per share, each unit was comprised of one share of common stock and one class B warrant exercisable at $1.20 per share with a term of 24 months. The relative fair value of the stock with embedded warrants was $44,454 for the common stock and $79,146 for the class B Warrants.

Between April 3, 2018 and May 14, 2018, the Company sold a total of 1,150,500 units for cash consideration of $690,300 at a price of $.60 per share, each unit was comprised of one share of common stock and one class B warrant exercisable at $1.20 per share with a term of 24 months. The relative fair value of the stock with embedded warrants was $290,996 for the common stock and $399,304 for the class B Warrants.

Between October 18, 2018 and October 22, 2018, the Company sold a total of 345,166 units for cash consideration of $207,004 at a price of $.60 per share, each unit was comprised of one share of common stock and one class B warrant exercisable at $1.20 per share with a term of 24 months. The relative fair value of the stock with embedded warrants was $64,431 for the common stock and $142,573 for the class B Warrants.

Between November 5, 2018 and November 28, 2018, the Company sold a total of 187,483 units for cash consideration of $224,980 at a price of $1.20 per share, each unit was comprised of one share of common stock and one class D warrant exercisable at $2.40 per share with a term of 24 months. Of these shares, 12,500 shares were recorded as subscribed share capital. The relative fair value of the stock with embedded warrants was $70,026 for the common stock and $154,954 for the class B Warrants

During the year ended December 31, 2018 50,000 shares were issued to one officer for services provided to the Company. Such shares were valued at $26,000.

On May 1, 2018, one consultant was issued a two-year Class B Warrants to acquire an aggregate of 41,000 shares of common stock at an exercise price of $1.20 per share. The fair value of these warrants is $26,731. The warrants were valued using the Black-Scholes model with volatility of 139% and discount rate of 2.50%. The Class B warrants are fully vested and were accordingly included in expenses as stock based compensation.

On December 10, 2018, three consultants were issued 750,000 Class J Warrants exercisable for a three-year period to acquire one share of common stock at a price of $0.30 per share; The fair value of these warrants is $1,199,643. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.73%. The Class J warrants are fully vested and were accordingly included in expenses as stock based compensation.

On December 10, 2018, three consultants were issued 450,000 Class I Warrants exercisable for a two-year period to acquire one share of common stock at a price of $0.01 per share; The fair value of these warrants is $719,774. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.72%. The Class I warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018, two consultants were issued 200,000 Class E Warrants exercisable for a four-year period to acquire one share of common stock at a price of $0.01 per share; The fair value of these warrants are $ 249,998. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.94%. The Class E warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018, one consultant was issued 100,000 Class F Warrants exercisable for a five-year period to acquire one share of common stock at a price of $3.00 per share; The fair value of these warrants is $124,997. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.96%. The Class F warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018, one consultant was issued 200,000 Class G Warrants exercisable for a five-year period to acquire one share of common stock at a price of $5.00 per share; The fair value of these warrants is $249,994. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.96%. The Class G warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018, one consultant was issued 100,000 Class H Warrants exercisable for a five-year period to acquire one share of common stock at a price of $1.00 per share; The fair value of these warrants is $124,999. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.96%. The Class H warrants are fully vested and were accordingly included in expenses as stock based compensation.

On December 12, 2018, one consultant was issued 50,000 Class C Warrants exercisable for a four-year period to acquire one share of common stock at a price of $2.40 per share; The fair value of these warrants is $62,492. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.94%.

On December 12, 2018, one consultant was issued 75,000 Class E Warrants exercisable for a five-year period to acquire one share of common stock at a price of $0.01 per share. The warrants are vesting equally over eight quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $9,439 in 2018 plus $24,311 in Q1 and Q2 2019 out of $89,999 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.22%.

On January 1, 2019, the Company issued an officer in consideration for services 300,000 Class I Warrants exercisable for a period of two years at an exercise price of $.01 per share. The warrants vest one third immediately, one third on December 31, 2019 and one third on December 31, 2020. The fair value of the vested amount recorded as expense as of September 30, 2019 was $159,341 out of $229,957 total value. The warrants were valued using the Black-Scholes model with volatility of 394% and discount rate of 2.47%.

On May 7, 2019, due to the resignation of Liron Carmel as Chief Executive Officer and a director, 200,000 Class J Warrants exercisable for a period of three years at an exercise price of $.30 per share were forfeited.

On January 24, 2019, the Company sold a total of 334,000 units for cash consideration of $334,000 at price of $1.00, each unit was comprised of one share of common stock, one Class F warrant exercisable at $3.00 per share with a term of 36 months and one Class G warrant exercisable at $5.00 per share with a term of 60 months. The relative fair value of the stock with embedded warrants was $73,513 for the common stock and $260,187 for the class F and class G Warrants.

On January 27, 2019, 12,500 shares subscribed for in 2018 and recorded as stock payable were issued to a shareholder who the Company sold common stock to on November 21, 2018 and recorded subscribed share capital for during the period ending December 31, 2018.

On January 31, 2019, one consultant was issued 50,000 Class E Warrants exercisable for a four-year period to acquire one share of common stock at a price of $0.01 per share; The fair value of these warrants are $94,999. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.43%. The Class E warrants are fully vested and were accordingly included in expenses as stock based compensation.

On February 28, 2019, one officer converted 100,000 Class I Warrants to 99,576 shares of common stock in a cashless exercise.

On April 5, 2019, one officer converted 100,000 Class J Warrants to 87,500 shares of common stock in a cashless exercise

On April 5, 2019, three consultants converted an aggregate of 750,000 Class J Warrants to 656,250 shares of common stock in a cashless exercise.

On April 5, 2019, three consultants converted an aggregate of 750,000 Class I Warrants to 448,125 shares of common stock in a cashless exercise.

On May 1, 2019, Shai Cohen, Chairman and CEO, was issued 150,000 Class F Warrants exercisable for a three-year period to acquire one share of common stock at a price of $3.00 per share; The Class F warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $27,476 out of $329,716 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.28%.

On May 1, 2019, Shai Cohen, Chairman and CEO was issued 100,000 Class G Warrants exercisable for a five-year period to acquire one share of common stock at a price of $5.00 per share; The Class G warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $36,661 out of $219,968 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.30%.

On May 1, 2019, Shai Cohen, Chairman and CEO was issued 150,000 Class H Warrants exercisable for a five-year period to acquire one share of common stock at a price of $1.00 per share; The Class H warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $54,996 out of $329,979 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.30%.

On May 1, 2019, Shai Cohen, Chairman and CEO was issued 250,000 Class I Warrants exercisable for a two-year period to acquire one share of common stock at a price of $.01 per share; The Class I warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $91,658 out of $549,945 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.28%.

On May 1, 2019, Ariel Dor, General Manager of the Subsidiary was issued 250,000 Class I Warrants exercisable for a two-year period to acquire one share of common stock at a price of $.01 per share; The fair value of these warrants is $549,855. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.31%. The Class I warrants are fully vested and were accordingly included in expenses as stock based compensation.

On June 1, 2019, one consultant was awarded 25,000 Class A Warrants exercisable for a two-year period to acquire one share of common stock at a price of $.50 per share for service provided to the Company. The fair value of the vested amount recorded as expense as of September 30, 2019 was $49,857. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 1.82%.

On June 25, 2019 one consultant was awarded 17,000 Class I Warrants exercisable for a two-year period to acquire one share of common stock at a price of $.01 per share for services provided to the Company. The fair value of the vested amount recorded as expense as of September 30, 2019 was $23,792. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 1.71%.

Following is a table of warrant and options outstanding as of September 30, 2019 and exercisable along with the exercise price and range of remaining term.

Type	Quantity		Exercise Price		Expiration Date
Warrants Class A		825,000	$	0.50	12 Months
Warrants Class B		1,599,166	$	1.20	12-18 Months
Warrants Class C		50,000	$	2.4	48 Months
Warrants Class D		330,983	$	2.4	8 Months
Warrants Class E		325,000	$	0.01	48 Months
Warrants Class F		584,000	$	3.00	36 Months
Warrants Class G		634,000	$	5.00	60 Months
Warrants Class H		250,000	$	1.00	60 Months
Warrants Class I		467,000	$	0.01	24 Months
Total		5,065,149

On September 30, 2019 and December 31, 2018 there were approximately 227 and 226 holders of record and 12,403,052 and 10,518,226 shares of the Company’s common stock par value $0.00001 per share, outstanding, respectively. All shares of common stock are entitled to one vote per share in all matters submitted to the shareholders. No preferred shares were issued and outstanding at September 30, 2019 and December 31, 2018.

Dividends

The Company has not declared or paid any cash dividends on its common stock nor does it anticipate paying any in the foreseeable future. Furthermore, the Company expects to retain any future earnings to finance its operations and expansion. The payment of cash dividends in the future will be at the discretion of its Board of Directors and will depend upon its earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

Securities Authorized for Issuance under Equity Compensation Plans – None.

Note (5) Marketable Securities

Marketable Securities of $0 at September 30, 2019 and $108,164 at December 31, 2018 consist of 200,000 shares of UNV Medicine Ltd. a public company organized under the laws of Israel (“UNV”). CannaPowder Israel paid $274,531 to UNV for the Marketable Securities for which in return UNV will finance and purchase a line of equipment to be used for the production of certain products, based on CannaPowder Israel’s specifications. On April 24, 2019 CannaPowder Israel sold the 200,000 UNV shares for $234,112 and recorded a realized loss on marketable securities of $27,618. As of December 31, 2018, CannaPowder Israel’s Statements of Operations included a $166,010 unrealized loss from Marketable Securities which as of the date of the sale, April 24, 2019, were reclassified and included in the $27,869 realized loss on marketable securities.

Note (6) Income Taxes

The provision (benefit) for income taxes for the periods ended September 30, 2019 and December 31, 2018, was as follows (assuming a 21% effective tax rate in 2019 and 21% in 2018):

	September 30, 2019		December 31, 2018
Current tax provision:
Federal-
Taxable income	$	-	$	-
Total current tax provision	$	-	$	-

The Company had deferred income tax assets as of September 30, 2019 and December 31, 2018 as follows:

	September 30, 2019			December 31, 2018
Loss carryforwards	$	1,211,125		$	750,409
Less- Valuation allowance		(1,211,125	)		(750,409	)
Total net deferred tax assets	$	-		$	-

The Company provided a valuation allowance equal to the deferred income tax assets for the period ended September 30, 2019 and December 31, 2018, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

As of September 30, 2019, and December 31, 2018, the Company had approximately $1,729,738 and $123,164, respectively, in tax loss carryforwards that can be utilized in future periods to reduce taxable income and which expire by the year 2030.

The Company did not identify any material uncertain tax positions that will be filed. The Company did not recognize any interest or penalties for unrecognized tax benefits during the three months ended September 30, 2019 or the year ended December 31, 2018.

The Company intends to file income tax returns in the United States. All tax years are closed by expiration of the statute of limitations.

Note (7) Related Party Transactions

On January 31, 2019, One of a kind marketing DUSA LLC, a Texas limited liability company (“Dusa”) was issued 50,000 Class E Warrants exercisable for a four-year period to acquire one share of common stock at a price of $0.01 per share; The fair value of these warrants are $94,999. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.43%. The Class E warrants are fully vested and were accordingly included in expenses as stock based compensation. On May 1, 2019, the Subsidiary entered into a service agreement (the “Dusa Service Agreement”) with One of a kind marketing DUSA LLC, to provide international business development and strategic marketing services to the Subsidiary. The term of the Agreement commenced on May 1, 2019 and will continue as long as the Company continues its operations and progress in fulfilling its goals unless sooner terminated in accordance with the Agreement. As compensation therefor, Dusa will be entitled to monthly fee of $15,000. The Subsidiary and Dusa may terminate the Dusa Service Agreement at any time upon 30 days prior written notice.

On May 1, 2019, the Company, entered into a service agreement with Shai Cohen Chairman and CEO pursuant to which Mr. Cohen will serve as chief executive officer and chairman of the board of the Company. The term of the Cohen Service Agreement commenced on May 1, 2019 and will continue as long as the Company continues its operations and progress in fulfilling its goals unless sooner terminated in accordance with the Agreement. As compensation therefor, Mr. Cohen received the following warrants:

(i) 150,000 Class F Warrants exercisable for a three-year period to acquire one share of common stock at a price of $3.00 per share; The Class F warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $27,476 out of $329,716 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.28%.

(ii) 100,000 Class G Warrants exercisable for a five-year period to acquire one share of common stock at a price of $5.00 per share; The Class G warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $18,331 out of $219,968 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.30%.

(iii) 150,000 Class H Warrants exercisable for a five-year period to acquire one share of common stock at a price of $1.00 per share; The Class H warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $27,498 out of $329,979 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.30%.

(iv) 250,000 Class I Warrants exercisable for a two-year period to acquire one share of common stock at a price of $.01 per share; The Class I warrants are vesting equally over twelve quarters, thus the fair value of the vested amount recorded as expense as of September 30, 2019 was $45,829 out of $549,945 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.28%.

On May 7, 2019 Liron Carmel resigned as the Company’s Chief Executive Officer and director and Shai Cohen, a more than 10% shareholder was appointed as the Company’s Chief Executive Officer and director.

On April 18, 2019, a group of persons and entities owning shares in the Company, sold an aggregate of 500,000 shares of common stock to One of a Kind Kamami LLC, and 5,500,000 shares of common stock to MNSCO LLC, entities which are more than 10% owned by Shai Cohen.

On January 1, 2019, the Company issued one officer in consideration for services 300,000 Class I Warrants exercisable for a period of three years at an exercise price of $.01 per share and 300,000 Class J Warrants exercisable for a period of three years at an exercise price of $.30 per share. The warrants vest one third immediately, one third on December 31, 2019 and one third on December 31, 2020. The fair value of the vested amount recorded as expense as of September 30, 2019 was $149,966 out of $449,898 total value. The warrants were valued using the Black-Scholes model with volatility of 394% and discount rate of 2.47%. On February 28, 2019, 100,000 Class I warrants were converted to 99,576 common shares in a cashless exercise.

On December 10, 2018, three entities were issued an aggregate of 750,000 Class J Warrants exercisable for a three-year period to acquire one share of common stock at a price of $0.30 per share for consulting services provided to the company; The fair value of these warrants is $1,199,643. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.73%. The Class J warrants are fully vested and were accordingly included in expenses as stock based compensation. The entities are considered related parties as they are more than 5% shareholders or are controlled by individuals who are more than 5% shareholders.

On December 10, 2018, three entities, were issued an aggregate of 450,000 Class I Warrants exercisable for a two-year period to acquire one share of common stock at a price of $0.01 per share for consulting services provided to the company; The fair value of these warrants is $719,774. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.72%. The Class I warrants are fully vested and were accordingly included in expenses as stock based compensation. The entities are considered related parties as they are more than 5% or are controlled by individuals who are more than 5% shareholders.

On October 17, 2017, Amir Uziel, Attribute Ltd, Lavi Krasney and Kfir Silberman (controlling shareholder of L.I.A. Pure Capital Ltd.) each purchased 650,000 shares of common stock at $0.01 per share for a total cash consideration of $26,000.

Note (8) Subsequent Events

As defined in FASB ASC 855-10, “Subsequent Events”, subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued.

The Company evaluated all transactions and events that occurred subsequent to the balance sheet date and prior to the date on which the financial statements contained in this report were issued and determined that no such events or transactions necessitated disclosure.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION Back to Table of Contents

FORWARD-LOOKING STATEMENTS

Certain statements that the Company may make from time to time, including all statements contained in this report that are not statements of historical fact, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the safe harbor provisions set forth in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words such as “plans,” “expects,” “believes,” “anticipates,” “estimates,” “projects,” “will,” “should,” and other words of similar meaning used in conjunction with, among other things, discussions of future operations, financial performance, product development and new product launches, market position and expenditures. The Company assumes no obligation to update any forward-looking statements. Additional information concerning factors which could cause differences between forward-looking statements and future actual results is discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K, as filed with the SEC on April 1, 2019.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our historical results of operations during the periods presented and our financial condition. This MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes to consolidated financial statements and contains forward-looking statements that involve risks and uncertainties. See section entitled “Forward-Looking Statements” above.

Plan of Operations

On August 30, 2017, the Company formed Canna Powder Ltd. (the “Subsidiary”) which is 90% owned by the Company and 10% owned by Rafi Ezra, co-founder and chief technology officer of the Subsidiary.

On September 14, 2017, the Subsidiary entered into a Feasibility Study and Option Agreement (the “Feasibility Study”) with Yissum Research Development Company of the Hebrew University of Jerusalem (“Yissum”), under the supervision of the inventor of the technology, Professor Shlomo Magdassi. The Subsidiary commenced efforts to develop the formulation and process to produce medical products using new technology involving nano-powder derived from cannabis oil.

On May 2, 2018, the Subsidiary entered into a Research Agreement with Yissumto develop nano-cannabis powder, standardized from cannabis oil in a known cannabinoid composition, with the view to applying it to enable the commercial production of cannabis powder to treat a myriad of medical conditions (the “Cannabis Powder Products”).

The Company currently expects that the research and development program under the Research Agreement will be completed within three years, with commercial sales of Cannabis Powder Products expected to commence in 2021. However, there can be no assurance that the development of the technology will be successful, that research will be completed by 2021 or that commercially viable Cannabis Powder Products will be developed and be accepted by the market in a timely manner, if at all. Additionally, there can be no assurance that the Company may not require additional capital to fully implement its business plan and complete production of commercially viable products based on the technology being developed.

In addition, on May 2, 2018, the Company entered into a separate License Agreement with Yissum under which the Subsidiary was granted the exclusive license to commercially exploit any technology related to the Cannabis Powder Products resulting from the efforts under the Research Agreement (the “License”). The License shall expire on the latter of: (i) the date of expiration in such country of the last to expire Licensed Patent included in the Licensed Technology; (ii) the date of expiration of any exclusivity on the Product granted by a regulatory or government body in such country; or (iii) twenty years from the date of the first commercial sale in such country. Should the periods referred to in Subsections (i) or (ii) expire in a particular country prior to the period referred to in Subsection (iii), above, the license in that country or those countries shall be deemed a license to the Know-How during such post-expiration period. The License Agreement also provides that the Subsidiary pay Yissum (i) a royalty equal to 4% of net sales of the Cannabis Powder Products; and (ii) a sublicense fee equal to 20% of any sublicense consideration received by the Subsidiary.

On October 8, 2018, the Company signed a binding memorandum of understating with UNV Medicine Ltd., a company organized under the laws of Israel (“UNV”)), under which the Subsidiary paid $274,531 to UNV and in return UNV will finance and purchase a line of production equipment to be used for the production of the Canna Products, based on the Subsidiary’s specifications. In addition, Canna Ltd received 200,000 UNV shares.

Recent Developments

On April 18, 2019, as previously reported by the Company on a Current Report on Form 8-K, as filed with the SEC on May 20, 2019, on April 18, 2019, Shai Cohen and affiliated entities acquired 5,500,000 shares of common stock of the Company, resulting in a change of control and Shai Cohen together with his affiliates owning an aggregate of 54.4 % of the issued and outstanding shares of the Company on a fully-diluted basis at such time.

Results of Operations

Three months ended September 30, 2019 and September 30, 2018

Revenues

We have not generated any revenues in the three months ended September 30, 2019 and September 30, 2018.

Operating Expenses

Total operating expenses for the three months ended September 30, 2019 were $485,355 compared to total operating expenses of $102,621 for the three months ended September 30, 2018 mostly due to non-cash compensation and increase in operating subsidiary expenses.

Research and development expenses during the three months ended September 30, 2019 were $37,865 as compared to $45,321 during the three months ended September 30, 2018. The slight decrease was due to decrease in research and development activities of the Subsidiary.

General and administrative expenses during the three months ended September 30, 2019 were $447,490 as compared to $57,300 during the three months ended September 30, 2018 and were comprised primarily of non-cash compensation and other general and administrative expenses. The increase was primarily due to non-cash compensation and an increase in general and administrative expenses incurred in the Subsidiary.

Other expenses during the three months ended September 30, 2019 were $251 as compared to $0 during the three months ended September 30, 2018.

Net Loss

We incurred a net loss attributable to the Company of $464,144 during the three months ended September 30, 2019 compared to $95,936 during the three months ended September 30, 2018 and a loss attributable to non-controlling interest for the three months ended September 30, 2019 of $21,462 compared to $6,685 during the three months ended September 30, 2018.

Nine months ended September 30, 2019 and September 30, 2018

Revenues

We have not generated any revenues in the nine months ended September 30, 2019 and September 30, 2018.

Operating Expenses

Total operating expenses for the nine months ended September 30, 2019 were $2,224,567 compared to total operating expenses of $397,385 for the nine months ended September 30, 2018.

Our research and development expenses during the nine months ended September 30, 2019 were $120,307 compared to $102,202 for the nine months ended September 30, 2018. The increase was due to research and development activities of the Subsidiary.

Our general and administrative expenses during the nine months ended September 30, 2019 were $2,104,260 compared to the general and administrative expense of $295,183 for the nine months ended September 30, 2018. The increase was mostly due to non-cash compensation and increase in general and administrative expenses incurred in the Subsidiary.

Other expenses during the nine months ended September 30, 2019 were $27,869 as compared to $0 during the nine months ended September 30, 2018. The increase was due to loss on sale of marketable securities in the Subsidiary.

Net Loss

We incurred a net loss attributable to the Company of $2,193,882, during the nine months ended September 30, 2019, compared to $375,513 during the nine months ended September 30, 2018. The loss attributable to non-controlling interest for the nine months ended September 30, 2019 was and $58,554, compared to $21,872 during the same period in the prior year.

Liquidity and Capital Resources

As of September 30, 2019 we had $86,111 in total assets consisting of cash and cash equivalents of $68,855, and prepaid assets of $17,256.

We had positive working capital of $86,611 as of September 30, 2019 compared to $702,097 at December 31, 2018. Such working capital has been sufficient to sustain our operations to date. Our total liabilities as of September 30, 2019 were $0 compared to $25,159 at December 31, 2018.

Net Cash Used in Operating Activities

During the nine months ended September 30, 2019, we used $1,118,304 in our operating activities. This resulted from a net loss of $2,193,882 attributable to the Company, $58,554 loss attributable to non-controlling interest, a decrease of $25,159 in accounts payable and accrued liabilities, offset by a decrease in prepaid expenses of $8,141, loss on sale of marketable securities of $27,869 and non-cash compensation of $1,123,281 which represented non-cash compensation for services provided by the Company’s Chairman and CEO as well as the Subsidiary’s general manager and consultants.

During the nine months ended September 30, 2018, we used $408,506 in our operating activities. This resulted from a net loss of $375,513 attributable to the Company, $21,872 loss attributable to non-controlling interest and increase in prepaid expenses of $10,321 and a decrease of $800 in accounts payable and accrued liabilities.

Net Cash Used provided by Investing Activities

During the nine months ended September 30, 2019, we financed our negative cash flow through the sale of marketable securities in the amount of $234,112.

During the nine months ended September 30, 2018 there were no investment activities.

Net Cash Provided by Financing Activities

During the nine months ended September 30, 2019, we financed our negative cash flow by financing activities through the sale of common stock in the amount of $334,000.

During the nine months ended September 30, 2018, we financed our negative cash flow through the sale of common stock in the amount of $813,900 offset by payments to notes payable of $2,687.

While management believes that the Company will be successful in its current and planned operating activities, there can be no assurance that the Company will be successful in developing and commercializing its planned products. The Company intends to finance its operations by the sale of equity or debt securities unless and until we begin to generate revenues from licensing our products which are in development.

Our ability to create sufficient working capital to sustain us over the next twelve-month period, and beyond, is dependent on our entering into additional licensing agreements and on our success in issuing additional debt or equity or entering into strategic arrangements with a third party. There can be no assurance that we will be successful in obtaining financing or that sufficient capital will be available to us, and if available on favorable terms. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to Table of Contents

We are a smaller reporting company and are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES Back to Table of Contents

Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of September 30, 2019, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, based on the material weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our internal controls are not effective for the following reasons: (i) there is an inadequate segregation of duties consistent with control objectives as management is comprised of only two persons, one of which is the Company’s principal executive officer and principal financial officer and, (ii) the Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS Back to Table of Contents

To our knowledge, there are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 1A. RISK FACTORS Back to Table of Contents

The Company is a smaller reporting company and is not required to provide this information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Back to Table of Contents

Except as set forth below, there were no sales of equity securities sold during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.

On May 1, 2019, Shai Cohen, our Chairman and Chief Executive Officer, was issued (i) a five-year Class F Warrant to purchase 150,000 shares of common stock at an exercise price of $3.00 per share.; (ii) a three-year Class G Warrants to purchase 100,000 shares of common stock at an exercise price of $5.00 per share; (iii) a five-year Class H Warrant to purchase 150,000 shares of common stock at an exercise price of $1.00 per share; and (iv) a two-year Class I Warrant to purchase 250,000 shares of common stock at an exercise price of $.01 per share.

On May 1, 2019, Ariel Dor, General Manager of the Subsidiary was issued a two-year Class I Warrant to purchase 250,000 shares of common stock at an exercise price of $.01 per share.

On June 1, 2019, we issued a two-year Class A Warrant to purchase 25,000 shares of common stock at an exercise price of $.50 per share to a consultant for marketing consulting services provided to the Company.

On June 25, 2019, we issued a two-year Class I Warrant to purchase 17,000 shares of common stock at an exercise price of $.01 per share to a consultant for strategic consulting services provided to the Company.

The above issuances did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe is exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES Back to Table of Contents

None.

ITEM 4. MINE SAFTY DISCLOSURE. Back to Table of Contents

Not applicable.

ITEM 5. OTHER INFORMATION Back to Table of Contents

Not applicable.

ITEM 6. EXHIBITS Back to Table of Contents

(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

Exhibit No.		Description

31.1		Section 302 Certification of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer
31.2		Section 302 Certification of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer
32.1		Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer
32.2		Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer

SIGNATURES

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

Canna Powder, Inc.

/s/ Shai Cohen
Shai Cohen
Chief Executive Officer (Principal Executive Officer)

/s/ Oded Gilboa
Oded Gilboa
Chief Financial Officer (Principal Financial and Accounting Officer)

November 14, 2019