The Securities and Exchange Commission (SEC) continues to target the cannabis industry for bad behavior, with CannAwake as its latest victim. The agency said this week that it was beginning proceedings against CannAwake Corp. (OTC: CANX) for not filing financial reports.
The company last filed a form 10-Q for the quarter ending Dec. 31, 2018, when CannAwake reported a net loss of $1,109,506 for the prior nine months.
The SEC also noted that it sent delinquency letters to the company, which were ignored.
The SEC issued an Order Instituting Proceedings on Sept. 22, 2022, but CannAwake never responded.
On Oct. 24, the SEC wrote in its Order to Show Cause, “Respondent is ORDERED to SHOW CAUSE by November 7, 2022, why the registration of its securities should not be revoked by default due to its failure to file an answer and to otherwise defend this proceeding.”
Who is CannAwake?
In 2018, Delta International Oil & Gas Inc. changed its name to CannAwake Corp.
“The name change is a public reflection of our organization’s shift away from oil and gas exploration/development toward real estate development with a strong focus on green and sustainable projects,“ Scott Stoegbauer, CannAwake’s president, said at the time.
In April 2018, the company did a deal with American Green Inc. (OTC: ERBB), which became an 80% owner. The plan was for CannAwake’s subsidiary called Nipton Inc. to act as a property developer, manager, and lessor for companies in the medical or recreational cannabis sectors in the state of California, including initiatives such as the transformation of nearly abandoned towns into “cannabis-friendly” destinations. The town of Nipton, California, was to be an example.
Instead, it seems that CannAwake was abandoned under the desert sun, as majority owner American Green continued to file current financial statements and operate normally.
Here are some of American Green’s highlights:
- Issued its own cryptocurrency called American Greenback in April 2022.
- Spent $3.7 million buying a 40,000-square-foot building known as American Green’s “Cypress Chill” cannabis facility in Phoenix.
- Began selling its own American Green branded “Private Reserve“ premium cannabis flower in Arizona in July.
What it didn’t do was file financial reports for CannAwake.
CannAwake shares haven’t sold in a while, and American Green shares sell for less than one cent.
SEC’s Cannabis Hits
In the last couple of weeks, the SEC announced multiple actions against cannabis companies:
- Elegance Brands and Emerald Health Pharmaceutical were charged with a stock promotion in a scheme that included HighTimes Holding Corp. stock.
- Cronos Group agreed to a C$1.3 million settlement for accounting errors.
- NewAge Beverage company was given cease-and-desist orders for filing misleading statements about the company.