EARTH DRAGON RESOURCES INC. - FORM 10-Q

Attached files

file	filename
EX-32.1 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - EARTH DRAGON RESOURCES INC.	exh321.htm
EX-31.1 - CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER - EARTH DRAGON RESOURCES INC.	exh311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2009

OR

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

Commission File Number: 000-53774

EARTH DRAGON RESOURCES INC.

(Exact name of registrant as specified in its charter)

NEVADA

(State or other jurisdiction of incorporation or organization)

12F, World Trade Centre

No. 25 Tongxing Street

Zhongshan District

Dalian, China 116001

(Address of principal executive offices, including zip code.)

011-86-130-798-88886

(Registrant’s telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. YES [X] NO [ ]

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

	Large Accelerated Filer	[ ]	Accelerated Filer	[ ]
	Non-accelerated Filer	[ ]	Smaller Reporting Company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [X] NO [ ]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 11,960,000 as of January 13, 2010.

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Earth Dragon Resources Inc.
(An Exploration Stage Company)
Balance Sheets
(Expressed in US Dollars)


				November 30,		May 31,
				2009		2009
ASSETS				(Unaudited)
Current Assets
	Cash		$	18,971	$	30,398
Total Current Assets				18,971		30,398
Mining property acquisition costs, less reserve for
	impairment of $6,500			-		-
Total Assets			$	18,971	$	30,398



LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
	Account payable and accrued liabilities		$	1,632	$	8,252
	Due to related party			3,105		2,705
Total current liabilities				4,737		10,957
Stockholders' Equity
	Common stock, $0.0001 par value;
		authorized 75,000,000 shares,
		issued and outstanding 11,960,000 and 11,960,000 shares, respectively		1,196		1,196
	Additional paid-in capital			116,804		116,804
	Deficit accumulated during
		the exploration stage		(103,766)		(98,559)
Total stockholders' equity				14,234		19,441
Total Liabilities and Stockholders' Equity			$	18,971	$	30,398

See notes to financial statements.

F-1

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Earth Dragon Resources Inc.
(An Exploration Stage Company)
Statements of Operations
(Expressed in US Dollars)
(Unaudited)



			Three			Three		Six		Six		Period October
			months			months		months		months		23, 2007
			Ended			Ended		Ended		Ended		(Inception) to
			November 30,			November 30,		November 30,		November 30,		November 30,
			2009			2008		2009		2008		2009

Revenue		$	-		$	-	$	-	$	-	$	-

Cost and expenses
	Impairment of mining property acquisition costs		-			-		-		-		6,500
	General and administrative expenses		2,071			11,146		5,207		31,265		97,266
Total Costs and Expenses			2,071			11,146		5,207		31,265		103,766
Net Loss		$	(2,071)		$	(11,146)	$	(5,207)	$	(31,265)	$	(103,766)

Net Loss per share
	Basic and diluted	$	(0.00)		$	(0.00)	$	(0.00)	$	(0.00)


Number of common shares used to compute loss per share
	Basic and Diluted			11,960,000		10,000,000		11,960,000		10,000,000

See notes to financial statements.

F-2

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Earth Dragon Resources Inc.
(An Exploration Stage Company)
Statements of Stockholders' Equity
For the period October 23, 2007 (Inception) to November 30, 2009
(Expressed in US Dollars)


			Common Stock, $0.0001 Par Value				Additional Paid-in Capital		Deficit Accumulated During the Exploration Stage		Total Stockholders' Equity
			Shares		Amount
Common stock issued for cash
	on January 31, 2008 at $0.002 per share	$	10,000,000	$	1,000	$	19,000	$	-	$	20,000
Net loss for the period October 23,
	2007 (inception) to May 31, 2008		-		-		-		(14,392)		(14,392)
Balance, May 31, 2008			10,000,000		1,000		19,000		(14,392)		5,608
Common stock sold on
	January 31, 2009 at $0.05 per share		1,960,000		196		97,804		-		98,000
Net loss			-		-		-		(84,167)		(84,167)
Balance, May 31, 2009			11,960,000		1,196		116,804		(98,559)		19,441
Unaudited:
Net loss for the six months
ended November 30, 2009			-		-		-		(5,207)		(5,207)
Balance, November 30, 2009		$	11,960,000	$	1,196	$	116,804	$	(103,766)	$	14,234

See notes to financial statements.

F-3

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Earth Dragon Resources Inc.
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in US Dollars)
(Unaudited)


				Six months Ended November 30, 2009		Six months Ended November 30, 2008		Period October 23, 2007 (Inception) to November 30, 2009
Cash Flows from Operating Activities
	Net loss		$	(5,207)	$	(31,265)	$	(103,766)
	Adjustments to reconcile net loss to net cash							-
		used for operating activities:						-
	Impairment of mining property acquisition costs			-		-		6,500
	Changes in operating assets and liabilities:
		Accounts payable and accrued liabilities		(6,620)		(5,800)		1,632
Net cash provided by (used for) operating activities				(11,827)		(37,065)		(95,634)
Cash Flows from Investing Activities
	Mineral property acquisition			-		-		(6,500)
Net cash provided by (used for) investing activities				-		-		(6,500)
Cash Flows from Financing Activities
	Proceeds from sale of common stock			-		-		118,000
	Due to related party			400		26,856		3,105
Net cash provided by (used for) financing activities				400		26,856		121,105
Increase (decrease) in cash				(11,427)		(10,209)		18,971
Cash, beginning of period				30,398		14,834		-
Cash, end of period			$	18,971	$	4,625	$	18,971

Supplemental Disclosures of Cash Flow Information:
	Interest paid		$	-	$	-	$	-
	Income taxes paid		$	-	$	-	$	-

See notes to financial statements.

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EARTH DRAGON RESOURCES INC.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

November 30, 2009

(Expressed in US Dollars)

(Unaudited)

1. Nature of Operations

Earth Dragon Resources, Inc. (the “Company”) was incorporated in the State of Nevada on October 23, 2007. The Company is an Exploration Stage Company as defined in Accounting Standards Codification ("ASC") 915, “Development Stage Entities”. The Company has acquired a mineral property located in the State of Nevada, U.S.A., and has not yet determined whether this property contains reserves that are economically recoverable.

2. Interim Financial Information

The unaudited financial statements as of November 30, 2009 and for the three and six months ended November 30, 2009 and 2008 and for the period October 23, 2007 (inception) to November 30, 2009 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of November 30, 2009 and the results of operations and cash flows for the periods ended November 30, 2009 and 2008. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the six months ended November 30, 2009 are not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending May 31, 2010. The balance sheet at May 31, 2009 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the period October 23, 2007 (inception) to May 31, 2009 as included in our Form 10-K filed with the Securities and Exchange Commission on August 25, 2009.

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EARTH DRAGON RESOURCES INC.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

November 30, 2009

(Expressed in US Dollars)

(Unaudited)

3. Mineral Property

In December 2007, the Company acquired the right to conduct exploration activation in the Mountain Queen Lode Mining Claim, located in Clark County, Nevada, U.S.A., at a cost of $6,500. The Claim Number is NMC#980946, which expires September 1, 2010. The property is in the name of Multi Metal Mining Corp. and held by it in trust for the Company.

In March 2008, the Company received an evaluation report from a third party consulting firm recommending an exploration program with a total estimated cost of $88,000. Due to lack of working capital, the Company has not completed this program.

On May 31, 2008, the Company recorded a $6,500 provision for impairment of mining property acquisition costs.

4. Due to Related Party

The $3,105 amount due to related party at November 30, 2009 ($2,705 at May 31, 2009) is due the chief executive officer of the Company, is non-interest bearing, and is due on demand.

5. Common Stock

On January 31, 2008, the Company issued 10,000,000 shares of common stock to its chief executive officer for total cash proceeds of $20,000.

On January 31, 2009, the Company closed on the sale of a total of 1,960,000 shares in its public offering at a price of $0.05 per share for total cash proceeds of $98,000.

At November 30, 2009, there are no outstanding stock options or warrants.

F-6

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EARTH DRAGON RESOURCES INC.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

November 30, 2009

(Expressed in US Dollars)

(Unaudited)

6. Income Taxes

The provision for (benefit from) income taxes differs from the amount computed by applying the statutory United States federal income tax rate of 35% to income (loss) before income taxes. The sources of the difference follow:

					Period from
	For the six months ended				October 23, 2007
	November 30				(Date of Inception) to
		2009		2008	November 30, 2009
Expected tax at 35%	$	(1,822)	$	(10,943)	$	(36,318)
Increase in valuation allowance		1,822		10,943		36,318
Income tax provision	$	-	$	-	$	-

Significant components of the Company’s deferred income tax assets are as follows:

	November 30, 2009			May 31, 2009
Net operating loss carryforward	$	36,318	$	34,496
Valuation allowances		(36,318)		(34,496)
Net deferred income tax assets	$	-	$	-

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $36,318 at November 30, 2009 attributable to the future utilization of the net operating loss carryforward of $103,766 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements. The Company will continue to review this valuation allowance and make adjustments as appropriate. The $103,766 net operating loss carryforward expires $14,392 in year 2028, $84,167 in year 2029 and $5,207 in year 2010.

Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

7. Subsequent Events

The Company has evaluated subsequent events through the filing date of this Form 10-Q and has determined that there were no subsequent events to recognize or disclose in these financial statements.

F-7

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ITEM 2.

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

This section of this quarterly report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Plan of Operation

We are a start-up, exploration stage corporation and have not yet generated or realized any revenues from our business operations.

Our auditor has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. There is no assurance we will ever reach this point. Accordingly, we must raise cash from sources other than the sale of minerals found on the claim. That cash must be raised from other sources. Our only other source for cash at this time is investments by other. We must raise cash to implement our project and stay in business.

We will be conducting research in the form of exploration of the claim. Access to the claim is from Las Vegas, Nevada to the Mountain Queen Claim is southward via Interstate Highway 15 for approximately 31 miles to within five miles past the town of Jean, Nevada, thence westerly for seven miles to the Mountain Queen Lode Claim which is north of the road.

Our exploration target is to find an ore body containing zinc. Our success depends upon finding mineralized material. This includes a determination by our consultant if the claim contains reserves. We have not selected a consultant as of the date of this report and will not do so until our offering is successfully completed, if that occurs, of which there is no assurance. Mineralized material is a mineralized body, which has been delineated by appropriate spaced drilling or underground sampling to support sufficient tonnage and average grade of metals to justify removal. If we don’t find mineralized material or we cannot remove mineralized material, either because we do not have the money to do it or because it is not economically feasible to do it, we will cease operations and you will lose your investment.

In addition, we may not have enough money to complete our exploration of the claim. If it turns out that we have not raised enough money to complete our exploration program, we will try to raise additional funds from a second public offering, a private placement or loans. At the present time, we have not made any plans to raise additional money and there is no assurance that we would be able to raise additional money in the future. In we need additional money and can’t raise it, we will have to suspend or cease operations.

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We must conduct exploration to determine what amount of minerals, if any, exist on our properties and if any minerals which are found can be economically extracted and profitably processed.

The claim is undeveloped raw land. To our knowledge, the claim has never been mined. The only event that has occurred is the recording of the claim by Larry Sostad in the name of Multi Metal Mining Corp., a physical examination of the claim by Yuan Kun Deng, our sole officer and director, and retaining our consultant to manage the exploration of the claim. The registration of the claim was included in the $6,500 paid to Mr. Sostad. No additional payments were made or are due to Mr. Sostad or Multi Metal Mining Corp. for their services. The claims were recorded in Multi Metal Mining Corp. in order to simplify possible reconveyances of the claims to the former record owners and to the Bureau of Land Management should mineralized material not be discovered on the claim. Since Mr. Deng is a resident of the People’s Republic of China, the ability to obtain an acknowledged reconveyances (notarized) in compliance with U.S. law is very limited. To eliminate the problems related with the foregoing, we elected to have the claims recorded in Multi Metal Mining Corp.’s name. Multi Metal Mining Corp. is owned by Mr. Sostad. On October 17, 2008, Multi Metal Mining Corp. executed a trust agreement acknowledging that it holds the claim in trust for us. In the event that Multi Metal Mining Corp. transfers title to a third party, the trust agreement will be used as evidence that he breached the terms thereof as well as breaching its fiduciary duty to us. Under the terms of the trust agreement, we have the responsibility to keep the claims in good standing in terms of filing and work and all other requirements. Originally, the trust agreement was executed by Mr. Sostad, individually, however, we discovered the claim was registered in the name of Multi Metal Mining Corp. a corporation owned by Mr. Sostad. We determined that the trust agreement would have to be executed by the record owner of the claim, Multi Metal Mining Corp. On October 17, 2008, a new the trust agreement was executed to specifically state that Multi Metal Mining Corp. was the record holder of the claim; that it held the claim in trust for us; that the law of the situs of the claim, the law of Nevada, would govern the terms of the trust agreement; that the parties to the trust agreement consented to personal jurisdiction in the state of Nevada; that Multi Metal Mining Corp. will not transfer its interest to anyone other than us; that Multi Metal Mining Corp. will only transfer title to the claim to us; that Multi Metal Mining Corp. will not demand payment for the claim when it transfers the same to us; that Multi Metal Mining Corp. does not have the right to sell or transfer the interest in and to the claim to anyone but us; that Multi Metal Mining Corp. does not have the right to profit from the transfer of the claim if mineralized material is found on the claim; and, that Multi Metal Mining Corp. must transfer title to the claim to us without payment of any kind, upon our demand, whether mineralized material is found on the claim or not. The trust agreement, under Nevada law, will have the effects described above with respect to the obligations and duties of Multi Metal Mining Corp.

We do not know if we will find mineralized material. We believe that activities occurring on adjoining properties are not material to our activities. The reason is that what ever is located under adjoining claim may or may not be located on our claim.

We do not claim to have any minerals or reserves whatsoever at this time on the claim.

We intend to implement an exploration program which consists of trenching. Trenching is the process of removing samples from the surface and immediately below the surface to the ground. Mr. Deng will not receive fees for his services. The samples will be tested to determine if mineralized material is located on the claim. Based upon the tests of samples, we will determine if we will terminate operations; proceed with additional exploration of the claim; or develop the claim. We intend to take our core samples to analytical chemists, geochemists and registered assayers located in Reno, Nevada. We have not selected any of the foregoing as of the date of this report.

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We do not intend to interest other companies in the claim if we find mineralized materials. We intend to try to develop the reserves ourselves through the use of consultant. We have no plans to interest other companies in the claim if we do not find mineralized material. To pay the consultant and develop the reserves, we will have to raise additional funds through a second public offering, a private placement or through loans. As of the date of this report, we have no plans to raise additional funds. Further, there is no assurance we will be able to raise any additional funds even if we discover mineralized material and a have a defined ore body.

If we are unable to complete any phase of exploration because we don’t have enough money, we will cease operations until we raise more money. If we can’t or don’t raise more money, we will cease operations. If we cease operations, we don’t know what we will do and we don’t have any plans to do anything.

All of the work on the claim will be conduct by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.

Results of Operations

From Inception October 23, 2007 to November 30, 2009

In January 2009, we retained our consultant to manage the exploration of the claim. Cost was $4,500. Time of retention was six days.

Milestones

The following are our milestones:

90-180 days - Surveying, Trenching and Sampling. We will survey the claim. Surveying will cost up to $5,000. Trenching and sampling will cost up to $7,500. Trenching will used to accumulate samples from the surface and just below the surface. Our activities will be subcontracted to non-affiliated third parties. Time to conduct trenching and sampling - 90 days.

180-210 days- Have an independent third party analyze the samples from the trenching to determine if mineralized material is below the ground. If mineralized material is found, we will attempt to define the ore body. We estimate that it will cost $3,000 to analyze the samples and will take 30 days. Delivery of the samples to the independent third party is necessary to carry out this milestone.

210-370 days – If mineralized material is found, specific drilling targets will be established. We estimate this would cost $1,200. Subsequently, a process of permitting, contracting and hosting a drilling rig on site (including posting reclamation bond and all necessary government permits) which we estimate will cost $35,000 for mobilization/demobilization and $12,500 – 25,000 per drill hold, depending upon terrain and depth.

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Limited Operating History; Need for Additional Capital

There is limited historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.

To become profitable and competitive, we conduct into the research and exploration of the claim before we start production of any minerals we may find. We believe that we have the funds that will allow us to operate for one year.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

Liquidity and Capital Resources

We have the right to explore one claim containing one twenty acre claim. We will begin our exploration soon.

Since inception, we have issued 11,960,000 shares of our common stock and received $118,000.

As of November 30, 2009, our total assets were $18,971 and our total liabilities were $4,737.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4.

CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended November 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A.

RISK FACTORS

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

ITEM 2.

CHANGES IN SECURITIES AND USE OF PROCEEDS.

On November 14, 2008, our Form S-1 registration statement (SEC file no. 333-152619) was declared effective by the SEC. Pursuant to the S-1, we offered 1,000,000 shares minimum, 2,000,000 shares maximum at an offering price of $0.05 per share in a direct public offering, without any involvement of underwriters or broker-dealers. On January 1, 2009, we completed our public offering and raised $98,000 by selling 1,960,000 shares of common stock at an offering price of $0.05 per share. Since completing our public offering, we have used $61,077 of the $98,000 proceeds as follows: legal fees of $ 31,078; audit fees of $17,924; and transfer agent fees of $12,075.

ITEM 6.

EXHIBITS.

The following documents are included herein:

Exhibit No.	Document Description
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 14th day of January, 2010.

	EARTH DRAGON RESOURCES INC.

	BY:	YUAN KUN DENG
		Yuan Kun Deng
		President, President, Principal Executive Officer,
		Principal Accounting Officer, Principal Financial
		Officer, Secretary/Treasurer and sole member of the
		Board of Directors

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EXHIBIT INDEX

Exhibit No.	Document Description
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002.

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EARTH DRAGON RESOURCES INC. - FORM 10-Q - January 14, 2010

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EARTH DRAGON RESOURCES INC. Reports