Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2014
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 000-27055
GOLDEN DRAGON HOLDING CO.
(Exact name of registrant as specified in its charter)
DELAWARE 24-4635140
(State of Incorporation) (IRS Employer ID Number)
7609 Ralston Road, Arvada, CO 80002
(Address of principal executive offices)
(720) 939-1133
(Registrant's Telephone number)
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 past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated file, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
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 [ ]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of August 29, 2014, there
were 11,384,407 shares of the registrant's common stock, $0.0001 par value,
issued and outstanding, excluding 4,164,000 shares subscribed and paid, but
unissued as of such date.
GOLDEN DRAGON HOLDING CO.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets
As of June 30, 2014 (Unaudited) and December 31, 2013 1
Condensed Statements of Operations
For the Three and Six Month Periods Ended June 30, 2014 and 2013 and
the Period from Inception (January 1, 2011) Through June 30, 2014 2
Condensed Statements of Cash Flows
For the Three and Six Month Periods Ended June 30, 2014 and 2013 and
the Period from Inception (January 1, 2011) Through June 30, 2014 3
Condensed Statement of Stockholders' Deficit
For the period from Inception (January 1, 2011) Through June 30, 2014 4
Notes to Unaudited Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3. Defaults upon Senior Securities 20
Item 4. Mine Safety Disclosures 20
Item 5. Other Information 20
SIGNATURES 20
PART I
ITEM 1. FINANCIAL STATEMENTS
GOLDEN DRAGON HOLDING CO.
A DEVELOPMENT STAGE COMPANY
BALANCE SHEETS
June 30, December 31,
2014 2013
----------------- -----------------
(Unaudited)
ASSETS
Current assets
Cash $ 1,978,862 $ -
- -
----------------- -----------------
Total current assets 1,978,862 -
----------------- -----------------
Total Assets $ 1,978,862 $ -
================= =================
ILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ - $ 52,206
Accrued interest payable - related party $ 25,894
Related party loan - 213,934
----------------- -----------------
Total current liabilties - 292,034
Notes payable - related party - -
----------------- -----------------
Total Liabilities - 292,034
Stockholders' Equity
Preferred Stock; $0.0001 par value, 10,000,000 shares
authorized no shares issued and outstanding - -
Common stock, $0.0001 par value;
100,000,000 shares authorized; 15,548,407 and 2,384,407
issued and outstanding respectively, (adjusted to
include 4,164,000 shares subscribed, authorized, and
fully paid but unissued at June 30, 2014) 1,555 238
Additional paid in capital 19,322,998 16,874,643
Retained deficit (17,345,691) (17,166,915)
----------------- -----------------
Total Stockholders' Deficit 1,978,862 (292,034)
----------------- -----------------
Total Liabilities and Stockholders' Deficit $ 1,978,862 $ -
================= =================
The accompanying notes are an integral part of these financial statements.
2
GOLDEN DRAGON HOLDING CO.
A DEVELOPMENT STAGE COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
For The Three Months For The Six Months
Ended June 30, Ended June 30,
2014 2013 2014 2013
------------ ----------- ------------ -----------
Revenue $ - $ - $ - $ -
Operating Expenses:
Advertising and promotion 12,844 12,844
Dues and subscriptions 5,200 5,200
Management consulting 69,000 69,000
Meeting expense 1,814 1,814
Professional fees 57,035 63,143
Payroll expense - 15,000
Travel 4,176 4,176
General and administrative 3,090 20,736 3,090 40,712
------------ ----------- ------------ -----------
Total operating expenses 153,159 20,736 174,267 40,712
------------ ----------- ------------ -----------
Income (loss) from operations (153,159) (20,736) (174,267) (40,712)
Other income (expense)
Interest income (expense) net 21 (3,361) (4,509) (6,279)
- - - -
------------ ----------- ------------ -----------
Other income (expense) net 21 (3,361) (4,509) (6,279)
------------ ----------- ------------ -----------
Income (loss) before provision (153,138) (24,097) (178,776) (46,991)
for income taxes
Provision (credit) for income tax - - - -
------------ ----------- ------------ -----------
Net income (loss) (153,138) (24,097) (178,776) (46,991)
------------ ----------- ------------ -----------
Net income (loss) per share
(Basic and fully diluted) $ (0.01) $ (0.01) $ (0.03) $ (0.02)
============ =========== ============ ===========
Weighted average number of
common shares outstanding 10,504,407 2,384,407 6,444,407 2,384,407
============ =========== ============ ===========
The accompanying notes are an integral part of these financial statements.
3
GOLDEN DRAGON HOLDING CO.
A DEVELOPMENT STAGE COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
For The Six Months Ended
June 30,
2014 2013
--------------- ----------------
Cash Flows From Operating Activities:
Net income (loss) $ (178,776) $ (46,991)
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities:
Compensatory loan increases/(decreases) (180,000) 30,000
Non cash write off of old debt 71,672
Changes in operating Assets & Liabilities
Increase/(Decrease) in Accounts Payable (52,206) 5,203
Increase/(Decrease) in Accrued Expenses (25,894) 5,829
--------------- ----------------
Net cash provided by (used for)
operating activities (365,204) (5,959)
Cash Flows From Investing Activities:
$ - $ -
- -
--------------- ----------------
Net cash provided by (used for)
investing activities - -
Cash Flows From Financing Activities:
Increase/(Decrease) in Related Party Loan (33,934) 5,959
Sales of common stock 2,378,000 -
--------------- ----------------
Net cash provided by (used for)
financing activities 2,344,066 5,959
Net Increase (Decrease) In Cash 1,978,862 -
Cash At The Beginning Of The Period - 25
--------------- ----------------
Cash At The End Of The Period $ 1,978,862 $ 25
=============== ================
Schedule of Non-Cash Investing and Financing Activities
Related party loans $ (71,672) $ 30,000
$ - $ -
Supplemental Disclosure
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
The accompanying notes are an integral part of these financial statements.
4
GOLDEN DRAGON HOLDING CO.
A DEVELOPMENT STAGE COMPANY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2014
(UNAUDITED)
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations
Business
Golden Dragon Holding Co. ("Golden Dragon," "We" or "Us") is a publicly quoted
company seeking to create value for our shareholders by merging with another
entity with experienced management and opportunities for growth in return for
shares of our common stock. On May 9, 2014 we entered into a "Plan of
Reorganization" with CannaPharmaRX, Inc. There are certain milestones to be met
under the terms of this plan and as at the time of this filing the requirements
are in the process of being met.
We are a development stage enterprise in accordance with Accounting Codification
Standard ("ACS") 915 "Development Stage Entities." We have been in the
development stage since Inception (January 1, 2011).
History
Golden Dragon was incorporated in the State of Delaware in April 2010 as a
wholly owned subsidiary of Concord Ventures, Inc. ("Concord"). Concord was a
publicly quoted shell company with no assets, no operating business or other
source of income and liabilities in excess of $590,000.
Merger of Concord
In order for Concord to re-domicile in the State of Delaware from the State of
Colorado, on September 29, 2010, Concord entered into an Agreement and Plan of
Reorganization ("the Merger Agreement") with one of its wholly owned subsidiary
companies, CCVG, Inc. ("CCVG"). Under the terms of the Merger Agreement, Concord
shares of common stock converted automatically to CCVG shares, without change or
necessity to reissue. Also under the Merger Agreement, CCVG became the surviving
company domiciled in Delaware.
Reorganization into a Holding Company Structure
Effective December 31, 2010, pursuant to the Delaware Holding Company formation
statute, under Delaware General Corporate Law (DGCL) Section 251(g), CCVG
completed an Agreement and Plan of Reorganization and Reorganization into a
Holding Company ("the Reorganization") with CCAPS, Inc., ("CCAPS") and Golden
Dragon, both wholly-owned subsidiaries of CCVG. The Reorganization provided for
the merger of CCVG with and into CCAPS, with CCAPS being the surviving
corporation in that merger. Contemporaneously with CCVG's merger with and into
CCAPS, the shareholders of CCVG were converted into shareholders of Golden
Dragon on a one share for one share basis.
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As a result of this reorganization into a Holding Company structure, Golden
Dragon became the surviving publicly quoted parent holding company with CCAPS,
the surviving corporation of the merger between CCVG and CCAPS, becoming the
sole remaining wholly-owned subsidiary of Golden Dragon.
The Reorganization has been accounted for so as to reflect the fact that both
CCVG and Golden Dragon were under common control at the date of the
Reorganization, similar to a reverse acquisition of CCVG and its subsidiary
company, CCAPS, by Golden Dragon.
Sale of CCAPS
On December 31, 2010, Golden Dragon entered into a Share Purchase Agreement with
an unrelated third party. Under the terms of the Share Purchase Agreement,
Golden Dragon sold 100% of the issued and outstanding shares of its sole
remaining wholly owned subsidiary, CCAPS for $100 cash consideration, subject to
its debts, and issued 25,000 restricted shares of Golden Dragon common stock,
valued at $1,000, to CCAPS pursuant to the terms of the Share Purchase
Agreement. At the time of the sale, CCAPS had no ongoing operations or assets
and outstanding liabilities of approximately $678,000.
Following the merger of CCVG with and into CCAPS, CCAPS, as the surviving
corporation in that merger, retained all outstanding liabilities of CCVG in the
divestiture.
As a result of the sale of 100% of the issued and outstanding shares of CCAPS,
Golden Dragon, the surviving publicly quoted holding company, will no longer
consolidate the liabilities of CCAPS or CCVG.
Basis of Presentation:
The accompanying unaudited financial statements of Golden Dragon have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion the financial statements include all
adjustments (consisting of normal recurring accruals) necessary in order to make
the financial statements not misleading.
Operating results for the three months ended June 30, 2014 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2014. For more complete financial information, these unaudited financial
statements should be read in conjunction with the audited financial statements
for the year ended December 31, 2013 included in our Form 10-K filed with the
SEC.
Significant Accounting Policies:
Development Stage Company - We are a development stage enterprise in accordance
with ACS 915 "Development Stage Entities". We have been in the development stage
since Inception (January 1, 2011). Among the disclosures required as a
development stage company are that our financial statements are identified as
those of a development stage company, and that the statements of operations,
stockholders' deficit and cash flows disclose activity since the date of our
Inception (January 1, 2011) as a development stage company.
5
Use of Estimate
The preparation of our financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in these financial statements and
accompanying notes. Actual results could differ from those estimates. Due to
uncertainties inherent in the estimation process, it is possible that these
estimates could be materially revised within the next year.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid debt instruments
with original maturities of less than three months.
Property and Equipment
We owned no property and equipment during the three months ended June 30, 2014
or 2013 and consequently we recorded no depreciation expense during the three
months ended June 30, 2014 or 2013.
Deferred Costs and Other Offering Costs
Costs with respect to issue of common stock, warrants or options by us were
initially deferred and ultimately offset against the proceeds from these equity
transactions if successful or expensed if the proposed equity transaction is
unsuccessful. We had no deferred costs and other as at June 30, 2014 or 2013.
Impairment of Long-Lived and Intangible Assets
In the event that facts and circumstances indicated that the cost of long-lived
and intangible assets may be impaired, an evaluation of recoverability was
performed. If an evaluation was required, the estimated future undiscounted cash
flows associated with the asset were compared to the asset's carrying amount to
determine if a write-down to market value or discounted cash flow value was
required.
Financial Instruments
The estimated fair values for financial instruments was determined at discrete
points in time based on relevant market information. These estimates involved
uncertainties and could not be determined with precision. The fair value of
accounts payable and related party loan approximate to their carrying value due
to the short maturities of these financial instruments.
Income Taxes
We account for income taxes under the liability method, which requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statements and tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.
6
Advertising costs
Advertising costs are expensed as incurred. Advertising costs of $12,844 were
incurred during the three months ended June 30, 2014, there were no advertising
costs for the three months ended June 30, 2013.
Comprehensive Income (Loss)
Comprehensive income is defined as all changes in stockholders' equity
(deficit), exclusive of transactions with owners, such as capital investments.
Comprehensive income includes net income or loss, changes in certain assets and
liabilities that are reported directly in equity such as translation adjustments
on investments in foreign subsidiaries and unrealized gains (losses) on
available-for-sale securities. From our inception there were no differences
between our comprehensive loss and net loss.
Our comprehensive loss was identical to our net loss for the three months ended
June 30, 2014 and 2013.
Income (Loss) Per Share
Income (loss) per share is presented in accordance with Accounting Standards
Update ("ASU"), Earning Per Share (Topic 260) which requires the presentation of
both basic and diluted earnings per share ("EPS") on the consolidated income
statements. Basic EPS would exclude any dilutive effects of options, warrants
and convertible securities but does include the restricted shares of common
stock issued. Diluted EPS would reflect the potential dilution that would occur
if securities of other contracts to issue common stock were exercised or
converted to common stock. Basic EPS calculations are determined by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted EPS calculations are determined by dividing net income
by the weighted average number of common shares and dilutive common share
equivalents outstanding.
Basic and diluted EPS were identical for the three months ended June 30, 2014
and 2013 as we had no stock options, warrants or convertible debt issued or
outstanding during those periods.
Stock-Based Compensation
We have adopted ASC Topic 718, "Accounting for Stock-Based Compensation", which
establishes a fair value method of accounting for stock-based compensation
plans. In accordance with guidance now incorporated in ASC Topic 718, the cost
of stock options and warrants issued to employees and non-employees is measured
on the grant date based on the fair value. The fair value is determined using
the Black-Scholes option pricing model. The resulting amount is charged to
expense on the straight-line basis over the period in which we expect to receive
the benefit, which is generally the vesting period. The fair value of stock
warrants was determined at the date of grant using the Black-Scholes option
pricing model. The Black-Scholes option model requires management to make
various estimates and assumptions, including expected term, expected volatility,
risk-free rate, and dividend yield.
No stock based compensation was issued or outstanding during the three months
ended June 30, 2014 or 2013.
7
Business Segments
We believe that our activities during the three months ended June 30, 2014 and
2013 comprised a single segment.
Recently Issued Accounting Pronouncements
We have reviewed all recently issued, but not yet effective, accounting
pronouncements and do not believe the future adoption of any such pronouncements
may be expected to cause a material impact on our financial condition or the
results of our operations.
2. GOING CONCERN AND LIQUIDITY
At June 30, 2014, we had $1,979,000 in cash assets but no operating business or
other source of income, outstanding liabilities totaling $0 and a stockholders'
equity of $1,979,000.
In our financial statements for the fiscal years ended December 31, 2013 and
2012, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern.
Our unaudited financial statements for the three months ended June 30, 2014 and
2013 have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business.
We had working capital of $1,979,000 and reported an accumulated equity since
Inception (January 1, 2011) of $1,979,000 as at June 30, 2014.
It is our current intention to seek to raise debt and, or, equity financing to
fund our ongoing operating expenses and attempt to complete the "Plan of
Reorganization" in order to create value for our shareholders. There is no
assurance that this series of events will be satisfactorily completed.
3. ASSETS
As at June 30, 2014 we had $1,979,000 in current assets compared to December 31,
2013, where we had no assets
4. ACCOUNTS PAYABLE
As at June 30, 2014, the balance of accounts payable was zero.
5. ACCRUED EXPENSES
As at June 30, 2014, the balance of accrued expenses was zero (See Note 6.).
6. RELATED PARTY LOAN
At June 30, 2014, the related party loan was released (as of May 9, 2014) by
David J. Cutler, our sole officer, a director and majority shareholder. This
loan was retired and settled in the initial transaction where CannaPharmaRX
acquired 9,000,000 shares of the Company in exchange for $296,000.
8
7. COMMITMENTS:
Capital and Operating Leases
We had no capital or operating leases outstanding as at June 30, 2014.
Litigation
No legal proceedings are currently pending or threatened to the best of our
knowledge.
8. RELATED PARTY TRANSACTIONS
As of May 9, 2014, Mr. Cutler, our former Officer and a Director, to whom we
owed $234,981 released all claims as to this debt.
9. STOCKHOLDERS' EQUITY:
Preferred Stock
We are authorized, without further action by the shareholders, to issue
10,000,000 shares of one or more series of preferred stock, at a par value of
$0.0001, all of which is nonvoting. The Board of Directors may, without
shareholder approval, determine the dividend rates, redemption prices,
preferences on liquidation or dissolution, conversion rights, voting rights and
any other preferences.
No shares of preferred stock were issued or outstanding during the three month
periods ended June 30, 2014 and 2013.
Common Stock
We are authorized to issue 100,000,000 shares of common stock, par value $0.0001
per share.
On April 29, 2008, we held our annual meeting of stockholders at which meeting
the majority of stockholders approved, an up to 3 for 1 reverse split of our
shares of common stock. No such reverse split has been effected as yet.
Recent Issuances
There were 9,000,000 shares issued on May 9, 2014 to CannaPharmaRX in exchange
for $296,000. There were 4,164,000 shares subscribed and paid during the month
of June 2014 in exchange for $2,082,000. These shares were placed through a
Private Placement Memorandum offered to accredited investors only. These shares
had not been issued by the transfer agent as of June 30, 2014.
Warrants
No warrants were issued or outstanding during the three months ended June 30,
2014 or 2013.
9
Stock Options
Effective March 19, 1999, we adopted a stock option plan (the "Plan"). The Plan
provides for grants of incentive stock options, nonqualified stock options and
restricted stock to designated employees, officers, directors, advisors and
independent contractors. The Plan authorized the issuance of up to 75,000 shares
of Class A Common Stock. Under the Plan, the exercise price per share of a
non-qualified stock option must be equal to at least 50% of the fair market
value of the common stock at the grant date, and the exercise price per share of
an incentive stock option must equal the fair market value of the common stock
at the grant date.
No stock options were issued or outstanding during the three months ended June
30, 2014 or 2013.
10. INCOME TAXES
We have had losses since our Inception (January 1, 2011), and therefore have not
been subject to federal or state income taxes since our Inception.
Following our reorganization into a holding company structure and the sales of
our subsidiary company, CCAPS, we disposed of the majority of our brought
forward net operating losses.
Consequently, effective June 30, 2014, we had NOLS of approximately $318,000,
which expire in 2031 and 2033.
11. SUBSEQUENT EVENTS
We have evaluated subsequent events through the date of this filing and note
there has been no events that would require disclosure in this report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and the other financial information
included elsewhere in this report. This discussion contains forward-looking
statements that involve risks and uncertainties. We believe that our
expectations are based on reasonable assumptions within the bounds of our
knowledge of our business and operations: there can be no assurance that actual
results will not differ materially from our expectations. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated, including but not limited
to, our ability to raise debt and, or, equity to fund our ongoing operating
expenses and to create value for our shareholders by merging with another entity
with experienced management and opportunities for growth in return for shares of
our common stock. You are urged to carefully consider these factors, as well as
other information contained in the Annual Report on Form 10-K and in our other
periodic reports and documents filed with the SEC.
OVERVIEW
Golden Dragon Holding Co. ("Golden Dragon") is a publicly quoted shell company
seeking to create value for our shareholders by merging with another entity with
experienced management and opportunities for growth in return for shares of our
common stock. On May 9, 2014 the Company entered into a "Plan of Reorganization"
with CannaPharmaRX, Inc. This plan requires certain events to take place and
both companies are engaged in monitoring the progress of these events.
History
Golden Dragon was incorporated in the State of Delaware in April 2010 as a
wholly owned subsidiary of Concord Ventures, Inc. ("Concord"). Concord was a
publicly quoted shell company with no assets, no operating business or other
source of income and liabilities in excess of $590,000.
PLAN OF OPERATIONS
General Business Plan
HISTORY OF CANNAPHARMARX, INC., A COLORADO CORPORATION, OUR SUBSIDIARY
----------------------------------------------------------------------
BUSINESS OF OUR COMPANY
We intend to operate our business through our subsidiary.
Our subsidiary, CannaPharmaRX is dedicated to advancing endo-cannabinoid
science, research, and discovery in the US and worldwide and to work
collaboratively to bring novel cannabinoid based products to market in the US
and worldwide.
CannaPharmaRX, Inc. ("CannaPharmaRX" or "Company" or "we") was incorporated on
April 22, 2014 in the State of Colorado for the purpose to engage in any lawful
activity for which corporations may be formed. CannaPharmaRX is dedicated to
advancing endo-cannabinoid science, research, and discovery in the US and
worldwide and to work collaboratively to bring novel cannabinoid based products
to market in the US and worldwide. Upon completion of our Agreement and Plan of
Merger with Golden Dragon Holding Co. we intend to change our holding company
name from Golden Dragon Holding Co. to CannaPharmaRX, Inc., as CannaPharma shall
be merged into our wholly-owned subsidiary, CPHR Acquisition Co.
CANNAPHARMARX, INC. OVERVIEW
We have no operating history in our proposed business and no representation is
made, nor is there any assurance that our Company will able to successfully
raise the necessary capital.
CannaPharmaRX management understands the wide range of efficacies that the
cannabinoid plant possesses, and is applying pharmaceutical research,
manufacturing and the distribution system that is already in place to provide
novel treatments to patients who can benefit from cannabinoid therapies.
CannaPharmaRX intends to serve the following marketplaces: Oncology, Infectious
Disease, Pain, Multiple Sclerosis, Inflammatory disease, Gastrointestinal, and
Ophthalmology.
Phase I
Compounding Pharmacies - CannaPharmaRX intends to acquire multiple licensed
pharmacy compounding centers. Each center will compound sterile, standardized
and labeled products.
Phase II
Once enough clinical and safety data is amassed, and CannaPharmaRX understands
the consumer needs, it intends to outsource, build, acquire or partner with a
pharmaceutical manufacturing facility for product development. This will further
ensure consistency of product quality, as well as bring cost for manufacturing
down due to scalable economies.
Patient Acquisition
CannaPharmaRX believes that patient acquisition will play an important role in
the success of their business. CannaPharmaRX has relationships with specialty
pharmacy providers treating patients with diseases requiring concomitant or mono
cannabinoid therapies.
Product Portfolio
CannaPharmaRX intends to develop a diverse line of cannabinoid based products,
that will meet the need of the healthcare provider serving the various patient
populations needs. Products will be labeled for medical indications, strengths,
dosing, safety, as well as route of administration.
Formulary development
CannaPharmaRX intends to develop and maintain a compendium for product usage,
supported by real world evidence from our data gathering through our monitoring.
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Surveillance Monitor
CannaPharmaRX intends to provide healthcare providers a prescribing and
monitoring tool for their patients to track and report the clinical outcomes
from their use of cannabinoid products.
Physician Portal - Designed to allow the physician to review common medical
conditions, and match CannaPharmaRX formulary products to the needs of their
patients.
Patient Portal - Allows patients to make product selections based upon disease
and available products. IPAD based applications allow the patients to report and
track their therapies, side effects, dosage adjustments, as well as disease
progress and clinical outcomes.
Pharmacist Portal - Allows for the Clinical Therapy Management of patients on
cannabinoid therapy.
Differentiation
CannaPharmaRX intends to provide licensed healthcare providers with a safe
environment for their patients to receive cannabinoid based products, while
being able to develop their own compendium and knowledge of real world clinical
evidence. Physicians and pharmacists can track the results of cannabinoid
therapy and document retrospective success. This may allow them to learn and
apply intelligence to future prescribing decisions.
Clinical research
CannaPharmaRX intends to provide cannabinoid based products and monitor patients
in controlled studies as well as real world environments. CannaPharmaRX intends
to collaborate with the leading scientific and medical researchers working with
Cannabinoid based products and patients.
Publishing
CannaPharmaRX intends to develop an independent peer reviewed medical journal
for publishing both prospective and retrospective medical cannabinoid research.
Public Relations
Our subsidiary, CannaPharmaRX, intends to establish itself as the new model for
the United States to look at for the safe manufacture and distribution of
cannabinoid based products. By surrounding the company with industry leaders
from the pharmaceutical community, cannabis community, legal community and
especially the scientific and medical community, and employing a best-practices
approach to cannabinoid therapy in the medical community, CPRX believes that it
will avoid legal and regulatory fines and penalties, but may have to deal with
challenges on a state by state or Federal level.
Background
The recent identification of cannabinoid receptors and their endogenous lipid
ligands has triggered an exponential growth of studies exploring the
endocannabinoid system and its regulatory functions in health and disease. Such
studies have been greatly facilitated by the introduction of selective
cannabinoid receptor antagonists and inhibitors of endocannabinoid metabolism
and transport, as well as mice deficient in cannabinoid receptors or the
endocannabinoid-degrading enzyme fatty acid amidohydrolase.
11
In the past decades, the endocannabinoid system has been implicated in a growing
number of physiological functions, both in the central and peripheral nervous
systems and in peripheral organs. More importantly, modulating the activity of
the endocannabinoid system turned out to hold therapeutic promise in a wide
range of disparate diseases and pathological conditions, ranging from mood and
anxiety disorders, movement disorders such as Parkinson's and Huntington's
disease, neuropathic pain, multiple sclerosis and spinal cord injury, to cancer,
atherosclerosis, myocardial infarction, stroke, hypertension, glaucoma,
obesity/metabolic syndrome, and osteoporosis, to name just a few.
An impediment to the development of cannabinoid medications has been the
socially unacceptable psychoactive properties of plant-derived or synthetic
agonists, mediated by CB1 receptors. However, this problem does not arise when
the therapeutic aim is achieved by treatment with a CB1 receptor antagonist,
such as in obesity, and may also be absent when the action of endocannabinoids
is enhanced indirectly through blocking their metabolism or transport. The use
of selective CB2 receptor agonists, which lack psychoactive properties, could
represent another promising avenue for certain conditions.
The abuse potential of plant-derived cannabinoids may also be limited through
the use of preparations with controlled composition and the careful selection of
dose and route of administration. The growing number of preclinical studies and
clinical trials with compounds that modulate the endocannabinoid system will
probably result in novel therapeutic approaches in a number of diseases for
which current treatments do not fully address the patients' need.
CannaPharmaRX intends to leverage its commercial, health system and academic
relationships, domestically, and worldwide, to further explore and exploit the
endocannabinoid system (eCS), and commence extensive discovery, research, and
development of the cannabinoid molecules(s), potentially offering not only new
insights into the mechanisms underlying the therapeutic actions of plant-derived
phytocannabinoids but also produce novel molecular targets for pharmacotherapy.
Innovative development of Prescription, OTC and Veterinary products
Working through collaborations with pharmaceutical and biotechnology companies,
research and academic institutions, as well as physicians and researchers, both
domestically and worldwide, CannaPharmaRX intends to develop both single and
combination prescription entity products and bring them to market.
CannaPharmarRX intends to develop protocols, apply to institutional review
boards, and conduct animal and human Phase I- Phase V clinical trials.
CannaPharmaRX intends to partner with existing organizations and subsequently
apply for GMP manufacturing licenses for the manufacture of pharmaceutical
products for both clinical trials and commercial development. Our strategy is to
become the worldwide leader in cannabinoid science and in the research,
development and commercialization of cannabinoid-based molecules for
prescription and OTC candidates.
Our purpose is to innovate to bring cannabinoid-based therapies that
significantly improve patients' lives to market. R&D is at the heart of our
purpose as we work to transform advanced science and technologies into the
therapies that matter most.
12
We intend to focus our efforts in core areas where we are best positioned to
bring needed therapies to patients. This includes chronic inflammatory disease,
oncology, pain, neurosciences, and metabolic disorders. All are specialty areas
that management has expertise in. We bring cutting-edge capabilities in medicine
design and development, and our approach is collaborating in new and dynamic
ways with other innovators across the health landscape including academic
scientists, patient foundations, governments, other biopharmaceutical companies
and treating physicians.
To execute on our commitment, we are developing an extensive international
network of the most prominent scientists in the cannabinoid field and are also
hiring a leadership team with extensive experience in developing plant-based
prescription pharmaceutical products.
Where advantageous, we plan to enter into license agreements with other
pharmaceutical companies.
We plan on retaining control over product development and also retaining the
manufacturing expertise for our products.
Note: Our Company and our major shareholder, CannaPharmaRX, Inc. are NOT
involved in the marijuana industry in any way. We intend to be involved only in
the hemp-based cannabinoid industry and be fully legal and compliant under all
Federal Laws, USDA, DEA, FDA and FTC Rules and Regulations. We do not intend to
rely on any State law exemptions for federally prohibited activities. We will
only deal with licensed health care providers and pharmacies and licensed
manufacturers for legal compounds under Federal law.
Recent Material Transactions
On May 9, 2014, the Company sold 9,000,000 shares of common stock for $296,000
to CannaPharmaRX, Inc. without registering the securities under the Securities
Act of 1933, exempt from registration under Section 4(a)5 of the Securities Act.
Effective May 15, 2014, the Company entered into an Agreement and Plan of
Merger, by and among Golden Dragon Holding Co., a Delaware corporation,
("GDHC"), CannaPharmaRX, Inc., a Colorado corporation ("CPHR"), and CPHR
Acquisition corp., a newly-formed wholly-owned subsidiary of GDHC, domiciled in
Delaware ("ACQUISITION SUB").
In May 2014, the Company, through a private offering of its restricted common
stock, entered into approximately $1,400,000 in subscription agreements for
2,800,000 shares of common stock at $0.50 per share. The shares were sold
pursuant to an exemption under Rule 506 of Regulation D of the 1933 Act, as
amended.
Competition
We believe we are an insignificant participant among the firms which engage in
the acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we have. In view of our limited
financial resources and limited management availability, we will continue to be
at a significant competitive disadvantage compared to our competitors.
As of May 9, 2014, control of our company was acquired by CannaPharmaRX, Inc.,
which now holds 10,421,120 shares. An 8-K reflecting such event is filed on May
16, 2014.
Investment Company Act 1940
Although we will be subject to regulation under the Securities Act of 1933, as
amended, and the 1934 Act, we believe we will not be subject to regulation under
the Investment Company Act of 1940 (the "1940 Act") insofar as we will not be
engaged in the business of investing or trading in securities. In the event we
engage in business combinations that result in us holding passive investment
interests in a number of entities, we could be subject to regulation under the
1940 Act. In such event, we would be required to register as an investment
company and incur significant registration and compliance costs. We have
obtained no formal determination from the SEC as to our status under the 1940
Act and, consequently, any violation of the 1940 Act would subject us to
material adverse consequences. We believe that, currently, we are exempt under
Regulation 3a-2 of the 1940 Act.
Liquidity and Capital Resources
At June 30, 2014, we had assets of $1,979,000 in cash, no operating business or
other source of income, outstanding liabilities totaling $0 and a stockholders'
equity of $1,979,000.
In our financial statements for the fiscal years ended December 31, 2013 and
2012, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern.
13
Our unaudited financial statements for the three months ended June 30, 2014 and
2013 have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business.
We had a working capital surplus of $1,979,000 and reported stockholders' equity
since Inception (January 1, 2011) of $1,979,000 as at June 30, 2014.
It is our current intention to seek to raise debt and, or, equity financing to
fund our ongoing operating expenses and pursue the Plan of Reorganization as
previously noted. There is no assurance that this series of events will be
satisfactorily completed.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2014 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2013
Revenue
During the three months ended June 30, 2014 and 2013, we did not recognize any
revenues and do not anticipate having revenue generating activities in the near
future.
General and Administrative Expenses
During the three months ended June 30, 2014, we incurred $3,090 in general and
administrative expenses compared to $20,736 in the three months ended June 30,
2013, a decrease of $17,646. The decrease was due to a reclassification of
expense categories in the current quarter. Advertising expenses were $12,844 in
the current quarter as compared to none in the comparable quarter. Management
consulting was $69,000 in the current quarter compared to none the prior
comparable quarter. Professional fees were $63,143 in the current quarter
compared to none in the prior comparable quarter. Travel expenses were $4,176 in
the current quarter and none in the comparable prior quarter. All of these
variances are attributable to the efforts of the new management team to
effectively carry out the "Plan of Reorganization" with CannaPharmaRX in an
expeditious manner.
During the six months ended June 30, 2014, we incurred $3,090 in general and
administrative expenses compared to $40,712 in the six months ended June 30,
2013, a decrease of $37,622. The decrease was due to a reclassification of
expense categories in the current quarter. Advertising expenses were $12,844 in
the current six months as compared to none in the prior comparable six months.
Management consulting was $69,000 in the current six months compared to none the
prior comparable six months. Professional fees were $57,035 in the current six
months compared to none in the prior comparable six months. Travel expenses were
$4,176 in the current six months and none in the comparable prior six months.
All of these variances are attributable to the efforts of the new management
team to effectively carry out the "Plan of Reorganization" with CannaPharmaRX in
an expeditious manner.
Interest Expense
We recognized interest expense of $4,509 during the three months ended June 30,
2014, compared to an expense of $3,361 during the three months ended June 30,
2013, a difference of $3,382. This interest difference relates to the interest
accrued on the loans made to us by one of our directors. The decrease in the
amount of interest between the two periods reflects the fact that the loan was
retired in May 2014 with the stock purchase effected by CannaPharmaRX.
We recognized interest income of $21 during the six months ended June 30, 2014,
compared to an expense of $6,279 during the six months ended June 30, 2013, a
difference of $1,770. This interest difference relates to the interest accrued
on the loans made to us by one of our directors. The decrease in the amount of
14
interest between the two periods reflects the fact that the loan was retired in
May 2014 with the stock purchase effected by CannaPharmaRX.
Profit / (Loss) before Income Tax
In the three months ended June 30, 2014, we recognized a loss before income tax
of $153,138 compared to a loss before income tax of $24,097 in the three months
ended June 30, 2013, an increase of $129,041 due to the factors discussed above.
In the six months ended June 30, 2014, we recognized a loss before income tax of
$178,776 compared to a loss before income tax of $46,991 in the six months ended
June 30, 2013, an increase of $131,785 due to the factors discussed above.
Provision for Income Taxes
No provision for income taxes was required in the three months ended June 30,
2014 or 2013 as we generated tax losses both periods.
Net Profit / (Loss) and Comprehensive Profit / (Loss)
In the three months ended June 30, 2014, we recognized a net loss of $153,138
compared to net a loss of $24,097 in the three months ended June 30, 2013, an
increase of $129,041 due to the factors discussed above.
In the six months ended June 30, 2014, we recognized a net loss of $178,776
compared to net a loss of $46,991 in the six months ended June 30, 2013, an
increase of $131,785 due to the factors discussed above.
The comprehensive loss was identical to the net loss in both the three months
ended June 30, 2014 and 2013.
CASH FLOW INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 2014 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 2013
At June 30, 2013, we had assets of $1,979,000 in cash, no operating business or
other source of income, outstanding liabilities totaling $0 and stockholders'
equity of $1,979,000.
In our financial statements for the fiscal years ended December 31, 2013 and
2012, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern.
Our unaudited financial statements for the six months ended June 30, 2014 and
2013 have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business.
15
We had a working capital surplus of $1,979,000 and reported an accumulated
equity since Inception (January 1, 2011) of $1,979,000 as at June 30, 2014.
It is our current intention to continue to seek to raise debt and, or, equity
financing to fund our ongoing operating expenses and pursue the "Plan of
Reorganization" with CannaPharmaRX as previously noted. There is no assurance
that this series of events will be satisfactorily completed.
Net cash used in operations for the six months ended June 30, 2014 was $365,204
compared to $5,959 in the six months ended June 30, 2013, an increase of
$359,245.
In the six months ended June 30, 2014, our net losses were $161,104, debt
retirement of $292,034.
No cash was provided by, or used in, investing activities during the six months
ended June 30, 2014 and 2013.
During the six months ended June 30, 2014, the Company received $2,378,000 from
its financing activities by way of sales of common stock to CannaPharmaRX and
investors through a private placement. The Company also retired a related party
loan in the amount of $33,934.This was compared to an increase in a loan from a
related party in the amount of $5,959 in the six months ended June 30, 2013.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) under the Securities Exchange Act of 1934, as amended
the "Exchange Act")) that are designed to ensure that information required to be
disclosed in our reports under the Exchange Act, is recorded, processed,
summarized and reported within the time periods required under the SEC's rules
and forms and that the information is gathered and communicated to our Chief
Executive Officer and Principal Financial Officer, as appropriate, to allow for
timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer and Principal
Financial Officer carried out an evaluation under the supervision and with the
participation of our management, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report.
Based on the foregoing evaluation, our Chief Executive Officer and Principal
Financial Officer have concluded that our disclosure controls and procedures are
effective in timely alerting them to material information required to be
included in our periodic SEC filings and to ensure that information required to
16
be disclosed in our periodic SEC filings is accumulated and communicated to our
management, including our Chief Executive Officer and Principal Financial
Officer, to allow timely decisions regarding required disclosure.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended June 30, 2014, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We were not subject to any legal proceedings during the three months ended June
30, 2014 or 2013 and, to the best of our knowledge; no legal proceedings are
pending or threatened.
ITEM 2. CHANGES IN SECURITIES
There were no changes in our securities in the three months ended June 30, 2014
or 2013.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal ExecutiveOfficer pursuant to
Section 906 of the Sarbanes-Oxley Act.
Exhibit 101.INS XBRL Instance Document (1)
Exhibit 101.SCH XBRL Taxonomy Extension Schema Document (1)
Exhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
Exhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1)
Exhibit 101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
Exhibit 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document(1)
Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed
not filed or part of (1) a registration statement or prospectus for purposes of
sections 11 or 12 of the Securities Act of 1933, is deemed not filed for
purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is
not subject to liability under these sections.
17
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GOLDEN DRAGON HOLDING CO.
Date: Setember 9, 2014 By: /s Gerry Crocker
-------------------------------------
Gerry Crocker
Chief Executive Officer
By: /s/ Gary Herick
--------------------------------------
Gary Herick
Chief Financial Officer
(Principal Accounting Officer)
1
