UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For Quarterly Period Ended June 30, 2018

 

or

 

☐  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 000-55308

 

CannaMED Enterprises, Inc.

formerly

Redwood Valley Acquisition Corporation 

(Exact name of registrant issuer as specified in its charter)

 

Delaware

47-2072746

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
391 East Brown Street, Stroudsburg, PA		18301
(Address of principal executive offices)		(zip code)

 

Registrant’s phone number, including area code (949) 673-4510

 

Check whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ 

  

Check whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒ 

  

Check 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 ☒ No ☐ 

  

Check 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 (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files). Yes ☐ No ☒ 

  

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) contained herein, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐ 

  

Check 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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):  

  

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐		(Do not check if a smaller reporting company)
			Smaller reporting company	☒
			Emerging growth company	☐

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

  

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

 

As of July 27, 2018, there were no non-affiliate holders of common stock of the Company.

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class		Outstanding at July 27, 2018
Common Stock, $0.0001 par value		3,500,000

  

  

TABLE OF CONTENTS

 

		Page No.
PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS:	3
	Condensed Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017 (audited)	3
	Condensed Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017 (unaudited)	4
	Condensed Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (unaudited)	5
	Notes to Condensed Financial Statements (unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13
ITEM 4.	CONTROLS AND PROCEDURES	13
PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	15
ITEM 1A.	RISK FACTORS	15
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	15
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4.	MINE SAFETY DISCLOSURES	16
ITEM 5.	OTHER INFORMATION	16
ITEM 6.	EXHIBITS	16

 

 

PART I - FINANCIAL INFORMATION

 

ITEM I - FINANCIAL STATEMENTS

 

CANNAMED ENTERPRISES, INC.

CONDENSED BALANCE SHEETS

 

 

 

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

 

  

CANNAMED ENTERPRISES, INC.
CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

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

 

  

CANNAMED ENTERPRISES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

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

 

  

CANNAMED ENTERPRISES, INC.

(Formerly Redwood Valley Acquisition Corporation)

NOTES TO CONDENSED FINANCIAL STATEMENTS

 (UNAUDITED)

 

 

 

 

 

  

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

 

The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended December 31, 2017 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

 

The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Annual Report on Form 10-K for the year ended December 31, 2017 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

 

Nature of Operations and Background —

 

CannaMED Enterprises, Inc. (“CannaMED” or “the Company”) was incorporated on September 25, 2014 under the laws of the state of Delaware under the name Redwood Valley Acquisition Corporation ("Redwood Valley ") to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company was formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered under the Securities Exchange Act of 1934.  The Company’s objectives were to locate and negotiate with a business entity for the combination of that target company with Redwood Valley. This combination would normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended.

 

During the period covered by this report, the Company located such a target and began the process to effect a change in control. On August 24, 2015, the following events occurred which resulted in a change of control of the Company:

 

	1.	The officers and directors of Redwood Valley, James Cassidy and James McKillop, entered into a Share Purchase Agreement (the “SPA”) pursuant to which they entered into an agreement to sell an aggregate of 19,500,000 shares of their shares of the Company’s common stock to Mikhail Artamonov, at an aggregate purchase price of $75,000. These shares represented 98% of the Company’s issued and outstanding common stock. Effective upon the closing date of the Share Purchase Agreement, James Cassidy and James McKillop executed the agreement and owned 7% of shares of the Company’s stock, respectively, and Mikhail Artamonov, was the majority stockholder of the Company.
	2.	The Company redeemed and cancelled an aggregate of 19,500,000 of the then 20,000,000 shares of outstanding stock at a redemption price of $.0001 per share and cancelled such shares. The then current officers and directors resigned.
	3.	Mikhail Artamonov was named President, Secretary and Chief Financial Officer of the Company.  He now serves as the Chief Executive Officer, Secretary, Chief Financial Officer and Director of the Company.

  

 

On August 25, 2015, the Company issued 3,000,000 shares of its common stock at par representing 86% of the total outstanding 3,500,000 shares of common stock to Mikhail Artamonov, the sole officer and director of the Company. The company effected a change of control and changed its name to CannaMED Enterprises, Inc.  With this change of direction, the Company intends to consult with or effect a business combination with a private company to develop as medical cannabis industry innovators, utilizing the Company's team of healthcare and business professionals to start and/or source, research, evaluate and purchase products and companies.  The Company will strive to develop environmentally friendly and economically sustainable business within the swiftly developing medical cannabis industry.

 

The Company envisions to initially enter into joint ventures or acquire partial ownership in:

 

	●	a laboratory for medical cannabis testing, a pharmacy to perform research;
	●	a pharmacy to perform research and development of the newest medical cannabis formulations;
	●	a clinical practice to establish the network dispensaries;
	●	a packaging company;
	●	a research facility; and
	●	real estate to establish the foundation for the growing network

  

No assurances can be given that the Company will be successful in locating or negotiating with any target company.

 

As of June 30, 2018, the CannaMED has not generated revenues and has no income or cash flows from operations since inception. For the six months ended June 30, 2018, the Company sustained net loss of $18,180, and had an accumulated deficit of $78,994.

 

Results of Operations for the Three and Six Months Ended June 30, 2018 and 2017

 

Net Sales

We had no net sales during the three and six months ended June 30, 2018 and 2017. We were existing as a shell company and had no sales.

 

Cost of Revenues

There were no costs of revenues for the three and six months ended June 30, 2018 and 2017 due to the lack of sales.

 

Operating Expenses

Our operating expenses for the three months ended June 30, 2018 and 2017 were $8,430 and $4,547, respectively. Our operating expenses for the six months ended June 30, 2018 and 2017 were $18,180 and $18,376, respectively. These costs related to post-acquisition public company expenses.

 

 

Cash Flows

 

The following table sets forth our cash flows for the six months ended June 30, 2018 and 2017.

 

		For the Six Months Ended June 30,
		2018				2017
		(unaudited)				(unaudited)
Operating activities
Net loss		$	(18,180	)		$	(18,376	)
Change in working capital			1,420				-
Total			(16,760	)			(18,376	)
Investing activities			-				-
Financing activities			16,760				18,376
total		$	-			$	-

  

Operating Activities

During the six months ended June 30, 2018 and 2017 operating cash activities were $(16,760) and $(18,376), respectively. The change in working capital is primarily related to an increase in operating expenses related to public company expenses after the change in control.

 

Investing Activities

There were no investing activities during the six months ended June 30, 2018 and 2017.

 

Financing Activities

During the six months ended June 30, 2018 and 2017 proceeds from financing activities were $16,760 and $18,376, respectively, comprised exclusively of shareholder loans.

 

CannaMED's independent auditors have issued a report raising substantial doubt about the Company's ability to continue as a going concern. At present, the Company has no operations and the continuation as a going concern is dependent upon financial support from its stockholders, its ability to obtain necessary equity financing to continue operations and/or to successfully locate and negotiate with a business entity for the combination of that target company with the Company.

 

Off-Balance Sheet Arrangements

 

We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

  

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following accounting policies are critical in the preparation of our financial statements.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery of product has met the criteria established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. This occurs when the products or services are completed in accordance with the contracts we have with clients. In connection with our products and services arrangements, when we are paid in advance, these amounts are classified as deferred revenue and amortized over the term of the agreement.

 

Recent Accounting Pronouncements

 

There are no recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

ITEM 3. QUANTITATIVE 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 the information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

In accordance with Exchange Act Rules 13a-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s President, Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on that evaluation, the Company’s President, Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were ineffective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms.

   

 

Evaluation of Internal Controls over Financial Reporting

 

The management of CannaMED Enterprises, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. These internal controls include policies and procedures that:

 

	●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets;
	●	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;
	●	Provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
	●	Provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that would have a material impact on financial statements will be prevented or detected on a timely basis.

 

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

 

Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) of 2013. Based on their evaluation, management concluded that internal control over financial reporting was ineffective as of June 30, 2018.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ending June 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

  

 

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

 

We are not a party to any legal or administrative proceedings that we believe, individually or in the aggregate, would be likely to have a material adverse effect on our financial condition or results of operations.

 

ITEM 1A. RISK FACTORS.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

From inception (September 25, 2014), the Company has issued 20,000,000 common shares pursuant to Section 4(2) of the Securities Act of 1933 for an aggregate purchase price of $2,000 as follows:

 

James Cassidy

10,000,000 shares, $1,000

James McKillop

10,000,000 shares, $1,000

 

On August 24, 2015, the Company redeemed 19,500,000 shares, equally, between the original founders, Cassidy and McKillop, for a total of $1,950. Additionally, the Company issued 3,000,000 common shares pursuant to Section 4(2) of the Securities Act of 1933 for an aggregate purchase price of $300 as follows:

 

Mikhail J. Artamonov

3,000,000 shares, $300

 

The current ownership structure is as follows:

 

		Common Shares				Percent
James Cassidy			250,000				7	%
James McKillop			250,000				7	%
Mikhail Artamonov			3,000,000				86	%
			3,500,000				100	%

 

Mikhail J. Artamonov, MD, serves as the sole officer and director of the Registrant. Dr. Artamonov received his M.D. in General Medicine from the 1^st Moscow Medical Sechenov School, Russia in 1994 and was a resident in the Combined Residency Training Program for Rehabilitation, Pain and Complementary Medicine from 1994 to 1997 at the 1st Moscow Medical Sechenov School, Russia and Hanover Medical University, Germany. From 1997 to 1999, Dr. Artamonov was a clinical and research fellow in psychotherapy at the 1st Moscow Medical Sechenov School, Russia and from 1999 to 2000 was at the Internship Training Program in Internal Redicine-Primary Care at the Brooklyn Jewish Hospital, New York.

 

From 2000 to 2003 Dr. Artamonov was in the Residency Training Program for Physical Medicine and Rehabilitation at Temple University and from 2003 to 2004, Dr. Artamonov was a Clinical Fellow at the Harvard Medical School Combined Pain Fellowship and working in Acute, Chronic and Cancer Pain in Adults and Children at Brigham and Women's Hospital, Boston, Beth Israel Deaconess Medical Center, Boston, Boston Children's Hospital and Dana Farber's Cancer Center, Boston. From 2009 to 2014, Dr. Artamonov was an Advanced Fellow in the Fellowship in Anti-Aging, Regenerative & Functional Medicine. From 2011 to the present, Dr. Artamonov has served as CEO and President of MJA Healthcare Network, a multispecialty healthcare system consisting of over 15 entities.

 

Dr. Artamonov is Board Certified in Brain Injury Medicine, Anti-Aging and Functional Medicine, and Pain Medicine. Dr. Artamonov has published books including "Pot Luck: Why Marijuana is Today's Medicine" (2015), "Integrative Interventional Pain Management" (2014), "Your Health, Your Weight, Your Life" (2012) and "Health is Everything: Patients, Practitioners and Good Medicine" (2011).

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

 

Exhibit No.		Name of Exhibit
31.1		Certification of Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.*
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS**		XBRL Instance
101.SCH**		XBRL Taxonomy Extension Schema
101.CAL**		XBRL Taxonomy Extension Calculations
101.DEF**		XBRL Taxonomy Extension Definitions
101.LAB**		XBRL Taxonomy Extension Labels
101.PRE**		XBRL Taxonomy Extension Presentation

 

 

* Filed herewith.

 

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES 

 

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

 

Date: July 27, 2018

 

CANNAMED ENTERPRISES, INC.
By:	/s/ Mikhail J. Artamonov
Name:	Mikhail J. Artamonov
Title:	Chief Executive and Financial Officer

 

17