Attached files

file filename
EX-32 - CERTIFICATION - CANNAPHARMARX, INC.cannapharmarx_10q-ex32.htm
EX-31.2 - CERTIFICATION - CANNAPHARMARX, INC.cannapharmarx_10q-ex3102.htm
EX-31.1 - CERTIFICATION - CANNAPHARMARX, INC.cannapharmarx_10q-ex3101.htm

 

Table of Contents

 

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-Q

 

Quarterly Report Under

the Securities Exchange Act of 1934

 

For Quarter Ended:  September 30, 2016

 

Commission File Number: 000-27055

 

CANNAPHARMARX, INC.

(Exact name of small business issuer as specified in its charter)

 

Delaware   27-4635140
(State of other jurisdiction of incorporation)   (IRS Employer ID No.)

 

2 Park Plaza

Suite 1200B

Irvine, CA 92614

(Address of principal executive offices)

 

(949) 652-6838

(Issuer’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 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 þ  No o

 

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 (§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 þ No o

 

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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o Accelerated filer o
       
Non-accelerated filer o Smaller reporting company þ
(Do not check if a smaller reporting company)

 

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

 

The number of shares of the registrant’s only class of common stock issued and outstanding as of September 14, 2018, was 17,960,741 shares.

 

 

 

 

   

 

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

      Page No.  
         
Item 1. Financial Statements   3  
         
  Balance Sheet as of September 30, 2016 (unaudited)   3  
         
  Unaudited Statement of Operations for the Three and Nine Month Periods September 30, 2016 and September 30, 2015   4  
         
  Unaudited Statement of Cash Flows for the for the Nine Month Periods Ended September 30, 2016 and 2015   5  
         
  Notes to Financial Statements   6  
         
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation.   14  
         
Item 3. Quantitative and Qualitative Disclosures About Market Risk.   19  
         
Item 4. Controls and Procedures.   19  
         
PART II. OTHER INFORMATION
         
Item 1. Legal Proceedings   20  
         
Item 1A. Risk Factors   20  
         
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  
         
Item 6. Exhibits   21  
           
    Signatures   22  

 

 

 

 2 

 

  

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

CANNAPHARMARX, INC.

BALANCE SHEETS

   

 

   September   December 31, 
   2016   2015 
   (unaudited)   (audited) 
ASSETS        
Current assets          
Cash and cash equivalents  $   $2,621 
Prepaid expenses   4,167    9,438 
Total current assets   4,167    12,059 
Total Assets  $4,167   $12,059 
           
           
LIABILITIES & STOCKHOLDERS' DEFICIT          
           
Current liabilities          
Accounts payable and accrued expenses  $565,855   $456,601 
Accrued legal settlement payable in cash -   190,000    190,000 
Accrued expense - related party   150,000    50,000 
Loan payable - related party   19,758     
Total current liabilities   925,613    696,601 
Total Liabilities   925,613    696,601 
           
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,17,960,741 and 17,960,741 issued and outstanding as of September 30, 2016 and December 31, 2015, respectively     1,796       1,796  
Additional paid in capital   32,930,067    32,201,942 
Retained earnings (deficit)   (33,853,310)   (32,888,280)
Total Stockholders' Deficit   (921,447)   (684,542)
Total Liabilities and Stockholders' Deficit  $4,167   $12,059 

 

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

 

 

 3 

 

 

CANNAPHARMARX, INC.

STATEMENTS OF OPERATIONS (unaudited)

 

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30,
   2016   2015   2016   2015 
                 
Revenue  $   $   $   $ 
                     
Operating Expenses:                    
General & administrative   33,584    610,420    240,545    2,317,888 
Stock-based compensation       1,095,760    728,125    5,171,296 
Total operating expenses   33,584    1,706,180    968,670    7,489,184 
Income (loss) from operations   (33,584)   (1,706,180)   (968,670)   (7,489,184)
                     
Other income (expense)                    
Interest (expense)        (518)   (423)   (2,071)
Other income   4,064        4,064     
Other income (expense) net   4,064    (518)   3,641    (2,071)
Income (loss) before provision for income taxes   (29,519)   (1,706,698)   (965,029)   (7,491,255)
Provision (credit) for income tax                
Net income (loss)  $(29,519)  $(1,706,698)  $(965,029)  $(7,491,255)
                     
Net income (loss) per share                    
(Basic and fully diluted)  $(0.00)  $(0.10)  $(0.05)  $(0.42)
                     
Weighted average number of shares outstanding   17,960,741    17,959,621    17,960,741    17,839,206 

 

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

 

 4 

 

 

CANNAPHARMARX, INC.

STATEMENTS OF CASH FLOWS (unaudited)

   

 

   For the Nine Months Ended 
   September 30, 
   2016   2015 
Cash Flows From Operating Activities:          
Net income (loss)  $(965,029)  $(7,491,255)
           
Adjustments to reconcile net income to net cash provided by (used for) operating activities                
Depreciation       9,520 
Stock-based compensation expense   728,125    5,171,296 
Write off of deposit paid toward Specialty Pharma acquisition       50,000 
Changes in operating assets and liabilities          
(Increase)/decrease in prepaid expenses   5,271    12,215 
Increase/(Decrease) in accounts payable and accrued expenses   109,254    40,223 
Increase/(Decrease) in accrued payable - related party   100,000     
Net cash provided by (used for) operating activities   (22,379)   (2,208,001)
           
Cash Flows From Investing Activities:          
Purchase of fixed assets       (2,078)
Net cash provided by (used for) investing activities       (2,078)
           
Cash Flows From Financing Activities:          
Proceeds from (paydown of) related party loans   19,758     
Cash acquired in acquisition of Canna Colorado       1,245 
Shares issued to vendor in prior year, paid par this period       120 
Proceeds from sales of common stock       804,500 
Net cash provided by (used for) financing activities   19,758    805,865 
           
Net Increase (Decrease) In Cash   (2,621)   (1,404,214)
Cash At The Beginning Of The Period   2,621    1,605,239 
Cash At The End Of The Period  $   $201,025 
           
Schedule of Non-Cash Investing and Financing Activities          
Value of stock issued in litigation settlement  $   $1,597,500 
           
Supplemental Disclosure          
Cash paid for interest  $423   $2,071 
Cash paid for income taxes  $   $500 

 

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

 

 

 5 

 

 

 

CANNAPHARMARX, INC.

NOTES TO FINANCIAL STATEMENTS

For the Three and Nine Month Interim Periods September 30, 2016 and 2015

 

 

NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

 

NATURE OF OPERATIONS

 

BUSINESS

 

CannaPharmaRx, Inc. (the “Company”) is a Delaware corporation whose shares were traded on the OTCQB during 2015. The Company began trading under its new stock ticker symbol “CPMD” effective as of March 21, 2015. The Company is an early-stage pharmaceutical company whose purpose is to advance cannabinoid research and discovery using proprietary formulation and drug delivery technology currently under development. It is also an aspect of the Company’s strategy to own and operate compounding and specialty pharmacies. The Company regularly engages in discussions to acquire such pharmacies and to finance such acquisitions, but to date, the Company has not completed any such acquisition.

 

HISTORY

 

The Company was originally incorporated in the State of Colorado in August 1998 under the name “Network Acquisitions, Inc.” It changed its name to Cavion Technologies, Inc. in February 1999 and subsequently to Concord Ventures, Inc. in October 2006. On December 21, 2000, the Company filed for protection under Chapter 11 of the United States Bankruptcy Code. In connection with the filing, on February 16, 2001, the Company sold its entire business, and all of its assets, for the benefit of its creditors. After the sale, the Company still had liabilities of $8.4 million and was subsequently dismissed by the Court from the Chapter 11 reorganization, effective March 13, 2001, at which time the last of the Company’s then remaining directors resigned. On March 13, 2001, the Company had no business or other source of income, no assets, no employees or directors, outstanding liabilities of approximately $8.4 million and had terminated its duty to file reports under securities law. In February 2008, after filing of a Form 10 registration statement pursuant to the Securities Exchange Act of 1934, as amended, we were re-listed on the OTC Bulletin Board.

 

In April 2010, the Company re-domiciled in Delaware under the name CCVG, Inc. (“CCVG”).Effective December 31, 2010, the Company completed an Agreement and Plan of Merger and Reorganization (the “Reorganization") which provided for the merger of two of the Company’s wholly owned subsidiaries. As a result of this reorganization the Company’s name became “Golden Dragon Inc.,” which became the surviving publicly quoted parent holding company.

 

On May 9, 2014, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with CannaPharmaRX, Inc., a Colorado corporation (“Canna Colorado”), and David Cutler, a former President, Chief Executive Officer, Chief Financial Officer and director of the Company. Under the Share Purchase Agreement, Canna Colorado purchased 1,421,120 restricted shares of the Company’s common stock from Mr. Cutler and an additional 9,000,000 common shares directly from the Company.

 

In October 2014, the Company changed its legal name to “CannaPharmaRx, Inc.”

 

As a result of the aforesaid transactions, the Company became an early-stage pharmaceutical company whose purpose was to advance cannabinoid research and discovery using proprietary formulation and drug delivery technology then under development.

 

 

 

 6 

 

 

In April 2016, the Company ceased operations. The Company’s then management resigned their respective positions with the Company, with the exception of Mr. Gary Herick, who remains as one of its officers and directors.

 

As a result, the Company is now considered a “shell” company pursuant to the Securities Exchange Act of 1934, as amended.

 

BASIS OF PRESENTATION

 

The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States. Certain amounts in prior periods have been reclassified to conform to current presentation.

 

USE OF ESTIMATES

 

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

 

The Company has acquired $102,799 in property and equipment, of which $100,721 was purchased during the year ended December 31, 2014, and another $2,078 purchased in the first quarter of 2015. Of this amount, $50,000 represents the capitalized cost of the Company’s proprietary RECRUIT Registry™ website development. This patient registry project was largely completed in the fourth quarter of 2014, although it is not currently operational, and the timing of the project launch is not certain at this time. Accordingly, no depreciation expense has been recorded against the capitalized cost of the RECRUIT Registry to date.

 

 

 

 7 

 

 

In addition to the investment in the Company’s patient registry, another $52,800 has been invested in office and computer equipment, primarily incurred since the November 2014 establishment of the Company’s new headquarters in Carneys Point, New Jersey. During the current year ended December 31, 2015 the Company has added $2,078 in additional office and computer equipment.

 

As of December 31, 2015, the Company had ceased using the offices that were rented and the related assets were disbursed with no accounting for their disposition. With this development, the Company recorded a loss on the disposal of the assets in the amount of $87,748.

 

Depreciation expenses have been calculated using the straight-line method over the estimated useful lives of the respective assets, ranging from three to seven years. As of September 30, 2016, the Company had no fixed assets on hand. Depreciation expense for the periods ended September 30, 2016 and September 30, 2015 was $-0- and $9,520 respectively.

 

DEFERRED COSTS AND OTHER OFFERING COSTS

 

All costs with respect to raising capital in the two private placements of the Company’s common stock were expensed by the Company both in 2014 and 2015. These costs were applied as internal operational expenses. The Company had no deferred costs or other stock offering costs as of either September 30, 2016 or December 31, 2015. The Company has not raised any capital since 2015.

 

Future costs associated with raising capital, be it debt or equity, may more likely be incurred as a direct variable cost with third parties. Our intent is to initially defer these costs and ultimately offset them against the proceeds from these capital or financial transactions if successful or expensed if the proposed financial transaction proves unsuccessful.

 

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 will be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset will be compared to the asset’s carrying amount to determine if a write-down to market value or discounted cash flow value will be required. The Company had no intangible assets at September 30, 2016 or December 31, 2015.

 

FAIR VALUES OF ASSETS AND LIABILITIES

 

The Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value.

 

         
    Level 1:   Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
     
    Level 2:   Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For example, Level 2 assets and liabilities may include debt securities with quoted prices that are traded less frequently than exchange-traded instruments.
     
    Level 3:   Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments and long-term derivative contracts.

 

 

 

 8 

 

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of September 30, 2016 and December 31, 2015, the Company does not have any assets or liabilities which are considered Level 2 or 3 in the hierarchy.

 

The Company may also be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were no such adjustments in the periods ended September 30, 2016, nor December 31, 2015.

 

FINANCIAL INSTRUMENTS

 

The estimated fair value 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 exact precision. The fair value of the Company’s financial instruments, which include cash, prepaid expenses, accounts payable and the related party loan, each approximate their carrying value due either to their short length to maturity or interest rates that approximate prevailing market rates.

 

INCOME TAXES

 

The Company accounts 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.

 

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 have been no differences between our comprehensive loss and net loss.

 

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 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 reflects the potential dilution that would occur if securities or 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.

 

Stock options outstanding at September 30, 2016 to purchase 750,000 shares of common stock are excluded from the calculations of diluted net loss per share since their effect is antidilutive.

 

STOCK-BASED COMPENSATION

 

The Company has adopted ASC Topic 718, (Compensation—Stock 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 the Company expects 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.

 

 

 

 9 

 

 

BUSINESS SEGMENTS

 

The Company’s activities during the six month period ended September 30, 2016 and the year ended December 31, 2015 comprised a single segment.

 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

NOTE 2. GOING CONCERN AND LIQUIDITY
   

The Company had $-0- cash on hand as of September 30, 2016 and no revenue-producing business or other sources of income. Additionally, as of September 30, 2016, the Company had outstanding liabilities totaling $925,613 and a stockholders’ deficit of $921,447. The Company had a working capital deficit of $921,447 at September 30, 2016.

 

In the Company’s financial statements for the fiscal years ended December 31, 2015 and 2014, the Reports of the Independent Registered Public Accounting Firm include an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern. These financial statements 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. Based on our current financial projections, we believe we do not have sufficient existing cash resources to fund our current limited operations.

 

It is the Company’s current intention to raise debt and/or equity financing to fund ongoing operating expenses. There is no assurance that these events will be satisfactorily completed or at terms acceptable to the Company. Any issuance of equity securities, if accomplished, could cause substantial dilution to existing stockholders. Any failure by the Company to successfully implement these plans would have a material adverse effect on its business, including the possible inability to continue operations.

 

NOTE 3. ASSETS

 

As of September 30, 2016, the Company had $4,167 in assets comprised of $4,167 in prepaid expenses.

 

NOTE 4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

As of September 30, 2016 and December 31, 2015, the balance of accounts payable and accrued expenses was $565,855 and $456,601, respectively, which is primarily comprised of trade payables and accrued salaries and wages and legal fees.

 

Additionally, the current portion of accrued legal settlements payable in cash as of September 30, 2016 and December 31, 2015 total $190,000 as of December 31, 2015, as discussed in Note 6 (Litigation and Accrued Settlement Liabilities).

 

NOTE 5. COMMITMENTS

 

OPERATING LEASE

 

The Company had a non-cancellable operating lease for its headquarters located in Carneys Point, New Jersey. The term of this lease ended April 30, 2016. As of September 30, 2016 the Company owed $12,360 on this lease and had not made any new commitments for office space.

 

 

 

 10 

 

 

NOTE 6. LITIGATION AND ACCRUED SETTLEMENT LIABILITIES

 

On October 30, 2014, Gary M. Cohen (“Cohen”), former President, Chief Operating Officer and a board member of Canna Colorado, filed a lawsuit against Canna Colorado and an individual officer and board member, Gary Herick, who is currently an officer and director of the Company. On November 26, 2014, Cohen filed an amended complaint naming the Company and Gerald Crocker, James Smeeding, Robert Liess and Mathew Sherwood, each of whom was a member of the Company’s board of directors at that time, as defendants. In his amended complaint, Cohen alleged various employment- related contract and wrongful termination claims, as well as claims alleging breach of fiduciary duty, misappropriation of assets, violations of corporate law regarding his access to internal corporate information, and alleged violations of U.S. federal securities laws, the Sarbanes- Oxley Act of 2002 and the U.S. Internal Revenue Code. Cohen’s claims arose out of the removal of Cohen as an officer and board member of Canna Colorado, which occurred on or about October 23, 2014. The defendants successfully removed Cohen’s lawsuit from state court in Hillsborough County, Florida—where it was filed originally—to the U.S. District Court in Tampa, Florida.

 

On November 11, 2014, the Company, under its former name Golden Dragon Holding Co., sued Cohen in U.S. District Court in New Jersey for libel and tortious interference.

 

On March 30, 2015, the Company executed a Confidential Settlement and Release of Claims Agreement dated March 30, 2015, by and between the Company, Canna Colorado, Cohen and the other individuals named above (the “Settlement Agreement”). Pursuant to the terms of the Settlement Agreement, the lawsuit filed in Florida on October 30, 2014 against the Company, Canna Colorado, Herick, Crocker, Smeeding, Sherwood and Liess by Cohen has been resolved and dismissed. The parties amicably resolved their differences before any discovery occurred or before any decision by the court on the merits of any claims. The Company and all the individuals who had been sued categorically denied of all Mr. Cohen’s claims and allegations, maintained that the allegations were false and were prepared to assert counterclaims of their own. As part of the parties’ resolution, Cohen retracted his allegations.

 

As part of the Settlement Agreement, the Company agreed to purchase all of Mr. Cohen’s 2,250,000 shares of Canna Colorado for a purchase price of $350,000, with $85,000 payable up front and the remainder payable in equal installments of $15,000 per month over the next 17 months, and a payment of $10,000 in the eighteenth month. In addition, on May 4, 2015, the Company issued 600,000 unregistered restricted shares of its common stock to Mr. Cohen as part of the Settlement Agreement. The Company valued those shares at $1,597,500 based on the trading average of the Company’s stock over the ten days preceding entry into the Settlement Agreement and recorded an expense in such amount during the period ended December 31, 2014. Pursuant to the Settlement Agreement, $160,000 has been paid to Mr. Cohen in cash through September 30, 2015 in accordance with the settlement payment terms, leaving a remaining liability of $190,000 as of December 31, 2015 to be paid in cash in the future, since no payments were made subsequent to September 30, 2015.

 

In addition, the Company and Cohen have resolved their differences in the Company’s lawsuit filed against Cohen on November 11, 2014 in New Jersey. The Company has dismissed its claims against Cohen of libel and tortious interference.

 

NOTE 7.  STOCKHOLDERS’ EQUITY

 

PREFERRED STOCK

 

The Company is authorized to issue up to 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 stockholder 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 as of September 30, 2016 and December 31, 2015, respectively.

 

COMMON STOCK

 

The Company is authorized to issue 100,000,000 shares of common stock, par value $0.0001 per share. As of September 30, 2016 and December 31, 2015, 17,960,741 shares of common stock were issued and outstanding.

 

 

 

 11 

 

 

RECENT ISSUANCES OF COMMON STOCK

 

In March 2015, the Company began offering in a private placement of shares of its restricted common stock to accredited investors at $1.50 per share (the “Private Placement”). Through December 31, 2015 the Company issued a total of 556,334 shares in exchange for $804,550 of gross proceeds.

 

On June 25, 2015, the Company issued 100,000 shares of the Company’s common stock to Benjamin & Jerold Brokerage I, LLC, an Illinois limited liability company (“B&J”), which had provided advisory and capital raising services to the Company. These shares were expensed to stock-based compensation costs during the period and were valued at $350,000 based on the trading average of the Company’s stock over the ten days preceding issuance of those shares.

 

No common shares have been issued subsequent to June 25, 2015.

 

WARRANTS

 

On January 20, 2015, the Company issued a 3-year warrant (the “First Warrant”) to Viridian Capital & Research, LLC (“VCR”) as compensation for the services rendered by VCR in connection with the delivery of a company report describing the business, technology and products, markets, growth strategy and financial aspects of the Company. The First Warrant is exercisable for 244,283 of the Company’s fully-diluted common shares at an exercise price equal to the price per share of the Company’s common stock on the 10 days preceding January 20, 2015 or $2.90. The First Warrant has a 3-year life, a cashless exercise provision and is fully transferable with the Company’s approval, which may not be unreasonably withheld. The First Warrant is callable on 60 days’ notice if (i) the Company’s common stock trades on the NASDAQ and (ii) the Company’s common stock trades at three times the exercise price of the First Warrant for 20 consecutive trading days. These warrants were valued at $630,067 using the Black-Scholes method of valuation.

 

On February 23, 2015, the Company issued another 3-year warrant (the “Second Warrant,” and together with the First Warrant, the “VCR Warrants”) to VCR as compensation for VCR’s services in managing and implementing investor relations strategies with the U.S. investment community and industry. The Second Warrant is exercisable for 244,283 of the Company’s fully-diluted common shares at an exercise price equal to the price per share of the Company’s common stock on the 10 days preceding February 23, 2015 or $2.50. The Second Warrant has a 3-year life, a cashless exercise provision and is fully transferable with the Company’s approval, which may not be unreasonably withheld. The Second Warrant is callable on 60 days’ notice if (i) the Company’s common stock trades on the NASDAQ and (ii) the Company’s common stock trades at three times the exercise price of the Second Warrant for 20 consecutive trading days. These warrants were valued at $523,576 using the Black-Scholes method of valuation.

 

The Company has not issued any warrants since February 23rd 2015.

 

STOCK OPTIONS

 

Effective November 1, 2014, the Company granted options to purchase shares of the Company’s common stock to each of its employees for a total of 4,800,000 options granted. Including the November 1, 2014 grant and all subsequent option grants, the Company has granted a total of 6,075,000 options at exercise prices ranging from $1.00 to $3.25.

 

Effective June 26, 2015, Mr. Gary Herick, the Company’s current Chief Financial Officer, entered into a consulting agreement with the Company. That consulting agreement provided for the full and immediate vesting of any unvested stock options held by Mr. Herick as of the date of the agreement, which totaled options to purchase 750,000 shares of common stock at an exercise price of $1.00 The Company recorded an option acceleration modification charge of $2,205,000 in the three months ended June 30, 2015. Mr. Herick has until November 1, 2024 to exercise his options.

 

 

 

 12 

 

 

As a result of all stock option activity to date, the Company has recorded aggregate stock-based compensation charges of $728,125 for the nine-month period ended September 30, 2016 and $7,435,004 during the year ended December 31, 2015. As of September 30, 2016, 750,000 options were outstanding, all of which belonged to Mr. Herick and all had been fully expensed.

 

NOTE 8. INCOME TAXES

 

As of September 30, 2016 the Company has approximately $6,281,000 of federal net operating loss carryforwards, respectively. The federal net operating loss carryforwards begin to expire in 2030. State net operating loss carryforwards begin to expire in 2034. Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carry forwards could be subject to annual limitations against taxable income in future periods, which could substantially limit the eventual utilization of such carry forwards. The Company has not analyzed the historical or potential impact of its equity financings on beneficial ownership and therefore no determination has been made whether the net operating loss carry forward is subject to any Internal Revenue Code Section 382 limitation. To the extent there is a limitation, there could be a substantial reduction in the deferred tax asset with an offsetting reduction in the valuation allowance. As of September 30, 2016, the Company has no unrecognized income tax benefits.

 

The tax years from 2014 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities.

 

NOTE 9. SUBSEQUENT EVENTS

 

In April 2018, the Company issued 60,000 shares of its Series A Convertible Preferred Stock at $1.00 per share to its current management, all of whom are accredited investors. Each share of Series A Convertible Preferred Stock is convertible into 1,250 shares of common stock and vote on an as converted basis. The rights and designations of these Preferred Shares include the following:

 

·entitles the holder thereof to 1,250 votes on all matters submitted to a vote of the shareholders;
·The holders of outstanding Series A Convertible Preferred Stock shall only be entitled to receive dividends upon declaration by the Board of Directors of a dividend payable on our Common Stock whereupon the holders of the Series A Convertible Preferred Stock shall receive a dividend on the number of shares of Common Stock in to which each share of Series A Convertible Preferred Stock is convertible;
·Each Series A Preferred Share is convertible into 1,250 shares of Common Stock;
·not redeemable.

 

In July 2018, the Company commenced an offering of up to $2MM of convertible notes.  The notes carry an interest rate of 12% and are convertible into shares of the Company’s common stock at the lesser of $0.40 or 50% discount to the market price on the date of conversion.  The term of the notes is for one year and they must be converted upon closing a financing, acquisition or other form of business combination in an amount greater than $5 million. As of the date of this report the Company has accepted aggregate subscriptions of $640,000 in this Offering, none of which has been converted. The offering remains open as of the date of this Report.

 

On April 1, 2018, the Company changed its principal place of business to 2 Park Plaza, Suite 1200 – B. Irvine, CA 92614. This space is provided on a twelve-month term by a public company that employs Mr. Nicosia, one of the Company’s directors, as its CEO. Monthly rent is $1,000, however, as of the date of this filing the Company has not made any rent payments and continue to accrue those amounts as accounts payable.

 

 

 13 

 

 

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

 

The following discussion should be read in conjunction with our financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

 

Overview and History

 

We were originally incorporated in the State of Colorado in August 1998 under the name “Network Acquisitions, Inc.” We changed our name to Cavion Technologies, Inc. in February 1999 and subsequently to Concord Ventures, Inc. in October 2006.

 

On December 21, 2000, we filed for protection under Chapter 11 of the United States Bankruptcy Code. In connection with the filing, on February 16, 2001, we sold our entire business, and all of our assets, for the benefit of our creditors. After the sale, we still had liabilities of $8.4 million and were subsequently dismissed by the Court from the Chapter 11 reorganization, effective March 13, 2001, at which time the last of our remaining directors resigned. On March 13, 2001, we had no business or other source of income, no assets, no employees or directors, outstanding liabilities of approximately $8.4 million and had terminated our duty to file reports under securities law. In February 2008, we were re-listed on the OTC Bulletin Board.

 

In April 2010, we re-domiciled in Delaware under the name CCVG, Inc. (“CCVG”). Effective December 31, 2010, CCVG completed an Agreement and Plan of Merger and Reorganization y (the “Reorganization") which provided for the merger of two of our wholly owned subsidiaries. As a result of this reorganization our name was changes to “Golden Dragon Inc.”, which became the surviving publicly quoted parent holding company.

 

On May 9, 2014, we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with CannaPharmaRX, Inc., a Colorado corporation (“Canna Colorado”), and David Cutler, a former President, Chief Executive Officer, Chief Financial Officer and director of our Company. Under the Share Purchase Agreement, Canna Colorado purchased 1,421,120 shares of our common stock from Mr. Cutler and an additional 9,000,000 restricted common shares directly from us.

 

On May 15, 2014, as amended and effective January 29, 2015, we entered into an Agreement and Plan of Merger (the “Merger”) pursuant to which Canna Colorado became a subsidiary of our Company. In October 2014, we changed our legal name to “CannaPharmaRx, Inc.”

 

Pursuant to the Merger, all of the shares of our common stock previously owned by Canna Colorado were cancelled. As a result of the aforesaid transactions we became an early-stage pharmaceutical company whose purpose was to advance cannabinoid research and discovery using proprietary formulation and drug delivery technology then under development.

 

In April 2016, we ceased operations. Our then management resigned their respective positions with our Company, with the exception of Mr. Gary Herick, who remains as one of our officers and directors.

 

As a result, we are now considered a “shell” company as defined under the Securities Exchange Act of 1934, as amended.

 

Our executive offices are located at Our principal place of business is located at 2 Park Plaza, Suite 1200B, Irvine, CA, 92614, phone (949) 652-6838. Our website address is www.cannapharmarx.com.

 

Because we have not generated any revenues during our prior two years, following is our Plan of Operation.

 

 

 

 14 

 

 

PLAN OF OPERATION

 

As of the date of this Report we intend to engage in what we believe to be synergistic acquisitions or joint ventures with a company or companies that we believe will enhance our business plan. Ultimately, our intent is to become a national or internationally branded cannabis cultivation company, or otherwise engage in the cannabis industry. However, if an opportunity in another industry arises we will review that opportunity as well. One of the benefits to our being a reporting and publicly traded company, is to allow us to utilize our securities as consideration for some, or all of the purchase price of these potential acquisitions. There are no assurances we will be able to consummate any acquisitions using our securities as consideration, or at all.

 

There are numerous things that will need to occur in order to allow us to implement this aspect of our business plan and there are no assurances that any of these developments will occur, or if they do occur, that we will be successful in fully implementing our plan.

 

Management will seek out and evaluate businesses for acquisition. The integrity and reputation of any potential acquisition candidate will first be thoroughly reviewed to ensure it meets with management’s standards. Once targeted as a potential acquisition candidate, we will enter into negotiations with the potential candidate and commence due diligence evaluation, including its financial statements, cash flow, debt, location and other material aspects of the candidate’s business. If we are successful in our attempts to acquire a company or companies utilizing our securities as part or all of the consideration to be paid, our current shareholders will incur dilution.

 

In implementing a structure for a particular acquisition, we may become a party to a merger, consolidation, reorganization, joint venture, asset purchase, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management and shareholders will no longer be in control of our Company.

 

As part of our investigation, our officers and directors will meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis of verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of our limited financial resources and management expertise. The manner in which we participate in an acquisition will depend on the nature of the opportunity, the respective needs and desires of us and other parties, the management of the acquisition candidate and our relative negotiation strength.

 

We will participate in an acquisition only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with our attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.

 

Depending upon the nature of the acquisition, including the financial condition of the acquisition company, as a reporting company under the Securities Exchange Act of 1934 (“34 Act “), it will be necessary for such acquisition candidate to provide independent audited financial statements. We will not acquire any entity which cannot provide independent audited financial statements within a reasonable period of time after closing of the proposed transaction. If such audited financial statements are not available at closing, or within time parameters necessary to insure our compliance with the requirements of the 34 Act, or if the audited financial statements provided do not conform to the representations made by the candidate to be acquired in the closing documents, the closing documents will provide that the proposed transaction will be voidable, at the discretion of our present management. If such transaction is voided, the agreement will also contain a provision providing for the acquisition entity to reimburse us for all costs associated with the proposed transaction.

 

 

 

 

 

 15 
 

 

As of the date of this Report we are engaged in discussions with various companies but there are no assurances that these discussions will result in any definitive agreement. There is no significant material acquisition that is probable to be consummated and there are no assurances that any such acquisition will occur in the future.

 

We believe there are certain perceived benefits to being a public company whose securities are publicly traded, including the following:

 

·increased visibility in the financial community;
·increased valuation;
·greater ease in raising capital;
·compensation of key employees through stock options for which there may be a market valuation; and
·enhanced corporate image.

 

There are also certain perceived disadvantages to being a trading company including the following:

 

·required publication of corporate information;
·required filings of periodic and episodic reports with the Securities and Exchange Commission.

 

Business entities, if any, which may be interested in a combination with us may include the following:

 

·a company for which a primary purpose of becoming public is the use of its securities for the acquisition of assets or businesses;
·a company which is unable to find an underwriter of its securities or is unable to find an underwriter of securities on terms acceptable to it;
·a company which wishes to become public with less dilution of its securities than would occur upon an underwriting;
·a company which believes that it will be able to obtain investment capital on more favorable terms after it has become public;
·a foreign company which may wish an initial entry into the United States securities market;
·a special situation company, such as a company seeking a public market to satisfy redemption requirements under a qualified Employee Stock Option Plan;
·a company seeking one or more of the other perceived benefits of becoming a public company.

 

A business combination with a private company will normally involve the transfer to the private company of the majority of our issued and outstanding common stock and the substitution by the private company of its own management and board of directors.

 

The proposed business activities described herein classify us as a “shell company. The Securities and Exchange Commission and certain states have enacted statutes, rules and regulations regarding the sales of securities of shell companies, as well as limitations on a shareholder’s ability to sell their “restricted” securities. Rule 144 is not available to a shareholder of a shell company unless and until the Company files a registration statement with the SEC that includes certain specific information about existing business operations of a registrant and thereafter must wait an additional one year to take advantage of that exemption from registration.

 

Rule 12b-2 of the 34 Act defines a shell company as a company that has:

 

(1) No or nominal operations; and

(2) Either:

(i) No or nominal assets;

(ii) Assets consisting solely of cash and cash equivalents; or

(iii) Assets consisting of any amount of cash and cash equivalents and nominal other assets.

 

We will continue to file all reports required of us under the Exchange Act until a business combination has occurred, or we organically build our business from cash raised from investors. A business combination will normally result in a change in control and management of our Company. Since a principal benefit of a business combination with us would normally be considered our status as a reporting company, it is anticipated that we will continue to file reports under the Exchange Act following a business combination. No assurance can be given that this will occur or, if it does, for how long.

 

 

 

 

 16 
 

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of September 30, 2016, we had no cash or cash equivalents.

 

Net cash provided by financing activities was $19,758 during the nine months ended September 30, 2016, compared to $0 in the comparable period in 2015. We have no revenue-producing operations or other source of income as of the date of this Report, or during 2016 or 2015.

 

In March 2015, we commenced a private placement of our common stock to accredited investors at $1.50 per share). Through September 30, 2015, we issued an aggregate of 536,334 shares and received $804,500 in gross proceeds.

 

We have no revenue-producing operations or other source of income as of the date of this Report, nor have we had any revenue during the past 3 years. See “Plan of Operation” above herein for an explanation of our current business activities.

 

It is our current intention to raise debt and/or equity financing to fund ongoing operating expenses. There is no assurance that these events will be satisfactorily completed or at terms acceptable to us. Any issuance of equity securities, if accomplished, could cause substantial dilution to existing stockholders. Any failure by us to successfully implement these plans would have a material adverse effect on our business, including the possible inability to continue operations.

 

Subsequent Events – Recent Financings

 

Also in April 2018, we issued 60,000 shares of our Series A Convertible Preferred Stock at a price of $1.00 per share to our current management, all of whom are accredited investors. Each share of Series A Convertible Preferred Stock is convertible into 1,250 shares of common stock and vote on an as converted basis. The rights and designations of these Preferred Shares include the following:

 

·entitles the holder thereof to 1,250 votes on all matters submitted to a vote of the shareholders;
·The holders of outstanding Series A Convertible Preferred Stock shall only be entitled to receive dividends upon declaration by the Board of Directors of a dividend payable on our Common Stock whereupon the holders of the Series A Convertible Preferred Stock shall receive a dividend on the number of shares of Common Stock in to which each share of Series A Convertible Preferred Stock is convertible;
·Each Series A Preferred Share is convertible into 1,250 shares of Common Stock; and
·not redeemable.

 

In July 2018, we commenced a private offering of up to $2,000,000 of 12% Convertible Debentures. Each Convertible Debenture is convertible into shares of our common stock at the lesser of $0.40 or a 50% of the closing market price on the date a business combination valued at great than $5,000,000 is completed. See “Part I, Item 1, Business.” To date, we have received $640,000 in subscriptions under this offering. The Convertible Debenture is being offered in reliance upon Rule 506 of Regulation D. We intend to use the proceeds from this offering on working capital.

 

We must raise additional funds to support our expected operating plan and our continued operations. We cannot provide any assurances that we will be able to raise such funds or whether we would be able to raise such funds on terms that are favorable to us. We may seek to borrow monies from lenders at commercial rates, but such lenders will probably be at higher than bank rates, which higher rates could, depending on the amount borrowed, render the net operating income of any of our planned profitable businesses insufficient to cover the interest burden.

 

 

 

 

 

 17 
 

 

Currently, we have no committed source for any funds as of the date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of these uncertainties.

 

Inflation

 

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the three and nine month periods ended September 30, 2016.

 

Critical Accounting Estimates

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

 

 

 

 

 

 

 

 

 

 

 

 

 

 18 

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures - Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report.

 

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2016, at the reasonable assurance level. We believe that our financial statements presented in this Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

 

Inherent Limitations - Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

 

Changes in Internal Control over Financial Reporting - There were no changes in our internal control over financial reporting during the six month period ended September 30, 2016, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 19 

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On October 30, 2014, Gary M. Cohen (“Mr. Cohen”), former president, Chief Operating Officer and board member of CannaRx, filed a lawsuit against CannaRx in the Circuit Civil Court of the Thirteenth Judicial District in and for Hillsborough County, Florida, in Division T. On November 11, 2014, we sued Mr. Cohen in the U.S. District Court for the District of New Jersey, alleging tortious interference with business relationships and defamation due to publishing fake press releases on the Internet concerning his lawsuit against us.

 

On March 25, 2015, we reached an agreement with Mr. Cohen in principle to the terms of a settlement agreement that resolved the aforementioned lawsuits. As part of that agreement in principle we agreed to purchase all of Mr. Cohen’s 2,250,000 shares for a purchase price of $350,000, with $85,000 payable up front and the remainder payable in equal installments of $15,000 per month over the next 17 months, and a final payment of $10,000 in the eighteenth month. In addition to this $350,000 cash expense, we issued Mr. Cohen 600,000 restricted shares of our common stock.

 

FINRA Action

On January 29, 2015, we received a deficiency notice from the Financial Industry Regulatory Authority (“FINRA”), stating that FINRA would not process our name change from October 2014 due to questions about our ownership raised in the Cohen litigation described above. We appealed the notice, arguing among other things that the ownership of our Company was not at issue in the Cohen litigation. On March 20, 2015, FINRA reversed the deficiency notice and subsequently processed ours request to change our name and trading symbol.

 

In addition to the above-mentioned matters, we may be subject, from time to time, to various legal proceedings and claims. Any such claims, whether with or without merit, could be time-consuming and expensive to defend and could divert management’s attention and resources. We cannot assure that the outcome of all current or future litigation will not have a material adverse effect on us and our results of operation.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

 

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

 

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURE

 

Not Applicable

 

ITEM 5. OTHER INFORMATION

 

None

 

 

 

 

 20 

 

 

ITEM 6. EXHIBITS

 

Exhibit No. Description
 
31.1   Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
31.2   Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32   Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
101.INS   XBRL Instances Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

 

 

 

 

 

  

 

 21 

 

 

 

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 on September 14, 2018.

 

  CannaPharmaRx, Inc.  
       
       
  By:   /s/ Dominic Colvin  
    Dominic Colvin,  
    Principal Executive Officer  
       
       
  By: /s/ Gary Herick  
   

Gary Herick,

Principal Financial Officer and

 
    Principal Accounting Officer  

 

 

 

 

 

 

 

 22