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 MARCH 31, 2011
[ ] 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
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(State of Incorporation) (IRS Employer ID Number)
2460 WEST 26TH AVENUE, SUITE 380-C, DENVER, COLORADO 80211
------------------------------------------------------------
(Address of principal executive offices)
303-704-4623
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(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 June 27, 2011, there were
2,384,407 shares of the registrant's common stock, $0.0001 par value, issued and
outstanding.
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Balance Sheet - March 31, 2011 (Unaudited) and December 31, 2010 (Audited) 3
Statement of Operations - Three months ended March 31, 2011 and 2010 4
Statement of Cash Flows - Three months ended March 31, 2011 and 2010 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
Item 4. Controls and Procedures 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Removed and Reserved 20
Item 5. Other Information 20
Item 6. Exhibits 20
SIGNATURES 21
PART I
ITEM 1. FINANCIAL STATEMENTS
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
BALANCE SHEETS
MARCH 31, DECEMBER 31,
2011 2010
---------------- -----------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 100 $ 100
---------------- -----------------
Total Current Assets 100 100
---------------- -----------------
TOTAL ASSETS $ 100 $ 100
================ =================
LIABILITIES & STOCKHOLDERS' (DEFICIT) / EQUITY
CURRENT LIABILITIES
Accounts Payable $ 477 $ -
Accrued Expenses 99 -
Related Party Loan 15,000 -
---------------- -----------------
Total Current Liabilities 15,576 -
---------------- -----------------
COMMITMENTS AND CONTINGENCIES (Note. 7)
STOCKHOLDERS' DEFICIT
Preferred Stock; $0.0001 par value, 10,000,000 shares authorized - -
no shares issued and outstanding
Class A Common Stock; $0.0001 par value, 100,000,000, 239 239
shares authorized as at March 31, 2011 and December 31, 2010,
2,384,407 shares issued and outstanding as at March 31, 2011 and
December 31, 2010
Additional Paid In Capital 16,874,642 16,874,642
Accumulated Deficit (16,890,357) (16,874,781)
---------------- -----------------
Total Stockholders' (Deficit) / Equity (15,476) 100
---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) / EQUITY $ 100 $ 100
================ =================
See Accompanying Notes to Financial Statements.
3
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED
MARCH 31,
2011 2010
-------------- ------------------
OPERATING EXPENSES
General & Administrative Expenses 15,477 14,255
-------------- ------------------
Total Operating Expenses 15,477 14,255
OPERATING LOSS (15,477) (14,255)
Interest and Other Income / (Expenses) Net (99) (2,067)
-------------- ------------------
Loss before Income Taxes (15,576) (16,322)
Provision for Income Taxes - -
-------------- ------------------
NET LOSS $ (15,576) $ (16,322)
============== ==================
NET LOSS PER COMMON SHARE
Basic & Diluted ($0.01) ($0.01)
============== ==================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic & Diluted 2,384,407 2,359,407
============== ==================
See Accompanying Notes to Financial Statements.
4
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
STATEMENTS OF CASH FLOWS
(Unadudited)
FOR THE THREE MONTHS ENDED
MARCH 31,
2011 2010
------------ -------------
CASH FLOW PROVIDED BY / (USED IN) OPERATING ACTIVITIES
NET PROFIT / (LOSS) $ (15,576) $ (16,322)
ADJUSTMENTS TO RECONCILE NET PROFIT / (LOSS) TO NET CASH
PROVIDED BY / (USED IN) OPERATING ACTIVITIES - -
CHANGES IN OPERATING ASSETS & LIABILITIES
Increase / (decrease) in Accounts Payable 477 (747)
Increase / (decrease) in Accrued Expenses 100 2,069
------------ -------------
Total Cash Flow provided by / (used in) Operating Activities (15,000) (15,000)
------------ -------------
CASH FLOW FROM INVESTING ACTIVITIES - -
------------ -------------
Total Cash Flow provided by / (used in) Investing Activities - -
------------ -------------
CASH FLOW FROM FINANCING ACTIVITIES
Increase in Related Party Loan 15,000 15,000
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Total Cash Flow provided by / (used in) Financing Activities 15,000 15,000
------------ -------------
INCREASE / (DECREASE) IN CASH & CASH EQUIVALENTS $ - $ -
============ =============
Cash and Cash Equivalents at the beginning of the period $ 100 $ -
============ =============
Cash and Cash Equivalents at the end of the period $ 100 $ -
============ =============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ - $ -
============ =============
Cash paid for income tax $ - $ -
============ =============
See Accompanying Notes to Financial Statements.
5
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations
Business
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. No potential merger candidate has been identified at this time.
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
Merger ("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 Merger 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.
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.
6
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 March 31, 2011 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2011. 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, 2010
included in our Form 10-K filed with the SEC.
Significant Accounting Policies:
Use of Estimates -- The preparation of our consolidated 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.
7
Property and Equipment -- We owned no property and equipment during the three
months ended March 31, 2011 or 2011 and consequently we recorded no depreciation
expense during the three months ended March 31, 2011 or 2010.
Deferred Costs and Other -- Offering 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 March 31, 2011 or 2010.
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 carrying amounts of notes receivable, accounts receivable,
accounts payable and accrued liabilities approximated fair value because of the
short-term maturities of these instruments. The fair value of notes payable
approximated to their carrying value as generally their interest rates reflected
our effective annual borrowing rate.
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.
Advertising costs -- Advertising costs are expensed as incurred. No advertising
costs were incurred during the three months ended March 31, 2011 or 2010.
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
March 31, 2011 and 2010.
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.
8
Basic and diluted EPS were identical for the three months ended March 31, 2011
and 2010. We had no stock options outstanding during the three months ended
March 31, 2011 and during the three months ended March 31, 2010 our outstanding
stock options was substantially in excess of our share price throughout the
period.
Stock-Based Compensation -- We have adopted ASC Topic 718 (formerly SFAS 123R),
"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
ending March 31, 2011 or 2010.
Business Segments -- We believe that our activities during the three months
ended March 31, 2011 and 2010 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 March 31, 2011, we had cash of $100, no other assets, no operating business
or other source of income, outstanding liabilities totaling $15,576 and a
stockholders' deficit of $15,476.
In our financial statements for the fiscal years ended December 31, 2010 and
2009, 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 March 31, 2011 and
2010 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 deficit of $15,476 and reported an accumulated deficit
of $16,890,357 as at March 31, 2011.
9
It is our current intention to seek to raise debt and, or, equity financing to
fund our ongoing operating expenses and attempt 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. There is no
assurance that this series of events will be satisfactorily completed.
3. ASSETS
As at March 31, 2011 and December 31, 2010, our sole asset was Cash and Cash
Equivalents of $100 relating to the sales consideration arising from the sale of
our subsidiary company, CCAPS.
4. ACCOUNTS PAYABLE
As at March 31, 2011, the balance of accounts payable represents legal fees
payable.
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no accounts payable outstanding as at December 31, 2010.
5. ACCRUED EXPENSES
As at March 31, 2011, the balance of accrued expenses represents interest
payable on our related party loan (See Note 6.).
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no accrued expenses outstanding as at December 31, 2010.
6. RELATED PARTY LOAN
As at March 31, 2011, the related party loan represents a loan made to us by Mr.
David J. Cutler, our sole officer, a director and majority shareholder. The loan
is repayable on demand and at March 31, 2011, the principal balance owed was
$15,000 with accrued interest of $99.
Interest is accrued on the loan at 8%.
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no related party loan outstanding as at December 31, 2010.
7. COMMITMENTS:
Capital and Operating Leases
We had no capital or operating leases outstanding as at March 31, 2011.
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no capital or operating leases outstanding as at December 31,
2010.
Litigation
No legal proceedings are currently pending or threatened to the best of our
knowledge.
10
8. RELATED PARTY TRANSACTIONS
As at March 31, 2011, we owed Mr. Cutler, our sole officer, a director and
majority shareholder, $15,099 including accrued interest of $99.
During the three months ended March 31, 2011, we paid $15,000 (2010 - $15,000)
of Mr. Cutler's remuneration to Burlingham Corporate Finance, Inc.
("Burlingham") in the form of consulting fees. Mr. Cutler is the principal
shareholder of Burlingham.
9. STOCKHOLDERS' DEFICIT:
Preferred Stock
We were 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 at March 31, 2011.
Common Stock
We were 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
No shares of our common stock were issued in the three months ended March 31,
2011 or 2010.
Warrants
No warrants were issued or outstanding during the three months ended March 31,
2011 or 2010.
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 March
31, 2011.
11
During the year ended December 31, 2009, the 2,000 remaining stock options
outstanding under the plan expired.
10. INCOME TAXES
We have had losses since our Inception, and therefore are not subject to federal
or state income taxes. We have accumulated tax losses available for carryforward
in excess $16 million. The carryforward is subject to examination by the tax
authorities and expires at various dates through the year 2022. The Tax Reform
Act of 1986 contains provisions that may limit the NOL carryforwards available
for use in any given year upon the occurrence of certain events, including
significant changes in ownership interest. Consequently following the issue more
than 50% of our total authorized and issued share capital in September 2006 to
Mr. Cutler, one of our directors, our ability to use these losses is
substantially restricted by the impact of section 382 of the Internal Revenue
Code.
11. SUBSEQUENT EVENTS
We have evaluated subsequent events through June 27, 2011. Other than those set
out above, there have been no subsequent events after March 31, 2011 for which
disclosure is required.
12
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 this 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. No such potential merger candidate has been identified at that
time of this filing.
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
Merger ("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 Merger 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
13
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.
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.
PLAN OF OPERATIONS
General Business Plan
Our plan of operations is to raise debt and, or, equity to meet our ongoing
operating expenses and attempt to merge with another entity with experienced
management and opportunities for growth in return for shares of our common stock
to create value for our shareholders. There can be no assurance that we will
successfully complete these transactions. In particular there is no assurance
that any such business will be located or that any stockholder will realize any
return on their shares after such a transaction. Any merger or acquisition
completed by us can be expected to have a significant dilutive effect on the
percentage of shares held by our current stockholders. 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.
We intend to seek, investigate and, if such investigation warrants, acquire an
interest in business opportunities presented to us by persons or firms which
desire to seek the advantages of an issuer who has complied with the Securities
Act of 1934 (the "1934 Act"). We will not restrict our search to any specific
14
business, industry or geographical location, and we may participate in business
ventures of virtually any nature. This discussion of our proposed business is
purposefully general and is not meant to be restrictive of our unlimited
discretion to search for and enter into potential business opportunities. We
anticipate that we may be able to participate in only one potential business
venture because of our lack of financial resources.
We may seek a business opportunity with entities which have recently commenced
operations, or that desire to utilize the public marketplace in order to raise
additional capital in order to expand into new products or markets, to develop a
new product or service, or for other corporate purposes. We may acquire assets
and establish wholly owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
We expect that the selection of a business opportunity will be complex. Due to
general economic conditions, rapid technological advances being made in some
industries and shortages of available capital, we believe that there are
numerous firms seeking the benefits of an issuer who has complied with the 1934
Act. Such benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all stockholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. We have, and will continue to have, essentially
no assets to provide the owners of business opportunities. However, we will be
able to offer owners of acquisition candidates the opportunity to acquire a
controlling ownership interest in an issuer who has complied with the 1934 Act
without incurring the cost and time required to conduct an initial public
offering.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, our Board of Directors. We intend to concentrate on identifying
preliminary prospective business opportunities which may be brought to our
attention through present associations of our director, professional advisors or
by our stockholders. In analyzing prospective business opportunities, we will
consider such matters as (i) available technical, financial and managerial
resources; (ii) working capital and other financial requirements; (iii) history
of operations, if any, and prospects for the future; (iv) nature of present and
expected competition; (v) quality, experience and depth of management services;
(vi) potential for further research, development or exploration; (vii) specific
risk factors not now foreseeable but that may be anticipated to impact the
proposed activities of the company; (viii) potential for growth or expansion;
(ix) potential for profit; (x) public recognition and acceptance of products,
services or trades; (xi) name identification; and (xii) other factors that we
consider relevant. As part of our investigation of the business opportunity, we
expect to meet personally with management and key personnel. To the extent
possible, we intend to utilize written reports and personal investigation to
evaluate the above factors.
We will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
15
Acquisition Opportunities
In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, or licensing
agreement with another company or entity. We may also acquire stock or assets of
an existing business. Upon consummation of a transaction, it is probable that
our present management and stockholders will no longer be in control of us. In
addition, our sole director may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
stockholders, or sell his stock in us. Any such sale will only be made in
compliance with the securities laws of the United States and any applicable
state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under application federal
and state securities laws. In some circumstances, as a negotiated element of the
transaction, we may agree to register all or a part of such securities
immediately after the transaction is consummated or at specified times
thereafter. If such registration occurs, it will be undertaken by the surviving
entity after it has successfully consummated a merger or acquisition and is no
longer considered an inactive company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
our securities may have a depressive effect on the value of our securities in
the future. There is no assurance that such a trading market will develop.
While the actual terms of a transaction cannot be predicted, it is expected that
the parties to any business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the business transaction in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under
the Code, it may be necessary for the owner of the acquired business to own 80%
or more of the voting stock of the surviving entity. In such event, our
stockholders would retain less than 20% of the issued and outstanding shares of
the surviving entity. This would result in significant dilution in the equity of
our stockholders.
As part of our investigation, we expect to meet personally with management and
key personnel, 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 opportunity will depend on the nature of
the opportunity, the respective needs and desires of both parties, and the
management of the opportunity.
With respect to any merger or acquisition, and depending upon, among other
things, the target company's assets and liabilities, our stockholders will in
all likelihood hold a substantially lesser percentage ownership interest in us
following any merger or acquisition. The percentage ownership may be subject to
significant reduction in the event we acquire a target company with assets and
expectations of growth. Any merger or acquisition can be expected to have a
significant dilutive effect on the percentage of shares held by our
stockholders.
We will participate in a business opportunity only after the negotiation and
execution of appropriate written business agreements. Although the terms of such
agreements cannot be predicted, generally we anticipate that such agreements
will (i) require specific representations and warranties by all of the parties;
(ii) specify certain events of default; (iii) detail the terms of closing and
16
the conditions which must be satisfied by each of the parties prior to and after
such closing; (iv) outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants; (v) set forth remedies
on defaults; and (vi) include miscellaneous other terms.
As stated above, we will not acquire or merge with 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 within the requirements of the 1934 Act, or if the audited
financial statements provided do not conform to the representations made by that
business to be acquired, the definitive closing documents will provide that the
proposed transaction will be voidable, at the discretion of our present
management. If such transaction is voided, the definitive closing documents will
also contain a provision providing for reimbursement for our costs associated
with the proposed transaction.
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.
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 March 31, 2011, we had cash of $100, no other assets, no operating business
or other source of income, outstanding liabilities totaling $15,576 and a
stockholders' deficit of $15,476.
In our financial statements for the fiscal years ended December 31, 2010 and
2009, 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 March 31, 2011 and
2010 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.
17
We had a working capital deficit of $15,476 and reported an accumulated deficit
of $16,890,357 as at March 31, 2011.
It is our current intention to seek to raise debt and, or, equity financing to
fund our ongoing operating expenses and attempt 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. There is no
assurance that this series of events will be satisfactorily completed.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2011 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2010
During the three months ended March 31, 2011 and 2010, 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 March 31, 2011, we incurred $15,477 in general and
administrative expenses compared to $14,255 in the three months ended March 31,
2010, an increase of $1,222. The increase was largely due to the fact that in
the three months ended March 31, 2010 we received a credit as an adjustment for
accounting fees which we did not receive in the three months ended March 31,
2011.
Interest Expense
We recognized an interest expense of $99 during the three months ended March 31,
2011, compared to $2,067 during the three months ended March 31, 2010, a
decrease of $1,968. This interest expense 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 decrease in the average principal balance
of the loans made to us by our director between the two periods .
Profit / (Loss) before Income Tax
In the three months ended March 31, 2011, we recognized a loss before income tax
of $15,576 compared to a loss before income tax of $16,322 in the three months
ended March 31, 2010, a decrease of $746 due to the factors discussed above.
Provision for Income Taxes
No provision for income taxes was required in the three months ended March 31,
2011 or 2010 as we generated tax losses both periods.
Net Profit / (Loss) and Comprehensive Profit / (Loss)
In the three months ended March 31, 2011, we recognized a net loss of $15,576
compared to net a loss of $16,322 in the three months ended March 31, 2010, a
decrease of $746 due to the factors discussed above.
18
The comprehensive loss was identical to the net loss in both the three months
ended March 31, 2011 and 2010.
CASH FLOW INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 2011 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 2010
At March 31, 2011, we had cash of $100, no other assets, no operating business
or other source of income, outstanding liabilities totaling $15,576 and a
stockholders' deficit of $15,476.
In our financial statements for the fiscal years ended December 31, 2010 and
2009, 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 March 31, 2011 and
2010 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 deficit of $15,476 and reported an accumulated deficit
of $16,890,357 as at March 31, 2011.
It is our current intention to seek to raise debt and, or, equity financing to
fund our ongoing operating expenses and attempt 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. There is no
assurance that this series of events will be satisfactorily completed.
During the three months ended March 31, 2011 and 2010, we did not have a bank
account, although we did hold a balance of $100 in cash during the three months
ended March 31, 2011 (2010- $0) arising from the proceeds on the sale of our
subsidiary company, CCAPS. Consequently, there were no movements in cash flow in
the three months ended March 31, 2011 and 2010. All our costs we paid for
directly by Mr. Cutler, an officer, director and shareholder of the Company.
Net cash used in operations for both the three months ended March 31, 2011 and
2010 was $15,000.
In the three months ended March 31, 2011, our net losses were $15,576, which
required no adjustment for any non-cash items, and were partially offset by a
net positive movement in $577 in our accounts payable and accrued expenses. This
does not represent an actual outflow of cash on our part.
In the three months ended March 31, 2010, our net losses were $16,322, which
required no adjustment for any non-cash items, and were partially offset by a
net positive movement in $1,322 in our accounts payable and accrued expenses.
This does not represent an actual outflow of cash on our part.
No cash was provided by, or used in, investing activities during the three
months ended March 31, 2011 and 2010.
19
During the both the three months ended March 31, 2011 and 2010, the Company
received $15,000 from its financing activities by way of loan from a related
party. This increase in the related party was a result of the payment of
liabilities and expenses on our behalf by a director of the Company.
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
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 March 31, 2011, 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 March
31, 2011 or 2010 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 March 31, 2011
or 2010.
20
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. REMOVED AND RESERVED
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 Executive Officer 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)
(1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is
deemed not filed or part of 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.
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: June 29, 2011 By: /s/ DAVID J. CUTLER
-------------------------
David J Cutler
Chief Executive Officer, &
Chief Financial Officer