Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010 OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NO. 000-27055
GOLDEN DRAGON HOLDING CO.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 27-4635140
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(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2460 WEST 26th AVENUE, SUITE 380-C, DENVER, COLORADO 80211
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(303) 704 4623
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(TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$0.0001 PAR VALUE
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|
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 |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
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
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act. (check one):
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |X| No |_|
As of June 20, 2011 there were 2,384,407 shares of Common Stock of the
registrant issued and outstanding of which 838,287 were held by non-affiliates
of the registrant
The aggregate market value of common stock held by non-affiliates of the
registrant as of June 20, 2011 was approximately $259,869.
GOLDEN DRAGON HOLDING CO. AND PREDECCESSOR COMPANY
2010 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
Part I.
Item 1. Business 3
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 10
Item 2. Description of Properties 11
Item 3 Legal Proceedings 11
Item 4. Removed and Reserved 11
Part II.
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters, and Issuer Purchases of Equity Securities 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial Condition and 13
Results of Operation
Item7A Quantative and Qualitative Disclosures About Market Risk 17
Item 8. Financial Statements and Supplementary Data 17
Item 9 Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 17
Item 9A. Controls and Procedures. 18
Item 9B. Other Information. 19
Part III.
Item 10. Directors, Executive Officers and Corporate Governance 19
Item 11. Executive Compensation 21
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 22
Item 13. Certain Relationships and Related Transactions and Director
Independence 22
Item 14. Principal Accountant Fees and Services. 23
Part IV.
Item 15. Exhibits and Financial Statement Schedules. 23
SIGNATURES 36
2
FORWARD-LOOKING STATEMENTS
In addition to historical information, some of the information presented in
this Annual Report on Form 10-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the"Reform
Act"). Although Golden Dragon Holding Co. ("Golden Dragon" or the "Company,"
which may also be referred to as "we," "us" or "our") believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its 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 an, or, equity to meet our ongoing operating
expenses and 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. Cautionary statements regarding the risks,
uncertainties and other factors associated with these forward-looking statements
are discussed on page 7 below. 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.
PART I
ITEM 1. BUSINESS
Introduction
In April 2010, Concord Ventures, Inc. ("Concord"), a Colorado corporation,
incorporated three new subsidiary companies, CCVG, Inc. ("CCVG"), CCAPS Co.
("CCAPS") and Golden Dragon Holding Co. ("Golden Dragon"). All three of the new
subsidiary companies were domiciled in Delaware.
Re-domicile in Delaware
In order for Concord to re-domicile in Delaware from Colorado, on September 29,
2010, Concord entered into an Agreement and Plan of Merger ("the Merger
Agreement") with its wholly owned subsidiary, 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 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.
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.
3
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.
Historical Operations
Concord was incorporated in August 1998 in the State of Colorado. On February
16, 2001, we sold our entire business, and all of our assets, for the benefit of
our creditors under a Chapter 11 reorganization. We were subsequently dismissed
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 and so are now
listed on both the Pink Sheets OTCQB and the OTC Bulletin Board and continue
trade under the symbol "CCVR"
PLAN OF OPERATIONS
Our plan of operation is to obtain debt and, or, equity finance 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 is can be no assurance
that these events can be successfully completed. 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.
General Business Plan
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
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.
4
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.
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 current directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
stockholders, or our controlling shareholder may 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 a shell 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.
5
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
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.
INTELLECTUAL PROPERTY
We do not hold any patents or patent applications.
EMPLOYEES
As of December 31, 2010, Mr. Cutler serves as our Chief Executive Officer and
Chief Financial Officer. We do not have an employment agreement with Mr. Cutler.
We have no other employees.
6
ITEM 1A. RISK FACTORS
WE HAD APPROXIMATELY $8.4 MILLION OF LIABILITIES OUTSTANDING
The legal advice we have received is that these liabilities have been
extinguished through the passage of time under the statute of limitations or
ceased to be our liabilities following the Reorganization and the sale of CCAPS.
It is possible that creditors may dispute this and could seek to take legal
action against us to collect their alleged debts. The costs of defending such
legal action could be significant and would hinder our ability to complete a
reverse merger.
WE HAVE INCURRED SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES
As of December 31, 20010, we had an accumulated deficit of $16,874,781 and
stockholders' equity just of $100.
Future losses are likely to occur as and until we are able 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 as we have no
sources of income to meet our operating expenses. As a result of these, among
other factors, we received from our registered independent public accountants in
their report for the financial statements for the years ended December 31, 2010
and 2009, an explanatory paragraph stating that there is substantial doubt about
our ability to continue as a going concern.
OUR EXISTING FINANCIAL RESOURCES ARE INSUFFICIENT TO MEET OUR ONGOING OPERATING
EXPENSES
We have no sources of income at this time and insufficient assets to meet our
ongoing operating expenses. In the short term, unless we are able to raise
additional debt and, or, equity we shall be unable to meet our ongoing operating
expenses. On a longer term basis, we intend 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 these events will be successfully completed.
WE INTEND TO PURSUE THE ACQUISITION OF AN OPERATING BUSINESS
Our sole strategy is to acquire an operating business. Successful implementation
of this strategy depends on our ability to identify a suitable acquisition
candidate, acquire such company on acceptable terms and integrate its
operations. In pursuing acquisition opportunities, we compete with other
companies with similar strategies. Competition for acquisition targets may
result in increased prices of acquisition targets and a diminished pool of
companies available for acquisition. Acquisitions involve a number of other
risks, including risks of acquiring undisclosed or undesired liabilities,
acquired in-process technology, stock compensation expense, diversion of
management attention, potential disputes with the seller of one or more acquired
entities and possible failure to retain key acquired personnel. Any acquired
entity or assets may not perform relative to our expectations. Our ability to
meet these challenges has not been established.
SCARCITY OF, AND COMPETITION FOR, BUSINESS OPPORTUNITIES AND COMBINATIONS
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. Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than us and, consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, we will also compete in seeking
merger or acquisition candidates with numerous other small public companies. 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.
7
WE HAVE NOT EXECUTED ANY FORMAL AGREEMENT FOR A BUSINESS COMBINATION OR OTHER
TRANSACTION AND HAVE ESTABLISHED NO STANDARDS FOR BUSINESS COMBINATIONS
We have not executed any formal arrangement, agreement or understanding with
respect to engaging in a merger with, joint venture with or acquisition of a
private or public entity. There can be no assurance that we will be successful
in identifying and evaluating suitable business opportunities or in concluding a
business combination. We have not identified any particular industry or specific
business within an industry for evaluation. There is no assurance we will be
able to negotiate a business combination on terms favorable, if at all. We have
not established a specific length of operating history or specified level of
earnings, assets, net worth or other criteria which we will require a target
business opportunity to have achieved, and without which we would not consider a
business combination. Accordingly, we may enter into a business combination with
a business opportunity having no significant operating history, losses, limited
or no potential for earnings, limited assets, negative net worth or other
negative characteristics.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION AND
DILUTION TO STOCKHOLDERS
Our primary plan of operation is based upon a business combination with a
private concern which, in all likelihood, would result in us issuing securities
to stockholders of such private company. The issuance of previously authorized
and unissued shares of our common stock would result in reduction in percentage
of shares owned by present and prospective stockholders and may result in a
change in control or management. In addition, any merger or acquisition can be
expected to have a significant dilutive effect on the percentage of the shares
held our stockholders.
BECAUSE INSIDERS CONTROL OUR ACTIVITIES, THET MAY CAUSE US TO ACT IN A MANNER
THAT IS MOST BENEFICIAL TO THEM AND NOT TO OUTSIDE SHAREHOLDERS WHICH COULD
CAUSE US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY
Our sole executive officer, directors, and holders of 5% or more of our issued
and outstanding common stock beneficially own approximately 65% of our issued
and outstanding common stock. As a result, they effectively control all matters
requiring director and stockholder approval, including the election of
directors, the approval of significant corporate transactions, such as mergers
and related party transaction. These insiders also have the ability to delay or
perhaps even block, by their ownership of our stock, an unsolicited tender
offer. This concentration of ownership could have the effect of delaying,
deterring or preventing a change in control of our company that you might view
favorably.
OUR DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE RESOLVED FAVORABLY
TO US.
Certain conflicts of interest may exist between our directors and us. Our
Directors have other business interests to which they devote their attention,
and may be expected to continue to do so although management time should be
devoted to our business. As a result, conflicts of interest may arise that can
be resolved only through exercise of such judgment as is consistent with
fiduciary duties to us. See "Directors, Executive Officers, Promoters and
Control Persons" (page 20), and "Conflicts of Interest." (page 20).
WE MAY DEPEND UPON OUTSIDE ADVISORS, WHO MAY NOT BE AVAILABLE ON REASONABLE
TERMS AND AS NEEDED.
To supplement the business experience of our officers and directors, we may be
required to employ accountants, technical experts, appraisers, attorneys, or
other consultants or advisors. Our Board without any input from stockholders
will make the selection of any such advisors. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to us. In the event we consider it necessary to
hire outside advisors, we may elect to hire persons who are affiliates, if they
are able to provide the required services.
8
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY HAVE AN EFFECT ON THE
TRADABILITY OF OUR SECURITIES.
Our securities are currently listed on the Over the Counter Bulletin Board and
the Pink Sheets' OTCQB. Our shares are subject to a Securities and Exchange
Commission rule that imposes special sales practice requirements upon
broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
our securities and also may affect the ability of purchasers in this offering to
sell their securities in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules may further affect the ability of owners of Shares to sell our securities
in any market that might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
OUR STOCK WILL IN ALL LIKELIHOOD BE THINLY TRADED AND AS A RESULT YOU MAY BE
UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR
SHARES.
The shares of our common stock may be thinly-traded on the OTC Bulletin Board
and the Pink Sheets' OTCQB, meaning that the number of persons interested in
purchasing our shares of common stock at or near ask prices at any given time
may be relatively small or non-existent. This situation is attributable to a
number of factors, including the fact that we are a small company which is
relatively unknown to stock analysts, stock brokers, institutional investors and
others in the investment community that generate or influence sales volume, and
that even if we came to the attention of such persons, they tend to be
risk-averse and would be reluctant to follow an unproven, early stage company
such as ours or purchase or recommend the purchase of our shares of common stock
until such time as we became more seasoned and viable. As a consequence, there
may be periods of several days or more when trading activity in our shares of
common stock is minimal or non-existent, as compared to a seasoned issuer which
has a large and steady volume of trading activity that will generally support
continuous sales without an adverse effect on Securities price. We cannot give
you any assurance that a broader or more active public trading market for our
shares of Common Stock will develop or be sustained, or that any trading levels
will be sustained. Due to these conditions, we can give investors no assurance
that they will be able to sell their shares of common stock at or near ask
prices or at all if you need money or otherwise desire to liquidate your shares
of common stock of our Company.
9
OUR CHIEF EXECUTIVE OFFICER HAS THE ABILITY TO EFFECTIVELY CONTROL SUBSTANTIALLY
ALL ACTIONS TAKEN BY STOCKHOLDERS
Mr. Cutler, an officer and director of the Company owns in excess of our 50% of
our issued and outstanding common stock and is able to effectively control
substantially all actions taken by our stockholders, including the election of
directors. Such concentration of ownership could also have the effect of
delaying, deterring or preventing a change in control that might otherwise be
beneficial to stockholders and may also discourage acquisition bids for us and
limit the amount certain investors may be willing to pay for shares of common
stock.
LOSS OF CONTROL BY OUR PRESENT MANAGEMENT AND STOCKHOLDERS MAY OCCUR UPON
ISSUANCE OF ADDITIONAL SHARES.
We may issue further Shares as consideration for the cash or assets or services
out of our authorized but unissued Common Stock that would, upon issuance,
represent a majority of our voting power and equity. The result of such an
issuance would be those new stockholders and management would control us, and
persons unknown could replace our management at this time. Such an occurrence
would result in a greatly reduced percentage of ownership of us by our current
Shareholders.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock held by our present officers,
directors, and affiliate stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
Shares, these Shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. We are registering all of our outstanding Shares so officers,
directors and affiliates will be able to sell their Shares if this Registration
Statement becomes effective. Rule 144 provides in essence that a person who has
held restricted securities for six months may, under certain conditions, sell
every three months, in brokerage transactions, a number of Shares that does not
exceed the greater of 1.0% of a company's outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
non-affiliate after the owner has held the restricted securities for a period of
one year. A sale under Rule 144 or under any other exemption from the Act, may
have a depressive effect upon the price of the common stock in any market that
may develop.
THE PRICE OF OUR COMMON STOCK COULD BE HIGHLY VOLATILE
It is likely that our common stock will be subject to price volatility, low
volumes of trades and large spreads in bid and ask prices quoted by market
makers. Due to the low volume of shares traded on any trading day, persons
buying or selling in relatively small quantities may easily influence prices of
our common stock. This low volume of trades could also cause the price of our
stock to fluctuate greatly, with large percentage changes in price occurring in
any trading day session. Holders of our common stock may also not be able to
readily liquidate their investment or may be forced to sell at depressed prices
due to low volume trading. If high spreads between the bid and ask prices of our
common stock exist at the time of a purchase, the stock would have to appreciate
substantially on a relative percentage basis for an investor to recoup their
investment. Broad market fluctuations and general economic and political
conditions may also adversely affect the market price of our common stock. No
assurance can be given that an active market in our common stock will develop or
be sustained. If an active market does not develop, holders of our common stock
may be unable to readily sell the shares they hold or may not be able to sell
their shares at all.
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON STOCK
We do not anticipate paying any cash dividends on our common stock in the
foreseeable future.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
10
ITEM 2. DESCRIPTION OF PROPERTIES
Our mailing address is 2460 West 26th Avenue, Suite 380-C, Denver, Colorado,
80211. We do not pay rent for the use of this mailing address. We do not believe
it will be necessary to maintain an office at any time in the foreseeable future
in order to carry out our plan of operations described herein.
ITEM 3.LEGAL PROCEEDINGS
No legal proceedings are currently pending or threatened to the best of our
knowledge.
ITEM 4. REMOVED AND RESERVED.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information.
Shares of our Common Stock are presently traded on the over-the-counter market
on the OTC Bulletin Board maintained by the Financial Industry Regulatory
Authority ("FINRA") and are listed on the Pink Sheets' OTCQB under the trading
symbol "CCVR."
The following table sets forth the range of high and low sales prices for the
Company's common stock for each of the fiscal quarters for the past two years as
reported on the Pink Sheets OTCQB and the OTC Bulletin Board. These prices
represent inter-dealer prices without adjustments for mark-up, mark-down, or
commission and do not necessarily reflect actual transactions.
High Low
Year Ended December 31, 2010:
First quarter $0.101 $0.10
Second quarter 0.12 0.10
Third quarter 1.01 0.12
Fourth quarter 0.125 0.0125
Year Ended December 31, 2009:
First quarter $1.25 $0.01
Second quarter 1.15 0.10
Third quarter 0.17 0.10
Fourth quarter 0.101 0.10
Record Holders.
There were 104 holders of record as of June 20, 2011. However, we believe the
number of beneficial holders of our shares of common stock to be approximately
430. In many instances, a registered stockholder is a broker or other entity
holding shares in street name for one or more customers who beneficially own the
shares.
Our transfer agent is Mountain Share Transfer, Inc., 1625 Abilene Drive,
Broomfield, Colorado, 80020. The telephone number is 303-460-1149.
Dividends.
We have not paid or declared cash distributions or dividends on our shares of
common stock and do not intend to pay cash dividends in the foreseeable future.
11
Future cash dividends will be determined by our board of directors based upon
our earnings, financial condition, capital requirements and other relevant
factors.
Penny Stock.
Penny Stock Regulation Broker-dealer practices in connection with transactions
in "penny stocks" are regulated by certain penny stock rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00. Excluded from the penny stock designation are
securities registered on certain national securities exchanges or quoted on
NASDAQ, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange/system or sold to
established customers or accredited investors.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in connection with the transaction, and the
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. As our securities have become subject to the penny stock
rules, investors may find it more difficult to sell their securities.
Recent Sales of Unregistered Securities
We made the following unregistered sales of securities during the years ended
December 31, 2010 and 2009:
Date of Issuance Title of Securities Number of Consideration Holder
Shares
December 31, 2010 Common Stock 25,000 Sale of CCAPS CCAPS
Exemption from Registration Claimed
All of the sales by us of our unregistered securities were made in reliance upon
Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). The
above entity was provided access to all material information which it requested,
all information necessary to verify such information and was afforded access to
our management in connection with the purchases. The purchaser of the
unregistered securities acquired such securities for investment with no
intention of distribution, acknowledging such intent to us. All certificates or
agreements representing such securities that were issued contained restrictive
legends, prohibiting further transfer of the certificates or agreements
representing such securities, without such securities either being first
registered or otherwise exempt from registration in any further resale or
disposition.
Stock Incentive Plans -- details concerning the activities and status of our
stock incentive plans during the period are set out in Note 10. Stockholders'
Deficit of our Financial Statements on page 35 below.
ITEM 6. SELECTED FINANCIAL AND OPERATING DATA
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
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. Our actual results could differ
materially from those anticipated in these forward looking statements as a
result of any number of factors, including those set forth under "Risk Factors"
on page 7 and elsewhere in this report.
OVERVIEW
Reorganization into a Holding Company Structure
Effective December 31, 2010, pursuant to the Delaware Holding Company formation
statute, DGCL Section 251(g), CCVG completed an Agreement and Plan of Merger and
Reorganization into a Holding Company ("the Reorganization") with 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.
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
James Clark. 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, to James Clark for $100 cash consideration, subject to its
debts, and issued 25,000 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
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.
13
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
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 virtually
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. Though no such opportunities have been
identified at the time of this filing.
We expect that the selection of a business opportunity will be complex and
risky. 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.
Liquidity and Capital Resources
As at December 31, 2010, we had assets of $100, no operating business or other
source of income, no outstanding liabilities and a stockholders' equity of $100.
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 financial statements for the fiscal years ended
December 31, 2010 and 2009 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 of $100
and reported an accumulated deficit of $16,874,781 as at December 31, 2010.
14
It is our current intention to seek raise debt and, or, equity financing to fund
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 is no assurance that
these events will be satisfactorily completed.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED DECEMBER 31, 2010 COMPARED TO THE FISCAL YEAR ENDED DECEMBER
31, 2009
Gain on Sale of Subsidiary
During the year ended December 31, 2010 we recognized a gain of $676,989 on the
sale of our subsidiary CCAPS, compared to no gain on sale of subsidiary in the
year ended December 31, 2009, an increase of $676,989. This was a one-time event
and the Company does not expect to recognize such a gain in the future.
As at December 31, 2010, when we sold CCAPS, CCAPS had net liabilities of
$677,889 and we sold 100% of the issued and outstanding share capital of CCAPS
for cash consideration of $100 and issued 25,000 shares of our common stock,
valued at $1,000, to CCAPS as part of the sales agreement.
Gain on Debt Relief
During the year ended December 31, 2010, we recognized no gain on debt relief,
compared to a gain of $207,300 on debt relief in the year ended December 31,
2009, a decrease of $207,300.
During the year ended December 31, 2009, outstanding liabilities, which had been
incurred, prior to our dismissal from our Chapter 11 reorganization, were
statute barred under the state laws of Texas and we recognized a gain on these
this debt relief of $207,300.
General and Administrative Expenses
During the year ended December 31, 2010, we incurred $91,389 in general and
administrative expenses, broadly in line with the $93,562 we incurred in general
and administrative expenses in the year ended December 31, 2009. General and
administrative expenses consist mainly of legal and accounting expenses incurred
with maintaining our public reporting status and associated with our recent
reorganization activities.
Operating Income (Loss)
In the year ended December 31, 20010, we recognized operating income of $586,600
compared to operating income of $113,748 in the year ended December 31, 200, an
increase of $472,852 due to the factors as discussed above.
Interest and Other Income / (Expenses) Net
In the year ended December 31, 2010, we incurred interest expense of $10,196 in
interest and other income / (expenses) net compared to $4,874 in the year ended
December 31, 2009, an increase of $5,322. The interest expense represented
accrued interest at 8% on the loan made to us by Mr. Cutler, an officer and
director, in respect of expenses incurred settling certain of our outstanding
liabilities and bringing our books and records up to date which he paid directly
on our behalf. The increase in interest expense in the year ended December 31,
2010 as compared to the year ended December 31, 2009 reflected the increase in
the principal balance of the loan provided to us by Mr. Cutler between the two
periods.
We have accrued no interest expense during the fiscal years ended December 31,
2010 and 2009, in respect to our outstanding liabilities from March 2001, as we
believe that these liabilities will be settled for their current carrying
values, or less, and, consequently, no additional interest provision is
required.
15
Profit before Income Tax
In the year ended December 31, 2010, we recognized income before income taxes of
$575,404 compared to a $108,863 in the year ended December 31, 2009, a variance
of $466,541, due to the factors discussed above.
Provision for Income Taxes
No provision for income taxes was recorded in either the year ended December 31
2010 or 2009. We had sufficient brought forward tax losses to offset the profits
arising the twelve months ended December 31, 2010 and 2009.
Net Income (Loss)
In the year ended December 31, 2010, we realized net income of $575,404 compared
to $108,863 in the year ended December 31, 2009, a variance of $466,541, due to
the factors set out above.
CASH FLOW INFORMATION FOR THE FISCAL YEARS ENDED DECEMBER 31, 2010 AND 2009
As at December 31, 2010, we had total current assets of $100, consisting solely
of cash, no operating business or other source of income, no outstanding
liabilities and a stockholders' equity of $100.
It is our current intention to seek raise debt and, or, equity financing to fund
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 is no assurance that
these events will be satisfactorily completed. At the time of this filing, we
have not identified any such opportunities.
During the years ended December 31, 2010 and 2009, we had no corporate bank
account and all our expenses we paid for on our behalf by one of our directors.
For the year ended December 31, 2010, we used net cash of $60,000 in our
operations, compared to $69,123 for the year ended December 31, 2009, a decrease
of $9,123. During the year ended December 31, 2010, the net income of $575,404,
after an adjustment of $676,989 for non-cash items, resulted in cash used in
operations of $101,585, which was partially offset by a positive movement of
$41,585 in operating assets and liabilities. This compares to the year ended
December 31, 2009, where the net income of $108,863, after adjustment of
$207,300 for non-cash items, resulted in a cash used in operations of $98,437,
partially offset by a positive movement of $29,314 in operating assets and
liabilities.
During the fiscal year ended December 31, 2010, we received $100 from the sale
of our subsidiary company. No cash was provided by, or used in, investing
activities during the fiscal year ended December 31, 2009.
During the fiscal year ended December 31, 2010, we received $60,000 from
financing activities, compared to $69,123 in the year ended December 31, 2009, a
decrease of $9,123. The decrease represented the reduced level of funding
required to be provided to us by Mr. Cutler, one of our officers and directors.
Critical Accounting Policies
All companies are required to include a discussion of critical accounting
policies and estimates used in the preparation of their financial statements. On
an on-going basis, we evaluate our critical accounting policies and estimates.
We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form our 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.
16
Our significant accounting policies are described in Note 1 to the financial
statements on page 31 below. These policies were selected because they represent
the more significant accounting policies and methods that are broadly applied in
the preparation of our financial statements. However, it should be noted that we
intend to acquire a new operating business. The critical accounting policies and
estimates for such new operations will, in all likelihood, be significantly
different from our current policies and estimates.
Off Balance Sheet Arrangements, Contractual Obligations and Commercial
Commitments
All companies are required to include a discussion to address, among other
things, liquidity, off-balance sheet arrangements, contractual obligations and
commercial commitments. Details of the arrangements, contractual obligations and
commercial commitments are described in Note. 8 to the financial statements on
page 34 below.
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.
EFFECTS OF INFLATION
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the future
to have, a material effect on our results or financial condition.
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 8. FINANCIAL STATEMENTS
Our financial statements are included herein commencing on page 24.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
We dismissed Larry O'Donnell, CPA, PC as our independent registered public
accountant on October 26, 2010. Effective December 14, 2010, the Public
Accounting Oversight Board ("PCAOB") revoked Larry O'Donnell, CPA, P.C.'s
registration as a registered public accountant.
On November 10, 2010, our Board of Directors approved the engagement of new
auditors, Ronald Chadwick, PC, of Aurora, Colorado to be our new independent
registered public accountant. No audit committee exists, other than the members
of the Board of Directors.
In connection with audit of fiscal years ended December 31, 2009 and 2008 and
the cumulative period of January 1, 2010 through June 30, 2010 and through the
date of termination of the accountants, no disagreements exist with the former
independent registered public accountant on any matter of accounting principles
or practices, financial statement disclosure, internal control assessment, or
auditing scope of procedure, which disagreements if not resolved to the
satisfaction of the former accountant would have caused them to make reference
in connection with their report to the subject of the disagreement(s).
The Independent Auditor Report by Larry O'Donnell, CPA, PC for the fiscal years
ended December 31, 2009 and 2008, contained an opinion which included a
paragraph discussing uncertainties related to our continuation as a going
concern.
17
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain a system of disclosure controls and procedures (as defined in
Securities Exchange Act Rule 15d-15(e)) 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 management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (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 Chief
Financial Officer, Mr. Cutler, 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, Mr. Cutler has concluded that our disclosure controls and
procedures are effective in timely alerting management 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
Chief Financial Officer, to allow timely decisions regarding required
disclosure.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f) and 15d-15(f), is a process designed by,
or under the supervision of, our principal executive and principal financial
officers and effected by our Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, based on criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and includes those policies and
procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of o financial statements in
accordance with generally accepted accounting principles, and that our
receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and
- Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use of disposition of our assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2010. Based on this assessment, management believes
that as of December 31, 2010, our internal control over financial reporting is
effective based on those criteria.
18
This annual report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the SEC to
provide only management's report in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes during our last fiscal quarter that materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
Item 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Effective December 31, 2010, our directors and officers were:
NAME AGE POSITION
David J. Cutler 54 President, Chief Executive Officer,
Chief Financial Officer and Director.
Redgie Green 58 Director
David J. Cutler - President, Chief Executive Officer, Chief Financial Office and
Director. Mr. Cutler became our director and officer in March 2006. Mr. Cutler
has more than 30 years of experience in international finance, accounting and
business administration. Mr. Cutler was Chief Financial Officer and subsequently
Chief Executive Officer of Multi-Link Telecommunications, Inc., a publicly
quoted voice messaging business, from 1999 to 2005, Chief Executive Officer,
Chief Financial Officer and a director of Aspeon, Inc. (nka Aspi, Inc.), a
publicly listed shell company from April 2005 until October 2009, Chief
Executive Officer, Chief Financial Officer and a director of Atomic Paintball,
Inc., a development stage owner and operator of paintball parks from August 2006
until December 2009 and was appointed as the sole director of Southwestern Water
Exploration Co., a public shell company, in March 2011. Atomic Paintball filed
for Chapter 7 in 2009. Mr. Cutler has a Masters degree from St. Catherine
College in Cambridge, England and qualified as a British Chartered Accountant
and as Chartered Tax Advisor with Arthur Andersen & Co. in London. He was
subsequently admitted as a Fellow of the UK Institute of Chartered Accountants.
Since arriving in the United States, Mr. Cutler has qualified as a Certified
Public Accountant, a Certified Valuation Analyst of the National Association of
Certified Valuation Analysts and obtained an executive MBA from Colorado State
University.
Redgie Green - Director. Mr. Green became a director in March 2006. Mr. Green
served as the President of Sun River Energy Inc. from January 2009 through July
2010. Mr. Green served as a Director of Sun River Energy, Inc. from 1998 through
July 2010. Mr. Green has been co-owner and operator of Green's B&R Enterprises,
a wholesale donut baker since 1983. He has been an active investor in small
capital and high-tech ventures since 1987. Mr. Green was a director of Colorado
Gold & Silver, Inc. in 2000. He was Secretary, Treasurer and Director of Baymark
Technologies, Inc. and was appointed as a director of Aspeon, Inc. (now Aspi,
Inc.) from March 2006 until October 2009. Mr. Green serves as a director of
IntreOrg Systems, Inc. and International Paintball, Inc. In addition, Mr. Green
in November 2010 was appointed the sole director and officer of Legacy
Technology Holdings, Inc.
19
CONFLICTS OF INTEREST - GENERAL.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts and corporation
opportunity, involved in participation with such other business entities. While
each officer and director of our business is engaged in business activities
outside of our business, they devote to our business such time as they believe
to be necessary.
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities which come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
COMMITTEES OF THE BOARD OF DIRECTORS
In the ordinary course of business, the board of directors maintains a
compensation committee and an audit committee. We do not have a compensation
committee or audit committee.
The primary function of the compensation committee is to review and make
recommendations to the board of directors with respect to the compensation,
including bonuses, of our officers and to administer the grants under our stock
option plan.
The functions of the audit committee are to review the scope of the audit
procedures employed by our independent auditors, to review with the independent
auditors our accounting practices and policies and recommend to whom reports
should be submitted, to review with the independent auditors their final audit
reports, to review with our internal and independent auditors our overall
accounting and financial controls, to be available to the independent auditors
during the year for consultation, to approve the audit fee charged by the
independent auditors, to report to the board of directors with respect to such
matters and to recommend the selection of the independent auditors.
In the absence of a separate audit committee our board of directors functions as
audit committee and performs some of the same functions of an audit committee,
such as recommending a firm of independent certified public accountants to audit
the annual financial statements; reviewing the independent auditors
independence, the financial statements and their audit report; and reviewing
management's administration of the system of internal accounting controls.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our Officers and
Directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the SEC.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of copies of such reports received, and representations
from certain reporting persons, we believe that, during the fiscal year ended
December 31, 2009, all Section 16(a) filing requirements applicable to our
officers, directors and greater than 10% beneficial owners were filed in
compliance with all applicable requirements
20
CODE OF ETHICS
A code of ethics relates to written standards that are reasonably designed to
deter wrongdoing and to promote;
- Honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
- Full, fair, accurate, timely and understandable disclosure in reports and
documents that are filed with, or submitted to, the SEC and in other public
communications made by an issuer;
- Compliance with applicable governmental laws, rules and regulations;
- The prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code; and
- Accountability for adherence to the code.
Due to the limited scope of our current operations, we have not adopted a
corporate code of ethics that applies to our principal executive officer,
principal accounting officer, or persons performing similar functions
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation paid
by the Company to the President and the Company's most highly compensated
executive officers for the fiscal year ended December 31, 2010, 2009 and 2008
(the "Named Executive Officers"):
SUMMARY EXECUTIVE COMPENSATION TABLE
-------------------- -------- -------- ------- -------- -------- ------------ -------------- ------------- --------
Non-equity Non-qualified
incentive deferred
Stock Option plan compensation All other
Salary Bonus awards awards compensation earnings compensation Total
Name & Position Year ($) ($) ($) ($) ($) ($) ($) ($)
-------------------- -------- -------- ------- -------- -------- ------------ -------------- ------------- --------
David J. Cutler,
President, CEO, 2010 60,000 0 0 0 0 0 0 60,000
CFO and Director 2009 60,000 0 0 0 0 0 0 60,000
(1) 2008 60,000 0 0 0 0 0 0 60,000
-------------------- -------- -------- ------- -------- -------- ------------ -------------- ------------- --------
(1) Mr. Cutler's remuneration was paid to Burlingham Corporate Finance, Inc. ("Burlingham") in the form of consulting fees. Mr.
Cutler is the principal shareholder of Burlingham. Mr. Cutler is both a director and officer of the Company and its majority
shareholder and as such he has the ability to significantly influence the terms and payment of such compensation.
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid
to our directors for services as directors during the year ended December 31,
2010:
----------------------- ------------- --------- ---------- ----------------- ---------------------- ----------------- --------------
Name Fees Earned Stock Options Non-Equity Nonqualified All Other Total
Or Paid-in Awards Awards Incentive Plan Deferred Compensation Compensation ($)
Cash ($) ($) Compensation ($) ($)
($)
----------------------- ------------- --------- ---------- ----------------- ---------------------- ----------------- --------------
David J. Cutler,
director (1) 0 0 0 0 0 60,000 60,000
----------------------- ------------- --------- ---------- ----------------- ---------------------- ----------------- --------------
Redgie Green,
director 0 0 0 0 0 0 0
----------------------- ------------- --------- ---------- ----------------- ---------------------- ----------------- --------------
(1) Mr. Cutler serves as the Company's Chief Executive Officer and Chief Financial Officer and as such receives consulting fees
through the firm of Burlingham Corporation Finance, Inc. of which he is the principal shareholder.
21
The Company does not pay any Directors fees for meeting attendance.
All of the Company's officers and/or directors will continue to be active in
other companies. All officers and directors have retained the right to conduct
their own independent business interests.
EQUITY COMPENSATION PLAN INFORMATION
The Company has not established an equity compensation plan or Incentive Stock
Option Plan.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding beneficial
ownership of our common stock, as of December 31, 2010 by:
o each person who is known by us to own beneficially more than 5% of our
outstanding common stock,
o each of our named executive officers and directors, and
o all executive officers and directors as a group.
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING (2)
------------------------------------------------ ------------- ------------
David J. Cutler (1) 1,521,120 63.8%
Redgie Green (1)
25,000 1.0%
------------ ------------
All executive officers and directors as a group. 1,546,120 64.8%
============ ============
(1) c/o 2460 West 26th Avenue, Suite 380-C, Denver, Colorado, 80211.
(2) Based upon 2,384,407 shares of the Company's common stock issued and
outstanding on December 31, 2010.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2010, we paid $60,000 (2009 - $60,000) 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. Mr. Cutler is both a director and officer of the Company and its
majority shareholder and as such he has the ability to significantly influence
the terms and payment of such compensation.
As at December 31, 2010, we had no outstanding liability with Mr. Cutler (2009-
$99,809) and no accrued interest outstanding (2009 - $5,749).
22
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
We incurred $2,800 audit fees with our former auditor, Larry O'Donnell, CPA, PC,
in the years ended December 31, 2010 (2009 - $2,800 ) in respect of the audit
for the fiscal year ended December 31, 2009. We incurred no audit fees with our
new auditor, Ronald Chadwick, PC, in the years ended December 31, 2010 or 2009.
Tax Fees
We did not incur any tax fees with our former auditor, Larry O'Donnell, CPA, PC,
or our new auditor, Ronald Chadwick, PC, in the years ended December 31, 2010 or
2009
We incurred $0 tax fees with any unconnected third party tax advisor in the year
ended December 31, 2010 (2009 - $275).
All Other Fees
We incurred $800 (2009 - $1,110) in other fees with our previous auditor, Larry
O'Donnell, CPA, PC, and $1,500 (2009 - $0) with our new auditor, Ronald
Chadwick, PC, in the year ended December 31, 2010 in respect the review of our
quarterly financial statements.
It is the role of the Audit Committee, or in the absence of an audit committee,
the Board of Directors, to consider whether, and determine that, the auditor's
provision of non-audit services would be compatible with maintaining the
auditor's independence.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Annual Report on Form 10-K in
accordance with Item 601 of Regulation S-K:
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
2.1 Agreement and Plan of Merger (1)
2.2 Agreement and Plan of Merger and Reorganization Into Holding Company (2)
3(i).1 Articles of Incorporation of Golden Dragon Holding Co.*
3(ii).1 Bylaws of Golden Dragon Holding Co.*
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act*
32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act *
101.INS XBRL Instance Document (1)
101.SCH XBRL Taxonomy Extension Schema Document (1)
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
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.
* Filed herewith.
(1) Filed as an exhibit to the Company' Current Report on Form 8-K, filed with
the SEC on October 14, 2010.
(2) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on January 28, 2011.
23
INDEX TO FINANCIAL STATEMENTS
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............... 25
BALANCE SHEETS
As of December 31, 2010 and 2009..................................... 26
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2010 and 2009....................... 27
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Years Ended December 31, 2010 and 2009....................... 28
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2010 and 2009....................... 29
NOTES TO FINANCIAL STATEMENTS......................................... 30
24
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Golden Dragon Holding Co.
Denver, Colorado
I have audited the accompanying balance sheets of Golden Dragon Holding Co. as
of December 31, 2010 and 2009, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Golden Dragon Holding Co. as of
December 31, 2010 and 2009, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered a loss from operations and has a
working capital deficit and stockholders' deficit. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Aurora, Colorado /s/ Ronald R. Chadwick, P.C.
June 20, 2011 RONALD R. CHADWICK, P.C.
25
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
BALANCE SHEETS
DECEMBER 31,
2010 2009
-------------- ---------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 100 $ -
-------------- ---------------
Total Current Assets 100 -
-------------- ---------------
TOTAL ASSETS $ 100 $ -
============== ===============
LIABILITIES & STOCKHOLDERS' EQUITY / (DEFICIT)
CURRENT LIABILITIES
Accounts Payable $ - $ 174,830
Accrued Expenses - 101,789
Capital Leases - 3,660
Operating Leases - 196,216
Related Party Loans - 99,809
-------------- ---------------
Total Current Liabilities - 576,304
-------------- ---------------
COMMITMENTS AND CONTINGENCIES (Note. 8)
STOCKHOLDERS' EQUITY / (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, 239 236
shares authorized, 2,384,407 and 2,359,407 shares issued and
outstanding respectively
Additional Paid In Capital 16,874,642 16,873,645
Accumulated Deficit (16,874,781) (17,450,185)
-------------- ---------------
Total Stockholders' Equity / (Deficit) 100 (576,304)
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT) $ 100 $ -
============== ===============
See Accompanying Notes to Financial Statements.
26
GOLDEN DRAGON HOLDING CO. AND PREDECESOR COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS
ENDED
DECEMBER 31,
2010 2009
------------- -------------
OPERATING (INCOME) / EXPENSES
Gain on Sale of Subsidiary Company $ (676,989)$ -
Gain on Debt Relief - (207,300)
General & Administrative Expenses 91,389 93,562
------------- -------------
Total Operating (Income) / Expenses (585,600) (113,738)
OPERATING INCOME (LOSS) 585,600 113,738
Interest and Other Income / (Expenses) Net (10,196) (4,875)
------------- -------------
Income / (Loss) before Income Taxes 575,404 108,863
Provision for Income Taxes - -
------------- -------------
NET INCOME (LOSS) $ 575,404 $ 108,863
============= =============
NET INCOME (LOSS) PER COMMON SHARE
Basic & Diluted $ 0.24 $ 0.05
============= =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic & Diluted 2,359,475 2,359,407
============= =============
See Accompanying Notes to Financial Statements.
27
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY / (DEFICIT)
THE YEARS ENDED DECEMBER 31, 2010 AND 2009
Class A Common Stock Additional
Paid - in Accumulated
Shares Amount Capital Equity / (Deficit) Total
# $ $ $ $
Balance, December 31, 2008 2,359,407 236 16,873,645 (17,559,048) (685,167)
Net Income - - - 108,863 108,863
------------ ------------ -------------- --------------- ---------------
Balance, December 31, 2009 2,359,407 236 16,873,645 (17,450,185) (576,304)
Stock Issued on Sale of Subsidiary 25,000 3 997 - 1,000
Net Income - - - 575,404 575,404
------------ ------------ -------------- --------------- ---------------
Balance, December 31, 2010 2,384,407 239 16,874,642 (16,874,781) 100
============ ============ ============== =============== ===============
See Accompanying Notes to Financial Statements.
28
GOLDEN DRAGON HOLDING CO. AND PREDECESSOR COMPANY
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31,
2010 2009
----------------------------
CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES
NET INCOME (LOSS) $ 575,404 $ 108,863
ADJUSTMENTS TO RECONCILE NET INCOME / (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Gain on Sale of Subsidiary (676,989) -
Gain on Debt Relief - (207,300)
CHANGES IN OPERATING ASSETS & LIABILITIES
Increase (Decrease) in Accounts Payable 31,389 24,440
Increase (Decrease) in Accrued Expenses 10,196 4,874
------------ ------------
Total Cash Flow used in Operating Activities (60,000) (69,123)
------------ ------------
CASH FLOW PROVIDED BY (USED IN) INVESTING ACTIVITIES
Proceeds on Sale of Subsidiary Company 100 -
------------ ------------
Total Cash Flow provided by / (used in) Investing Activities 100 -
------------ ------------
CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES
Funds from Related Party Loans 60,000 69,123
------------ ------------
Total Cash Flow provided by / (used in) Financing Activities 60,000 69,123
------------ ------------
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 100 (0)
Cash and Cash Equivalents at the beginning of the period - -
============ ============
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.
29
GOLDEN DRAGON HOLDING CO AND PREDECESSOR COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations - In April 2010, Concord Ventures, Inc. ("Concord"), a
Colorado corporation, incorporated three new subsidiary companies, CCVG, Inc.
("CCVG"), CCAPS Co. ("CCAPS") and Golden Dragon Holding Co. ("Golden Dragon").
All three of the new subsidiary companies were domiciled in Delaware.
Re-domicile in Delaware
In order for Concord to re-domicile in Delaware from Colorado, on September 29,
2010, Concord entered into an Agreement and Plan of Merger ("the Merger
Agreement") with its wholly owned subsidiary, 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, under an Agreement and Plan of Merger and
Reorganization into a Holding Company ("the Reorganization") filed with the
Secretary of State of Delaware:
- Golden Dragon acquired 100% of the issued share capital of CCVG in a
share for share exchange of Golden Dragon shares for CCVG shares with
CCVG's existing shareholders, and
- CCVG merged with CCAPS, one of CCVG's former subsidiary companies.
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
James Clark. 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, to James Clark for $100 cash consideration, subject to its
debts, and issued 25,000 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.
30
Cash and Cash Equivalents -- Cash and cash equivalents consist of cash and
highly liquid debt instruments with original maturities of less than three
months.
Property and Equipment- We sold all of our fixed assets effective February 16,
2001 for the benefit of our creditors as part of our Chapter 11 reorganization.
Accordingly, we had no property and equipment as of December 31, 2010 and 2009
and we recorded no depreciation expense in the years ended December 31, 2010 and
2009.
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 December 31, 2010 and 2009.
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 cost -- Advertising costs were expensed as incurred. No advertising
costs were incurred in the years ended December 31, 2010 and 2009.
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 income / (loss) for the years ended December 31, 2010 and 2009
was identical to our net income / (loss) for the years ended December 31, 2010
and 2009.
Income (Loss) Per Share --. Income (loss) per share is presented in accordance
with Accounting Standards Update ("ASU"), Earning Per Share (Topic 260) which
requires the presentation of both basic and diluted earnings per share ("EPS")
on the consolidated income statements. Basic EPS would exclude any dilutive
effects of options, warrants and convertible securities but does include the
restricted shares of common stock issued. Diluted EPS would reflect the
potential dilution that would occur if securities of other contracts to issue
common stock were exercised or converted to common stock. Basic EPS calculations
are determined by dividing net income by the weighted average number of shares
of common stock outstanding during the year. Diluted EPS calculations are
determined by dividing net income by the weighted average number of common
shares and dilutive common share equivalents outstanding. Basic and diluted EPS
were identical for the years ended December 31, 2010 and 2009 as the exercise
price of our outstanding stock options was substantially in excess of our share
price throughout these periods.
31
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.
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.
Business Segments -- We consider our ongoing activities to constitute 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.
Gain on debt relief - The Company recorded a gain on debt relief in the year
ended December 13, 2009 of $207,300 based on its interpretation of and estimates
from various state statutes of limitation.
2. GOING CONCERN AND LIQUIDITY
As at December 31, 2010, we had assets of $100, no operating business or other
source of income, no outstanding liabilities and a stockholders' equity of $100.
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 financial statements for the fiscal years ended
December 31, 2010 and 2009 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 of $100
and reported an accumulated deficit of $16,874,781 as at December 31, 2010.
It is our current intention to seek raise debt and, or, equity financing to fund
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 is no assurance that
these events will be satisfactorily completed.
3. ASSETS
As at 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. We had no assets as at December 31, 2009.
4. ACCOUNTS PAYABLE
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no liabilities outstanding.
Of the outstanding accounts payable at December 31, 2009, $92,226 related to
liabilities outstanding in December 2000 when we filed for Chapter 11 bankruptcy
protections which have not been settled or statute barred as yet. The remaining
balance of $82,604 accounts payable related to current liabilities incurred in
bringing our financial and SEC filings up to date.
32
5. ACCRUED EXPENSES
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2000, we had no accrued expenses outstanding.
Of the expenses accrued at December 31, 2009, $89,040 relates to potential
liabilities to creditors of the December 2010 Chapter11 including a reserve for
potential disputes in respect of liabilities believed to be statute barred and
potential interest at default rates and penalties on capital leases. The balance
of $12,749 relates to expenses incurred in 2009 relating to share transfer agent
fees and interest on our related party loan.
6. CAPITAL AND OPERATING LEASES
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no liabilities under capital and operating outstanding.
These balances of payable under capital and operating leases outstanding at
December 31, 2009 represented an estimate of the outstanding liabilities on
capital and operating leases remaining from the December 2000 Chapter 11
bankruptcy.
7. RELATED PARTY LOANS
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no liabilities under related party loans outstanding.
As at December 31, 2009, related party loans represent the loan made to us by
one of our directors, Mr. David J Cutler. Interest is accrued on the loan at 8%.
8. COMMITMENTS AND CONTINGENCIES
Capital and Operating Leases
Following the sale of all of our subsidiary company, CCAPS, effective December
31, 2010, we had no liabilities under capital and operating outstanding.
The balances of payable under capital and operating leases outstanding at
December 31, 2009 represented an estimate of the outstanding liabilities on
capital and operating leases remaining from the December 2000 Chapter 11
bankruptcy.
We have not entered into any further capital or operating leases since December
2006.
Litigation
No legal proceedings are currently pending or threatened to the best of our
knowledge.
9. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2010, we paid $60,000 (2009 - $60,000) 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.
As at December 31, 2010, we had no outstanding liability with Mr. Cutler (2009 -
$99,809) and no accrued interest outstanding (2009 - $5,749).
33
10. STOCKHOLDERS' EQUITY (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 during the financial
years ended December 31, 2010 and 2009.
Common Stock
We were authorized to issue 100,000,000 shares of common stock, par value
$0.0001 per share.
Effective December 31, 2010 we issued 25,000 shares of our common stock, valued
at $1,000, under the terms of the agreement for the sale of our subsidiary
company, CCAPS.
Warrants
No warrants were issued or outstanding during the years ended December 31, 2010
and 2009.
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 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.
The following table summarizes stock option activity under the Plan:
Under the Stock Option Plan: Other Grants:
------------------------------------------- --------------------
Granted to Granted to
Non- Employees Non-Employees
-------------------- -------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------- -------- -------- --------
Outstanding at December 31, 2008 2,000 $45.00 - -
Granted - - - -
Exercised - - - -
Canceled (2,000) (45.00) - -
--------- --------- -------- --------
Outstanding at December 31, 2009 - - - -
========= ========= ======== ========
Our remaining options expired, un-exercised, during the year ended December 31, 2009.
34
11. 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.
12. SEGMENT INFORMATION:
We consider our ongoing business activities to constitute a single segment.
13. SUBSEQUENT EVENTS:
We have evaluated subsequent events through June 20, 2011. There have been no
subsequent events after December 31, 2010 for which disclosure is required.
35
SIGNATURES
In accordance with the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
GOLDEN DRAGON HOLDING CO.
.
Date: June 27, 2011 By: /s/ DAVID J. CUTLER
--------------------------
David J Cutler
Chief Executive Officer, &
Chief Financial Officer
In accordance with the Securities Exchange Act of 1924, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ David J. Cutler Chief Executive Officer June 27, 2011
David J. Cutler &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Redgie Green Director June 27, 2011
Redgie Green
3
