UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For The Quarterly Period Ended
or
For The Transition Period of ____________________ to ______________________
Commission file number:
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
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 ☐ ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at May 22, 2023 | |
INDEX
| 2 |
PART I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
GOLDEN DEVELOPING SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Investments - cost method | ||||||||
| Investments - equity method | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Right of use liabilities - operating leases short-term | ||||||||
| Notes payable - related party | ||||||||
| Acquisition notes payable - short-term | ||||||||
| Note payable, net of discount and deferred financing costs | ||||||||
| Convertible notes payable, net | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, shares authorized, $ par value | ||||||||
| Series A Preferred stock, share authorized, issued and outstanding | ||||||||
| Series B Preferred stock, shares authorized and shares issued and outstanding, respectively | ||||||||
| Common stock, shares authorized, $ par value, and issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 3 |
GOLDEN DEVELOPING SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ( | ) | ||||||
| Gross profit | ||||||||
| Operating Expenses: | ||||||||
| Professional fees | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Income (Loss) from Operations | ( | ) | ( | ) | ||||
| Other Income (Expense) | ||||||||
| Gain on settlement of liabilities | ||||||||
| Derivative gain (loss) | ||||||||
| Equity Method income (loss) | ( | ) | ||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Net Income (loss), before tax | ( | ) | ||||||
| Income tax expense | ||||||||
| Net Income (Loss) | $ | ( | ) | $ | ||||
| Net income (loss) from per share - basic | $ | ( | ) | $ | ||||
| Net income (loss) from per share - dilutive | $ | ( | ) | $ | ||||
| Weighted average shares outstanding - basic | ||||||||
| Weighted average shares outstanding - dilutive | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
GOLDEN DEVELOPING SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
Series A Preferred Stock | Series B Preferred Stock | Common Stock | Additional Paid-in | Accumulated |
Total Stockholders’ Equity | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | |||||||||||||||||||||||||
| Balance December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Common shares issued due to conversion of note | – | – | |||||||||||||||||||||||||||||||
| Common Shares issued for cash proceeds | – | – | |||||||||||||||||||||||||||||||
| Common shares issued for payment of services | – | – | |||||||||||||||||||||||||||||||
| Beneficial conversion feature | – | – | – | ||||||||||||||||||||||||||||||
| Settlement of derivative liability through note conversion | – | – | – | ||||||||||||||||||||||||||||||
| Net income | – | – | – | ||||||||||||||||||||||||||||||
| Balance March 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Preferred shares issued in exchange for common, related party | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 5 |
GOLDEN DEVELOPING SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
| March 31, 2023 | March 31, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Derivative (gain) loss | ( | ) | ||||||
| Amortization of debt discount and deferred financing costs | ||||||||
| Gain on settlement of debt | ( | ) | ||||||
| Equity method income | ||||||||
| Net Changes in: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ||||||||
| Other assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investments - cost method | ( | ) | ||||||
| Investments - equity method | ||||||||
| Net cash provided by investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds from convertible notes payable | ||||||||
| Net proceeds from the sale of common shares | ||||||||
| Net cash used in financing activities | ( | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Noncash activities | ||||||||
| Derecognition of cost method investment related to business combination | $ | $ | ||||||
| Derecognition of equity method investment related to business combination | $ | $ | ||||||
| Beneficial conversion feature upon issuance of convertible notes | $ | $ | ||||||
| Conversion and settlement of note | $ | $ | ||||||
| Settlement of derivative liability on conversion | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 6 |
GOLDEN DEVELOPING SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business. Golden Developing Solutions, Inc. (the “Company” or “GDS”) was organized as a corporation in Nevada in 1998 as American Associates Group. In 2007 the name was changed to Clean Hydrogen Producers, Ltd before being changed in April of 2017 to Golden Developing Solutions, Inc. The Company has restructured itself in 2022 as a health and wellness holding company and intends to make additional acquisitions in the industry in the near future.
Basis of Presentation. The accompanying unaudited financial statements of Golden Developing Solutions, Inc. have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the condensed financial statements not misleading. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the final results that may be expected for the year ended December 31, 2022. For more complete financial information, these unaudited financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the annual financial statements for the most recent fiscal period have been omitted.
Use of Estimates in Financial Statement Preparation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation. The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which have a fiscal year end of December 31. All intercompany accounts, balances and transactions have been eliminated in the consolidation. The Company also consolidates any variable interest entities for which the Company is the primary beneficiary based on whether the Company has the ability to direct the activities that most significantly impact the entities economic performance.
On April 27, 2018, the Company incorporated Pura Vida
Vitamins, LLC as a wholly owned subsidiary. Pura Vida Vitamins, LLC entered into two consulting agreements with individuals that paid
each consultant $6,000 per month in cash, additional bonuses depending on certain sales-related milestones, and 20,500,000 shares each
for the completion of certain sales-related milestones, of which none were earned by either consultant. On July 1, 2018, the Company reorganized
the entity to be a joint venture in which it owns
On September 26, 2018, the Company incorporated Tasos Media LLC as a wholly owned subsidiary.
On December 1, 2021, the Company incorporated Renown Pharmaceuticals LLC as a wholly owned subsidiary in the state Florida. In July 2022, the domicile was move to Delaware.
| 7 |
On September 30, 2022, the Company incorporated Orchard Trails, LLC as a wholly-owned subsidiary in the state of Delaware.
On November 22, 2022, the Company acquired Radiance Enterprises, Inc, incorporated in the state of Florida, as a wholly-owned subsidiary.
Goodwill, Intangible Assets, and Long-Lived Assets. Goodwill is carried at cost and is not amortized. The Company tests goodwill for impairment on an annual basis, relying on a number of factors including operating results, business plans, economic projections, anticipated future cash flows and marketplace data. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC 350.
The fair value of the Company’s reporting unit is dependent upon the Company’s estimate of future cash flows and other factors. The Company’s estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the Company’s market capitalization plus a suitable control premium at date of the evaluation.
The financial and credit market volatility directly impacts the Company’s fair value measurement through the Company’s weighted average cost of capital that the Company uses to determine its discount rate and through the Company’s stock price that the Company uses to determine its market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded.
The Company recognizes an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value.
The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset.
Fair Value of Financial Instruments
As defined in ASC 820” Fair Value Measurements,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
| 8 |
Level 3: Significant unobservable inputs which reflect a reporting entity’s own assumptions about the assumptions that market participants would use for pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
As of March 31, 2023 and December 31, 2022, the Company had no assets or liabilities required to be measured at fair value on a recurring basis.
Selling, General and Administrative Expenses. Selling, general and administrative expenses include advertising and promotional costs and research and development costs. Also included in Selling, general and administrative expenses are share-based compensation, certain warehousing fees, non-manufacturing overhead, personnel and related expenses, rent on operating leases, and professional fees.
The Company accounts for equity-based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
During the three months ended March 31, 2023, the impact of
Recently Issued Accounting Standards.
The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
NOTE 2 – GOING CONCERN AND LIQUIDITY
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company had incurred substantial losses from inception to date, the Company
had a working capital deficit. These factors gave rise to substantial doubt that the Company would continue as a going concern. As of
March 31, 2023, the Company had $
| 9 |
The financial statements for the three months ended March 31, 2023 and 2022 have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with loans or contributions from related parties and, or, the sale of common stock. There is no assurance that this series of events will be satisfactorily completed.
Financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern.
NOTE 3 – ACQUISITIONS
Orchard Trails Acquisition
On September 23, 2022, Renown Pharmaceuticals LLC (“Renown”), a wholly owned subsidiary of the Company, formed in the State of Florida, entered into a Purchase Agreement (the “Purchase Agreement”) with COD Management, LLC d/b/a Orchard Trails Pharmacy (“Seller”), pursuant to which the Company will purchase certain assets currently utilized in the operation of Seller Two’s pharmacy located at 23133 Orchard Lake Rd. Suite 101, Farmington, MI 48336. The Company shall assume no liabilities of Seller Two.
The COD Purchase Agreement
closed on October 14, 2022, on which date the Company paid COD a purchase price in the amount of $
On September 28, 2022, the Company, entered into an Asset Purchase and Sale Agreement (the “APA”) with Jai Chamunda New Hudson LLC, a Michigan limited liability company (“Seller”), pursuant to which the Company will purchase certain assets currently utilized in the operation of Seller’s pharmacy located at 56270 Grand River Ave., New Hudson, MI 48165.
After closing, the Company shall engage the Seller for a period of thirty (30) days commencing from the Closing Date. The Company agrees to compensate Seller at the rate of $125 per hour, which payment shall be made on a bi-weekly basis upon Seller submitting an invoice to the Company.
The
Jai Chamunda Purchase Agreement closed on October 17, 2022, on which date the Company paid Jai Chamunda the purchase price of $
On October 17, 2022, the Company entered into an assignment and assumption agreement (the “Assignment and Assumption Agreement Two”) with Orchard, to assign that certain Asset Purchase and Sale Agreement, dated as of September 28, 2022 (the “Jai Chamunda Purchase Agreement”), pursuant to which the Company assigned to Orchard all of the Company’s right, title and interest in the Jai Chamunda Purchase Agreement, such that Orchard shall be the “Buyer” for all purposes of the Jai Chamunda Purchase Agreement. The Company is also party to a Distribution Agreement, dated as of September 28, 2022, which was assigned to Orchard concurrently with the Jai Chamunda Purchase Agreement.
| 10 |
Pursuant to ASC805-10-25-6: The acquirer shall identify the acquisition date, which is the date on which it obtains control of the acquiree. At the time of closing and as of December 31, 2022, the Company had not acquired control of the acquiree as a result of the operational pharmacy license not being transferred for regulatory reasons.
On March 23, 2023, the Company gained control of the acquiree as the pharmacy license was transferred into the name of the Company, and as such March 23, 2023 was determined to be the acquisition date under ASC 805. The acquisitions under Orchard Trails are being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize the fair value of the acquired assets within one year of the acquisition date.
The aggregate preliminary fair value of consideration for the Orchard Trails Acquisition was as follows:
| Amount | ||||
| Cash paid to seller | ||||
| Operations funded by GDS prior to obtaining control | ||||
| Total preliminary consideration transferred | $ | |||
The following information summarizes the preliminary allocation of the fair values assigned to the assets acquired at the acquisition date:
| Accounts receivable | $ | |||
| Inventory | ||||
| Furniture and Fixtures | ||||
| Goodwill | ||||
| Net Assets acquired | $ | |||
From the period of
acquisition of Orchard Trails through March 31, 2023, the Company generated total revenue and net income of $
Florida Acquisitions
Asset Purchase and Sale Agreement – One
On October 4, 2022,
Golden Developing Solutions, Inc., a Nevada corporation (“we”, “us” or the “Company”) entered
into an Asset Purchase and Sale Agreement (the “APA One”) with Sai Siva Healthcare, LLC, a Florida limited liability
company (“Seller”), pursuant to which the Company will purchase certain assets currently utilized in the operation of
Seller’s pharmacy located at 12753 S.W. 42nd St., Miami, FL 33175. On November 9, 2022, the Company completed
the closing of the purchase of the assets from Seller pursuant to the terms of APA One and paid cash of $
Pursuant to ASC805-10-25-6: The acquirer shall identify the acquisition date, which is the date on which it obtains control of the acquiree. At the time of closing and as of December 31, 2022, the Company had not acquired control of the acquiree as a result of the operational pharmacy license not being transferred for regulatory reasons. As control had not been achieved, the Company is accounting for the acquisition as a business combination achieved in stages. The Company does not exert significant influence over the investee, as defined in ASC 323-10-15-6 and will therefore account for the acquisition as a cost method investment until such time that operational control has been achieved.
| 11 |
Asset Purchase and Sale Agreement – Two
On October 4, 2022, the Company
entered into a second Asset Purchase and Sale Agreement (the “APA Two”) with Bushnell Pharmacy LLC, a Florida limited liability
company (“Seller Two”), pursuant to which the Company will purchase certain assets currently utilized in the operation of
Seller Two’s pharmacy located at 1304 Golden Gate Drive, Southlake, TX 76092. On November 9, 2022, the Company completed the closing
of the purchase of the assets from Seller Two pursuant to the terms of APA Two and paid cash of $
Pursuant to ASC805-10-25-6: The acquirer shall identify the acquisition date, which is the date on which it obtains control of the acquiree. At the time of closing and as of December 31, 2022, the Company had not acquired control of the acquiree as a result of the operational pharmacy license not being transferred for regulatory reasons.
On March 23, 2023, the Company gained control of the acquiree as the pharmacy license was transferred into the name of the Company, and as such March 23, 2023 was determined to be the acquisition date under ASC 805. The acquisitions under Orchard Trails are being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize the fair value of the acquired assets within one year of the acquisition date.
The aggregate preliminary fair value of consideration for the Bushnell Acquisition was as follows:
| Amount | ||||
| Cash paid to seller | $ | |||
| Operations funded by GDS prior to obtaining control | ||||
| Total preliminary consideration transferred | $ | |||
The following information summarizes the preliminary allocation of the fair values assigned to the assets acquired at the acquisition date:
| Accounts receivable | $ | |||
| Amount due from seller | ||||
| Inventory | ||||
| Goodwill | ||||
| Net Assets acquires | $ | |||
From the period of
acquisition of Bushnell through March 31, 2023, the Company generated total revenue and net loss of $
Unaudited Pro Forma Financial Information
The following table sets forth the pro-forma consolidated results of operations for the three months ended March 31, 2023 and 2022 as if the Orchard Trails and Bushell acquisitions occurred on January 1, 2022. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur in the future.
| Three Months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| Operating income (loss) | ( | ) | ||||||
| Net income (loss) | ( | ) | ||||||
| Net income (loss) per common share | $ | ( | ) | $ | ||||
| Weighted Average common shares outstanding | ||||||||
| 12 |
NOTE 4 – DEBT
Notes Payable related party
In May of 2018, the Company issued a $
Convertible Debt
In November 2021, the Company entered into a Secured
convertible promissory note for an aggregate principal amount of $58,889. The Company received net cash proceeds of $
In connection with promissory note, the Company issued
shares of stock to the lender as a deferred finance cost and granted a warrant to purchase
The Company evaluated the embedded conversion feature
within the above convertible note payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the
definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company
accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the relative fair value of the convertible notes payable
and a total debt discount of $
During the year ended December 31, 2022, as a result
of default provisions, an additional $
In April 2022, the Company entered into a Secured
convertible promissory note for an aggregate principal amount of $
| 13 |
In connection with promissory note, the Company granted
a warrant to purchase
The Company evaluated the embedded conversion feature
within the above convertible note payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the
definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company
accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the relative fair value of the convertible notes payable
and a total debt discount of $
During the year ended December 31, 2022, as a result
of default provisions, an additional $
Merchant Loans
On October 17, 2022, the
Company, through its subsidiary, Orchard Trails, entered into a merchant loan with a lender for $
On November 4, 2022, the
Company entered into a merchant loan with a lender for $
On November 4, 2022, the
Company entered into a merchant loan with a lender for $
On November 4, 2022, the Company entered into a merchant
loan with a lender for $
The Company intends to hold the all the notes to maturity; therefore, the notes are not carried at fair value.
The Company was in default
of the Merchant Loans disclosed above. As of March 31, 2023, the Company had an aggregated remaining principal balance of $
NOTE 5 – STOCKHOLDERS EQUITY
In March 2019, the Board of Directors of the Company amended the Company’s articles of incorporation to increase the authorized common shares to 975,000,000. On July 17, 2019, the Board of Directors approved the below Corporate Actions and recommended to the stockholders of the Company that they approve the Corporate Actions. On July 17, 2019, a majority of the Company’s stockholders, approved the following actions:
| 14 |
| ● | The granting of discretionary authority to the Board, at any time or times for a period of 12 months after the date of the Written Consent, to adopt an amendment to the Certificate, to effect a reverse stock split at a ratio of a minimum of 1 to 5 and a maximum of 1 to 500, such ratio to be determined by the Board, or to determine not to proceed with the reverse stock split (the “Reverse Stock Split”); and |
| ● | The approval of an amendment to the Certificate increasing the number of shares of Common Stock the Company is authorized to issue from 975,000,000 to 4,000,000,000 as provided for herein (the “Increase in Authorized Shares”, and together with the Reverse Stock Split, the “Corporate Actions”). |
The Reverse Stock Split has not been executed to date.
In November 2022, the Company filed a Certificate of Designate to decrease the number of shares of Common Stock the Company is authorized to issue from 4,000,000,000 to 2,500,000,000 shares.
Stock Warrants
The following table represents the warrant activity for the three months ended March 31, 2023. All warrants are accounted for as equity instruments:
| Stock Warrants | ||||||||||||
| Shares | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding at December 31, 2022 | $ | $ | ||||||||||
| Granted | – | – | ||||||||||
| Cancelled | – | – | ||||||||||
| Expired | – | – | ||||||||||
| Exercised | – | – | ||||||||||
| Outstanding at March 31, 2023 | $ | $ | ||||||||||
| Exercisable at March 31, 2023 | $ | $ | ||||||||||
Outstanding warrants at March 31, 2023 had an aggregate intrinsic value of $.
Series A Preferred Stock
During the year ended December 31, 2018 the Company sold 1 share of Series A Preferred Stock in exchange for $232,500. Each share of Series A Preferred Stock has the voting rights of 350,000,000 shares. The Series A Preferred stock has no liquidation preference, and is not entitled to any dividends paid to common stockholders.
Series B Convertible Preferred Stock
On November 8, 2022, the Company designated share of Series B Convertible Preferred Stock, par value $. Each share of Series B Convertible Preferred Stock has the voting rights equal to the number of common shares issuable upon conversion. Each share of Series B Convertible Preferred stock is convertible into common shares, has no liquidation preference, and is not entitled to any dividends paid to common stockholders. shares of Series B Convertible Preferred stock are outstanding as of December 31, 2022.
During the three months ended March 31, 2023, the Company exchanged shares of Common Stock that were beneficially held by the Company’s CEO for the issuance of shares of Series B Convertible Preferred Stock.
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NOTE 6 – LEASES
The Company has operating leases for its administrative offices. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that the Company will exercise those options. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the initial ROU asset or lease liability. The Company’s lease agreements do not contain any material restrictive covenants.
During the year ended December 31, 2019, the Company
entered into a real estate lease for office and warehouse space in Colorado. The lease had monthly payments ranging from approximately
$19,500 to $23,700 over the lease term of 54 months. The Company has an option to acquire the leased premises at the conclusion of the
lease for a purchase price of $3,500,000. Under ASC 842, this lease was determined to be an operating lease, and a right of use asset
and lease liability of $
During the year ended December 31, 2020, the Company
agreed to settle an existing lease in exchange for a note payable of $15,214, which bears interest at 10% or 22% in the event of default.
As of the date of this report, the Company is in default of this note. The Company recognized a loss on settlement of $
NOTE 7 – SUBSEQUENT EVENTS
The Company evaluates subsequent events that have occurred after the balance sheet date of March 31, 2023 and up through May 22, 2023, which is the date that these financial statements are available to be issued. There are two types of subsequent events: (i) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (ii) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.
On May 8, 2023, the Company entered into a consulting agreement with an unrelated third party for services to be performed. In exchange the Company agreed to issue 40,200,000 common shares with 15,000,000 being issued immediately and the remaining to be issued at a rate of 8,400,000 for the next three consecutive quarters.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.
Company Overview
The Company
Golden Developing Solutions, Inc. (the “Company,” “we,” “our,” or “us”) was originally incorporated on December 17, 1998 in the State of Nevada under the name American Associates Group. In 2007 the name was changed to Clean Hydrogen Producers, Ltd before being changed in April of 2017 to Golden Developing Solutions, Inc. The Company has restructured itself in 2022 as a health and wellness holding company and intends to make additional acquisitions in the industry in the near future
On September 26, 2018, the Company incorporated Tasos Media LLC as a wholly owned subsidiary.
On December 1, 2021, the Company incorporated Renown Pharmaceuticals LLC as a wholly owned subsidiary in the state Florida. In July 2022, the domicile was move to Delaware.
On September 30, 2022, the Company incorporated Orchard Trails, LLC as a wholly-owned subsidiary in the state of Delaware.
On November 22, 2022, the Company acquired Radiance Enterprises, Inc, incorporated in the state of Florida, as a wholly-owned subsidiary.
Operations
Golden Developing Solutions is a public online health and wellness start-up company. Its pharmaceutical division specializes in providing specialty medicine with rapid delivery services and adequate medical support in the United States. The recent 4 specialty pharmacy acquisitions in 2022 have capacitated the Company’s service offerings to the State of Michigan and Florida.
Results of Operations
Three months ended March 31, 2023 compared to three months ended March 31, 2022
Revenue
Revenues amounted to $169,806 and $0, respectively for the three months ended March 31, 2023 and 2022. Revenue in the current period is a result of the Company gaining control of two of the acquired business in the three months ended March 31, 2023.
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Cost of Good Sold
Cost of Goods Sold amounted to $150,783 and $0, respectively for the three months ended March 31, 2023 and 2022. Cost of goods sold in the current period is a result of the Company gaining control of the acquired businesses in the three months ended March 31, 2023.
Selling, General and Administrative Expenses
Selling, general and administrative expenses amounted to $199,204 and $46,209, respectively for the three months ended March 31, 2023 and 2022, an increase of $152,995 due to increased consulting fees in the current period along with the Company gaining control of the acquired business in the three months ended March 31, 2023.
Professional fees
Professional fees amounted to $16,397 and $12,021, respectively for the three months ended March 31, 2023 and 2022. The increase of $4,376 was due to increased audit and accounting related expenses.
Interest expense
Interest expense was $1,167,250 and $61,609 for the three months ended March 31, 2023, and 2022, respectively.
Other Income/Expense
The Company recognized equity method loss of $509,603 from income generated before control was obtained of the Orchard Trails acquisition during the three months ended March 31, 2023, compared to a gain of $11,000 from extinguishment of liabilities and a derivative gain of $124,891 during the three months ended March 31, 2022.
Liquidity and Capital Resources
The following is a summary of the Company’s cash flows used in operating activities for the three months ended March 31, 2023 and 2022:
Three Months ended March 31, 2023 | Three Months ended March 31, 2022 | |||||||
| Net cash used in operating activities | $ | (294,697 | ) | $ | (32,460 | ) | ||
| Net cash provided by investing activities | $ | 324,531 | $ | – | ||||
| Net cash used in financing activities | $ | (20,668 | ) | $ | 22,500 | |||
Operating Activities
The cash used in operating activities of $294,697 for the three months ended March 31, 2023 was primarily due to working capital and general and administrative expenses during the period.
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Investing Activities
The cash provided by investing activities of $324,531 for the three months ended March 31, 2023 was primarily due to cash returned from its equity method investments prior to obtaining control, and cash investments in the cost method investments related to acquired and to be acquired businesses.
Financing Activities
The cash used in financing activities from continuing operations of $20,668 during the three months ended March 31, 2023 was from payments on notes payable.
We are a public company and as such we have incurred and will continue to incur significant expenses for legal, accounting and related services. As a public entity, subject to the reporting requirements of the Exchange Act of 1934, we incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will increase over the next few years and may be significantly higher if our business volume and transactional activity increases. These obligations will certainly reduce our ability and resources to expand our business plan and activities.
Going Concern
As of March 31, 2023, the Company had $219,423 of cash and had limited revenue during the three months ended March 31, 2023 to meet its ongoing operating expenses and liabilities of $7,631,425 all of which are due within 12 months.
Our auditor has issued a “going concern” qualification as part of its opinion in the Audit Report for the year ending December 31, 2022, and our unaudited financial statements for the three months ended March 31, 2023, include a “going concern” note disclosing that our ability to continue as a going concern is contingent on us being able to raise working capital to grow our operations and generate revenue.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions.
Recently Issued Accounting Pronouncements
The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
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Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures: Our management carried out an evaluation of the effectiveness and design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the Exchange Act). Based on that evaluation, our Chief Executive Officer and Principal Financial Officer has concluded that, at March 31, 2023, such disclosure controls and procedures were not effective due to the existing of the following material weaknesses:
| ● | Lack of segregation of duties. The Company did not effectively segregate certain accounting duties due to the small size of its accounting staff. |
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management including our Chief Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Controls: Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Our Chief Executive Officer and Principal Financial Officer has concluded, based on his evaluation as of the end of the period covered by this Quarterly Report that our disclosure controls and procedures were not sufficiently effective to provide reasonable assurance that the objectives of our disclosure control system were met.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not involved in any disputes and does not have any litigation matters pending. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company, threatened against or affecting our Company or our common stock, in which an adverse decision could have a material adverse effect.
Item 1A. Risk Factors.
Not Applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
The Company is in default of the following debt instruments:
| - | $15,214 note payable from lease settlement bearing interest at 18% | |
| - | $50,000 note payable accruing interest at a default rate of 15% per year and a default rate of 15%, arising from the sale of the Infusionz Business. | |
| - | $29,367 convertible note payable accruing interest at a default rate of 24% per year. | |
| - | $43,333 convertible note payable accruing interest at a default rate of 24% per year. | |
| - | Merchant loan with principal balance of $1,366,359 | |
| - | Merchant loan with principal balance of $1,203,309 | |
| - | Merchant loan with principal balance of $1,109,679 | |
| - | Merchant loan with principal balance of $2,419,820 |
Item 4. Mine Safety Disclosure.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
| 101.INS * | XBRL Instance Document | |
| 101.SCH * | XBRL Taxonomy Extension Schema Document | |
| 101.CAL * | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF * | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB * | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE * | XBRL Taxonomy Extension Presentation Linkbase Document |
| * | Filed herewith. | |
| ** | In accordance with SEC Release 33-8238, Exhibit 32.1 is furnished and not filed. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GOLDEN DEVELOPING SOLUTIONS, INC. | ||
| Date: May 23, 2023 | By: | /s/ Stavros Triant |
| Chief Executive Officer | ||
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