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 November 14, 2022 | |
| Common Stock, $.0001 par value |
INDEX
| 2 |
PART I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
GOLDEN DEVELOPING SOLUTIONS, INC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Right of use liabilities - operating leases short-term | ||||||||
| Derivative liability | ||||||||
| Notes payable - related party | ||||||||
| Acquisition notes payable | ||||||||
| Note payable | ||||||||
| Convertible notes payable, net of debt discounts | ||||||||
| 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 | ||||||||
| 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
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Gain on settlement of liabilities | ||||||||||||||||
| Derivative gain (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
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GOLDEN DEVELOPING SOLUTIONS, INC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Golden Developing Solutions Share of Equity | Non Controlling | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | Interest | (Deficit) | ||||||||||||||||||||||||||||
| Balance December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common shares and warrants issued for deferred offering costs | – | |||||||||||||||||||||||||||||||||||
| Beneficial conversion feature upon issuance on convertible debt | – | – | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance March 31, 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance June 30, 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| 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 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Common Shares issued for cash proceeds | – | |||||||||||||||||||||||||||||||||||
| Common shares issued for payment of services | – | |||||||||||||||||||||||||||||||||||
| Beneficial conversion feature | – | – | ||||||||||||||||||||||||||||||||||
| Warrants issued for deferred offering costs | – | – | ||||||||||||||||||||||||||||||||||
| Net income | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance June 30, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Common Shares issued for cash proceeds | – | |||||||||||||||||||||||||||||||||||
| Common shares issued for payment of services | – | |||||||||||||||||||||||||||||||||||
| Net income | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 5 |
GOLDEN DEVELOPING SOLUTIONS, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, 2022 | September 30, 2021 | |||||||
| 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 | ||||||||
| Note payable issued for services | ||||||||
| Derivative (gain) loss | ( | ) | ||||||
| Amortization of debt discount and deferred financing costs | ||||||||
| Interest expense from derivative liability in excess of principal | ||||||||
| Gain on settlement of debt | ( | ) | ( | ) | ||||
| Net Changes in: | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments on notes payable | ( | ) | ||||||
| Payments on related party loans | ( | ) | ||||||
| Proceeds from convertible notes payable | ||||||||
| Net proceeds from the sale of common shares | ||||||||
| Net cash provided by 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 | ||||||||
| Beneficial conversion feature upon issuance of convertible notes | $ | $ | ||||||
| Common stock and warrants issued for deferred financing costs | $ | $ | ||||||
| Settlement of debt paid directly by related party | $ | $ | ||||||
| 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 structured itself in 2022 as a pharmaceutical retail 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 nine months ended September 30, 2022 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, 2021. 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.
On September 30, 2022, the Company incorporated Orchard Trails, LLC as a wholly-owned subsidiary in the state of Delaware.
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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.
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.
| 8 |
The following table summarizes fair value measurements by level at September 30, 2022 and December 31, 2021, measured at fair value on a recurring basis:
| September 30, 2022 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | ||||||||||||||||
| None | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| December 31, 2021 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | ||||||||||||||||
| None | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
The recorded amounts of financial instruments, including cash equivalents, investments, accounts payable, accrued expenses, note payable and loan from related parties approximate their market values as of September 30, 2022 and December 31, 2021 due to the intended short-term maturities of these financial instruments.
Derivative Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815. The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated for derivative classification. The Company’s policy is to evaluate for reclassification contracts with the earliest maturity date first.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
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.
| 9 |
During the three and nine months ended September 30, 2022, 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 September 30, 2022, the Company had $
The financial statements for the nine months ended September 30, 2022 and 2021 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 - DEBT
Notes Payable
During 2020, the Company entered into a note payable
agreement with a vendor related to $
| 10 |
Notes Payable related party
In May of 2018, the Company issued a $
Convertible Debt
On January 14, 2020, the Company entered into
an unsecured convertible promissory note, with a principal amount of $
On January 27, 2022, the Company entered into
a settlement agreement with the lender related to the convertible promissory note dated January 14, 2020. Pursuant to the agreement the
company issued shares of common stock for the conversion of $
The Company evaluated the embedded conversion
feature within the above convertible promissory note under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does meets
the definition of a liability on the date the note became convertible. The Company accounted for the intrinsic value of Conversion Feature
inherent to the convertible promissory note and a total debt discount of $
In March 2021, the Company entered into a Senior
Secured convertible promissory note for an aggregate principal amount 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
| 11 |
On November 3, 2021 the second trance in the amount
of $
During the nine months ended September 30, 2022,
as a result of default provisions, and additional $
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 $
As of September 30, 2022, the company owed $
In November 2021, the Company entered into a Secured
convertible promissory note for an aggregate principal amount 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 $
As of September 30, 2022, the company owed $
On March 29, 2022, the Company entered into a
secured convertible promissory note, with a principal amount of $
| 12 |
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 $
As of September 30, 2022, the company owed $
In April 2022, the Company entered into a Secured
convertible promissory note for an aggregate principal amount of $
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 $
As of September 30, 2022, the company owed $
On May 9, 2022, the Company entered into a secured
convertible promissory note, with a principal amount of $
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 $
As of September 30, 2022, the company owed $
| 13 |
NOTE 4 - DERIVATIVE LIABILITIES
As discussed in Note 3 – Convertible Notes Payable, the Company analyzed the conversion features of the agreements for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as a derivative because the exercise price of these convertible notes are subject to a variable conversion rate. The Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the notes and recorded a derivative liability.
The embedded derivatives for the notes are carried on the Company’s balance sheet at fair value. The derivative liability is marked- to-market each measurement period and any unrealized change in fair value is recorded as a component of the income statement and the associated fair value carrying amount on the balance sheet is adjusted by the change.
The fair value of the embedded derivatives for
the notes were determined using the Black-Scholes option pricing model based on the following assumptions during the nine months ending
September 30, 2022: (1) dividend yield of
The table below presents the change in the fair value of the derivative liability:
| Fair value as of December 31, 2021 | $ | |||
| Fair value on the date of issuance recorded as debt discounts | ||||
| Settlement of derivative upon repayment of notes | ( | ) | ||
| Settlement of derivative upon conversion of notes | ( | ) | ||
| Gain on change in fair value of derivatives | ( | ) | ||
| Fair value as of September 30, 2022 | $ |
The total impact to the Company’s statement
of operations for derivatives during the nine months ended September 30, 2022 was a gain 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:
| · | 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 | |
| · | The approval of an amendment to the Certificate increasing the number of shares of Common Stock the Company is authorized to issue from to 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.
| 14 |
During the nine months ended September 30, 2022 the company issued shares of common stock for cash proceeds of $
During the nine months ended September 30, 2022 the company issued shares of common stock for the conversion of $ of principal and interest on convertible notes as discussed in Note 3.
During the nine months ended September 30, 2022
the company issued shares of common stock as compensation for services with a fair value of $
Stock Warrants
The following table represents the warrant activity for the nine months ended September 30, 2022. 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, 2021 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Cancelled | – | – | ||||||||||
| Expired | – | – | ||||||||||
| Exercised | – | – | ||||||||||
| Outstanding at September 30, 2022 | $ | $ | ||||||||||
| Exercisable at September 30, 2022 | $ | $ | ||||||||||
Outstanding warrants at September 30, 2022 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.
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.
At adoption of ASC 842, the Company recognized
right of use assets and liabilities for operating leases of $
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During the year ended December 31, 2019, the Company
entered into a real estate lease for office and warehouse space in Colorado. The lease has 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 $
The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheet at September 30, 2022 and December 31, 2021:
| Lease Position | September 30, 2022 | December 31, 2021 | ||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Right of use liability operating lease short term | ||||||||
| Right of use liability operating lease long term | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
The Company recognized operating lease cost of
$
The following table provides the maturities of lease liabilities at September 30, 2022:
| Maturity of Lease Liabilities at September 30, 2022 | Operating Leases | |||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 and thereafter | ||||
| Total future undiscounted lease payments | ||||
| Less: Interest | ||||
| Present value of lease liabilities | $ | |||
At September 30, 2022, the Company had no additional leases which had not yet commenced.
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NOTE 7 - ACQUISITIONS
New Hudson Acquisition
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.
The purchase price under
the APA is $
After closing, the Company shall engage the Seller for a period of thirty (30) days commencing from the Closing Date, no more than five (5) days a week (Monday to Friday), for a maximum of forty (40) hours per week, if necessary. The Company agrees to compensate Seller at the rate of $125.00 per hour, which payment shall be made on a bi-weekly basis upon Seller submitting an invoice to the Company.
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 Two”), 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 purchase price under the Purchase Agreement shall be established on the basis of the following assets:
| (a) | Seller Two’s salable and usable merchandise inventory at the pharmacy, which shall be valued at the original, actual cost to Seller Two; | |
| (b) | Non-leased furniture, fixtures, equipment, computers, transferable software, telephone numbers, and other items of a similar nature including fixtures and equipment at the pharmacy, which is valued at $ | |
| (c) | All prescription lists, patient profiles, customer lists, prescription files, and other records relating to the pharmacy and goodwill as of the Closing Date Two, which together are valued at $ | |
| (d) | A covenant not to compete which will be binding upon Seller, and its officers, directors and shareholders, which is valued at $ |
The APA and the Purchase Agreement contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of their respective parties.
NOTE 8 - SUBSEQUENT EVENTS
The Company evaluates subsequent events that have occurred after the balance sheet date of September 30, 2022 and up through November 14, 2022, 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.
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On October 14, 2022, Renown and COD Management, LLC (“COD”), entered into an assignment and assumption agreement (the "Assignment and Assumption Agreement One”) with Orchard Tails, LLC, a Delaware limited liability company which is a wholly owned subsidiary of the Company (“Orchard”), to assign that certain Purchase Agreement, dated as of September 23, 2022 (the “COD Purchase Agreement”), pursuant to which Renown assigned to Orchard all of Renown’s right, title and interest in the COD Purchase Agreement, such that Orchard shall be the “Buyer” for all purposes of the COD Purchase Agreement.
The Assignment and Assumption Agreement One is joined by COD, as “Seller One”, for purposes of evidencing the agreement and consent of Seller One to the transactions set forth therein. The COD Purchase Agreement closed on October 14, 2022, on which date the Company paid COD a purchase price in the amount of $300,200. The Company will account for this transaction as a business combination under FASB ASC 805.
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.
The Assignment and Assumption Agreement Two is joined by Jai Chamunda New Hudson LLC, a Michigan limited liability company (“Jai Chamunda”), as “Seller Two”, and by SRX, LLC, a Tennessee limited liability company (“Stillwell”), in each case for purposes of evidencing the agreement and consent of Seller Two and Stillwell to the transactions set forth therein. The Company closed the APA on October 17, 2022, on which date the Company paid the seller the purchase price of $1,452,053. As of the closing, the Company began its engagement of Jai Chamunda at the rate of $125 per hour. The Company will account for this transaction as a business combination under FASB ASC 805.
On October 4, 2022, 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.
The purchase price under the APA One is $3,050,000, which shall include inventory of $650,000, RX Data of $2,390,000 and member’s non-compete contribution of $10,000. The closing of the transactions occurred on November 9, 2022, and the transaction will be accounted for as a business combination under ASC 805.
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.
The purchase price under the APA Two is $2,250,000, which shall include inventory of $550,000, RX Data of $1,690,000 and member’s non-compete contribution of $10,000. The closing of the transactions occurred on November 9, 2022, and the transaction will be accounted for as a business combination under ASC 805.
The APA One and APA Two contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of their respective parties.
On October 17, 2022, the Company entered into a merchant loan with a lender for $1,469,865 and received cash proceeds of $1,425,769. The Company is required to make 44 weekly payments of $46,434 for a total repayment amount of $2,043,112.
On October 20, 2022, the Company entered into a Settlement and Exchange Agreement with Leonite Capital, LLC, pursuant to which the company agreed to issue 62,000,000 shares of common stock in full settlement of the outstanding principal and interest of $123,506
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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 structured itself in 2022 as a pharmaceutical retail 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 March 9, 2019, the Company incorporated CBD Infusionz, 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.
Operations
Golden Developing Solutions is a public online health and wellness start-up company with a focus on delivering nutritional supplements including vitamins, tinctures, softgels, and topical application products. Its pharmaceutical division specializes in providing specialty medicine with rapid delivery services and adequate medical support in the United State. The recent 4 specialty pharmacy acquisitions in 2022 have capacitated the company’s service offerings to the State of Michigan and Florida with a consolidated revenue of $100M.
We aim to position ourselves to build shareholder value by setting the highest standards in service, reliability, and safety in our rapidly growing industry.
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Results of Operations
Three months ended September 30, 2022 compared to three months ended September 30, 2021
Selling, General and Administrative Expenses
Selling, general and administrative expenses amounted to $54,423 and $40,257, respectively for the three months ended September 30, 2022 and 2021, an increase of $14,166 due to increased consulting fees in the current period.
Professional fees
Professional fees amounted to $16,755 and $24,595 respectively for the three months ended September 30, 2022 and 2021. The decrease of $7,840 was due to increased investor relations along with audit and accounting related expenses to bring the Company’s reporting requirements current in the prior period.
Interest expense
Interest expense was $152,123 and $41,772 for the three months ended September 30, 2022, and 2021, respectively.
Other Income/Expense
The Company recognized gain of $13,149 for the three months ended September 30, 2022 compared to a loss of $369,749 from the change in fair value of derivative liabilities during the three months ended September 30, 2021.
Nine months ended September 30, 2022 compared to nine months ended September 30, 2021
Selling, General and Administrative Expenses
Selling, general and administrative expenses amounted to $151,288 and $45,970, respectively for the nine months ended September 30, 2022 and 2021, an increase of $105,318 due to increased consulting fees in the current period as the Company increased its operations to raise additional funds.
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Professional fees
Professional fees amounted to $141,265 and $45,054 respectively for the nine months ended September 30, 2022 and 2021. The increase of $96,211 was due to increased investor relations along with audit and accounting related expenses and professional fees associated with future acquisitions.
Interest expense
Interest expense was $297,150 and $105,682 for the nine months ended September 30, 2021, and 2020, respectively.
Other Income/Expense
The Company recognized a gain of $11,000 from extinguishment of liabilities and a derivative gain of $161,614 during the nine months ended September 30, 2022, compared to a gain of $58,617 from extinguishment of liabilities and a derivative loss of $452,008 during the nine months ended September 30, 2021.
Liquidity and Capital Resources
The following is a summary of the Company’s cash flows used in operating activities for the nine months ended September 30, 2022 and 2021:
Nine Months ended September 30, 2022 | Nine Months ended September 30, 2021 | |||||||
| Net cash used in operating activities | (215,320 | ) | (49,827 | ) | ||||
| Net cash used in investing activities | – | – | ||||||
| Net cash provided by financing activities | 544,300 | 50,000 | ||||||
Operating Activities
The cash used in operating activities from continuing operations of $215,320 for the nine months ended September 30, 2022 was primarily due working capital and general and administrative expenses during the period.
Financing Activities
The cash provided by financing activities from continuing operations of $544,300 during the nine months ended September 30, 2022 was from the proceeds of $615,000 from issuance of common shares, and $29,500 proceeds from issuance of a convertible note, offset by payments on convertible notes of $75,000 and payments on related party loans of $25,200.
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 September 30, 2022, the Company had $339,715 of cash and had no revenue during the nine months ended September 30, 2022 to meets its ongoing operating expenses and liabilities of $704,754 all of which are due within 12 months.
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Our auditor has issued a “going concern” qualification as part of its opinion in the Audit Report for the year ending December 31, 2021, and our unaudited financial statements for the quarter ended nine months ended September 30, 2022, 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.
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 September 30, 2022, 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. |
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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. | |
| - | $5,000 convertible note payable accruing interest at a default rate of 22% per year. | |
| - | $120,113 convertible note payable accruing interest at a default rate of 24% per year. | |
| - | $8,889 convertible note payable accruing interest at a default rate of 24% per year. |
Item 4. Mine Safety Disclosure.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
| * | 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: November 14, 2022 | By: | /s/ Stavros Triant |
| Chief Executive Officer | ||
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