Golden Developing Solutions, Inc. - Quarter Report: 2022 September (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period of ____________________ to ______________________

Commission file number: 000-54208

GOLDEN DEVELOPING SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

PO Box 460573

Fort Lauderdale, FL 33346

(Address of principal executive offices) (Zip Code)

623-826-5206

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

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 ☐ NO ☒

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). YES ☒ 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.

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 ☐ NO ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

INDEX

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

GOLDEN DEVELOPING SOLUTIONS, INC

CONSOLIDATED BALANCE SHEETS

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements

GOLDEN DEVELOPING SOLUTIONS, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements

GOLDEN DEVELOPING SOLUTIONS, INC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

The accompanying notes are an integral part of these unaudited consolidated financial statements

GOLDEN DEVELOPING SOLUTIONS, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements

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 50%, in exchange for the cancelation of these consulting agreements. During the year ended December 31, 2021 the Company wrote off the balances for the non-controlling interest investment due to the dissolution of the joint venture, resulting in a loss of $53,442.

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.

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.

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: 

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.

Stock-Based Compensation. The Company applies Topic 718 “Share-Based Payments” (“Topic 718”) to share-based compensation, which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized when the event occurs. The Black-Scholes option-pricing model is used to estimate the fair value of options granted.

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.

Earnings (Loss) Per Share. The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share.” ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. 

During the three and nine months ended September 30, 2022, the impact of 41,064,815 warrants to purchase common stock and 122,442,534 shares issuable under convertible debt were excluded from the calculation above as their impact would be anti-dilutive. During the three and nine months ended September 30, 2021, the impact of 25,000,000 warrants to purchase common stock and 90,759,744 shares issuable under convertible debt were excluded from the calculation as their impact would be anti-dilutive.

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 $339,715 of cash and no revenue to meets its ongoing operating expenses, and liabilities of $704,754 all of which are due within 12 months, and as of September 30, 2022, the Company still had a working capital deficit. Accordingly, the substantial doubt of the Company’s ability to continue as a going concern that existed at December 31, 2021 was not alleviated and is still outstanding at September 30, 2022 and up through the date of this report.

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 $75,000 of accounts payable. The note bears interest at 10% per annum and is due on demand. On September 6, 2022, the Company entered into an agreement with the lender to settle the note and accrued interest of $8,486 in exchange for 16,697,260 common shares.

Notes Payable related party

In May of 2018, the Company issued a $70,025 Note payable to a related party for cash proceeds received. The related party also paid $2,000 of expense on behalf of the Company. The note was unsecured, with no stated interest rate and is due on demand. In February 2021, the CEO of the Company paid $25,200 on behalf of the Company to settle the balance of the line of credit in full. The note was unsecured, with no stated interest rate and is due on demand. In May 2022, the Company repaid the 25,200 to the related party. As of September 30, 2022 and December 31, 2021, the Company owed $6,117 and 31,317, respectively, on this note payable.

Convertible Debt

On January 14, 2020, the Company entered into an unsecured convertible promissory note, with a principal amount of $40,000. The Company received net cash proceeds of $37,000 after payment of fees of $3,000. The convertible note bears interest at 10% and matures on January 14, 2021, with interest accruing at a rate of 22% if the Company is in default. Beginning six months after the issuance of the note, the holder may convert the note at any time through the maturity date into shares of common stock, to the extent and provided that no holder of these notes was or will be permitted to convert such notes to the extent that the holder or any of its affiliates would beneficially own in excess of 4.99% of the Company’s common stock after such conversion. The conversion price is determined based on 61% of the lowest trading price during the 20 trading days prior to the conversion date. During the year ended December 31, 2020, the Company was in default of the agreement and incurred an additional $20,000 of principal, which was recorded as interest expense. The Company also recognized $37,956 of derivative loss associated with the additional principal.

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 2,000,000 shares of common stock for the conversion of $4,000 of principal balance of the note and has agreed to repay the remaining balance of $45,000 in nine equal payments of $5,000, beginning on February 1, 2022. The settlement agreement resulted in the forgiveness of $11,000 in principal on the note. The Company issued an additional 10,000,000 shares to this lender in March 2022 for the conversion of $15,000 of principal. As of September 30, 2022 the Company owed $5,000 on this note.

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 $39,131 was recorded along with a day one derivative loss of $21,558. Unamortized debt discount costs were $0 as September 30, 2022 related to this convertible note.

In March 2021, the Company entered into a Senior Secured convertible promissory note for an aggregate principal amount of $588,235. The note had an original issue discount of $88,235, bears interest at the greater of Prime plus 8% or 14%. The cash proceeds are to be distributed in tranches, with the first tranche of $65,000 being advanced in March 2021, with $15,000 of the amount paying legal fees related to the note payable and $11,471 of the original issue discount was assigned to this tranche. Each tranche has a maturity date of 9 months from the date of funding of that tranche. The principal and accrued interest are convertible into shares of the Company’s common stock at a fixed price of $0.002. In the event of default, the conversion price will be 60% of the lowest intraday rice during the previous 21 days from conversion. If the Company issues or sells common stock or any instrument that is convertible or exercisable into common stock at a price less than the fixed conversion price, the fixed conversion price shall be reset to such lower price. The holder of these notes is not permitted to convert such notes to the extent that the holder or any of its affiliates would beneficially own in excess of 4.99% of the Company’s common stock after such conversion.

In connection with promissory note, the Company issued 30,000,000 shares of stock to the lender as a deferred finance cost and granted a warrant to purchase 25,000,000 shares of common stock at a fixed price of $0.006 for a period of 10 years. If the Company issues or sells common stock or any instrument that is convertible or exercisable into common stock at a price less than the fixed conversion price, the fixed conversion price shall be reset to such lower price. Each additional tranche that is borrowed, the Company will issue shares of common stock in the amount of 393 multiplied by the principal amount advanced, and additional warrants for 327 multiplied by the principal amount advanced. The lender will receive an additional 25,000,000 warrants upon fully funding the convertible note payable. The common stock was valued at $0.004 per share for a total fair value of 120,000 and a relative fair value of $22,304, which was recorded as a debt discount. The warrants were valued using the Black-Scholes model with volatility, measurement date Treasury yield curve rate of ten-year bond, closing stock price, convertible period, and conversion price as inputs. The fair value of the warrants was determined to be $99,014, with a relative fair value of $18,403, which was recorded to debt discount.

On November 3, 2021 the second trance in the amount of $50,000 was advanced under the March 21, 2021 financing, with $8,824 of the original issue discount being assigned to this tranche. No additional shares or warrants have been issued related to this tranche.

During the nine months ended September 30, 2022, as a result of default provisions, and additional $61,440 of principal was added to the note and recorded as interest expense. In addition, the Company issued 65,000,000 shares for the conversion of $124,688 of principal and accrued interest on the note

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 $58,824 was recorded on the note.

As of September 30, 2022, the company owed $120,113 under the promissory note. Unamortized debt discount was $0 as of September 30, 2022, with $46,326 of amortization of debt discount during the nine months ended September 30, 2022.

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 $46,500 after an original issue discount of $8,889 and legal fees of $3,500. The convertible note bears interest at 12% and matures on May 16, 2022, with interest accruing at a rate of 24% if the Company is in default. The principal and accrued interest are convertible into shares of the Company’s common stock at a fixed price of $0.002 in the event of default. If the Company issues or sells common stock or any instrument that is convertible or exercisable into common stock at a price less than the fixed conversion price, the fixed conversion price shall be reset to such lower price.

In connection with promissory note, the Company issued 20,000,000 shares of stock to the lender as a deferred finance cost and granted a warrant to purchase 9,814,815 shares of common stock at a fixed price of $0.006 for a period of 5 years. If the Company issues or sells common stock or any instrument that is convertible or exercisable into common stock at a price less than the fixed conversion price, the fixed conversion price shall be reset to such lower price. The common stock was valued at $0.0042 per share for a total fair value of 84,000 and a relative fair value of $23,019, which was recorded as a debt discount. The warrants were valued using the Black-Scholes model with volatility, measurement date Treasury yield curve rate of ten-year bond, closing stock price, convertible period, and conversion price as inputs. The fair value of the warrants was determined to be $39,187, with a relative fair value of $10,739, which was recorded to debt discount.

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 $12,743 was recorded on the note.

As of September 30, 2022, the company owed $8,889 under the promissory note. Unamortized debt discount was $0 as of September 30, 2022, with $44,248 of amortization of debt discount during the nine months ended September 30, 2022.

On March 29, 2022, the Company entered into a secured convertible promissory note, with a principal amount of $7,500. The convertible note bears interest at 14% and matures on March 29, 2023, with interest accruing at a rate of 22% if the Company is in default. The holder may convert the note at a rate of $0.001 at any time through the maturity date into shares of common stock, to the extent and provided that no holder of this note was or will be permitted to convert such notes to the extent that the holder or any of its affiliates would beneficially own in excess of 4.99% of the Company’s common stock after such conversion. In the event of a default by the Company under the terms of the note, the conversion price will be 60% of the lowest trading price of the Company’s common stock with the previous 21 days.

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 $7,500 was recorded on the note.

As of September 30, 2022, the company owed $7,500 under the promissory note. Unamortized debt discount was $3,699 as of September 30, 2022, with $3,801 of amortization of debt discount during the nine months ended September 30, 2022.

In April 2022, the Company entered into a Secured convertible promissory note for an aggregate principal amount of $27,778. The Company received net cash proceeds of $22,000 after an original issue discount of $2,778 and legal fees of $2,500. The convertible note bears interest at 12% and matures on October 6, 2022, with interest accruing at a rate of 24% if the Company is in default. The principal and accrued interest are convertible into shares of the Company’s common stock at a fixed price of $0.001 in the event of default. If the Company issues or sells common stock or any instrument that is convertible or exercisable into common stock at a price less than the fixed conversion price, the fixed conversion price shall be reset to such lower price.

In connection with promissory note, the Company granted a warrant to purchase 6,250,000 shares of common stock at a fixed price of $0.004 for a period of 5 years. If the Company issues or sells common stock or any instrument that is convertible or exercisable into common stock at a price less than the fixed conversion price, the fixed conversion price shall be reset to such lower price. The warrants were valued using the Black-Scholes model with volatility, measurement date Treasury yield curve rate of ten-year bond, closing stock price, convertible period, and conversion price as inputs. The fair value of the warrants was determined to be $18,714, with a relative fair value of $10,112, which was recorded to debt discount.

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 $11,888 was recorded on the note.

As of September 30, 2022, the company owed $27,778 under the promissory note. Unamortized debt discount was $911 as of September 30, 2022, with $26,867 of amortization of debt discount during the nine months ended September 30, 2022.

On May 9, 2022, the Company entered into a secured convertible promissory note, with a principal amount of $75,000 in exchange for services rendered to the Company. The convertible note bears interest at 10% and matures on November 9, 2022, with interest accruing at a rate of 22% if the Company is in default. The holder may convert the note at a rate of $0.0015 at any time through the maturity date into shares of common stock, to the extent and provided that no holder of this note was or will be permitted to convert such notes to the extent that the holder or any of its affiliates would beneficially own in excess of 4.99% of the Company’s common stock after such conversion.

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 $75,000 was recorded on the note.

As of September 30, 2022, the company owed $75,000 under the promissory note. Unamortized debt discount was $16,304 as of September 30, 2022, with $58,696 of amortization of debt discount during the nine months ended September 30, 2022.

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 0%, (2) expected volatility ranging from 198% - 284%, (3) risk- free interest rate ranging from 0.43% – 3.92%, (4) expected life 0.5 – 0.75 year, and (5) estimated fair value of the Company’s common stock ranging from $0.0025 - $0.0059 per share. The instruments were fair valued at the date it was settled and the period end date of September 30, 2022.

The table below presents the change in the fair value of the derivative liability: 

The total impact to the Company’s statement of operations for derivatives during the nine months ended September 30, 2022 was a gain of $161,614.

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 Reverse Stock Split has not been executed to date.

During the nine months ended September 30, 2022 the company issued 153,750,000 shares of common stock for cash proceeds of $615,000

During the nine months ended September 30, 2022 the company issued 93,697,260 shares of common stock for the conversion of $230,874 of principal and interest on convertible notes as discussed in Note 3.

During the nine months ended September 30, 2022 the company issued 15,200,000 shares of common stock as compensation for services with a fair value of $37,240.

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: 

Outstanding warrants at September 30, 2022 had an aggregate intrinsic value of $11,875.

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 $102,878 related to its office space lease, which has a monthly payment of $4,134 and expires in March 2021. As part of the Infusionz Acquisition, the Company assumed the business’ operating lease for warehouse space. The Company recognized preliminary estimates of the right of use assets and liabilities related of this operating lease of $23,315. The lease has a monthly payment of $4,000 through August 31, 2019. The Infusionz business also has two rental agreements with total payments of $3,800 per month with month to month terms. In April 2018, Pura Vida Vitamins LLC entered into a month to month rental agreement for office space for $1,000 per month. 

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 $928,372 was recognized at commencement of the lease. The Company did not consider the purchase option to be reasonably certain of exercise in its analysis of the lease. The Company paid a security deposit of $58,749 at commencement, along with first and last month’s rent, for a total of $102,000. During the year ended December 31, 2020, the Company was notified by its landlord to vacate the premises and lost the use of the asset. The landlord subleased the property and agreed to accept one year of payments as final settlement of the lease. The Company recognized a loss on settlement of $172,740 related to this lease.

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 $6,944 related to this agreement.

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheet at September 30, 2022 and December 31, 2021: 

The Company recognized operating lease cost of $0 for the nine months ended September 30, 2022 and 2021. The Company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable.

The following table provides the maturities of lease liabilities at September 30, 2022: 

At September 30, 2022, the Company had no additional leases which had not yet commenced.

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 $1,350,000, which shall include inventory of $450,000, Rx Data of $890,000 and member’s non-compete contribution of $10,000.

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:

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.

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. 42^nd 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

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.

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.

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:

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.

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:

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.

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:

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

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.