UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C.  20549








FORM 10-K





(Mark One)





[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended March 31, 2011





[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from ___________ to _____________








Commission File Number: 333-90618





CN DRAGON CORPORATION


(Name of small business issuer as specified in its charter)








Nevada
98-0358149(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)8/F Paul Y Centre, 51 Hung To Rd.

Kwun Tong, Kowloon, Hong Kong

(Address of principal executive offices, including zip code)





Registrant’s telephone number, including area code:                                                                                                         (+852) 2772 9900


Securities registered pursuant to Section 12(b) of the Act:                                                                                                None


Securities registered pursuant to Section 12(g) of the Act:                                                                                                common stock, $.001 par value








Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes [  ] No[X]





Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [  ]





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K.  Yes [ ]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.





Large accelerated filer  [   ]

Accelerated filer    [    ]Non-accelerated filer    [   ]

(Do not check if smaller reporting company)

Smaller reporting company    [X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]





State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:





The aggregate market value of the voting and non-voting common equity held by non-affiliates on August 13, 2011 (an aggregate 19,463,291 out of a total of 81,010,491 shares outstanding) was approximately $2,919,493 computed by reference to the closing price of $0.15, as quoted on www.otcmarkets.com.





APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PRECEDING FIVE YEARS





Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.


Yes [  ]  No [  ]





(APPLICABLE ONLY TO CORPORATE REGISTRANTS)





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  As of August 12, 2010, there were 81,010,491 shares of our common stock issued and outstanding.





DOCUMENTS INCORPORATE BY REFERENCE





List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to securities holders for fiscal year ended December 24, 1980).





Throughout this Annual Report on Form 10-K, we refer to CN Dragon Corporation,  as “we,” “us,” “our,” “the Company,” “our Company,” unless otherwise specified.





Cautionary Statement Concerning Forward-Looking Statements





The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes included in this report.  This report contains “forward-looking statements.” The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.





Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements.  Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in this report.





The forward-looking events discussed in this report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.  For these statements, we claim the protection of the “bespeaks caution” doctrine. All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.





PART I





Item 1.                      Business.





Organization





CN Dragon Corporation was incorporated under the laws of the State of Nevada on August 30, 2001, under the name Infotech Business Systems, Inc. On June 8, 2007, we changed our name to Wavelit, Inc. On September 14, 2010, we changed our name to CN Dragon Corporation, and announced on a Current Report on Form 8-K dated December 2, 2009, that we made the determination to change the direction of the Company’s current business operations and direct the Company’s future activities and endeavors towards the development, ownership and operation of upscale lodging and leisure facilities in the People’s Republic of China (“PRC”).





On January 11, 2010, we effected a reverse split of our Common Stock issued on a 100:1 basis. Accordingly, 180,469,940 shares of Common Stock issued were decreased to 1,804,696 shares issued. The total number of shares of Capital Stock which the Company was authorized to issue remained unchanged at 625,000,000, made up of 250,000,000 shares of Common Stock [par value $0.001] and 375,000,000 shares of Preferred Stock [par value $0.001]. The reverse split had the effect of creating newly available authorized shares of Common Stock which the Company intended to use for various purposes, including effecting acquisitions, business expansion, obtaining finance and recruiting management personnel, all of which were necessary for the Company to undertake new business operations in the PRC.





Business of the Issuer





Background





On May 17, 2010, we completed a Share Exchange Agreement with CNDC Group Ltd, wherein the Company acquired 100% of CNDC Corporation (“CNDC”). In exchange, we issued 42,000,000 restricted shares of our common stock to CNDC Group Ltd, placing CNDC Group Ltd as the majority shareholder of the Company. The acquisition was described by the Company on a Current Report on Form 8-K filed with the Securities and Exchange Commission dated 21 May, 2010. All the operations of CNDC have become the operations of the Company and we intend to carry on CNDC’s business as the company’s sole line of business.





Business Description





CNDC is a hotel management, development and consulting group. CNDC was incorporated under the laws of the British Virgin Islands on March 26, 2008. CNDC operates through its wholly-owned subsidiaries, CN Dragon Holdings Ltd and Zhengzhou Dragon Business Ltd, which were incorporated in Hong Kong and People’s Republic of China (“PRC”) respectively. From our inception, we have been engaged in providing consulting and management services to hotel investors and owners in the PRC. Our services have focused on covering major aspects of hotel development from the initial planning stages of a project to enhancing the management of a fully operating hotel asset. Specifically, we offer hospitality development, operations management and financial advisory services to clients. Over the years, we have specialized in assisting a number of clients in redeveloping unused idle buildings into fully operating hotel assets.





Hospitality Development





CNDC offers initial consultation, planning and development services to aspiring hotel owners. We will discuss with owners ideas and options to help quickly formulate a course of action and identify steps that need to be taken. Our experienced team will devise a solid project development plan, investing many hours in feasibility work and assisting owners in executing the plan. We believe a clear project development schedule is critical for owners to successfully develop a hotel on time and within budget. CNDC’s comprehensive hospitality development services include:





·
Project appraisal


·
Market feasibility studies


·
Formulating master development plan


·
Investment analysis, financial projections, risk analysis, and recommendations;


·
Pre-opening management, including planning, design and facility mix for hotels, resorts and spas, and support facilities;


·
Engagement of professionals such as master planners, architects, interior designers, landscape and services engineers


·
Training and staff development, including personalized services culture and guest recognition;





Operations Management





CNDC’s underlying goal is to enhance the efficiency and value of our client’s hotel assets, providing professional and candid consultant & management services. Our operations management services include:





·
Restructuring operations & procedures


·
Supplies procurement


·
Implement enhanced management systems, including financial reporting system;


·
Human resource management & training


·
Marketing & promotions





Financial Advisory





CNDC’s financial advisory services provides integrated investment and added-value solutions for businesses involved in the hospitality industry. Services offered includes customized investment advice, business consultation, mentorship programs, and capital raising strategies (debt & equity). Individual advice is tailored having conducted due diligence on the venture and the range of financial instruments available for closing a deal.





Business Strategy of CNDC





Anticipating the fast and continuous growth of the PRC economy, CNDC is directing and predominately focusing its business into the development and operation of luxury hotels & resorts in the PRC’s second-tier city holiday destinations. Under this new direction, CNDC plans to derive the majority of its earnings and revenue from the development of hotels & resorts; which includes management and other revenue generated from hotel investments. CNDC’s hotels & resorts business will specialize in the upscale segment of the hospitality sector, offering luxury accommodation and hospitality services to savvy business and leisure travelers. Our long term strategy is to build an asset based portfolio of hotel businesses, aiming to cater for the demand of consumers in the growing premium segment in the PRC.





CNDC presently does not have any ongoing hotel & resorts or other lodging developments. It current business involves actively seeking to procure interests in respect to properties in this segment through CNDC’s established network in the PRC hotel industry. CNDC’s procurement strategy involves identifying high growth second-tier cities in the PRC and examining whether they exhibit a strong demand for luxury hospitality services and facilities. We carry this out by thoroughly analyzing tourism figures, the supply of upper scale lodging and other industry related data. Additional factors we evaluate include the locality, population, GDP, infrastructure and the major industries of each target city.





Market Analysis





One of CNDC’s key strategies is to target investments in the PRC’s second-tier cities that have been experiencing a sustained period of economic growth. This growth has attracted business and investment interests from around the world fuelling an increase in demand for travel and lodging services. Further, tourism in the PRC has greatly expanded over the last few decades. The emergence of a newly emerging middle class and an easing of restrictions on movement by the Chinese authorities are also fueling this travel increase. The PRC’s long history and diverse tourism resources will attract both international and domestic leisure tourists to visit different parts of the country, creating a high demand for hotel products and services.





In 2008, the PRC was the world’s second largest economy with its GDP registering US$ 7.9 trillion (IMF). According to the IMF, this figure will be eclipsed in 2009 with the PRC’s GDP already registering US$ 8.7 trillion in Oct 2009. In comparison with the US (1.1%) and Europe (0.80%), the PRC was the fastest growing economy last year with a GDP real growth rate of 9%. CNDC believes that the PRCs’ emerging second-tier cities have prospered along with that growth, attracting major investment and developments; with such markets evidencing a strong demand for modernization and presenting investors with comfortable room for growth.





In addition, CNDC believes the PRC has witnessed a rapid development of its hotel properties over the past two decades. The strengths of the PRC’s hotel industry rest in (1) the growing popularity of the PRC as a major international business market and tourism destination, (2) the diversity and quality of the PRC’s hotel products, (3) the efforts to standardize operations and improve service quality, and (4) increased development by global hotel corporations. The World Tourism Organization estimates that the PRC will become the leading tourist destination in the world by 2020. Therefore, CNDC believes that sustained economic development and the PRC’s rising popularity will provide a hotel market conducive to development.





Competition





CNDC faces significant competition from other hotel developers and operators, most of which have recognized trade names, and greater resources. In the event that CNDC are able to operate hotels & resorts in the PRC, competition may limit CNDC’s ability to attract and retain guests and may reduce room rates we are able to charge, which could ultimately reduce any future revenues. Further, since the PRC’s accession to the World Trade Organization (WTO) on December 11, 2001, the PRC has been gradually opening its hotel market to international development and competition. The Intensified competition from international developers and operators will pose great challenges to domestic hotel operations.





Employees





CNDC has 1 full time employee at March 31, 2011. CNDC intends to hire additional full time employees to implement its plans to expand its business into the development and operation of hotels & resorts.





Reorganization





Spin-off of wholly-owned subsidiaries





On February 18, 2010, we filed with a definitive information statement with the Securities and Exchange Commission on Schedule 14C to spin-off our wholly-owned subsidiaries Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada) and China Teletech Limited (fka. Stream Horizons Studio, Inc.) (the “Spin-Off”). We believe the Spin-Off will better equip the company to successfully implement its new business direction in engaging in the development, ownership and operation of upscale lodging and leisure facilities in the PRC. Specifically, the spin-offs will separate distinct companies with different financial, investment and operating characteristics so that each can adopt business strategies and objectives tailored to their respective markets. This will allow the companies that have operations that are inconsistent with each other to better prioritize the allocation of their management and their financial resources for achievement of their corporate objectives.





In order to better achieve these objectives, the company pursuant to the Spin-Off relinquished and transferred administrative control of its wholly-owned subsidiaries, Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada) and China Teletech Limited (fka. Stream Horizons Studio, Inc.) to ATB Company, a Colorado corporation, (“ATB”). This transaction was executed in accordance with a Administrative Control Transfer Agreement, effective February 18, 2010, between CN Dragon Corporation, Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada), China Teletech Limited (fka. Stream Horizons Studio, Inc.) and ATB Company.





In accordance with the Spin-Off, record shareholders of CN Dragon Corporation as of February 12, 2009 (the “Record Date”) will receive one common share of Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada) and China Teletech Limited (fka. Stream Horizons Studio, Inc.) for everyone one share of CN Dragon Corporation common stock owned. Accordingly, ATB Company will receive 40 million shares of common stock in Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada) and China Teletech Limited (fka. Stream Horizons Studio, Inc.), representing 56% controlling interest in each.





In light of this and to better prioritize our endeavors in establishing business operations in the PRC, the Company relinquished and transferred administrative control of Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada) and China Teletech Limited (fka. Stream Horizons Studio, Inc.) to ATB Company.





Sale of wholly-owned subsidiary





Effective November 22, 2007, we completed a Stock Purchase Agreement with ATB Company wherein the Company acquired 100% of Precision Aviation, Inc. (“Precision”) in exchange for 40,000,000 restricted common shares of our common stock.  Following the issuance, ATB Company was our majority shareholder.





Effective March 29, 2010, we completed the sale of our wholly-owned subsidiary, Precision back to its prior owner ATB Company. Under the terms of the Stock Purchase Agreement, ATB Company acquired 100% of the issued and outstanding common stock of Precision for the consideration of US $1. We believe the sale of Precision allows us to better prioritize our management and financial resources towards implementing our new business strategy in engaging in the development, ownership and operation of upscale lodging and leisure facilities in the PRC.





Management Strategy





Following the reorganization of Precision Aviation, Inc., Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada) and China Teletech Limited (fka. Stream Horizons Studio, Inc.), management was able to direct all the Company’s resources towards implementing our new business operations in the PRC. The scope of which included conducting due diligence on several identified acquisition targets with a well establish business in the lodging and leisure industries in the PRC, as well as conducting comprehensive market research specifically on high growth second-tier cities in the PRC. Management viewed this as an integral step towards building the Company’s network in the PRC, and utilized their existing in the area and the expertise of local lodging and leisure operators. After several investigations and on site visits, the Company acquired CNDC Corporation on May 17, 2010, which operates through CN Dragon Holdings Ltd and Zhengzhou Dragon Business Ltd, having a two year operational history in providing consulting and management services to hotel investors and owners in the PRC.





Item 1A.                      Risk Factors.





Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included or referred to in this Current Report on Form 8-K, before purchasing shares of our common stock. There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. The risks described below are not the only risks we will face. Our business, financial condition and results of operations may be materially adversely affected by any of the following risks. In such case, the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not exclusive and are intended to reflect the material risks that are specific to us, related to our industry and related to companies that undertake a public offering or seek to maintain a class of securities that is registered or traded on any exchange or over-the-counter market.





Risks Related To Our Company





In terms of our hotels & resorts business, we are a development stage company and have little to no operating history upon which to evaluate our business.





We have a limited operating history and may not succeed. Our business strategy is “proposed” and “intended” but we may not be able to successfully implement it. Our primary business purpose is developing our luxury hotels & resorts business in the PRC. We expect that unanticipated expenses, problems, and technical difficulties will occur and that they will result in material delays in the operation of our business. We may not obtain sufficient capital or achieve a significant level of operations and, even if we do, we may not be able to conduct such operations on a profitable basis.





You should consider our prospects in light of the risks, uncertainties and difficulties frequently encountered by companies that, like us, are in their early stage of development. We cannot guarantee that we will succeed in achieving our business goals, and our failure to do so would have a material adverse effect on our business, prospects, financial condition, operating results and our abilities to continue as a going concern. We expect that we will require additional capital in order to execute our current business plan. As a development stage business, we may in the future experience under capitalization, shortages, setbacks and many of the problems, delays and expenses encountered by an early stage business. As a result of these factors, other factors described herein and unforeseen factors, we may not be able to successfully implement our business model.





We need to attract qualified employees.





Our future success depends in large part upon our ability to attract, train, retain and motivate employees. Qualified individuals of the requisite caliber and number needed to fill positions are in short supply in some areas. Our industry is characterized by high levels of employee attrition. Although we believe we will be able to offer competitive salaries and benefits, we may have to increase spending in order to retain personnel.





The success of our business strategy will be dependent on our ability to recruit and/or promote enough qualified personnel to support our future growth. The time and effort required to train and supervise a large number of new managers and associates may divert our existing resources and adversely affect our operating and financial performance.





We may pursue strategic acquisitions, which could have an adverse impact on our business.





We may from time to time consider acquiring companies or assets. To do so, we would need to identify suitable acquisition candidates, negotiate acceptable acquisition terms and obtain appropriate financing. Any acquisition that we pursue, whether or not successfully completed, may involve risks, including:





·
the diversion of our capital and our management’s attention from other business issues and opportunities;


·
difficulties in successfully integrating companies or assets that we acquire, including personnel, financial systems and controls, distribution, operations and general operating procedures;


·
material adverse effects on our operating results, particularly in the fiscal quarters immediately following an acquisition as it is integrated into our operations;


·
potentially dilutive issuances of our equity securities; and


·
the incurrence of debt and contingent liabilities.





We may have insufficient funds to implement our business strategy.





Our business strategy will require additional capital for, among other purposes, developing and operating hotels & resorts in the PRC. Adequate financing may not be available or, if available, may not be available on terms satisfactory to us. If we fail to obtain sufficient additional capital, there can be no assurance that we will be able to fund our current plans for acquiring and developing hotels & resorts businesses.





Effect of existing or probable governmental regulations on the business, and economic and political risks





Our operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the economic, political, legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among other things.





Operating risks common to the tourism and hospitality industry in the PRC could reduce our potential revenues.





Risks associated with the tourism and hospitality industry include the following, any of which could reduce our potential revenues:





·
competition for guests and hosting events from other hotels;


·
increases in operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation and other factors, which may not be offset in the future by increased room rates;


·
dependence on demand from business and leisure travelers;


·
increases in energy costs, airline fares, and other expenses related to travel, which may deter travelling; and


·
adverse effects of weak general and local economic conditions.





Costs of legal matters and regulation could exceed estimates.





We may become parties to a number of legal and administrative proceedings involving matters pending in various courts or agencies. These include proceedings associated with businesses which may be owned, operated or used by us and include claims for personal injuries and property damages. It is not possible for us to estimate reliably the amount and timing of all future expenditures related to legal matters and other contingencies.





Risks Related to Our Stock





We require substantial capital requirements to finance our operations.





We have substantial anticipated capital requirements and we may require additional capital for future operations. We plan to finance anticipated ongoing expenses and capital requirements with funds generated from the following sources:





·
available cash and cash investments; and


·
capital raised through debt and equity offerings.





The funds provided by these sources, if attainable, may not be sufficient to meet our anticipated capital requirements and we may not be able to obtain additional financing in such a circumstance.





As a public company, our stock could be extremely volatile and, as a result, you may not be able to resell your shares at or above the price you paid them.





Among the factors that could affect our stock price are:





·
industry trends and the business success of our developments;


·
actual or anticipated fluctuations in our quarterly financial and operating results;


·
our failure to meet the expectations of the investment community and changes in investment community recommendations or estimates of our future operating results;


·
strategic moves by our competitors, such as product announcements or acquisitions;


·
regulatory developments;


·
litigation;


·
general market conditions;


·
other domestic and international macroeconomic factors unrelated to our performance; and


·
additions or departures of key personnel.





The stock market has from time to time experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These kinds of broad market fluctuations may adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. If a securities class action suit is filed against us, we would incur substantial legal fees and our management’s attention and resources would be diverted from operating our business in order to respond to the litigation.





We need to raise additional funds. If we fail to, it could be difficult to continue our business.





We currently do not have sufficient financial resources to meet our capital requirements. We will seek additional funding through public or private financing or through collaborative arrangements with strategic partners. You should be aware that in the future:





·
we may not obtain additional financial resources when necessary or on terms favorable to us, if at all;


·
any available additional financing may not be adequate; and


·
we may be required to sell shares of our common stock at extremely discounted prices in order for us to obtain additional financing.





If we cannot raise additional funds when needed, or on acceptable terms, we may not be able to continue to operate.





We do not anticipate paying dividends on our capital stock in the foreseeable future.





We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, the terms of any future debt or credit facility may preclude us from paying dividends. As such, our shareholders may not receive any profit on their investment other than from the eventual sale of their shares, if any.





Risks Related to Doing Business in the PRC





Changes in PRCs’ political or economic situation could harm us and our operating results.





Economic reforms adopted by the Chinese government have had positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time. This could either benefit or damage our operations and profitability. Some of the things that could have this effect are:





·
level of government intervention in the economy;


·
control of foreign exchange;


·
methods of allocating resources;


·
balance of payments position;


·
international trade restrictions; and


·
international conflict.





The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, OECD, in many ways. For example, state-owned enterprises still constitute a large portion of the Chinese economy and weak corporate governance and a lack of flexible currency exchange policy still prevail in the PRC. As a result of these differences, we may not develop in the same way or at the same rate as might be expected if the Chinese economy was similar to those of the OECD member countries.




Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.





The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in the PRC. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in the PRC may be protracted and result in substantial costs and diversion of resources and management attention.





You may have difficulty enforcing judgments against us.





We are a Nevada company and most of our assets are located outside of the United States. Most of our current operations will be conducted in the PRC. In addition, all of our directors and officers are nationals and residents of countries other than the United States. All of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, all of whom are not residents in the United States and whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts.





The PRC government exerts substantial influence over the manner in which we must conduct our business activities.





The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in the PRC may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in the PRC are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.  Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.





Future inflation in the PRC may inhibit our ability to conduct business in the PRC.





In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in the PRC, and thereby harm the market for our products and our company.





Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.





The majority of our revenues will be settled in RMB and U.S. dollars, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to settle any business costs outside the PRC or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in the PRC authorized to conduct foreign exchange business. In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to governmental approval in the PRC, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.





Fluctuations in exchange rates could adversely affect our business and the value of our securities.





The value of our common stock will be indirectly affected by the foreign exchange rate between U.S. dollars and RMB and between those currencies and other currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future. Since July 2005, the RMB has no longer been pegged to the U.S. dollar. Although the People's Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.





Item 1B.                      Unresolved Staff Comments.





None.





Item 2.                                Properties.





We do not own any property. Our principal office is located at 8/F Paul Y Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong.





Item 3.                                Legal Proceedings.





We do not believe we are a party to any pending or ongoing legal proceeding responsive to this item.





Item 4.                                (Removed and Reserved).




PART II





Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.





Market Information





Our common stock is quoted on the Over the Counter Bulletin Board under the Symbol “DRGN.  The stock price of our stock has been extremely volatile and an active public market for our common stock may not develop or be sustained. The following table sets forth the high and low bid quotations of our common stock as reported by Pink OTC Markets for each quarterly period within the last two fiscal years ended March 31, 2011 and have been adjusted to reflect our 100:1 reverse split which took effect on January 11, 2010. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.





High
Low2009
Second Quarter
$4.00
$0.60Third Quarter
$1.50
$0.11Fourth Quarter
$0.40
$0.152010
First Quarter
$0.51
$0.11High
Low2010
Second Quarter
$1.05
$0.15Third Quarter
$0.50
$0.15Fourth Quarter
$0.45
$0.152011
First Quarter
$0.20
$0.15





Penny Stock Regulations





The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has


a market price of less than $5.00 per share, subject to certain exceptions. Depending on market fluctuations, our common stock may be considered a “penny stock”. As a result, it may be subject to rules that impose additional sales practice requirements on broker/dealers who sell these securities to persons other than established customers and accredited investors. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of our securities. In addition, the broker-dealer must receive the purchaser’s written consent to the transaction prior to the purchase. The broker-dealer must also provide certain written disclosures to the purchaser. Consequently, the “penny stock” rules may restrict the ability of broker/dealers to sell our securities, and may negatively affect the ability of holders of our shares to resell them.





Holders





As of March 31, 2011, we had 120 shareholders of record of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. We have appointed Action Stock Transfer Corporation, of S. Highland Drive, Suite 300, Salt Lake City, Utah to act as our transfer agent.





Dividends





We have not declared any dividends on our common stock during the two fiscal years ended March 31, 2011 and 2010, or in any subsequent period. We do not plan to declare any dividends in the foreseeable future. There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:





1.           We would not be able to pay our debts as they become due in the usual course of business; or


2.
Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.





Securities authorized for issuance under equity compensation plans





We do not have any securities authorized for issuance under equity compensation plans.





Item 6.
Selected Financial Data.





As a smaller reporting company, we have elected not to provide the information required by this item.





Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.





The matters and items discussed in this annual report on Form 10-K are forward-looking statements that involve risks and uncertainties, other than historical and factual statements. Actual results of the company may differ materially from the results discussed in the forward-looking statements. Certain factors that could contribute to such differences are discussed with the forward-looking statements throughout this annual report.





The following discussion should be read together with the information contained in the consolidated financial statements and related notes included elsewhere in this annual report.





General





Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate these estimates, including those related to business development expenses, financing operations and contingencies and litigation. We base these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.




Critical Accounting Policies





Method of Accounting





The Company maintains its general ledger and journals with the accrual method of accounting for financial


reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.





Principles of Consolidation





The consolidated financial statements are presented in US Dollars and include the accounts of the Company and its subsidiaries (the “Group”).  All significant inter-company balances and transactions are eliminated in consolidation.





The Company owned its subsidiaries and continued to own the equity’s interests through March 31, 2011.  The following table depicts the identity of the subsidiaries:








Date of




Share capital/Disposal (D)/
Place & date of Incorporation

Attributable equity Interest %

registeredName of subsidiary
Acquisition(A)
incorporation

interest %

capitalCNDC Corporation
May 17, 2010
British Virgin Islands/(A)
March 26, 2008

100

US$1CN Dragon Holdings Limited
May 17, 2010
Hong Kong

100

HK$1(A)
Mar 5, 2008Zhengzhou Dragon Business Limited
May 17, 2010
PRC/Sep 12, 2008

100

HK$3,000,000(A)
(Deregistered onJuly 12, 2010)





Property, plant and equipment





Property, plant and equipment are carried at cost less accumulated depreciation.  Depreciation is provided over their estimated useful lives, using the straight-line method.





The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.





Trade receivables





Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for uncollectible accounts is maintained for all customers in considering with a variety of factors, including the length of past due, significant one-time events and the Group’s historical experience. Bad debts are written off as incurred.





Accounting for impairment of long-lived assets





The Group periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in ASC 360. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognised based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.





During the reporting period, there was no impairment loss.





Cash and cash equivalents





The Group considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Group maintains bank accounts only in the PRC and Hong Kong. The Group does not maintain any bank accounts in the United States of America.





Revenue recognition





Revenue is recognized when all of the following criteria are met:





- Persuasive evidence of an arrangement exists;


- Delivery has occurred or services have been rendered;


- The seller’s price to the buyer is fixed or determinable; and


- Collection is reasonably assured.


Income taxes





The Group accounts for income taxes using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Group is able to realize their benefits, or that future realization is uncertain.





Cash and concentration risk





Cash includes cash on hand and demand deposits in bank accounts maintained within PRC and Hong Kong.  Total cash in these banks at March 31, 2011 amounted to $898, of which no deposits are covered by Federal Depository Insured Commission.  The Group has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.





Results of Operations





Comparison of the Years ended March 31, 2011 and 2010





The following table sets forth key components of our results of operations for the Company, for the periods indicated (Stated in US Dollars).








Year-ended

March 31, 2011

US$
Year-ended

March 31, 2010

US$Net Revenues
451,710
1,151,397Cost of Net Revenue
(391,388)
(843,906)Gross Profit
60,322
307,491Operating Expenses:

Selling and Distribution

General and administrative
-

(958,097)
(81,194)

(407,258)Income (Loss) Before Income Taxes
(897,775)
(180,961)Income Taxes
-
-Net Profit (Loss)
(897,775)
(180,961)




For the year ended March 31, 2011, we incurred a loss from operations of $897,775. Our principal areas of expenditure during the period were for Accounting and Legal fees, and staffing fees. Accounting and Legal fees reflect costs incurred for regulatory filings and due diligence conducted on lodging and leisure businesses in the PRC. Terminating our business operations in the PRC also caused our revenues to decrease to $451,710 for the year ended March 31, 2011. This follows from the spin-off of our subsidiaries, Galaxy Networks, Inc. (USA), Galaxy Networks, Inc. (Canada), China Teletech Limited (fka. Stream Horizons Studio, Inc.) and sale of Precision Aviation, Inc. This allowed the Company to direct all the Company’s resources towards implementing our new business operations in the PRC. The scope of which included conducting due diligence on several identified acquisition targets with a well establish business in the lodging and leisure industries in the PRC, as well as conducting comprehensive market research specifically on high growth second-tier cities in the PRC.


Pursuant to these endeavors, the Company acquired CNDC Corporation on May 17, 2010, which operates through CN Dragon Holdings Ltd and Zhengzhou Dragon Business Ltd, having a two year operational history in providing consulting and management services to hotel investors and owners in the PRC.




Liquidity and Capital Resources





Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. Our working capital is currently insufficient to sustain our current operations.  Our plan is to seek additional funding and business relationships.





While management believes that revenues can be grown and that ultimately profitable operations can be attained in the future, there is no assurance that revenues will be maintained or grown or that they will ultimately be of a level required to generate profitable operations or provide positive cash follow. We are unable to predict at this time the exact amount of any additional working capital we will require to fund the implementation of our business plan and achieve cash flow sufficient to sustain operations and achieve profitability. To fund out operations and more fully implement our business plan, we may seek additional capital in the private and/or public equity markets through the sale of equity and debt securities. However, if we receive additional funds through the issuance of equity securities, our existing stockholders may experience significant dilution. If we issue new securities, they may contain certain rights, preferences or privileges that are senior to those of our common stock. Moreover, we may not be successful in obtaining additional financing when needed or on terms favorable to our stockholders. As we have no commitments from any third parties to provide additional equity or debt financing, we cannot provide any assurance that we will be successful in attaining such additional funding.




Off-balance Sheet Arrangements





We maintain no significant Off-balance Sheet Arrangements





Future Goals





In the next 12 months, our goal is to fully establish our business in the PRC. We plan to make acquisitions of existing operating hotel assets, and/or by developing, redeveloping hotel assets under our brand. Our long term goal is to build an asset based portfolio of hotels & resorts throughout the PRC’s emerging second-tier cities that are renown for tourism. To achieve our goals, we plan on making a private placement of our securities to raise the funds necessary. The development or acquisition of a suitable hotel asset is dependent upon sufficient financing and the identification of suitable development, or operating hotel.





Recent Accounting Pronouncements





In April 2011, the FASB issued ASU 2011-02, Receivable (Topic 310) “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”, which clarifies when creditors should classify loan modifications as troubled debt restructurings. The guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the year. The guidance on measuring the impairment of a receivable restructured in a troubled debt restructuring is effective on a prospective basis. A provision in ASU 2011-02 also supersedes the FASB’s deferral of the additional disclosures about troubled debt restructurings as required by ASU 2010-20. The adoption of ASU 2011-02 is not expected to have a material impact on the Company’s financial condition or results of operations.





In April 2011, the FASB issued ASU 2011-03, Transfers and Servicing (Topic 860), Consideration of Effective Control on Repurchase Agreements, which deals with the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU 2011-03 changes the rules for determining when these transactions should be accounted for as financings, as opposed to sales. The guidance in ASU 2011-03 is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The adoption of ASU 2011-03 is not expected to have a material impact on the Company’s financial condition or results of operation.





In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU 2011-04 clarifies some existing concepts, eliminates wording differences between U.S. GAAP and IFRS, and in some limited cases, changes some principles to achieve convergence between U.S. GAAP and IFRS. ASU 2011-04 results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-04 to have a material effect on its operating results or financial position.





In June 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-05, Comprehensive Income (Topic 220) Presentation of Comprehensive Income, which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of equity. ASU 2011-05 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its operating results or financial position but is evaluating the format revision on the presentation of comprehensive income.





Item 7.A                      Quantitative and Qualitative Disclosures About Market Risk.





As a smaller reporting company, we have elected not to provide the information required by this item.





Item 8.
Financial Statements and Supplementary Data.





Our financial statements and related explanatory notes can be found on the “F” Pages at the end of this Report.





Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.





On May 20, 2010, we dismissed Mendoza Berger & Company, LLP as our independent registered public accounting firm, and appointed Albert Wong & Co, CPA, as disclosed on our Current Report on Form 8-K/A filed with the Securities and Exchange Commission on June 2, 2010. In connection with the change in accountants, there have been no disagreements as required by this item.





Item 9A.                      Controls and Procedures.





In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as of the end of the period covered by this annual report on Form 10K, our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as such defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Disclosure controls and procedures are defined as those controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Based on their evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer has concluded that our disclosure controls and procedures are effective.





Item 9A(T).
Controls and Procedures.





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States of America. The Company's internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of  unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Management assessed the effectiveness of the Company's internal control over financial reporting at March 31, 2011.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control--Integrated Framework. Based on that assessment under those criteria, management has determined that, at March 31, 2011, the Company's internal control over financial reporting was effective.





This Annual Report on Form 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.





Inherent Limitations of Internal Controls





Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:





●

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;●

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and●

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.





Our management does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Internal Control Over Financial Reporting





Management has not identified any changes in our internal control over financial reporting in connection with the its evaluation of our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





Item 9B.
Other Information.





None.





PART III





Item 10.
Directors, Executive Officers and Corporate Governance.





Current Management





The following table sets forth the name, age and position of our current directors and executive officers:


Name
Age
Position(s)
TenureTeck Fong Kong
39
President

Chief Executive Officer

Director
12/2009 – PresentChong Him Lau
46
Chief Financial Officer

Secretary

Treasurer

Director
12/2009 – PresentShing Hin Li
54
Director
08/2010 - Present




Teck Fong Kong – President, Chief Executive Officer, Director





Mr. Kong is our President, Chief Executive Officer and one of our Directors.  Prior to joining the Company, Mr. Kong was appointed Executive Director of Kong Foo Leong & Sons Realty Sdn Bhd in May, 2008. He still presently serves in that capacity and is responsible for the overall planning, project management and marketing of a mixed township being developed on 1,000 acres of prime real estate in Malaysia.  From 2002 to 2008, Mr. Kong was the Chief Sales & Marketing Officer of MicroGreen Bio-Industry Berhad. Mr. Kong is experienced in both the construction and marketing stages of major property development projects.  Mr. Kong is 40 years old and holds a Business Administration degree from the Oregon State University.





Chong Him Lau - Chief Financial Officer, Secretary, Treasurer, Director





Mr. Lau is our Chief Financial Officer, Secretary, Treasurer and one of our Directors.  Prior to joining the Company, Mr. Lau was Senior Vice President of MG BioGreen Sdn Bhd from September, 2005.  From 2004 to 2005, Mr. Lau was the Senior Accounting Manager of Hsin Textile (HK) Ltd.  Mr. Lau has over 20 years of experience in corporate finance, accounting and project management practices. He has represented multi-national corporations in the property development and travel services industries. His experiences have led him to gain extensive experience on investment and business practices in China and the regions of South-East Asia. Mr. Lau is 47 years old and holds a Bachelor of Business Accounting and MBA degrees from the University of South Australia.





Shing Hin Li - Director





Mr. Li is one of our directors. He had served as Senior Vice President of Rosedale Hotel Holdings Ltd, formally known as Wing On Travel Holdings Ltd (HKSE: 1189) from 2005 to 2010.  Mr. Li has over 20 years of Corporate & Strategic development & management experience in construction and property development as well as hotel and travel related sectors. His previous positions include Regional General Manager and Director of Memteck Products Pte, Ltd., a wholly owned subsidiary of Hanny Holdings, Ltd. (HKSE: 0275) from 1995 to 2005; and Regional General Manager and Director of Paul Y. Construction & Development (Asia) Ltd., a wholly owned subsidiary of PYI Corporation Ltd (HKSE: 0498) from 1991 to 1997. Mr. Li has a Master of Business Administration majoring in Finance from the University of Hull, UK (in 1993) and is a founding fellow of the Society of Project Managers in Singapore (in 1995).




Information about our Board and its Committees





Audit Committee





We currently do not have an audit committee although we intend to create one as the need arises. Currently, our Board of Directors serves as our audit committee.





Compensation Committee





We currently do not have a compensation committee although we intend to create one as the need arises. Currently, our Board of Directors serves as our Compensation Committee.





Advisory Board





We currently do not have an advisory board although we intend to create one as the need arises.




Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock.  Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.  To the best of our knowledge, based solely on review of the copies of such reports furnished to us for the period ended March 31, 2011, the Section 16(a) reports required to be filed by our executive officers, directors and greater-than-10% stockholders were filed on a timely basis.





Code of Ethics





We have not adopted a Code of Business Conduct and Ethics. However, we intend to do so.





Item 11.
Executive Compensation.





We do not currently compensate our directors. We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors may in the future to receive stock options to purchase common shares as awarded by our board of directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.





The following table sets forth the compensation paid to our officers and directors for services rendered, and to be rendered.  No restricted stock awards, long-term incentive plan payouts or other types of compensation, other than the compensation identified in the chart below, were paid to our officers or directors during the fiscal years presented.





Summary Compensation TableNon-Equity

Nonqualified
AllName and











Incentive

Deferred
OtherPrincipal







Stock

Option

Plan

Compen-

sation
CompenPosition

Year

Salary

Bonus

Awards

Awards

Compensation

Earnings
-sation
TotalTeck Fong Kong

2011

0

0

0

0

0

0
0
0President, Chief Executive Officer, and Current Director

2010

0

0

0

0

0

0
0
0Chong Him Lau

2011

0

0

0

0

0

0
0
0Chief Financial  Officer, Secretary and Director

2010

0

0

0

0

0

0
0
0Shing Hin Li

2011

0

0

0

0

0

0
0
0Director

2010

0

0

0

0

0

0
0
0





Employment Agreements





No employment agreements are currently in place. There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock option may be granted at the discretion of our board of directors.





Compensation Committee





We have not formed an independent compensation committee. Our board of directors acts as our compensation committee.








Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.





The following table sets forth certain information regarding the beneficial ownership of the 81,010,491 issued and outstanding shares of our common stock by the following persons:





·
each person who is known to be the beneficial owner of more than five percent (5%) of our issued and outstanding shares of common stock;


·
each of our directors and executive officers; and


·
all of our Directors and Officers as a group





Name And Address
Number Of Shares

Beneficially Owned
Percentage

OwnedTeck Fong Kong(1)
157,500
*Chong Him Lau(1)
0
*Shing Hin Li(1)
0
*CNDC Group Ltd(2)
36,042,500
44.49%China Gate Holdings Ltd(3)
25,347,200
31.29%All Officers and Directors as  Group
157,000
*Total
61,546,700
75.97%


*           Less than 1%





(1)           The address is 8/F Paul Y Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong


(2)           OMC Chambers, PO Box 3152, Road Town, Tortola, British Virgin Islands


(3)           Sea Meadow House, Blackburne Highway, PO Box 116, Road Town, Tortola, British Virgin Islands





Beneficial ownership is determined in accordance with the rules and regulations of the SEC.  The number of shares and the percentage beneficially owned by each individual listed above include shares that are subject to options held by that individual that are immediately exercisable or exercisable within 60 days from the date of this registration statement and the number of shares and the percentage beneficially owned by all officers and directors as a group includes shares subject to options held by all officers and directors as a group that are immediately exercisable or exercisable within 60 days from the date of this registration statement.





Item 13.
Certain Relationships and Related Transactions, and Director Independence.





On March 14, 2010, we entered into a share exchange agreement (the “Exchange Agreement”) with CNDC Group Ltd. (“CNDC Group”), a privately held corporation incorporated under the laws of the British Virgin Islands. The Exchange Agreement provided for the acquisition of CNDC Corporation (“CNDC”), a wholly-owned subsidiary of CNDC Group.





CNDC is a hotel management, development and consulting group. CNDC was incorporated under the laws of the British Virgin Islands on March 26, 2008. CNDC operates through its wholly-owned subsidiaries, CN Dragon Holdings Ltd and Zhengzhou Dragon Business Ltd, which were incorporated in Hong Kong and People’s Republic of China (“PRC”) respectively. From its inception, CNDC has been engaged in providing consulting and management services to hotel investors and owners in the PRC. CNDC’s services have focused on covering major aspects of hotel development from the initial planning stages of a project to enhancing the management of a fully operating hotel asset.




Related Party Disclosure





The parties to the Exchange Agreement are related parties. Mr. Chong Him Lau is one of our directors. Mr. Lau is also the sole director and shareholder of CNDC Group. CNDC Group is director and sole shareholder of CNDC. Accordingly, Mr Lau is a related party in the transaction.





On May 17, 2010 (the Closing Date of the Exchange Agreement), we issued 42,000,000 restricted shares of our common stock to CNDC Group. In exchange, we acquired one (1) issued and fully paid ordinary share of CNDC Corporation (“CNDC”) representing 100% equity interest in CNDC. Accordingly, CNDC became our wholly-owned subsidiary.





On August 26, 2010, the Company issued of 35,852,200 restricted shares of the Corporation’s common stock to CNDC Group, Ltd. upon conversion of a $1,792,610 convertible promissory note held by CNDC Group, Ltd.  The issuance of the securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving any public offering.





Transactions with Promoters





None.





Item 14.
Principal Accounting Fees and Services.





Appointment of Auditors





Effective as of May 20, 2010, our Board of Directors appointed Albert Wong & Co., CPA as our new independent registered public accounting firm for the year ended April 30, 2010 and March 31, 2011.





During the two most recent fiscal years and through the date of our engagement, we did not consult with Albert Wong & Co., CPA regarding either (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, or (2) any matter that was either the subject of a disagreement (as defined in Regulation S-K Item 304(a)(1)(v)), during the two most recent fiscal years.





Prior to engaging Albert Wong, Albert Wong did not provide our company with either written or oral advice that was an important factor considered by our company in reaching a decision to change our independent registered public accounting form from Mendoza to Albert Wong.




Audit Fees





Albert Wong & Co., CPA., billed us $15,000 and $10,000 in audit fees during the year ended April 30, 2010 and March 31, 2011 respectively.





Audit-Related Fees





We did not pay any fees to Albert Wong & Co., CPA., for assurance and related services that are not reported under Audit Fees above, during our fiscal year ending March 31, 2011.




Tax and All Other Fees





We did not pay any fees to Albert Wong & Co., CPA., for tax compliance, tax advice, tax planning or other work during our fiscal year ending March 31, 2011.





Pre-Approval Policies and Procedures





We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services.  Under these procedures, our board of directors pre-approves all services to be provided by Albert Wong & Co., CPA., and the estimated fees related to these services.





With respect to the audit of our financial statements as of March 31, 2011, and for the year then ended, none of the hours expended on Albert Wong & Co., CPA., engagement to audit those financial statements were attributed to work by persons other than Albert Wong & Co., CPA.’s, full-time, permanent employees.








Item 15.                                Exhibits, Financial Statement Schedules.





StatementsReport of Independent Registered Public Accounting FirmBalance Sheets at March 31, 2011 and April 30, 2010Statements of Operations for the years ended March 31, 2011 and 2010Statement of Changes in Shareholders' Deficit for the years ended March 31, 2011 and April 30, 2010Statements of Cash Flows for the years ended March 31, 2011 and 2010Notes to Financial StatementsSchedulesAll schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or notes thereto.Exhibit
Form
Filing
Filed withExhibits
#
Type
Date
This ReportArticles of Incorporation filed with the Secretary of State of Nevada on August 30, 2001
3.1
SB-2
6/17/2002Certificate of Change effective March 18, 2003
3.2
8-K
3/7/2003Certificate of Change effective May 30, 2007
3.3
8-K
6/13/2007Certificate of Amendment filed with the Secretary of State of Nevada on May 30, 2007
3.4
8-K
6/13/2007Certificate of Amendment filed with the Secretary of State of Nevada on September  14, 2009
3.5
10-K

XCertificate of Amendment filed with the Secretary of State of Nevada on November 20, 2009
3.6
DEF 14C
11/20/09Bylaws dated August 30, 2001
3.3
SB-2
6/17/2002Share Exchange Agreement between CN Dragon Corporation and CNDC Group, Ltd.
10.1
8-K
5/21/10Subsidiaries
21.1


XConsent of Experts
23.1


XCertification of Teck Fong Kong, pursuant to Rule 13a-14(a)
31.1


XCertification of Chong Him Lau, pursuant to Rule 13a-14(a)
31.2


XCertification of Teck Fong Kong , pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1


XCertification of Chong Him Lau, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1


X












SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) 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.











CN Dragon CorporationDate:  August 13, 2011
By:
/s/ Teck Fong Kong(Teck Fong Kong, President, Director, CEO)By:
/s/ Chong Him Lau(Chong Him Lau, Director, CFO)













CN DRAGON CORPORATION





CONSOLIDATED FINANCIAL STATEMENTS


FOR THE YEARS ENDED MARCH 31, 2011 AND APRIL 30, 2010


(Stated in US dollars)











CN DRAGON CORPORATION

















CONTENTS                                                                                       PAGES





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUTINGFIRM
1CONSOLIDATED BALANCE SHEETS
2 – 3CONSOLIDATED STATEMENTS OF INCOME ANDCOMPREHENSIVE INCOME
4CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYAND ACCUMULATED OTHER COMPREHENSIVE INCOME
5CONSOLIDATED STATEMENTS OF CASH FLOWS
6NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7 – 19

















ALBERT WONG & CO.

CERTIFIED PUBLIC ACCOUNTANTS

7th Floor, Nan Dao Commercial Building

359-361 Queen’s Road Central

Hong Kong

Tel : 2851 7954

Fax: 2545 4086

ALBERT WONG

B.Soc., Sc., ACA., LL.B., CPA (Practising)





The Board of Directors and Stockholders of


CN Dragon Corporation (“the Company”)





Report of Independent Registered Public Accounting Firm





We have audited the accompanying consolidated balance sheet of CN Dragon Corporation as of March 31, 2011 and April 30, 2010, and the pro-forma consolidated statements of income and comprehensive income, stockholders' equity and cash flows for the periods ended March 31, 2011 and 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.





We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide reasonable basis for our opinion.





In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2011 and April 30, 2010 and the proforma consolidated results of its operations and its cash flows for the years ended March 31, 2011 and 2010 in conformity with accounting principles generally accepted in the United States of America.





The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. These factors as discussed in Note 8 to the financial statements, raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.








/S/ Albert Wong & Co.


Hong Kong, China


Albert Wong & Co.




August 13, 2011










CN DRAGON CORPORATIONCONSOLIDATED BALANCE SHEETSAS AT MARCH 31, 2011 AND APRIL 30, 2010(Stated in US Dollars)





As at,March 31,

April 30,Note

2011

2010ASSETSCurrent assetsCash and cash equivalents
2(l)
$
1,898
$
1,000Deposits and prepaid expense


18,320

-Other receivables


1,210,775

1Total current assets


1,230,993

1,001Property, plant and equipment, net
4

11,456

-Intangible asset, net


-

-Goodwill


63,967

-TOTAL ASSETS

$
1,306,416
$
1,001LIABILITIES ANDSTOCKHOLDERS’ EQUITYCurrent liabilitiesAccounts payable

$
69,003
$
-Amounts due to the related companies
5

-

42,016Accrued liabilities


209,155

-Loans payable to shareholders


14,583

-Other payables


18,248

-Total current liabilities


310,990

42,016TOTAL LIABILITIES

$
310,990
$
42,016








See accompanying notes to consolidated financial statements

















CN DRAGON CORPORATIONCONSOLIDATED BALANCE SHEETS (Continued)AS AT MARCH 31, 2011 AND April 30, 2010(Stated in US Dollars)








As at,Note

March 31,

April 30,2011

2010STOCKHOLDERS’ EQUITYPreferred Stock, $0.001 par value,375,000,000 shares authorized,no share issued and outstanding

$
-
$
-Common stock - $0.001 par value250,000,000 shares authorized; 81,010,491and 1,804,791 shares issued and outstandingas of March 31,2011 and April 30, 2010
6
$
81,011
$
1,805Additional paid-in capital


7,029,442

5,206,969Accumulated deficits


(7,739,848)

(5,244,919)Accumulated other comprehensive income/(loss)


1,624,821

(4,870)$
995,426
$
(41,015)TOTAL LIABILITIES ANDSTOCKHOLDERS’ EQUITY

$
1,306,416
$
1,001








See accompanying notes to consolidated financial statements

















CN DRAGON CORPORATIONCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOMEFOR THE YEARS ENDED MARCH 31, 2011 AND MARCH 31, 2010(Stated in US Dollars)





Years ended March 31,Note

2011

2010(Proforma)Net revenues

$
451,710
$
1,151,397Cost of net revenues


(391,388)

(843,906)Gross profit/(loss)


60,322

307,491Operating expenses:Selling and distribution


-

(81,194)General and administrative


(958,097)

(407,258)Income/(loss) before income taxes


(897,775)

(180,961)Income taxes
7

-

-Net income/(loss)


(897,775)

(180,961)Other comprehensive income:Foreign currency translation adjustment


32,538

4,094Comprehensive income/(loss)

$
(865,238)
$
(176,867)Basic and diluted income/(loss) per share
6
$
(0.015)
$
(0.004)Weighted average number of shareoutstanding
6

58,664,189

43,804,791











See accompanying notes to consolidated financial statements












CN DRAGON CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYAND ACCUMULATED OTHER COMPREHENSIVE INCOMEFOR THE YEARS ENDED MARCH 31,2011 AND APRIL 30,2010(Stated in US Dollars)





AccumulatedAdditional



otherPreferred stock

Common stock

paid-in

Accumulated

comprehensiveNumber of
Number of

Amount

capital

Deficit

income

Totalshare

shareBalance, April 1, 2009
-

43,804,791
$
43,805
$
5,979,550
$
(6,661,112)
$
53,545
$
(584,212)Net loss
-

-

-

-

(180,961)

-

(180,961)Foreign currencytranslation adjustment
-

-

-

-

-

4,094

4,094Balance, April 30, 2010
-

43,804,791
$
43,805
$
5,979,550
$
(6,842,073)
$
57,639
$
(761,079)





AccumulatedAdditional



otherPreferred stock

Common stock

paid-in

Accumulated

comprehensiveNumber of

Number of
Amount

capital

Deficit

income

Totalshare

shareBalance, May 1, 2010
-

43,804,791
$
43,805
$
5,979,550
$
(6,842,073)
$
57,639
$
(761,079)Issuance for service
-

1,353,500

1,354

553,581

-

-

554,935Issuance for share capital
-

35,852,200

35,852

496,311

-

-

532,163Net loss
-

-

-

-

(897,775)

-

(897,775)Foreign currencytranslation adjustment
-

-

-

-

-

1,567,182

1,567,182Balance, March 31, 2011
-

81,010,491
$
81,011
$
7,029,442
$
(7,739,848)
$
1,624,821
$
995,426











See accompanying notes to consolidated financial statements













CN DRAGON CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED MARCH 31, 2011 AND MARCH 31, 2010(Stated in US Dollars)





For the years ended,March 31, 2011

March 31, 2010Cash flows from operating activitiesNet loss
$
(897,775)
$
(180,961)Depreciation

11,100

5,137Loss on disposal of fixed assets

3,444

-Goodwill written off

353,607

-Adjustments to reconcile net income to net cash provided by operating activities:Accounts receivables

21,737

-Inventories

144,007

-Deposits and prepaid expense

232,603

547,047Other receivables

100,956

-Amounts due to the related companies

(1,785,707)

(949,627)Amounts due to shareholders

(105,430)

437,107Accounts payable

(221,639)

2,519Other payables

(1,106,743)

(24,384)Accrued liabilities

186,754

22,067Net cash used in operating activities

(3,063,086)

(141,095)Cash flows from investing activitiesDisposal of plant and equipment

277,625

-Acquisition of plant and equipment

(52,030)

(45,520)Net cash provided by/(used in) investing activities

225,595

(45,520)Cash flows from financing activitiesProceeds from issuance of common stock

1,087,099

-Net cash provided by financing activities

1,087,099

-Net cash and cash equivalents sourced (used)

(1,750,392)

(186,615)Effect of foreign currency translation on cashand cash equivalents

1,721,596

211,966Cash and cash equivalents – beginning of year

30,694

5,343Cash and cash equivalents – end of year
$
1,898
$
30,694





See accompanying notes to consolidated financial statements














CN DRAGON CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE YEARS ENDED MARCH 31,2011 AND APRIL 30,2010


(Stated in US Dollars)





1.ORGANIZATION AND PRINCIPAL ACTIVITIES





CN Dragon Corporation (formerly Wavelit, Inc.) (“the Company”) was incorporated under the laws of the State of Nevada on August 30, 2001, under the name Infotec Business Systems, Inc. On June 8, 2007, we changed our name to Wavelit, Inc. On September 14, 2009, we changed our name to CN Dragon Corporation (formerly Wavelit, Inc.) and began new business operations in the PRC.





On May 17, 2010, pursuant to the terms of the Agreement for Share Exchange, the Company acquired CNDC Corporation (“CNDC BVI”), and its wholly-owned subsidiaries, CN Dragon Holdings Limited (“CN Dragon Holdings”) and Zhengzhou Dragon Business Limited (“Zhengzhou Dragon”). This transaction was accounted for as a “reverse merger” with CNDC BVI deemed to be the accounting acquirer and the Company as the legal acquirer.  Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements for periods prior to the Share Exchange will be those of CNDC BVI, recorded at its historical cost basis. After completion of the Share Exchange, the Company’s consolidated financial statements will include the assets and liabilities of both the Company and CNDC BVI, the historical operations of CNDC BVI and the operations of the Company and its subsidiaries from the closing date of the Share Exchange.





CNDC BVI was established under the laws of the British Virgin Islands on March 26, 2008. The Company currently operates through itself and two subsidiaries, CN Dragon Holdings Limited and Zhengzhou Dragon Business Limited which were incorporated in Hong Kong and the People’s Republic of China (the PRC) respectively.





The Company and its subsidiaries (hereinafter, collectively referred to as (the “Group”) are engaged and specialized in investment, development and fund management in hospitality properties, as well as advisory and consulting services to the hospitality, tourism and real estate industries in the PRC.





2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





(a)
Method of Accounting





The Group maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes.  The financial statements and notes are representations of management.  Accounting policies adopted by the Group conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.





(b)
Principles of consolidation





The consolidated financial statements are presented in US Dollars and include the accounts of the Company and its subsidiaries.  All significant inter-company balances and transactions are eliminated in consolidation.





The Company owned its subsidiaries soon after its inception and continued to own the equity’s interests through March 31,2011.  The following table depicts the identity of the subsidiaries:





Date of


Attributable

Share capital/Disposal (D)/
Place & date of

equity

registeredName of subsidiary
Acquisition(A)
Incorporation

interest %

CapitalCNDC Corporation
May 17, 2010
British Virgin Islands/(A)
March 26, 2008

100

US$1CN Dragon Holdings Limited
May 17, 2010
Hong Kong/

Mar 5, 2008

100

HK$1(A)Zhengzhou Dragon Business Limited
May 17, 2010
PRC/Sep 12, 2008

100

HK$3,000,000(A)
(Deregistered onJuly 12, 2010)




(c)
Economic and political risks





The Group’s operations are conducted in Hong Kong and the PRC. Accordingly, the Group’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.


The Group’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Group’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.





(d)
Property, plant and equipment





Property, plant and equipment are carried at cost less accumulated depreciation.  Depreciation is provided over their estimated useful lives, using the straight-line method.





The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.





(e)
Trade receivables





Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for uncollectible accounts is maintained for all customers in considering with a variety of factors, including the length of past due, significant one-time events and the Group’s historical experience. Bad debts are written off as incurred.





(f)
Accounting for the impairment of long-lived assets





The Group periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in ASC 360. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.





During the reporting period, there was no impairment loss.





(g)
Foreign currency translation





The accompanying financial statements are presented in United States dollars. The functional currency of the Group is the Hong Kong dollars (HKD) and Renminbi (RMB).  The financial statements are translated into United States dollars from HKD and RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.





Year ended

March 31, 2011

March 31, 2010RMB : USD exchange rate

6.5563

6.8358Average period endedRMB : USD exchange rate

6.7061

6.8375





Year ended

March 31, 2011

March 31, 2010HKD : USD exchange rate

7.7884

7.7660Average period endedHKD : USD exchange rate

7.7749

7.7555





The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.  No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.





(h)
Cash and cash equivalents





The Group considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Group maintains bank accounts only in the PRC and Hong Kong. The Group does not maintain any bank accounts in the United States of America.





(i)
Revenue recognition





Revenue is recognized when all of the following criteria are met:





- Persuasive evidence of an arrangement exists;


- Delivery has occurred or services have been rendered;


- The seller’s price to the buyer is fixed or determinable; and


- Collection is reasonably assured.





(j)
Operating lease rental





The Group did not have leases which met the criteria of a capital lease. Leases which do not qualify as capital leases are classified as operating leases. Operating lease rental payment has $92,892 and $81,320 included in general and administrative expenses for the years ended March 31, 2011, and 2010 respectively.





(k)
Income taxes





The Group accounts for income taxes using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Group is able to realize their benefits, or that future realization is uncertain.





(l)  Cash and concentration of risk





Cash includes cash on hand and demand deposits in bank accounts maintained within PRC and Hong Kong.  Total cash in these banks at March 31,2011 amounted to $898, of which no deposits are covered by Federal Depository Insured Commission.  The Group has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.





(m) Comprehensive income





Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.  Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements.  The Group’s current component of comprehensive income is net income and foreign currency translation adjustment.





(n) Recent accounting pronouncements





In April 2011, the FASB issued ASU 2011-02, Receivable (Topic 310) “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”, which clarifies when creditors should classify loan modifications as troubled debt restructurings. The guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the year. The guidance on measuring the impairment of a receivable restructured in a troubled debt restructuring is effective on a prospective basis. A provision in ASU 2011-02 also supersedes the FASB’s deferral of the additional disclosures about troubled debt restructurings as required by ASU 2010-20. The adoption of ASU 2011-02 is not expected to have a material impact on the Company’s financial condition or results of operations.





In April 2011, the FASB issued ASU 2011-03, Transfers and Servicing (Topic 860), Consideration of Effective Control on Repurchase Agreements, which deals with the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU 2011-03 changes the rules for determining when these transactions should be accounted for as financings, as opposed to sales. The guidance in ASU 2011-03 is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The adoption of ASU 2011-03 is not expected to have a material impact on the Company’s financial condition or results of operation.





In May 2011, the FASB issued ASU 2011-04, FairValue Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”).ASU 2011-04 clarifies some existing concepts, eliminates wording differences between U.S. GAAP and IFRS, and in some limited cases, changes some principles to achieve convergence between U.S. GAAP and IFRS. ASU 2011-04 results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-04 to have a material effect on its operating results or financial position.





In June 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-05, Comprehensive Income (Topic 220) Presentation of Comprehensive Income, which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of equity. ASU 2011-05 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its operating results or financial position but is evaluating the format revision on the presentation of comprehensive income.








3.   PROPERTY, PLANT AND EQUIPMENT, NET





Details of property, plant and equipment, net are as follows:





2011

2010At costMotor vehicles
$
-
$
36,447Office equipment

15,604

10,66515,604

47,112Less: accumulated depreciation

(4,148)

(5,439)$
11,456
$
41,6743





Depreciation expenses are included in the statements of income as follows:





2011

2010General and administrative expenses
$
11,100
$
5,137








5.  AMOUNTS DUE TO THE RELATED COMPANIES





The amounts due to the related companies are unsecured, interest free and repayable on demand.





6.  SHARE CAPITAL








The calculation of the basic and diluted earnings per share attributable to the share capital holder is based on the following data:





For the years ended March 31,2011

2010Earnings:Earnings for the purpose of basic loss per share
$
(897,775)
$
(180,961)Effect of dilutive potential share capital

-

-Earnings for the purpose of diluted earnings (loss) per share
$
(897,775)
$
(180,961)Number of shares:Weighted average number of share capital for the purposeof basic earnings (loss) per share

58,664,189

43,804,791Effect of dilutive potential share capital

-

-Weighted average number of share capital for the purposeof dilutive earnings (loss) per share

58,664,189

43,804,791








7.  INCOME TAXES





The Company is not subject to any income tax as there are no estimated assessable profits for the years ended March 31, 2011 and 2010.





No deferred tax has been provided as there is no material temporary difference arising for the years ended March 31, 2011 and 2010.





8.  UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN





The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not generated significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. The management will seek to raise funds from shareholders.





For the year ended March 31, 2011, the Company has generated revenue of $451,710 and has incurred an accumulated deficit $7,739,848. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors noted above raise substantial doubts regarding the Company's ability to continue as a going concern.





9.  CONTINGENT LIABILITIES





Pending litigation





There are a lawsuit currently pending in Supreme Court of British Columbia, Canada against the Company. The case was filed in May, 2009 and the Company entered into a Settlement Agreement with Claimant and has paid compensation pursuant to the terms of Agreement. The Company is waiting for the Claimant to dismiss the matter pursuant to his obligations under the Agreement. The Settlement amount is approximately $35,000, and the merits of the claim are unknown.








10.  SUBSEQUENT EVENT





The Company has evaluated all other subsequent events through August 13, 2010, the date these consolidated financial statements were issued, and determined that there were no other subsequent events or transactions that require recognition or disclosures in the financial statements.





Pursuant to the requirements of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Signatures

Title

Date/s/ Teck Fong Kong

Teck Fong Kong

Chief Executive Officer

Director

August 13, 2011








Exhibit 31.1


Certification of Chief Executive Officer





I, Teck Fong Kong, certify that:





1.  I have reviewed this Report on Form 10-K of CN Dragon Corporation;





2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;





3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;





4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:





a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;





b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;





c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and





d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and





5.           The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):





a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and





b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.








Signatures

Title

Date/s/ Teck Fong Kong

Teck Fong Kong

Chief Executive Officer

Director

August 13, 2011












Exhibit 31.2





Certification of Chief Financial Officer





I, Chong Him Lau, certify that:





1.           I have reviewed this Report on Form 10-K of CN Dragon Corporation;





2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;





3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;





4.           The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:





a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;





b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;





c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and





d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and





5.           The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):





a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and





b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.





Signatures

Title

Date/s/ Chong Him Lau

Chong Him Lau

Chief Financial Officer

Principal Accounting Officer

Director

August 13, 2011











Exhibit 32.1








CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection with the Annual Report of CN Dragon Corporation (the “Company”) on Form 10-K for the year ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies the following pursuant to Section 18, U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:





1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and





2.
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.











Signatures

Title

Date/s/ Teck Fong Kong

Teck Fong Kong

Chief Executive Officer

Director

August 13, 2011













Exhibit 32.2





CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection with the Annual Report of CN Dragon Corporation (the “Company”) on Form 10-K for the year ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies the following pursuant to Section 18, U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:





1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and





2.
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.







Signatures

Title

Date/s/ Chong Him Lau

Chong Him Lau

Chief Financial Officer

Principal Accounting Officer

Director

August 13, 2011