UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
| [X] | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period endedDecember 31, 2017
| [ ] | Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from _________ to _________
Commission File Number:333-187874
LUCKYCOM PHARMACEUTICALS INC.
(Exact name of registrant as specified in its charter)
| Nevada | 46-1660653 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
11767 Katy Freeway, Suite 830, Houston, Texas 77079
(Address of principal executive offices) (Zip Code)
(281) 668-8266
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[ ] Yes [X] No
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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [ ] | Accelerated filer | [ ] |
| Non-accelerated filer | [ ] | Smaller reporting company | [X] |
| Emerging growth company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The number of shares of common stock, par value $0.01 outstanding as of February 9, 2018 was 18,376,000.
TABLE OF CONTENTS
| Page | ||
| PART I – Financial Information | ||
| Item 1: | Financial Statements (Unaudited) | 3 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 6 |
| Item 4: | Controls and Procedures | 6 |
| PART II – Other Information | ||
| Item 1: | Legal Proceedings | 8 |
| Item 1A: | Risk Factors | 8 |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 8 |
| Item 3: | Defaults Upon Senior Securities | 8 |
| Item 4: | Mine Safety Disclosures | 8 |
| Item 5: | Other Information | 8 |
| Item 6: | Exhibits | 8 |
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Our condensed consolidated financial statements included in this Form 10-Q are as follows:
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the Securities and Exchange Commission instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended December 31, 2017 are not necessarily indicative of the results that can be expected for the full year.
| 3 |
LUCKYCOM PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2017 | March 31, 2017 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 129,843 | $ | 29,413 | ||||
| Prepaid expense and other current assets | 15,125 | 17,568 | ||||||
| Total Current Assets | 144,968 | 46,981 | ||||||
| Other Assets | ||||||||
| Other assets | - | 5,405 | ||||||
| Total Other Assets | - | 5,405 | ||||||
| Total Assets | $ | 144,968 | $ | 52,386 | ||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current Liabilities | ||||||||
| Other payable and accrued liabilities | $ | 67,728 | $ | 67,541 | ||||
| Due to officer | 62,105 | 327,054 | ||||||
| Total Liabilities | 129,833 | 394,595 | ||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Common stock, $0.01 par value; 100,000,000 shares authorized; 18,376,000 and 17,626,000 shares issued and outstanding as of December 31, 2017 and March 31, 2017, respectively. | 183,760 | 176,260 | ||||||
| Additional paid-in capital | 1,715,748 | 973,248 | ||||||
| Accumulated other comprehensive income | 10 | 10 | ||||||
| Accumulated deficit | (1,884,383 | ) | (1,491,727 | ) | ||||
| Total stockholders’ equity (deficit) | 15,135 | (342,209 | ) | |||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | 144,968 | $ | 52,386 | ||||
See accompanying notes to condensed consolidated financial statements.
| F-1 |
LUCKYCOM PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the three months ended | For the nine months ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| General and administrative expenses | $ | (122,806 | ) | $ | (128,749 | ) | $ | (388,820 | ) | $ | (351,677 | ) | ||||
| Other Income (expense) | 95 | 12 | 287 | (278 | ) | |||||||||||
| Loss on disposal of a subsidiary | (4,123 | ) | - | (4,123 | ) | - | ||||||||||
| Net Loss | $ | (126,834 | ) | $ | (128,737 | ) | $ | (392,656 | ) | $ | (351,955 | ) | ||||
| Net loss per share – basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
| Weighted average common shares – basic and diluted | 18,376,000 | 17,626,000 | 18,280,545 | 17,555,898 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
| F-2 |
LUCKYCOM PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the nine months ended | ||||||||
| December 31 | ||||||||
| 2017 | 2016 | |||||||
| (unaudited) | (unaudited) | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | (392,656 | ) | $ | (351,955 | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Disposal loss from a subsidiary | 4,123 | - | ||||||
| Common stock issued for service | - | 5,940 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expense and other current assets | (1,224 | ) | - | |||||
| Other assets | 4,944 | - | ||||||
| Other payable and accrued liabilities | 187 | 38,222 | ||||||
| Net cash flow used in operating activities | (384,626 | ) | (307,793 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
Proceedsfrom disposal of a subsidiary, net of cash balance at disposed entity | 5 | - | ||||||
| Net cash flow provided by investing activities | 5 | - | ||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from issuance of common stock | 422,946 | 112,508 | ||||||
| Proceeds from officer loans | 62,105 | 190,282 | ||||||
| Net cash flow provided by financing activities | 485,051 | 302,790 | ||||||
| Net increase (decrease) in cash | 100,430 | (5,003 | ) | |||||
| Cash, beginning of period | 29,413 | 86,262 | ||||||
| Cash, End of Period | $ | 129,843 | $ | 81,259 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest expense | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Noncash financing activities | ||||||||
| Shares issued to officer for debt repayment | $ | 327,054 | $ | - | ||||
| Expenses paid by officer | $ | - | 28,823 | |||||
See accompanying notes to condensed consolidated financial statements.
| F-3 |
LUCKYCOM PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 – Organization and Basis of Presentation
The accompanying condensed consolidated unaudited interim financial statements of Luckycom Pharmaceuticals Inc. (the “Company”, “Luckycom”, “we” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto of the Company contained in the Company’s Form 10-K filed with the SEC on June 27, 2017.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
Organization and Description of Business
The Company plans to acquire, develop, manufacture and market pharmaceutical medication.
Luckycom Limited, a wholly-owned subsidiary of the Company, was incorporated in Hong Kong as Goldsans Capital (Hong Kong) Limited (“Goldsans”) on November 8, 2011. Goldsans name was changed to Wudor Capital Hong Kong Limited on May 22, 2012 and subsequently to Luckycom Limited on June 28, 2013.
On December 13, 2017, the Company’s sole officer and director, and a shareholder, Mr. Kingrich Lee executed a Sold Note and Instrument of Transfer on behalf of Luckycom Pharmaceuticals Inc., pursuant to which the Company would sell to Ms. Lijian Li, Mr. Kingrich Lee’s sister, 10,000 shares of stock of the Company’s wholly-owned Hong Kong subsidiary, Luckycom Limited at a purchase price of HKD 1 (approximately $0.13) per share aggregating to HKD 10,000 (approximately $1,281). On the same date, the transaction was consummated with the payment of stamp duty to the Hong Kong tax department.
Accounting Policies on Disposal of Subsidiary
The results of disposal of subsidiary, less applicable income taxes (benefit), is reported as a separate component of income. A gain or loss recognized on the disposal is presented separately on the face of the statement where net income is reported or disclosed in the notes to financial statements.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.
Note 2 – Going Concern
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $1,844,383 as of December 31, 2017, and further losses are anticipated as a result of the development of business which raises substantial doubt about the Company’s ability to continue as a going concern within the next twelve months from the issuance date of this report. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining financing necessary to meet the Company’s obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of the Company’s common stock. However, there will be no assurance that management plan would work. We do not have any formal commitments or arrangements for the sale of stock or the advancement of loans of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.
| F-4 |
Note 3 – Related Party Transactions
The Company’s sole officer and director, and a shareholder, Mr. Kingrich Lee, loaned an aggregate of $24,365 and $39,388 to the Company during the three months ended December 31, 2017 and 2016, respectively, and loaned an aggregate of $62,105 and $190,282 to the Company during the nine months ended December 31, 2017 and 2016, respectively.
Mr. Kingrich Lee is owed an aggregate amount of $62,105 and $327,054 as of December 31, 2017 and March 31, 2017, respectively.
The amounts are unsecured, non-interest bearing and due on demand.
During the nine months ended December 31, 2017, the Company issued an aggregate of 750,000 shares of common stock to Mr. Kingrich Lee in the settlement of the debt owed to Mr. Kingrich Lee in the amount of $327,054 and in exchange of Mr. Kingrich Lee’s investment of $422,946 of cash.
On December 13, 2017, Mr. Kingrich Lee sold to Ms. Lijian Li, his sister, 10,000 shares of stock of the Company’s wholly-owned Hong Kong subsidiary, Luckycom Limited at a purchase price of HKD 1 (approximately $0.13) per share aggregating to HKD 10,000 (approximately $1,281). The disposal loss recorded from the sale was $4,123.
Note 4 – Capital Stock
As of December 31, 2017, the Company had 18,376,000 shares of common stock issued and outstanding. During the nine months ended December 31, 2017, the Company issued in aggregate of 750,000 shares of common stock to Mr. Kingrich Lee.
Note 5 – Disposal of a Subsidiary
On December 13, 2017, Mr. Kingrich Lee, on behalf of the Company, sold 100% of the ownership of Luckycom Limited, a wholly-owned Hong Kong subsidiary, to Ms. Lijian Li for cash proceeds of $1,255 (net of expenses $26). The Company recognized a loss of $4,123, net of Hong Kong subsidiary net assets of $5,378. Simultaneously the Hong Kong subsidiary forgave the $219,653 owed by the Company and transferred the amount due from an officer totaled $17,015 to the Company to offset the aggregate amount due to the same officer.
Note 6 – Subsequent Event
The Company has evaluated subsequent events through the issuance of the condensed consolidated financial statements and no subsequent event is identified.
| F-5 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview
We are a shell company and have not begun operations.
As reflected in the accompanying financial statements, we have no source of revenues and need additional cash resources to maintain our operations. Our ability to continue as a going concern is dependent on our ability to raise additional capital or obtain necessary debt financing. These factors raise substantial doubt about our ability to continue as a going concern. We are presently dependent on our controlling shareholder to provide us funding for our daily operations and expenses, including professional fees and fees charged by regulators, although he is under no obligation to do so.
We have $129,843 in cash as of December 31, 2017. We believe that our expenses over the next 12 months from the issuance date of this report will be approximately $2,000,000. This estimate may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.
We intend to meet our cash requirements for the next 12 months from the issuance date of this report through a combination of debt and equity financing by way of private placements, friends, family and business associates. As a reporting company, we are better equipped to raise capital because of the transparency of our operations and development. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.We anticipate that Mr. Kingrich Lee, our Chief Executive Office, will spearhead our financing efforts.
If we are unable to raise $2,000,000 to implement our business plan as anticipated, we will need to scale our business development in line with available capital. Our primary priority will be to retain our reporting status with the SEC, which means that we will first ensure that we have sufficient capital to cover our expenses, which are estimated to be $300,000 over the next 12 months. Once these costs are accounted for, we will focus on the following activities:
| 1. | Establish a management team to work on our pharmaceutical operations in US and Malaysia. |
| 2. | Identify and locate a privately-owned company or companies involved in the pharmaceutical business, which is looking to become a publicly listed company by combining their operation with us through a reverse merge. |
| 3. | Implement manufacturing and sales of products. |
Any failure to raise money will have the effect of delaying the time frames in our business plan as set forth above, and we may have to push back the dates of such activities.
| 4 |
Results of Operations
The Three Monthsand Nine Months Ended December 31, 2017 and 2016
Operating Revenue
We recorded no consolidated revenue and consolidated gross loss for the three-month and nine-month periods ended December 31, 2017 and the same for the corresponding periods in 2016 as we are a shell company without any operations to generate revenue. We do not anticipate receiving further revenue for so long as we have no operations.
Operating Expenses
We had operating expenses of $122,806 and $128,749 for the three months ended December 31, 2017 and 2016, respectively, and $388,820 and $351,677 for the nine months ended December 31, 2017 and 2016, respectively.
Our operating expenses for the three months ended December 31, 2017 consisted mainly of professional fees of $48,906, officer compensation of $59,624, travel expenses of $8,213, and rent of $3,481.
Our operating expenses for the three months endedDecember 31, 2016 consisted mainly of professional fees of $56,465 (which includes $5,940 stock-based compensation), officer compensation of $44,663, travel expenses of $12,086, and rent of $9,396.
The increase in officer compensation is mainly due to the additional benefits provided in our Chief Executive Officer’s new employment contract; the decrease in travel expenses is mainly due to fewer business trips; the decrease in rent is mainly due to the cancellation of our virtual office services.
Our operating expenses for the nine months ended December 31, 2017 consisted mainly of professional fees of $175,177, officer compensation of $155,623, travel expenses of $22,896, and rent of $21,677.
Our operating expenses for thenine months ended December 31, 2016 consisted mainly of professional fees of $152,644 (which includes $5,940 stock-based compensation), officer compensation of $134,659, travel expenses of $25,287, and rent of $25,506.
The increase in professional fees is mainly due to the upgrading of our accounting and audit services; the increase in officer compensation is mainly due to the increased compensation to our principal officer, Mr. Kingrich Lee.
We anticipate our operating expenses will increase sharply as we proceed to implement our business plan described above and become operational.
Net Loss
We incurred a net loss of $126,834 and $128,737 for the three months ended December 31, 2017 and 2016, respectively,net loss of $392,656 and $351,955 for thenine months ended December 31, 2017 and 2016, respectively. We anticipate that we will continue to incur losses unless we are able to achieve some of our goals above.
Liquidity and Capital Resources
As of December 31, 2017, we had total current assets of $144,968 consisting of $129,843 in cash and $15,125 in prepaid expenses and other current assets. As of December 31, 2017, we had current liabilities in the amount of $129,833 consisting of other payable and accrued liabilities of $67,728, and $62,105 due to an officer.
| 5 |
The table below sets forth selected cash flow data for the periods presented:
| Nine Months Ended | ||||||||
| December 31 | ||||||||
| 2017 | 2016 | |||||||
| Net cash used in operating activities | $ | (384,626 | ) | $ | (307,793 | ) | ||
| Net cash provided by investing activities | 5 | - | ||||||
| Net cash provided by financing activities | 485,051 | 302,790 | ||||||
| Net increase (decrease) in cash | $ | 100,430 | $ | (5,003 | ) | |||
Our negative operating cash flows were mainly a result of operating expenses (See also Result of Operations)
Our positive investing cash flows were mainly a result of disposal of a subsidiary.
Our positive financing cash flows were a result of proceeds from issuance of common stock and officer loans.
For the nine months ended December 31, 2017, the Company issued an aggregate of 750,000 shares of common stock to Mr. Kingrich Lee in the settlement of the debt owed to Mr. Kingrich Lee in the amount of $327,054 and in exchange of Mr. Kingrich Lee’s investment of $422,946 of cash.
On October 2, 2016, our wholly owned subsidiary, Luckycom Limited, entered into an employment agreement with Mr. Kingrich Lee. The agreement was for one year, renewable for successive one-year terms if not terminated, and provided for an annual compensation of $180,000, and other benefits. On November 1, 2017, the Company entered into a new employment agreement with Mr. Kingrich Lee. The agreement is for one year, renewable for successive one-year terms if not terminated, and provides an annual compensation of $180,000, and other benefits, including housing and education allowances. This agreement will materially impact our cash needs in the future, as any investment money we obtain will be used to pay Mr. Kingrich Lee’s salary and other benefits, and will have the effect of diverting funds that may be used to pursue our business plan.
Despite having $129,843 in cash as of December 31, 2017, we have insufficient cash to operate our business at the current level for the next 12 months from the issuance date of this report and insufficient cash to achieve our business goals. The success of our business plan beyond the next 12 months from the issuance date of this report is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sale of stock or the advancement of loans of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of December 31, 2017, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our chief executive and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that as of December 31, 2017, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified below.
| 6 |
Our principal executive officer and principal financial officer does not expect that our disclosure controls or internal controls will prevent all error and all fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the 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 controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following two material weaknesses that have caused management to conclude that, as of December 31, 2017, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:
| ● | We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. We only have one officer and director. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
| ● | Effective controls over the control environment have not been maintained. Specifically, we do not have a formally adopted written code of business conduct and ethics that governs our employees, officers and directors. Additionally, management has not developed and effectively communicated to its employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. |
| ● | We do not have sufficient levels of supervision and review of the accounting and financial reporting process. Our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Management evaluated the impact of insufficient levels of supervision and review of the accounting and financial reporting process and has concluded that the control deficiency that resulted represented a material weakness. |
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once resources become available.
We intend to remedy our material weakness with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective internal controls once resources become available.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2017, there have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 7 |
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
None.
| Exhibit Number | Description of Exhibit | |
| 31.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Presentation Linkbase Document |
* Filed herewith
**Furnished herewith
| 8 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Luckycom Pharmaceuticals Inc. | ||
| Date: | February 9, 2018 | |
| By: | /s/ Kingrich Lee | |
| Kingrich Lee | ||
| Title: | Chief Executive Officer and Chief | |
Financial Officer (Principal Executive Officer and Principal Accounting and Financial Officer) | ||
| 9 |