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 ended June 30, 2018

 

[  ]	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

 

LUCKWEL 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.)

 

One International Place, Suite 1400, Boston, MA, 02110

(Address of principal executive offices) (Zip Code)

 

617-535-7788

(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]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [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 August 14, 2018 was 143,376,000.

 

 

 

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

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements (Unaudited)

 

Our condensed consolidated financial statements included in this Form 10-Q are as follows:

 

Condensed Consolidated Balance Sheets as of June 30, 2018 (unaudited) and March 31, 2018 (audited);	F-1
Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2018 and 2017 (unaudited);	F-2
Condensed Consolidated Cash Flows for the Three Months Ended June 30, 2018 and 2017 (unaudited);	F-3
Notes to Condensed Consolidated Financial Statements (unaudited).	F-4

 

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 June 30, 2018 are not necessarily indicative of the results that can be expected for the full year.

 

 

LUCKWEL PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

 

		June 30, 2018				March 31, 2018
			(unaudited)
Assets
Current Assets
Cash		$	34,452			$	18,503
Total Assets		$	34,452			$	18,503
Liabilities and Stockholders’ Deficit
Current Liabilities
Other payable and accrued liabilities		$	73,511			$	66,043
Due to officer			350,591				81,757
Total Liabilities			424,102				147,800
Stockholders’ Deficit
Common stock, $0.01 par value; 200,000,000 and 100,000,000 shares authorized; 143,376,000 and 18,376,000 shares issued and outstanding as of June 30, 2018 and March 31, 2018, respectively.			1,433,760				183,760
Additional paid-in capital			465,748				1,715,748
Accumulated other comprehensive income			10				10
Accumulated deficit			(2,289,168	)			(2,028,815	)
Total stockholders’ deficit			(389,650	)			(129,297	)
Total Liabilities and Stockholders’ Deficit		$	34,452			$	18,503

 

See accompanying notes to condensed consolidated financial statements.

 

 

LUCKWEL PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Stated in US Dollars)

 

		For the three months ended
		June 30,
		2018				2017
		(unaudited)				(unaudited)
General and administrative expenses		$	(220,356	)		$	(157,859	)
Other Income			3				563
Net Loss		$	(220,353	)		$	(157,296	)
Net loss per share – basic and diluted		$	(0.002	)		$	(0.009	)
Weighted average common shares – basic and diluted			98,046,330				18,087,538

 

See accompanying notes to condensed consolidated financial statements.

 

 

LUCKWEL PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

 

		For the three months ended
		June 30,
		2018				2017
		(unaudited)				(unaudited)
Cash Flows from Operating Activities
Net loss		$	(220,353	)		$	(157,296	)
Adjustment to reconcile net loss to net cash used in operating activities:
Prepaid expense and other current assets			-				(20,019	)
Other payable and accrued liabilities			7,468				(844	)
Net cash flow used in operating activities			(212,885	)			(178,159	)
Cash Flows from Investing Activities			-				-
Cash Flows from Financing Activities
Proceeds from issuance of common stock			-				422,946
Capital distribution			(40,000	)
Proceeds from officer loans			268,834				18,868
Net cash flow provided by financing activities			228,834				441,364
Net increase in cash			15,949				263,205
Cash, beginning of period			18,503				29,413
Cash, End of Period		$	34,452			$	292,618
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		$	-			$	327,504

 

See accompanying notes to condensed consolidated financial statements.

 

 

LUCKWEL 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 Luckwel Pharmaceuticals Inc. (the “Company”, “we” or “our” and formerly known as “Luckycom Pharmaceuticals Inc.” and “Luckycom Inc.”) 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 July 13, 2018.

 

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 Luckwel 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.

 

On April 11, 2018, Luckwel Pharmaceuticals Inc. filed a Certificate of Amendment to the Articles of Incorporation to change its name from Luckycom Pharmaceuticals Inc. to Luckwel Pharmaceuticals Inc. and to increase the number of its authorized shares of common stock from 100,000,000 to 200,000,000 with an effective date of April 13, 2018. It then amended and restated its by-laws to reflect the new corporate name.

 

Recent Accounting Pronouncements

 

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this Update also require certain disclosures about stranded tax effects. Public business entities should apply the amendments in ASU 2018-02 for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The Company is currently evaluating the impact of adopting ASU 2018-02 on its consolidated financial statements.

 

 

In March 2018, the FASB issued ASU No. 2018-05, Income Tax (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This update adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Act was signed into law.

 

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

 

Note 2 – Going Concern

 

The Company has no source of revenues and need additional cash resources to maintain the operations. The Company has a working capital deficit of $389,650, has incurred losses since inception of $2,289,168, and have not yet received any revenue from sales of products or services. These factors raise substantial doubt about its ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital or obtain necessary debt financing. The Company is presently dependent on its controlling shareholder to provide us funding for its daily operation and expenses, including professional fee and fees charged by regulators, although he is under no obligation to do so.

 

The Company has $34,452 in cash as of June 30, 2018 and believes that the expenses over the next 12 months from the issuance date of this report will be approximately $300,000. This estimate may change significantly depending on the nature of the future business activities and the ability to raise capital from shareholders or other sources.

 

The Company intends to meet the cash requirements for the next 12 months from the issuance date of the condensed consolidated financial statements through a combination of debt and equity financing by way of private placements, friends, family and business associates. The Company currently did not have any arrangements in place to complete any private placement financings and there is no assurance that the Company will be successful in completing any such financings on terms that will be acceptable to it. The Company anticipates that Mr. Kingrich Lee, the Chief Executive Office, will spearhead the financing efforts.

 

If we do not have sufficient working capital to pay our operating costs for the next 12 months, we will require additional funds to pay our legal, accounting and other fees associated with our Company and our filing obligations under United States federal securities laws, as well as to pay our other accounts payable generated in the ordinary course of our business. Once these costs are accounted for, we will focus on the following activities:

 

1.	Establish a management team to work on the pharmaceutical operations in US and Asia. In particular, our goal is to submit an abbreviated new drug application (“ANDA”) with the US Food and Drug Administration for our generic drugs.
2.	Implement manufacturing and sales of the newly-acquired hypertension and cholesterol drugs, namely WELVASC, WELTOR and WEDUET.

 

Any failure to raise money will have the effect of delaying the timeframes in the business plan as set forth above, and the Company may have to push back the dates of such activities.

 

The condensed consolidated 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 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 the condensed consolidated financial statements. 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.

 

 

Note 3 – Related Party Transactions

 

The Company’s sole officer and director, and a shareholder, Mr. Kingrich Lee, loaned an aggregate of $268,834 and $18,868 to the Company during the three months ended June 30, 2018 and 2017, respectively.

 

Mr. Kingrich Lee is owed an aggregate amount of $350,591 and $81,757 as of June 30, 2018 and March 31, 2018, respectively.

 

The amounts are unsecured, non-interest bearing and due on demand.

 

On May 3, 2018, the Company entered into an Intellectual Property Sale and Purchase Agreement (the “Agreement”) with Luckwel Asia Limited (the “Seller”, formerly known as Essential Choice Ventures Ltd), an entity under common control of Mr. Kingrich Lee to purchase from the Seller the intellectual property rights to five drugs, comprising three generic medicines used to treat hypertension and high cholesterol and two advanced drug candidates - KL008 for treatment of hypertension and KL009 for treatment of high cholesterol in various stages of being developed and manufactured (the “Transaction”).Pursuant to the terms of the Agreement, the Company would pay the Seller on closing (i) US$40,000 and (ii) issue an aggregate 125,000,000 restricted shares of its common stock, par value $0.01. The Transaction closed on May 3, 2018. The Company recorded the carrying value of the intellectual property as nil in the Seller’s record, $40,000 as capital distribution to the Seller and recorded the par value of the common stock as additional paid-in capital, which was due to the Transaction being regarded as an equity transaction because both parties were under common control.

 

Note 4 – Capital Stock

 

As of June 30, 2018, the Company had 143,376,000 shares of common stock issued and outstanding. During the three months ended June 30, 2018, the Company issued in aggregate of 125,000,000 restricted shares of its common stock to Luckwel Asia Limited.

 

Note 5 – Subsequent Event

 

The Company has evaluated subsequent events through the issuance of the condensed consolidated financial statements and no subsequent event is identified.

 

 

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

 

As reflected in the accompanying financial statements, we have no source of revenues and need additional cash resources to maintain our operations. We have a working capital deficit of $389,650, have incurred losses since inception of $2,289,168, and have not yet received any revenue from sales of products or services. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital or obtain necessary debt financing. We are presently dependent on our controlling shareholder to provide us funding for our daily operation and expenses, including professional fee and fees charged by regulators, although he is under no obligation to do so.

 

We have $34,452 in cash as of June 30, 2018. We believe that our expenses over the next 12 months from the issuance date of this report will be approximately $300,000. 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. 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 do not have sufficient working capital to pay our operating costs for the next 12 months, we will require additional funds to pay our legal, accounting and other fees associated with our Company and our filing obligations under United States federal securities laws, as well as to pay our other accounts payable generated in the ordinary course of our business. 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 Asia. In particular, our goal is to submit an abbreviated new drug application (“ANDA”) with the US Food and Drug Administration for our generic drugs.
	2.	Implement manufacturing and sales of our newly-acquired hypertension and cholesterol drugs, namely WELVASC, WELTOR and WEDUET.

 

Any failure to raise money will have the effect of delaying the timeframes in our business plan as set forth above, and we may have to push back the dates of such activities.

 

 

Results of Operations

 

The Three Months Ended June 30, 2018 and 2017

 

Operating Revenue

 

We recorded no consolidated revenue and consolidated gross loss for the three-month period ended June 30, 2018 and the same for the corresponding period in 2017 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 $220,356 and $157,859 for the three months ended June 30, 2018 and 2017, respectively.

 

Our operating expenses for the three months ended June 30, 2018 consisted mainly of professional fees of $64,712, officer compensation of $54,000, travel expenses of $23,268, and office expenses of $77,429. Operating expense increased significantly because the Company has attended more conference and meetings with bankers to seek for financing during three month ended June 30, 2018.

 

Our operating expenses for the three months ended June 30, 2017 consisted mainly of professional fees of $88,177, officer compensation of $45,000, travel expenses of $9,018, and rent of $9,916.

 

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 $220,353 and $157,296 for the three months ended June 30, 2018 and 2017, respectively.

 

Liquidity and Capital Resources

 

As of June 30, 2018, we had total current assets of $34,452 in cash. As of June 30, 2018, we had current liabilities in the amount of $424,102 consisting of other payable and accrued liabilities of $73,511, and $350,591 due to an officer.

 

 

The table below sets forth selected cash flow data for the periods presented:

 

		Three Months Ended
		June 30,
		2018				2017
Net cash used in operating activities		$	(212,885	)		$	(178,159	)
Net cash provided by financing activities			228,834				441,364
Net increase in cash		$	15,949			$	263,205

 

Our negative operating cash flows were mainly a result of operating expenses (See also Result of Operations).

 

Our positive financing cash flows were a result of proceeds from officer loans.

 

On May 3, 2018, we entered into an Intellectual Property Sale and Purchase Agreement (the “Agreement”) with Luckwel Asia Limited (the “Seller”, formerly known as Essential Choice Ventures Ltd), an entity under common control of Mr. Kingrich Lee to purchase from the Seller the intellectual property rights to five drugs, comprising three generic medicines used to treat hypertension and high cholesterol and two advanced drug candidates - KL008 for treatment of hypertension and KL009 for treatment of high cholesterol in various stages of being developed and manufactured (the “Transaction”). Pursuant to the terms of the Agreement, the Company would pay the Seller on closing (i) US$40,000 and (ii) issue an aggregate 125,000,000 newly issued restricted shares of its common stock, par value $0.01. The Transaction closed on May 3, 2018. The Company recorded the carrying value of the intellectual property as nil in the Seller’s record, $40,000 as capital distribution the Seller and recorded the par value of the common stock as additional paid-in capital, which was due to the Transaction being regarded as an equity transaction because both parties were under common control.

 

Despite having $34,452 in cash as of June 30, 2018, 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 June 30, 2018, 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 June 30, 2018, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified below.

 

 

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.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2018 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of June 30, 2018, our internal control over financial reporting was not effective. The material weaknesses identified related to (i) a lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements; (ii) a lack of sufficient documented financial closing policies and procedures; and (iii) a lack of independent directors and an audit committee..

 

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending March 31, 2019: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; (ii) adopt sufficient written policies and procedures for accounting and financial reporting, and (iii) strengthen our financial team by employing more qualified accountant(s) conversant with US GAAP to enhance the quality of our financial reporting function. The remediation efforts set out in (i), (ii) and (iii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

 

During the quarter ended June 30, 2018, 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.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

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.

 

Item 1A. Risk Factors

 

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.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

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

 

 

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.

 

Luckwel Pharmaceuticals Inc.
Date:	August 14, 2018
By:	/s/ Kingrich Lee
	Kingrich Lee
Title:	Chief Executive Officer and Chief
	Financial Officer (Principal Executive Officer and Principal Accounting and Financial Officer)