Item 1. Condensed Financial Statements.
FCCC, INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands, except share data)
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June 30,
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March 31,
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2021
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2021
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(Unaudited)
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$
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48
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$
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66
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Prepaid expense
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4
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4
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Total current assets
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52
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70
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TOTAL ASSETS
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52
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70
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable and other accrued expenses
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$
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6
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$
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4
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Other liabilities:
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Due to Related party – David He
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$
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10
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Convertible note payable
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65
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65
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Accrued interest
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2
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TOTAL LIABILITIES
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81
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71
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Stockholders’ equity:
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Common stock, no par value,22,000,000 shares authorized, 3,461,022 issued and outstanding at June 30, 2021 and at March 31, 2021
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800
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800
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Additional paid-in capital
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8,396
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8,396
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Accumulated deficit
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(9,225
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)
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(9,197
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)
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Total stockholders’ equity
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(29
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)
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(1
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)
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
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52
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$
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70
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See notes to condensed financial statements
FCCC, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except share and per share data)
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Three Months Ended
June 30,
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2021
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2020
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Income:
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Interest income
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$
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-
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$
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-
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Total income
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-
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-
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Expenses:
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Operating and administrative expenses
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28
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21
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Interest expense
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0
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-
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Total expenses
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28
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21
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Loss before income taxes
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(28
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)
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(21
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)
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Income tax expense
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-
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-
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Net Loss
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$
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(28
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)
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$
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(21
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)
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Basic and diluted loss per share
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$
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(0.006
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)
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$
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(0.006
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)
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Weighted average common shares outstanding
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Basic
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3,461,022
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3,461,022
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See notes to condensed financial statements
FCCC, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
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Three Months Ended
June 30,
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2021
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2020
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Cash Flows from Operating Activities
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Net loss
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$
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(28
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)
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$
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(21
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)
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Adjustments to reconcile net loss to cash used in operating activities
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Changes in assets and liabilities
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Increase in prepaid expenses
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(-
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)
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(9
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)
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Decrease in accounts payable and accrued expenses
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10
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5
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Increase in accrued interest
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(18
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)
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25
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Net cash used in operating activities
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(18
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)
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Cash Flows from Financing Activities
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Proceeds from convertible note payable
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-
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-
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Net increase (decrease) in cash
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(18
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)
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(25
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)
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Cash at the beginning of the period
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66
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63
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Cash at the end of the period
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$
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48
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$
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38
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See notes to condensed financial statements
FCCC, INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
(Dollars in thousands)
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Common Stock
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Additional
Paid-In
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Accumulated
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Total
Stockholders’
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Shares
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Amount
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Capital
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Deficit
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Equity (Deficit)
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Balance as of Year Ended March 31, 2019
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3,461,022
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$
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800
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$
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8,396
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$
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(9,081
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)
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$
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115
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Net Loss – Year Ended March 31, 2020
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–
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-
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-
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(54
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)
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(54
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)
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Balance as of Year Ended March 31, 2020
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3,461,022
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800
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8,396
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(9,135
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)
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61
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Net Loss – Year Ended March 31, 2021
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–
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-
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-
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(62
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)
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(62
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)
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Balance as of Year Ended March 31, 2021
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3,461,022
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$
|
800
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$
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8,396
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$
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(9,197
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)
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$
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(1
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)
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Net Loss – 3 months Ended June 30, 2021
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–
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|
-
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-
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(28
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)
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|
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(28
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)
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|
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|
|
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Balance as of 3 months Ended June 30, 2021
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3,461,022
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$
|
800
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$
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8,396
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$
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(9,225
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)
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$
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(29
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)
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See notes to condensed financial statements
FCCC, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2021
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of FCCC, Inc. (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X, promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair representation have been included herein. Operating results are not necessarily indicative of the results which may be expected for the year ending March 31, 2022 or other future periods. For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
NOTE 2 – RELATED PARTY TRANSACTIONS
On September 21, 2020, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Frederick L. Farrar, who then served as the Company’s Chief Executive Officer and Chief Financial Officer, pursuant to which the Company issued and sold to Mr. Farrar a Convertible Promissory Note in aggregate principal amount of $65,000 bearing 5.0% interest per annum due and payable in cash on October 31, 2022 (the “Note”). The Note is unsecured and may be prepaid by the Company in whole or in part at any time without penalty or premium, at the option of the Company. Mr. Farrar has the option, on or prior to the maturity date, to convert all (but not less than all) of the principal and accrued but unpaid interest under this Note into the Company’s common stock, no par value, at a conversion price of $0.23 per share.
On April 26, 2021, the Company entered into an agreement to issue and sell 695,652 shares (the “New Shares”) of the Company’s common stock, no par value, to Huijun He, the Company’s Chief Executive Officer Vice President, and a Director, for a price of $160,000 or $0.23 per share (the “Subscription Agreement”). Pursuant to the terms of the Subscription Agreement, the sale of the New Shares will take place on or before July 25, 2021, which is the 90th day after the execution of the Subscription Agreement.
Since the beginning of the fiscal year ended March 31, 2021, the Company has not been a party to any other related party transactions.
NOTE 3 – EARNINGS PER SHARE
The Company follows FASB ASC 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding for the period, excluding the effects of any potentially dilutive securities. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.
Basic and diluted loss per common share was calculated using the following number of shares for the three months ended June 30, 2021 and 2020:
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Three Months Ended June 30:
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2021
|
|
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2020
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|
|
Weighted average number of common shares outstanding - Basic
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|
3,461,022
|
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3,461,022
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Weighted average number of common shares outstanding - Diluted
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|
3,611,309
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|
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|
3,461,022
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|
NOTE 4 – INDEBTEDNESS
On September 21, 2020, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold to Frederick L. Farrar, a former executive officer, director and significant stockholder of the Company, a Convertible Promissory Note in the principal amount of $65,000 (the “Note”) in exchange for a loan of the same amount. The Note accrues interest at 5.0% per annum and is scheduled to mature and become payable on October 31, 2022. The Company’s payment obligations under the Note are unsecured and the Company can prepay the amount due in whole or in part at any time without penalty or premium. The holder of the Note has the option, on or prior to maturity, to convert all (but not less than all) of the amount due under the Note to into shares of the Company’s common stock at a conversion price of $0.23 per share. The Company intends to use the proceeds from the issuance of the Note for general corporate purposes. As of June 30, 2021, the principal and interest due under the Note totaled $67,000.
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations.
FORWARD-LOOKING STATEMENTS
The following discussion may contain forward-looking statements regarding the Company, its business prospects and its results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause the Company’s actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. The risks and uncertainties may be summarized in other documents that the Company may file with the Securities Exchange Commission, such as our Annual Report on Form 10-K for the year ended March 31, 2021. These forward-looking statements reflect our view only as of the date of this report. The Company cannot guarantee future results, levels of activity, performance, or achievement. The Company does not undertake any obligation to update or correct any forward-looking statements.
ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION
The Company has limited operations and is actively seeking a merger, reverse merger, acquisition or business combination opportunities with an operating business or other financial transaction opportunities. Until a transaction is effectuated, the Company does not expect to have significant operations. Accordingly, during this period the Company does not expect to achieve sufficient income to offset the Company’s operating expenses, resulting in operating losses that may require the Company to use and thereby reduce the Company’s limited cash balance. The Company’s prepaid expenses during the three-months ended June 30, 2020 remained unchanged. Until the Company completes a merger, reverse merger or other financial transaction, and unless interest rates increase dramatically, the Company expects to continue to incur losses between $15,000 to $20,000 per quarter. The Company does not have any arrangements with banks or financial institutions with respect to the availability of financing in the future.
The payment of any cash distributions is subject to the discretion of our board of directors. At this time, the Company has no plans to pay any additional cash distributions in the foreseeable future.
CURRENT BUSINESS
Since June 2003, the Company’s operations consist of a search for a merger, acquisition, reverse merger or a business transaction opportunity with an operating business or other financial transaction; however, there can be no assurance that this plan will be successfully implemented. Until a transaction is effectuated, the Company does not expect to have significant operations. At this time, the Company has no arrangements or understandings with respect to any potential merger, acquisition, reverse merger or business combination candidate pursuant to which the Company may become an operating company.
Opportunities may come to the Company’s attention from various sources, including our management, our stockholders, professional advisors, securities broker dealers, venture capitalists and private equity funds, members of the financial community and others who may present unsolicited proposals. At this time, the Company has no plans, understandings, agreements, or commitments with any individual or entity to act as a finder in regard to any business opportunities. While it is not currently anticipated that the Company will engage unaffiliated professional firms specializing in business acquisitions, reorganizations or other such transactions, such firms may be retained if such arrangements are deemed to be in the best interest of the Company. Compensation to a finder or business acquisition firm may take various forms, including one-time cash payments, payments involving issuance of securities (including those of the Company), or any combination of these or other compensation arrangements. Consequently, the Company is currently unable to predict the cost of utilizing such services.
The Company has not restricted its search to any particular business, industry, or geographical location. In evaluating a potential transaction, the Company analyzes all available factors and make a determination based on a composite of available facts, without reliance on any single factor.
It is not possible at this time to predict the nature of a transaction in which the Company may participate. Specific business opportunities would be reviewed as well as the respective needs and desires of the Company and the legal structure or method deemed by management to be suitable would be selected. In implementing a structure for a particular transaction, the Company may become a party to a merger, consolidation, reorganization, tender offer, joint venture, license, purchase and sale of assets, or purchase and sale of stock, or other arrangement the exact nature of which cannot now be predicted. Additionally, the Company may act directly or indirectly through an interest in a partnership, corporation or other form of organization. Implementing such structure may require the merger, consolidation or reorganization of the Company with other business organizations and there is no assurance that the Company would be the surviving entity. In addition, our present management and stockholders may not have control of a majority of the voting shares of the Company following reorganization or other financial transaction. As part of such a transaction, some or all of the Company’s existing directors may resign and new directors may be appointed. The Company’s operations following the consummation of a transaction will be dependent on the nature of the transaction. There may also be various risks inherent in the transaction, the nature and magnitude of which cannot be predicted.
The Company may also be subject to increased governmental regulation following a transaction; however, it is not possible at this time to predict the nature or magnitude of such increased regulation, if any.
The Company expects to continue to incur moderate losses each quarter until a transaction considered appropriate by management is effectuated.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
During the quarter ended June 30, 2021, the Company had a loss from operations of $28,000. The loss is attributable to the operational, administrative, auditing, tax return preparation, legal and interest expenses incurred during the quarter. During the quarter ended June 30, 2020, the loss from operations was $21,000. No taxes were paid in the quarters ended June 30, 2021 or 2020.
During the three months ended June 30, 2021, the Company had a loss from operations of $28,000. The loss is attributable to the operational, administrative, auditing, tax return preparation, legal and interest expenses incurred during the three-month period. During the three months ended June 30, 2020, the loss from operations was $21,000. Taxes paid in the three months ended June 30, 2021 and 2020 were $0 in both three-month periods.
LIQUIDITY AND CAPITAL RESOURCES
Stockholders’ equity as of June 30, 2021, was $(29,000), compared to ($1,000) at March 31, 2021. The decrease is attributable to the net loss incurred during the three months ended June 30, 2021.
Net cash used in operating activities was $18,000 during the three months ended June 30, 2021, compared to net cash used in operating activities of $25,000 in the three months ended June 30, 2020. The net cash from financing activities during the three months ended June 30, 2021 was a result of the payment of operating expenses.
Cash on hand at June 30, 2021 was $48,000, compared to $66,000 at June 30, 2020. The decrease in cash on hand was primarily the net result of the expenses incurred during the first three months of the fiscal year.
Convertible Promissory Note
On September 21, 2020, the Company entered into a Note Purchase Agreement with Frederick L. Farrar, its Chief Executive Officer, Chief Financial Officer and a member of its board of directors, pursuant to which the Company issued and sold to Mr. Farrar a Convertible Promissory Note in the principal amount of $65,000 (the “Note”) in exchange for a loan of the same amount. The Note accrues interest at 5.0% per annum and is scheduled to mature and become payable on October 31, 2022. The Company’s payment obligations under the Note are unsecured and the Company can prepay the amount due in whole or in part at any time without penalty or premium. The holder of the Note has the option, on or prior to maturity, to convert all (but not less than all) of the amount due under the Note to into shares of the Company’s common stock at a conversion price of $0.23 per share. The Company intends to use the proceeds from the issuance of the Note for general corporate purposes.
The Company has no material off-balance sheet arrangements. There has been no material change in any contractual obligation as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.