UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

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

 

For the fiscal year ended March 31, 2020

 

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

 

For the transition period from ________________to ______________

 

Commission file number 333-187874

 

LUCKWEL PHARMACEUTICALS INC.

(Exact name of registrant as specified in its charter)

 

Nevada   46-1660653

(State or other jurisdiction of

incorporation or organization)

  (I.R.S. Employer
Identification No.)

 

125 Cambridge Park Drive, Suite 301, Cambridge, MA 02140

(Address of principal executive offices and Zip Code)

 

(617) 430-5222

(Registrant’s telephone number, including area code)

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

Securities registered pursuant to Section 12(g) of the Exchange Act

 

None

 

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

 

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

 

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [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). [X] Yes [  ] No

 

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer [X]   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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [  ]

 

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

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of September 30, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $50,455,552 based upon the last sales price of the common stock of $4.00 per share on September 30, 2019 as of such date. Solely for purposes of this disclosure, shares of common stock held by executive officers, directors and beneficial holders of 10% or more of the outstanding common stock of the registrant as of such date have been excluded because such persons may be deemed to be affiliates.

 

The number of shares of common stock, par value $0.01 outstanding as of May 31, 2021 is 147,163,500.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
PART I
 
Item 1. Business 1
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Mine Safety Disclosures 3
   
PART II
 
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 3
Item 6. Selected Financial Data 5
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 8
Item 8. Financial Statements and Supplementary Data 8
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 9
Item 9A. Controls and Procedures 9
Item 9B. Other Information 10
     
PART III
 
Item 10. Directors, Executive Officers and Corporate Governance 10
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 14
Item 13. Certain Relationships and Related Transactions, and Director Independence 15
Item 14. Principal Accountant Fees and Services 16
     
PART IV
 
Item 15. Exhibits, Financial Statement Schedules 17

 

i

 

 

This Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

 

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “contemplate,” “anticipate,” “goals,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:

 

  our plans to develop and commercialize our product candidates;
  the timing of and our ability to submit applications for, and obtain and maintain regulatory approvals for our product candidates;
  our estimates regarding expenses, capital requirements, and needs for additional financing;
  our intellectual property position and our ability to obtain, maintain and enforce intellectual property protection for our proprietary assets;
  our estimates regarding the size of the potential markets for our product candidates and our ability to serve those markets;
  the rate and degree of market acceptance of our product candidates for any indication once approved;
  our plans and ability to raise additional capital, including through equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements;
  our competitive position and the success of competing products that are or become available for the indications that we are pursuing;
  the impact of government laws and regulations in important geographies;
  our ability to enter into future collaborations, strategic alliances, or licensing arrangements.

 

These forward-looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. You should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

 

You should read this Annual Report on Form 10-K and the documents that we have filed as exhibits to the Annual Report on Form 10-K with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

 

ii

 

 

PART I

 

Item 1. Business

 

Business of Company

 

We were incorporated on January 2, 2013 under the laws of the State of Nevada. Our principal executive offices are located at 125 Cambridge Park Drive, Suite 301, Cambridge, MA 02140. Our telephone number is +1 (617) 430-5222. Our fiscal year end is March 31.

 

On March 30, 2017, our name was changed from Luckycom Inc. to Luckycom Pharmaceuticals Inc. and again on April 11, 2018, our name was changed to Luckwel Pharmaceuticals Inc. In connection with the most recent name change, on April 13, 2018, our common stock began trading on the OTC Pink under its new ticker symbol “LWEL” and ceased trading under the ticker symbol “LCOM”. On April 13, 2018, we increased the number of our authorized shares of common stock from 100,000,000 to 200,000,000 and on January 15, 2021 we increased the number of our authorized shares from 200,000,000 to 500,000,000.

 

At March 31, 2020 we were still a shell company and had not begun operations. We have no source of revenue and need additional cash resources to maintain the operations. 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 Chief Executive Officer, Mr. Kingrich Lee to either 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, or to spearhead financing efforts with third parties.

 

We currently do not have any arrangements in place to complete any financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable.

 

Our priority, should we receive such additional funds, is 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:

 

  Continue to work to establish a management team to work on establishing pharmaceutical operations in the Boston area.
  Continue intellectual property registration work for drug candidates.

 

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

 

Going Concern

 

We were still a shell company and had not yet begun operations as of March 31, 2020. Although management has taken steps since March 31, 2020 to develop the Company, there can be no assurances that it will be successful in doing so. We have no source of revenue and need additional cash resources to maintain the operations. 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 Chief Executive Officer, Mr. Kingrich Lee, to either 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, or to spearhead financing efforts with third parties.

 

As reflected in the accompanying financial statements, we have no source of revenue and need additional cash resources to maintain our operations. At March 31, 2020 we had current assets of $17,213, liabilities totaling $1,345,468, have incurred losses since inception of $3,227,773, 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 fees and fees charged by regulators, although he is under no obligation to do so.

 

1

 

 

Any failure to raise additional funds will have the effect of delaying the timeframes as described in our business plan as set forth above, and we may have to push back the dates or modify the scope of such planned activities.

 

In March 2020, the World Health Organization declared the global novel coronavirus disease 2019 (COVID-19) outbreak a pandemic. As the Company was still a shell company at March 31, 2020, the Company’s operations have not been significantly impacted financially by the COVID-19 outbreak other than to delay the Company’s plans to develop the business and raise required funds. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 outbreak will have on its financial condition and ability to raise additional capital to finance future planned operations.

 

Management has been taking steps to improve the financial position of the Company. Subsequent to the year end of March 31, 2020, in January 2021, we sold 300,000 shares of our common stock at a purchase price of $0.40 per share for net proceeds of $120,000. In February 2021, $1.2 million of Company liabilities that was owed to Mr. Kingrich Lee were converted into 3,000,000 shares of our common stock at a conversion price of $0.40 per share. In April 2021, the Company sold 300,000 shares of its common stock at a purchase price of $0.40 per share for total gross proceeds of $120,000. In May 2021, the Company sold 187,500 shares of its common stock at a purchase price of $0.40 per share for total gross proceeds of $75,000.

 

Intellectual Property

 

In May 2018, the Company entered into an Intellectual Property Sale and Purchase 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.

 

On February 5, 2021, Mr. Kingrich Lee, our CEO executed a Deed of Gift to irrevocably and unconditionally give, transfer, and assign, by way of give, without limitations or restrictions, to us all of his right, tile and interest in, arising from the following drug programs:

 

Program Code Patent No. Filing Date Description
LWEL-2101 63/086,205 October 5, 2020 Rapid Disintegrating dosage form comprising Fosamprenavir
LWEL-2102 63/134,881 January 7, 2021 Rapid Disintegrating dosage form comprising Metformin Hydrochloride
LWEL-2103 62/992,693 March 20,2020 Combination Therapy for treating COVID-19

 

On March 19, 2021, Mr. Lee executed another Deed of Gift to irrevocably and unconditionally give, transfer and assign, by way of gift, without limitation or restriction, to us all of his right, title and interest in, arising from and to the following drug programs:

 

Program Code Description
KL-2118   Candidate drug to be developed into orally disintegrating tablets (ODT) to treat Type 2 diabetes.
KL-2119   Candidate drug to be developed into an oral formulation treatment of HIV
KL-2120   Candidate drug to be developed into a liquid injection for the treatment of Rheumatoid Arthritis

 

Sales and Marketing

 

Given our current stage of development, we have not yet established commercial organization or distribution capabilities, nor have we entered into any partnership or co-promotion arrangements with an established pharmaceutical company.

 

Competition

 

The industry we are in is highly competitive and subject to rapid and significant technological change. Key competitive factors affecting the commercial success of our products are likely to be efficacy, safety and tolerability profile, reliability, convenience of dosing, price and reimbursement. Many of these competitor companies have substantially greater financial, marketing, and human resources than we do (including, in some cases, substantially greater experience in clinical testing, manufacturing, and marketing of pharmaceutical products).

 

2

 

 

Employees

 

As of March 31, 2020 and as of the date of this filing, we do not have any employees, other than Mr. Kingrich Lee.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 1B. Unresolved Staff Comments

 

None.

 

Item 2. Properties

 

Our principal executive office is located at 125 Cambridge Park Drive, Suite 301, Cambridge, MA 02140, which is leased by us.

 

Item 3. 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 4. Mine Safety Disclosures

 

Not applicable.

 

PART II

 

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

 

Our common stock used to be quoted under the symbol “LCOM” on the OTC Pink operated by OTC Markets Group, Inc. On April 11, 2018, our name was changed to Luckwel Pharmaceuticals Inc. and in connection with the most recent name change, on April 13, 2018, our common stock began trading on the OTC Pink under its new ticker symbol “LWEL”.

 

There has been very little trade in our shares of common stock in fiscal 2020 and 2019. The table below presents the high and low bid for our common stock for each quarter from April 1, 2019 through March 31, 2020. These prices reflect inter-dealer prices, without retail markup, markdown, or commission, and may not represent actual transactions.

 

Year ended March 31, 2019   High     Low  
1st Quarter   $ 4.00     $ 3.50  
2nd Quarter   $ 5.00     $ 3.26  
3rd Quarter   $     $  
4th Quarter   $     $  

 

Year ended March 31, 2020     High       Low  
1st Quarter   $     $  
2nd Quarter   $     $  
3rd Quarter   $     $  
4th Quarter   $     $  

 

There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

 

3

 

 

Penny Stock

 

The Securities and Exchange Commission (the “SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

 

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

 

Holders of Our Common Stock

 

As of May 31, 2021, we had 147,163,500 shares of our common stock issued and outstanding, held by 53 shareholders of record.

 

Dividends

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

 

  1. we would not be able to pay our debts as they become due in the usual course of business, or;
     
  2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

 

Recent Sales of Unregistered Securities

 

On January 12, 2021, we completed a private placement offering of 300,000 shares of our common stock at a price of $0.40 per share for total proceeds to the Company of $120,000 to an investor in an offering that had not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and that had not been reported on our previously filed periodic reports filed under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) pursuant to Rule 903 of Regulation S of the Securities Act.

 

We completed the offering of the shares pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the shares was completed in “offshore transactions”, as defined in Rule 902(h) of Regulation S. We did not engage in any “directed selling efforts”, as defined in Regulation S, in the United States in connection with the sale of the shares. The investor represented to us that she was not a U.S. person, as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person.

 

4

 

 

On February 11, 2021, we converted $1.2 million of the total amount of $1,269,580 we owed to our Chief Executive Officer, Mr. Kingrich Lee, into 3,000,000 shares of our common stock at a price of $0.40 per share.

 

The issuance of Company common stock to Mr. Lee was exempt from registration pursuant to the provisions of Section 4(a)(2) of the Securities Act, as amended and Rule 506 of Regulation D promulgated thereunder. Mr. Lee represented to us that he (i) was an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act, (ii) was knowledgeable, sophisticated and experienced in making investment decisions of this kind, and (iii) has had adequate access to information about the Company. Further, the Company relied on the exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended and Regulation S under the Securities Act for purposes of the private placement of the shares of common stock as such shares have not been offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) or persons in the United States.

 

On April 20, 2021, we completed a private placement offering of 300,000 shares of our common stock at a price of $0.40 per share for total gross proceeds to the Company of $120,000 to a group of investors in an offering that had not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and that had not been reported on our previously filed periodic reports filed under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) pursuant to Rule 903 of Regulation S of the Securities Act.

 

We completed the offering of the shares pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the shares was completed in “offshore transactions”, as defined in Rule 902(h) of Regulation S. We did not engage in any “directed selling efforts”, as defined in Regulation S, in the United States in connection with the sale of the shares. The investors represented to us that they were not U.S. persons, as defined in Regulation S, and were not acquiring the shares for the account or benefit of a U.S. person.

 

In May 2021, we completed a private placement offering of 187,500 shares of our common stock at a price of $0.40 per share for total gross proceeds to the Company of $75,000 to an investor in an offering that had not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and that had not been reported on our previously filed periodic reports filed under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) pursuant to Rule 903 of Regulation S of the Securities Act.

 

We completed the offering of the shares pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the shares was completed in “offshore transactions”, as defined in Rule 902(h) of Regulation S. We did not engage in any “directed selling efforts”, as defined in Regulation S, in the United States in connection with the sale of the shares. The investors represented to us that they were not U.S. persons, as defined in Regulation S, and were not acquiring the shares for the account or benefit of a U.S. person.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We did not have any equity compensation plans as of March 31, 2020.

 

Stock Option and Warrants

 

None.

 

Repurchase of Equity Securities by Luckwel Pharmaceuticals, Inc. and Affiliated Purchasers

 

None.

 

Stock Transfer Agent

 

Our stock transfer agent is VStock Transfer, LLC, whose address is 18 Lafayette Place, Woodmere, New York 11598 (Telephone number: (212) 828-8436).

 

Item 6. Selected Financial Data

 

A smaller reporting company is not required to provide the information required by this Item.

 

5

 

 

Item 7. 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 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

 

At March 31, 2020 we were still a shell company and had not yet begun operations. We have no source of revenue and need additional cash resources to maintain the operations. 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 Chief Executive Officer, Mr. Kingrich Lee to either 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, or to spearhead financing efforts with third parties.

 

We currently do not have any arrangements in place to complete any financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable.

 

Our priority, should we receive such additional funds, is 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:

 

  Continue to work to establish a management team to work on establishing pharmaceutical operations in the Boston area.
  Continue intellectual property registration work for drug candidates.

 

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

 

Going Concern

 

As of March 31, 2020, we were a shell company and had not yet begun operations. We have no source of revenue and need additional cash resources to maintain the operations. 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 Chief Executive Officer, Mr. Kingrich Lee, to either 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, or to spearhead financing efforts with third parties.

 

At March 31, 2020 we had current assets of $17,213, liabilities totalling $1,345,468, have incurred losses since inception of $3,227,773, 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.

 

Any failure to raise additional funds will have the effect of delaying the timeframes as described in our business plan as set forth above and elsewhere in this Annual Report on Form 10-K, and we may have to push back the dates or modify the scope of such planned activities.

 

6

 

 

In March 2020, the World Health Organization declared the global novel coronavirus disease 2019 (COVID-19) outbreak a pandemic. As the Company was still a shell company at March 31, 2020, the Company’s operations have not been significantly impacted financially by the COVID-19 outbreak other than to delay the Company’s plans to develop the business and raise required funds. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 outbreak will have on its financial condition and ability to raise additional capital to finance future planned operations.

 

Management has been taking steps to improve the financial position of the Company. Subsequent to March 31, 2020, in January 2021, we sold 300,000 shares of our common stock at $0.40 per share for gross proceeds of $120,000. In February 2021, $1.2 million of Company debt that was owed to Mr. Kingrich Lee was converted into 3,000,000 shares of our common stock at a conversion price of $0.40 per share. In April 2021, the Company sold 300,000 shares of its common stock at a purchase price of $0.40 per share for total gross proceeds of $120,000. In May 2021, the Company sold 187,500 shares of its common stock at a purchase price of $0.40 per share for total gross proceeds of $75,000.

 

Results of Operations for the Years Ended March 31, 2020 and March 31, 2019

 

General and Administrative Expenses

 

As we were a shell company without operations during the years ended March 31, 2020 and 2019, our expenses were primarily general and administrative related. We recognized general and administrative expenses for the years ended March 31, 2020 and 2019 of $536,432 and $622,531, respectively.

 

Our operating expenses for the year ended March 31, 2020 consisted primarily of officer compensation of $286,547, professional fees of $185,393, travel expenses of $37,849 and rent and office operating expenses of $11,266.

 

Our operating expenses for the year ended March 31, 2019 consisted primarily of officer compensation of $267,277, professional fees of $247,282, travel expenses of $96,053, and rent and office operating expenses of $6,658.

 

We anticipate our operating expenses will increase sharply as we proceed to implement our business plan described above and become operational.

 

Other Income (Expenses)

 

Our income for the years ended March 31, 2020 and 2019 was immaterial.

 

Net Loss

 

We incurred a net loss of $536,432 for the year ended March 31, 2020, as compared with a net loss of $622,526 for the year ended March 31, 2019.

 

Capital Resources and Liquidity

 

As of March 31, 2020, we had $17,213 in current assets, consisting of $44 in cash and $17,169 in prepaid expense, and current liabilities in the amount of $1,345,468, consisting of other payable and accrued liabilities of $78,163, accrued officer compensation of $144,000, and $1,123,305 due to an officer. We had a working capital deficit of $1,328,255 as of March 31, 2020.

 

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

 

    Year Ended  
    March 31  
    2020     2019  
Net cash used in operating activities   $ (397,765 )   $ (622,242 )
Net cash provided by investing activities     -       -  
Net cash provided by financing activities     372,055       629,493  
Net (decrease) increase in cash   $ (25,710 )   $ 7,251  

 

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

 

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

 

7

 

 

On November 1, 2018, we entered into another new one-year employment agreement with Mr. Kingrich Lee to continue his employment as our Chief Executive Officer through October 31, 2019 and continuing on a year-to-year basis thereafter unless terminated by either party on not less than thirty (30) days notice prior to the expiration of the one-year extension anniversary. His salary is $180,000 a year. Additionally, he shall be entitled to an education allowance for his children who are attending full-time local education from kindergarten to senior secondary levels in any type of school and a housing allowance of $3,000 a month. Upon termination of Mr. Lee’s employment, except for termination for cause or termination by Mr. Lee, he shall be entitled to a payment equal to two (2) months’ salary ($30,000 at March 31, 2020) and shall also be eligible to retain his other benefits for a period of six (6) months.

 

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.

 

Critical Accounting Policies and Estimates

 

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates.

 

While our significant accounting policies are described in more detail in the notes to our financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our financial statements require the most significant judgments and estimates.

 

Income Taxes

 

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements

 

See Note 2 to our financial statements included herewith.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 8. Financial Statements and Supplementary Data

 

Index to Financial Statements Required by Article 8 of Regulation S-X:

 

F-1 Report of Independent Registered Public Accounting Firm – Marcum LLP
F-2 Balance Sheets as of March 31, 2020 and 2019
F-3 Statements of Operations for the Years Ended March 31, 2020 and 2019
F-4 Statements of Changes in Stockholders’ Deficit for the Years Ended March 31, 2020 and 2019
F-5 Statements of Cash Flows for the Years Ended March 31, 2020 and 2019
F-6 Notes to Financial Statements

 

8

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and Board of Directors of

Luckwel Pharmaceuticals Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Luckwel Pharmaceuticals Inc. (the “Company”) as of March 31, 2020 and 2019, the related statements of operations, changes in stockholders’ deficit and cash flows for the years ended March 31, 2020 and 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019, and the results of its operations and its cash flows for the years ended March 31, 2020 and 2019, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph – Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 3, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Marcum llp  
Marcum llp  

 

We have served as the Company’s auditor since 2019.

 

Portland, Maine

June 10, 2021

 

F- 1  

 

 

LUCKWEL PHARMACEUTICALS INC.

BALANCE SHEETS

As of March 31, 2020 and 2019

 

    March 31  
    2020     2019  
Assets            
Current Assets                
Cash   $ 44     $ 25,754  
Prepaid expense and other current assets     17,169       1,516  
Total Assets     17,213       27,270  
                 
Liabilities                
Current Liabilities:                
Other payable and accrued liabilities   $ 78,163     $ 67,843  
Accrued officer compensation     144,000       -  
Due to officer     1,123,305       751,250  
Total Liabilities     1,345,468       819,093  
                 
Stockholders’ Deficit:                
Common stock, $0.01 par value; 200,000,000 shares authorized; 143,376,000 shares issued and outstanding as of March 31, 2020 and 2019     1,433,760       1,433,760  
Additional paid in capital     465,748       465,748  
Accumulated other comprehensive income     10       10  
Accumulated deficit     (3,227,773 )     (2,691,341 )
Total stockholders’ deficit     (1,328,255 )     (791,823 )
Total Liabilities and Stockholders’ Deficit   $ 17,213     $ 27,270  

 

The accompanying notes are an integral part of these financial statements.

 

F- 2

 

 

LUCKWEL PHARMACEUTICALS INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED MARCH 31, 2020 AND 2019

 

    2020     2019  
General and administrative expenses   $ (536,432 )   $ (622,531 )
Other Income     -       5  
                 
Net Loss   $ (536,432 )   $ (622,526 )
                 
Net loss per share – basic and diluted   $ (0.004 )   $ (0.005 )
                 
Weighted average common shares – basic and diluted     143,376,000       132,074,630  

 

The accompanying notes are an integral part of these financial statements.

 

F- 3

 

 

LUCKWEL PHARMACEUTICALS INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED MARCH 31, 2020 AND 2019

 

    Common Stock    

Additional

Paid-in

   

Accumulated other

Comprehensive

    Accumulated    

Total

Stockholders’

 
    Shares     Amount     Capital     Income     Deficit     Deficit  
Balance as of April 1, 2018     18,376,000     $ 183,760     $ 1,715,748     $ 10     $ (2,028,815 )   $ (129,297 )
Common stock issued for service     125,000,000       1,250,000       (1,250,000 )     -       -       -  
Capital distribution     -       -       -       -       (40,000 )     (40,000 )
Net loss     -       -       -       -       (622,526 )     (622,526 )
Balance as of March 31, 2019     143,376,000     $ 1,433,760     $ 465,748     $ 10       (2,691,341 )     (791,823 )
Net loss     -       -       -       -       (536,432 )     (536,432 )
Balance as of March 31, 2020     143,376,000     $ 1,433,760     $ 465,748     $ 10     $ (3,227,773 )   $ (1,328,255 )

 

The accompanying notes are an integral part of these financial statements.

 

F- 4

 

 

LUCKWEL PHARMACEUTICALS INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31, 2020 AND 2019

 

    2020     2019  
Cash Flows from Operating Activities                
Net loss   $ (536,432 )   $ (622,526 )
Adjustment to reconcile net loss to net cash used in operating activities:                
                 
Changes in operating assets and liabilities:                
Prepaid expense and other current assets     (15,653 )     (1,516 )
Other payable and accrued liabilities     10,320       1,800  
Accrued officer compensation     144,000       -  
Net cash flow used in operating activities     (397,765 )     (622,242 )
                 
Cash Flows from Investing Activities                
      -       -  
Net cash flow provided by investing activities     -       -  
                 
Cash Flows from Financing Activities                
                 
Proceeds from officer loans     372,055       669,493  
Capital distribution     -       (40,000 )
Net cash flow provided by financing activities     372,055       629,493  
                 
Net (decrease) increase in cash     (25,710 )     7,251  
                 
Cash, beginning of period     25,754       18,503  
                 
Cash, End of period   $ 44     $ 25,754  
                 
Supplemental disclosures of cash flow information:                
Cash paid for interest expense   $ -     $ -  
Cash paid for income taxes   $ -     $ -  

 

The accompanying notes are an integral part of these financial statements.

 

F- 5

 

 

LUCKWEL PHARMACEUTICALS INC.

NOTES TO THE FINANCIAL STATEMENTS

MARCH 31, 2020 AND 2019

 

Note 1 – Nature of the Business

 

Luckwel Pharmaceuticals Inc. (“Luckwel” or the “Company”) plans to acquire, develop, manufacture, and market pharmaceutical medication.

 

On April 11, 2018, Luckwel filed a Certificate of Amendment to the Articles of Incorporation to change its name from Luckycom Pharmaceuticals Inc. to Luckwel and to increase the number of its authorized shares of common stock to 200,000,000 with an effective date of April 13, 2018. The Company then amended and restated its by-laws to reflect the new corporate name. In January 2021, the Company amended its certificate of incorporation to increase the number of authorized shares from 200,000,000 to 500,000,000.

 

The Company’s corporate office is located in Cambridge, Massachusetts and is incorporated in the State of Nevada.

 

As used in this Annual Report on Form 10-K (“Annual Report”), unless otherwise indicated, all references herein to “Luckwel,” the “Company,” “we” or “us” refer to Luckwel Pharmaceuticals Inc.

 

Note 2 – Summary of Significant Accounting Policies

 

The following is a summary of the significant accounting policies followed in the preparation of these financial statements.

 

Basis of Presentation

 

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

 

Cash

 

Cash include all cash in banks with no restrictions.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Fair Value of Financial Instruments

 

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

 

The Company’s financial instruments consist of cash, accrued liabilities and due to officer. The carrying amount of these financial instruments approximate fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. There were no financial instruments classified as Level 3 in the fair value hierarchy during the years ended March 31, 2020 and 2019.

 

F- 6

 

 

Income Taxes

 

Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using the enacted tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enacted or substantively enacted date.

 

Accounting for uncertainty in income taxes recognized in the financial statements is in accordance with accounting authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more likely than not” to be sustained, the tax position is then assessed to determine the amount of the benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement.

 

Basic and Diluted Net Loss Per Share

 

Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no potentially dilutive debt or equity outstanding as of March 31, 2020 and March 31, 2019.

 

Recent Accounting Pronouncements

 

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

 

Note 3 – Going Concern

 

The Company does not have any sources of revenues and needs additional cash resources to maintain its operations. The Company had $44 in cash and a stockholders’ deficit of $3,227,773 at March 31, 2020, has incurred losses since inception, and has not yet received any revenue from sales of products or services. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date that the financial statements are issued. 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 Chief Executive Officer, Mr. Kingrich Lee to either provide the Company funding for its daily operation and expenses, including professional fees and fees charged by regulators, although he is under no obligation to do so, or to spearhead financing efforts with third parties.

 

The Company currently does not have any arrangements in place to complete any financings and there is no assurance that it will be successful in completing any such financings on terms that will be acceptable.

 

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 and further losses are anticipated as a result of the development of business which raises substantial doubt about its ability to continue as a going concern for a period of one year after the date that the financial statements are issued. 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 its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of its common stock.

 

F- 7

 

 

In March 2020, the World Health Organization declared the global novel coronavirus disease 2019 (COVID-19) outbreak a pandemic. As the Company was still a shell company at March 31, 2020, the Company’s operations have not been significantly impacted financially by the COVID-19 outbreak other than to delay the Company’s plans to develop the business and raise required funds. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 outbreak will have on its financial condition and ability to raise additional capital to finance future planned operations.

 

Subsequent to March 31, 2020, in January 2021, the Company sold 300,000 shares of its common stock at a purchase price of $0.40 per share for gross proceeds of $120,000. In February 2021, $1.2 million of debt that was owed to Mr. Kingrich Lee was converted into 3,000,000 shares of the Company’s common stock at a conversion price of $0.40 per share. In April 2021, the Company sold 300,000 shares of its common stock at a purchase price of $0.40 per share for total gross proceeds of $120,000. In May 2021, the Company sold 187,500 shares of its common stock at a purchase price of $0.40 per share for total gross proceeds of $75,000.

 

Note 4 – Other Payable and Accrued Liabilities

 

Other payable and accrued liabilities at March 31, 2020 and 2019 were as follows:

 

    March 31, 2020     March 31, 2019  
Tax penalties     70,000       60,000  
Other accrued expenses and payables     8,163       7,843  
Total other payable and accrued liabilities   $ 78,163     $ 67,843  

 

Note 5 – Related Party Transactions

 

The Company’s sole officer and director, and a shareholder, Mr. Kingrich Lee, loaned an aggregate of $372,055 and $669,493 in cash to the Company during the years ended March 31, 2020 and March 31, 2019, respectively. Accordingly, Mr. Kingrich Lee was owed an aggregate amount of $1,123,305 and $751,250 as of March 31, 2020 and March 31, 2019, respectively. These amounts were unsecured, non-interest bearing and are 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) $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.

 

On November 1, 2018, we entered into another new one-year employment agreement with Mr. Lee to continue his employment as our Chief Executive Officer through October 31, 2019 and continuing on a year-to-year basis thereafter unless terminated by either party on not less than thirty (30) days notice prior to the expiration of the one-year extension anniversary. His salary is $180,000 a year. Additionally, he shall be entitled to an education allowance for his children who are attending full-time local education from kindergarten to senior secondary levels in any type of school and a housing allowance of $3,000 a month. As of March 31, 2020, Mr. Kingrich Lee was owed $144,000 pursuant to his employment agreement, which is recorded in accrued expenses. Upon termination of Mr. Lee’s employment, except for termination for cause or termination by Mr. Lee, he shall be entitled to a payment equal to two (2) months’ salary ($30,000 at March 31, 2020) and shall also be eligible to retain his other benefits for a period of six (6) months (a minimum of $18,000 in housing allowance at March 31, 2020 plus any eligible education expenses).

 

F- 8

 

 

Note 6 – Capital Stock

 

As of March 31, 2020 and March 31, 2019, the Company had 143,376,000 shares of common stock issued and outstanding. During the year ended March 31, 2019, the Company issued an aggregate of 125,000,000 restricted shares of its common stock to Luckwel Asia Limited.

 

Note 7 – Income Taxes

 

The Company accounts for income taxes under FASB ASC 740 (“ASC 740”). For the years ended March 31, 2020 and 2019, the Company did not record a current or deferred income tax expense or benefit. The following table reconciles the federal statutory income rate to the Company’s effective income tax rate:

 

   

Year Ended March 31,

 
   

2020

 

2019

 
Tax at U.S. statutory rate 21.00 %     21.00 %
Changes from statutory rate:                
State taxes, net of federal benefit     6.2 %     -%  
Non-deductible Permanent items     (0.5 )%     (0.6 )%
Change in valuation allowance     (26.7 )%     (20.4 )%
                 
Effective income tax rate     0.00 %     0.00 %

 

Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted rates in effect for the year in which the differences are expected to reverse. The components of the Company’s deferred tax assets are as follows:

 

   

Year Ended March 31,

 
   

2020

   

2019

 
             
Net operating loss carryforwards   $ 411,448     $ 309,099  
Accrued expenses     39,658       -  
                 
Gross deferred tax assets     451,106       309,099  
Valuation allowance     (451,106 )     (309,099 )
                 
Deferred tax assets, net   $     $  

 

The Company has weighed the positive and negative evidence to assess the recoverability of its deferred tax assets. Realization of future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income. After this assessment, the Company determined it was more likely than not that the Company will not realize the benefit of its deferred tax assets. As a result, the Company has provided a full valuation allowance against its net deferred tax assets. The valuation allowance for deferred tax assets as of March 31, 2020 and 2019 was $451,106 and $309,099, respectively. For the years ended March 31, 2020 and March 31, 2019, the Company recorded a net valuation increase of $142,007 and $126,963, respectively, primarily related to net operating losses and accrued expenses.

 

As of March 31, 2020, the Company had gross U.S. federal net operating loss carryforwards of $1,845,401 including $978,994 that had an indefinite carryforward period and $866,407 that were subject to expiration at various dates through 2037. The Company had gross state operating loss carryforwards of $378,380 that were subject to expiration through 2040. The net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state authorities.

 

F- 9

 

 

Net operating loss carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.

 

The Company has not completed a study to assess whether one or more ownership changes have occurred, as defined in Section 382 of the Code. As such, the Company’s net operating losses may be limited. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research development credit carryforwards before utilization.

 

The Company files income tax returns in the United States and Massachusetts. All years prior to March 31, 2016 are closed with the Internal Revenue Service. As of March 31, 2020, there are currently no income tax audits in progress.

 

As of March 31, 2020 and 2019, the Company did not have any unrecognized tax benefits and did not have a balance of accrued interest or penalties related to uncertain tax positions.

 

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act includes provisions relating to several aspects of corporate income taxes. The CARES Act did not have a significant impact on the Company’s provision for income taxes.

 

Note 8 – Risks and Uncertainties

 

In March 2020, the World Health Organization declared the global novel coronavirus disease 2019 (COVID-19) outbreak a pandemic. As the Company is still a shell company, the Company’s operations have not been significantly impacted financially by the COVID-19 outbreak other than to delay the Company’s plans to develop the business and raise required funds. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 outbreak will have on its financial condition and ability to raise additional capital to finance future planned operations.

 

Note 9 – Subsequent Events

 

Management of the Company has evaluated subsequent events through the date of issuance of the financial statements and has concluded that there were no other subsequent events requiring adjustment to or disclosure in these financial statements, other than those noted below:

 

In April 2020, the Company borrowed $15,000 in the form of a promissory note (the “Note”) from a third party. The Note bears interest at 7% per annum and had no maturity date. This loan was repaid in May 2021.

 

In January 2021, the Company completed a private placement offering with an individual for the purchase of an aggregate of 300,000 shares of common stock of the Company at a price of $0.40 per share for total gross proceeds of $120,000.

 

In January 2021, the Company amended its certificate of incorporation to increase the number of authorized shares from 200,000,000 to 500,000,000.

 

In February 2021, $1.2 million of debt that was owed to Mr. Kingrich Lee was converted into 3,000,000 shares of common stock of the Company at a conversion price of $0.40 per share.

 

In April 2021, the Company completed a private placement offering with a group of individual investors for the purchase of an aggregate of 300,000 shares of common stock of the Company at a price of $0.40 per share for total gross proceeds of $120,000.

 

In May 2021, the Company completed a private placement offering with an investor for the purchase of 187,500 shares of common stock of the Company at a price of $0.40 per share for total gross proceeds of $75,000.

 

F- 10

 

 

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

Item 9A. Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being March 31, 2020. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer who is also Chief Financial Officer.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Because of these multiple roles assumed by our Chief Executive Officer and who is also our Chief Financial Officer, it is impossible to fully segregate duties to ensure that all information required to be disclosed by us in the reports that we file or submit is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer concluded that (i) there continue to be material weaknesses in the Company’s internal controls over financial reporting, which could result in misstatements of the foregoing accounts and disclosures that could result in a material misstatement to the financial statements for the period covered by this report that would not be detected, and (ii) accordingly, our disclosure controls and procedures were not effective as of the fiscal year ended March 31, 2020.

 

Management’s Annual Report on Internal Control over Financing Reporting

 

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 March 31, 2020 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 March 31, 2020, 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 annual report on Form 10-K, 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, 2021: (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.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

Changes in Internal Controls over Financial Reporting

 

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

 

There have been no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

9

 

 

Limitations on Controls

 

Management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and the Company’s Chief Executive Officer (who is also our Chief Financial Officer) has concluded that the Company’s disclosure controls and procedures are effective at that reasonable assurance level.

 

Item 9B. Other Information

 

None

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

 

The following table contains information with respect to our current executive officers and directors. Our sole officer and director, Mr. Kingrich Lee is resident in Hong Kong and therefore, it may be difficult for investors to effect service of process within the U.S. upon him or to enforce judgments against him obtained from the United States courts.

 

Name   Age   Principal Positions With Us
Kingrich Lee   46   President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, Chairman and Sole Director

 

Kingrich Lee, President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director

 

Our sole officer and director, president, Mr. Kingrich Lee, has more than 20 years’ experience in the pharmaceuticals and food industry. From January 2013 to the present, Mr. Lee has been our founder and sole officer and director. From April 2005 to December 2017, Mr. Lee was a director of the Luckycom Pharma group of companies. Earlier, he was marketing manager for Holleykin Pharma for the Asian and American markets for antimalarial drug Artekin®. Before Holleykin, he was marketing manager for Star Lake Biosciences Ltd, where he developed markets for around 20 countries and facilitated Star Lake becoming the Roche HCV drug COPEGUS®’ (ribavirin) API supplier with FDA approval.

Mr. Lee received his mergers and acquisition diploma from The University of Hong Kong (HKU) and undergraduate degree from Guangdong University of Finance and Economics.

 

Director Qualifications

 

Directors are responsible for overseeing the Company’s business consistent with their fiduciary duty to the stockholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. Our Board believes that there are general requirements for service on the Board that are applicable to directors and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by each director. The Board considers the qualifications of director and director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.

 

Qualifications for All Directors

 

In its assessment of each potential candidate, including those recommended by the stockholders, the Board will consider the nominee’s judgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such other factors it determines are pertinent in light of the current needs of the Board. The Board also takes into account the ability of a director to devote the time and effort necessary to fulfil his or her responsibilities to the Company.

 

The Board requires that each director be a recognized person of high integrity with a proven record of success in his or her field. Each director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition to the qualifications required of all directors, the Board conducts interviews of potential director candidates to assess intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.

 

10

 

 

Qualifications, Attributes, Skills and Experience to be Represented on the Board as a Whole

 

The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the board as a whole, in light of the Company’s current needs and its business priorities. The Board believes that it should include some directors with a high level of financial literacy and some directors who possess relevant business experience as a Chief Executive Officer or a President or like position. Marketing is the core focus of our business and the Company seeks to develop and deploy the world’s most innovative and effective marketing and technology. Therefore, the Board believes that marketing and technology experience should be represented on the Board. The Company plans to be involved in the pharmaceuticals business and therefore the Company’s business also requires compliance with a variety of regulatory requirements and relationships with various governmental entities. Therefore, the Board believes that governmental, political or diplomatic expertise should be represented on the Board.

 

Board Leadership Structure and Role in Risk Oversight

 

Our sole director and officer, Mr. Kingrich Lee has held numerous leadership roles as Chief Executive Officer or a President or like position for more than 10 years and has been involved in various capacities in the pharmaceuticals and food business developed numerous markets internationally. Accordingly, we believe that Mr. Lee is well-equipped and qualified to be our Chairman and Chief Executive Officer. Our entire Board has overall responsibility for risk oversight including related party transactions. We have not adopted written policies and procedures specifically for related person transactions.

 

Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board.

 

Director Independence

 

Except as reported above, our sole officer and director, Mr. Kingrich Lee, does not hold any directorships in other reporting companies and does not qualify as an “independent director” under the Rules of NASDAQ, Marketplace Rule 4200(a)(15).

 

Family Relationships

 

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

During the past ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

 

11

 

 

Committees of the Board

 

We currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our director believe that it is not necessary to have such committees, at this time, because we are still a shell company without operations and the functions of such committees can be adequately performed by the Board of Directors.

 

We do not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The Board of Directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. We do not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

 

A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our Chief Executive Officer and sole director, Mr. Kingrich Lee, at the address appearing on the first page of this annual report.

 

Conflicts of Interest

 

Our Chief Executive Officer and sole director, Mr. Kingrich Lee, is not obligated to commit his full time and attention to our business and, accordingly, he may encounter a conflict of interest in allocating his time between our operations and those of other businesses. In the course of his other business activities, he may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which he owes a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. He may also in the future become affiliated with entities, engaged in business activities similar to those we intend to conduct.

 

Mr. Lee owes fiduciary duties in his capacity as director of the following companies:

 

Luckwel Pharmaceuticals Inc. Nevada

Kingrich Holdings Ltd, Cayman Islands

 

Most of Mr. Lee’s time and energy is spent with us, and we plan to implement our business strategies as stated above.

 

In general, officers and directors of a corporation are required to present business opportunities to a corporation if:

 

the corporation could financially undertake the opportunity;
   
the opportunity is within the corporation’s line of business; and
   
it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.

 

We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent. We have not done so as of the date of this annual report.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

As of the date of this report, we are not subject to Section 16(a) of the Securities Exchange Act of 1934.

 

12

 

 

Item 11. Executive Compensation

 

The following table sets forth information with respect to the compensation of each of the named executive officers for services provided in all capacities to Luckwel Pharmaceuticals Inc. in the fiscal years ended March 31, 2020 and March 31, 2019 in their capacity as such officers. No other executive officer or former executive officer received more than $100,000 in compensation in the fiscal years except reported below.

 

Position   Year     Salary
($)
    Bonus
($)
    Stock
Awards
($)
    Option
Awards
($)
    Non-equity
Incentive
Plan
Compensation ($)
    All Other
Compensation
($)
    Total
($)
 
Kingrich Lee     2019       180,000                               87,277 1     267,277  
President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, Chairman and Sole Director     2020       180,000                               106,547 2     286,547  

 

  (1) Includes $36,000 for housing allowance and $51,277 for educational expenses.
  (2) Includes $36,000 for housing allowance and $70,547 for educational expenses.

 

Narrative Disclosure to the Summary Compensation Table

 

Mr. Kingrich Lee has served as our President, Chief Executive Officer, Director, Chief Financial Officer and Treasurer since our inception on January 2, 2013. On November 1, 2018, we entered into a one-year employment agreement with Mr. Kingrich Lee to continue his employment as our Chief Executive Officer through October 31, 2019. The agreement would be automatically renewed unless terminated earlier and is currently in place through October 31, 2021. His salary and benefits remain unchanged.

 

Employment Agreements

 

On November 1, 2018, we entered into another new one-year employment agreement with Mr. Lee to continue his employment as our Chief Executive Officer through October 31, 2019 and continuing on a year-to-year basis thereafter unless terminated by either party on not less than thirty (30) days notice prior to the expiration of the one-year extension anniversary. His salary is $180,000 per year. Additionally, he shall be entitled to an education allowance for his children who are attending full-time local education from kindergarten to senior secondary levels in any type of school and a housing allowance of $3,000 per month. Upon termination of Mr. Lee’s employment, except for termination for cause or termination by Mr. Lee, he shall be entitled to a payment equal to two (2) months’ salary ($30,000 at March 31, 2020) and shall also be eligible to retain his other benefits for a period of six (6) months.

 

Stock Option Grants

 

We have not granted any stock options to the executive officers or directors since our inception.

 

Outstanding Equity Awards at Fiscal Year-End

 

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of March 31, 2020.

 

    Equity Awards  
Name   Number of
securities
underlying
unexercised
options
(#)
Exercisable
    Number of
securities
underlying
unexercised
options
(#)
Unexercisable
      Equity incentive
plan awards:
number of
securities underlying
unexercised
unearned
options
(#)
      Option
exercise
price
(US$)
      Option
expiration
date
 
Kingrich Lee   -     -       -       -       -  

 

13

 

 

 

Compensation Discussion and Analysis

 

We strive to provide our named executive officers (as defined in Item 402 of Regulation S-K) with a competitive base salary that is in line with their roles and responsibilities when compared to peer companies of comparable size in similar locations.

 

We will consider forming a compensation committee to oversee the compensation of our named executive officers. The majority of the members of the compensation committee would be independent directors.

 

Director Compensation

 

We do not pay any compensation to our sole director at this time. However, we reserve the right to compensate our directors in the future with cash, stock, options, or some combination of the above.

 

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

 

The following table sets forth, as of February 28, 2021, certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.

 

Name and Address of Beneficial Owner  

Shares

Beneficially

Owned6

   

Percentage

Beneficially

Owned6

 

Kingrich Lee1 2 Flat A, 23F,Tower 3,Florient Rise,38 Cherry Street, Hong Kong

    83,532,112       56.95 %
All directors and officers as a group (1 person)     83,532,112       56.95 %
                 
Owners of more than 5% of Shares of Common Stock                
Morgold Limited
No. A18 Shen Rong Hao Ting Villa,
Pan Gu Road, Qi Xing Yan Resort
Zhaoqing City
Guangdong Province 526040
The People’s Republic of China
    25,000,000       17.04 %
                 

Lijian Li1 3

Rm B7-2C, Xin Hi Yuan New World Garden

No. 2 Cai Yun Road, Zhaoqing,

Guangdong, 526040

The People’s Republic of China

    25,145,000       17.14 %
                 
Goldvito Limited
RM B7-2C. Xin Hu Yuan New World Garden
No. 2 Cai Yun Road, Zhaoqing,
Guangdong 526040
The People’s Republic of China
    25,000,000       17.04 %
                 

Yongjian Li1 4

No. A18 Shen Rong Hao Ting Villa

Pan Gu Road, Qi Xing Yan Resort,

Zhaoqing ,Guangdong, The People’s Republic of China

    25,085,000       17.10 %
                 

Kingrich Holdings Limited1 2 5

Flat A, 23F,Tower 3,Florient Rise,38 Cherry Street, Hong Kong

    75,000,000       51.13 %

 

14

 

 

(1) On May 3, 2018, we entered into an Intellectual Property Sale and Purchase Agreement (the “Agreement”) with Luckwel Asia Limited (the “Luckwel Asia”, formerly known as Essential Choice Ventures Ltd) to purchase from Luckwel Asia the intellectual property rights to five (5) 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. Luckwel Asia is a British Virgin Islands corporation whose shareholders comprise Kingrich Holdings Limited, a Cayman Islands corporation (60%), Goldvito Ltd, Seychelles corporation (20%) and Morgold Ltd, a Seychelles corporation (20%). Mr. Kingrich Lee, our Chief Executive Officer, owns 100% of the shares in Kingrich Holdings Limited and his two sisters, Lijian Li and Yongjian Li are each the sole shareholder of each of Goldvito Ltd and Morgold Ltd, respectively. Pursuant to the Agreement, we paid $40,000 and issued an aggregate 125,000,000 newly issued restricted shares of our common stock as consideration to Luckwel Asia. On June 12, 2018, the board of Luckwel Asia Limited consented to a dividend in specie of the 125,000,000 fully paid and non-assessable shares of our common stock to the shareholders of Luckwel Asia Limited. – 25,000,000 shares to Morgold Ltd, 25,000,000 shares to Goldvito Ltd, and 75,000,000 shares to Kingrich Holdings Limited.
   
(2) Mr. Kingrich Lee owns 8,532,112 shares of common stock directly and 75,000,000 shares of common stock indirectly through Kingrich Holdings Limited, his wholly-owned and controlled Cayman company. Accordingly, 100% of Kingrich Holdings Ltd’s total shareholdings in the Company is attributed to Mr. Lee, its sole shareholder.
   
(3) Ms. Lijian Li owns 145,000 shares of common stock and 25,000,000 shares of common stock indirectly through Goldvito Ltd, her wholly-owned and controlled Seychelles company. Accordingly, 100% of Goldvito Ltd’s total shareholdings in the Company is attributed to Ms. Li, its sole shareholder.
   
(4) Ms. Yongjian Li owns 85,000 shares of common stock and 25,000,000 shares of common stock indirectly through Morgold Ltd, her wholly-owned and controlled Seychelles company. Accordingly, 100% of Morgold Ltd’s total shareholdings in the Company is attributed to Ms. Li, its sole shareholder.
   
(5) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity. In determining beneficial ownership of our common stock as of a given date, the number of shares shown includes shares of common stock which may be acquired on exercise of warrants or options or conversion of convertible securities within 60 days of that date. In determining the percent of common stock owned by a person or entity on February 28, 2021, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock, 146,676,000, outstanding on February 28, 2021, and (ii) the total number of shares that the beneficial owner may acquire upon conversion of the preferred and on exercise of the warrants and options, subject to limitations on conversion and exercise. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.
   
(6) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 146,676,000 voting shares as of February 28, 2021.

 

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

 

Other than the transactions described below and under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), for the past two fiscal years there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed $120,000, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.

 

15

 

 

The Company’s sole officer and director, and a shareholder, Mr. Kingrich Lee, loaned an aggregate of $372,055 and $669,493 in cash during the years ended March 31, 2020 and March 31, 2019, respectively. Accordingly, Mr. Kingrich Lee was owed an aggregate amount of $1,123,305 and $751,250 as of March 31, 2020 and March 31, 2019, respectively. The amounts were unsecured, non-interest bearing and due on demand.

 

On November 1, 2018, we entered into another new one-year employment agreement with Mr. Lee to continue his employment as our Chief Executive Officer through October 31, 2019 and continuing on a year-to-year basis thereafter unless terminated by either party on not less than thirty (30) days notice prior to the expiration of the one-year extension anniversary. His salary is $180,000 a year. Additionally, he shall be entitled to an education allowance for his children who are attending full-time local education from kindergarten to senior secondary levels in any type of school and a housing allowance of $3,000 a month. Upon termination of Mr. Lee’s employment, except for termination for cause or termination by Mr. Lee, he shall be entitled to a payment equal to two (2) months’ salary ($30,000 at March 31, 2020) and shall also be eligible to retain his other benefits for a period of six (6) months.

 

On May 3, 2018, we entered into an Intellectual Property Sale and Purchase Agreement (the “Agreement”) with Luckwel Asia Limited (the “Luckwel Asia”, formerly known as Essential Choice Ventures Ltd) to purchase from Luckwel Asia the intellectual property rights to five (5) 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. Luckwel Asia is a British Virgin Islands corporation whose shareholders comprise Kingrich Holding Ltd, a Cayman Islands corporation (60%), Goldvito Ltd, Seychelles Corporation (20%) and Morgold Ltd, a Seychelles corporation (20%). Mr. Kingrich Lee, our Chief Executive Officer and majority shareholder is the sole shareholder of Kingrich Holding Ltd and his two sisters, Lijian Li and Yongjian Li are each the sole shareholder of each of Goldvito Ltd and Morgold Ltd, respectively. Pursuant to the Agreement, we paid $40,000 and issued an aggregate 125,000,000 newly issued restricted shares of our common stock as consideration to Luckwel Asia.

 

Item 14. Principal Accounting Fees and Services

 

On June 10, 2019, Marcum LLP (“Marcum”) was appointed as the new independent registered public accounting firm for the Company. The decision to appoint Marcum was approved by the Company’s Board of Directors. Marcum LLP and Marcum Bernstein & Pinchuk LLP (“MBP”) are affiliated firms operating under a common system of internal controls which would include consultation regarding the application of accounting principles to a specified transaction, completed or proposed, the type of audit opinion that might be rendered on our financial statements or a reportable event. The Company did not consult with Marcum regarding any disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure, which disagreements, if not resolved to the satisfaction of MBP, would have caused it to make a reference to the subject matter of the disagreements in connection with its reports. Simultaneously with the appointment of Marcum, on June 10, 2019, MBP was terminated as our independent registered public accounting firm.

 

The following is a summary of the fees billed to us by Marcum and MBP, for professional services rendered for the fiscal years ended March 31, 2020 and March 31, 2019, respectively:

 

   

Year Ended

March 31, 2020

   

Year Ended

March 31, 2019

 
Audit Fees and Audit Related Fees   $ 64,114     $ 51,575  
Tax Fees     -       -  
All Other Fees     -       -  
Total   $ 64,114     $ 51,575  

 

Pre-Approval Policies and Procedures

 

The Board of Directors pre-approves all audit and non-audit services performed by the Company’s auditor and the fees to be paid in connection with such services in order to assure that the provision of such services does not impair the auditor’s independence.

 

16

 

 

PART IV

 

Item 15. Exhibits, Financial Statements Schedules

 

(a) Financial Statements and Schedules

 

The following financial statements and schedules listed below are included in this Form 10-K.

 

Financial Statements (See Item 8)

 

(b) Exhibits

 

Exhibit

Number

  Description
3.1   Articles of Incorporation(4)
3.2   Bylaws(1)
3.3   Amendment to Articles of Incorporation(2)
3.4   Certificate of Amendment to Articles of Incorporation (6)
3.5   Amended and Restated By-laws (6)
10.1   Employment Agreement(3)
10.2   Rental Agreement(1)
10.3   Exclusive License Agreement(2)
10.4   Custodian Agreement(2)
10.5   Termination of Custodian Agreement(2)
10.6   Engagement Letter & Agreement(3)
10.7   Termination of Engagement Letter & Agreement(3)
10.8   Amendment No. 1 to Exclusive License Agreement(3)
10.9   Amendment No. 2 to Exclusive License Agreement(5)
10.10   Oral Agreement for Compensation and Loans(4)
10.11   Employment Agreement between Kingrich Lee and Luckycom Limited (7)
10.12   Sold Note dated December 13, 2017 (8)
10.13   Instrument of Transfer dated December 13, 2017 (8)
10.14   Intellectual Property Sale and Purchase Agreement dated May 3, 2018 (9)
10.15   Employment Agreement between Kingrich Lee and Luckwel Pharmaceuticals Inc. (11)
10.16   Servcorp Virtual Office Service Agreement (10)
21.1   List of Subsidiaries*
31.1*   Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*   Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*   Certification of 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*   The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 formatted in Extensible Business Reporting Language (XBRL).

 

*Filed herewith.

 

(1) Incorporated by reference to the Registration Statement on Form S-1 filed on April 12, 2013.
(2) Incorporated by reference to the Registration Statement on Form S-1/A filed on July 8, 2013.
(3) Incorporated by reference to the Registration Statement on Form S-1/A filed on September 6, 2013.
(4) Incorporated by reference to the Registration Statement on Form S-1/A filed on October 10, 2013.
(5) Incorporated by reference to the Registration Statement on Form S-1/A filed on January 10, 2014.
(6) Incorporated by reference to the Current Report on Form 8-K filed on April 13, 2018.
(7) Incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K filed on June 27, 2017.
(8) Incorporated by reference to Exhibits 2.1 and 2.2 to the Current Report on Form 8-K filed on December 18, 2017.
(9) Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 7, 2018.
(10) Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 20, 2018.
(11) Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K filed on July 2, 2019.

 

Item 16. Form 10-K Summary

 

None.

 

17

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the 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.
     
Dated: June 10, 2021 By: /s/ Kingrich Lee
  Name: Kingrich Lee
  Title: Chief Executive Officer (Principal Executive Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature   Title(s)   Date
         
/s/ Kingrich Lee   Chief Executive Officer and Director   June 10, 2021
Kingrich Lee   (Principal Executive Officer)    
         
/s/ Kingrich Lee   Chief Financial Officer   June 10, 2021
Kingrich Lee   (Principal Financial and Accounting Officer)    

 

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