REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
FCCC, Inc.
Indianapolis, Indiana
We have audited the accompanying balance sheet of FCCC, Inc. (the "Company") as of March
31, 2015, and the related statements of operations, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
I
n our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of FCCC, Inc., as of March 31, 2015, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Marcum LLP
Marcum
LLP
P
rovidence, Rhode Island
June 30, 2015
The accompanying notes to the financial statements are an integral part of these statements.
The accompanying notes to the financial statements are an integral part of these statements.
The accompanying notes to the financial statements are an integral part of these statements.
The accompanying notes to the financial statements are an integral part of these statements.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2016
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Company Operations
:
The accompanying financial statements of FCCC, Inc. (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
The Company has limited operations and is actively seeking merger, acquisition or business combination opportunities with an operating business or other financial transaction opportunities. Until a transaction is effectuated, the Company does not expect to have significant operations. Accordingly, during such period, the Company does not expect to achieve sufficient income to offset its operating expenses, resulting in operating losses that may require the Company to use and thereby reduce its cash balance.
Cash and Cash Equivalents
:
The Company has defined cash as including cash on hand and cash in interest bearing and non-interest bearing operating bank accounts. Highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents.
The Company maintains cash balances at a financial institution. Accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 at such institution. At various times throughout the year, cash balances may exceed FDIC limits. At March 31, 2016 the amount uninsured was $43,000.
Estimates
:
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Dividends
:
The Company may or may not pay cash dividends or make other distributions in the future depending on a number of factors. The Company may, however, pay a cash dividend or other distribution as part of a merger, acquisition, reverse merger or business combination transaction or if the Board of Directors deems it advisable for the benefit of all shareholders at any time.
Income Taxes
:
The Company utilizes the asset and liability method of accounting for deferred income taxes as prescribed by the FASB Accounting Standard Codification, ("ASC"), 740 (Income Taxes). This method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the tax return and financial statement reporting basis of certain assets and liabilities.
As required by ASC 740-10, "Income Taxes", the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Management does not believe that there are any uncertain tax positions which would have a material impact on the financial statements. The Company has elected to include interest and penalties related to uncertain tax positions as a component of income tax expense. To date, the Company has not recorded any interest or penalties related to uncertain tax positions.
FCCC, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2016
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Advertising
:
The Company expenses advertising costs as incurred. Advertising expense included in operating expenses was $0 and $0 for the years ended March 31, 2016 and 2015 respectively.
Earnings Per Common Share
:
The Company follows FASB ASC 260. Basic Earnings Per Share ("EPS) is based on the weighted average number of common shares outstanding for the period, excluding the effects of any potentially dilutive securities. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.
Basic and diluted loss per common share was calculated using the following number of shares:
|
|
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Weighted average number of common shares outstanding
|
|
|
3,461,022
|
|
|
|
2,930,063
|
|
Revenue and Cost Recognition
:
Not applicable.
Common Stock Warrants
:
None outstanding.
Recently Issued Accounting Pronouncements
:
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
FCCC, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2016
NOTE 2 - FINANCIAL INSTRUMENTS:
Concentrations of Credit Risk
:
The Company's financial instruments that are exposed to concentrations of credit risk consist of cash on deposit with financial institutions.
Fair Value of Financial Instruments
:
The Company follows FASB ASC 825 "Fair Value of Financial Instruments", which requires disclosure of the fair value of financial instruments for which the determination of fair value is practicable. The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of the Company's financial instruments (cash and cash equivalents) approximate their fair value because of the short maturity of these instruments.
NOTE 3 - COMMITMENTS AND CONTINGENCIES AND FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK:
The Company leased office space on a month-to-month basis at a rate of $500 per month. Rent expense totaled $2,500 for the year ended March 31, 2015. The month-to-month tenancy was cancelled in August, 2014.
Management of the Company expects to use consultants, attorneys and accountants as necessary, and it is not expected that FCCC, Inc. will have any full-time or other employees, except as may be the result of completing a transaction.
NOTE 4 - INCOME TAXES:
The Company's deferred tax asset relates to net operating losses that may be carried forward to future years. At March 31, 2016, the Company has available net operating losses of $401,366 and $515,867 for federal and state income taxes, respectively, that expire from 2019 to 2036. For the years ended March 31, 2016 and 2015, $0 in federal net operating losses have expired, respectively. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry-forwards will expire unused. Accordingly, the potential tax benefits of the loss carry-forward are offset by a valuation allowance of the same amount. The Company's increase in valuation allowance of $18,059 and $29,703 during the years ended March 31,2016 and 2015, respectively, were recorded to offset the deferred tax benefit of the Company's tax losses for those years.
FCCC, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2016
The Company's deferred tax asset and valuation allowance as of March 31, 2016 and 2015 were as follows:
|
|
March 31
|
|
|
|
2016
|
|
|
2015
|
|
Net Operating Losses
|
|
$
|
172,575
|
|
|
$
|
154,516
|
|
Valuation Allowance
|
|
|
(172,575
|
)
|
|
|
(154,516
|
)
|
|
|
$
|
–
|
|
|
$
|
–
|
|
The Company's provision for federal and state income taxes for the years ended March 31, 2016 and 2015 consisted of the following:
|
|
March 31
|
|
|
|
2016
|
|
|
2015
|
|
Current Tax Benefit
|
|
$
|
(18,059
|
)
|
|
$
|
(29,703
|
)
|
Increase in Valuation Allowance
|
|
|
18,059
|
|
|
|
29,703
|
|
Net tax provision
|
|
$
|
–
|
|
|
$
|
–
|
|
The Company's effective tax rate differed from the federal statutory income tax rate for the years ended March 31, 2016 and 2015 as follows:
|
|
March 31
|
|
|
|
2016
|
|
|
2015
|
|
Federal statutory rate
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
State tax, net of federal tax effect
|
|
|
4.95
|
%
|
|
|
4.95
|
%
|
Valuation allowance
|
|
|
(38.95
|
)%
|
|
|
(38.95
|
)%
|
Effective tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
As of March 31, 2016 and 2015, the Company does not believe that it has taken any tax positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next twelve months. The Company's income tax returns are subject to examination by the appropriate taxing jurisdictions. As of March 31, 2016, the Company's income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.
NOTE 5 - COMMON STOCK:
The Company's capital structure consists of 22,000,000 shares of authorized common stock with no par value and 3,461,022 shares were issued and outstanding at both March 31, 2016 and 2015. There were no changes to the Company's capital structure during the year ended March 31, 2016. During the year ended March 31, 2015, the Company entered into a Securities Purchase Agreement with Frederick L. Farrar, LFM Investments, Inc., Chafre, LLC, Charles E. Lanham and Daniel R. Loftus, pursuant to which the Company agreed to sell to these purchasers an aggregate of 1,900,000 shares of common stock for aggregate cash consideration equal to $380,000. The shares represented approximately 54.9% of the issued and outstanding shares of our common stock as of the date of sale. This sale closed on July 11, 2014.