LESCARDEN INC - FORM 10-Q - January 13, 2016

Attached files

file	filename
EX-31 - CERTIFICATION - LESCARDEN INC	lcar_ex31.htm
EX-32 - CERTIFICATION - LESCARDEN INC	lcar_ex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10-Q

———————

ü	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
For the quarterly period ended: November 30, 2015
or

	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: 0-10035

———————

LESCARDEN, INC.

(Exact name of registrant as specified in its charter)

———————

New York	13-2538207
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

420 Lexington Ave. Ste 212, New York 10170

(Address of Principal Executive Office) (Zip Code)

(212) 687-1050

(Registrant’s telephone number, including area code)

———————

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.				ü	Yes		No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).					Yes		No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer		Accelerated filer
Non-accelerated filer	(Do not check if a smaller	Smaller reporting company				ü
	reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class			Outstanding January 12, 2016
Common Stock $.001 par value			63,622,316

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	6
Item 4. Controls and Procedures.	6
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.	7
Item 1A. Risk Factors.	7
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	7
Item 3. Defaults Upon Senior Securities.	7
Item 4. Submission of Matters to a Vote of Security Holders.	7
Item 5. Other Information.	7
Item 6. Exhibits.	7

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

LESCARDEN INC.

CONDENSED BALANCE SHEETS (UNAUDITED)

	November 30, 2015			May 31, 2015

ASSETS
Current assets:
Cash and cash equivalents	$	7,347		$	37,207
Accounts receivable		1,640			48,902
Inventory		85,770			83,586
Total current assets		94,757			169,695
Deferred income tax asset, net of valuation allowance of $1,659,000 and $1,630,000 at November 30, 2015 and May 31, 2015 respectively		––			––

Total assets	$	94,757		$	169,695

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	182,536		$	172,846
Shareholder loan		268,765			268,765
Total liabilities		451,301			441,611

Stockholders' deficit
Convertible preferred stock - $.02 par value, authorized 2,000,000 shares, issued and outstanding 92,000 shares		1,840			1,840
Common stock - $.001 par value, authorized 200,000,000 shares, 63,622,316 issued and outstanding at November 30, 2015 and May 31, 2015		63,622			63,622
Additional paid-in capital		17,505,936			17,505,936
Accumulated deficit		(17,927,942	)		(17,843,314	)
Stockholders' deficit		(356,544	)		(271,916	)
Total liabilities and stockholders' deficit	$	94,757		$	169,695

See notes to financial statements

LESCARDEN INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the three months Ended November 30,					For the six months Ended November 30,
	2015			2014		2015			2014
Revenues:
Product sales	$	10,422		$	165,023	$	42,519		$	171,270
License fees		––			1,500		––			3,000
Total revenues		10,422			166,523		42,519			174,270

Costs and expenses:
Cost of sales		1,411			42,078		2,815			43,309
Salaries		20,527			13,838		41,259			41,099
Professional fees and consulting		9,700			24,297		49,165			60,209
Rent and office expense		5,555			31,187		8,947			62,400
Insurance		7,178			12,933		20,125			24,801
Commission		––			10,743		––			10,743
Other administrative expenses		1,366			12,464		4,836			13,210
Total costs and expenses		45,737			147,540		127,147			255,771

Net (loss) income	$	(35,315	)	$	18,983	$	(84,628	)	$	(81,501	)

Net (loss) income per share – basic and diluted	$	(0.00	)	$	0.00	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding – basic and diluted		63,622,316			63,622,316		63,622,316			63,622,316

See notes to financial statements

LESCARDEN INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the six months Ended November 30,
	2015			2014

Cash flows from operating activities:
Net loss	$	(84,628	)	$	(81,501	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable		47,262			(157,490	)
(Increase) decrease in inventory		(2,184	)		25,324
Increase in accounts payable and accrued expenses		9,690			85,486
Decrease in deferred license fees		—			(3,000	)
Net cash used in operating activities		(29,860	)		(131,181	)

Cash flows from financing activities:
Proceeds from shareholder loan		—			129,000
Cash provided by financing activities		—			129,000


Decrease in cash		(29,860	)		(2,181	)

Cash - beginning of period		37,207			10,432

Cash – end of period	$	7,347		$	8,251

See notes to financial statements

LESCARDEN INC .

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

November 30, 2015

Note 1 - General:

The accompanying condensed financial statements include all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods. All such adjustments are of a normal recurring nature. The statements have been prepared in accordance with the requirements for Form 10-Q and, therefore, do not include all disclosures or financial details required by generally accepted accounting principles. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended May 31, 2015. The results of operations for the interim periods are not necessarily indicative of results to be expected for a full year's operations.

Note 2 – Going Concern:

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability of assets and the satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern. As shown in the financial statements, the Company incurred a loss from operations for the six months ended November 30, 2015, has a stockholders’ deficiency and a working capital deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s plan and ability to continue as a going concern is primarily dependent upon its ability to maintain consistent production volumes to fulfill existing sales orders. Alternative sources of supply are being evaluated so that manufacturing and production disruptions can be minimized. There can be no assurance that the Company will be able to establish an alternative source of supply and maintain consistent production volumes to meet demand.

Note 3 – Inventory:

At November 30, 2015, inventory of $85,770 consisted of $34,059 of finished goods and $51,711 of raw materials.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations:

The results of operations for the three and six month periods ended November 30, 2014 reflect decreased sales and operating losses due to an ongoing production outage. Preliminary testing of product samples from an alternative supplier suggests that the Company will be able to resume production operations within the next six months. Regulatory certification of the new suppler is required prior to product shipment which could further delay the fulfillment of existing purchase orders after the resumption of production operations. Revenues for the six-months ended November 30, 2015 consisted solely of sales of skin-care and nutritional supplements

Three months ended November 30, 2015 compared to November 30, 2014

Skin care and nutritional supplement product sales decreased by $1,130 or 9.78% for the three months ended November 30, 2015 compared to November 30, 2014.

Non-direct costs and expenses during the three months ended November 30, 2014 were $61,136 or 58% lower than those of the comparative prior-year period due to decreases in rent expense, professional fees, other administrative expenses and insurance of $25,632, $14,597, $11,098 and $5,755 respectively offset by increased payroll expenses of 48% or $6,689.

Six months ended November 30, 2015 compared to November 30, 2014

Decreased Catrix sales of $153,472 for the six months ended November 30, 2015 resulted in an increase in the net loss for the six months ended November 30, 2015 of $3,127 compared to November 30, 2014.

Liquidity and Capital Resources

As of November 30, 2015, the Company’s liabilities exceeded its assets by $356,544. The Company’s cash and cash equivalents balance decreased by $29,860 in the six months ended November 30, 2015 to $7,347.

The Company has no material commitments for capital expenditures at November 30, 2015.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting company.

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Company’s management, including its Chief Executive and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, including the Chief Executive and Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on such evaluation, the Company’s Chief Executive and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report on Form 10-Q.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this quarterly report on Form 10-Q.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.		Description
31		Certification pursuant to Exchange Act Rule 13a – 14 (a)/15d-14(a)
32		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LESCARDEN INC.
	(Registrant)

Date: January 12, 2016



	/s/ William E. Luther
	William E. Luther
	Chief Executive and Chief Financial Officer

LESCARDEN INC - FORM 10-Q - January 13, 2016

Attached files

LESCARDEN INC Reports