lcar_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10–Q

———————

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
For the quarterly period ended: August 31, 2013
or

o	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

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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.				þ	Yes	o	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).				o	Yes	o	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	o	(Do not check if a smaller	Accelerated filer			o
Non-accelerated filer	o	reporting company)	Smaller reporting company			þ


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
				o	Yes	þ	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 October 9, 2013
Common Stock $.001 par value		48,722,316

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.	5

Item 4.	Controls and Procedures.	5
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	6

Item 1A.	Risk Factors.	6

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	6

Item 3.	Defaults Upon Senior Securities.	6

Item 4.	(Removed and Reserved).	6

Item 5.	Other Information.	6

Item 6.	Exhibits.	6

SIGNATURES		7

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

LESCARDEN INC.

CONDENSED BALANCE SHEETS

	August 31, 2013 (UNAUDITED)			May 31, 2013
ASSETS

Current assets:
Cash and cash equivalents	$	74,358		$	84,562
Accounts receivable		305,764			26,801
Inventory		85,710			148,432
Total current assets		465,832			259,795
Deferred income tax asset, net of valuation allowance of $1,488,000 and $1,504,000 at August 31, 2013 and May 31, 2013, respectively		—			––
Total assets	$	465,832		$	259,795

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable	$	327,475		$	267,303
Shareholder loan		447,000			347,000
Deferred revenue		4,782			4,782
Deferred license fees		9,000			10,500
Total liabilities		788,257			629,585

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, issued and outstanding 48,722,316 shares		48,722			48,722
Additional paid–in capital		17,073,836			17,073,836
Accumulated deficit		(17,446,823	)		(17,494,188	)
Stockholders' deficit		(322,425	)		(369,790	)
Total liabilities and stockholders' deficit	$	465,832		$	259,795

LESCARDEN INC.

CONDENSED STATEMENTS OF OPERATIONS

	(UNAUDITED) For the three months ended August 31,
	2013		2012
Revenues:
Product sales	$	308,091	$	14,500
License fees		1,500		1,500
Total revenues		309,591		16,000

Costs and expenses:
Cost of sales		134,300		4,539
Salaries		29,170		20,493
Professional fees and consulting		29,644		46,403
Rent and office expenses		30,149		29,896
Commission		20,689		––
Insurance		12,858		14,140
Other administrative expenses		5,416		3,872
Total costs and expenses		262,226		119,343
Net income (loss)	$	47,365	$	(103,343	)

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

Weighted average number of common shares outstanding – basic and diluted		48,722,316		40,076,783

LESCARDEN INC.

CONDENSED STATEMENTS OF CASH FLOWS

	(UNAUDITED) For the three months ended August 31,
	2013			2012
Cash flows from operating activities:
Net income (loss)	$	47,365		$	(103,343	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(278,963	)		26,128
Decrease (increase) in inventory		62,722			(57,052	)
Increase in accounts payable and accrued expenses		60,172			23,287
Decrease in deferred revenue		––			(4,075	)
Decrease in deferred license fees		(1,500	)		(1,500	)
Net cash used in operating activities		(110,204	)		(116,555	)

Cash flows from financing activities:
Proceeds from shareholder loan		100,000			100,000
Cash provided by financing activities		100,000			100,000

Decrease in cash		(10,204	)		(16,555	)

Cash – Beginning of Period		84,562			42,617

Cash – End of Period	$	74,358		$	26,062
Supplemental disclosures of cash flow information
Cash paid for interest	$	––		$	––
Cash paid for taxes	$	––		$	––

LESCARDEN INC.

(UNAUDITED) NOTES TO FINANCIAL STATEMENTS

August 31, 2013

Note 1 - General:

The accompanying unaudited 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, 2013.

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 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 as there can be no assurance that the Company will be able to grow revenues or secure sufficient additional financing to meet future obligations. The Company’s plan and ability to continue as a going concern is primarily dependent upon timely fulfillment of purchases of raw material and identification of alternative suppliers and packagers. Raw material production delays and regulatory recertification of packaging facilities have resulted in order fulfillment lead times of greater than six months. The results of operations for the interim periods are not necessarily indicative of results to be expected for a full year's operations.

Note 3 - Inventory:

At August 31, 2013, inventory of $85,710 consisted of $38,966 of finished goods and $46,744 of raw materials.

Note 4 - Related Party Transactions:

In August 2013, the Company received an additional loan of $100,000 from its’ Chairman. Pursuant to an agreement with a director of the Company, sales commission expense of $20,689 for services rendered in connection with the sale of Catrix in Europe was included in accounts payable at August 31, 2013.

Item 2.

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

Results of Operations--Three months ended August 31, 2013 compared to August 31, 2012

The Company’s revenues from product sales increased in the fiscal quarter ended August 31, 2013 compared to August 31, 2012 by $293,591 due to fulfillment of customer backorders. The gross margin percentage on product sales decreased to 56% of product sales from 69% during the prior year period due to increased raw materials costs. The cost of sales as a percent of product sales for the three months ended August 31, 2013 was 44% compared with 31% during the prior year period, which reflects the significant increase in the cost of raw materials.

Non-direct costs and expenses during the three months ended August 31, 2013 were 7% or $7,567 lower than those of the comparative prior-year period due to decreases in professional fees and insurance expenses of $16,759 and $1,282 offset by increases in salaries and other administrative expenses of $8,677 and $1,544 respectively.

Liquidity and Capital Resources

The use of cash for operating activities was funded by an increase in shareholder loans of $100,000 and a decrease of $10,204 in cash for the period to $74,358.

As of August 31, 2013, the Company’s current assets exceeded its accounts payable and accrued expenses by $159,046.

The Company has no material commitments for capital expenditures at August 31, 2013.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not required for a 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.

(Removed and Reserved)

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.

Date: October 10, 2013	By:	/s/ William E. Luther
		William E. Luther
		Chief Executive and Chief Financial Officer