U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB - Quarterly or Transitional Report
(Added by 34-30968, eff. 8/13/93, as amended)
(Mark One)
[X] Quarterly Report Under Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended November 30, 1995.
[ ] Transition Report Under 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 small business issuer as specified in its charter)
New York 13-2538207
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 Lexington Avenue, New York Suite 2025 10170
(Address of principle executive offices) (Zip Code)
Issuer's telephone number (212) 687-1050
__________________________________________________________________.
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at November 30, 1995
Common Stock $.001 par value 11,822,010
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<TABLE>
LESCARDEN INC.
(Unaudited)
BALANCE SHEET
NOVEMBER 30, 1995
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash 105,514
Accounts receivable 148,705
Inventory 13,881
Prepaid expenses 7,500
Total currents assets 275,600
Security Deposit 3,080
Total Assets 278,680
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts Payable and Accrued Expenses 729,109
Accounts Payable and Accrued Expenses - related parties 304,622
Customer deposit 8,750
Notes Payable 260,000
Total current Liabilities 1,302,481
Notes Payable 267,000
Notes Payable - related parties 496,000
Total Liabilities 2,065,481
Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 11,822
Additional Paid-In Capital 10,634,177
Accumulated Deficit (12,434,640)
Stockholder's Deficiency (1,786,801)
Total Liabilites and Stockholders' Deficiency 278,680
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(UNAUDITED)
STATEMENTS OF CONDENSED OPERATIONS
<CAPTION>
For the Three Months For the Six Months
Ended November 30, Ended November 30,
--------------------- --------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Revenues 180,622 51,064 418,021 65,520
_______ ______ _______ ______
Cost and Expenses:
Cost of Product Sales 58,309 6,600 132,696 20,350
Salaries - Officer 24,000 23,000 48,000 45,500
Salaries - Office 1,244 584 5,753 3,694
Professional Fees and Consulting 35,963 24,737 56,905 45,044
Research and Development 3,129 15,801 4,951 24,581
Rent and Office Expenses 15,285 15,560 30,328 34,796
Travel amd Meetings 11,388 2,490 15,582 8,602
Taxes - Other 1,291 611 2,732 2,120
Insurance 205 973 210 1,157
Interest 15,787 15,787 31,574 31,574
Interest to Related Parties 14,944 14,944 29,888 29,888
Other Adminstrative Expenses 2,760 3,448 6,040 6,727
------- ------- ------- -------
Total Costs and Expense 184,305 124,535 364,659 233,683
_______ ______ _______ _______
Net Loss $ (3,683) $ (73,471) $ 53,362 $ (188,513)
--------- ---------- ---------- -----------
--------- ---------- ---------- -----------
Net Loss Per Share $ (.00) $(.01) $(.00) $(.02)
------- ------ ------- ------
------- ------ ------- ------
Weighted Average Number of
Common Shares Outstanding 11,822,010 11,559,510 11,822,010 11,522,010
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(UNAUDITED)
STATEMENT OF CASH FLOWS
<CAPTION>
For the Six Months Ended
November 30,
------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash Flows Used in Operating Activities:
Net Income (Loss) $ 53,362 $ (188,513)
Adjustments to reconcile net loss to net
cash used in operating activities:
Changes in operating assets and liabilites:
(Increase) in accounts receivable (54,326) -
Decrease (increase) in inventory 3,465 (1,462)
Increase (decrease) in customer deposits 8,750 (13,750)
(Increase) is prepaid expenses (7,500) -
Increase in accounts payable
and accrued expenses 52,629 49,082
Increase in accounts payable
and accrued expenses - related parties 8,888 19,138
__________ __________
Net Cash Used In Operating Activities 65,268 135,505
---------- ----------
Cash Flows Used in Financing Activities:
Proceeds from issuance of common stock - 35,000
__________ ___________
Cash Provided by Financing Activites - 35,000
__________ ___________
Net Increase (decrease) in cash 65,268 (100,505)
Cash- beginning of period 40,246 182,127
__________ ___________
Cash - end of period $ 105,514 $ 81,622
---------- -----------
</TABLE>
<PAGE>
LESCARDEN INC. (Unaudited)
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
Note 1 - General:
The accompanying unaudited financial statements include all adjustments
which are, in the opinion of management, necessary for a fair statement of
the results for the interim periods. The statements have been prepared in
accordance with the requirements for Form 10-QSB 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-KSB for the year ended May
31, 1995.
The results of operations for the interim periods are not necessarily
indicative of results to be expected for a full year's operations.
<PAGE>
LESCARDEN INC.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Overview
Since its inception the Company has primarily devoted its resources to
fund research, drug discovery and development. In addition, the Company
licenses its technology for commercialization by other companies and in the
fiscal year ended May 31, 1995, the Company began sales of its proprietary
bovine cartilage material, BIO-CARTILAGE<F1>, to a food supplement distributor
for sale through nutritional food supplement stores in the U.S. The Company
has sustained net losses of approximately $12.4 million from inception to
November 31, 1995. The Company has primarily financed its research and develop-
ment activities through a public offering of Common Stock and private place-
ments of debt and equity securities.
Three months and six months ended November 30, 1995 compared to three months
and six months ended November 30, 1994.
The Company generates revenues primarily by selling BIO-CARTILAGE<F1>
and Catrix<F1> and from royalties and license fees.
The Company's revenues increased in the quarter and six months ended
November 30, 1995 from the comparative periods of 1994 primarily due to sales
of BIO-CARTILAGE<F1> to food supplement distributors, for sale through nutri-
tional food supplement stores in the U.S., in the quarter and six months ended
November 30, 1995 as compared to no such sales in the quarter and six months
ended November 30, 1994. Total cost and expenses during the three and six
months ended November 30, 1995 were 48% and 56% higher than those of the com-
parative periods of the prior year, respectively. The increases were princi-
pally due to higher costs of product sales related to the increase in revenues.
Liquidity and Capital Resources
Overview
The Company has had losses from operations in each of the five years ended
May 31, 1995. This trend may continue in the foreseeable future. Working
capital has been provided since the Company's inception primarily from the sale
of equity securities or from borrowings from its officers, directors and share-
holders and from outside investors, and in recent quarters, from revenues from
licensing fees and product sales.
Present Liquidity
The Company's present liquidity position is critical. As of November
30, 1995 the Company's current liabilities exceeded its current assets by
$1,026,881, and its total liabilities exceeded its total assets by, $1,786,801.
The Company will require additional product sales or funding during or, shortly
after, the current fiscal year, ending May 31, 1996, to sustain its operations.
As a result of the history of losses incurred by the Company, the net loss
during the year ended May 31, 1995 of ($199,652), and the limited amount of
funds currently available to finance the Company's operations, the report of
the Company's independent Certified Public Accountants on the Company's Finan-
cial Statements as of May 31, 1994 and 1995 contain an explanatory paragraph
indicating that the Company may be unable to continue in existence.
The Company plans to continue to implement plans to enter the over-the-
counter food supplement business which, if successful, may increase cash
flow in order to allow the Company to continue to meet its obligations and
sustain its operations.
In addition, on September 6, 1995 the Company received the decision of the
Arbitrator in the Matter of the Arbitration between John F. Prudden, M.D. and
the Company (the "Award"). The Company filed a motion with the Arbitrator for
him to reconsider the decision. The Arbitrator decided not to reconsider his
decision. The Company then filed a motion to vacate the Award before the New
York Supreme Court, New York County.
Management of the Company believes that there are good and sufficient
grounds to have the Award modified and/or vacated. However, as the Award pro-
vides for the Company to make payments to Dr.Prudden in excess of the Company's
liquid assets, if the Company is not successful in vacating, or amending, the
Award it may be forced to seek relief in bankruptcy or it may be unable to con-
tinue in existence.
The Company has no material commitments for capital expenditures at
November 30, 1995.
<F1>
A registered trademark of Lescarden, Inc.
</F1>
<PAGE>
LESCARDEN INC.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K: There were no reports on Form 8-K filed for the
three months ended November 30, 1995.
<PAGE>
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 5, 1996 s/Gerard A. Dupuis
Gerard A. Dupuis
Chairman of the Board
Chief Executive Officer
