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 February 29, 1996.
[ ] 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 February 29, 1996
Common Stock $.001 par value 11,872,010
<PAGE>
<TABLE>
LESCARDEN INC.
(Unaudited)
BALANCE SHEET
FEBRUARY 29, 1996
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash 158,827
Inventory 16,801
Prepaid expenses 7,500
_______
Total currents assets 183,128
Security Deposit 3,080
_______
Total Assets 186,208
-------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts Payable and Accrued Expenses 696,152
Accounts Payable and Accrued Expenses - related parties 310,566
Notes Payable 527,000
Notes Payable - related parties 496,000
_________
Total current Liabilities 2,029,718
---------
Commitments and Contingencies
Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 11,872
Additional Paid-In Capital 10,641,627
Accumulated Deficit (12,498,849)
____________
Stockholder's Deficiency (1,843,510)
____________
Total Liabilites and Stockholders' Deficiency 186,208
------------
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(UNAUDITED)
STATEMENTS OF CONDENSED OPERATIONS
<CAPTION>
For the Three Months For the Nine Months
Ended February 29 Ended February 29,
--------------------- --------------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Revenues 111,705 50,172 175,050 468,193
_______ ______ _______ _______
Cost and Expenses:
Costs of Product Sales 37,674 8,923 55,849 141,620
Salaries - Officer 24,000 24,000 69,500 72,000
Salaries - Office 336 2,026 4,030 7,779
Professional Fees and Consulting 18,879 20,772 63,923 77,677
Research and Development 2,530 5,248 27,110 10,199
Rent and Office Expenses 14,573 14,104 49,369 44,432
Travel and Meetings 2,118 5,145 10,721 20,726
Taxes - Other 652 130 2,772 2,862
Insurance 105 305 1,262 515
Interest 15,787 15,787 47,361 47,361
Interest to Related Parties 14,944 14,944 44,832 44,832
Other Adminstrative Expenses 3,250 2,997 9,977 9,037
------- ------- ------- -------
Total Costs and Expense 134,848 114,381 386,706 479,040
_______ ______ _______ _______
Net Loss $ (23,143) $ (64,209) $ (211,656) $ (10,847)
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Net Loss Per Share $ (.01) $(.01) $(.02) $(.00)
------- ------ ------- ------
------- ------ ------- ------
Weighted Average Number of
Common Shares Outstanding 11,822,010 11,838,677 11,627,566 11,827,566
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(UNAUDITED)
STATEMENT OF CASH FLOWS
<CAPTION>
For the Nine Months Ended
February 29,
------------------------------
1995 1996
---- ----
<S> <C> <C>
Cash Flows Used in Operating Activities:
Net Income (Loss) $ (211,656) $ (10,847)
Adjustments to reconcile net loss to net
cash provided by (used in)
operating activities:
Decrease in accounts receivable - 94,379
Decrease in inventory 13,376 545
Decrease in customer deposits (13,750) -
(Increase) is prepaid expenses - (7,500)
Increase in accounts payable
and accrued expenses 64,869 19,672
Increase in accounts payable
and accrued expenses-related parties 26,082 14,832
__________ __________
Net Cash Provided by (Used In)
Operating Activities (121,079) 111,081
---------- ----------
Cash Flows Used in Financing Activities:
Proceeds from exercise of common stock
purchase warrants - 7,500
Proceeds from issuance of common stock 35,000 -
_________ _________
Cash Provided by Financing Activites 35,000 7,500
_________ _________
Increase (Decrease) in cash (86,079) 118,581
Cash- beginning of period 182,127 40,246
_________ _________
Cash - end of period $ 96,048 $ 158,827
--------- ---------
</TABLE>
<PAGE>
LESCARDEN INC. (Unaudited)
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
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 $12.5 million from inception to
February 29, 1996. 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 nine months ended February 29, 1996 compared to three months
and nine months ended February 28, 1995.
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 nine months ended February 29,
1996 from the comparative period of fiscal 1995 primarily due to higher sales
of BIO-CARTILAGE<F1> to food supplement distributors, for sale through nutri-
tional food supplement stores in the U.S. The company's revenues decreased
in the quarter ended February 29, 1996 from the three months ended February 28,
1995 primarily due to lower sales of BIO-CARTILAGE<F1>. The Company's initial
sales of BIO-CARTILAGE<F1> began in the quarter ended February 28, 1995. Total
costs and expenses during the nine months ended February 29, 1996 were 24%
higher than those of the comparative period of the prior year. The increases
were principally due to higher costs of product sales related to the increase
in revenues; and in addition, to higher professional fees and consulting and
travel and meeting expenses which were partially offset by lower research and
development expenses.
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 February 29,
1996 the Company's current liabilities exceeded its current assets by
$1,846,590, and its total liabilities exceeded its total assets by, $1,843,510.
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
February 29, 1996.
<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 February 29, 1996.
<PAGE>
INDEX TO EXHIBITS
27 - FINANCIAL DATA SCHEDULE
<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: April 11, 1996 s/Gerard A. Dupuis
Gerard A. Dupuis
Chairman of the Board
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LESCARDEN,
INC'S FEBRUARY 29, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 158,827
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 16,801
<CURRENT-ASSETS> 183,128
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 186,208
<CURRENT-LIABILITIES> 2,029,718
<BONDS> 0
0
1,840
<COMMON> 11,872
<OTHER-SE> (1,857,222)
<TOTAL-LIABILITY-AND-EQUITY> 186,208
<SALES> 468,193
<TOTAL-REVENUES> 468,193
<CGS> 141,620
<TOTAL-COSTS> 479,040
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,847)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,847)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,847)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
