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 28, 1997.
[ ] 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 28, 1997
- ---------------------------- --------------------------------
Common Stock $.001 par value 12,491,010
<PAGE>
<TABLE>
LESCARDEN INC.
(Debtor-In-Possession)
(UNAUDITED)
CONDENSED BALANCE SHEET
-----------------------
February 28, 1997
-----------------
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $ 83,933
Inventory 9,488
----------
Total currents assets 93,421
----------
Security Deposit 3,080
----------
Total Assets $ 96,501
----------
----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts Payable and Accrued Expenses $ 57,038
Stock subscriptions payable 20,000
Liabilities subject to compromise:
Trade and other miscellaneous claims 862,092
Trade and other miscellaneous claims - related parties 319,509
Notes payable 517,000
Notes payable - related parties 496,000
----------
Total liabilities 2,271,639
----------
Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 12,491
Additional Paid-In Capital 10,932,008
Accumulated Deficit (13,121,477)
-----------
Stockholder's Deficiency (2,175,138)
-----------
Total Liabilities and Stockholders' Deficiency $ 96,501
-----------
-----------
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(Debtor-in-Possession)
(UNAUDITED)
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
<CAPTION>
For the Three Months For the Nine Months
Ended February 28, Ended February 28,
-------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Revenues $ 17,627 $ 50,172 $ 44,752 $ 468,193
--------- --------- --------- ----------
Costs and Expenses:
Cost of Product Sales 5,341 8,923 5,341 141,620
Salaries - Officer 25,832 24,000 77,840 72,000
Salaries - Office 2,492 2,026 7,817 7,779
Professional Fees and Consulting 29,876 20,772 101,484 77,677
Research and Development 1,344 5,248 5,156 10,199
Rent and Office Expenses 14,015 14,104 45,750 44,432
Travel and Meetings 2,091 5,145 3,017 20,726
Taxes - Other - 130 1,316 2,862
Insurance (511) 305 792 515
Interest - 15,787 - 47,361
Interest to Related Parties - 14,944 - 44,832
Other Administrative Expenses 3,922 2,997 10,320 9,037
---------- ---------- ---------- -----------
Total Costs and Expense 84,402 114,381 258,833 479,040
---------- ---------- ----------- -----------
Net Loss $ (66,775) $ (64,209) $(214,081) $ (10,847)
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Net Loss Per Share $ (.01) $ (.01) $ (.02) $ (.00)
------- ------- ------- -------
Weighted Average Number of
Common Shares Outstanding 12,026,760 11,838,677 11,933,910 11,827,566
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(Debtor-in-Possession)
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
<CAPTION>
For the Nine Months Ended
February 28,
-------------------------
1997 1996
---- ----
<S> <C> <C>
Cash Flows Provided By (Used in) Operations:
Net (Loss) $ (214,081) $ (10,847)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Changes in operating assets and liabilities:
Decrease in accounts receivable - 94,379
Decrease in inventory 4,368 545
Decrease (Increase) in prepaid expenses 17,673 (7,500)
Increase in accounts payable
and accrued expenses 57,038 19,672
Increase in accounts payable
and accrued expenses - related parties - 14,832
Increase in stock subscriptions payable 20,000 -
---------- ---------
Net Cash (Used In) Provided By
Operations (115,002) 111,081
---------- ---------
Cash Flows Provided By Financing Activities:
Proceeds from exercise of common stock
purchase warrants 145,000 7,500
---------- ---------
Increase in cash 29,998 118,581
Cash- Beginning of period 53,935 40,246
---------- ---------
Cash - End of period $ 83,933 $ 158,827
---------- ---------
---------- ---------
</TABLE>
<PAGE>
LESCARDEN INC.
--------------
(Debtor-in-Possession)
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
February 28, 1997
-----------------
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, 1996.
During the interim period the Company has continued as
Debtor-in-Possession under Chapter 11 of the U.S. Bankruptcy code.
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.
--------------
(Debtor-in-Possession)
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<F2>, to a food supplement distributor for sale through
nutritional food supplement stores in the U.S. The Company has
sustained net losses of approximately $13 million from inception to
February 28, 1997. The Company has primarily financed its research
and development activities through a public offering of Common
Stock, and private placements of debt and equity securities and in
recent years, revenues from license fees and product sales. On May
7, 1996, the Company filed a petition for reorganization under
Chapter 11 of the U.S. bankruptcy code and continues as Debtor-in-Possession.
Three months and six months ended February 28, 1997 compared to
three months and six months ended February 29, 1996.
- --------------------------------------------------------------
The Company generates revenues primarily by selling
BIO-CARTILAGE<F2> and Catrix<F1> and from royalties and license fees.
The Company's revenues decreased in the quarter and nine
months ended February 28, 1997 from the comparative periods of the
prior fiscal year primarily due to lower sales of BIO-CARTILAGE<F2> to
food supplement distributors, for sale through nutritional food
supplement stores in the U.S. Total costs and expenses during the
three and nine months ended February 28, 1997 were 26% and 46%
lower than those of the comparative periods of the prior year,
respectively. The decreases were principally due to lower costs of
product sales related to sales of BIO-CARTILAGE<F2> in the nine months
ended February 28, 1997 and the absence of interest expense on the
Company's Notes payable in the quarter and nine months ended
February 29, 1997 in accordance with accounting rules for Company's
operating under Debtor-In-Possession.
Liquidity and Capital Resources
- -------------------------------
Overview
- --------
The Company has had losses from operations in each of the five
years ended May 31, 1996. 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 shareholders 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 28, 1997 the Company's total liabilities exceeded its
total assets by $2,175,138. The Company will require additional
product sales or funding during, or shortly after the end of, the
current fiscal quarter ending May 31, 1997, 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, 1996 of ($419,394), 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 Financial Statements
as of May 31, 1995 and 1996 contain an explanatory paragraph
indicating that the Company may be unable to continue in existence.
The Company's Chapter XI proceeding is in progress and a
Creditor's Committee of seven is in place. The Company proposed
a reorganization plan during the quarter ending February 28, 1997
and has submitted the plan to all creditors and shareholders for
approval. It is reasonable to anticipate that the company may be
discharged from bankruptcy around the end of April 1997. Assuming
acceptance of the reorganization plan, upon discharge, the
Company's balance sheet would reflect no significant debt.
The Company plans to continue to implement plans to sell BIO-CARTILAGE<F2>
to the over-the-counter food supplement market and may
also introduce a second product in the same marketplace in the near
future. If successful, the Company may increase cash flow in order
to allow the Company to continue to meet its obligations and
sustain its operations. The Company also plans to obtain a modest
amount of short-term financing from certain of its stockholders.
The Company has no material commitments for capital
expenditures at February 28, 1997.
<F1>
A registered trademark of Lescarden Inc.
</F1>
<F2>
A trademark of Lesarden Inc.
</F2>
<PAGE>
LESCARDEN INC.
--------------
Part II - Other Information
---------------------------
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits: EX-27
(b) Reports on Form 8-K: There were no reports on Form 8-K
filed for the three months ended February 28, 1997.
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 8, 1997 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 28, 1997 FINANCIAL STATMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> FEB-28-1997
<CASH> 83,933
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 9,488
<CURRENT-ASSETS> 93,421
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 96,501
<CURRENT-LIABILITIES> 2,271,639
<BONDS> 0
0
0
<COMMON> 12,491
<OTHER-SE> (2,187,629)
<TOTAL-LIABILITY-AND-EQUITY> 96,501
<SALES> 44,752
<TOTAL-REVENUES> 44,752
<CGS> 0
<TOTAL-COSTS> 258,833
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (214,081)
<INCOME-TAX> 0
<INCOME-CONTINUING> (214,081)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (214,081)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
