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, 1998.
[ ] 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.
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(Exact name of small business issuer as specified in its charter)
New York 13-2538207
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 Lexington Avenue, New York Suite 2025 10170
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(Address of principle executive offices) (Zip Code)
Issuer's telephone number (212) 687-1050
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________________________________________________________________________.
(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, 1998
- ---------------------------- --------------------------------
Common Stock $.001 par value 19,509,238
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED BALANCE SHEET
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November 30, 1998
-----------------
<CAPTION>
ASSETS
------
<S> <C>
Current Assets:
Cash $ 60,561
Inventory 75,057
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Total currents assets 135,618
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Security Deposit 3,080
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Total Assets $ 138,698
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts Payable and Accrued Expenses $ 106,668
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Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 19,509
Additional Paid-In Capital 13,989,371
Accumulated Deficit (13,978,690)
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Stockholder's Deficiency 32,030
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Total Liabilities and Stockholders' Deficiency $ 138,698
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</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
<CAPTION>
For The Three Months For the Six Months
Ended November 30, Ended November 30,
-------------------- ------------------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
---- ---- ---- ----
Total Revenues $ 2,563 $ 145 $ 3,027 $ 156
----------- ------------ ----------- ----------
Costs and Expenses:
Cost of Sales 1,954 - 1,954 -
Salaries - Officer 39,332 39,332 78,665 78,803
Salaries - Office 3,402 1,572 8,354 5,269
Professional Fees and Consulting 54,045 27,388 100,590 77,299
Research and Development 5,582 299 7,408 10,252
Rent and Office Expenses 16,679 14,219 34,584 29,554
Travel and Meetings 3,797 5,991 7,734 14,729
Taxes - Other - - 680 695
Insurance 521 802 566 969
Other Administrative Expenses 2,476 47,603 3,408 65,825
----------- ------------ ----------- ----------
Total Costs and Expenses 127,788 137,206 243,943 283,395
----------- ------------ ----------- ----------
Net (Loss) $ (125,225) $ (137,061) $ (240,916) $ (283,239)
----------- ------------ ----------- ----------
----------- ------------ ----------- ----------
Net (Loss) Per Share $ (.01) $ (.01) $ (.01) $ (.02)
----------- ------------ ----------- ----------
----------- ------------ ----------- ----------
Weighted Average Number of
Common Shares Outstanding 18,060,376 16,402,013 17,577,421 16,324,435
----------- ------------ ----------- ----------
----------- ------------ ----------- ----------
</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
For the Six Months Ended
November 30,
------------------------
<S> <C> <C>
1998 1997
---- ----
Cash Flows (Used in) Operations:
Net (Loss) $ (240,916) $ (283,239)
Adjustments to reconcile net (loss)
to net cash used in operations:
Changes in operating assets and liabilities:
(Increase) Decrease in inventory (39,991) 1,500
(Increase) in prepaid expenses - (3,000)
(Decrease) Increase in accounts payable
and accrued expenses (3,000) 20,001
(Decrease) Increase in advances from
related parties (265,225) 10,000
----------- -----------
Net Cash (Used In) Operations (549,132) (254,738)
----------- -----------
Cash Flows Provided By Financing Activities:
Proceeds from exercise of common stock
purchase warrants and financing costs 2,160 143,405
Proceeds from the conversion of Advances
from related parties into common stock 575,225 -
Cash Flows Provided By Financing ----------- -----------
Activities 577,385 143,405
----------- -----------
Increase (Decrease) in cash 28,253 (111,333)
Cash- Beginning of period 32,308 115,340
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Cash - End of period $60,561 $ 4,007
----------- -----------
----------- -----------
</TABLE>
<PAGE>
LESCARDEN INC.
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(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 1998
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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, 1998.
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.
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Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------
November 30, 1998
-----------------
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 $14 million from
inception to August 31, 1998. 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.
Three Months and Six Months ended November 30, 1998 compared to the Three
Months and Six Months ended November 30, 1997.
- -------------------------------------------------------------------------
Total costs and expenses during the three months ended and six months
ended November 30, 1998 were 7% and 14% lower, respectively, than those of
the comparative periods of the prior year principally due to lower other
administrative expenses. Other administrative expenses in the second fiscal
quarter of 1998 includes $37,000 of fees which were paid with the issuance
of 92,500 shares of restricted Common Stock of the Company. Professional
fees and consulting expenses have increased in the current fiscal year with
additional professionals required to assist the company in promotion,
regulatory and commercial development matters.
Liquidity and Capital Resources
- -------------------------------
Overview
- --------
The Company has had losses from operations in each of the five years
ended May 31, 1998. 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 more recent
quarters, from revenues from licensing fees and product sales.
Present Liquidity
- -----------------
The Company's present liquidity position is critical. As of November 30,
1998 the Company's total assets exceeded its total liabilities by $32,030.
The Company will require additional product sales or funding during, or
shortly after the end of, the current fiscal quarter ending February 28, 1999,
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, 1998 of ($484,860), 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, 1997 and 1998 contain an explanatory
paragraph indicating that the Company may be unable to continue in existence.
The Company plans to sell a line of cosmetic products in the near future
and to continue to implement plans to sell BIO-CARTILAGE<F1> to the
over-the-counter food supplement market and may also introduce a second
product in the same marketplace in the near future. In addition, the Company
continues to seek to obtain either a new licensee, or distributors, for its
CATRIX<F1> product, in powder form only, for topical wound healing purposes.
If successful, the Company may increase cash flow in order to allow the
Company to meet its obligations and sustain its operations. The Company also
plans to try to obtain a financing from sales of unregistered shares of
common stock.
The Company has no material commitments for capital expenditures at
November 30,1998.
<F1>
A registered trademark of Lescarden Inc.
<PAGE>
LESCARDEN INC.
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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 November 30, 1998.
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: December 21, 1998 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 INFORMAITON EXTRACTED FROM
LESCARDEN INC'S NOVEMBER 30, 1998 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> NOV-30-1998
<CASH> 60,561
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 75,057
<CURRENT-ASSETS> 135,618
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 138,698
<CURRENT-LIABILITIES> 106,668
<BONDS> 0
0
0
<COMMON> 19,509
<OTHER-SE> 12,521
<TOTAL-LIABILITY-AND-EQUITY> 138,698
<SALES> 3,027
<TOTAL-REVENUES> 3,027
<CGS> 0
<TOTAL-COSTS> 243,943
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (240,916)
<INCOME-TAX> 0
<INCOME-CONTINUING> (240,916)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (240,916)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>