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, 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.
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(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
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(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, 1997
- ---------------------------- --------------------------------
Common Stock $.001 par value 16,611,513
<PAGE>
<TABLE>
LESCARDEN INC.
(UNAUDITED)
CONDENSED BALANCE SHEET
-----------------------
November 30, 1997
-----------------
<CAPTION>
ASSETS
------
<S> <C>
Current Assets:
Cash $ 4,007
Inventory 7,988
Prepaid Expenses 3,000
----------
Total currents assets 14,995
----------
Security Deposit 3,080
----------
Total Assets $ 18,075
----------
----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts Payable and Accrued Expenses $ 134,803
Advance from Stockholder 10,000
-----------
Total liabilities 144,803
-----------
Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 16,611
Additional Paid-In Capital 13,390,974
Accumulated Deficit (13,536,153)
-----------
Stockholder's Deficiency (126,728)
-----------
Total Liabilities and Stockholders' Deficiency $ 18,075
-----------
-----------
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(UNAUDITED)
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
<CAPTION>
For The Three Months For the Six Months
Ended November 30, Ended November 30,
-------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Revenues $ 145 $ 2,004 $ 156 $ 27,125
---------- ---------- ---------- ----------
Costs and Expenses:
Salaries - Officer 39,332 26,786 78,803 52,008
Salaries - Office 1,572 1,885 5,269 5,325
Professional Fees and Consulting 27,388 38,673 77,299 71,609
Research and Development 299 1,288 10,252 3,812
Rent and Office Expenses 14,219 16,975 29,554 31,735
Travel and Meetings 5,991 925 14,729 925
Taxes - Other - - 695 1,316
Insurance 802 1,200 969 1,303
Other Administrative Expenses 47,603 2,771 65,825 6,398
---------- ---------- ---------- ----------
Total Costs and Expenses 137,206 90,503 283,395 174,431
---------- ---------- ---------- ----------
Net (Loss) $ (137,061) $ (88,499) $ (283,239) $ (147,306)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net (Loss) Per Share $ ( .01) $( .01) $ (.02) $ (.01)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted Average Number of
Common Shares Outstanding 16,402,013 11,872,010 16,324,435 11,872,010
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
LESCARDEN INC.
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
<CAPTION>
For the Six Months Ended
November 30,
------------------------
1997 1996
---- ----
<S> <C> <C>
Cash Flows (Used in) Operations:
Net (Loss) $ (283,239) $ (147,306)
Adjustments to reconcile net (loss)
to net cash used in operations:
Changes in operating assets and liabilities:
Decrease in Inventory 1,500 3,024
(Increase) decrease in prepaid expenses (3,000) 17,673
Increase in accounts payable
and accrued expenses 20,001 37,366
Increase in advance from stockholder 10,000 -
----------- -----------
Net Cash (Used In) Operations (254,738) (89,243)
Cash Flows Provided By Financing Activities:
Proceeds from exercise of common stock
purchase warrants and financing costs 143,405 -
Proceeds from warrants subscription payable - 60,000
----------- -----------
(Decrease) in cash (111,333) (29,243)
Cash- Beginning of period 115,340 53,935
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Cash - End of period $ 4,007 $24,692
----------- -----------
----------- -----------
</TABLE>
<PAGE>
LESCARDEN INC.
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 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, 1997.
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 $13.5 million from inception to
November 30, 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.
Three Months and Six Months ended November 30, 1997 compared to the Three
Months and Six Months ended November 30, 1996.
- -------------------------------------------------------------------------
The Company's revenues in the six months ended November 30, 1996 include
$25,000 of license fees from Orphan Medical Inc. ("Orphan"). Total costs and
expenses during the three months and six months ended November 30, 1997 were
62% and 52% higher, respectively, than those of the comparative periods of
the prior year principally due to higher officer's salary, professional fees
and consulting, travel and other administrative expenses.
Liquidity and Capital Resources
- -------------------------------
Overview
- --------
The Company has had losses from operations in each of the five years
ended May 31, 1997. 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 November 30,
1997 the Company's total liabilities exceeded its total assets by $126,728.
The Company will require additional product sales or funding during the
current fiscal quarter ending February 28, 1998, 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, 1997 of ($345,518), 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, 1996 and 1997 contain an explanatory
paragraph indicating that the Company may be unable to continue in existence.
Orphan recently informed the company that it wishes to terminate its
license agreement to develop the Company's proprietary bovine cartilage
material, CATRIX<F1>, in powder form only, for, topical wound healing purposes.
Management is hopeful that it will receive from Orphan its approved 510 (K)
files and related regulatory and clinical materials related to the product,
which represents a significant investment and advancement of the product's
development. The Company intends to seek to obtain either new licensees, or
distributors, for the product.
The Company plans 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, or a cosmetic product, 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 try to obtain a short-term financing from the exercise
of common stock purchase warrants and the sales of unregistered shares of
common stock.
The Company has no material commitments for capital expenditures at
November 30, 1997.
<F1>
A registered trademark of Lescarden Inc.
<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, 1997.
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 13, 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 INFORMATION EXTRACTED
FROM LESCARDEN INC'S NOVEMBER 30, 1997 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-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 4,007
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 7,988
<CURRENT-ASSETS> 14,995
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,075
<CURRENT-LIABILITIES> 144,803
<BONDS> 0
0
0
<COMMON> 16,611
<OTHER-SE> (143,339)
<TOTAL-LIABILITY-AND-EQUITY> 18,075
<SALES> 156
<TOTAL-REVENUES> 156
<CGS> 0
<TOTAL-COSTS> 283,395
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (283,239)
<INCOME-TAX> 0
<INCOME-CONTINUING> (283,239)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (283,239)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
