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, 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
- ------------------------------ -------------------
(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, 1998
- ---------------------------- --------------------------------
Common Stock $.001 par value 16,611,513
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<TABLE>
LESCARDEN INC.
(UNAUDITED)
CONDENSED BALANCE SHEET
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February 28, 1998
-----------------
<CAPTION>
ASSETS
------
<S> <C>
Current Assets:
Cash $ 33,015
Inventory 7,988
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Total currents assets 41,003
--------------
Security Deposit 3,080
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Total Assets $ 44,083
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--------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts Payable and Accrued Expenses $ 134,802
Advance from Stockholders 122,000
--------------
Total liabilities 256,802
--------------
Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 16,611
Additional Paid-In Capital 13,390,974
Accumulated Deficit (13,622,144)
--------------
Stockholder's Deficiency (212,719)
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Total Liabilities and Stockholders' Deficiency $ 44,083
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</TABLE>
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<TABLE>
LESCARDEN INC.
(UNAUDITED)
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
<CAPTION>
For the Three Months For the Nine Months
Ended February 28, Ended February 28,
-------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Revenues $ 203 $ 17,627 $ 359 $ 44,752
--------- ---------- ---------- ---------
Costs and Expenses:
Cost of Product Sales - 5,341 - 5,341
Salaries - Officer 37,749 25,832 116,552 77,840
Salaries - Office 1,566 2,492 6,835 7,817
Professional Fees and Consulting 21,091 29,876 98,390 101,484
Research and Development - 1,344 10,252 5,156
Rent and Office Expenses 15,122 14,015 44,676 45,750
Travel and Meetings 2,080 2,091 16,809 3,017
Taxes - Other 51 - 746 1,316
Insurance 518 (511) 1,487 792
Other Administrative Expenses 8,017 3,922 73,842 10,320
--------- ---------- ---------- ---------
Total Costs and Expense 86,194 84,402 369,589 258,833
--------- ---------- ---------- ---------
Net Loss $ (85,991) $ (66,775) $(369,230) $ (214,081)
--------- ---------- ---------- ------------
--------- ---------- ---------- ------------
Net Loss Per Share $ (.01) $(.01) $(.02) $(.02)
--------- ---------- ---------- ------------
--------- ---------- ---------- ------------
Weighted Average Number of
Common Shares Outstanding 16,611,513 12,026,760 16,368,415 11,933,910
--------- ---------- ---------- ------------
--------- ---------- ---------- ------------
</TABLE>
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<TABLE>
LESCARDEN INC.
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
<CAPTION>
For the Nine Months Ended
February 28,
-------------------------
1998 1997
---- ----
<S> <C> <C>
Cash Flows Provided By (Used in) Operations:
Net (Loss) $ (369,230) $ (214,081)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Changes in operating assets and liabilities:
Decrease in inventory 1,500 4,368
Decrease in prepaid expenses - 17,673
Increase in accounts payable
and accrued expenses 20,000 57,038
Increase in advance from stockholders 122,000 -
Increase in stock subscriptions payable - 20,000
----------- ----------
Net Cash (Used In) Operations (225,730) (115,002)
----------- ----------
Cash Flows Provided By Financing Activities:
Proceeds from exercise of common stock
purchase warrants and financing costs 143,405 145,000
----------- ----------
Increase in cash (82,325) 29,998
Cash- Beginning of period 115,340 53,935
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Cash - End of period $ 33,015 $ 83,933
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</TABLE>
<PAGE>
LESCARDEN INC.
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
February 28, 1998
-----------------
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
-----------------------------------------------------------
February 28, 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 $13.6 million from
inception to February 28, 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 nine months ended February 28, 1998 compared to three
- ----------------------------------------------------------------------
months and nine months ended February 29, 1997.
- -----------------------------------------------
The Company's revenues in the nine months ended February 28, 1997
include $25,000 of license fees from Orphan Medical Inc. ("Orphan") and
approximately $15,00 of revenue from sales of BIO-CARTILAGE<F1> compared to
no such revenues in the 1998 fiscal year. Total costs and expenses during
the three months and nine months ended February 28, 1998 were 43% and 2%
higher, respectively, than those of the comparative periods of the prior
year principally due to higher officer's salary, travel and other
administrative expenses. Other administrative expenses in the nine months
ended February 28, 1998 include $37,000 of financing expenses that were paid
with the issuance of 92,500 shares of restricted common stock of the company.
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 February
28, 1998 the Company's total liabilities exceeded its total assets by
$212,719. The Company will require additional product sales or funding
during, or shortly after the end of, the current fiscal quarter ending
May 31, 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.
During the quarter ended February 28, 1998, Orphan and the Company
terminated their license agreement for Orphan to develop the Company's
proprietary bovine cartilage material, CATRIX<F1>, in powder from only, for
topical wound healing purposes. The Company received from Orphan its
approved 510 (K) files and related regulatory and clinical materials related
to the product's development. The Company is seeking to obtain either a new
licensee, 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 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 financing from the sales of
unregistered shares of common stock.
The Company has no material commitments for capital expenditures at
February 28, 1998.
<F1>
A registered trademark of Lescarden Inc.
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, 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: April 9, 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 FEBRUARY 28, 1998 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-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 33,015
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 7,988
<CURRENT-ASSETS> 41,003
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,083
<CURRENT-LIABILITIES> 256,802
<BONDS> 0
0
1,840
<COMMON> 16,611
<OTHER-SE> (231,170)
<TOTAL-LIABILITY-AND-EQUITY> 44,083
<SALES> 359
<TOTAL-REVENUES> 359
<CGS> 0
<TOTAL-COSTS> 369,589
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (369,230)
<INCOME-TAX> 0
<INCOME-CONTINUING> (369,230)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (369,230)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
