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 August 31, 1999.
[ ] 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 212 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 August 31, 1999
- ---------------------------- ------------------------------
Common Stock $.001 par value 21,725,169
<PAGE>
LESCARDEN INC.
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<TABLE>
(UNAUDITED)
CONDENSED BALANCE SHEET
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August 31, 1999
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<CAPTION>
ASSETS
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<S> <C>
Current Assets:
Cash $ 86,822
Inventory 224,512
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Total Assets $ 311,334
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts payable and accrued expenses $ 183,736
Advances from related parties 155,000
Unearned revenue 43,250
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Total liabilities 381,986
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Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 21,725
Additional Paid-In Capital 14,728,848
Accumulated Deficit (14,823,065)
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Stockholder's Deficiency (70,652)
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Total Liabilities and Stockholders' Deficiency $ 311,334
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</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
<CAPTION>
For the Three Months
Ended August 31,
--------------------
<C> <C>
1999 1998
---- ----
Total Revenues $ 9,920 $ 464
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Costs and Expenses:
Cost of Product Sales 6,821 -
Salaries - Officer 39,228 39,333
Salaries - Office 11,659 4,952
Professional Fees and Consulting 44,458 46,545
Research and Development 8,381 1,826
Rent and Office Expenses 24,898 17,905
Travel and Meetings 7,750 3,937
Taxes - Other 680 680
Insurance 84 47
Other Administrative Expenses 12,870 932
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Total Costs and Expense 156,829 116,155
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Net Loss $ (146,909) $ (115,691)
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Net Loss Per Share $ (.01) $ (.01)
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Weighted Average Number of
Common Shares Outstanding 21,725,169 16,311,308
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----------- -----------
</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
<S> <C> <C>
For the Three Months
Ended August 31,
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1999 1998
---- ----
Cash Flows (Used in) Operations:
Net (Loss) $ (146,909) $ (115,691)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Changes in operating assets and liabilities:
(Increase) decrease in inventory (33,196) 1,232
Decrease in prepaid expenses 36,000 -
Decrease in security deposit 3,080 -
(Decrease) in accounts payable and
accrued expenses (18,678) (3,000)
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Net Cash (Used In) Operations (159,703) (117,459)
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Cash Flows Provided By Financing Activities:
Advances from related parties 155,000 190,000
Cash Flows Provided By Financing ----------- -----------
Activities 155,000 190,000
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(Decrease) increase in cash (4,703) 72,541
Cash- Beginning of period 91,525 32,308
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Cash - End of period $ 86,822 $ 104,849
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<PAGE>
LESCARDEN INC.
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(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
August 31, 1999
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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, 1999.
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
-----------------------------------------------------------
August 31, 1999
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Results of Operations
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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 , to a food supplement distributor
for sale through nutritional food supplement stores in the U.S. In the
fiscal year ended May 31, 1999, the Company began direct sales to consumers
of a line of cosmetic products, which include the Company's proprietary
bovine cartilage material. The Company has sustained net losses of
approximately $14.8 million from inception to August 31, 1999. 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 ended August 31, 1999 compared to August 31, 1998.
- ---------------------------------------------------------------
The Company's revenues increased in the quarter ended August 31, 1999
from the comparative prior fiscal year primarily due to the commencement of
direct sales to consumers of a line of cosmetic products, which include the
Company's proprietary bovine cartilage material.
Total costs and expenses during the three months ended August 31, 1999
were 35% higher than those of the comparative period of the prior year
principally due to higher office salaries, research and development, rent
and office expenses 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, 1999. 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 August 31,
1999 the Company's total liabilities exceeded its total assets by $ 70,652.
The Company will require additional product sales or funding during, or
shortly after the end of, the current fiscal quarter ending November 30,
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, 1999 of ($ 938,382), 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, 1998 and 1999 contain an explanatory
paragraph indicating that the Company may be unable to continue in existence.
The Company began to sell a line of cosmetic products and plans to
continue to implement plans to sell BIO-CARTILAGE<F1> to the over-the-counter
food supplement market. 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 (see below). 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 financing from additional advances from stockholders and sales of
unregistered shares of uncommon stock.
On March 16, 1999, the Company announced that it had entered into
agreement with ICN IBERICA, S.A. ("ICNI", a wholly owned subsidiary of ICN
Pharmaceuticals, USA) of Barcelona, Spain whereby ICNI acquired the
semi-exclusive rights to distribute and market the Company's CATRIX<F1> WOUND
CARE DRESSING in Spain for a period of ten years. Implementation of this
Agreement is contingent upon securing marketing approval for the product by
the Spanish Health Ministry.
On September 13, 1999, the Company announced that its CATRIX<F1> WOUND
DRESSING product was granted full marketing approval by the Spanish Health
Ministry in Madrid. Under the prevailing regulations of the European Union,
of which Spain is a member, a drug/device approval in one member country
renders the product marketable in all member states. Therefore, CATRIX<F1>
WOUND DRESSING may now be sold throughout the 15 countries of the European
Union.
The Agreement with ICNI also contains terms granting it the exclusive
right, for a limited period of time, to negotiate with the Company for the
expansion of its exclusive territory to include all of the countries in the
European Union. Additionally, the Agreement gives ICNI the exclusive right,
for a similarly limited period of time, to negotiate with the Company for the
inclusion of CATRIX<F1> 10 OINTMENT in its product line for distribution
within the countries covered by the Agreement.
The Company has no material commitments for capital expenditures at
August 31, 1999.
The Company has conducted a review of its computer systems to identify
the systems that could be affected by the Year 2000 Issue. The Company
presently believes that, with conversions to new software, if required, the
Year 2000 problem will not pose significant operational problems.
<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 August 31, 1999.
INDEX TO EXHIBITS
27-Financial Data Schedule
<PAGE>
Signatures
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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.
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(Registrant)
Date: October 5, 1999 s/Gerard A. Dupuis
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Gerard A. Dupuis
Chairman of the Board
Chief Executive Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LESCARDEN
INC'S AUGUST 31, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL LEGENDS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> AUG-31-1999
<CASH> 86,822
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 224,512
<CURRENT-ASSETS> 311,334
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 311,334
<CURRENT-LIABILITIES> 381,986
<BONDS> 0
0
0
<COMMON> 21,725
<OTHER-SE> (92,377)
<TOTAL-LIABILITY-AND-EQUITY> 311,334
<SALES> 9,920
<TOTAL-REVENUES> 9,920
<CGS> 0
<TOTAL-COSTS> 156,829
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (146,909)
<INCOME-TAX> 0
<INCOME-CONTINUING> (146,909)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (146,909)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
