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, 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
- ------------------------------- -------------------
(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 November 30, 1999
- ---------------------------- --------------------------------
Common Stock $.001 par value 21,875,169
<PAGE>
LESCARDEN INC.
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<TABLE>
(UNAUDITED)
CONDENSED BALANCE SHEET
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November 30, 1999
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<CAPTION>
ASSETS
------
<S> <C>
Current Assets:
Cash $ 23,541
Accounts receivable 10,500
Inventory 217,079
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Total Assets $ 251,120
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts payable and accrued expenses $ 135,486
Advances from related parties 167,000
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Total Liabilities 302,486
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Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 21,875
Additional Paid-In Capital 14,783,698
Accumulated Deficit (14,858,779)
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Stockholder's Deficiency (51,366)
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Total Liabilities and Stockholders' Deficiency $ 251,120
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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,
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<S> <C> <C> <C> <C>
1999 1998 1999 1998
---- ---- ---- ----
License fees $ 86,500 - $ 86,500 -
Product sales and other 20,108 2,563 30,028 3,027
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Total Revenues $ 106,608 $ 2,563 $ 116,528 $ 3,027
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Costs and Expenses:
Cost of Sales 11,710 1,954 18,531 1,954
Salaries - Officer 39,804 39,332 79,032 78,665
Salaries - Office 4,432 3,402 16,091 8,354
Professional Fees and Consulting 25,366 54,045 69,824 100,590
Research and Development 6,538 5,582 14,919 7,408
Rent and Office Expenses 26,081 16,679 50,979 34,584
Travel and Meetings 2,081 3,797 9,831 7,734
Taxes - Other - - 680 680
Insurance 900 521 984 566
Other Administrative Expenses 25,410 2,476 38,280 3,408
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Total Costs and Expenses 142,322 127,788 299,151 243,943
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Net (Loss) $ (35,714) $(125,225) $ (182,623) $ (240,916)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net (Loss) Per Share $ ( .002) $ ( .01) $ (.01) $ (.01)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted Average Number of
Common Shares Outstanding 21,800,169 18,060,376 21,775,169 17,577,421
---------- ---------- ---------- ----------
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</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
For the Six Months Ended
November 30,
------------------------------
<S> <C> <C>
1999 1998
---- ----
Cash Flows (Used in) Operations:
Net (Loss) $ (182,623) $ (240,916)
Adjustments to reconcile net (loss)
to net cash used in operations:
Changes in operating assets and liabilities:
(Increase) in inventory (25,763) (39,991)
(Increase) in accounts receivable (10,500) -
Decrease in prepaid expenses 36,000 -
Decrease in security deposit 3,080 -
(Decrease) in accounts payable
and accrued expenses (66,928) (3,000)
(Decrease) unearned revenue (43,250) -
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Net Cash (Used In) Operations (289,984) (283,907)
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Cash Flows Provided By Financing Activities:
Increase (decrease) in advances from related parties 167,000 (265,225)
Proceeds from purchase of common stock and
exercise of common stock purchase warrants 55,000 2,160
Proceeds from the conversion of advances
from related parties into common stock - 575,225
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Cash Flows Provided By Financing
Activities 222,000 312,160
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Increase (Decrease) in cash (67,984) 28,253
Cash- Beginning of period 91,525 32,308
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Cash - End of period $ 23,541 $ 60,561
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</TABLE>
<PAGE>
LESCARDEN INC.
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(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
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November 30, 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
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November 30, 1999
-----------------
Results of Operations
- ---------------------
Overview
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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
$14.9 million from inception to November 30, 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 and Six Months ended November 30, 1999 compared to the Three
- -------------------------------------------------------------------------
Months and Six Months ended November 30, 1998.
- ----------------------------------------------
The Company's revenues increased in the quarter and six months ended
November 30, 1999 from the comparative prior fiscal year periods primarily
due to a license fee earned persuant to the Company's agreement with ICN
IBERICA, S.A. (see below) and 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 and six months
ended November 30, 1999 were 11% and 23% higher, respectively, than those
of the comparative periods 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 November 30,
1999 the Company's total liabilities exceeded its total assets by $51,366.
The Company will require additional product sales or funding during, or
shortly after the end of, the current fiscal quarter ending February 29,
2000, 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 ($938,282), 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 a financing from additional advances from related parties and sales
of unregistered shares of common 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 where by ICNI acquired the
semi-exclusive rights to distribute and market the Company's CATRIX 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 Company is hopeful, although there
can be no assurance, that the distribution of CATRIX<F1> WOUND DRESSING, in
Spain may start during the first quarter of calendar year 2000.
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
November 30,1999.
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
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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, 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: December 21, 1999 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, 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> NOV-30-1999
<CASH> 23,541
<SECURITIES> 0
<RECEIVABLES> 10,500
<ALLOWANCES> 0
<INVENTORY> 217,079
<CURRENT-ASSETS> 251,120
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 251,120
<CURRENT-LIABILITIES> 302,486
<BONDS> 0
0
0
<COMMON> 21,875
<OTHER-SE> (73,241)
<TOTAL-LIABILITY-AND-EQUITY> 251,120
<SALES> 116,528
<TOTAL-REVENUES> 116,528
<CGS> 0
<TOTAL-COSTS> 299,151
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (182,623)
<INCOME-TAX> 0
<INCOME-CONTINUING> (182,623)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (182,623)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
