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, 2000.
[ ] 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, 2000
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Common Stock $.001 par value 22,319,169
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LESCARDEN INC.
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<TABLE>
CONDENSED BALANCE SHEET
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<CAPTION>
ASSETS
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August 31, 2000 May 31, 2000
(UNAUDITED) (AUDITED)
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<S> <C> <C>
Current Assets:
Cash $ 117,158 $ 43,449
Accounts receivable - 71,532
Inventory 93,430 99,880
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Total Current Assets 210,588 214,861
Deferred Income Tax Asset, net of valuation allowance of
$2,355,000 and $2,581,000 at August 31, 2000 and
May 31, 2000 respectively - -
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Total Assets 210,588 214,861
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Currents Liabilities:
Accounts payable and accrued expenses $ 163,213 $ 163,213
Advances from related parties 155,000 50,000
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Total liabilities 318,213 213,213
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Commitments and Contingencies
Stockholders' Equity:
Convertible Preferred Stock 1,840 1,840
Common Stock 22,319 22,319
Additional Paid-In Capital 15,259,731 15,259,731
Accumulated Deficit (15,391,515) (15,282,242)
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Stockholders' Equity (Deficiency) (107,625) 1,648
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Total Liabilities and Stockholders' Equity (Deficiency) $ 210,588 $ 214,861
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See notes to financial statements
</TABLE>
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LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF OPERATIONS
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<CAPTION>
For the Three Months
Ended August 31,
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<S> <C> <C>
2000 1999
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Total Revenues $ 9,288 $ 9,920
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Costs and Expenses:
Cost of Product Sales 6,450 6,821
Salaries - Officer 39,228 39,228
Salaries - Office 6,471 11,659
Professional Fees and Consulting 30,691 44,458
Research and Development - 8,381
Rent and Office Expenses 22,521 24,898
Travel and Meetings 5,331 7,750
Taxes - Other 417 680
Insurance 78 84
Interest 600 -
Other Administrative Expenses 6,774 12,870
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Total Costs and Expense 118,561 156,829
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Net Loss $ (109,273) $ (146,909)
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Net Loss Per Share $ (.00) $ (.01)
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Weighted Average Number of
Common Shares Outstanding 22,319,169 21,725,169
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See notes to financial statements
</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Three Months Ended
August 31,
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<S> <C>
2000 1999
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Cash Flows (Used in) Operations:
Net (Loss) $ (109,273) $ (146,909)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Changes in operating assets and liabilities:
Decrease in accounts receivable 71,532 -
Decrease (Increase) in inventory 6,450 (33,196)
Decrease in prepaid expenses - 36,000
Decrease in security deposit - 3,080
(Decrease) in accounts payable and
accrued expenses - (18,678)
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Net Cash (Used In) Operations (31,291) (159,703)
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Cash Flows Provided By Financing Activities:
Advances from related parties 105,000 155,000
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(Decrease) increase in cash 73,709 (4,703)
Cash- Beginning of period 43,449 91,525
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Cash - End of period $ 117,158 $ 86,822
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See notes to financial statements
</TABLE>
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LESCARDEN INC.
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(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
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August 31, 2000
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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, 2000.
The results of operations for the interim periods are not necessarily
indicative of results to be expected for a full year's operations.
Note 2 - Inventory:
Inventory at August 31, 2000 consists of the following:
Finished Goods $ 6,930
Raw Materials 86,500
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$ 93,430
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<PAGE>
LESCARDEN INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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August 31, 2000
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Results of Operations
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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 recent
fiscal years, the Company began sales of its proprietary bovine cartilage
material, BIO-CARTILAGE<F1>, as a food supplement, and direct sales to
consumers of a line of cosmetic products, which include the Company's
proprietary bovine cartilage material. In the fiscal year May 31, 2000, the
Company made its initial two commercial shipments of its CATRIX<F1> Wound
Dressing product pursuant to its agreement with ICN IBERICA, S.A., Spain.
The Company has been unprofitable to date and may continue to incur
operating losses in the foreseeable future. The Company has sustained net
losses of approximately $15.4 million from inception to August 31, 2000. The
Company has primarily financed its research and development activities through
a public offering of Common Stock, private placements of debt and equity
securities, and in recent years, revenues from licensing fees and product
sales.
Three months ended August 31, 2000 compared to August 31, 1999.
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The Company's revenues in the quarters ended August 31, 2000 and 1999
were primarily from the 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, 2000
were 24% lower than those of the comparative period of the prior year
principally due to lower office salaries, research and development,
professional fees and consulting and other administrative expenses.
Liquidity and Capital Resources
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Overview
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The Company has had losses from operations in each of the five years
ended May 31, 2000. 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
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The Company's present liquidity position is critical. As of
August 31, 2000 the Company's total liabilities exceeded its total assets by
$ 107,625. The Company will require additional product sales or funding
during, or shortly after the end of, the current fiscal quarter ending
November 30, 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, 2000 of ($ 606,086), 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, 1999 and 2000 contain an explanatory
paragraph indicating that the Company may be unable to continue in existence.
The Company's licensee of its CATRIX<F1> product, in powder form only, for
topical wound healing purposes (see below) received its initial two shipments
from the Company in the year ended May 31, 2000. In addition, the Company
continued 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. If the Company's efforts to increase revenues are
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 common stock.
On March 16, 1999, the Company announced that it had entered into an
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 was 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 of Madrid. Under the prevailing regulations of the European Union
("EU"), 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
EU.
The Company has no material commitments for capital expenditures at
August 31, 2000.
<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 August 31, 2000.
INDEX TO EXHIBITS
27-Financial Data Schedule
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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 6, 2000 s/Gerard A. Dupuis
Gerard A. Dupuis
Chairman of the Board
Chief Executive Officer
