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 29, 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 February 29, 2000
- ---------------------------- --------------------------------
Common Stock $.001 par value 21,875,169
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED BALANCE SHEET
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February 29, 2000
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<CAPTION>
ASSETS
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<S> <C>
Current Assets:
Cash $ 6,790
Accounts Receivable 232,653
Inventory 135,745
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Total Assets $ 375,188
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Currents Liabilities:
Accounts Payable and Accrued Expenses $ 194,695
Advances from Stockholders 272,000
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Total liabilities 466,695
Stockholders' Deficiency:
Convertible Preferred Stock 1,840
Common Stock 21,875
Additional Paid-In Capital 14,783,698
Accumulated Deficit (14,898,920)
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Stockholder's Deficiency (91,507)
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Total Liabilities and Stockholders' Deficiency $ 375,188
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</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
<CAPTION>
For The Three Months For the Nine Months
Ended February 29, Ended February 29,
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<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
Total Revenues $ 231,179 $ 13,475 $ 347,707 $ 16,502
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Costs and Expenses:
Cost of Sales 134,284 10,209 152,815 12,163
Salaries - Officer 39,228 39,332 118,260 117,997
Salaries - Office 4,016 3,369 20,107 11,723
Professional Fees and Consulting 37,275 51,461 107,099 152,051
Research and Development 6,735 41,507 21,654 48,915
Rent and Office Expenses 25,994 22,171 76,973 56,755
Travel and Meetings 16,414 12,016 26,245 19,750
Taxes - Other - - 680 680
Insurance 625 252 1,609 818
Other Administrative Expenses 6,749 7,173 45,029 10,581
--------- --------- --------- ---------
Total Costs and Expenses 271,320 187,490 570,471 431,433
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Net (Loss) $ (40,141) $(174,015) $(222,764) $(414,931)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net (Loss) Per Share $ ( .00) $ ( .01) $ (.01) $ (.02)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted Average Number of
Common Shares Outstanding 21,875,169 19,509,238 21,800,169 18,550,530
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</TABLE>
<PAGE>
LESCARDEN INC.
<TABLE>
(UNAUDITED)
CONDENSED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
February 29
2000 1999
Cash Flows (Used in) Operations:
Net (Loss) $ (222,764) $ (414,931)
Adjustments to reconcile net (loss)
to net cash used in operations:
Changes in operating assets and liabilities:
Decrease (Increase) in inventory 55,571 (105,781)
(Increase) in account receivable (232,653) -
Decrease in prepaid expenses 36,000 -
Decrease in security deposit 3,080 -
(Decrease)Increase in accounts payable
and accrued expenses (7,719) 32,000
(Decrease) unearned revenue (43,250) -
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Net Cash (Used In) Operations (411,735) (488,712)
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Cash Flows Provided By Financing Activities:
Increase (decrease) in advances from related parties 272,000 (115,225)
Proceeds from exercise of common stock
purchase warrants 55,000 2,160
Proceeds from the conversion of Advances
from stockholders into common stock - 575,225
Cash Flows Provided By Financing
Activities 327,000 462,160
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(Decrease) in cash (84,735) (26,552)
Cash- Beginning of period 91,525 32,308
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Cash - End of period $ 6,790 $ 5,756
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<PAGE>
LESCARDEN INC.
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(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
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February 29, 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, 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.
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Management's Discussion and Analysis of Financial Condition
and Results of Operations
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February 29, 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 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
current fiscal year, the Company made its first commercial shipment of its
CATRIX<F1> Wound Dressing product pursuant to the agreement with ICN IBERICA,
S.A., Spain (see below) and began direct sales to consumers of a line of
cosmetic products, which include the company's proprietory bovine cartilage
material. The Company has sustained net losses of approximately $14.9
million from inception to February 29, 2000. The Company has primarily
financed its research and development activities through a public offering
of Common Stock, and private placements of equity securities and in recent
years, revenues from license fees and product sales.
Three Months and Nine Months ended February 29, 2000 compared to the Three
Months and Nine Months ended February 28, 1999.
- --------------------------------------------------------------------------
The Company's revenues increased in the quarter and nine months ended
February 29, 2000 from the comparative prior fiscal year periods primarily
due the first commercial shipment of its CATRIX Wound Dressing Product and
to a license fee earned pursuant to the Company's agreement with ICN IBERICA,
S.A., Spain (see below) and the commencement of direct sales to consumers of
a line of cosmetics products, which include the Company's proprietary bovine
cartilage material. Total costs and expenses during the three months and
nine months ended February 29, 2000 were 45% and 32% higher, respectively,
than those of the comparative periods of the prior year principally due to
higher cost of sales related to increased products' sales.
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 February
29, 2000 the Company's total liabilities exceeded its total assets by $91,505.
The Company will require additional product sales or funding during, or
shortly after the end of, the current fiscal quarter ending May 31, 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's licensee of its CATRIX product, in powder form only,
for topical wound healing purposes (see below) received its first shipment
from the Company in the quarter ended February 29, 2000. In addition, the
Company began to sell a line of cosmetic products and plans to continue to
implement plans to sell BIO-CARTILAGE 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 Wound Dressing may now be sold throughout the 15 countries
of the EU.
On February 14, 2000, the Company announced that it had completed its
first commercial shipment of its CATRIX<F1> Wound Dressing product to ICNI
pursuant to the March 16, 1999 Agreement between the two companies.
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 territory to include all of the countries in the EU.
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
February 28,1999.
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
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(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 29, 2000.
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: March 22, 2000 s/Gerard A. Dupuis
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Gerard A. Dupuis
Chairman of the Board
Chief Executive Officer
<S> <C>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LESCARDEN
INC'S FEBRUARY 29, 2000 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 6,790
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 135,745
<CURRENT-ASSETS> 375,188
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 375,188
<CURRENT-LIABILITIES> 466,695
<BONDS> 0
0
1,840
<COMMON> 21,874
<OTHER-SE> (115,222)
<TOTAL-LIABILITY-AND-EQUITY> 375,188
<SALES> 347,707
<TOTAL-REVENUES> 347,707
<CGS> 152,815
<TOTAL-COSTS> 570,471
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (222,764)
<INCOME-TAX> 0
<INCOME-CONTINUING> (222,764)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (222,764)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
