UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

———————
FORM 10-Q10–Q
———————

þ
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: August 31, 2014
or
o
For the quarterly period ended: February 28, 2014
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
For the transition period from: _____________ to _____________

Commission File Number: 0-10035

———————
LESCARDEN INC.
(Exact name of registrant as specified in its charter)
———————

New York13-2538207
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization)Identification No.)
 
420 Lexington Ave. Ste 212, New York 10170
(Address of Principal Executive Office) (Zip Code)
 
(212) 687-1050
(Registrant’s telephone number, including area code)
———————
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.
þYes  o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o Yeso No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated fileroAccelerated filero
Non-accelerated filero
 (DoSmaller reporting company
þ
(Do not check if a smaller reporting company)Smaller reporting company
þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yesþ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class Outstanding April 1,October 9, 2014
Common Stock $.001 par value 48,722,31663,622,316
 
 
 
 
 
 
TABLE OF CONTENTS
 
PART I – FINANCIAL INFORMATION
  Page
PART I – FINANCIAL INFORMATION
Item 11.      Financial Statements. 63
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations. 7
Item 3.Quantitative and Qualitative Disclosures About Market Risk. 87
Item 4.Controls and Procedures. 87
 
PART II – OTHER INFORMATION
Item 1.Legal Proceedings. 98
Item 1A.Risk Factors. 98
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds. 98
Item 3.      Defaults Upon Senior Securities. 98
Item 4.Submission of Matters to a Vote of Security Holders.      (Removed and Reserved). 98
Item 5.Other Information. 98
Item 6.Exhibits. 8
SIGNATURES9

 
 
2
 

PART I -– FINANCIAL INFORMATION

Item 1.         Financial Statements.
Item 1.Financial Statements.
 
LESCARDEN INC.
CONDENSED BALANCE SHEETS
 
 
February 28,
2014
  
May 31,
2013
 
 (Unaudited)     
August 31,
2014
 
May 31,
2014
 
ASSETS       (UNAUDITED)   
     
Current assets:           
Cash and cash equivalents $13,566  $84,562  $13,023  $10,432 
Accounts receivable  42,570   26,801   800   2,088 
Inventory  117,113   148,432   112,342  113,572 
Total current assets  173,249   259,795   126,165   126,092 
Deferred income tax asset, net of valuation allowance of $1,538,000 and $1,504,000 at February 28, 2014 and May 31, 2013 respectively  —   — 
        
Deferred income tax asset, net of valuation allowance of $1,598,000 and $1,564,000 at August 31, 2014 and May 31, 2014, respectively  —  –– 
Total assets $173,249  $259,795  $126,165  $126,092 
             
LIABILITIES AND STOCKHOLDERS' DEFICIT             
   
Current liabilities:             
Accounts payable and accrued expenses $191,440  $267,303 
Accounts payable $247,649  $220,592 
Shareholder loan  447,000   347,000  75,000 –– 
Deferred revenue  —   4,782 
Deferred license fees  6,000   10,500   3,000   4,500 
Total liabilities  644,440   629,585   325,649   225,092 
             
Stockholders' deficit        
Stockholders' deficit:     
Convertible preferred stock - $.02 par value, authorized 2,000,000 shares, issued and outstanding 92,000 shares  1,840   1,840   1,840   1,840 
Common stock - $.001 par value, authorized 200,000,000 shares, 48,722,316 issued and outstanding at February 28, 2014 and May 31, 2013  48,722   48,722 
Additional paid-in capital  17,073,836   17,073,836 
Common stock - $.001 par value, authorized 200,000,000 shares, issued and outstanding 63,622,316 shares
  63,622   63,622 
Additional paid–in capital  17,505,936   17,505,936 
Accumulated deficit  (17,595,589)  (17,494,188)  (17,770,882)  (17,670,398)
Stockholders' deficit  (471,191)  (369,790)  (199,484)  (99,000)
Total liabilities and stockholders' deficit $173,249  $259,795  $126,165  $126,092 

See notes to financial statements
 
 
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LESCARDEN INC.
CONDENSED STATEMENTS OF OPERATIONS
 
 (UNAUDITED)  (UNAUDITED) 
 Three months ended February 28,  Nine months ended February 28,  
(UNAUDITED)
For the three months ended
August 31,
 
 2014  2013  2014  2013  2014 2013 
Revenues:                 
Product sales $61,689  $125,448  $379,616  $409,589  $6,247 $308,091 
License fees  1,500   1,500   4,500   4,500   1,500  1,500 
Total revenues  63,189   126,948   384,116   414,089   7,747   309,591 
                     
Costs and expenses:                     
Cost of sales  33,825   62,654   170,422   161,431   1,230   134,300 
Salaries  28,536   28,267   85,622   69,279   27,261   29,170 
Professional fees and consulting  12,461   62,325   61,703   139,970   35,912   29,644 
Rent and office expense  29,729   29,880   87,469   82,436 
Rent and office expenses  31,213   30,149 
Commission –– 20,689 
Insurance  9,656   4,390   40,281   32,173   11,869   12,858 
Commission  —   6,632   20,689   19,481 
Other administrative expenses  8,313   9,016   19,331   26,183   746   5,416 
Total costs and expenses  122,520   203,164   485,517   530,953   108,231   262,226 
Net (loss) income $(100,484) $47,365 
                     
Operating loss  (59,331)  (76,216)  (101,401)  (116,864)
                
Other income  —   44,581   —   44,581 
                
Net loss $(59,331) $(31,635) $(101,401) $(72,283)
                
Net loss per share – basic and diluted $( 0.00) $( 0.00) $(0.00) $(0.00)
Net (loss) income per share – basic and diluted
 $(0.00) $0.00 
                     
Weighted average number of common
shares outstanding – basic and diluted
  48,722,316   48,722,316   48,722,316   48,722,316   63,622,316  48,722,316 

See notes to financial statements
 
 
4
 

LESCARDEN INC.
CONDENSED STATEMENTS OF CASH FLOWS

  (UNAUDITED) 
  Nine months ended 
  February 28, 
  2014  2013 
       
Cash flows from operating activities:      
Net loss $(101,401) $(72,283)
Adjustments to reconcile net loss to net cash
used in operating activities:
        
Changes in operating assets and liabilities:        
Increase in accounts receivable  (15,769)  (11,113)
Decrease (increase) in inventory  31,319   (46,204)
Decrease in accounts payable and accrued expenses  (75,863)  (20,683)
Decrease in deferred revenue  (4,782)  (4,075)
Decrease in deferred license fees  (4,500)  (4,500)
Net cash used in operating activities  (170,996)  (158,858)
         
Cash flows from financing activities:        
Proceeds from shareholder loan  100,000   115,000 
Proceeds from the sale of common stock  —   200,000 
Cash provided by financing activities  100,000   315,000 
         
         
Increase (decrease) in cash  (70,996)  156,142 
         
Cash - beginning of period  84,562   42,617 
         
Cash – end of period $13,566  $198,759 
         
Supplemental disclosures of cash flow information        
         
Cash paid for interest  $-  $- 
Cash paid for taxes  $-  $- 
  
(UNAUDITED)
For the three months ended
August 31,
 
  2014  2013 
Cash flows from operating activities:      
Net (loss) income  $(100,484) $47,365 
Adjustments to reconcile net (loss) income to net cash used in operating activities:        
Changes in operating assets and liabilities:        
Decrease (increase) in accounts receivable  1,288   (278,963)
Decrease in inventory  1,230   62,722 
Increase in accounts payable and accrued expenses  27,057   60,172 
Decrease in deferred license fees  (1,500)  (1,500)
Net cash used in operating activities  (72,409)  (110,204)
         
Cash flows from financing activities:        
Proceeds from shareholder loan  75,000   100,000 
Cash provided by financing activities  75,000   100,000 
         
Increase (decrease) in cash  2,591   (10,204)
         
Cash – Beginning of Period  10,432   84,562 
         
Cash – End of Period $13,023  $74,358 
Supplemental Disclosures of Cash Flow Information        
   Cash paid for interest $-  $- 
   Cash paid for taxes $380  $380 

See notes to financial statements
 
 
5
 

LESCARDEN INC.
 

LESCARDEN INC .
(UNAUDITED) NOTES TO FINANCIAL STATEMENTS
 
February 28,August 31, 2014
 
Note 1 - General:
 
The accompanying condensedunaudited financial statements include all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods. All such adjustments are of a normal recurring nature. The statements have been prepared in accordance with the requirements for Form 10-Q10–Q 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-K10–K for the year ended May 31, 2013. The results of operations for the interim periods are not necessarily indicative of results to be expected for a full year's operations.2014.
 
Note 2 –- Going Concern:
 
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability of assets and the satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.
As shown in the financial statements, the Company incurred a loss from operations for the nine months ended February 28, 2014, has a stockholders’ deficiency and a working capital deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
concern as there can be no assurance that the Company will be able to restore production operations, grow revenues or secure sufficient additional financing to meet future obligations. The Company’s plan and ability to continue as a going concern is primarily dependent upon itsthe majority shareholder’s ability to maintain consistentfund operating losses until production volumesoperations are restored.  The results of operations for the interim periods are not necessarily indicative of results to fulfill existing sales orders.  Production lead time has increased at the Company’s primary raw material supplier and alternative sources of supply are being evaluated so that manufacturing and production disruptions can be minimized. There can be no assurance that the Company will be able to establish an alternative source of supply and maintain consistent production volumes to meet demand.  The financial statements do not include any potential contingent liabilities associated with the establishment of an alternative source of supply due to the uncertainties associated with the regulatory, logistic and financial issues, but it is likely that mill construction, testing and regulatory certification will necessitate at least six months before production commences.expected for a full year's operations.
 
Note 3 –- Inventory:
 
At February 28,August 31, 2014, inventory of $117,113$112,342 consisted of $41,640$37,449 of finished goods and $75,473$74,893 of raw materialsmaterials.
 
Note 4 –- Related Party Transactions:Transaction:

In August 2013, theThe Company received an additional loan of $100,000loans totaling $75,000 from its’ Chairman.  Pursuant to an agreement with a director of the Company, sales commission expense of $20,689 for services rendered in connection with the sale of Citrix in Europe was paidmajority shareholder during the ninethree months ended February 28,August 31, 2014.
 
 
6
 

Item 2.         
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
Results of Operations:
Ongoing raw material production delays have resulted in order fulfillment lead times of greater than six months and increasing backorders in both new and existing markets. The Company has been unable to reach an agreement with its existing supplier to continue production until an alternative means of supply is established and prospective suppliers have provided estimates of a year or more before an alternative means of production is operational and significant increases in the unit cost of raw material.
ThreeOperations--Three months ended February 28,August 31, 2014 compared to February 29,August 31, 2013
 
The Company’s inability to reestablish production operations resulted in a 97% decrease in revenues decreasedand a decrease of  $153,800 in cost of sales and commission expenses in the fiscal quarter ended February 28, 2014 compared to February 28, 2013August 31, 2014.  Professional fees increased by 51% or $63,759. .  Cost of sales as a percent of sales was 55%% for the three months ended February 28, 2014 reflecting non-recurring set-up costs of $7,989 associated with the Company’s efforts to secure alternative sources of raw material supply.
Non-direct costs and expenses during the three months ended February 28, 2014 were 37% or $51,815 lower than those of the comparative prior-year period21% due to a $49,864 decrease in quality control expenses associated with a viral clearance study and a decrease in commissions expense of $6,632 offset by an increase in insurance expense of $5,266.
Nine months ended February 28, 2014 compared to February 29, 2013
The Company’s revenues decreased by $29,973 or 7% for the nine months ended February 28, 2014 due to ongoing production delays.  Cost of sales as a percent of sales was 44.9% for the nine months ended February 28, 2014 reflecting the increased cost of raw materials.
Non-direct costs and expenses during the nine months ended February 28, 2014 were 14.7% or $54,427 lower than those of the comparative prior-year period due to decreases in professional fees and other administrative expenses of $78,267 and $6,852 respectively offset by increased payroll and insurances expenses of $16,343 and $8,108 respectively.legal expenses.
 
Liquidity and Capital Resources
 
The increase in shareholder loans of $75,000 funded the use of cash in operating activities and increase of $2,591in cash for the period to $13,023 at August 31, 2014.
As of February 28,August 31, 2014, the Company’s accounts payable and accrued expensesliabilities exceeded its current assets by $18,191. The Company’s cash and cash equivalents balance decreased by $70,996 in the nine months ended February 28, 2014 to $13,566.$199,484.
 
The Company has no material commitments for capital expenditures at February 28,August 31, 2014.
 
7
Item 3.         
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
 
Not required for a smaller reporting company.
 
Item 4.         Controls and Procedures.
Item 4.Controls and Procedures.
 
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Company’s management, including its Chief Executive and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, including the Chief Executive and Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
 
The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on such evaluation, the Company’s Chief Executive and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report on Form 10-Q.10–Q.
 
There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this quarterly report on Form 10-Q.10–Q.
 
 
87
 

 
PART II -– OTHER INFORMATION
 
Item 1.         Legal Proceedings.
Item 1.Legal Proceedings.
 
None.
 
Item 1A.      Risk Factors.
Item 1A.Risk Factors.
 
None.
 
Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
 
See Stock Purchase Agreement with Charles T. Maxwell (incorporated by reference from our Current Report on Form 8-K filed on September 24, 2012)None.
 
Item 3.         Defaults Upon Senior Securities.
Item 3.Defaults Upon Senior Securities.
 
None.
 
Item 4.         Submission of Matters to a Vote of Security Holders.
Item 4.(Removed and Reserved)
 
None.
Item 5.         Other Information.
Item 5.Other Information.
 
None.
 
Item 6.         Exhibits.
Item 6.Exhibits.
 
Exhibit No.     Description
31
 Certification pursuant to Exchange Act Rule 13a – 14 (a)/15d-14(a)
32
 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

8

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.

Date: October 9, 2014
LESCARDEN INC.
By:  
/s/ William E. Luther
William E. Luther
Chief Executive and Chief Financial Officer

9