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

———————
FORM 10-Q10–Q
———————

þü
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: February 28, 2015
or
oFor the quarterly period ended: August 31, 2015
or
 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)
(I.R.S. Employer Identification No.)
 
420 Lexington Ave. Ste 400,Suite 300, 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 theSecurities 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. þ Yes   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). þ Yes   o 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.
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.ü Yes 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). Yes 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 (Do not check if a smallerSmaller reporting companyþü
(Do not check if a smaller reporting company) 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 Yesü 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). þ Yes   o No
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 10,October 9, 2015
Common Stock $.001 par value 63,622,316
 
 
 
 
 
 
TABLE OF CONTENTS
 
PART I – FINANCIAL INFORMATION
  Page
PART I – FINANCIAL INFORMATION
Item 1.Financial Statements.3
1
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.7
4
Item 3.Quantitative and Qualitative Disclosures About Market Risk.7
5
Item 4.Controls and Procedures.7
5
PART II – OTHER INFORMATION
Item 1.Legal Proceedings.8
6
Item 1A.Risk Factors.8
6
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.8
6
Item 3.Defaults Upon Senior Securities.8
6
Item 4.Submission of Matters to a Vote of Security Holders.(Removed and Reserved).8
6
Item 5.Other Information.8
6
Item 6.Exhibits.8
6
SIGNATURES 97
 
 
2
 
 
PART I -– FINANCIAL INFORMATION

Item 1. Financial Statements.
Item 1.Financial Statements.
 
LESCARDEN INC.
CONDENSED BALANCE SHEETS (UNAUDITED)

  
August 31,
2015
  
May 31,
2015
 
ASSETS      
       
Current assets:      
Cash and cash equivalents $5,577  $37,207 
Accounts receivable  46,576   48,902 
Inventory  82,181   83,586 
Total current assets  134,334   169,695 
Deferred income tax asset, net of valuation allowance of $1,647,000 and $1,630,000 at August 31, 2015 and May 31, 2015, respectively  —   –– 
Total assets $134,334  $169,695 
         
LIABILITIES AND STOCKHOLDERS' DEFICIT        
      
Current liabilities:        
Accounts payable $186,798  $172,846 
Shareholder loan  268,765   268,765 
Total liabilities  455,563   441,611 
         
Stockholders' deficit:        
Convertible preferred stock - $.02 par value, authorized 2,000,000 shares, issued and outstanding 92,000 shares  1,840   1,840 
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  (17,892,627)  (17,843,314)
Stockholders' deficit  (321,229)  (271,916)
Total liabilities and stockholders' deficit $134,334  $169,695 
 
  
February 28,
2015
  
May 31,
2014
 
  (UNAUDITED)  (AUDITED) 
ASSETS      
Current assets:      
Cash and cash equivalents $119,819  $10,432 
Accounts receivable  3,338   2,088 
Inventory  90,015   113,572 
Total current assets  213,172   126,092 
Deferred income tax asset, net of valuation allowance of $1,613,000 and $1,564,000 at February 28, 2015 and May 31, 2014 respectively  ––   –– 
         
Total assets $213,172  $126,092 
         
LIABILITIES AND STOCKHOLDERS' DEFICIT        
Current liabilities:        
Accounts payable and accrued expenses $301,412  $220,592 
Shareholder loan  154,000   — 
Deferred license fees  ––   4,500 
Total liabilities  455,412   225,092 
         
Stockholders' deficit        
Convertible preferred stock - $.02 par value, authorized 2,000,000 shares, issued and outstanding 92,000 shares  1,840   1,840 
Common stock - $.001 par value, authorized 200,000,000 shares, 63,622,316 issued and outstanding  63,622   63,622 
Additional paid-in capital  17,505,936   17,505,936 
Accumulated deficit  (17,813,638)  (17,670,398)
Stockholders' deficit  (242,240)  (99,000)
Total liabilities and stockholders' deficit $213,172  $126,092 
See note to financial statements
1
LESCARDEN INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

  
For the three months ended
August 31,
 
  2015  2014 
Revenues:      
Product sales $32,097  $6,247 
License fees  ––   1,500 
Total revenues  32,097   7,747 
         
Costs and expenses:        
Cost of sales  1,405   1,230 
Salaries  20,733   27,261 
Professional fees and consulting  39,465   35,912 
Rent and office expenses  3,391   31,213 
Insurance  12,947   11,869 
Other administrative expenses  3,469   746 
Total costs and expenses  81,410   108,231 
Net loss $(49,313) $(100,484)
         
Net loss per share – basic and diluted
 $(0.00) $(0.00)
         
Weighted average number of common shares outstanding – basic and diluted  63,622,316   63,622,316 
See notesnote to financial statements
2
LESCARDEN INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

  
For the three months ended
August 31,
 
  2015  2014 
Cash flows from operating activities:      
Net loss  $(49,313) $(100,484)
Adjustments to reconcile net loss to net cash used in operating activities:        
Changes in operating assets and liabilities:        
Decrease in accounts receivable  2,326   1,288 
Decrease in inventory  1,405   1,230 
Increase in accounts payable and accrued expenses  13,952   27,057 
Decrease in deferred license fees  ––   (1,500)
Net cash used in operating activities  (31,630)  (72,409)
         
Cash flows from financing activities:        
Proceeds from shareholder loan  ––   75,000 
Cash provided by financing activities  ––   75,000 
         
(Decrease) increase in cash  (31,630)  2,591 
         
Cash – Beginning of Period  37,207   10,432 
         
Cash – End of Period $5,577  $13,023 
See note to financial statements
 
 
3
 

LESCARDEN INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
  
For the three months
Ended February 28,
  
For the nine months
Ended February 28,
 
  2015  2014  2015  2014 
Revenues:            
Product sales $23,396  $61,689  $194,667  $379,616 
License fees  1,500   1,500   4,500   4,500 
Total revenues  24,896   63,189   199,167   384,116 
                 
Costs and expenses:                
Cost of sales  5,816   33,825   49,124   170,422 
Salaries  30,329   28,536   71,428   85,622 
Professional fees and consulting  15,501   12,461   75,711   61,703 
Rent and office expense  27,445   29,729   89,845   87,469 
Insurance  6,131   9,656   30,933   40,281 
Interest expense  144   496   144   496 
Commission  —   —   10,743   20,689 
Other administrative expenses  1,269   7,817   14,479   18,835 
Total costs and expenses  86,635   122,520   342,407   485,517 
                 
Net loss $(61,739) $(59,331) $(143,240) $(101,401)
                 
Net loss per share – basic and diluted $(0.00) $(0.00) $(0.00) $(0.00)
                 
Weighted average number of common shares outstanding – basic and diluted  63,622,316   48,722,316   63,622,316   48,722,316 

See notes to financial statements
4
LESCARDEN INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

  
For the nine months
Ended February 28,
 
  2015  2014 
       
Cash flows from operating activities:      
Net loss $(143,240) $(101,401)
Adjustments to reconcile net loss to net cash used in operating activities:        
Changes in operating assets and liabilities        
Increase in accounts receivable  (1,250)  (15,769)
Decrease in inventory  23,557   31,319 
Increase (decrease) in accounts payable and accrued expenses  80,820   (75,863)
Decrease in deferred revenue  —   (4,782)
Decrease in deferred license fees  (4.500)  (4,500)
Net cash used in operating activities  (44,613)  (170,996)
         
Cash flows from investing activities:  —   — 
         
Cash flows from financing activities:        
Proceeds from shareholder loan  154,000   100,000 
Cash provided by financing activities  154,000   100,000 
         
         
Increase (decrease) in cash  109,387   (70,996)
         
Cash - beginning of period  10,432   84,562 
         
Cash – end of period $119,819  $13,566 
Supplemental Disclosures of Cash Flow Information      
   Cash paid for interest $-  $- 
   Cash paid for taxes $380  $380 

See notes to financial statements
5
LESCARDEN INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
 
February 28,August 31, 2015
 
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, 2014.2015. 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 –
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 incurredhad a net loss from operations for the ninethree months ended February 28,August 31, 2015 of $143,240, and has a stockholders’ deficiency and a working capital deficiency of $242,240.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 establish and maintain consistentfund operating losses until production volumes to fulfill existing sales orders.  Alternative sources of supply continue to be evaluated so that manufacturing and production disruptions can be minimized in the future. There can be no assurance that the Company will be able to establish an alternative source of supply to meet demand.  The establishment of an alternative source of supply may require additional expenditures given the uncertainties associated with the regulatory and financial issues involved.operations are restored.
 
Note 3 – Inventory:
Note 3 - Inventory:
 
At February 28,August 31, 2015, inventory of $90,015$82,181 consisted of $34,629$35,470 of finished goods and $55,386$46,711 of raw materials.
 
Note 4 – Related Party Transactions:
The Company received additional unsecured loans aggregating $154,000 from its Chairman during the nine months ended February 28, 2015. The loans are interest bearing at the internal revenue service short-term applicable federal rate and due upon demand.  Pursuant to an agreement with a director of the Company, sales commission expense of $10,743 for services rendered in connection with the sale of Citrix in Europe was paid during the nine months ended February 28, 2015.
Note 5- Commitments and Contingencies:

At February 28, 2015, the Company is obligated under a non-cancellable lease with an unrelated third party to rent office space which expires on January 31, 2016.  The Company is currently negotiating a termination of this lease.  At February 28, 2015, the Company owes $105,151 under this lease and has minimum future rental payments due on this lease of $82,627.

There have been no other significant subsequent developments relating to the commitments and contingencies reported on the Company’s latest Annual Report on Form 10-K.

6

Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
Results of Operations:
The results of operations for the three and nineOperations--Three months ended February 28, 2015 reflect an ongoing production outage, which has delayed fulfillment of customer purchase orders.
Three months ended February 28,August 31, 2015 compared to February 28,August 31, 2014
 
The Company’s cost reduction initiatives resulted in a $24,820 reduction in rent expense and a $6,528 reduction in payroll expenses.  Professional fees increased by almost 10% or $3,553 due to a $10,092 increase in quality assurance costs offset by decreases in legal and accounting costs of  $5,939 and $600 respectively.  The ongoing delays associated with the reestablishment of production operations for wound dressing, has limited sales opportunities to skin care and nutritional supplement product lines. Skin care revenues decreased in the fiscal quarter ended February 28, 2015 by $38,293 or 61%increased almost $26,000 due to the ongoing delays inbulk sale of recovered product to be packaged for sale by the resumption of raw material production.customer.   Cost of sales as a percent of sales was 25% for the three months ended February 28,August 31, 2015 reflecting lower raw material costs of discounted raw material purchasesdecreased to 4.4% from the Company’s former supplier.
Non-direct costs and expenses during the three months ended February 28, 2015 were 9% lower than those of20.29% in the comparative prior-yearprior period due to decreases in other administrative expenses and insurance expensethe bulk sale of $6,900 and $3,525 offset by increased professional fees and salaries of $3,040 and $1,793 respectively.
Nine months ended February 28, 2015 compared to February 28, 2014
The Company’s revenues decreased in the nine months ended February 28, 2015 compared to February 28, 2014 by 48% or $184,949 due to the Company’s inability to reestablish production operations. Cost of sales as a percent of sales decreased from 45%inventory quantities on hand that had been written off for the nine months ended February 28, 2014 to 25% for the nine months ended February 28, 2015, reflecting the acquisition of discounted raw material from the Company’s former supplier and the costs of exploring alternative sources of supply during the comparative prior year period.accounting purposes.
 
Liquidity and Capital Resources
 
The use of cash in operating activities resulted in a decrease of $31,630 in cash for the period ended August 31, 2015.  As of February 28,August 31, 2015, the Company’s liabilities exceeded its current assets by $242,240. The Company’s cash and cash equivalents balance increased by $109,387 in the nine months ended February 28, 2015 to $119,819.$321,229.
 
The Company has no material commitments for capital expenditures at February 28,August 31, 2015.
 
Item 3.         Quantitative and Qualitative Disclosures About Market Risk.
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
 
Not required for a smaller reporting company.
 
4
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.
 
 
75
 

PART II -– OTHER INFORMATION
 

Item 1.         
Item 1.Legal Proceedings.
 
None.
 
Item 1A.      
Item 1A.Risk Factors.
 
None.
 
Item 2.         
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
 
NoneNone.
 
Item 3.         
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.         
Item 5.Other Information.
 
None.
 
Item 6.         
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

 
86
 

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, 2015
         LESCARDEN INC.
 (Registrant)
 
Date: April 10, 2015
  
 By:  
/s/ William E. Luther
 /s/ William E. Luther
 William E. Luther
 
Chief Executive and Chief Financial Officer

 
 7
 
9