UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
ü | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE |
ACT OF 1934 | |
For the quarterly period ended: November 30, 2015 | |
or | |
TRANSITION REPORT PURSUANT TO 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.
(Exact name of registrant as specified in its charter)
———————
New York | 13-2538207 |
(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. | 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 filer | Accelerated filer | |||||||||
Non-accelerated filer | (Do not check if a smaller | Smaller reporting company | ü | |||||||
reporting company) | ||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | ||||||||||
Yes | ü | 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 January 12, 2016 | |||||||||
Common Stock $.001 par value | 63,622,316 |
TABLE OF CONTENTS
Page | |
PART I – FINANCIAL INFORMATION | |
Item 1. Financial Statements. | 1 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 4 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 6 |
Item 4. Controls and Procedures. | 6 |
PART II – OTHER INFORMATION | |
Item 1. Legal Proceedings. | 7 |
Item 1A. Risk Factors. | 7 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | 7 |
Item 3. Defaults Upon Senior Securities. | 7 |
Item 4. Submission of Matters to a Vote of Security Holders. | 7 |
Item 5. Other Information. | 7 |
Item 6. Exhibits. | 7 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LESCARDEN INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
November 30, 2015 | May 31, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,347 | $ | 37,207 | ||||
Accounts receivable | 1,640 | 48,902 | ||||||
Inventory | 85,770 | 83,586 | ||||||
Total current assets | 94,757 | 169,695 | ||||||
Deferred income tax asset, net of valuation allowance of $1,659,000 and $1,630,000 at November 30, 2015 and May 31, 2015 respectively | –– | –– | ||||||
Total assets | $ | 94,757 | $ | 169,695 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 182,536 | $ | 172,846 | ||||
Shareholder loan | 268,765 | 268,765 | ||||||
Total liabilities | 451,301 | 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, 63,622,316 issued and outstanding at November 30, 2015 and May 31, 2015 | 63,622 | 63,622 | ||||||
Additional paid-in capital | 17,505,936 | 17,505,936 | ||||||
Accumulated deficit | (17,927,942 | ) | (17,843,314 | ) | ||||
Stockholders' deficit | (356,544 | ) | (271,916 | ) | ||||
Total liabilities and stockholders' deficit | $ | 94,757 | $ | 169,695 |
See notes to financial statements
LESCARDEN INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months Ended November 30, | For the six months Ended November 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 10,422 | $ | 165,023 | $ | 42,519 | $ | 171,270 | ||||||||
License fees | –– | 1,500 | –– | 3,000 | ||||||||||||
Total revenues | 10,422 | 166,523 | 42,519 | 174,270 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales | 1,411 | 42,078 | 2,815 | 43,309 | ||||||||||||
Salaries | 20,527 | 13,838 | 41,259 | 41,099 | ||||||||||||
Professional fees and consulting | 9,700 | 24,297 | 49,165 | 60,209 | ||||||||||||
Rent and office expense | 5,555 | 31,187 | 8,947 | 62,400 | ||||||||||||
Insurance | 7,178 | 12,933 | 20,125 | 24,801 | ||||||||||||
Commission | –– | 10,743 | –– | 10,743 | ||||||||||||
Other administrative expenses | 1,366 | 12,464 | 4,836 | 13,210 | ||||||||||||
Total costs and expenses | 45,737 | 147,540 | 127,147 | 255,771 | ||||||||||||
Net (loss) income | $ | (35,315 | ) | $ | 18,983 | $ | (84,628 | ) | $ | (81,501 | ) | |||||
Net (loss) income 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 | 63,622,316 | 63,622,316 | 63,622,316 |
See notes to financial statements
LESCARDEN INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months Ended November 30, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (84,628 | ) | $ | (81,501 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Changes in operating assets and liabilities | ||||||||
Decrease (increase) in accounts receivable | 47,262 | (157,490 | ) | |||||
(Increase) decrease in inventory | (2,184 | ) | 25,324 | |||||
Increase in accounts payable and accrued expenses | 9,690 | 85,486 | ||||||
Decrease in deferred license fees | — | (3,000 | ) | |||||
Net cash used in operating activities | (29,860 | ) | (131,181 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from shareholder loan | — | 129,000 | ||||||
Cash provided by financing activities | — | 129,000 | ||||||
Decrease in cash | (29,860 | ) | (2,181 | ) | ||||
Cash - beginning of period | 37,207 | 10,432 | ||||||
Cash – end of period | $ | 7,347 | $ | 8,251 |
See notes to financial statements
LESCARDEN INC .
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
November 30, 2015
Note 1 - General:
The accompanying condensed 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-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-K for the year ended May 31, 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 – 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 six months ended November 30, 2015, 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.
The Company’s plan and ability to continue as a going concern is primarily dependent upon its ability to maintain consistent production volumes to fulfill existing sales orders. 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.
At November 30, 2015, inventory of $85,770 consisted of $34,059 of finished goods and $51,711 of raw materials.
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 six month periods ended November 30, 2014 reflect decreased sales and operating losses due to an ongoing production outage. Preliminary testing of product samples from an alternative supplier suggests that the Company will be able to resume production operations within the next six months. Regulatory certification of the new suppler is required prior to product shipment which could further delay the fulfillment of existing purchase orders after the resumption of production operations. Revenues for the six-months ended November 30, 2015 consisted solely of sales of skin-care and nutritional supplements
Three months ended November 30, 2015 compared to November 30, 2014
Skin care and nutritional supplement product sales decreased by $1,130 or 9.78% for the three months ended November 30, 2015 compared to November 30, 2014.
Non-direct costs and expenses during the three months ended November 30, 2014 were $61,136 or 58% lower than those of the comparative prior-year period due to decreases in rent expense, professional fees, other administrative expenses and insurance of $25,632, $14,597, $11,098 and $5,755 respectively offset by increased payroll expenses of 48% or $6,689.
Six months ended November 30, 2015 compared to November 30, 2014
Decreased Catrix sales of $153,472 for the six months ended November 30, 2015 resulted in an increase in the net loss for the six months ended November 30, 2015 of $3,127 compared to November 30, 2014.
Liquidity and Capital Resources
As of November 30, 2015, the Company’s liabilities exceeded its assets by $356,544. The Company’s cash and cash equivalents balance decreased by $29,860 in the six months ended November 30, 2015 to $7,347.
The Company has no material commitments for capital expenditures at November 30, 2015.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting company.
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.
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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
Exhibit No. | Description | |
Certification pursuant to Exchange Act Rule 13a – 14 (a)/15d-14(a) | ||
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
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.
LESCARDEN INC. | |
(Registrant) | |
Date: January 12, 2016
/s/ William E. Luther | |
William E. Luther | |
Chief Executive and Chief Financial Officer | |