Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - LESCARDEN INC | Financial_Report.xls |
| EX-32 - CERTIFICATION - LESCARDEN INC | lcar_ex32.htm |
| EX-31 - CERTIFICATION - LESCARDEN INC | lcar_ex31.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
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ACT OF 1934
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For the quarterly period ended: August 31, 2011
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or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
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ACT OF 1934
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For the transition period from: _____________ to _____________
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Commission File Number: 0-10035
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LESCARDEN INC.
(Exact name of registrant as specified in its charter)
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New York
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13-2538207
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification No.)
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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)
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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. þ Yes o No
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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
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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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
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Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class
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Outstanding October 6, 2011
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Common Stock $.001 par value
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40,076,783
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2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
LESCARDEN INC.
CONDENSED BALANCE SHEETS
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August 31, 2011
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May 31, 2011
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(UNAUDITED)
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| ASSETS |
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Current assets:
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Cash and cash equivalents
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$
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28,550
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$
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10,780
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Accounts receivable, net
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11,963
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49,286
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Inventory
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99,657
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97,720
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Total current assets
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140,170
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157,787
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Deferred income tax asset, net of valuation allowance of $1,757,000 and $1,721,000 at August 31, 2011 and May 31, 2011, respectively
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—
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—
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Total assets
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$
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140,170
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$
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157,787
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current liabilities:
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Accounts payable and accrued expenses
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$
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186,066
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$
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221,106
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Shareholder loan
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132,000
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37,000
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Deferred revenue
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34,162
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4,075
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Deferred license fees
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21,000
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22,500
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Total liabilities
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373,228
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284,681
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Stockholders' deficit:
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Convertible preferred stock - $.02 par value, authorized 2,000,000 shares, issued and outstanding 92,000 shares
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1,840
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1,840
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Common stock - $.001 par value, authorized 200,000,000 shares, issued and outstanding 40,076,783 shares
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40,077
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40,077
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Additional paid-in capital
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16,882,481
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16,882,481
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Accumulated deficit
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(17,157,456
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)
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(17,051,292
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)
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Stockholders' deficit
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(233,058
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(126,894
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Total liabilities and stockholders' deficit
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$
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140,170
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$
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157,787
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See notes to financial statements
3
LESCARDEN INC.
CONDENSED STATEMENTS OF OPERATIONS
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(UNAUDITED)
For the three months ended
August 31,
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2011
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2010
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Revenues:
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Product sales
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$
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26,214
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$
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104,022
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License fees
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1,500
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1,500
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Total revenues
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27,714
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105,522
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Costs and expenses:
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Cost of sales
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8,731
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23,394
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Salaries
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27,350
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27,443
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Professional fees and consulting
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51,721
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44,751
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Rent and office expenses
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29,507
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30,752
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Insurance
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12,657
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11,389
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Other administrative expenses
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3,912
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2,578
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Total costs and expenses
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133,878
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140,307
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Net loss
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$
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(106,164
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$
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(34,785
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Net loss per share – basic and diluted
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$
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(0.00
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$
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(0.00
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Weighted average number of common shares outstanding – basic and diluted
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40,076,783
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30,943,450
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See notes to financial statements
4
CONDENSED STATEMENTS OF CASH FLOWS
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(UNAUDITED)
For the three months ended
August 31,
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2011
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2010
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Cash flows from operating activities:
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Net loss
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$
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(106,164
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$
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(34,785
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
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Changes in operating assets and liabilities:
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Decrease (increase) in accounts receivable
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37,324
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(50,610
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Decrease in prepaid expense
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6,800
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(Increase) decrease in inventory
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(1,937
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5,652
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Decrease in accounts payable and accrued expenses
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(35,040
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(11,839
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Increase (decrease) in deferred revenue
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30,087
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(29,059
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Decrease in deferred license fees
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(1,500
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(1,500
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Net cash provided by (used in) operating activities
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(77,230
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(115,341
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Cash flows from financing activities:
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Increase in shareholder loan
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95,000
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Cash provided by financing activities
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95,000
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(Decrease) increase in cash
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17,770
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(115,341
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Cash - Beginning of Period
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10,780
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137,928
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Cash – End of Period
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$
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28,550
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$
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22,587
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See notes to financial statements
5
LESCARDEN INC.
(UNAUDITED) NOTES TO FINANCIAL STATEMENTS
August 31, 2011
Note 1 - General:
The accompanying unaudited 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, 2011.
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 quarter ended August 31, 2011, 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 as there can be no assurance that the Company will be able to 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 successful regulatory certification of a new packager, which will enable the Company to grow revenue through existing and new lines of business. The results of operations for the interim periods are not necessarily indicative of results to be expected for a full year's operations.
At August 31, 2011, inventory of $99,657 consisted of $47,867 of finished goods and $51,790 of raw materials.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Results of Operations--Three months ended August 31, 2011 compared to August 31, 2010
The transfer of the Company’s packaging process to a new facility continued throughout the first quarter. Upon commencement of production operations, the Company will be required to submit a notice of significant change to the European regulated body in accordance with the reporting requirements of the Company’s CE Mark. Based on recent experience, the Company believes that the costs associated with this transfer of the packaging process are minimal.
The Company’s revenues decreased in the fiscal quarter ended August 31, 2011 compared to August 31, 2010 by 74% or $25,189 due primarily to decreased sales to its Korean and UK distributors. Cost of sales decreased by $14,663 or 64% due to decreased production and sales volume offset by an increase in raw material cost. The cost of sales as a percent of sales for the three months ended August 31, 2011 was 32% compared with 22% during the prior year period, which reflect the increased raw material cost.
Total costs and expenses during the three months ended August 31, 2011 were 5% or $6,429 lower than those of the comparative prior-year period due to decreased cost of sales offset by increased professional fees of $6,970.
Liquidity and Capital Resources
The Company had a net loss of $106,164 for the three months ended August 31, 2011. An decrease in accounts receivable of $37,324 and an increase in deferred revenue of $30,087 contributed to a use of cash for operating activities of $77,230. The use of cash for operating activities and increase in cash were funded by an increase in shareholder loans.
As of August 31, 2011, the Company’s accounts payable and accrued expenses exceeded its current assets by $45.896. The Company’s cash and cash equivalents balance increased by $17,770 in the quarter ended August 31, 2011 to $28,550.
The Company has no material commitments for capital expenditures at August 31, 2011.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for a 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 10Q.
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.
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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. (REMOVED AND RESERVED)
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
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Exhibit No.
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Description
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31
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Certification pursuant to Exchange Act Rule 13a – 14 (a)/15d-14(a)
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32
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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
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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 6, 2011
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LESCARDEN INC.
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By:
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/s/ William E. Luther
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William E. Luther
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Chief Executive and Chief Financial Officer
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