LESCARDEN INC - FORM 10-Q - January 13, 2012

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - LESCARDEN INC	Financial_Report.xls
EX-31 - CERTIFICATION - LESCARDEN INC	lcar_ex31.htm
EX-32 - CERTIFICATION - LESCARDEN INC	lcar_ex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10-Q

———————

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: November 30, 2011
or

o	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. 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.

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller	Smaller reporting company	þ
		reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ 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, 2012
Common Stock $.001 par value						40,076,783

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.			5
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			5
Item 4. Controls and Procedures.			5

PART II – OTHER INFORMATION


Item 1. Legal Proceedings.			6
Item 1A. Risk Factors.			6
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			6
Item 3. Defaults Upon Senior Securities.			6
Item 4. (Removed and Reserved).			6
Item 5. Other Information.			6
Item 6. Exhibits.			6
SIGNATURES			7

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

LESCARDEN INC.

CONDENSED BALANCE SHEETS

	November 30, 2011			May 31, 2011
	(UNAUDITED)			(AUDITED)
ASSETS
Current assets:
Cash and cash equivalents	$	5,142		$	10,780
Accounts receivable		9,938			49,287
Inventory		122,985			97,720
Total current assets		138,065			157,787
Deferred income tax asset, net of valuation allowance of $1,789,000 and $1,721,000 at November 30, 2011 and May 31, 2011

Total assets	$	138,065		$	157,787

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	251,584		$	221,106
Shareholder loan		162,000			37,000
Deferred revenue		31,051			4,075
Deferred license fees		19,500			22,500
Total liabilities		464,135			284,681



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 40,076,783 shares		40,077			40,077
Additional paid-in capital		16,882,481			16,882,481
Accumulated deficit		(17,250,468	)		(17,051,292	)
Stockholders' deficit		(326,070	)		(126,894	)
Total liabilities and stockholders' deficit	$	138,065		$	157,787

See notes to financial statements

LESCARDEN INC.

CONDENSED STATEMENTS OF OPERATIONS

	(UNAUDITED) For the three months Ended November 30,					(UNAUDITED) For the six months Ended November 30,
	2011			2010		2011			2010
Revenues:
Product sales	$	19,264		$	214,822	$	45,478		$	318,844
License fees		1,500			1,500		3,000			3,000
Total revenues		20,764			216,322		48,478			321,844

Costs and expenses:
Cost of sales		10,070			85,297		18,801			108,691
Salaries		6,900			17,105		34,250			44,548
Professional fees and consulting		43,806			40,282		95,527			85,033
Rent and office expense		26,064			26,106		55,571			56,858
Insurance		20,618			19,627		33,275			31,016
Commission		—			12,114		—			12,114
Other administrative expenses		6,318			4,767		10,230			7,344
Total costs and expenses		113,776			205,298		247,654			345,604

Net income (loss)	$	(93,012	)	$	11,024	$	(199,176	)	$	(23,760	)

Net income (loss) per share – basic and diluted	$	(0.00	)	$	0.00	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding – basic and diluted		40,076,783			32,973,080		40,076,783			31,947,113

See notes to financial statements

LESCARDEN INC.

CONDENSED STATEMENTS OF CASH FLOWS

	(UNAUDITED) For the six months Ended November 30,
	2011			2010

Cash flows from operating activities:
Net loss	$	(199,176	)	$	(23,760	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities
(Decrease) increase in accounts receivable		39,349			(196,488	)
Increase in inventory		(25,265	)		(43,892	)
Decrease in prepaid expense		—			6,800
Increase in accounts payable and accrued expenses		30,478			124,449
Increase (decrease) in deferred revenue		26,976			(29,059	)
Decrease in deferred license fees		(3,000	)		(3,000	)
Net cash used in operating activities		(130,638	)		(164,950	)

Cash flows from financing activities:
Increase in shareholder loan		125,000			30,000
Cash provided by financing activities		125,000			30,000

Decrease in cash		(5,638	)		(134,950	)

Cash - beginning of period		10,780			137,928

Cash – end of period	$	5,142		$	2,978


Non-cash financing activities
Increase in common stock resulting from loan conversion		—			9,134
Increase in paid-in capital resulting from loan conversion		—			264,866
Decrease in shareholder loan		—			(274,000	)

See notes to financial statements

LESCARDEN INC .

(UNAUDITED) NOTES TO FINANCIAL STATEMENTS

November 30, 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 results of operations for the interim periods are not necessarily indicative of results to be expected for a full year's operations.

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, 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.

The Company’s plan and ability to continue as a going concern is primarily dependent upon successful regulatory certification of its new packager, which will enable the Company to grow revenue through existing and new lines of business. There can be no assurance that the Company will be able to grow revenues or secure sufficient additional financing to meet future obligations.

At November 30, 2011, inventory of $122,985 consisted of $46,196 of finished goods and $76,789 of raw materials.

The Company’s assets and liabilities that qualify as financial instruments under SFAS No. 107 ”Disclosures About Fair Value of Financial Instruments” (ASC 825-10-50) approximate their carrying amounts presented in the balance sheet based upon the short-term nature of the accounts at November 30, 2011.

The Company has evaluated the financial statements for subsequent events through the date of the filing of this quarterly report on Form 10-Q on January 12, 2012.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations:

The results of operations for the six months ended November 30, 2011 reflect decreased sales volume in both Europe and Asian markets brought about by the need to transfer product packaging to a new facility for the third time in three years. In anticipation of the plant closing of Amcor’s packaging facility in December 2010, the Company accelerated production and shipment of existing purchase orders from its major customers scheduled for delivery in the third quarter of the previous fiscal year. The successor packaging facility is completing set-up of the Company’s packaging process and anticipates a resumption of production operations in January 2012.

Three months ended November 30, 2011 compared to November 30, 2010

The Company’s revenues decreased in the fiscal quarter ended November 30, 2011 compared to November 30, 2010 by 90% or $195,558 due to the disruption in production operations associated with the need to transfer product packaging to a new facility and resultant delay of Catrix production. Total costs and expenses during the three months ended November 30, 2011 were 45% or $91,522 lower than those of the comparative prior year period due to a decrease in cost of sales of $75,227 and a 60% decrease in salary of $10,205. Professional fees increased by 9% or $3,524 due to the audit fees associated with the re-audit of the year ended May 31, 2010 offset by a decrease in fees attributable to regulatory recertification

Six months ended November 30, 2011 compared to November 30, 2010

The Company’s revenues decreased 85% or $273,366 during the six months ended November 30, 2011 compared to November 30, 2010 due to the disruption in production operations associated with the need to transfer product packaging to a new facility and resultant delay of Catrix production. Total costs and expenses during the six months ended November 30, 2011 were 28% or $97,950 lower than those of the comparative prior year period due to a decrease in cost of sales of $89,890 as well as decreases in salary of 23% or $10,298 and commission expense of $12,114. Professional fees increased by $10,494 or 12% due to the audit fees associated with the re-audit of the year ended May 31, 2010 offset by a decrease in fees attributable to regulatory recertification.

Liquidity and Capital Resources

As of November 30, 2011, the Company’s accounts payable and accrued expenses exceeded its current assets by $113,519. The Company’s cash and cash equivalents balance decreased by $5,638 in the six months ended November 30, 2011 to $5,142. On November 10, 2010, the Company completed conversion of a $274,000 shareholder loan into common stock. Pursuant to the Loan Conversion and Stock Purchase agreement dated November 8, 2010, the Company issued 9,133,333 shares of common stock in exchange for the extinguishment of a $274,000 shareholder loan.

The Company has no material commitments for capital expenditures at November 30, 2011.

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.

See Loan Conversion and Stock Purchase Agreement with Charles T. Maxwell (incorporated by reference from our Current Report on Form 8-K filed on November 10, 2010)

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

None.

Item 5. Other Information.

None.

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

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 13, 2012



	/s/ William E. Luther
	William E. Luther
	Chief Executive and Chief Financial Officer

LESCARDEN INC - FORM 10-Q - January 13, 2012

Attached files

LESCARDEN INC Reports