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

———————
FORM 10Q
———————

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
 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. 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.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
þ
(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). 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 October 9, 2014
Common Stock $.001 par value
 
63,622,316
 


 
 
 
 
 
TABLE OF CONTENTS
 
    Page
 
PART I – FINANCIAL INFORMATION
     
Item 1.      Financial Statements.
 
3
     
Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
7
     
Item 3.      Quantitative and Qualitative Disclosures About Market Risk.
 
7
     
Item 4.      Controls and Procedures.
 
7
 
PART II – OTHER INFORMATION
     
Item 1.      Legal Proceedings.
 
8
     
Item 1A.   Risk Factors.
 
8
     
Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds.
 
8
     
Item 3.      Defaults Upon Senior Securities.
 
8
     
Item 4.      (Removed and Reserved).
 
8
     
Item 5.      Other Information.
 
8
     
Item 6.      Exhibits.
 
8
     
SIGNATURES
 
9
 
 
 
2

 
 
PART I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements.
 
LESCARDEN INC.
 
CONDENSED BALANCE SHEETS
 
 
 
August 31,
2014
 
 
May 31,
2014
 
ASSETS
 
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
13,023
 
 
$
10,432
 
Accounts receivable
 
 
800
 
 
 
2,088
 
Inventory
   
112,342
     
113,572
 
Total current assets
 
 
126,165
 
 
 
126,092
 
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
 
$
126,165
 
 
$
126,092
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable
 
$
247,649
 
 
$
220,592
 
Shareholder loan
   
75,000
     
––
 
Deferred license fees
 
 
3,000
 
 
 
4,500
 
Total liabilities
 
 
325,649
 
 
 
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, issued and outstanding 63,622,316 shares
 
 
63,622
 
 
 
63,622
 
Additional paid–in capital
 
 
17,505,936
 
 
 
17,505,936
 
Accumulated deficit
 
 
(17,770,882
)
 
 
(17,670,398
)
Stockholders' deficit
 
 
(199,484
)
 
 
(99,000
)
Total liabilities and stockholders' deficit
 
$
126,165
 
 
$
126,092
 

See notes to financial statements
 
 
3

 
 
LESCARDEN INC.
 
CONDENSED STATEMENTS OF OPERATIONS
 
 
 
(UNAUDITED)
For the three months ended
August 31,
 
 
 
2014
 
 
2013
 
Revenues:
 
 
 
 
 
 
Product sales
 
$
6,247
   
$
308,091
 
License fees
   
1,500
     
1,500
 
Total revenues
 
 
7,747
 
 
 
309,591
 
 
 
 
 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
 
 
 
Cost of sales
 
 
1,230
 
 
 
134,300
 
Salaries
 
 
27,261
 
 
 
29,170
 
Professional fees and consulting
 
 
35,912
 
 
 
29,644
 
Rent and office expenses
 
 
31,213
 
 
 
30,149
 
Commission
   
––
     
20,689
 
Insurance
 
 
11,869
 
 
 
12,858
 
Other administrative expenses
 
 
746
 
 
 
5,416
 
Total costs and expenses
 
 
108,231
 
 
 
262,226
 
Net (loss) income
 
$
(100,484
)
 
$
47,365
 
 
 
 
 
 
 
 
 
 
Net (loss) income per share basic and diluted
 
$
(0.00
)
 
$
0.00
 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding – basic and diluted
 
 
63,622,316
 
 
 
48,722,316
 

See notes to financial statements
 
 
4

 

LESCARDEN INC.
 
CONDENSED STATEMENTS OF CASH FLOWS
 
 
 
 
(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.
 
(UNAUDITED) NOTES TO FINANCIAL STATEMENTS
 
August 31, 2014
 
  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, 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 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 restore production operations, grow revenues or secure sufficient additional financing to meet future obligations. The Company’s ability to continue as a going concern is primarily dependent upon the majority shareholder’s ability to fund operating losses until production operations are restored.  The results of operations for the interim periods are not necessarily indicative of results to be expected for a full year's operations.
 
  Note 3 - Inventory:
 
At August 31, 2014, inventory of $112,342 consisted of $37,449 of finished goods and $74,893 of raw materials.
 
  Note 4 - Related Party Transaction:
 
The Company received additional loans totaling $75,000 from the majority shareholder during the three months ended August 31, 2014.
 
 
6

 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
Results of Operations--Three months ended August 31, 2014 compared to August 31, 2013
 
The Company’s inability to reestablish production operations resulted in a 97% decrease in revenues and a decrease of  $153,800 in cost of sales and commission expenses in the fiscal quarter ended August 31, 2014.  Professional fees increased by 21% due to increased 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 August 31, 2014, the Company’s liabilities exceeded its current assets by $199,484.
 
The Company has no material commitments for capital expenditures at August 31, 2014.
 
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 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.
 
 
7

 
 
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.
 
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

 
 
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