Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: February 28, 2017
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
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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)
———————
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. ☑
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
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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Smaller
reporting company
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☑
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(Do
not check if a 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). ☐
Yes ☑
No
Indicate the number of shares outstanding of each of the
issuer’s classes of common stock, as of the latest
practicable date.
Class
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Outstanding
April 12, 2017
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Common
Stock $.001 par value
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63,622,316
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PART I – FINANCIAL INFORMATION
Item 1.
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Financial Statements.
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1
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Item 2.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
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5
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Item 3.
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Quantitative and Qualitative Disclosures About Market
Risk.
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6
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Item 4.
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Controls and Procedures.
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6
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PART II – OTHER
INFORMATION
Item 1.
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Legal Proceedings.
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7
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Item 1A.
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Risk Factors.
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7
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Item 2.
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Unregistered Sales of Equity Securities and Use of
Proceeds.
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7
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Item 3.
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Defaults Upon Senior Securities.
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7
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Item 4.
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Submission of Matters to a Vote of Security Holders.
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7
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Item 5.
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Other Information.
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7
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Item 6.
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Exhibits.
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8
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SIGNATURES
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10
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2
PART I - FINANCIAL INFORMATION
LESCARDEN INC.
BALANCE SHEETS (UNAUDITED)
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February 28,
2017
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May 31,
2016
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ASSETS
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Current assets:
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Cash
and cash equivalents
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$88,985
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$4,252
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Accounts
receivable
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11,751
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1,279
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Inventory
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66,342
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197,978
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Total current assets
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167,078
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203,509
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Total assets
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$167,078
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$203,509
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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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$256,869
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$309,403
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Shareholder
loan
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268,765
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278,765
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Total liabilities
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525,634
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588,168
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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, 63,622,316
issued and outstanding at February 28, 2017 and May 31,
2016
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63,622
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63,622
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Additional
paid-in capital
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17,505,936
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17,505,936
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Accumulated
deficit
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(17,929,954)
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(17,956,057)
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Stockholders' deficit
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(358,556)
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(384,659)
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Total liabilities and stockholders' deficit
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$167,078
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$203,509
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See notes to unaudited financial statements
3
LESCARDEN INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
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For the three months ended
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For the nine months ended
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||
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February 28,
2017
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February 29,
2016
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February 28,
2017
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February 29,
2016
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Revenues:
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Product
sales
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$24,950
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$69,902
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$416,745
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$112,421
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Total revenues
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24,950
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69,902
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416,745
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112,421
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Operating costs and expenses:
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Cost
of sales
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3,570
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4,655
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168,429
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7,471
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Salaries
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25,679
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7,088
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46,165
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48,347
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Professional
fees and consulting
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26,677
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26,970
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90,057
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76,135
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Rent
and office expense
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3,226
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3,721
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9,532
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12,667
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Insurance
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9,061
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5,780
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31,729
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25,905
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Commission
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0
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2,675
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19,434
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2,675
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Other
administrative expenses
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6,810
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12,663
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17,870
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17,499
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Total operating costs and expenses
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75,023
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63,552
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383,216
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190,699
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Other expenses:
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Interest
expense
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(3,811)
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—
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(7,426)
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—
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Net (loss) income
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$(53,884)
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$6,350
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$26,103
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$(78,278)
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Net (loss) income per share – basic and diluted
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$(0.00)
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$0.00
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$0.00
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$(0.00)
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Weighted average number of common shares outstanding – basic
and diluted
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63,622,316
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63,622,316
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63,622,316
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63,622,316
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See notes to unaudited financial statements
4
LESCARDEN INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
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For the
nine months ended
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February
28,
2017
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February
29,
2016
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Cash flows from operating activities:
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Net
income (loss)
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$26,103
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$(78,278)
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Adjustments
to reconcile net income (loss) to net cash provided by (used in)
operating activities:
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Changes
in operating assets and liabilities
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(Increase)
decrease in accounts receivable
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(10,472)
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47,389
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Decrease
(increase) in inventory
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131,636
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(74,358)
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(Decrease)
increase in accounts payable and accrued expenses
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(52,534)
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104,079
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Net cash provided by (used in) operating activities
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94,733
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(1,168)
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Cash flows from financing activities:
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Borrowings
on shareholder loan
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50,000
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—
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Repayment
of shareholder loan
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(60,000)
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—
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Cash used in financing activities
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(10,000)
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—
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Net
increase (decrease) in cash
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84,733
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(1,168)
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Cash
- beginning of period
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4,252
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37,207
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Cash
– end of period
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$88,985
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$36,039
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Supplemental disclosure of cash flow information:
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Cash
paid for:
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Interest
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$7,426
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—
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Income
taxes
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56
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380
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See notes to unaudited financial statements
5
LESCARDEN
INC .
(UNAUDITED) NOTES TO FINANCIAL STATEMENTS
February 28, 2017
Note 1 - General:
The accompanying 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 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, 2016. 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 three months ended February
28, 2017 of $53,884 and has a stockholders’ deficit of
$358,556 and a working capital deficit of $358,556 as of February
28, 2017. 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 establish and maintain
consistent 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.
Note 3 – Inventory:
At February 28, 2017, inventory of $66,342 consisted of $19,661 of
finished goods and $46,681 of raw materials.
Note 4 – Related Party Transactions:
Pursuant to an agreement with a director of the Company, sales
commission expense of $19,434 for services rendered in connection
with the sale of Citrix in Europe was paid during the nine months
ended February 28, 2017.
During the nine months ended February 28, 2017, an officer/director
of the Company provided a loan to the Company of $50,000. The loan
is non-interest bearing and is due upon demand. In addition, the
Company repaid $60,000 of loans from an officer/director of the
Company.
6
Results of Operations:
Three months ended February 28, 2017 compared to February 28,
2016
The Company’s revenues decreased in the fiscal quarter ended
February 28, 2017 by $44,952 or 64% due to the delayed shipment of
Catrix to European licensee.
Non-direct costs and expenses during the three months ended
February 28, 2017 were 21% or $12,556 higher than those of the
comparative prior-year period due to an increase in salaries of
$18,591 and insurance of $3,281 offset by decreases in commission
and other administrative expenses of $2,675 and $5,853
respectively.
Nine months ended February 28, 2017 compared to February 28,
2016
The Company’s revenues increased in the nine months ended
February 28, 2017 compared to February 29, 2016 by 270% or
$304,324. Non-direct costs and expenses increased by $31,559 or
17.22% due to increases in commission and professional fees of
$16,759 and $13,922 offset by decreases in rent and office
expenses, and salaries of $3,135 and $2,182 respectively during the
nine months ended February 28, 2017.
Liquidity and Capital Resources
As of February 28, 2017, the Company’s liabilities exceeded
its assets by $358,556. The Company’s cash and cash
equivalents balance increased by $84,733 in the nine months ended
February 28, 2017 to $88,985.
The Company has no material commitments for capital expenditures at
February 28, 2017.
7
Item
3. Quantitative
and Qualitative Disclosures About Market Risk.
Not required for smaller reporting company.
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 not 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.
8
PART II - OTHER INFORMATION
None.
None.
None
Item
3. Defaults
Upon Senior Securities.
None.
None.
None.
Exhibit No.
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Description
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Certification pursuant to Exchange Act Rule 13a – 14
(a)/15d-14(a)
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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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9
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.
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LESCARDEN INC.
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(Registrant)
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Date: April 12, 2017
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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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10