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EX-32 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - LESCARDEN INClcar_ex32.htm
EX-31 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - LESCARDEN INClcar_ex31.htm
 
 

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
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 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
 ☐
 Accelerated filer
 ☐
 Non-accelerated filer
 ☐
 Smaller reporting company
 ☑
 (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  ☑  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 April 12, 2017
 Common Stock $.001 par value
 
 63,622,316
 
 

 
 
TABLE OF CONTENTS
 
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.
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.
8
 
 
 
SIGNATURES  
10
 
 
2
 
 
PART I - FINANCIAL INFORMATION
 
Item 1.         Financial Statements.
 
LESCARDEN INC.
BALANCE SHEETS (UNAUDITED)
 
 
 
February 28,
2017
 
 
May 31,
2016
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $88,985 
 $4,252 
Accounts receivable
  11,751 
  1,279 
Inventory
  66,342 
  197,978 
Total current assets
  167,078 
  203,509 
 
    
    
Total assets
 $167,078 
 $203,509 
 
    
    
LIABILITIES AND STOCKHOLDERS' DEFICIT
    
    
Current liabilities:
    
    
Accounts payable and accrued expenses
 $256,869 
 $309,403 
Shareholder loan
  268,765 
  278,765 
Total liabilities
  525,634 
  588,168 
 
    
    
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 February 28, 2017 and May 31, 2016
  63,622 
  63,622 
Additional paid-in capital
  17,505,936 
  17,505,936 
Accumulated deficit
  (17,929,954)
  (17,956,057)
Stockholders' deficit
  (358,556)
  (384,659)
Total liabilities and stockholders' deficit
 $167,078 
 $203,509 
 
See notes to unaudited financial statements
 
 
3
 
 
LESCARDEN INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
 
 
 
For the three months ended
 
 
For the nine months ended
 
 
 
February 28,
2017
 
 
February 29,
2016
 
 
February 28,
2017
 
 
February 29,
2016
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Product sales
 $24,950 
 $69,902 
 $416,745 
 $112,421 
Total revenues
  24,950 
  69,902 
  416,745 
  112,421 
 
    
    
    
    
Operating costs and expenses:
    
    
    
    
Cost of sales
  3,570 
  4,655 
  168,429 
  7,471 
Salaries
  25,679
  7,088 
  46,165 
  48,347 
Professional fees and consulting
  26,677
  26,970 
  90,057 
  76,135 
Rent and office expense
  3,226
  3,721 
  9,532
  12,667 
Insurance
  9,061
  5,780 
  31,729 
  25,905 
Commission
     0
  2,675 
  19,434 
  2,675 
Other administrative expenses
  6,810
  12,663 
  17,870
  17,499 
Total operating costs and expenses
  75,023 
  63,552 
  383,216 
  190,699 
 
    
    
    
    
Other expenses:
    
    
    
    
Interest expense
  (3,811)
   
  (7,426)
   
 
    
    
    
    
Net (loss) income
 $(53,884)
 $6,350 
 $26,103 
 $(78,278)
 
    
    
    
    
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 unaudited financial statements
 
 
4
 
 
LESCARDEN INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
 
For the nine months ended
 
 
 
February 28,
2017
 
 
February 29,
2016
 
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
Net income (loss)
 $26,103 
 $(78,278)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
    
    
Changes in operating assets and liabilities
    
    
(Increase) decrease in accounts receivable
  (10,472)
  47,389 
Decrease (increase) in inventory
  131,636 
  (74,358)
(Decrease) increase in accounts payable and accrued expenses
  (52,534)
  104,079 
Net cash provided by (used in) operating activities
  94,733 
  (1,168)
 
    
    
Cash flows from financing activities:
    
    
Borrowings on shareholder loan
  50,000 
   
Repayment of shareholder loan
  (60,000)
   
Cash used in financing activities
  (10,000)
   
 
    
    
Net increase (decrease) in cash
  84,733 
  (1,168)
 
    
    
Cash - beginning of period
  4,252 
  37,207 
 
    
    
Cash – end of period
 $88,985 
 $36,039 
 
    
    
Supplemental disclosure of cash flow information:
    
    
Cash paid for:
    
    
   Interest
 $7,426
 
   
   Income taxes
  56 
  380 
 
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
 
 
Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
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.
 
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 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
 
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
 
 
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.
 
 
 
LESCARDEN INC.
 
(Registrant)
 
 
Date: April 12, 2017
 
 
 
 
 
/s/ William E. Luther
 
William E. Luther
 
Chief Executive and Chief Financial Officer
 
 
 
 
 
 
10