Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10–Q

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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

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LESCARDEN INC.

(Exact name of registrant as specified in its charter)

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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)

 

[phone]

(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. 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

 

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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

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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

 

 

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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

 

 

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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

 

 

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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.

 

 

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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, 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.

 

 

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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.

 

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

 

 

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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

 

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Exhibit 31

 

CERTIFICATION

 

I, William E. Luther, certify that:

 

1.           I have reviewed this annual report on Form 10–Q of Lescarden Inc.;

 

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of end of the period covered by this report based on such evaluation; and

 

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: October 9, 2014
	/s/ William E. Luther
	William E. Luther
	Chief Executive and Chief Financial Officer

EXHIBIT 32

 
 

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Lescarden Inc. (the "Company") on Form 10–Q for the period ended August 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William E. Luther, Chief Executive and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.

The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: October 9, 2014
	/s/ William E. Luther
	William E. Luther
	Chief Executive and Chief Financial Officer