See notes to unaudited financial statements
2
LESCARDEN INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
For the three months ended
August 31,
|
|
|
|
Cash flows from operating activities:
|
|
|
Net
income (loss)
|
$
120,393
|
$
(49,313
)
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
Changes
in operating assets and liabilities:
|
|
|
(Increase)
decrease in accounts receivable
|
(293,368
)
|
2,326
|
Decrease
in inventory
|
150,452
|
1,405
|
(Decrease)
increase in accounts payable and accrued expenses
|
(4,430
)
|
13,952
|
Net cash used in operating activities
|
(26,953
)
|
(31,630
)
|
|
|
|
Cash flows from financing activities:
|
|
|
Proceeds
from shareholder loan
|
50,000
|
––
|
Cash provided by financing activities
|
50,000
|
––
|
|
|
|
Increase
(decrease) in cash
|
23,047
|
(31,630
)
|
|
|
|
Cash
– Beginning of Period
|
4,252
|
37,207
|
|
|
|
Cash
– End of Period
|
$
27,299
|
$
5,577
|
Tax and Interest
paid for the period
|
|
|
See notes to unaudited financial statements
3
LESCARDEN INC.
(UNAUDITED) NOTES TO FINANCIAL STATEMENTS
August 31, 2016
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, 2016.
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, 2016, inventory of $47,526 consisted of $31,105 of
finished goods and $16,421 of raw materials.
Note 4 - Related Party Transactions:
During
the three months ended August 31, 2016, 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. During the three
months ended August 31, 2016, a sales commission of $19,434 was
paid to a director of the Company for services rendered in
connection with the sale of Catrix in Europe.
Item 2.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
Results of Operations--Three months ended August 31, 2016
compared to August 31, 2015
Catrix sales increased by $277,632 due to the successful recovery,
repackaging and sale of recycled product to European licensee. Skin
care revenues increased $17,652 or 60% due to increased sales in
Asia. Cost of sales as a percent of sales for the three months
ended August 31, 2016 increased to 45.5% from 4.4% in the
comparative prior period due to the bulk sale in 2015 of inventory
quantities on hand that had been written off for accounting
purposes and the use of special order raw materials that were more
than double the historical per unit costs.
Professional fees decreased by almost 28% or $10,894 due to
decreases in quality assurance and accounting costs of $5,529 and
$4,700 respectively. The decrease in payroll expenses of $20,668
was offset by an increase in commission expense of $19,434
associated with the fulfillment of $277,632 of back-ordered Catrix
wound dressing to European licensees.
The Company began testing and evaluations of samples produced at a
third-party facility in connection with the ongoing effort to
reestablish ongoing production operations for wound
dressing.
Liquidity and Capital Resources
The use of cash in operating activities of $26,953 offset by an
increase in shareholder loan, resulted in an increase in cash of
$23, 047 for the period ended August 31, 2016. As of
August 31, 2016, the Company’s liabilities exceeded its
current assets by $264,266.
The Company has no material commitments for capital expenditures at
August 31, 2016.
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 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.
PART
II – OTHER INFORMATION
Item 1.
Legal Proceedings.
None.
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.
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
|
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 14, 2016
|
LESCARDEN INC.
|
|
|
|
|
|
|
|
By:
|
/s/
W
illiam
E. L
uther
|
|
|
William E. Luther
|
|
|
Chief Executive and Chief Financial Officer
|
7
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