Quarterly Report (10-q)
January 12 2017 - 11:18AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
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ACT OF 1934
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For the quarterly period ended: November 30, 2016
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or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
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ACT OF 1934
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For the transition period from: _____________ to
_____________
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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
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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 300, 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
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required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
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Yes
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No
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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
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and post such files).
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Yes
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No
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Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller
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Smaller reporting company
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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).
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Yes
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No
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Indicate the number of shares outstanding of each of the
issuer’s classes of common stock, as of the latest
practicable date.
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Class
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Outstanding January 12, 2017
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Common Stock $.001 par value
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63,622,316
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Page
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PART I – FINANCIAL INFORMATION
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Item
1. Financial
Statements.
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1
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Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
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4
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Item
3. Quantitative
and Qualitative Disclosures About Market Risk.
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6
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Item
4. Controls
and Procedures.
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6
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PART II – OTHER INFORMATION
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Item 1. Legal
Proceedings.
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7
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Item 1A. Risk
Factors.
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7
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Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds.
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7
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Item
3. Defaults
Upon Senior Securities.
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7
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Item
4. Submission
of Matters to a Vote of Security Holders.
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7
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Item 5. Other
Information.
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7
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Item
6. Exhibits.
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7
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PART I - FINANCIAL INFORMATION
Item
1. Financial
Statements.
LESCARDEN INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
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ASSETS
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Current assets:
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Cash
and cash equivalents
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$
166,613
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$
4,252
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Accounts
receivable
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12,956
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1,279
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Inventory
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42,938
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197,978
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Total current assets
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222,507
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203,509
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Total assets
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$
222,507
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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
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$
258,414
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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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527,179
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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 - $.001 par value, authorized 200,000,000 shares, 63,622,316
issued and outstanding at November 30, 2016 and May 31,
2016
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63,622
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63,622
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Additional
paid-in capital
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17,505,936
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17,505,936
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Accumulated
deficit
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(17,876,070
)
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(17,956,057
)
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Stockholders' deficit
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(304,672
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(384,659
)
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Total liabilities and stockholders' deficit
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$
222,507
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$
203,509
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See
notes to unaudited financial statements.
LESCARDEN INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
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For the three months
Ended November 30,
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For the six months
Ended November 30,
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Revenues:
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Product
sales
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$
41,960
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$
10,422
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$
391,795
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$
42,519
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Total revenues
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41,960
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10,422
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391,795
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42,519
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Operating costs and expenses:
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Cost
of sales
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5,612
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1,411
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164,859
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2,815
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Salaries
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20,422
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20,527
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20,486
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41,259
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Professional
fees and consulting
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34,809
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9,700
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63,380
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49,165
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Commission
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––
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––
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19,434
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––
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Rent
and office expense
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3,306
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5,555
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6,306
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8,947
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Insurance
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8,520
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7,178
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22,668
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20,125
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Other
administrative expenses
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6,082
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1,366
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11,060
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4,836
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Total operating costs and expenses
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78,751
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45,737
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308,193
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127,147
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Other expenses:
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Interest
expense
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(3,615
)
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––
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(3,615
)
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––
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Net (loss) income
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$
(40,406
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$
(35,315
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$
79,987
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$
(84,628
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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
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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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Diluted
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63,622,316
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63,622,316
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63,714,316
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63,622,316
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See notes to unaudited financial statements.
LESCARDEN INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
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For the six months
Ended November 30,
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Cash flows from operating activities:
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Net
income (loss)
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$
79,987
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$
(84,628
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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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(11,677
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47,262
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Decrease
(increase) in inventory
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155,040
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(2,184
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(Decrease)
increase in accounts payable and accrued expenses
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(50,989
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9,690
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Net cash provided by (used in) operating activities
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172,361
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(29,860
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Cash flows from financing activities:
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Borrowings
from shareholder loan
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50,000
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—
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Repayments
on shareholder loan
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(60,000
)
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—
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Cash provided by 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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162,361
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(29,860
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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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$
166,613
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$
7,347
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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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$
—
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$
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Income
taxes
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—
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—
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See
notes to unaudited financial statements.
LESCARDEN
INC
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
November 30, 2016
Note 1 - General:
The
accompanying condensed 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. 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
November 30, 2016, 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.
The
Company’s plan and ability to continue as a going concern is
primarily dependent upon its ability to maintain consistent
production volumes to fulfill existing sales orders. Alternative
sources of supply are being evaluated so that manufacturing and
production disruptions can be minimized.
Note 3 – Inventory:
At
November 30, 2016, inventory of $42,938 consisted of $26,569 of
finished goods and $16,369 of raw materials.
Note 4 – Related Party Transactions:
During the six months ended November 30, 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. In addition, the
Company repaid $60,000 of loans from an officer/director of the
Company.
During the six months ended November 30, 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
:
Six months ended November 30, 2016 compared to
November 30, 2015
Revenues
for the six-months ended November 30, 2016 consisted solely of
sales of skin-care and nutritional supplements. The Company is in
the process of evaluating test runs of Catrix produced by its new
supplier. Product shipments from new supplier are expected to
commence upon validation of test runs and regulatory certification
of supplier’s production facility.
Three months ended November 30, 2016 compared to
November 30, 2015
Skin
care and nutritional supplement product sales increased by $31,538
or 303% for the three months ended November 30, 2016 compared to
November 30, 2015.
Non-direct
costs and expenses during the three months ended November 30, 2016
were $32,428 or 71% higher than those of the comparative prior-year
period mainly due to increases in professional fees, other
administrative expenses and insurance of $25,109, $4,716, $1,342
respectively offset by decreased rent and office expense of $2,249.
The increase in professional fees was attributable to increased
quality assurance expenses of $6,831 and increased accounting
expenses of $17,940 associated with the design, implementation and
documentation of internal accounting control procedures. Interest
expense of $3,615 consisted of financing charges associated with
overdue vendor invoices of $2,701 and shareholder loan interest of
$914.
Liquidity and Capital Resources
As
of November 30, 2016, the Company’s liabilities exceeded
its assets by $304,672. The Company’s cash and cash
equivalents balance increased by $162,361 in the six months ended
November 30, 2016 to $166,613.
The
Company has no material commitments for capital expenditures at
November 30, 2016.
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.
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. Submission
of Matters to a Vote of Security Holders.
None.
Item
5. Other
Information.
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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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.
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LESCARDEN INC.
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(Registrant)
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Date: January 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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