U.S. Securities and Exchange Commission
                        Washington, D.C. 20549

                             FORM 10-KSB

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
    SECURITIES EXCHANGE ACT OF 1934 [Fee required]

For the fiscal year ended May 31, 1999

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
    EXCHANGE ACT OF 1934 [No fee required]

For the transition period from ______________ to ________________

Commission file number 0-10035

                           LESCARDEN INC.
------------------------------------------------------------------
 (Exact name of small business issuer as specified in its charter)

        NEW YORK                                13-2538207
-------------------------------           --------------------
(State or other jurisdiction of           (I.R.S. Employer
 incorporation or organization)            Identification No.)

420 LEXINGTON AVENUE, NEW YORK SUITE 212           10170
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(Address of principle executive offices)       (Zip Code)

Issuer's telephone number (212) 687-1050
                          --------------
Securities registered under Section 12(b) of the Act: None
                                                      ----
Securities registered under Section 12(g) of the Act:
             Common Stock $.001 par value
             ----------------------------

Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 [X]   No [ ]

Check if there is no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[ ]

Issuers revenues for its most recent fiscal year were $ 24,756.

The aggregate market value of the registrant's Common Stock held by
nonaffiliates of the registrant on July 16, 1999 was approximately
$7,896,372.

The number of shares of registrant's Common Stock outstanding as of
July 16, 1999 was 21,725,169.

ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court.
Yes [X]   No [ ]

              DOCUMENTS INCORPORATED BY REFERENCES: None

Transitional Small Business Disclosure Format (Check one): Yes     :
No X
  ---

2<PAGE>
                                  PART I


ITEM 1. BUSINESS
        --------
          The Company's current liquidity position must be viewed as
critical.

          The Company, a New York Corporation, has been in business
since 1960. The Company's product developments continue to
concentrate on its proprietary materials, Catrix(R) and
POLY-NAG(R), both in terms of their therapeutic and food supplement
values.

          With regard to Catrix(R), the Company, in the early
1980's, obtained an Investigational New Drug ("IND") exemption from
the U.S. Food and Drug Administration ("FDA") and the Canadian
Health Protection Branch ("HPB") for the experimental treatment of
solid tumors in humans.  Prior to obtaining the IND, the Company
completed all pre-clinical studies and Phase I clinical trials
relating to the safety of Catrix(R).  It is now conducting one Phase
II human clinical trial to establish the efficacy of Catrix(R) in
the treatment of metastatic renal cell cancer.

          On completion of Phase II and subsequent Phase III trials,
the Company intends to submit a New Drug Application ("NDA") to the
FDA and New Drug Submission ("NDS") to the HPB seeking marketing
approval for Catrix(R) in the treatment of metastatic renal cell
disease.  The Company anticipates that the NDA and NDS will not be
filed for several years.  Thereafter, approval by the FDA and HPA
may require an additional one to three years, although the FDA and
HPB can accelerate the process.

          As part of the FDA and HPB approval process, the Company
may be required to do additional laboratory research to identify the
molecular composition of the active fractions of Catrix(R).  Results
of this research could assist the Company in developing standardized
manufacturing and production processes.  In addition, chemically
modified versions of the isolated active fractions may prove to have
additional therapeutic effects.

          In 1994, the Company licensed another company to seek FDA
approval for the use of pure Catrix(R) powder in treating decubitus
ulcers (the pressure sores experienced by some diabetics and the
chronically bed-ridden), and other topical wounds. Traditional
treatment for these lesions involves debridement, improved hygiene,
nutrition and nursing care.  Moreover, there currently exist
literally dozens of drugs and devices targeted to treat chronic
non-healing wounds.  The clinical efficacy of these products in
wound care is generally viewed as modest to merely palliative.

3<PAGE>

          The Company believes that the ability to provide an active
agent to accelerate the healing process represents a clear business
opportunity in a significant market with a demonstrated need for a
more effective therapy.

          The Company's prior licensee, Orphan Medical Inc.,
("ORPHAN") filed a so-called 510 (k) marketing application with the
FDA in August 1996.  In December 1996 the FDA approved the 510 (k)
application thus establishing pure Catrix(R) powder as safe and
efficacious in the management of wounds.

          Thereafter, in 1997, ORPHAN undertook an internal review
of its product development program and concluded that some of its
products would not be further pursued, among which was Catrix(R).  This
decision was not based on Catrix(R)'s safety or efficacy but rather on
resource allocation.  In early 1998 the parties amicably resolved
the situation with the assignment to the Company of all rights to
the 510 (k) marketing approval together with all record's and the
name Repliderm(TM) which ORPHAN had coined in place of Catrix(R) for
domestic use.

          At this time, the Company intends to focus a significant
portion of its resources on the development of a complete marketing
program for pure Catrix(R) powder, as well as Catrix(R) Ointment, creams
and lip balm, in the treatment of a multiplicity of topical wounds.
Furthermore, the Company believes that the observed effects of
Catrix(R) (including acceleration of wound healing, tumor inhibition
and reduction, inhibition of excessive vascularization and
modulation of immune system functions) coupled with an absence of
toxicity, present additional promising avenues of investigation.

          Additionally, the Company is pursuing the clinical
efficacy of its POLY-NAG(R) material as an anti-arthritic.  The
product is derived from specially processed crustacean shells
("Poly-N-Acetyl-Glucosamine").

          In 1996 the Company sponsored a clinical bio-availability
trial on 16 healthy individuals to determine metabolic absorption.
The published results confirmed that POLY-NAG(R) was indeed
absorbed and metabolized into glucosamine which was measurably
present in the subjects' serum.  This initial study also indicated
that serum levels of glucosamine remained somewhat more elevated
longer in the POLY-NAG(R) subjects compared to those subjects who were
administered plain NAG over the same period of time.

          Scientific research has long established the potential
value of glucosamine in the treatment of various inflammatory
diseases such as arthritis and even ulcerative colitis.  Therefore,

4<PAGE>

in July 1998, the Company sponsored the institution of a small
clinical trial orally administering capsules of POLY-NAG(R) to
several arthritic patients.  Results will be available later this year.

          In January/February 1999 the company engaged in
negotiations with a Spanish Company named ICN Iberica, SA ("ICNI")
whose headquarters are in Barcelona.  ICNI is a wholly owned
subsidiary of ICN Pharmaceuticals, Inc. headquartered in Costa Mesa,
California.

           Such negotiations led to the execution of a formal agreement,
in March 1999, between the Company and ICNI.  Among other terms, the
agreement grants ICNI the semi-exclusive rights to market CATRIX(R)
Wound Dressing in Spain only.  In return, ICNI is obligated to pay
the Company a license fee and to purchase finished product from the
Company.

          However, the full implementation of the ICNI Agreement is
subject to the Company's securing marketing approval from the
Spanish Health Ministry ("SHM") in Madrid.  Inspectors from the
Spanish Health Ministry have inspected the Company's facilities and
its records on two occasions, in November 1998 and in April 1999.
On those same occasions, the Inspectors also visited the Company's
contract manufacturers in the U.S. and Canada.

          The Company believes that it has complied fully with SHM
requirements and is currently awaiting the results of final
documentary review by the SHM.

SCIENTIFIC BACKGROUND.

          BACKGROUND OF CATRIX(R).  In the early 1950's, one of the
Company's co-founders discovered that cartilage powder significantly
hastened the healing of surgical wounds in animals.  During early
wound healing experiments, it was noted that the margins of the
surgical wounds treated with Catrix(R) were less red and swollen
than those of the controls.  This observation led the discoverer to
the application of Catrix(R) to various inflammatory diseases,
systemic and topical.  One inflammatory condition that was
successfully treated was psoriasis, a condition caused by an over
production of skin cells.

          The Company believes that Catrix(R) acts as a biological
response modifier, regulating the activity of important components
of the immune system.  Other observed effects of Catrix(R) include:
          -acceleration of wound healing;
          -inhibition of excessive vascularization of certain
           tissues;
          -inhibition of proliferation of malignant cells; and

5<PAGE>

          -(in vitro) moderation of excessive collagen synthesis by
           fibroblast cells.

          METASTATIC RENAL CELL CANCER.  Metastatic renal cell
cancer (which is the spread of a primary kidney cancer to other
organs) is a particularly lethal form of cancer afflicting
approximately 10,000 individuals per year in the United States and
Canada.  Only eight to twenty percent of the metastatic renal cell
cancer patients survive two years after diagnosis.  The patient's
chance of overcoming the disease is dependent upon how advanced the
disease is at the time of diagnosis.  The disease originates as a
tumor in the kidney.  After a certain stage in tumor growth,
metastasis, or spread of cancerous cells to other body organs,
occurs.  Conventional treatment generally involves removal of the
diseased kidney followed by radiation or chemotherapy to affect
reduction of the secondary tumors or metastases.

          It has been recognized that renal cell cancers may be
responsive to treatment with some cytokines such as interleukin-2.
Cytokines are intimate components of the body's immune system, the
integrity of which system is important  in defending the body
against many forms of cancer.  Interleukin-2 is somewhat effective
in treating renal cell cancer but its usefulness is limited by its
significant toxicity.  The Company believes that Catrix(R), with its
ability to modulate the body's immune system and its non-toxic
properties, is promising as a treatment for this devastating disease.

          HEALING DECUBITUS WOUNDS.  Decubitus ulcers, or pressure
sores, are a scourge of the infirmed elderly, diabetic and generally
immobile, wheel chair limited patient.  Current therapy includes
removal of the dead tissue around the ulcer, good hygiene, and
nutrition and nursing care.  Given the ever increasing elderly
population in the United States and the costs of specialized medical
treatment, a product such as Catrix(R), which appears to promote wound
healing, will, the Company believes, be sought after by the medical
community.

          In July 1998, in pursuit of its marketing opportunities
worldwide for Catrix(R) powder and wound care, the Company entered into
an agreement with a Spanish physician residing in Barcelona, Spain.
This agreement appoints the physician as the Company's exclusive
agent in Europe for the purpose of securing marketing approval from
the Spanish Health Ministry for Catrix(R) powder in the treatment of
all manner of topical wounds.

          Spain is one of the 16 member countries of the European
Union.  Under the rules of the EU one member's approval of a
therapeutic drug or device results in the automatic approval in the
other member nations.

6<PAGE>


          OTHER TOPICAL TREATMENTS.  For the past two years the
Company has engaged a corporate specialty formulator for the purpose
of designing and formulating several topical products.  Among these
products are an ointment, creams and a lip balm.  Each of these
products contains various strengths of pure Catrix(R) powder, generally
either 5% or 10%.

          The Ointment product, containing 10% Catrix(R), is intended
for the use of physicians only, particularly clinical dermatologists
whose practice is largely devoted to laser surgery of the face
and/or chemical peel procedures.  Patients who undergo such
treatments suffer from facial wounds requiring weeks of healing.

          The Company's Catrix(R) Ointment, when applied
post-surgically, contributes significantly to the wound healing
process greatly reducing the healing period.  At this time, Catrix(R)
Ointment is the subject of a human clinical trial, ultimately to
involve some twenty-five patients undergoing some sort of facial
surgery.  The trial has received IRB approval and is being conducted
by Dr. Maritza I. Perez in her private practice in Mount Kisco, New
York.  This trial will not be concluded for another few months.
However, initial results are most encouraging.

          With the assistance of the same formulator, first above
mentioned, the Company has also designed and formulated a 5% Catrix(R)
Cream and a 5% Catrix(R) Lip Balm.  The Cream is a consumer product
intended for use on various skin conditions such as psoriasis, mild
sun or chemical burns, scratches and other topical anamolies.
Modest sales of these products have already occurred principally via
the Company's Internet web site at www.catrix.com.

PRE-CLINICAL STUDIES OF CATRIX(R).

          During the 1970's, the Company conducted a wide range of
pre-clinical laboratory and animal studies to assess the potential
safety and efficacy of Catrix(R).  These studies included the
following:  Acute Oral Toxicity (rats); Acute Subcutaneous Toxicity
(mice): Acute Dermal Toxicity (rabbits): 18-Month Chronic Toxicity
and Carcinogenicity Study (mice); 2-Year Chronic Toxicity and
Carcinogenicity (rats); 14 week Chronic Toxicity Study (dogs); Per
cutaneous Toxicity (guinea pigs); Dental Wound Healing (rats);
Dental Wound Healing (dogs); and Irritation and Sensitization of
Human Skin by Catrix(R).

          The results of these studies were submitted to the FDA and
HPB as part of the Company's application for an IND exemption,
approval of which is required prior to the commencement of human
clinical trials.  In 1985, the FDA granted the Company's request for
an IND exemption for the application of Catrix(R) in the treatment
of Scleroderma, a rare skin disease.  Shortly thereafter, the IND
exemption was expanded to include the application of Catrix(R) for
various forms of cancer, including metastatic renal cell cancer.
Due to financial constraints, the Scleroderma Therapy has not been
pursued to date.

7<PAGE>

HUMAN CLINICAL TRIALS CONDUCTED WITH CATRIX(R)

          Since approval of the Company's IND, it has completed
Phase I clinical trial and is conducting a Phase II clinical trial.
The Company's clinical trials involves the administration  of
Catrix(R) capsules to solid tumor cancer patients.  (See,
"Business-Government Regulation").

PHASE I TRIALS

          The objective of the Company's Phase I trials (involving
the initial introduction of Catrix(R) into human subjects) was to
test for safety, side effects, dosage tolerance, metabolism and
clinical pharmacology.  Initial testing was conducted on patients
with advanced cancers that were unresponsive to other forms of
therapy.  Regulatory authorities require that new cancer therapies
be administered in patients who have failed conventional therapy and
that some indication of efficacy be shown before the drug can be
used as the "drug of choice" in earlier stage patients (i.e., in
Phase II trials).

          The Company's Phase I studies were conducted in the early
1980's at Pennsylvania State University's Milton S. Hershey Medical
Center in Hershey, Pennsylvania , and at the University of Medicine
and Dentistry of New Jersey in Newark, New Jersey.  The FDA required
that both Phase I studies use Catrix(R)-S, the injectable dosage
form of Catrix(R) only.

     PHASE II TRIALS.

          The Company is currently engaged in one Phase II trial.
Phase II trials involve well controlled tests in a larger (but still
limited) patient population to determine the efficacy of the drug
for specific indications, to determine optimal dosage and to
identify possible side effects  and safety risks.  The Company's
Phase II trial is being conducted at the Westchester County Medical
Center, New York Medical College, in Valhalla, New York (the
"Valhalla Study").  A second study site has been discontinued due to
a failure in timely clinical reporting.

          The Valhalla Study.  The Valhalla investigation has been
on-going for about 6 years. Of the thirty-five patients enrolled,
twenty-two patients, who had completed more than three months of
therapy, were considered evaluable for response by the Medical Team
overseeing the study.  Results to date were reported by the study
team, at the thirtieth annual meeting of the American Society of

8<PAGE>

Clinical Oncology, in Dallas, Texas, May, 1994, and those results
were stated to be as follows:


          "Ten of the 22 valuable pts were not previously
          treated with any systemic therapy; all 3
          responders (and 1 SD) occurred in the subset of
          untreated pts.  Lungs were the major site of
          response with disappearance of lesions (2) and
          >50% shrinkage (1); minor responses noted in
          liver (1) and kidney (1).  Duration of response
          is 30+ months (mos), 12+ mos and 6+ mos in the 3
          PRs.  Toxicity was mild (Grade I) and included
          dysgeusia (8), fatigue (3), dyspepsia (2),
          nausea (2), fever (2), dizziness (1), and
          scrotal edema (1).  Our results suggest that
          Catrix is very well tolerated and may be active
          in previously untreated pts with metastatic
          renal cell carcinoma.  Further accrual of
          patients is warranted."  [Initials mean: pts.=
          patients. SD= stable disease; mos.= months; PR=
          partial response].

     The Valhalla study continues with only one patient on the
treatment protocol.  This patient has been treated since 1992 and
remains essentially disease free.

     The Company intends to expand the Valhalla Study to include
approximately 100 patients over the next 6 years, assuming that
sufficient funding is available.

     PHASE III TRIALS

          Upon completion of the Phase II trial the Company will
meet with the FDA and HPB for authorization to commence Phase III
trials to evaluate the overall risks and benefits of Catrix(R) in
relation to the treated disease and in light of other available
therapies.  Following this further evaluation of efficacy and
safety, the Company will file its NDA and NDS.  (See,
"Government Regulation-Orphan Drug Status").

     TRIALS INVOLVING DECUBITUS ULCERS

          Given the FDA's approval of the 510(k) application for the
use of Catrix(R) in wound treatment, Catrix(R) powder can be marketed
in the U.S. presently.  In order to spark interest in the  material,
the Company supplied Catrix(R) powder to two hospitals for the
treatment of patients suffering from decubitus or venus ulcers.
Clinical results have been encouraging.  Additional in vivo and in
vitro trials may be undertaken by ICNI in Spain.

9<PAGE>

     LABORATORY STUDIES

          As part of the FDA and HPB approval process, the Company
may be required to do additional laboratory research into the
molecular composition of the active fractions of Catrix(R).
Significant progress has been made in this regard by consultants
working under contract with the company.  Results of this research
will assist the Company in developing standardized manufacturing and
production processes.  In addition, chemically modified versions of
the isolated active fractions may prove to have additional
therapeutic effects.

          Several of the Company's specific laboratory research
projects conducted at Battelle Columbus Laboratories relating to
cancer conclude that there are low molecular weight components of
Catrix(R) which are anti-mitotic, that is, relatively small
components in Catrix(R) that prevent cell replication. Further
results indicate that certain higher molecular weight components of
Catrix(R) have a significant effect on many segments of the body's
immune system.  The results of these later investigations have been
published in the Journal of Biological Response Modifiers.

GOVERNMENT REGULATION.

          The production and marketing of the Company's products and
its research and development activities are subject to comprehensive
regulation by various federal, state and local authorities in the
United States and governmental authorities of other countries.
Among others, the FDA and HPB exercise regulatory authority over the
development, testing, formulation, manufacture, labeling, storage,
record keeping, quality control, advertising and promotion of the
Company's products.  The Company believes that the regulations and
procedures involving the above in Canada are essentially the same as
the United States.  Accordingly, the discussion set forth below is
also applicable to the Company's efforts to obtain regulatory
approval in Canada.

          A New Drug may not be marketed in the United States until
it has satisfied rigorous testing procedures established and
approved by the FDA.  The drug may then be marketed only for the
specific indications, uses, formulation, dosage, forms, and
strengths approved by the FDA.  Similar requirements are imposed by
foreign regulators upon the marketing of a new drug in their
respective countries.

          The steps required before a pharmaceutical agent may be
marketed in the United States include (a) pre-clinical laboratory
and animal tests, (b) the submission to the FDA of an application
for an IND, which must become effective before human clinical trials
may commence, (c) well controlled human clinical trials to establish

10<PAGE>

the safety and efficacy of the drug, (d) the submission of a
detailed NDA to the FDA, and (e) the FDA approval of the NDA prior
to any commercial sale or shipment of the drug.  In addition to
obtaining FDA approval for each product, each domestic drug
manufacturing establishment must comply with Good Manufacturing
Practices (GMP) and are subject to biennial inspections by the FDA.
Foreign manufacturing establishments also must comply with GMP'S and
are subject to periodic inspection by the FDA or by local
authorities under agreement with the FDA.

          The results of the pre-clinical studies and clinical
trials are submitted to the FDA in the form of an NDA for approval
of the marketing and commercial shipment of the drug.  The NDA
includes information pertaining to the chemistry, formulation,
activity and manufacture of the drug and each component of the final
product, as well as details relating to the sponsoring company.
Submission of an NDA does not assure FDA approval for marketing.
The application review process takes more than two years on average
to complete, although FDA reviews of cancer therapies, and other
life-threatening diseases may be accelerated and average less than
two years.  However, the process may take substantially longer if
the FDA has questions or concerns about the product.

          All of the Company's contract manufacturing facilities
will be subject to periodic inspections by the FDA and comparable
agencies from countries in the European Union.  If violations of
applicable regulations are discovered during these inspections, the
Company may be restrained from continued marketing of the
manufactured products.  Such facilities are also subject to
regulation regarding, among other things, occupational safety,
laboratory practices, the use and handling of radio-isotopes and
hazardous chemicals, prevention of illness and injury, environmental
protection and hazardous substance control.

          The product testing and approval process is likely to take
a substantial number of years and involves the expenditure of
substantial resources.  There can be no assurance that any approval
will be granted on a timely basis, or at all.  The FDA also may
require post-marketing testing and surveillance to monitor the
record of the product and continued compliance with regulatory
requirements.  Upon approval, a drug may be marketed only for the
approved indications in the approved dosage forms and at the
approved levels.  Adverse experiences with the product must be
reported to the FDA.  The FDA also may require the submission of any
lot of the product for inspection and may restrict the release of
any lot that does not comply with FDA standards, or otherwise may
order the suspension of manufacture, recall or seizure if
non-compliant product is delivered.  Product approvals may be
withdrawn if compliance with regulatory standards is not maintained
or if problems concerning safety or efficacy of the product are
discovered following approval.

11<PAGE>

          The Company also will be subject to foreign regulatory
authorities with respect to clinical trials and pharmaceutical
sales.  Whether or not the FDA approval has been obtained, approval
of a product by the comparable regulatory authorities of foreign
countries must be obtained prior to commencement of marketing of the
product in those countries.  The approval process varies from
country to country and the time required may be longer or shorter
than that required for FDA approval.

RAW MATERIALS AND MANUFACTURING.

          Catrix(R) is manufactured for the Company by contract
manufacturers.  These new manufacturers are as will be FDA-approved
pharmaceutical manufacturing facility. The Company's food supplement
cartilage material, BIO-CARTILAGE(R) , and its POLY-NAG(R) are
manufactured in the United States and an additional manufacturer is
being developed in the Western Pacific Area.


          RAW MATERIALS. Catrix(R) is prepared from animal cartilage
tissue. The most accessible and easily processed source is bovine
tracheas collected from normal healthy beef cattle, subsequent to
slaughter.  Tracheas are cleaned, flash frozen and delivered to
qualified pharmaceutical manufacturing facilities.  The cattle from
which the tracheas are harvested are certified free of BSE (Bovine
Spongiform Encephylitis).

          REGULATORY REVIEW.  All Catrix(R) and production
procedures have been submitted in extensive detail to the FDA, the
HPB in Canada, and the Spanish Health Ministry in Spain, and
accepted as part of the review of the Company's official submissions
with respect to studying Catrix(R) in patients.

PATENTS AND PROPRIETARY TECHNOLOGY.

          The Company was granted and owns, by assignment, several
United States patents some of which have expired, and has assigned
certain patents to Catrix(R) Research Limited Partnership (see,
"Certain Relationships and Related Transactions").  The most recent
patent granted was for the use of cartilage-based agents as an
anti-tumor agent and method (U.S. Patent #4,827,607).

          The Company also holds several patents in various foreign
countries.  While the Company believes that these patents may be
valuable, there is no assurance that any such patent will afford the
Company any material protection.  Furthermore, if any of its patents
should be infringed, there is no assurance that the Company would be
financially capable of protecting its interests.

12<PAGE>

COMPETITION.

          Competition in the anti-cancer, wound healing
pharmaceutical industry is based primarily on:  product performance,
including efficacy, safety, ease of use and adaptability to various
modes of administration; patient compliance; price;  acceptance by
physicians; marketing; and distribution.  The availability of patent
protection and orphan drug status, and the ability to obtain
government approval for testing, manufacturing and marketing are
also critical factors.  See "Business-Government Regulation."

          Most companies, including well-known pharmaceutical and
chemical companies, are marketing anti-cancer drugs and seeking to
develop new products and technologies for the treatment of cancer
and chronic non-healing wounds.  Many of these companies have
substantially greater financial and technical resources and
production and marketing capabilities than the Company.  In
addition, many such companies have had significantly greater
experience both in undertaking pre-clinical testing and human
clinical trials of new or improved pharmaceutical products, and
obtaining the approval of the FDA or other regulatory authorities to
market products for health care.  Accordingly, the Company's
competitors may succeed in obtaining regulatory approval of such
products before the Company obtains approval  of competitive products.

HUMAN RESOURCES.

          EMPLOYEES AND CONSULTANTS.

          At August 1, 1999, the Company had three full time
employees, and retains several consultants to assist in the
administration of the Company and coordinating its ongoing research
and clinical trials.

          SCIENTIFIC ADVISORY BOARD.

          The Company benefits from consultations with prominent
scientists active in fields related to the Company's business.  For
this purpose, the Company maintains a Scientific Advisory Board.  At
the Company's request, these advisors review the feasibility of
product development  programs under consideration, advise the
Company of research advances in areas related to the Company's
technology and aid in recruiting personnel.  It is intended that the
Scientific Advisors meet individually and in small groups with the
Company's management and scientists.  Because the scientific
advisors may have consulting or advisory positions with other
companies which may compete with the Company, the Company has
entered into confidentiality agreements with each member of the
Scientific Advisory Board.

13<PAGE>

          The Company's Scientific Advisory Board consists of Dr.
William T. Sherman, Vice President for Science-Elect. , as Chair,
and the following persons:

          Michael Bazinet M.D., is assistant Urologist, Attending
Staff at The Montreal General Hospital in Montreal, Quebec, Canada,
and Assistant Professor of Urology, McGill University.  Dr. Bazinet
has completed residencies in surgery and urology at Sherbrooke
University and a residency in urology at the Royal Victoria
Hospital.  He has served as a Research Fellow in Human Tumor
Immunology and as a Clinical Fellow in Urologic Oncology at Memorial
Sloan-Kettering Hospital in New York, NY.  He has authored or
co-authored numerous papers and presentations.

          Robert W. Gracy, Ph.D., principal advisor to the Company
for biochemistry, is professor of Chemistry and Associate Dean for
Basic Science and Research at The University of North Texas, Texas
College of Osteopathic Medicine in Fort Worth, Texas.  Dr. Gracy
received his Ph.D. from the University of California, in Riverside,
and performed postdoctoral work in molecular biology at the Albert
Einstein College of Medicine, where he was a postdoctoral fellow.
He became an Associate Professor of Chemistry at North Texas State
University, and subsequently a visiting professor of physiological
chemistry at the University of Wurtzburg.  Dr. Gracy has published
over 130 papers in peer-reviewed scientific journals and books.

          Carmelo Anthony Puccio, M.D., director of the Company's
Phase II Valhalla Study, is Assistant Professor of Medicine at New
York Medical College and an Attending Physician at Westchester
County Medical Center, both in Valhalla, New York.  Dr. Puccio
received his medical degree from the Universidad Autonoma de
Guadalajara, graduating first in his class.  He completed the Fifth
Pathway Program at the Albert Einstein College of Medicine in New
York City, and a residency in Internal Medicine at Maimonides
Medical Center.  He was a Research Fellow at New York Medical
College prior to attaining his present position.  Dr. Puccio's
papers have been published in several scientific journals.

ITEM 2. PROPERTIES
        ----------
          The Company owns no real property.  Its executive offices
in New York City, occupying approximately 2,200 square feet, are
currently leased under a five year lease ending January 31, 2004.
Management considers that its leased premises are well maintained
and sufficient for its present operations.

14<PAGE>

ITEM 3. LEGAL PROCEEDINGS
        -----------------
          None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        ---------------------------------------------------
          None

                               PART II



ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
        --------------------------------------------------------
The Common Stock of the Company is traded in the over-the counter
market under the symbol "LCAR".  The following table sets forth, for
the periods indicated, the high and low bid quotations for the
Common Stock as reported by the National Quotation Bureau.

FISCAL YEAR ENDING MAY 31, 1999              HIGH           LOW

Fourth Quarter                                .78      .31
Third Quarter                                 .35      .17
Second Quarter                                .36      .06
First Quarter                                 .37      .13


FISCAL YEAR ENDING MAY 31, 1998                HIGH    LOW

Fourth Quarter                                 7/16    3/16
Third Quarter                                  .26     1/4
Second Quarter                                 5/8     1/4
First Quarter                                  .80     .4




          On July 16, 1999 the closing bid price per share of Common
Stock, as reported by the National Quotation Bureau, was $.625.  As
of May 31, 1999 there were 550 holders of record of the Company's
Common stock.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
         --------------------------------------------------
RESULTS OF OPERATIONS
---------------------
OVERVIEW
--------
          Since its inception, the Company has primarily devoted its
resources to fund research, drug discovery and development.   In

15<PAGE>

addition, the Company licenses its technology for commercialization
by other companies and in the fiscal year ended May 31, 1995, the
Company began sales of its proprietary bovine cartilage material,
BIO-CARTILAGE(R), to a food supplement distributor for sale through
nutritional food supplement stores in the U.S.  In the current
fiscal year, the Company began direct sales to consumers of a line
of cosmetic products, which include the Company's proprietary bovine
cartilage material.  The Company has been unprofitable to date and
may continue to incur  operating losses in the foreseeable future.
The Company has sustained net losses of approximately $14.7 million
from inception to May 31, 1999.  The Company has primarily financed
its research and development activities through a public offering of
Common Stock, private placements of debt and equity securities, and
in recent years, revenues from licensing fees and product sales.


FISCAL YEAR ENDED MAY 31, 1999 COMPARED TO MAY 31, 1998
-------------------------------------------------------
     The Company's revenues increased in the year ended May 31, 1999
from the comparative prior fiscal year primarily due to the
commencement of direct sales to consumers of a line of cosmetic
products, which include the Company's proprietary bovine cartilage
material.  Total  costs and expenses during the year ended May 31,
1999 were 98% higher than those of the comparative prior year
principally due to higher professional fees and consulting, research
and development expenses, Cost of product sales, office salaries,
rent and travel expenses.  Other administrative expenses in fiscal
1998 includes $37,000 of fees which were paid with the issuance of
92,500 shares of restricted Common Stock of the Company.
Professional fees and consulting, research and development and
travel and meetings expenses have increased in the current fiscal
year with additional professionals and outside services required to
assist the company in promotion, regulatory and commercial
development matters.  Officer salaries and interest expense
increased by $150,141 and $155,145 in fiscal 1999, respectively, due
to the below market issuance and extension of stock options to an
officer and the issuance of shares of restricted common stock upon
the conversion of advances from related parties, respectively.

LIQUIDITY AND CAPITAL RESOURCES.

OVERVIEW

          The Company has had losses from operations in each of the
five years ended May 31, 1999.  This trend may continue in the
foreseeable future.  Working capital has been provided since the
Company's inception primarily from the sale of equity securities,
from borrowings (from its officers, directors, and shareholders and
from outside investors), and in recent years, from revenues from
licensing fees and product sales.

16<PAGE>

          During the current fiscal year $960,225 of Advances from
Stockholders were exchanged for 4,989,761 shares of the Company's
Common Stock.

PRESENT LIQUIDITY

          The Company's present liquidity position is critical.  As
of May 31, 1999 the Company's total assets exceed its liabilities by
$76,257.  The Company will require additional product sales or
funding during or, shortly after the end of, the current fiscal
quarter ending August 31, 1999, to sustain its operations.

          As a result of the history of losses incurred by the
Company, the net loss during the year ended May 31, 1999 of
($938,382), and the limited amount of funds currently available to
finance the Company's operations, the report of the Company's
independent Certified Public Accountants on the Financial Statements
as of May 31, 1998 and 1999 contain an explanatory paragraph
indicating that the Company may be unable to continue in existence.

          The Company began to sell a line of cosmetic products and
plans to continue to implement plans to sell BIO-CARTILAGE(R) to the
over-the-counter food supplement market.  In addition, the company
continues to seek to obtain either a new licensee, or distributors,
for its Catrix(R) product, in powder form only, for topical wound
healing purposes.  If successful, the Company may increase cash flow
in order to allow the Company to meet its obligations and sustain
its operations.  The Company also plans to try to obtain financing
from additional advances from stockholders and sales of unregistered
shares of common stock.

          On March 16, 1999, the Company announced that it had
entered into an agreement with ICN IBERICA, S.A. ("ICNI", a wholly
owned subsidiary of ICN Pharmaceuticals, USA) of Barcelona, Spain
whereby ICNI acquired the semi-exclusive rights to distribute and
market the Company's CATRIX(R) WOUND CARE DRESSING in Spain for a
period of ten years.  Implementation of this Agreement is contingent
upon securing marketing approval for the product by the Spanish
Health Ministry.  Such approval has been under review by the Spanish
Health Ministry for several months.

          The Agreement with ICNI also contains terms granting it
the exclusive right, for a limited period of time, to negotiate with
the Company for the expansion of its exclusive territory to include
all of the countries in the European Union.  Additionally, the
Agreement gives ICNI the exclusive right, for a similarly limited
period of time, to negotiate with the Company for the inclusion of
CATRIX(R) 10 OINTMENT in its product line for distribution within
the countries covered by the Agreement.

17<PAGE>

          The Company has no material commitments for capital
expenditures at May 31, 1999.

          The Company has conducted a review of its computer systems
to identify the systems that could be affected by the Year 2000
Issue.  The Company presently believes that, with conversions to new
software, if required, the Year 2000 problem will not pose
significant operational problems.

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------
          See page F-1 for Lescarden Inc. Index to Financial
Statements.

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE
          ------------------------------------------------
          None.
                               Part III



ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
          PERSONS, COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
          -----------------------------------------------------------

The executive officers and directors of the Company are as follows:

Name                                         Position
----                                         --------
Gerard A. Dupuis                             Chairman and
                                             Chief executive
                                             Officer, Director.

William T. Sherman, Ph.D.                    Vice President
                                             Science Elect.

Frank E. Berglas                             Director.

George E. Ehrlich, M.D.                      Director.

Charles T. Maxwell                           Executive Vice President
                                             and Director.

          Mr. Dupuis (age 61) is an attorney who practiced in New
York City for more than twenty five years.  He became General
Counsel, Secretary and a Director of the Company in February 1986.
On June 19, 1990 Mr. Dupuis was elected President and Chief
Executive Officer of the Company and in 1992 was elected chairman.
Mr. Dupuis is a graduate of Syracuse University and received his law
degree from Columbus School of Law, of the Catholic University of
America in Washington, D.C.

18<PAGE>

          Dr. Sherman (age 57) Executive Vice President for
Science-Elect of the Company, received his Bachelor of Science in
pharmacy from the Philadelphia College of Pharmacy and Science, and
a Ph.D. in pharmacology from Temple University.  Since 1989 Dr.
Sherman has been an independent consultant to the pharmaceutical
industry.  From 1987 to 1989 he served as Vice President of Martec
Pharmaceutical Company.  Prior to that he was Vice President for
research and development for the Company.  Dr. Sherman is a
registered pharmacist in Pennsylvania and New Jersey and has
published in several scientific journals.

          Mr. Berglas (age 58) was the President and Chief Executive
Officer of Great Lakes American Reinsurance Co., a position he has
held for more than the past five years until his retirement in 1997.
 He became a Director of the Company on December 1, 1993.  Mr.
Berglas is a graduate of City College of New York.

          Dr. Ehrlich (age 70) is the President of George E. Ehrlich
Associates, International Consultant Firm, a position he has held
for more than the past five years.  He became a Director of the
Company on March 2, 1995. Dr. Ehrlich is a graduate of Harvard
University and received his medical degree from Chicago Medical
School.

          Mr. Maxwell (age 67) was the Vice Chairman and Senior
Energy Strategist of C.J. Lawrence Inc., a member firm of the New
York Stock Exchange, for more than twenty-five years, until his
retirement in 1997.  Mr. Maxwell has acted as a consultant to
various oil companies and the United States Government on oil policy
matters.  He became a Director and Executive Vice-President of the Company
in July 1997.  Mr.Maxwell is a graduate of Princeton University and Oxford
University.

19<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION
          ----------------------
                         Annual Compensation      Long-Term
                         -------------------      Compensation
                                                  Awards
                                                  ------------
Name and                 Fiscal Year
Principal                Ended
Position                 May 31,       Salary $       Warrants (#)
--------                 -------       --------       ------------
Gerard A. Dupuis         1999          $150,000        1,700,000
President and CEO        1998          $152,000          100,000
                         1997          $127,000             -



Aggregated Option and Warrant Exercises in Last Fiscal Year and FY
End Option and Warrant Values.
------------------------------------------------------------------
               Shares              Number of      Value of
               Acquired            Unexercised    Unexercised
               on        Value     Options/       In-the-money
               Exercise  Realized  Warrants       Options
                                   at FY End (#)  Warrants
                                                  at FY End ($)
Name             (#)       ($)     Exercisable    Exercisable
------------------------------------------------------------------
G.A. Dupuis                        Warrants       Warrants
                                   2,920,312      $1,393,967


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT
          ---------------------------------------------------
          The following table sets forth, as of May 31, 1999, the
ownership of the Company's Common Stock by (I) each person who is
known by the Company to own Shares of record or beneficially, more
that (5%) of the Company's Common Stock, (ii) each of the Company's
directors and executive officers and (iii) all directors and
executive officers as a group.  Except as otherwise indicated, the
stockholders listed in the table have sole voting and investment
powers with respect to the shares indicated.

20<PAGE>

          Name and                 Number of Shares
Title of  Address of               Beneficially        Percent
Class     Beneficial Owner         Owned               of Class (1)
------------------------------------------------------------------
Common    Gerard A. Dupuis (2)       3,101,229             12.58%
Stock     420 Lexington Avenue
          Suite 212
          New York, NY 10170


          Charles T. Maxwell (2)     6,806,307             30.94%
          420 Lexington Avenue
          Suite 212
          New York, NY 10170


          Frank E. Berglas (2)         275,000              1.26%
          420 Lexington Avenue
          Suite 212
          New York, NY 10170

          Peter B. Ruffin (2)        2,525,500             11.49%
          753 Forest Hills Drive
          Wilmington, NC

          George E. Ehrlich (2)        150,000              0.69%
          420 Lexington Avenue
          Suite 212
          New York, NY 10170

          Directors and              10,332,536            40.93%
          Officers as a group
          (2) (4 persons)


          (1) The percentages are calculated on the basis of
21,725,169 shares of Common Stock outstanding.  For the purpose of
calculating the percentage of shares of the Company's Common Stock
owned by any person, the shares issuable upon the exercise of rights
to acquire, owned by such a person if exercisable within 60 days of
May 31, 1999 are deemed outstanding, but such shares are not deemed
outstanding for the purpose of calculating the percentage of Common
Stock owned by any other person.  All share ownership is direct
unless otherwise indicated.

          (2) Includes 252,000, 2,920,312, 175,000, 150,000 and
272,000 warrants to purchase the Company's Common Stock held by Mr.
Ruffin, Mr. Dupuis, Mr. Berglas, Dr. Ehrlich and Mr. Maxwell,
respectively.

21<PAGE>

          During the year end May 31, 1999, Merrs. Maxwell and
Ruffin received shares of the Company's common stock upon the
exercise of common stock purchase Warrants; they plan to file
reports on Form 4 reporting their changes in beneficial ownership of
shares of the Company's common stock late, by the end of August 1999
or shortly thereafter.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          -----------------------------------------------
          None.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------
          (A) (1) EXHIBIT

          EXHIBIT NUMBER

          DESCRIPTION OF EXHIBIT

2.1            Plan of Reorganization dtd. January 15, 1997 (and
               Amended Disclosure Statement dtd. March 12, 1997).****

3.1            Certificate of Incorporation of Registrant, as amended.*

3.2            By-Laws of Registrant, as amended.*

10.1           License Agreement between the Company and Donell,
               Inc., dated October 2, 1989, with amendments dated
               June 18, 1990 and March 16, 1992.*

10.2           Employment Agreement with John F. Prudden dated
               November 15, 1985, as amended July 14, 1992.*

10.3           Letter agreements with Donald K. Lourie dated
               November 15, 1985, February 11, 1988, and September
               7, 1990.*

10.4           Lease for 6th floor office space at 790 Madison
               Avenue, New York, NY  dated August 19, 1986, as
               amended on April 18, 1991.*

10.5           Licensee Agreement between Lescarden Inc. and Catrix
               Research Ltd. Partnership dated June 4, 1982.*

10.6           Research Agreement between Lescarden Inc. and Catrix
               Research Ltd. Partnership dated June 4, 1983.*


22<PAGE>

10.7           Lease for office space at 420 Lexington Avenue, New
               York, NY  dated March 9, 1993.**

22.1           Subsidiaries of the Registrant.*

23.            Notice of annual meeting of shareholders and Proxy
               Statement for Annual Meeting of shareholders held
               October 19, 1992.**

27.            Financial Data Schedule

99.1           Award of the Arbitrator in the Matter of the
               Arbitration between John F. Prudden, M.D. and the
               Registrant dated September 6, 1995.***

*              Incorporated by reference to Registrant's Form S-1
               (Registration no. 33-50743) filed August 12, 1992.

**             Incorporated by reference to Registrant's Form 10-KSB
               for the fiscal year ended May 31, 1993.

***            Incorporated by reference to Registrant's Form 8K
               dated September 6, 1995.

****           Incorporated by reference to Registrant's Form
               10-KSB for the fiscal year ended May 31, 1998.



(b)            Reports on Form 8-K
               -------------------
               There were no reports on Form 8-K filed by the
               Company during the fourth Quarter at the year ended
               May 31, 1999.


23<PAGE>

                              SIGNATURES


          Pursuant to the requirements of Section 13 or 15(d) 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.

                                   By: S/Gerard A. Dupuis
                                       ------------------
                                   Gerard A. Dupuis, President
                                   August 23, 1999

          Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.


By:  S/Gerard A. Dupuis            President, Principal Executive
     ------------------
     Gerard A. Dupuis              Officer, Principal Financial
     August 23, 1999               Officer, Principal Accounting
                                   Officer and Director



By:  S/Frank E. Berglas            Director
     ------------------
     Frank E. Berglas
     August 23, 1999



By:  S/George E. Ehrlich           Director
     -------------------
     George E. Ehrlich
     August 23, 1999


By:  S/Charles T. Maxwell          Executive Vice President
     --------------------
     Charles T. Maxwell
     August 23, 1999

24<PAGE>

                                                               LESCARDEN INC.

                                                INDEX TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
Independent Auditor's Report                                             F-2
Balance Sheet as of May 31, 1999                                         F-3
Statement of Operations for the Years Ended May 31, 1999 and 1998        F-4
Statement of Stockholders' Equity (Deficiency)
 for the Years Ended May 31, 1999 and 1998                               F-5
Statement of Cash Flows for the Years Ended May 31, 1999 and 1998        F-6
Notes to Financial Statements                                       F-7 - F-12

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders of
Lescarden Inc.

We have audited the accompanying balance sheet of Lescarden Inc. (the
"Company") as of May 31, 1999 and the related statements of operations,
stockholders' equity (deficiency), and cash flows for each of the two years
in the period then ended.  These financial statements are the responsibility
of the Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lescarden Inc. as of
May 31, 1999, and the results of its operations and its cash flows for each
of the two years in the period then ended in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from
operations, and has recognized limited revenue which raises substantial doubt
about its ability to continue as a going concern.  Management's plans in
regard to these matters are described in Note 1.  The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.


GOLDSTEIN GOLUB KESSLER LLP
New York, New York

July 22, 1999
F-2

<PAGE>
                                                                 LESCARDEN INC.
<TABLE>
                                                                         BALANCE SHEET
<CAPTION>
May 31, 1999
--------------------------------------------------------------------------------------
ASSETS
<S>                                                                       <C>
Current Assets:
  Cash                                                                    $     91,525
  Inventory                                                                    191,316
  Prepaid expenses                                                              36,000
--------------------------------------------------------------------------------------
      Total current assets                                                     318,841

Security Deposit                                                                 3,080

Deferred Income Tax Asset, net of valuation allowance of $ 3,241,000              -
--------------------------------------------------------------------------------------
      Total Assets                                                        $    321,921
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable and accrued expenses                                   $    202,414
  Unearned revenue                                                              43,250
--------------------------------------------------------------------------------------
      Total liabilities                                                        245,664
--------------------------------------------------------------------------------------
Commitments and Contingencies

Stockholders' Equity (Deficiency):
  Convertible preferred stock - $.02 par value; $1.50 liquidation value
   (aggregating $138,000); authorized 2,000,000 shares, issued and
   outstanding 92,000 shares                                                     1,840
  Common stock - $.001 par value; authorized 200,000,000 shares, issued
   and outstanding 21,725,169                                                   21,725
  Additional paid-in capital                                                14,728,848
  Accumulated deficit                                                      (14,676,156)
--------------------------------------------------------------------------------------
      Stockholders' equity                                                      76,257
--------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Equity                          $    321,921
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
</TABLE>

The accompanying notes and independent auditor's report should be read in
conjunction with the financial statements

F-3
<PAGE>
                                                                 LESCARDEN INC.
<TABLE>
                                                               STATEMENT OF OPERATIONS
<CAPTION>
Year ended May 31,                                                 1999           1998
--------------------------------------------------------------------------------------
<S>                                                       <C>             <C>
Revenue:
  Product sales                                           $      23,655           -
  Royalties and other                                             1,101   $      1,944
--------------------------------------------------------------------------------------
Total revenue                                                    24,756          1,944
--------------------------------------------------------------------------------------
Costs and expenses:
  Cost of product sales                                          17,978           -
  Salaries:
    Officer                                                     309,525        159,384
    Office                                                       18,777          9,190
  Interest                                                      155,145
  Professional fees and consulting                              235,644        172,896
  Research and development                                       67,801         23,286
  Rent and office expenses                                       82,903         60,367
  Travel and meetings                                            51,631         19,979
  Taxes                                                             692            745
  Insurance                                                       1,009          1,534
  Other administrative expenses                                  22,033         39,423
--------------------------------------------------------------------------------------
Total costs and expenses                                        963,138        486,804
--------------------------------------------------------------------------------------
Net loss                                                   $   (938,382)  $   (484,860)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net loss per common share                                  $       (.05)  $       (.03)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Weighted-average number of common shares outstanding         18,513,379     16,293,704
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
</TABLE>

The accompanying notes and independent auditor's report should be read in
conjunction with the financial statements

F-4
<PAGE>
                                                                 LESCARDEN INC.
<TABLE>
                                                                                  STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<CAPTION>
                                    Convertible
                                  Preferred Stock                Common Stock         Additional                   Stockholders'
                               Number of    Par Value       Number of    Par Value     Paid-in     Accumulated         Equity
                                 Shares      Amount           Shares     Amount        Capital     Deficit          (Deficiency)
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>       <C>             <C>         <C>         <C>           <C>                <C>
Balance at June 1, 1997          92,000    $  1,840        15,882,218  $ 15,882    $ 13,248,298  $ (13,252,914)     $    13,106
Issuance of common stock
 upon exercise of common
 stock warrants                    -           -              636,590       637         105,768           -             106,405
Issuance of common stock
 for services                      -           -               92,500        92          36,908           -              37,000
Issuance of common stock
 warrants for services             -           -                 -         -             23,910           -              23,910
Net loss                           -           -                 -         -               -          (484,860)        (484,860)
--------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1998          92,000       1,840        16,611,308    16,611      13,414,884    (13,737,774)        (304,439)
Issuance of common stock
 upon exercise of common
 stock warrants                    -           -              124,100       124          14,336           -              14,460
Issuance of common stock
 upon conversion of advances
 to related parties                -           -            4,989,761     4,990       1,110,380           -           1,115,370
Issuance of common stock
 warrants for services             -           -                 -         -            189,248           -             189,248
Net loss                           -           -                 -         -               -          (938,382)        (938,382)
--------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1999          92,000    $  1,840        21,725,169  $ 21,725    $ 14,728,848  $ (14,676,156)     $    76,257
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes and independent auditor's report should be read in
conjunction with the financial statements

F-5
<PAGE>
                                                                 LESCARDEN INC.
<TABLE>

                                                                      STATEMENT OF CASH FLOWS
<CAPTION>

Year ended May 31,                                                        1999           1998
---------------------------------------------------------------------------------------------
<S>                                                                 <C>            <C>
Cash flows from operating activities:
  Net loss                                                          $ (938,382)    $ (484,860)
  Adjustments to reconcile net loss to net cash used in
   operating activities:
    Issuance of common stock upon conversion of advances to
     related parties                                                   155,145           -
    Issuance of common stock for services                                 -            37,000
    Issuance of common stock warrants for services                     189,248         23,910
    Changes in operating assets and liabilities:
      Increase in inventory                                           (156,250)       (25,578)
      Increase in prepaid expenses                                     (36,000)          -
      Increase (decrease) in accounts payable and accrued expenses      92,746         (5,134)
      Increase in unearned revenue                                      43,250           -
---------------------------------------------------------------------------------------------
      Net cash used in operating activities                           (650,243)      (454,662)
---------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Proceeds from issuance of common stock                                14,460        106,405
  Advances from related parties                                        695,000        265,225
---------------------------------------------------------------------------------------------
      Cash provided by financing activities                            709,460        371,630
---------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                         59,217        (83,032)

Cash at beginning of year                                               32,308        115,340
---------------------------------------------------------------------------------------------
Cash at end of year                                                 $   91,525     $   32,308
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------

Supplemental schedule of noncash financing activities:

  Conversion of advances received from related parties
   to common stock                                                  $  960,225      $  - 0 -
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
  Issuance of common stock for services                             $   - 0 -       $  37,000
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
  Issuance of common stock warrants for services                    $  189,248      $  23,910
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
  Issuance of common stock upon conversion of advances to
   related parties                                                  $  155,145      $  - 0 -
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes and independent auditor's report should be read in
conjunction with the financial statements

F-6
<PAGE>
                                                                LESCARDEN INC.
                                                 NOTES TO FINANCIAL STATEMENTS


1.    OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:

The Company is engaged in the research, testing and development of medications
for the control and cure of various diseases and the licensing of its
technologies for commercialization by other companies.  In its research and
testing to date, the Company has discovered and is primarily investigating
Catrix(R), a complex of mucopolysaccharides derived from bovine cartilage.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  As shown in the financial statements, the
Company has suffered recurring losses from operations during the years ended
May 31, 1999 and 1998 and has had limited revenue in those years.  At May 31,
1999, the Company had stockholders' equity attributable to a capital infusion
through the issuance of 5,113,861 common shares during the year.  At May 31,
1998, the Company had a stockholders' deficit.  These factors indicate that
the Company may be unable to continue as a going concern.  In the past few
years, management has implemented plans to enter the food supplement business
and during the year ending May 31, 2000, management expects the continuation
of these plans and additional activity is expected regarding its products for
therapeutic applications and wound healing.  If successful, this may increase
cash flow which would allow the Company to meet its obligations and sustain
operations.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

Revenue from royalties and license fees is recorded when the funds are
received.  Revenue from the product sales is recognized upon shipment of the
product.

Research and development costs, including patent costs, are charged to costs
and expenses in the year incurred.

Net loss per common share is based upon the weighted-average number of common
shares outstanding during the year.  Stock options, warrants and convertible
preferred stock are excluded from the computation of net loss per common
share since they would have an antidilutive effect.

Inventory, consisting principally of Catrix(R) and BIO-CARTILAGE(R) supplies
and Catrix(R) topical wound treatment creams and solutions, is stated at the
lower of cost, determined by the first-in, first-out method, or market.

The Company adopted SFAS No. 123, Accounting for Stock-based Compensation.
The Company has elected to apply Accounting Procedures Bulletin ("APB")
Opinion No. 25 and related interpretations in accounting for its stock options
issued to employees and has adopted the disclosure-only provisions of SFAS
No. 123.

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates by management.  Actual
results could differ from those estimates.  Management does not believe that
any recently issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying financial statements.

F-7
<PAGE>

2.	INVENTORY:

Inventory at May 31, 1999 consists of the following:

Raw materials                                                        $  96,168
Finished goods                                                          95,148
------------------------------------------------------------------------------
                                                                     $ 191,316
------------------------------------------------------------------------------
------------------------------------------------------------------------------

3.    ADVANCES FROM RELATED PARTIES:

During the year ended May 31, 1998, certain members of the Company's board of
directors loaned the Company $265,225.  During the year ended May 31, 1999,
certain members of the Company's board of directors loaned the Company
$695,000.  These loans were noninterest-bearing and due on demand.  The
Company converted these advances into common stock during the year ended
May 31, 1999.  The conversion terms were based on the fair market value of
the Company's stock at the time of conversion.  The Company recorded an
interest charge of $155,145 as a result of the conversion in the accompanying
statement of operations.

4.    STOCK OPTIONS AND WARRANTS:

Pursuant to the Company's 1981 incentive and nonqualified stock option plans,
as amended, options have been granted to officers and key employees, and to
directors, officers, consultants and key employees, respectively, at exercise
prices not less than the fair market value at date of grant.  Options are
generally exercisable at the grant date or at other determinate dates
subsequent to the grant date, and expire 5 or 10 years from the date of grant
(or from other subsequent dates on which they become exercisable).  The two
stock option plans expired in November 1991 without affecting any options
then outstanding.  Changes in incentive and nonqualified stock options granted
and outstanding are as follows:

Year ended May 31,                     1999                      1998
------------------------------------------------------------------------
                                        Weighted-              Weighted-
                                         Average                Average
                                        Exercise               Exercise
                            Options       Price    Options       Price
------------------------------------------------------------------------
Outstanding at beginning
 of year                     80,000     $  .75     175,000        $.61
Canceled during year         80,000        .75      95,000         .50
      Outstanding at
        end of year          - 0 -      $- 0 -      80,000        $.75
------------------------------------------------------------------------
------------------------------------------------------------------------

In the year ended May 31, 1993, the Company approved the "1992 Employee
Incentive Stock Plan" (the "1992 Plan").  The 1992 Plan authorized the
issuance of stock options, restricted shares of stock and stock bonus awards
to eligible participants.  The 1992 Plan provides for the reservation and
availability of 2,000,000 shares of common stock, subject to adjustment for

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<PAGE>

future stock splits, dividends, reorganizations and other similar events,
at exercise prices not less than the fair market value at the date of grant.
Options are exercisable from 12 months after the date of grant and expire 10
years from the date of grant.  At May 31, 1999, no options were granted under
the 1992 Plan.

The Company has outstanding warrants permitting the holders to purchase
shares of its common stock at prices ranging from $.10 to $1.00 per share.
The warrants have varying expiration dates to May 15, 2007.  Warrants to
purchase 5,548,739 common shares were outstanding at May 31, 1999.  In the
years ended May 31, 1999 and 1998, warrants to purchase 550,000 and 84,000
common shares expired, respectively.  In the years ended May 31, 1999 and
1998, warrants to purchase 124,100 and 636,590 common shares, respectively,
were exercised at prices ranging from $.10 to $.12 and from $.15625 to $.25
per share, respectively.  During the years ended May 31, 1999 and 1998,
warrants to purchase 2,205,000 and 180,000 shares of common stock,
respectively, were issued.  The warrants contain restrictions on transfer
and required that the underlying shares be acquired solely for investment.

The Company has elected, in accordance with the provisions of SFAS No. 123,
to apply the accounting rules under APB Opinion No. 25 and related
interpretations in accounting for its stock warrants and to present the
disclosure-only information as required by SFAS No. 123.  If the Company
had elected to recognize compensation cost based on the fair value of the
warrants granted at the grant date as prescribed by SFAS No. 123, the
Company's net loss and net loss per common share for the years ended
May 31, 1999 and 1998 would approximate the pro forma amounts indicated in
the table below.

Year ended May 31,                                  1999                 1998
-----------------------------------------------------------------------------
Net loss - as reported                      $   (938,382)        $   (484,860)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net loss - pro forma                        $ (1,267,737)        $   (507,060)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net loss per common share - as reported     $       (.05)        $       (.03)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net loss per common share - pro forma       $       (.07)        $       (.03)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

The fair value of each warrant grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for the years ended May 31, 1999 and 1998, respectively:
expected volatility of 1.48 and 1.43; risk-free interest rates of 4.7% and
6.1%; and expected lives of five years.

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<PAGE>


At May 31, 1999 and 1998, shares of common stock have been reserved as
follows:

                                                    1999              1998
                                                  Number of        Number of
                                                   Shares            Shares
----------------------------------------------------------------------------
Stock option plans                                    -               80,000
Total warrants outstanding including
 those specifically described in the
 notes to financial statements                   5,548,739         4,017,839
----------------------------------------------------------------------------

5.    COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS:

Substantially all of the Company's purchases for the year ended May 31, 1999
were from one vendor.

During the year ended May 31, 1999, the Company entered into a noncancelable
lease with an unrelated third party to rent office space.  The lease, which
expires in January 2004, is subject to real estate tax escalations and
electrical inclusions.  In lieu of security deposit, the Company opened a
$75,000 irrevocable letter of credit with a financial institution.  An
officer of the Company is a guarantor of the letter of credit and the lease.
The aggregate minimum rental payments under this lease are as follows:

Year ending May 31,
      2000                                                        $  67,200
      2001                                                           68,600
      2002                                                           71,500
      2003                                                           71,500
      2004                                                           47,700
---------------------------------------------------------------------------
                                                                  $ 326,500
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Rent expense charged to operations for the years ended May 31, 1999 and 1998
amounted to approximately $58,000 and $45,000, respectively.

During the year ended May 31, 1999, the Company entered into a three-year
agency agreement with a third party (the "Agent"), which is representing the
Company for the purpose of securing marketing approval in Spain for Catrix(R)
(in powder form) as a wound treatment.  The agency agreement also calls for
the Agent to identify commercial enterprises able and willing to distribute
and market Catrix(R) in each of the countries in the European Union.  The
Company has agreed to pay finders' fees and commissions to the Agent, as
defined.

In March 1999, the Company entered into a 10-year license agreement in which
it designated a company located in Spain as a semi-exclusive licensee (the
"Licensee") of Catrix(R) Wound Dressing (the "Product").  Upon the signing of
the license agreement, the Company received 50% of an up-front fee it is

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<PAGE>

charging for distributorship rights.  The balance will be due upon the
Company having secured registration and marketing approval for the Product
from the Spanish Health Ministry ("SHM").  Failure to secure such
registration/marketing approval by September 1, 1999 shall give the Licensee
the right to cancel the agreement without further obligation by either party
and to demand return of the fee paid.  Upon receiving marketing approval from
SHM, the Licensee will secure shipments of the Product in minimum order
amounts and at prices as defined by the license agreement.  In the event that
the Licensee's gross margins on the Product fall below a certain margin, or
in the event that the exchange rate between the Euro and the U.S. dollar
shall vary by 20% for more than 30 days, the parties agree to renegotiate
the terms of the price agreement.

A revised agreement with a former Chairman, which is for a period of 20 years,
provides for a minimum annual consultancy fee/pension payment of $25,000 to
be paid in any year in which the Company's net worth is in excess of
$2,500,000 or pretax profits of $500,000 are achieved.  In the event of the
death of this former Chairman, any amounts due under this agreement will be
payable to his estate.  Additionally, the agreement provides for the issuance
of nonqualified stock options to purchase 100,000 shares of the Company's
common stock.  Under the agreement, pension costs cannot be reasonably
estimated principally because the conditions required to create a pension
liability do not exist at May 31, 1999 and are not anticipated in the
foreseeable future.

In June 1982, individuals related to the Company formed the Catrix(R)
Research Limited Partnership (the "Partnership").

The Company has entered into two agreements with the Partnership, as follows:

	A.	Research Agreement:

            Under the Research Agreement, the Company received $200,000 from
            the Partnership to perform or cause to be performed research in
            connection with Catrix(R) involving several technologies.  No
            further payments to the Company by the Partnership are
            contemplated under the Research Agreement.

	B.	License Agreement:

            Under the License Agreement, the Company assigned to the
            Partnership (for additional consideration of $25,000) three of
            its United States patents and one of its United States patent
            applications.  In addition, the Company assigned to the
            Partnership all foreign patents and patent applications
            corresponding thereto, together with certain technical
            information pertaining to Catrix(R).  The Partnership granted
            the Company exclusive worldwide licenses to make, use and sell
            products developed therefrom, subject to the Company's obligation
            to pay the Partnership three-fourths of 1% of the net sales price
            of any licensed products manufactured and sold by the Company,

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<PAGE>

            plus percentages ranging from 3.125% to 6.25% of any amounts
            received from any sublicensees of the Company.

		If the Partnership is terminated, dissolved or its assets are
            liquidated, the Company will have the option to purchase for
            $25,000 all United States and foreign patents and patent
            applications transferred by the Company to the Partnership.

		At May 31, 1999, the principal asset of the Partnership consists
            of the License Agreement described above.


6.    STOCKHOLDERS' EQUITY:

The convertible preferred stock has a preference upon liquidation of $1.50
per share; is convertible, at the option of the holder, into one share of the
Company's common stock, for each share of preferred stock; and is callable,
at the option of the Company, at such time as its net worth exceeds
$3,000,000, for $1.50 per share.  Additionally, holders of preferred stock
are entitled to vote for directors of the Company on a one-share/one-vote
basis.

7.    INCOME TAXES:

The Company has net operating loss carryforwards of approximately $8,546,000
available to reduce future taxable income which expire in various years
through 2019.

In addition, the Company has a tax credit carryforward, from research
ctivities, of approximately $335,000, which expires in 2000.

The utilization of net operating loss carryforwards may be limited as a
result of cumulative changes in the Company's stock ownership.

Deferred income taxes reflect the impact of net operating loss carryforwards
and tax credits.  In recognition of the uncertainty regarding the ultimate
amount of income tax benefits to be derived from the Company's net operating
loss and tax credit carryforwards, the Company has recorded a valuation
allowance for the entire deferred tax asset.  The deferred income tax asset
is comprised of the following at May 31, 1999:

Net operating loss carryforwards                                  $ 2,906,000
Tax credits                                                           335,000
-----------------------------------------------------------------------------
Gross deferred tax assets                                           3,241,000
Valuation allowance                                                (3,241,000)
-----------------------------------------------------------------------------
      Net deferred income tax asset                              $    - 0 -
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

F-12