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, 2001

[ ] 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
----------------------------------------  --------------------
(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.
[X]

<PAGE>

Issuers revenues for its most recent fiscal year were $ 41,211.

The aggregate market value of the registrant's Common Stock held by
nonaffiliates of the registrant on July 13, 2001 was approximately
$1,496,290.

The number of shares of registrant's Common Stock outstanding as of
July 13, 2001 was 22,435,356.

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.  (See Item 6 Management's Discussion and Analysis of
Operations)

          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, cosmetic 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).  For several years, the Company
conducted a Phase II/III clinical trial on patients with metastatic
renal cell disease.  This trial was conducted at two locations, and
more than 25 patients were enrolled.  Patients tolerated the drug
well, and only a few patients experienced mild adverse reactions.
Otherwise, the clinical results were encouraging.  However, at the
end of 1999, the Company, in consultation with the principal
investigators, suspended continuation of the study.  This
suspension was due to the Company's inability to finance a larger
patient population for the study.  While the Company cannot
guarantee that the study will be resumed at any time, the Company
retains the option to resume this study in the future.  Prior to
resuming these trials however, the Company is required to file for
permission from the FDA.

          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 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 powder as safe and efficacious in the management of
wounds.  Specifically, the FDA approval letter states:

          "[Catrix(R) Wound Dressing...is...intended for use in the
          management of pressure ulcers (stages I-IV), stasis
          ulcers, 1st and 2nd degree burns, diabetic ulcers, foot
          ulcers, post surgical incisions, cuts, abrasions, partial
          thickness wounds and skin conditions associated with
          peristomal care."

          Thereafter, in 1997, the prior licensee 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's(R) 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 records and the name Repliderm? which the prior licensee
had coined in place of Catrix(R) for domestic use.

          At this time, the Company is focusing 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 has pursued a program to
establish 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.

4<PAGE>

          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,
in July 1998, the Company sponsored the institution of a small
clinical trial orally administering capsules of POLY-NAG(R) to
several arthritic patients.  This clinical study has been
concluded, and the favorable results are to be published by the
principal investigators in the near future.  Moreover, based upon
these two clinical experiences, the Company applied for patent
protection with the U.S. Patent Office and on September 12, 2000
the Company was issued Patent Number 6,117,851.  The Patent
Abstract, as issued by Patent Office states:

          "The methods of the present invention relate to
          administering to a mammal afflicted with osteoarthritis
          an effective amount of poly-N-acetyl-D-glucosamine (poly-
          NAG), partially depolimerized poly-NAG, or mixtures
          thereof, to treat osteoarthritis and/or alleviate the
          symptoms of osteoarthritis such as pain, joint tenderness
          and swelling and impaired joint mobility.  The present
          invention also comprises solid and liquid pharmaceutical
          dosage forms comprising poly-NAG, Its pharmaceutically
          acceptable salts and mixtures thereof.  These dosage
          forms may be administered orally and by-injection to
          treat osteoarthritis and/or alleviate the symptoms
          thereof."

          In March 1999, the Company licensed ICN Iberica, SA
("ICNI")as its semi-exclusive distributor of CATRIX Wound Dressing
in Spain.  ICNI is a wholly owner subsidiary of ICN
Pharmaceuticals, Inc. of Costa Mesa, California.

          In September 1999, the Spanish Health Ministry ("SHM")
approved the marketing of Catrix Wound Dressing in Spain, and the
Agreement between the Company and ICNI became fully implemented.
Since then, the Company has fulfilled all of its obligations
thereunder, including the timely shipment of the product.  ICNI has
commenced implementation of a complete marketing program in Spain,
and it also applied to the appropriate Spanish authorities for a
government sponsored reimbursement plan for patients covered under
the national medical care program.  Unfortunately, in the Spring of
2001, the SHM ultimately allowed only a very low patient
reimbursement rate.  As a result, ICNI is prosecuting an appeal of
this decision and a resolution of the matter is not expected for
several months.

          As a result of the low reimbursement rate allowed by the
Spanish government, ICNI has been unable to meet minimum sales
levels as set forth in the parties' agreement.  This has led the
parties to agree to continue their relationship absent an

5<PAGE>
operational agreement until such time as ICNI's appeal of its rate
case has been decided by the SHM.  Moreover, the Company has
granted ICNI permission to market the product in Portugal for a
period of three months.
          Spain's socialized medicine system covers about 80% of
its population.  The other 20% are either insured privately or self
insured.  Thus, unless ICNI is allowed an adequate reimbursement
rate, its sales of CATRIX Wound Dressing will be largely limited to
20% of the population.  At this time, no representation can be made
on the possible outcome of ICNI's rate appeal.

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

          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 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

6<PAGE>
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 can result in the automatic approval in
the other member nations.

          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.  For eighteen months ending in
November 2000, Catrix(R) Ointment was the subject of a human clinical
trial, ultimately to involve some twenty patients undergoing
cosmetic facial surgery by laser peel.  The trial having received
IRB approval was conducted by Dr. Maritza I. Perez in her private
practice in Mount Kisco, New York and in New York City.  Results
were exceptional, and the findings were presented at the annual
meeting of the American Society for Dermatologic Surgery in Denver
in November, 2000.  Moreover, a complete paper on the trial results
has been submitted to Dermatological Surgery, a peel reviewed
journal for publication

          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

7<PAGE>

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.

Human Clinical Trials Conducted with Catrix(R)

          Since approval of the Company's IND, it has completed
Phase I clinical trial and conducted a Phase II clinical trial.
The Company's clinical trials involved the administration  of
Catrix(R) capsules to solid tumor cancer patients.  This trial was
suspended in December 1999 for the reasons given above.  (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.

8<PAGE>

          The Company engaged in one Phase II trial which is now
suspended.  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.


Phase III Trials

          Upon completion of the Phase II trial, should it be
resumed, the Company would 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 would 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 as a prescription product.  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 are being
conducted by ICNI in Spain.

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.

9<PAGE>

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, HPB and the SHM 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 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

10<PAGE>

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.

          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 manufacturers must be FDA-approved
pharmaceutical manufacturing facilities.  Likewise, foreign
government agencies, in countries where marketing approval is
sought, must also approve all such manufacturers.  The Company's
food supplement cartilage material, BIO-CARTILAGE(R) , and its POLY-
Nag? are manufactured in the United States and an additional
manufacturer is being developed in the Western Pacific Area.

11<PAGE>

          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) and the only cattles herds used as source
material are located in the United States, Canada, New Zealand and
Australia.

          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.  The most recent
patents granted were for the use of cartilage-based agents as an
anti-tumor agent and method (U.S. Patent #4,827,607), and for Poly-
NAG for use as an anti-inflammatory.

          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.

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

12<PAGE>

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, 2001, 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.

          The Company's Scientific Advisory Board consists of 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

13<PAGE>

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.

Item 3. Legal Proceedings
        -----------------
        None

Item 4. Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------
        None


14<PAGE>

 	                     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, 2001		       High  	 Low
                                               ----      ---
Fourth Quarter                                  .22      .11
Third Quarter                                   .35      .22
Second Quarter                                  .45      .28
First Quarter                                   .44      .28

Fiscal Year Ending May 31, 2000                High      Low
                                               ----      ---
Fourth Quarter                                $1.12     $.40
Third Quarter                                   .75      .29
Second Quarter                                  .65      .35
First Quarter                                   .72      .50


         On July 13, 2001 the closing bid price per share of
Common Stock, as reported by the National Quotation Bureau, was
$.10.  As of May 31, 2001 there were 515 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 addition, the Company licenses its technology for
commercialization by other companies and in recent fiscal years,
the Company began sales of its proprietary bovine cartilage
material, BIO-CARTILAGE(R), as a food supplement, and direct sales to
consumers of a line of cosmetic products, which include the
Company's proprietary bovine cartilage material.  In the fiscal

15<PAGE>

year ended May 31,2000, the Company made its initial two commercial
shipments of its Catrix(R) Wound Dressing product pursuant to its
agreement with ICN IBERICA, S.A., Spain (see below).

          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 $15.8 million from inception
to May 31, 2001.  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, 2001 compared to May 31, 2000
-------------------------------------------------------
          The Company's revenues decreased in the year ended May 31,
2001 from the comparative prior fiscal y ear primarily due to the
initial two commercial shipments of its Catrix(R) Wound Dressing
Product and an $86,500 license fee earned pursuant to the Company's
agreement with ICN IBERICA, S.A., Spain (see below) in the fiscal
year ended May 31, 2000.  Total  costs and expenses during the year
ended May 31, 2001 were 41% lower than those of the comparative
prior year.  The decrease was principally due to lower costs of
sales related to decreased products' sales and lower professional
fees and consulting expenses.

Liquidity and Capital Resources.

Overview

          The Company has had losses from operations in each of the
five years ended May 31, 2001.  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.

Present Liquidity

          The Company's present liquidity position is critical.  As
of May 31, 2001 the Company's liabilities exceeded its total assets
by $487,339.  The Company will require additional product sales or
funding during or, shortly after the end of, the current fiscal
quarter ending August 31, 2001, to sustain its operations.

16<PAGE>

          As a result of the history of losses incurred by the
Company, the net loss during the year ended May 31, 2001 of
($568,368), 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, 2000 and 2001 contain an explanatory
paragraph  indicating that the Company may be unable to continue in
existence.

          The Company's licensee of its Catrix(R) product, in powder
form only, for topical wound healing purposes (see below) received
its initial two shipments from the Company in the year ended May
31, 2000.  In addition, the Company continued 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. If
the Company's efforts to increase revenues are 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 was
contingent upon securing marketing approval for the product by the
Spanish Health Ministry.

          On September 13, 1999, the Company announced that its
Catrix(R) Wound Dressing product was granted full marketing approval
by the Spanish Health Ministry of Madrid.  Under the prevailing
regulations of the European Union ("EU"), of which Spain is a
member, a drug/device approval in one member country renders the
product marketable in all member states.  Therefore, Catrix Wound
Dressing may now be sold throughout the 15 countries of the EU.

          Since September 1999, the Company has fulfilled all of
its obligations under its agreement with ICNI, including the timely
shipment of the product.  ICNI has commenced implementation of a
complete marketing program in Spain, and it also applied to the
appropriate Spanish authorities for a government sponsored
reimbursement plan for patients covered under the national medical
care program.  The Spanish Health Ministry in the Spring of 2001
allowed only a very low patient reimbursement rate.  As a result,
ICNI is prosecuting an appeal of this decision and a resolution of
the matter is not expected for several months.

17<PAGE>

          As a result of the low reimbursement rate allowed by the
Spanish government, ICNI has been unable to meet minimum sales
levels as set forth in the parties' agreement.  This has led the
parties to agree to continue their relationship absent an
operational agreement until such time as ICNI's appeal of its rate
case has been decided by the Spanish Health Ministry.
Additionally, the Company has granted ICNI permission to market the
product in Portugal for a period of three months.

          Spain's socialized medicine system covers about 80% of
its population.  The other 20% are either privately insured or self
insured.  Unless ICNI is allowed an adequate reimbursement rate,
its sales of CATRIX Wound Dressing will be largely limited to 20%
of the population.  At this time, no representation can be made on
the possible outcome of ICNI's rate appeal.


          The Company has no material commitments for capital
expenditures at May 31, 2001.

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.

Frank E. Berglas                             Director.

George E. Ehrlich, M.D.                      Director.

Charles T. Maxwell                           Director.


18<PAGE>

          Mr. Dupuis (age 63) 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.

          Mr. Berglas (age 60) 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 72) 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 69) 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 and in April 2000 Mr.
Maxwell became Senior Energy Analyst with Weeden & Co.,
Greenwich, Connecticut.  Mr. Maxwell is a graduate of Princeton
University and Oxford University.

Item 10.  Executive Compensation
          ----------------------
                        Annual Compensation     Long-Term
                        -------------------     Compensation
                                                Awards
                                                ------------
Name and               Fiscal Year
Principal              Ended
Position               May 31,      Salary $       Warrants (#)
--------               -------      --------       ------------
Gerard A. Dupuis       2001         $150,000          2,000,000
President and CEO      2000         $150,000          1,000,000
                       1999         $150,000          1,700,000

19<PAGE>

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
                                              5,920,312       $37,500


Item 11. Security Ownership of Certain Beneficial Owners and
	 Management
         ---------------------------------------------------
	The following table sets forth, as of May 31, 2001, 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.

         Name and                     Number of Shares
Title of Address of                   Beneficially            Percent
Class    Beneficial Owner             Owned                   of Class
(1)
------------------------------------------------------------------------

Common	Gerard A. Dupuis (2)	  	6,101,229	       21.52%
Stock	420 Lexington Avenue
	Suite 212
	New York, NY 10170


	Charles T. Maxwell (2)	  	7,004,307	       31.01%
	420 Lexington Avenue
	Suite 212
	New York, NY 10170


	Frank E. Berglas (2)	    	  325,000		1.43%
	420 Lexington Avenue
	Suite 212
	New York, NY 10170

	Peter B. Ruffin 		1,697,500		7.57%
	753 Forest Hills Drive
	Wilmington, NC

20<PAGE>

	George E. Ehrlich (2)      	  275,000      		1.21%
	420 Lexington Avenue
	Suite 212
	New York, NY 10170

	Directors and 		       13,705,536	       47.25%
	Officers as a group
	(2) (4 persons)


	(1) The percentages are calculated on the basis of
22,435,356 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, 2001 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 5,920,312, 225,000, 275,000 and 150,000
warrants to purchase the Company's Common Stock held by Mr.
Dupuis, Mr. Berglas, Dr. Ehrlich and Mr. Maxwell, respectively.


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.*

21<PAGE>

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.*

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, 2001.

22<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 13, 2001

	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 13, 2001			Officer, Principal Accounting
					Officer and Director



By:  S/Frank E. Berglas		   	Director
     ------------------
     Frank E. Berglas
     August 13, 2001

By:  S/George E. Ehrlich          	Director
     ------------------
     George E. Ehrlich
     August 13, 2001


By:  S/Charles T. Maxwell		Director
     ------------------
     Charles T. Maxwell
     August 13, 2001

23<PAGE>


                                                               LESCARDEN INC.


                                               INDEX TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
Independent Auditor's Report						F-2
Balance Sheet as of May 31, 2001					F-3
Statement of Operations for the Years Ended May 31, 2001 and 2000	F-4
Statement of Stockholders' Equity (Deficiency) for the Years
Ended May 31, 2001 and 2000						F-5
Statement of Cash Flows for the Years Ended May 31, 2001 and 2000	F-6
Notes to Financial Statements	  				     F-7 - F-12


F-1<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, 2001 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 auditing standards
generally accepted in the United States of America.  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, 2001, and the results of its operations and its
cash flows for each of the two years in the period then ended in
conformity with accounting principles generally accepted in the
United States of America.

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 2, 2001

F-2<PAGE>

                                                                 LESCARDEN INC.
<TABLE>
                                                                         BALANCE SHEET
<CAPTION>
May 31, 2001
---------------------------------------------------------------------------------------
ASSETS
<S>                                                                       <C>
Current Assets:
  Cash									  $      79,429
  Inventory 									102,812
---------------------------------------------------------------------------------------
      Total current assets							182,241

Deferred Income Tax Asset, net of valuation allowance of $2,502,000		   -
---------------------------------------------------------------------------------------
      Total Assets							  $     182,241
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
  Accounts payable and accrued expenses					  $     119,580
  Advance from stockholder							445,000
  Unearned revenue								105,000
---------------------------------------------------------------------------------------
      Total liabilities								669,580
---------------------------------------------------------------------------------------

Commitments and Contingencies

Stockholders' 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 22,435,356							22,435
  Additional paid-in capital						    15,338,996
  Accumulated deficit							   (15,850,610)
---------------------------------------------------------------------------------------
      Stockholders' deficiency                                                (487,339)
---------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Deficiency			 $     182,241
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
</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,                                                 2001            2000
---------------------------------------------------------------------------------------
<S>                                                        <C>            <C>
Revenue:
  Product sales						   $     39,348	  $     346,633
  License fees							   -      	 86,500
  Interest income						  1,863		  1,448
---------------------------------------------------------------------------------------
Total revenue							 41,211		434,581
---------------------------------------------------------------------------------------

Costs and expenses:
  Cost of product sales						 29,905		218,380
  Salaries:
    Officer							177,312		223,738
    Office							 22,094	 	 23,645
  Interest							 27,600		 11,739
  Professional fees and consulting				157,906		330,978
  Research and development 					 17,646		 28,520
  Rent and office expenses 					109,510		103,669
  Travel and meetings						 32,860		 47,191
  Taxes								    639		  1,116
  Insurance							  1,836		  1,513
  Other administrative expenses					 32,271		 50,178
---------------------------------------------------------------------------------------
Total costs and expenses					609,579       1,040,667
---------------------------------------------------------------------------------------
Net loss						   $  (568,368)	  $   (606,086)
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Net loss per common share - basic and diluted		   $      (.03)	  $       (.03)
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Weighted-average number of common shares outstanding	    22,383,355	    21,901,021
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
</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, 1999		 92,000	   $1,840	   21,725,169	$21,725	   $14,728,848	 $(14,676,156)	    $   76,257
Issuance of common stock
 upon exercise of common
 stock warrants			   -         -    	       50,000  	     50		 4,950		 -         	 5,000
Issuance of common stock
 upon conversion of advances
 to related parties	 	   -         -    	      444,000	    444	       233,295		 -             233,739
Issuance of common stock
 in settlement of liability	   -         -    	      100,000	    100	        49,900		 -         	50,000
Issuance of common stock
 warrants for services             -         -                   -         -           242,738           -             242,738
Net loss			   -         -    	 	 -         -       	  -          (606,086)	      (606,086)
---------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 2000		92,000	    1,840	   22,319,169	 22,319	    15,259,731	  (15,282,242)		 1,648
Issuance of common stock
 upon exercise of common
 stock warrants			  -          -    	      116,187	    116		15,226		 -         	15,342
Imputed interest on advance
 from stockholder		  -          -    		 -         -      	27,000		 -         	27,000
Issuance of common stock
 warrants for services		  -          -    		 -         -      	37,039		 -         	37,039
Net loss			  -          -    		 -         -         	  -          (568,368)	      (568,368)
---------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 2001		92,000	   $1,840	   22,435,356	$22,435	   $15,338,996	 $(15,850,610)	     $(487,339)
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</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,                                                        2001           2000
----------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>
Cash flows from operating activities:
  Net loss							    $(568,368)	     $(606,086)
  Adjustments to reconcile net loss to net cash used in
   operating activities:
    Issuance of common stock for interest				 -		11,739
    Issuance of common stock warrants for services		       37,039	       242,738
    Noncash compensation					       10,342		  -
    Imputed interest on advances from stockholder		       27,000		  -
    Changes in operating assets and liabilities:
      Decrease (increase) in accounts receivable		       71,532	       (71,532)
      (Increase) decrease in inventory				       (2,932)		91,436
      Decrease in prepaid expenses					 -		36,000
      (Decrease) increase in accounts payable and accrued expenses
								      (43,633)		15,799
      Increase (decrease) in unearned revenue			      105,000	       (43,250)
      Decrease in security deposit					 -		 3,080
----------------------------------------------------------------------------------------------
	Net cash used in operating activities			     (364,020)	      (320,076)
----------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from issuance of common stock				5,000		 -
  Net advances from stockholder and related parties		      395,000	       272,000
----------------------------------------------------------------------------------------------
	Cash provided by financing activities			      400,000	       272,000
----------------------------------------------------------------------------------------------

Net increase (decrease) in cash					       35,980	       (48,076)

Cash at beginning of year					       43,449           91,525
Cash at end of year						    $  79,429	     $  43,449
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------


Supplemental schedule of noncash financing activities:

  Conversion of advances received from related parties
   to common stock 						    $   -	     $ 222,000
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
  Issuance of common stock warrants for services		    $ 37,039	     $ 242,738
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
  Issuance of common stock for interest				    $   -	     $  11,739
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
  Conversion of accounts payable and accrued expenses
   into common stock						    $   -   	     $  55,000
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
</TABLE>

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

F-6<PAGE>



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, 2001 and 2000 and has had limited revenue in those years.  At
May 31, 2001, the Company had stockholders' deficiency and a working capital
deficiency.  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 license its Catrix(R) product for topical wound healing
purposes and sell a line of cosmetic products and enter the food supplement
business.  During the year ending May 31, 2002, management expects the
continuation of these plans.  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
earned.  Revenue from the product sales is recognized upon shipment of the
product.

Research and development 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 diluted 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 Statement of Financial Accounting Standards ("SFAS")
No. 123, Accounting for Stock-based Compensation.  The Company has
elected to apply Accounting Principles 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.

The Company does not believe that any recently issued, but not yet effective,
accounting standards will have a material effect on the Company's financial
position, results of operations or cash flows.

F-7<PAGE>

2.	INVENTORY:

Inventory at May 31, 2001 consists of the following:
Finished goods							$  70,192
Raw materials							   32,620
-------------------------------------------------------------------------
								$ 102,812
-------------------------------------------------------------------------
-------------------------------------------------------------------------


3.	ADVANCES FROM RELATED PARTIES:

During the year ended May 31, 2001, certain related parties loaned the
Company $272,000.  The loans were noninterest-bearing and due on demand.
The Company converted $222,000 of these advances into common stock during
the year ended May 31, 2001.  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 $11,739 as a result of the conversion in the
accompanying statement of operations.

During the year ended May 31, 2001, a related party loaned the Company
$445,000.  The loan, which is noninterest-bearing and due upon demand, is
convertible into common stock of the Company.  The conversion terms are
based on the fair market value of the Company's stock at the time of the
loan.  The Company has charged interest expense and credited paid-in
capital for interest imputed on this loan at the Federal Reserve's
prime rate.


4.	STOCK OPTIONS AND WARRANTS:

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 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, 2001, no options were granted under
the 1992 Plan.

F-8<PAGE>

Transactions relating to warrants are as follows:

                                           	             Weighted-
                                           Number of         average
                                            Warrants       Exercise Price
                                          Exercisable        Per Share
--------------------------------------------------------------------------

Balance at June 1, 1999			    5,548,739		      $.32
Granted					    1,812,219		       .35
Expired					     (838,000)		       .94
Exercised				      (50,000)		       .10
--------------------------------------------------------------------------
Balance at May 31, 2000			    6,472,958		       .25
Granted					    2,177,778		      1.85
Expired					     (470,678)		       .42
Exercised				     (116,187)		       .13
--------------------------------------------------------------------------
Balance at May 31, 2001			    8,063,871		      $.67
--------------------------------------------------------------------------
--------------------------------------------------------------------------

The following table summarizes the information about
warrants outstanding at May 31, 2001:


                                   Warrants Outstanding and Exercisable
--------------------------------------------------------------------------

                                               Weighted-
                                                average      Weighted-
                                               Remaining      average
                  Range of        Number       Contractual    Exercise
               Exercise Price  Outstanding    Life (Years)      Price
-----------------------------------------------------------------------

	     $  .10		  855,000	1.98	     $  .10
		.12		  500,000	2.84		.12
		.15		1,100,000	3.22		.15
		.15625 - .25	  703,874	4.60		.18
		.30 - .34	1,055,000	3.79		.31
		.35		1,760,000	3.43		.35
		.40 - .75	   89,997	3.96		.46
	       2.00		2,000,000	4.69	       2.00
--------------------------------------------------------------------------
	     $  .10 - $2.00	8,063,871	    	     $  .67
--------------------------------------------------------------------------
--------------------------------------------------------------------------

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

F-9<PAGE>

Company's net loss and net loss per common share for the years ended
May 31, 2001 and 2000 would approximate the pro forma amounts indicated
in the table below.

Year ended May 31,				2001		2000
----------------------------------------------------------------------

Net loss - as reported			$   (568,368)	$   (606,086)
----------------------------------------------------------------------

Net loss - pro forma			$ (1,088,368)	$ (1,016,836)
----------------------------------------------------------------------

Net loss per common share - as reported	$       (.03)	$       (.03)
----------------------------------------------------------------------
----------------------------------------------------------------------

Net loss per common share - pro forma	$       (.05)	$       (.05)
----------------------------------------------------------------------
----------------------------------------------------------------------

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, 2001 and
2000, respectively: expected volatility of 1.72 and 1.41; risk-free
interest rates of 4.9% and 6.2%; and expected lives of 5 to 10 years.


5.	COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS:


Substantially all of the Company's purchases of its primary raw material
for the Company's merchandise inventory for the year ended May 31, 2001
was 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.  A member of the Company's board of directors 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,
	2002						     $  71,500
	2003							71,500
	2004							47,700
----------------------------------------------------------------------
						       	     $ 190,700
----------------------------------------------------------------------
----------------------------------------------------------------------

Rent expense charged to operations for the years ended May 31, 2001 and
2000 amounted to approximately $86,000 and $81,000, respectively.

During the year ended May 31, 1999, the Company entered into a three-year
agency agreement (as amended during the year ended May 31, 2001) 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

F-10<PAGE>

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 charging for distributorship rights.  The balance
was paid during the fiscal year ended May 31, 2001, upon the Company
having secured registration and marketing approval for the Product from
the Spanish Health Ministry as required under the agreement.  The
Licensee is required to 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, 2001 and are not anticipated in the foreseeable
future.

The chief executive officer ("CEO") of the Company is entitled to
receive a salary increase should the Company achieve certain levels of
net profits as defined in the minutes of the board of directors'
meeting.  The CEO is also entitled to a bonus and warrants to purchase
shares of common stock of the Company if the common stock of the
Company achieves certain price levels and trading volume, as defined in
the minutes.

In June 1982, individuals related to the Company formed the Catrix(R)
Research Limited Partnership (the "Partnership").  The Company entered
into research and license agreements with the Partnership.  On June 1,
2001, the Partnership was dissolved and the agreement terminated.


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.

F-11<PAGE>

7.	INCOME TAXES:

The Company has net operating loss carryforwards of approximately
$7,359,000 available to reduce future taxable income which expire in
various years through 2021.

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.  In recognition of the uncertainty regarding the
ultimate amount of income tax benefits to be derived from the
Company's net operating loss 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, 2001:

Net operating loss carryforwards			$ 2,502,000
-------------------------------------------------------------------
Gross deferred tax assets				  2,502,000
Valuation allowance					 (2,502,000)
-------------------------------------------------------------------
-------------------------------------------------------------------
	Net deferred income tax asset			$   - 0 -
-------------------------------------------------------------------
-------------------------------------------------------------------


8.	MAJOR  CUSTOMER:

During the year ended May 31, 2000, sales to one foreign customer
accounted for approximately 86% of product sale revenue.


F-12