UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q

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|                                                               |                                                                             
|-------------------------------------------------------------- | ----------------------------------------------------------------------------
|ü                                                              | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
|                                                               | ACT OF 1934                                                                 
|For the quarterly period ended: August 31, 2010               
|or                                                            
|                                                               |                                                                             
|                                                               | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
|                                                               | ACT OF 1934                                                                 
|For the transition period from: _____________ to _____________



Commission File Number: 0-10035





LESCARDEN INC.

(Exact name of registrant as specified in its charter)





|                                  |                    
|--------------------------------- | -------------------
|New York                          | 13-2538207         
|(State or other jurisdiction      | (I.R.S. Employer   
|of incorporation or organization) | Identification No.)

420 Lexington Ave. Ste 212, New York 10170

(Address of Principal Executive Office) (Zip Code)

(212) 687-1050

(Registrants telephone number, including area code)



|                                                                                                                                                                                                                                                                                                                                                                   |   |                              |   |                           |   |  |  |  |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ---------------------------- | - | ------------------------- | - |  |  |  |  | 
|Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was                                                                                                                     
|required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                                                                                                                                                                                                                                         | ü | Yes                          |   | No                       
|                                                                                                                                                                                                                                                                                                                                                                   |   |                              |   |                          
|Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
|and post such files).                                                                                                                                                                                                                                                                                                                                              |   | Yes                          |   | No                       
|                                                                                                                                                                                                                                                                                                                                                                  
|Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                   |  
|Large accelerated filer                                                                                                                                                                                                                                                                                                                                            |   |                              |   | Accelerated filer         |   | 
|Non-accelerated filer                                                                                                                                                                                                                                                                                                                                              |   | (Do not check if a smaller   |   | Smaller reporting company | ü | 
|                                                                                                                                                                                                                                                                                                                                                                   |   | reporting company)           |   |                           |   | 
|                                                                                                                                                                                                                                                                                                                                                                   |  
|Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                   |   | Yes                          | ü | No                       
|                                                                                                                                                                                                                                                                                                                                                                   |  
|Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                  
|Class                                                                                                                                                                                                                                                                                                                                                              |   | Outstanding October 13, 2010
|Common Stock $.001 par value                                                                                                                                                                                                                                                                                                                                       |   | 30,943,450                  







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TABLE OF CONTENTS



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Page                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|PART I  FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Item 1.      Financial Statements.
1
Item 2.      Managements Discussion and Analysis of Financial Condition and Results of Operations.
4
Item 3.      Quantitative and Qualitative Disclosures About Market Risk.
5
Item 4.      Controls and Procedures.
5
PART II  OTHER INFORMATION
Item 1.      Legal Proceedings.
6
Item 1A.   Risk Factors.
6
Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds.
6
Item 3.      Defaults Upon Senior Securities.
6
Item 4.      (Removed and Reserved).
6
Item 5.      Other Information.
6
Item 6.      Exhibits.
6
SIGNATURES
7













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PART I  FINANCIAL INFORMATION

Item 1.

Financial Statements.

LESCARDEN INC.

CONDENSED BALANCE SHEETS



|                                                                                                                                     |  |                             |             |   |              |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------- | ----------- | - | ------------ | - | ----------- | -
|                                                                                                                                     |  | August 31, 2010
(UNAUDITED) |             |   | May 31, 2010 |  
|ASSETS                                                                                                                               |  |                             |             |   |              |  
|                                                                                                                                     |  |                             |             |   |              |  
|Current assets:                                                                                                                      |  |                             |             |   |              |  
|Cash and cash equivalents                                                                                                            |  | $                           | 22,587      |   |              | $ | 137,928     |  
|Accounts receivable, net                                                                                                             |  |                             | 55,931      |   |              |   | 5,321       |  
|Prepaid expenses                                                                                                                     |  |                             |            |   |              |   | 6,800       |  
|Inventory                                                                                                                            |  |                             | 71,172      |   |              |   | 76,824      |  
|Total current assets                                                                                                                 |  |                             | 149,690     |   |              |   | 226,873     |  
|Deferred income tax asset, net of valuation allowance of $1,476,000 and $1,464,000 at August 31, 2010 and May 31, 2010, respectively |  |                             |            |   |              |   |            |  
|Total assets                                                                                                                         |  | $                           | 149,690     |   |              | $ | 226,873     |  
|                                                                                                                                     |  |                             |             |   |              |   |             |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                |  |                             |             |   |              |   |             |  
|                                                                                                                                     |  |                             |             |   |             
|Current liabilities:                                                                                                                 |  |                             |             |   |              |   |             |  
|Accounts payable and accrued expenses                                                                                                |  | $                           | 163,005     |   |              | $ | 174,844     |  
|Shareholder loan                                                                                                                     |  |                             | 274,000     |   |              |   | 274,000     |  
|Deferred revenue                                                                                                                     |  |                             | 4,075       |   |              |   | 33,134      |  
|Deferred license fees                                                                                                                |  |                             | 27,000      |   |              |   | 28,500      |  
|Total liabilities                                                                                                                    |  |                             | 468,080     |   |              |   | 510,478     |  
|                                                                                                                                     |  |                             |             |   |              |   |             |  
|Stockholders' deficit:                                                                                                               |  |                             |             |   |              |   |             |  
|Convertible preferred stock - $.02 par value, authorized 2,000,000 shares, issued and outstanding 92,000 shares                      |  |                             | 1,840       |   |              |   | 1,840       |  
|Common stock-$.001 par value,authorized 200,000,000 shares, issued and outstanding 30,943,450 shares                                 |  |                             | 30,943      |   |              |   | 30,943      |  
|Additional paid-in capital                                                                                                           |  |                             | 16,617,615  |   |              |   | 16,617,615  |  
|Accumulated deficit                                                                                                                  |  |                             | (16,968,788 | ) |              |   | (16,934,003 | )
|Stockholders' deficit                                                                                                                |  |                             | (318,390    | ) |              |   | (283,605    | )
|Total liabilities and stockholders' deficit                                                                                          |  | $                           | 149,690     |   |              | $ | 226,873     |  







See notes to financial statements



1



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LESCARDEN INC.

CONDENSED STATEMENTS OF OPERATIONS



|                                                                         |  |                                                   |            |   |      |   |            |  
|------------------------------------------------------------------------ |  | ------------------------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                         |  | (UNAUDITED)
For the three months ended
August 31, |           
|                                                                         |  | 2010                                              |            |   | 2009 |  
|Revenues:                                                                |  |                                                   |            |   |      |  
|Product sales                                                            |  | $                                                 | 104,022    |   |      | $ | 52,632     |  
|License fees                                                             |  |                                                   | 1,500      |   |      |   | 27,701     |  
|Total revenues                                                           |  |                                                   | 105,522    |   |      |   | 80,333     |  
|                                                                         |  |                                                   |            |   |      |   |            |  
|Costs and expenses:                                                      |  |                                                   |            |   |      |   |            |  
|Cost of sales                                                            |  |                                                   | 23,394     |   |      |   | 31,981     |  
|Salaries                                                                 |  |                                                   | 27,443     |   |      |   | 20,368     |  
|Professional fees and consulting                                         |  |                                                   | 44,751     |   |      |   | 39,146     |  
|Rent and office expenses                                                 |  |                                                   | 30,752     |   |      |   | 34,439     |  
|Insurance                                                                |  |                                                   | 11,389     |   |      |   | 5,341      |  
|Other administrative expenses                                            |  |                                                   | 2,578      |   |      |   | 2,696      |  
|Total costs and expenses                                                 |  |                                                   | 140,307    |   |      |   | 133,971    |  
|Net loss                                                                 |  | $                                                 | (34,785    | ) |      | $ | (53,638    | )
|                                                                         |  |                                                   |            |   |      |   |            |  
|Net loss per share  basic and diluted                                   |  | $                                                 | (0.00      | ) |      | $ | (0.00      | )
|                                                                         |  |                                                   |            |   |      |   |            |  
|Weighted average number of common shares outstanding  basic and diluted |  |                                                   | 30,943,450 |   |      |   | 30,943,450 |  







See notes to financial statements



2



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LESCARDEN INC.

CONDENSED STATEMENTS OF CASH FLOWS



|                                                                                          |  |                                                   |          |   |      |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------------------------------------- | -------- | - | ---- | - | ------- | -
|                                                                                          |  | (UNAUDITED)
For the three months ended
August 31, |         
|                                                                                          |  | 2010                                              |          |   | 2009 |  
|Cash flows from operating activities:                                                     |  |                                                   |          |   |      |  
|Net loss                                                                                  |  | $                                                 | (34,785  | ) |      | $ | (53,638 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                                                   |          |   |      |   |         |  
|Changes in operating assets and liabilities:                                              |  |                                                   |          |   |      |   |         |  
|(Increase) decrease in accounts receivable                                                |  |                                                   | (50,610  | ) |      |   | 2,534   |  
|Decrease in prepaid expense                                                               |  |                                                   | 6,800    |   |      |   |        |  
|Decrease in inventory                                                                     |  |                                                   | 5,652    |   |      |   | 5,016   |  
|(Decrease) increase in accounts payable and accrued expenses                              |  |                                                   | (11,839  | ) |      |   | 11,474  |  
|(Decrease) increase in deferred revenue                                                   |  |                                                   | (29,059  | ) |      |   | 72,923  |  
|Decrease in deferred license fees                                                         |  |                                                   | (1,500   | ) |      |   | (27,701 | )
|Net cash provided by (used in) operating activities                                       |  |                                                   | (115,341 | ) |      |   | 10,608  |  
|                                                                                          |  |                                                   |          |   |      |   |         |  
|Cash flows from financing activities:                                                     |  |                                                   |          |   |      |   |         |  
|Increase in shareholder loan                                                              |  |                                                   |         |   |      |   | 20,000  |  
|Cash provided by financing activities                                                     |  |                                                   |         |   |      |   | 20,000  |  
|                                                                                          |  |                                                   |          |   |      |   |         |  
|(Decrease) increase in cash                                                               |  |                                                   | (115,341 | ) |      |   | 30,608  |  
|                                                                                          |  |                                                   |          |   |      |   |         |  
|Cash - Beginning of Period                                                                |  |                                                   | 137,928  |   |      |   | 40,265  |  
|                                                                                          |  |                                                   |          |   |      |   |         |  
|Cash  End of Period                                                                      |  | $                                                 | 22,587   |   |      | $ | 70,873  |  







See notes to financial statements



3



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LESCARDEN INC.

(UNAUDITED) NOTES TO FINANCIAL STATEMENTS

August 31, 2010

Note 1 - General:

The accompanying unaudited financial statements include all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods. All such adjustments are of a normal recurring nature. The statements have been prepared in accordance with the requirements for Form 10-Q and, therefore, do not include all disclosures or financial details required by generally accepted accounting principles. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended May 31, 2010.

The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability of assets and the satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.

As shown in the financial statements, the Company incurred a loss from operations for the quarter ended August 31, 2010, has a stockholders deficiency and a working capital deficiency. These conditions raise substantial doubt about the Companys ability to continue as a going concern as there can be no assurance that the Company will be able to grow revenues or secure sufficient additional financing to meet future obligations.

The Companys plan and ability to continue as a going concern is primarily dependent upon successful regulatory certification of a new packager, which will enable the Company to grow revenue through existing and new lines of business.  The Company is evaluating proposals from packaging facilities and will be required to submit notification of a significant change to the European regulatory body to maintain its CE mark.

The results of operations for the interim periods are not necessarily indicative of results to be expected for a full year's operations.

At August 31, 2010, inventory of $71,172 consisted of $51,731 of finished goods and $19,441 of raw materials.

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations--Three months ended August 31, 2010 compared to August 31, 2009

The Company resumed shipments of Catrix wound dressing to its European distributor during the previous fiscal year upon completion of the regulatory recertification of the Alcan Pharmaceutical packaging facility in Pennsylvania. In June 2010, the Company received notice from Alcan that the packaging facility was scheduled to close in less than six months which will necessitate the selection of a new facility to package the Companys products and regulatory recertification of the new packager.

The Company is evaluating alternative packaging facilities and believes that inventory on-hand is sufficient to meet demand until the packaging process can be transferred to a new facility.  The transfer of our packaging process to a new facility will require a notice of significant change to be submitted to, and approved by, the European regulated body in accordance with the reporting requirements of the Companys CE Mark.  Based on recent experience, the Company believes that the non-recurring costs associated with this transfer of our packaging process are minimal.

The Companys revenues increased in the fiscal quarter ended August 31, 2010 compared to August 31, 2009 by 31% or $25,189 due to increased sales of $25,823 to its Korean distributor, and increases of $11,600, $4,575 and $3,027 to its UK, Spanish and Taiwanese distributors, respectively, offset by a decrease in deferred license fee income brought about by a change in estimate regarding the amortization of license fees. Cost of sales decreased by $8,587 due to the non-recurring costs associated with the transfer of its packaging process to a new facility incurred during the quarter ended August 31, 2009.  The cost of sales as a percent of sales for the three months ended August 31, 2010 was 22%, which is consistent with historical levels during periods that do not involve the non-recurring costs associated with significant changes to the production packaging process.



4



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Total costs and expenses during the three months ended August 31, 2010 were 5% or $6,336 higher than those of the comparative prior-year period.   Increased payroll expenses of $7,075 reflect improved liquidity and the desire of the board of directors to begin reducing the salary reductions necessitated by the Companys financial difficulties.  Increased insurance expenses of $6,048 are attributable to increases in both health insurance and products liability premiums. Increased professional fees of $5,605 include an increase in quality assurance services of $1,784 and increased accounting and reporting costs of $3,821.  Rent and office expense decreased by $3,687 or 11% due to a  reduction in the real estate tax and operating expense adjustment for the Companys office lease.

Liquidity and Capital Resources

The Company had a net loss of $34,785 for the three months ended August 31, 2010.  An increase in accounts receivable of $50,610, a decrease in accounts payable of $11,839, a decrease in deferred revenue of $29,059, a decrease of $1,500 in deferred license fees offset by decreases in prepaid expense and inventory of $6,800 and $5,652 respectively resulted in a use of $115,341 for operating activities.  The Company has reached an agreement with its Chairman of the Board to convert the aggregate shareholder loans aggregating $274,000 at August 31, 2010 into common stock through the issuance of common stock in exchange for cancellation of indebtedness at prevailing market prices during the second fiscal quarter.

As of August 31, 2010, the Companys accounts payable and accrued expenses exceeded its current assets by $13,315. The Companys cash and cash equivalents balance decreased by $115,341 in the quarter ended August 31, 2010 to $22,587.

The Company has no material commitments for capital expenditures at August 31, 2010.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not required for a smaller reporting company.

Item 4.

Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Companys management, including its Chief Executive and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Companys management, including the Chief Executive and Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

The Company has carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based on such evaluation, the Companys Chief Executive and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective as of the end of the period covered by this quarterly report on Form 10Q.

There have been no significant changes in the Companys internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this quarterly report on Form 10-Q.



5



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PART II  OTHER INFORMATION

Item 1.

Legal Proceedings.

None.

Item 1A.

Risk Factors.

None.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

(Removed and Reserved)

Item 5.

Other Information.

None.

Item 6.

Exhibits.

|            |  |                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                          
|31          |  | Certification pursuant to Exchange Act Rule 13a  14 (a)/15d-14(a)                                                   
|32          |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002





6



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date: October 14, 2010

| |                |                                            
| | -------------- | -------------------------------------------
| | LESCARDEN INC.
| |                |                                            
| |                |                                            
| | By:            | /s/ WILLIAM E. LUTHER                      
| |                | William E. Luther                          
| |                | Chief Executive and Chief Financial Officer





7