UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended 4/30/02
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-12459
Biosynergy, Inc.
(Exact name of registrant as specified in its charter)
Illinois 36-2880990
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1940 East Devon Avenue, Elk Grove Village, Illinois 60007
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 956-0471
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registrant
NONE NONE
Securities registered pursuant to section 12(g) of the Act:
Common Stock, No Par Value
(Title of class)
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. Yes[X] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K [X]
The aggregate market value of the voting stock and non-voting stock held by
non-affiliates of the registrant on April 30, 2002 cannot be ascertained
with any certainty because there is no established trading market for the
common stock of the Company.
The number of shares of common stock outstanding on April 30, 2002 was
14,075,511.
No documents have been incorporated by reference in this report except for
certain exhibits and schedules listed in Item 14.
Part I
------
Item 1. Description of Business
-----------------------
General Development of Business
- -------------------------------
Biosynergy, Inc. (the "Company") was incorporated as an Illinois corporation
on February 9, 1976. The Company was formed primarily for the purpose of
developing, manufacturing, and marketing products utilizing cholesteric
liquid crystals. The Company presently manufactures and markets disposable
medical, laboratory and industrial thermometric and thermographic
cholesteric liquid crystal devices. The Company also distributes certain
blood bank and laboratory products manufactured by third parties to
specifications of the Company.
Although the Company did not enter into any agreements materially affecting
its operations during Fiscal 2002, the Company experienced an increase in
sales. The Company's sales of $602,305 were the highest since Fiscal 1982.
However, the Company realized a loss of $11,373 for the fiscal year ending
April 30, 2002 compared to a profit of $44,671 for Fiscal 2001 and $25,457
for Fiscal 2000. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The Company did not introduce any new products in Fiscal 2002. The Company,
however, continued its development and review of the proposed products
described in "Thermographic and Thermometric Devices and Accessories" below.
The Company continued to introduce its products directly to industrial
customers during Fiscal 2002. However, the Company did not make any
material sales to customers in the industrial markets. Although the
ultimate results of these activities are not known, Management believes
there is a need for its products and technology in the industrial markets.
Except as stated above, there were no other significant contracts or
developments with regard to the Company's business during the past fiscal year.
Financial Information About Industry Segments
- ---------------------------------------------
The Company generated revenues from sales of the medical and laboratory
products listed below in the medical and laboratory industry segment during
the fiscal year ended April 30, 2002, 2001 and 2000. For a description of
these products, see "Narrative Description of Business."
Below is a schedule which presents the sales for each product and the
percentage of the Company's total sales attributable to each product for the
fiscal years ending April 30, 2002, 2001 and 2000.
Fiscal Year Ending
April 30, 2002
-------------------
Medical and Percentage
Laboratory Sales of Of Total
Products Product Sales
- ------------------------- -------------- ----------
HemoTempR II BMD $525,736.00 87.3%
TempTrendR TI 31,253.00 5.2%
HemoTempR BMD 16,929.40 2.8%
HemoTempR II Activator 8,903.00 1.5%
TempTrendR II TTD 7,649.50 1.3%
Hemo-CoolTM JR & Accessories 4,459.70 0.7%
LabTempR 40 ST 3,196.00 0.5%
LabTempR 20 ST 2,732.50 0.4%
StaFreezR FTI 1,373.50 0.2%
Miscellaneous72.00 0.1%
-------------- ---------
$602,304.60100.0%
Fiscal Year Ending
April 30, 2001
--------------------------
Medical and Percentage
Laboratory Sales of of Total
Products Products Sales
- ------------------------ ------------- ----------
HemoTempR II BMD $514,684.80 87.3%
TempTrendR TI 26,349.50 4.5%
HemoTempR BMD 15,880.00 2.7%
TempTrendR II TTD 9,700.50 1.6%
HemoTempR II Activator 7,937.00 1.4%
LabTempR 40 ST 4,690.00 .8%
LabTempR 20 ST 3,051.50 .5%
Miscellaneous3,042.00 .5%
Hemo-CoolTM JR + Accessories 1,794.00 .3%
Vena-VueR VAD 1,330.00 .2%
StaFreezR FTI 957.50 .2%
---------------- -------
$589,416.80100.0%
Fiscal Year Ending
April 30, 2000
--------------------
Medical and Percentage
Laboratory Sales of of Total
Products Product Sales
- ----------------------- ------------- ----------
HemoTempR II BMD $481,261.10 86.1%
TempTrendR TI 25,959.00 4.6%
HemoTempR BMD 15,441.00 2.8%
TempTrendR II TTD 11,300.00 2.0%
HemoTempR II Activator 8,139.00 1.5%
LabTempR 40 ST 6,610.00 1.2%
LabTempR 20 ST 3,373.50 .6%
Hemo-CoolTM JR & Accessories 3,040.00 .5%
StaFreezR FTI 1,593.50 .3%
Vena-VueR VAD 1,500.00 .3%
Miscellaneous512.00 .1%
- ----------------------- -------------- --------
$558,729.10100.0%
- --------------------------------
Includes sales of LabTempr 60 and L.C. Sheets.
Includes sales of LabTempR 60, L.C. Sheets, Tempa.SlideTM, and special
order thermometric and thermographic consumer and laboratory products.
Includes discounts and returns.
See "Information About Foreign and Domestic Operations and Export Sales".
See also "Selected Financial Data" and "Financial Statements and
Supplementary Data" for the operating profit and loss and identifiable
assets related to the Company's operations in its industry segment.
Narrative Description of Business.
- ----------------------------------
As described in "General Development of Business", the Company is presently
engaged in the business of developing, manufacturing, and marketing
disposable thermometric and thermographic temperature indicators and
accessories, and distributing and marketing certain non-disposable
thermometric and blood transportation products for the medical, laboratory
and industrial markets. The Company is also developing bacteria growth
retardant agents. Further information about the business and proposed
products of the Company are described below.
Thermographic and Thermometric Devices and Other Products.
- ----------------------------------------------------------
During the fiscal year ending April 30, 2002 the Company manufactured and
marketed various medical, laboratory and consumer thermometric and
thermographic devices and accessories. These products were sold to
hospitals, clinical end-users, laboratories and product dealers.
1. The HemoTempR Blood Monitoring Device ("BMD") is designed to be a human
blood bag temperature indicator. Human blood must be maintained, optimally,
at 1-6o C., and not allowed to exceed 10o C. Since human blood is always in
short supply, it is critical that blood be maintained within these
specifications to avoid loss. HemoTempR BMD monitors the core temperature
of a blood bag from 1-12o C., and replaces the impractical mercury
thermometer susceptible to breakage. HemoTempR BMD once attached to the
blood bag is usable throughout the life of the blood.
2. HemoTempR II BMD is designed to warn blood bank personnel whenever the
internal temperature of the blood bag has exceeded approximately 10-11o C.
HemoTempR II BMD has an irreversible indicator that is activated when the
tag is applied to the blood bag at approximately 4o C. After being
activated, the irreversible indicator remains blue colored for 72 hours
unless the blood is warmed to a temperature of 10o C. or above, in which
case the indicator loses its blue color. The irreversible indicator will
not return to blue even if the blood is subsequently recooled, indicating
that the blood has been warmed. The reversible portion of the indicator
reversibly monitors temperatures from 1-9o C. HemoTempR II BMD is
non-reusable and must be replaced each time the blood bag is returned to the
blood bank and reissued.
3. HemoTempR II Activator, is an electronic, portable block model heater
developed to provide a reliable source of heat necessary to activate the
Company's HemoTempR II BMD. The HemoTempR II Activator has a thermostatic
control to permit precise setting and continuous control of temperatures in
the range for activation of the Company's HemoTempR II BMD. This device is
intended by the Company to be used with HemoTempR II BMD as a system for
blood monitoring. This device is manufactured by another company to
specifications set by the Company.
4. TempTrendR Temperature Indicator ("TI") is primarily used to monitor
the temperature of urine specimens collected for drug testing to detect
fraudulent urine specimens. Most common forms of drug testing require a
urine specimen. However, the test is valid only if a legitimate urine
specimen is collected which has not been altered by the subject to mask a
drug abuse problem. In order to eliminate altered or fraudulent urine
specimens in tests on federal employees, federal government guidelines
require that urine temperature be measured within four minutes of sample
collection, and that the temperature be 90.5-98.9o F. Temperature
measurements taken with TempTrendR TI are simply a matter of observing the
color illuminated number and recording the temperature. TempTrendR TI also
provides a non-invasive method of monitoring the actual surface temperature
trends of any body surface where temperature measurement is important, such
as near joints in rheumatoid arthritis and to assess blood circulation.
5. TempTrendR II Temperature Trend Device ("TTD") is a second generation
temperature trend device which is correlated to internal body temperature
and provides a non-invasive, readily visible means of monitoring changes in
body temperature. TempTrendR II TTD will reflect oral temperatures such as
those taken by glass thermometers. TempTrendR II TTD is used
intraoperatively to warn of developing hyper or hypothermic conditions.
The indicator is also excellent for monitoring a patient's temperature
during any type of transfusion procedure.
6. LabTempR 20, LabTempR 40 and LabTempR 60 Surface Temperature Indicators
("STI") are designed to reversibly indicate the temperature of laboratory
materials which require specific storage or use temperatures. LabTempR 20
STI indicates temperatures between 0-21o C., LabTempR 40 STI monitors
temperatures between 19-21 and 24-41o C., while LabTempR 60 STI measures
temperatures between 41-61o C. These thermometers are designed to monitor
the temperature and changes in temperature of hundreds of laboratory
chemicals and supplies which require specific temperature conditions;
however, these thermometers are suitable for temperature measurement of any
surface.
7. Tempa.SlideTM Temperature Indicator ("SLTI") is amicroscope glass slide
temperature indicator. The SLTI helps the viewer read the optimum
temperature of a slide by indicating in large visible colors when the
desired slide temperature is reached. Tempa.SlideTM can be mounted on a
glass microscope slide and can be used continuously for over one year.
These thermometers are suitable for temperature monitoring of glass slides
during antibody/antigen tests when an optimum temperature of the cells and
protein must be maintained for accurate test results.
8. StaFreezR Freeze-Thaw Indicator ("FTI") is a freeze-thaw indicator which
will irreversibly indicate whether frozen material is warmed to greater than
- -20o C. Once the frozen product exceeds -20o C., the liquid crystal film
will turn from blue to gray to black, and refreezing the product at a lower
temperature will not bring back the original frozen state color.
9. The Vena-VueR Vein Assessment Device ("VAD") is designed to locate good
veins by assessing blood flow, and to assess vein depth, and size. It is
used primarily to minimize complications and reduce discomfort for geriatric
patients, obese patients, diabetic patients, burn patients, drug addicts
with sclerosed veins, shock patients with collapsed veins and long-term
hospitalized or cancer chemotherapy patients with severely damaged and
traumatized veins. However, Vena-VueR VAD is also useful in helping to
select the most patent and least traumatized veins for the purpose of any
venipuncture. This product was discontinued as of May 1, 2001.
10. Hemo-CoolTM and Hemo-CoolTM Jr. Thermoelectric Blood Cooling/Storage
Systems ("TBCSS") are self-contained, portable blood storage and shipping
devices for use in shipping whole blood from the blood bank to surgery, in
the hospital setting, or to other destinations outside the hospital. The
devices operate similar to a portable refrigerator with a DC power supply,
and are designed to maintain a constant temperature suitable for human
blood. The cooling devices are portable and can be used for storage and
shipping of various other biologicals that have to be maintained at a
constant refrigerated temperature.
11. Temp-D-TekTM - Infrared temperature monitor ("ITM") is a hand held
infrared temperature detecting device offering non-contact surface
temperature monitoring in milliseconds to a tenth of a degree accuracy. The
Temp-D-Tek ITM provides quality central temperature monitoring of lab
equipment up to 26 times faster than a traditional electronic thermometer
and 46 times faster than a ASTM mercury thermometer. The Temp-D-Tek ITM is
ideal for use in laboratories or any setting where non-invasive or
non-contact temperature monitoring is desirable.
12. Specialty products include devices manufactured to the specification
and design of the customer, such as time/ temperature shipping labels for
food products under the tradename FoodGardeTM Time/Temperature Indicators
and liquid crystal thermometers for general purpose thermometry. The
Company anticipates continued manufacturing of these and additional
specialty products in the future.
The Company is also developing these other products.
1. The Company is developing certain compounds intended for use as bacteria
growth retardant agents for use in food and other products. Although these
antibacterial compounds are subject to Food and Drug Administration
Regulation, they are historically designated as generally recognized as
safe. Since the development of these compounds is in its initial stages,
and there are several unknown factors regarding efficacy, supply and
regulatory requirements, the completion of this project cannot be predicted
with any certainty at this time.
2. The Company intends to market new irreversible time/ temperature
indicators which will be used as shipping labels, and in other forms, for
the frozen food packaging industry (under the tradename FoodGardeTM), the
pharmaceutical industry, and for other industries requiring careful
monitoring of refrigerated or frozen materials. The devices will have
irreversible color changes at various temperatures determined to be critical
by the end-user. Therefore, a purchaser, whether an individual consumer or
a merchant, will be able to instantaneously determine the temperature
history of the material. Although the liquid crystal formulations are
substantially completed, the Company is uncertain at this time when these
products will be sold.
3. The Company has recognized a need exists for a simple, inexpensive
indicator to determine if sensitive materials have been subjected to
freezing temperatures. The Company is continuing its investigation of the
feasibility of such an indicator.
4. The Company is investigating the feasibility of additional products to
systematize the use of its thermometric and thermographic liquid crystal
devices as well as alternative technologies to supplement its current
product line. The results of such investigations are not predictable at
this time.
5. The Company is investigating alternative thermometric and thermographic
technologies for use in applications where the Company's current products
are not suitable. Since the investigation of these alternative technologies
is not complete, there can be no assurance the Company will be able to
develop any commercial products as a result of this activity.
MANUFACTURING. The Company manufactures all of its products except for the
HemoTempR II Activator, Hemo-CoolTM TBCSS, Hemo-Cool Jr. TBCSS and
Temp-D-TekTM ITM. These products are manufactured for the Company by
unrelated companies on an as needed basis. Raw materials for the Company's
other products are purchased, but all manufacturing of these products is
performed at the Company's production facility. All outside manufacturing
is done to specifications set by the Company. There are no commitments or
firm agreements for outside manufacturers to provide products for the
Company, and the Company does not anticipate it will enter into any such
agreements in the foreseeable future.
The Company has twenty-six years of experience working with various liquid
crystal formulations, thermometric and thermographic application methods and
the effect of temperature and other factors on degradable materials. The
Company maintains complete records of manufacturing and quality assurance
testing of all of its products in compliance with Food and Drug
Administration ("FDA") regulations. All products are manufactured according
to "good manufacturing practices" ("GMP") for medical devices.
MARKETING AND DISTRIBUTION. The Company has traditionally targeted the
medical and laboratory markets. While novel products, such as the Company's
products, enjoy the advantage of no initial competition, they also initially
lack a demonstrated market and acceptance. Furthermore, cost savings
programs and awareness have slowed down the introduction of new products,
particularly in the medical market. As a result, the time required to
achieve acceptance of the Company's medical products is significantly
increased, in Management's opinion.
Because of these conditions, the Company has been forced to rely heavily on
its own marketing and distribution efforts, rather than the use of the
traditional product distributors, for a large portion of its sales.
Nevertheless, the Company's primary distributor in the United States medical
market, Fisher Scientific Company ("Fisher"), and the Company's other
product distributors have increased their sales of the Company's products
throughout the United States over the past few years. During Fiscal 2002,
Fisher accounted for 42.16% of the Company's sales. Although it is
difficult to predict the ultimate success of Fisher and other distributors
in selling the Company's products, management believes this trend will
continue.
The Company continues to negotiate with various medical and laboratory
product companies for the distribution of its products under private labels
and to introduce its products in the industrial, pharmaceutical and
laboratory markets, the success of which cannot be assured. The Company is
attempting to introduce new products to supplement its current product line.
The Company is also researching products outside the traditional medical
and laboratory markets, the results of which cannot be predicted at this time.
At the present time, two employees are engaged on a part-time basis in
marketing the Company's products. The Company uses the services of an
in-house sales representative for telemarketing. The Company does not have
an outside sales force. Since the Company markets its products to
approximately 7,000 hospitals in the United States, hundreds of laboratories
and industrial end-users in the United States, and thousands of hospitals
and laboratories in foreign countries, it will continue to rely upon the
marketing efforts of independent dealers and sales representatives for the
medical and laboratory markets. The Company directly markets and sells to
industrial customers.
The Company is unaware of its current market share for its medical and
laboratory products.
SOURCES AND AVAILABILITY OF RAW MATERIALS. In general, the Company believes
its sources and availability of raw materials and finished products to be
satisfactory. Presently, there are a limited number of domestic
manufacturers of liquid crystal chemicals. Although it is expected that
these domestic manufacturers will continue to supply the raw liquid crystals
needed for the production of the Company's products, which cannot be
assured, if industrial quantities of raw liquid crystals are unavailable
from domestic sources, the Company will need to import these materials from
foreign suppliers, or, as an alternative, manufacture such materials itself.
Other materials and products are currently available from a variety of
suppliers.
PATENTS AND TRADEMARKS. The Company was previously granted or assigned five
United States and four foreign patents relating to liquid crystal
technology. All of these patents have expired. Although these patents are
no longer in effect, management does not believe this will have an adverse
material impact on the Company's operations, revenues or properties. The
Company is also investigating the patentability of certain inventions
related to bacteria growth retardant agents under development and other
products. See "Thermographic and Termometric Devices and Other Products"
above.
The Company has received registered trademark protection on all product
names to date excepting Temp-D-TekTM, Tempa.SlideTM, FoodGardeTM,
LaproVueTM and Hemo-CoolTM. The Company has retained, however, all the
common law rights to the Temp-D-TekTM, Temp.SlideTM, FoodGardeTM,
LaproVueTM and Hemo-CoolTM trademarks. Additional trademark registrations
will be applied for as needed.
Although patent and trademark protection is important, the Company believes
no material adverse effects to the Company's operations will result in the
event additional patents and/or trademarks are not obtained, or, if
obtained, such patents and/or trademarks are held to be invalid. Certain
processes and chemical formulas will be maintained only as trade secrets.
Management feels that it will be difficult for potential competition to
analyze or reproduce the secret processes and formulas without substantial
expenditure of capital and resources.
SEASONAL ASPECT OF BUSINESS. The business of the Company is not seasonal.
WORKING CAPITAL ITEMS. The Company has attempted to conserve working
capital whenever possible. To this end, the Company attempts to keep
inventory at minimum levels. The Company believes that it will be able to
maintain adequate inventory to supply its customers on a timely basis by
careful planning and forecasting demand for its products. However, the
Company is nevertheless required, as is customary in the medical and
laboratory markets, to carry inventory to meet the delivery requirements of
customers and thus, inventory represents a substantial portion of the
Company's current assets.
The Company presently grants payment terms to customers and dealers of 30
days. The Company will not accept returns of products from its dealers
except for exchange, but does guarantee the quality of its products to the
end user.
As of April 30, 2002, the Company had $527,788 of current assets available.
Of this amount, $59,629 was inventory, $121,254 was net trade receivables,
and $312,890 represented cash and short-term cash investments.
Management of the Company believes that it has sufficient working capital to
continue operations for the fiscal year ending April 30, 2003 provided the
Company's sales and ability to collect accounts receivable are not adversely
affected. In the event the Company's sales decrease, the receivables of the
Company are impaired for any reason or the Company needs additional capital
for its development projects, it may be necessary to obtain additional
financing to cover working capital items and keep current trade accounts
payable, of which there can be no assurance. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
MAJOR CUSTOMERS. Fisher, the Company's primary independent product
distributor, was directly responsible for 42.16% of the Company's net sales
during the fiscal year ending April 30, 2002. No other customer or
distributor accounted for 10% or more of the Company's net sales during the
past fiscal year. At April 30, 2002, Fisher owed the Company $70,037.
Management believes the loss of this distributor would materially reduce the
revenues of the Company until the Company could retain the services of
another major product distributor or the end users serviced by Fisher begin
ordering directly from the Company.
BACKLOGS. The Company had $1,495 in backorders as of April 30, 2002.
GOVERNMENT CONTRACTS. The Company does not have a material portion of its
business that may be subject to renegotiation of profits or termination of
contracts or subcontracts at the election of any government entity.
COMPETITION. The Company has no known commercial competitors of its
disposable vein assessment device or blood monitoring devices using liquid
crystal technology. Because of the Company's employment agreements with
former employees and processing trade secrets, it does not anticipate
competition in these areas in the near future.
In the area of laboratory temperature monitoring, there are no other
competitors who market an infinitely thin liquid crystal temperature
indicator. In the area of a frozen food or drink safety indicator, there is
no competition known to the Company that utilizes liquid crystal technology.
The Company believes that the frozen food industry presently uses primarily
physical and organoleptic evaluation (e.g., evaluation of softness, texture,
aroma, taste and the like), as well as mercury thermometers and temperature
sensitive inks to monitor freshness. Labels containing wax encapsulated
dyes with specific low melting points and capillary action products produced
by 3M under the tradename MonitorMarkR and DeltaTrak, Inc. under the
tradename WarmMarkTM, and polymer/monomer indicators from Lifeline are also
available.
The Company's HEMOTEMPR II BMD (blood bag temperature monitor) competes in
the medical market against Safe-T-VueTM (Williams Laboratory), MonitorMarkTM
(3M) and WarmMarkTM (DeltaTrak). Management of the Company believes that
the MonoTech and 3M products are technically inferior to HEMOTEMPR II BMD in
that they provide only an irreversible monitor with nothing to warn the user
that blood is approaching an unsafe temperature. In addition, the MonoTech
product must be refrigerated prior to use, and, because of their design,
both products can readily be dislodged from the blood bag. There are no
known commercial competitors of the Company's HemoTempR II Activator or
Hemo-CoolTM Blood Cooling/Storage Systems. Other manufacturers and
distributors of portable coolers are not marketing their products for use in
storing and transporting blood. Most portable coolers utilize ice for
cooling, where the Company's Hemo-CoolTM Blood Cooling/Storage Systems use
an electric cooling system. Management of the Company believes its product
provides a superior and more reliable method of keeping blood and other
biologicals at desired cold temperatures.
The Company competes with several other infrared device manufacturers and
distributers in general temperature monitoring, but no other company has
stressed quality control as a primary reason for use of an infrared
thermometric device such as the Temp-D-TekTM ITM. The Company's
Temp-D-TekTM ITM has been designed with a lower accuracy variance than other
hand held infrared thermometric devices. As a result, it is more suitable
for certain quality control and precision thermometric procedures.
The Company's TempTrendR II competes in the medical market against
Temp-A-Strip (Johnson & Johnson), Stick-Temp (Trademark Sales) and
Temp-A-Dot (PyMaH Corp). Stick-Temp is distributed on a limited basis and
there is little information available concerning it. Management of the
Company believes that the Johnson & Johnson product is less technically
advanced than the Company's TempTrendR TTD and is primarily distributed in
the Consumer market. Temp-A-Dot is a wax impregnated strip of paper
inserted into the mouth to monitor core temperature. Although it is
reported to cost less than TempTrendR II thermometers, it has the
disadvantage of single reading, invasive methodology and cannot be used to
monitor temperature trends. Recently, a few private label indicators have
been introduced to the market. These are manufactured by Dijinni
Industries, PyMaH Corporation, Hallcrest Products and American Thermometer,
who compete with the Company in the consumer market for forehead temperature
indicators and in the drug testing market for urine thermometers.
Other companies, such as Eurand American, are only involved in the
manufacture of liquid crystal raw materials and do not directly compete with
the Company for sale of medical, industrial or consumer products. Mercury
and electronic thermometers are used in several competitive applications.
They are generally more costly, non-disposable or not usable in most
applications where liquid crystal thermometry and temperature indicators are
utilized.
RESEARCH AND DEVELOPMENT. During Fiscal 2002, 2001 and 2000, the Company
spent $129,067, $109,864 and $100,624, respectively, on Company-sponsored
research and development activities. All expenditures for research and
development are expensed currently with the exception of significant
equipment and set-up charges which are capitalized and depreciated or
amortized over their estimated useful life.
The Company is conducting research and development of products, which are
discussed under "Thermographic and Thermometric Devices and Accessories."
In this regard, the Company may require financing to complete the
development of these products. The success of the Company in obtaining
financing for research and development may largely determine whether the
Company will continue the research and development for such products or
expand its research and development to other products. Management believes
the Company has sufficient working capital for anticipated research and
development for the ensuing year.
GOVERNMENT REGULATIONS. The Company does not currently plan to market
diagnostic or therapeutic products which are subject to stringent United
States Food and Drug Administration (FDA) review and pre-market approval in
the near future, although some of the products under review, such as the
bacteria growth retarding compound, may require pre-clearance by the FDA or
other government agencies. Present medical products of the Company are
classified by the FDA as Class I or Class II. These are subject only to
general regulations requiring that manufacturers adhere to certain
guidelines to provide reasonable assurance of utility, safety, and
effectiveness. These guidelines include labeling requirements, registration
with the FDA as a manufacturer, listing of devices in commercial
distribution with the FDA, notification to FDA of devices proposed to be
marketed, conformance to specified current good manufacturing practices in
the manufacture of the devices, conformance to certain record-keeping
requirements, and, in the case of Class II devices, conformance to certain
performance standards. At the present time, the Company believes that it is
in compliance with regulations set forth by the FDA.
INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES. The
Company had export sales of $10,944 during the last fiscal year, and export
sales of $12,812 and $11,046 during the fiscal years ending in 2001 and
2000, respectively. The Company also believes that some of its medical
devices were sold to distributors within the United States who resold the
devices in foreign markets. However, the Company does not have any
information regarding such sales, and such sales are not considered to be
material.
The Company does not rely on any foreign operations other than its dealers
and marketing representatives in their respective marketing areas. See
"Marketing and Distribution." It is not anticipated export sales will be
material to operating revenues or income of the Company. Foreign sales are
contingent upon, among other factors, foreign trade regulations, value of
the United States Dollar and, where required, government approval of the
Company's products including CE Marketing requirements.
ENVIRONMENTAL PROTECTION EXPENDITURES. The Company's operations are not
subject to any federal, state or local laws regulating the discharge of
materials into the environment which materially affect earnings or the
competitive position of the Company, although the Company is subject to such
laws. There were no material capital expenditures made during the last
fiscal year to comply with such laws, nor are any such expenditures
anticipated for Fiscal 2003.
EMPLOYEES. The Company presently has four full-time employees comprised of
the President (who also presently serves as the Director of Marketing and
Technical Operations), two Vice Presidents, and a secretary/receptionist.
The Company also has two part-time employees in the Research and Development
Department.
Item 2. Properties
----------
The Company's production facilities, research facilities, and administrative
offices are located at 1940 East Devon, Elk Grove Village, Illinois 60007,
in a 10,400 square foot facility leased from an unaffiliated third party.
The lease for these facilities expires on January 31, 2006. See footnote 9
of the "Financial Statements."
A majority of the Company's Elk Grove Village facility is currently in use;
however, Management believes this facility is adequate for its needs in the
foreseeable future. Located at the Company's facility is equipment utilized
for research, development, and manufacturing of the Company's products.
Item 3. Legal Proceedings
-----------------
There is no material litigation threatened or pending against the Company or
any of its properties.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None
PART II
-------
Item 5. Market for Registrant's Common Stock and Related Shareholder
------------------------------------------------------------
Matters.
-------
MARKET INFORMATION. Although the common stock of the Company is traded in
the over-the-counter market, there is no established public trading market
due to limited and sporadic trades. Information regarding these trades is
compiled by the Stock Section of the National Daily Quotation Service ("Pink
Sheets") and selected broker-dealers trading such common stock. During
Fiscal 2000, trades of the common stock of the Company were also reported on
the OTC Bulletin Board ("OTCBB"). The Company's common stock was deleted
from the OTCBB on April 4, 2000 because the Company did not have current
audited financial information on file with the Securities and Exchange
Commission. Although quotations for each quarter are not available, the
OTCBB reported a 52 week range of $0.00 to $0.38 during fiscal 2000. These
quotations do not necessarily reflect actual transactions nor represent the
actual value or trading price of the Company's common stock. Trading and
pricing information for Fiscal 2001 and 2002 is not available to the Company.
HOLDERS. As of April 30, 2002, there were approximately 848 shareholders of
record of the Company's common stock.
DIVIDENDS. The Company has never declared any dividends and does not intend
to do so until such time as the Company sustains a profitable status and has
provided for all of its capital requirements.
Item 6. Selected Financial Data
-----------------------
Fiscal Years Ending
-------------------
2002 2001 2000 1999 1998__
--------- --------- --------- --------- ---------
Operating Revenues $ 602,305 $ 589,417 $ 558,729 $ 548,800 $ 529,460
Other Revenues 10,914 19,855 15,964 3,812 3,460
Net Income/(Loss) (11,373) 44,671 25,457 19,488 99,351
after Taxes
Net Income/(Loss) (.0008) .0032 .0018 .0014 .0072
per Share After Taxes
Total Assets 576,560 574,539 527,227 507,396 521,062
Long Term Debt - - - - -
Stockholder Equity/
(Deficit) 552,714 557,362 512,691 487,234 467,786
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
NET SALES. Net sales for the fiscal year ending April 30, 2002 were
$12,888, or 2.19%, higher than the previous fiscal year, and $43,576, or
7.8%, higher than the fiscal year ending in 2000. The increase in sales
during Fiscal 2002 was primarily due to increased sales of the Company's
HemoTempR II blood temperature indicators. The Company experienced an
increase of $11,051, or 2.15%, in sales of its HemoTempR II product in
Fiscal 2002 as compared to Fiscal 2001, and an increase of $44,475 as
compared to Fiscal 2000.
OTHER REVENUES. During Fiscal 2002, the Company realized $8,890 of interest
income derived from the investment of available cash in short term
certificates of deposit. Interest income for Fiscal 2002 was $7,291 less
than fiscal 2001 due to a decrease in interest rates on available
investments. The Company also realized $2,024 in miscellaneous income from
subleasing a portion of the Company's storage space.
COSTS AND EXPESNES. Operating costs and expenses for the fiscal year ending
April 30, 2002 increased by $59,991 compared to the fiscal year ending in
2001, and increased by $75,356 compared to the fiscal year ending in 2000.
The overall increase in operating costs and expenses for Fiscal 2002 was
generally related to increased research and development expenses, marketing
expenses and increased salaries and related employee expenses. Generally,
with the exception of the above expenses, the overhead of the Company has
remained constant. In order for the Company to continue without materially
altering its present operations, the overall operating costs and expenses
for the ensuing fiscal year are expected to be similar to than those of the
last fiscal year.
COST OF SALES. As a percentage of net sales, the cost of sales was 31.73%
for the fiscal year ending April 30, 2002, 32.42% for the fiscal year ending
in 2001 and 35.68% for the fiscal year ending in 2000. The Company expects
that the cost of sales as a percentage of net sales will remain
substantially the same over the next fiscal year in the absence of a
material decrease in sales or increase in raw material cost.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased during the fiscal year ending in 2002 by $19,203 or 17.48%, as
compared to the fiscal year ending in 2001, and increased by $28,443, or
28.27%, as compared to the fiscal year ending in 2000. This increase is due
to the Company's investigation and development of certain compounds for use
in food and other products as antibacterial agents and research intended to
improve the Company's current product line. These expenses include travel,
outside testing, laboratory supplies, increased salaries and legal and
technical consulting expenses. Recently the Company has been investigating
other products and entirely new technologies. There is insufficient
information available to determine the extent to which the Company will be
required to allocate its resources to the continued development of these
products. See "Narrative Description of Business - Thermographic and
Thermometric Devices and Accessories."
MARKETING EXPENSES. The Company's marketing expenses were $77,850 in 2002
and $59,603 in 2001, as compared to $58,034 for the fiscal year ending in
2000. The increase for fiscal 2002 was primarily due to expenses incurred
to replenish the marketing materials and an overall increase in employee
costs. The Company will continue to increase its marketing activities as
resources became available which management believes is necessary to
continue the Company's growth. Included in marketing expenses for Fiscal
2002 are commissions related to an in-house salesperson.
GENERAL AND ADMINISTRATIVE EXPENSES. The Company's general and
administrative costs increased by $22,532 as compared to the 2001 fiscal
year, and increased by $35,373 as compared to the fiscal year ending in
2000. The increase was primarily the result of increases in salaries,
related employment expenses, automobile depreciation and rent. The Company
is currently amortizing the cost of an automobile used primarily for
marketing and research purposes. The Company's annual amortized rental
expense has increased by approximately $4,000 since the Company extended the
lease for its Elk Grove Village, Illinois facilities in January 2001. See
"Financial Statements." Except for unforeseen extraordinary items and
salary and related employee expenses, it is unlikely general and
administrative expenses will materially change during Fiscal 2002.
NET INCOME/LOSS. The Company experienced a net loss of $11,373 as compared
to income of $33,916 for Fiscal 2001 and income of $19,805 for Fiscal 2000.
Although the Company experienced increased revenues during Fiscal 2002, the
Company's expenses increased at a faster rate than revenues and interest
income was almost 50% less in Fiscal 2002. See "Net Sales and Costs and
Expenses" above.
As of April 30, 2002, the Company had net operating loss carryovers
aggregating $166,784. See "Financial Statements," for the effect of the net
operating loss carryforwards on the Company's income tax position. The Tax
Reform Act of 1986 did not alter the Company's net operating loss
carryforward position, and the net operating loss carryforwards will be
available and expire, if not used, as set forth in Footnote 9 to the
Financial Statements for the year ending April 30, 2002. See "Financial
Statements."
ASSETS. Since April 30, 2001, the Company's assets have increased by
$2,021. This is primarily due to increased accounts receivable offset by a
decrease in cash resulting from the Company's loss position and use of cash
for increased expenses. Other minor changes in specific items do not reflect
transactions outside the ordinary course of business.
Effective November 12, 2001, but approved by the Board of Directors on March
21, 2002, the Company entered into a stock option agreement with Fred K.
Suzuki, President, granting Mr. Suzuki an option to purchase 2,731,000
shares of the Company's common stock at an option price of $.025 per share.
The option is subject to several contingencies, including, but not limited
to, shareholder approval. Management believes the option has no value in
excess of the fair market value of the Company's common stock, however,
there was no independent analysis of this transaction. The option contains
anti-dilutive provisions in the event of corporate capital reorganizations.
As of April 30, 2002, no portion of this option had been exercised. Mr.
Suzuki exercised a prior option to the extent of 269,000 shares on May 9,
2001 for option price of $.025 per share.
The Company was owed $19,432 by F.K. Suzuki International, Inc. ("FKSI"), an
affiliate, at April 30, 2002 and $19,083 at April 30, 2001. This account
primarily represents common expenses which are charged by the Company to
FKSI for reimbursement. These expenses include certain office expenses,
general operating expenses and legal fees. See "Financial Statements."
These expenses are incurred in the ordinary course of business. Although
management believes it is cost effective to share common expenses with FKSI,
the Company has reduced the amount of advances and common expenses charged
to FKSI until FKSI is in a position to reimburse the Company.
Collectability of the amounts due from FKSI cannot be assured without the
liquidation of all or a portion of its assets, and thus such receivable has
been classified as a non-current asset.
LIABILITIES. The Company's overall liabilities have increased by $6,669
since April 30, 2001. This increase represents ordinary fluctuations in
operations and does not represent any material change in the financial
status or operations of the Company. See also "Assets" and "Liquidity and
Capital Resources."
CURRENT ASSETS/LIABILITIES RATIO. The ratio of current assets to current
liabilities, 21.32 to 1, has decreased from 29.89 to 1 at April 30, 2001.
The decrease in ratio of current assets to current liabilities does not
represent a material change in the financial condition or operations of the
Company, although it is reflective of the net loss incurred by the Company
in Fiscal 2002 and increased expenditures discussed above. In order to
maintain the Company's asset/liability ratio, the Company's operations must
return to profitability.
LIQUIDITY AND CAPITAL RESOURCES. During the fiscal year ending April 30,
2002, the Company had a decrease in net working capital of $11,730. The
decrease in net working capital is primarily due to the Company's operating
losses sustained in fiscal 2002 and the use of cash assets for patent
expenses and increased inventories.
Cash used in operating activities was $27,185 during Fiscal 2002. Cash
provided by operating activities was $33,560 during Fiscal 2001 and $15,937
during Fiscal 2000. Although the Company experiences varying collection
periods of its accounts receivable, the Company believes that uncollectible
accounts receivable will not have a significant effect on future liquidity.
The Company's cash flows from operations are considered adequate to fund the
short term capital needs of the Company. However, the Company does not have
a working line of credit, and does not anticipate obtaining a working line
of credit in the near future. There is therefore a risk additional
financing may be necessary to fund long-term capital needs of the Company,
although there is no such currently known long-term capital needs.
Due to the financial condition of the Company during the fiscal year ending
prior to April 30, 2002, the Company chose not to have its financial
statements audited. The cost of such an audit would have been approximately
$25,000.
Except for its operating capital needs, the Company does not have any other
material contingencies for which it must provide.
EFFECTS OF INFLATION. With the exception of inventory and labor costs
increasing with inflation, inflation has not had a material effect on the
Company's revenues and income from continuing operations in the past three
years. Inflation is not expected to have a material effect in the
foreseeable future.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The information required by this item is set forth in pages F-1 to F-12.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
---------------------
None.
Part III
--------
The information contained in items 10, 11, 12, and 13 is the same
information to be included in the Registrant's definitive proxy statement,
if any, to be filed with the Commission, and is included herein for
convenience only.
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
The executive officers and directors of the Company are:
Positions Served in
Name Age with Company Office Since
- -------------- ---- --------------------- ------------------
Fred K. Suzuki 72 President, Treasurer, February, 1976
Director of Research
and Development,
Director of Marketing
and Sales, and Chairman
Of the Board of Directors
Mary K. Friske 42 Vice President - September, 1993
Administration,
Manager of Sales
Laurence Mead 40 Vice President - April, 1994
Manufacturing,
Manager of Financial
and Product Development
Lauane C. Addis 46 Corporate Counsel, February, 1984
Secretary and December, 1985
Director February, 1987
James F. Schembri 67 Director November, 1990
- ------------------------------
Mr. Suzuki did not serve as President from August 1982 through February
1983. Prior to October, 1984, Mr. Suzuki served as Treasurer of the
Company, and was once again appointed Treasurer on June 30, 1991.
As an incentive for his investment in the Company, the Board of Directors
agreed to nominate James F. Schembri as a candidate for election to the
Board of Directors of the Company. Other than the foregoing, there are no
arrangements or understandings between any of the directors or officers of
the Company and any other person pursuant to which any director or officer
was or is to be selected as a director or officer.
The term of office for the members of the Board of Directors extends to the
next regular meeting of shareholders or until they resign, and until their
successors are duly elected. The term of office for the officers of the
Company extends until they resign, are not re-elected by the Board of
Directors, or are otherwise replaced by the Board of Directors of the Company.
Family Relationships.
- --------------------
Lauane C. Addis is the son-in-law of Fred K. Suzuki. Otherwise, there is no
family relationship between any director, executive officer, or person
nominated or chosen by the Company to become a director or executive officer.
Involvement in Certain Legal Proceedings.
- ----------------------------------------
None of the officers or directors are or have been involved in any legal
proceedings which are material to an evaluation of the ability or integrity
of same.
Business Experience.
- -------------------
Certain information regarding the business experience of the directors,
officers, significant employees and consultants of the Company are set forth
below:
FRED K. SUZUKI, Jr., Chairman of the Board, President, Treasurer, Director
of Research and Development and Director of Marketing and Sales. Mr. Suzuki
is founder of the Company and has served as President of the Company since
its inception in 1976 to August 1982 and from February 1983 to the present.
He has served as Chairman of the Board of Directors of the Company since its
inception to the present, and as Treasurer from its inception to October,
1984 and from July, 1991 to the present. Mr. Suzuki is also President and
Chairman of the Board of Directors of F.K. Suzuki International, Inc.
("FKSI"), and President and Chairman of the Board of Directors of Medlab
Products, Inc. ("Medlab"), affiliates of the Company. Mr. Suzuki is the
sole owner, President and Director of Suzuki International, Inc. ("SI"). Mr.
Suzuki also served as President and Chairman of the Board of Directors of
Stevia Company, Inc. ("Stevia") until is dissolution on April 16, 1999.
FKSI is a holding company of Medlab and the Company, and was a holder of a
majority of the common stock of Stevia until its dissolution. As such, it
has no other business operations. See "Security Ownership of Certain
Beneficial Owners and Management." Medlab is a dormant company, organized
to develop, manufacture, and market scientific products. Stevia was a
development company in the business of developing, manufacturing, and
marketing natural sweeteners and other products derived from Stevia
rebaudiana plant. SI is in the business of marketing various products. Mr.
Suzuki has developed several patents or patents pending for clinical
instruments and has licensed them to unaffiliated corporations. These
patents do not inure to the benefit of the Company. Mr. Suzuki has
developed several patents in the area of Diterpene glycosides chemistry
derived from the Stevia rebaudiana plant. Mr. Suzuki also holds patents in
the area of liquid crystal chemistry. Mr. Suzuki attended Roosevelt
University from 1951 to 1954, where he studied Chemistry and Biology.
MARY K. FRISKE, Vice President - Administration and Manager of Sales. Ms.
Friske joined the office staff in July, 1983. Ms. Friske served as an
Executive Secretary for several years and was promoted to Office Manager in
1989. In September, 1993, Ms. Friske was appointed Vice President -
Administration and Manager of Sales. Ms. Friske received her Bachelor of
Science degree in May, 1981 from Eastern Illinois University where she
majored in Personnel Management.
LAURENCE MEAD, Vice President - Manufacturing and Manager of Financial and
Product Development. Mr. Mead joined the production department of the
Company in 1980, and has served as the Company's Production Manager since
1984. In April, 1994, Mr. Mead was appointed Vice President - Manufacturing
and Manager of Financial and Product Development. Mr. Mead received his
Bachelor of Science degree in August, 1992 from Roosevelt University where
he majored in Accounting.
LAUANE C. ADDIS, Secretary, Corporate Counsel, and Director. Mr. Addis is
currently a member of the law firm Stahl Cowen Crowley LLC, Chicago,
Illinois. Mr. Addis served the Company from February, 1984 to December,
1985 as its Vice President - Finance and Chief Financial Officer on a
part-time basis and was employed in the equivalent capacity on a part-time
basis by Stevia. From December, 1985 thru June, 1991, Mr. Addis also served
as Executive Vice President, Chief Operating Officer, Chief Financial
Officer, and Treasurer of the Company and as President of Stevia. In July,
1991, Mr. Addis resigned from these positions to return to the full-time
private practice of law. Mr. Addis is also an officer and director of FKSI,
an affiliate of the Company, and served as the Secretary and a director of
Stevia until its dissolution on April 16, 1999. Mr. Addis graduated from
Andrews University with a B.A. in History and Business Administration in
June, 1978. He received his Doctor of Jurisprudence from Baylor University
in 1981 and his Master of Laws in Taxation from the University of Denver in
1982. Mr. Addis is a member of the Colorado, Illinois and Texas Bar
Associations.
JAMES F. SCHEMBRI, Director. Mr. Schembri was elected to the Board of
Directors on November 15, 1990. Mr. Schembri is the founder and President
of Schembri & Associates (formerly Automatic Controls Company). This
company was a manufacturer's representative with offices in Michigan, Ohio
and Kentucky. It currently is involved in specialized lending situations
with Equity Funding, Inc. of West Bloomfield, Michigan. Mr. Schembri is one
of the founders and President of Fenton Systems, Inc., Burton, Michigan. In
addition to these activities, Mr. Schembri is founder and President of
Wickfield Leasing Company, which leases automobiles and office equipment.
Mr. Schembri also served as a director of Stevia until its dissolution on
April 16, 1999. Mr. Schembri received his Bachelor of Science Degree in
Mechanical Engineering from the University of Detroit in June, 1957.
Item 11. Executive Compensation.
----------------------
The following summary compensation table sets forth a summary of
compensation for services in all capacities to the Company during the fiscal
years ended April 30, 2002, 2001 and 2000 paid to the Chief Executive
Officer. None of the Company's other executive officers received annual
salaries and bonuses for such fiscal years exceeding $100,000.
Summary Compensation Table
---------------------------
Annual Compensation Long Term Compensation/Awards
- ----------------------- --------------------------------
Name and Other
Principal Annual All Other
Position Year Salary Bonus Compensation(1) Options(2) Compensation
- ------------- ---- ------- ------- -------------- ---------- ----------
Fred K. Suzuki 2002 $80,000 $5,000 - - -
President, 2001 $76,608 - - - -
Chairman of 2000 $72,540 - - - -
the Board and
Chief Executive
Officer
- ------------------------------
(1) No executive officer received perquisites in excess of the lesser of
$50,000 or 10% of the aggregate of such officer's salary and bonus.
(2) See "Stock Options" below.
All officers and directors are reimbursed for out-of-pocket expenses
incurred in connection with the Company's business. Messrs. Suzuki, Addis
and Schembri are not remunerated in their capacities as directors. See,
however, "Certain Relationships and Related Party Transactions."
The Company does not have any pension or profit sharing plans in effect for
the benefit of its employees, including its officers and directors. Such
plans may be adopted in the future if deemed in the best interests of the
Company by its Board of Directors.
Stock Options
- -------------
On November 12, 1998, the Company entered into a Stock Option Agreement
("Stock Option I"), described below, with Fred Suzuki, President of the
Company. Stock Option I terminated by its terms on November 12, 2001.
Effective November 12, 2001, but approved by the Board of Directors on March
21, 2002, another Stock Option ("Stock Option II"), described below, was
granted to Fred K. Suzuki. No other stock options were granted to the Chief
Executive Officer or the Company's four other most highly compensated
executive officers (other than the Chief Executive Officer) whose total
annual salary and bonus for fiscal year 2002 exceeded $100,000, and such
officers did not exercise any options during fiscal year 2002. The
following table sets forth the aggregate value as of April 30, 2002 of
unexercised options held by such individuals.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
------------------------------------------------
Number of Value of
Unexercised Unexercised
Options at in-the-Money
Shares Fiscal Year Options at
Acquired End (#) Fiscal Year-End
On Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
- -------------- ---------- ----------- ------------- ----------------
Fred K.
Suzuki
President
and
Chairman of
the Board
Stock
Option I269,000 - 0 $0/0
Stock
Option II- 2,731,000/0 $0/0
- -----------------------------
On November 12, 1998, the Company entered into a Stock Option Agreement
with Fred K. Suzuki, President, granting Mr. Suzuki an option to purchase
3,000,000 shares of Company's common stock at an option price of $0.025 per
share. The option is subject to several contingencies, including, but not
limited to, shareholder approval. Management believes this option has no
value in excess of the fair market value of the Company's common stock,
however, there was no independent analysis of this transaction. The option
contains anti-dilutive provisions in the event of corporate capital
reorganizations. Mr. Suzuki exercised this option to the extent of 269,000
shares on May 9, 2001. This option terminated November 12, 2001 to the
extent it was not exercised.
Effective November 12, 2001, but approved by the Board of Directors on
March 21, 2002, the Company entered into a Stock Option Agreement with Fred
K. Suzuki, President, granting Mr. Suzuki an option to purchase 2,731,000
shares of the Company's common stock at an option price of $0.025 per share.
The option is subject to several contingencies, including, but not limited
to Shareholder approval. Management believes this option has no value in
excess of the fair market value of the Company's common stock, however,
there was no independent analysis of this transaction. The
option contains anti-dilutive provisions in the event of a corporate capital
reorganization. As of April 30, 2002, no portion of this option had been
exercised. This option will terminate on November 12, 2004.
COMPENSATION COMMITTEE. The Company does not have a Compensation Committee
of its Board of Directors. The Board of Directors makes all decisions
concerning the President's compensation including, but not limited to, the
granting of options to acquire common stock of the Company. The President
of the Company, Fred K. Suzuki, has the sole authority, as granted by the
Board of Directors, to make compensation decisions for other employees of
the Company other than the granting of Options to acquire the common stock
of the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
The following table sets forth information as of April 30, 2002, as to the
voting securities of the Company owned by the officers and directors of the
Company and by each person who owns of record, or is known by the Company to
own beneficially, more than 5% of any class of voting securities.
Amount and Nature
Name and Address of Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
- -------------- ------------------- ----------------- ----------
Common Stock Fred K. Suzuki 4,766,146 shares 33.86%
710 S. Kennicott of record and
Arlington Heights, beneficial
Illinois 60005
Common Stock F.K. Suzuki Inter- 4,497,146 shares 31.95%
national, Inc. record and bene-
1940 E. Devon Ave. ficial
Elk Grove Village,
IL 60007
Common Stock Lauane C. Addis 4,506,146 shares 32.01%
1819 Orleans Circle record and bene-
Elk Grove Village, ficial
IL 60007
Common Stock James F. Schembri 1,799,500 shares 12.78%
19115 W. Eight Mile of record and
Rd., Detroit, MI beneficial
48219
Common Stock Mary K. Friske1,000 shares of .01%
940 Bradley Court record and
Palatine, IL 60074 beneficial
Common Stock Laurence C. Mead1,250 shares of .01%
1151 Warwick Cir. record and
North, Hoffman beneficial
Estates, IL 60194
Common Stock All directors and 6,576,896 46.73%
officers as a
group (5 members)
- ----------------------
Fred K. Suzuki is President of F.K. Suzuki International, Inc.
("FKSI") and owns 35.6% of the outstanding common stock of FKSI. Mr. Suzuki
personally holds of record 269,000 shares of the company's common stock;
however he is deemed to be beneficial owner by reason of voting and
disposition control 4,497,146 shares which are owned by FKSI. The above
table does not include an option granted to Mr. Suzuki to acquire 2,731,000
shares of the Company's common stock at $0.025 per share. See "Executive
Compensation" and "Certain Relationships and Related Party Transactions."
Mr. Addis personally owns 9,000 shares of the outstanding Common
Stock of the Company. In addition, Mr. Addis owns 32.7% of the
outstanding Common Stock of FKSI, which owns 31.95% of the Common Stock of
the Company. Mr. Addis is therefore deemed to be beneficial owner by
reason of voting and disposition control of 4,497,146 shares owned by FKSI.
Included in the shares owned beneficially by Mr. Schembri are 35,000
shares held in Auto Controls Profit Sharing Plan for the benefit of
Mr. Schembri and 508,000 shares owned in joint tenancy with Mr.
Schembri's son.
In addition to the Shares of outstanding common stock of the Company
owned by Mary K. Friske, she also owns 200 shares, or approximately .2%,
of the outstanding common stock of FKSI, which owns 32.57% of the common
stock of the Company.
In addition to the common stock of the Company owned by Laurence C.
Mead, he also owns 4,000 shares, or approximately 4%, of the outstanding
common stock of FKSI, which owns 32.57% of the common stock of the Company.
Changes in Control
- ------------------
The Company does not know of any arrangements, the operation of which may at
a subsequent date result in a change in control in the Company nor has a
change in the control of the Company occurred during the last fiscal year.
Item 13. Certain Relationships and Related Party Transactions.
----------------------------------------------------
During the fiscal year ending April 30, 2002, the Company shared common
office expenses, including legal fees, with F.K. Suzuki International, Inc.
("FKSI"). It is believed by management that by sharing these common
expenses with FKSI, they will be reduced and kept at minimum levels. As of
April 30, 2002, FKSI owed $19,432 to the Company in connection with the
shared common expenses. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
On November 12, 1998, the Company granted an option to its President Fred K.
Suzuki, to purchase all or a portion of 3,000,000 shares of the Company's
common stock at a purchase price of $.025 per share. The option was subject
to several contingencies including, but not limited to, shareholder
approval. Mr. Suzuki exercised this option to the extent of 269,000 shares
on May 9, 2001. The option granted November 12, 1998 terminated by its
terms on November 12, 2001. Effective November 12, 2001, the Company
granted an additional option to Mr. Suzuki to purchase all or a portion of
2,731,000 shares of the Company' common stock at a purchase price of $0.025
per share. This option is also subject to several contingencies including,
but not limited to, shareholder approval. As of April 30, 2002, no portion
of this second option was exercised. See "Executive Compensation."
Lauane C. Addis, Secretary and Director, a member of the law firm of Stahl
Cowen Crowley LLC, has represented the Company with respect to the
preparation and filing of this Report. Mr. Addis, and other Members and
associates of Stahl Cowen Crowley LLC, perform other legal services for the
Company from time to time, and it is anticipated such services will be
performed by Mr. Addis and other members and associates of Stahl Cowen
Crowley LLC, in the future. During Fiscal 2002, the Company paid $7,166 in
legal fees to the law firm, some of which inured to the benefit of Mr. Addis
in the form of distributions. Mr. Addis is an officer, director and
shareholder of the Company, and is also the son-in-law of Fred K. Suzuki,
President and Chairman of the Board of Directors. See "Directors and
Executive Officers of the Registrant" and "Security Ownership of Certain
Beneficial Owners and Management."
Except with regard to the above, there were no other material transactions
involving management of the Company or any third party during the last
fiscal year which accrued to the benefit of officers or directors of the
Company.
PART IV
--------------
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
----------------------------------------------------------------
The following financial statements, schedules and exhibits are filed as a
part of this report:
(a) (1) Financial statements.
--------------------
Balance sheet for the fiscal years ending April 30, 2001 and 2002.
Statements of operations for the fiscal years ending April 30,
2000, 2001 and 2002.
Statements of Shareholders' Equity (Deficit) for the fiscal years
April 30, 2000, 2001 and 2002.
Statements of Cash Flows of the Company for fiscal years ending
April 30, 2000, 2001 and 2002.
Notes to financial statements.
(a) (2) List of Financial Statement Schedules:
-------------------------------------
No financial schedules for the fiscal years ending April 30, 2002,
2001, and 2000 are submitted.
Except as listed above, there are no financial statement schedules
required to be filed by Item 8 of this Form 10-K except for those
otherwise shown on the financial statements or notes thereto
contained in this report.
(b) Reports on Form 8K.
------------------
No current reports on Form 8K were filed during the last quarter covered by
this report.
(c) The Following Exhibits are Filed as a Part of this Report:
----------------------------------------------------------
3a. Articles of Incorporation and By-Laws
4. Instruments Defining the Rights of Security Holders, Including
Indentures - none.
9. Voting Trust Agreements - none.
10. Material Contracts
(a) Stock Option Agreement, dated November 12, 1998, between the
Company and Fred K. Suzuki
(b) Stock Option Agreement, dated November 12, 2001, between the
Company and Fred K. Suzuki. P.E-1
11. Statement Regarding Computation of Earnings Per Share - none.
12. Statements Regarding Computation of Ratios - none.
13. Annual Report to Security Holders - none.
16. Letter Regarding Change in Certifying Accountants - none.
18. Letter Regarding Change in Accounting Principles - none.
19. Previously Unfiled Documents - none.
22. Subsidiaries of Registrant - none.
23. Published Report Regarding Matters Submitted to Vote of Security
Holders - none.
24. Consent of Experts and Counsel - none.
25. Power of Attorney - none.
27. Financial Data Schedule - none.
28. Additional Exhibits - none.
29. Information From Reports Furnished to State Insurance Regulatory
Agencies. N/A
- ---------------------------
Incorporated by reference to a Registration Statement filed on Form
S-18 with the Securities and Exchange Commission, 1933 Act Registration
Number 2-83015C, under the Securities Act of 1933, as amended, and
Incorporated by reference, with regard to Amended By-Laws, to the Company's
Annual Report on Form 10K for fiscal year ending April 30, 1986 filed with
the Securities and Exchange Commission.
Incorporated by reference to the Company's Quarterly Report on Form 10Q
for quarter ending January 31, 1999 filed with the Securities and Exchange
Commission.
SIGNATURES
----------
Pursuant to the requirement 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, duly authorized.
REGISTRANT: BIOSYNERGY, INC.
/s/ Fred K. Suzuki July 26, 2002
- ------------------------------------ --------------------
Fred K. Suzuki, Chairman of the Date
Board of Directors and President
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant in the capacities on the dates indicated.
/s/ Fred K. Suzuki July 26, 2002
- --------------------------------- ---------------------
Fred K. Suzuki, Chairman of the Date
Board of Directors, President,
Treasurer and Chief Accounting
Officer
/s/ Lauane C. Addis July 26, 2002
- -------------------------------- ---------------------
Lauane C. Addis, Corporate Date
Counsel, Secretary and Director
BIOSYNERGY, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2002, 2001 AND 2000
Board of Directors and Shareholders
Biosynergy, Inc.
Elk Grove Village, Illinois
The accompanying balance sheet of BIOSYNERGY, INC. at April 30, 2002
and 2001, and the related statements of operations, shareholders' equity and
cash flows for the fiscal years ending April 30, 2002, 2001 and 2000 were
not audited due to the Company's financial condition; however, the financial
statements for the fiscal years ending April 30, 2002, 2001 and 2000 reflect
all adjustments (consisting only of normal reoccurring adjustments) which
are, in opinion of management, necessary to provide a fair statement of the
results of operations for the period presented.
The financial statements for the fiscal year ending April 30, 1991 were
examined by the Company's accountants, KPMG Peat Marwick, and they expressed
a qualified opinion on them in their report dated June 7, 1991. These
opinions were qualified as to the Company's ability to continue as a going
concern. The Company has not had any auditing procedures performed since
June 7, 1991.
BIOSYNERGY, INC.
July 2, 2002
BIOSYNERGY, INC.
BALANCE SHEET
April 30,
------------------------
2002 2001
Unaudited Unaudited
---------- ---------
ASSETS
------
CURRENT ASSETS
Cash 37,874 64,828
Short-term Investment (Note 4) 275,016 271,925
Accounts Receivable, Trade, Net of
Allowance for Doubtful Accounts of
$500 in 2002 and 2001 121,254 105,421
Inventories (Note 5) 59,629 52,637
Prepaid Expenses 13,768 11,194
Interest Receivable 815 7,412
--------- -------
Total Current Assets 508,356 513,417
--------- -------
Due From Affiliates (Note 3) 19,432 19,083
Equipment and Leasehold Improvements:
Equipment 132,556 129,349
Leasehold Improvements 15,140 15,140
------- -------
147,696 144,489
Less: Accumulated Depreciation and
Amortization 116,928 114,010
------- -------
30,768 30,479
OTHER ASSETS ------- -------
Pending Patents, Net of Accumulated
Amortization 11,989 5,545
Deposits 6,015 6,015
------ -------
18,004 11,560
========== ==========
576,560 574,539
The accompanying notes are an integral part of the financial statements.
F-2
April 30,
-------------------------
2002 2001
Unaudited Unaudited
--------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable 9,659 7,700
Accrued Compensation 7,501 5,887
Accrued Payroll Taxes 651 498
Deferred Rent 2,750 660
Other Accrued Expenses 3,285 2,432
------- ------
Total Current Liabilities 23,846 17,177
COMMITMENTS AND CONTINGENCIES (Note 8) - -
SHAREHOLDERS' EQUITY (DEFICIT) (Notes 3 and 6)
Common Stock, No Par Value, 20,000,000
Authorized, Issued: 14,075,511 Shares
at April 30, 2002 and 13,806,511 Shares
at April 30, 2001 639,388 632,663
Additional Paid in Capital 100 100
Accumulated Deficit (86,774) (75,401)
--------- ---------
552,714 557,362
576,560 574,539
========= =========
The accompanying notes are an integral part of the financial statements.
F-3
BIOSYNERGY, INC.
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30,
-----------------------------------
2002 2001 2000
Unaudited Unaudited Unaudited
---------- ------------ ----------
REVENUES
Net Sales 602,305 589,417 558,729
Interest Income 8,890 16,182 13,492
Other Income 2,024 3,673 2,472
-------- -------- -------
613,219 609,272 574,693
COST AND EXPENSES -------- -------- -------
Cost of Sales and Other
Operating Charges 191,099 191,090 199,375
Research and Development 129,067 109,864 100,624
Marketing 77,850 59,603 58,034
General and Administrative 226,576 204,044 191,203
------- ------- -------
624,592 564,601 549,236
INCOME (LOSS) BEFORE INCOME ------- ------- -------
TAXES AND EXTRAORDINARY ITEMS (11,373) 44,671 25,457
INCOME TAXES - 10,755 5,652
INCOME (LOSS) BEFORE ------- ------- -------
EXTRAORDINARY ITEMS (11,373) 33,916 19,805
------- ------- -------
EXTRAORDINARY ITEMS
Reduction of Income Taxes arising from
Utilization of prior years'- Net
Operating Losses (Note 9) - 10,755 5,652
------ -------- --------
- 10,755 5,652
------ -------- --------
NET INCOME (LOSS) (11,373) 44,671 25,457
====== ======== ========
INCOME (LOSS) PER COMMON SHARE (Note 7)
Before Extraordinary Items (.0008) .0025 .0014
---------- ------------ ---------
Extraordinary Items - .0007 .0004
---------- ------------ ---------
NET INCOME (LOSS) (.0008) .0032 .0018
=========== =========== =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 14,075,511 13,806,511 13,806,511
=========== ========== ==========
F-4
BIOSYNERGY, INC.
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
YEARS ENDED APRIL 30, 2002, 2001 AND 2000
Common Stock Additional
--------------------- Paid-In
Shares Amount Capital Deficit Total
---------- -------- --------- ---------- ------
BALANCE,
April 30, 2000 13,806,511 632,663 100 ( 120,072) 12,691
(Unaudited) ========== ======== ========= ========== ======
Net Income (Loss) - - - 44,671 44,671
---------- -------- --------- ---------- ------
BALANCE,
April 30, 2001 13,806,511 632,663 100 (75,401) 57,362
(Unaudited) ========== ======== ========= ========== ======
Issuance of Stock(1) 269,000 6,725 - - 6,725
Net Income (Loss) - - - (11,373) (11,373)
BALANCE,
April 30, 2002 14,075,511 639,388 100 (86,774) 52,714
(Unaudited) ========== ======= ========= ========== ======
(1) See Note 6
The accompanying notes are an integral part of the financial statements.
F-5
BIOSYNERGY, INC.
STATEMENTS OF CASH FLOW
YEAR ENDED APRIL 30,
-----------------------------
2002 2001 2000
Unaudited Unaudited Unaudited
--------- --------- ----------
OPERATING ACTIVITIES:
Net Income (Loss) (11,373) 44,671 25,457
Adjustments to Reconcile Net Cash Provided
By (Used In) Operating Activities:
Depreciation and Amortization 2,918 8,002 6,990
Changes in Assets and Liabilities:
Accounts Receivable, Net (15,833) (27,304) (4,468)
Inventories and Prepaid Expenses (9,566) 5,570 (9,416)
Accounts Payable and Accrued Expenses 6,669 2,641 (5,626)
Deposits - (20) -
Net Cash Provided By (Used In) Operating -------- ------- -------
Activities (27,185) 33,560 15,937
INVESTING ACTIVITIES:
Advances to Affiliated Companies (349) (218) (291)
(Note 3)
Retirement/Purchase of Equipment (3,207) (304) (26,548)
Patents Pending (6,444) (5,545) -
Short-term Investment Interest
Receivable (Note 4) 6,597 (3,913) (3,499)
Short-term Investment (Note 4) (3,091) (12,269) (259,656)
Interest Receivable from Officer - - 66
Net Cash Provided By (Used In) Investing ------- -------- ---------
Activities (6,494) (22,249) (281,928)
FINANCING ACTIVITIES:
Exercise of Stock Option by Officer (Note 6) 6,725 - -
Net Cash Provided By (Used In) Financing -------- ------- -------
Activities 6,725 - -
Increase (Decrease) in Cash and Cash
Equivalents (26,954) 11,311 (265,991)
Cash and Cash Equivalents at Beginning -------- -------- -------
of Year 64,828 53,517 319,508
Cash and Cash Equivalents at End of Year 37,874 64,828 53,517
-------- -------- -------
SUPPLEMENTAL DISCLOSURE:
Cash Paid for Interest - - -
======== ======== =======
The accompanying notes are an integral part of the financial statements.
F-6
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
INVENTORIES - Inventories are valued at the lower of cost using the FIFO
(first-in, first-out) method or market (using net realizable value).
EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Equipment and leasehold improvements
are stated at cost. Depreciation is computed primarily on the straight-line
method over the estimated useful lives of the respective assets. Repairs
and maintenance are charged to expense as incurred; renewals and betterments
which significantly extend the useful lives of existing equipment are
capitalized. Significant leasehold improvements are capitalized and
amortized over the term of the lease.
RESEARCH AND DEVELOPMENT, AND PATENTS - Research and development
expenditures are charged to operations as incurred. The cost of obtaining
patents, primarily legal fees, are capitalized and amortized over the life
of the respective patent on the straight-line method.
2. Company Organization and Description:
Biosynergy, Inc. (Company) was incorporated under the laws of the State of
Illinois on February 9, 1976. It is primarily engaged in the development
and marketing of medical, consumer and industrial thermometric and
thermographic products that utilize cholesteric liquid crystals.
3. Related Party Transactions:
The Company and its affiliates are related through common stock ownership as
follows as of April 30, 2002:
F-7
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
S T O C K O F A F F I L I A T E S
-------------------------------------
F.K. Suzuki
Biosynergy International Medlab
Stock Owner Inc. Inc. Inc.
- -------------------------------- ------------ ------------- -------
F.K. Suzuki
International, Inc. 31.9% - 100.0%
Fred K. Suzuki, Officer 2.1% 35.6% -
Lauane C. Addis,
Officer .1% 32.7% -
James F. Schembri, 12.8% - -
Director
Mary K. Friske, Officer .1% .2% -
Laurence C. Mead, Officer .1% 4.0% -
The following balances were due from F.K. Suzuki International, Inc.
("FKSI") at April 30, 2002 and 2001:
April 30, 2002 - $19,432
April 30, 2001 - $19,083
These balances result from an allocation of common expenses charged to FKSI
offset by advances received from time to time. At April 30, 2002, the
financial condition of FKSI was such that it unlikely will be able to repay
the Company during the next year without liquidating a portion of its assets.
See also Note 6.
4. Short-Term Investments:
In November, 2001, the Company invested $275,016 in a 90-day Certificate of
Deposit, pending its use. This Certificate of Deposit provided for interest
at 1.85%. The Certificate of Deposit was renewed in February, 2002 at an
interest rate of 175%. In May, 2002 the Company invested $250,00 in a
270-day Certificate of Deposit at an interest rate of 2.2%.
F-8
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
5. Inventories:
Components of inventories are as follows:
April 30, 2002 April 30, 2001
-------------- --------------
Raw Materials $35,953 $31,543
Work-in process 5,429 12,622
Finished Goods 18,247 8,472
============== ==============
$59,629 $52,637
============== ==============
6 Common Stock:
The Company's stock is traded in the Over-The-Counter market. However,
there is no established public trading market due to limited and sporadic
trades. The Company's common stock is not listed on a recognized market or
stock exchange.
On November 12, 1998, the Company granted an option to its President, Fred
K. Suzuki, to purchase all or a portion of 3,000,000 shares of the Company's
common stock at a purchase price of $.025 per share. The option is subject
to several contingencies including, but not limited to, shareholder
approval. Mr. Suzuki exercised this option to the extent of 269,000 Shares
on May 9, 2001. This option expired on November 12, 2001.
Effective November 12, 2001, the Company granted an additional option to Mr.
Suzuki to purchase all or a portion of 2,731,000 shares of the Company's
common stock at a purchase price of $.025 per share. The option is subject
to several contingencies, including, but not limited to, shareholder
approval. As of April 30, 2002, no portion of this additional option had
been exercised.
7. Income or (Loss) Per Share:
Net income or (loss) per common share is computed using the
weighted average number of common shares outstanding during the
period, and also computed using the average number of common
shares outstanding during the period after giving effect to stock
splits and the number of shares of common stock equivalents which
would have been outstanding after exercises of stock option granted
to officers. The calculation of net income (loss) per common share
and common share equivalents is as follows:
F-9
BIOSYNERGY, INC.
NOTES TO FINANCIAL SSTATEMENTS
Year Ended April 30,
2002 2001 2000
---------- ---------- ----------
Net Income (Loss) (11,373) 44,671 25,457
Weighted Average Shares Outstanding
Shares of Common Stock Outstanding 14,075,511 13,806,511 3,806,511
Common Share Equivalents-
Options to Officer 2,731,000 3,000,000 3,000,000
---------- ---------- ----------
Total Weighted Shares 16,806,511 16,806,511 16,806,511
========== ========== ==========
Net Income (Loss) per Common Share
and Common Share Equivalent (.0007) .0027 .0015
8. Lease Commitments:
In 2001 the Company entered a five year extension of the lease
agreement for its current facilities which expires January 31,
2006. The base rent under the extended lease escalates over the
life of the lease. Total rent payments for each fiscal year are
as follows:
Year ending April 30 Total Base Rent
--------------------- -----------------
2001 17,875
2002 72,000
2003 73,500
2004 74,100
2005 75,900
2006 56,925
Also included in the lease agreement are escalation clauses for
the lessor's increases in property taxes and other operating
expenses. Rent expense was $74,140, $69,833 and $68,397, for the
fiscal years ending on April 30, 2002, 2001 and 2000,
respectively. The lease can be extended for an additional five
year term.
F-10
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
9. Income Taxes:
At April 30, 2002, net operating loss carryforwards were available
and expire, if not used, as follows:
Year Ending Net Operating
April 30, Losses
------------ -------------
2003 85,822
2004 41,176
2006 160
2007 28,253
2017 11,373
-----------
$166,784
-----------
The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes" as required by SFAS No. 109. The
effect, if any, of adopting Statement No. 109 on pretax income from
continuing operations is not material. The Company has elected not to
retroactively adopt the provisions allowed in SFAS No. 109, however all
provisions of the document have been applied since the beginning of fiscal
year 1994.
10. Major Customers:
Shipments to one customer amounted to approximately 42.16% of sales in
Fiscal 2002. At April 30, 2002, there was an outstanding accounts
receivable from this customer of approximately $70,904.
11. Management's Plans:
Management of the Company recognizes the Company's ability to continue as a
going concern is subject to continuing sales performance and the ability of
the Company to raise money, when needed. To this extent, management has
endeavored to introduce the Company's products to new markets, expand its
marketing efforts in the traditional medical market and introduce new
products. Finally, management intends to continue pursuing financing
opportunities, if necessary.
F-11
BIOSYNERGY,INC.
NOTES TO FINANCIAL STATEMENTS
12. Forward-Looking Statements:
This report may contain statements which, to the extent they are not
recitations of historical fact, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). Such forward-looking statements involve risks and
uncertainties. Actual results may differ materially from such
forward-looking statements for reasons including, but not limited to,
changes to and developments in the legislative and regulatory environments
effecting the Company's business, the impact of competitive products and
services, changes in the medical and laboratory industries caused by various
factors, as well as other factors as set forth in this report. Thus, such
forward-looking statements should not be relied upon to indicate the actual
results which might be obtained by the Company. No representation or
warranty of any kind is given with respect to the accuracy of such
forward-looking information. The forward-looking information has been
prepared by the management of the Company and has not been reviewed or
compiled by independent public accountants.
F-12