UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2002
Commission File Number 0-12459
Biosynergy, Inc.
(Exact name of registrant as specified in its charter)
Illinois
(State or other jurisdiction of incorporation or organization)
36-2880990
(I.R.S. Employer Identification No.)
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
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
--------- ---------
Number of shares outstanding of common stock as of the close of
the period covered by this report: 14,215,511
BIOSYNERGY, INC.
PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF MANAGEMENT
The management of Biosynergy, Inc. has prepared and is responsible
for the integrity of the information presented in this Quarterly
Report, including the Company's financial statements. These
statements have been prepared in conformity with generally accepted
accounting principals and include, where necessary, informed
estimates and judgments by management.
The Company maintains systems of accounting and internal controls,
policies and procedures designed to provide assurance that assets
are property accounted for, as well as to ensure that the financial
records are reliable for preparing financial statements. The
systems are augmented by qualified personnel and are reviewed on a
periodic basis. There have been no significant changes in such
controls, policies or procedures which could significantly affect
such controls, policies or procedures since the Annual Report filed
on Form 10-K for the fiscal year ending April 30, 2002.
The Company has an Audit Committee that meets periodically with
management to review the manner in which they are performing their
responsibilities and to discuss auditing, internal accounting
controls and financial reporting matters. It is our opinion that
such controls, policies and procedures are effective to ensure that
material information regarding the Company is presented in this
Quarterly Report.
/s/ Fred K. Suzuki
- -------------------------------------------------
Fred K. Suzuki
Chairman of the Board and President
Board of Directors and Shareholders
Biosynergy, Inc.
Elk Grove Village, Illinois
The accompanying Balance Sheet of BIOSYNERGY, INC. as at
October 31, 2002 and the related Statements of Operations,
Shareholders' Equity (Deficit) and Statements of Cash Flows for the
six month periods ended October 31, 2002 and 2001 were not audited;
however, the financial statements for the three and six month
periods ending October 31, 2002 and 2001 reflect all adjustments
(consisting only of normal reoccurring adjustments) which are, in
the opinion of management, necessary to provide a fair statement of
the results of operations for the interim periods presented.
The financial statements for the fiscal year ended April 30,
2002, were not audited due to the Company's lack of available cash
to pay for such audit; however, the financial statements for the
fiscal year ending April 30, 2002 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.
BIOSYNERGY, INC.
December 13, 2002
BIOSYNERGY, INC.
BALANCE SHEET
ASSETS
October 31, 2002 April 30,2002
Unaudited Unaudited
---------------- -------------
CURRENT ASSETS
Cash 97,448 37,874
Short-Term Investments (Note 4) 250,000 275,016
Accounts Receivable, Trade, Net of 104,848 121,254
Allowance for Uncollectible Accounts
of $500 at October 31, 2002 and $500
at April 30, 2002
Inventories (Notes 1 and 5) 65,644 59,629
Prepaid Expenses 9,099 13,768
Interest Receivable (Note 4) 3,830 815
---------- ----------
Total Current Assets 530,869 508,356
---------- ----------
DUE FROM AFFILIATES (Note 3) 19,432 19,432
---------- ---------
PROPERTY AND EQUIPMENT (Note 1)
Equipment 132,556 132,556
Leasehold Improvements 15,140 15,140
---------- ---------
147,696 147,696
Less: Accumulated Depreciation and
Amortization (120,850) (116,928)
---------- ---------
26,846 30,768
---------- ---------
OTHER ASSETS
Pending Patents, Net of Accumulated
Amortization (Note 1) 18,233 11,989
Deposits 6,015 6,015
---------- ---------
24,248 18,004
601,395 576,560
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable 6,183 9,659
Other Accrued Compensation 9,374 7,501
Accrued Payroll Taxes 863 651
Deferred Rent (Note 8) 2,970 2,750
Other Accrued Expenses 3,455 3,285
--------- ---------
Total Current Liabilities 22,845 23,846
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 8) - -
--------- ---------
SHAREHOLDERS' EQUITY (Note 6)
Common Stock, No Par Value; 20,000,000
Shares Authorized, Issued:
14,215,511 Shares at October 31,
2002 and 14,075,511 at
April 30, 2002 642,888 639,388
Additional paid-in capital 100 100
Accumulated Deficit (64,438) (86,774)
---------- ---------
578,550 552,714
---------- ---------
601,395 576,560
========== =========
The accompanying notes are an integral part of the financial statements.
STATEMENT OF OPERATIONS
Unaudited
Three Months Ended Six Months Ended
October 31, October 31,
2002 2001 2002 2001
------------- ----------- ------------ ------------
REVENUES
Sales 171,704 143,121 344,622 284,610
Other Income 495 320 1,038 1,064
Interest Income 2,303 2,051 4,244 5,985
_____________ __________ _________ __________
174,502 145,492 349,904 291,659
COST AND EXPENSES
Cost of Sales and Other Operating Charges 52,933 42,464 102,853 93,291
Research and Development 35,724 31,317 69,530 61,064
Marketing 19,607 17,135 40,805 32,809
General and Administrative 58,838 52,933 114,380 105,825
_____________ __________ _________ __________
167,102 143,849 327,568 292,989
_____________ __________ _________ __________
NET INCOME (LOSS) BEFORE INCOME 7,400 1,643 22,336 (1,330)
TAXES AND EXTRAORDINARY ITEMS
INCOME TAXES 2,022 615 5,604 -
_____________ __________ _________ __________
INCOME (LOSS) BEFORE 5,378 1,028 16,732 (1,330)
EXTRAORDINARY ITEMS _____________ __________ _________ __________
EXTRAORDINARY ITEMS
Reduction of Income Taxes arising from 2,022 615 5,604 -
Utilization of prior Years' Net Operating ------------- ---------- --------- ----------
Losses (Note 9)
NET INCOME (LOSS) 7,400 1,643 22,336 (1,330)
============= ========== ========= ==========
NET INCOME (LOSS) PER COMMON SHARE (Note 7)
Before Extraordinary Items .0004 .0001 .0012 (.0001)
Extraordinary Items .0001 - .0004 -
_____________ __________ _________ __________
NET INCOME (LOSS) PER COMMON SHARE .0005 .0001 .0016 (.0001)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 14,215,511 14,075,511 14,215,511 14,075,511
The accompanying notes are an integral part of the financial
statements.
BIOSYNERGY, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED OCTOBER 31, 2002
Unaudited
Additional
Common Stock Paid-in
Shares Amount Capital Deficit Total
---------- ------- --------- -------- -------
Balance, May 1,
2002 14,075,511 639,388 100 (86,774) 552,714
Net Profit (Loss) 140,000 3,500 - 22,336 22,336
Balance, October 31,
2002 14,215,511 642,888 100 (64,438) 578,550
The accompanying notes are an integral part of the financial
statements.
BIOSYNERGY, INC.
STATEMENTS OF CASH FLOWS
Unaudited
SIX MONTHS ENDED OCTOBER 31,
2002 2001
------------ -----------
OPERATING ACTIVITIES:
Net Income (Loss) 22,336 (1,330)
Adjustments to Reconcile Net Cash Used for
Operating Activities:
Depreciation and Amortization 3,922 3,663
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 16,406 6,681
(Increase) Decrease in Inventories (6,015) (7,271)
(Increase) Decrease in Prepaid Expenses 4,669 3,596
(Increase) Decrease Business Advance - (769)
Increase (Decrease) in Accounts Payable
and Accrued Expenses (1,001) 3,791
--------- ---------
Net Cash Provided (Used) by Operating
Activities 40,317 8,361
--------- ---------
INVESTING ACTIVITIES:
(Increase) Decrease in Advance to Affiliated
Companies (Note 3) - (80)
(Increase) Decrease in Patents Pending (6,244) (1,694)
(Increase) Decrease in Short-Term Investment
(Note 4) 25,016 (28,075)
(Increase) Decrease in Short-Term Investment
Interest (Note 4) (3,015) 5,739
--------- --------
Net Cash Provided (Used) by Investing Activities 15,757 (24,110)
--------- --------
FINANCING ACTIVITIES:
Exercise of Stock Option by Officer (Note 6) 3,500 6,725
Net Cash Provided (Used) by Financing --------- --------
Activities 3,500 6,725
Increase (Decrease) in Cash and Cash --------- --------
Equivalents 59,574 (9,024)
Cash and Cash Equivalents at Beginning --------- --------
of Period 37,874 64,828
--------- --------
Cash and Cash Equivalents at End of Period 97,448 55,804
========= ========
The accompanying notes are an integral part of the financial statements.
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, manufacture 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 October 31, 2002:
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. 31.6% - 100%
Fred K. Suzuki, Officer 2.9% 35.6% -
Lauane C. Addis, Officer .1% 32.7% -
James F. Schembri, Director 12.6% - -
Mary K. Friske, Officer .1% .2% -
Laurence C. Mead, Officer .1% 4.0% -
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
The following balances were due from F.K. Suzuki International,
Inc., an affiliate, at October 31, 2002:
April 30, 2002 - $19,432
October 31, 2002 - $19,432
The balances result from an allocation of common expenses offset by
advances received from time to time. At October 31, 2002, the
financial condition of F.K. Suzuki International, Inc. is such that
it is unlikely to be able to repay Biosynergy during the next year
without liquidating a portion of its assets.
4. Short-Term Investments:
In May, 2002, the Company invested $250,000 in a 270-day Certificate
of Deposit at an interset rate of 2.2%, pending their use. The
Company is not registered under the Investment Company Act of 1940
and therefore is limited to the types of investments which the
Company may make. The funds invested in the Certificate of Deposit
have not been allocated or earmarked for any specific use.
5. Inventories:
Components of inventories are as follows:
April 30, 2002 October 31, 2002
-------------- ----------------
Raw Materials $35,953 $40,670
Work-in process 5,429 10,204
Finished Goods 18,247 14,770
------- -------
$59,629 $65,644
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. On May 9,
2001, this option was exercised to the extent of 269,000 shares
resulting in additional paid-in-capital of $6,725. This option
expired on November 12, 2001.
Effective November 12, 2001, the Company extended the option to Mr.
Suzuki to purchase all or a portion of the remaining 2,731,000
shares of the Company's common stock at a purchase price of $.025
per share to November 12, 2004. The extended option is subject to
several contingencies, including, but not limited to, shareholder
approval. On September 30, 2002, this option was exercised to the
extent of 140,000 shares resulting in additional paid-in-capital of
$3,500.
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
7. Income or (Loss) Per Shares:
Net income or (loss) per common share is computed using the weighted
average number of common shares outstanding during the period, after
giving effect to stock splits, and also computed using the average
number of common shares outstanding during the period after giving
effect to the number of shares of common stock equivalents which
would have been outstanding after exercise of stock options to
officers. The calculation of net income (loss) per common share and
common share equivalent is as follows:
Three Months Ending Six Months Ending
October 31, October 31,
2002 2001 2002 2001
---------- ---------- ---------- ---------
Net Income (Loss) 7,400 1,643 22,336 (1,330)
Weighted Average Shares Outstanding
Shares of Common Stock Outstanding 14,215,511 14,075,511 14,215,511 14,075,511
Common Share Equivalents -
Options to Officers 2,591,000 2,731,000 2,591,000 2,731,000
Total Weighted Shares 16,806,511 16,806,511 16,806,511 16,806,511
Net Income (Loss) per Common share
and Common Share Equivalent .0004 .0001 .0013 (.0001)
The weighted average number of common shares outstanding were
14,215,511 at October 31, 2002 and 14,075,511 at April 30, 2002.
The effect of conversion of stock options has not been presented as
conversion would be anti-dilutive; however, there has been no
independent evaluation of this transaction to determine if the
option price is less than the market price for the shares.
8. Lease Commitments:
In January, 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 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.
The lease can be extended for an additional five year term.
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 46.25% of sales
during the quarter ending October 31, 2002. At October 31, 2002
there was an outstanding account receivable from this customer of
approximately $64,356.
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 in 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.
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.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SALES/REVENUES
For the three month period ending October 31, 2002 ("2nd Quarter"),
the net sales increased 19.98%, or $28,583, and increased 21.07% or
$60,012 during the six month period ending October 31, 2002, as
compared to net sales for the comparative periods ending in 2001.
This overall increase in sales is primarily the result of increased
sales of HemoempR II Blood Temperature Monitors. As of October 31,
2002, the Company had product back orders aggregating $4,029.
In addition to the above, the Company realized $4,244 of interest
income as a result of a short term investment of $250,000 in a
270-day Certificate of Deposit. The interest rate for this
Certificate of Deposit is 2.2%. Previously, the Company invested
$275,016 in a 90-day Certificate of Deposit providing for an
interest rate of 1.75%. The Company also had $1,038 of
miscellaneous income for the six month period ending October 31,
2002 primarily from leasing a portion of its storage space to a
third party.
INCOME/LOSS
The Company realized a net income of $7,400 during the 2nd Quarter
as compared to a net income of $1,643 for the comparative quarter of
the prior year. The Company also realized net income of $22,336 for
the six month period ending October 31, 2002 as compared to a net
loss of $1,330 during the same period in 2001. This increase in net
profits is primarily due to increased sales discussed above.
As of April 30, 2002, the Company has net operating
losses/carryovers aggregating $166,784. As a result of net
operating loss carryovers, no income taxes were due for Fiscal 2002
and will unlikely be due for Fiscal 2003. 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
will 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 8 of the
"FINANCIAL STATEMENTS."
BIOSYNERGY, INC
EXPENSES
GENERAL
The operating expenses of the Company during the 2nd Quarter
increased overall by 16.17%, or $23,253, and increased by 11.81%, or
$34,579 for the six month period ending October 31, 2002. An
explanation of each category of expenses is included to assist the
reader in reviewing the operations of the Company during the periods
indicated.
COST OF SALES AND OTHER OPERATING CHARGES
The cost of sales and other operating charges during the 2nd Quarter
increased by $10,469 and increased by $9,562 during the six month
period ending October 31, 2002 as compared to the same periods in
2001. As a percentage of sales, the cost of sales and other
operating charges were 30.83% during the 2nd Quarter and 29.67% for
the same quarter ending in 2001, and 29.85% during the six month
period ending October 31, 2002 compared to 32.78% in 2001. Although
the sales of the Company increased, the cost of sales and other
operating charges as a percentage of sales has not materially
changed during the last year and is not expected to materially
change in the foreseeable future.
RESEARCH AND DEVELOPMENT
Research and Development costs increased $4,407, or 10.38% during
the 2nd Quarter, as compared to the same quarter in 2001. These
costs increased by $8,466 or 13.87% during the six month period
ending October 31, 2002 as compared to the same period in 2001.
This increase is due to the Company's investigation of certain
compounds for use of the bacteria growth retardant agents for use in
food and other products. These expenses include travel, laboratory
supplies, legal and technical consulting expenses related to these
compounds.
MARKETING
Marketing costs for the 1st Quarter increased by $2,472 or 14.43%,
as compared to the quarter ending October 31, 2001, and increased
$7,996 or 14.43% during the six month period ending October 31, 2002
as compared to the same period in 2001. This increase is the result
of increased group health insurance and the cost of reprinting
certain marketing brochures related to the Company's products.
BIOSYNERGY, INC.
GENERAL AND ADMINISTRATIVE
General and administrative costs increased by $5,905, or 11.16%, as
compared to the 2nd quarter and increased by $8,555 or 8.09% during
the six month period ending October 31, 2002, as compared to the
same periods in 2001. These increased costs were primarily the
result of an increase in group health insurance and legal fees
related to new reporting requirements under the Securities Act of 1934.
ASSETS/LIABILITIES
GENERAL
Since April 30, 2002 the Company's assets have increased by $24,835
and liabilities have decreased by $1,001. The increase in assets,
primarily cash, and liabilities, primarily accrued expenses, is due
to normal fluctuations, and is not indicative of any material change
in the operations of the Company.
PATENTS PENDING
On August 9, 2002, the Company filed a patent application with the
U.S. Patent and Trademark Office, U.S. Serial Number 60/402,188,
titled "Eggshell Microbial Agent and Method of Use." This patent is
a result of the Company's investigation and development of bacterial
retardant agents conducted over the past 3 years.
RELATED PARTY TRANSACTIONS
The Company was owed $19,432 by F.K. Suzuki International, Inc.
("FKSI"), an affiliate, at October 31, 2002. FKSI owed $19,432 at
April 30, 2002. This account primarily represents common expenses
which are charged by the Company to FKSI for reimbursement. These
expenses include general operating expenses. 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.
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 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. 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 extended the option to Mr.
Suzuki to purchase all or a portion of the remaining 2,731,000
shares of the Company's common stock at a purchase price of $.025
per share. The extended option is subject to several contingencies,
including, but not limited to, shareholder approval and expires
November 12, 2004. On September 30, 2002, Mr. Suzuki exercised this
option to the extent of 140,000 shares. Options for a total of
409,000 shares have now been exercised out of the original 3,000,000
shares.
CURRENT ASSETS/CURRENT LIABILITY RATIO
The ratio of current assets to current liabilities, 23.24 to 1, has
increased compared to 21.32 to 1 at April 30, 2002. Management
believes it has sufficient current assets for its operations during
the ensuing year provided there is no adverse material changes.
WORKING CAPITAL/LIQUIDITY
During the six month period ending October 31, 2002, the Company
experienced an increase in working capital of $23,514. This is due
to the profitability of the Company during the 2nd Quarter. See
"RELATED PARTY TRANSACTIONS" above.
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 to carry a minimum
amount of 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 October 31, 2002, the Company had $530,869 of current assets
available. Of this amount, $65,644 was inventory, $104,848 was net
trade receivables, and $347,448 was cash or short-term 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 or the receivables of the Company are impaired for
any reason, 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.
Except for its operating working capital needs, the Company has no
material contingencies for which it must provide.
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,
risks inherit in marketing new products, 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.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The Company has not entered into any transactions using derivative
financial instruments, nor has the Company invested in any
instruments or securities which are subject to market fluctuations
which could adversely affect the financial condition or operations
of the Company.
BIOSYNERGY, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8K.
(a) The following exhibits are filed as a part of this report:
(2) Plan of Acquisition, reorganization, arrangement,
liquidation or succession - none
(3) Articles of Incorporation and By-laws (i)
(4) Instruments defining rights of security holders,
including indentures - none.
(10) Material Contracts
(a) Stock Option Agreement, dated November 12,
2001, between the Company and Fred K. Suzuki (ii)
(11) Statement regarding computation of per share earnings- none.
(15) Letter dated December 13, 2002, regarding interim financial
information. (iii)
(18) Letter regarding change in accounting principals - none.
(19) Reports furnished to security holders - none.
(22) Published report regarding matters submitted to vote of
security holders - none.
(23) Consents of experts and counsel - none.
(24) Power of Attorney - none.
(27) Financial Data Schedule - none.
(b) No Current Reports on Form 8K were filed during the period
covered by this Report.
(i) Incorporated by reference to a Registration Statement
filed on Form S-18 with the Securities and Exchange
Commission, 1933 Act Registration Number 2-38015C, 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.
(ii) Incorporated by reference to the Company's Annual Report
on Form 10K for fiscal year ending April 30, 2002 filed
with the Securities and Exchange Commission.
(iii) This exhibit is included in this report as a part of the
Financial Statements, and is incorporated by reference
herein.
BIOSYNERGY, INC.
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.
Biosynergy, Inc.
Date December 13, 2002 /s/ Fred K. Suzuki
----------------------------------
Fred K. Suzuki
Chief ExecutiveOfficer,
Chairman of the Board,
President and Treasurer
Date December 13, 2002 /s/ Laurence C. Mead
----------------------------------
Laurence C. Mead
Vice President/Manufacturing and
Development, and Chief Accounting Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Fred K. Suzuki, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Biosynergy, Inc., registrant;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and we have:
a. Designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
b. Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
a. All significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weakness in internal controls; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: December 13, 2002.
/s/ Fred K. Suzuki
--------------------------------------
Fred K. Suzuki
Chairman of the Board, Chief Executive
Officer, President and Treasurer
CERTIFICATION OF CHIEF ACCOUNTING OFFICER
I, Laurence C. Mead, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Biosynergy, Inc., registrant;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and we have:
a. Designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
b. Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
a. All significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weakness in internal controls; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: December 13, 2002.
/s/ Laurence C. Mead
----------------------------------------
Laurence C. Mead
Vice President/Manufacturing and
Development, and Chief Accounting Officer