UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2014

 

__ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from __________ to ___________

 

Commission file number 0 -12459

 

Biosynergy, Inc.

(Exact name of registrant as specified in its charter)

 

Illinois	36-2880990
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1940 East Devon Avenue, Elk Grove Village, Illinois 60007	847-956-0471
(Address of principal executive offices)	(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes X No __

 

Indicate by check mark whether the registrant is a large accelerated filing, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer			Accelerated filer
Non-accelerated filer		(Do not check if a smaller reporting company)	Smaller reporting company	X

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of December 15, 2014: 14,935,511

BIOSYNERGY, INC.

 

PART 1 - FINANCIAL INFORMATION

 

Item 1. FINANCIAL STATEMENTS

 

Balance Sheets

 

 

ASSETS

 

			October 31, 2014				April 30, 2014
			Unaudited				Audited
Current Assets
Cash			948,655				864,528
Accounts receivable. Trade (net of allowance for doubtful   accounts of $500 at October 31, 2014 and April 30, 2014			141,662				190,749
Inventories			118,765				121,197
Prepaid expenses			13,334				30,375
Total Current Liabilities			1,222,416				1,206,849
Equipment and leasehold improvements
Equipment			199,596				197,980
Leasehold improvements			20,022				20,022
			219,618				218,002
Less accumulated depreciation and amortization			(191,672	)			(185,366	)
Total Equipment and Leasehold Improvements Net			27,946				32,636
Other Assets
Patents less accumulated amortization			102,512				26,116
Pending patents			30,860				87,825
Deposits			5,937				5,937
Total Other Assets			139,309				119,878
			1,389,671				1,359,363

 

The accompanying notes are an integral part of the financial statements.

 

Liabilities and Shareholders’ Equity

 

 

			October 31, 2014				April 30, 2014
			Unaudited				Audited
Current Liabilities
Accounts payable			14,259				14,436
Accrued compensation and payroll taxes			—				32,143
Medical device excise tax			2,409				1,616
State/Federal Income Taxes Payable			7,636				—
Accrued Vacation			25,782				28,714
Total Current Liabilities			50,086				76,909
Deferred Income Taxes			23,822				23,822
Shareholder's Equity
Common stock, no par value: 20,000,000 authorized shares issued: 14,935,511 shares at October 31, 2014 and April 30, 2014			660,988				660,988
Receivable from affiliate			(19,699	)			(19,699	)
Retained earnings			674,474				617,343
Total Shareholders' Equity			1,315,763				1,258,632
			1,389,671				1,359,363

 

 

The accompanying notes are an integral part of the financial statements.

Biosynergy, Inc.

 

Statements of Income

 

 

 

		Three Months Ended								Six Months Ended
		October 31								October 31
		2014				2013				2014				2013
Net sales		$	360,163			$	345,634			$	684,209			$	669,474
Cost of sales			113,168				98,688				213,186				206,097
Gross profit			246,995				246,946				471,023				463,377
Operating expenses
Marketing			46,632				42,832				96,037				96,439
General and administrative			98,182				94,459				222,961				220,394
Research and development			35,113				33,963				69,728				69,994
Total Operating Expenses			179,927				171,254				388,726				386,827
Income from operations			67,068				75,692				82,297				76,550
Other income
Interest income			127				161				232				323
Other income			480				480				960				960
Total Other Income			607				641				1,192				1,283
Net income before income taxes			67,675				76,333				83,489				77,833
Provision for income taxes			21,366				25,809				26,358				23,772
Net income		$	46,309			$	50,524			$	57,131			$	54,061
Net income per common share - basic and diluted		$	—			$	—			$	—			$	—
Weighted-Average Shares of Common Stock Outstanding - Basic and Diluted			14,935,511				14,935,511				14,935,511				14,935,511

 

 

The accompanying notes are an integral part of the financial statements.

BIOSYNERGY, INC.

 

STATEMENT OF SHAREHOLDERS' EQUITY

 

SIX MONTHS ENDED OCTOBER 31, 2014

 

(Unaudited)

 

 

 

 

 

 

	Common Stock
	Shares	Amounts	Receivable from Affiliate	Retained Earnings	Total
Balance, May 1, 2014	14,935,511	$    660,988	$        (19,699)	$      617,343	$    1,258,632
Net Income	-	-	-	57,131	57,131
Balance, October 31, 2014	14,935,511	$    660,988	$        (19,699)	$      674,474	$    1,315,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

BIOSYNERGY, INC.

 

STATEMENTS OF CASH FLOWS

 

		Six Months Ended October 31
		2014				2013
Cash flows from operating activities
Net income		$	57,131			$	54,061
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization			7,924				4,420
Changes in assets and liabilities
Accounts receivable			49,087				3,163
Inventories			2,432				7,465
Prepaid expenses and other			17,041				28,294
Accounts payable and accrued expenses			(26,823	)			(12,769	)
Total adjustments			49,661				30,573
Net cash provided by operating activities			106,792				84,634
Cash flow from investing activities
Patents and patents pending			(21,049	)			(16,601	)
Purchase of equipment			(1,616	)			(3,525	)
Net cash used in investing activities			(22,665	)			(20,126	)
Increase in cash and cash equivalents			84,127				64,508
Cash beginning period			864,528				796,023
Cash ending period			948,655				860,531
Supplemental cash flow information
Interest paid		$	—			$	—
Income taxes paid		$	7,592			$	27,564

 

 

 

The accompanying notes are an integral part of the financial statements.

 

 

 

 

Note 1 - Company Organization and Description

 

In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments, consisting of normal recurring adjustments which are necessary for a fair presentation of the financial position and results of operations for the periods presented. The unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These condensed financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s April 30, 2014 Annual Report on Form 10-K. The results of operations for the six months ended October 31, 2014 are not necessarily indicative of the operating results for the full year.

 

Biosynergy, Inc. (the 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. The Company’s primary product, the HemoTemp II Blood Monitoring Device, accounted for approximately 88.9% of the sales during the quarter ending October 31, 2014 and 89.8% during the six month period ending October 31, 2014. The products are sold to hospitals, clinical end-users, laboratories and product dealers located throughout the United States.

 

Note 2 - Summary of Significant Accounting Policies

 

Cash

 

The Company maintains all of its cash in various bank deposit accounts, which at times may exceed federally insured limits. No losses have been experienced on such accounts.

 

Receivables

 

Receivables are carried at original invoice less estimates made for doubtful receivables. Management determines the allowances for doubtful accounts by reviewing and identifying troubled accounts on a periodic basis and by using historical experience applied to an aging of accounts. A receivable is considered to be past due if any portion of the receivable balance is outstanding for more than 30 days. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.

 

Inventories

 

Inventories are valued at the lower of cost or market using the FIFO (first-in, first-out) method.

 

 

 

 

 

Note 2 – Summary of Significant Accounting Policies (Continued)

 

Depreciation and Amortization

 

Equipment and leasehold improvements are stated at cost. Depreciation is computed using 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; equipment is depreciated over three to ten years.

 

Prepaid Expenses

 

Certain expenses, primarily insurance and income taxes, have been prepaid and will be used within one year.

 

Revenue Recognition

 

The Company recognizes net sales revenue upon the shipment of product to customers.

 

Research and Development and Patents

 

Research and development expenditures are charged to operations as incurred. The costs of obtaining patents, primarily legal fees, are capitalized and once obtained, amortized over the life of the respective patent on the straight-line method.

 

The Company is developing certain Gelpaks intended for use in temperature control. On September 2, 2014, the Company was granted a design patent entitled “Rollup GelPak for Test Tubes,” the Patent Number D712,559 related to the Company’s HemoCool^TM Gel-Pak. This patent will expire on September 2, 2028. Another patent was granted on October 14, 2014 entitled “Method of Producing Eggshell Powder,” Patent Number 8,859,010. This patent will expire on May 28, 2024. Additionally $78,014 was moved from patents pending to amortizable patents during the quarter. Amortization expense for the six months ended October 31, 2014 was $1,618.

 

Patents and patents pending relate to products that have been developed by the Company.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Note 2 – Summary of Significant Accounting Policies (Continued)

 

Income Per Common Share

 

Income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. When dilutive, stock options are included as share equivalents using the treasury stock method in the calculation of diluted earnings per share. The Company has no outstanding options or other rights to acquire its unissued common shares.

 

Comprehensive Income

 

Components of comprehensive income include amounts that are included in the comprehensive income but are excluded from net income. During the quarter endings and six month periods ending October 31, 2014 and 2013, there were no differences between the Company’s net income and comprehensive income.

 

Income Taxes

 

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due and deferred taxes related primarily to differences in the methods of accounting for patents, inventories, certain accrued expenses and bad debt expenses for financial and income tax reporting purposes. The deferred income taxes represent the future tax consequences of those differences, which will be taxable in the future.

 

The Company files tax returns in the U.S. federal jurisdiction and with the state of Illinois. Various tax years remain open to examinations, generally for three years after filed, although there are currently no ongoing tax examinations. Management’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense.

Note 2 - Summary of Significant Accounting Policies (Continued)

 

The provision for income taxes consists of the following components as of October 31:

 

			2014				2013
Current
Federal		$	18,593			$	16,689
State			7,765				7,083
Provision for Income Taxes		$	26,358			$	23,772

 

The differences between the U.S. federal statutory tax rate and the Company’s effective tax rate are as follows:

 

		Period ended October 31,
		2014				2013
U.S. federal statutory tax rate			34.0	%			34.0	%
State income tax expense, net of Federal tax benefit			5.0				5.0
Adjustment for prior year estimates			—				(4.9	)
Effect of graduated federal tax rates			(7.5	)			(3.6	)
Effective Tax Rate			31.5	%			30.5	%

 

Recent Accounting Pronouncements

 

The FASB issues ASUs to amend the authoritative literature in Accounting Standards Certification (ASC). There have been a number of ASUs to date that amend the original text of ASCs. Those ASUs issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

 

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.

 

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard as of May 1, 2017.

 

Note 3 – Inventories

 

Components of inventories are as follows:

 

		October 31, 2014				April 30, 2014
Raw materials		$	93,710			$	94,266
Work-in-process			15,845				16,391
Finished goods			9,210				10,540
		$	118,765			$	121,197

 

Note 4 – Common Stock

 

The Company’s common 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.

 

Note 5 - Related Party Transactions

 

The Company and its affiliates are related through common stock ownership as follows as of October 31, 2014:

 

		Stock of Affiliates
			Biosynergy, Inc.				F.K. Suzuki International, Inc.				Medlab, Inc.
F.K. Suzuki International, Inc			30.0	%			- %				100.0	%
Fred K. Suzuki, Officer			4.1				30.0				—
Lauane C. Addis, Officer			—				—				—
Jeanne S. Addis, Trustee			—				28.1				—
James F. Schembri, Director			8.6				—				—
Mary K. Friske, Officer			.3				.7				—
Laurence C. Mead, Officer			.4				10.0	(1)			—
Beverly K. Suzuki, Officer			2.7				—				—

_________________

 

(1)

Effective December 13, 2013, Fred K. Suzuki and Jeanne S. Addis, Trustee, each gifted 3,051 shares each of F.K. Suzuki International, Inc. (“FKSI”) common stock to Laurence C. Mead. As a result of these gifts, Laurence C. Mead currently owns 10,102 shares, or approximately 10% of the outstanding common stock of FKSI.

 

Note 5 - Related Party Transactions (continued)

 

As of October 31, 2014, $19,699 was due from F. K. Suzuki International, Inc. These balances result from an allocation of common expenses charged to FKSI prior to April 30, 2006 offset by advances received from time to time. No interest income is received or accrued by the Company. The financial condition of FKSI is such that it will unlikely be able to repay the Company during the next year without liquidating a portion of its assets, including a portion of its ownership in the Company. As a result, the receivable balance has been reclassified as a contra equity account since April 30, 2006.

 

A board member provided a variety of legal services to the Company in his capacity as a partner in a law firm. Fees for such legal services were approximately $22,785 and $18,046 for the six months ended October 31, 2014 and 2013, respectively.

 

Note 6 - Major Customers

 

Shipments to one customer amounted to 30.93% of sales during the first six months of Fiscal 2015 compared to 33.62% during the comparative Fiscal 2014 period. As of October 31, 2014, there were outstanding accounts receivable from this customer of $65,373 compared to $76,783 at October 31, 2013. Shipments to another customer amounted to 32.56% of sales during the first six months of Fiscal 2015 and 29.19% of sales during the first six months of Fiscal 2014. As of October 31, 2014, there were outstanding accounts receivable from this customer of $36,940 compared to $43,755 at October 31, 2013.

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Net Sales/Revenues

 

For the three month period ending October 31, 2014 (“2nd Quarter”), the net sales increased 4.2%, or $14,529, and increased 2.2%, or $14,735 during the six month period ending October 31, 2014, as compared to net sales for the comparative periods ending in 2013. This increase in sales is primarily the result of an increase in the sales of TempTrend and HemoTemp II Activators. As of October 31, 2014, the Company had $290 in back orders.

 

In addition to the above, the Company had $607 and $1,192 of other miscellaneous revenues primarily from interest income and leasing a portion of its storage space to a third party during the three and the six month periods ending October 31, 2014, respectively.

 

Costs and Expenses

General

The operating expenses of the Company during the 2nd Quarter increased overall by 5.06%, or $8,673 and increased by .05%, or $1,899 for the six month period ending October 31, 2014, as compared to the same periods ending in 2013. The increase was due to an increase in the Company’s group health insurance plan premiums during the 2^nd Quarter.

 

Cost of Sales

 

The overall cost of sales during the 2nd Quarter increased by $14,480 and increased by $7,089 during the six month period ending October 31, 2014 as compared to the same periods ending in 2013 as a result of an increase in unit sales of HemoTemp II Activator and higher group health insurance plan premiums. As a percentage of sales, the cost of sales were 31.42% during the 2nd Quarter and 28.55% for the comparative quarter ending in 2013; and 31.16% during the six month period ending October 31, 2014 compared to 30.78% in 2013. Included in the cost of sales is the medical device excise tax. It is not anticipated that the cost of sales as a percentage of sales will materially change in the near future.

 

Research and Development Expenses

 

Research and Development costs increased $1,150, or 3.39%, during the 2nd Quarter as compared to the same quarter in 2013. These costs decreased by $266, or .04%, during the six month period ending October 31, 2014 as compared to the same period in 2013. This increase during the 2^nd Quarter was primarily due to an increase in the Company’s group health insurance plan premiums. The Company is continuing its investigation and development of certain products intended to improve and expand its current product line. The Company does not have sufficient information to determine the extent to which its resources will be required to complete the development of such products.

 

Marketing Expenses

 

Marketing expenses for the 2nd Quarter increased by $3,800, or 8.87%, as compared to the quarter ending October 31, 2013 and decreased by $402, or .42%, during the six month period ending October 31, 2014 compared to the six-month period ending October 31, 2013. The increase was primarily due to an increase in the Company’s group health insurance plan premiums during the 2^nd Quarter.

 

  

General and Administrative Expenses

 

General and administrative costs increased by $3,723, or 3.94%, in the 2nd Quarter, and increased by $2,567, or 1.16%, during the six month period ending October 31, 2014, as compared to the same periods in 2013. This overall increase for the six months ending October 31, 2013 was due primarily to an increase in the cost of the Company’s group health insurance plan. Except for unforeseen items and ordinary cost increases, it is unlikely general and administrative expenses will materially change during the remainder of Fiscal 2015.

 

Net Income

 

The Company realized a net income of $46,309 during the 2nd Quarter as compared to a net income of $50,524 for the comparative quarter in the prior year. The Company also realized a net income of $57,131 for the six month period ending October 31, 2014 as compared to a net income of $54,061 during the same period in 2013. The decrease in net income during the 2^nd Quarter is a result of an increase in operating expenses, primarily employee benefits. The increase in net income during the six month ending October 31, 2014 was primarily due to an increase in sales of TempTrend^R and the HemoTemp^R II Activators.

 

Assets/Liabilities

General

 

Since April 30, 2014, the Company's assets have increased by $30,308 and liabilities have decreased by $26,823. The increase in assets, primarily cash and patents, is due to the overall profitability of the Company and investment in the development of potential products since April 30, 2014.

 

Related Party Transactions

 

The Company was owed $19,699 by F.K. Suzuki International, Inc. ("FKSI"), an affiliate, at October 31, 2014 and April 30, 2014. This account primarily represents common expenses which were previously charged by the Company to FKSI for reimbursement. No interest is received or accrued by the Company. Collectability of the amounts due from FKSI cannot be assured without the liquidation of all or a portion of its assets, including a portion of its common stock of the Company. As a result, the amount owed by FKSI to the Company is classified as a reduction of FKSI’s capital in the Company.

 

A board member provides a variety of legal services to the Company in his capacity as a partner in a law firm. Fees for such legal services were approximately $22,785 and $18,046 for the six months ended October 31, 2014 and 2013, respectively.

 

Current Assets/Liabilities Ratio

 

The ratio of current assets to current liabilities, 24.41 to 1, has increased compared to 15.69 to 1 at April 30, 2014. In order to maintain or improve the Company’s asset/liabilities ratio, the Company’s operations must remain profitable.

 

Liquidity and Capital Resources

 

During the six month period ending October 31, 2014, the Company experienced an increase in working capital of $42,390. This is primarily due to the Company’s net income sustained during the six month period ending October 31, 2014.

 

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 investment in current assets.

 

The Company presently grants payment terms to customers and dealers of 30 days. Although the Company experiences varying collection periods of its account receivable, the Company believes that uncollectable accounts receivable will not have a significant effect on future liquidity.

 

The cash provided by operating activities was $106,792 during the six month period ending October 31, 2014. $22,665 was used for patent expenses and equipment purchases during this same period. The Company does not anticipate any material expenditures for capital items to be utilized for the production or manufacture of products based on the Company’s recently issued patent for the “Rollup GelPak for Test Tubes,” Patent Number D712,559, or for its patent entitled “Method of Producing Eggshell Powder,” Patent Number 8,859,010. Except for its operating working capital, limited equipment purchases and patent expenses, management is not aware of any other material capital requirements or material contingencies for which it must provide. There were no cash flows from financing activities during the six month period ending October 31, 2014.

 

As of October 31, 2014, the Company had $1,222,416 of current assets available. Of this amount, $13,334 was prepaid expenses, $118,765 was inventory, $141,662 was net trade receivables and $948,655 was cash. The Company’s available cash and cash flow are considered adequate to fund the short-term capital needs of the Company. The Company does not have a working line of credit, and does not anticipate obtaining a working line of credit in the near future. Thus there is 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 other than operations.

 

Effects of Inflation. With the exception of raw material 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.

 

Critical Accounting Policies and Estimates. On December 12, 2001, the SEC issued FR-60 “Cautionary Advice Regarding Disclosure About Critical Accounting Policies.” FR-60 is an intermediate step to alert companies to the need for greater investor awareness of the sensitivity of financial statements to the methods, assumptions, and estimates underlying their preparation, including the judgments and uncertainties affecting the application of those policies and the likelihood that materially different amounts would be reported under different conditions or using different assumptions.

 

The Company’s significant accounting policies are disclosed in Note 2 to the Financial Statements for the 2nd Quarter. See “Financial Statements.” Except as noted below, the impact on the Company’s financial position or results of operation would not have been materially different had the Company reported under different conditions or used different assumptions. The policies which may have materially affected the financial position and results of operations of the Company if such information had been reported under different circumstances or assumptions are:

 

Use of Estimates. Preparation of financial statements and conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. The financial condition of the Company and results of operations may differ from the estimates and assumptions made by management in preparation of the Financial Statements accompanying this report.

 

Allowance for Bad Debts. The Company periodically performs credit evaluations of its customers and generally does not require collateral to support amounts due from the sale of its products. The Company maintains an allowance for doubtful accounts based on its best estimate of accounts receivable.

 

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.

 

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. The Company’s primary exposure to market risk is interest rate risk associated with its short term money market investments. The Company does not have any financial instruments held for trading or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure. The Company does not have any credit facilities with variable interest rates. The Company’s operations are not exposed to financial risk that will have a material impact on its financial position and results of operation.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) which are controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Accounting Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company’s Chief Executive Officer and Chief Accounting Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and its Chief Accounting Officer have concluded that the Company’s disclosure controls and procedures are effective.

 

There have been no changes in the Company’s internal control over financial reporting during the Company’s Fiscal Quarter ending October 31, 2014 that have materially affected or are likely to materially affect the Company’s internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

As of the end of the Company’s Fiscal Quarter ending October 31, 2014, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party to of which any of their property is the subject.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the past three years, the Company has not sold securities which were not registered under the Securities Act.

 

Item 3. Defaults Upon Senior Securities.

 

(a) As of the end of the Company’s Fiscal Quarter ending October 31, 2014, there have been no material defaults in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within 30 days, with respect to any indebtedness of the registrant or any of its significant subsidiaries exceeding 5 percent of the total assets of the Company and its consolidated subsidiaries.

 

(b) As of the end of the Company’s Fiscal Quarter ending October 31, 2014, there have been no material arrearages in the payment of dividends and there has been no other material delinquency not cured within 30 days, with respect to any class of preferred stock of the Company which is registered or which ranks prior to any class of registered securities, or with respect to any class of preferred stock of any significant subsidiary of the Company.

 

Item 4. Mine Safety Disclosures.

 

The disclosures required by this Item are not applicable to the Company.

 

Item 5. Other Information.

 

(a) The Company is not required to disclose any information in this Form 10-Q otherwise required to be disclosed in a report on Form 8-K during the period covered by this Form 10-Q.

 

(b) During the Fiscal Quarter ending October 31, 2014, there have been no material changes to the procedures by which the security holders may recommend nominees to the Company’s board of directors, where such changes were implemented after the Company last provided disclosure in response to the requirements of Regulation S-K.

 

 

 

 

Item 6. Exhibits.

 

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 – none.

 

(11) Statement regarding computation of per share earnings- none.

 

(15) Letter regarding unaudited interim financial information - none.

 

(18) Letter regarding change in accounting principles - 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.

 

(31.1) Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. Filed herewith.

 

(31.2) Certification of the Chief Accounting Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. Filed herewith.

 

(32.1) Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Sect. 1350. Filed herewith.

 

(32.2) Certification of the Chief Accounting Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Sect. 1350. Filed herewith.

____________________

 

(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 and Restated By-Laws, to the Company’s Current Statement on Form 8-K dated as of July 2, 2009 filed with the Securities and Exchange Commission.

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 15, 2014	/s/ Fred K. Suzuki
	Fred K. Suzuki Chief Executive Officer, Chairman of the Board, and President
Date  December 15, 2014	/s/ Laurence C. Mead
	Laurence C. Mead Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer and Treasurer

 

 

 

 

EXHIBIT 31.1

 

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.;

 

2. Based on my knowledge, this 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 report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, 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 report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: December 15, 2014

 

 

/s/ Fred K. Suzuki

Fred K. Suzuki

Chairman of the Board, Chief Executive Officer, and President

 

EXHIBIT 31.2

 

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.;

 

2. Based on my knowledge, this 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 report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, 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 report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: December 15, 2014

 

 

/s/ Laurence C. Mead

Laurence C. Mead

Vice President/Manufacturing and Development, Chief Financial Officer and Chief Accounting Officer

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Report of Biosynergy, Inc. (the "Company") on Form 10-Q for the quarter ending October 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

 

(2) the information contained in the Report fairly represents, in all material respects, the financial conditions and results of operations of the Company as of October 31, 2014, and for the period then ended.

 

Biosynergy, Inc.

 

 

/s/ Fred K. Suzuki

Fred K. Suzuki

Chairman of the Board, Chief Executive Officer and President

 

Dated: December 15, 2014

 

 

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Report of Biosynergy, Inc. (the "Company") on Form 10-Q for the quarter ending October 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

 

(2) the information contained in the Report fairly represents, in all material respects, the financial conditions and results of operations of the Company as of October 31, 2014, and for the period then ended.

 

Biosynergy, Inc.

 

/s/ Laurence C. Mead

Laurence C. Mead

Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer and Treasurer

 

 

Dated: December 15, 2014