UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________
Commission File Number 0-12459
Biosynergy, Inc.
(Exact name of registrant as specified in its charter)
Illinois 36-2880990
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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: 13,806,511
Page 1 of the 18 pages contained in the sequential numbering system.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Board of Directors and Shareholders
Biosynergy, Inc.
Elk Grove Village, Illinois
The accompanying Balance Sheet of BIOSYNERGY, INC. as at October 31, 1998
and the related Statements of Operations, Shareholders' Equity (Deficit) and
Statements of Cash Flows for the three and six month periods ended October 31,
1998 and 1997 were not audited; however, the financial statements for the
three and six month periods ending October 31, 1998 and 1997 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, 1998, 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, 1998
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 10, 1998
<PAGE>
<TABLE>
BIOSYNERGY, INC.
BALANCE SHEET
ASSETS
<CAPTION>
October 31, 1998 April 30,1998
Unaudited Unaudited
---------------- ---------------
<S> <C> <C>
CURRENT ASSETS
Cash 49,208 31,150
Accounts Receivable, Trade, Net of
Allowance for Uncollectible Accounts
of $500 at October 31, 1998 and $500 at
April 30, 1998 73,078 75,955
Inventories (Notes 1 and 4) 53,607 50,148
Short Term Note Due from Affiliate (Note 3) 2,200 -
Prepaid Expenses 3,978 3,792
Total Current Assets 182,071 161,045
DUE FROM AFFILIATE (Note 3) 326,476 311,556
PROPERTY AND EQUIPMENT
Equipment 170,670 170,670
Leasehold Improvements 15,140 15,140
185,810 185,810
Less: Accumulated Depreciation and
Amortization ( 168,125) ( 165,897)
17,685 19,913
OTHER ASSETS
Patents, Net of Accumulated
Amortization (Note 1) 20,878 22,553
Deposits 5,995 5,995
Investment in Affiliated Company (Note 3) - -
26,873 28,548
553,105 521,062
--------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable 8,970 8,875
Accrued Executive Compensation 24,616 37,355
Other Accrued Compensation 3,768 3,060
Accrued Payroll Taxes 324 254
Deferred Rent 1,799 1,783
Other Accrued Expenses 1,770 1,949
Total Current Liabilities 41,247 43,276
COMMITMENTS AND CONTINGENCIES (Note 7) - -
SHAREHOLDERS' EQUITY (Note 5)
Common Stock, No Par Value; 20,000,000 Shares
Authorized, Issued: 13,806,511 Shares
at October 31, 1998 and at April 30,
1998 632,663 632,663
Additional paid-in capital 100 100
Accumulated Deficit (120,905) 164,977)
511,858 467,786
553,105 521,062
----------- ----------
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
BIOSYNERGY, INC.
STATEMENT OF OPERATIONS
Unaudited
<CAPTION>
Three Months Ended Six Months Ended
October 31, October 31,
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
REVENUES
Sales 130,926 131,513 277,629 273,874
Computer Rentals
and Services 150 150 300 300
Other Income 775 630 1,486 1,431
131,851 132,293 279,415 275,605
COST AND EXPENSES
Cost of Sales and Other
Operating Charges 44,612 50,644 93,937 97,557
Research and
Development 12,120 9,663 21,446 18,134
Marketing 20,366 12,012 35,797 24,281
General and
Administrative 43,974 36,633 83,982 74,668
Interest Expense 91 121 181 242
121,163 109,073 235,343 214,882
NET INCOME (LOSS) BEFORE
INCOME TAXES AND
EXTRAORDINARY ITEMS 10,688 23,220 44,072 60,723
INCOME TAXES 2,373 3,483 9,784 10,181
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS 8,315 19,737 34,288 50,542
EXTRAORDINARY ITEMS
Reduction of Income Taxes
arising from utilization of prior
Years' Net Operating Losses
(Note 8) 2,373 3,483 9,784 10,181
NET INCOME (LOSS) 10,688 23,220 44,072 60,723
------------ ------------- ----------- -----------
NET INCOME (LOSS) PER
COMMON SHARE (Note 6):
Before Extraordinary
Items .0006 .0014 .0025 .0037
Extraordinary Items .0002 .0002 .0007 .0007
NET INCOME (LOSS) .0008 .0016 .0032 .0044
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
(Note 6) 13,806,511 13,806,511 13,806,511 13,806,511
---------- ----------- --------- ----------
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
BIOSYNERGY, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED OCTOBER 31, 1998
Unaudited
<CAPTION>
Additional
Common Stock Paid-in
Shares Amount Capital Deficit Total
------- ------ ---------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance, May 1,
1998 13,806,511 632,663 100 (164,977) 467,786
Net Profit (Loss) - - - 44,072 44,072
Balance, October 31,
1998 13,806,511 632,663 100 (120,905) 511,858
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
BIOSYNERGY, INC.
STATEMENTS OF CASH FLOWS
Unaudited
<CAPTION>
SIX MONTHS ENDED JULY 31,
1998 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss) 44,072 60,723
Adjustments to Reconcile Net Cash Used for
Operating Activities:
Depreciation and Amortization 3,903 2,758
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 2,877 ( 7,096)
(Increase) Decrease in Inventories ( 3,459) 1,764
(Increase) Decrease in Prepaid Expenses ( 186) ( 1,799)
Increase (Decrease) in Accounts Payable
and Accrued Expenses (12,029) (20,650)
Net Cash Provided (Used) by Operating
Activities 35,178 35,700
INVESTING ACTIVITIES:
(Increase) Decrease in Due From Affiliate
(Note 3) (14,920) ( 9,618)
(Increase) Decrease in Short Term Note
Due From Affiliate (Note 3) ( 2,200) -
(Increase) Decrease in Deposits - 39
Net Cash Provided (Used) by Investing
Activities (17,120) ( 9,579)
FINANCING ACTIVITIES:
Net Cash Provided (Used) by Financing
Activities - -
Increase (Decrease) in Cash and Cash
Equivalents 18,058 16,121
Cash and Cash Equivalents at Beginning
of Period 31,150 12,420
Cash and Cash Equivalents at End of Period 49,208 28,541
----------- ------------
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
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.
3. Related Party Transactions:
The Company and its affiliates are related through common stock ownership as
follows as of October 31, 1998:
<TABLE>
S T O C K O F A F F I L I A T E S
<CAPTION>
F.K. Suzuki
Stevia Biosynergy International Medlab
Stock Owner Company Inc. Inc. Inc.
- ------------------ -------- ---------- ------------- --------
<S> <C> <C> <C> <C>
Stevia Company, Inc. - 13.8% - -
Biosynergy, Inc. .4% - - -
F.K. Suzuki International, Inc. 55.8% 18.8% - 100%
Fred K. Suzuki, Officer - - 35.6% -
Lauane C. Addis, Officer .1% .1% 32.7% -
James F. Schembri, Director - 12.9% - -
Mary K. Friske, Officer - .1% .2% -
Laurence C. Mead, Officer .1% .1% 2.9% -
</TABLE>
<PAGE>
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
Upon the completion of the Company's public offering on July 7, 1983, the
Company issued 2,000,000 shares of its no par value common stock, representing
19% of the outstanding common stock of the Company, in exchange for 1,058,181
shares of the common stock of Stevia Company, Inc., which was approximately
4.4% of the then outstanding common stock of Stevia Company, Inc. The common
stock of Stevia Company, Inc. had no book value at the time of the exchange
and, as a consequence, the Company recorded the exchange at zero dollar value.
The Company owned 130,403 shares of Stevia Company, Inc. Common Stock at
October 31, 1998, representing a .4% interest in Stevia. Although the Common
Stock of Stevia Company, Inc. is tradeable in the over-the-counter market,
there is no established public trading market for such Common Stock due to
limited and sporadic trades. As of October 31, 1998, the bid price of the
common stock of Stevia Company, Inc. was estimated to be zero. Furthermore,
on December 8, 1998, Stevia Company, Inc. announced it had filed a Complaint
for Judicial Dissolution.
Common offices are shared with Stevia Company, Inc. Intercompany charges for
shared expenses are made by whichever company incurs such charges. Such
intercompany charges, together with funds advanced by Stevia in prior years,
have resulted in the following balances:
April 30, 1998 - $298,335
October 31, 1998 - $308,170
At October 31, 1998, the financial condition of Stevia Company, Inc. is such
that it is unlikely to be able to repay the Company during the next year
without liquidating a portion of its assets. On December 8, 1998, Stevia
Company, Inc. announced it had filed a complaint for judicial dissolution in
the Circuit Court of Cook County, Chancery Division. Lauane C. Addis,
Secretary and General Counsel of the Company and Stevia Company, Inc., was
appointed interim receiver to sell certain assets of Stevia Company, Inc. It
is uncertain the amount, if any, of the proceeds from the sale of such assets
will be used to satisfy the unpaid intercompany charges owed to the Company.
The following balances were due from F.K. Suzuki International, Inc.;
April 30, 1998 - $13,221
October 31, 1998 - $18,306
The balances result from an allocation of common expenses offset by advances
received from time to time. At October 31, 1998, the financial condition of
F.K. Suzuki International, Inc. is such that it is unlikely to be able to
repay the Company during the next year without liquidating a portion of its
assets.
<PAGE>
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
On August 31, 1998, the Company extended a line of credit to Stevia Company,
Inc. of $20,000 evidenced by a Note payable on or before December 31, 1998
with 10% interest on the unpaid principal balance. Proceeds of this line of
credit are intended to be used by Stevia Company, Inc. for expenses related to
its dissolution. The Note is secured by a first mortgage on a processing
facility in Pueblo, Colorado owned by Stevia Company, Inc. At October 31,
1998, the balance due under the Note was $2,200.
4. Inventories:
Components of inventories are as follows:
April 30, 1998 October 31, 1998
Raw Materials $31,789 $33,144
Work-in process 16,049 11,670
Finished Goods 2,310 8,788
$50,148 $53,607
5. 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.
Effective January 31, 1990, the Company entered into an agreement with its
President, Fred K. Suzuki, pursuant to which the Company granted an option to
convert all or a portion of his accrued but unpaid compensation into shares of
the Company's no par value common stock at a conversion rate of $.05 per
share. The balance of Mr. Suzuki's deferred compensation was paid on May 7,
1998, and the option agreement expired by its terms.
6. 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. The weighted average number of common shares outstanding were
13,806,511 at October 31, 1998 and April 30, 1998. The affect of conversion
of stock options has not been presented as conversion would be anti-dilutive.
<PAGE>
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
7. Lease Commitments:
In 1996 the Company entered a new lease agreement for its current facilities
which expires January 31, 2001. The base rent under the lease, of which 15%
is allocated to Stevia Company, Inc., escalates over the life of the lease.
Total rent payments for each fiscal year are as follows:
Year ending April 30 Total Base Rent
1996 11,000
1997 66,733
1998 68,200
1999 68,567
2000 69,300
2001 51,975
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.
8. Income Taxes:
At April 30, 1998, net operating loss carryforwards were available and expire,
if not used, as follows:
Year Ending Net Operating
April 30, Losses
1999 $ 677,671
2000 455,166
2001 449,142
2002 132,470
2003 85,822
2004 41,176
2006 160
2007 28,253
$1,869,860
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.
<PAGE>
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
9. Major Customers:
Shipments to one customer amounted to approximately 37.1% of sales during the
quarter ending October 31, 1998. At October 31, 1998 there was an outstanding
account receivable from this customer of approximately $36,149.
10. 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
which compliment its product line. Finally, management intends to continue
pursuing financing opportunities, if necessary.
11.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.
<PAGE>
BIOSYNERGY, INC.
Item 2.MANAGEMENT ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SALES/REVENUES
For the three month period ending October 31, 1998 ("2nd Quarter"), the net
sales decreased .45% or $587, and increased 1.37% or $3,755 during the six
month period ending October 31, 1998, as compared to net sales for the
comparative periods ending in 1997. This overall increase in sales is the
result of increased sales of HemoTempR II Blood Temperature Monitors. As of
October 31, 1998, the Company had no product back orders.
In addition to the above, the Company realized $300 of income as a result of
leasing a portion of its computer time to Stevia Company, Inc., an affiliate,
and $1,486 of miscellaneous income for the six month period ending October 31,
1998.
INCOME/LOSS
The Company realized a net profit of $10,688 during the 2nd Quarter as
compared to a net profit of $23,220 for the comparative quarter of the prior
year. The Company also realized a net profit of $44,072 for the six month
period ending October 31, 1998 as compared to a net profit of $60,723 during
the same period in 1997. The decrease in net profit is due primarily to an
increase in marketing and research and development expenses described below.
As of April 30, 1998, the Company has incurred net operating losses/carryovers
aggregating $1,869,860. As a result of net operating loss carryovers, no
income taxes were due for Fiscal 1998 and will unlikely be due for Fiscal
1999. 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."
EXPENSES
GENERAL
The operating expenses incurred by the Company during the 2nd Quarter
increased overall by 11.08%, or $12,090, and increased by 9.52%, or $20,461
for the six month period ending October 31, 1998. 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 decreased
by $6,032 and decreased by $3,620 during the six month period ending October
31, 1998 as compared to the same periods in 1997. As a percentage of sales,
the cost of sales and other operating charges were 34.07% during the 2nd
Quarter and 38.51% for the same quarter ending in 1997, compared to 35.62% in
1997, and 33.84% during the six month period ending October 31, 1998.
Although the cost of sales and operating charges decreased, the cost of sales
and 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 $2,457 or 25.43% during the 2nd
Quarter, as compared to the same quarter in 1997. These costs increased by
$3,312 or 18.26% during the six month period ending October 31, 1998 as
compared to the same period in 1997. These increased costs reflect
non-reoccurring expenses related to research for new technology applications,
including prototype expenses, but do not reflect changes in the Company's
development policies. The Company intends to continue to direct research and
development to the improvement of its current product line and to those new
products which are natural expansions of the current product line. The
Company may also increase its research and development activities to fulfill
research and development contracts for the development of products
specifically designed for a customer, which will generally be offset by
research revenues.
MARKETING
Marketing costs for the 2nd Quarter increased by $8,354 or 69.55%, as compared
to the quarter ending October 31, 1997, and increased $11,516 or 47.43% during
the six month period ending October 31, 1998 as compared to the same period in
1997. The additional expenses incurred by the Company during the comparative
periods in 1998 were related to the Company's participation in trade shows and
reprinting certain product information brochures. The Company intends to
expand its marketing budget as resources become available.
GENERAL AND ADMINISTRATIVE
General and administrative costs increased by $7,341, or 20.04%, during the
2nd Quarter and increased by $9,314 or 12.47% during the six month period
ending October 31, 1998, as compared to the same periods in 1997. The overall
increase in these costs was primarily related to employment taxes due as a
result of the payment of deferred compensation. Otherwise, there was no
material change in the company's General and Administrative expenses.
ASSETS/LIABILITIES
GENERAL
Since April 30, 1998, the Company's assets and liabilities have not materially
changed. The Company has experienced an increase in current assets and a
decrease in liabilities due to improved cash flow from operations.
DUE FROM AFFILIATES/SHORT TERM NOTE DUE FROM AFFILIATE
The Company was owed $308,170 by Stevia Company, Inc. ("Stevia"), an
affiliate, and $18,306 by F.K. Suzuki International, Inc. ("FKSI"), an
affiliate, at October 31, 1998. These affiliates owed $298,335 and $13,221 at
April 30, 1998, respectively. These accounts primarily represent common
expenses which are charged by one company to the other for reimbursement.
These expenses include rent, salaries and benefits for common employees,
insurance and legal fees. These expenses are reviewed from time to time to
determine if reallocation is appropriate. As a result of the increase in
amounts due from affiliates, the Company has reduced its own liquid
resources. See "FINANCIAL STATEMENTS."
On December 8, 1998, Stevia announced it had filed a complaint for judicial
dissolution in the Illinois Circuit Court of Cook County, Chancery Division.
Lauane C. Addis, Secretary and General Counsel of the Company and Stevia
Company, Inc., was appointed interim receiver to sell certain assets of
Stevia, including its Pueblo, Colorado facility. Although the Company
anticipates a portion of the proceeds from the liquidation of Stevia's assets
will be used to repay the intercompany charges, it is uncertain how much, if
any, of the unpaid intercompany charges will be repaid.
In this regard, on August 31, 1998, the Company extended a line of credit to
Stevia of $20,000 evidenced by a Note payable on or before December 31, 1998,
with interest at 10% on the unpaid principal balance. The proceeds from this
line of credit are intended to be used by Stevia for expenses related to its
dissolution. The Note is secured by a first mortgage on Stevia's Pueblo,
Colorado facility. The Balance due under the Note at October 31, 1998 was
$2,200.
CURRENT ASSETS/CURRENT LIABILITY RATIO
The ratio of current assets to current liabilities, 4.36 to 1, has improved
compared to 3.02 to 1 at April 30, 1998. Although the Company realized income
for the six-month period ending October 31, 1998, the Company used $14,920 of
its cash to pay expenses incurred by the Company on behalf of Stevia and FKSI,
which was not reimbursed. To this extent, the Company's current assets were
converted to long-term receivables thereby reducing its current
assets/liabilities ratio. In order to continue to improve the current
asset/liability ratio, the Company's operations must remain profitable and the
Company. See "DUE FROM AFFILIATES/SHORT TERM NOTE DUE FROM AFFILIATE" above.
WORKING CAPITAL/LIQUIDITY
During the six-month period ending October 31, 1998, the Company experienced
an increase in working capital of $30,855. This is due to the profitable
operations of the Company during the six-month period October 31, 1998.
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 October 31, 1998, the Company had $182,071 of current assets available.
Of this amount, $53,607 was inventory and $73,078 was net trade receivables.
Management of the Company believes that it has sufficient working capital to
continue operations for the fiscal year ending April 30, 1999 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 capital needs, the Company has no material
contingencies for which it must provide.
<PAGE>
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)Deferred Compensation Option Agreement, dated January 31,
1990, between the Company and Fred K. Suzuki(ii)
(b)Note, dated August 31, 1998, executed by Stevia Company,
Inc., P. E-1
(c)Mortgage, dated August 31, 1998, executed by Stevia Company,
Inc., P. E-5.
(11) Statement regarding computation of per share earnings - none.
(15) Letter dated December 10, 1998, 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.
(24) Power of Attorney - none.
(27) Financial Data Schedule - P.E-8.
(b) No Current Reports on Form 8-K were filed during the period
covered by this Report.
____________________________
[FN]
(i)Incorporated by reference to a Registration Statement filed on Form S-18
with the Securities and Exchange Commission, 1933 Act Registration Number
3-28015C, 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, 1990 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.
<PAGE>
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 ---------------------------------
Fred K. Suzuki
President, Chairman of the Board,
Chief Accounting Officer
and Treasurer
Date --------------------------------
Lauane C. Addis
Secretary, Corporate Counsel and
Director
<PAGE>
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 10, 1998 /s/ FRED K. SUZUKI /s/
-------------------------------
Fred K. Suzuki
President, Chairman of the Board,
Chief Accounting Officer and
Treasurer
Date December 10, 1998 /s/ LAUANE C. ADDIS /s/
-------------------------------
Lauane C. Addis
Secretary, Corporate Counsel and
Director
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of
THE SECURITIES AND EXCHANGE ACT OF 1934
For the period ending October 31, 1998
Commission File Number: 0-12459
BIOSYNERGY, INC.
(Exact name of registrant as specified in charter)
1940 East Devon Avenue
Elk Grove Village, IL 60007
(847) 956-0471
Address and telephone number of registrant's principal executive office or
principal place of business)
EXHIBITS
<PAGE>
BIOSYNERGY, INC.
EXHIBIT INDEX
Page Number
Pursuant to
Sequential
Exhibit Numbering
Number Exhibit System
10(b) Note dated August 31, 1998, executed
by Stevia Company, Inc. E-1
10(c) Mortgage, dated August 31, 1998, executed
by Stevia Company, Inc. E-5
27 Financial Data Schedule E-8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF THE REGISTRANT FOR THE THREE MONTH PERIOD AND SIX MONTH PERIOD
ENDING OCTOBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> APR-30-1999 APR-30-1999
<PERIOD-END> OCT-31-1998 OCT-31-1998
<CASH> 49,208 49,208
<SECURITIES> 0 0
<RECEIVABLES> 73,078 73,078
<ALLOWANCES> 500 500
<INVENTORY> 53,607 53,607
<CURRENT-ASSETS> 182,071 182,071
<PP&E> 185,810 185,810
<DEPRECIATION> (168,125) (168,125)
<TOTAL-ASSETS> 553,105 553,105
<CURRENT-LIABILITIES> 41,247 41,247
<BONDS> 0 0
632,663 632,663
0 0
<COMMON> 0 0
<OTHER-SE> (120,905) (120,905)
<TOTAL-LIABILITY-AND-EQUITY> 553,105 553,105
<SALES> 130,926 277,629
<TOTAL-REVENUES> 131,851 279,415
<CGS> 44,612 93,937
<TOTAL-COSTS> 44,612 93,937
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 91 181
<INCOME-PRETAX> 32,486 57,243
<INCOME-TAX> 2,373 9,784
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 2,373 9,784
<CHANGES> 0 0
<NET-INCOME> 10,688 44,072
<EPS-PRIMARY> .001 .003
<EPS-DILUTED> .001 .003
</TABLE>
N O T E
FOR VALUE RECEIVED, the undersigned, Stevia Company, Inc., an Illinois
corporation ("Borrower") herein), hereby promises to pay to the order of
Biosynergy, Inc., an Illinois corporation, its successors and assigns
("Lender" herein), at 1940 E. Devon, Elk Grove Village, Illinois, 60007, or
such other place as may be designated by the holder of this Note, the
principal sum of Twenty-Thousand Dollars (U.S. $20,000) (the "Maximum
Principal Amount") or such other lesser amount as may be advanced by Lender to
Borrower from time to time, together with interest on the principal balance
remaining unpaid from time to time at the rate of ten percent (10%) per annum
from the hereof until maturity, interest payable in monthly installments
commencing September 1, 1998 and on the first day of each subsequent month,
and the final payment of unpaid principal and accrued interest, if not sooner
paid, shall be due December 31, 1998. Interest on the principal balance of
the Note outstanding from time to time shall be computed on the basis of a
year consisting of 360 days and paid for the actual days elapsed.
This Note may be prepaid in full or in part. Any prepayment of principal
must include accrued interest, if any, and any other sums then due Lender
hereunder.
At the request of Borrower, Lender may, provided Borrower is not in
default hereunder, from time to time, advance funds to Borrower to be used by
Borrower for payment of expenses incurred by Borrower in the sale of 33850
United Avenue, Pueblo, Colorado (the "Premises"), such advance of funds to
become principal under this Note; provided, however, the principal of this
Note shall not at any time exceed the Maximum Principal Amount. Borrower
further agrees to pay to Lender the expenses of Lender incurred with respect
to the advancement of the funds by Lender to Borrower under this Note, the
enforcement of this Note and the enforcement of the Mortgage (hereafter
defined) including, but not limited to, filing charges, recording fees,
appraisal fees, real estate tax service fees, court costs, and all other fees
incurred by Lender from time to time related to this Note, including the fees
of Lender's counsel.
All payments on account of indebtedness evidenced by this Note are to be
applied first to any costs, fees or expenses incurred by Lender pursuant to
the provisions of this Note or the Mortgage (hereafter defined), then to
Penalty Interest (hereafter defined) and late charges, then to interest on the
unpaid principal balance and the remainder to principal, provided that if any
installment due hereunder or the final payment of the principal balance of the
Note and accrued interest thereon is not paid within fifteen (15) days of the
due date then such installment payment or final payment will be subject to a
late charge in the amount of ten (10%) percent of the installment or final
payment then due. Upon maturity of the principal balance of this Note whether
by acceleration or otherwise according to the terms of this Note, the
remaining unpaid principal balance of this Note shall accrue interest at the
per annum rate equal to the unmatured Note rate plus three (3%) percent
("Penalty Rate") until paid. All of said principal, interest, fees, costs and
expenses are payable at such place as the holders of this Note may, from time
to time in writing appoint, and in the absence of such appointment, then at
the address of Lender set forth above.
The payment of this Note is secured by a Mortgage ("the "Mortgage")
bearing same date herewith delivered by Borrower to Lender encumbering real
estate at 33850 United Avenue, in the County of Pueblo, State of Colorado, as
legally described therein. It is agreed that at the election of the holder or
holders hereof and without notice, the principal balance of this Note
remaining unpaid, together with accrued interest thereon, shall become at once
due and payable at the place of payment aforesaid in case of default in the
payment of principal or interest when due in accordance with the terms hereof
or in case at any time hereafter the right to foreclose the said Mortgage
shall accrue to the legal holders hereto under any of the provisions contained
in the said Mortgage, time being the essence of this Note. The terms and
provisions of said Mortgage are incorporated herein by reference as if fully
restated.
Waiver by Lender of any default hereunder or under the Mortgage shall
not, at any other time, be taken to be a waiver of the terms of this Note or
the Mortgage, and the acceptance of payments after default shall not
constitute a waiver of the option of the holder of this Note to accelerate
repayments of the entire unpaid balance of this Note or prejudice Lender if
acceleration has occurred or this Note has matured. If suit is brought for
collection of this Note, the Note holder shall be entitled to collect all
reasonable costs and expenses of suit, including, but not limited to
reasonable attorneys' fees, appraisal fees, title charges, recording charges,
court costs, and costs incurred to preserve, protect or liquidate the real
estate encumbered by the Mortgage which secures this Note.
The Borrower and any endorser or guarantor hereof hereby waive demand,
presentment for payment, notice of non-payment and protest, all notices of
whatever kind or nature, including prompt payment demands and further waive
exhaustion of legal remedies, valuation, exemption, marshaling and homestead
rights as may be applicable.
This Note shall be interpreted under the laws of the State of Illinois.
In the event that any provision of this Note is ruled invalid or unenforceable
under the laws of the State of Illinois or any other applicable law, including
any provision of applicable usury laws, such invalid or unenforceable provision
shall be deleted herefrom or shall be modified to the extent necessary to make
such invalid or enforceable provision valid and enforceable. This Note shall
remain fully effective according to its terms after such deletions or
modifications.
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed by its
President, and its corporate seal to be hereunder affixed and attested by its
secretary this 31st day of August, 1998.
/S/ FRED K. SUZUKI, PRESIDENT /S/
____________________________________
ATTEST: Fred K. Suzuki, President
/S/ LAUANE C. ADDIS /S/
_____________________________
Secretary
MORTGAGE
This Mortgage (the "Mortgage"), dated as of August 31, 1998, is made
between Stevia Company, Inc., an Illinois corporation with offices at 1940
East Devon, Elk Grove Village, Illinois, 60007, (the "Mortgagor"), and
Biosynergy, Inc., an Illinois corporation, with offices at 1940 E. Devon, Elk
Grove Village, Illinois, 60007 (the "Mortgage").
In order to secure the payment of that certain promissory note (the
"Note") executed by the Mortgagor and payable to the order of Mortgagee on or
before December 31, 1998 in the principal sum of Twenty Thousand Dollars
($20,000), with interest thereon at the rate of ten percent (10%) per annum,
and to secure the terms, covenants, promises, agreements and conditions as
more fully described in the Note between the Mortgagor and the Mortgagee,
bearing the same date as this Mortgage, the Mortgagor hereby mortgages and
warrants to the Mortgagee, its successors and assigns the following described
real estate:
Lot 55 of the Pueblo Memorial Airport Industrial Park Subdivision, a
Subdivision of a portion of Sections 29 and 30, Township 20 South, Range 63
West and Sections 25 and 26, Township 20 South, Range 64 West of the Sixth
Principal Meridian, Pueblo County, Colorado
Tax Parcel Number: 03-00-01-001
Address of real estate: 33850 United Avenue, Pueblo, Colorado, 81001
In the event of a default in payment of the Note, or any part thereof, or
the interest thereon, or any part thereof, or the interest thereon, or any
part thereof, or in the event of a default under this Mortgage, or in case of
waste or non-payment of taxes or assessments on said premises, or of a breach
of any of the covenants or agreements herein contained, then and in such case
the whole of said principal sum and interest payable under the Note shall
thereupon, at the option of the said Mortgagee, its assigns or successors,
become immediately due and payable; and this Mortgage may be immediately
foreclosed to pay the same by said Mortgagee, its assigns or successors, to
enter into and upon the premises hereby granted, or any part thereof, and to
receive and collect all rents, issues and profits thereof.
If any provisions of this Mortgage shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating or affecting the
remainder of such provision or the remaining provisions of this Mortgage.
Dated this ____ day of ___________________, 1998.
ATTEST: STEVIA COMPANY, INC.
/S/ LAUANE C. ADDIS/S/ /S/ FRED K. SUZUKI, PRESIDENT/S/
______________________________ ______________________________
Fred K. Suzuki, President
This instrument was prepared by: KATZ, KARACIC, HELMIN & ADDIS, P.C.
180 North LaSalle, Suite 3001
Chicago, Illinois 60601
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF C O O K )
/S/MARCIA J. NAWROCKI-VERBURGT/S/
I, __________________________________, a Notary Public in and for
said County, in the State aforesaid, DO HEREBY CERTIFY that Fred K. Suzuki
and Lauane C. Addis, personally known to me to be the same persons whose
names are subscribed to the foregoing instrument and the president and
secretary, respectively of Stevia Company, Inc., appeared before me this day
in person and acknowledged that they signed, sealed and delivered the said
instrument as their free and voluntary act, for the uses and purposes therein
set forth, including the release and waiver of the right of homestead.
Given under my hand and official seal this 31st day of August, 1998.
/S/ MARCIA J. NAWROCKI-VERBURGT /S/
____________________________________
Notary Public
Commission Expires: 9-28-99
