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, 1999
----------------
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
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Biosynergy, Inc.
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(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
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(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 17 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,
1999
and the related Statements of Operations, Shareholders' Equity (Deficit) and
Statements of Cash Flows for the three and six month periods ended October
31,
1999 and 1998 were not audited; however, the financial statements for the
three and six month periods ending October 31, 1999 and 1998 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, 1999, 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, 1999
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 6, 1999
<PAGE>
BIOSYNERGY, INC.
BALANCE SHEET
ASSETS
October 31, 1999 April 30,1999
---------------- -------------
Unaudited Unaudited
--------- ---------
CURRENT ASSETS
Cash 90,933 319,508
Short term Investments (Note 4) 250,000 -
Accounts Receivable, Trade, Net of
Allowance for Uncollectible Accounts
of $500 at October 31, 1999 and $500 at
April 30, 1999 97,604 76,649
Inventories (Notes 1 and 5) 61,902 49,671
Note Receivable from Officer (Note 3) - 8,000
Prepaid Expenses 3,777 10,314
Interest Receivable (Notes 3 and 4) 6,003 66
-------- --------
Total Current Assets 510,219 464,208
-------- --------
DUE FROM AFFILIATE (Note 3) 18,574 18,574
-------- --------
PROPERTY AND EQUIPMENT
Equipment 103,598 102,497
Leasehold Improvements 15,140 15,140
-------- --------
118,738 117,637
Less: Accumulated Depreciation and
Amortization ( 101,913) ( 99,018)
-------- --------
16,825 18,619
-------- --------
OTHER ASSETS
Deposits 5,995 5,995
-------- --------
5,995 5,995
-------- --------
551,613 507,396
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable 9,835 11,899
Other Accrued Compensation 4,430 4,230
Accrued Payroll Taxes 364 324
Deferred Rent 1,129 1,581
Other Accrued Expenses 2,013 2,128
--------- --------
Total Current Liabilities 17,771 20,162
--------- --------
COMMITMENTS AND CONTINGENCIES (Note 8) - -
--------- --------
SHAREHOLDERS' EQUITY (Note 6)
Common Stock, No Par Value; 20,000,000 Shares
Authorized, Issued: 13,806,511
Shares
at October 31, 1999 and at April 30, 1999 632,663 632,663
Additional paid-in capital 100 100
Accumulated Deficit ( 98,921) (145,529)
--------- ---------
533,842 487,234
--------- ---------
551,613 507,396
----------- -----------
----------- -----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
BIOSYNERGY, INC.
STATEMENT OF OPERATIONS
Unaudited
Three Months Ended Six Months Ended
------------------ ----------------
October 31, October 31,
----------- -----------
1999 1998 1999
1998
REVENUES ------- ------- ------- -------
Sales 155,349 130,926 287,691 277,629
Computer Rentals and Services - 150 - 300
Other Income 890 775 1,602
1,486
Interest Income 3,424 - 6,237 -
------- ------- ------- -------
159,663 131,851 295,530
279,415
COST AND EXPENSES ------- ------- ------- -------
Cost of Sales and Other
Operating Charges 49,595 44,612 91,843 93,937
Research and Development 20,613 12,120 38,064 21,446
Marketing 14,733 20,366 28,859 35,797
General and Administrative 45,911 43,974 90,156 83,982
Interest Expense - 91 -
181
------- ------- ------- -------
130,852 121,163 248,922
235,343
------- ------- ------- -------
NET INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEMS 28,811 10,688 46,608 44,072
INCOME TAXES 6,396 2,373 10,347
9,784
INCOME (LOSS) BEFORE ------- ------- -------
- -------
EXTRAORDINARY ITEMS 22,415 8,315 36,261
34,288
------- ------- ------- -------
EXTRAORDINARY ITEMS
Reduction of Income Taxes
arising from utilization of prior
Years' Net Operating Losses
(Note 9) 6,396 2,373 10,347
9,784
-------- -------- --------
- --------
NET INCOME (LOSS) 28,811 10,688 46,608
44,072
-------- -------- --------
- --------
-------- -------- --------
- --------
NET INCOME (LOSS) PER
COMMON SHARE (Note 7):
Before Extraordinary Items .0016 .0006 .0026 .0025
Extraordinary Items .0005 .0002 .0007
.0007
-------- -------- --------
- --------
NET INCOME (LOSS) .0021 .0008 .0033
.0032
-------- -------- --------
- --------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
(Note 7) 13,806,511 13,806,511 13,806,511
13,806,511
---------- ---------- ----------
- ----------
---------- ---------- ----------
- ----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
BIOSYNERGY, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED OCTOBER 31, 1999
Unaudited
Additional
Common Stock Paid-in
Shares Amount Capital Deficit Total
---------- ------- ------- --------- -------
Balance, May 1,
1999 13,806,511 632,663 100 (145,529) 487,234
Net Profit (Loss) - - - 46,608 46,608
Balance, October 31,
1999 13,806,511 632,663 100 ( 98,921) 533,842
The accompanying notes are an integral part of the financial statements.
<PAGE>
BIOSYNERGY, INC.
STATEMENTS OF CASH FLOWS
Unaudited
SIX MONTHS ENDED OCTOBER
31,
- ----------------------------
1999
1998
-------------
- -------------
OPERATING ACTIVITIES:
Net Income (Loss) 46,608 44,072
Adjustments to Reconcile Net Cash Used for
Operating Activities:
Depreciation and Amortization 2,895 3,903
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (20,955) 2,877
(Increase) Decrease in Inventories (12,231) ( 3,459)
(Increase) Decrease in Prepaid Expenses 6,537 ( 186)
Increase (Decrease) in Accounts Payable
and Accrued Expenses ( 2,391)
(12,029)
----------- ---------
Net Cash Provided (Used) by Operating
Activities 20,463 35,178
----------- ---------
INVESTING ACTIVITIES:
(Increase) Decrease in Due From Affiliate
(Note 3) - (14,920)
(Increase) Decrease in Short Term Note Due
From Affiliate (Note 3) - (23,200)
(Increase) Decrease in Short-Term Investment
(Note 4) (250,000) -
(Increase) Decrease in Retirement (Purchase)of
Equipment ( 1,101) -
(Increase) Decrease in Interest Receivable
from Officer (Note 3) ( 37) -
(Increase) Decrease in Short-Term Investment
Interest (Note 4) ( 5,900) -
(Increase) Decrease in Short-Term Note from
Officer (Note 3) 8,000 -
Net Cash Provided (Used) by Investing
Activities (249,038)
(17,120)
------------
- ----------
FINANCING ACTIVITIES:
Net Cash Provided (Used) by Financing
Activities - -
------------
- ----------
Increase (Decrease) in Cash and Cash
Equivalents (228,575)
18,058
------------
- ----------
Cash and Cash Equivalents at Beginning
of Period 319,508
31,150
------------
- ----------
Cash and Cash Equivalents at End of Period 90,933 49,208
------------
- ----------
------------
- ----------
The accompanying notes are an integral part of the financial statements.
<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 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, 1999:
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. 32.6% - 100%
Fred K. Suzuki, Officer - 35.6% -
Lauane C. Addis, Officer .1% 32.7% -
James F. Schembri, Director 12.9% - -
Mary K. Friske, Officer .1% .2% -
Laurence C. Mead, Officer .1% 4.0% -
<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. ("Stevia"), which was
approximately 4.4% of the then outstanding common stock of Stevia. The
common
stock of Stevia had no book value at the time of the exchange and, as a
consequence, the Company recorded the exchange at zero dollar value. On
April
16, 1999, Stevia was judicially dissolved and the remaining shares of Common
Stock of the Company held by Stevia (1,900,000 shares) were assigned to F.K.
Suzuki International, Inc. ("FKSI") for certain amounts payable by Stevia to
FKSI. The shares of Stevia Common Stock held by the Company are now
worthless.
The Company extended a line of credit to Stevia on August 31, 1998 to finance
Stevia's dissolution under the terms of a short-term note. The balance of
his
note was paid in March, 1999.
Prior to the dissolution of Stevia, common offices, employees and certain
operating expenses were shared with Stevia. On April 16, 1999, inter-company
charges to Stevia for shares expenses aggregated $315,015. The Company
received 93% of this amount, or $290,918, as its share of the Stevia
dissolution proceeds, resulting in a loss of $24,097. Since April 16, 1999,
the ongoing common expenses previously shared with Stevia have been allocated
100% to the Company as reflected on the Company's financial statements.
The following balances were due from F.K. Suzuki International, Inc. at
October 31, 1999:
April 30, 1999 - $18,574
October 31, 1999 - $18,574
The balances result from an allocation of common expenses offset by advances
received from time to time. At October 31, 1999, 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.
On April 1, 1999, the Company loaned $8,000 to its President, Fred K. Suzuki,
as an accommodation to Mr. Suzuki. The loan is evidenced by an unsecured
Promissory Note payable on demand with 10% interest on the unpaid balance.
The principal balance of this Note was paid off on October 5, 1999, but at
October 31, 1999, accrued interest of $103 remained unpaid.
<PAGE>
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
4. Short-Term Investments:
The Company invested $250,000 of the proceeds received from the liquidation
of
Stevia described in Footnote 3 above in a 270-day Certificate of Deposit,
pending their use. The Company is not registered under the Investment
Company
Act of 1940 and therefore is limited to the types of investments available.
The funds invested in the Certificate of Deposit and the remaining proceeds
received upon the liquidation of Stevia have not been allocated or earmarked
for any specific use.
5. Inventories:
Components of inventories are as follows:
April 30, 1999 October 31, 1999
-------------- ----------------
Raw Materials $32,639 $38,914
Work-in process 6,634 12,756
Finished Goods 10,378 10,232
------- -------
$49,671 $61,902
------- -------
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.
As
of October 31, 1999, no portion of this option has been exercised.
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. The weighted average number of common shares outstanding were
13,806,511 at October 31, 1999 and April 30, 1999. The effect of conversion
of stock options has not been presented as conversion would be anti-dilutive.
<PAGE>
BIOSYNERGY, INC.
NOTES TO FINANCIAL STATEMENTS
8. Lease Commitments:
In 1996 the Company entered a lease agreement for its current facilities
which
expires January 31, 2001. 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
-------------------- ---------------
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.
9. Income Taxes:
At April 30, 1999, net operating loss carryforwards were available and
expire,
if not used, as follows:
Year Ending Net Operating
April 30, Losses
----------- -------------
2000 455,166
2001 449,142
2002 132,470
2003 85,822
2004 41,176
2006 160
2007 28,253
-----------
$1,192,189
-----------
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
10. Major Customers:
Shipments to one customer amounted to approximately 37.2% of sales during the
quarter ending October 31, 1999. At October 31, 1999 there was an
outstanding
account receivable from this customer of approximately $47,467.
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.
<PAGE>
BIOSYNERGY, INC.
Item 2.MANAGEMENT ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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SALES/REVENUES
- --------------
For the three month period ending October 31, 1999 ("2nd Quarter"), the net
sales increased 18.65% or $24,423, and increased 3.6% or $10,062 during the
six month period ending October 31, 1999, as compared to net sales for the
comparative periods ending in 1998. This overall increase in sales is the
result of increased sales of HemoTempR II Blood Temperature Monitors. As of
October 31, 1999, the Company had no product back orders.
In addition to the above, the Company realized $6,237 of income as a result
of
short term investments; and $1,486 of miscellaneous income for the six month
period ending October 31, 1999.
INCOME/LOSS
- -----------
The Company realized a net profit of $28,811 during the 2nd Quarter as
compared to a net profit of $10,688 for the comparative quarter of the prior
year. The Company also realized a net profit of $46,608 for the six month
period ending October 31, 1999 as compared to a net profit of $44,072 during
the same period in 1998. The increase in net profit is due primarily to an
increase in sales.
As of April 30, 1999, the Company has incurred net operating
losses/carryovers
aggregating $1,192,189. As a result of net operating loss carryovers, no
income taxes were due for Fiscal 1999 and will unlikely be due for Fiscal
2000. 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 8%, or $9,689, and increased by 5.77%, or $13,579 for
the
six month period ending October 31, 1999. 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 $4,983 and decreased by $2,094 during the six month period ending October
31, 1999 as compared to the same periods in 1998. As a percentage of sales,
<PAGE>
the cost of sales and other operating charges were 31.92% during the 2nd
Quarter and 34.07% for the same quarter ending in 1998, compared to 33.84% in
1998, and 31.92% during the six month period ending October 31, 1999.
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 $8,493 or 70.07% during the 2nd
Quarter, as compared to the same quarter in 1998. These costs increased by
$16,618 or 77.49% during the six month period ending October 31, 1999 as
compared to the same period in 1998. This increase is due to the Company's
investigation of certain compounds for use of the bacteria growth retardant
agents for use in foods and other products. These expenses include travel,
laboratory supplies, and legal and technical consulting expenses related to
these compounds. Historically, the Company's research and development
activities have been limited to improvement of the current product line in
development of products which are natural extensions thereof. Recently the
Company has been investigating other products and accessories complementary
to
its current product line and entirely new technologies.
MARKETING
---------
Marketing costs for the 2nd Quarter decreased by $5,633 or 27.66%, as
compared
to the quarter ending October 31, 1998, and decreased $6,938 or 19.38% during
the six month period ending October 31, 1999 as compared to the same period
in
1998. This decrease is reflected by non-reoccurring expenses incurred during
the six month period ending October 31, 1998 rather than a decrease in
current
marketing expenses. These non-reoccurring expenses included attendance at
trade shows during the comparative period ending October 31, 1998.
GENERAL AND ADMINISTRATIVE
--------------------------
General and administrative costs increased by $1,937, or 4.4%, during the
2nd
Quarter and increased by $6,174 or 7.35% during the six month period ending
October 31, 1999, as compared to the same periods in 1998. These increased
costs were primarily a result of an increase in salaries and rent which were
previously allocated to Stevia. See "Related Party Transactions" below.
ASSETS/LIABILITIES
- ------------------
GENERAL
-------
Since April 30, 1999, the Company's assets and liabilities have not
materially
changed. The Company invested $250,000 of the proceeds received from Stevia
as a result of its liquidation on April 16, 1999 in a 270-day certificate of
deposit. Since the Company is not registered under the Investment Company
Act
of 1940, it is limited to the types of investments which may be made with
such
proceeds. Management anticipates interest earned on the Certificate of
Deposit will be used to augment operating expenses. The funds invested in
the
certificate of deposit and the interest have not been allocated or earmarked
for any specific use.
<PAGE>
The increase in current assets from operations, primarily cash and accounts
receivable, is due to normal fluctuations and is not indicative of any trend
in the operations in the Company.
RELATED PARTY TRANSACTIONS
--------------------------
On April 16, 1999, Stevia was judicially dissolved. Prior to the dissolution
of Stevia, common offices, employees and certain operating expenses were
shared by the Company and Stevia. On April 16, 1999, inter-company charges
to
Stevia for shared expenses aggregated $315,015. The Stevia dissolution plan
called for each creditor to receive 93% of the amount owed in full
satisfaction of such amount. As a result, the Company received $290,918 as
its share of the Stevia dissolution proceeds. This resulted in a loss of
$24,097.
The Company was owed $18,574.35 by F.K. Suzuki International, Inc. ("FKSI"),
an affiliate, at October 31, 1999. FKSI owed the same amount at April 30,
1999. This account primarily represents common expenses which are charged by
the Company to FKSI for reimbursement. These expenses include certain office
expenses, general operating expenses and legal fees. See "Financial
Statements." These expenses are incurred in the ordinary course of
business.
Although management believes it is cost effective to share common expenses
with FKSI, the Company has reduced the amount of advances and common expenses
charged to FKSI until FKSI is in a position to reimburse the Company.
Collectability of the amounts due from FKSI cannot be assured without the
liquidation of all or a portion of its assets, and thus such receivable has
been classified as a non-current asset.
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. As of October
31, 1999, no portion of this option had been exercised.
On April 1, 1999, the Company loaned $8,000 to its President, Fred K.
Suzuki.
The loan was evidenced by an unsecured note payable on demand with 10%
interest on the unpaid balance. The principal balance of the note was paid
on
October 5, 1999, but accrued interest of $103 remained unpaid at October 31,
1999. The Company made this loan as an accommodation to Mr. Suzuki. There
has not been an independent evaluation of the value of this loan to Mr.
Suzuki, however, it is believed by management that the interest charged Mr.
Suzuki on this loan approximates fair market interest.
<PAGE>
CURRENT ASSETS/CURRENT LIABILITY RATIO
- --------------------------------------
The ratio of current assets to current liabilities, 28.71 to 1, has improved
compared to 23.02 to 1 at April 30, 1999. Management believes it has
sufficient current assets for its operation during the current year provided
there is no adverse material changes in operations.
WORKING CAPITAL/LIQUIDITY
- -------------------------
During the six-month period ending October 31, 1999, the Company experienced
an increase in working capital of $48,402. This is due to the profitable
operations of the Company during the six-month period October 31, 1999.
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, 1999, the Company had $510,219 of current assets
available.
Of this amount, $61,902 was inventory and $97,604 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, 2000 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)Stock Option Agreement, dated November 12, 1998, between
the
Company and Fred K. Suzuki(ii)
(b)Promissory Note, dated April 1, 1999, executed by Fred K.
Suzuki payable to the Company (iii)
(11) Statement regarding computation of per share earnings - none.
(15) Letter dated December 6, 1999, regarding interim financial
information (iv).
(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-1.
(b) No Current Reports on Form 8-K 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
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 Quarterly Report on Form 10Q
for the quarter ending January 31, 1999 filed with the Securities and
Exchange
Commission.
(iii) Incorporated by reference to the Company's Annual Report on Form 10K
for fiscal year ending April 30, 1999 filed with the Securities and
Exchange Commission.
(iv)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 December 10, 1999 /s/ FRED K. SUZUKI /s/
----------------- --------------------------
Fred K. Suzuki
President, Chairman of the Board,
Chief Accounting Officer
and Treasurer
Date December 10, 1999 /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, 1999
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
- ------------ --------------------------------- --------------
27 Financial Data Schedule E-1
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF THE REGISTRANT FOR THE SIX MONTH PERIOD ENDING OCTOBER 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> APR-30-2000 APR-30-2000
<PERIOD-END> OCT-31-1999 OCT-31-2000
<CASH> 90,933 90,933
<SECURITIES> 250,000 250,000
<RECEIVABLES> 103,607 103,607
<ALLOWANCES> 500 500
<INVENTORY> 61,902 61,902
<CURRENT-ASSETS> 510,219 510,219
<PP&E> 118,738 118,738
<DEPRECIATION> ( 101,913) (101,913)
<TOTAL-ASSETS> 551,613 551,613
<CURRENT-LIABILITIES> 9,835 9,835
<BONDS> 0 0
<COMMON> 632,663 632,663
0 0
0 0
<OTHER-SE> ( 98,921) (98,921)
<TOTAL-LIABILITY-AND-EQUITY> 551,613 551,613
<SALES> 155,349 287,691
<TOTAL-REVENUES> 159,663 295,530
<CGS> 49,595 91,843
<TOTAL-COSTS> 49,595 94,843
<OTHER-EXPENSES> 35,346 66,923
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 28,811 46,608
<INCOME-TAX> 6,396 10,347
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 6,396 10,347
<CHANGES> 0 0
<NET-INCOME> 28,811 46,608
<EPS-BASIC> .002 .003
<EPS-DILUTED> .002 .003
</TABLE>
