UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended 4/30/99
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-12459
Biosynergy, Inc.
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Illinois 36-2880990
______________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
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
______________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registrant
NONE NONE
___________________________ __________________________________________
Securities registered pursuant to section 12(g) of the Act:
Common Stock, No Par Value
_____________________________________________________________________________
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
--------- -------
Page One of 53 pages contained in the sequential number system. The Exhibit
Index may be found on page E-i of the sequential numbering system.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [X]
The aggregate market value of the voting stock and non-voting stock held by
non-affiliates of the registrant on April 30, 1999 cannot be ascertained with
any certainty because there is no established trading market due to limited
and sporadic trades.
The number of shares of common stock outstanding on April 30, 1999 was
13,806,511.
No documents have been incorporated by reference in this report except for
certain exhibits and schedules listed in Item 14.
Part I
______
Item 1. Description of Business
-----------------------
General Development of Business
- -------------------------------
Biosynergy, Inc. (the "Company") was incorporated as an Illinois corporation
on February 9, 1976. The Company was formed primarily for the purpose of
developing, manufacturing, and marketing products utilizing cholesteric
liquid
crystals. The Company presently manufactures and markets disposable medical,
laboratory and industrial thermometric and thermographic cholesteric liquid
crystal devices. The Company also distributes certain blood bank and
laboratory products manufactured by third parties to specifications of the
Company.
Although the Company did not enter into any agreements materially affecting
its operations during Fiscal 1999, the Company experienced an increase in
sales during fiscal 1999. The Company's sales of $548,800 were the highest
since fiscal 1982. Although the Company realized a profit of $19,448 for the
fiscal year ending April 30, 1999 compared to $99,351 for fiscal 1998, the
Company had non-recovering extraordinary losses and write downs totaling
$45,886 during fiscal 1999. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The Company began distributing two new products, Hemo-CoolTM Thermoelectric
Blood Cooling/Storage System and Temp-D-TekTM Infrared Temperature Monitor.
See "Thermographic and Thermometric Devices and Accessories" below. Although
these products did not contribute significantly to the sales or profits of
the
Company, they are products which management of the Company believes are
logical extensions of its product line.
The Company continued to introduce its products directly to industrial
customers during Fiscal 1999. Although the Company did not make any material
sales to customers in the industrial markets, the Company submitted various
proposals to potential customers for use of its products and potential
products. Although the ultimate results of these activities are not known,
Management believes there is a need for its products and technology in the
industrial markets.
Except as stated above, there were no other significant contracts or
developments with regard to the Company's business during the past fiscal
year.
Financial Information About Industry Segments
- ---------------------------------------------
The Company generated revenues from sales of the medical and laboratory
products listed below in the medical and laboratory industry segment during
the fiscal year ended April 30, 1999, 1998 and 1997. For a description of
these products, see "Narrative Description of Business."
Below is a schedule which presents the sales for each product and the
percentage of the Company's total sales attributable to each product for the
fiscal years ending April 30, 1999, 1998 and 1997.
Fiscal Year Ending
April 30, 1999
---------------------------
Medical and Percentage
Laboratory Sales of of Total
Products Product Sales
- ------------------------- ------------- -----------
HemoTempR II BMD $470,778.50 85.8%
TempTrendR TI 24,479.00 4.5%
HemoTempR BMD 15,861.00 2.9%
TempTrendR II TTD 12,137.50 2.2%
HemoTempR II Activator 7,592.00 1.4%
LabTempR 20 ST 4,695.50 0.9%
LabTempR 40 ST 3,903.50 0.7%
Hemo-CoolTM & Accessories 2,709.80 0.5%
Vena-VueR VAD 2,330.00 0.4%
StaFreezR FTI 2,291.00 0.4%
Miscellaneous (1) 1,527.00 0.2%
Temp-D-TekTM 495.00 0.1%
-------------- ---------
$548,799.80(2) 100.0%
Fiscal Year Ending
April 30, 1998
--------------------------
Medical and Percentage
Laboratory Sales of of Total
Products Product Sales
- -------------------------- ----------- ----------
HemoTempR II BMD $444,005.90 83.8%
TempTrendR TI 31,165.50 5.9%
TempTrendR II TTD 13,136.00 2.5%
HemoTempR BMD 12,574.60 2.4%
LabTempR 20 ST 6,796.00 1.3%
LabTempR 40 ST 6,688.50 1.3%
Miscellaneous (1) 5,926.50 1.1%
HemoTempR II Activator 5,570.00 1.0%
Vena-VueR VAD 2,070.00 .4%
StaFreezR FTI 1,527.00 .3%
-------------- ---------
$529,460.00(2) 100.0%
Fiscal Year Ending
April 30, 1997
--------------------------
Medical and Percentage
Laboratory Sales of of Total
Products Product Sales
------------- -----------
HemoTempR II BMD $415,616.20 82.7%
TempTrendR TI 29,215.50 5.8%
TempTrendR II TTD 15,708.00 3.1%
HemoTempR BMD 14,496.00 2.9%
LabTempR 20 ST 9,042.50 1.8%
HemoTempR II Activator 6,164.00 1.3%
LabTempR 40 ST 5,589.50 1.1%
Vena-VueR VAD 2,635.00 .5%
Miscellaneous (1) 1,517.00 .5%
StaFreezR FTI 2,576.35 .3%
-------------- ----------
$502,560.05(2) 100.0%
__________________
(1) Includes sales of LabTempR 60, L.C. Sheets, Tempa.SlideTM, and special
order thermometric and thermographic consumer and laboratory products.
(2) Includes discounts and returns.
See "Information About Foreign and Domestic Operations and Export Sales".
See
also "Selected Financial Data" and "Financial Statements and Supplementary
Data" for the operating profit and loss and identifiable assets related to
the
Company's operations in its industry segment.
Narrative Description of Business.
- ---------------------------------
As described in "General Development of Business", the Company is presently
engaged in the business of developing, manufacturing, and marketing
disposable
thermometric and thermographic temperature indicators and accessories, and
distributing and marketing certain non-disposable thermometric and blood
transportation products for the medical, laboratory and industrial markets.
Further information about this business segment and proposed products of the
Company are described below.
Thermographic and Thermometric Devices and Accessories.
- ------------------------------------------------------
During the fiscal year ending April 30, 1999 the Company manufactured and
marketed various medical, laboratory and consumer thermometric and
thermographic devices and accessories. These products were sold to
hospitals,
clinical end-users, laboratories and product dealers.
1. The HemoTempR Blood Monitoring Device ("BMD") is designed to be a human
blood bag temperature indicator. Human blood must be maintained, optimally,
at 1-6o C., and not allowed to exceed 10o C. Since human blood is always in
short supply, it is critical that blood be maintained within these
specifications to avoid loss. HemoTempR BMD monitors the core temperature of
a blood bag from 1-12o C., and replaces the impractical mercury thermometer
susceptible to breakage. HemoTempR BMD once attached to the blood bag is
usable throughout the life of the blood.
2. HemoTempR II BMD is designed to warn blood bank personnel whenever the
internal temperature of the blood bag has exceeded approximately 10-11o C.
HemoTempR II BMD has an irreversible indicator that is activated when the
tag
is applied to the blood bag at approximately 4o C. After being activated,
the irreversible indicator remains blue colored for 72 hours unless the
blood
is warmed to a temperature of 10o C. or above, in which case the indicator
loses its blue color. The irreversible indicator will not return to blue
even if the blood is subsequently recooled, indicating that the blood has
been warmed. The reversible portion of the indicator reversibly monitors
temperatures from 1-9o C. HemoTempR II BMD is non-reusable and must be
replaced each time the blood bag is returned to the blood bank and reissued.
3. HemoTempR II Activator, is an electronic, portable block model heater
developed to provide a reliable source of heat necessary to activate the
Company's HemoTempR II BMD. The HemoTempR II Activator has a thermostatic
control to permit precise setting and continuous control of temperatures in
the range for activation of the Company's HemoTempR II BMD. This device is
intended by the Company to be used with HemoTempR II BMD as a system for
blood
monitoring. This device is manufactured by another company to specifications
set by the Company.
4. TempTrendR Temperature Indicator ("TI") is primarily used to monitor the
temperature of urine specimens collected for drug testing to detect
fraudulent urine specimens. Most common forms of drug testing require a
urine
specimen. However, the test is valid only if a legitimate urine specimen is
collected which has not been altered by the subject to mask a drug abuse
problem. In order to eliminate altered or fraudulent urine specimens in
tests on federal employees, federal government guidelines require that urine
temperature be measured within four minutes of sample collection, and that
the temperature be 90.5-98.9o F. Temperature measurements taken with
TempTrendR TI are simply a matter of observing the color illuminated number
and recording the temperature. TempTrendR TI also provides a non-invasive
method of monitoring the actual surface temperature trends of any body
surface
where temperature measurement is important, such as near joints in rheumatoid
arthritis and to assess blood circulation.
5. TempTrendR II Temperature Trend Device ("TTD") is a second generation
temperature trend device which is correlated to internal body temperature and
provides a non-invasive, readily visible means of monitoring changes in body
temperature. TempTrendR II TTD will reflect oral temperatures such as those
taken by glass thermometers. TempTrendR II TTD is used intraoperatively to
warn of developing hyper or hypothermic conditions. The indicator is also
excellent for monitoring a patient's temperature during any type of
transfusion procedure.
6. LabTempR 20, LabTempR 40 and LabTempR 60 Surface Temperature Indicators
("STI") are designed to reversibly indicate the temperature of laboratory
materials which require specific storage or use temperatures. LabTempR 20
STI
indicates temperatures between 0-21o C., LabTempR 40 STI monitors
temperatures
between 19-21 and 24-41o C., while LabTempR 60 STI measures temperatures
between 41-61o C. These thermometers are designed to monitor the temperature
and changes in temperature of hundreds of laboratory chemicals and supplies
which require specific temperature conditions; however, these thermometers
are
suitable for temperature measurement of any surface.
7. Tempa.SlideTM Temperature Indicator ("SLTI") is amicroscope glass slide
temperature indicator. The SLTI helps the viewer read the optimum
temperature
of a slide by indicating in large visible colors when the desired slide
temperature is reached. Tempa.SlideTM can be mounted on a glass microscope
slide and can be used continuously for over one year. These thermometers are
suitable for temperature monitoring of glass slides during antibody/antigen
tests when an optimum temperature of the cells and protein must be maintained
for accurate test results.
8. StaFreezR Freeze-Thaw Indicator ("FTI") is a freeze-thaw indicator which
will irreversibly indicate whether frozen material is warmed to greater than
- -20o C. Once the frozen product exceeds -20o C., the liquid crystal film
will
turn from blue to gray to black, and refreezing the product at a lower
temperature will not bring back the original frozen state color.
9. The Vena-VueR Vein Assessment Device ("VAD") is designed to locate good
veins by assessing blood flow, and to assess vein depth, and size. It is
used
primarily to minimize complications and reduce discomfort for geriatric
patients, obese patients, diabetic patients, burn patients, drug addicts with
sclerosed veins, shock patients with collapsed veins and long-term
hospitalized or cancer chemotherapy patients with severely damaged and
traumatized veins. However, Vena-VueR VAD is also useful in helping to
select
the most patent and least traumatized veins for the purpose of any
venipuncture. Three efficacy medical publications have been written about
Vena-VueR VAD.
10. Specialty products include devices manufactured to the specification and
design of the customer, such as time/ temperature shipping labels for food
products under the tradename FoodGardeTM Time/Temperature Indicators and
liquid crystal thermometers for general purpose thermometry. The Company
anticipates continued manufacturing of these and additional specialty
products
in the future.
During Fiscal 1999, the Company began marketing and distributing the
following
products manufactured by other companies to specifications set by the Company:
1 Hemo-CoolTM Thermoelectric Blood Cooling/Storage System ("TBCSS") is a
self-contained, portable blood storage and shipping device for use in
shipping
whole blood from the blood bank to surgery, in the hospital setting, or to
other destinations outside the hospital. The device operates similar to a
portable refrigerator with a DC power supply, which is designed to maintain a
constant temperature suitable for human blood. The cooling device is
portable
and can be used for storage and shipping of various other biologicals that
have to be maintained at a constant refrigerated temperature.
2. Temp-D-TekTM - Infrared temperature monitor ("ITM") is a hand held
infrared temperature detecting device offering non-contact surface
temperature
monitoring in milliseconds to a tenth of a degree accuracy. The Temp-D-Tek
ITM provides quality central temperature monitoring of lab equipment up to 26
times faster than a traditional electronic thermometer and 46 times faster
than a ASTM mercury thermometer. The Temp-D-Tek ITM is ideal for use in
laboratories or any setting where non-invasive or non-contact temperature
monitoring is desirable.
The Company is also developing these other products.
1. The Company intends to market new irreversible time/ temperature
indicators which will be used as shipping labels, and in other forms, for the
frozen food packaging industry (under the tradename FoodGardeTM), the
pharmaceutical industry, and for other industries requiring careful
monitoring
of refrigerated or frozen materials. The devices will have irreversible
color
changes at various temperatures determined to be critical by the end-user.
Therefore, a purchaser, whether an individual consumer or a merchant, will be
able to instantaneously determine the temperature history of the material.
Although the liquid crystal formulations are substantially completed, the
Company is uncertain at this time when these products will be sold.
2. The Company has recognized a need exists for a simple, inexpensive
indicator to determine if sensitive materials have been subjected to freezing
temperatures. The Company is continuing its investigation of the feasibility
of such an indicator.
3. The Company has become aware that a need exists for products to augment
its current product line, such as the HemoTempR II Activator and Hemo-CoolTM
Thermoelectric Blood Cooling/Storage System. The Company is investigating
the
feasibility of additional products to systematize the use of its thermometric
and thermographic liquid crystal devices as well as alternative technologies
to supplement its current product line. The results of such investigations
are not predictable at this time.
4. The Company is investigating alternative thermometric and thermographic
technologies for use in applications where the Company's current products are
unsuitable. Since the investigation of these alternative technologies is not
complete, there can be no assurance the Company will be able to develop any
commercial products as a result of this activity.
5. The Company is investigating the use of certain compounds for use as
bacteria growth regarding agents for use in food and other products. Since
the review of these compounds is in its initial stages, and there are several
unknown factors regarding efficacy, supply and regulatory requirements, the
feasibility of this project cannot be predicted with any certainty at this
time.
Manufacturing.
- -------------
The Company manufactures all of its products except for the
HemoTempR II Activator, Hemo-CoolTM TBCSS and Temp-D-TekTM ITM. These
products are manufactured for the Company by unrelated companies on an as
needed basis. Raw materials for the Company's other products are purchased,
but all manufacturing is performed at the Company's production facility. All
outside manufacturing is done to specifications set by the Company. There
are
no commitments or firm agreements for outside manufacturers to provide
products for the Company, and the Company does not anticipate it will enter
into any such agreements in the foreseeable future.
The Company has twenty-three years of experience working with various liquid
crystal formulations and thermometric and thermographic application methods.
The Company maintains complete records of manufacturing and quality assurance
testing of all of its products in compliance with Food and Drug
Administration
("FDA") regulations. All products are manufactured according to "good
manufacturing practices" ("GMP") for medical devices.
Marketing and Distribution.
- --------------------------
The Company has traditionally targeted the medical and laboratory markets.
While novel products, such as the Company's products, enjoy the advantage of
no initial competition, they also initially lack a demonstrated market and
acceptance by medical and laboratory personnel. Furthermore, cost savings
programs and awareness have slowed down the introduction of new products,
particularly in the medical market. As a result, the time required to
achieve acceptance of the Company's medical products is significantly
increased, in Management's opinion.
Because of these conditions, the Company has been forced to rely heavily on
its own marketing and distribution efforts in the medical market, rather than
the use of the traditional medical product distributors, for a large portion
of its sales. Nevertheless, the Company's primary distributor in the United
States, Fisher Scientific Company ("Fisher"), and the Company's other product
distributors have increased their sales of the Company's products throughout
the United States over the past few years. During Fiscal 1999, Fisher
accounted for 36.57% of the Company's sales. Although it is difficult to
predict the ultimate success of Fisher and other distributors in selling the
Company's products, management believes this trend will continue.
The Company's contract with the American Association of Blood Banks ("AABB")
Group Purchasing Program expires March 31, 2000. Approximately 2,500 AABB
Member Institutions throughout the United States are eligible to purchase
HemoTempR II blood bag temperature indicators and HemoTempR II Activators at
a
discount under this contract. The Company is required to pay a commission of
2% of all sales under this contract to the AABB.
The Company continues to negotiate with various medical and laboratory
product
companies for the distribution of its products under private labels and to
introduce its products in the industrial, pharmaceutical and laboratory
markets, the success of which cannot be assured. The Company is attempting
to
introduce new products to supplement its current product line. The Company
is
also researching products outside the traditional medical and laboratory
markets, the results of which cannot be predicted at this time.
At the present time, two employees are engaged on a part-time basis in
marketing the Company's products. The Company uses the services of an
in-house sales representative for telemarketing on a commission only basis.
The Company does not have an outside sales force. Since the Company markets
its products to approximately 7,000 hospitals in the United States, hundreds
of laboratories and industrial end-users in the United States, and thousands
of hospitals and laboratories in foreign countries, it will continue to rely
upon the marketing efforts of independent dealers and sales representatives
for the medical and laboratory markets. The Company directly markets and
sells to industrial customers.
The Company is unaware of its current market share for its medical and
laboratory products, although the Company is currently collecting data to be
used in marketing studies in the future.
Sources and Availability of Raw Materials.
- -----------------------------------------
In general, the Company believes its sources and availability of raw
materials
and finished products to be satisfactory. Presently, there are a limited
number
of domestic manufacturers of liquid crystal chemicals. Although it is
expected that these domestic manufacturers will continue to supply the raw
liquid crystals needed for the production of the Company's products, which
cannot be assured, if industrial quantities of raw liquid crystals are
unavailable from domestic sources, the Company will need to import these
materials from foreign suppliers, or, as an alternative, manufacture such
materials itself. Other materials and products are currently available from
a variety of suppliers.
Patents and Trademarks.
- ----------------------
The Company has been granted or assigned five United States and four foreign
patents relating to liquid crystal technology. All of the related Company's
patents of the United States patents and all of the foreign patents,
generally related to liquid crystals or liquid crystal dispersion processes,
have expired. During Fiscal 1999, the Company was informed that its patent
relating to cholesteric liquid crystal formulations and temperature
monitoring means for the Company's irreversible liquid crystal products
(No. 4,859,360) was administratively invalidated for failure to pay
patent fees. Although the Company's patents are no longer in effect,
management does not believe this will have an adverse material impact on the
Company's operations, revenues or properties.
The Company has received registered trademark protection on all product names
to date excepting Temp-D-TekTM, Tempa.SlideTM, FoodGardeTM, LaproVueTM and
Hemo-CoolTM. The Company has retained, however, all the rights to the
Temp-D-TekTM, Temp.SlideTM, FoodGardeTM, LaproVueTM and Hemo-CoolTM common
law trademark. Additional trademarks registrations will be applied for as
needed.
Although patent and trademark protection is important, the Company believes
no
material adverse effects to the Company's operations will result in the event
additional patents and/or trademarks are not obtained, or, if attained, such
patents and/or trademarks are held to be invalid. Certain processes and
chemical formulas will be maintained only as trade secrets. Management feels
that it will be difficult for potential competition to analyze or reproduce
the secret processes and formulas without substantial expenditures of capital
and resources.
Seasonal Aspect of Business. The business of the Company is not seasonal.
- ---------------------------
Working Capital Items.
- ---------------------
The Company has attempted to conserve working capital
whenever possible. To this end, the Company attempts to keep inventory at
minimum levels. The Company believes that it will be able to maintain
adequate inventory to supply its customers on a timely basis by careful
planning and forecasting demand for its products. However, the Company is
nevertheless required, as is customary in the medical and laboratory markets,
to carry inventory to meet the delivery requirements of customers and thus,
inventory represents a substantial portion of the Company's current assets.
The Company presently grants payment terms to customers and dealers of 30
days. The Company will not accept returns of products from its dealers
except
for exchange, but does guarantee the quality of its products to the end user.
As of April 30, 1999, the Company had $464,208 of current assets available.
Of this amount, $49,671 was inventory and $76,649 was net trade receivables.
The additional cash on hand represented the proceeds from the repayment of
previous advances to Stevia Company, Inc. ("Stevia") for common area
expenses. See "Management's Decision and Analysis of Financial Condition and
Results of Operations." The Company invested $250,000 of its cash in
certificates of deposit on May 19, 1999.
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 will be necessary to obtain
additional
financing to cover working capital items and keep current trade accounts
payable, of which there can be no assurance. See "Management's Discussion
and
Analysis of Financial Condition and Results of Operations."
Major Customers.
- ---------------
Fisher, the Company's primary independent product distributor, was directly
responsible for 36.57% or more of the Company's net sales during the fiscal
year ending April 30, 1999. No other customer or distributor accounted for
10% or more of the Company's net sales during the past fiscal year. At April
30, 1999, Fisher owed the Company $32,916. Management believes the loss of
this
customer would materially reduce the revenues of the Company until the
Company could retain the services of another major product distributor.
Backlogs.
- --------
The Company had backorders of $6,759 as of April 30, 1999. The
Company still had $485 in backorders as of June 14, 1999.
Government Contracts.
- --------------------
The Company does not have a material portion of its
business that may be subject to renegotiation of profits or termination of
contracts or subcontracts at the election of any government entity.
Competition.
- -----------
The Company has no known commercial competitors of its
disposable vein assessment device or blood monitoring devices using liquid
crystal technology. Because of the Company's employment agreements with
former employees and processing trade secrets, it does not anticipate
competition in these areas in the near future. In the area of laboratory
temperature monitoring, there are no other competitors who market an
infinitely thin liquid crystal temperature indicator. In the area of a
frozen
food or drink safety indicator, there is no competition known to the Company
that utilizes liquid crystal technology. The Company believes that the
frozen
food industry presently uses primarily physical and organoleptic evaluation
(e.g., evaluation of softness, texture, aroma, taste and the like), as well
as
mercury thermometers and temperature sensitive inks to monitor freshness.
Labels containing wax encapsulated dyes with specific low melting points and
capillary action products produced by 3M under the tradename MonitorMarkR and
polymer/monomer indicators from Lifeline are also available.
The Company's HEMOTEMPR II BMD (blood bag temperature monitor) competes in
the
medical market against Safe-T-Vue (Williams Laboratory) and MonitorMark
(3M).
Management of the Company believes that the MonoTech and 3M products are
technically inferior to HEMOTEMPR II BMD in that they provide only an
irreversible monitor with nothing to warn the user that blood is approaching
an unsafe temperature. In addition, the MonoTech product must be
refrigerated
prior to use, and, because of their design, both products can readily be
dislodged from the blood bag. There is no known commercial competitors of
the
Company's HemoTempR II Activator or Hemo-CoolTM Blood Cooling/Storage System.
The Company competes with several other infrared device manufacturers and
distributers in general temperature monitoring, but no other company has
stressed quality control as a primary reason for use of an infrared
thermometric device such as the Temp-D-TekTM ITM. The Company's Temp-D-TekTM
ITM has been designed with a lower accuracy variance than other hand held
infrared thermometric devices. As a result, it is more suitable for certain
quality control and precision thermometric procedures.
The Company's TempTrendR II competes in the medical market against
Temp-A-Strip (Johnson & Johnson), Stick-Temp (Trademark Sales) and Temp-A-Dot
(PyMaH Corp). Stick-Temp is distributed on a limited basis and there is
little information available concerning it. Management of the Company
believes that the Johnson & Johnson product is less technically advanced than
the Company's TempTrendR TTD and is primarily distributed in the Consumer
market. Temp-A-Dot is a wax impregnated strip of paper inserted into the
mouth to monitor core temperature. Although it is reported to cost less than
TempTrendR II thermometers, it has the disadvantage of single reading,
invasive methodology and cannot be used to monitor temperature trends.
Recently, a few private label indicators have been introduced to the market.
These are manufactured by Dijinni Industries, PyMaH Corporation, Hallcrest
Products and American Thermometer, who compete with the Company in the
consumer market for forehead temperature indicators and in the drug testing
market for urine thermometers.
Other companies, such as Eurand American, are only involved in the
manufacture
of liquid crystal raw materials and do not directly compete with the Company
for sale of medical, industrial or consumer products. Mercury and electronic
thermometers are used in several competitive applications. They are
generally
more costly, non-disposable or not usable in most applications where liquid
crystal thermometry and temperature indicators are utilized.
Research and Development.
- ------------------------
During Fiscal 1999, 1998 and 1997, the Company spent $47,377, $36,070 and
$32,265, respectively, on Company-sponsored research and development
activities. All expenditures for research and development are expensed
currently with the exception of significant equipment and set-up charges
which are capitalized and depreciated or amortized over their estimated
useful life.
The Company is conducting research and development of products, which are
discussed under "Thermographic and Thermometric Devices and Accessories." In
this regard, the Company may require financing to complete the development of
these products. The success of the Company in obtaining financing for
research and development will largely determine whether the Company will
continue the research and development for such products or expand its
research
and development to other products.
Government Regulations.
- ----------------------
The Company does not currently plan to market diagnostic or therapeutic
products which are subject to stringent United States Food and Drug
Administration (FDA) review and pre-market approval in the near future,
although some of the products under review, such as the bacteria growth
retarding compound, may require approval by the FDA or other government
agencies. Present medical products of the Company are classified by the FDA
as Class I or Class II. These are subject only to general regulations
requiring that manufacturers adhere to certain guidelines to provide
reasonable assurance of utility, safety, and effectiveness. These guidelines
include labeling requirements, registration with the FDA as a
manufacturer, listing of devices in commercial distribution with the FDA,
notification to FDA of devices proposed to be marketed, conformance to
specified current good manufacturing practices in the manufacture of the
devices, conformance to certain record-keeping requirements, and, in the case
of Class II devices, conformance to certain performance standards. At the
present time, the Company believes that it is in compliance with regulations
set forth by the FDA.
Information About Foreign and Domestic Operations and Export Sales.
- ------------------------------------------------------------------
The Company had export sales of $12,266 during the last fiscal year, and
export
sales of $17,077 and $22,145 during the fiscal years ending in 1998 and 1997,
respectively. The Company also believes that some of its medical devices
were
sold to distributors within the United States who resold the devices in
foreign markets. However, the Company does not have any information
regarding
such sales, and such sales are not considered to be material.
The Company does not rely on any foreign operations other than its dealers
and
marketing representatives in their respective marketing areas. See
"Marketing
and Distribution." It is not anticipated export sales will be material to
operating revenues or income of the Company. Foreign sales are contingent
upon, among other factors, foreign trade regulations, value of the United
States Dollar and, where required, government approval of the Company's
products including CE Marketing requirements.
Environmental Protection Expenditures.
- -------------------------------------
The Company's operations are not subject to any federal, state or local laws
regulating the discharge of materials into the environment which materially
affect earnings or the competitive position of the Company, although the
Company is subject to such laws. There were no material capital expenditures
made during the last fiscal year to comply with such laws, nor are any such
expenditures anticipated for Fiscal 2000.
Employees.
- ---------
The Company presently has five full-time employees comprised of
the President (who also presently serves as the Director of Marketing and
Technical Operations), two Vice Presidents, a manufacturing/packaging
employee
and a secretary/receptionist.
Item 2. Properties
----------
The Company's production facilities, research facilities, and administrative
offices are located at 1940 East Devon, Elk Grove Village, Illinois 60007, in
a 10,400 square foot facility leased from an unaffiliated third party. The
lease for these facilities expires on January 31, 2001. See footnote 9 of
the
"Financial Statements."
A majority of the Company's Elk Grove Village facility is currently in use;
however, Management believes this facility is adequate for its needs in the
foreseeable future. Located at the Company's facility is equipment utilized
for research, development, and manufacturing of the Company's products.
Item 3. Legal Proceedings
-----------------
There is no material litigation threatened or pending against the Company or
any of its properties.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None
PART II
-------
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters.
--------------------------------------------------------------------
Market Information.
- ------------------
Although the common stock of the Company is traded in the
over-the-counter market, there is no established public trading market due to
limited and sporadic trades. Information regarding these trades is compiled
by the Stock Section of the National Daily Quotation Service ("Pink Sheets")
and selected broker-dealers trading such common stock. These quotations do
not necessarily reflect actual transactions nor represent the actual value or
trading price of the Company's common stock. Such over-the-counter
quotations
reflect inter-dealer prices, without retail markup, markdown, or commission.
Trading and pricing information for Fiscal 1997, 1998 and 1999 was not
available to the Company, although the management of the Company does not
believe there were sufficient trades to establish a market for its common
stock.
Holders.
- -------
As of April 30, 1999, there were approximately 850 shareholders of
record of the Company's common stock.
Dividends.
- ---------
The Company has never declared any dividends and does not intend
to do so until such time as the Company sustains a profitable status and has
provided for all of its capital requirements.
Item 6. Selected Financial Data
-----------------------
Fiscal Years Ending
-------------------
1999 1998 1997 1996 1995
-------- -------- -------- --------- --------
Operating Revenues $548,800 $529,460 $502,560 $454,784 $443,337
Other Revenues 3,812 3,460 8,104 5,677 6,863
Net Income/(Loss) 19,488 99,351 88,963 92,197 47,824
after Taxes
Net Income/(Loss) .0014 .0072 .0064 .0066 .0035
per Share After
Taxes
Total Assets 507,396 521,062 455,579 428,331 409,320
Long Term Debt - - - - -
Stockholder Equity/
(Deficit) 487,234 467,786 368,435 279,472 187,275
Item 7.Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Net Sales.
- ---------
Net sales for the fiscal year ending April 30, 1999 were $19,340,
or 3.65%, higher than the previous fiscal year, and $46,240, or 9.2%, higher
than the fiscal year ending in 1997. The increase in sales during Fiscal
1999
was due to the growing acceptance of the Company's HemoTempR II blood
temperature indicators. The Company experienced an increase of $26,773, or
6.03%, in sales of its HemoTempR II product in Fiscal 1999 as compared to
Fiscal 1997, and an increase of $55,163 as compared to Fiscal 1997.
Other Revenues.
- --------------
During Fiscal 1999, the Company realized $3,596 of miscellaneous income.
This income was related to leasing a portion of its computer time to Stevia
Company, Inc. ("Stevia"), an affiliate, sub-leasing a portion of the
Company's storage space to a non-affiliate, and contract printing for a non-
affiliate.
Costs and Expenses.
- ------------------
Operating costs and expenses for the fiscal year ending
April 30, 1999 increased by $53,241 compared to the fiscal year ending in
1998, and increased by $65,109 as compared to the fiscal year ending in
1997.
The overall increase in operating costs and expenses for Fiscal 1999 were
generally related to increases in salaries and related employee expenses, and
increased marketing and research and development expenses. Generally, with
the exception of the increase in employee salary and related expenses, the
overhead expenses of the Company have remained substantially constant. In
order for the Company to continue without materially altering its present
operations, the overall operating costs and expenses for the ensuing fiscal
year are expected to be similar to or slightly higher than those of the last
fiscal year.
Cost of Sales.
- -------------
As a percentage of net sales, the cost of sales was 31.5% for
the fiscal year ending April 30, 1999, 35.77% for the fiscal year ending in
1998 and 36.94% for the fiscal year ending in 1997. The Company expects that
the cost of sales as a percentage of net sales will remain substantially the
same over the next fiscal year in the absence of a material decrease in sales
or increase in raw material cost.
Research and Development Expenses.
- ---------------------------------
Research and development expenses increased during the fiscal year ending in
1999 by $11,307, or 31.35%, as compared to the fiscal year ending in 1998,
and increased by $15,112, or 46.84%, as compared to the fiscal year ending in
1997. Historically, the Company's research and development activities were
limited to improvement of the current product line and development of
products which were natural extensions thereof. Recently the Company has
been investigating other products and accessories complimentary to its
current product line and entirely new technologies. See "Narrative
Description of Business - Thermographic and Thermometric Devices and
Accessories." Although it is not anticipated that the development of such
products will materially increase the Company's research and development
expenses, there is insufficient information available to determine the extent
the Company will be required to allocate its resources to develop these
products.
Marketing Expenses.
- ------------------
The Company's marketing expenses were $69,207 in 1999 and
$51,077 in 1998, as compared to $54,075 for the fiscal year ending in 1997.
The increase during Fiscal 1999 was primarily due to expenses incurred for
attendance at the Blood Bank Show and printing product information
materials.
The Company continues to increase its marketing activities as resources
became
available which management believes is necessary to continue the Company's
growth. Included in marketing expenses for Fiscal 1999 are commissions
related to an unsalaried salesperson.
General and Administrative Expenses.
- -----------------------------------
The Company's general and administrative costs increased by $18,533 as
compared to the 1998 fiscal year, and increased by $26,008 as compared to the
fiscal year ending in 1997. The increase was primarily the result of
increases in salaries and related employment expenses. See "Cost and
Expenses" above. Except for extraordinary items, and salary and related
employee expenses, it is unlikely general and administrative expenses will
materially change during Fiscal 2000.
Extraordinary Items.
- -------------------
During the last quarter of fiscal 1999, the Company
abandoned certain furniture and equipment, resulting in a write-off of
$2,523. In addition, the Company discovered that its patent related to
irreversible liquid crystals had been administratively invalidated due to the
failure of the Company to pay patent fees. As a result, the Company wrote
off
patent expenses which had been previously capitalized aggregating $19,732.
The Company realized a loss of $24,097 as a result of partial payment and
satisfaction of the amount due from Stevia, an affiliate. On April 16, 1999,
Stevia was judicially dissolved. At that time, Stevia owed the Company an
aggregate of $315,015. The Company received 93% of this amount, or $290,918,
thus resulting in the loss. Notwithstanding the foregoing, management of the
Company believes it was in the best interest of the Company to accept the
reduced amount due from Stevia in order to liquidate the receivable. As a
result, the Company was able to convert a long-term receivable into cash.
The
Company, as of May 19, 1999, invested $250,000 of the proceeds in
certificates
of deposit. See "Related Party Transactions" below.
Net Income/Loss.
- ---------------
The Company experienced an operating income of $65,334, but
a net income of $19,448, a decrease of $79,903 over Fiscal 1998, and a
decrease of $69,515 over Fiscal 1997. The overall decrease is primarily due
to the extraordinary items and secondarily to the increase in operating
expenses discussed above. See "Net Sales," "Costs and Expenses" and
"Extraordinary Items" above. Management realizes that the continued
profitability of the Company depends upon improving and maintaining sales of
the Company's products and controlling expenses. The Company has continued
its efforts to improve sales. However, there can be no assurance the Company
will be able to continue to increase or maintain the current level of net
sales.
As of April 30, 1999, the Company had net operating loss carryovers
aggregating $1,192,189. Therefore, no income taxes are 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 did not alter the Company's net operating loss carryforward position,
and
the net operating loss carryforwards will be available and expire, if not
used, as set forth in Footnote 9 to the Financial Statements for the year
ending April 30, 1999. See "Financial Statements."
Assets.
- ------
Since April 30, 1998, the Company's assets have decreased by
$13,666. This is primarily due to the writeoff of patents and furniture and
equipment, and the loss sustained on the satisfaction of the amount due from
Stevia. See "Extraordinary Items" above. Other minor changes in specific
items do not reflect changes outside the ordinary course of business.
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 was subject to several contingencies, including, but not limited
to, shareholder approval. Management believes the option has no value in
excess of the fair market value of the Company's common stock, however, there
was no independent analysis of this transaction. The option contains
anti-dilutive provisions in the event of corporate capital reorganizations.
As of April 30, 1999, no portion of this option had been exercised.
The Company was owed $18,574.35 by F.K. Suzuki International, Inc. ("FKSI"),
an affiliate, at April 30, 1999. FKSI owed $13,221 at April 30, 1998. This
account primarily represents common expenses which are charged by the Company
to FKSI for reimbursement. These expenses include certain office expenses,
general operating expenses and legal fees. See "Financial Statements."
These
expenses are incurred in the ordinary course of business. Although
management
believes it is cost effective to share common expenses with FKSI, the Company
has reduced the amount of advances and common expenses charged to FKSI until
FKSI is in a position to reimburse the Company. Collectability of the
amounts
due from FKSI cannot be assured without the liquidation of all or a portion
of
its assets, and thus such receivable has been classified as a non-current
asset.
Liabilities.
- -----------
The Company's overall liabilities have decreased by $33,114
since April 30, 1998. This is primarily due to the use of cash from
operations and a portion of the proceeds from the satisfaction of the amount
due from Stevia to satisfy liabilities. See also "Assets" and "Liquidity and
Capital Resources."
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 at $315,015. The Stevia dissolution plan
called
for each creditor to receive 93% of the amount owed in full satisfaction 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. 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, which date was
extended to March 31, 1999. The proceeds of the line of credit were used by
Stevia to finance its dissolution. The maximum amount due under the note was
$2,200, which was repaid on March 25, 1999.
On April 1, 1999, the Company loaned $8,000 to its President, Fred K.
Suzuki.
The loan is evidenced by an unsecured note payable on demand with 10%
interest
on the unpaid balance. The entire balance remained unpaid at April 30, 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.
Current Assets/Liabilities Ratio.
- --------------------------------
The ratio of current assets to current liabilities, 23.02 to 1, has increased
from 3.02 to 1 at April 30, 1998. Although the Company realized income in
fiscal 1999, the Company's increase in ratio of current assets to current
liabilities was primarily the result of receiving $290,918 in proceeds from
the satisfaction of the amount due from Stevia. The Company also advanced
amounts to FKSI, thus resulting in the conversion of $5,353 in current assets
to
long-term receivables. See "Related Party Transactions" above. In order to
maintain the Company's asset/liability ratio, the Company's operations must
remain profitable and the Company must curtail use of its current assets for
the benefit of FKSI.
Liquidity and Capital Resources.
During the fiscal year ending April 30, 1999, the Company had an increase in
net
working capital of $336,277. The increase in net working capital is
primarily
due to the receipt of $292,918 from the satisfaction of the amount due from
Stevia to the Company and secondarily to cash flow from operations.
Cash used by operating activities was $16,454 during Fiscal 1999, primarily
to
retire company debt. Cash provided by operating activities was $50,709
during
Fiscal 1998 and $30,652 during Fiscal 1997. Although the Company experiences
varying collection periods of its accounts receivable, the Company believes
that uncollectible accounts receivable will not have a significant effect on
future liquidity.
The Company's cash flows from operations are considered adequate to fund the
short term capital needs of the Company. However, the Company does not have
a
working line of credit, and does not anticipate obtaining a working line of
credit in the near future. There is therefore a risk additional financing
may
be necessary to fund long-term capital needs of the Company. However, there
is no currently known long-term capital needs.
Due to the financial condition of the Company during the fiscal years ending
April 30, 1997, 1998 and 1999, the Company chose not to have its financial
statements audited. The cost of such an audit would be approximately $15,000.
Except for its operating capital needs, the Company does not have any other
material contingencies for which it must provide.
Effects of Inflation.
- --------------------
With the exception of inventory and labor costs
increasing with inflation, inflation has not had a material effect on the
Company's revenues and income from continuing operations in the past three
years. Inflation is not expected to have a material effect in the
foreseeable
future.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The information required by this item is set forth in pages F-1 to F-12.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
--------------------
None.
Part III
--------
The information contained in items 10, 11, 12, and 13 is the same information
to be included in the Registrant's definitive proxy statement, if any, to be
filed with the Commission, and is included herein for convenience only.
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
The executive officers and directors of the Company are:
Positions Served in
Name Age with Company Office Since
- -------------- --- ------------------- --------------------
Fred K. Suzuki 69 President, Treasurer, February, 1976 (1)
Director of Research
and Development,
Director of Marketing
and Sales, and Chairman
of the Board of Directors
Mary K. Friske 39 Vice President - September, 1993
Administration,
Manager of Sales
Laurence Mead 37 Vice President - April, 1994
Manufacturing,
Manager of Financial
and Product Development
Lauane C. Addis 43 Corporate Counsel, February,
1984
Secretary and December, 1985
Director February, 1987
James F. Schembri 64 Director November, 1990
_____________________
(1) Mr. Suzuki did not serve as President from August 1982 through February
1983. Prior to October, 1984, Mr. Suzuki served as Treasurer of the Company,
and was once again appointed Treasurer on June 30, 1991.
As an incentive for his investment in the Company, the Board of Directors
agreed to nominate James F. Schembri as a candidate for election to the Board
of Directors of the Company. Other than the foregoing, there are no
arrangement
s or understandings between any of the directors or officers of the Company
and any other person pursuant to which any director or officer was or is to
be
selected as a director or officer.
The term of office for the members of the Board of Directors extends to the
next regular meeting of shareholders or until they resign, and until their
successors are duly elected. The term of office for the officers of the
Company extends until they resign, are not re-elected by the Board of
Directors, or are otherwise replaced by the Board of Directors of the Company.
Family Relationships.
- --------------------
Lauane C. Addis is the son-in-law of Fred K. Suzuki. Otherwise, there is no
family relationship between any director, executive officer, or person
nominated or chosen by the Company to become a director or executive officer.
Involvement in Certain Legal Proceedings.
- ----------------------------------------
None of the officers or directors are or have been involved in any legal
proceedings which are material to an evaluation of the ability or integrity
of
same.
Business Experience.
- -------------------
Certain information regarding the business experience of the directors,
officers, significant employees and consultants of the Company are set forth
below:
FRED K. SUZUKI, Jr., Chairman of the Board, President, Treasurer, Director of
Research and Development and Director of Marketing and Sales. Mr. Suzuki is
founder of the Company and has served as President of the Company since its
inception in 1976 to August 1982 and from February 1983 to the present. He
has served as Chairman of the Board of Directors of the Company since its
inception to the present, and as Treasurer from its inception to October,
1984
and from July, 1991 to the present. Mr. Suzuki is also President and
Chairman
of the Board of Directors of F.K. Suzuki International, Inc. ("FKSI"), and
President and Chairman of the Board of Directors of Medlab Products, Inc.
("Medlab"), affiliates of the Company. Mr. Suzuki is the sole owner,
President and Director of Suzuki International, Inc. ("SI"). Mr. Suzuki also
served as President and Chairman of the Board of Directors of Stevia Company,
Inc. ("Stevia") until is dissolution on April 16, 1999. FKSI is a holding
company of Medlab and the Company, and was a holder of a majority of the
common stock of Stevia until its dissolution. As such, it has no other
business operations. See "Security Ownership of Certain Beneficial Owners
and
Management." Medlab is a dormant company, organized to develop, manufacture,
and market scientific products. Stevia was a development company in the
business of developing, manufacturing, and marketing natural sweeteners and
other products derived from Stevia rebaudiana plant. SI is in the business
of
marketing various products. Mr. Suzuki has developed several patents or
patents pending for clinical instruments and has licensed them to
unaffiliated
corporations. These patents do not inure to the benefit of the Company. Mr.
Suzuki has developed several patents in the area of Diterpene glycosides,
chemistry derived from the Stevia rebaudiana plant. Mr. Suzuki also holds
patents in the area of liquid crystal chemistry. Mr. Suzuki attended
Roosevelt University from 1951 to 1954, where he studied Chemistry and
Biology.
MARY K. FRISKE, Vice President - Administration and Manager of Sales. Ms.
Friske joined the office staff in July, 1983. Ms. Friske served as an
Executive Secretary for several years and was promoted to Office Manager in
1989. In September, 1993, Ms. Friske was appointed Vice President -
Administration and Manager of Sales. Ms. Friske received her Bachelor of
Science degree in May, 1981 from Eastern Illinois University where she
majored
in Personnel Management.
LAURENCE MEAD, Vice President - Manufacturing and Manager of Financial and
Product Development. Mr. Mead joined the production department of the
Company
in 1980, and has served as the Company's Production Manager since 1984. In
April, 1994, Mr. Mead was appointed Vice President - Manufacturing and
Manager
of Financial and Product Development. Mr. Mead received his Bachelor of
Science degree in August, 1992 from Roosevelt University where he majored in
Accounting.
LAUANE C. ADDIS, Secretary, Corporate Counsel, and Director. Mr. Addis is
currently a member of the law firm Katz & Karacic, L.L.C., Chicago,
Illinois.
Mr. Addis served the Company from February, 1984 to June, 1991 as its Vice
President - Finance and Chief Financial Officer on a part-time basis and was
employed in the equivalent capacity on a part-time basis by Stevia. From
December, 1985 thru June, 1991, Mr. Addis also served as Executive Vice
President, Chief Operating Officer, Chief Financial Officer, and Treasurer of
the Company. In July, 1991, Mr. Addis resigned from these positions to
return
to the full-time private practice of law. Mr. Addis is also an officer and
director of FKSI, an affiliate of the Company, and served as the Secretary
and
a director of Stevia until its dissolution on April 16, 1999. Mr. Addis
graduated from Andrews University with a B.A. in History and Business
Administration in June, 1978. He received his Doctor of Jurisprudence from
Baylor University in 1981 and his Master of Laws in Taxation from the
University of Denver in 1982. Mr. Addis is a member of the Colorado,
Illinois
and Texas Bar Associations.
JAMES F. SCHEMBRI, Director. Mr. Schembri was elected to the Board of
Directors on November 15, 1990. Mr. Schembri is the founder and President of
Schembri & Associates (formerly Automatic Controls Company). This company
was
a manufacturer's representative with offices in Michigan, Ohio and Kentucky.
It currently is involved in specialized lending situations with Equity
Funding, Inc. of West Bloomfield, Michigan. Mr. Schembri is one of the
founders and President of Fenton Systems, Inc., Burton, Michigan. In
addition
to these activities, Mr. Schembri is founder and President of Wickfield
Leasing Company, which leases automobiles and office equipment. Mr. Schembri
also served as a director of Stevia until its dissolution on April 16, 1999.
Mr. Schembri received his Bachelor of Science Degree in Mechanical
Engineering
from the University of Detroit in June, 1957.
Item 11. Executive Compensation.
----------------------
The following summary compensation table sets forth a summary of compensation
for services in all capacities to the Company during the fiscal years ended
April 30, 1999, 1998 and 1997 paid to the Chief Executive Officer. None of
the Company's other executive officers received annual salaries and bonuses
for such fiscal years exceeding $100,000.
Summary Compensation Table
--------------------------
Annual Compensation Long Term Compensation/Awards
------------------- -----------------------------
Name and Other
Principal Annual All Other
Position Year Salary Bonus Compensation (1) Options (2) Compensation
- -------------- ---- -------- ----- ----------------- ----------- ------------
Fred K. Suzuki 1999 $66,750 - - - $3,000(3)
President, 1998 $60,770 - - - -
Chairman of 1997 $56,827 - - - -
the Board and
Chief Executive
Officer
_____________________
(1) No executive officer received perquisites in excess of the lesser of
$50,000 or 10% of the aggregate of such officer's salary and bonus.
(2) See "Stock Options" below.
(3) Deferred salary of $3,000 was paid to Mr. Suzuki. See also "Certain
Relationships and Related Party Transactions" regarding certain loans to Mr.
Suzuki.
All officers and directors are reimbursed for out-of-pocket expenses incurred
in connection with the Company's business. Messrs. Suzuki, Addis and
Schembri are not remunerated in their capacities as directors. See, however,
"Certain Relationships and Related Party Transactions."
The Company does not have any pension or profit sharing plans in effect for
the benefit of its employees, including its officers and directors. Such
plans may be adopted in the future if deemed in the best interests of the
Company by its Board of Directors.
Stock Options
- -------------
During Fiscal 1999, a stock option, described below, was granted to Fred K.
Suzuki, President of the Company. No other stock options were granted to the
Chief Executive Officer or the Company's four other most highly compensated
executive officers (other than the Chief Executive Officer) whose total
annual
salary and bonus for fiscal year 1999 exceeded $100,000, and such officers
did
not exercise any options during fiscal year 1999. The following table sets
forth the aggregate value as of April 30, 1999 of unexercised options held by
such individuals.
Aggregated Option Exercises in Last Fiscal Year
-----------------------------------------------
and Fiscal Year-End Option Values
---------------------------------
Number of Value of
Unexercised Unexercised
Options at in-the-Money
Shares Fiscal Year Options at
Acquired End (#) Fiscal Year-End
on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ------- ------------ ------------ ------------- ----------------
Fred K.
Suzuki - - - -
President
and - - 3,000,000/0(1) $0/0
Chairman of
the Board
___________________
(1) On November 12, 1998, the Company entered into a Stock Option Agreement
with Fred K. Suzuki, President, granting Mr. Suzuki an option to purchase
3,000,000 shares of Company's common stock at an option price of $0.025 per
share. The option is subject to several contingencies, including, but not
limited to, shareholder approval. Management believes this option has no
value in excess of the fair market value of the Company's common stock,
however, there was no independent analysis of this transaction. The option
contains anti-dilutive provisions in the event of corporate capital
reorganizations. As of April 30, 1999, no portion of this Option had been
exercised.
Compensation Committee.
- ----------------------
The Company does not have a Compensation Committee of
its Board of Directors. The Board of Directors makes all decisions
concerning
the President's compensation including, but not limited to, the granting of
options to acquire common stock of the Company. The President of the
Company,
Fred K. Suzuki, has the sole authority, as granted by the Board of Directors,
to make compensation decisions for other employees of the Company other than
the granting of Options to acquire the common stock of the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
The following table sets forth information as of April 30, 1999, as to the
voting securities of the Company owned by the officers and directors of the
Company and by each person who owns of record, or is known by the Company to
own beneficially, more than 5% of any class of voting securities.
Amount and Nature
Name and Address of Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
- -------------- ------------------- ----------------- ----------
Common Stock Fred K. Suzuki 4,497,146 shares 32.57%
710 S. Kennicott of record and
Arlington Heights, beneficial (1)
Illinois 60005
Common Stock F.K. Suzuki Inter- 4,497,146 shares 32.57%
national, Inc. record and bene-
1940 E. Devon Ave. ficial
Elk Grove Village, IL
60007
Common Stock Lauane C. Addis 4,506,146 shares 32.64%
1819 Orleans Circle record and bene-
Elk Grove Village, IL ficial (3)
60007
Common Stock James F. Schembri 1,799,500 shares 13.03%
19115 W. Eight Mile Rd. of record and
Detroit, MI 48219 beneficial (3)
Common Stock Mary K. Friske (4) 1,000 shares of .01%
940 Bradley Court record and
Palatine, IL 60074 beneficial
60194
Common Stock Laurence C. Mead (5) 1,250 shares of .01%
1151 Warwick Cir. North record and
Hoffman Estates IL beneficial
60194
Common Stock All directors and 6,307,896 45.69%
officers as a
group (5 members)
________________
(1)Fred K. Suzuki is President of F.K. Suzuki International, Inc. ("FKSI")
and
owns 35.6% of the outstanding common stock of FKSI. Mr. Suzuki does not
personally hold of record any shares of the company's common stock; however
he
is deemed to be beneficial owner by reason of voting and disposition control
4,497,146 shares which are owned by FKSI. The above table does not include
an
option granted to Mr. Suzuki to acquire 3,000,000 shares of the Company's
common stock at $0.025 per share. See "Executive Compensation" and "Certain
Relationships and Related Party Transactions."
(2)Mr. Addis personally owns 9,000 shares of the outstanding Common Stock of
the Company. In addition, Mr. Addis owns 32.7% of the outstanding Common
Stock of FKSI, which owns 32.57% of the Common Stock of the Company. Mr.
Addis is therefore deemed to be beneficial owner by reason of voting and
disposition control of 4,497,146 shares owned by FKSI.
(3)Included in the shares owned beneficially by Mr. Schembri are 35,000
shares
held in Auto Controls Profit Sharing Plan for the benefit of Mr. Schembri and
508,000 shares owned in joint tenancy with Mr. Schembri's son.
(4)In addition to the Shares of outstanding common stock of the Company owned
by Mary K. Friske, she also owns 200 shares, or approximately .2%, of the
outstanding common stock of FKSI, which owns 32.57% of the common stock of
the
Company.
(5)In addition to the common stock of the Company owned by Laurence C. Mead,
he also owns 4,000 shares, or approximately 4%, of the outstanding common
stock of FKSI, which owns 32.57% of the common stock of the Company.
Changes in Control
- ------------------
The Company does not know of any arrangements, the operation of which may at
a
subsequent date result in a change in control in the Company nor has a change
in the control of the Company occurred during the last fiscal year.
Item 13. Certain Relationships and Related Party Transactions.
----------------------------------------------------
During the fiscal year ending April 30, 1999, the Company shared common
office
expenses, including legal fees, with F.K. Suzuki International, Inc.
("FKSI"). It is believed by management that by sharing these common expenses
with FKSI, they will be reduced and kept at minimum levels. As of April 30,
1999, FKSI owed $18,574 to the Company in connection with the shared common
expenses. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." On April 16, 1999, Stevia Company, Inc.
("Stevia"), an affiliate, was judicially dissolved. At that time, Stevia
owed
the Company an aggregate of $315,015 resulting from inter-company charges to
Stevia for shared expenses. As a part of the dissolution, creditors of the
Company agreed to received 93% of the amount due since Stevia did not have
sufficient liquidation proceeds to pay all of its debt. Thus, the Company
received $290,918 of its share of the Stevia dissolution proceeds. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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.
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 April 30, 1999, no portion of this option was exercised. See "Executive
Compensation."
On April 1, 1999, the Company loaned $8,000 to its President, Fred K.
Suzuki.
The loan is evidenced by an unsecured note payable on demand with 10% interest
on the unpaid balance. There has been no independent analysis made with
respect to the value of this loan to Fred K. Suzuki. Management believes
that
the interest approximates fair market value. This loan was made to Mr.
Suzuki
as an accommodation. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
During the 3rd Quarter, the Company purchased a microscope from its
President,
Fred K. Suzuki, for the purchase price of $1,500. Although there was no
independent analysis of this transaction, the Company believes the purchase
price approximates market value.
Lauane C. Addis, Secretary and Director, as a member of the law firm of Katz
&
Karacic, L.L.C., has represented the Company with respect to the preparation
and filing of this Report. Mr. Addis, and other members of Katz & Karacic,
L.L.C., perform other legal services for the Company from time to time, and
it
is anticipated such services will be performed by Mr. Addis and other members
of Katz & Karacic, L.L.C., in the future. During Fiscal 1999, the Company
paid $6,048 in legal fees to Katz, Karacic, Helmin & Addis, P.C., some of
which inured to the benefit of Mr. Addis in the form of salary and bonuses.
Mr. Addis is an officer, director and shareholder of the Company, and is also
the son-in-law of Fred K. Suzuki, President and Chairman of the Board of
Directors. See "Directors and Executive Officers of the Registrant" and
"Security Ownership of Certain Beneficial Owners and Management."
Except with regard to the above, there were no other material transactions
involving management of the Company or any third party during the last fiscal
year which accrued to the benefit of officers or directors of the Company.
PART IV
---------
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
----------------------------------------------------------------
The following financial statements, schedules and exhibits are filed as a
part
of this report:
(a) (1) Financial statements.
--------------------
Balance sheet for the fiscal years ending April 30, 1998 and 1999.
Statements of operations for the fiscal years ending April 30,
1997, 1998 and 1999.
Statements of Shareholders' Equity (Deficit) for the fiscal years
ended April 30, 1997, 1998 and 1999.
Statements of Cash Flows of the Company for fiscal years ending
April 30, 1996, 1997 and 1998.
Notes to financial statements.
(a) (2) List of Financial Statement Schedules:
-------------------------------------
No financial schedules for the fiscal years ending April 30,
1999, 1998 and 1997 are submitted.
Except as listed above, there are no financial statement schedules
required to be filed by Item 8 of this Form 10-K except for those otherwise
shown on the financial statements or notes thereto contained in this report.
(b) Reports on Form 8K. No current reports on Form 8K were filed during the
last quarter covered by this report.
(c) The Following Exhibits are Filed as a Part of this Report:
3a. Articles of Incorporation and By-Laws (1)
4. Instruments Defining the Rights of Security Holders, Including
Indentures - none.
9. Voting Trust Agreements - none.
10. Material Contracts
(a) Stock Option Agreement, dated November 12, 1998, between the
Company and Fred K. Suzuki (2)
(b) Promissory note dated April 1, 1999, payable to the Company by
Fred K. Suzuki P. E-1
11. Statement Regarding Computation of Earnings Per Share - none.
12. Statements Regarding Computation of Ratios - none.
13. Annual Report to Security Holders - none.
16. Letter Regarding Change in Certifying Accountants - none.
18. Letter Regarding Change in Accounting Principles - none.
19. Previously Unfiled Documents - none.
22. Subsidiaries of Registrant - none.
23. Published Report Regarding Matters Submitted to Vote of Security
Holders - none.
24. Consent of Experts and Counsel - none.
25. Power of Attorney - none.
27. Financial Data Schedule - P. E-3.
28. Additional Exhibits - none.
29. Information From Reports Furnished to State Insurance Regulatory
Agencies. N/A
__________________
(1) Incorporated by reference to a Registration Statement filed on Form S-18
with the Securities and Exchange Commission, 1933 Act Registration Number
2-83015C, under the Securities Act of 1933, as amended, and Incorporated by
reference, with regard to Amended By-Laws, to the Company's Annual Report on
Form 10K for fiscal year ending April 30, 1986 filed with the Securities and
Exchange Commission.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10Q
for quarter ending January 31, 1999 filed with the Securities and Exchange
Commission.
<PAGE> SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, duly authorized.
REGISTRANT: BIOSYNERGY, INC.
/s/ FRED K. SUZUKI /s/ /s/JULY 10, 1998/s/
- -------------------------------- -------------------
Fred K. Suzuki, Chairman of the Date
Board of Directors and President
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
in
the capacities on the dates indicated.
/s/ FRED K. SUZUKI /s/ /s/ JULY 10, 1998 /s/
- ------------------------------- -----------------------
Fred K. Suzuki, Chairman of the Date
Board of Directors, President,
Treasurer and Chief Accounting
Officer
/s/ LAUANE C. ADDIS /s/ /s/ JULY 10, 1998 /s/
- ------------------------------- -----------------------
Lauane C. Addis, Corporate Date
Counsel, Secretary and Director
