UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-- EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2009
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
--
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
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1940 East Devon Avenue, Elk Grove Village, Illinois 60007
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(Address of principal executive offices)
847-956-0471
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(Registrant's telephone number, including area code)
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Former name, former address and formal fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive Data file
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(?232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files. Yes No
Indicate by check mark whether the registrant is a large accelerated
filing, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
(Do not check if a smaller ---
reporting company)
Smaller reporting company X
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SEC 1296 (04-09) Potential persons who are to respond to the collection of
information contained in this form are not required to respond unless the
form displays a currently valid OMB control number.
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN A BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 14,935,511
BIOSYNERGY, INC.
PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
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Balance Sheets
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ASSETS
October 31, 2009 April 30, 2009
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Unaudited Audited
Current Assets
Cash $318,119 $285,395
Short-Term Investment 200,000 200,000
Accounts receivable, Trade (Net of 152,499 150,033
allowance for doubtful accounts of $500
at October 31, 2009 and April 30, 2009)
Inventories 91,178 81,299
Prepaid Expenses 34,284 48,937
Interest Receivable 1,578 541
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Total Current Assets 797,658 766,205
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Equipment and Leasehold Improvements
Equipment 197,594 203,137
Leasehold improvements 20,022 20,022
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217,616 223,159
Less accumulated depreciation
and amortization (191,749) (188,793)
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Total Equipment and
Leasehold Improvements, Net 25,867 34,366
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Other Assets
Patents less Accumulated Amortization 15,410 15,938
Pending Patents 98,259 85,282
Deposits 5,947 5,947
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Total Other Assets 119,616 107,167
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$943,141 $907,738
======== ========
The accompanying notes are an integral part of the financial
statements.
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Liabilities and Shareholders' Equity
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October 31, 2009 April 30, 2009
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Unaudited Audited
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Current Liabilities
Accounts payable $14,988 $ 9,454
Accrued compensation and payroll taxes 8,327 19,995
Deferred rent 4,713 5,733
Other accrued expenses 462 468
Accrued vacation 24,456 17,855
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Total Current Liabilities 52,946 53,505
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Deferred Income Taxes 13,019 13,019
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Shareholders' Equity
Common stock, No par value; 20,000,000
authorized shares issued: 14,935,511
Shares at October 31, 2009
and at April 30, 2009 660,988 660,988
Receivable from Affiliate (19,699) (19,699)
Retained Earnings 235,887 199,925
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Total Shareholders' Equity 877,176 841,214
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$943,141 $907,738
======== ========
The accompanying notes are an integral part of the financial
statements.
Biosynergy, Inc.
Statements of Operations
Three Months Ended Six Months Ended
October 31 October 31
2009 2008 2009 2008
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Net Sales $262,705 $229,173 $545,768 $508,604
Cost of Sales 71,845 69,853 150,609 137,550
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Gross Profit 190,860 159,320 395,159 371,054
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Operating Expenses
Marketing 32,210 31,341 69,194 59,539
General and Administrative 96,785 87,308 234,770 217,767
Research and Development 23,518 22,365 46,483 42,991
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Total Operating Expenses 152,513 141,014 350,447 320,297
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Income from Operations 38,347 18,306 44,712 50,757
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Other Income
Interest Income 1,415 2,539 2,833 4,895
Other Income 480 480 960 960
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Total Other Income 1,895 3,019 3,793 5,855
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Net Income Before Income Taxes $40,242 $21,325 $48,505 $56,612
Provision for Income Taxes 10,487 4,985 12,543 18,126
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Net Income $29,755 $16,340 $35,962 $38,486
Net Income Per Common Stock -
Basic and Diluted - - - -
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Weighted-Average Common Stock
Outstanding - Basic and Diluted 14,935,511 14,935,511 14,935,511 14,935,511
The accompanying notes are an integral part of the financial
statements.
BIOSYNERGY, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED OCTOBER 31, 2009
(Unaudited)
Common Stock Receivable Retained
Shares Amount from Affiliate Earnings Total
----------- --------- -------------- --------- --------
Balance, May 1,2009 14,935,511 $660,988 $(19,699) $199,925 $841,214
Net Income - - - 35,962 35,962
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Balance, October 31,
2009 14,935,511 $660,988 $(19,699) $235,887 $877,176
=========== ========= ========= ======== ========
The accompanying notes are an integral part of the financial
statements.
BIOSYNERGY, INC.
STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended October 31,
2009 2008
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Cash Flows from Operating Activities
Net income $35,962 $38,486
Adjustments to reconcile net
income to cash provided by (used in)
operating activities
Depreciation and amortization 8,499 9,774
Changes in assets and liabilities
Accounts receivable (2,466) 17,978
Inventories (9,879) (22,432)
Prepaid expenses 14,653 (7,265)
Interest Receivable (1,037) 333
Accounts payable and accrued expenses (559) (16,471)
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Total Adjustments 9,211 (18,083)
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Net Cash Provided by Operating Activities 45,173 20,403
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Cash Flow from Investing Activities
Patents and Patents Pending (12,449) (14,826)
Purchase of Equipment - (3,408)
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Net Cash (Used in) Investing Activities (12,449) (18,234)
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Increase in Cash and Cash Equivalents 32,724 2,169
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Cash Beginning Period 285,395 281,123
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Cash Ending Period $318,119 $283,292
========== ==========
The accompanying notes are an integral part of the
financial statements.
Note 1 - Company Organization and Description
In the opinion of management, the accompanying unaudited
condensed financial statements contain all adjustments,
consisting of normal recurring adjustments which are necessary
for a fair presentation of the financial position and results of
operations for the periods presented. The unaudited condensed
financial statements have been prepared in accordance with the
instructions to Form 10-Q and do not include all the information
and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America. These
condensed financial statements should be read in conjunction with
the audited financial statements and notes included in the April
30, 2009 Annual Report on Form 10-K of Biosynergy, Inc. (the
Company). The results of operations for the six months ended
October 31, 2009 are not necessarily indicative of the operating
results for the full year.
The Company was incorporated under the laws of the State of
Illinois on February 9, 1976. It is primarily engaged in the
development and marketing of medical, consumer and industrial
thermometric and thermographic products that utilize cholesteric
liquid crystals. The Company's primary product, the HemoTemp II
Blood Monitoring Device, accounted for approximately 94.21% of
the sales during the quarter ending October 31, 2009. The
products are sold to hospitals, clinical end-users, laboratories
and product dealers located throughout the United States.
Note 2 - Summary of Significant Accounting Policies
Cash and Cash Equivalents
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The Company maintains cash and cash equivalents with major
financial institutions. Cash and cash equivalents are maintained
in demand accounts to minimize risks. Demand accounts and
certificates of deposit are insured up to $250,000 as of October
31, 2009 and April 30, 2009 per depositor by the Federal Deposit
Insurance Corporation. Balances in excess of insured amounts
totaled $39,432 as of April 30, 2009 and $69,692 as of October
31, 2009. The Company has not experienced any loss on these
accounts. The Company does not believe it is exposed to any
significant risk on the uninsured amounts.
Receivables
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Receivables are carried at original invoice less estimates made
for doubtful receivables. Management determines the allowances
for doubtful accounts by reviewing and identifying troubled
accounts on a periodic basis and by using historical experience
applied to an aging of accounts. A receivable is considered to
be past due if any portion of the receivable balance is
outstanding for more than 30 days. Receivables are written off
when deemed uncollectible. Recoveries of receivables previously
written off are recorded when received.
Note 2 - Summary of Significant Accounting Policies (Continued)
Inventories
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Inventories are valued at the lower of cost or market using the
FIFO (first-in, first-out) method.
Depreciation and Amortization
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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; equipment is depreciated over 3 to 10 years.
Revenue Recognition
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The Company recognizes net sales revenue upon the shipment of
product to customers.
Research and Development and Patents
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Research and development expenditures are charged to operations
as incurred. The costs of obtaining patents, primarily legal
fees, are capitalized and once obtained, amortized over the life
of the respective patent on the straight-line method.
Use of Estimates
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The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Income Per Common Share
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Income per common share is computed by dividing net income by the
weighted-average number of common shares outstanding during the
period. When dilutive, stock options are included as share
equivalents using the treasury stock method in the calculation of
diluted earnings per share. The Company has no outstanding
options or other rights to acquire its unissued common shares.
Note 2 - Summary of Significant Accounting Policies (Continued)
Fair Value of Financial Instruments/Short Term Investments
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The Company evaluates its financial instruments based on current
market interest rates relative to stated interest rates, length
to maturity and the existence of readily determinable market
prices. Short-term investments have been categorized as held-to-
maturity and as a result are stated at cost, which approximates
fair value. Short-term investments consist of certificates of
deposit, which mature within one year of October 31, 2009 and
April 30, 2009, respectively. Based on the Company's analysis,
the fair value of short term investments recorded on the balance
sheet as of October 31, 2009 and April 30, 2009, approximates
their carrying value.
Comprehensive Income
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Components of comprehensive income include amounts that are
included in the comprehensive income but are excluded from net
income. There were no significant differences between the
Company's net income and comprehensive income.
Income Taxes
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Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due and deferred taxes related primarily to differences
in the methods of accounting for patents, inventories, certain
accrued expenses and bad debt expenses for financial and income
tax purposes. The deferred tax income taxes represent the future
tax consequences of those differences, which will be taxable in
the future.
The Company files tax returns in the U.S. federal jurisdiction
and with the state of Illinois. Various tax years remain open to
examinations although there are currently no ongoing tax
examinations. Management's policy is to recognize interest and
penalties related to uncertain tax positions in income tax
expenses.
The provision for income taxes consists of the following
components as of October 31:
EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Fred K. Suzuki, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Biosynergy, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: December 15, 2009 /s/ Fred K. Suzuki ------------------------------ Fred K. Suzuki Chairman of the Board, Chief Executive Officer and President
EXHIBIT 31.2 CERTIFICATION OF CHIEF ACCOUNTING OFFICER I, Laurence C. Mead, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Biosynergy, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: December 15, 2009 /s/ Laurence C. Mead ---------------------------- Laurence C. Mead Vice President/Manufacturing and Development, Chief Financial Officer, and Chief Accounting Officer
EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Report of Biosynergy, Inc. (the "Company") on Form 10-Q for the quarter ending October 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly represents, in all material respects, the financial conditions and results of operations of the Company as of October 31, 2009, and for the period then ended. Biosynergy, Inc. /s/ Fred K. Suzuki ------------------------------------- Fred K. Suzuki Chairman of the Board, Chief Executive Officer and President Dated: December 15, 2009
EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Report of Biosynergy, Inc. (the "Company") on Form 10-Q for the quarter ending October 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly represents, in all material respects, the financial conditions and results of operations of the Company as of October 31, 2009, and for the period then ended. Biosynergy, Inc. /s/ Laurence C. Mead -------------------------------------- Laurence C. Mead Vice President/Manufacturing and Development, Chief Financial Officer, and Chief Accounting Officer Dated: December 15, 200