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 EXCHANGE ACT OF 1934
For the fiscal year ended 4/30/10
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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Commission file number 0-12459
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Biosynergy, Inc.
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(Name of registrant as specified in its charter)
Illinois 36-2880990
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(State or other jurisdiction of I.R.S. Employer
Identification No.)
incorporation or organization)
1940 East Devon Avenue, Elk Grove Village, Illinois 60007
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 956-
0471
Securities registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
NONE NONE
Securities registered under section 12(g) of the Act:
Common Stock, No Par Value
(Title of class)
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes[ ] No[X]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. Yes[] No[X]
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 issuer was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any,
every Interactive Date File required to be submitted and posted
pursuant to Rule 405 of Regulations S-T (Sec. 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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this
chapter) 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]
Indicate by check mark whether the registrant is a large
accelerated filer, 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 [ ]
Non-accelerated filer [ ]
(do not check if a smaller reporting company
Accelerated filer [ ]
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes[ ] No[X]
The aggregate market value of the voting stock and non-voting
stock held by non-affiliates of the issuer on April 30, 2010
cannot be ascertained with any certainty because there is no
established trading market for the common stock of the Company.
The number of shares of common stock outstanding on July 21,
2010 was 14,935,511.
No documents have been incorporated by reference in this report
except for certain exhibits and schedules listed in Item 15.
Part I
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Item 1. Business.
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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 a blood bank manufactured by a third party to
specifications of the Company.
The Company did not enter into any agreements materially
affecting its operations during Fiscal 2010. The Company
experienced an increase in sales of $56,880 or 5.5% in Fiscal
2010. Sales of $1,090,198 in Fiscal 2010 were the highest in
the Company's history. The Company realized an after income tax
profit of $73,958 for Fiscal 2010 compared to an after income
tax profit of $91,364 for Fiscal 2009. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
The Company did not introduce any new products in Fiscal 2010.
The Company, however, continued its development and review of
the proposed products described in "Thermographic and
Thermometric Devices and Accessories" below.
The Company continued to introduce its products directly to
industrial customers during Fiscal 2010. 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's revenues were generated from sales of medical and
laboratory products in the medical and laboratory industry
segment during the fiscal years ended April 30, 2010 and 2009.
For a description of these products, see "Narrative Description
of Business."
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 for the
medical, laboratory and industrial markets. The Company is also
developing bacteria growth retardant agents. Further information
about the business and proposed products of the Company are
described below.
Thermographic and Thermometric Devices and Other Products.
---------------------------------------------------------
During the fiscal year ending April 30, 2010 the Company
manufactured and marketed various medical, laboratory, and
consumer thermometric and thermographic devices and accessories.
These products (described below) were sold to hospitals,
clinical end-users, laboratories, and product dealers.
1. The HemoTemp Core Correlated Blood Monitoring Device
("BMD") is designed to be a human blood bag temperature
indicator. Human blood must be maintained, optimally, at 1-4
degrees Celsius, and not allowed to exceed 10 degrees Celsius. Since
human blood is always in short supply, it is critical that blood
be maintained within these specifications to avoid loss.
HemoTemp BMD monitors the core temperature of a blood bag
from 1-12 degrees Celsius, and replaces the impractical mercury
thermometer susceptible to breakage. HemoTemp BMD once
attached to the blood bag is usable throughout the life of the
blood.
2. HemoTemp II Core Correlated BMD is designed to warn
blood bank personnel whenever the internal temperature of the
blood bag has exceeded approximately 10-11 degrees Celsius.
HemoTemp II BMD has an irreversible indicator that is
activated when the tag is applied to the blood bag at
approximately 4 degrees Celsius. After being activated, the
irreversible indicator remains blue colored for at least 72
hours if the blood is kept at 4 degrees Celsius, however, if the
blood is warmed to a temperature of 10 degrees Celsius. or above,
the indicator will lose its blue color much more rapidly or the
indicator will change color; the nature and degree of the color
change depend on the temperature of the sample and the time at
each temperature. 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 1-9degrees Celsius.
HemoTemp II BMD is non-reusable and must be replaced each
time the blood bag is returned to the blood bank and reissued.
3. HemoTemp II Activator is an electronic, portable
block model heater developed to provide a reliable source of
heat necessary to activate the Company's HemoTemp II BMD.
The HemoTemp II Activator has a thermostatic control to
permit precise setting and continuous control of temperatures in
the range for activation of the Company's HemoTemp II
BMD. This device is intended by the Company to be used with
HemoTemp II BMD as a system for blood monitoring. This
device is manufactured by another company to specifications set
by the Company.
4. TempTrend 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
90.5-98.9 degrees Fahrenheit. Temperature measurements taken with
TempTrend TI are simply a matter of observing the color
illuminated number and recording the temperature.
TempTrend 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. TempTrend 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.
TempTrend II TTD will reflect oral temperatures such as
those taken by glass thermometers. TempTrend II TTD is
used intraoperatively to warn of developing hyper or hypothermic
conditions. The indicator can also be used for monitoring a
patient's temperature during any type of transfusion procedure.
6. LabTemp 20, LabTemp 40 and LabTemp 60
Surface Temperature Indicators ("STI") are designed to
reversibly indicate the temperature of laboratory materials
which require specific storage or use temperatures.
LabTemp 20 STI indicates temperatures between 0-21 degrees
Celsius, LabTemp 40 STI monitors temperatures between 19-
21 and 24-41 degrees Celsius, while LabTemp 60 STI measures
temperatures between 41-61 degrees Celsius. 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. StaFreez Freeze-Thaw Indicator ("FTI") is a freeze-
thaw indicator which will irreversibly indicate whether frozen
material is warmed to greater than -20 degrees Celsius. Once the
frozen product exceeds -20degrees Celsius, the liquid crystal
indicator 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.
8. Thermolyzer Liquid Conductive Cooling/Heating Device
is a small product for providing continuous heating or cooling
of medical fluids which are administered to patients,
particularly for patients undergoing intravenous fluid
administration during surgery or post-operative recovery. The
device does not use electricity for heating or cooling the
medical fluids. The heating or cooling is accomplished by
conduction, which is a process for transporting energy in a
medium from one location to another without the involvement of
any visible movement.
9. The Company also has the capability of manufacturing on an
as needed basis, specialty products including devices
manufactured to the specification and design of the customer,
such as time/ temperature shipping labels for food products
under the trade name FoodGarde Time/Temperature Indicators
and liquid crystal thermometers for general purpose thermometry.
The Company is not currently selling any such specialty
products.
Products Under Development.
--------------------------
The Company is also developing these other products.
1. The Company is developing certain compounds intended for use
as bacteria growth retardant agents for use in food and other
products. Although these antibacterial compounds are subject to
Food and Drug Administration regulation, they are historically
designated as Generally Recognized As Safe (GRAS). Since there
are several unknown factors regarding efficacy, supply and
regulatory requirements, the outcome of this project cannot be
predicted with any certainty at this time.
2. The Company is also investigating production methods for the
bacteria growth retardant compound described in Paragraph 1
above. In this regard, the Company has developed certain
proprietary technology related to the processing of these
compounds. The Company has filed for one patent related to the
processing and manufacture of bacteria growth retardant
compounds for use in food and other products and one patent
related to the use of such compounds (see "Patents and
Trademarks").
3. 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 FoodGarde), 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. These products will
generally be customized to meet the requirements of the
customer. There are currently no contracts for development,
manufacture or sale of any such irreversible time/temperature
indicators.
4. 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.
5. 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 where the
Company's current products are not suitable. The results of
such investigations are not available at this time.
Manufacturing.
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The Company manufactures all of its products
except for the HemoTemp II Activator. This product is
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 of these products 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 thirty-four years of experience working with
various liquid crystal formulations, thermometric and
thermographic application methods and the effect of temperature
and other factors on degradable materials. 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.
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.
Although the Company relies on its own sales and distribution
efforts for a portion of its sales, the Company's distributors
accounted for a majority of the Company's net sales in Fiscal
2010. During Fiscal 2010, Fisher Scientific Company ("Fisher")
accounted for 35.36% of the Company's sales. Cardinal Health,
Inc. ("Cardinal") accounted for 24.10% of Company sales during
Fiscal 2010. Management believes distributors will continue to
be an important part of the Company's sales and distribution
system in the future.
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 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.
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 was previously granted or assigned five United
States and four foreign patents relating to
liquid crystal technology. All of these patents have expired.
Although these 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 was granted a patent, "Liquid Conductive
Cooling/Heating Device and Method of Use", Patent Number US
7,276,046 B1, relating to the Company's thermolyzer, on October
2, 2007. This patent will expire on June 6, 2024.
The Company has filed two patents which are pending related to
its products and products under development. One patent
entitled "Method of Producing Eggshell Powder," application
number 10/535,779 was filed on August 4, 2005 replacing
provisional patent application number 60/474,175 filed May 29,
2003 and provisional patent number 60/575,336 filed May 27,
2004. The other patent, "Eggshell Antimicrobial Agent and
Method of Use", application number 11/108,584 was filed April
18, 2005 replacing provisional patent application number
60/638,548 filed December 22, 2004. The application was
published as U.S. Pat. Publication No. 2006/0062857. The
subject of this patent is the Company's bacteria growth
retardant under development. These patent applications are
pending review by the U.S. Patent and Trademark office. See
"Products Under Development." It is uncertain whether the
patent pending related to the use of the bacteria growth
retardant will ultimately be approved, or, if approved, will be
approved as currently presented.
The Company will also seek to obtain patents on other products
currently being developed, as appropriate.
On May 6, 2010, the Company filed for registered trademark
protection on its Thermolyzer. The application serial
number is 85/032,117.
The Company has received registered trademark protection on all
product names to date excepting Temp-D-Tek, Tempa-
Slide, FoodGarde, LaproVue and Hemo-
Cool. The Company has retained, however, all the common
law rights to the Temp-D-Tek, Tempa-Slide,
FoodGarde, LaproVue, and Hemo-Cool
trademarks. Additional trademark 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 obtained, 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 expenditure of capital and
resources.
Seasonable 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 industries, 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, 2010, the Company had $834,621 of current assets
available. Of this amount, $124,666 was inventory, $149,033 was
net trade receivables, and $526,569 represented cash and short-
term cash investments.
Management of the Company believes that it has sufficient
working capital to continue operations for the fiscal year
ending April 30, 2011 provided the Company's sales and ability
to collect accounts receivable are not adversely affected. In
the event the Company's sales decrease, the receivables of the
Company are impaired for any reason, or the Company needs
additional capital for its development projects, it may be
necessary to obtain additional financing to cover working
capital items and keep current trade accounts payable, of which
there can be no assurance. 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 35.36% of the Company's net sales
during the fiscal year ending April 30, 2010. Cardinal, the
Company's other primary distributor, accounted for 24.10% of
the Company's net sales during the fiscal year ending April 30, 2010.
At April 30, 2010, Fisher owed the Company $78,225 and Cardinal owed
$22,100. No other customers accounted for 10% or more of the
Company's net sales during Fiscal 2009. Management believes the
loss of these distributors would materially reduce the revenues of
the Company until the Company could retain, if available, the services of
other major product distributors or the end users serviced by
Fisher and Cardinal began ordering directly from the Company.
Management has no reason to believe that the Company will lose
either of these distributors in the foreseeable future.
Backlogs.
--------
The Company had no backorders at April 30, 2010 or April 30, 2009.
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.
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The Company has no known commercial competitors of
its blood monitoring devices using liquid crystal technology.
The Company's HEMOTEMP II BMD (blood bag temperature
monitor) competes in the medical market against several
functionally similar products. Management of the Company
believes that HEMOTEMP II BMD is superior because it
provides an irreversible monitor with a reversible monitor to
warn the user that blood is approaching an unsafe temperature.
There are no known commercial competitors of the Company's
HemoTemp II Activator.
In the area of laboratory temperature monitoring, a known
competitor supplies RLC reversible and TL irreversible
temperature indicators. In the area of a 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 are produced by several
other companies.
The Company's TempTrend II competes in the medical market
against products produced by several other companies. The
Company's TempTrend competes in the drug testing market,
specifically for monitoring the temperature of urine samples,
with several other companies utilizing liquid crystal and non-
liquid crystal technology.
A number of other companies 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.
Many of the Company's competitors may have greater financial and
other resources than the Company. The Company's ability to
compete depends on its ability to design, manufacture and sell
high quality products as well as its ability to develop new
products and functionality that meet evolving customer
requirements.
Research and Development.
------------------------
During Fiscal 2010 and 2009, the Company spent $96,884 and $90,572,
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
discussed under "Products Under Development." 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 may largely determine
whether the Company will be able to continue the research and
development for such products. Management believes the Company
has sufficient working capital for anticipated research and
development for the ensuing year.
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 pre-clearance 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 $32,790 during the last
fiscal year, and export sales of $45,990 during the fiscal year
ending in 2009. 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.
The Company is exposed to risks generally attendant to foreign
operations, including but not limited to, trade restrictions,
tariffs, embargos, foreign war and unrest and competition from
foreign and domestic producers. Management believes the partial
or total loss of foreign operations would not have a material
impact on the Company's financial condition or results of
operations.
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 2011.
Employees.
---------
The Company presently has four full-time employees
comprised of the President (who also presently serves as the
Director of Marketing and Technical Operations), and three Vice
Presidents. The Company also has several part-time employees in
the production department when needed.
Website.
-------
The Company maintains a Website at www.biosynergyinc.com.
The Company makes available on its Website free of charge its
annual report on form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports
filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act (15 U.S.C. 78m(a) or 78o(d)). The
Company will provide electronic or paper copies of its filings
free of charge upon request.
Reports to Shareholders.
-----------------------
The Company is not required to deliver annual reports to
its shareholders. Historically, the Company
has not delivered annual reports to its shareholders and does
not intend to do so this year. However, all written material
filed with the Securities and Exchange Commission may be read
and copied at the Securities and Exchange Commission's Public
Reference Room at 450 5th Street, N.W., Washington, D.C. 20549.
Such information may also be obtained from the Public Reference
Room by calling 1-800-SEC-0330 or by visiting the Securities and
Exchange Commission's internet site at www.sec.gov. You may
obtain copies of this Annual Report and other reports filed with
the Securities and Exchange Commission by contacting the Company
at 1940 East Devon Avenue, Elk Grove Village, Illinois 60007,
telephone number 847-956-0471. See also "Website" above.
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 April 30, 2015.
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.
The Company does not as a matter of policy invest in any
derivative financial instruments or any other instruments as
securities which are subject to market fluctuations which could
adversely affect the financial condition or operations of the
Company. The Company does not invest in real estate, mortgages
or in entities owing or investing in real estate.
Item 3. Legal Proceedings.
-----------------
There is no material litigation threatened or pending against
the Company or any of its properties.
Item 4. (Removed and Reserved).
--------------------
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
----------------------------------------------------------
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.
Holders.
-------
As of April 30, 2010, there were approximately 791
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.
Common Stock for Issuance Under Equity Compensation Plans. As
of April 30, 2010, the Company has no outstanding equity
compensation plans and otherwise has no obligation to issue or
sell stock pursuant to an option or similar agreement.
Item 6. Selected Financial Data.
-----------------------
The registrant is not required to furnish any information in
this Item.
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, 2010
were $56,880, or 5.5%, higher than the previous fiscal year.
The increase in sales during Fiscal 2010 was primarily due to
increased sales of the Company's HemoTemp II blood
temperature indicators. The Company experienced an increase of
$51,745, or 5.39%, in sales of its HemoTemp II product in
Fiscal 2010 as compared to Fiscal 2009. The increase in net
sales of the HemoTemp II product is a result of price
increases as well as an increase in unit sales volume during
Fiscal 2010.
Other Revenues.
--------------
Interest income for Fiscal 2010 was $3,702 less
than fiscal 2009 due to a decrease in the interest rate paid on
investments of available cash. At April 30, 2010, the Company
had invested $100,000 in a certificate of deposit dated April
22, 2010, with a maturity date of January 22, 2011, at an
interest rate of .5% APY. During Fiscal 2010, the Company
maintained a money market account which received an interest
rate between .25% and .52% APY. The Company also realized
$1,920 in miscellaneous income from subleasing a portion of the
Company's storage space during Fiscal 2010.
Costs and Expenses.
------------------
Overall operating costs and expenses for
the fiscal year ending April 30, 2010 increased by $41,321
compared to the fiscal year ending in 2009. The increase in
operating costs and expenses for Fiscal 2010 was generally
related to expenses incurred as the result of increased
accounting and employee expenses. With the exception of the
above expenses, the overhead of the Company has 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 28.86% for the fiscal year ending April 30, 2010 and 27.57%
for the fiscal year ending April 30, 2009. This increase in
cost of sales as a percentage of net sales is primarily due to
increases in employee expenses during the comparative time
periods. The Company expects that the cost of sales as a
percentage of net sales will remain relatively stable over the
next fiscal year in the absence of a material change in unit
sales volume or an increase in cost of raw materials.
Research and Development Expenses.
---------------------------------
Research and development expenses increased during the fiscal
year ending in 2010 by $6,312 or 7%, as compared to the fiscal
year ending in 2009. The overall increase from Fiscal 2009
is due to increases in employee costs and supplies. The
Company is investigating several new products including certain
compounds for use in food and other products as antibacterial
agents and research intended to improve the Company's current
product line. These development expenses have remained
substantially constant for the past three years. There is
insufficient information available to determine the extent to
which the Company will be required to allocate its resources
to the continued development of these products.
See "Narrative Description of Business - Products Under Development."
Marketing Expenses.
------------------
The Company's marketing expenses were $152,968 in 2010 as compared
to $138,918 for the fiscal year ending in 2009. The increase for
Fiscal 2010 was primarily due to an increase in product advertising
costs, travel and employee salaries. The Company will continue to
increase its marketing activities as resources became available
which management believes is necessary to continue the Company's growth.
General and Administrative Expenses.
-----------------------------------
The Company's general and administrative costs increased by $20,959
as compared to the 2009 fiscal year. The increase was primarily
the result of increases in accounting fees, employee costs general
maintenance costs, and offset by a decrease in legal fees. Except for
unforeseen extraordinary items, increases to employee
compensation associated with the Company's 401(k) plan and
formal bonus plan, and normal increases in employee
compensation, it is unlikely general and administrative expenses
will materially change during Fiscal 2011.
Net Income/Loss.
----------------
The Company experienced a net after-tax profit of $73,958 for
Fiscal 2010 as compared to a net after-tax profit of $91,364 for
Fiscal 2009. The overall decrease in profitability of the Company
is due to increased expenses during Fiscal 2010. See discussion
of various expenses above.
Assets.
------
Since April 30, 2009, the Company's assets have
increased by $75,950. This increase is primarily due to
increased cash resulting from the Company's profit position.
Other changes in specific items do not reflect transactions
outside the ordinary course of business. See also "Related
Party Transactions" below.
Related Party Transactions.
--------------------------
The Company was owed $19,699 by F.K. Suzuki International,
Inc. ("FKSI"), an affiliate, at April 30, 2010 and 2009 in
connection with past shared common expenses. These expenses
include certain office expenses, general operating expenses and
legal fees incurred in the ordinary course of business.
See "Financial Statements." No interest is received or accrued
by the Company. Collectibility of the amounts due from FKSI
cannot be assured without the liquidation of all or a portion
of its assets, including a portion of its common stock of the
Company. As a result, $19,699 of the amount owed by FKSI to
the Company was reclassified as a reduction of FKSI's capital in
the Company.
Lauane C. Addis, Secretary and Director of the Company, is a
member of the law firm of Stahl Cowen Crowley Addis LLC. Mr.
Addis has represented the Company with respect to the
preparation and filing of this Report. Mr. Addis, and other
members and associates of Stahl Cowen Crowley Addis LLC, 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 and associates of Stahl Cowen Crowley Addis LLC,
in the future. During Fiscal 2010, the Company paid $41,813 in
legal fees to Stahl Cowen Crowley Addis LLC, some of which
inured to the benefit of Mr. Addis in the form of distributions
from the law firm.
On October 21, 2009, Lauane C. Addis transferred all of his
interest in F.K. Suzuki International, Inc. (FKSI) consisting of
31,423 shares of FKSI Common Stock to Jeanne S. Addis, as
Trustee of the Addis Family Equity Trust dated September 1,
2009. FKSI owns 4,497,146 shares of the Company's Common Stock.
See Item 12, "Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters."
Liabilities.
-----------
The Company's current liabilities have decreased
by $2,761 since April 30, 2009. This decrease is primarily due
to reduced number of vacation days earned but not paid as of
April 30, 2010 as compared to the fiscal year ended April 30,
2009 and ordinary fluctuations in operations. The decrease
does not represent any material change in the financial status
or operations of the Company. See also "Assets" and "Liquidity
and Capital Resources."
Current Assets/Liabilities Ratio.
--------------------------------
The ratio of current assets to current liabilities, 16.45 to 1,
has increased from 14.32 to 1 at April 30, 2009. The increase in
ratio of current assets to current liabilities is a result of
recent net income realized by the Company, and is reflective of a
decrease in current payables. In order to maintain the Company's
asset/liability ratio, the Company's operations must remain profitable.
Liquidity and Capital Resources.
-------------------------------
During the fiscal year ending April 30, 2010, the Company had an
increase in net working capital of $71,177. The increase in net
working capital is primarily due to the Company's realizing a profit
in Fiscal 2010.
The Company has attempted to conserve working capital whenever
possible. To this end, the Company attempts to keep inventory
at a minimum level. The Company believes that it will be able
to maintain adequate inventory to supply its customers on a
timely basis by careful planning and forecasting demand for its
products. However, the Company is nevertheless required to
carry sufficient 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. Although the Company experiences varying
collection periods of its account receivable, the Company
believes that uncollectible accounts receivable will not have a
significant effect on future liquidity.
Cash provided by operating activities was $59,946 during Fiscal
2010. Cash provided by operating activities was $21,449 during
Fiscal 2009. An aggregate of $81,228 was also provided by
redemption of the Company's short term investments, equipment
purchases/disposal and capitalized patent costs during Fiscal
2010. Except for operating capital, limited equipment
purchases/disposal, and patent expenses, Management is not aware
of any other material capital requirements or material
contingencies for which it must provide.
As of April 30, 2010, the Company had $834,621 of current assets
available. Of this amount, $34,342 was prepaid expenses,
$124,666 was inventory, $149,033 was net trade receivables, and
$526,569 was cash and short term investments. The Company's
cash flow from operations is considered adequate to fund the
short-term operating 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. Thus there is a risk additional financing may be
necessary to fund long-term operating capital needs of the
Company if the Company does not remain profitable.
Effects of Inflation.
--------------------
With the exception of inventory, labor
costs and product sales prices 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 on
the Company's revenues or income in the foreseeable future.
Critical Accounting Policies and Estimates.
------------------------------------------
On December 12, 2001, the SEC issued FR-60 "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies." FR-60 is an
intermediate step to alert companies to the need for greater
investor awareness of the sensitivity of financial statements to
the methods, assumptions, and estimates underlying their
preparation, including the judgments and uncertainties affecting
the application of those policies and the likelihood that
materially different amounts would be reported under different
conditions or using different assumptions.
The Company's significant accounting policies are disclosed in
Note 2 to the Financial Statements for the year ending April 30,
2010. See "Financial Statements." Except as noted below, the
impact on the Company's financial position or results of
operation would not have been materially different had the
Company reported under different conditions or using different
assumptions. The policies which may have materially affected
the financial position and results of operations of the Company
if such information had been reported under different
circumstances or assumptions are:
Use of Estimates - preparation of financial statements and
conformity with accounting principals generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
as of the date of the Financial Statements and the reported
amounts of revenues and expenses during the reporting period.
The financial condition of the Company and results of operations
may differ from the estimates and assumptions made by management
in preparation of the Financial Statements accompanying this
report.
Allowance for Bad Debts - The Company periodically performs
credit evaluations of its customers and generally does not
require collateral to support amounts due from the sale of its
products. The Company maintains an allowance for doubtful
accounts based on its best estimate of accounts receivable.
Hierarchy of Generally Accepted Accounting Principles - In June
2009, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 168, "The 'FASB Accounting Standards
Codification' and the Hierarchy of Generally Accepted Accounting
Principals, a replacement of FASB Statement No. 162", now ASC
105, "Generally Accepted Accounting Principles" (ASC 105). ASC
105 establishes the "FASB Accounting Standards Codification"
("Codification"), which officially launched July 1, 2009, to
become the source of authoritative U.S. generally accepted
accounting principles ("GAAP") recognized by the FASB to be
applied by nongovernmental entities, superseding existing FASB,
American Institute of Certified Public Accountants ("AICPA"),
Emerging Issues Task Force ("EITF"), and related accounting
literature. Rules and interpretive releases to the Securities
and Exchange Commission ("SEC") under authority of federal
securities laws are also sources of authoritative U.S. GAAP for
SEC registrants. ASC 105 reorganizes the previously issued GAAP
pronouncements into accounting topics and displays them using a
consistent structure. The subsequent issuances of new standards
will be in the form of Accounting Standards Updates that will be
included in the Codification. ASC 105 was adopted by the
Company as of the interim period ended October 31, 2009. As the
Codification was not intended to change or alter existing GAAP,
ASC 105 did not have an impact on the Company's financial
statements. The only impact will be that any future references
to authoritative accounting literature will be the new numbering
system prescribed by the Codification.
Minority Interest - In December 2007, the FASB issued SFAS No.
160, "Noncontrolling Interests in Consolidated Financial
Statements, and amendment of ARB No. 51", now ASC 810,
"Consolidation" (ASC 810). ASC 810 changes the accounting and
reporting for minority interests, which will be recharacterized
as noncontrolling interests and classified as a component of
equity. This new consolidation method significantly changes the
accounting for transactions with minority interest holders. ASC
810 became effective for the Company May 1, 2009. The Company's
adoption of ASC 810 did not have a significant impact on the
Company's financial position or results of operations.
Fair Value of Assets, Liabilities and Expenditures - In
September 2006, FASB issued SFAS 157, "Fair Value Measurements",
now ASC 820, "Fair Value Measurements and Disclosures" (ASC
820). ASC 820 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants as of the
measurement date, establishes a framework for measuring fair
value and expands disclosures about fair value measurements.
ASC 820 also establishes a fair value hierarchy that prioritizes
information used in developing assumptions when pricing an asset
of liability. ASC 820 became effective for the Company
beginning in fiscal year 2009. The Company's adoption of ASC
820 did not have a significant effect on the Company's financial
position or results of operations.
Forward Looking Statements.
--------------------------
This report may contain statements which, to the extent they
are not recitations of historical fact, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve risks and uncertainties. Actual results may
differ materially from such forward-looking statements for reasons
including, but not limited to, changes to and developments in the
legislative and regulatory environments effecting the Company's
business, the impact of competitive products and services, changes in the
medical and laboratory industries caused by various factors
including level of reimbursement by insurance companies and
Medicare and Medicaid agencies, and other factors as set forth
in this report. Thus, such forward-looking statements should
not be relied upon to indicate the actual results which might be
obtained by the Company. No representation or warranty of any
kind is given with respect to the accuracy of such forward-
looking information. The forward-looking information has been
prepared by the management of the Company and has not been
reviewed or compiled by the Company's independent public
accountants.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
-----------------------------------------------------
The Company has not entered into any transactions using
derivative financial instruments, nor has the Company invested
in any instruments or securities which are subject to market
fluctuations which could adversely affect the financial
condition or operations of the Company.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The financial statements required by this item are filed as a
part of this report as described in Item 15.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
------------------------------------------------
The Company retained the services of Blackman Kallick, LLP to
audit the Company's annual financial statements as of April 30,
2009, and to review the Company's quarterly statements during
Fiscal 2009. On August 27, 2009, the Company dismissed Blackman
Kallick, LLP and hired the services of Frank L. Sassetti & Co.
to audit the Company's annual financial statements as of April
30, 2010, and to review the Company's quarterly statements
during Fiscal 2010. The Company changed accounting firms after
the preparation of April 30, 2009 financial statements. There
have been no disagreements with the Company's accountants
regarding accounting matters or financial disclosure.
Item 9A. Controls and Procedures.
-----------------------
The Company has established and maintains disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act) which are controls and other procedures of the
Company that are designed to ensure that information required to
be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in
the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company's
management, including its Chief Executive Officer and Chief
Accounting Officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure. The Company's Chief Executive Officer and Chief
Accounting Officer have evaluated the effectiveness of the
Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end
of the period covered by this report. Based upon that
evaluation, the Company's Chief Executive Officer and its Chief
Accounting Officer have concluded that the Company's disclosure
controls and procedures were effective.
(a) Management's Annual Report on Internal Control Over
Financial Reporting.
(1) Management of the Company is responsible for establishing
and maintaining adequate internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) for the Company. The Company maintains processes
designed by, or under the supervision of the Company's
management, including but not limited to the Company's Chief
Executive Officer and its Chief Accounting Officer, or persons
performing similar functions, and effected by the Company's
board of directors, management and other personnel, 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 including policies and procedures that:
(i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and
disposition of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the issuer are being made only in accordance
with authorization of management and directors of the Company;
and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition
of the Company's assets that could have a material effect on the
financial statements.
(2) The Company has an Audit Committee that meets periodically
with management to review the manner in which they are
performing their responsibilities and to discuss auditing,
internal accounting controls and financial reporting matters.
It is the opinion of the Audit Committee that the Company's
internal control over financial reporting is effective. The
internal control over financial reporting is augmented by
qualified personnel and is evaluated on a periodic basis. The
evaluation is essentially an audit of the controls and
procedures (and risk factors related to them) which was
developed by the Company utilizing the framework proscribed by
the committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control - Integrated Framework.
(3) Prior to the date of filing this Form 10-K, the Company
carried out an evaluation, under the supervision and with the
participation of the Company's management, including the
Company's Chief Executive Officer and the Company's Chief
Accounting Officer, of the effectiveness as of the end of the
Company's fiscal year ending April 30, 2010 of the Company's
internal control over financial reporting pursuant to Exchange
Act Rule 13a-15(c). Based upon that evaluation, the Company's
Chief Executive Officer and the Company's Chief Accounting
Officer conclude that the Company's internal control over
financial reporting is effective.
(4) This Annual Report does not include an attestation report
of the Company's registered public accounting firm regarding
internal control over financial reporting. Management's report
was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to
provide only management's report in this Annual Report.
(b) There have been no changes in the Company's internal
control over financial reporting during the Company's Fiscal
Quarter ending April 30, 2010 that have materially affected or
are likely to materially affect the Company's internal control
over financial reporting.
Item 9B. Other Information.
-----------------
No information was required to be disclosed by the Company on
Form 8-K during the fourth quarter of the year covered by this
Annual Report.
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:
Served in Office
Name Age Positions with Company Since
-------------------- ----- -------------------------- -----------------
Fred K. Suzuki 80 President, Chief February, 1976
Executive Officer,
Director of Research and
Development,
Director of Marketing
and Sales, and Chairman
of the Board of Directors
Mary K. Friske 50 Vice President - September, 1993
Administration,
Manager of Sales
Laurence Mead 48 Vice President - April, 1994
Manufacturing and
Development, Chief
Operating Officer, Chief
Financial Officer, Chief
Accounting Officer, and
Treasurer and
Manager of Product
Development
Beverly R. Suzuki 75 Vice President - Customer June, 2005
Service
Lauane C. Addis 54 Corporate Counsel, February, 1984
Secretary and December, 1985
Director February, 1987
James F. Schembri 75 Director November, 1990
------------------------------
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 arrangements 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. Beverly
R. Suzuki is the spouse 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, Chief
Executive Officer, 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 until
June, 2008. 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 its 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, Chief Operating Officer, Chief Financial Officer,
Vice President - Manufacturing and Development, Chief Accounting
Officer, Treasurer, Manager of Product Development and Director.
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 was appointed to the Company's Board of Directors in
June, 2006. Mr. Mead received his Bachelor of Science degree in
August, 1992 from Roosevelt University where he majored in
Accounting.
BEVERLY R. SUZUKI, Vice President - Customer Service. Mrs.
Suzuki was elected to the office of Vice-President - Customer
Service on June 20, 2005. Mrs. Suzuki served the Company as a
sales representative from 1993 through 2000 promoting the
Company's products directly to end users. In 2000, Mrs. Suzuki
was promoted to the position of research associate/sales
liaison. During this time, Mrs. Suzuki assisted both in
research and product production development as well as
continuing with her marketing and sales responsibilities. Mrs.
Suzuki's extensive experience in sales and customer service
includes serving as a sales representative for Computer Services
Bull, H.N. from 1992 to 1993, serving as a sales representative
for Honeywell, Inc. from 1984 to 1991, and serving as human
resources assistant for UOP, Inc. from 1970 to 1983. Mrs.
Suzuki attended DePaul University from 1963 to 1966 and again
from 1978 to 1979. Mrs. Suzuki also completed course work at
William Rainey Harper College during 1983 and 1984.
LAUANE C. ADDIS, Secretary and Director. Mr. Addis is currently
a member of the law firm Stahl Cowen Crowley Addis LLC, Chicago,
Illinois. Mr. Addis served the Company from February, 1984 to
December, 1985 as its Vice President - Finance and Chief
Financial Officer. 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.
Mr. Addis is the Secretary FKSI, an affiliate of the Company.
Mr. Addis is also a member of the board of directors of
Northwest Suburban Day Care Center, a non-profit organization
which provides child day care services for low-income and
indigent persons. 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. Mr.
Schembri is one of the founders and President of Fenton Systems,
Inc., Goodrich, Michigan. In addition to these activities, Mr.
Schembri is founder and President of Wickfield Leasing Company.
Both Schembri & Associates and Wickfield Leasing Company are
involved in public and private investments. 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.
Section 16(a) Beneficial Ownership Reporting Compliance.
-------------------------------------------------------
On October 22, 2009, the Company received a Form 4 from Lauane C.
Addis indicating that he transferred by gift all of his Common
Stock of F.K. Suzuki International, Inc. ("FKSI"), consisting of
31,423 shares of FKSI Common Stock to Jeanne S. Addis, as
Trustee of the Addis Family Equity Trust dated September 1,
2009. On the same date, Mrs. Addis delivered a Form 3 to the
Company indicating that she, in her capacity as Trustee of the
Addis Family Equity Trust dated September 1, 2009, had become
the beneficial owner of 31,423 shares of FKSI Common Stock.
FKSI owns 4,497,146 shares, or 30.11% of the Company's Common
Stock. The Company did not receive any other reports during
Fiscal 2010 required to be filed by a director, officer or
beneficial owner of more than 10% of the Company's common stock
pursuant to Section 16(a) of the Securities and Exchange Act.
Management is not aware of any director, officer or beneficial
owner of more than 10% of the Company's common stock who has
failed to file on a timely basis any reports required by Section
16(a) of the Securities Exchange Act during the fiscal year
ending April 30, 2010.
Audit Committee.
---------------
The Audit Committee reviews and, when it deems appropriate,
approves internal accounting and financial controls
for the Company and accounting principals and auditing practices
and procedures to be employed in the preparation and review of
the financial statements of the Company. The Audit Committee
also meets periodically with management to review the manner in
which they are performing their responsibilities and to discuss
auditing, internal accounting controls and financial reporting
matters. The Audit Committee also makes recommendations to the
Board of Directors concerning the engagement of independent
public auditors to audit the annual consolidated financial
statements, review the unaudited quarterly financial statements
of the Company, and perform other services for the Company. The
Audit Committee arranges with such auditors the scope of the
audit to be undertaken by them and any other services to be
provided. The Audit Committee currently has one member, James
F. Schembri, a director of the Company. The Board of Directors
has determined that Mr. Schembri is a financial expert as a
result of Mr. Schembri's experience described under "Business
Experience" above. Mr. Schembri is an independent director as
defined in Rule 407of Regulation SK.
Audit Committee Charter.
-----------------------
The Board of Directors has adopted a written charter for the
Audit Committee. A copy of the Audit Committee Charter is available
without charge upon request delivered to the Company at its
principal executive offices.
Code of Ethics.
--------------
The Company has adopted a Code of Ethics which applies to all officers
of the Company. A copy of the Company's Code of Ethics was filed
with the Company's Annual Report on Form 10-K for Fiscal 2009 as
Exhibit 14 and is incorporated in this Report by reference.
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, 2010 and 2009 paid to
the Chief Executive Officer and Chief Operating Officer. None
of the Company's other executive officers received annual
salaries and bonuses for such fiscal years exceeding $100,000.
Summary Compensation Table:
Non-Equity Nonqualified
Incentive Plan Deferred All Other
Stock Option Compensation Compensation Compensation
Salary Bonus Awards Awards Earnings Total
Name and Principal Position Year $ $ $ $ $ $ $ $
--------------------------- ---- -------- ------- ------- ------- -------------- ------------ ------------ --------
Fred K. Suzuki,
President, Chairman of
the Board, and Chief
Executive Officer 2010 $120,150 $ 3,750 - - $ 5,983 - $14,035 $143,918
2009 $117,791 $2,880 - - $ 5,204 - $16,754 $142,629
Laurence C. Mead, Chief
Operating Officer, Chief
Financial Officer, Vice
President/Manufacturing
and Development Chief
Accounting Officer,
Treasurer and
Manager of Product
Development 2010 $105,012 $3,750 - - $ 5,228 - $12,600 $126,590
2009 $102,018 $2,880 - - $ 4,508 - $ 8,380 $117,786
------------------------------
Amounts represent Company's match portion of 401(k)
contribution.
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. Mr. Suzuki received $11,535 and $14,254 in lieu of
accrued vacation for Fiscal 2010 and 2009 respectively. Mr. Suzuki
and Mr. Mead each received $2,500 for their services as directors in
Fiscal 2010 and 2009. Mr. Mead also received $10,100 and $5,880 in
lieu of accrued vacation for Fiscal 2010 and 2009, respecrtively.
Stock Options.
-------------
The Company did not grant stock options to any of the named
executive officers during the predecessor period of the fiscal
year ended April 30, 2010, and no such stock options were
outstanding as of April 30, 2010.
Directors Compensation.
----------------------
The directors' compensation is determined by the Company's
Compensation Committee and approved by the Board of Directors.
The following Director Compensation Table sets forth a summary
of compensation for services by the directors of the Company in
their capacities as directors for the fiscal year ending April
30, 2010.
Directors Compensation Table
Fees Earned or Paid
in Cash Total
Director Name $ $
--------------------------------- ------------------- -----------
Fred K. Suzuki, President,
Chairman of the Board and
Chief Executive Officer $2,500 $2,500
James F. Schembri, Director $2,500 $2,500
Lauane C. Addis, Director and $2,500 $2,500
Secretary
Laurence C. Mead, Director, Chief
Operating Officer, Chief Financial
Officer, Vice-President
Manufacturing and Development,
Chief Accounting Officer,
Treasurer and Manager of
Product Development $2,500 $2,500
------------------------
Does not include compensation received as an officer
of the Company. See also "Summary Compensation Table"
above for more information.
All officers and directors are reimbursed for out-of-pocket
expenses incurred in connection with the Company's business.
See "Certain Relationships and Related Party Transactions."
The Company's 401(k) retirement plan provides for the Company to
match participant contributions up to 5% of the participant's
compensation. Management of the Company believes it is
important to provide a retirement plan for the benefit of its
employees to retain key employees and provide its employees with
retirement benefits.
Compensation Committee.
----------------------
The Company has a Compensation Committee of its Board of Directors.
The Compensation Committee makes all decisions concerning the
compensation of the officers and directors of the Company,
including, but not limited to, the granting of options to acquire
common stock of the Company.
Compensation Committee Interlocks and Insider Participation.
-----------------------------------------------------------
The members of the Company's Board of Directors serving as the
Compensation Committee are set forth in the preceding section.
During the most recent fiscal year, none of our executive
officers served on the Compensation Committee (or equivalent),
or the board of directors, of another entity whose executive
officer(s) served either on our Compensation Committee or on our
board of directors.
Compensation Committee Charter.
------------------------------
The Board of Directors has adopted a written charter for the Compensation
Committee. A copy of the Compensation Committee Charter is available without
charge upon request delivered to the Company at its principal
executive offices.
Competitiveness of Company's Compensation System.
------------------------------------------------
The Compensation Committee of the Company's Board of Directors has
reviewed and discussed the competitiveness of the Company's
compensation system and has concluded that such system is
competitive with the compensation systems of similar sized
organizations operating in identical or similar industries.
Performance of the Compensation Committee.
-----------------------------------------
The Compensation Committee of the Company's Board of Directors has
reviewed its performance during the fiscal year ending April 30,
2010 and has concluded that the Compensation Committee has performed all
necessary duties and complied with all of its obligations as set
forth in the Compensation Committee charter. The Compensation
Committee has adopted a bonus program for all executive officers
of the Company based on Company profitability. In the
aggregate, $25,000 in bonuses was paid or accrued during fiscal
year ended April 30, 2010 to four executive officers. Under
the bonus program, as Company profitability improves, the bonus
payouts will increase. The distribution of the bonus payouts
under the bonus program is determined with consultation from the
Company's CEO.
Compensation Committee Report.
-----------------------------
The Compensation Committee of the Company's Board of Directors has
reviewed and discussed the Compensation Discussion and Analysis
presented above with management and, based on that review and discussion, has
recommended to the Company's Board of Directors that the
Compensation Discussion and Analysis be included in this Annual
Report on Form 10-K.
The current members of the Compensation Committee are James F.
Schembri, director of the Company, and Lauane C. Addis, director
and Secretary of the Company.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
---------------------------------------------------
The following table sets forth information as of April 30, 2010,
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 5,526,146 shares 37.00%
710 S. Kennicott of record and
Arlington Heights, beneficial
Illinois 60005
Common Stock F.K. Suzuki Inter- 4,497,146 shares 30.11%
national, Inc. record and bene-
1940 E. Devon Ave. ficial
Elk Grove Village, IL
60007
Common Stock Lauane C. Addis 9,000 shares .06%
1819 Orleans Circle record and bene-
Elk Grove Village, IL ficial
60007
Common Stock Jeanne S. Addis, 4,497,146 shares 30.11%
Trustee of the Addis record and bene-
Family Equity Trust ficial
dated September 1,
2009
1819 Orleans Circle
Elk Grove Village, IL
60007
Common Stock James F. Schembri 1,291,500 shares 8.65%
3565 Port Cove Dr. #73 of record and
Waterford, MI 48328 beneficial
Common Stock Mary K. Friske 41,000 shares of .27%
940 Bradley Court record and
Palatine, IL 60074 beneficial
Common Stock Laurence C. Mead 61,250 shares of .41%
1151 Warwick Cir. North record and
Hoffman Estates IL beneficial
60169
Common Stock Beverly R. Suzuki 820,000 shares of 5.49%
710 S. Kennicott record and
Arlington Heights IL beneficial
60005
Common Stock All directors and 6,928,896 46.39%
officers as a
group (6 members)
----------------------
Fred K. Suzuki is President of F.K. Suzuki International,
Inc. ("FKSI") and owns 33.5% of the outstanding common stock of
FKSI. Mr. Suzuki personally holds of record 209,000 shares of
the Company's common stock; however he is deemed to be
beneficial owner by reason of voting and disposition control of
4,497,146 shares which are owned by FKSI and 820,000 shares
which are owned by him and Beverly R. Suzuki as joint tenants.
Lauane C. Addis personally owns 9,000 shares of the
outstanding Common Stock of the Company. On October 21, 2009,
Mr. Addis transferred all of his interest in F.K. Suzuki
International, Inc. (FKSI), consisting of 31,423 shares of FKSI
Common Stock, to Jeanne S. Addis, as Trustee of the Addis Family
Equity Trust dated September 1, 2009.
Jeanne S. Addis, as Trustee of the Addis Family Equity
Trust dated September 1, 2009, owns 31.1% of the outstanding
Common Stock of FKSI, which owns 30.11% of the Common Stock of
the Company. Jeanne S. Addis as Trustee of the Addis Family
Equity Trust dated September 1, 2009 is therefore deemed to be
beneficial owner by reason of voting and disposition control of
4,497,146 shares owned by FKSI.
Included in the shares owned by James F. Schembri are
66,000 shares in Mr. Schembri's individual retirement account
for the benefit of Mr. Schembri.
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 30.11% of the common stock of the Company.
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 30.11%
of the common stock of the Company.
Beverly R. Suzuki is deemed to be a beneficial owner by
reason of voting and disposition control of 820,000 shares owned
by her and Fred K. Suzuki as joint tenants.
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. Except for the transfer of Mr. Addis of his 31,423
shares of FKSI Common Stock described in footnote 2 above, there
has not been a change in the control of the Company during the
last fiscal year.
Item 13. Certain Relationships and Related Transactions, and
Director Independence.
----------------------------------------------------
At April 30, 2010, F.K. Suzuki International, Inc. ("FKSI") owed
$19,699 to the Company in connection with past shared common
expenses. Since a portion of this receivable had been
outstanding for a significant period of time, and FKSI was not
in a position to reimburse the Company without the liquidation
of all or a portion of its assets, including common stock of the
Company, $19,669 of the receivable balance was reclassified as a
contra-equity account thus reducing FKSI's capital in the
Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Lauane C. Addis, Secretary and Director, as a member of the law
firm of Stahl Cowen Crowley Addis LLC, has represented the
Company with respect to the preparation and filing of this
Report. Mr. Addis, and other Members and associates of Stahl
Cowen Crowley Addis LLC, 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 and associates
of Stahl Cowen Crowley Addis LLC, in the future. During Fiscal
2010, the Company paid $41,813 in legal fees to Stahl Cowen
Crowley Addis LLC, some of which inured to the benefit of Mr.
Addis in the form of distributions from the law firm. 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.
Jim Schembri is the sole independent director under the
independence standards applicable to the Company's board of
directors and the sole independent member of the board's
compensation and audit committees under the independence
standards applicable to such committees.
In determining whether a director is an independent director of
the Company's board or directors, or an independent member of
the board's audit and compensation committees, the Company uses
the determination of "independence" promulgated by the New York
Stock Exchange. While the Company applies the New York Stock
Exchange's standards for purposes of determination of
"independence", the Company does not apply the New York Stock
Exchange's or any other exchange's requirements with respect to
the number or proportion of independent directors required to be
a part of the Company's board or directors.
Item 14. Principal Accounting Fees and Services.
--------------------------------------
Frank L. Sassetti & Co. served as independent auditors for the
fiscal year ended April 30, 2010, and it has acted as auditors
for the Company since August 29, 2009. Blackman Kallick, LLC
served as independent auditors for the fiscal year ended April
30, 2009, and acted as auditors for the Company from May 1, 2002
to August 29, 2009.
Audit Fees.
----------
Fees billed by Frank L. Sassetti & Co. totaled
$13,335 for year ended April 30, 2010. This amount includes
fees for the reviews of all the Company's quarterly reports
filed by the Company with the SEC for Fiscal 2010. Fees billed
by Blackman Kallick, LLP totaled $39,648 for year ended April
30, 2010. This amount includes fees for the annual audit for
the fiscal year ending April 30, 2009. Fees billed by Blackman
Kallick, LLP totaled $47,510 for year ended April 30, 2009.
This amount includes fees for the annual audit for the fiscal
year ending April 30, 2008 and reviews of all the Company's
quarterly reports filed by the Company with the SEC during the
fiscal year ended April 30, 2009.
Audit-Related Fees.
------------------
Frank L. Sassetti & Co. and Blackman Kallick, LLP did not bill
any fees for professional services described in paragraph 9(e)(2)
of Schedule 14A during the past two fiscal years.
Tax Fees.
--------
During the fiscal year ending April 30, 2010, Frank
L. Sassetti & Co. did not bill the Company for professional fees
related to tax services rendered to the Company. During the
fiscal year ending April 30, 2010, Blackman Kallick, LLP billed
the Company $5,018 for professional fees related to tax services
rendered to the Company. Blackman Kallick, LLP billed the
Company $4,063 for professional fees related to tax services
during the fiscal year ending April 30, 2009.
All Other Fees.
--------------
Frank L. Sassetti & Co. and Blackman Kallick, LLP did not bill
for any fees for professional services described in Item 9(e)(4)
of Schedule 14A during the past two fiscal years.
Audit Committee Review.
----------------------
The Company's Audit Committee is required to approve all non-audit
services to be performed by the Company's auditors. In this respect,
the Audit Committee has considered whether the provision of the
tax services during the Company's fiscal year ending April 30, 2010
and April 30, 2009 was compatible with maintaining the independence of the
Company's auditors. The Audit Committee has made a
determination that the independence of Frank L. Sassetti & Co.
and of Blackman Kallick, LLP will not be adversely affected as a
result of performance of tax services for the Company, and
therefore has approved the performance of such tax services for
the fiscal years ending April 30, 2010 and April 30, 2009,
respectively.
Item 15. Exhibits, Financial Statement Schedules
The following financial statements, schedules and exhibits are
filed as a part of this report:
(a) (1) Financial Statements.
Balance sheets for the fiscal years ending April 30,
2010 and 2009.
Statements of income for the fiscal years ending April
30, 2010 and 2009.
Statements of Shareholders' Equity for the fiscal years
April 30, 2010 and 2009.
Statements of Cash Flows for fiscal years ending
April 30, 2010 and 2009.
Notes to financial statements.
(a) (2) List of Financial Statement Schedules:
No financial schedules for the fiscal years ending April
30, 2010 and 2009 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.
(a)(3) The Following Exhibits are Filed as a Part of this
Report:
2. Plan of Acquisition, reorganization, arrangement,
liquidation or succession - none.
3. a. Articles of Incorporation
b. Amended and Restated By-Laws
4. Instruments Defining the Rights of Security Holders,
Including Indentures - none.
9. Voting Trust Agreements - none.
10. Material Contracts - none.
11. Statement Regarding Computation of Earnings Per Share
- none.
13. Annual or Quarterly Reports to Security Holders -
none.
14. Code of Ethics.
(a) Amended and Restated Code of Ethics of Biosynergy, Inc.,
adopted as of June 30, 2009
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.
31.1 Certification of the Chief Executive Officer pursuant
to Rule 13a-14(a) under the Securities Exchange Act of 1934.
Accompanying this Report.
31.2 Certification of the Chief Accounting Officer pursuant
to Rule 13a-14(a) under the Securities Exchange Act of 1934.
Accompanying this Report.
32.1 Certification of the Chief Executive Officer pursuant
to Rule 13a-14(b) under the Securities Exchange Act of
1934 and 18 U.S.C. Sect. 1350.
Accompanying this Report.
32.2 Certification of the Chief Accounting Officer pursuant
to Rule 13a-14(b) under the Securities Exchange Act of 1934
and 18 U.S.C. Sect. 1350.
Accompanying this Report.
(99) Additional Exhibits - none
---------------------------
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.
Incorporated by reference to the Company's Current Report
filed on Form 8-K with the Securities and Exchange Commission as
of July 2, 2009.
Incorporated by reference to the Company's Annual Report
for the fiscal year ending April 30, 2009 filed on Form 10-K
with the Securities and Exchange Commission.
(b) Reports on Form 8K. No current reports on Form 8K were
filed or were required to be filed during the last quarter
covered by this report.
SIGNATURES
Pursuant to the requirements 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,
thereunto duly authorized.
REGISTRANT: BIOSYNERGY, INC.
/s/ Fred K. Suzuki /s/ July 21, 2010
------------------------------------- -------------
Fred K. Suzuki, Chairman of the Date
Board, Chief Executive
Officer and President
Pursuant to the requirements of Securities and Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Fred K. Suzuki /s/ July 21, 2010
------------------------------------- ------------
Fred K. Suzuki, Chairman of the Date
Board of Directors, Chief Executive
Officer, President and Treasurer
/s/ Lauane C. Addis /s/ July 21, 2010
------------------------------------- ------------
Lauane C. Addis, Secretary Date
and Director
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Fred K. Suzuki, certify that:
1. I have reviewed this Annual Report on Form 10-K 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 disclosure 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: July 21, 2010
/s/ Fred K. Suzuki /s/
--------------------------------------
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 Annual Report on Form 10-K 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 disclosure 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: July 21, 2010
/s/ Laurence C. Mead /s/
-----------------------------------------------------
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 Annual Report of Biosynergy, Inc. (the
"Company") on Form 10-K for the year ending April 30, 2010, 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) and 15(d) of the Securities and Exchange Act of
1934; 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 April 30, 2010,
and for the period then ended.
Biosynergy, Inc.
/s/ Fred K. Suzuki /s/
---------------------------------------
Fred K. Suzuki
Chairman of the Board, Chief Executive
Officer and President
Dated: July 21, 2010
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 Annual Report of Biosynergy, Inc. (the
"Company") on Form 10-K for the year ending April 30, 2010, 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) and 15(d) of the Securities and Exchange Act of
1934; 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 April 30, 2010,
and for the period then ended.
Biosynergy, Inc.
/s/Laurence C. Mead/s/
-----------------------------------------------------
Laurence C. Mead
Vice President/Manufacturing and Development,
Chief Financial Officer, and Chief Accounting Officer
Dated: July 21, 2010
Biosynergy, Inc.
Financial Statements for the
Years Ended April 30, 2010 and 2009
C o n t e n t s
Reference Page
--------- ----
Reports of Independent Registered Public
Accounting Firms 1-2
Balance Sheets Exhibit A 3-4
Statements of Income Exhibit B 5
Statements of Stockholders' Equity Exhibit C 6
Statements of Cash Flows Exhibit D 7
Notes to Financial Statements 8-16
Frank L. Sassetti & Co.
Certified Public Accountants
The Board of Directors
Positron Corporation
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying balance sheet of
Biosynergy, Inc. as of April 30, 2010 and the related statements
of income, stockholders' equity, and cash flows for the year
then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of
the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has
determined that it is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control
over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of
the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Biosynergy, Inc. as of April 30, 2010 and the results of its
operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the
United States of America.
/s/ Frank L. Sassetti & Co.
---------------------------
July 21, 2010
Oak Park, Illinois
6611 W. North Avenue * Oak Park, Illinois 60302 * Phone (708)
386-1433 * Fax (708) 386-0139
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------
Board of Directors and Stockholders
Biosynergy, Inc.
Elk Grove Village, Illinois
We have audited the accompanying balance sheets of Biosynergy,
Inc. as of April 30, 2009 and the related statements of income,
stockholders' equity and cash flows for the year then ended.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Company has determined that
it is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our
audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Biosynergy, Inc. as of April 30, 2009 and the results of its
operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the
United States of America.
/s/ Blackman Kallick, LLP /s/
-----------------------------
July 29, 2009
Chicago, Illinois
Balance Sheets Follow
Biosynergy, Inc. Exhibit A
---------
Balance Sheets
April 30, 2010 and 2009
---------------------------------------------------------------------
Assets
--------
2010 2009
-------- --------
Current Assets
Cash $426,569 $285,395
Short-term investments 100,000 200,000
Accounts receivable - Trade (Net of allowance for
doubtful accounts of $500 in both 2010 and 2009) 149,033 150,033
Inventories 124,666 81,299
Prepaid expenses 34,342 48,937
Interest receivable 11 541
-------- --------
Total Current Assets 834,621 766,205
-------- --------
Equipment and Leasehold Improvements
Equipment 200,923 203,137
Leasehold improvements 20,022 20,022
-------- --------
220,945 223,159
Less accumulated depreciation and amortization 198,975 188,793
-------- --------
Total Equipment and Leasehold Improvements 21,970 34,366
-------- --------
Other Assets
Patents less accumulated amortization 14,882 15,938
Patents pending 106,268 85,282
Deposits 5,947 5,947
-------- --------
Total Other Assets 127,097 107,167
-------- --------
$983,688 $907,738
======== ========
The accompanying notes are an integral part of the financial statements.
-2-
Exhibit A
---------
--------------------------------------------------------------------
Liabilities and Stockholders' Equity
------------------------------------
2009 2008
-------- --------
Current Liabilities
Accounts payable $ 12,892 $ 9,454
Accrued compensation and payroll taxes 20,406 19,995
Deferred rent 3,152 5,733
Other accrued expenses - 468
Accrued vacation 14,294 17,855
-------- --------
Total Current Liabilities 50,744 53,505
-------- --------
Deferred Income Taxes 17,772 13,019
-------- --------
Stockholders' Equity
Common stock - No par value; 20,000,000 shares
authorized; 14,935,511 shares issued as of
both April 30, 2010 and 2009 660,988 660,988
Receivable from affiliate (19,699) (19,699)
Retained earnings 273,883 199,925
-------- --------
Total Stockholders' Equity 915,172 841,214
-------- --------
$983,688 $907,738
======== ========
The accompanying notes are an integral part of the financial statements.
-3-
Exhibit B
---------
Biosynergy, Inc.
Statements of Income
Years Ended April 30, 2010 and 2009
----------------------------------------------------------------------
2010 2009
---------- ----------
Net Sales $1,090,198 $1,033,318
Cost of Sales 314,668 284,875
---------- ----------
Gross Profit 775,530 748,443
---------- ----------
Operating Expenses
Marketing 152,968 138,918
General and administrative 430,549 409,590
Research and development 96,884 90,572
---------- ----------
Total Operating Expenses 680,401 639,080
---------- ----------
Income from Operations 95,129 109,363
---------- ----------
Other Income
Interest income 5,034 8,736
Other income 1,920 1,920
---------- ----------
Total Other Income 6,954 10,656
---------- ----------
Income Before Income Taxes 102,083 120,019
Provision for Income Taxes 28,125 28,655
---------- ----------
Net Income $73,958 $91,364
========== ==========
Net Income Per Common Share -
Basic and diluted $ - $ -
========== ==========
Weighted-Average Common
Shares Outstanding 14,935,511 14,935,511
The accompanying notes are an integral part of the financial statements.
-4-
Exhibit C
---------
Biosynergy, Inc.
Statements of Stockholders' Equity
Years Ended April 30, 2010 and 2009
--------------------------------------------------------------------
Common Stock Other and Accumulated
------------------- Related (Deficit)
Shares Amount Receivable Equity Total
---------- -------- ---------- ----------- --------
Balance,
April 30, 2008 14,935,511 $660,988 $(19,699) $108,561 $749,850
Net income - - - 91,364 91,364
---------- -------- --------- -------- --------
Balance,
April 30, 2009 14,935,511 660,988 (19,699) 199,925 841,214
Net income - - - 73,958 73,958
---------- -------- ---------- -------- --------
Balance,
April 30, 2010 14,935,511 $660,988 $(19,699) $273,883 $915,172
========== ======== ========== ======== ========
The accompanying notes are an integral part of the financial statements.
-5-
Exhibit D
---------
Biosynergy, Inc.
Statements of Cash Flows
Years Ended April 30, 2010 and 2009
----------------------------------------------------------------------
2010 2009
-------- --------
Cash Flows from Operating Activities
Net income $73,958 $91,364
-------- --------
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 11,238 18,504
Deferred income taxes 4,753 754
Changes in assets and liabilities
Accounts receivable 1,000 (6,377)
Interest receivable 530 1,093
Inventories and prepaid expenses (28,772) (50,317)
Accounts payable and accrued expenses (2,761) (33,572)
-------- --------
Total Adjustments (14,012) (69,915)
-------- --------
Net Cash Provided by
Operating Activities 59,946 21,449
-------- --------
Cash Flows from Investing Activities
Purchase/disposal of equipment 2,214 (1,561)
Purchase of leasehold improvements - (1,847)
Patents and patents pending (20,986) (13,769)
Purchases of short-term investments (100,000) (500,000)
Redemption of short-term investments 200,000 500,000
-------- --------
Net Cash Provided by (Used in)
Investing Activities 81,228 (17,177)
-------- --------
Increase in Cash 141,174 4,272
Cash, Beginning of Year 285,395 281,123
-------- --------
Cash, End of Year $426,569 $285,395
======== ========
Supplemental disclosure of cash flow information
Income taxes paid $ 10,232 $ 70,469
======== ========
The accompanying notes are an integral part of the financial statements.
-6-
Biosynergy, Inc.
Notes to Financial Statements
Years Ended April 30, 2010 and 2009
----------------------------------------------------------------------
Note 1 - Company Organization and Description
Biosynergy, Inc. (the Company) was incorporated under the laws
of the state of Illinois on February 9, 1976. The Company 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 Hemo Temp II Blood Monitoring Device, accounted for
more than 90% of sales for the years ended April 30, 2010 and
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
----
The Company maintains all of its cash in bank deposit accounts,
which at times may exceed federally insured limits. No losses
have been experienced on such accounts. All cash is held with
Bank of America, N.A. and JPMorgan Chase Bank.
Short-Term Investments
----------------------
The Company's investments in certificates of deposit are
classified as held to maturity. These investments are stated at
amortized cost, which approximates fair value.
Receivables
-----------
Receivables are carried at original invoice less estimates made
for doubtful receivables. Management determines the allowance
for doubtful accounts by reviewing and identifying troubled
accounts on a periodic basis by using historical experience
applied to an aging of accounts. A receivable is considered to
be past due if any portion of the receivable balance is
outstanding for more than 30 days. Receivables are written off
when deemed uncollectible. Recoveries of receivables previously
written off are recorded when received.
Inventories
-----------
Inventories are valued at the lower of cost using the FIFO
(first-in, first-out) method or market.
Depreciation and Amortization
-----------------------------
Equipment and leasehold improvements are stated at cost.
Depreciation is computed primarily using the straight-line
method over the estimated useful lives of the respective assets.
Repairs and maintenance are charged to expense as incurred.
Renewals and betterments, which significantly extend the useful
lives of existing equipment, are capitalized. Significant
leasehold improvements are capitalized and amortized over 10
years or the term of the lease, if shorter. Equipment is
depreciated over three to 10 years.
Note 2 - Summary of Significant Accounting Policies (Cont'd)
Prepaid Expenses
----------------
Certain expenses, primarily insurance and income taxes, have
been prepaid and will be used within one year.
Revenue Recognition
-------------------
The Company recognizes net sales revenue upon the shipment of
products to customers.
Income Taxes
------------
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due and deferred taxes related primarily to
differences in the methods of accounting for patents,
inventories, certain accrued expenses and bad debt expenses for
financial and income tax reporting purposes. The deferred tax
income taxes represent the future tax consequences of those
differences, which will be taxable in the future. See Note 5 for
additional information regarding income taxes.
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
expense.
Research and Development and Patents
------------------------------------
Research and development expenditures are charged to operations
as incurred. The costs of obtaining patents, primarily legal
fees, are capitalized and, once obtained, are amortized over the
life of the respective patent using the straight-line method.
Patents relate to products that have been developed and are
being marketed by the Company.
Patents pending relate to products under development. The
Company is developing certain compounds intended for use as
bacteria growth retardant agents for use in food and other
products.
The Company is also investigating production methods for the
bacteria growth retardant. In this regard, management has
developed certain proprietary technology related to the
processing of these compounds. The Company has filed for one
patent related to the processing and manufacturing of bacteria
growth compounds and one patent related to the use of such
compounds.
Note 2 - Summary of Significant Accounting Policies (Cont'd)
Use of Estimates
----------------
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Income Per Common Share
-----------------------
Income (loss) 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. Basic and diluted
net income per common share is the same for the years ended
April 30, 2010 and 2009, as the common stock equivalents of the
Company were anti-dilutive.
Fair Value of Financial Instruments
-----------------------------------
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. Based on the Company's analysis, the fair value of
financial instruments recorded on the balance sheets as of April
30, 2010 and 2009, approximates their carrying value.
Conformity With Generally Accepted Accounting Principles." The
Company does not expect this adoption to have a material impact
on its financial statements.
Recent Accounting Pronouncements
--------------------------------
In January 2010, FASB issued ASU 2010-6, "Improving Disclosures
about Fair Measurements" (ASU 2010-6). ASU 2010-6 provides
amendments to subtopic 820-10 of the FASB Accounting Standards
Codification, originally issued as FASB Statement No.157, "Fair
Value Measurements", now ASC 820, "Fair Value Measurements and
Disclosures" (ASC 820) that require separate disclosure of
significant transfers in and out of Level 1 and Level 2 fair
value measurements and the presentation of separate information
regarding purchases, sales, issuances and settlements for
Level 3 fair value measurements. Additionally, ASU 2010-6
provides amendments to Subtopic 820-10 that clarify existing
disclosures about the level of disaggregation and inputs and
valuation techniques. ASU 2010-6 is effective for financial
statements issued for interim and annual periods ending after
December 15, 2010. The Company will adopt this pronouncement in
the third quarter of fiscal 2011 and does not expect the
adoption of ASU 2010-06 will have a material impact on its
consolidated results of operation and financial condition.
Note 2 - Summary of Significant Accounting Policies (Cont'd)
In February 2010, FASB issued ASU 2010-9, "Subsequent Events
(Topic 855) Amendments to Certain Recognition and Disclosure
Requirements" (ASU 2010-9). ASU 2010-9 amends disclosure
requirements within Subtopic 855-10. An entity that is an SEC
filer is not required to disclose the date through which
subsequent events have been evaluated. This change alleviates
potential conflicts between Subtopic 855-10 and the SEC's
requirements. The adoption of ASU 2010-09 did not have a
material impact on the Company's results of operation and
financial condition.
In June 2009, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 168, "The 'FASB Accounting Standards
Codification' and the Hierarchy of Generally Accepted Accounting
Principals, a replacement of FASB Statement No. 162", now ASC
105, "Generally Accepted Accounting Principles" (ASC 105). ASC
105 establishes the "FASB Accounting Standards Codification"
("Codification"), which officially launched July 1, 2009, to
become the source of authoritative U.S. generally accepted
accounting principles ("GAAP") recognized by the FASB to be
applied by nongovernmental entities, superseding existing FASB,
American Institute of Certified Public Accountants ("AICPA"),
Emerging Issues Task Force ("EITF"), and related accounting
literature. Rules and interpretive releases to the Securities
and Exchange Commission ("SEC") under authority of federal
securities laws are also sources of authoritative U.S. GAAP for
SEC registrants. ASC 105 reorganizes the previously issued GAAP
pronouncements into accounting topics and displays them using a
consistent structure. The subsequent issuances of new standards
will be in the form of Accounting Standards Updates that will be
included in the Codification. ASC 105 was adopted by the
Company as of the interim period ended October 31, 2009. As the
Codification was not intended to change or alter existing GAAP,
ASC 105 did not have an impact on the Company's financial
statements. The only impact will be that any future references
to authoritative accounting literature will be the new numbering
system prescribed by the Codification.
In October 2009, the FASB issued ASC 605-25, "Revenue
Recognition" (ASC 605-25). ASC 605-25 modifies the fair value
requirements of revenue recognition on multiple element
arrangements by allowing the use of the "best estimate of
selling price" in addition to vendor specific objective evidence
and third-party evidence for determining the selling price of a
deliverable. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable,
which is based on: (a) vendor-specified objective evidence, (b)
third-party evidence, or (c) estimates. In addition, ASC 605-25
eliminates the residual method of allocation and significantly
expands the disclosure requirements for such arrangements. ASC
605-25 is effective for fiscal years beginning on or after June
15, 2010, with early adoption permitted. The Company does not
expect the adoption of ASU 201-16 will have a material impact on
its results of operations and financial condition.
The FASB issues ASUs to amend the authoritative literature in
Accounting Standards Certification (ASC). There have been a
number of ASUs to date that amend the original text of ASCs.
Except for the ASUs listed above, those issued to date either
(i) provide supplemental guidance, (ii) are technical
corrections, (iii) are not applicable to the Company or (iv) are
not expected to have a significant impact on the Company.
Note 3 - Short-Term Investments / Fair Value Measurements
In May 2008, the Company reinvested $100,000 in a 120-day
certificate of deposit at an annual percentage yield of 2.64%.
The maturity date was September 18, 2008. As of the maturity
date, the Company reinvested the funds in a seven-month
certificate of deposit at an annual percentage yield of 3%. The
maturity date was April 18, 2009. As of the maturity date, the
Company reinvested the funds in a one-year certificate of
deposit an annul percentage yield of 2% with a maturity date of
April 22, 2010. As of the maturity date, the Company reinvested
the funds in a nine-month certificate of deposit at an annual
percentage yield of .5% with a maturity date of January 22,
2011. The Company reinvested an additional $100,000 in a
certificate of deposit on July 23, 2008 for seven months at an
annual percentage yield of 3.51%. The maturity date was February
23, 2009. As of the maturity date, the Company reinvested the
funds in a one-year certificate of deposit at an annual
percentage yield of 2.75% with a maturity date of February 23,
2010. As of the maturity date, the Company moved these funds
into a cash account.
Accounting Standards Codification Topic 820 (SASC 820) defines
fair value as the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When
determining the fair value measurements for assets and
liabilities required to be recorded at fair value, the Plan
considers the principal or most advantageous market in which it
would transact and considers assumptions that market
participants would use when pricing the asset or liability, such
as inherent risk, transfer restrictions, and risk of
nonperformance.
ASC 820 also establishes a fair value hierarchy that requires
the Company to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair
value. A financial instrument's categorization within the fair
value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. The standard
establishes three levels of inputs that may be used to measure
fair value:
- Level 1 : quoted prices in active markets for identical
assets or liabilities;
- Level 2 : inputs other than Level 1 that are observable,
either directly or indirectly, such as quoted prices in
active markets for similar assets or liabilities, quoted
prices for identical or similar assets or liabilities in
markets that are not active, or other inputs that are
observable or can be corroborated by observable market data
for substantially the full term of the assets or liabilities; or
- Level 3: observable inputs that are supported by little or no
market activity and that are significant to the fair value of
the assets or liabilities.
The Company's investments in certificates of deposit are deemed
to be Level 2.
Note 4 - Inventories
Inventories consist of the following:
2010 2009
-------- --------
Raw materials $ 54,994 $40,681
Work-in-process 34,795 24,211
Finished goods 34,877 16,407
-------- --------
$124,666 $81,299
Note 5 - Income Taxes
The components of the deferred income tax (assets) and liabilities as of
April 30, 2009 and 2008 are as follows:
2010 2009
------- -------
Total deferred tax liabilities
Patents $17,721 $10,966
Equipment and leaseholds - 4,888
Prepaid insurance 5,940 4,258
------- -------
23,661 20,112
Total deferred tax assets
Accrued vacation pay (3,293) (4,616)
Equipment and leaseholds (2,183) -
Other (413) (2,477)
------- -------
(5,889) (7,093)
------- -------
Net deferred income tax
liabilities $17,772 $13,019
======= =======
Deferred income tax liabilities result primarily from prepaid
expenses and capitalized legal costs associated with patents
that are deducted immediately for income tax purposes and from
differences between depreciation expense for book and tax
purposes. (See Note 2.) Deferred income tax assets result
primarily from accrued vacation pay, which is not deducted for
tax purposes unless it is paid within 2-1/2 months of each year-
end, and other expenses, which are not deductible for tax
purposes until paid.
Note 5 - Income Taxes (Continued)
The provision for income taxes consists of the following
components:
2010 2009
------- -------
Current
Federal $15,652 $20,700
State 6,347 7,201
------- -------
21,999 27,901
Deferred 6,126 754
------- -------
$28,125 $28,655
======= =======
The differences between the U.S. federal statutory tax rate and
the Company's effective tax rate are as follows:
Year Ended April 30,
2010 2009
------- -------
U.S. federal statutory tax rate 34.0% 34.0%
State income tax expense, net of
federal tax benefit 3.0 3.0
Effect of graduated federal tax rates (11.7) (13.1)
------- -------
Consolidated effective tax rate 25.3% 23.9%
======= =======
Note 6 - Related Party Transactions
The Company and its affiliates are related through common stock
ownership as follows as of April 30, 2010:
Stock of Affiliates
F.K. Suzuki
Biosynergy, International, Medlab,
Inc. Inc. Inc.
------------- -------------- --------
F.K. Suzuki International, Inc. 30.1% - % 100.0%
Fred K. Suzuki, Officer 4.1 35.6 -
Lauane C. Addis, Officer .1 - -
James F. Schembri, Director 8.6 - -
Mary K. Friske, Officer .3 .2 -
Laurence C. Mead, Officer .4 4.0 -
Beverly R. Suzuki, Officer 2.7 - -
Jeanne S. Addis, as Trustee - 32.7 -
As of April 30, 2010 and 2009, $19,699 was due from F.K. Suzuki
International, Inc. (FKSI). This balance is resulted from an
allocation of common expenses charged to FKSI offset by advances
received from time to time. No interest income is received or
accrued by the Company. The financial condition of FKSI is such
that it will likely be unable to repay the Company without
liquidating a portion of its assets, including a portion of its
ownership in the Company. As a result, $19,699 of the total
receivable balance was reclassified as a contra equity account.
A board member, who is also a stockholder, provides a variety of
legal services to the Company in his capacity as a partner in a
law firm. Fees for such legal services were approximately
$41,813 and $35,400 for the years ended April 30, 2010 and 2009,
respectively.
Note 7 - Lease Commitments
In May 2010, the Company entered into a five-year extension of
the lease agreement for its current facilities, which expires on
April 30, 2015. The base rent under the extended lease is
payable in equal monthly installments over the life of the
lease. As of April 30, 2010, the Company's approximate total
future minimum lease payments are as follows:
Year Ending April 30:
2011 $ 70,200
2012 70,200
2013 70,200
2014 70,200
2015 70,200
--------
Total $351,000
========
Also included in the lease agreement are escalation clauses for
the lessor's increases in property taxes and other operating
expenses. Rent expense was $70,081 for both fiscal years ended
April 30, 2010 and 2009.
Note 8 - Major Customers
Shipments to one customer amounted to approximately 35% and 38%
of sales in fiscal years 2010 and 2009, respectively. As of
April 30, 2010 and 2009, there were outstanding accounts
receivable from this customer of approximately $78,225 and
$78,150, respectively.
Shipments to another customer accounted for 24% and 19% of sales
in fiscal years 2010 and 2009, respectively. As of April 30,
2010 and 2009, there were outstanding accounts receivable from
this customer of approximately $22,100 and $28,455,
respectively.
