UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

: QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended January 31, 2012

 

9 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from __________ to ___________

 

Commission file number 0 -12459

 

Biosynergy, Inc.

(Exact name of registrant as specified in its charter)

 

Illinois 36-2880990

(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

 

1940 East Devon Avenue, Elk Grove Village, Illinois 60007 847-956-0471

(Address of principal executive offices) (Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes X No __

 

Indicate by check mark whether the registrant is a large accelerated filing, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer __ Accelerated filer __

 

Non-accelerated filer __ (Do not check if a smaller reporting company) Smaller reporting company X

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of January 31, 2012: 14,935,511

BIOSYNERGY, INC.

 

PART 1 - FINANCIAL INFORMATION

 

 

Item 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

Balance Sheets

 

IMAGE OMITTED 

 

ASSETS

 

	January 31, 2012 Unaudited	April 30, 2011 Audited
Current Assets
Cash	$743,993	$667,897
Accounts receivable, Trade (Net of allowance for doubtful accounts of $500 at January 31, 2012 and April 30, 2011)	157,194	150,748
Inventories	91,361	86,662
Prepaid Expenses	25,267	25,315
Total Current Assets	1,017,815	930,622
Equipment and Leasehold Improvements
Equipment	203,120	198,906
Leasehold Improvements	20,022	20,022
	223,142	218,928
Less Accumulated Depreciation and Amortization	(212,156)	(204,557)
Total Equipment and Leasehold Improvements, Net	10,986	14,371
Other Assets
Patents less Accumulated Amortization	13,032	13,825
Pending Patents	143,925	137,622
Deposits	5,937	5,947
Total Other Assets	162,894	157,394
	$1,191,695	$1,102,387

 

 

 

The accompanying notes are an integral part of the financial statements.

 

IMAGE OMITTED 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

	January 31, 2012 Unaudited	April 30, 2011 Audited
Current Liabilities
Accounts Payable	$12,571	$15,249
Accrued Compensation and Payroll Taxes	3,472	24,631
Income Taxes Payable	12,993	-
Accrued Vacation	20,692	16,244
Other Accrued Expenses	5,692	5,692
Total Current Liabilities	55,420	61,816
Deferred Income Taxes	28,534	28,534
Shareholder’s Equity
Common Stock, No Par Value; 20,000,000 Authorized Shares Issued: 14,935,511 Shares at January 31, 2012 and at April 30, 2011	660,988	660,988
Receivable from Affiliate	(19,699)	(19,699)
Retained Earnings	466,452	370,748
Total Shareholders’ Equity	1,107,741	1,012,037
	$1,191,695	$1,102,387

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.

Biosynergy, Inc.

 

Statements of Operations

(unaudited)

 

IMAGE OMITTED 

 

 

	Three Months Ended		Nine Months Ended
	January 31		January 31
	2012	2011	2012	2011
Net Sales	$305,364	$298,725	914,360	$862,882
Cost of Sales	83,320	94,717	261,083	260,482
Gross Profit	222,044	204,008	653,277	602,400
Operating Expenses
Marketing	43,458	38,262	122,236	113,212
General and Administrative	88,775	89,574	315,811	298,953
Research and Development	23,192	23,005	73,433	71,618
Total Operating Expenses	155,425	150,841	511,480	483,783
Income from Operations	66,619	53,167	141,797	118,617
Other Income
Interest Income	263	483	744	1,148
Other Income	480	481	1,440	1,441
Total Other Income	743	964	2,184	2,589
Net Income Before Income Taxes	67,362	54,131	143,981	121,206
Provision for Income Taxes	22,993	15,721	48,277	35,186
Net Income	44,369	$38,410	95,704	$86,020
Net Income Per Common Share – Basic and Diluted	$ -	$ -	$ -	$ -
Weighted-Average Shares of Common Stock Outstanding – Basic and Diluted	14,935,511	14,935,511	14,935,511	14,935,511

 

 

The accompanying notes are an integral part of the financial statements.

BIOSYNERGY, INC.

 

STATEMENT OF SHAREHOLDERS' EQUITY

 

NINE MONTHS ENDED January 31, 2012

 

Unaudited

 

 

 

 

 

	Common Stock Shares	Common Stock Amount	Other and related Receivables	Retained Earnings	Total
Balance, May 1, 2011	14,935,511	$660,988	($19,699)	$370,748	$1,012,037
Net Income	-	-	-	95,704	95,704
Balance, January 31, 2012	14,935,511	$660,988	($19,699)	$466,452	$1,107,741

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

BIOSYNERGY, INC.

 

STATEMENTS OF CASH FLOWS

Unaudited

 

 

	Nine Months Ended January 31
		2012		2011
Cash Flows from Operating Activities
Net Income		$95,704		$86,020
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities: Depreciation and Amortization		8,392		12,900
Changes in Assets and Liabilities
Accounts Receivable		(6,446)		(7,825)
Inventories		(4,699)		41,398
Prepaid Expenses and Other		58		8,430
Interest Receivable		-		11
Accounts Payable and Accrued Expenses		(6,396)		28,777
Total Adjustments		(9,091)		83,691
Net Cash Provided by Operating Activities		86,613		169,711
Cash Flow from Investing Activities
Patents and Patents Pending		(6,303)		(30,528)
Equipment and Leasehold Improvements		(4,214)		(7,495)
Redemption of Short-Term Investments		-		100,000
Net Cash Provided by (Used in) Investing Activities		(10,517)		61,977
Increase in Cash and Cash Equivalents		76,096		231,688
Cash Beginning Period		667,897		426,569
Cash Ending Period		743,993		$658,257

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

Note 1 - Company Organization and Description

 

In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments, consisting of normal recurring adjustments which are necessary for a fair presentation of the financial position and results of operations for the periods presented. The unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These condensed financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s April 30, 2011 Annual Report on Form 10-K. The results of operations for the three and nine months ended January 31, 2012 are not necessarily indicative of the operating results for the full year.

 

Biosynergy, Inc. (the Company) was incorporated under the laws of the State of Illinois on February 9, 1976. It is primarily engaged in the development and marketing of medical, consumer and industrial thermometric and thermographic products that utilize cholesteric liquid crystals. The Company’s primary product, the HemoTemp II Blood Monitoring Device, accounted for approximately 92.62% of the sales during the quarter ending January 31, 2012. 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.

 

Receivables

 

Receivables are carried at original invoice less estimates made for doubtful receivables. Management determines the allowances for doubtful accounts by reviewing and identifying troubled accounts on a periodic basis and by using historical experience applied to an aging of accounts. A receivable is considered to be past due if any portion of the receivable balance is outstanding for more than 30 days. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.

 

 

 

Note 2 – Summary of Significant Accounting Policies (Continued)

 

Inventories

 

Inventories are valued at the lower of cost or market using the FIFO (first-in, first-out) method.

 

Depreciation and Amortization

 

Equipment and leasehold improvements are stated at cost. Depreciation is computed primarily on the straight-line method over the estimated useful lives of the respective assets. Repairs and maintenance are charged to expense as incurred; renewals and betterments which significantly extend the useful lives of existing equipment are capitalized. Significant leasehold improvements are capitalized and amortized over the term of the lease; equipment is depreciated over 3 to 10 years.

 

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 product to customers.

 

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, amortized over the life of the respective patent on 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.

 

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.

 

Note 2 – Summary of Significant Accounting Policies (Continued)

 

Income Per Common Share

 

Income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. When dilutive, stock options are included as share equivalents using the treasury stock method in the calculation of diluted earnings per share. The Company has no outstanding options or other rights to acquire its unissued common shares.

 

Comprehensive Income

 

Components of comprehensive income include amounts that are included in the comprehensive income but are excluded from net income. There were no differences between the Company’s net income and comprehensive income.

 

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 purposes. The deferred income taxes represent the future tax consequences of those differences, which will be taxable in the future.

 

The Company files tax returns in the U.S. federal jurisdiction and with the state of Illinois. The Company’s income tax returns for the years ending April 30, 2009, 2010 and 2011 are subject to examination by the IRS and State of Illinois, generally for three years after they were filed. There are no tax examinations in process. Management’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense.

 

Note 2 - Summary of Significant Accounting Policies (Continued)

 

The provision for income taxes consists of the following components as of January 31:

 

	2012	2011
Current
Federal	$34,877	$26,096
State	13,390	9,090
Provision for Income Taxes	$48,277	$35,186

 

The differences between the U.S. federal statutory tax rate and the Company’s effective tax rate are as follows:

 

	Period ended January 31,
	2012	2011
U.S. federal statutory tax rate	34.0%	34.0%
State income tax expense, net of Federal tax benefit	5.0	3.0
Effect of graduated federal tax rates	(5.5)	(8.0)
Effective Tax Rate	33.5%	29.0%

 

 

Recent Accounting Pronouncements

 

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in single continuous statement of income or separately in consecutive statements of income and comprehensive income. The Company’s adoption of ASU 2011-05 did not have a material impact on its financial condition or results of operations.

 

In April 2010, FASB issued ASU 2010-17, “Revenue Recognition – Milestone Method of Revenue Recognition – a consensus of the Financial Accounting Standards Board (“FASB”) Emerging Issues Task Force” (ASU 2010-17). ASU 2010-17 provides new authoritative guidance on the milestone method of revenue recognition. The milestone method applies to research and development arrangements in which one or more payments are contingent upon achieving certain future events or circumstances. ASU 2010-17 defines a milestone and provides criteria for determining whether the milestone method is appropriate. This standard is effective for milestones achieved in fiscal years beginning on or after June 15, 2010, on a prospective basis, with earlier application permitted. The adoption of ASU 2010-has not resulted in a material impact on the Company’s results of operation and financial condition.

 

 

Note 3 – Inventories

 

Components of inventories are as follows:

 

	January 31, 2012	April 30, 2011
Raw materials	$74,346	$56,901
Work-in-process	8,780	17,957
Finished goods	8,235	12,006
	$91,361	$86,662

 

Note 4 – Common Stock

 

The Company’s common stock is traded in the over-the-counter market. However, there is no established public trading market due to limited and sporadic trades. The Company’s common stock is not listed on a recognized market or stock exchange.

 

Note 5 - Related Party Transactions

 

The Company and its affiliates are related through common stock ownership as follows as of January 31, 2012:

 

	Stock of Affiliates
	Biosynergy, Inc.	F.K. Suzuki International(1)	Medlab, Inc.
F.K. Suzuki International, Inc	30.0%(2)	- %	100.0%
Fred K. Suzuki, Officer	6.8	33.0	-
Lauane C. Addis, Officer	.03(2)	-	-
Jeanne S. Addis, Trustee	-	31.1	-
James F. Schembri, Director	8.6	-	-
Mary K. Friske, Officer	.3	.7	-
Laurence C. Mead, Officer	.4(2)	4.0	-
Beverly K. Suzuki, Officer	2.7	-	-

_________________

(1) As of January 31, 2012 and April 30, 2011, $19,699 was due from F.K. Suzuki International, Inc. (FKSI). These balances result from an allocation of common expenses charged to FKSI prior to April 30, 2006 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 unlikely be able to repay the Company during the next year without liquidating a portion of its assets, including a portion of its ownership in the Company. As a result, the receivable balance has been reclassified as a contra equity account since April 30, 2006.

 

(2) As of April 21, 2010, a number of shares of stock of the Company were escheated to the State of Illinois as a result of incorrect shareholder addresses maintained by the Company’s transfer agent. These shares were sold at auction by the State of Illinois on January 13, 2011. The escheated stock includes shares previously owned by FKSI (12,676 escheated shares), Lauane C. Addis (5,000 escheated shares) and Laurence C. Mead (1,000 escheated shares). The percentage ownership indicated in the table reflects the escheatment of such shares.

 

Note 6 - Major Customers

 

Shipments to one customer amounted to 31.54% of sales during the first nine months of Fiscal 2012 compared to 31.59% during the comparative Fiscal 2011 period. As of January 31, 2012, there were outstanding accounts receivable from this customer of $74,810 compared to $72,750 at January 31, 2011. Shipments to another customer amounted to 28.51% of sales during the first nine months of Fiscal 2012 and 27.33% of sales during the first nine months of Fiscal 2011. As of January 31, 2012, there were outstanding accounts receivable from this customer of $32,405 compared to $39,250 at January 31, 2011.

 

Item 2. Management’s Discussion of Financial Condition and Results of Operations

 

Net Sales/Revenues

 

For the three month period ending January 31, 2012 (“3^rd Quarter”), the net sales increased 2.2%, or $6,639, and increased 5.96%, or $51,478, during the nine month period ending January 31, 2012, as compared to net sales for the comparative periods ending in 2011. This increase in sales is primarily the result of an increase in unit sales of HemoTemp^R II and the one-time sale of a specialty indicator to a customer in the amount of $4,900.

 

In addition, during the 3^rd Quarter the Company had $743 of miscellaneous revenues primarily from interest income and leasing a portion of its storage space to an unrelated party as compared to $964 in the prior year.

 

Costs and Expenses

General

 

The operating expenses of the Company during the 3^rd Quarter increased overall by 3.03%, or $4,584, as compared to the 3^rd quarter in 2011 primarily due to an increase in salaries, 401(k) plan contributions and lab supplies. The operating expenses of the Company increased by 5.73%, or $27,697, for the nine month period ending January 31, 2012, primarily due to salaries, legal expenses, general insurance, lab and office supplies.

 

Cost of Sales

 

The cost of sales during the 3^rd Quarter decreased by $11,397, and increased by $601 during the nine month period ending January 31, 2012 as compared to these expenses during the same periods ending in 2011. The decrease during the 3^rd Quarter was primarily due to decreased costs of raw inventory and salaries. As a percentage of sales, the cost of sales were 27.28% during the 3^rd Quarter, 31.7% for the comparative quarter ending in 2011, and 28.55% during the nine month period ending January 31, 2012 compared to 30.19% in 2011. Subject to unanticipated changes in the price of raw materials or extraordinary occurrences, it is not anticipated that the cost of sales as a percentage of sales will materially change in the near future.

 

Research and Development Expenses

 

Research and Development costs increased $187, or .81%, during the 3^rd Quarter as compared to the same quarter in 2011. These costs increased by $1,815, or 2.53%, during the nine month period ending January 31, 2012 as compared to the same period in 2011. The overall increase in research and development expense is due primarily to an increase in purchases of lab supplies. The Company is continuing its investigation and development of certain compounds for use as bacteria retardant agents for use in food and other products. The Company is uncertain how much of its resources will be required to complete its investigation and development of these products.

 

Marketing Expenses

 

Marketing expenses for the 3rd Quarter increased by $5,196, or 13.58%, as compared to the quarter ending January 31, 2011. These costs increased by $9,024, or 7.97%, during the nine month period ending January 31, 2012 as compared to the same period in 2011. The increase is due to an increase in salaries and medical insurance due to a new full time employee.

 

General and Administrative Expenses

 

General and administrative costs for the 3^rd Quarter decreased by $799, or .89%, as compared to the 3^rd quarter ending January 31, 2011, primarily due to decreased medical insurance during the 3^rd Quarter. General and administrative costs have increased overall by $16,858, or 5.63%, during the nine month period ending January 31, 2012, as compared to the same periods in 2011, primarily due to an increase in salary, office supplies, general insurance and legal fees.

 

Net Income

 

The Company realized a net income of $44,369 during the 3^rd Quarter as compared to a net income of $38,410 for the comparative quarter in the prior year. The Company also realized a net income of $95,704 for the nine month period ending January 31, 2012 as compared to a net income of $86,020 during the same period in 2011. The increase in net income is a direct result of an increase in sales.

 

Assets/Liabilities

General

 

Since April 30, 2011, the Company's assets have increased by $89,308 and liabilities have decreased by $6,396. The increase in assets, primarily cash, accounts receivable and inventory, is a result of the Company’s increase in sales and profits.

 

 

Related Party Transactions

 

The Company was owed $19,699 by F.K. Suzuki International, Inc. ("FKSI"), an affiliate, at January 31, 2012 and April 30, 2011. This account primarily represents common expenses which were previously charged by the Company to FKSI for reimbursement. 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 since April 30, 2006 could not 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, as of April 30, 2006, all of the amount owed by FKSI to the Company was reclassified as a reduction of FKSI’s capital in the Company.

 

Current Assets/Liabilities Ratio

 

The ratio of current assets to current liabilities, 18.36 to 1, has increased compared to 15.05 to 1 at April 30, 2011. This increase in ratio of current assets to current liabilities is a result of increased cash, accounts receivable and inventory. In order to maintain or improve the Company’s asset/liabilities ratio, the Company’s operations must remain profitable.

 

Liquidity and Capital Resources

 

During the nine month period ending January 31, 2012, the Company experienced an increase in working capital of $93,589. This is primarily due to the Company’s increase in cash and a decrease in accrued expenses.

 

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 to carry a minimum amount of finished inventory and raw materials to meet the delivery requirements of customers and thus, inventory represents a material portion of the Company’s investment in current assets.

 

The Company presently grants payment terms to customers and dealers of 30 days. Although the Company experiences varying collection periods of its accounts receivable, based on past experience, the Company believes that uncollectable accounts receivable will not have a significant effect on future liquidity.

 

Cash provided by operating activities was $86,613 during the nine month period ending January 31, 2012. An aggregate of $10,517 was used for equipment purchases and patent application expenditures during this same period. Except for its operating working capital, limited equipment purchases and patent expenses, management is not aware of any other material capital requirements or material contingencies for which it must provide. There were no cash flows from financing activities during the nine month periods ending January 31, 2012 or 2011.

 

As of January 31, 2012, the Company had $1,017,815 of current assets available. Of this amount, $25,267 was prepaid expenses, $91,361 was inventory, $157,194 was net trade receivables and $743,993 was cash. The Company’s available cash and cash flow from operations is considered adequate to fund the short-term operating capital needs of the Company. The Company does not have a working line of credit, and does not anticipate obtaining a working line of credit in the near future. There is a risk 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 and labor costs increasing with inflation, inflation has not had a material effect on the Company’s revenues and income from continuing operations in the past three years. Inflation is not expected to have a material effect in the foreseeable future.

 

Critical Accounting Policies and Estimates. The Company’s accounting policies are disclosed in Note 1 to the Financial Statements for the 3rd Quarter. 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 used 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 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. 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.

 

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, risks inherit in marketing new products, as well as other factors as set forth in this report. Thus, such forward-looking statements should not be relied upon to indicate the actual results which might be obtained by the Company. No representation or warranty of any kind is given with respect to the accuracy of such forward-looking information. The forward-looking information has been prepared by the management of the Company and has not been reviewed or compiled by independent public accountants.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Historically, the Company’s primary exposure to market risk has been interest rate risk associated with its short term money market investments. The Company currently does not have any money market investments. The Company does not have any financial instruments held for trading or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure. Thus, the Company does not have any credit facilities with variable interest rates. The Company’s operations are not exposed to financial risk that will have a material impact on its financial position and results of operation.

 

Item 4. Controls and Procedures

 

Disclosure 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 are effective.

 

There have been no changes in the Company’s internal control over financial reporting during the Company’s Fiscal Quarter ending January 31, 2012 that have materially affected or are likely to materially affect the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

As of the end of the Company’s Fiscal Quarter ending January 31, 2012, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party to of which any of their property is the subject.

 

Item 2. Unregistered Sales of Equity Securities and Use or Proceeds.

 

During the past three years, the Company has not sold securities which were not registered under the Securities Act.

 

Item 3. Defaults Upon Senior Securities.

 

(a) As of the end of the Company’s Fiscal Quarter ending January 31, 2012, there have been no material defaults in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within 30 days, with respect to any indebtedness of the registrant or any of its significant subsidiaries exceeding 5 percent of the total assets of the Company and its consolidated subsidiaries.

 

(b) As of the end of the Company’s Fiscal Quarter ending January 31, 2012, there have been no material arrearages in the payment of dividends and there has been no other material delinquency not cured within 30 days, with respect to any class of preferred stock of the Company which is registered or which ranks prior to any class of registered securities, or with respect to any class of preferred stock of any significant subsidiary of the Company.

 

Item 4. (Removed and Reserved).

 

Item 5. Other Information.

 

(a) The Company is not required to disclose any information in this Form 10-Q otherwise required to be disclosed in a report on Form 8-K during the period covered by this Form 10-Q.

 

(b) During the Fiscal Quarter ending January 31, 2012, there have been no material changes to the procedures by which the security holders may recommend nominees to the Company’s board of directors, where such changes were implemented after the Company last provided disclosure in response to the requirements of Regulation S-K.

 

Item 6. Exhibits.

 

The following exhibits are filed as a part of this report:

 

(2) Plan of Acquisition, reorganization, arrangement, liquidation

or succession - none

 

(3) Articles of Incorporation and By-laws⁽ⁱ⁾

 

(4) Instruments defining rights of security holders,

including indentures - none.

 

(10) Material Contracts – none.

 

(11) Statement regarding computation of per share earnings- none.

 

(15) Letter regarding unaudited interim financial information - none.

 

(18) Letter regarding change in accounting principles - none.

 

(19) Reports furnished to security holders - none.

 

(22) Published report regarding matters submitted to vote of security holders - none.

 

(23) Consents of experts and counsel - none.

 

(24) 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.

Filed herewith.

 

(31.2) Certification of the Chief Accounting Officer pursuant to

Rule 13a-14(a) under the Securities Exchange Act of 1934.

Filed herewith.

 

(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. Filed herewith.

 

(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. Filed herewith.

 

(101) The following materials for Biosynergy’s Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Shareholders’ Equity, (iv) Statements of Cash Flows, and (v) Notes⁽ⁱⁱ⁾.

____________________

 

(i) Incorporated by reference to a Registration Statement filed on Form S-18 with the Securities and Exchange Commission, 1933 Act Registration Number 2-38015C, under the Securities Act of 1933, as amended, and Incorporated by reference, with regard to Amended and Restated By-Laws, to the Company’s Current Statement on Form 8-K dated as of July 2, 2009 filed with the Securities and Exchange Commission.

 

(ii) Pursuant to Rule 406T of Regulation S-T, the Interactive Date Filed on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Biosynergy, Inc.

 

Date March 16, 2012 /s/ Fred K. Suzuki

Fred K. Suzuki

Chief Executive Officer, Chairman of the Board, and

President

 

Date March 16, 2012 /s/ Laurence C. Mead

Laurence C. Mead

Vice President/Manufacturing and Development,

Chief Financial Officer, and Chief Accounting Officer

 

EXHIBIT 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

 

I, Fred K. Suzuki, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Biosynergy, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.            Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer 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: March 16, 2012

 

/s/ Fred K. Suzuki

----------------------------------------------------------

Fred K. Suzuki

Chairman of the Board, Chief Executive

Officer and President

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF ACCOUNTING OFFICER

 

I, Laurence C. Mead, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Biosynergy, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.            Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer 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: March 16, 2012

 

 

/s/ Laurence C. Mead

----------------------------------------------------------

Laurence C. Mead

Vice President/Manufacturing and

Development, Chief Financial Officer,

and Chief Accounting Officer

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Report of Biosynergy, Inc. (the "Company") on Form 10-Q for the quarter ending January 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

 

(2) the information contained in the Report fairly represents, in all material respects, the financial conditions and results of operations of the Company as of January 31, 2012, and for the period then ended.

 

Biosynergy, Inc.

 

/s/ Fred K. Suzuki

--------------------------------------------

Fred K. Suzuki

Chairman of the Board, Chief Executive

Officer and President

 

Dated: March 16, 2012

 

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Report of Biosynergy, Inc. (the "Company") on Form 10-Q for the quarter ending January 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

 

(2) the information contained in the Report fairly represents, in all material respects, the financial conditions and results of operations of the Company as of January 31, 2012, and for the period then ended.

 

Biosynergy, Inc.

 

/s/ Laurence C. Mead

--------------------------------------------

Laurence C. Mead

Vice President/Manufacturing and Development,

Chief Financial Officer, and Chief Accounting Officer

 

 

Dated: March 16, 2012