UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2002 Commission File Number 0-12459 Biosynergy, Inc. (Exact name of registrant as specified in its charter) Illinois (State or other jurisdiction of incorporation or organization) 36-2880990 (I.R.S. Employer Identification No.) 1940 East Devon Avenue, Elk Grove Village, Illinois 60007 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (847) 956-0471 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----------- --------- Number of shares outstanding of common stock as of the close of the period covered by this report: 14,075,511 BIOSYNERGY, INC. PART 1 - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA --------------------------------------------- REPORT OF MANAGEMENT The management of Biosynergy, Inc. has prepared and is responsible for the integrity of the information presented in this Quarterly Report, including the Company's financial statements. These statements have been prepared in conformity with generally accepted accounting principals and include, where necessary, informed estimates and judgments by management. The Company maintains systems of accounting and internal controls, policies and procedures designed to provide assurance that assets are property accounted for, as well as to ensure that the financial records are reliable for preparing financial statements. The systems are augmented by qualified personnel and are reviewed on a periodic basis. There have been no significant changes in such controls, policies or procedures which could significantly affect such controls, policies or procedures since the Annual Report filed on Form 10-K for the fiscal year ending April 30, 2002. 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 our opinion that such controls, policies and procedures are effective to ensure that material information regarding the Company is presented in this Quarterly Report. /s/ Fred K. Suzuki - ------------------------------------ Fred K. Suzuki Chairman of the Board and President Board of Directors and Shareholders Biosynergy, Inc. Elk Grove Village, Illinois The accompanying Balance Sheet of BIOSYNERGY, INC. as at July 31, 2002 and the related Statements of Operations, Shareholders' Equity (Deficit) and Statements of Cash Flows for the three month periods ended July 31, 2002 and 2001 were not audited; however, the financial statements for the three month periods ending July 31, 2002 and 2001 reflect all adjustments (consisting only of normal reoccurring adjustments) which are, in the opinion of management, necessary to provide a fair statement of the results of operations for the interim periods presented. The financial statements for the fiscal year ended April 30, 2002, were not audited due to the Company's lack of available cash to pay for such audit; however, the financial statements for the fiscal year ending April 30, 2002 reflect all adjustments (consisting only of normal reoccurring adjustments) which are, in opinion of management, necessary to provide a fair statement of the results of operations for the period presented. BIOSYNERGY, INC. September 13, 2002 BIOSYNERGY, INC. BALANCE SHEET ASSETS July 31, 2002 April 30,2002 Unaudited Unaudited ------------- ------------- CURRENT ASSETS Cash 92,651 37,874 Short-Term Investments (Note 4) 250,000 275,016 Accounts Receivable, Trade, Net of 104,109 121,254 Allowance for Uncollectible Accounts of $500 at July 31, 2002 and $500 at April 30, 2002 Inventories (Notes 1 and 5) 58,574 59,629 Prepaid Expenses 10,302 13,768 Interest Receivable (Note 4) 1,527 815 ------- ------- Total Current Assets 517,163 508,356 DUE FROM AFFILIATES (Note 3) 19,432 19,432 ------- ------- PROPERTY AND EQUIPMENT (Note 1) Equipment 132,556 132,556 Leasehold Improvements 15,140 15,140 ------- ------- 147,696 147,696 Less: Accumulated Depreciation and Amortization (118,889) (116,928) ------- ------- 28,807 30,768 OTHER ASSETS Pending Patents, Net of Accumulated Amortization (Note 1) 17,309 11,989 Deposits 6,015 6,015 ------- ------- 23,324 18,004 588,726 576,560 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable 11,799 9,659 Other Accrued Compensation 3,157 7,501 Accrued Payroll Taxes 273 651 Deferred Rent (Note 8) 2,860 2,750 Other Accrued Expenses 2,986 3,285 ------- ------- Total Current Liabilities 21,075 23,846 ------- ------- COMMITMENTS AND CONTINGENCIES (Note 8) - - ------- ------- SHAREHOLDERS' EQUITY (Note 6) Common Stock, No Par Value; 20,000,000 Shares Authorized, Issued: 13,806,511 Shares at July 31, 2002 and at April 30, 2002 639,388 639,388 Additional paid-in capital 100 100 Accumulated Deficit (71,837) (86,774) -------- -------- 567,651 552,714 -------- -------- 588,726 576,560 ======== ======== The accompanying notes are an integral part of the financial statements. BIOSYNERGY, INC. STATEMENT OF OPERATIONS Unaudited Three Months Ended July 31 2002 2001 ----------- ------------ REVENUES Sales 172,918 141,489 Other Income 543 744 Interest Income (Note 4) 1,941 3,934 ---------- ---------- 175,402 146,167 ---------- ---------- COST AND EXPENSES Cost of Sales and Other Operating Charges 49,920 50,827 Research and Development 33,806 29,747 Marketing 21,198 15,673 General and Administrative 55,541 52,893 ---------- --------- 160,465 149,140 ---------- --------- NET INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS 14,937 (2,973) INCOME TAXES 3,582 - ---------- --------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS 11,355 (2,973) EXTRAORDINARY ITEMS Reduction of Income Taxes arising from utilization of prior years' Net Operating Losses (Note 9) 3,582 - ---------- --------- NET INCOME (LOSS) 14,937 (2,973) ========== ========= NET INCOME (LOSS) PER COMMON SHARE (Note 7): Before Extraordinary Items .0008 (.002) --------- --------- Extraordinary Items .0003 .000 --------- --------- NET INCOME (LOSS) PER COMMON SHARE .0011 (.002) ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 7) 14,075,511 14,075,511 The accompanying notes are an integral part of the financial statements. BIOSYNERGY, INC. STATEMENT OF SHAREHOLDERS' EQUITY THREE MONTHS ENDED JULY 31, 2002 Unaudited Additional Common Stock Paid-in Shares Amount Capital Deficit Total ------- ------- ----------- --------- ------- Balance, May 1, 2002 14,075,511 639,388 100 (86,774) 552,714 Net Profit (Loss) - - - 14,937 14,937 Balance, July 31, 2002 14,075,511 639,388 100 (71,837) 567,651 ---------- ------- ----- ------- ------- The accompanying notes are an integral part of the financial statements. BIOSYNERGY, INC. STATEMENTS OF CASH FLOWS Unaudited THREE MONTHS ENDED JULY 21, 2001 2002 ------------ ------------- OPERATING ACTIVITIES: Net Income (Loss) (2,973) 14,937 Adjustments to Reconcile Net Cash Used for Operating Activities: Depreciation and Amortization 1,831 1,961 Changes in Operating Assets and Liabilities: (Increase) Decrease in Accounts Receivable 17,728 17,145 (Increase) Decrease in Inventories (3,832) 1,055 (Increase) Decrease in Prepaid Expenses 1,819 3,466 Increase (Decrease) in Accounts Payable and Accrued Expenses (5,145) (2,771) ------- ------- Net Cash Provided (Used) by Operating Activities 9,428 35,793 ------- ------- INVESTING ACTIVITIES: Advance to Affiliated Companies (80) - Patents Pending (250) (5,320) (Increase) Decrease in Interest Receivable(Note 4) (3,934) (712) (Increase) Decrease in Short Term Investment - 25,016 Net Cash Provided by (Used In) Investing Activities (4,264) 18,984 FINANCING ACTIVITIES: Exercise of Stock Option by Officer (Note 6) 6,725 - ------- ------- Net Cash Provided (Used) by Financing Activities 6,725 - Increase (Decrease) in Cash and Cash Equivalents 11,889 54,777 ------- ------- Cash and Cash Equivalents at Beginning of Period 64,828 37,874 ------- ------- Cash and Cash Equivalents at End of Period 76,717 92,651 ======= ======= The accompanying notes are an integral part of the financial statements. BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies: Inventories - Inventories are valued at the lower of cost using the FIFO (first-in, first-out) method or market (using net realizable value). Equipment and Leasehold Improvements - Equipment and leasehold improvements are stated at cost. Depreciation is computed primarily on the straight-line method over the estimated useful lives of the respective assets. Repairs and maintenance are charged to expense as incurred; renewals and betterments which significantly extend the useful lives of existing equipment are capitalized. Significant leasehold improvements are capitalized and amortized over the term of the lease. Research and Development, and Patents - Research and development expenditures are charged to operations as incurred. The cost of obtaining patents, primarily legal fees, are capitalized and amortized over the life of the respective patent on the straight-line method. 2. Company Organization and Description: Biosynergy, Inc. (Company) was incorporated under the laws of the State of Illinois on February 9, 1976. It is primarily engaged in the development and marketing of medical, consumer and industrial thermometric and thermographic products that utilize cholesteric liquid crystals. 3. Related Party Transactions: The Company and its affiliates are related through common stock ownership as follows as of July 31, 2002: S T O C K O F A F F I L I A T E S F.K. Suzuki Biosynergy International Medlab Stock Owner Inc. Inc. Inc. - ------------------------------- ---------- ------------- --------- F.K. Suzuki International, Inc. 31.9% - 100% Fred K. Suzuki, Officer 2.1% 35.6% - Lauane C. Addis, Officer .1% 32.7% - James F. Schembri, Director 12.8% - - Mary K. Friske, Officer .1% .2% - Laurence C. Mead, Officer .1% 4.0% - BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS The following balances were due from F.K. Suzuki International, Inc., an affiliate, at July 31, 2002: April 30, 2002 - $19,432 July 31, 2002 - $19,432 The balances result from an allocation of common expenses offset by advances received from time to time. At July 31, 2002, the financial condition of F.K. Suzuki International, Inc. is such that it is unlikely to be able to repay Biosynergy during the next year without liquidating a portion of its assets. 4. Short-Term Investments: In May, 2002, the Company invested $250,000 in a 270-day Certificate of Deposit at an interset rate of 2.2%, pending their use. The Company is not registered under the Investment Company Act of 1940 and therefore is limited to the types of investments which the Company may make. The funds invested in the Certificate of Deposit have not been allocated or earmarked for any specific use. 5. Inventories: Components of inventories are as follows: April 30, 2002 July 31, 2002 -------------- ------------- Raw Materials $35,953 $29,717 Work-in process 5,429 9,347 Finished Goods 18,247 19,510 ------- ------- $59,629 $58,574 ======= ======= 6. Common Stock: The Company's stock is traded in the Over-The-Counter market. However, there is no established public trading market due to limited and sporadic trades. The Company's common stock is not listed on a recognized market or stock exchange. On November 12, 1998, the Company granted an option to its President, Fred K. Suzuki, to purchase all or a portion of 3,000,000 shares of the Company's common stock at a purchase price of $.025 per share. The option is subject to several contingencies including, but not limited to, shareholder approval. On May 9, 2001, this option was exercised to the extent of 290,000 shares resulting in additional paid-in-capital of $6,725. This option expired on November 12, 2001. Effective November 12, 2001, the Company extended the option to Mr. Suzuki to purchase all or a portion of the remaining 2,731,000 shares of the Company's common stock at a purchase price of $.025 per share to November 12, 2004. The extended option is subject to several contingencies, including, but not limited to, shareholder approval. As of July 31, 2002, no portion of this option had been exercised. BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS 7. Income or (Loss) Per Shares: Net income or (loss) per common share is computed using the weighted average number of common shares outstanding during the period, after giving effect to stock splits, and also computed using the average number of common shares outstanding during the period after giving effect to the number of shares of common stock equivalents which would have been outstanding after exercise of stock options to officers. The calculation of net income (loss) per common share and common share equivalent is as follows: Quarter Ending July 31 2002 2001 --------- ---------- Net Income (Loss) 14,937 (2,973) Weighted Average Shares Outstanding Shares of Common Stock Outstanding 14,075,511 14,075,511 Common Share Equivalents - Options to Officers 2,731,000 2,731,000 ---------- ---------- Total Weighted Shares 16,806,511 16,806,511 Net Income (Loss) per Common share and Common Share Equivalent $.0009 (.0002) The weighted average number of common shares outstanding were 14,075,511 at July 31, 2002 and 14,075,511 at April 30, 2002. The effect of conversion of stock options has not been presented as conversion would be anti-dilutive. 8. Lease Commitments: In January, 2001, the Company entered a five year extension of the lease agreement for its current facilities which expires January 31, 2006. The base rent under the lease escalates over the life of the lease. Total rent payments for each fiscal year are as follows: Year ending April 30 Total Base Rent -------------------- --------------- 2001 17,875 2002 72,000 2003 73,500 2004 74,100 2005 75,900 2006 56,925 Also included in the lease agreement are escalation clauses for the lessor's increases in property taxes and other operating expenses. The lease can be extended for an additional five year term. BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS 9. Income Taxes: At April 30, 2002, net operating loss carryforwards were available and expire, if not used, as follows: Year Ending Net Operating April 30, Losses ----------- ------------- 2003 85,822 2004 41,176 2006 160 2007 28,253 2017 11,373 -------- $166,784 ======== The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes" as required by SFAS No. 109. The effect, if any, of adopting Statement No. 109 on pretax income from continuing operations is not material. The Company has elected not to retroactively adopt the provisions allowed in SFAS No. 109, however all provisions of the document have been applied since the beginning of fiscal year 1994. 10. Major Customers: Shipments to one customer amounted to approximately 42.19% of sales during the first quarter of Fiscal 2003. At July 31, 2002 there was an outstanding account receivable from this customer of approximately $60,346.00. 11. Management's Plans: Management of the Company recognizes the Company's ability to continue as a going concern is subject to continuing sales performance and the ability of the Company to raise money, when needed. To this extent, management has endeavored to introduce the Company's products in new markets, expand its marketing efforts in the traditional medical market and introduce new products. Finally, management intends to continue pursuing financing opportunities, if necessary. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------- SALES/REVENUES For the three month period ending July 31, 2002 ("1st Quarter"), the net sales increased 22.22%, or $31,429, as compared to net sales for the comparative quarter ending in 2001. This increase in sales is primarily the result of an increase in sales of HemoTempR II. As of July 31, 2002, the Company had $559 in back orders. In addition to the above, during the 1st Quarter the Company realized $1,941 of interest income as the result of an investment of $250,000 in a 270-day Certificate of Deposit. The Company also had $543 of other miscellaneous revenues primarily from leasing a portion of its storage space to a third party. INCOME/LOSS The Company realized a net income of $14,937 during the 1st Quarter as compared to a net loss of $2,973 for the comparative quarter of the prior year. The net income is primarily a result of increased sales during the 1st Quarter. The overall increase in sales was offset by an increase in operating expenses discussed below. As of April 30, 2002, the Company has net operating losses carryovers aggregating $166,784. As a result of net operating loss carryovers, no income taxes were due for Fiscal 2002 and will unlikely be due for Fiscal 2003. See "FINANCIAL STATEMENTS" for the effect of the net operating loss carryforwards on the Company's income tax position. The Tax Reform Act of 1986 will not alter the Company's net operating loss carryforward position, and the net operating loss carryforwards will be available and expire, if not used, as set forth in Footnote 9 of the "FINANCIAL STATEMENTS." BIOSYNERGY, INC EXPENSES GENERAL The operating expenses of the Company during the 1st Quarter increased overall by 7.6%, or $11,325, as compared to the 1st quarter in 2001, primarily due to an increase in substantially all expense categories. COST OF SALES AND OTHER OPERATING CHARGES The cost of sales and other operating charges during the 1st Quarter decreased by $907 as compared to these expenses during the same quarter ending in 2001. As a percentage of sales, the cost of sales and other operating charges were 28.87% during the 1st Quarter and 35.93% for the comparative quarter ending in 2001. Although the sales of the Company increased, the cost of sales and other operating charges as a percentage of sales went down primarily because expenses incurred in the comparative quarter ending 2001 included a write-off of raw materials. Subject to unanticipated increases in raw materials or extraordinary occurrences, it is not anticipated that the cost of sales and other operating charges as a percentage of sales will materially change in the near future. RESEARCH AND DEVELOPMENT Research and Development costs increased $4,059, or 13.65%, as compared to the same quarter in 2001. This increase is due to the Company's accelerating of its investigation and development of certain compounds for use as bacteria retardant agents for use in food and other products. These expenses include travel, clinical trials, laboratory supplies, legal and technical consulting expenses related to these compounds, and increased salaries for research personnel. Prior to the recent investigation and development of the bacteria retardant agents, the Company's research and development activities were limited to improvement of the current product line and development of products which were natural extensions thereof. The Company is uncertain how much of its resources will be required to complete its investigation and development of the bacteria retardant agents. MARKETING Marketing costs for the 1st Quarter increased by $5,525 or 35.26%, as compared to the quarter ending July 31, 2001. This increase was primarily due to an increase in commissions as a result of the higher sales, and for the development of marketing materials for the Company's current and proposed products. BIOSYNERGY, INC. GENERAL AND ADMINISTRATIVE General and administrative costs increased by $2,648, or 5.01%, as compared to the 1st quarter ending in 2001. This increase was primarily the result of an increase in group health, general insurance and legal expenses. ASSETS/LIABILITIES GENERAL Since April 30, 2002 the Company's assets have increased by $12,166 and liabilities have decreased by $2,771. The increase in assets, primarily cash, and liabilities, primarily accrued expenses, is due to normal fluctuations, and is not indicative of any material change in the operations of the Company. PATENTS PENDING On August 9, 2002, the Company filed a patent application with the U.S. Patent and Trademark Office, U.S. Serial Number 60/402,188, titled "Eggshell Microbial Agent and Method of Use." This patent is a result of the Company's investigation and development of bacterial retardant agents conducted over the past 3 years. RELATED PARTY TRANSACTIONS The Company was owed $19,432 by F.K. Suzuki International, Inc. ("FKSI"), an affiliate, at July 31, 2002. FKSI owed $19,432 at April 30, 2002. This account primarily represents common expenses which are charged by the Company to FKSI for reimbursement. These expenses include general operating expenses. See "Financial Statements." These expenses are incurred in the ordinary course of business. Although management believes it is cost effective to share common expenses with FKSI, the Company has reduced the amount of advances and common expenses charged to FKSI until FKSI is in a position to reimburse the Company. Collectability of the amounts due from FKSI cannot be assured without the liquidation of all or a portion of its assets, and thus such receivable has been classified as a non-current asset. On November 12, 1998, the Company entered into a stock option agreement with Fred K. Suzuki, President, granting Mr. Suzuki an option to purchase 3,000,000 shares of the Company's common stock at an option price of $.025 per share. The option is subject to several contingencies, including, but not limited to, shareholder approval. Management believes the option has no value in excess of the fair market value of the Company's common stock, however, there was no independent analysis of this transaction. The option contains anti-dilutive provisions in the event of corporate capital reorganizations. Mr. Suzuki exercised this option to the extent of 269,000 shares on May 9, 2001. This option expired on November 12, 2001. Effective November 12, 2001, the Company extended the option to Mr. Suzuki to purchase all or a portion of the remaining 2,731,000 shares of the Company's common stock at a purchase price of $.025 per share. The extended option is subject to several contingencies, including, but not limited to, shareholder approval and expires November 12, 2004. As of July 31, 2002, no portion of this option had been exercised. CURRENT ASSETS/CURRENT LIABILITY RATIO The ratio of current assets to current liabilities, 24.54 to 1, has increased compared to 21.32 to 1 at April 30, 2002. Management believes it has sufficient current assets for its operations during the ensuing year provided there is no adverse material changes. WORKING CAPITAL/LIQUIDITY During the 1st Quarter, the Company experienced an increase in working capital of $11,578. This is due to the profitability of the Company during the 1st Quarter. See "RELATED PARTY TRANSACTIONS" above. 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 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 July 31, 2002, the Company had $517,163 of current assets available. Of this amount, $58,574 was inventory, $104,109 was net trade receivables, and $342,651 was cash or short-term investments. Management of the Company believes that it has sufficient working capital to continue operations for the fiscal year ending April 30, 2003 provided the Company's sales and ability to collect accounts receivable are not adversely affected. In the event the Company's sales decrease or the receivables of the Company are impaired for any reason, it may be necessary to obtain additional financing to cover working capital items and keep current trade accounts payable, of which there can be no assurance. Except for its operating working capital needs, the Company has no material contingencies for which it must provide. 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 ----------------------------------------------------- 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. BIOSYNERGY, INC. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8K. ------------------------------- (a) The following exhibits are filed as a part of this report: (2) Plan of Acquisition, reorganization, arrangement, liquidation or succession - none (3) Articles of Incorporation and By-laws (i) (4) Instruments defining rights of security holders, including indentures - none. (10) Material Contracts (a) Stock Option Agreement, dated November 12, 2001, between the Company and Fred K. Suzuki (ii) (11) Statement regarding computation of per share earnings- none. (15) Letter dated September 13, 2002, regarding interim financial information. (iii) (18) Letter regarding change in accounting principals - none. (19) Reports furnished to security holders - none. (22) Published report regarding matters submitted to vote of security holders - none. (23) Consents of experts and counsel - none. (24) Power of Attorney - none. (27) Financial Data Schedule - none. (b) No Current Reports on Form 8K were filed during the period covered by this Report. - ---------------------------------------------------------------- (i) Incorporated by reference to a Registration Statement filed on Form S-18 with the Securities and Exchange Commission, 1933 Act Registration Number 2-38015C, under the Securities Act of 1933, as amended, and Incorporated by reference, with regard to Amended By-Laws, to the Company's Annual Report on Form 10K for fiscal year ending April 30, 1986 filed with the Securities and Exchange Commission. (ii) Incorporated by reference to the Company's Annual Report on Form 10K for fiscal year ending April 30, 2002 filed with the Securities and Exchange Commission. (iii) This exhibit is included in this report as a part of the Financial Statements, and is incorporated by reference herein. BIOSYNERGY, INC. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Biosynergy, Inc. Date September 13, 2001 /s/ Fred K. Suzuki ------------------------------- Fred K. Suzuki Chief Executive Officer, Chairman of the Board, President and Treasurer Date September 13, 2001 /s/ Laurence C. Mead -------------------------------- Laurence C. Mead Vice President/Manufacturing and Development, and Chief Accounting Officer 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., registrant; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. Designed such disclosure controls and procedures 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 quarterly report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: September 13, 2002. /s/ Fred K. Suzuki -------------------------------------- Fred K. Suzuki Chairman of the Board, Chief Executive Officer, President and Treasurer 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., registrant; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. Designed such disclosure controls and procedures 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 quarterly report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: September 13, 2002. /s/ Laurence C. Mead --------------------------------------- Laurence C. Mead Vice President/Manufacturing and Development, and Chief Accounting Officer