UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 (I.R.S. Employer incorporation or organization) Identification No.) 1940 East Devon Avenue, Elk Grove Village, Illinois 60007 ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (847) 956-0471 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: 13,806,511 Page 1 of the 28 pages contained in the sequential numbering system. PART 1 - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Board of Directors and Shareholders Biosynergy, Inc. Elk Grove Village, Illinois The accompanying Balance Sheet of BIOSYNERGY, INC. as at January 31, 1999 and the related Statements of Operations, Shareholders' Equity (Deficit) and Statements of Cash Flows for the three and nine month periods ended January 31, 1999 and 1998 were not audited; however, the financial statements for the three and nine month periods ending January 31, 1999 and 1998 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, 1998, 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, 1998 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. March 5, 1999 BIOSYNERGY, INC. BALANCE SHEET ASSETS January 31, 1999 April 30,1998 Unaudited Unaudited ------------------ --------------- CURRENT ASSETS Cash 65,637 31,150 Accounts Receivable, Trade, Net of Allowance for Uncollectible Accounts of $500 at January 31, 1999 and $500 at April 30, 1998 74,641 75,955 Inventories (Notes 1 and 4) 46,660 50,148 Short Term Note Due from Affiliate (Note 3) 2,200 - Prepaid Expenses 2,245 3,792 Total Current Assets 191,383 161,045 DUE FROM AFFILIATE (Note 3) 331,340 311,556 PROPERTY AND EQUIPMENT Equipment 128,691 170,670 Leasehold Improvements 15,140 15,140 143,831 185,810 Less: Accumulated Depreciation and Amortization ( 129,320) ( 165,897) 14,511 19,913 OTHER ASSETS Patents, Net of Accumulated Amortization (Note 1) 20,162 22,553 Deposits 5,995 5,995 Investment in Affiliated Company (Note 3) - - 26,157 28,548 563,391 521,062 --------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable 9,695 8,875 Accrued Executive Compensation 24,616 37,355 Other Accrued Compensation 7,769 3,060 Accrued Payroll Taxes 594 254 Deferred Rent 1,807 1,783 Other Accrued Expenses 2,247 1,949 Total Current Liabilities 46,728 53,276 COMMITMENTS AND CONTINGENCIES (Note 7) - - SHAREHOLDERS' EQUITY (Note 5) Common Stock, No Par Value; 20,000,000 Shares Authorized, Issued: 13,806,511 Shares at January 31, 1999 and at April 30, 1998 632,663 632,663 Additional paid-in capital 100 100 Accumulated Deficit (116,100) (164,977) 516,663 467,786 563,391 521,062 ----------- ---------- <FN> The accompanying notes are an integral part of the financial statements. BIOSYNERGY, INC. STATEMENT OF OPERATIONS Unaudited Three Months Ended Nine Months Ended January 31, January 31, 1999 1998 1999 1998 --------------------- ------------------- REVENUES Sales 131,704 129,139 409,332 403,014 Computer Rentals and Services 150 150 450 450 Other Income 879 762 2,365 2,192 132,733 130,051 412,147 405,656 COST AND EXPENSES Cost of Sales and Other Operating Charges 50,863 47,164 144,800 144,720 Research and Development 11,636 8,230 33,081 23,364 Marketing 18,642 13,195 54,439 37,477 General and Administrative 46,787 41,200 130,769 115,868 Interest Expense - - 181 242 127,928 109,789 363,270 324,671 NET INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS 4,805 20,262 48,877 80,985 INCOME TAXES 721 3,039 7,332 15,246 INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS 4,084 17,223 41,545 65,739 EXTRAORDINARY ITEMS Reduction of Income Taxes arising from utilization of prior Years' Net Operating Losses (Note 8) 721 3,039 7,332 15,246 NET INCOME (LOSS) 4,805 20,262 48,877 80,985 NET INCOME (LOSS) PER COMMON SHARE (Note 6): Before Extraordinary Items .0003 .0012 .0030 .0048 Extraordinary Items .0000 .0002 .0005 .0011 NET INCOME (LOSS) .0003 .0014 .0035 .0059 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 6) 13,806,511 13,806,511 13,806,511 13,806,511 ---------- ---------- ---------- ---------- <FN> The accompanying notes are an integral part of the financial statements. BIOSYNERGY, INC. STATEMENT OF SHAREHOLDERS' EQUITY NINE MONTHS ENDED JANUARY 31, 1999 Unaudited Additional Common Stock Paid-in Shares Amount Capital Deficit Total --------------------------------------------------------- Balance, May 1, 1998 13,806,511 632,663 100 (164,977) 467,786 Net Profit (Loss) - - - 48,877 48,877 Balance, January 31, 1999 13,806,511 632,663 100 (116,100) 516,663 <FN> The accompanying notes are an integral part of the financial statements. BIOSYNERGY, INC. STATEMENTS OF CASH FLOWS Unaudited NINE MONTHS ENDED JANUARY 31, 1999 1998 ------------------------------ OPERATING ACTIVITIES: Net Income (Loss) 48,877 80,985 Adjustments to Reconcile Net Cash Used for Operating Activities: Depreciation and Amortization 5,732 4,602 Changes in Operating Assets and Liabilities: (Increase) Decrease in Accounts Receivable 1,314 (17,442) (Increase) Decrease in Inventories 3,488 ( 3,139) (Increase) Decrease in Prepaid Expenses 1,547 ( 3,554) Increase (Decrease) in Accounts Payable and Accrued Expenses ( 6,548) (28,585) Net Cash Provided (Used) by Operating Activities 54,410 32,867 INVESTING ACTIVITIES: (Increase) Decrease in Due From Affiliate ( 19,784) ( 14,323) (Increase) Decrease in Deposits - 56 (Increase) Decrease Short Term Note Affiliate (Note 3) 2,200 - (Increase) Decrease Equipment 2,061 ( 9,350) (Increase) Decrease Leasehold Improvements ( - ) ( 2,924) Net Cash Provided (Used) by Investing Activities ( 19,923) ( 26,541) FINANCING ACTIVITIES: Net Cash Provided (Used) by Financing Activities - - Increase (Decrease) in Cash and Cash Equivalents 34,487 6,326 Cash and Cash Equivalents at Beginning of Period 31,150 12,420 Cash and Cash Equivalents at End of Period 65,637 18,746 ----------- ---------- <FN> 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. 3. Related Party Transactions: The Company and its affiliates are related through common stock ownership as follows as of January 31, 1999: S T O C K O F A F F I L I A T E S F.K. Suzuki Stevia Biosynergy International Medlab Stock Owner Company Inc. Inc. Inc. - -------------------- --------------------------------------------- Stevia Company, Inc. - 13.8% - - Biosynergy, Inc. .4% - - - F.K. Suzuki International, Inc. 55.8% 18.8% - 100% Fred K. Suzuki, Officer - - 35.6% - Lauane C. Addis, Officer .1% .1% 32.7% - James F. Schembri, Director - 12.9% - - Mary K. Friske, Officer - .1% .2% - Laurence C. Mead, Officer .1% .1% 2.9% - BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS Upon the completion of the Company's public offering on July 7, 1983, the Company issued 2,000,000 shares of its no par value common stock, representing 19% of the outstanding common stock of the Company, in exchange for 1,058,181 shares of the common stock of Stevia Company, Inc., which was approximately 4.4% of the then outstanding common stock of Stevia Company, Inc. The common stock of Stevia Company, Inc. had no book value at the time of the exchange and, as a consequence, the Company recorded the exchange at zero dollar value. The Company owned 130,403 shares of Stevia Company, Inc. Common Stock at January 31, 1999, representing a .4% interest in Stevia. Although the Common Stock of Stevia Company, Inc. is tradeable in the over-the-counter market, there is no established public trading market for such Common Stock due to limited and sporadic trades. Furthermore, on December 8, 1998, Stevia Company, Inc. announced it filed a Complaint for Judicial Dissolution. As of January 31, 1999, the bid price of the common stock of Stevia Company, Inc. was estimated to be zero. Common offices are shared with Stevia Company, Inc. Intercompany charges for shared expenses are made by whichever company incurs such charges. Such intercompany charges, together with funds advanced to Stevia in prior years, have resulted in the following balances: April 30, 1998 - $298,335 January 31, 1999 - $312,816 At January 31, 1999, the financial condition of Stevia Company, Inc. is such that it is unlikely to be able to repay the Company during the next year without liquidating a portion of its assets. On December 8, 1998, Stevia Company, Inc. announced it had filed a complaint for judicial dissolution in the Circuit Court of Cook County, Chancery Division. Lauane C. Addis, Secretary and General Counsel of the Company and Stevia Company, Inc., was appointed interim receiver to sell certain assets of Stevia Company, Inc. It is uncertain the amount, if any, of the proceeds from the sale of such assets will be used to satisfy the unpaid intercompany charges owed to the Company. The following balances were due from F.K. Suzuki International, Inc.; April 30, 1998 - $13,221 January 31, 1999 - $18,524 The balances result from an allocation of common expenses offset by advances received from time to time. At January 31, 1999, the financial condition of F.K. Suzuki International, Inc. is such that it is unlikely to be able to repay the Company during the next year without liquidating a portion of its assets. BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS On August 31, 1998, the Company extended a line of credit to Stevia Company, Inc. of $20,000 evidenced by a Note payable on or before December 31, 1998, which date has been extended to March 31, 1999, with 10% interest on the unpaid principal balance. Proceeds of this line of credit are intended to be used by Stevia Company, Inc. for expenses related to its dissolution. The Note is secured by a first mortgage on a processing facility in Pueblo, Colorado owned by Stevia Company, Inc. At January 31, 1999, the balance due under the Note was $2,200. 4. Inventories: Components of inventories are as follows: April 30, 1998 January 31, 1999 -------------- ------------------ Raw Materials $31,789 $27,933 Work-in process 16,049 11,624 Finished Goods 2,310 7,103 $50,148 $46,660 5. 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. Effective January 31, 1990, the Company entered into an agreement with its President, Fred K. Suzuki, pursuant to which the Company granted an option to convert all or a portion of his accrued but unpaid compensation into shares of the Company's no par value common stock at a conversion rate of $.05 per share. The balance of Mr. Suzuki's deferred compensation was paid on May 7, 1998, and the option agreement expired by its terms. On November 12, 1998, the Company granted an option to its President, Fred K. Suzuki, to purchase all or a portion of 3,000,000 shares of the Company's common stock at a purchase price of $.025 per share. The option is subject to several contingencies including, but not limited to, shareholder approval. As of January 31, 1999, no portion of this option was exercised. BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS 6. 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. The weighted average number of common shares outstanding were 13,806,511 at January 31, 1999 and April 30, 1998. The affect of conversion of stock options has not been presented as conversion would be anti-dilutive. 7. Lease Commitments: In 1996 the Company entered a new lease agreement for its current facilities which expires January 31, 2001. The base rent under the lease, of which 15% is allocated to Stevia Company, Inc., escalates over the life of the lease. Total rent payments for each fiscal year are as follows: Year ending April 30 Total Base Rent --------------------- --------------- 1996 11,000 1997 66,733 1998 68,200 1999 68,567 2000 69,300 2001 51,975 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. 8. Income Taxes: At April 30, 1998, net operating loss carryforwards were available and expire, if not used, as follows: Year Ending Net Operating April 30, Losses ------------ --------------- 1999 $ 677,671 2000 455,166 2001 449,142 2002 132,470 2003 85,822 2004 41,176 2006 160 2007 28,253 --------------- $1,869,860 BIOSYNERGY, INC. NOTES TO FINANCIAL STATEMENTS 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. 9. Major Customers: Shipments to one customer amounted to approximately 40.12% of sales during the quarter ending January 31, 1999. At January 31, 1999 there was an outstanding account receivable from this customer of approximately $37,981. 10. 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 which compliment its product line. Finally, management intends to continue pursuing financing opportunities, if necessary. 11.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, 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. BIOSYNERGY, INC. Item 2.MANAGEMENT ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SALES/REVENUES - --------------- For the three month period ending January 31, 1999 ("3rd Quarter"), the net sales increased 2% or $2,565, and increased 1.57% or $6,318 during the nine month period ending January 31, 1999, as compared to net sales for the comparative periods ending in 1998. This overall increase in sales is the result of increased sales of HemoTempR II Blood Temperature Monitors. As of January 31, 1999, the Company had no product back orders. In addition to the above, the Company realized $450 of income as a result of leasing a portion of its computer time to Stevia Company, Inc., an affiliate, and $2,365 of miscellaneous income for the nine month period ending January 31, 1999. INCOME/LOSS - ----------- The Company realized a net profit of $4,805 during the 3rd Quarter as compared to a net profit of $20,262 for the comparative quarter of the prior year. The Company also realized a net profit of $48,877 for the nine month period ending January 31, 1999 as compared to a net profit of $80,985 during the same period in 1998. The decrease in net profit is due primarily to an increase in marketing, research and development, and general and administrative expenses described below. As of April 30, 1998, the Company has incurred net operating losses/carryovers aggregating $1,869,860. As a result of net operating loss carryovers, no income taxes were due for Fiscal 1998 and will unlikely be due for Fiscal 1999. See "FINANCIAL STATEMENTS" for the effect of the net operating loss carryforwards on the Company's income tax position. The Tax Reform Act of 1986 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 8 of the "FINANCIAL STATEMENTS." EXPENSES GENERAL - ----------- The operating expenses incurred by the Company during the 3rd Quarter increased overall by 16.52%, or $18,139, and increased by 11.89%, or $38,599 for the nine month period ending January 31, 1999. An explanation of each category of expenses is included to assist the reader in reviewing the operations of the Company during the periods indicated. COST OF SALES AND OTHER OPERATING CHARGES - ------------------------------------------- The cost of sales and other operating charges during the 3rd Quarter increased by $3,699 and increased by $80 during the nine month period ending January 31, 1999 as compared to the same periods in 1998. As a percentage of sales, the cost of sales and other operating charges were 38.62% during the 3rd Quarter and 36.52% for the same quarter ending in 1998, and 35.37% during the nine month period ending January 31, 1999 as compared to 35.91% for the same nine-month period ending in 1998. Although the cost of sales and operating charges increased, the cost of sales and operating charges, as a percentage of sales, has not materially changed during the last year, and is not expected to materially change in the foreseeable future. RESEARCH AND DEVELOPMENT - ------------------------- Research and development costs increased $3,406 or 41.39% during the 3rd Quarter, as compared to the same quarter in 1998. These costs increased by $6,717 or 25.48% during the nine month period ending January 31, 1999 as compared to the same period in 1998. These increases are primarily related to increases in salaries, purchases of laboratory equipment and product prototype costs. These increased costs do not reflect changes in the Company's development policies. The Company intends to continue to direct research and development to the improvement of its current product line and to those new products which are natural expansions of the current product line. The Company may also increase its research and development activities to fulfill research and development contracts for the development of products specifically designed for a customer, which will generally be offset by research revenues. MARKETING - ------------ Marketing costs for the 3rd Quarter increased by $5,447 or 41.28%, as compared to the quarter ending January 31, 1998, and increased $16,962 or 45.26% during the nine month period ending January 31, 1999 as compared to the same period in 1998. The additional expenses incurred by the Company during the comparative periods ending January 31, 1999 were related to the Company's participation in a trade show, increased salaries, brochure reprints, and promotion/entertainment expenses. The Company intends to expand its marketing budget as resources become available. GENERAL AND ADMINISTRATIVE - ----------------------------- General and administrative costs increased by $5,587, or 13.56%, during the 3rd Quarter and increased by $14,901 or 12.86% during the nine month period ending January 31, 1999, as compared to the same periods in 1998. The overall increase in these costs was primarily related to increased salaries and bonuses and the write-of of certain outdated computer equipment retired during the 3rd Quarter. ASSETS/LIABILITIES - -------------------- GENERAL ---------- Since April 30, 1998, the Company's assets and liabilities have not materially changed. The Company has experienced an increase in current assets and a decrease in liabilities due to improved cash flow from operations. DUE FROM AFFILIATES/SHORT TERM NOTE DUE FROM AFFILIATE - ------------------------------------------------------ The Company was owed $312,816 by Stevia Company, Inc. ("Stevia"), an affiliate, and $18,524 by F.K. Suzuki International, Inc. ("FKSI"), an affiliate, at January 31, 1999. These affiliates owed $298,335 and $13,221 at April 30, 1998, respectively. These accounts primarily represent common expenses which are charged by one company to the other for reimbursement. These expenses include rent, salaries and benefits for common employees, insurance and legal fees. These expenses are reviewed from time to time to determine if reallocation is appropriate. As a result of the increase in amounts due from affiliates, the Company has reduced its own liquid resources. See "FINANCIAL STATEMENTS." On December 8, 1998, Stevia announced it filed a complaint for judicial dissolution in the Illinois Circuit Court of Cook County, Chancery Division. Lauane C. Addis, Secretary and General Counsel of the Company and Stevia Company, Inc., was appointed interim receiver to sell certain assets of Stevia, including its Pueblo, Colorado facility. Although the Company anticipates a portion of the proceeds from the liquidation of Stevia's assets will be used to repay the intercompany charges, it is uncertain how much, if any, of the unpaid intercompany charges will be repaid. In this regard, on August 31, 1998, the Company extended a line of credit to Stevia of $20,000 evidenced by a Note payable on or before December 31, 1998, which due date has been extended to March 31, 1999, with interest at 10% on the unpaid principal balance. The proceeds from this line of credit are intended to be used by Stevia for expenses related to its dissolution. The Note is secured by a first mortgage on Stevia's Pueblo, Colorado facility. The Balance due under the Note at January 31, 1999 was $2,200. OTHER RELATED PARTY TRANSACTIONS - ----------------------------------- On November 12, 1998, the Company granted an option to its President, Fred K. Suzuki, to purchase all or a portion of 3,000,000 shares of the Company's common stock at a purchase price of $.025 per share. The option is subject to several contingencies including, but not limited to, shareholder approval. As of January 31, 1999, no portion of this option was exercised. During the 3rd Quarter, the Company purchased a microscope from its President, Fred K. Suzuki, for the purchase price of $1,500. Although there was no independent analysis of this transaction, the Company believes the purchase price approximates market value. CURRENT ASSETS/CURRENT LIABILITY RATIO - --------------------------------------- The ratio of current assets to current liabilities, 4.10 to 1, has improved compared to 3.02 to 1 at April 30, 1998. Although the Company realized income for the nine-month period ending January 31, 1999, the Company used $14,920 of its cash to pay expenses incurred by the Company on behalf of Stevia and FKSI, which was not reimbursed. To this extent, the Company's current assets were converted to long-term receivables thereby reducing its current assets/liabilities ratio. In order to continue to improve the current asset/liability ratio, the Company's operations must remain profitable and the Company. See "DUE FROM AFFILIATES/SHORT TERM NOTE DUE FROM AFFILIATE" above. WORKING CAPITAL/LIQUIDITY - -------------------------- During the nine-month period ending January 31, 1999, the Company experienced an increase in working capital of $36,886. This is due to the profitable operations of the Company during the nine-month period January 31, 1999. The Company has attempted to conserve working capital whenever possible. To this end, the Company attempts to keep inventory at minimum levels. The Company believes that it will be able to maintain adequate inventory to supply its customers on a timely basis by careful planning and forecasting demand for its products. However, the Company is nevertheless required, as is customary in the medical and laboratory markets, to carry inventory to meet the delivery requirements of customers and thus, inventory represents a substantial portion of the Company's current assets. The Company presently grants payment terms to customers and dealers of 30 days. The Company will not accept returns of products from its dealers except for exchange, but does guarantee the quality of its products to the end user. As of January 31, 1999, the Company had $191,383 of current assets available. Of this amount, $46,660 was inventory and $74,641 was net trade receivables. Management of the Company believes that it has sufficient working capital to continue operations for the fiscal year ending April 30, 1999 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 capital needs, the Company has no material contingencies for which it must provide. 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)Deferred Compensation Option Agreement, dated January 31, 1990, between the Company and Fred K. Suzuki(ii) (b)Note, dated August 31, 1998, executed by Stevia Company, Inc. (iii) (c)Mortgage, dated August 31, 1998, executed by Stevia Company, Inc. (iii) (d)Stock Option Agreement, dated November 12, 1998, between the Company and Fred K. Suzuki P. E-1. (11) Statement regarding computation of per share earnings - none. (15) Letter dated March 5, 1999, regarding interim financial information (iv). (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. (24) Power of Attorney - none. (27) Financial Data Schedule - P.E-8. (b) No Current Reports on Form 8-K were filed during the period covered by this Report. ____________________________ [FN] (i)Incorporated by reference to a Registration Statement filed on Form S-18 with the Securities and Exchange Commission, 1933 Act Registration Number 3-28015C, 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, 1990 filed with the Securities and Exchange Commission. (iii)Incorporated by reference to the Company's Quarterly Report on Form 10Q for the quarterly period ended October 31, 1998. (iv)This exhibit is included in this report as a part of the Financial Statements, and is incorporated by reference herein. 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. MARCH 9, 1999 /s/ FRED K. SUZUKI /s/ Date --------------------- ----------------------------------- Fred K. Suzuki President, Chairman of the Board, Chief Accounting Officer and Treasurer MARCH 9, 1999 /s/ LAUANE C. ADDIS /s/ Date -------------------- ------------------------------------ Lauane C. Addis Secretary, Corporate Counsel and Director SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10Q Quarterly Report Pursuant to Section 13 or 15 (d) of THE SECURITIES AND EXCHANGE ACT OF 1934 For the period ending October 31, 1998 Commission File Number: 0-12459 BIOSYNERGY, INC. -------------------------------------------------- (Exact name of registrant as specified in charter) 1940 East Devon Avenue Elk Grove Village, IL 60007 (847) 956-0471 (Address and telephone number of registrant's principal executive office or principal place of business) --------------------------------------------------------------------------- EXHIBITS BIOSYNERGY, INC. EXHIBIT INDEX Page Number Pursuant to Sequential Exhibit Numbering Number Exhibit System - ---------- ------------------------------ ------------ 10(a) Stock Option Agreement dated November 12, 1998, between the Company and Fred K. Suzuki E-1 27 Financial Data Schedule E-8