Item 1.
FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Balance Sheets
ASSETS
|
October 31, 2017
|
April 30, 2017
|
Unaudited
|
Audited
|
Current Assets
|
|
|
Cash
|
$ 1,106,992
|
$ 1,040,582
|
Trade accounts receivable (net of allowance for doubtful accounts of $500 at October 31, 2017 and April 30, 2017
|
234,585
|
267,545
|
Inventories
|
161,480
|
186,312
|
Prepaid expenses
|
27,398
|
32,165
|
Total Current Assets
|
1,530,455
|
1,526,604
|
|
|
|
Equipment and leasehold improvements
|
|
|
Equipment
|
201,764
|
201,764
|
Leasehold improvements
|
23,447
|
23,447
|
|
225,211
|
225,211
|
Less accumulated depreciation and amortization
|
(210,393)
|
(205,326)
|
Total Equipment and Leasehold Improvements Net
|
14,818
|
19,885
|
|
|
|
Other Assets
|
|
|
Patents less accumulated amortization
|
66,029
|
70,372
|
Patents pending
|
69,420
|
69,420
|
Deposits
|
5,937
|
5,937
|
Total Other Assets
|
141,386
|
145,729
|
|
|
|
|
$ 1,686,659
|
$ 1,692,218
|
The accompanying notes are an integral part
of the financial statements.
BIOSYNERGY, INC.
PART 1 - FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Balance Sheets
Liabilities and Shareholders’ Equity
|
October 31, 2017
|
April 30, 2017
|
Unaudited
|
Audited
|
Current Liabilities
|
|
|
Accounts payable
|
$ 6,292
|
$ 3,842
|
Accrued compensation and payroll taxes
|
4,844
|
42,472
|
Other accrued liabilities
|
1,287
|
3,589
|
Accrued vacation
|
30,415
|
21,795
|
Total Current Liabilities
|
42,838
|
71,698
|
|
|
|
Deferred Income Taxes
|
34,800
|
34,800
|
|
|
|
Shareholders’ Equity
|
|
|
Common stock, no par value: 20,000,000 authorized shares issued: 14,935,511 shares at October 31, 2017 and April 30, 2017
|
660,988
|
660,988
|
Receivable from affiliate
|
(19,699)
|
(19,699)
|
Retained earnings
|
967,732
|
944,431
|
Total Shareholders' Equity
|
1,609,021
|
1,585,720
|
|
|
|
|
$ 1,686,659
|
$ 1,692,218
|
The accompanying notes are an integral part
of the financial statements.
BIOSYNERGY, INC.
PART 1 - FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Statements of Income
(unaudited)
|
Three Months Ended
|
Six Months Ended
|
|
October 31
|
October 31
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Net sales
|
$ 320,515
|
$ 350,346
|
$ 623,419
|
$ 640,393
|
Cost of sales
|
88,976
|
95,947
|
187,212
|
187,177
|
Gross profit
|
231,539
|
254,399
|
436,207
|
453,216
|
Operating expenses
|
|
|
|
|
Marketing
|
47,961
|
45,858
|
93,535
|
93,579
|
General and administrative
|
94,653
|
86,472
|
224,096
|
213,474
|
Research and development
|
49,898
|
37,694
|
90,565
|
79,891
|
Total Operating Expenses
|
192,512
|
170,024
|
408,196
|
386,944
|
|
|
|
|
|
Income from operations
|
39,027
|
84,375
|
28,011
|
66,272
|
Other income
|
|
|
|
|
Interest income
|
107
|
107
|
215
|
214
|
Other income
|
480
|
480
|
960
|
960
|
Total Other Income
|
587
|
587
|
1,175
|
1,174
|
|
|
|
|
|
Net income before income taxes
|
39,614
|
84,962
|
29,186
|
67,446
|
|
|
|
|
|
Provision for income taxes
|
9,153
|
26,463
|
5,885
|
20,989
|
Net income
|
$ 30,461
|
$ 58,499
|
$ 23,301
|
$ 46,457
|
|
|
|
|
|
Net income per common share - basic and diluted
|
$ 0.002
|
$ 0.004
|
$ 0.002
|
$ 0.003
|
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
SIX MONTHS ENDED OCTOBER 31, 2017
(Unaudited)
|
Common Stock
|
|
|
|
|
Shares
|
Amounts
|
Receivable from Affiliate
|
Retained Earnings
|
Total
|
Balance, May 1, 2017
|
14,935,511
|
$ 660,988
|
$ (19,699)
|
$ 944,431
|
$ 1,585,720
|
|
|
|
|
|
|
Net income
|
-
|
-
|
-
|
23,301
|
23,301
|
Balance, October 31, 2017
|
14,935,511
|
$ 660,988
|
$ (19,699)
|
$ 967,732
|
$ 1,609,021
|
The
accompanying notes are an integral part of the financial statements.
BIOSYNERGY, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
|
Six Months Ended October 31
|
|
2017
|
2016
|
Cash flows from operating activities
|
|
|
Net income
|
$ 23,301
|
$ 46,457
|
Adjustments to reconcile net income to cash provided by operating activities
|
|
|
Depreciation and amortization
|
9,410
|
8,346
|
Changes in assets and liabilities
|
|
|
Accounts receivable
|
32,960
|
5,152
|
Inventories
|
24,832
|
(51,098)
|
Prepaid expenses and other
|
4,767
|
8,527
|
Accounts payable and accrued expenses
|
(28,860)
|
(4,333)
|
Total adjustments
|
43,109
|
(33,406)
|
|
|
|
Net cash provided by operating activities
|
66,410
|
13,051
|
|
|
|
Cash flows from investing activities
|
|
|
Patents and patents pending
|
-
|
(8,632)
|
Purchase of equipment
|
-
|
(3,312)
|
|
|
|
Net cash used in investing activities
|
-
|
(11,944)
|
|
|
|
Increase in cash and cash equivalents
|
66,410
|
1,107
|
Cash beginning period
|
1,040,582
|
1,091,649
|
Cash ending period
|
$ 1,106,992
|
$ 1,092,756
|
|
|
|
Supplemental cash flow information
|
|
|
Interest paid
|
$ -
|
$ -
|
Income taxes paid
|
$ 11,000
|
$ 19,100
|
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, 2017 Annual Report on Form 10-K. The results of operations for the
six months ended October 31, 2017 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 92.5% of the sales during the quarter ending October
31, 2017 and 91.8% during the six month period ending October 31, 2017. 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 various
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 beyond the stipulated due date. Receivables are written
off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.
Inventories
Inventories are valued at the lower of cost or market using the
FIFO (first-in, first-out) method.
Depreciation and Amortization
Equipment and leasehold improvements are stated
at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Repairs
and maintenance are charged to expense as incurred; renewals and betterments which significantly extend the useful lives of existing
equipment are capitalized. Significant leasehold improvements are capitalized and amortized over the term of the lease; equipment
is depreciated over three to ten years. Depreciation expense was $5,067 and $4,004 for the six month period ending October 31,
2017 and 2016, respectively.
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.
Patent amortization expense for the six months
ended October 31, 2017 and 2016 was $4,343, respectively. Patents relate to products that have been developed by the Company. Patents
pending relate to products under development.
Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Income Per Common Share
Income 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. During the quarter endings and six month
periods ending October 31, 2017 and 2016, 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 reporting purposes. The deferred income taxes represent the future tax consequences of those differences, which
will be taxable in the future. The Company implemented ASU 2015-17 during the quarter ended October 31, 2017 on a retrospective
basis, and have classified their net deferred tax liabilities as non-current.
The Company files tax returns in the U.S. federal
jurisdiction and with the state of Illinois. Various tax years remain open to examinations, generally for three years after filed,
although there are currently no ongoing tax examinations. Management’s policy is to recognize interest and penalties related
to uncertain tax positions in income tax expense.
The provision for income taxes consists of the following components
for the six months ended October 31:
|
2017
|
2016
|
Current
|
|
|
Federal
|
$4,431
|
$15,762
|
State
|
1,454
|
5,227
|
Provision for Income Taxes
|
$5,885
|
$20,989
|
The differences between the U.S. federal statutory tax rate and
the Company’s effective tax rate are as follows:
|
Period ended October 31,
|
|
2017
|
2016
|
U.S. federal statutory tax rate
|
34.0%
|
34.0%
|
State income tax expense, net of
Federal tax benefit
|
5.0
|
5.0
|
Effect of graduated federal tax rates
|
(7.64)
|
(7.9)
|
Effective Tax Rate
|
31.36%
|
31.1%
|
Recent Accounting Pronouncements
The FASB issues ASUs to amend the authoritative
literature in Accounting Standards Certification (ASC). Except for the ASUs listed below, there have been a number of ASUs to date
that amend the original text of ASCs. Those ASUs issued to date either (i) provide supplemental guidance, (ii) are technical corrections,
(iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.
On February 25, 2016, the FASB issued Topic
842, its highly-anticipated leasing standard for both lessees and lessors. Under its core principle, a lessee will recognize lease
assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months. Lessor accounting remains largely
consistent with existing U.S. GAAP. The amendments are effective for public companies for fiscal years beginning after December
15, 2018, including interim periods within those fiscal years. At inception, a lessee must classify all leases as either finance
or operating. The Company intends to adopt Topic 842 upon extension of the current lease for its facilities in Elk Grove Village
or upon entering into a new lease agreement for alternative facilities on or about May 1, 2018. The Company is investigating the
effect of adoption of Topic 842 on its results of operations and financial condition. However, it is not anticipated that adoption
of Topic 842 will have a material impact on the results of operations or financial condition of the Company.
In May 2014, the Financial Accounting Standard
Board (FASB) issued ASU 2014-09, Revenue from Contract with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 and
subsequent amendments supersede the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific
guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein,
using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard
in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the
cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).
We are currently
evaluating the impact of our pending adoption
of ASU 2014-09 on our financial statements and have not yet determined the method by which we will adopt the standards as of May
1, 2018.
Note 3 – Inventories
Components of inventories are as follows:
|
October 31,
2017
_____________
|
April 30,
2017
__________
|
|
|
|
Raw materials
|
$ 111,964
|
$142,713
|
Work-in-process
|
25,375
|
16,752
|
Finished goods
|
24,141
|
26,847
|
|
$161,480
|
$186,312
|
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 October 31, 2017:
|
Stock of Affiliates
|
|
Biosynergy, Inc.
|
F.K. Suzuki International, Inc.
|
Medlab, Inc.
|
F.K. Suzuki International, Inc
|
30.0%
|
- %
|
100.0%
|
Fred K. Suzuki, Officer
|
4.1
|
30.0
|
-
|
Lauane C. Addis, Officer
|
-
|
-
|
-
|
Jeanne S. Addis, Trustee
|
-
|
28.1
|
-
|
Mary K. Friske, Officer
|
.3
|
.7
|
-
|
Laurence C. Mead, Officer
|
.4
|
10.0
|
-
|
Beverly K. Suzuki
|
2.7
|
-
|
-
|
As of October 31, 2017, $19,699 was due from
F. K. Suzuki International, Inc. 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.
A board member provided a variety of legal
services to the Company in his capacity as a partner in a law firm. Fees for such legal services were approximately $19,421 and
$13,765 for the six months ended October 31, 2017 and 2016, respectively.
Note 6 – Lease Commitments
In January 2015, the Company entered into a
three-year lease agreement for its current facilities, which expires on April 30, 2018. The base rent under the lease escalates
over the life of the lease. However, rent expense is recorded on a straight-line basis as required by accounting principles generally
accepted in the United States of America. As of October 31, 2017, the Company’s approximate total future minimum lease payments
are as follows:
Year Ending April 30:
|
|
2018
|
44,637
|
Also included in the lease agreement are escalation
clauses for the lessor’s increases in property taxes and other operating expenses.
Note 7 – Customer Concentrations
Shipments to one customer amounted to 29.58%
of sales during the first six months of Fiscal 2018 compared to 28.36% during the comparative Fiscal 2017 period. As of October
31, 2017, there were outstanding accounts receivable from this customer of $66,320 compared to $68,616 at October 31, 2016. Shipments
to another customer amounted to 35.53% of sales during the first six months of Fiscal 2018 and 34.85% of sales during the first
six months of Fiscal 2017. As of October 31, 2017, there were outstanding accounts receivable from this customer of $130,456 compared
to $71,141 at October 31, 2016.
The Company had export sales of $24,960 during
the first six months of Fiscal 2018, and export sales of $16,310 during the Quarter ending October 31, 2017. The Company also believes
that some of its medical devices were sold to distributors within the United States who resold the devices in foreign markets.
However, the Company does not have any information regarding such sales and such sales are not considered to be material.
Item 2.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Net Sales/Revenues
For the three month period ending October 31,
2017 (“2nd Quarter”), the net sales decreased 8.50%, or $29,831, and decreased 2.65%, or $16,974, during the six month
period ending October 31, 2017, as compared to net sales for the comparative periods ending in 2016. This decrease in sales is
primarily the result of a decrease in the sales of HemoTemp II and HemoTemp II Activators. As of October 31, 2017, the Company
had no back orders.
In addition to the above, the Company had $587
and $1,175 of other miscellaneous revenues primarily from interest income and leasing a portion of its storage space to a third
party during the three and the six month periods ending October 31, 2017, respectively.
Costs and Expenses
General
The operating expenses of the Company during
the 2nd Quarter increased overall by 13.23%, or 22,488, and increased by 5.49%, or $21,252, for the six month period ending October
31, 2017, as compared to the same periods ending in 2016. The increase during the 2
nd
Quarter and for the six month
period ending October 31, 2017 was due to chemical waste disposal fees, increased legal fees and increased insurance costs.
Cost of Sales
The overall cost of sales during the 2nd Quarter
decreased by $6,971 and increased by $35 during the six month period ending October 31, 2017 as compared to the same periods ending
in 2016. The decrease for the 2
nd
Quarter ending was a result of lower cost of raw materials used due to lower sales.
For the six months ended October 31, 2017, the increase was a result of higher manufacturing labor cost offset by lower cost of
raw materials used due to lower sales. As a percentage of sales, the cost of sales were 27.76% during the 2nd Quarter and 27.39%
for the comparative quarter ending in 2016; and 30.00% during the six month period ending October 31, 2017 compared to 29.22% in
2016. 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 $12,204,
or 32.38%, during the 2nd Quarter as compared to the same quarter in 2016. These costs increased by $10,674, or 13.36%, during
the six month period ending October 31, 2017 as compared to the same period in 2016. This increase was primarily due to the cost
of chemical waste disposal.
Marketing Expenses
Marketing expenses for the 2nd Quarter increased
by $2,103, or 4.59%, as compared to the quarter ending October 31, 2016 and decreased by $44, during the six month period ending
October 31, 2017 compared to the six-month period ending October 31, 2016. The change in marketing expenses for the six-month period
ending October 31, 2017 compared to the six-month period ending October 31, 2016 was not material or related to any one expense
item.
General and Administrative Expenses
General and administrative costs increased
by $8,181, or 9.46%, in the 2nd Quarter, and increased by $10,622, or 4.97%, during the six month period ending October 31, 2017,
as compared to the same periods in 2016. This overall increase for the six months ending October 31, 2017 was due primarily to
insurance premiums and higher legal fees. Except for unforeseen items and ordinary cost increases, it is unlikely general and administrative
expenses will materially change during the remainder of Fiscal 2018.
Net Income
The Company realized a net income of $30,461
during the 2nd Quarter as compared to a net income of $58,499 for the comparative quarter in the prior year. The Company also realized
a net income of $23,301 for the six month period ending October 31, 2017 as compared to a net income of $46,457 during the same
period in 2016. The decrease in net income is a result of a decrease in net sales and an increase in legal fees, insurance premiums
and chemical license disposal fees.
Assets/Liabilities
General
Since April 30, 2017, the Company's assets
have decreased by $5,559 and liabilities have decreased by $28,860. Although cash has increased, there was a decrease in accounts
receivables, inventories, and prepaid expenses. The decrease in liabilities is primarily due to a decrease in accrued compensation
and payroll taxes.
Related Party Transactions
The Company was owed $19,699 by F.K. Suzuki
International, Inc. ("FKSI"), an affiliate, at October 31, 2017 and April 30, 2017. This account primarily represents
common expenses which were previously charged by the Company to FKSI for reimbursement. No interest is received or accrued by the
Company. Collectability of the amounts due from FKSI cannot be assured without the liquidation of all or a portion of its assets,
including a portion of its common stock of the Company. As a result, the amount owed by FKSI to the Company is classified as a
reduction of FKSI’s capital in the Company.
A board member provides a variety of legal
services to the Company in his capacity as a partner in a law firm. Fees for such legal services were approximately $19,421 and
$13,765 for the six months ended October 31, 2017 and 2016, respectively.
Current Assets/Liabilities Ratio
The ratio of current assets to current liabilities,
35.73% to 1, has increased compared to 21.29 to 1 at April 30, 2017. 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 six month period ending October
31, 2017, the Company experienced an increase in working capital of $32,711. This is primarily due to the Company’s decrease
in liabilities, primarily to a decrease
in accrued compensation and payroll taxes during
the second quarter related to timing of employee compensation and payroll taxes sustained during the six month period ending October
31, 2017.
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 investment in current assets.
The Company presently grants payment terms
to customers and dealers. Although the Company experiences varying collection periods of its account receivable, the Company believes
that uncollectable accounts receivable will not have a significant effect on future liquidity.
The cash provided by operating activities was
$66,410 during the six month period ending October 31, 2017. 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 or investing activities during the six month period ending October 31, 2017.
As of October 31, 2017, the Company had $1,530,455
of current assets available. Of this amount, $27,398 was prepaid expenses, $161,480 was inventory, $234,585 was net trade receivables
and $1,106,992 was cash. The Company’s available cash and cash flow are considered adequate to fund the short-term 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. Thus there is a risk additional financing may be necessary to fund long-term capital needs of the Company,
although there is no such currently known long-term capital needs other than operations.
Effects of Inflation
. With the exception
of raw material 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
.
On December 12, 2001, the SEC issued FR-60 “Cautionary Advice Regarding Disclosure About Critical Accounting Policies.”
FR-60 is an intermediate step to alert companies to the need for greater investor awareness of the sensitivity of financial statements
to the methods, assumptions, and estimates underlying their preparation, including the judgments and uncertainties affecting the
application of those policies and the likelihood that materially different amounts would be reported under different conditions
or using different assumptions.
The Company’s significant accounting
policies are disclosed in Note 2 to the Financial Statements for the 2nd 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: none.
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.