Net Sales/Revenues

For the three month period ending October 31, 2019 ("2nd Quarter"), the net sales decreased 4.91%, or $16,126, and decreased 2.66%, or $17,173, during the six month period ending October 31, 2019, as compared to net sales for the comparative periods ending in 2018. This decrease in sales is primarily the result of a decrease in the sales of HemoTemp®, HemoTemp®II and TempTrend® products. As of October 31, 2019, the Company had no back orders.

In addition to the above, the Company had $630 and $1,260 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, 2019, respectively.





Costs and Expenses

                                    General

The operating expenses of the Company during the 2nd Quarter decreased overall by 2.26%, or $4,172, and decreased by 1.53%, or $5,901, for the six month period ending October 31, 2019, as compared to the same periods ending in 2018. The decrease during the 2ndQuarter and for the six month period ending October 31, 2019 was due to a decrease in legal and advertising fees.





                                 Cost of Sales

The overall cost of sales during the 2nd Quarter increased by $668 and increased by $3,928 during the six month period ending October 31, 2019 as compared to the same periods ending in 2018. For the six months ended October 31, 2019, the increase was due to higher employee costs and higher raw material costs. As a percentage of sales, the cost of sales were 34.76% during the 2nd Quarter and 32.85% for the comparative quarter ending in 2018; and 34.29% during the six month period ending October 31, 2019 compared to 32.77% in 2018. 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 $264, or .68%, during the 2nd Quarter as compared to the same quarter in 2018. These costs increased by $3,265, or 4.31%, during the six month period ending October 31, 2019 as compared to the same period in 2018. This increase was primarily due to higher employee costs.





                               Marketing Expenses

Marketing expenses for the 2nd Quarter decreased by $4,499, or 9.32%, as compared to the quarter ending October 31, 2018 and decreased by $2,405 or 2.56%, during the six month period ending October 31, 2019 compared to the six-month period ending October 31, 2018. The change in marketing expenses for the six-month period ending October 31, 2019 compared to the six-month period ending October 31, 2018 was primarily due to lower advertising fees and lower health insurance costs.





                      General and Administrative Expenses

General and administrative costs increased by $63, or .06%, in the 2nd Quarter, and decreased by $6,761, or 3.15%, during the six month period ending October 31, 2019, as compared to the same periods in 2018. This overall decrease for the six months ending October 31, 2019 was due primarily to lower legal fees and a decrease in healthcare costs. Except for unforeseen items and ordinary cost increases, it is unlikely general and administrative expenses will materially change during the remainder of Fiscal 2020.





Net Income

The Company realized a net income of $16,990 during the 2nd Quarter as compared to a net income of $25,997 for the comparative quarter in the prior year. The Company also realized a net income of $25,568 for the six month period ending October 31, 2019 as compared to a net income of $36,376 during the same period in 2018. The decrease in net income is a result of decreased net sales for the six month period ending October 31, 2019.





Assets /Liabilities





                                    General

Since April 30, 2019, the Company's assets have decreased by $37,878 and liabilities have decreased by $63,446. The overall decrease in assets and liabilities is primarily due to the changes in the accounting treatment for leases, which include amortization of the right of use asset and payments against the lease liability.





                           Related Party Transactions

The Company was owed $19,699 by F.K. Suzuki International, Inc. ("FKSI"), an affiliate, at October 31, 2019 and April 30, 2019. 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 $7,585 and $14,811 for the six months ended October 31, 2019 and 2018, respectively.

Current Assets/Liabilities Ratio

The ratio of current assets to current liabilities, 17.9 to 1, has increased compared to 10.5 to 1 at April 30, 2019, primarily due to higher cash balances and lower accrued liabilities and lower operating lease liability. The Company anticipates the ratio of current assets to current liabilities will remain substantially at its current level as a result of the change in accounting methods, subject to other normal fluctuations. 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, 2019, the Company experienced an increase in working capital of $79,777. This was primarily due to higher cash balances and lower accrued liabilities and lower operating lease liability.

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 $44,045 during the six month period ending October 31, 2019. There was no cash used in investing activities. Except for its operating capital, limited equipment purchases and patent prosecution costs, 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, 2019.

As of October 31, 2019, the Company had $1,663,155 of current assets available. Of this amount, $39,836 was prepaid expenses, $156,959 was inventory, $242,190 was net trade receivables and $1,224,170 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 inventory, labor costs and product sales prices increasing with inflation, inflation has not had a material effect on the Company's revenues and income from continuing operations in the past three years. Inflation is not expected to have a material effect 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.

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