<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q-SB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended May 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ to ________
Commission File No. 0-12231
BIO-LOGIC SYSTEMS CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 36-3025678
(State or other jurisdiction of (I.R.S. Employer Identification Number)
ncorporation or organization)
One Bio-logic Plaza, Mundelein, Illinois 60060
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (708-949-5200)
(Former address, if changed since last report): not applicable
Check whether the issuer (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 issuer was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----- ------
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July , 1995
Common Stock $.Ol par value shares
Traditional Small Business Disclosure Format
Yes X No
---- ----
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Page
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets at May 31, 1995
and February 28, 1995 3
Condensed Consolidated Statements of Operations and
Retained Earnings for the three months ended May 31,
1995 and 1994 4
Condensed Consolidated Statements of Cash Flows for the
three months ended May 31, 1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, 1995 February 28, 1995
------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 564,495 $ 1,187,388
Marketable securities 1,637,367 1,627,660
Accounts receivable, net 3,565,344 3,105,769
Inventories 2,887,927 2,895,987
Prepaid expenses 58,268 91,144
Deferred income taxes 139,251 139,251
------------ -------------
Total current assets 8,852,652 9,047,199
PROPERTY, PLANT AND EQUIPMENT - Net 1,970,605 2,012,121
MARKETABLE SECURITIES 1,723,520 1,727,440
OTHER ASSETS 774,059 712,924
------------ -------------
TOTAL ASSETS $ 13,320,836 $ 13,499,684
------------ -------------
------------ -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 112,499 $ 110,649
Accounts payable 265,743 698,410
Accrued salaries & payroll taxes 540,137 513,558
Accrued interest & other expenses 426,665 445,065
Accrued income taxes 151,424 162,274
Deferred revenue 196,684 191,701
------------ -------------
Total current liabilities 1,693,152 2,121,657
LONG-TERM DEBT - Less current maturities 779,749 808,726
DEFERRED INCOME TAXES 200,048 200,048
------------ -------------
Total liabilities 2,672,949 3,130,431
------------ -------------
SHAREHOLDERS' EQUITY:
Capital stock, $.Ol par value. Authorized
10,000,000 shares, issued and outstanding
4,147,799 shares at May 31, 1995 and
4,146,949 at February 28, 1995. 41,477 41,469
Additional paid-in capital 5,343,433 5,342,371
Retained Earnings 5,262,977 4,985,413
------------ -------------
Total shareholders' equity 10,647,887 10,369,253
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,320,836 $ 13,499,684
------------ -------------
------------ -------------
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
-------------------------
1995 1994
----------- -----------
(unaudited)
<S> <C> <C>
NET SALES $3,666,987 $2,453,628
COST OF SALES 1,313,262 897,254
---------- ----------
Gross Profit 2,353,725 1,556,374
---------- ----------
OPERATING EXPENSES:
Selling, general & administrative 1,598,774 1,225,304
Research & development 375,844 393,517
---------- ----------
Total operating expenses 1,974,618 1,618,821
---------- ----------
OPERATING INCOME (LOSS) 379,107 (62,447)
OTHER INCOME (EXPENSE):
Interest income 45,975 51,503
Interest expense (18,962) (11,992)
Miscellaneous 444 243
---------- ----------
TOTAL OTHER INCOME 27,457 39,754
INCOME (LOSS) BEFORE INCOME TAXES 406,564 (22,693)
PROVISION (BENEFIT) FOR INCOME TAXES 129,000 (3,000)
---------- ----------
NET INCOME (LOSS) $ 277,564 $ (19,693)
---------- ----------
---------- ----------
RETAINED EARNINGS, BEGINNING OF PERIOD 4,985,413 4,245,001
---------- ----------
RETAINED EARNINGS, END OF PERIOD $5,262,977 $4,225,308
---------- ----------
---------- ----------
EARNINGS PER SHARE:
Primary and Fully Diluted $.07 $0.00
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended May 31,
---------------------------
1995 1994
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 277,564 $ (19,693)
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation and amortization 84,055 74,709
Provision for bad debts 3,000 3,000
Provision for inventory valuation 77,250 40,461
(Increases) decreases in assets:
Accounts receivable (462,575) (263,426)
Inventories (69,190) (167,489)
Income taxes receivable 0 (61,578)
Prepaid expenses 32,876 (4,148)
Increases (decreases) in liabilities:
Accounts payable and overdrafts (432,667) (81,560)
Accrued liabilities and deferred revenue 13,162 80,876
Accrued income taxes (10,850) (69,522)
---------- --------
Net cash flows from operating activities (487,375) (468,370)
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (25,183) (62,381)
Investments in other assets (78,491) (14,654)
Purchases of investments (5,787) 0
Proceeds from maturities of investments 0 22,737
---------- ---------
Net cash flows from investing activities (109,461) (54,298)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 1,070 10,434
Payments of long-term debt (27,127) (25,388)
---------- ---------
Net cash flows from financing activities (26,057) (14,954)
---------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (622,893) (537,622)
CASH AND CASH EQUIVALENTS - Beginning of period 1,187,388 1,010,329
---------- ----------
CASH AND CASH EQUIVALENTS - End of period $ 564,495 $ 472,707
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid during the period for:
Interest $ 19,538 $ 17,683
---------- ----------
---------- ----------
Income Taxes $ 139,850 $ 128,100
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to condensed financial statements
5
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The information furnished in this report reflects all adjustments which
are, in the opinion of management, necessary to a fair statement of the
results for the interim periods. The results of operations for the three
months ended May 31, 1995 are not necessarily indicative of the results
to be expected for the full year.
2. INVENTORIES
Inventories principally consist of components, parts and supplies.
3. NET INCOME PER SHARE
Primary earnings per share are based on the weighted average number of
common and dilutive common equivalent shares outstanding during each
quarter. The weighted average shares for computing primary earnings per
share were 4,214,975 and 4,237,289 for the quarters ended May 31, 1995
and May 31, 1994, respectively.
Fully diluted earnings per share are based on the weighted average number
of common and dilutive common equivalent shares calculated at quarter-end
market prices. The weighted average shares for computing fully diluted
earnings per share were 4,260,343 and 4,237,289 for the quarters ended
May 31, 1995, and 1994, respectively.
4. ACCOUNTING FOR INCOME TAXES
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," effective March 1, 1993. This
standard requires an asset and liability approach of accounting for
income taxes. Deferred tax assets and liabilities are computed annually
for differences between financial statement basis and tax basis of assets,
liabilities and available general business tax credit carry-forwards. A
valuation allowance is established when necessary to reduce deferred tax
assets to the amount expected to be realized.
6
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
Deferred tax assets and liabilities as of May 31, 1995 are comprised of
the following:
<TABLE>
<S> <C>
Deferred tax liabilities:
Depreciation $ 76,802
Research and development 123,246
Total deferred tax liabilities 200,048
Deferred tax assets:
Accounts receivable 51,318
Inventory 70,813
Vacation 12,601
Warranty 60,774
Other 4,181
Tax credit carry-forwards 11,856
Less: current deferred tax -
DISC income deferral (72,292)
---------
Total deferred current tax assets - net 139,251
Net deferred tax liability $ 60,797
---------
---------
</TABLE>
5. MARKETABLE SECURITIES
Effective March 1, 1994, the company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS No. 115.)
As required by SFAS 115, securities are classified into three
categories: trading, held-to-maturity, and available for sale. Debt
securities that the Company has the positive intent and ability to hold
to maturity are classified as held-to-maturity debt securities. The
entire Company's portfolio of debt securities has been classified as
held-to-maturity and are stated at cost, with premiums amortized and
discounts accredited using the simple-interest method.
7
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
Investment Securities Held-To-Maturity
The amortized cost, unrealized gains, unrealized losses and estimated fair
values of investment securities are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
May 31, 1995 Amortized Cost Gains Losses Value
- ------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
US Government securities $3,360,887 $ 0 $13,077 $3,347,810
<CAPTION>
May 31, 1994
- ------------
<S> <C> <C> <C> <C>
US Government securities $4,323,344 $ 0 $56,659 $4,266,685
</TABLE>
At May 31, 1995, the maturities of marketable securities held-to-maturity are
as follows:
<TABLE>
<CAPTION>
Estimated Fair
Term to Maturity Amortized Cost Value
- ---------------- -------------- ---------------
<S> <C> <C>
Due one year or less $1,637,367 $1,632,408
Due after one year through
five years 1,723,520 1,715,402
---------- ----------
Total $3,360,887 $3,347,810
---------- ----------
---------- ----------
</TABLE>
6. SUBSEQUENT EVENT - STOCK REPURCHASE
On June 1, 1995 the Board of Directors of the Company authorized the
repurchase, from time to time, of up to 100,000 shares of the
Company's common stock. As of the date of this report, the Company
had made no repurchases of its common stock.
8
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of May 31, 1995 the Company had working capital of $7,159,500
including $2,201,862 in cash, cash equivalents and short-term investments.
In addition, as of May 31, 1995, the Company has long-term investments of
$1,723,520 in US Government Treasury Notes. The Company believes its capital
and liquidity requirements for the foreseeable future will be satisfied by
available and internally generated funds. To the extent the Company's
capital and liquidity requirements are not satisfied internally, the Company
may utilize a $ 1,000,000 unsecured bank line of credit, all of which is
currently available. Borrowings under this line will bear interest at the
bank's prime rate.
Cash flow for the three months ended May 31, 1995 decreased by
$622,893 and net cash flow from operations decreased $487,375. The
decrease in cash flow from operations primarily reflects an increase in
accounts receivable from higher net sales and a reduction in accounts
payable due to cash payments to vendors. The Company's accounts
receivable and payable balances at May 31, 1995 increased $462,575 and
$432,667, respectively, from the net accounts receivable and payable
balances at February 28, 1995.
RESULTS OF OPERATIONS
Net sales for the three months ended May 31, 1995 increased by
approximately 50% to $3,666,987 from $2,453,628 for the three months ended
May 31, 1994. Domestic sales increased by 52% to $2,673,323 for the three
months ended May 31, 1995 from $1,753,161 for the three months
ended May 31, 1994. Foreign sales of $993,664 contributed 27% of net sales
for the three months ended May 31, 1995, a increase of 42% from
$700,467 for the three months ended May 31, 1994. The Company attributes the
increase in domestic and foreign sales to the strong continued acceptance of
the Ceegraph-Trademark- product line and sales of the LBM series EMG product
line first introduced on July 1, 1994.
Cost of sales as a percentage of net sales decreased to 36% from 37%
for the three months ended May 31, 1995 and 1994, respectively. This
slight decrease in cost of sales reflects the higher efficiencies in the
Company's manufacturing processes.
Selling, general and administrative expenses increased by 30% to
$1,598,774 from $1,225,304 during the three months ended May 31, 1995, and
1994, respectively, and as a percentage of net sales, decreased to 44%
from 50% for the three months ended May 31, 1995 and May 31 1994,
respectively. The increase in selling, general and administrative
expenditures reflects additional costs from an expanded direct sales force
plus higher sales costs associated with the increased net sales for the
quarter ended May 31, 1995 compared to the quarter ended May 31, 1994.
The decrease in selling, general and administrative expenditures as a
percentage of net sales is due to the fixed cost component of these
expenditures not increasing at the same rate as net sales for the three month
period ending May 31, 1995.
Research and development costs decreased by 4% to $375,844 from
$393,517 for the three months ended May 31, 1995, and 1994, respectively,
and as a percentage of net sales, decreased to 10% from 16% for the
three months ended May 31, 1995 and 1994, respectively. This decrease is
attributable to the capitalization of approximately $58,600 in certain
research and development costs associated with specific identifiable
future products.
9
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
For the three months ended May 31, 1995, the Company had operating income
of $379,107 compared to an operating loss of $62,447 for the three months
ended May 31, 1994. This operating profit for the three months ended May 31,
1995 is due to significantly higher net sales and lower research and
development costs partially offset by higher selling, general and
administrative expenses.
Net interest income decreased to $27,013 from $39,511 for the three month
periods ended May 31, 1995 and 1994, respectively. This decrease reflects
lower investment returns and higher interest rates on long-term debt.
The income tax provision of $129,000 or 32% of income before taxes for the
three month period ended May 31, 1995 and the income tax benefit of $3,000,
or 13% of net loss before taxes for the three month period ended May 31, 1994
differ from the federal statutory rate of 35% due to the differences between
financial statement basis and tax basis of assets, liabilities and available
general business tax credit carry-forwards.
The Company had net income of $277,564 or $0.07 per share for the three
month period ended May 31, 1995 compared to net loss of $19,693 or $0.00 per
share for the three month period ended May 31, 1994. The increase in
earnings reflect significantly higher net sales resulting in higher gross
profit, which was offset by both increases in selling, general, and
administrative costs and income tax expense, as previously discussed.
10
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) Exhibits
<TABLE>
<S> <C>
3.1 Certificate of Incorporation, Certificate of Amendment to Certificate of Incorporation,
Agreement of Merger and Certificate of Merger and By-Laws (1)
3.2 Certificate of Amendment to Certificate of Incorporation (7)
10.1 Lease between the Company and Harris Trust & Savings Bank dated August 9, 1983 (2)
10.2 Technology License Agreement between the Company and Neurographic Technologies
dated August 13, 1984 (3)
10.3 Real Estate Sale Contract between the Company and First National Bank of Lake
Forest, as Trustee, dated December 23, 1985 (4)
10.4 Loan Agreement between the Company and Village of Mundelein, Illinois dated as of
December 1, 1985 (4)
10.5 Mortgage and Security Agreement between the Company and Village of Mundelein,
Illinois dated as of December 1, 1985 (4)
10.6 Bond Purchase Agreement between the Company and First American Bank of Dundee
dated as of December 1, 1985 (4)
10.7 Agreement among Gabriel Raviv, Gil Raviv, Charles Z. Weingarten and the
Company (5)
10.8 Employment Agreement between the Company and Gabriel Raviv (5)
10.9 Employment Agreement between the Company and Gil Raviv (5)
10.10 Form of Export Property Sale, Commission and Lease Agreement between the
Company and Bio-logic International Corporation (6)
10.11 Agreement and General Release between the Company and Gil Raviv (9)
10.12 Letter dated May 2, 1994 from First American Bank to the Company (10)
10.13 Letter of Intent dated June 30, 1994 by and among the Company, Luther Medical
Products, Inc. and Neuro Diagnostics, Inc. (11)
10.14 Asset Purchase Agreement dated as of July 1, 1994 by and among the Company, NDI
Acquisition Corp., Luther Medical Products, Inc. and Neuro Diagnostics, Inc. (12)
21. Subsidiaries of the Company (8)
23. Consent of Independent Auditors (13)
27. Financial Data Schedule
</TABLE>
11
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
- -----------------------
(1) Incorporated by reference from the Company's Registration
Statement on Form S-18 filed on August 7, 1981 (File No.
2-73587-C).
(2) Incorporated by reference from the Company's Report on Form
10-Q for the quarter ended August 31, 1983.
(3) Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended February 28, 1985.
(4) Incorporated by reference from the Company's Report on Form
10-Q for the quarter ended November 30, 1985.
(5) Incorporated by reference from the Company's Registration
Statement on Form S-1 (File No. 33-5471).
(6) Incorporated by reference from the Company's Report on Form
10-Q for the quarter ended May 31, 1986.
(7) Incorporated by reference from the Company's Annual Report on
Form 10-K for the Fiscal Year ended February 28, 1987.
(8) Incorporated by reference from the Company's Annual Report on
Form 10-K for the Fiscal Year ended February 28, 1990.
(9) Incorporated by reference from the Company's Annual Report on
Form 10-K for the Fiscal Year ended February 28, 1993.
(10) Incorporated by reference from the Company's Annual Report on
Form 10-K for the Fiscal Year ended February 28, 1994.
(11) Incorporated by reference from the Company's Report on Form
10-Q for the quarter ended May 31, 1994.
(12) Incorporated by reference from the Company's Report on Form
10-Q for the quarter ended August 31, 1994.
(13) Incorporated by reference from the Company's Annual Report on
Form 10K-SB for the Fiscal Year ended February 28, 1995.
(b) The Registrant did not file any reports on Form 8-K during the three
months ended May 31, 1995
12
<PAGE>
BIO-LOGIC SYSTEMS CORP
FORM 10Q-SB
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 14, 1995 By: /s/ Gabriel Raviv
-------------------------------
Gabriel Raviv, President
Date: July 14, 1995 By: /s/ William K. Roenitz
-------------------------------
William K. Roenitz,
Controller and Asst. Treasurer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-END> MAY-31-1995
<CASH> 564,495
<SECURITIES> 3,360,887
<RECEIVABLES> 3,701,442
<ALLOWANCES> 136,098
<INVENTORY> 2,887,927
<CURRENT-ASSETS> 8,852,652
<PP&E> 4,271,604
<DEPRECIATION> 2,300,999
<TOTAL-ASSETS> 13,320,836
<CURRENT-LIABILITIES> 1,693,152
<BONDS> 892,248
<COMMON> 41,477
0
0
<OTHER-SE> 10,606,410
<TOTAL-LIABILITY-AND-EQUITY> 13,320,836
<SALES> 3,666,987
<TOTAL-REVENUES> 3,666,987
<CGS> 1,313,262
<TOTAL-COSTS> 1,313,262
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,000
<INTEREST-EXPENSE> 18,962
<INCOME-PRETAX> 406,564
<INCOME-TAX> 129,000
<INCOME-CONTINUING> 277,564
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 277,564
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
