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 November 30, 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
(State or other jurisdiction of incorporation or organization)
36-3025678
(I.R.S. Employer Identification Number)
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 January 11, 1996
Common Stock $.01 par value 4,228,919 shares
Traditional Small Business Disclosure Format
Yes X No
<PAGE>
TABLE OF CONTENTS
Part I. Financial Information
Page
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at November 30, 1995
and February 28, 1995 3
Condensed Consolidated Statements of Operations and Retained
Earnings for the three and nine months ended November 30, 1995
and 1994 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended November 30, 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 I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
<TABLE>
NOVEMBER 30, 1995 FEBRUARY 28, 1995
------------------- -------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,534,244 $ 1,187,388
Marketable securities 2,956,573 1,627,660
Accounts receivable, net 3,539,553 3,105,769
Inventories 2,960,774 2,895,987
Prepaid expenses 59,887 91,144
Deferred income taxes 139,442 139,251
----------------- -----------------
Total current assets 11,190,473 9,047,199
PROPERTY, PLANT AND EQUIPMENT - Net 1,915,494 2,012,121
MARKETABLE SECURITIES 0 1,727,440
OTHER ASSETS 1,006,765 712,924
------------------ -----------------
TOTAL ASSETS $ 14,112,732 $ 13,499,684
================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 116,292 $ 110,649
Accounts payable 479,227 698,410
Accrued salaries & payroll taxes 614,346 513,558
Accrued interest & other expenses 244,329 445,065
Accrued income taxes 208,235 162,274
Deferred revenue 264,107 191,701
------------------ -----------------
Total current liabilities 1,926,536 2,121,657
LONG-TERM DEBT - Less current maturities 720,332 808,726
DEFERRED INCOME TAXES 200,048 200,048
------------------ -----------------
Total liabilities 2,846,916 3,130,431
------------------ -----------------
SHAREHOLDERS' EQUITY:
Capital stock, $.01 par value. Authorized10,000,000
shares, issued and outstanding 4,227,869 shares at
November 30, 1995 and 4,146,949 at February 28, 1995 42,279 41,469
Additional paid-in capital 5,474,853 5,342,371
Retained Earnings 5,748,684 4,985,413
------------------ -----------------
Total shareholders' equity 11,265,816 10,369,253
------------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $14,112,732 $ 13,499,684
=================== =================
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
<PAGE>
Bio-logic Systems Corp
Form 10Q-SB
Condensed Consolidated Statements of Operations and Retained Earnings
(Unaudited)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
November 30, November 30,
----------------------- --------------------
1995 1994 1995 1994
------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 4,008,417 $ 3,012,914 $ 11,120,166 $ 8,078,842
COST OF SALES 1,390,843 999,932 3,816,175 2,851,825
------------ ----------- ------------ -------------
Gross Profit 2,617,574 2,012,982 7,303,991 5,227,017
------------ ----------- ------------ -------------
OPERATING EXPENSES:
Selling, general & administrative 1,895,315 1,482,931 5,130,310 4,028,133
Research & development 393,563 417,525 1,139,845 1,186,057
------------ ----------- ------------ -------------
Total operating expenses 2,288,878 1,900,456 6,270,155 5,214,190
------------ ----------- ------------ -------------
OPERATING INCOME 328,696 112,526 1,033,836 12,827
OTHER INCOME (EXPENSE):
Interest income 46,251 51,065 137,046 154,356
Interest expense (12,708) (17,718) (46,447) (45,761)
Miscellaneous 358 847 (1,864) 1,314
------------ ------------ ------------ -------------
TOTAL OTHER INCOME 33,901 34,194 88,735 109,909
INCOME BEFORE
INCOME TAXES 362,597 146,720 1,122,571 122,736
PROVISION FOR INCOME TAXES 117,200 18,000 359,300 15,000
------------ ----------- ------------ -------------
NET INCOME $ 245,397 $ 128,720 $ 763,271 $ 107,736
============ =========== ============ =============
RETAINED EARNINGS, 5,503,287 4,224,017 4,985,413 4,245,001
------------ ----------- ------------ -------------
BEGINNING OF PERIOD
RETAINED EARNINGS,
END OF PERIOD $ 5,748,684 $ 4,352,737 $ 5,748,684 $ 4,352,737
============ =========== ============ =============
EARNINGS PER SHARE:
Primary and Fully Diluted $ 0.06 $ 0.03 $ 0.18 $ 0.03
============ =========== ============ =============
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
<PAGE>
Bio-logic Systems Corp
Form 10Q-SB
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
NINE MONTHS ENDED NOVEMBER 30,
------------------------------
1995 1994
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 763,271 $107,736
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation and amortization 264,216 240,086
Provision for bad debts 21,000 3,000
Provision for inventory valuation 160,390 3,750
(Increases) decreases in assets:
Accounts receivable (454,784) (473,193)
Inventories (225,177) (598,531)
Income taxes receivable 0 (17,625)
Prepaid expenses 31,066 14,527
Increases (decreases) in liabilities:
Accounts payable (219,183) 81,354
Accrued liabilities and deferred revenue (27,542) 160,339
Accrued income taxes 45,961 (69,713)
----------- ------------
Net cash flows from operating activities 359,218 (548,270)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (104,528) (132,310)
Investments in other assets (356,902) (170,890)
Purchases of investments held to maturity (691,259)
Proceeds from sales of investments 390,150
Proceeds from maturities of investments 398,527 724,480
------------ -----------
Net cash flows from investing activities (62,903) 120,171
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 133,292 25,307
Payments of long-term debt (82,751) (77,442)
------------ ------------
Net cash flows from financing activities (62,903) (120,171)
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 346,856 (480,234)
CASH AND CASH EQUIVALENTS - Beginning of period 1,187,388 1,010,329
----------- ------------
CASH AND CASH EQUIVALENTS - End of period $ 1,534,244 $ 530,095
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid during the period for:
Interest $ 50,119 $ 48,359
============== =============
Income Taxes $ 313,339 $ 131,194
============== =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
NOTES TO 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 and nine months ended November 30, 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 4,375,436 and 4,354,131 for the quarters ended November 30,
1995 and 1994, respectively, and 4,334,203 and 4,284,691 for the nine
months ended November 30,1995 and 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 for computing fully
diluted earnings per share were 4,380,583 and 4,361,289 for the
quarters ended November 30, 1995, and 1994, respectively, and 4,356,609
and 4,310,625 for the nine months ended November 30, 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.
<PAGE>
Deferred tax assets and liabilities as of November 30, 1995 are comprised of the
following:
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 4,372
Tax credit carry-forwards 11,856
Less: current deferred tax -
DISC income deferral (72,292)
-----------
Total deferred current tax assets-net 139,442
Net deferred tax liability $ 60,606
===========
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 accreted using the simple-interest method.
<PAGE>
INVESTMENT SECURITIES HELD-TO-MATURITY
The amortized cost, unrealized gains, unrealized losses and estimated fair
values of investment securities are summarized as follows:
<TABLE>
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
AMORTIZED COST GAINS LOSES VALUE
-------------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
NOVEMBER 30, 1995
- -----------------
U.S. Government Securities $ 2,956,573 $ 551 $ 0 $ 2,957,124
NOVEMBER 30, 1994
- -----------------
U.S. Government Securities $ 3,919,630 $ 0 $ 83,527 $ 3,836,103
</TABLE>
At November 30, 1995, the maturities of marketable securitiesheld-to-maturity as
follows:
ESTIMATED FAIR
AMORTIZED COST VALUE
TERM TO MATURITY -------------- ---------------
- ----------------
Due one year or less $ 2,956,573 $ 2,957,124
Due after one year through
five years 0 0
-------------- ---------------
Total $ 2,956,573 $ 2,957,124
============== ===============
6. 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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of November 30, 1995, Bio-logic Systems Corp., (the "Company") had
working capital of $9,263,937 including $4,490,817 in cash, cash equivalents and
short-term investments. 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.
RESULTS OF OPERATIONS
Net sales for the three and nine month periods ended November 30, 1995
("1995 three and nine months") increased by approximately 33% and 38% to
$4,008,417 and $11,120,166, respectively, as compared to $3,012,914 and
$8,078,842 for the three and nine month periods ended November 30, 1994 ("1994
three and nine months"), respectively. Domestic sales increased 36% and 42% for
the 1995 three and nine months to $3,308,546 and $8,497,486, respectively, from
$2,439,414 and $5,963,876 for the 1994 three and nine months, respectively.
These increases reflect higher net sales in the majority of the Company's
product lines, particularly the CeegraphTM, and Navigator3/4 models.
Foreign sales for the 1995 three and nine months were $699,871 and
$2,622,680, respectively, compared to $573,500 and $2,114,966 for the 1994 three
and nine months, respectively, an increase of 22% and 24%, respectively. As a
percentage of net sales, foreign sales contributed 17% and 24% for the 1995
three and nine months, respectively, a decrease of 2% from both the 1994 three
and nine months.
Cost of equipment sold as a percentage of net sales increased to 35%
and decreased to 34% for the 1995 three and nine months, respectively, compared
to 33% and 35% for the 1994 three and nine months, respectively. The increase in
cost of sales in the 1995 three months is due in part to volume sales discounts
on multiple system orders, while the overall decrease in cost of sales for the
1995 nine months is attributable to increased sales of higher margin products
and increased efficiencies in the manufacturing processes.
Selling, general and administrative expenses were $1,895,315 and
$5,130,310 for the 1995 three and nine months, respectively, compared to
$1,482,931 and $4,028,133 for the 1994 three and nine months, respectively. As a
percentage of net sales, selling, general and administrative expenses decreased
to 47% and 46% for the 1995 three and nine months, respectively, from 49% and
50% for the 1994 three and nine months, respectively. These increases in the
1995 three and nine months reflect additional sales expenses associated with
higher net sales, such as sales commissions and travel, plus additional costs
associated with an expanded sales function.
Research and development costs decreased by 6% and 4% to $393,563 and
$1,139,845 for the 1995 three and nine months, respectively, from $417,525 and
$1,186,057 for the 1994 three and nine months, respectively. As a percentage of
net sales, total research and development costs decreased to 10% for both the
1995 three and nine months compared to 14% and 15% for the 1994 three and nine
months, respectively.
<PAGE>
These decreases in the 1995 three and nine months are attributable in part to
the capitalization of approximately $83,400 and $218,400, respectively, in
certain research and development costs associated with specific identifiable
future products. The Company continues to place a significant emphasis on
research and development.
The Company's operating income increased by approximately 200% and
8,000% to $328,696 and $1,033,836 for the 1995 three and nine months,
respectively, compared to $112,526 and $12,827 for the 1994 three and nine
months, respectively. These operating profits for the 1995 three and nine months
were the result of significantly higher net sales and increased profit margins,
slightly offset by higher selling, general and administrative expenses.
Net interest income decreased to $90,599 from $108,595 for the 1995 and
1994 nine months, respectively. This decrease reflects lower investment returns
and higher interest rates on long-term debt.
The income tax provision of $117,200 and $359,300 or 32% of income
before taxes for both the 1995 three and nine months, respectively, and the
income tax provision of $18,000 and $15,000 or 12% of income tax before taxes
for both the 1994 three and the nine months, respectively, differ from the
federal statutory rate of 35% due to various permanent tax differences.
The Company had net income of $245,397 and $763,271 or $0.06 and $0.18
per share for the 1995 three and nine months, respectively, compared to $128,720
and $107,736 or $0.03 per share for both the 1994 three and nine months,
respectively. The higher earnings reflect higher net sales from generally all
the Company's product lines less expected increases in sales expenses, as
previously discussed.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) Exhibits
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
<PAGE>
- -------------------------
(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 November 30, 1995.
<PAGE>
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: January 11, 1996 By: /s/ Gabriel Raviv
---------------------------
Gabriel Raviv, President
Date: January 11, 1996 By: /s/ William K. Roenitz
----------------------------
William K. Roenitz,
Controller and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-22-1996
<PERIOD-END> NOV-30-1995
<CASH> 1,534,244
<SECURITIES> 2,956,573
<RECEIVABLES> 3,693,651
<ALLOWANCES> 154,098
<INVENTORY> 2,960,774
<CURRENT-ASSETS> 11,190,473
<PP&E> 4,348,928
<DEPRECIATION> 2,433,434
<TOTAL-ASSETS> 14,112,732
<CURRENT-LIABILITIES> 1,926,536
<BONDS> 836,624
<COMMON> 42,279
0
0
<OTHER-SE> 11,223,537
<TOTAL-LIABILITY-AND-EQUITY> 14,112,732
<SALES> 11,120,166
<TOTAL-REVENUES> 11,120,166
<CGS> 3,816,175
<TOTAL-COSTS> 3,816,175
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 21,000
<INTEREST-EXPENSE> 46,447
<INCOME-PRETAX> 1,122,571
<INCOME-TAX> 359,300
<INCOME-CONTINUING> 763,271
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 763,271
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
