<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10K-SB
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 1997
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 No. 0-12240
BIO-LOGIC SYSTEMS, CORP.
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(Name of Small Business Issuer in its charter)
Delaware 36-3025678
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Bio-logic Plaza, Mundelein, Illinois 60060-3700
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (847) 949-5200
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Securities registered under Section 12(b) of the Act:
Name of each exchange
Title of Each class on which registered
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None None
Securities registered under Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
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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 registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
YES /X/ NO/ /
Check here if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10K-SB or any amendment to
this Form 10K-SB. / /
State the issuer's revenues for its most recent fiscal year: $14,856,955.
As of May 21, 1997 the issuer had 3,943,209 shares of Common Stock
outstanding. The aggregate market value of the Common Stock held by
nonaffiliates as of May 21, 1997 was approximately $7.6 million.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
PART III
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Item 9. Directors,
Executive Officers, To be included in the
Promoters and Control Proxy Statement to be
Persons; Compliance with filed pursuant to
with Section 16(a) of the Regulation 14A not
Exchange Act later than 120 days
after the end of the
Item 10. Executive Compensation Registrant's fiscal year.
Item 11. Security Ownership
of Certain Beneficial
Owners and Management
Item 12. Certain Relationships
and Related Transactions
</TABLE>
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<PAGE> PART I
ITEM 1. BUSINESS
(a) General Development of Business
Bio-logicR Systems Corp. ("Bio-logic" or the "Company") designs,
develops, assembles and markets computer-based electro-diagnostic systems for
use by hospitals, clinics, universities and physicians. The principal
electro-diagnostic procedures performed by the Company's systems include digital
electroencephalography, for routine and long-term monitoring, evoked response
testing, computerized electromyography, polysomnography, topographic brain
mapping, and other quantitative EEG analyses. These tests are typically used by
medical practitioners specializing in fields such as neurology, otolaryngology,
audiology, anesthesiology, pulmonology, and psychiatry to aid in diagnosis of
certain neurological, sensory, and psychiatric disorders, and to monitor brain
function in the intensive care unit and operating theater.
The Company was incorporated under the laws of the State of Delaware
in August 1981 as a successor to an Illinois corporation formed in March 1979.
All references herein to the Company include, unless otherwise indicated, the
operations of the Company and its wholly-owned subsidiaries. On July 1, 1994,
the Company acquired certain assets and assumed certain liabilities of Neuro
Diagnostics, Inc. ("NDI"), a wholly-owned subsidiary of Luther Medical Products,
Inc. NDI, now a wholly-owned subsidiary of the Company, develops, manufactures
and distributes high technology human nervous system testing equipment for use
by hospitals, clinics and physicians. The Company's executive offices are
located at One Bio-logic Plaza, Mundelein, Illinois 60060-3700.
(b) Financial Information About Industry Segments
The Company operates in one business segment: the design,
development, assembly and marketing of computerized medical electro-diagnostic
systems for use in the health care field.
(c) Narrative Description of Business
Bio-logic designs, develops, assembles and markets computer-based
electro-diagnostic systems for use by hospitals, clinics, universities and
physicians. The principal electro-diagnostic procedures performed by the
Company's systems include computerized electroencephalography, for routine and
long-term monitoring, topographic brain mapping, and evoked response testing,
sleep analysis and computerized electromyography. These tests are typically used
by medical practitioners specializing in fields such as neurology, psychiatry,
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audiology, otolaryngology, anesthesiology and psychology to aid in diagnosis of
certain neurological, psychiatric and sensory disorders, psychological and
learning disorders, brain disorders and tumors.
Bio-logic's systems are in modular form and consist of IBM* PC
compatible microcomputers purchased from third parties, interfaced with software
and peripheral devices developed and manufactured by the Company. Any
combination of available diagnostic tests can be included in a system depending
on the user's specialty and requirements. The Company has developed software
which enables medical personnel to administer diagnostic tests, to control
various aspects of the testing and to record and process data generated by the
tests. Operation of any of the Company's systems does not require programming
skills on the part of the customer. The Company believes that its systems allow
users to test patients on a cost efficient basis and that cost effectiveness and
ease of operation are important competitive advantages of its systems.
The Company's systems perform tests by means of computer programs
which are controlled by flexible software. The monitor screen displays a menu of
instructions prompting the operator to input information, test parameters or
specific hardware setting adjustments. Testing can be interrupted, continued or
aborted at any time. The Company's systems can be expanded beyond the main
system to include remote monitors or "data analysis stations." Data can be
collected on the main system and analyzed on data analysis stations placed in
convenient locations. Because the Company's system is compatible with the IBM
PC, the user's IBM compatible computer can be converted into a data analysis
station for a Bio-logic system, and a variety of commercially available
programs, such as word processing and database management, can be used.
Bio-logic is incorporating remote communications capabilities in its
product lines through both modem communications and computer networks. These new
information capabilities provide (a) the ability to view in real time tests
being conducted on a remote system, which is particularly useful for
consultation during monitoring in the operating room in connection with tests
performed at alternate sites outside the hospital; (b) electronic transfer of
test results, reports and patient information among different systems; (c)
review and analysis of records stored in a remote location; and (d) sharing of
archiving media (such as optical disks) and printing devices among several
systems. These enhancements are designed to increase the efficiency and
productivity of operations and minimize duplication of equipment by customers of
the Company's systems.
The Company's systems are sold to hospitals, universities and private
clinics and physicians to test and monitor patients as well as conduct research.
Bio-logic has a continuing program to develop new applications of
electro-diagnostic testing.
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* A trademark of International Business Machines Corp.
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Computerized Electroencephalograph (EEG)
The Company's CeegraphTM line of computerized EEG systems records,
displays, stores, and analyzes the spontaneous brain electrical activity from
various locations on a patient's scalp. Traditional EEG machines provide only
paper tracings of EEG recordings. The Ceegraph offers the user the option of
storing the information in digital form for later display on a color monitor.
This allows the user added flexibility in display and analysis capabilities.
Furthermore, digital analysis allows increased sensitivity to subtle functional
abnormalities that may not be perceived in paper tracings of the raw data. The
Ceegraph minimizes the need for hard copies of all recorded data thereby
significantly reducing paper supply and storage expenses.
The Ceegraph line includes a series of several products ranging from
a hardware and software kit, which the customer can add to his own
IBM-compatible computer to create a digital EEG system, to a portable EEG system
and/or an advanced stationary system with multiple capabilities for EEG,
quantitative EEG analysis, and other neurological applications. The Ceegraph
line also includes a Ceegraph Reader-TM-which permits fast and easy review in a
graphic display. The Ceegraph line is priced from approximately $25,000 to
$60,000 depending upon the model.
A video option allows videotape recording of a patient during EEG
acquisition. Computerized control of the VCR provides synchronous recording of
EEG and video for long-term epilepsy monitoring and other applications.
SmartPack-TM-, a software option available with the Ceegraph line, is
an innovative data compression process that saves about 60% in storage and
archiving space. Data compression is performed in real-time with no loss of
information.
The Ceegraph Traveler-Registered Trademark- is a solid-state
battery-operated ambulatory recorder for epilepsy monitoring that records
continuous information from 24 channels and saves data on a removable PCMCIA
hard disk. Data can immediately be reviewed and analyzed by the Ceegraph
analysis program and subjected to automatic spike and seizure analysis.
SmartTrack-TM- is another Ceegraph software option used for automatic
analysis of epileptic spikes and seizures. This system was developed through a
collaboration between the Company and Johns Hopkins Epilepsy Center and is used
to assist in the identification of clinical EEG events indicative of epilepsy.
The detection algorithm is based on a neural-network approach and can be used in
real time or off line. The same system is used to analyze long-term records
obtained in the hospital and ambulatory recordings performed with the Ceegraph
Traveler off site.
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Quantitative EEG
The Company offers a series of products for advanced analysis of EEG
and evoked potentials, including (i) topographic brain mapping, which is used,
among other things, to evaluate the effects of drug treatments, psychiatric and
other behavioral disorders and field distribution of epileptic spikes and
seizures, (ii) dipole source localization, which is used in modeling and
characterizing the intracranial source of brain electrical activity and as an
aid in noninvasive evaluation of epilepsy, and (iii) compressed spectral array,
a quantitative analysis of EEG spectra, which is used in intensive care and
operating room monitoring. These products are priced from approximately $25,000
to $60,000 depending upon the model.
Distortion Product Otoacoustic Emissions Testing
Distortion Product Otoacoustic Emissions (DPOAE) testing is a
non-invasive, objective technique for evaluating the function of the cochlea,
the sensory organ of the auditory system. The system introduces two pure tones
of known intensity and frequency parameters into the patient's ear canal and
measures the small amplitude acoustic response generated by the outer hair cells
in response to the signal. The measurement of an emission greater in amplitude
then the level of the ambient acoustic noise suggests functional cochlear
structures. The Company offers a series of products for DPOAE measurements,
which are used in clinical practice to diagnose hearing/auditory impairments.
They can also be used in hospital neonatal intensive care units or well-baby
nurseries as a peripheral hearing screening tool.
In April 1997, the Company introduced its recently developed AuDX
system, which is designed to routinely test the hearing of toddlers and
school-age children who currently cannot be objectively screened for
audiological problems. AuDX is a battery-operated, hand-held device designed to
detect hearing impairment which is being marketed by the Company to
pediatricians, family practitioners and schools. The Company is unaware of any
other product comparable to AuDX currently being marketed.
Evoked Response Testing
Evoked response testing is an accepted, non-invasive and objective
technique for evaluating the peripheral and central nervous systems. An evoked
response test measures the reaction to a stimulus by monitoring the electrical
activity in the patient's brain. By comparing the magnitude and timing of the
response in a particular patient to normal patterns of response, a physician is
aided in his evaluation of the patient's neurological pathways.
Evoked response testing facilitates the diagnosis of a number of
disorders. Evoked response testing provides information that can be used in the
investigation of neurological and sensory disorders, brain tumors, and damage to
the brainstem. The Company provides modular systems which can perform auditory,
visual and somatosensory evoked response tests. The auditory evoked response
testing evaluates the function and disorders of the central and peripheral
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auditory system. Visual testing is used to diagnose disorders of the
visual system and somatosensory testing is used to test various segments of
the central nervous system.
The evoked response tests performed by the Company's systems may be
used to test hearing and sight of patients who are unable to communicate
effectively, such as infants and mentally impaired individuals. Evoked response
testing may also be utilized in intensive care units as a method of confirming
brain death and in intraoperative monitoring, a recently developed application.
Surgical procedures of the back, head, neck and other areas involving the
central nervous system can be monitored to reduce risks to the patient and
improve outcomes. In addition, pharmacologists are using these measurements to
study the interaction of drugs and their effects on living organisms, and
researchers have used the test data to study the effects of pollution and
chemicals on the human body. The approximate selling price of the evoked
response systems, which consist of the Company's Explorer-TM-, EP
Navigator-Registered Trademark- and Traveler, range from $15,000 to $70,000
depending upon the number and types of tests included.
Ophthalmologists and neurologists may use the system to conduct
electroretinogram (ERG) and electro-oculogram (EOG) testing. The ERG measures
the electrical activity of the eye in response to light. ERG results are used
in the diagnosis and monitoring of retinitis pigmentosa and other hereditary
retina diseases. The EOG is a recording and analysis of eye movement and
position. EOG results are used in the diagnosis and monitoring of inherited
disorders in vision, early diabetic retinopathy, macular degeneration,
diffuse cone degeneration, Beat's dystrophy, and congenital night blindness.
Both ERG and EOG provide insight into the nature and extent of the disease
process and thereby can aid specific diagnosis of some diseases.
Computerized Polysomnography
SleepscanTM is a computerized system for sleep scoring and
respiratory analysis. The analysis of sleep and respiratory patterns has
proven useful in the diagnosis and treatment of sleep related diseases, some
of them life threatening, such as apnea, insomnia, and narcolepsy. Other
specialities analyze sleep patterns to study mental disorders like
depression, sexual dysfunction, and more.
A routine sleep study entails whole-night recordings of brain
electrical activity, muscle movement, air flow, respiratory effort, oxygen
levels and EKG. These recordings result in over 1,000 pages of paper traces
which have to be reviewed, analyzed, scored by a specialist, and summarized
in a report. This process is costly and time consuming.
Sleepscan stores all the information digitally on magnetic and
optic media. A high resolution fast display offers an alternative to costly
and bulky paper. This flexible system enables the user to specify rules to be
used during analysis. This analysis can rapidly be performed by the computer,
and the results are summarized graphically and incorporated in a detailed
report which is readily available. The user has the ability to verify the
analysis, manually override sections as needed, modify parameters and
reanalyze data. Sleepscan offers savings in time and the cost of
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paper and paper storage. Sleepscan is interfaced with a Ceegraph EEG
System, and is priced from approximately $25,000 to $60,000 depending on the
model.
The Company also offers a portable Sleepscan Express system with
32-channel recording capability and built-in oximeter. Whereas other portable
sleep analysis systems provide only summary analysis and fewer channels, the
Sleepscan Express is the first truly portable sleep system with full data
disclosure of up to 32 channels. Records can be analyzed on other desktop
Sleepscan systems.
Sleepscan Traveler, introduced in spring of 1997, is a solid-state,
battery operated ambulatory recorder for sleep and epilepsy monitoring. It
records continuous information on 8, 19, or 27 channels. The data, which is
saved on a PCMCIA removable miniature hard disk for easy access, can be
immediately reviewed and analyzed by the Extended Analysis Sleep Program and the
Computer-Assisted Arousal and Sleep Staging Program, software programs available
with the Sleepscan Traveler.
Computerized Electromyography
The Company's Explorer-TM- is used in the field of electromyography
(EMG). EMG systems are typically used by neurologists to aid in the assessment
of neuromuscular function. The Explorer allows digital processing, display and
storage of neuromuscular information, together with real-time display of
muscular activity, which previously had been available only through the
utilization of traditional analog displays. The Explorer complements the
Company's product line in that it is intended to meet the electro-diagnostic
needs of neurologists and other clinicians. The Company discontinued sales of
its EMG Navigator product during fiscal 1997. In addition, NDI's products are
used in electrodiagnostic studies that include electromyography and evoked
potential testing. These tests are typically performed by neurologists,
physiatrists, and electrodiagnostic technicians to diagnose nerve and muscle
disorders.
Brain Mapping
The Company offers a series of Brain AtlasR systems, which vary
depending on features and capabilities. Brain Atlas detects, and presents a
series of topographical maps which actively display in color on the computer
screen, the on-going electrical activity of the brain. The different colors
and shades indicate the magnitude of positive or negative electroencephalograph
(EEG) voltages simultaneously measured at various scalp locations. The Brain
Atlas has the capability of providing an on-line, simultaneous display of
voltage-time plots and topographic maps. The maps displayed can be paused, moved
forward or reversed one frame at a time when the clinician wants to pinpoint an
exact time period for detailed analysis. The data acquired can be printed out
immediately on a multi-color printer for a permanent patient record or stored on
disk for future evaluation and printing.
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Product Development
Bio-logic's development activities consist primarily of developing
new products and adding new features to and enhancing the capabilities of the
existing products. Refinements to the Company's systems are also developed in
response to users' suggestions. During fiscal 1997 and 1996, Bio-logic expended
$1,873,716, and $1,536,671, respectively, for research and development.
The Company's research and product development activities include
further development of the Bio-logic Ceegraph, a computerized EEG which contains
high-definition resolution graphics; Ceegraph Express, a portable EEG system;
Sleepcan, a system for computerized polysomnography; Sleepscan Express, a
portable system with full data disclosure; and the Explorer, an EMG system for
measuring muscle activity. The Company has and is continuing to develop
Distortion Otoacoustic Emission (DPOAE) equipment for the audiology market, an
8-channel EMG/EP system for intraoperative monitoring, a polysomnography system
with ultra-high color resolution and long-term monitoring for the sleep market.
The Company has also developed an EEG system with long-term video monitoring and
spike/seizure detection for the epilepsy monitoring market and hardware
improvement to the portable Scout-TM- Sport, one of the Company's DPOAE
products, may result in new markets for audiologic screening.
The latest development is a 128-channel ambulatory recorder for EEG
and sleep. The system features continuous data disclosure saved on high-capacity
PCMCIA removable miniature hard disks. The Company anticipates that it will
continue to incur significant research and development expenditures in
connection with the introduction of new products and new models and upgrades of
existing products. Additionally, from time to time the Company may seek to
license or acquire complementary technologies from third parties.
The Company's brain mapping system, the Brain Atlas, was developed by
a wholly-owned subsidiary under a research and development agreement with a
limited partnership (the "Partnership"). On August 31, 1995, the Company
purchased the assets of the Partnership, consisting of the rights to the brain
mapping technology, for $60,000.
The Company is a party to a number of other research and development
agreements under which, as of February 28, 1997, the Company had received an
aggregate of approximately $1,087,000. The Company is required to pay royalties
based on sales of any product developed under such agreements, or in the event
of licensing of such products to a third party. The total payments by the
Company, including royalties and licensing fees, will not exceed 150% of the
amounts received under such agreements. As of February 28, 1997, the Company has
paid royalties of $923,170 under such agreements.
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Sales and Marketing
The Company's marketing efforts are directed at medical
practitioners, hospitals and clinics. Sales are presently conducted by sales
representatives and independent dealer organizations covering the United States
and Canada. Some of these distributors may also represent other companies
offering products competitive with those of the Company. The Company's marketing
efforts are directed and controlled from its corporate headquarters in the
Chicago area. The Company has an overseas office to cover European and Middle
Eastern markets and has arrangements with foreign distributors to sell the
Company's products overseas, including the Far East and Latin America. No one
customer or distributor has accounted for over 10% of the Company's revenues.
To demonstrate, promote and market its systems, Bio-logic attends
seminars and trade shows organized by others and sponsors its own educational
and sales oriented seminars throughout the United States. Selling and marketing
programs include operations of the European sales office and sales and other
product brochures and direct mail programs.
Foreign Sales
During fiscal 1997, export sales increased to $3,605,475, or
approximately 24% of net sales, compared to $3,545,660, or approximately 24% of
net sales, in fiscal 1996. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Company is required to
obtain export licenses for sales of some of its systems to foreign countries.
Political and governmental conditions, import and export restrictions, and
currency fluctuations may adversely affect the Company's foreign business.
Customer Training, Support and Maintenance
In connection with the installation of a system, the independent
dealer's sales representative or, if the sale was made directly by the Company,
the Company's customer support personnel, train medical and office personnel in
the use of the equipment, assist in the introduction of the data into the system
and provide assistance to the customer during the initial period of operations.
The Company continues to support its technical and customer training staff.
Foreign sales are supported by the foreign distributors. The Company's practice
is to offer without additional charge a one year limited warranty on its
software and equipment for parts and labor. The Company has experienced
satisfactory field operating results and warranty expense has been insignificant
to date. The manufacturers of the microcomputer included in the Company's
systems provide a one year warranty against defects and have service
capabilities throughout the United States. In addition, the Company offers its
customers service and maintenance agreements for an additional fee. Service fees
have been insignificant to date. Software enhancements developed by the Company
are typically distributed to system users for a minimal fee.
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Assembly, System Hardward and Sources of Supply
The Company assembles its systems by integrating microcomputers,
monitors and printers and certain standard components manufactured by other
manufacturers, with peripherals and other hardware including circuit boards and
certain electronic components manufactured by Bio-logic and software packages
which it has developed. The Company's systems are composed of IBM PC compatible
microcomputers, appropriate printers and mass storage media such as Winchester
hard disks, floppy diskettes and optical or laser disks for the storage of both
operating programs and data. The Company purchases microcomputers from
distributors of such products for varying discounts depending upon the volume of
equipment purchased. The components used in the Company's systems are available
from a number of suppliers.
The microcomputer is non-dedicated and therefore adaptable for a wide
variety of applications. Making a program change or adding a new capability
usually requires only the interchanging of floppy diskettes.
The Company performs quality control and testing procedures on all
systems prior to delivery.
Patents and Trademarks
The Company currently owns six patents covering certain aspects of
its brain mapping system and other technology developed by the Company,
including a patent issued in February 1997 relating to the SmartPack. There is
no assurance that such patents will afford any commercial benefits. The Company
has registered the trademarks Bio-logic, Brain Atlas, Navigator and Traveler.
The Company has developed a number of unpublished computer software programs
which are entitled to unpublished copyright privileges as confidential
proprietary material. The Company believes that rapidly changing technology
makes its continued success dependent primarily upon the technical competence
and creative skill of its personnel rather than on patents, copyrights or other
proprietary rights.
Competition
The Company competes with a number of entities, several of which have
greater resources than the Company, which offer systems performing diagnostic
tests similar to those performed by the Company's systems. The Company's
principal competitors, some of which are substantially larger and have more
marketing personnel and greater technical resources than the Company, are
Nicolet Instrument Corporation, NCI , Inc., Nihon-Koden Corporation, Teca Corp.,
and Cadwell Laboratories, Inc. Bio-logic believes that it competes for customers
on the basis of the range and quality of software and hardware offered, and the
cost effectiveness of, its integrated system. Another major competitive factor
is its ability to tailor systems to a customer's particular diagnostic and data
processing requirements.
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Government Regulation
The Company's products, to the extent they are deemed medical
devices, are subject to government regulation by the United States Food and Drug
Administration ("FDA") and accordingly, unless determined to be exempt, are
subject to the preclearance procedures of the FDA before reaching the market.
Under FDA regulations, a medical device is classified as either a
Class I device, which is subject only to general control provisions, a Class II
device which, in addition to applicable general controls, will be made subject
to future performance standards developed by the FDA, or a Class III device
which, in addition to applicable general controls, is subject to FDA premarket
approval.
The Company's systems have been classified as Class II medical
devices as such term is defined in the regulations promulgated by the FDA. The
Company has filed 510(K) applications (notifications of intention to market)
with the FDA. The Company continues to advise the FDA as modifications and
additions are made to its systems.
In addition, all manufacturers of medical devices are required to
register with the FDA and to adhere to certain "good manufacturing practices"
and "good laboratory practices," which prescribe recordkeeping procedures and
provide for the unscheduled inspection of facilities.
Employees
As of February 28, 1997, the Company employed 89 persons full time.
The Company's business is dependent in part upon its ability to recruit and
retain qualified personnel. None of its employees are represented by a labor
union and the Company believes its employee relations are satisfactory.
Executive Officers
The executive officers of the Company are as follows:
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<CAPTION>
NAME AGE POSITION
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<S> <C> <C>
Gabriel Raviv, Ph.D. 46 President, Chief
Executive Officer,
Director
Thomas S. Lacy 54 Vice
President-Marketing
and Sales
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Gabriel Raviv has been a Director of the Company since the Company
commenced operations in March 1979. He was Vice President of the Company from
March 1979 until February 1981, when he became President and Chief Executive
Officer. He is a member of the Board of Trustees of the Mid-West Bio-Laser
Institute and an Adjunct Professor at Northwestern University. From October 1975
until January 1981, Dr. Raviv was the director of the Clinical Research
Instrumentation Laboratory at Evanston Hospital (an affiliate of Northwestern
University). Dr. Raviv received his M.S. and Ph.D. degrees in Electrical
Engineering and Computer Sciences from Northwestern University.
Thomas Lacy has been Vice President-Marketing and Sales of the
Company since January 1994. Prior thereto he was Vice President-International
of Packard Instrument Corporation from July 1992 until July 1993 and Vice
President-General Manager of Packard Instrument Company from September 1988
until July 1992.
ITEM 2. Properties
The Company's headquarters and manufacturing operations are located
in an approximately 26,000 square foot facility built by the Company on
approximately 20 acres in Mundelein, Illinois. The building and property are
owned by the Company, subject to Industrial Development Bond financing in the
original principal amount of $1,600,000. As collateral for the Bond, the Company
granted the municipality a mortgage on the property.
The Company also leases two offices overseas, both of which are
occupied pursuant to a lease providing for an annual rental of approximately
$13,800 and $34,800, respectively, subject to annual increases.
ITEM 3. Legal Proceedings
The Company is not a party to any material legal proceedings.
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
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PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder
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Matters
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(a) Price Range of Securities
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The Company's Common Stock is listed on the Nasdaq National
Market under the symbol BLSC. The Company's Warrants are listed in the "pink
sheets" but have not been priced since December 1990. The following tables
set forth the high and low sales prices of the Common Stock for the periods
indicated as reported by Nasdaq. These quotations represent prices between
dealers in securities, do not include retail mark-ups, mark-downs or
commissions and do not necessarily represent actual transactions. These
quotations are rounded to the nearest 1/16.
<TABLE>
<CAPTION>
High Low
Sales Price Sales Price
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<S> <C> <C>
Fiscal Year Ended February 28, 1997
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<C>
1st Quarter $4 1/2 $3 1/8
2nd Quarter 3 7/8 2 1/2
3rd Quarter 3 1/8 2 3/8
4th Quarter 3 1/2 2 3/8
Fiscal Year Ended February 29, 1996
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1st Quarter $3 3/4 $2 1/8
2nd Quarter 5 5/8 3 1/4
3rd Quarter 5 1/4 4 3/8
4th Quarter 5 3 1/2
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(b) Approximate Number of Equity Security Holders
---------------------------------------------
As of May 21, 1997 there were approximately 277 record
holders of the Company's Common Stock. The Company believes that there are in
excess of 400 beneficial owners of its Common Stock.
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(c) Dividends
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The Company has never paid a cash dividend on its Common
Stock and intends to continue to follow a policy of retaining earnings to
finance future growth. Accordingly, the Company does not anticipate the
payment of cash dividends to holders of Common Stock in the foreseeable
future. Under an agreement with the bank which purchased the Industrial
Development Bond issued to finance construction of the Company's
headquarters, the Company may not pay cash dividends during the term of the
Bond without the prior written consent of the bank.
ITEM 6. Managements' Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations ---------------------
The selected financial data presented below summarizes certain financial
data and should be read in conjunction with the more detailed financial
statements of the Company and the notes thereto included elsewhere in this
Annual Report on Form 10K-SB along with said financial statements.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED LAST DAY OF FEBRUARY,
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1997 1996 1995 1994 1993
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Net sales $ 14,856,955 $ 14,602,000 $ 12,072,674 $ 10,749,332 $ 10,958,308
Operating income 811,712 1,204,459 787,150 403,994 (37,665)
Net income (1)(2) 683,845 892,091 740,412 539,755 99,809
Net income per share(2) 0.17 0.21 0.18 0.13 0.02
Working capital 7,645,040 9,428,915 6,925,542 8,204,175 7,888,372
Total assets 13,924,402 14,379,986 13,499,684 12,323,224 11,942,433
Long-term debt 562,879 689,877 808,726 919,950 1,024,036
Total liabilities 2,725,000 2,982,675 3,130,431 2,740,415 2,601,655
Shareholders' equity $ 11,199,402 $ 11,397,311 $ 10,369,253 $ 9,948,140 $ 9,392,266
Shares outstanding(3) 4,144,075 4,344,913 4,227,823 4,300,839 4,437,146
</TABLE>
- ------------------------
(1) Includes net interest income of $170,864, $114,412, $137,972, $185,855
and $98,334 in fiscal 1997, 1996, 1995, 1994 and 1993, respectively.
-16-
<PAGE>
(2) In fiscal 1993, net income and net income per share include an income
tax benefit of $68,000.
(3) Weighted average number of common and dilutive common equivalent shares
calculated at year-end market prices.
Results of Operations
- ---------------------
Fiscal 1997 Compared To Fiscal 1996
-----------------------------------
Net sales for fiscal 1997 were $14,856,955, a 2% increase from
net sales of $14,602,000 during fiscal 1996. Domestic sales in fiscal 1997
increased by 2% to $11,251,480 from $11,056,340 in fiscal 1996. Foreign sales
in fiscal 1997 increased by 2% to $3,605,475 compared to $3,545,660 for
fiscal 1996. As a percentage of net sales, domestic and foreign sales for
both fiscal 1997 and fiscal 1996 were 76% and 24%, respectively. The increase
in net sales reflects higher system sales of the Ceegraph, EP Navigator and
Traveler product lines, partially offset by lower net sales in the Explorer
and sleep product lines.
Cost of equipment sold increased to $5,140,195 during fiscal
1997 compared to $5,044,415 for fiscal 1996, and as a percentage of net sales
remained at approximately 35% during both fiscal 1997 and fiscal 1996.
Selling, general and administrative expenses increased by
approximately 3% to $7,031,332 during fiscal 1997 compared to $6,816,455 for
fiscal 1996, and as a percentage of net sales, remained at 47% for both
fiscal 1997 and fiscal 1996. Selling, general and administrative expenses for
fiscal 1997 were higher primarily due to increased advertising costs and
higher travel expenses.
Research and development expenses increased by approximately
22% to $1,873,716 during fiscal 1997 from $1,536,671 in fiscal 1996, and as a
percentage of net sales, increased to approximately 13% in fiscal 1997 from
11% in fiscal 1996. The increase in research and development costs was mainly
due to higher individual salaries plus the reduction in the capitalization of
certain research and development costs aligned with specific identifiable
future products. The capitalization of these future products amounted to
approximately $144,402 and $305,751 during fiscal 1997 and 1996,
respectively. Finally, the amortization expense of these capitalized research
and development costs increased to $90,503 in fiscal 1997 compared to $55,547
in fiscal 1996. Bio-logic continues to place a significant emphasis on
research and development.
For fiscal 1997, the Company had operating income of $811,712
compared to operating income of $1,204,459 for fiscal 1996. The decrease in
operating income for fiscal 1997 was due to higher selling, general and
administrative costs plus higher research and development expenses, offset by
higher net sales.
-17-
<PAGE>
The Company had net interest income of $170,864 for fiscal 1997
compared to $114,412 for fiscal 1996. The increase of net interest income is
primarily due to higher interest income earned on marketable securities and
lower interest expense on short and long term debt.
The provision for income taxes during fiscal 1997 was
approximately 30% of income before taxes, compared to 32% of income before
taxes in fiscal 1996. The tax provision as a percentage of net income in
fiscal 1997 was lower due to differences in foreign income and corresponding
taxes rates.
The Company had net income of $683,845 or $.17 per share for
fiscal 1997 compared to $892,091 or $.21 per share for fiscal 1996. The
decrease in net income was the result of higher research and development
costs and selling, general and administrative expenses, partially offset by
higher net sales.
Liquidity and Capital Resources
- -------------------------------
Prospective investors are cautioned that the statements in this
Annual Report on Form 10K-SB that are not descriptions of historical facts
may be forward looking statements that are subject to risks and
uncertainties. Actual results could differ materially from those currently
anticipated due to a number of factors, including those identified elsewhere
in this report or documents incorporated by reference herein.
As of February 28, 1997, the Company had working capital of
$7,645,040; including $2,425,694 of cash, cash equivalents and short-term
investments and $3,583,673 of accounts receivable. In addition, as of
February 28, 1997, the Company had long-term investments of $1,501,287. The
principal sources of working capital are funds generated from operations. Net
cash provided by operating activities during fiscal 1997 was $275,240. 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 of
credit will bear interest at the Bank's prime rate.
Bio-logic's headquarters and manufacturing facility were
partially financed with an Industrial Development Bond (the "Bond") in the
original principal amount of $1,600,000. Principal and interest on the Bond
are payable in monthly installments through December 1, 2001. The Bond bears
interest at 80% of the base lending rate in effect from time to time. As
collateral for the Bond indebtedness, the Company granted the municipality a
mortgage on the property including improvements. The Company also agreed to
maintain a current ratio of not less than 1.5:1 and a ratio of total
liabilities to net worth of not greater than 1:1, and agreed not to declare
or pay cash dividends without the prior written consent of the bank which
purchased the Bond. The Company agreed to maintain at such bank a
compensating balance equal to 10% of the unpaid balance of the loan in a
non-interest bearing account. The outstanding principal amount of the Bond
was approximately $689,000 at February 28, 1997.
-18-
<PAGE>
The Company is a party to a number of research and development
agreements under which, at February 28, 1997, the Company had received an
aggregate of approximately $1,087,000. The Company is required to pay
royalties based on sales of any product developed under such agreements, or
in the event of licensing of such products to a third party. The total
payments by the Company, including royalties and licensing fees, will not
exceed 150% of the amounts received under such agreements. As of February 28,
1997, the Company has paid royalties of $923,170 under such agreements.
At February 28, 1997, the Company had no material capital
commitments. During fiscal 1997, the Company repurchased 286,310 shares of
its common stock for an aggregate cost of $882,706.
During fiscal 1989, the Company established a Foreign Sales
Corporation (FSC) and discontinued its Domestic International Sales
Corporation (DISC). Accordingly, at February 28, 1989, the Company recorded
deferred income taxes of approximately $373,200 (which was partially offset
by general business tax credits) attributable to the DISC's unremitted
earnings, the deferred taxes to be paid over six years. Accordingly, for the
seven years ending fiscal year 1996 the Company recognized deferred DISC
earnings of approximately $187,000 per year for tax purposes.
From time to time, the Company explores various corporate
finance transactions such as business combinations or acquisitions, certain
of which may include the issuance of Company securities. However, the Company
has no agreements or commitments with respect to any particular transaction
and there can be no assurance that any such transaction will be completed.
New Accounting Pronouncements
- -----------------------------
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings per Share," which requires presentation of
basic and diluted earnings per share together with disclosure of how the per
share amounts were computed. "Basic earnings per share excludes dilution and
is computed by dividing income available to common shareholders by the
weighted-average common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised and converted into
common stock or resulted in the issuance of common stock that then shared in
the earnings of the entity." The adoption of SFAS No. 128 is effective for
financial statements issued after December 15, 1997. Early adoption of this
new standard is not permitted. The adoption of SFAS No. 128 is not expected
to have a material impact on the disclosure of earnings per share in the
Company's financial statements.
-19-
<PAGE>
ITEM 7. Financial Statements
--------------------
The response to this item is submitted in a separate section of
this report. See Table of Contents to Consolidated Financial Statements on
page F-1.
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Effective January 24, 1996, the Company dismissed Deloitte &
Touche LLP ("Deloitte"), its principal independent accountants. Also
effective January 24, 1996, the Company engaged Grant Thornton LLP as its new
principal independent accountants to audit its financial statements.
Deloitte's report on the financial statements of the Company for each of the
two fiscal years in the period ended February 28, 1995 contained no adverse
opinion or disclaimer of opinion, nor was it modified as to audit scope or
accounting principles. The Company's Board of Directors authorized the
Company to pursue a change in auditors at a meeting held on January 24, 1996.
Since the Company's engagement of Deloitte as its principal independent
accountants, there have been no disagreements with Deloitte on any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
During each of the Company's two fiscal years in the period
ended February 28, 1995 and subsequent thereto, there were no consultations
with Grant Thornton LLP with regard to either the application of accounting
principles as to any specific transaction, either completed or proposed, the
type of audit opinion that would be rendered on the Company's financial
statements, or any matter of disagreement with the Company's former
accountants, Deloitte.
-20-
<PAGE>
PART III
The information called for by Items 9, 10, 11 and 12 of Part III
has been omitted and will be included in the Registrant's proxy statement
which will be filed not later than 120 days after the close of its fiscal
year.
-21-
<PAGE>
PART IV
Item 13. Exhibits, List and Reports on Form 8-K
--------------------------------------
(a) Exhibits.
--------
<TABLE>
<C> <S>
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)
-22-
<PAGE>
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)
23.1 Consent of Independent Auditors
(b) Reports on Form 8-K
-------------------
During the three months ended February 28, 1997, no reports on Form 8-K were filed by
the Company.
</TABLE>
- ------------------------
(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.
-23-
<PAGE>
(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.
-24-
<PAGE>
BIO-LOGIC SYSTEMS CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..................................... F-2
FINANCIAL STATEMENTS:
Consolidated Balance Sheets, February 28, 1997 and February 29, 1996................. F-3
Consolidated Statements of Earnings for the Years Ended
February 28, 1997 and February 29, 1996............................................ F-4
Consolidated Statements of Shareholders' Equity for the Years
Ended February 28, 1997 and February 29, 1996...................................... F-5
Consolidated Statements of Cash Flows for the Years Ended
February 28, 1997 and February 29, 1996............................................ F-6
Notes to Consolidated Financial Statements........................................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Bio-logic Systems Corp.:
We have audited the accompanying consolidated balance sheet of Bio-logic
Systems Corp. and subsidiaries for the years ended February 28, 1997 and
Febrauary 29, 1996, and the related consolidated statements of earnings,
shareholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on the financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1997 and 1996 financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Bio-logic Systems Corp. and subsidiaries as of February 28, 1997 and February
29, 1996, and the consolidated results of their consolidated operations and
their consolidated cash flows for the years then ended, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
April 24, 1997
F-2
<PAGE>
BIO-LOGIC SYSTEMS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................. $ 1,134,310 $ 3,249,071
Marketable securities...................................... 1,291,384 1,711,760
Accounts receivable, less allowance for doubtful accounts of
$152,068 in 1997 and $128,243 in 1996.................... 3,583,673 3,197,495
Inventories................................................ 3,055,429 2,887,528
Prepaid expenses........................................... 141,928 129,044
Deferred income taxes...................................... 262,039 239,609
------------ ------------
Total current assets.................................... 9,468,763 11,414,507
PROPERTY, PLANT AND EQUIPMENT--Net........................... 1,827,859 1,863,811
MARKETABLE SECURITIES........................................ 1,501,287
OTHER ASSETS................................................. 1,126,493 1,101,668
------------ ------------
TOTAL ASSETS................................................. $ 13,924,402 $ 14,379,986
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt....................... $ 126,343 $ 118,236
Accounts payable........................................... 484,323 544,346
Accrued salaries and payroll taxes......................... 560,676 500,412
Accrued interest and other expenses........................ 309,861 362,031
Accrued income taxes....................................... 48,931 213,735
Deferred revenue........................................... 293,589 246,832
------------ ------------
Total current liabilities............................... 1,823,723 1,985,592
LONG-TERM DEBT--Less current maturities...................... 562,879 689,877
COMMITMENTS
DEFERRED INCOME TAXES........................................ 338,398 307,206
------------ ------------
Total liabilities....................................... 2,725,000 2,982,675
------------ ------------
SHAREHOLDERS' EQUITY:
Capital stock, $.01 par value; authorized, 10,000,000
shares; issued and outstanding; 4,229,519 shares in 1997
and 4,229,119 shares in 1996.............................. 42,295 42,291
Additional paid-in capital.................................. 5,478,464 5,477,516
Retained earnings........................................... 6,561,349 5,877,504
------------ ------------
Total shareholders' equity............................... 12,082,108 11,397,311
Less treasury stock, at cost: 286,310 shares.................. (882,706)
------------ ------------
Shareholders' equity--net................................ 11,199,402 11,397,311
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................... $13,924,402 $ 14,379,986
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
BIO-LOGIC SYSTEMS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
NET SALES................................................... $ 14,856,955 $ 14,602,000
COST OF SALES............................................... 5,140,195 5,044,415
------------ ------------
Gross profit............................................ 9,716,760 9,557,585
------------ ------------
OPERATING EXPENSES:
Selling, general, and administrative...................... 7,031,332 6,816,455
Research and development.................................. 1,873,716 1,536,671
------------ ------------
Total operating expenses................................ 8,905,048 8,353,126
------------ ------------
OPERATING INCOME............................................ 811,712 1,204,459
OTHER INCOME (EXPENSE):
Interest income........................................... 223,591 188,865
Interest expense.......................................... (52,727) (74,453)
Miscellaneous............................................. 652 (1,780)
------------ ------------
TOTAL OTHER INCOME.......................................... 171,516 112,632
------------ ------------
INCOME BEFORE INCOME TAXES.................................. 983,228 1,317,091
PROVISION FOR INCOME TAXES.................................. 299,383 425,000
------------ ------------
NET INCOME.................................................. $ 683,845 $ 892,091
------------ ------------
------------ ------------
NET INCOME PER SHARE:
Primary and fully diluted................................. $ 0.17 $ 0.21
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
BIO-LOGIC SYSTEMS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
<TABLE>
<CAPTION>
CAPITAL STOCK
--------------------- ADDITIONAL
NUMBER OF PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
---------- --------- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 1, 1995.................... 4,146,949 $ 41,469 $ 5,342,371 $ 4,985,413 $ 0 $ 10,369,253
Exercise of stock options............... 82,170 822 135,145 135,967
Net income.............................. 892,091 892,091
---------- --------- ------------ ------------ ----------- -------------
BALANCE, FEBRUARY 29, 1996................ 4,229,119 42,291 5,477,516 5,877,504 0 11,397,311
Purchase of treasury stock.............. (286,310) 0 0 (882,706) (882,706)
Exercise of stock options............... 400 4 948 952
Net income.............................. 683,845 683,845
---------- --------- ------------ ------------ ----------- -------------
BALANCE, FEBRUARY 28, 1997................ 3,943,209 $ 42,295 $ 5,478,464 $ 6,561,349 $ (882,706) $ 11,199,402
---------- --------- ------------ ------------ ----------- -------------
---------- --------- ------------ ------------ ----------- -------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
BIO-LOGIC SYSTEMS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 683,845 $ 892,091
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 328,872 326,953
Provision (recovery) for bad debts 23,825 (4,855)
Provision for inventory valuation 160,007 160,000
Deferred income tax provision 8,762 6,800
(Increases) decreases in assets:
Accounts receivable (410,003) (86,871)
Inventories (337,208) (151,541)
Prepaid expenses (12,884) (37,900)
Increases (decreases) in liabilities:
Accounts payable (60,023) (154,064)
Accrued liabilities and deferred revenue 54,851 (41,049)
Accrued income taxes (164,804) 51,461
----------- ------------
Net cash flows provided by operating activities 275,240 961,025
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (170,904) (106,883)
Other assets (137,541) (460,504)
Purchases of investments held to maturity (2,779,542) (730,198)
Proceeds from maturities of investments 1,698,631 2,373,538
----------- ----------
Net cash flows (used in) provided by investing activities (1,389,356) 1,075,953
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 952 135,967
Purchase of treasury stock (882,706)
Payments on long-term debt (118,891) (111,262)
----------- ------------
Net cash flows (used in) provided by financing activities (1,000,645) 24,705
----------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,114,761) 2,061,683
CASH AND CASH EQUIVALENTS--Beginning of year 3,249,071 1,187,388
---------- ------------
CASH AND CASH EQUIVALENTS--End of year $ 1,134,310 $ 3,249,071
---------- ------------
---------- ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid during the period for:
Interest $ 56,084 $ 72,347
--------- ---------
--------- ---------
Income taxes $ 421,790 $ 366,739
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
BIO-LOGIC SYSTEMS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
1. BUSINESS
Bio-logic Systems Corp. (the "Company") develops and markets
computer-assisted medical diagnostic equipment. The Company sells
primarily to the Health Care Industry in North America, Europe and the Far
East.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation--The consolidated financial statements include the Company
and its wholly owned domestic subsidiaries, Neuro Diagnostics, Inc.,
Bio-logic '83 Research Corp. and Bio-logic International Corp., and its
wholly owned foreign subsidiaries, Bio-logic Systems Corp., Ltd. and
Bio-logic FSC International Corp. All significant intercompany balances
and transactions have been eliminated in consolidation.
Cash, and Cash Equivalents--Cash equivalents include all highly liquid
investments purchased with maturities of three months or less.
Marketable Securities--Marketable securities are comprised of US
Government securities with maturities of more than three months.
Inventories--Inventories, consisting principally of components, parts
and supplies, are stated at the lower of cost, determined by the
first-in, first-out method, or market.
Property, Plant and Equipment--Property, plant and equipment are stated
at cost. The cost of maintenance and repairs is charged to income as
incurred; significant renewals and betterments are capitalized.
Depreciation is provided using straight-line and accelerated methods
over the estimated useful lives of the assets.
Other Assets - Other assets consist primarily of capitalized research
and development costs, patent cost and the cash value of officers' life
insurance policies. On an ongoing basis, management reviews the
valuation of other assets to determine if there has been impairment by
comparing the related assets' carrying value to the undiscounted
estimated future cash flows and/or operating income from related
operations.
Revenue Recognition for Research and Development Contracts - Revenue
from research and development contracts is recognized as related costs
are incurred.
F-7
<PAGE>
Income Taxes - Deferred tax assets and liabilities are recognized for
the expected future tax consequences of events that have been included
in the financial statements or tax return. 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 using enacted tax rates for
the years in which the differences are expected to become recoverable. A
valuation allowance is established where necessary to reduce deferred
tax asset to the amount expected to be realized.
Deferred federal income taxes are not provided for the undistributed
earnings of the Company's foreign subsidiary. Undistributed foreign
earnings were approximately $1,116,000 and $829,000 as of February 28,
1997 and February 29, 1996, respectively.
Use of Estimates - In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at
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.
Fair Value of Financial Instruments--The Company's financial instruments
include cash equivalents, short-term and long-term marketable
securities, accounts receivable, accounts payable and bank overdrafts,
and long-term debt. The carrying value of cash equivalents, short-term
marketable securities, accounts receivable and accounts payable and bank
overdrafts approximate their fair value because of the short-term nature
of these instruments. The carrying value of long-term debt approximates
fair value based on quoted prices of similar issuances at the reporting
date. The carrying value of marketable securities is based on amortized
cost and does not materially differ from their fair value.
Impact of Adoption of Recently Issued Accounting Standards - In February
1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share," which requires presentation of basic and diluted
earnings per share together with disclosure of how the per share
amounts were computed. "Basic earnings per share excludes dilution
and is computed by dividing income available to common shareholders
by the weighted-average common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock
were exercised and converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the
entity." The adoption of SFAS No. 128 is effective for financial
statements issued after December 15, 1997. Early adoption of this new
standard is not permitted. The adoption of SFAS No. 128 is not expected
to have a material impact on the disclosure of earnings per share in the
financial statements.
F-8
<PAGE>
3. 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
Company's entire portfolio of debt securities has been classified as
held-to-maturity and is stated at cost, with premiums amortized and
discounts accreted using the simple-interest method. For fiscal 1997,
marketable debt securities with remaining maturities in excess of twelve
months have been classified as non-current.
Investment Securities Held-To-Maturity
The amortized cost, unrealized gains, unrealized losses and estimated
fair values of marketable securities are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----- ------ ------- ------
<S> <C> <C> <C> <C>
February 28, 1997
- -----------------
US Government
securities $ 2,792,671 $ 3,462 $ 0 $ 2,796,133
----------- ------ -------- ----------
----------- ------ -------- ----------
February 29, 1996
- -----------------
US Government
securities $ 1,711,760 $ 3,642 $ 0 $ 1,715,402
----------- ------ -------- ----------
----------- ------ -------- ----------
At February 28, 1997, the maturities of marketable securities are as follows:
</TABLE>
<TABLE>
<CAPTION>
Estimated Fair
Term to Maturity Amortized Cost Value
---------------- -------------- ---------------
S> <C> <C>
Due one year or less $ 1,291,384 $ 1,291,438
Due after one year
through five years $ 1,501,287 $ 1,504,695
---------- ---------
Total $ 2,792,671 $ 2,796,133
---------- ---------
---------- ---------
</TABLE>
F-9
<PAGE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise the following at February 28,
1997 and February 29, 1996:
<TABLE>
<CAPTION>
Estimated
Useful Lives
1997 1996 (IN YEARS)
------------ ------------ -----------------
<S> <C> <C> <C>
Land $ 676,534 $ 676,534
Building 1,117,907 1,117,907 40
Test and shop equipment 915,070 821,794 5
Booths and exhibits 101,531 69,849 5
Office furniture and equipment 1,405,754 1,359,808 7
Transportation equipment 123,799 123,799 3
Building improvements 121,651 121,651 15
------------ ------------
Total 4,462,246 4,291,342
Less accumulated depreciation 2,634,387 2,427,531
------------ ------------
Property, plant and equipment--net $ 1,827,859 $ 1,863,811
------------ ------------
------------ ------------
Depreciation expense amounted to $206,856 and $255,193 for 1997 and 1996,
respectively.
</TABLE>
5. CAPITALIZED RESEARCH AND DEVELOPMENT COSTS
Capitalized research and development expense consists of costs incurred
from when the product is determined to be technologically feasible to
the time the product is available for general release to customers. These
costs consist primarily of internal research and development
labor costs and outside development costs for software and related
engineering prototypes necessary in the final design of new products.
Capitalized research and development costs are amortized over a 5
year period, which approximates the expected life of the product.
Unamortized research and development costs amounted to $723,967 and
$636,567 at February 28, 1997 and February 29, 1996, respectively.
Amortization expense amounted to $90,503 and $55,547 in 1997 and 1996,
respectively.
F-10
<PAGE>
6. OPERATING LEASES
The Company leases office and assembly facilities under long-term
operating leases expiring from 2001 to 2009. Total rental expense
amounted to $55,521 and $52,367 for 1997 and 1996, respectively.
Future minimum annual rental commitments under these leases for the five
years ending the last day of February, 2002 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 48,641
1999 49,985
2000 49,985
2001 47,083
2002 15,154
Thereafter 106,080
</TABLE>
7. LONG-TERM DEBT
Borrowings of $1,600,000 under the Industrial Development Bond, Series
1985 (the "Bond") are due in varying monthly installments through
December 2001. The interest rate on the Bond (6.6%) is 80 percent of the
prime rate (8.25 percent at February 28, 1997). The office building and
land are pledged as collateral for the Bond.
The Company has obtained a commitment, renewed annually, for an
unsecured $1,000,000 bank line of credit with interest at the bank's
prime rate. No borrowings have been made under the line of credit as of
either February 28, 1997 or February 29, 1996.
Under the terms of the Bond agreement and the line of credit, the
Company is to maintain average available non-interest-bearing deposits
in amounts not less than ten percent of the unpaid balance of the Bond
at the bank which purchased the Bond. The Company is also required to
maintain certain minimum working capital and net worth ratios. The Bond
agreement restricts the payment or declaration of dividends (other than
dividends payable in stock) without the prior consent of the holder of
the Bond.
Annual maturities of the Bond are as follows:
<TABLE>
<S> <C>
1998 $ 126,343
1999 135,005
2000 144,262
2001 154,153
Thereafter 129,459
-------
$ 689,222
-------
-------
</TABLE>
F-11
<PAGE>
8. INCOME TAXES
The provision for income taxes is as follows::
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
---- ----
Current:
Federal $ 206,788 $ 348,900
State 32,900 69,300
Foreign 50,933
---------- ----------
Total current 290,621 418,200
Deferred 8,762 6,800
---------- ----------
Total $ 299,383 $ 425,000
---------- ----------
---------- ----------
</TABLE>
The provision for income taxes differs from the U.S. Federal statutory
rate as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
---- ----
U.S. Federal statutory rate 34.0% 34.0%
Difference in foreign tax rate (6.2) (4.3)
Foreign Sales Corporation (FSC) operations (1.5) (1.1)
State income taxes, net of Federal income tax benefit 2.2 3.4
General business tax credits -- (.9)
Other 2.0 1.2
--- ---
Effective income tax rate 30.5% 32.3%
--- ---
--- ---
</TABLE>
Deferred tax assets and liabilities as of February 28, 1997 and February
29, 1996 consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
--------- ---------
Deferred tax liabilities:
Depreciation $ 58,458 $ 61,090
Research and development 279,940 246,116
--------- --------
Total deferred tax liabilities 338,398 307,206
------- -------
Deferred tax assets:
Accounts receivable 58,770 49,550
Inventory 82,488 80,585
Vacation 21,327 20,360
Warranty 99,454 86,984
Other -- 2,130
------ -------
Total deferred current tax assets--net 262,039 239,609
--------- --------
Net deferred tax liability $ 76,359 $ 67,597
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
In 1989, the Company established a Foreign Sales Corporation (FSC) to
replace its Domestic International Sales Corporation (DISC). Accordingly,
deferred income taxes attributable to unremitted DISC earnings were
recorded during 1989. During fiscal 1996, the Company recognized
deferred DISC earnings in the amount of approximately $187,000 for tax
purposes. The last of the remaining unremitted DISC earnings was
recognized in the year ending February 29, 1996.
9. 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
year. The weighted average shares for computing primary earnings per
share were 4,140,216 and 4,329,445 for fiscal 1997 and fiscal 1996,
respectively.
Fully diluted earnings per share are based on the weighted average
number of common and dilutive common equivalent shares calculated at
year-end market prices. The dilutive effect of stock options creates
the difference between primary and fully diluted shares outstanding.
The weighted average shares for computing fully diluted earnings per
share were 4,144,075 and 4,344,913 for fiscal 1997 and fiscal 1996,
respectively.
10. STOCK OPTIONS AND WARRANTS
The Company's 1994 Incentive Stock Option Plan (the "Plan") permits the
granting of both incentive stock options and nonqualified options for
option periods not to exceed ten years. The Plan provides for the
granting of up to 450,000 shares of incentive stock options at a per
share price not less than 100 percent of the fair market value on the
date of grant. In the case of nonqualified options, the per share price
may be at any amount determined by the Board of Directors or the Stock
Option Committee on the date of grant, but not less than par value.
Currently outstanding options become exercisable one to five years from
the grant date and expire five to ten years after the grant date.
Bio-logic has adopted only the disclosure provisions of Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
(FAS 123). It applies APB Opinion No. 25, "Accounting for Stock Issued
to Employee," and related interpretations in accounting for its plans
and does not recognize compensation expense for its stock-based
compensation plans when options are granted at fair value at the date
of grant. If the Company had elected to recognize compensation expense
based upon the fair value at the grand date for awards under these
plans consistent with the methodology prescribed
F-13
<PAGE>
by FAS 123, the Company's net income and earnings per share would be
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR
ENDED ENDED
FEBRUARY 28, FEBRUARY 29,
1997 1996
---------------- ----------------
<S> <C> <C>
Net Income
As Reported $ 683,845 $892,091
Pro Forma 627,878 $857,664
Net Income per share
(primary and fully diluted)
As Reported $0.17 $0.21
Pro Forma 0.15 0.20
</TABLE>
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense
related to grants made before fiscal 1996. The fair values of these
options was estimated at the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions
for the year ended February 28, 1997 and February 29, 1996,
respectively: no dividends; expected volatility of 49% and 56%,
respectively; risk free interest rates of 6.3% for both years; and
expected life of 7.8 and 8.0 years. The weighted average exercise
price of options granted during the year ended February 28, 1997 and
February 29, 1996 for which the exercise price exceeds the market
price on the grant date was $3.30 and $2.85, respectively, and the
weighted average fair value prices were $1.44 and $1.35,
respectively. The weighted average exercise price of options
granted during the year ended February 28, 1997 and February 29,
1996 for which the exercise price equals the market price on the
grant date was $2.89 and $2.63, respectively, and the weighted
average fair value prices were $2.00 and $1.94, respectively. The
weighted average exercise price of options granted during the year
ended February 28, 1997 and February 29, 1996 for which the
exercise price is below the market price on the grant date was $2.71
and $3.75, respectively, and the weighted average fair prices were
$2.05 and $3.17, respectively.
The following tables summarize information concerning outstanding and
exercisable stock options, as of February 28, 1997:
<TABLE>
<CAPTION>
Weighted Average
Remaining
Range of Number Contractual Life Weighted Average
Exercise Price Outstanding (years) Exercise Price
-------------- ------------ ------------------ ----------------
<S> <C> <C> <C>
$1.50-$2.50 154,833 5.5 $2.05
$2.51-$3.75 199,675 5.2 2.86
$3.76-$5.22 14,000 8.3 4.87
------
368,508
-------
-------
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
Range of Number Weighted Average
Exercise Price Exercisable Exercise Price
-------------- ----------- -----------------
<S> <C> <C>
$1.50-$2.50 120,208 $ 1.99
$2.51-$3.75 74,300 2.77
$3.76-$5.225 4,000 4.87
-------
198,508
--------
--------
</TABLE>
Additional information with respect to Bio-logic's plan at February 28,
1997 and February 29, 1996, are as follows:
FISCAL 1997
<TABLE>
<CAPTION> Weighted Average
Shares Exercise Price
--------- -----------------
<S> <C> <C>
Shares Under Option:
Outstanding at beginning of year 311,008 $2.49
Granted 78,000 $3.01
Exercised -- --
Forfeited (20,500) $3.20
--------
Outstanding at end of year 368,508 $2.56
--------
Options exercisable at year-end 198,508 $2.34
--------
--------
Weighted average fair value for
stock options granted during 1996 $1.77
</TABLE>
FISCAL 1996
-----------
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
--------- -----------------
<S> <C> <C>
Shares Under Option:
Outstanding at beginning of year 335,833 $2.18
Granted 109,500 $2.76
Exercised (90,446) $1.95
Forfeited (43,879) $2.69
---------
Outstanding at end of year 311,008 $2.49
---------
Options exercisable at year-end 150,650 $2.24
---------
---------
Weighted average fair value for
stock options granted during 1997 $2.29
</TABLE>
F-15
<PAGE>
In connection with the Company's 1986 stock offering, 258,750
warrants (including 33,750 to the underwriter) were issued.
Each warrant entitles the holder to purchase one and one-half
shares of common stock at an exercise price of $8.33 per
share, subject to adjustment at any time commencing
after the separation date, August 27, 1986, until
May 31, 1998. The warrants are subject to redemption by the
Company at $.05 per warrant on 30 days' prior written notice,
provided the closing price of the Company's common stock
exceeds $11.67 per share for 20 consecutive trading days
ending within 30 days of the date of notice.
11. RESEARCH AND DEVELOPMENT ARRANGEMENTS
In 1986, 1989 and 1991 and 1992, the Company entered into research
and development agreements with a third party under which the
Company received approximately $400,000, $396,000, $126,700 and
$164,300 respectively, or an aggregate of $1,087,000. The Company is
required to pay royalties on the sales of products developed under
the grants, as well as a percentage of any licensing fees for
agreements entered into with other companies for the sales of developed
products. Royalties paid under these agreements amounted to
approximately $130,000 and $207,000 in 1997 and 1996 respectively.
12. EXPORT SALES
Net foreign export sales are summarized as follows:
1997 1996
------------ ------------
Europe.............................. $ 1,121,114 $ 1,076,163
Far East............................ 1,857,117 1,677,486
Other............................... 627,244 792,011
------------ ------------
Total............................... $ 3,605,475 $ 3,545,660
------------ ------------
------------ ------------
No significant sales were made by foreign subsidiaries in 1997 and 1996.
F-16
<PAGE>
13. EMPLOYEE BENEFIT PLAN
The Company has a profit-sharing plan under Section 401(k) of the Internal
Revenue Code which allows employees to defer a portion of their income on a
pretax basis through contributions to the plan. Employee contributions are
matched by the Company at varying rates. The Company may also make
discretionary contributions to the plan. Total contributions of $59,506 and
$54,004 were made by the Company in 1997 and 1996, respectively.
14. EMPLOYMENT AGREEMENTS
The Company has executed an employment agreement with one of its key
officers. Under the terms of the agreement, which extends through May 1997,
the Company is obligated to pay contractually specified amounts in the
event of the key officer's termination, disability or death.
15. STOCK REPURCHASE
On May 16, 1996 the Board of Directors of the Company authorized the
repurchase, from time to time, of shares of the Company's common stock. As
of February 28, 1997, the Company purchased an aggregate of 286,310 shares
of its common stock at a total cost of $882,706.
F-17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BIO-LOGIC SYSTEMS CORP.
DATE: MAY 21, 1997
BY: /S/ GABRIEL RAVIV
-----------------------
GABRIEL RAVIV, PRESIDENT
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ ---------------------------- ----------------
President, Chief Executive
/s/ GABRIEL RAVIV Officer, Director
- ------------------------------ (Principal Executive May 21, 1997
Gabriel Raviv Officer)
/s/ CHARLES Z. WEINGARTEN Director
- ------------------------------ May 21, 1997
Charles Z. Weingarten, M.D.
/s/ WILLIAM K. ROENITZ Controller and Treasurer
- ------------------------------ (Principal Financial May 21, 1997
William K. Roenitz Officer)
/s/ GIL RAVIV Director
- ------------------------------ May 21, 1997
Gil Raviv
/s/ IRVING KUPFERBERG Director
- ------------------------------ May 21, 1997
Irving Kupferberg
/s/ ALBERT MILSTEIN Director
- ------------------------------ May 21, 1997
Albert Milstein
/s/ CRAIG W. MOORE Director
- ------------------------------ May 21, 1997
Craig W. Moore
<PAGE>
EXHIBIT INDEX
EXHIBIT
PAGE
NUMBER DESCRIPTION NUMBER
- ----------- -------------------------------------------------------- ------
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)
<PAGE>
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)
23.1 Consent of Independent Auditors
- ------------------------
(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.
<PAGE>
(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.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 33-3776 of Bio-logic Systems Corp. on Form S-8 of our report, dated April
24, 1997, appearing in this Annual Report on Form 10K-SB of Bio-logic Systems
Corp. for the year ended February 28, 1997.
GRANT THORNTON LLP
May 27, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 1,134,310
<SECURITIES> 1,291,384
<RECEIVABLES> 3,583,673
<ALLOWANCES> 152,068
<INVENTORY> 3,055,429
<CURRENT-ASSETS> 9,468,763
<PP&E> 4,462,246
<DEPRECIATION> 2,634,387
<TOTAL-ASSETS> 13,924,402
<CURRENT-LIABILITIES> 1,823,723
<BONDS> 689,222
0
0
<COMMON> 42,295
<OTHER-SE> 11,157,107
<TOTAL-LIABILITY-AND-EQUITY> 13,924,402
<SALES> 14,856,955
<TOTAL-REVENUES> 14,856,955
<CGS> 5,140,195
<TOTAL-COSTS> 5,140,195
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 133,000
<INTEREST-EXPENSE> 56,084
<INCOME-PRETAX> 983,228
<INCOME-TAX> 299,383
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 683,845
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
