<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly period ended May 31, 2000
[_] 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.
(Exact name of small business issuer as specified in its charter)
Delaware 36-3025678
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Bio-logic Plaza, Mundelein, Illinois 60060
(Address of principal executive offices) (Zip code)
Issuers telephone number, including area code (847-949-5200)
(Former name, former address and former fiscal year, if changed since last
report): not applicable
Check whether the issuer (1) 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 equity, as of the latest practicable date.
Class Outstanding at July 11, 2000
Common Stock $.01 par value 4,171,709
Transitional Small Business Disclosure Format
Yes __ No X
--
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Part I. Financial Information
Page
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at May 31, 2000
and February 29, 2000 3
Condensed Consolidated Statements of Operations and
Retained Earnings for the three months ended
May 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for
the three months ended May 31, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
Signatures
2
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
Part 1. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
ASSETS May 31, 2000 Feb. 29, 2000
------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,200,079 $ 4,959,902
Accounts receivable, less allowance for doubtful accounts
of $389,058 at May 31, 2000 and $360,554 at Feb. 29, 2000 4,702,195 6,323,513
Inventories 4,573,246 4,408,557
Prepaid expenses 197,179 150,435
Deferred income taxes 400,286 400,286
----------- -----------
Total current assets 15,072,985 16,242,693
PROPERTY, PLANT AND EQUIPMENT - Net 2,553,795 2,381,425
OTHER ASSETS 580,388 544,029
----------- -----------
TOTAL ASSETS $18,207,168 $19,168,147
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 156,730 $ 154,153
Accounts payable 777,235 1,029,175
Accrued salaries and payroll taxes 1,104,234 1,366,129
Accrued interest and other expenses 348,089 438,208
Accrued income taxes 288,864 469,257
Deferred revenue 379,529 355,189
----------- -----------
Total current liabilities 3,054,681 3,812,111
LONG-TERM DEBT - Less current maturities 97,054 139,670
DEFERRED INCOME TAXES 175,799 175,799
----------- -----------
Total liabilities 3,327,534 4,127,580
----------- -----------
COMMITMENTS -- --
SHAREHOLDERS' EQUITY:
Capital stock, $.01 par value; authorized, 10,000,000 shares;
issued and outstanding; issued 4,170,509 and outstanding
4,122,709 at May 31, 2000; issued 4,161,309 and
outstanding 4,113,509 at February 29, 2000 41,705 41,613
Additional paid-in capital 4,996,067 4,969,417
Retained earnings 9,973,842 10,161,517
----------- -----------
15,011,614 15,172,547
Less treasury stock, at cost: 47,800 shares at May 31, 2000
and February 29, 2000 131,980 131,980
----------- -----------
Total shareholders' equity 14,879,634 15,040,567
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $18,207,168 $19,168,147
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
Condensed Consolidated Statements of Operations and Retained Earnings
(Unaudited)
Three Months Ended
May 31,
----------------------------
2000 1999
------------ ------------
NET SALES $ 5,319,377 $ 6,278,284
COST OF SALES 1,861,246 1,996,924
------------ ------------
Gross Profit 3,458,131 4,281,360
OPERATING EXPENSES:
Selling, general and administrative 2,953,361 2,668,385
Research and development 846,466 683,520
------------ ------------
Total operating expenses 3,799,827 3,351,905
------------ ------------
OPERATING INCOME (LOSS) (341,696) 929,455
OTHER INCOME (EXPENSE):
Interest income 86,769 58,527
Interest expense (3,031) (7,424)
Miscellaneous (2,717) (529)
------------ ------------
TOTAL OTHER INCOME 81,021 50,574
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (260,675) 980,029
PROVISION (BENEFIT) FOR INCOME TAXES (73,000) 274,400
------------ ------------
NET INCOME (LOSS) $ (187,675) $ 705,629
============ ============
RETAINED EARNINGS,
BEGINNING OF PERIOD 10,161,517 7,998,925
------------ ------------
RETAINED EARNINGS,
END OF PERIOD $ 9,973,842 $ 8,704,554
============ ============
EARNINGS (LOSS) PER SHARE:
Basic and diluted $ (0.05) $ 0.18
============ ============
The accompanying notes are an integral part of these statements.
4
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
----------------------------
2000 1999
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (187,675) $ 705,629
Adjustments to reconcile net income (loss) to net cash flows
provided by (used in) operating activities:
Depreciation and amortization 122,420 115,046
Provision for bad debts 28,800 28,800
Provision for inventory valuation 120,000 78,750
(Increases) decreases in assets:
Accounts receivable 1,592,518 (698,313)
Inventories (284,689) (359,036)
Prepaid expenses (46,744) 151,088
Increases (decreases) in liabilities:
Accounts payable and overdrafts (251,940) (5,086)
Accrued liabilities and deferred revenue (327,674) (151,087)
Accrued income taxes (180,393) 210,685
----------- -----------
Net cash flows provided by operating activities 584,623 76,476
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (260,535) (49,570)
Other assets (70,614) (7,042)
----------- -----------
Net cash flows (used in) investing activities (331,149) (56,612)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 26,742 500
Purchase of treasury stock -- (43,060)
Payments of long-term debt (40,039) (34,233)
----------- -----------
Net cash flows (used in) financing activities (13,297) (76,793)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 240,177 (56,929)
CASH AND CASH EQUIVALENTS - Beginning of period 4,959,902 5,957,112
----------- -----------
CASH AND CASH EQUIVALENTS - End of period $ 5,200,079 $ 5,900,183
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid during the period for:
Interest $ 2,533 $ 7,550
=========== ===========
Income taxes $ 188,113 $ 29,415
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
Notes to Condensed Consolidated Financial Statements
1. The information furnished in this report reflects all adjustments which
are, in the opinion of management, necessary to a fair statement of the
results for the interim periods. The results of operations for the three
months ended May 31, 2000 are not necessarily indicative of the results
to be expected for the full year.
2. Inventories
Inventories consist principally of components, parts and supplies and are
stated at the lower of cost, determined by the first-in, first-out method,
or market.
3. Net Income (Loss) Per Share
Basic earnings per share are based on the weighted average number of shares
outstanding during each quarter. The weighted average shares for computing
basic earnings per share were 4,118,044 and 3,995,036 for the quarters
ended May 31, 2000 and May 31, 1999, respectively.
Diluted earnings per share are based on the weighted average number of
common and dilutive common equivalent shares calculated at average market
prices. The weighted average shares for computing diluted earnings per
share were 4,340,113 and 4,025,299 for the quarters ended May 31, 2000 and
May 31, 1999, respectively.
Because of the net loss for the quarter ended May 31, 2000, common
equivalent shares were not included in the calculation of diluted earnings
per share as their inclusion would be anti-dilutive.
4. 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.
5. Treasury Stock Repurchase
As of May 31, 2000, the Company purchased an aggregate of 47,800 shares of
its common stock at a total cost of $131,980.
6
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Prospective investors are cautioned that the statements in this Quarterly
Report on Form 10-QSB that are not descriptions of historical facts may be
forward-looking statements within the meaning of the Private Securities Reform
Act of 1995, including statements concerning the Company's future products,
results of operations and prospects. These forward-looking statements are
subject to risks and uncertainties. Actual results could differ materially from
those currently anticipated, including those relating to general economic and
business conditions, the results of research and development efforts,
technological changes and competition, potential changes in regulation by the
FDA, costs relating to manufacturing of products and the timing of customer
orders detailed elsewhere in this Quarterly Report on Form 10-QSB and from time
to time in the Company's filings with the Securities and Exchange Commission.
Liquidity and Capital Resources
As of May 31, 2000, the Company had working capital of $12,018,304
including $5,200,079 in cash and cash equivalents and $4,702,195 of accounts
receivable. The principal sources of working capital are funds generated from
operations. 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.
The increase in cash flow for the three months ended May 31, 2000 was
$240,177 and net cash flow provided by operations was $584,623. Net loss for the
quarter ended May 31, 2000 was $187,675, decreasing cash flow from operations,
while in contrast a net gain of $705,629 in the quarter ended May 31, 1999
increased cash flow from operations. In the first quarter ended May 31, 2000,
cash flow from operations was provided in a reduction of accounts receivable and
used in the purchase of additional inventory and in the reduction of accounts
payable and accrued liabilities and income taxes.
Results of Operations
Net sales for the three month period ended May 31, 2000 (the "2000 three
months") decreased by approximately 15% to $5,319,377 from $6,278,284 in the
three month period ended May 31, 1999 (the "1999 three months"). Domestic sales
for the 2000 three months which represents 86% of net sales, decreased by 12% to
$4,566,582 compared to $5,171,257 for the 1999 three months while foreign sales
decreased approximately 32% to $752,795 for the 2000 three months from
$1,107,027 during the 1999 three months. The decline in both domestic and
international sales was across the Company's neurology, hearing and sleep
product lines. The Company believes that a lack of urgency by purchasing
managers in making capital expenditure decisions now that Year 2000 concerns
have passed negatively impacted first quarter sales. In addition, first quarter
sales comparisons were adversely impacted by two unusually large shipments which
occurred in last year's first quarter, one domestic and one international,
totaling approximately $1.5 million. Also, a temporary shortage of electronic
components contributed to delays in shipments of the Company's recently launched
ABaer(TM) hearing systems for newborns.
Cost of sales decreased to $1,861,246 during the 2000 three months compared
to $1,996,924 for the 1999 three months, and as a percentage of net sales
increased to 35% for the 2000 three months compared to 32% for the 1999 three
months. This increase in cost of sales as a percentage of net sales was the
result of the lower sales volume, with higher fixed manufacturing and a less
favorable sales mix.
Selling, general and administrative expenses increased by 11% to $2,953,361
for the 2000 three months compared to $2,668,385 for the 1999 three months. As a
percentage of net sales, selling, general and administrative expenses increased
to 56% in the 2000 three months compared to 43% in the 1999 three months. This
increase in selling, general and administrative expenses is primarily due to
increased staffing in the areas of management, sales, customer support and field
applications, partially offset by lower sales commissions. In addition, the
Company experienced increases in travel, freight and office services expenses.
7
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
Research and development costs increased by 24% to $846,466 or 16% of net
sales in the 2000 three months, compared to $683,520 or 11% of net sales in the
1999 three months. The increase in research and development costs in the 2000
first quarter was caused by higher employee costs at our facility in the U.S.
plus increased expenses associated with expanded research and development
activities in Israel and Poland.
For the 2000 three months, the Company had an operating loss of $341,696
compared to an operating gain of $929,455 for the three months ended May 31,
1999. This decrease in operating income for the 2000 three months is mainly the
result of lower net sales and higher operating expenses.
Net interest income increased to $83,738 from $51,103 for the 2000 and 1999
three months, respectively. This increase reflects higher interest income due to
a larger investment base and higher interest rates with a more favorable rate,
plus lower interest expense from reduced long-term debt.
The income tax benefit of $73,000 was 28% of the loss before income taxes
during the 2000 three months compared to a tax provision of $274,400 or 28% of
net income before taxes during the 1999 three months. The Company's income tax
rate differs from the federal statutory rate of 35% due to differences in
foreign income and its corresponding tax rates.
The Company had a net loss of $187,675 or $.05 per basic and diluted share
for the 2000 three months, compared to a net gain of $705,629 or $0.18 per basic
and diluted share for the 1999 three months. The Company attributes the loss in
the 2000 three months to lower sales worldwide, reduced gross profit margin and
higher operating expenses.
8
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
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 (2)
27. Financial Data Schedule
(b) The Registrant did not file any reports on Form 8-K during the three months
ended May 31, 2000.
----------------------------
(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 Annual Report on
Form 10-K for the Fiscal Year ended February 28, 1987.
9
<PAGE>
Bio-logic Systems Corp.
Form 10-QSB
Signatures
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 14, 2000 By: /s/ Roderick G. Johnson
________________________
Roderick G. Johnson,
President & Chief
Operating Officer
Date: July 14, 2000 By: /s/ James M. Smearman
______________________
James M. Smearman,
Controller
(Principal Financial Officer)
