U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-KSB A1

           ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                            AND EXCHANGE ACT OF 1934

                     For the Fiscal Year Ended June 30, 1997

                          Commission File Number 0-9407

                                REHABILICARE INC.

     Minnesota                                         41-0985318
State of Incorporation                       IRS Employer Identification No.

                             1811 Old Highway Eight
                       New Brighton, Minnesota 55112-3493
                                 (612) 631-0590


Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, $.10 par value per share

Check whether issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such 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 if disclosure of delinquent  filers in response to Item 405 of Regulations
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The  Company's  revenues  for the  Fiscal  Year  Ended  June  30,  1997  totaled
$10,991,105.

The aggregate market value of voting stock held by  non-affiliates of registrant
as of September 16, 1997 was approximately $16,667,000 (based upon the last sale
price of such  stock on such date as  reported  by the  NASDAQ  National  Market
System).  The  number of shares of the  Company's  $.10 par value  common  stock
outstanding as of September 16, 1997 was 4,870,002.

Transitional Small Business Disclosure Format (Check One):

Yes___ No_X_


<PAGE>



                        Report of Independent Accountants
                        ---------------------------------


    August 8, 1997

    To the Board of Directors and
     Shareholders of Rehabilicare, Inc.

    In our opinion, the accompanying balance sheet and the related statements of
    operations,  of changes in  stockholders'  equity and of cash flows  present
    fairly, in all material  respects,  the financial  position of Rehabilicare,
    Inc. at June 30, 1997 and the results of its  operations  and its cash flows
    for the year then ended in conformity  with  generally  accepted  accounting
    principles.  These  financial  statements  are  the  responsibility  of  the
    Company's  management;  our responsibility is to express an opinion on these
    financial  statements  based on our audit.  We conducted  our audit of these
    statements in accordance with generally  accepted  auditing  standards which
    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,  assessing  the  accounting
    principles used and significant estimates made by management, and evaluating
    the overall  financial  statement  presentation.  We believe  that our audit
    provides a reasonable basis for the opinion expressed above.

    PRICE WATERHOUSE LLP


<PAGE>








                        REPORT OF INDEPENDENT ACCOUNTANTS
                        ---------------------------------



To Rehabilicare Inc.:

We have audited the accompanying balance sheet of Rehabilicare Inc. (a Minnesota
corporation)  as of June 30, 1996,  and the related  statements  of  operations,
changes in  stockholders'  equity and cash flows for the year then ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit 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 financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Rehabilicare Inc. as of June
30, 1996,  and the results of their  operations  and its cash flows for the year
then ended, in conformity with generally accepted accounting principles.




                                                            ARTHUR ANDERSEN LLP


Minneapolis, Minnesota,
    August 9, 1996



<PAGE>





                                    SIGNATURE

         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934, the registrant has duly caused this amendment to it Form 10-KSB for the
fiscal year ended June 30,  1997 to be signed on its behalf by the  undersigned,
hereunto duly authorized.

                                           REHABILICARE INC.


Dated:  September 30, 1997            By:  /s/W. Glen Winchell
                                           -------------------------------------
                                           W. Glen Winchell
                                           Vice President of Finance