FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1995
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 number O-13176
NON-INVASIVE MONITORING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2007840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
1840 West Avenue
Miami Beach, Florida 33139
(Address of principal executive offices)
(Zip Code)
(305) 534-3694
(Registrant's telephone number, including area code)
Check whether the 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 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
APPLICABLE ONLY TO CORPORATE ISSUERS
Number of shares of the registrant's common stock outstanding as of
December 11, 1995 is 12,439,729.
Transitional Small Business Disclosure Format: (Check one)
Yes No X
NON-INVASIVE MONITORING SYSTEMS, INC.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets -- July 31, 1995
and October 31, 1995.
Condensed consolidated statements of operations--Three
Months Ended October 31, 1994 and 1995
Condensed consolidated statements of cash flows--Three
Months Ended October 31, 1994 and 1995
Notes to condensed consolidated financial
statements--October 31, 1995
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I - FINANCIAL INFORMATION
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
[CAPTION]
<TABLE>
<S> <C> <C>
July 31, October 31,
1995 1995
(Note) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 189,769 $ 171,200
Accounts and royalties
receivable 108,752 220,740
Inventories 623,575 528,300
Prepaid expenses and
other current assets 42,539 49,910
TOTAL CURRENT ASSETS 964,635 970,150
PLANT AND EQUIPMENT
Furniture and equipment 608,070 610,284
Leasehold improvements 15,730 15,730
623,800 626,014
Less accumulated deprecia-
tion and amortization 509,925 526,490
113,875 99,524
OTHER ASSETS
Patent costs, net of accu-
mulated amortization of
$111,871 in October and
$107,537 in July 238,066 242,391
Deferred software production
costs, net of accumulated
amortization of $380,204 in
October and $357,704 in
July 127,606 105,109
365,672 347,500
$ 1,444,182 $ 1,417,174
</TABLE>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS--Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
[CAPTION]
<TABLE>
<S> <C> <C>
July 31, October 31,
1995 1995
(Note) (Unaudited)
LIABILITIES AND SHARE-
HOLDERS' EQUITY
CURRENT LIABILITIES
Customer deposit 12,983 3,972
Accounts payable 63,604 73,980
Accrued expenses 99,110 115,926
Royalties payable to
related party 45,267 57,769
TOTAL CURRENT LIABILITIES 220,964 251,647
SHAREHOLDERS' EQUITY
Convertible Preferred
Stock, $1.00 par value,
1,000,000 shares
authorized:
Series B: (liquida-
tion preference
of $100 per share,
aggregating
$10,000) 100 100
Series C: 62,048
shares issued
and outstanding 62,048 62,048
Common Stock, $.01 par
value, 100,000,000 shares
authorized, 12,439,729
issued and outstanding 124,398 124,398
Additional Paid-in
capital 10,693,126 10,693,126
Accumulated deficit (9,656,454) (9,714,054)
1,223,218 1,165,527
$ 1,444,182 $ 1,417,174
</TABLE>
Note: The balance sheet at July 31, 1995 has been derived from the
audited financial statements at that date.
See notes to condensed consolidated financial statements.
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
[CAPTION]
<TABLE>
<S> <C>
Three Months Ended
October 31,
1994 1995
Net sales $ 509,088 $ 357,278
Less:
Cost of goods sold 156,949 199,360
Amortization of software
production costs 22,500 22,500
329,639 135,418
Operating expenses:
Selling and distribution 55,686 17,633
General and administrative 81,741 110,561
Research and development 72,458 74,902
209,885 203,096
(LOSS) INCOME FROM OPERATIONS 119,754 (67,678)
Other (expense) income:
Interest expense (20,595) -
Interest income 11,709 677
Royalties 6,000 4,940
Other income 52,787 4,370
49,901 9,987
NET (LOSS) INCOME $ 169,655 $ (57,691)
AVERAGE COMMON SHARES
OUTSTANDING 12,439,729 12,439,729
(LOSS) INCOME PER
COMMON SHARE $ 0.014 $ (0.005)
See notes to condensed consolidated financial statements.
NON-INVASIVE MONITORING SYSTEMS, INC.
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
[CAPTION]
<TABLE>
<S> <C>
Three Months Ended
October 31,
1994 1995
OPERATING ACTIVITIES
Net (loss) income $ 169,655 $ (57,691)
Adjustments to recon-
cile net income
(loss) to net cash
provided by operating
activities:
Depreciation and
amortization 43,212 43,399
Reversal of liability (48,000) -
Changes in operating
assets and liabili-
ties:
Decrease (increase) in
accounts and royalties
receivable (85,376) (111,988)
(Increase) decrease
in inventories (114,737) 95,275
Decrease in prepaid
expenses and other
current assets 999 (7,371)
Increase (decrease)
in accounts payable
current liabilities 79,035 30,680
NET CASH PROVIDED BY
OPERATING ACTIVITIES 44,688 (7,696)
INVESTING ACTIVITIES
Purchases of plant and
equipment (27,610) (2,214)
Patent costs (178) (8,659)
NET CASH USED IN INVESTING
ACTIVITIES (27,788) (10,873)
FINANCING ACTIVITIES
Proceeds from redemption
of Restricted Certificate
of Deposit 2,000,000 -
Net proceeds from
(payments of) notes
payable (1,965,000) -
NET CASH PROVIDED BY
FINANCING ACTIVITIES 35,000 -
(DECREASE) INCREASE IN
CASH 52,000 (18,569)
CASH AT BEGINNING OF
PERIOD 297,088 189,769
CASH AT END OF PERIOD $ 349,088 $ 171,200
See notes to condensed consolidated financial statements.
</TABLE>
NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Three Months Ended October 31, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-QSB. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month period
ended October 31, 1995 are not necessarily indicative of the
results that may be expected for the year ended July 31, 1996. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's 10-KSB and/or
Annual Report for the fiscal year ended July 31, 1995.
NOTE B--INVENTORIES
Inventories consist of the following:
[CAPTION]
<TABLE>
<S> <C> <C>
July 31, 1995 October 31, 1995
Raw materials $ 217,353 $ 192,009
Work-in-process 266,324 232,452
Finished Goods 139,898 103,839
$ 623,575 $ 528,300
</TABLE>
Item 2. Management's Discussion and Analysis or Plan of
Operations.
Results of Operations
The Company had a net loss of approximately $58,000 for the three
month period ended October 31, 1995 as compared to a net income of
approximately $170,000 for the three month period ended October 31,
1994. This loss was primarily due to an decrease in sales and
lower gross margin described below.
Net sales for the three month period ended October 31, 1995 were
approximately $357,000, as compared to approximately $509,000 for
the three month period ended October 31, 1994. Net sales for the
1994 period included a sale of a Respicardio Central System and
sales to the National Institutes of Health (NIH) CHIME Study, which
did not recur in the 1995 period. In September 1995, the Company
renegotiated its marketing agreement with SensorMedics Corporation
(SMC) extending the agreement through August 1997. Under the terms
of the agreement, the Company has granted SMC exclusive world-wide
distribution rights (as defined) for certain products. In return,
SMC must purchase minimum quantities of the Company's products to
maintain these exclusive distribution rights. Pursuant to the
marketing agreement, SMC purchases at a discount of 30% to 50% of
the Company's published list price. Sales to SMC during the three
month period ended October 31, 1995 amounted to approximately
$289,000 (which included a sale of a Respicardio Central System) as
compared to approximately $153,000 for the three month period ended
October 31, 1994.
Cost of goods sold expressed as a percentage of sales was
approximately 56% for the three month period ended October 31, 1995
compared to approximately 31% for the three months ended October
31, 1994 due to lower gross margin as a result of product mix and
decreased sales revenue.
Operating expenses were approximately $203,000 for the three month
period ended October 31, 1994 and approximately $209,000 for the
three month period ended October 31, 1995.
Other income during the three month period ended October 31, 1994
included $48,000 related to the reversal of a liability resulting
from the elimination of a prior period accrual that was determined
by management, to be unnecessary.
Liquidity and Capital Resources
The Company's primary sources of working capital are revenues from
operations.
Working capital was approximately $718,000 at October 31, 1995 as
compared to approximately $745,000 at July 31, 1995.
As a result of working capital constraints, the Company continues
to focus its limited resources on the following areas of activity.
These areas include; 1) in connection with the NIH CHIME study
vendor of choice production, shipment, technical involvement and
participation as a non-voting member to CHIME Steering Committee
meetings, 2) servicing the product marketing agreement with SMC, 3)
manufacture and sale of current products, including disposable
items such as Respiband Plus and 4) the submission of 510K
applications to the Food & Drug Administration (FDA) for permission
to market Respitrace PT and RespiEvents developed in connection
with the CHIME project mentioned above. The Company expects to
continue efforts on these four areas of activity during fiscal
1996.
Management believes that sales resulting from the renegotiated
marketing agreement with SMC will generate sufficient cash flows to
meet working capital needs and continue for the fiscal year ending
July 31, 1996. No assurance can be given that such assumptions
will prove to be correct, that the Company will not require
additional financing during the current fiscal year or as to
availability of terms of any such financing required. Failure to
secure adequate financing, if and when needed, would have a
material adverse effect on operations.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits - None
B. Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.
NON-INVASIVE MONITORING SYSTEMS, INC.
Registrant
Date: December 13, 1995 By: /s/Marvin A. Sackner
Marvin A. Sackner, as Chairman
and Principal Executive
Officer
Date: December 13, 1995 By:/s/Richard L. Dougherty
Richard L. Dougherty, as
President and Principal
Operating, Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> OCT-31-1995
<CASH> 171,200
<SECURITIES> 0
<RECEIVABLES> 220,740
<ALLOWANCES> 0
<INVENTORY> 528,300
<CURRENT-ASSETS> 970,150
<PP&E> 626,014
<DEPRECIATION> 526,490
<TOTAL-ASSETS> 1,417,174
<CURRENT-LIABILITIES> 251,647
<BONDS> 0
<COMMON> 124,398
100
62,048
<OTHER-SE> 1,165,527
<TOTAL-LIABILITY-AND-EQUITY> 1,417,174
<SALES> 357,278
<TOTAL-REVENUES> 357,278
<CGS> 199,360
<TOTAL-COSTS> 135,418
<OTHER-EXPENSES> 203,096
<LOSS-PROVISION> (67,678)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (57,691)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,691)
<EPS-PRIMARY> (.005)
<EPS-DILUTED> 0
</TABLE>
