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 January 31, 1996
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 0-13176
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)
Indicate by check mark whether the registrant (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
Number of shares of the registrant's common stock outstanding as of
March 14, 1996 is 12,439,729.
This document consists of 11 pages.
NON-INVASIVE MONITORING SYSTEMS, INC.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets -- July 31, 1995
and January 31, 1996.
Condensed consolidated statements of operations--Three
and Six Months Ended January 31, 1995 and 1996
Condensed consolidated statements of cash flows--Six
Months Ended January 31, 1995 and 1996
Notes to condensed consolidated financial
statements--January 31, 1996
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, January 31,
1995 1996
(Note) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 189,769 $ 124,940
Accounts and royalties
receivable 108,752 56,851
Inventories 623,575 607,132
Prepaid expenses and other
current assets 42,539 20,888
TOTAL CURRENT ASSETS 964,635 809,811
PLANT AND EQUIPMENT
Furniture and equipment 608,070 615,017
Leasehold improvements 15,730 15,730
623,800 630,747
Less accumulated depreciation
and amortization 509,925 541,941
113,875 88,806
OTHER ASSETS
Patent costs, net of accumulated
amortization of $116,087 in
January and $107,537 in July 238,066 246,411
Deferred software production
costs, net of accumulated
amortization of $402,704 in
January and $357,704 in July 127,606 82,609
365,672 329,020
$ 1,444,182 $ 1,227,637
</TABLE>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS--Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
[CAPTION]
<TABLE>
<S> <C> <C>
July 31, January 31,
1996 1996
(Note) (Unaudited)
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Customer deposits $ 12,983 $ 2,467
Accounts payable 63,604 114,628
Accrued expenses 99,110 83,675
Royalties payable to
related party 45,267 66,103
TOTAL CURRENT LIABILITIES 220,964 266,873
SHAREHOLDERS' EQUITY
Convertible Preferred Stock,
$1.00 par value, 1,000,000
shares authorized:
Series B: (liquidation
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 out-
standing 124,398 124,398
Additional Paid-in capital 10,693,126 10,693,126
Accumulated deficit (9,656,454) (9,918,908)
1,223,218 960,764
$ 1,444,182 $ 1,227,637
</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> <C>
Three Months Ended Six Months Ended
January 31, January 31,
1995 1996 1995 1996
Net sales $ 581,060 $ 92,824 $1,090,148 450,102
Cost of goods
sold 366,188 74,927 523,137 274,287
Amortization of
software produc-
tion costs 22,500 22,500 45,000 45,000
192,372 (4,603) 522,011 130,815
Operating expenses:
Selling and distri-
bution 26,562 12,849 82,248 30,482
General and adminis-
trative 80,782 123,353 162,523 233,914
Research and deve-
lopment 86,105 81,384 158,563 156,286
193,449 217,586 403,334 420,682
PROFIT (LOSS) FROM
OPERATIONS (1,077) (222,189) 118,677 (289,867)
Other (expense) income:
Interest expense (111) -0- (20,706) -0-
Interest income 861 555 12,570 1,232
Royalties 6,000 3,600 12,000 8,540
Other income
(expense) (51,090) 11,500 1,697 15,870
(44,340) 15,655 5,561 25,642
NET PROFIT (LOSS) $ (45,417) $(206,534) 124,238 (264,225)
AVERAGE COMMON SHARES
OUTSTANDING 12,439,729 12,439,729 12,439,729 12,439,729
PROFIT (LOSS) PER
COMMON SHARE $ 0.00 $ (0.02) $ 0.01 $ (0.02)
See notes to condensed consolidated financial statements.
</TABLE>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
[CAPTION]
<TABLE>
<S> <C>
Six Months Ended
January 31,
1995 1996
OPERATING ACTIVITIES
Net profit (loss) $ 124,238 $ (264,225)
Adjustment to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and
amortization 89,511 85,566
Changes in operating assets
and liabilities:
Decrease (increase) in
accounts and royalties
receivable (187,225) 51,901
Decrease in inventories 129,135 16,443
Decrease (increase) in
prepaid expenses
and other current assets (2,877) 21,651
Increase (decrease) in
accounts payable and
accrued expenses 11,685 58,193
Decrease in customer
deposits (201,630) (10,516)
NET CASH USED IN
OPERATING ACTIVI-
TIES $ (37,163) $ (40,987)
INVESTING ACTIVITIES
Purchases of plant and
equipment (55,771) (6,947)
Patent costs (12,750) (16,895)
NET CASH USED IN INVESTING
ACTIVITIES $ (68,521) $ (23,842)
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 $ -0-
(DECREASE) INCREASE IN CASH $ (70,684) $ (64,829)
CASH AT BEGINNING OF PERIOD $ 297,088 $ 189,769
CASH AT END OF PERIOD $ 226,404 $ 124,940
See notes to condensed consolidated financial statements.
</TABLE>
NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
January 31, 1996
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 and Article 10 of regulation S-B.
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 and six month periods ended January 31, 1996
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 January 31, 1996
Raw materials $ 217,353 $ 235,175
Work-in-process 266,324 248,677
Finished Goods 139,898 123,280
$ 623,575 $ 607,132
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
The Company's net loss for the three month period ended January 31,
1996 was approximately $207,000 as compared to a net loss of
approximately $45,000 for the three month period ended January 31,
1995. The net loss for the six month period ended January 31, 1996
was approximately $264,000 as compared to a net profit of
approximately $124,000 for the same period in 1995. The increased
loss for the three and six month periods was primarily due to a
decrease in sales and lower gross margins as described below.
Net sales for the three month period ended January 31, 1996 were
approximately $93,000 as compared to approximately $581,000 for the
three month period ended January 31, 1995; net sales for the six
month period ended January 31, 1996 were approximately $450,000 as
compared to approximately $1,090,000 for the six month period ended
January 31, 1995. Net sales for both the three and six month
period ended January 31, 1995 included sales to the National
Institutes of Health (NIH) CHIME Study, of which did not recur in
both the three and six month periods ending January 31, 1996. Sales
were further negatively impacted due to extended vendor delivery
schedules and delays in new product approvals by the U.S. Food and
Drug Administration (the "FDA") more fully described below. The
Company principally sells its products through SensorMedics
Corporation ("SMC") pursuant to a marketing agreement which expires
in 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 CHIME amounted to approximately $36,000 and
$73,000, respectively, for the three and six month periods ending
January 31, 1996 while sales to SMC amounted to approximately
$41,000 and $330,000, respectively, for the same three and six
month periods.
Cost of goods sold expressed as a percentage of net sales was
approximately 81% during the three month period ended January 31,
1996 compared to approximately 63% for the three months ended
January 31, 1995. Cost of goods sold was approximately 61% during
the six month period ended January 31, 1996 compared to
approximately 48% for the same period last year. The increase in
cost of goods sold for both the three and six month periods ending
January 31, 1996 resulted from decreased sales revenue.
Operating expenses increased slightly from approximately $193,000
for the three month period ended January 31, 1995 to approximately
$218,000 for the three month period ended January 31, 1996 and from
approximately $403,000 for the six month period ended January 31,
1995 to approximately $421,000 for the six month period ended
January 31, 1996.
In February 1996, the Company received FDA permission to market two
new products, the Respitrace PT recorder and the RespiEvents
software package. Nims expects to begin shipping Respitrace PT,
under the name SomnoStar PT, and RespiEvents to its sole
distributor, SMC, in mid April 1996.
The RespiEvents contains a method, whose US patent application has
just been allowed and will issue in the near future, for quality
control over validity of arterial oxygen saturation values measured
with pulse oximetry. It acts by automatically eliminating
erroneous oxygen values caused by movement of the oxygen sensor, a
shortcoming of this widely utilized technology in sleep disorders.
The Company believes that such patent, if issued, will enhance the
marketability of the two new products.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of working capital is revenues from
operations.
Working capital was approximately $543,000 at January 31, 1996 as
compared to approximately $745,000 at July 31, 1995. The decrease
in working capital is due to net loss generated during the six
month period. During the three month period ended January 31, 1996
the Company continued to limit research and development activities
to projects which have the potential for generating revenues in the
short term.
As a result of working capital constraints, the Company continues
to focus its resources on the following areas activity. These
areas include; 1) in connection with the NIH CHIME study,
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
gearing up for the manufacture and sale of Respitrace PT and
RespiEvents 4) planning further submissions of 510K applications
to the FDA for permission to market certain additional products,
including an upgrade version of RespiEvents. The Company expects
to continue efforts in these 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 operations 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 the 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: March 14, 1996 By:/s/Marvin A. Sackner
Marvin A. Sackner, as
Chairman and Principal
Executive Officer
Date: March 14, 1996 By:/s/Richard L. Dougherty
Richard L. Dougherty, as
President and Principal
Operating, Financial
and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Article 5 FDS for 2nd Quarter 10-QSB
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 124,940
<SECURITIES> 0
<RECEIVABLES> 56,851
<ALLOWANCES> 0
<INVENTORY> 607,132
<CURRENT-ASSETS> 809,811
<PP&E> 630,747
<DEPRECIATION> 541,941
<TOTAL-ASSETS> 1,227,637
<CURRENT-LIABILITIES> 266,873
<BONDS> 0
100
62,048
<COMMON> 124,398
<OTHER-SE> 960,764
<TOTAL-LIABILITY-AND-EQUITY> 1,227,637
<SALES> 450,102
<TOTAL-REVENUES> 450,102
<CGS> 274,287
<TOTAL-COSTS> (420,682)
<OTHER-EXPENSES> 25,642
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (264,225)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (264,225)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
