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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, 1997
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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
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NON-INVASIVE MONITORING SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 59-2007840
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
1840 West Avenue
Miami Beach, Florida 33139
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(Address of principal executive offices)
(Zip Code)
(305) 534-3694
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(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
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Number of shares of the registrant's common stock outstanding as of December 12,
1997 is 12,439,729.
This document consists of 12 pages.
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NON-INVASIVE MONITORING SYSTEMS, INC.
Index
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets -- July 31, 1997 and October 31, 1997.
Condensed consolidated statements of operations--Three Months Ended October 31, 1996 and 1997
Condensed consolidated statements of cash flows--Three Months Ended October 31, 1996 and 1997
Notes to condensed consolidated financial statements--October 31, 1997
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
</TABLE>
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PART I - FINANCIAL INFORMATION
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
July 31, 1997 October 31,1997
(Note) (Unaudited)
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 646,261 $ 517,083
Accounts and royalties receivable 93,905 41,221
Prepaid expenses and other current assets 10,313 6,337
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TOTAL CURRENT ASSETS 750,479 564,641
PROPERTY AND EQUIPMENT
Furniture and equipment 695,428 695,428
Leasehold improvements 15,731 15,731
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711,159 711,159
Less accumulated depreciation
and amortization (616,339) (630,078)
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94,820 81,081
Patent costs, net of accumulated amortization
of $149,706 in October and $144,284 in July 253,326 256,601
3,770 3,770
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OTHER ASSETS 257,096 260,371
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$ 1,102,396 $ 906,093
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</TABLE>
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS--Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
July 31, 1997 October 31, 1997
(Note) (Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 25,775 16,061
Accrued expenses 84,638 66,370
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TOTAL CURRENT LIABILITIES 110,413 82,431
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 outstanding 124,398 124,398
Additional Paid-in capital 10,693,127 10,693,126
Accumulated deficit (9,887,691) (10,056,011)
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Total shareholder's equity 991,982 823,662
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Total liabilities and shareholders equity $ 1,102,395 $ 906,093
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</TABLE>
Note: The balance sheet at July 31, 1997 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1996 1997
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<S> <C> <C>
Revenues
Product sales $ 280,301 $ 21,438
License revenue and product sales under Joint
Development, Manufacturing and Marketing
Agreement
Royalty income 3,600 28,600
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Total revenue 283,901 50,038
Operating Expenses:
Cost of goods sold 124,221 762
Cost of goods sold under
Joint Development,
Manufacturing and Marketing
Agreement
Amortization of software
production costs 22,500 --
Selling, and distribution 1,166 1,525
General and administrative 93,497 111,460
Research and development 75,262 109,505
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Total operating expenses
LOSS FROM OPERATIONS (32,745) (173,214)
Interest income -- 4,144
Other income 2,562 750
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NET (LOSS) $ (30,183) $ (168,320)
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AVERAGE COMMON SHARES
OUTSTANDING 12,439,729 12,439,729
(LOSS) INCOME PER
COMMON SHARE $ (0.002) $ (0.014)
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</TABLE>
See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1996 1997
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<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ ( 30,183) $(168,320)
Adjustment to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 39,365 19,161
Changes in operating assets and liabilities:
Decrease in accounts and
royalties receivable 546,234 52,684
Decrease (Increase) in inventories (8,731) --
Decrease in prepaid expenses
and other current assets -- 3,976
Decrease in accounts
payable and accrued expenses (523,586) (31,752)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 23,099 (124,251)
INVESTING ACTIVITIES
Purchases of plant and equipment -- --
Patent costs (3,574) (4,927)
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NET CASH USED IN INVESTING ACTIVITIES (3,574) (4,927)
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INCREASE (DECREASE) IN CASH 19,525 (129,178)
CASH AT BEGINNING OF PERIOD 189,092 646,261
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CASH AT END OF PERIOD $ 208,617 $ 517,083
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</TABLE>
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See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
October 31, 1997
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 month period ended October 31,
1997 are not necessarily indicative of the results that may be expected for the
year ended July 31, 1998. 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, 1997.
NOTE B--INVENTORIES
During the fourth fiscal quarter of the year ended July 31, 1997, the Company
wrote off its inventory balance with a cost of approximately $164,072.
The following discussion contains, in addition to historical information,
forward looking statements with respect to Non-Invasive Monitoring Systems, Inc.
(the "Company") that involve risks and uncertainties. The Company's actual
results could differ materially. For this purpose, any statements contained in
this Report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may", "will", "expect", "believe", "anticipate", "intend",
"could", "estimate", or "continue" or the negative other variations thereof or
comparable terminology are intended to identify forward-looking statements.
Factors that could cause or contribute to such difference include, but not
limited to, history of operating losses and accumulated deficit; possible need
for additional financing; dependence on SensorMedics Corporation ("SMC");
competition; dependence on management; risk related to proprietary rights; and
other factors discussed in this Report and the Company's filings with the
Securities and Exchange Commission.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Introduction
Prior to December 1996, the Company's products were distributed
exclusively by SMC, a subsidiary of Thermo Electron Corporation. In December
1996, the Company and SMC, amended the terms of their existing arrangement and
entered into a Joint Development, Manufacturing and Marketing Agreement (the
"SMC Agreement") pursuant to which the Company granted SMC the exclusive rights
to manufacture the Company's Respibands and non-exclusive rights to manufacture
the Company's Respitrace Plus and Respitrace PT. In exchange for such rights,
Nims received or will receive certain fixed payments from SMC, as well as
ongoing royalties. The Company has also developed a new sleep diagnostic device
to be manufactured and marketed exclusively by SMC. SMC also produces
instruments for pulmonary function testing, metabolic measurements, sleep
diagnostics and like support and has over 30 years experience in the medical
device industry. SMC distributes through 35 direct representatives in the United
States, the United Kingdom, the Benelux countries, France, and Germany and uses
50 dealers in other countries.
In recent years, the increasing financial cost of domestic and foreign
regulatory compliance in the manufacture and marketing of medical devices has
adversely affected Nims' ability, particularly in light of its limited capital
resources, to manufacture and market new products targeted to adult and infant
critical care. As SMC is responsible under the Agreement for regulatory
compliance, the Company believes that by granting manufacturing rights to SMC,
it allows Nims to focus its efforts on product development which, in the opinion
of management, has always been the Company's strength. Nims is pursuing such
development efforts to improve its existing products and develop new products
for licensing to third parties for manufacture and marketing to the medical
community.
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Results of Operations
Revenue for the three month period ended October 31, 1997 was approximately
$50,000 as compared to approximately $284,000 for the three month period ended
October 31, 1996. The decrease was due to decreased sales to SMC during the 1997
period.
Royalty income increased approximately $25,000 to $28,600 during the 1997 period
as compared to the 1996 period as a result of the minimum royalties earned under
the SMC Agreement.
Cost of goods sold expressed as a percentage of product sales was approximately
4% during the three month period ended October 31, 1997 compared to
approximately 44% for the 1996 period. As described above, in December 1996, the
Company granted SMC certain manufacturing rights for the Company's products,
which largely eliminated product sales and cost of goods sold and has resulted
in expense reductions.
General and administrative expenses were approximately $18,000 higher for the
1997 period as compared to the 1996 period.
Research and development expenses were approximately $34,000 higher for the 1997
period as compared to the 1996 period, due to increased research and development
of new products pursuant to the SMC Agreement and otherwise.
Nims incurred a net loss of $168,320 in the 1997 period as compared to a net
loss of $30,183 in the 1996 period as a result of the factors described above.
Liquidity and Capital Resources
As of October 31, 1997, Nims primary source of working capital was generated
from royalties under the SMC Agreement.
Working capital at October 31, 1997 was approximately $482,000 as compared to
approximately $495,000 at October 31, 1996. The decrease in working capital is
primarily due to cash used for operations during the three month period ended
October 31, 1997.
Management believes that current working capital levels and anticipated revenues
from the amended SMC Agreement will generate sufficient cash flows to meet
working capital needs and continue operations for the fiscal year ending July
31, 1998. If revenues generated from the SMC Agreement, as amended, do not reach
levels sufficient to fund working capital requirements the Company may require
further financing to continue operations during fiscal year ending July 31, 1998
and in any event may require additional capital to fund its research and
development efforts thereafter. Failure to secure necessary financing might
result in the further reduction and curtailment of operations.
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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 - 27.1 - Financial data schedule (SEC use only)
B. Not applicable
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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 15, 1997 By: /s/ Marvin A. Sackner
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Marvin A. Sackner, as Chairman and
Principal Executive Officer
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<PERIOD-START> OCT-31-1997
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