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, 1998
----------------
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)
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 December 15,
1998 is 16,514,726.
1
This document consists of 11 pages.
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
Index
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets -- July 31, 1998 and October 31,
1998.
Condensed consolidated statements of operations--Three Months Ended
October 31, 1997 and 1998
Condensed consolidated statements of cash flows--Three Months Ended
October 31, 1997 and 1998
Notes to condensed consolidated financial statements--October 31, 1998
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
- ----------
2
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
July 31, 1998 October 31,1998
(Note) (Unaudited)
------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 136,975 $ 244,577
Short-term investments 200,000 --
Accounts and royalties receivable 75,997 37,993
Inventories -- 18,229
Prepaid expenses 4,000 4,000
--------- ---------
TOTAL CURRENT ASSETS 416,972 304,799
PROPERTY AND EQUIPMENT
Furniture and equipment 718,755 722,051
Leasehold improvements 15,731 15,731
--------- ---------
734,486 737,782
Less accumulated depreciation and amortization (661,969) (671,522)
--------- ---------
72,517 66,260
Patent costs, net of accumulated amortization
of $181,147 in October and $167,234 in July 293,500 292,795
OTHER ASSETS 3,770 3,770
--------- ---------
Total other assets 297,270 296,565
- ------------------ --------- ---------
TOTAL ASSETS $ 786,759 $ 667,624
- ------------ --------- ---------
3
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS--Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, 1998 October 31, 1998
(Note) (Unaudited)
------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 30,150 $ 66,170
Accrued expenses 38,930 15,975
----------- ------------
TOTAL CURRENT LIABILITIES 69,080 82,145
SHAREHOLDERS' EQUITY
Convertible Preferred Stock, $1.00 par value, 1,000,000
shares authorized:
Series B: 100 shares issued and outstanding (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
Subscribed common stock $.01 par value, 4,074,997
shares paid for but not issued 40,750 40,750
Additional Paid-in capital 10,896,877 10,896,877
Accumulated deficit (10,406,494) (10,538,694)
----------- ------------
TOTAL SHAREHOLDER'S EQUITY 717,679 585,479
----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 786,759 $ 667,624
----------- ------------
</TABLE>
Note: The balance sheet at July 31, 1998 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
4
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1997 1998
---- ----
<S> <C> <C>
Revenues
Product sales $ 21,438 $ 44,337
License revenue and product sales under Joint
Development, Manufacturing and Marketing
Agreement
Royalty income 28,600 28,000
----------- -----------
Total revenue 50,038 72,337
Operating Expenses:
Cost of goods sold 762 7,704
Selling, and distribution 1,525 10,713
General and administrative 111,460 82,207
Research and development 109,505 109,548
----------- -----------
Total operating expenses 223,252 210,172
LOSS FROM OPERATIONS (173,214) (137,835)
Interest income 4,144 5,635
Other income 750 -
----------- -----------
NET (LOSS) $ (168,320) $ (132,200)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 12,439,729 16,514,726
BASIC AND DILUTED (LOSS) INCOME
PER COMMON SHARE $ (0.014) $ (0.008)
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1997 1998
---------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $ (168,320) (132,200)
Adjustment to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 19,161 23,466
Changes in operating assets and liabilities:
Decrease in accounts and
royalties receivable 52,684 38,004
(Increase) in inventories - (18,229)
Decrease in prepaid expenses
and other current assets 3,976 -
Increase (Decrease) in accounts
payable and accrued expenses (31,752) 13,065
NET CASH (USED IN) OPERATING ACTIVITIES (124,251) (75,894)
INVESTING ACTIVITIES
Short-term investment - 200,000
Purchases of plant and equipment (3,296)
Patent costs (4,927) (13,208)
------------ ------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (4,927) 183,496
------------ ------------
INCREASE (DECREASE) IN CASH (129,178) 107,602
CASH AT BEGINNING OF PERIOD 646,261 136,975
------------ ------------
CASH AT END OF PERIOD $517,083 244,577
------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
October 31, 1998
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,
1998 are not necessarily indicative of the results that may be expected for the
year ended July 31, 1999. 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, 1998.
7
<PAGE>
The following discussion contains, in addition to historical information,
forward looking statements regarding 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 other filings with the
Securities and Exchange Commission.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Introduction
- ------------
Non-Invasive Monitoring Systems, Inc. (the "Company" or "Nims") is
engaged in the research and development of computer assisted, non-invasive
monitoring devices designed to detect abnormal respiratory and related pulmonary
events from sensors placed on the body's surface. These devices provide
diagnostic information regarding cardiorespiratory and sleep disorders in
infants, children and adults; in addition alarms are sounded for adverse cardiac
and respiratory events in critically ill patients. The Company also is
developing non-invasive, therapeutic, cardiorespiratory devices.
Results of Operations
- ---------------------
Revenue for the three month period ended October 31, 1998 was approximately
$72,000 as compared to approximately $50,000 for the three month period ended
October 31, 1997. The increase was due to sale of newly marketed products
developed in the 1998 period.
Royalty income earned under a distributor agreement with SMC decreased
approximately $1,000 to $28,000 during the 1998 period as compared to the 1997
period.
Cost of goods sold expressed as a percentage of product sales was approximately
17% during the three month period ended October 31, 1998 compared to
approximately 4% for the 1997 period. The increase was due to new product sales
and manufacturing.
Selling, general and administrative expenses were approximately $20,000 lower
for the 1998 period as compared to the 1997 period. Research and development
expenses were approximately the same for the 1998 period as compared to the 1997
period.
Nims incurred a net loss of $132,200 in the 1998 period as compared to a net
loss of $168,320 in the 1997 period as a result of the factors described above.
8
<PAGE>
Liquidity and Capital Resources
- -------------------------------
As of October 31, 1998 Nims primary source of working capital was generated from
product sales of Respitrace 200 Data Acquisition Systems and a private offering,
completed on April 30, 1998 of 4,974,997 shares of common stock to certain
directors, executive officers and employees of the Company at a price of $.06
per share for total proceeds of $244,500.
Working capital at October 31, 1998 was approximately $223,000 as compared to
approximately $482,000 at October 31, 1997. The decrease in working capital is
primarily due to cash used for operations during the three month period ended
October 31, 1998.
If revenues generated from product sales or other do not reach levels sufficient
to fund working capital requirements during fiscal 1999, the Company will
require further financing to continue operations during fiscal 1999 and in any
event may require additional capital to fund research and development efforts
thereafter. Failure to secure necessary financing might result in the further
reduction and curtailment of operations.
Year 2000
- ---------
Nims has made every effort that all currently marketed devices are Year 2000
compliant. All of the Company's hardware and software products are able to
perform date recording and computations beginning with January 1, 2000. Nims has
implemented through its Good Manufacturing Processes and Regulatory Compliance
the implementation of Y2000 as a criteria of new and current product
development.
9
<PAGE>
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
10
<PAGE>
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, 1998 By: /s/Marvin A. Sackner
-----------------------------------
Marvin A. Sackner, as Chairman and
Principal Executive Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> OCT-31-1998
<CASH> 244,577
<SECURITIES> 0
<RECEIVABLES> 37,993
<ALLOWANCES> 0
<INVENTORY> 18,229
<CURRENT-ASSETS> 304,799
<PP&E> 737,782
<DEPRECIATION> 671,522
<TOTAL-ASSETS> 66,260
<CURRENT-LIABILITIES> 82,145
<BONDS> 0
100
62,048
<COMMON> 124,398
<OTHER-SE> 358,183
<TOTAL-LIABILITY-AND-EQUITY> 667,624
<SALES> 44,337
<TOTAL-REVENUES> 72,337
<CGS> 7,704
<TOTAL-COSTS> 36,633
<OTHER-EXPENSES> 202,468
<LOSS-PROVISION> (137,835)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (132,200)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (132,200)
<EPS-PRIMARY> (0.008)
<EPS-DILUTED> 0
</TABLE>
