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 Quarter ended October 31, 1999
( ) 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 Identification No.)
incorporation or organization)
1840 West Avenue, Miami Beach, Florida, 33139
(Address of principal executive offices) (Zip Code)
(305) 534-3694
(Registrant's telephone number:)
-----------------------
Indicate by check mark if 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 [ ]
The number of shares outstanding of the registrant's Common
Stock, par value $.01 per share (the "Common Stock"), as of December
15, 1999 was 21,514,726.
This document contains 11 pages
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NON-INVASIVE MONITORING SYSTEMS, INC.
Index
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets at July 31, 1999 and October 31,
1999
Condensed consolidated statements of operations for the Three Months
Ended October 31, 1998 and 1999
Condensed consolidated statements of cash flows for the Three months
ended October 31, 1998 and 1999
Notes to condensed consolidated financial statements October 31, 1999
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
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<CAPTION>
PART I. FINANCIAL INFORMATION
- ------- ---------------------
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
July 31, 1999 October 31, 1999
(Note) (Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 3,198 8,237
Accounts and royalties receivable
- net of allowance of $4,343 35,636 27,948
Inventories 37,665 15,901
Prepaid expenses - 3,926
----------- ----------
TOTAL CURRENT ASSETS 76,499 56,012
PROPERTY AND EQUIPMENT
Furniture and equipment 722,339 722,339
Leasehold improvements 15,731 15,731
----------- ----------
738,070 738,070
Less accumulated depreciation and amortization (712,036) (714,536)
----------- ----------
26,034 23,534
Patent costs, net of accumulated amortization of
$202,035 in July and $208,365 in October 283,632 301,302
OTHER ASSETS 6,758 3,782
----------- ----------
Total other assets 290,390 305,084
- ------------------ ----------- ----------
Total Assets $ 392,923 $ 384,630
- ------------ ----------- ----------
</TABLE>
Note: The balance sheet at July 31, 1999 has been derived from the
audited financial statements at that date.
See notes to condensed consolidated financial statements.
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<TABLE>
<CAPTION>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS---Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, 1999 Oct. 31, 1999
(Note) (Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and Accrued expenses $ 64,629 $ 118,101
Loan Payable to Shareholder 29,500 67,000
------------ ------------
TOTAL CURRENT LIABILITIES 94,129 185,101
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value,
1,000.000 shares authorized
Series B: 100 shares issued and outstanding 100 100
Series C: 62,048 shares issued and outstanding 62,048 62,048
Common Stock, $.01 par value, 100,000,000 shares
authorized, 21,514,726 issued and outstanding 215,148 215,148
Additional Paid-in capital 10,996,877 10,996,877
Accumulated deficit (10,975,379) (11,074,644)
------------ ------------
Total shareholder's equity 298,794 199,529
------------ ------------
Total liabilities and shareholders equity $ 392,923 $ 384,630
------------ ------------
</TABLE>
Note: The balance sheet at July 31, 1999 has been derived from the audited
consolidated financial statements at that date.
See notes to condensed consolidated financial statements.
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<TABLE>
<CAPTION>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
October 31,
1998 1999
---- ----
<S> <C> <C>
Revenues:
Product sales $44,337 $59,160
Royalty income 28,000 23,881
----------- -----------
Total revenue 72,337 83,041
Operating Expenses:
Cost of goods sold 7,704 25,111
Selling, General & Administrative 92,920 66,459
Research & Development 109,548 92,138
----------- -----------
Total operating expenses 210,172 183,708
(LOSS) FROM OPERATIONS (137,835) (100,667)
Interest income 352
Other income 5,635 1,050
----------- -----------
NET (LOSS) $(132,200) $( 99,265)
----------- -----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 16,514,726 21,514,726
BASIC AND DILUTED (LOSS) PER COMMON SHARE
(0.008) (.005)
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
5
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<TABLE>
<CAPTION>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
October 31,
1998 1999
---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) $ (132,200) $ ( 99,265)
Adjustment to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 23,466 8,830
Changes in operating assets and liabilities:
Decrease in accounts and royalties receivable 38,004 7,688
(Increase) Decrease in inventories (18,229) 21,764
(Increase) in prepaid expenses and other assets (950)
Increase in accounts payable and accrued expenses 13,065 53,472
------------ ------------
NET CASH (USED IN) OPERATING ACTIVITIES (75,894) (8,461)
INVESTING ACTIVITIES 200,000
Short-term investments (3,296)
Purchases of plant and equipment (13,208) (24,000)
------------ ------------
Patent costs
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (24,000)
183,496
FINANCING ACTIVITIES
Proceeds from Shareholder loans
37,500
NET CASH PROVIDED BY
FINANCING ACTIVITIES
37,500
Increase in cash
107,602 5,039
CASH AT BEGINNING OF PERIOD
136,975 3,198
------------ ------------
CASH AT END OF PERIOD
$ 244,577 $ 8,237
------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
6
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NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED
October 31, 1999
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 to 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
ending October 31, 1999 are not necessarily indicative of the results that may
be expected for the year ending July 31, 2000. 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, 1999.
Forward-Looking Statements
The following discussion contains, in addition to historical information,
forward-looking statements regarding Non-Invasive Monitoring Systems, Inc. (the
"Company" or "Nims"), 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 or 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; competition; dependence on management; risks related
to proprietary rights; government regulation; 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 has been
developing a therapeutic motion platform that produces periodic acceleration in
the spinal axis of the resting subject. In animal experiments, this device has
been found to effect Non-Invasive Motion Ventilation, Non-
7
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Invasive Cardiopulmonary Resuscitation, release of Nitric Oxide from the lining
of blood vessels, and marked increases in heart and brain blood flows.
Prior to April, 1999, the Company was party to an exclusive
distribution agreement for most of its products with SensorMedics Corporation
and was largely dependent on SensorMedics Corporation for the marketing of Nims
Products. The agreement was amended to a non-exclusive arrangement. Nims
believes that the amendment will allow it to seek additional channels of
distribution rather than relying exclusively on SensorMedics Corporation.
On November 2, 1999, the Company entered into a License Agreement with
Lifeshirt.com, Inc., an Internet start-up company. The License Agreement
provides that LifeShirt.com, Inc. will license the Company's technology and
software incorporated into a wearable computer garment system termed Lifeshirt.
In December, 1999, the Company received notification from the patent office that
its claims for patent of this garment were allowed. The Company received an
equity position in Lifeshirt.com, Inc. as well as termed royalties based upon
the revenues of Lifeshirt.com, Inc. In addition, an Agreement was signed that
called for research and development of the Lifeshirt System. This agreement
funds Company operations through April 2000. Thereafter, it is renewable on a
month-by-month basis depending upon needs for further research and development.
As long as Lifeshirt.com, Inc. meets its fiscal responsibilities through the R&D
Agreement, the Company should be able to meet its working capital requirements
during fiscal 2000. However, if Lifeshirt.com, Inc. fails to meet its financial
obligations to the Company, then the Company may require additional capital to
remain in business. Failure to secure necessary financing might result in the
further reduction and curtailment of operations.
Results of Operations
- ---------------------
Revenue for the three month period ended October 31, 1999 was approximately
$83,000 as compared to approximately $72,000 for the same period for the prior
year.
Royalty income decreased approximately $4,100 during the period ended October
31, 1999 period as compared to the same period 1998.
Selling, general and administrative expenses decreased approximately $26,000
during the three month period ended October 31, 1999 as compared to the same
period in 1998. 1998 Costs were higher due to the costs associated with ISO 9001
certification and CE marking process required for marketing the company's
products.
Nims incurred a net loss of $99,265 in the 1999 period as compared to a net loss
of $132,200 in the 1998 as a result of the factors described above.
Liquidity and Capital Resources
- -------------------------------
Working capital at October 31, 1999 was ($129,000) as compared to $223,000 at
October 31, 1998. The decrease in working capital was primarily due to the
increase in Accounts Payable and Accrued expenses during the three month period
ended October 31, 1999.
8
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In March 1999, Nims required additional working capital to fund continued
operations, as revenues from product sales and royalty income were not
sufficient to sustain operations. Accordingly, in March 1999, Dr. Marvin A.
Sackner, Nims' Chairman provided the Company with an equity infusion of $150,000
through the purchase of 5,000,000 shares of Common Stock at a price of $.03 per
share.
The Company believes that the equity infusion combined with the anticipated
revenues from operations, will enable Nims to meet its working capital needs and
continue operations through July 31, 2000. However, if revenues do not reach
levels sufficient to fund working capital operations, Nims will require further
financing to continue operations in subsequent periods 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
curtailment of operations.
ISO 9001 Certification and CE Mark
- ----------------------------------
The Company has been notified that it met requirements for ISO 9001
certification and may affix the CE Mark to its products. Quality System
Requirements are required to market products into the EC. In addition, it has
met the FDA GMP Good Manufacturing Practice qualifications which correspond to
the ISO certification as well. Management believes this will enhance the
Company's ability to favorably position itself to potential marketing and
development partners.
Year 2000
- ---------
Nims has made every effort to assure 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.
As part of the Company's routine Good Manufacturing Processes and Regulatory
Compliance, Nims addressed this potential problem and implemented through its
normal working procedures the implementation of Y2000 as a criteria of new and
present product development. The Company recently released Respitrends v2.0, a
personal computer based software which is year 2000 compliant to be used with
the Respitrace Plus as a replacement for Respitrends, a noncompliant software
product. There is no impact on the safety or effectiveness of the Respitrace
Plus which utilizes the Respitrends software, although incorrect dates and birth
date computations will appear on screens and reports. These dates are not used
in any calculation in the Respitrends software, affecting physiological
monitored parameters, however it is this anomaly which makes Respitrends
software non-Year 2000 compliant.
9
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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
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934 the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NON-INVASIVE MONITORING SYSTEMS, INC.
Dated: December 15, 1999 By: /S/ Marvin A. Sackner
--------------------------
Marvin A. Sackner,
Chairman of the Board
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-END> OCT-31-1999
<CASH> 83237,198
<SECURITIES> 0
<RECEIVABLES> 27,948
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,012
<PP&E> 738,070
<DEPRECIATION> 714,536
<TOTAL-ASSETS> 384,630
<CURRENT-LIABILITIES> 185,101
<BONDS> 0
0
62,148
<COMMON> 215,148
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 384,630
<SALES> 59,160
<TOTAL-REVENUES> 83,041
<CGS> 25,111
<TOTAL-COSTS> 183,708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (99,265)
<EPS-BASIC> (.005)
<EPS-DILUTED> (.005)
</TABLE>
