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 January 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.)
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 March 15.
1999 was 16,514,726.
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, 1998 and January 31, 1999
Condensed consolidated statements of operations for the Three and Six
Months Ended January 31, 1998 and 1999
Condensed consolidated statements of cash flows for the Three and Six
months ended January 31, 1998 and 1999
Notes to condensed consolidated financial statements January 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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PART I. FINANCIAL INFORMATION
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
July 31, 1998 January 31, 1999
(Note) (Unaudited)
------ -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash 136,975 68,905
Short-term investments 200,000 --
Accounts and royalties receivable 75,997 63,195
Inventories -- 36,951
Prepaid expenses 4,000 --
--------- ---------
TOTAL CURRENT ASSETS 416,972 169,051
PROPERTY AND EQUIPMENT
Furniture and equipment 718,755 722,189
Leasehold improvements 15,731 15,731
--------- ---------
734,486 737,920
--------- ---------
Less accumulated depreciation and amortization (661,969) (680,883)
--------- ---------
72,517 57,037
Patent costs, net of accumulated amortization of
$186,885 in January and $167,234 in July 293,500 296,712
OTHER ASSETS 3,770 3,770
--------- ---------
Total other assets 297,270 300,482
- ------------------ --------- ---------
Total Assets $ 786,759 $ 526,570
- ------------ --------- ---------
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BLANCE SHEETS---Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, 1998 January 31, 1999
(Note) (Unaudited)
------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 30,150 $ 30,224
Accrued expenses 38,930 27,720
TOTAL CURRENT LIABILITIES -- --
69,080 57,944
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) (10,655,547)
Total shareholder's equity -- --
Total liabilities and shareholders equity 717,679 468,626
------------ ------------
$ 786,759 $ 526,570
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Note: The balance sheet at July 31, 1998 has been derived from the audited
consolidated 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)
Three Months Ended Six Months Ended
January 31, January 31,
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 38,973 $ 53,136 $ 60,411 $ 97,473
License revenue and product sales under Joint Development,
Manufacturing and Marketing Agreement
Royalty income -- -- --
Total revenue 28,600 28,000 57,200 56,000
------------ ------------ ------------ ------------
67,573 81,136 117,611 153,473
Operating Expenses:
Cost of goods sold
Cost of goods sold under Joint Development, Manufacturing and 666 18,786 1,428 26,490
Marketing Agreement
Amortization of software production costs -- -- --
Selling and distribution -- -- --
General and administrative 3,006 3,290 4,531 14,003
Research and development 95,686 90,137 207,146 172,344
Total operating expenses 90,757 88,098 200,262 197,646
------------ ------------ ------------ ------------
190,115 200,331 413,367 410,483
(LOSS) FROM OPERATIONS
(122,542) (119,175) (295,756) (257,010)
Interest income
Other income -- 572 6,207
NET (LOSS) 3,497 1,750 8,391 1,750
------------ ------------ ------------ ------------
$ (119,045) $ (116,853) $ (287,365) $ (249,053)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 12,439,729 16,514,726 12,439,729 16,514,726
BASIC AND DILUTED (LOSS) PER COMMON SHARE
(0.010) (0.007) (0.023) (0.015)
------------ ------------ ------------ ------------
See notes to condensed consolidated financial statements.
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<CAPTION>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Ended
January 31,
1998 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $(287,465) $(249,053)
Adjustment to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 36,278 38,565
Changes in operating assets and liabilities:
Decrease in accounts and royalties receivable 42,245 12,802
(Increase) in inventories -- (36,951)
Decrease in prepaid expenses and other current assets 8,742 4,000
(Decrease) in accounts payable and accrued expenses (5,997) (11,136)
NET CASH (USED IN) OPERATING ACTIVITIES (206,097) (241,773)
INVESETING ACTIVITIES
Short-term investments -- 200,000
Purchases of plant and equipment (1,476) (3,434)
Patent costs (22,997) (22,863)
---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (24,473) 173,703
(DECREASE) in cash (230,570) (68,070)
CASH AT BEGINNING OF PERIOD 646,261 136,975
--------- ---------
CASH AT END OF PERIOD $ 415,691 $ 68,905
--------- ---------
See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED
January 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 and six month
period ending January 31, 1999 are not necessarily indicative of the results
that may be expected for the year ending 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
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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; dependence on SensorMedics Corporation ("SMC");
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
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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.
Results of Operations
- ---------------------
Revenue for the three and six month periods ended January 31, 1999 was
approximately $81,000 and $153,000 respectively as compared to approximately
$68,000 and $118,000 for the same periods for the prior year.
Royalty income decreased approximately $1,000 to $56,000 during the period ended
January 31, 1999 period as compared to the same period 1998.
Cost of goods sold expressed as a percentage of sales increased to approximately
35% during the three month period ended January 31, 1999 compared to
approximately 2% for the 1998 period. The increase was due to new product sales
and manufacturing.
Selling, general and administrative expenses decreased approximately $6,000 and
$26,000 during the three and six month period ended January 31, 1999 as compared
to the same periods in 1998, due to the overall reduction in the Company's
operations that included among others, reduction in personnel.
8
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Nims incurred a net loss of $249,000 in the 1999 period as compared to a net
loss of $287,000 in the 1998 as a result of the factors described above.
Liquidity and Capital Resources
- -------------------------------
As of January 31, 1999, 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 January 31, 1999 was $111,000 as compared to $364,000 at
January 31, 1998. The decrease in working capital was primarily due to cash used
for operations during the six month period ended January 31, 1999.
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 Dr. Sacker's capital infusion combined with
anticipated revenues from operations, will enable Nims to meet its working
capital needs and continue operations through July 31, 1999. 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.
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. 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.
9
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PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
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. These shares were sold pursuant from the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended, Dr. Sackner
having delivered appropriate investment representations to the company and
having consented to the imposition of a restrictive legend on certificates
evidencing the shares.
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: March 15, 1999 By: /S/ Marvin A. Sackner
---------------------
Marvin A. Sackner,
Chairman of the Board
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> JAN-31-1999
<CASH> 68,905
<SECURITIES> 0
<RECEIVABLES> 63,195
<ALLOWANCES> 0
<INVENTORY> 36,951
<CURRENT-ASSETS> 169,051
<PP&E> 737,920
<DEPRECIATION> (680,883)
<TOTAL-ASSETS> 57,037
<CURRENT-LIABILITIES> 57,944
<BONDS> 0
124,398
100
<COMMON> 62,048
<OTHER-SE> 241,330
<TOTAL-LIABILITY-AND-EQUITY> 526,570
<SALES> 97,473
<TOTAL-REVENUES> 153,473
<CGS> 26,490
<TOTAL-COSTS> 126,983
<OTHER-EXPENSES> 383,993
<LOSS-PROVISION> (257,010)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (249,053)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (249,053)
<EPS-PRIMARY> (0.015)
<EPS-DILUTED> 0
</TABLE>
