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 April 30, 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 June 11
1999 was 21,514,726.
This document contains 11 pages
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
Index
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets at July 31, 1998 and
April 30, 1999
Condensed consolidated statements of operations for the Three and Nine
Months Ended April 30, 1998 and 1999
Condensed consolidated statements of cash flows for the Three and Nine
months ended April 30, 1998 and 1999
Notes to condensed consolidated financial statements April 30, 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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2
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PART I. FINANCIAL INFORMATION
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
July 31, 1998 April 30, 1999
(Note) (Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 136,975 117,833
Short-term investments 200,000 --
Accounts and royalties receivable 75,997 26,172
Inventories -- 36,951
Prepaid expenses 4,000 2,976
--------- ---------
TOTAL CURRENT ASSETS 416,972 183,932
PROPERTY AND EQUIPMENT
Furniture and equipment 718,755 722,339
Leasehold improvements 15,731 15,731
--------- ---------
734,486 738,070
Less accumulated depreciation and amortization (661,969) (708,052)
--------- ---------
72,517 30,018
Patent costs, net of accumulated amortization of
$193,515 in April and $167,234 in July 293,500 291,602
OTHER ASSETS 3,770 3,770
--------- ---------
Total other assets 297,270 295,372
--------- ---------
Total Assets $ 786,759 $ 509,322
--------- ---------
</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.
3
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BLANCE SHEETS---Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
July 31, 1998 April 30, 1999
(Note) (Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 30,150 $ 33,486
Accrued expenses 38,930 26,358
------------ ------------
TOTAL CURRENT LIABILITIES 69,080 59,844
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, 17,439,729 issued and outstanding 124,398 174,398
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 10,996,877
Accumulated deficit (10,406,494) (10,824,695)
------------ ------------
Total shareholder's equity 717,679 449,478
------------ ------------
Total liabilities and shareholders equity $ 786,759 $ 509,322
------------ ------------
</TABLE>
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.
4
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
April 30, April 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 7,321 $ 20,110 $ 67,732 $ 117,583
License revenue and product sales under Joint Development,
Manufacturing and Marketing Agreement -- -- --
Royalty income 28,600 28,000 85,800 84,000
------------ ------------ ------------ ------------
Total revenue 35,921 48,110 153,532 201,583
Operating Expenses:
Cost of goods sold 833 1,194 2,261 27,684
Cost of goods sold under Joint Development, Manufacturing and
Marketing Agreement -- -- --
Amortization of software production costs -- -- --
Selling and distribution 11,084 10,329 15,615 24,332
General and administrative 79,722 109,000 286,868 281,344
Research and development 93,329 98,174 293,591 295,820
------------ ------------ ------------ ------------
Total operating expenses 184,968 218,697 598,335 629,180
(LOSS) FROM OPERATIONS (149,047) (170,587) (44,803) (427,597)
Interest income 389 6,596
Other income 4,513 1,050 12,904 2,800
------------ ------------ ------------ ------------
NET (LOSS) $ (144,534) $ (169,148) $ (431,899) $ (418,201)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 16,514,726 18,986,641 16,514,726 17,320,588
BASIC AND DILUTED (LOSS) PER COMMON SHARE (0.009) (.009) (0.026) (0.024)
------------ ------------ ------------ ------------
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
April 30,
1998 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $(431,899) $(418,201)
Adjustment to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 52,844 72,364
Changes in operating assets and liabilities:
Decrease in accounts and royalties receivable 76,090 79,825
(Increase) in inventories -- (36,951)
Decrease in prepaid expenses and other current assets 6,313 1,024
Increase(Decrease) in accounts payable and accrued expenses 11,989 (9,236)
(284,663) (341,175)
NET CASH (USED IN) OPERATING ACTIVITIES
INVESTING ACTIVITIES
Short-term investments -- 200,000
Purchases of plant and equipment (19,610) (3,584)
Patent costs (55,171) (24,383)
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (74,781) 172,033
Financing Activity 244,500 150,000
(DECREASE)increase in cash (114,944) (19,142)
CASH AT BEGINNING OF PERIOD 624,261 136,975
--------- ---------
CASH AT END OF PERIOD $ 531,317 $ 117,833
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED
April 30, 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 nine month
period ending April 30, 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
<PAGE>
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.
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.
Results of Operations
- ---------------------
Revenue for the three and nine month periods ended April 30, 1999 was
approximately $48,000 and $202,000 respectively as compared to approximately
$36,000 and $153,000 for the same periods for the prior year.
Royalty income decreased approximately $2,000 during the period ended April 30,
1999 period as compared to the same period 1998.
Selling, general and administrative expenses increased approximately $28,000 and
$3,000 during the three and nine month period ended April 30, 1999 as compared
to the same periods in 1998, due to the costs associated with ISO 9000
certification and CE marking process required for marketing the company's
products.
8
<PAGE>
Nims incurred a net loss of $418,201 in the 1999 period as compared to a net
loss of $431,899 in the 1998 as a result of the factors described above.
Liquidity and Capital Resources
- -------------------------------
Working capital at April 30, 1999 was $124,000 as compared to $431,000 at April
30, 1998. The decrease in working capital was primarily due to cash used for
operations during the nine month period ended April 30, 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 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, 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.
ISO 9000 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.
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 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: June 14, 1999 By:/s/ Marvin A. Sackner
---------------------
Marvin A. Sackner,
Chairman of the Board
- -------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> APR-30-1999
<CASH> 117,833
<SECURITIES> 0
<RECEIVABLES> 26,172
<ALLOWANCES> 0
<INVENTORY> 36,951
<CURRENT-ASSETS> 183,932
<PP&E> 738,070
<DEPRECIATION> (708,052)
<TOTAL-ASSETS> 30,018
<CURRENT-LIABILITIES> 59,844
<BONDS> 0
100
62,048
<COMMON> 174,398
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 449,478
<SALES> 117,583
<TOTAL-REVENUES> 201,583
<CGS> 27,684
<TOTAL-COSTS> 173,899
<OTHER-EXPENSES> 601,496
<LOSS-PROVISION> (427,597)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (418,201)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (418,201)
<EPS-BASIC> (0.024)
<EPS-DILUTED> 0
</TABLE>
