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, 2000
( ) 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, 2000 was 21,514,726.
This document contains 13 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, 2000 and October 31, 2000
Condensed consolidated statements of operations for the Three Months ended
October 31, 1999 and 2000
Condensed consolidated statements of cash flows for the Three Months ended
October 31, 1999 and 2000
Notes to condensed consolidated financial statements October 31, 2000
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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
July 31, 2000 October 31, 2000
(Note) (Unaudited)
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 27,721 $ 71,581
Accounts and royalties receivable,
net of allowance of $4,343 in July and $0 in October 36,637 11,820
Inventories 18,451 13,065
--------- ---------
TOTAL CURRENT ASSETS 82,809 96,466
PROPERTY AND EQUIPMENT
Furniture and equipment 112,254 136,623
Leasehold improvements 3,464 3,464
--------- ---------
115,718 140,087
Less accumulated depreciation (99,570) (103,397)
--------- ---------
TOTAL PROPERTY AND EQUIPMENT 16,148 36,690
INTANGIBLE ASSETS
Patents, net of accumulated amortization of
$202,035 in July and $131,156 in October 342,466 253,553
Licensing Agreement,
net of accumulated amortization of $20,794 in October -- 62,380
--------- ---------
TOTAL INTANGIBLE ASSETS 342,466 315,933
TOTAL ASSETS $ 441,423 $ 449,089
========= =========
</TABLE>
Note: The balance sheet at July 31, 2000 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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and Accrued expenses $ 125,754 $ 84,894
Prepaid Research and Consulting Fees -- 25,000
Loan Payable to Shareholder 51,980 38,606
------------ ------------
TOTAL CURRENT LIABILITIES 177,734 148,500
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 (11,010,484) (10,973,584)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 263,689 300,589
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 441,423 $ 449,089
============ ============
</TABLE>
Note: The balance sheet at July 31, 2000 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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
------------------------------
October 31,
1999 2000
------------ ------------
Revenues:
Research and Consulting $ -- $ 221,500
Product sales 59,160 26,125
Research and Consulting 23,881 8,970
------------ ------------
Total revenues 83,041 256,595
Operating Expenses:
Research & Development 92,138 122,246
Cost of goods sold 25,111 4,765
Selling, General & Administrative 66,459 92,684
------------ ------------
Total operating expenses 183,708 219,695
INCOME (LOSS) FROM OPERATIONS (100,667) 36,900
Interest income 352 --
Other income 1,050 --
------------ ------------
NET INCOME (LOSS) $ (99,265) $ 36,900
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 21,514,726 21,514,726
BASIC AND DILUTED INCOME (LOSS) PER
COMMON SHARE $ (0.005) $ 0.002
------------ ------------
See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
October 31,
1999 2000
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(99,265) $ 36,900
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 8,830 30,360
Changes in operating assets and liabilities:
Decrease in accounts and Royalties Receivable 7,688 24,817
Decrease in inventories 21,764 5,386
(Increase) in prepaid expenses and other assets (950) --
Increase in prepaid consulting fees -- 25,000
(Decrease) in accounts payable and accrued expenses 53,472 (40,860)
-------- --------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (8,461) 81,603
-------- --------
Purchases of furniture and equipment -- (24,369)
Patent costs (24,000) --
-------- --------
NET CASH (USED IN)
INVESTING ACTIVITIES (24,000) (24,369)
-------- --------
FINANCING ACTIVITIES
Payments on Shareholder loans -- (13,374)
Proceeds from Shareholder loans 37,500 --
-------- --------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES 37,500 (13,374)
-------- --------
Increase in Cash 5,039 43,860
CASH AT BEGINNING OF PERIOD 3,198 27,721
-------- --------
CASH AT END OF PERIOD $ 8,237 $ 71,581
======== ========
</TABLE>
Supplemental Disclosure of Non-cash Investing Activities: The Company
transferred $83,174 of patent costs to Lifeshirt.com, Inc. during the period
ended October 31, 2000, under the terms of a licensing agreement. These costs
are being amortized over the twelve month period of the research and consulting
agreement.
See notes to condensed consolidated financial statements.
6
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
October 31, 2000
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,
2000 are not necessarily indicative of the results that may be expected for the
year ending July 31, 2001. 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, 2000.
The Financial statements referred to above have been prepared assuming that the
Company will continue as a going concern and do not reflect any adjustments to
reflect the possible future effects on the recovery and classification of
assets, or the amounts or classifications of liabilities that might result from
the possible inability of the Company to continue as a going concern.
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 and related software designed to detect abnormal respiratory, cardiac,
and other medical conditions from sensors placed externally 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 develops non-invasive, therapeutic,
cardiorespiratory devices.
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Nims is continuing its development of a therapeutic motion platform device that
produces repetitive head to foot motion. In experiments, this device produces
"Non-Invasive Motion Ventilation", a new means to achieve ventilation at breath
volumes lower than natural breathing and with rates that are more rapid. This
modality does not impose positive pressure on the lungs either in normal or
diseased lungs thereby reducing potential for damage to lung tissue as often
occurs with conventional positive pressure mechanical ventilation. Two papers on
these findings were published by Dr. Jose Adams, Chief of Neonatology, Mt. Sinai
Medical Center, Miami Beach, FL in the December issue of Journal of Applied
Physiology. Further, these studies suggested that the motion platform appeared
to release nitric oxide from the inner lining of blood vessels. Nitric oxide is
the most powerful dilator of blood vessels in the body and has a major
beneficial role in the prevention and treatment of coronary artery disease,
angina pectoris, hypertension, chronic heart failure, arteriosclerosis, stroke,
and venous thrombosis. The release of nitric oxide during aerobic exercise is
believed to account for the beneficial effects of exercise on the heart. During
the quarter ended October 31, 2000, the Company fabricated a second, improved,
prototype adult motion platform for testing purposes. Non-invasive monitoring of
the digital pulse revealed that the motion platform released significant
quantities of nitric oxide from the inner lining of blood vessels in normal
adults who lay quietly on the device while headward to footward motion was
applied with the platform. This was accomplished when pulses of significant
amplitude were added by the motion platform to the subject's own digital pulse.
On December 5, 2000, the Company was awarded US Patent 6,155,976 for
Reciprocating Movement Platform for Shifting Subject to and fro in
Headwards-Footwards Direction. The Company has a provisional patent pending that
is entitled "External Addition of Pulses to Fluid Channels of Body to Release or
Suppress Endothelial Mediators and to Determine Effectiveness of such
Intervention". The Company is exploring means to bring this device to market
with other companies.
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 subsequently amended to a non-exclusive arrangement. This
amendment allowed the Company 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. now known as Vivometrics, Inc. (Ventura, CA)
("VivoMetrics"), a medical device company that plans to market the Lifeshirt
system, a computerized shirt that monitors and records over 40 physical signs
into a small digital recorder onto flash memory and sends full disclosure
waveforms via mail, modem or Internet for analysis and display to a secure data
collection center for Physician review. By adapting Nims hospital-tested
technology for ambulatory transmission over the Internet, the LifeShirt system
has the potential for providing vital information to physicians as an aid to
management and prevention of such debilitating and life-threatening illnesses
such as asthma, chronic obstructive pulmonary disease, chronic heart failure,
sleep disorders, anxiety, coronary artery disease and cancer pain.
VivoMetrics was founded in August 9, 1999 with 1,000,000 shares of common stock
issued and outstanding. The Company received 235,000 of these shares of common
stock in VivoMetrics, as well as termed royalties of 3% based upon the revenues
of VivoMetrics. From October 22, 1999 to January 14, 2000, VivoMetrics, through
a private placement memorandum, sold 196,814 shares at $5.00 per share. In
addition to the Licensing Agreement, a Research and Development Agreement ("R&D
Agreement") was
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<PAGE>
signed between the Company and VivoMetrics that called for research and
development of the LifeShirt System. Receipt of payments from VivoMetrics for
research and development of the Lifeshirt System began in November 1999 and
product launch is planned for late fall 2000 or early in 2001. In this quarter,
the company was responsible for overseeing manufacture of prototype miniaturized
electrical modules to run the sensors within the LifeShirt system and collect
data from them.
In August 2000, VivoMetrics signed a one-year R&D Agreement with the Company
that also involved assigning the Company's patents relating to LifeShirt's
technology to VivoMetrics. In turn, VivoMetrics granted license back to the
Company to pursue its non-wireless hospital business. At the time, VivoMetrics
obtained $7.5 million from a group led by Credit Suisse First Boston. This
resulted in dilution of the Company's shares in VivoMetrics from an initial
23.5% to 9.56%.
The Company anticipates meeting its working capital requirements during fiscal
2001. However, if VivoMetrics fails to meet its financial obligations to the
Company, then the Company may require additional capital to remain in business
in the future. Failure to secure necessary financing might result in the further
reduction and curtailment of operations.
In October 2000, Dr. Marvin Sackner, CEO of the Company and Medical Director of
VivoMetrics, delivered a lecture at the annual meeting of the American College
of Chest Physicians in San Francisco dealing with Disease Oriented Tele-Health
using the LifeShirt system. In December 2000, Dr. Marvin Sackner gave a lecture
on Diagnostic Killer Apps of the LifeShirt system at the eHealthCareWorld
conference in New York. Reference to the LifeShirt system appeared in December
issues of South Florida The Business Journal, BusinessWeek, Time, and Newsweek
magazines.
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 that 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. In May 2000, the Company received ISO 9001
recertification.
THREE MONTHS ENDED OCTOBER 31, 2000
COMPARED TO THREE MONTHS ENDED OCTOBER 31, 1999
Gross Revenues and Costs of Operations
--------------------------------------
Gross revenues increased from $83,041 for the three-month period ended October
31, 1999 to $256,595 for the three-month period ended October 31, 2000, an
increase of $173,554. The increase is attributed to an increase revenues from
product sales and revenues derived from the research and development contract
between VivoMetrics, Inc. and the Company.
Cost of Operations increased from $183,708 for the three months ended October
31, 1999 to $219,695 for the three months ended October 31, 2001, an increase of
$35,987.
Costs of goods sold decreased from $25,111 for the three months ended October
31, 1999 to $4,765 for the three months ended October 31, 2000.
9
<PAGE>
Selling, general and administrative expenses increased from $66,459 for the
three months ended October 31, 1999 to $92,684 for the three months ended
October 31, 2000.
Research and development costs increased from $92,138 for the three months ended
October 31, 1999 to $122,246 for the three months ended October 31, 2000.
Net Income
----------
Net income increased from a loss of $99,265 for the three months ended October
31, 1999 to income of $36,900 for the three months ended October 31, 2000. The
increase is attributed to an increase revenues from product sales and revenues
derived from the research and development contract between VivoMetrics, Inc. and
the Company.
Liquidity and Capital Resources
-------------------------------
Cash used in operating activities was $8,461 for the three months ended October
31, 1999 as compared to Cash provided by operating activities of $81,603 for the
three months ended October 31, 2000.
Cash used in investing activities was $24,000 for the three months ended October
31, 1999 as compared to cash used in investing activities of $24,369 for the
three months ended October 31, 2000. Investing activities consist primarily of
costs for patents, software production and purchases of furniture and equipment.
Cash provided by financing activities was $37,500 for the three months ended
October 31, 1999 compared to cash used in financing activities of $13,374 for
the three months ended October 31, 2000. The decrease is a result of the
repayments of loans from a shareholder for the three-month period ended October
31, 2000.
The Company believes those anticipated revenues from operations and payments
from VivoMetrics, Inc. for Research and Development of the Lifeshirt System
pursuant to the R&D Agreement will enable the Company to meet its working
capital needs and continue operations through July 31, 2001. However, if
revenues do not reach levels sufficient to fund working capital operations, the
Company 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.
Current Assets
--------------
Total assets increased from $441,423 at July 31, 1999 to $449,089 at the three
month period ended October 31, 2000.
Liabilities
-----------
Current liabilities decreased from $177,734 at July 31, 1999, to $148,500 at the
three month period ended October 31, 2000, as a result of a decrease in accounts
payable and accrued expenses.
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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:
Exhibit - 27.1 - Financial data schedule (SEC use only)
B. Reports on Form 8-K - Not applicable
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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.
AND SUBSIDIARIES
Dated: December 15, 2000 /s/ Marvin A. Sackner
-----------------------------
Marvin A. Sackner,
Chairman of the Board
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