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, 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 June 14,
2000 was 21,514,726.
This document contains 13 pages
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NON-INVASIVE MONITORING SYSTEMS, INC.
Index
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets at July 31, 1999 and April 30,
2000
Condensed consolidated statements of operations for the Three and Nine
Months Ended April 30, 1999 and 2000
Condensed consolidated statements of cash flows for the Three and Nine
Months ended April 30, 1999 and 2000
Notes to condensed consolidated financial statements April 30, 2000
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
PART II OTHER INFORMATION
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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
------------------------------
<TABLE>
<CAPTION>
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
July 31, 1999 April 30, 2000
(Note) (Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 3,198 $ 24,353
Accounts and royalties receivable
- net of allowance of $4,343 in July 35,636 23,010
Inventories 37,665 18,797
---------- -----------
TOTAL CURRENT ASSETS 76,499 66,160
PROPERTY AND EQUIPMENT
Furniture and equipment 722,339 113,024
Leasehold improvements 15,731 3,464
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738,070 116,488
Less accumulated depreciation and amortization (712,036) ( 96,748)
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26,034 19,740
Patent costs, net of accumulated amortization of
$202,035 in July and $221,025 in April 283,632 338,805
Other assets 6,758 3,661
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TOTAL OTHER ASSETS 290,390 342,466
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TOTAL ASSETS $ 392,923 $ 428,366
========== ===========
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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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS---Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, 1999 April 30, 2000
(Note) (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and Accrued expenses $ 64,629 $ 108,290
Loan Payable to Shareholder 29,500 50,454
------------ -----------
TOTAL CURRENT LIABILITIES 94,129 158,744
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) (11,004,551)
------------ -----------
TOTAL SHAREHOLDERS' EQUITY 298,794 269,622
------------ -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 392,923 $ 428,366
============ ===========
</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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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
April 30, April 30,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 20,110 $ 42,806 $ 117,583 $ 177,422
Royalty Income 28,000 16,880 84,000 59,877
Research and Consulting 0 129,000 0 268,000
------------ ------------ ------------ ------------
Total revenues 48,110 188,686 201,583 505,299
------------ ------------ ------------ ------------
Operating Expenses:
Cost of goods sold 1,194 11,070 27,684 45,028
Selling, General & Administrative 119,329 106,620 305,676 284,863
Research & Development 98,174 76,978 295,820 208,434
------------ ------------ ------------ ------------
Total operating expenses 218,697 194,668 629,180 538,325
LOSS FROM OPERATIONS (170,587) (5,982) (427,597) (33,026)
Interest income 389 0 6,596 4
Other income 1,050 842 2,800 3,850
------------ ------------ ------------ ------------
NET LOSS $ (169,148) $ (5,140) $ (418,201) $ (29,172)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 18,986,641 21,514,726 17,320,588 21,514,726
BASIC AND DILUTED (LOSS) PER COMMON SHARE (0.009) (0.0002) (0.024) (0.001)
------------ ------------ ------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
April 30,
---------
1999 2000
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(418,201) $ ( 29,172)
Adjustment to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 72,364 27,458
Changes in operating assets and liabilities:
Decrease in accounts and
Royalties receivable 79,825 12,626
(Increase) Decrease in inventories (36,951) 18,868
Decrease in prepaid expenses and other assets 1,024 3,097
(Decrease) Increase in accounts payable and
accrued expenses (9,236) 47,615
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NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (341,175) 80,492
--------- ---------
INVESTING ACTIVITIES
Short-term investments 200,000 0
Purchases of plant and equipment (3,584) ( 2,174)
Patent costs (24,383) (74,163)
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 172,033 (76,337)
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FINANCING ACTIVITIES
Proceeds from Sale of Stock 150,000 0
Proceeds from Shareholder loans 0 17,000
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 150,000 17,000
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(Decrease) Increase in Cash (19,142) 21,155
CASH AT BEGINNING OF PERIOD 136,975 3,198
--------- ---------
CASH AT END OF PERIOD $ 117,833 $ 24,353
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED
April 30, 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 and nine month
periods ending April 30, 2000 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.
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
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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.
Nims continues development of its therapeutic motion platform (patent
pending) 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 and
reduces the potential for damage to lung tissue as has been demonstrated with
conventional mechanical ventilation. Two papers have been submitted for
consideration of scientific publication on this method by Dr. Jose Adams, Chief
of Neonatology, Mt. Sinai Medical Center, Miami Beach, FL. This new modality
might also serve as a means for Non-Invasive Cardiopulmonary Resuscitation.
Further, the motion platform appears 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 the prevention and treatment
of coronary artery disease, angina pectoris, hypertension, chronic heart
failure, arteriosclerosis, stroke, and venous thrombosis. Its release during
aerobic exercise is believed to account for the beneficial effects of exercise
on the heart. During this quarter, the Company fabricated a prototype adult
motion platform for preliminary 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 a normal adult who lay
quietly on the device while headward to footward motion was applied with the
platform. The Company plans to make a second generation prototype of the motion
platform during the first quarter of the next fiscal year while continuing to
test adults with the initial prototype.
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. 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. Lifeshirt.com (Ojai, CA) is a eCare company that plans to
market the Lifeshirt system, a computerized shirt that monitors and records
physical signs into a small digital recorder and uploads the encrypted data over
the Internet for analysis and display on a secure website for Physician review.
By adapting Nims hospital-tested technology for transmission over the Internet,
Lifeshirt has potential for providing vital information to physicians as an aid
to management and prevention of acute problems in such conditions as asthma,
chronic heart failure, sleep disorders, anxiety, coronary artery disease and
cancer pain.
In December, 1999, the Company received notification from the patent
office that its claims for patent of this garment were allowed. LifeShirt.com,
Inc. was founded in August 9, 1999 with 1,000,000 shares. The Company received
235,000 of these shares in Lifeshirt.com, Inc. as well as termed royalties (3%)
based upon the revenues of Lifeshirt.com, Inc. From October 22, 1999 to January
14, 2000, LifeShirt.com, Inc. through a private placement memorandum issued
196,814 shares at $5 each. In addition to the Licensing Agreement, an Agreement
("R&D Agreement") was signed that called for research and development of the
Lifeshirt System. Receipt of payments from Lifeshirt.com for research and
development of the Lifeshirt System began in November 1999 and product launch is
planned for late fall 2000. In this quarter, prototype
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miniaturized electrical modules to run the sensors within the LifeShirt and
collect data from them were manufactured.
The R&D agreement is renewable on a month-by-month basis depending upon
needs for further research and development. 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 in the future. Failure to
secure necessary financing might result in the further reduction and curtailment
of operations.
Results of Operations
---------------------
Revenue for the three and nine month periods ended April 30, 2000 was
approximately $189,000 and $505,000 respectively as compared to approximately
$48,000 and $202,000 for the same period for the prior year. The increase is
attributed to increase of product sales and the research and development
contract between Lifeshirt.com and Nims.
Royalty income decreased approximately $11,000 and $24,000 during the three
month and nine month periods ended April 30, 2000 as compared to the same
periods in 1999.
Selling, general and administrative expenses decreased approximately $13,000 and
$21,000 during the three month and nine month periods ended April 30, 2000 as
compared to the same periods in 1999.
Nims incurred a net loss of approximately $5,000 and $29,000 during the three
month and nine periods ended April 30, 2000 as compared to a net loss of
$169,000 and $418,000 in the same periods in 1999 as a result of the factors
described above.
Liquidity and Capital Resources
-------------------------------
Working capital at April 30, 2000 was approximately ($93,000) as compared to
approximately $24,000 at April 30, 1999. The decrease in working capital was
primarily due to the increase in Accounts Payable and Accrued expenses during
the nine month period ended April 30, 2000.
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 anticipated revenues from operations and payments from
Lifeshirt.com for Research and Development of the Lifeshirt System pursuant to
the R&D Agreement 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.
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Cash provided by operating activities was approximately $80,000 for the nine
months ended April 30, 2000 as compared to Cash used in operating activities
$341,000 during the nine months ended April 30, 1999.
Cash used in investing activities was approximately $76,000 during the nine
months ended April 30, 2000 as compared to cash provided by investing activities
of approximately $172,000 during the nine months ended April 30, 1999. Investing
activities consist primarily of costs for patents, software production and
purchase/sale of short term investments.
Cash provided by financing activities was $17,000 and consisted of loans from a
shareholder for the nine month period ended April 30, 2000 and proceeds from the
sale of stock during the same period in 1999.
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. In May 2000, the Company received ISO 9001
recertification.
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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.
Dated: June 14, 2000 By: /S/ Marvin A. Sackner
-------------------------
Marvin A. Sackner,
Chairman of the Board
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