Cautionary Statement Regarding Forward-looking Statements.
This Interim Report on Form 10-Q contains, in addition to historical
information, certain forward-looking statements regarding Non-Invasive
Monitoring Systems, Inc. (the "Company" or "NIMS," also referred to as "us",
"we" or "our"). These forward-looking statements represent our expectations or
beliefs concerning the Company's operations, performance, financial condition,
business strategies, and other information and that involve substantial risks
and uncertainties. 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. The Company's
actual results of operations, some of which are beyond the Company's control,
could differ materially from the activities and results implied by the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to the Company's: history of operating
losses and accumulated deficit; need for additional financing; dependence on
management;; risks related to proprietary rights; other factors described herein
as well as the factors contained in "Item 1A - Risk Factors" of our Annual
Report on Form 10-K for the year ended July 31, 2019. We do not undertake any
obligation to update forward-looking statements, except as required by
applicable law. These forward-looking statements are only predictions and
reflect our views as of the date they are made with respect to future events and
financial performance.
Overview
We previously were engaged in the development, manufacture and marketing of
non-invasive, whole body periodic acceleration ("WBPA") therapeutic platforms,
which are motorized platforms that move a subject repetitively head to foot. The
Company discontinued operations in May 2019, accordingly, certain assets,
liabilities and expenses are classified as discontinued operations.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these consolidated financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related income taxes. We base our estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. A more detailed discussion on the application of these and other
accounting policies can be found in Note 2 in the Notes to the Consolidated
Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.
While we believe that the factors we evaluate provide us with a meaningful basis
for establishing and applying sound accounting policies, we cannot guarantee
that the results will always be accurate. Since the determination of these
estimates requires the exercise of judgment, actual results could differ from
such estimates.
Results of Operations
In January 2009 our Exer-Rest line of therapeutic platforms was registered by
the FDA in the United States as Class I (Exempt) Medical Devices. We began our
sales activity with marketing and promotional pricing beginning in February
2009. We have discontinued those operations in May 2019. The Company is
assessing potential mergers, acquisitions and strategic collaborations.
Three months ended October 31, 2019 Compared to Three months Ended October 31,
2018
General and administrative costs and expenses from continuing operations.
General and administrative ("G&A") costs and expenses from continuing operations
were $52,000 for the three months ended October 31, 2019 as compared to $135,000
for the three months ended October 31, 2018. The $83,000 decrease was primarily
due to legal expense related to the Company's exploration of a strategic target
in 2018.
Selling, general and administrative costs and expenses from discontinued
operations. Selling, general and administrative ("SG&A") costs and expenses from
discontinued operations were $3,000 for the three months ended October 31, 2019
as compared to $13,000 for the three months ended October 31, 2018. The $10,000
decrease was primarily due to discontinued rent.
13
Total operating costs and expenses from continuing operations. Total operating
costs and expenses from continuing operations were $52,000 for the three months
ended October 31, 2019 as compared to $135,000 for the three months ended
October 31, 2018. The $83,000 decrease is explained above in G&A.
Interest expense. Net interest expense was $0 and $59,000 for the three months
ended October 31, 2019 and 2018, respectively. The $59,000 decrease was related
to the Debt Exchange further described in Note 7 to the accompanying unaudited
condensed consolidated financial statements that satisfied outstanding
principal.
Lossfrom discontinuing operations. Loss from discontinuing operations was $3,000
for the three months ended October 31, 2019 as compared to a loss of $13,000 for
the three months ended October 31, 2018. The $10,000 decrease was primarily due
to discontinued rent.
Liquidity and Capital Resources
The Company's operations have been primarily financed through private sales of
its equity securities and advances under Credit Facility and Promissory Notes.
At October 31, 2019, we had approximately $333,000 of cash and working capital
of approximately $26,000. We believe that the cash on hand at October 31, 2019
is sufficient to meet our anticipated cash requirements for operations and debt
service for the next 12 months.
We expect to incur losses from operations for the foreseeable future. It is
likely that we will not be able to generate significant additional revenue and
we will be required to obtain additional external financing through public or
private equity offerings, debt financings or collaborative agreements to
continue operations. No assurance can be given that such additional financing
will be available on acceptable terms or at all.
Current economic conditions have been, and continue to be, volatile and
continued instability in these market conditions may limit our ability to access
the capital necessary to fund and grow our business and to replace, in a timely
manner, maturing liabilities or to successfully examine strategic alternatives.
Additionally, the sales of equity or convertible debt securities may result in
dilution to our stockholders.
Net cash used in operating activities was $20,000 and $51,000 for three months
ended October 31, 2019 and 2018, respectively. This $31,000 decrease was
primarily due to reduced legal expense related to the Company's exploration of
strategic alternatives during the three months ended October 31, 2019 when
compared to the three months ended October 31, 2018.
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