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 condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these condensed consolidated financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates. 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.
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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. In May 2019, we have discontinued those operations. The Company is now
assessing potential mergers, acquisitions and strategic collaborations.
Three and Nine months ended April 30, 2020 Compared to Three and Nine months
Ended April 30, 2019
General and administrative costs and expenses from continuing operations.
General and administrative ("G&A") costs and expenses from continuing operations
were $40,000 and $139,000 for the three and nine months ended April 30, 2020,
respectively, as compared to $177,000 and $378,000 for the three and nine months
ended April 30, 2019, respectively. The $137,000 and $239,000 decrease for the
three and nine months was primarily due to legal and professional services
related to the Company's exploration of a strategic target in 2019.
Selling, general and administrative costs and expenses from discontinued
operations. Selling, general and administrative ("SG&A") costs and expenses from
discontinued operations were $0 and $3,000 for the three and nine months ended
April 30, 2020, as compared to $12,000 and $37,000 for the three and nine months
ended April 30, 2019. The $12,000 and $34,000 decrease were primarily due to the
winding down of operations.
Total operating costs and expenses from continuing operations. Total operating
costs and expenses were $40,000 and $139,000 for the three and nine months ended
April 30, 2020, respectively, as compared to $177,000 and $378,000 for the three
and nine months ended April 30, 2019, respectively. The $137,000 and $239,000
decrease are explained above in G&A.
Interest expense. Net interest expense was $0 for the three and nine months
ended April 30, 2020, respectively, and was $0 and $93,000 for the three and
nine months ended April 30, 2019. The $93,000 decrease for the nine months ended
was related to the Debt Exchange further described in Note 5 to the accompanying
unaudited condensed consolidated financial statements that satisfied outstanding
principal.
Gain (loss) from discontinuing operations. Gain from discontinuing operations
was $0 and $1,000 for the three and nine months ended April 30, 2020 as compared
to a loss of ($12,000) and ($37,000) for the three and nine months ended April
30, 2019. The $12,000 and $38,000 decrease were primarily due to winding down of
operations.
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 April 30, 2020, we had approximately $213,000 of cash and working capital
deficit of approximately ($57,000).
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 with COVID-19 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 $140,000 and $215,000 for nine months
ended April 30, 2020 and 2019, respectively. This $75,000 decrease was primarily
due to reduced legal expense related to the Company's exploration of strategic
alternatives during the nine months ended April 30, 2020 as compared to the nine
months ended April 30, 2019.
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