10-Q: Non-Invasive Monitoring Systems Reports Q2 2025 Results, Cites Going Concern Uncertainty

Non-Invasive Monitoring Systems, Inc. reports a net loss for Q2 2025 and acknowledges substantial doubt about its ability to continue as a going concern.

Summary

• Non-Invasive Monitoring Systems, Inc. filed its Form 10-Q for the quarterly period ended January 31, 2025.
• The company is currently a shell company after discontinuing operations in May 2019.
• The company had a net loss of $42,000 for the three months ended January 31, 2025, compared to a net loss of $54,000 for the same period in 2024.
• For the six months ended January 31, 2025, the net loss was $119,000, compared to $142,000 for the same period in 2024.
• The company has an accumulated deficit of approximately $28,966,000 as of January 31, 2025.
• The company had approximately $27,000 of cash and a total shareholders deficit of $844,000 at January 31, 2025.
• The company is seeking potential mergers, acquisitions, and strategic collaborations.
• The company is also exploring obtaining additional promissory notes from related parties.
• Management has identified material weaknesses in internal control over financial reporting.
• The company's independent auditors have not audited the financial statements.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's going concern uncertainty, accumulated losses, and material weaknesses in internal control. While there were some improvements in reducing losses and expenses, the overall financial situation remains precarious.

Positives

• General and administrative costs decreased for the three and six months ended January 31, 2025, primarily due to reduced professional fees, insurance premiums and timing of expenses.
• Net loss decreased for the three and six months ended January 31, 2025, primarily due to reduced G&A that was partially offset by increased interest expense on related party notes payable.
• Net cash used in operating activities decreased for the six months ended January 31, 2025, primarily due to decreases in prepaid expenses.

Negatives

• The company is currently a shell company with no operations or inventory.
• The company has a history of operating losses and an accumulated deficit.
• The company's auditors have identified material weaknesses in internal control over financial reporting.
• The company's cash position is low, and it may need additional financing to continue operations.
• The company is dependent on management and related parties for financing.

Risks

• The company's ability to continue as a going concern is uncertain.
• The company may not be successful in finding a merger, acquisition, or strategic collaboration.
• The company may not be able to obtain additional financing on acceptable terms.
• The company's internal controls are weak, which could lead to errors in financial reporting.
• The company is dependent on related parties for financing, which could create conflicts of interest.

Future Outlook

The company is seeking potential mergers, acquisitions, and strategic collaborations and is exploring obtaining additional promissory notes from related parties; however, there is no assurance of success.

Management Comments

• Management believes that the condensed consolidated financial statements included in this Form 10-Q fairly present in all material respects the Company's financial condition, results of operations and cash flows for the periods presented.
• Management has concluded that the Company did not maintain effective internal control over financial reporting as of January 31, 2025 based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Industry Context

As a shell company, Non-Invasive Monitoring Systems' performance is not directly comparable to operating companies in the medical device or biotechnology industries. The company's focus is on finding a merger or acquisition target, which places it in the context of the M&A market.

Comparison to Industry Standards

• Given that NIMS is a shell company, direct comparison to industry standards is not applicable.
• Shell companies are typically evaluated based on their cash reserves, potential target industries, and management's experience in deal-making, rather than traditional financial metrics.
• Comparisons could be made to other shell companies or SPACs (Special Purpose Acquisition Companies) in terms of market capitalization and deal-sourcing strategies, but this information is not provided in the document.

Related Party Transactions

• The company is provided office space in Miami, Florida on a month-to-month basis by a company controlled by Dr. Phillip Frost, who is the beneficial owner of more than 10% of the Company's common stock.
• The company has outstanding notes payable to Frost Gamma Investments Trust (Frost Gamma) which pertained to promissory notes issued in fiscal 2021 and 2022, in the principal amount of $75,000 and $75,000, respectively.
• On August 15, 2023, the Company entered into a new promissory note agreement with Frost Gamma in the principal amount of $200,000.
• On September 25, 2024, October 23, 2024 and January 23, 2025, the Company entered into new promissory note agreements with Frost Gamma in the aggregate principal amount of $95,000.
• The company has outstanding notes payable Jane Hsiao, Ph.D. (Dr. Hsiao) which pertained to promissory notes issued in fiscal 2021 and 2022, in the principal amount of $75,000 and $75,000, respectively.

Stakeholder Impact

• Shareholders face significant risk due to the company's going concern uncertainty and accumulated losses.
• Employees may be impacted by potential restructuring or liquidation.
• Creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company will continue to seek potential mergers, acquisitions, and strategic collaborations.
• The company will explore obtaining additional promissory notes from related parties.
• The company will assess potential mergers, acquisitions, strategic collaborations and liquidation.

Key Dates