NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
April
30, 2019
The
following (a) condensed consolidated balance sheet as of April 30, 2019, which has been derived from audited financial statements,
and (b) the unaudited condensed consolidated interim financial statements included herein have been prepared by Non-Invasive Monitoring
Systems, Inc. (together with its consolidated subsidiaries, the “Company” or “NIMS”) in accordance with
accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions
to the quarterly report on Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP for complete financial statements. These statements reflect adjustments, all of which are of a
normal, recurring nature, and which are, in the opinion of management, necessary to present fairly the Company’s financial
position as of April 30, 2019, and results of operations and cash flows for the interim periods ended April 30, 2019 and 2018.
The results of operations for the three and nine months ended April 30, 2019, are not necessarily indicative of the results for
a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with
GAAP have been condensed or omitted. The Company’s accounting policies continue unchanged from July 31, 2018. These financial
statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s
annual report on Form 10-K for the year ended July 31, 2018.
1.
ORGANIZATION AND BUSINESS
Organization.
Non-Invasive Monitoring Systems, Inc., a Florida corporation (together with its consolidated subsidiaries, the “Company”
or “NIMS”), began business as a medical diagnostic monitoring company to develop computer-aided continuous monitoring
devices to detect abnormal respiratory and cardiac events using sensors on the human body’s surface. It has ceased to operate
in this market.
The Company has developed and marketed its Exer-Rest
®
line
of acceleration therapeutic platforms based upon unique, patented whole body periodic acceleration (“WBPA”) technology
of which the Company maintains patents.
Business.
During the calendar years 2005 to 2007, the Company designed, developed and manufactured the first Exer-Rest platform
(now the Exer-Rest AT), a second generation acceleration therapeutics platform, and updated its operations to promote the Exer-Rest
AT overseas as an aid to improve circulation and joint mobility and to relieve minor aches and pains. The Company then developed
a third generation of Exer-Rest acceleration therapeutic platforms (designated the Exer-Rest AT3800 and the Exer-Rest AT4700)
that has been manufactured by Sing Lin Technologies Co. Ltd. (“Sing Lin”) based in Taichung, Taiwan (see Note 8).
The Company continues
researching the development of a next generation Exer-Rest
®
line of acceleration therapeutic platforms. The
goal for this fourth generation Exer-Rest model is to be more portable than the current models and reduce cost to manufacture.
The
Company’s condensed financial statements have been prepared and presented on a basis assuming it will continue as a going
concern. As reflected in the accompanying unaudited condensed consolidated financial statements, the Company had net losses of
approximately $1,574,000 and $338,000 for the nine month periods ended April 30, 2019 and 2018, respectively, and has experienced
cash outflows from operating activities. The Company also has an accumulated deficit of approximately $28.0 million as of April
30, 2019 and has potential purchase obligations at April 30, 2019 (see note 8). The Company had $575,000 of cash at April 30,
2019 and working capital of approximately $122,000. These matters raise substantial doubt about the Company’s ability to
continue as a going concern.
The
Company is continuing its business activities without any significant revenues from product sales. Absent any significant revenues
from product sales, the Company is seeking debt or equity financing or a strategic collaboration. There is no assurance that the
Company will be successful in this regard, and, if not successful, that it will be able to continue its business activities. The
accompanying condensed consolidated financial statements do not include any adjustments that might be necessary from the outcome
of this uncertainty.
Equity Exchange
Agreement.
On December 3, 2018, the Company entered into an Equity Exchange Agreement, as amended on April 17, 2019
by Amendment No. 1 and as amended on June 3, 2019 by Amendment No. 2, with IRA Financial Trust Company, a South
Dakota trust corporation (“IRA Trust”), IRA Financial Group LLC, a Florida limited liability company (“IRAFG”
and, together with IRA Trust, “IRA Financial”), and their respective equity holders (the “Equityholders”).
Upon the terms and subject to the conditions contained in the Exchange Agreement, the Company will issue to the Equityholders
shares of a newly-designated series of its convertible preferred stock (the “Exchange Shares”) in exchange for 100%
of the issued and outstanding equity in IRA Financial (the “Exchange”).
Upon
consummation of the Exchange, the Exchange Shares, on an as-converted basis, will comprise 85% of the issued and outstanding shares
of the Company’s common stock.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation.
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries,
Non-Invasive Monitoring Systems of Florida, Inc., which has no current operations, and NIMS of Canada, Inc., a Canadian corporation,
which has no current operations. All inter-company accounts and transactions have been eliminated in consolidation.
Use
of Estimates.
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) requires management to make estimates and assumptions, such as warranty accrual
and deferred taxes as estimates, that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the condensed consolidated financial statements and reported amounts of expenses during the reporting
period. Actual results could differ materially from these estimates.
Cash
and Cash Equivalents.
The Company considers all highly liquid short-term investments purchased with an original maturity
date of three months or less to be cash equivalents. The Company had approximately $575,000 and $90,000, on deposit in bank operating
accounts at April 30, 2019 and July 31, 2018, respectively.
Inventories.
Inventories are stated at lower of cost or net realizable value using the first-in, first-out method, and are evaluated
at least annually for impairment. Inventories at April 30, 2019 and July 31, 2018 primarily consist of finished Exer-Rest units,
spare parts and accessories. Provisions for potentially obsolete or slow-moving inventory are made based on management’s
analysis of inventory levels, historical obsolescence and future sales forecasts. The Company had fully written down its inventory
during the year ended July 31, 2018 and had no inventory value at April 30, 2019 and July 31, 2018.
Long-lived
Assets.
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. In performing the review for recoverability, the Company estimates the future
undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected
future cash flows is less than the carrying amount of the assets, an impairment loss is recognized as the difference between the
fair value and the carrying amount of the asset.
Taxes
Assessed on Revenue-Producing Transactions.
The Company presents sales taxes assessed on revenue-producing transactions
between a seller and customer using the net presentation; thus, sales and cost of revenues are not affected by such taxes.
Income
Taxes.
The Company provides for income taxes using an asset and liability based approach. Deferred income tax assets and
liabilities are recorded to reflect the tax consequences in future years of temporary differences between the carrying amounts
of assets and liabilities for financial statement and income tax purposes. The deferred tax asset for loss carryforwards and other
potential future tax benefits has been fully offset by a valuation allowance since it is uncertain whether any future benefit
will be realized. The utilization of the loss carryforward is limited to future taxable earnings of the Company and may be subject
to severe limitations if the Company undergoes an ownership change pursuant to the Internal Revenue Code Section 382.
The
Company files its tax returns as prescribed by the laws of the jurisdictions in which it operates. Tax years ranging from 2015
to 2018 remain open to examination by various taxing jurisdictions as the statute of limitations has not expired. It is the Company’s
policy to include income tax interest and penalty expense in its tax provision.
Revenue
Recognition.
The Company adopted ASC Topic 606,
Revenue from Contracts with Customers
, on July 1, 2018. The Company’s
revenue consists of product sales and parts. The Company accounts for a contract with a customer when there is a legally enforceable
contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance,
and collectability of the contract consideration is probable. The Company’s revenues are measured based on consideration
specified in the contract with each customer, net of any sales incentives and taxes collected from customers that are remitted
to government authorities.
Segments
The Company operates in only one segment. Management uses cash flow as the primary measure to manage its business and
does not segment its business for internal reporting or decision-making.
Comprehensive
Income (Loss).
Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period
from transactions and other events and circumstances from non-owner sources, including foreign currency translations. There were
no transactions that resulted in comprehensive income or losses during the three and nine months ended April 30, 2019 or 2018.
Warranties.
The Company’s warranties are two years on all Exer-Rest
®
products sold domestically and one year
for products sold outside of the U.S. and are accrued based on management’s estimates and the history of warranty costs
incurred. Warranty accrual of approximately $12,000 is included in accounts payable and accrued liabilities as of April 30, 2019
and July 31, 2018. There were no material warranty costs incurred during the three and nine months ended April 30, 2019 and 2018,
and management estimates that the Company’s accrued warranty expense at April 30, 2019 will be sufficient to offset claims
made for units under warranty.
Fair
Value of Financial Instruments.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent
information available to management as of April 30, 2019 and July 31, 2018. The respective carrying value of certain on-balance-sheet
financial instruments such as cash, prepaid expenses, deposits, other current assets, accounts payable and accrued expenses approximate
fair values because they are short term in nature or they bear current market interest rates. The standard describes a fair value
hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may
be used to measure fair value which are the following:
Level
1 — quoted prices in active markets for identical assets or liabilities.
Level
2 — other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement
date.
Level
3 — significant unobservable inputs that reflect management’s best estimate of what market participants would use
to price the assets or liabilities at the measurement date.
Financial
instruments recognized in the consolidated balance sheet consist of cash, prepaid expenses, deposits, and other current assets.
The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term
nature of these instruments. The Company does not hold any derivative financial instruments.
The
respective carrying value of the notes payable – related party and notes payable – other approximate our current borrowing
rate for similar debt instruments of comparable maturity and are considered Level 3 measurements within the fair value hierarchy.
The
following table presents changes in Level 3 financial liabilities measured at fair value on a recurring basis:
|
|
|
Level
3
|
|
|
Fair value of promissory
notes at July 31, 2018
|
|
$
|
2,125,000
|
|
|
Additions:
|
|
|
100,000
|
|
|
Reductions:
|
|
|
2,225,000
|
|
|
Changes in fair
value
|
|
|
-
|
|
|
Fair value at
April 30, 2019
|
|
$
|
-
|
|
Recent
Accounting Pronouncements.
The Company considers the applicability and impact of all Accounting Standard Updates (“ASU’s”).
ASU’s not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact
on our consolidated balance sheets or consolidated comprehensive statement of operations.
In
August 2016, the FASB issued ASU No. 2016-15,
Statement of Cash Flows (Topic 230)
. This standard addresses the classification
of eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 will be effective
for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted.
The Company implemented this ASU on October 1, 2018. The adoption of this update did not have an impact on the Company’s
consolidated financial statements.
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2016-02,
Leases
(Topic 842). ASU 2016-02 impacts any entity that enters into a lease with some specified scope exceptions.
This new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on
the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with
classification affecting the pattern of expense recognition in the statement of operations. The guidance updates and supersedes
Topic 840,
Leases
. For public entities, ASU 2016-02 is effective for fiscal years, and interim periods with those years,
beginning after December 15, 2018, and early adoption is permitted. A modified retrospective transition approach is required for
leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements,
with certain practical expedients available. The Company currently has no long-term leases. However, in the event that the Company
should enter any long-term leases it would then evaluate the effect that the new guidance would have on its consolidated financial
statements and related disclosures.
3.
STOCK-BASED COMPENSATION
The
Company measures the cost of employee, officer and director services received in exchange for an award of equity instruments based
on the grant-date fair value of the award. The fair value of the Company’s stock option awards is expensed over the vesting
life of the underlying stock options using the graded vesting method, with each tranche of vesting options valued separately.
The Company did not record any stock-based compensation for the three and nine months ended April 30, 2019 and 2018.
In
November 2010, the Company’s Board and Compensation Committee approved the Non-Invasive Monitoring Systems, Inc. 2011 Stock
Incentive Plan (the “2011 Plan”). Awards granted under the 2011 Plan may consist of incentive stock options, stock
appreciation rights (SAR), restricted stock grants, restricted stock units (RSU) performance shares, performance units or cash
awards. Subject to adjustment in certain circumstances, the 2011 Plan authorizes up to 4,000,000 shares of the Company’s
common stock for issuance pursuant to the terms of the 2011 Plan. The 2011 Plan was approved by our shareholders in March 2012
and no awards have been granted under the 2011 Plan as of April 30, 2019.
As
of April 30, 2019, there were no outstanding stock options. The Company did not grant any stock options during the three and nine
months ended April 30, 2019 or 2018.
4.
NOTES PAYABLE
The
Company entered into various notes payable with related parties from 2010 to 2018 with an aggregate principal total of $2,175,000
and with an unrelated third party for $50,000 for total principal amount of $2,225,000. The interest rate was 11% and the maturity
date was July 31, 2020. The Company could prepay these notes in advance of the maturity date without premium or penalty.
As
discussed further in Note 5, on December 21, 2018, the Company issued 50,584,413 shares of Common Stock in exchange for the extinguishment
of debt and related accrued interest totaling approximately $3,541,000. The Company incurred interest expense related to the Credit
Facility and notes payable of $0 and $93,000 for the three and nine months ended April 30, 2019, respectively, and 56,000 and
$161,000 for the three and nine months ended April 30, 2018, respectively.
As
a result of this transaction on April 30, 2019, the Company no longer has debt under the promissory notes and Credit Facility
discussed above.
5.
SHAREHOLDERS’ EQUITY
The
Company has three classes of Preferred Stock. Holders of Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock are entitled to vote with the holders of common stock as a single class on all matters.
Series
B Preferred Stock is not redeemable by the Company and has a liquidation value of $100 per share, plus declared and unpaid dividends,
if any. Dividends are non-cumulative, and are at the rate of $10 per share, if declared.
Series
C Preferred Stock is redeemable by the Company at a price of $0.10 per share upon 30 days prior written notice. This series has
a liquidation value of $1.00 per share plus declared and unpaid dividends, if any. Dividends are non-cumulative, and are at the
rate of $0.10 per share, if declared. Each share of Series C Preferred Stock is convertible into 25 shares of the Company’s
common stock upon payment of a conversion premium of $4.20 per share of common stock. The conversion rate and the conversion premium
are subject to adjustments in the event of stock splits, stock dividends, reverse stock splits and certain other events. In February
2019, all outstanding shares of Series C Preferred Stock were redeemed by the Company following 30 days written notice. The redemption
amount for the 62,048 Series C Preferred Stock was $24,819 at a rate of $0.40 per share and was included in accrued expenses at
April 30, 2019. The redeemed Series C Preferred Stock were then cancelled following the redemption.
Series
D Preferred Stock is not redeemable by the Company. This series has a liquidation value of $1,500 per share, plus declared and
unpaid dividends, if any. Each share of Series D Preferred Stock is convertible into 5,000 shares of the Company’s common
stock. The conversion rate is subject to adjustments in the event of stock splits, stock dividends, reverse stock splits and certain
other events. In February 2019, all holders of the 2,782 outstanding shares of Series D Preferred Stock converted their shares
to common stock. As a result, the Company issued 13,910,000 common shares.
No
preferred stock dividends were declared for the three and nine months ended April 30, 2019 and 2018.
On
December 21, 2018, the Company entered into stock purchase agreements (each, a “
Purchase Agreement
”) with Frost
Gamma Investments Trust (“
FGIT
”), a trust controlled by Dr. Philip Frost, and Jane Hsiao, Ph.D., the Company’s
Chairman and Interim CEO. As a result of the Purchase Agreements, the Company issued and sold to FGIT and Dr. Hsiao an aggregate
of 8,571,428 shares of the Company’s common stock, par value $0.01 per share (at a purchase price of $0.07 per share for
total aggregate amount of $600,000.
On
December 21, 2018, the Company entered into a Debt Exchange Agreement with Frost Gamma Investments Trust, Dr. Jane Hsiao, Hsu
Gamma Investments LP and Marie Wolf (collectively, the “
Creditors
”), pursuant to which the Company issued to
the Creditors aggregate of 50,584,413 shares of Common Stock (the “
Exchange Shares
”) in exchange the extinguishment
of the credit facility and notes payable totaling $2,225,000 and related accrued interest of approximately $1,316,000. In addition,
the Company issued an additional 2,737,391 shares of common stock to Hsu Gamma Investments LP and Frost Gamma Investments Trust,
for in exchange for the extinguishment of rent payable totaling approximately $192,000. The Company issued the Exchange Shares
at a price of $0.07 per share. The fair value of the stock issued was based on the closing price of the Company’s stock
on the day of the debt exchange which was $0.09 per share resulting in a $1,066,000 loss on the extinguishment of debt.
6.
BASIC AND DILUTED LOSS PER SHARE
Basic
net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number
of common shares outstanding during the period. Diluted net loss per common share is computed giving effect to all dilutive potential
common shares that were outstanding during the period. Diluted potential common shares consist of incremental shares issuable
upon exercise of stock options and warrants and conversion of preferred stock. In computing diluted net loss per share for the
three and nine months ended April 30, 2019 and 2018, no dilution adjustment has been made to the weighted average outstanding
common shares because the assumed exercise of outstanding options and warrants and the conversion of preferred stock would be
anti-dilutive.
Potential
weighted average outstanding common shares not included in calculating diluted net loss per share are as follows:
|
|
|
Three
months ended
April
30, 2019
|
|
|
Nine
months ended
April
30, 2019
|
|
|
Three
months ended
April
30, 2018
|
|
|
Nine
months ended
April
30, 2018
|
|
|
Series C Preferred Stock
|
|
|
366,013
|
|
|
|
1,164,821
|
|
|
|
1,551,200
|
|
|
|
1,551,200
|
|
|
Series D Preferred Stock
|
|
|
2,031,798
|
|
|
|
10,037,619
|
|
|
|
13,910,000
|
|
|
|
13,910,000
|
|
|
Total
|
|
|
2,397,811
|
|
|
|
11,202,440
|
|
|
|
15,461,200
|
|
|
|
15,461,200
|
|
7.
RELATED PARTY TRANSACTIONS
Dr.
Hsiao, Dr. Frost and directors Steven Rubin and Rao Uppaluri are each stockholders, current or former officers and/or directors
or former directors of TransEnterix, Inc. (formerly SafeStitch Medical, Inc.) (“TransEnterix”), a publicly-traded
medical device company. The Company’s Chief Financial Officer also served as the Chief Financial Officer of TransEnterix
until October 2, 2013. The Company’s Chief Financial Officer continued as an employee of TransEnterix until March 3, 2014,
during which he supervised the Miami based accounting staff of TransEnterix under a cost sharing arrangement whereby the total
salaries of the Miami based accounting staff was shared by the Company and TransEnterix. The Chief Financial Officer continues
to serve as the Chief Financial Officer of Cocrytal Pharma, Inc., a clinical stage biotechnology company, and in which Steve Rubin
and Jane Hsiao, serve on the Board. Since December 2009, the Company’s Chief Legal Officer has served under a similar cost
sharing arrangement as the Chief Legal Officer of TransEnterix.
The
Company signed a five year lease for office space in Miami, Florida with a company controlled by Dr. Phillip Frost, who is the
beneficial owner of more than 10% of the Company’s common stock. The rental payments under the Miami office lease, which
commenced January 1, 2008 and expired on December 31, 2012, were approximately $1,250 per month and then continued on a month-to-month
basis. In February 2016 the rent was reduced to $0 per month. For the three and nine months ended April 30, 2019 and 2018, the
Company did not record any rent expense related to the Miami lease. On December 21, 2018, the Company issued common shares in
exchange for the extinguishment of rent payable of $76,000 (see Note 5). At April 30, 2019 and July 31, 2018, approximately $0
and $76,000 respectively in rent was payable.
The
Company signed a three year lease for warehouse space in Hialeah, Florida with a company jointly controlled by Dr. Frost and Dr.
Jane Hsiao, the Company’s Chairman and Interim CEO. The rental payments under the Hialeah warehouse lease, which commenced
February 1, 2009 and expired on January 31, 2012, were approximately $5,000 per month for the first year and were subsequently
on a month-to-month basis following the expiration of the lease. The Company vacated the Hialeah warehouse in September 2014 and
entered into a new lease with an unrelated third party. The Company did not record any rent expense related to the Hialeah lease
for the three and nine months ended April 30, 2019 and 2018, respectively. On December 21, 2018, the Company issued common shares
in exchange for the extinguishment of rent payable of $115,000 (see Note 5). At April 30, 2019 and July 31, 2018, approximately
$0 and $115,000 respectively in rent was payable under the previous Hialeah lease.
The
Company had the Credit Facility and multiple notes payable outstanding to related parties, as more fully described in Note 4 to
these consolidated financial statements.
The
Company is under common control with multiple entities and the existence of that control could result in operating results or
financial position of each individual entity significantly different from those that would have been obtained if the entities
were autonomous. One of those related parties, OPKO Health, Inc. (“OPKO”) and the Company are under common control
and OPKO has a one percent ownership interest in the Company that OPKO has accounted for as an equity method investment due to
the ability to significantly influence the Company.
8.
COMMITMENTS AND CONTINGENCIES
Leases.
The
Company is under an operating lease agreement with a related party for our corporate office space that expired in 2012. The lease
currently continues on a month to month basis at no cost.
We
house a majority of our inventory in approximately 4,000 square feet of warehouse space in Pembroke Park, Florida. The lease commenced
September 15, 2014 and originally expired on September 30, 2015 and we have exercised our option to renew the lease and extended
the expiration to September 15, 2017. Following the expiration, we have remained on a month-to-month term.
The
Pembroke Park lease agreement requires the payment of base rent. Rental expense for operating leases amounted to $34,000 and $33,000
for the nine months ended April 30, 2019 and 2018, respectively, and $11,300 and $11,000 for the three months ended April 30,
2019 and 2018, respectively. As discussed in Note 11, on May 3, 2019 the Company exchanged the inventory stored in the warehouse
for forgiveness of the accrued rent.
9.
RISKS AND UNCERTAINTIES AND CONCENTRATIONS OF RISK
Financial
instruments that potentially subject the Company to risk consist principally of purchases and advances to contract manufacturer.
Purchases
from and Advances to Contract Manufacturer.
Substantially all of the Company’s current inventory has been acquired from
Sing Lin pursuant to the now-terminated Agreement. The Company notified Sing Lin in June 2010 that it was terminating the agreement
effective September 2010. If the Company is unable to establish a contract and obtain a sufficient alternative supply from Sing
Lin or another supplier, it may not be able to procure additional inventory on a timely basis or in the quantities required. Sing
Lin and its subcontractors currently maintain custody of the Company’s specialized tooling, which could adversely impact
the Company’s ability to reallocate production to other vendors.
10.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts
payable and accrued expenses are summarized in the following table (in thousands):
|
|
|
April 30, 2019
|
|
|
July 31, 2018
|
|
|
Accounts Payable
|
|
$
|
381
|
|
|
$
|
417
|
|
|
Accrual Professional Fees
|
|
|
35
|
|
|
|
-
|
|
|
Accrued Interest
|
|
|
-
|
|
|
|
1,223
|
|
|
Accrued Warranty
|
|
|
12
|
|
|
|
12
|
|
|
Accrued Other
|
|
|
46
|
|
|
|
7
|
|
|
Total
|
|
$
|
474
|
|
|
$
|
1,659
|
|
11.
SUBSEQUENT EVENTS
On
May 3, 2019 the Company exchanged inventory for forgiveness of $16,000 of accrued unpaid rent. The Company had previously written
off the value of this inventory resulting in a gain on the forgiveness of approximately $16,000.