SANTA CLARA, Calif., Aug. 12 /PRNewswire-FirstCall/ -- NewCardio, Inc., (OTC Bulletin Board: NWCI) a cardiac diagnostic technology provider, today announced financial results for the second quarter ended June 30, 2010. More details on the financial results are available in the Form 10-Q, filed with the Securities and Exchange Commission.
“In the last 12 months, we have made tremendous progress in commercializing our initial solution, QTinno,” commented Vincent Renz, NewCardio’s President and CEO. “Additionally, we have solidified our infrastructure to better position the Company for success, including a management transition and an expanded line of credit. Specifically, we have signed Master Services Agreements (MSAs) with three of the five largest contract research organizations (CROs), and leading, forward-thinking drug developers are increasingly interested in incorporating QTinno in their study designs. In addition, we are increasingly excited about the long-term potential for our innovative platform technology. We believe we have the potential to add value to each and every one of the electrocardiographs (ECG) performed each year. We expect our CardioBip to become a powerful clinical diagnostic tool in the emerging mobile healthcare space enabling a cost effective means for remotely capturing and transmitting a 12 lead ECG. It will expand the breadth of cardiovascular disease that can be effectively monitored remotely. Our Cardio3KG solution has the potential to become the gold standard for timely and accurate diagnosis of acute coronary syndrome, ultimately saving lives, health care costs and litigation expenses. And these solutions are just the start. Our platform technology promises a wide range of solutions, each targeting substantial market opportunities with unrivaled, state-of-the-art technology.”
Year-to-Date Highlights
- The Company implemented a planned management succession designed to facilitate the Company’s continuing transition to a commercial enterprise that will bring the platform technology and related solutions to market and accelerate revenue growth, electing Mr. Renz, the Company’s President and Chief Operating Officer, to the board of directors and promoting him to Chief Executive Officer. Dr. Branislav Vajdic remains on the Company’s board of directors as Vice Chairman and serves as a Special Fellow focusing on driving the development of our 3-D platform technology.
- NewCardio has initiated its first revenue-generating QT studies using QTinno having signed an MSA with one of the world’s leading CROs. With this agreement, NewCardio has MSAs in place with three of the world’s top five CROs. NewCardio licensed its QTinno software solution to enable the clinical trial service providers in the delivery of fully automated cardiac safety analyses for early phase Thorough QT (TQT) studies. The CRO is expected to deploy QTinno in several clinical pharmacology units worldwide. The study was initiated in June and revenue is contributing to NewCardio’s third quarter 2010 results.
- Clinilabs, a New York-based contract research organization that provides early phase and specialty clinical drug development services to the pharmaceutical industry, signed an MSA with NewCardio. Clinilabs has licensed QTinno software solution in order to perform fully-automated cardiac safety analyses in cardiac intensive and thorough QT studies. In addition, Clinilabs has signed a services work order, including standard operating procedures (SOP) and validation kits, as well as professional services, in order to accelerate its time to market in delivering cardiac safety services. This produced NewCardio’s first half revenues.
- On January 12, 2010, NewCardio received notice of issuance for U.S. patent 7,647,093, titled “Apparatus and method for cordless recording and telecommunication transmission of three special ECG leads and their processing,” from the U.S. Patent and Trademark Office. This represents the core patent for CardioBip and, in conjunction with the two encouraging validation studies announced on January 5, 2010, validates the CardioBip technology, positioning NewCardio as an emerging leader in remote cardiac monitoring.
- NewCardio received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for a patent covering technology relating to NewCardio’s Cardio3KG solution. This represents the core patent for NewCardio’s anticipated emergency/urgent care solution, Cardio3KG. The patent, U.S. patent 7,751,875, was issued on July 6, 2010. One of the primary industry trade shows, the Heart Rhythm Society (HRS), accepted an abstract detailing the superior performance of NewCardio’s patented CardioBip technology for remote wireless monitoring and detection of atrial fibrillation (AF). The study results, which discussed the use of CardioBip for improved AF monitoring and detection, were presented at the HRS 31st Annual Scientific Sessions in May 2010.
- NewCardio announced that two of its recent medical and technical submissions have been accepted for presentation at the 32nd Annual International Conference of the IEEE Engineering in Medicine and Biology Society conference. The two papers: ‘Wireless Transmission of Reconstructed 12-Lead ECGs in the Remote Monitoring of Atrial Fibrillation’ and ‘Wireless Remote Monitoring of Myocardial Ischemia Using Reconstructed 12-Lead ECGs’ will be presented during the conference to be held August 31st through September 4th, 2010, in Buenos Aires, Argentina.
Financial Results
NewCardio generated revenue, derived exclusively from the delivery of SOP and validation kits and services to its clinical trial service provider partners during the quarter. Revenue was $21,077 for the quarter, with no corresponding revenue in the prior year quarter. Total operating expenses were $2.7 million for the quarter, compared to $2.6 million in the second quarter last year. The Company has taken steps to strengthen its financial position by reducing cash usage from the first half level of $505,000 per month by 30-35%. In connection with his promotion to CEO, Mr. Renz implemented Company-wide salary reductions of up to 30%, negotiating similar reductions from its external consultants and vendors, and reducing discretionary spending. The measures went into effect on July 1 and are planned to be in effect for at least six months, and longer if required by the Company’s cash position. For the quarter, the Company reported a net loss of $(1.5 million), or $(0.05) per fully diluted share (based on 28.5 million shares outstanding) compared to a loss of $(2.6 million), or $(0.11) per share (based on 23.8 million shares outstanding) for the same quarter last year.
“While the economic situation has had a significant impact on Phase 1 study activity, we remain well positioned to benefit once the trial activity, especially for TQT studies, returns to the pre-2009 levels and in fact believe there is a building pent-up demand for this work,” Mr. Renz continued. “The efforts of the last year have yet to positively impact our financial results, but I am encouraged by our progress and believe it is only a matter of time before the industry transition to automated trials takes hold, and when it does, QTinno will be the solution of choice.”
Year-to-date, the Company reported revenue of $70,118, compared to no revenue in the prior year. Year-to-date operating expenses were $5.5 million, compared to $5.0 million last year. Year-to-date, the Company’s net loss $(5.8 million), or $(0.21) per share, compared to a net loss of $(4.9 million), or $(0.21) per share last year.
NewCardio entered into a new, $1.5 million, line of credit with three of its existing shareholders, one of which is represented on the Board of Directors, to strengthen its financial position. This will allow the company further time to fully commercialize its lead solution, QTinno. The credit facility is part of a series of steps designed to improve the company’s ability to identify and attract potential strategic relationships and/or investors, which will enable the company to maximize the value to be derived through continued development of its 3-D platform technology.
“QTinno represents the near-term, obvious opportunity to derive high-margin revenue from our platform technology, but it continues to be by far our smallest overall opportunity,” Mr. Renz concluded. “Accordingly, we are working diligently to develop additional solutions based on our proven 3-D platform technology to create shareholder value and bring technological advancement to the ECG as a diagnostic tool. We are focused on identifying opportunities, either through strategic partnerships or other relationships, to raise sufficient capital that will enable us to accelerate our R&D efforts for our second and third products, CardioBip and Cardio3KG, as well as other solutions currently in the exploratory phase. The future is exciting for NewCardio, and we look forward to further innovations and accelerating growth as we continue our progress.”
Conference Call
NewCardio management will conduct a conference call to provide a corporate update and discuss progress at 1:30 p.m. PT/ 4:30 p.m. ET on Thursday, August 12, 2010. Interested parties should dial 1-888-846-5003 (domestic) or 1-480-629-9856 (International) five to 10 minutes before the call. Investors will also have the opportunity to listen to the conference call and the replay on the News and Events section of the NewCardio website at: http://www.newcardio.com. Select questions for the conference call will also be taken via email at nwci@haydenir.com and can be sent any time prior to the conference call’s starting time. A replay of the call will be available by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and referencing passcode 4339629.
About NewCardio, Inc.
NewCardio is a cardiac diagnostic and services company developing and marketing proprietary software platform technologies to provide higher accuracy to, and increase the value of, the standard 12-lead ECG. NewCardio’s 3D ECG software platform reduces the time and expense involved in assessing cardiac status while increasing the ability to diagnose clinically significant conditions which were previously difficult to detect. NewCardio’s software products and services significantly improve the diagnosis and monitoring of cardiovascular disease, as well as cardiac safety assessment of drugs under development. For more information, visit www.newcardio.com.
Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based on currently available information and assumptions made by management. Although we believe that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including the potential risks and uncertainties set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009 and relate to our business plan, our business strategy, development of our proprietary technology platform and our products, timing of such development, timing and results of clinical trials, level and timing of FDA regulatory clearance or review, market acceptance of our products, protection of our intellectual property, implementation of our strategic, operating and people initiatives, benefits to be derived from personnel and directors, ability to commercialize our products, our assumptions regarding cash flow from operations and cash on-hand, the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure, implementation of marketing programs, our key agreements and strategic alliances, our ability to obtain additional capital as, and when, needed, and on acceptable terms and general economic conditions specific to our industry, any of which could impact sales, costs and expenses and/or planned strategies and timing. We assume no obligation to, and do not currently intend to, update these forward-looking statements.
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Investor Contact: | |
Hayden IR | |
Jeff Stanlis, Partner | |
(602) 476-1821 | |
jeff@haydenir.com | |
NEWCARDIO, INC | |||
(a development stage company) | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
June 30, | December 31, | ||
2010 | 2009 | ||
(unaudited) | |||
ASSETS | |||
Current assets: | |||
Cash | $ 180,490 | $ 1,386,007 | |
Short term investment | - | 25,010 | |
Accounts receivable, trade | 39,628 | - | |
Prepaid expenses | 174,877 | 111,871 | |
Prepaid commitment fees | 1,728,660 | 556,875 | |
Total current assets | 2,123,655 | 2,079,763 | |
Property, plant and equipment, net of accumulated | 181,261 | 198,955 | |
Other assets: | |||
Patent costs, net | 10,714 | - | |
Deposits | 22,600 | 22,600 | |
$ 2,338,230 | $ 2,301,318 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||
Current liabilities: | |||
Accounts payable and accrued expenses | $ 598,959 | $ 480,152 | |
Unearned revenue | 9,450 | - | |
Line of credit | 1,816,667 | - | |
Put liability | - | 744,280 | |
Total current liabilities | 2,425,076 | 1,224,432 | |
Warrant liability | 2,551,648 | 1,078,292 | |
Reset derivative | 553,597 | 687,958 | |
Total liabilities | 5,530,321 | 2,990,682 | |
Preferred shares subject to liability conversion | - | 784,010 | |
Stockholders’ deficit: | |||
Preferred stock, $0.001 par value; 1,000,000 shares authorized: | |||
Preferred stock Series B, $0.001 par value; 18,000 shares | 12 | 16 | |
Preferred stock Series C, $0.001 par value; 7,000 shares | 3 | - | |
Common stock, $0.001 par value, 99,000,000 shares | 29,304 | 24,290 | |
