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NewCardio Announces Financial Results for Its 2010 Fourth Quarter and Full Year

Mar 29, 2011 (04:03 PM EDT)
URL: http://www.techweb.com/show-press-release/X837504/newcardio-announces-financial-results-for-its-2010-fourth-quarter-and-full-year.html

Company Recognizes Initial Revenue, Further Penetrates Market and Reduces Cash Utilization

SANTA CLARA, Calif., March 29, 2011 /PRNewswire/ -- NewCardio, Inc., (OTC Bulletin Board: NWCI) a cardiac diagnostic technology provider, today announced financial results for the fourth quarter and full year ended December 31, 2010. More details on the financial results are available in the Company's Annual Report on Form 10-K, filed today with the Securities and Exchange Commission.

"The last year was one in which NewCardio transitioned from a development to a commercial stage company, achieving a number of key milestones, including realizing our initial revenues for QTinno®," commented Vincent Renz, NewCardio's President and CEO. "This achievement not only demonstrates the commercial opportunity for our initial solution, but just as importantly, validates the regulatory and commercial viability of our underlying 3-D platform technology. To support this evolution as a company, we also transitioned management from a research and development to a commercially driven focus, formalized our going-to-market priorities and implemented a more disciplined approach to our strategic and operational planning. This approach ensures that we will continue to build on our core strengths of science, technology and operations in establishing the foundation that will be required to support the strategic development of our 3D platform technology. These efforts have been focused in two primary areas: driving QTinno commercialization and attracting the strategic funding required to advance the development of CardioBip™ and my3KG™."

Mr. Renz continued, "We are working closely with our strategic advisors to secure the funding we need and while these initiatives always take longer than anticipated, we are hopeful that the exercise will result in a partnership that will enable the Company to deliver on the promise of CardioBip and my3KG and strengthen NewCardio in the long term."

Highlights

  • QTinno achieved increasing market awareness, experiencing increased adoption by clinical trial services providers, sponsors and regulatory bodies, as evidenced by four new MSAs signed by leading organizations during 2010, resulting in initial revenue-generating contracts for clinical studies.
  • A top 5 global pharmaceutical company selected QTinno for two Phase I drug safety studies, demonstrating that QTinno is achieving traction in the market. Consistent with our delivery model, the fully automated ECG analysis, empowered by QTinno, will be delivered by one of our existing MSA customers, the ECG core lab of a top 3 Clinical Research Organization (CRO).
  • The Company presented the results from a blinded drug safety study conducted by the Cardiac Safety Research Consortium (CSRC) to evaluate the performance of QTinno on its "testing" ECG dataset. To date, the Company knows of no other automated cardiac safety solution provider that has accepted the CSRC validation challenge. The CSRC results showed that fully automated QTinno measurements were highly accurate and demonstrated significantly reduced measurement variability relative to the measurements submitted to the FDA by the pharmaceutical sponsor. These CSRC findings provide independent and authoritative validation of the QTinno value proposition that we believe will resonate deeply with potential QTinno customers.
  • The Company bolstered its position with industry leaders and regulators through the acceptance of abstracts and presentations at a variety of conferences, including the Drug Information Agency(DIA)/Food and Drug Administration (FDA) conference on drug cardiac safety; the Heart Rhythm Society Annual Scientific Meeting; the World Congress of Cardiology; the IEEE international meeting on biomedical engineering; a conference on state-of-the-art drug safety assessment of diabetes drugs cosponsored by the FDA, the CSRC, and the DIA; the Cambridge Healthtech Institute (CHI) inaugural conference entitled "Mitigating Safety Risks in Early Clinical Development"; and the CSRC's Annual Meeting, at the headquarters of the FDA.
  • NewCardio completed preliminary clinical studies that have shown that remote monitoring by CardioBip has the potential of detecting recurrence of post-ablation atrial arrhythmias (e.g. atrial fibrillation or atrial flutter) much earlier than detected by Holter, which is the current standard of care. The data pointed to the potential that CardioBip has as an effective, accurate and patient-friendly solution for long-term monitoring of cardiac conditions.
  • The Company completed a number of internal studies to validate the performance of my3KG. In one such validation study, the Company focused on the performance improvements that my3KG can bring to the detection of acute myocardial infarction (AMI) in patients suffering from diabetes. The study showed that my3KG had 42% greater sensitivity than expert cardiologist interpretation of 12-lead ECG for early detection of AMI, with equal or better specificity.
  • NewCardio continued its commitment to strengthening and protecting the Company's intellectual property worldwide by expanding the IP portfolio with additional patent applications that covered advanced cardiac safety QTinno solutions and atrial fibrillation management using CardioBip. In addition, NewCardio has aggressively filed PCT patent applications and had the core CardioBip patent issued in several countries, including the United States. The United States Patent and Trademark Office also issued a NewCardio patent that covered core aspects of its 3-D ECG platform technology.

Financial Results

NewCardio generated revenue from professional services associated with the deployment of QTinno for use in the cardiac safety component of a drug development study, as well as initial per ECG revenues from the first two studies, totaling $88,071 with no corresponding revenue in the prior year quarter. Net cash used in operating activities was $677,000 in the current quarter, which is a decrease of 41.9% from $1,166,000 in the fourth quarter last year and down 20.5% from the immediately prior quarter of 2010, as the Company implemented an initiative to reduce its cash usage by 30-35%. For the quarter, the Company reported a net loss attributable to common shareholders of $3.2 million, or $(0.11) per fully diluted share, compared to a net loss attributable to common shareholders of $2.0 million, or $(0.09) per fully diluted share, in the fourth quarter last year. The net loss per share was based on 30.0 million and 24.1 million weighted average shares outstanding, respectively.

For the full year ending December 31, 2010, the Company reported revenue of $257,399, compared to no revenue in the prior year. For the full year ending December 31, 2010, the Company's net loss attributable to common shareholders was $11.5 million, or $(0.40) per share, compared to a net loss attributable to common shareholders of $10.4 million, or $(0.44) per share last year.

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, Tuesday, March 29, 2011. 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. A replay of the call will be available by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and referencing pass code 4425345.

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, 2010 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

 CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2010 AND 2009





2010

2009

ASSETS


Current assets:



Cash

$                        584,974

$           1,386,007

Short term investment

-

25,010

Accounts receivable, trade

42,905

-

Prepaid expenses

32,303

111,871

Prepaid commitment fees

1,958,654

556,875

 Total current assets

2,618,836

2,079,763




Property, plant and equipment, net of accumulated depreciation of $158,950 and $79,041 as of December 31, 2010 and 2009, respectively

156,261

198,955




Other assets:



Patent costs

55,357

-

Deposits

22,600

22,600





$                     2,853,054

$           2,301,318




LIABILITIES AND STOCKHOLDERS' DEFICIT


Current liabilities:



Accounts payable and accrued expenses

$                        618,413

$              480,152

Unearned revenue

1,500

-

Line of credit, including $1,900,000 to a related party as of December 31, 2010

3,000,000

-

Put liability

    -

744,280

 Total current liabilities

3,619,913

1,224,432




Warrant derivative liability

2,141,871

1,078,292

Preferred stock derivative liability

250,863

687,958

 Long term liabilities

2,392,734

1,766,250




 Total liabilities

6,012,647

2,990,682




Commitments and contingencies






Temporary equity:



Preferred shares subject to liability conversion

    -

784,010




Permanent equity:



Stockholders' deficit:



Preferred stock, $0.001 par value; 1,000,000 shares authorized:



Preferred stock Series B, $0.001 par value; 18,000 shares designated; 12,250 and 16,435 shares issued and outstanding as of  December 31, 2010 and 2009, respectively

12

16

Preferred stock Series C, $0.001 par value; 7,000 shares designated; 2,295 and 2,920 shares issued and outstanding as of December 31, 2010 and 2009, respectively

2

-

Preferred stock Series D, $0.001 par value;  1,000 shares designated; 800 and -0- shares issued and outstanding as of December 31, 2010 and 2009

1

-

Common stock, $0.001 par value, 500,000,000 and 99,000,000 shares authorized as of December 31, 2010 and 2009, respectively; 30,688,902 and 24,290,279 shares issued as of December 31, 2010 and 2009, respectively; 30,563,902 and 24,290,279 shares outstanding as of December 31, 2010 and 2009, respectively

30,689

24,290

Additional paid in capital

39,236,320

29,432,680

Deficit

(42,426,617)

(30,930,360)

 Total stockholders' deficit

(3,159,593)

(1,473,374)





$                     2,853,054

$           2,301,318






NEWCARDIO, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2010 AND 2009




2010

2009

Revenue

$                    257,399

$                           -

Cost of sales

152,296

    -

Gross profit

105,103

-




Operating expenses:



Selling, general and administrative

5,916,092

6,904,521

Depreciation

63,133

59,833

Research and development

3,585,115

3,047,994

Total operating expenses

9,564,340

10,012,348




Net loss from operations

(9,459,237)

(10,012,348)




Other income (expense)



Gain on change in fair value of warrant derivative liability and preferred stock derivative liability

194,553

907,866

Amortization of commitment fees

(1,900,915)

(378,985)

Other financing costs

(119,183)

(133,345)

Interest, net

(211,475)

26,199

Total other income (expense):

(2,037,020)

421,735




Net loss before income taxes

(11,496,257)

(9,590,613)




Provision for income taxes

    -

    -




Net loss

(11,496,257)

(9,590,613)




Preferred stock dividend

    -

(784,010)




NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$              (11,496,257)

$           (10,374,623)




Net loss per share-basic and fully diluted

$                         (0.40)

$                      (0.44)




Weighted average number of shares-basic and fully diluted

28,638,363

23,726,059




SOURCE NewCardio, Inc.