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Dear Shareholders,
CardioComm Solutions, Inc. (the "Company") has just released its financial records for the fiscal year ended December 31, 2012.
The 2012 calendar year was an extremely busy and very unique year for the Company. Most significant was our launch of the HeartCheck PEN and ECG monitors with the associated internet enabled SMART Monitoring ECG reading service. Both these products and services hold the potential for achieving significant international sales and for placing CardioComm Solutions at the forefront of home ECG monitoring technologies. Our unique FDA clearances and software credibility have opened a window of opportunity that we have and will aggressively pursue.
Four summary observations can be drawn from a review of the 2012 financial statements.
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Annual revenues were $1,605,690, a decrease of 29% as compared to $2,277,136 in 2011. This was largely due to clinical trial contacts that were secured in 2011 with one time equipment acquisitions to the benefits of the Company. |
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During the year, the Company issued 20,990,060 equity units for cash proceeds of $3,292,109. This was used to offset certain on-off liabilities described below. |
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A loss for the year of $3,342,457, compared to the 2011 losses of $669,656. |
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A net positive working capital of $470,176 despite the posted losses. |
Most noticeable is the loss reported of approximately $3.34 million. This loss is related to a combination of unique accounting treatments and one-off transactions. These losses were undertaken with the understanding that the Company would be significantly reducing its cash reserves by the end of the 2012 fiscal year. While undertaking this risk, senior management was required to maintain operations without incurring any debt, a challenging objective that was preserved.
The series of one-off occurrences are summarized.
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During the year, the Company paid MD Primer $500,000 to acquire the full ownership of certain rights pursuant to a prior software development agreement with MD Primer including certain intellectual property. The payment of $500,000 does not meet the criteria of an intangible asset as the additional development costs to complete the GEMS 4.0 software project are substantial. Therefore, the auditors have concluded the $500,000 payment is to be included as in-process development costs and be included as a net loss in the Company's consolidated statement. |
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In mid-December of 2011, CardioComm Solutions secured an FDA clearance for the first consumer-based ECG monitoring solution capable of displaying ECGs and capable of providing ECG reporting without the requirement of the physician prescription. The clearance was received 10 months ahead of schedule. The company had anticipated using 2013 to ready production lines, complete product enhancements and ECG software management technologies, and to develop a working capital fund for the global launch of the HeartCheck ECG solutions. Rather than being able to utilize these 10 months for the readiness of the launch, CardioComm Solutions was instead to move immediately into production and sales. A private placement in Q2 2012 generated permitted CardioComm Solutions to aggressively deploy efforts to meet the advanced sales and marketing schedule. A calculated risk, the Company undertook efforts to ensure the HeartCheck products be readied for global commercialization which included recruitment of a significant amount of software engineering infrastructure. With this infrastructure, CardioComm Solutions was able to complete the needed work in December 2012. The cost to the Company was an approximate $1 million in additional research and development expenses. |
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As options were granted in association with employment contracts, service agreements, and continued relationships with key consultants, the amount of the entry recorded in the accounting for these options was $664,470. This non-cash accounting item is also reflected as an expense of the Company. |
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During 2011 and 2012, provincial reimbursements for the provision of ECG monitoring and interpretation services (OHIP reimbursement) were cut. This resulted in a loss in C4 derived income of $218,540 in 2012. CardioComm Solutions is restructuring its C4 service to meet the new funding guidelines and has begun to introduce larger base clients such as the AIM Health Clinics of Ontario as previously announced. |
Accordingly, the majority of the $3.34 million in losses for 2012 are related to a limited number of distinct events. The Company has also realized losses from non-renewed service agreements associated with GEMS software licensing agreements. With the allocation of programming and R&D resources primarily to the HeartCheck and SMART Monitoring technologies, CardioComm Solutions was required to delay work to complete GEMS 4.0. Work had has been reinitiated in 2013 and the Company expects to release both GEMS 4.0 as well as it's enhanced ECG viewer GUAVA II within this current fiscal year. A review of past financial records would demonstrate that significant revenue can be recaptured by the Company as these updated software solutions are reintroduced to the market and our current and waiting customer base re-signs their service agreements.
Looking at 2013, this will be a year focused on the promotion of sales of software and hardware solutions for the Company. The material efforts undertaken for R&D are behind us and with ongoing discussions with multiple distributors across the globe, we are anticipating a year where we will recapture lost revenue, generate new revenue from the introduction of new products, and most importantly develop new strategic alliances with device manufacturers interested in bringing other ECG specific workflow solutions into the home and healthcare markets utilizing CardioComm Solutions' credentialed and highly pedigreed GEMS, GlobalCardio, and SMART Monitoring software technologies.
For a small company, we've accomplished much. We have garnered international interest, not just from other sales organizations, but also from large research and consultancy companies interested in learning how disruptive ECG monitoring technologies will help to shape the home health monitoring markets in 2013 and beyond. Indeed, the 2012 Foster and Sullivan Award we were conferred, was an early indicator of the keen interest of the markets.
We look forward to continuing to provide regular updates to our shareholders, colleagues and partners with respect to the exciting opportunities that we have already begun to work on in 2013.
We thank everyone who has supported the Company to date, and look forward to working for our shareholders as we continue to grow CardioComm Solutions into a preferred provider of ECG monitoring technologies on a global platform.
Sincerely,
Etienne Grima
This release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of CardioComm Solutions and certain of the plans and objectives of CardioComm Solutions with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.
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