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NewCardio Restructures 2007 Financing, Receives $2.8 Million Additional Cash and Improves Capital Structure
Wednesday, December 03, 2008
Vision Capital's Director of Healthcare Investing, Jess Jones, MD, to Join NewCardio's Board of Directors
SANTA CLARA, Calif., Dec. 3 /PRNewswire-FirstCall/ -- NewCardio, Inc.,
(OTC Bulletin Board: NWCI) a cardiac diagnostic and services company, today
announced that it has completed a restructure of the going-forward terms of
its December 27, 2007 financing. As a result of this agreement, the investors
in the transaction have exercised a portion of their existing warrants, adding
$2.8 million in cash to NewCardio's balance sheet. This will extend the
Company's cash reserves to past the expected revenue ramp, based on current
and projected cash burns. The agreement also results in a simplified capital
structure that includes a restriction on transfer of certain of the Company's
securities held by those investors that can extend through September 30, 2009.
Key terms of the agreement:
-- The initial investors, affiliates of Vision Capital Advisors, and
Platinum Partners have agreed to an early exercise of a portion of
their warrants, adding $2.8 million to NewCardio's cash reserves.
-- NewCardio's balance sheet strengthened by resulting reclassification
of investment from debt and Preferred Shares to equity under US GAAP.
The September 30, 2007 warrant liability of $21.7 million in
liabilities and $2.0 million in Preferred Shares Subject to Redemption
will now be classified in Equity.
-- The cash from the warrant exercise and the above reclassifications, in
aggregate, resulted in a net increase to equity on the Company's
balance sheet of $26.5 million.
-- The investors agreed to "lock up" certain of their securities for a
period that can extend to September 30, 2009. This agreement removes
all existing overhangs from the 2007 investment.
-- All preferences associated with the 2007 transaction, including
anti-dilution protection and rights impacting management decisions,
have been removed. The Company's capital structure now contains only
common stock, preferred "B" stock with no voting rights and the "A"
warrants, which have a $1.14 strike price, expire in four years
(12/27/12) and have been amended to remove preferences.
The following pro forma balance sheet is based on historical financial
statements giving the effect of the transaction as if occurred on September
30, 2008:
NewCardio, Inc.
Pro forma Balance Sheet
September 30, 2008
(unaudited)
Pro forma
As filed Adjustments Pro forma
ASSETS
Current assets:
Cash and investments $3,329,443 (1) $2,800,000 $6,129,443
Other current assets 29,329 - 29,329
Total current assets 3,358,772 2,800,000 6,158,772
Property and equipment 90,471 - 90,471
Other assets 12,600 - 12,600
Total assets $3,461,843 $2,800,000 $6,261,843
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $1,024,023 $- $1,024,023
Warrant liability 21,653,301 (1),(2) (21,653,301) -
Total liabilities 22,677,324 (21,653,301) 1,024,023
Preferred shares
subject to redemption 2,020,226 (3) (2,020,226) -
Equity (21,235,707)(4) 26,473,527 5,237,820
Total liabilities and
stockholders' equity $3,461,843 $2,800,000 $6,261,843
(1) To record receipt of cash for exercise of warrants
(2) To adjust for the reclassification of remaining warrants to equity
instruments
(3) To Adjust for the cancellation of preferred shares subject to
redemption and issuance of series B preferred stock
(4) As described above
Election of Jess Jones, MD as Director
The Company's Board of Directors has elected Jess Jones, MD, the Director
of Healthcare Investing of Vision Capital Advisors, LLC the investment manager
of its largest shareholder, to fill a vacancy on the Board.
Branislav Vajdic, PhD, NewCardio's Chief Executive Officer, commented,
"This agreement enhances our cash position, and extends our cash reserves to
past our expected revenue ramp. In addition, the agreement significantly
simplifies our capital structure, removes significant overhang in the stock
and eliminates the initial investors' preferences that were in place. The
restructuring demonstrates the confidence our initial investors have in
NewCardio. We are pleased to have completed this favorable transaction and
welcome Dr. Jones to our Board of Directors."
Dr. Jones spent the last two years at Vision Capital Advisors analyzing
investment opportunities in the biotech, pharmaceutical, medical technology,
and medical services fields. Previously, he spent one year as a research
associate at Columbia University in the Department of Neurosurgery. In this
role, he was awarded a Medical Student Research Fellowship from the American
Heart Association. Prior to that, he spent three years at the University of
Utah in the Department of Radiology, also as a research associate. He earned
both an MBA and his MD from Columbia University, and a BA from the University
of Utah.
"NewCardio possesses novel technology that has the potential to add value
to each of the more than 325 million electrocardiographs performed each year,"
commented Dr. Jones. "As an investor, we are impressed with the team the
Company has assembled to develop and commercialize this technology across the
entire range of cardiology and healthcare. We are further pleased with the
pace at which the Company has progressed. Accordingly, Vision Capital Advisors
was pleased to assist the Company with the restructure of the original terms
of the financing, demonstrating Vision's long-term commitment to NewCardio. I
am excited to join the Company's Board of Directors to assist the Company in
the successful execution of its business plan."
About Vision Capital Advisors, LLC
Vision Capital Advisors, LLC is an SEC-registered investment adviser.
Vision Capital Advisors, LLC specializes in making value-oriented investments
in fundamentally strong small public companies in the US and abroad.
About NewCardio, Inc.
NewCardio is a cardiac diagnostic and services company focused on the
development of a proprietary platform technology to provide higher accuracy
to, and increase the value of, the standard 12-lead electrocardiogram (ECG).
NewCardio's development-stage software and hardware products and services are
intended to improve the diagnosis and monitoring of cardiovascular disease
(CVD), as well as cardiac safety assessment of drugs under development.
NewCardio's three-dimensional ECG platform is designed to reduce the time and
expense involved in assessing cardiac status while increasing the ability to
diagnose clinically significant conditions which were previously difficult to
detect. For more information, visit http://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/A (No. 2) for the year ended December 31, 2007 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.
To join our email distribution please click this link:
http://www.b2i.us/irpass.asp?BzID=1645&to=ea&s=0
SOURCE NewCardio, Inc.
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