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Dear Shareholders and Friends:
CardioComm Solutions is a medical software engineering company that has a long and respected history of servicing the hospital, physician and ECG diagnostic laboratory markets. We are also an organization that has recently entered the consumer medical device and ECG services markets with the handheld HeartCheck™ PEN ECG device and patent pending, SMART Monitoring ECG service. Over the past five months we have been working to complete critical development stages on both fronts with commercial releases scheduled for Q1 2014. The resulting products will allow us to grow current revenue streams and open new business verticals. In advance of realizing a benefit from these revenue sources, we also have initiated a round of financing that will serve as a bridge over the next quarter to ensure we meet those development and product launch objectives.
Below I have summarized our activities and highlighted the opportunities that are working to realize.
HeartCheck™ BASED ACTIVITIES:
HISTORY: The HeartCheck™ PEN ECG device is a consumer product that can allow any person to record their ECG and to then have the ECGs read by a physician or technician to confirm if an arrhythmia has been captured within the 30 second ECG reading using our patent pending SMART Monitoring ECG service. We have leveraged our consumer clearances and medical software to create this unique service.
OPPORTUNITES:
- Patent Applications: Patent applications were submitted (press release May 9, 2013) to protect our rights for a software-based system to control and enable consumer products to display diagnostic images that would only have been available through prescribed diagnostic devices. On November 26, 2013, we were provided a First Action Prediction letter from the US Patent Office to confirm that our application is in the queue for examination. A successful patent will not only apply to ECG wave forms, but provide CardioComm Solutions wider patent rights that can be applied to any diagnostic images that could be shown on consumer medical devices. The Canadian patent examination will commence in 2014.
- HeartCheck™ Partner Program: We have developed a Business-In-A-Box solution for sales of the HeartCheck™ PEN and SMART Monitoring services into specific verticals. Each HeartCheck™ Partner Kit will include one HeartCheck™ PEN, 20 pre-paid physician readings, store posters, window clings and consumer pamphlets. We are initially targeting pharmacies, sports training centres and allied health professionals. In each of these verticals we will leverage a one-to-many approach. A pharmacist may complete as many as 200 prescriptions in a day, a personal trainer may train 40 people per week and a health care worker may see up to 20 people per week. We have already initiated in-pharmacy based pilots in Ontario (see “Where to Buy” on our website). For you reference, please see the following resource centre for physical fitness trainers. The plan is to implement a $20 per ECG screening service, where the Partner retains $10 from each ECG screening. Advertising for the HeartCheck™ Partner Program and HeartCheck™ ECG PEN Sales: In October we launched a TV commercial that was aimed at introducing the HeartCheck™ PEN to the consumer market through pharmacies in Southern Ontario. We partnered with Total Health Pharmacies and Remedy’sRx. Here is a link to the commercial (http://www.youtube.com/watch?v=ZaCIw0g2Swk).
- Expansion of the HeartCheck™ Program:
- Pharmacies: CardioComm Solutions has made presentations over the past nine months to several large pharmacy banner groups with operations in both Canada and the USA. The initial response has been very positive. We anticipate news very soon regarding Pharmacy adoption of in-pharmacy ECG screening services under the HeartCheck™ Partner Program with a specific Heart Health Initiative as early as February 2014.
- Sports Facilities: CardioComm Solutions has partnered with the International Health, Racquet & Sports Club Association (http://www.ihrsa.org/about/) who represents health and fitness facilities, gyms, spas, sports clubs and suppliers worldwide. The HeartCheck™ PEN is a feature product in their 2014 FIT Magazine. We will announce more once we have initiated pilot ECG screenings.
- Long-Term Care Facilities: We have been introducing the HeartCheck™ ECG Monitor into long-term care (LTC) facilities to evaluate its use in preventing unnecessary emergency room transfers through the provision of 12 lead (GlobalCardio product) and for identifying potential Atrial Fibrillation (AF) through our SMART Monitoring support. Three LTC facilities have already been confirmed as pilot sites. We have also been invited to propose an AF screening program for use in all LTC facilities in Ontario for stroke prevention.
- Research Activities: When implementing sales of the HeartCheck™ PEN, we were asked to provide evidence of clinical validation of our SMART Monitoring ECG service with the HeartCheck™ devices in North America. With 13 years of providing medical software solutions, we turned our efforts to developing an equally impressive track record with our consumer facing solutions.
- ECG is better than Pulse Check:
Through our association with the Heart and Stroke Foundation, we were able to partner with University of Toronto researchers which resulted in the presentation of arrhythmia screening result at the 2013 Canadian CardioVascular Congress meeting (Vascular 2013). The results showed that pulse detection, even by qualified staff, is not an adequate method for AF detection and could not replace ECG screening. This was a big shift from the prior “Be pulse aware” message promoted by the Heart and Stroke.
- Screen for Atrial Fibrillation Everywhere (SAFE) Study.
Based on the findings from the Heart and Stroke project, CardioComm Solutions launched a new public screening research study called SAFE. Screening will occur at all events CardioComm Solution will attend in 2013/2014. The study is cleared by an Ethics Committee and has academic representation from the University of Toronto. The SAFE Study will be open to sponsorship by like motivated organizations – those active in the identification and treatment of arrhythmias and the primary/secondary prevention of arrhythmia related cardiac disease.
- C-SPIN Canadian Institutes for Health Research (CIHR):
We announced on October 10, 2013, that we would be working within a CIHR grant to be the providers of HeartCheck™ ECG devices and SMART Monitoring ECG service technologies to screen 8,000 Canadians through pharmacies and primary care offices. All ECGs will be read centrally by cardiologists associated with the grant. The study is expected to start in 2014.
GLOBAL ECG MANAGEMENT SOFTWARE (GEMS) BASED ACTIVITIES:
The majority of ECG management solutions available on the market for medical use were developed for use within the Windows XP and Server 2000 operating systems. The introduction of Win 7 and Win 8 has resulted in the need for software engineering groups to re-write their programs to continue to be compatible in these new operating environments. To be able to offer a digital (software-based) ECG interpretation service, ECGs should be viewed and reported within a software solution that is manufactured by an ISO certified group, in accordance with ISO standards and cleared as a Class II medical device by the Food and Drug Administration for use in the USA or approved as a Class II medical device by Health Canada. A review of FDA records, the market and solutions providers in North America will show that CardioComm Solutions is one of only a few that is actively working to release Win 7/8 compliant Class II medical software for the management, viewing and interpretation of ECGs and is the only ECG solutions company that will have software that can work with multiple ECG devices, including those that will become legacy software operating systems as of April 1, 2014. Organizations with legacy systems will be forced to decommission their WIN XP and Server 2000 computer inventory and will need to implement a new ECG software solution.
GEMS 4.0, CardioComm Solutions’ Win 7/8 compliant offering, is in beta testing now and is scheduled for commercial release in Q1 2014. We anticipate a re-capture of owners of our GEMS 3 series software licenses as well as obtaining new clients who will need compatibility by April 2014. This pressure to upgrade to a GEMS 4.0 solution will be felt globally.
Associated with GEMS 4.0 are: GEMS Air, a module which is geared to support use of GSM enabled ECG recording and transmitting devices; Auto Attendant for the receipt of simultaneous analogy phone transmissions of ECGs (largely a Canadian requirement); and our GEMS HL7 module for integration with electronic medical records systems.
Mobile Cardiac Telemetry and GEMS 4.0:
Mobile Cardiac Telemetry (MCT) is a highly reimbursed ECG mobile monitoring test performed in the USA.
CardioComm Solutions intends to have commercially available, GEMS MCT software offering prior to the end of Q1 2014. The GEMS 4.0 software was a prerequisite to the release of GEMS MCT. Through the release of GEMS and GEMS MCT, any IDTF may continue to use trans-telephonic and regular GSM enabled wireless ECG devices, as well as now deploying MCT monitoring, an option previously only available to the few large IDTFs. This release will open the doors to free competition within the USA and re-level the playing field for all diagnostic and medical monitoring facilities. Sales of GEMS MCT will provide a new revenue stream to CardioComm Solutions on top of the anticipated GEMS 4.0 licensing revenue.
SMART MONITORING AND NEW DEVICES FOR 2014:
CardioComm Solutions’ core competency is that of a medical software company. We have Class II medical device clearances for our SMART Monitoring ECG services, our SMART Monitoring technologies have been placed under a patenting procedure and we can deploy this solution anywhere in the world to a virtually limitless number of clients. Our strategy is to be hardware agnostic and as such, although we will continue to market our own hardware devices like the HeartCheck™ PEN, our plan is to work with a wide variety of hardware devices from a plethora of device manufacturers. We continue to be approached by many device manufacturers interested in placing their devices into our SMART Monitoring service.
Smartphone and Bluetooth versions of the HeartCheck™ PEN are under development; however, with the speed that technology advances, we are looking at strategic partnerships with companies that have ECG devices already cleared by the FDA for prescription use, that are already in production, that communicate by Bluetooth to Apple and Android smartphones and that have applications robust enough to manage ECG recordings in accordance with our quality and performance standards. These device manufacturers will combine their device and smartphone solutions with our SMART Monitoring ECG solution and provide multiple use cases with the different devices for sale in North America under our own HeartCheck™, SMART Monitoring FDA clearances and Health Canada approvals. We will realize revenue from the sale of their SMART Monitoring compatible devices, while they will benefit from revenue sharing through the ECG SaaS use of the SMART Monitoring ECG service. These new devices will be disclosed soon once contract negotiations have been completed.
EQUITY FINANCING:
CardioComm Solutions is seeking to raise between $500,000 and $1,000,000 in a round of equity financing by February 2014. These funds will be used as bridge financing until we start realizing revenue from commercial sale/licensing of GEMS, GEMS MCT and new smartphone connected HeartCheck™ SMART Monitoring devices.
MARKETING ACTIVITIES:
We continue to build awareness for the HeartCheck™ PEN and our Smart Monitoring solution through an Integrated Marketing Strategy that includes participation in relevant conferences and industry trade shows. Recent examples include the Zoomer Show in Toronto, Omnicare in Kingston, CCS in Montreal, and the Heart Innovation Summit in Chicago. We have been featured in a number of industry magazines, on a radio talk show (http://www.youtube.com/watch?v=2KAD3gHgXoI) and on network television (http://www.youtube.com/watch?v=ZaCIw0g2Swk). We have also launched a social media initiative that is achieving some very positive results. All of these efforts are geared towards building mindshare and driving consumer demand.
DISTRIBUTION AGREEMENTS:
We continue to support our network of interested distributors. Our closest deals for realizing sales from the distribution of the HeartCheck™ PEN and SMART Monitoring service opportunities include:
Panama: The distributor has executed an agreement that provides rights to develop a market in Central America and parts of the Caribbean.
Iran: This executed agreement has required extensive periods of review from the Canadian Government and Iranian Embassy. With a population of approximately 70 million people, Iran will be an important territory. Work has been ongoing since 2012 and we hope to see approvals in place by mid-2014.
Vietnam: We have been working through the Canadian Trade Commission in Vietnam to complete regulatory reviews for the commencement of sales. The confirmed distributor has already presented our HeartCheck™ devices at medical trade shows in Vietnam and is looking forward to getting approvals to import and sell product soon.
Gulf Region: We learned from our first executed contract with a distributor in Dubai that we would need to wait to announce sales rather than agreements to sell in any press releases that we issue. We have now secured an agreement with a well-established medical device distribution organization that will manage the development of a market for us in the Gulf Region and Turkey.
In closing, I thank those shareholders and HeartCheck™ PEN customers who have been emailing and calling me with their questions, support and continued interest in CardioComm Solutions and our products.
On behalf of the staff of CardioComm Solutions, we wish you all a safe and happy holiday season and a Happy New Year.
Sincerely,
Etienne Grima
Chief Executive Officer
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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