WEB NEWS Comments & Business Outlook
EVENT CARDIO GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE NINE MONTHS ENDED MAY 31, 2015 and 2014
(Unaudited)
Three Months Ended
Nine Months Ended
2015
2014
2015
2014
Revenue
$
—
$
—
$
—
$
—
Operating Expenses
General and administrative
387,444
121,629
708,330
133,003
Research and development
241,660
—
456,759
—
Total Operating Expenses
629,104
121,629
1,165,089
133,003
Loss from Operations
(629,104
)
(121,629
)
(1,165,089
)
(133,003
)
Other Expenses
Interest expense - related parties
15,749
—
55,818
—
Interest expense - other
3,500
—
3,500
—
Net Loss
(648,353
)
(121,629
)
(1,224,407
)
(133,003
)
Other Comprehensive Income
Foreign currency translation adjustment
(13,694
)
—
62,827
—
Total Comprehensive Loss
$
(662,047
)
$
(121,629
)
$
(1,161,580
)
$
(133,003
)
Loss per Share - Basic and Diluted
$
(0.007
)
$
(0.002
)
$
(0.013
)
$
(0.002
)
Weighted Average Shares - Basic and Diluted
98,720,647
79,500,000
92,065,904
79,500,000
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement.
On June 30, 2016, Event Cardio Group Inc., a Nevada corporation (the “Company”), entered into a Stock Purchase Agreement to acquire all of the outstanding shares of Ambumed, Inc., a Maryland corporation (the “Ambumed Stock Purchase Agreement”), which provides electrocardiography support services designed specifically for physicians, hospitals, scanning services and home health care agencies, including a 24-hour/day ECG monitoring center, under the name National Cardiac Monitoring Center. The consideration for the acquisition, which is expected to close in mid-July, will consist of $1,200,000, of which $600,000 is payable at closing and $600,000 is payable on the first anniversary of the closing, together with two million (2,000,000) restricted shares of the Company’s common stock, of which 500,000 shares will be deposited in escrow to satisfy the indemnification obligations of the former shareholders of Ambumed. The number of shares issued to the former shareholders of Ambumed is subject to adjustment if the market price of the common stock for the ten trading days preceding August 1, 2017 is less than $0.25 per share. The Ambumed Stock Purchase Agreement is filed as Exhibit 10.1 to this report.
Comments & Business Outlook
Item 8.01 Other Events.
On June 28, 2016, Event Cardio Group Inc. received notice that the Medical Device Bureau of Health Canada issued a Class 2 medical device license for its NowCardio™ heart monitoring system. The license was issued in the name of Contex International technologies (Canada) Inc., an engineering firm engaged by Event Cardio Group Inc. (“ECGI”) to develop and manufacture the product.
NowCardio is a noninvasive continuous heart monitoring device that is both leadless and wireless, offering the functionality of Holter monitoring, event monitoring, mobile cardiac telemetry and real-time streaming of all ECG data within a single device. The NowCardio heart monitor involves a single-lead ECG patch that allows patients to be remotely monitored for extended periods of time to obtain important data which is continuously transferred to a data center for immediate analysis.
NowCardio incorporates several features designed to improve patient adherence, including: no wired leads; wireless transmitter; automatic arrhythmia detection; patient-triggered alarm; small footprint and 24/7 patient support. It also incorporates several features designed to enhance diagnostic yield, including: advanced automated ECG analysis software; superior noise reduction; extended monitoring up to 32 days; real-time streaming of all ECG data; mobile device support; and custom electrodes without skin prep.
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement.
On June 24, 2016, Event Cardio Group Inc., a Nevada corporation (the “Company”), entered into, and consummated a share exchange with the John Bentivoglio Family Trust and the Frank Sgro Family (2010) Trust, the shareholders of 2375757 Ontario Inc., pursuant to which it acquired all of the outstanding shares of 2375757 Ontario Inc. for a total of 2,812,500 shares of the Company’s common stock. 2375757 Ontario Inc. had previously acquired from John Bentivoglio, the Chairman and Chief Executive Officer of the Company, rights granted to him by the Company in 2014 to market and distribute the Company’s wireless cardiac monitoring device in Canada. Coupled with the acquisition of the rights granted to Nicholas Bozza, the Company has re-acquired all of the rights to market and distribute the Company’s wireless cardiac monitoring device in Canada.
Item 3.02 Unregistered Sales of Equity Securities.
On June 24, 2016, the Company issued 2,812,500 shares of the Company’s common stock to the John Bentivoglio Family Trust and the Frank Sgro Family (2010) Trust, in exchange for all of the outstanding shares of 2375757 Ontario Inc. The shares were issued pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act. The Company did not pay any sales commissions or broker fees in connection with the issuance of the shares. The certificates evidencing the shares were endorsed with a legend restricting their sale or other disposition without compliance with the registration requirements of the Securities Act or an exemption therefrom.
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement.
On June 16, 2016, Event Cardio Group Inc., a Nevada corporation (the “Company”), and certain of its affiliated entities, entered into, and consummated the transactions contemplated by, a Share Purchase and Option Agreement (the “Agreement”) with Nick Bozza, individually and as nominee of the Nick Bozza Family Trust (collectively, “Mr. Bozza”), filed as exhibit 10.1 to this report. Pursuant to the Agreement, Mr. Bozza relinquished his rights under a license granted by the Company in 2014 to market and distribute the Company’s wireless cardiac monitoring device in Canada, exclusively within the Province of Ontario, and to the repayment of certain indebtedness of the Company and its affiliated entities. Each of the parties also released all claims which it may have against each of the other parties to the Agreement. In addition, Mr. Bozza sold to the Company 20,000,000 shares of the Company’s common stock, together with shares of the affiliated entities. In addition, Mr. Bozza granted the Company an option to purchase the remaining 9,812,500 shares of the Company’s common stock owned by him for a purchase price of US$500,000 at any time prior to May 6, 2018. For all the rights acquired, in addition to releasing Mr. Bozza from any claims it may have against him, the Company paid Mr. Bozza CAD $1,025,000, or approximately US $850,000.
Subscription Agreements
On June 16, 2016, the Company sold to Zhenli Xu, a citizen of China, 2,500,000 shares of the Company’s common stock and warrants to purchase an additional 833,333 shares of common stock, for a purchase price of $375,000, pursuant to a subscription agreement filed as exhibit 10.2 to this report. The warrants may be exercised at any time prior to December 31, 2019 at an initial exercise price of $0.25 per share.
On June 15, 2016, the Company sold to entities controlled by each of Ian Genoa and Michael Ho an aggregate of 10,000,000 shares of the Company’s common stock and warrants to purchase an aggregate of 5,000,000 shares of common stock, for a total purchase price of $1,000,000, pursuant to subscription agreements filed as exhibits 10.4 and 10.6, respectively, to this report. The warrants may be exercised at any time prior to May 26, 2019 at an initial exercise price of $0.25 per share.
Item 3.02 Unregistered Sales of Equity Securities.
On June 16, 2016, the Company sold 2,500,000 shares of the Company’s common stock and warrants to purchase an additional 833,333 shares of common stock to Zhenli Xu, a citizen of China, for a purchase price of $375,000. The warrants may be exercised at any time prior to December 31, 2019 at an initial exercise price of $0.25 per share. The shares and warrants were sold pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act. The Company did not pay any sales commissions or broker fees in connection with the issuance of the shares and warrants. The certificates evidencing the shares and the warrants were endorsed with a legend restricting their sale or other disposition without compliance with the registration requirements of the Securities Act or an exemption therefrom.
On June 15, 2016, the Company sold an aggregate of 10,000,000 shares of the Company’s common stock and warrants to purchase an additional 5,000,000 shares of common stock to entities controlled by Ian Genoa and Michael Ho. The warrants may be exercised at any time prior to May 26, 2019 at an initial exercise price of $0.25 per share. The shares and warrants were sold pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act. The Company did not pay any sales commissions or broker fees in connection with the issuance of the shares and warrants. The certificates evidencing the shares and the warrants were endorsed with a legend restricting their sale or other disposition without compliance with the registration requirements of the Securities Act or an exemption therefrom.
Comments & Business Outlook
EVENT CARDIO GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2016 and FEBRUARY 28, 2015
(Unaudited)
Three Months Ended
Six Months Ended
2016
2015
2016
2015
Revenue
$
—
$
—
$
—
$
—
Operating Expenses
General and administrative
368,020
190,832
755,553
303,471
Research and development - related party
284,176
3,416
284,176
138,229
Research and development - other
23,900
66,870
104,110
76,870
Total Operating Expenses
646,096
261,118
1,143,839
518,570
Loss from Operations
(646,096
)
(261,118
)
(1,143,839
)
(518,570
)
Other Expenses
Interest expense - related parties
16,922
20,480
33,912
40,070
Interest expense - other
7,618
—
18,118
—
Amortization - loan costs
56,090
8,707
90,672
17,414
Loss before Income Taxes
(756,726
)
(290,305
)
(1,286,541
)
(576,054
)
Provision for Income Taxes
—
—
—
—
Net Loss
$
(756,726
)
$
(290,305
)
(1,286,541
)
(576,054
)
Other Comprehensive Income
Foreign currency translation adjustment
313,303
92,677
371,787
76,521
Comprehensive Loss
$
(443,423
)
$
(197,628
)
$
(914,754
)
$
(499,533
)
Loss per Share:
Basic and Diluted loss per share
$
(0.006
)
$
(0.003
)
$
(0.01
)
$
(0.006
)
Weighted Average Number of Shares Outstanding
Basic and Diluted
119,328,947
90,301,774
116,556,366
88,683,381
Comments & Business Outlook
Item 2.01 Entry into a Material Definitive Agreement.
Event Cardio Group Inc. has entered into Subscription Agreements with ten individuals who have agreed to pay an aggregate of Cdn$1,500,000 (US$1,082,251) for an aggregate of 16,901,400 million shares of the Company’s common stock and 10,000,000 warrants to purchase shares of the Company’s common stock. The Warrants are exercisable until February 28, 2019, at an exercise price of US$0.15 per share. The Subscription Agreements provide for monthly payments to be made to the Company in accordance with a schedule attached to the Subscription Agreements and, to date, the investors have remitted an aggregate of Cdn$335,000 (US$241,702) to the Company. The form of Subscription Agreements and Warrants have been filed as Exhibits to this report.
The Company anticipates that the majority of the proceeds received from the investors will be used to finalize the development of its heart monitor and activities necessary to finalize and submit the application for approval to HealthCare Canada and a 510(k) application to the United States FDA. The Company anticipates that it will require additional investments to commence commercial distribution of its heart monitor and the software to be used to process information received from patients wearing the heart monitor.
As a condition to the subscription by the investors, 2399371 Ontario Inc., which inclusive of accrued interest is due Cdn$960,300 (US$692,857) from the Company, agreed to extend the due date of all amounts owed until January 31, 2018. 23999371 Ontario Inc. and the Company entered into a 12% Convertible Promissory Note in substitution for the Notes currently evidencing the amounts due the lender. Further, in the Convertible Promissory Note 2399371 Ontario Inc. waived its right to receive any of the proceeds from the amounts to be received from the current investors and from any future issuances of equity or debt made by the Company. In consideration of the concessions made by 2399371 Ontario Inc., the Company agreed that it would have the right to convert the principal amounts due and all interest accrued thereon into shares of common stock of the Company at an initial conversion price of Cdn$0.0873 per share and issued to it a warrant to purchase 3,000,000 shares of the Company’s common stock exercisable until February 28, 2019, at a price of US$0.01 per share. A copy of the 12% Convertible Promissory Note and warrant have been filed as exhibits to this report.
As an additional condition to the investment by the ten investors, John Bentivoglio, currently the sole director of the Company, agreed to amend his Employment Agreement and to appoint additional directors to the Company’s Board in consultation with Frank Sgro and Gino Alberelli, the representatives of the lender and ten investors, respectively. It is anticipated that the additional directors will only begin to serve at such time as the Company has obtained directors’ and officers’ insurance in amounts acceptable to the new directors.
Mr. Bentivoglio’s Employment Agreement will be revised to provide for a term of 2 years commencing February 1, 2016. His salary for the first year will be US$100,000 and for the second year will be determined no later than the end of January 2017 in consultation with the Board of Directors of the Company. In addition, Mr. Bentivoglio will be entitled to receive a bonus of $225,000 when the Company achieves profitable operations. The bonus will be paid by remitting to Mr. Bentivoglio 25% of the Company’s profits in excess of $200,000 until the bonus has been satisfied. If the Company is sold before the bonus has been paid in full, Mr. Bentivoglio will be paid such amount out of the proceeds of the sale or, in the event of a stock sale, out of the Company’s cash on hand. If Mr. Bentivoglio leaves the employ of the Company before the bonus is paid in full, it will be paid at such time as the conditions to payment are met, provided he is then not competing with the Company. The revisions to Mr. Bentivoglio’s Employment Agreement are currently being documented and the amendment will be filed as an Exhibit to an amendment to this Report.
As an inducement to Mr. Bentivoglio to amend his employment agreement the Company issued to him a Warrant to purchase 3,000,000 shares of the Company’s common stock exercisable until February 28, 2019, at a price of $.01 per share. In addition, for consultation services previously rendered to the Company and his agreement to continue to consult with the Company, the Company has agreed to issue Warrants to purchase 2,000,000 shares of the Company’s common stock exercisable until February 28, 2019 at a price of $0.01 per share to Mr. Gino Alberelli. As an inducement to future efforts on behalf of the Company, the Company has agreed to issue Warrants to purchase 2,000,000 shares of the Company’s common stock exercisable until February 28, 2019 at a price of $0.01 per share to each of Richard Smith and Ricardo Rodriguez, engineers at Contex Engineering, which has been developing the Company’s hear monitor, and the Company’s counsel, except that the Warrants issued to counsel are exercisable at US$0.03 per share.
Comments & Business Outlook
EVENT CARDIO GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
(Unaudited)
2015
2014
Revenue
$
—
$
—
Operating Expenses
General and administrative
387,533
112,639
Research and development - related party
—
134,813
Research and development - other
80,210
10,000
Total Operating Expenses
467,743
257,452
Loss from Operations
(467,743
)
(257,452
)
Other Expenses
Interest expense - related parties
16,990
19,590
Interest expense - other
10,500
—
Amortization - loan costs
34,582
8,707
Loss before Income Taxes
(529,815
)
(285,749
)
Provision for Income Taxes
—
—
Net Loss
$
(529,815
)
$
(285,749
)
Other Comprehensive Income
Foreign currency translation adjustment
58,484
(16,156
)
Comprehensive Loss
$
(471,331
)
$
(301,905
)
Loss per Share:
Basic and Diluted loss per share
$
(0.005
)
$
(0.004
)
Weighted Average Number of Shares Outstanding Basic and Diluted
113,783,783
80,871,696
Management Discussion and Analysis
Our loss from operations for the three months ended November 30, 2015 was $467,743 compared to a loss from operations of $257,452 for the three months ended November 30, 2014. General and administrative expenses were $387,533 for the three months ended November 30, 2015, compared to $112,639 for the three months ended November 30, 2014, an increase of $274,894. This increase is predominately due to increased expenses related to efforts to commence our operations, including the accrual of salary due our President, expenditures related to our efforts to raise funds and introduce our products to prospective distributors and licensees, and obtain regulatory approval from Health Canada.
Investor Alert
Item 8.01 Other Events.
Comments & Business Outlook
EVENT CARDIO GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Year ended August 31,
Year ended August 31,
Revenue
$
—
$
—
Operating Expenses
General and administrative
1,185,356
122,421
Research and development - related party
952,188
41,756
Research and development - other
270,633
—
Total Operating Expenses
2,408,177
164,177
Loss from Operations
(2,408,177
)
(164,177
)
Other Expenses
Interest expense - related parties
71,104
—
Interest expense - other
14,000
—
Impairment of goodwill
—
181,297
Loss before Income Taxes
(2,493,281
)
(345,474
)
Provision for Income Taxes
—
—
Net Loss
(2,493,281
)
(345,474
)
Net loss attributable to non-controlling interests
—
12,940
Net loss attributable to Event Cardio Group Inc. stockholders
$
(2,493,281
)
$
(332,534
)
Other Comprehensive Income
Foreign currency translation adjustment
98,433
3,102
Comprehensive Loss
$
(2,394,848
)
$
(342,372
)
Comprehensive loss attributable to non-controlling interests
—
—
Comprehensive loss attributable to Event Cardio Group Inc. stockholders
$
(2,394,848
)
$
(342,372
)
Loss per Share:
Basic and Diluted loss per share
$
(0.03
)
$
(0.00
)
Weighted Average Number of Shares Outstanding Basic and Diluted
95,254,771
79,500,000
Management Discussion and Analysis
We have been in the developmental stage since inception. Since inception, our efforts have been principally devoted to designing and developing a wireless cordless cardio monitor and a device intended to detect breast disease. From inception to August 31, 2015, the Company has sustained losses and has an accumulated deficit of $2,980,587.
Our loss from operations for the year ended August 31, 2015 (“2015 Fiscal Year”) was $2,408,177, compared to a loss of $164,177 for the year ended August 31, 2014 (“2014 Fiscal Year”). General and administrative expenses were $1,185,356 for the 2015 Fiscal Year, compared to $122,421 for the 2014 Fiscal Year, an increase of $1,062,935. This increase is predominately due to the fact that we have had no revenues and incurred increased expenses related to the start-up of our business, the acquisition of the license from Life Medical and expenses related to operating as a public company.
Comments & Business Outlook
Item 8.01 Other Events.
Completion of NowCardio Field Audit
On November 26 and 27, 2015, Contex International Technologies (Canada) Inc., the engineering firm engaged by Event Cardio Group, Inc., to develop its NowCardio® heart monitor, completed a Stage 2 Audit, last of a series of audits, conducted by the registrar BSI Group Canada Inc. No non-conformances were noted in the audit, and the Company anticipates that Contex will receive ISO 9001 and ISO 13485/CMDCAS Certificates in the coming weeks. These certificates are required to apply to Health Canada for certification of the NowCardio® System as a Class II Medical Device, and furthermore, to license manufacturing and distribution within Canada. In addition to obtaining the ISO/CMDCAS Certificates, Contex must also submit the NowCardio® device to an outside lab for regulatory testing. NowCardio® has already passed interim testing of development prototypes at the lab.
The Company expects that Contex will receive the ISO/CMDCAS Certificates by the end of the year at which time it will make the submission to Health Canada. Although there can be no assurances, the Company currently anticipates that it will receive the necessary approvals and be authorized to sell NowCardio® in Canada in early February 2016.
On November 25, 2015, the Company received a notice from Medpac Asia Pacific Pty Ltd. alleging that the Company was in default of representations and covenants contained in the Subscription Agreement dated April 27, 2015, whereby Medpac purchased the Company’s $500,000 Convertible Note. Specifically, the notice alleges that the Company did not have the authority to grant sublicenses with respect to certain territories as to which Medpac was to acquire rights and that the Company has failed to pay to the engineers engaged to develop NowCardio® and a production line for Breastcare® the amounts required by the Subscription Agreement. The notice requested payment of the monies due on December 30, 2015.
The Company believes that it had the necessary authority to grant the rights intended to be granted to Medpac and that it has made the required payments to its engineering firms. Consequently, there is no basis for the allegation that it is in default of its obligations to Medpac. The Company is currently in discussion with Medpac to resolve these issues but, if they are not satisfactorily resolved, intends to contest them vigorously.
On November 30, 2015, the Company received a notice from Life Medical Technologies, Inc., alleging that it is in default of its obligations under the License Agreement between the Company and Life Medical. Specifically, Life Medical alleges that the $500,000 received from Medpac in consideration of the Convertible Promissory Note issued to Medpac in April 2015 constitutes an advance royalty and that a portion of the funds were to be paid to Life Medical. In addition, Life Medical alleges that the Company or its licensee has failed to expend the requisite amounts necessary to maintain exclusivity in certain of the countries which are the subject of the agreements between the Company and Medpac and therefore, the Company is no longer entitled to retain these territories and is obligated to pay Life Medical amounts provided for in the License between Life Medical and the Company.
The Company believes Life Medical’s claim regarding the monies received from Medpac has no merit and that, among other things, it is entitled to offset against any amounts that may be due Life Medical amounts that it has paid to creditors of Life Medical. Further, the Company believes that it and Medpac have paid the amounts necessary to maintain the rights to distribute BreastCare® in Australia and that, among other reasons, the failure of the parties to due to develop a manufacturing line to produce the BreastCare® device has extended the Company’s and Medpac’s obligations to expend funds in furtherance of the marketing of the device in Australia. If Life Medical pursues its claims, the Company will defend them vigorously and pursue any counterclaims it may have against Life Medical for actions which it believes were intentionally intended to interfere with the Company’s attempts to raise the financing necessary to advance its products.
Julie Singleton
The Company had previously announced that Julie Singleton, an investor in MedPac, had agreed to serve as the CEO of its BreatCare Division and as a member of its Board of Directors. In light of the current dispute between the Company and Medpac, Ms. Singleton will not be serving in either of such positions.
Deal Flow
Item 3.02 Sale of Unregistered Securities.
The issuance and sale of the shares of common stock and warrants to the two investors located within the United States were exempt from the registration requirements of the Securities Act of 1933 under Rule 506 of Regulation D. Each of the investors is an accredited investor within the meaning of Rule 501(a) of Regulation D. The balance of the investors were not “U.S. Persons” as defined in Regulation S promulgated under the Securities Act. The sales to such persons were made in “Offshore Transactions” and were exempt from the registration requirements of the Securities Act pursuant to Regulation S. The Company agreed to issue to MedPac Asia Pacific Pty. Ltd 320,000 shares of its common stock for coordinating the sales to the Australian investors. A legend restricting the sale, transfer or other disposition of the securities issued to the investors and Medpac other than pursuant to registration under the Securities Act or an exemption therefrom was imprinted on the certificates evidencing the securities.
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement.
Pursuant to a Loan Agreement dated as of the 20th day of May, 2014 among 8401144 Canada Inc. formerly known as Event Cardio Group Inc. (“former ECG”), 2340960 Ontario Inc., an Ontario corporation which had been the parent of the former ECG (the “Borrower”), as borrower, Taunton Ravenscroft Inc. (“TR”), Gianfranco Bentivoglio (“JB”) and Nicholas D. Bozza (“NB” and collectively with TR and JB, the “Controlling Shareholders”), as guarantors, and 2399371 Ontario Inc., an Ontario corporation (the “Lender”), as lender (the “Loan Agreement”), the Borrower issued its promissory note dated May 20, 2014, in the original principal amount of Cdn$583,000 to Lender (the “Original Note”) to evidence the loan in such amount (the “ Original Loan”).
In connection with a share exchange whereby the registrant, Event Cardio Group, Inc., a Nevada corporation (the “Company”), acquired all of the outstanding shares of the Borrower (the “Share Exchange”), the Company agreed to guaranty the Borrower’s obligations under the Loan Agreement and pledge the shares of the Borrower that the Company acquired in the Share Exchange to Lender as security for the Company’s guaranty of the Borrower’s obligations with respect to the Loan. The guaranty is secured by a lien on all of the Company’s assets. In addition, the Controlling Stockholders guaranteed the Borrower’s obligations under the Loan Agreement with recourse exclusively to the shares of the Company’s common stock that they acquired in the Share Exchange.
On August 19, 2015, the Company and the Lender confirmed their agreement to extend the maturity date of the Original Note to June 1, 2016 and the Lender has agreed to lend an additional Cdn$63,855 (the “Additional Loan”) to the Borrower. Interest on the Original Note and the promissory note of the Company in the principal amount of Cdn$63,855 evidencing its obligation to repay the Additional Loan (the “New Note”) bear interest at the rate of 12% per annum compounded monthly until paid in full. The maturity date of the New Note is also June 1, 2016.
Deal Flow
Item 3.02 Sale of Unregistered Securities.
The Company has entered into Subscription Agreements with four investors whereby it received an aggregate of $110,000. The investors include affiliates of two of its principal shareholders, a Partner of counsel to the Company and a non-affiliated shareholder who previously invested $100,000 in the Company. In consideration of an investment of $20,000, each of the affiliated shareholders and the Company’s counsel received 400,000 shares of the Company’s common stock and warrants to purchase 400,000 shares of common stock, exercisable for a period of four years at ten cents ($0.10) per share. For his investment of $50,000 the unrelated shareholder received 1,000,000 shares of common stock and warrants to purchase 1,000,000 shares of common stock, exercisable for a period of four years at ten cents ($0.10) per share
The Company will pay approximately $80,000 of the $110,000 gross proceeds received from the investments described above to Contex Engineering to further the development of its Now Cardio device.
Comments & Business Outlook
EVENT CARDIO GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE NINE MONTHS ENDED MAY 31, 2015 and 2014
(Unaudited)
Three Months Ended
Nine Months Ended
2015
2014
2015
2014
Revenue
$
—
$
—
$
—
$
—
Operating Expenses
General and administrative
387,444
121,629
708,330
133,003
Research and development
241,660
—
456,759
—
Total Operating Expenses
629,104
121,629
1,165,089
133,003
Loss from Operations
(629,104
)
(121,629
)
(1,165,089
)
(133,003
)
Other Expenses
Interest expense - related parties
15,749
—
55,818
—
Interest expense - other
3,500
—
3,500
—
Net Loss
(648,353
)
(121,629
)
(1,224,407
)
(133,003
)
Other Comprehensive Income
Foreign currency translation adjustment
(13,694
)
—
62,827
—
Total Comprehensive Loss
$
(662,047
)
$
(121,629
)
$
(1,161,580
)
$
(133,003
)
Loss per Share - Basic and Diluted
$
(0.007
)
$
(0.002
)
$
(0.013
)
$
(0.002
)
Weighted Average Shares - Basic and Diluted
98,720,647
79,500,000
92,065,904
79,500,000
Management Discussion and Analysis
We have been in the developmental stage since inception. Since inception, our efforts have been principally devoted to designing and developing a wireless cordless cardio monitor and a device intended to detect breast disease. From inception to May 31, 2015, the Company has sustained losses and has an accumulated deficit of $1.701,713.
Our loss from operations for the nine months ended May 31, 2015 was $1,165,089 compared to a loss of $133,003 for the nine months ended May 31, 2014. General and administrative expenses were $708,330 for the nine months ended May 31, 2015, compared to $133,003 for the nine months ended May 31, 2014, an increase of $575,317. This increase is predominately due to increased expenses related to the start-up of our business, the acquisition of the license from Life Medical and expenses related to operating as a public company.
Comments & Business Outlook
EVENT CARDIO GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2015 and 2014
(Unaudited)
Three Months Ended
Six Months Ended
2015
2014
2015
2014
Revenue
$
—
$
—
$
—
$
—
Operating Expenses
General and administrative
214,227
5,813
320,886
11,374
Research and development
55,599
—
215,099
—
Total Operating Expenses
269,826
5,813
535,985
11,374
Loss from Operations
(269,826
)
(5,813
)
(535,985
)
(11,374
)
Other Expense
Interest expense - related parties
20,479
—
40,069
—
Net Loss
(290,305
)
(5,813
)
(576,054
)
(11,374
)
Other Comprehensive Income
Foreign currency translation adjustment
92,677
—
76,521
—
Total Comprehensive Loss
$
(197,628
)
$
(5,813
)
$
(499,533
)
$
(11,374
)
Loss per Share - Basic and Diluted
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Weighted Average Shares - Basic and Diluted
90,301,774
79,500,000
88,683,381
79,500,000
Management Discussion and Analysis
Our loss from operations for the six months ended February 28, 2015 was $535,985 compared to a loss of $11,374 for the six months ended February 28, 2014. General and administrative expenses were $320,886 for the six months ended February 28, 2015, compared to $11,374 for the six months ended February 28, 2014, an increase of $309,512. This increase is predominately due to increased expenses related to the start-up of our business, the acquisition of the license from Life Medical and expenses related operating as a public company.
Also, we incurred research and development expenses of $215,099 during the six months ended February 28, 2015 as compared to $0 during the comparable period ended February 28, 2014, related to the development of our cardiac monitoring device.
Total comprehensive loss for the six months ended February 28, 2015 was $499,533 as compared to $11,374 for the period six months ended February 28, 2015. The increase in our loss resulted from the general and administrative and research development expenses described above which began in earnest as a result of the reverse merger and the efforts to develop our heart monitor.
Deal Flow
Item 7.01 Regulation FD Disclosure.
Deal Flow
Item 3.02 Sale of Unregistered Securities.
Comments & Business Outlook
Item 1.01 Entry into a Material Definitive Agreement.
On January 29, 2015, the Company entered into a subscription agreement for the sale of 800,000 shares of its common to Louis P. Solferino for a purchase price of $72,000, or $0.09 per share. See Item 3.02 below for additional information concerning the transaction, which information is incorporated herein by reference. The subscription agreement with Mr. Solferino is filed as Exhibit 10.2 to this report.
Item 3.02 Sale of Unregistered Securities.
On February 2, 2015 the Company issued and sold 800,000 shares of its common to Louis P. Solferino for a purchase price of $72,000, or $0.09 per share pursuant to a Subscription Agreement with Mr. Solferino. Mr. Solferino represented that he is an accredited investor within the meaning of Rule 501 of Regulation D. The issuance and sale of the shares to Mr. Solferino was exempt from the registration requirements of the Securities Act under Rule 506 of Regulation D of the Securities Act. The certificate evidencing the shares issued to Mr. Solferino was endorsed with restrictive legend. No broker-dealer or other person received a commission in connection with the sale.
Comments & Business Outlook
EVENT CARDIO GROUP INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2014 and 2013
(Unaudited)
2014
2013
Revenue
$
—
$
—
Operating Expenses
General and administrative
106,659
5,561
Research and development
159,500
—
Total Operating Expenses
266,159
5,561
Loss from Operations
(266,159
)
(5,561
)
Other Expense
Interest expense - related parties
19,590
—
Net Loss
(285,749
)
(5,561
)
Other Comprehensive Income
Foreign currency translation adjustment
(16,156
)
—
Total Comprehensive Loss
$
(301,905
)
$
(5,561
)
Loss per Share - Basic and Diluted
$
(0.00
)
$
(0.00
)
Weighted Average Shares - Basic and Diluted
80,871,696
79,500,000
Management Discussion and Analysis
We have been in the developmental stage since inception. Since inception, our efforts have been principally devoted to designing and developing a wireless cordless cardio monitor. From inception to November 30, 2014, the Company has sustained losses and has an accumulated deficit of $763,055.
Our loss from operations for the three months ended November 30, 2014 was $ 266,159 compared to a loss of $5,561 for the three months ended November 30, 2013. General and administrative expenses were $106,659 for the three-months ended November 30, 2014, compared to $5,561 for the three-months ended November 30, 2013, an increase of $101,098. This increase in general is predominately due to expenses related to the start-up of our business and expenses related to our expenses as a public company.
Also, we incurred research and development expenses of $159,500 during the period ended November 30, 2014 as compared to $0 during the comparable period in 2013, related to the development of our cardiac monitoring device.
Total comprehensive loss for the period ended November 30, 2014 was $301,905 as compared to $5,561 for the period ended November 30, 2013, an increase of $296,344, $260,598 of which resulted from the general and administrative and research development expenses described above.
Auditor trail
ITEM 4.01 CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.
The report of M&K on our financial statements for our fiscal years ended September 30, 2013 and 2014 indicated conditions which raised substantial doubt about our ability to continue as a going concern. Except as set forth in the preceding sentence, the report of M&K on our financial statements for its fiscal years ended September 30, 2013 and 2014 did not contain an adverse opinion or a disclaimer of opinion nor was it qualified or modified as to uncertainty, audit scope, or accounting principles. During our fiscal years ended September 30, 2013 and 2014, and the subsequent interim period through the dismissal date, there were no disagreements with M&K on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of M&K would have caused M&K to make reference to the subject matter of the disagreements in connection with its report on the financial statements for such years or subsequent interim periods and there were no reportable events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
The Company requested that M&K furnish it with a letter addressed to the Securities and Exchange Commission (“SEC”) stating whether or not it agrees with the Company’s statements in this Item 4.01. A copy of the letter furnished by M&K in response to that request, dated January 14, 2015, is filed as Exhibit 16.1 to this Form 8-K.
Comments & Business Outlook
EVENT CARDIO GROUP INC.
(f.k.a. SUNRISE HOLDINGS LIMITED)
(a Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2013
FROM OCTOBER 25, 2005 (INCEPTION) THROUGH SEPTEMBER 30, 2014
October 25, 2005
Year Ended
(Inception) to
September 30,
September 30,
2014
2013
2014
EXPENSES:
Exploration costs
$
—
$
—
$
37,956
General and administrative expenses
32,967
10,573
275,096
TOTAL OPERATING EXPENSES
32,967
10,573
313,052
NET OPERATING LOSS
$
(32,967
)
$
(10,573
)
$
(313,052
)
OTHER INCOME (EXPENSE)
Interest income
—
—
64,960
Gain on extinguishment of debt
—
—
5,669
Interest expense
(1,287
)
—
(9,372
)
TOTAL OTHER INCOME (EXPENSE)
(1,287
)
—
61,257
NET INCOME (LOSS)
$
(34,254
)
$
(10,573
)
$
(251,795
)
INCOME (LOSS) PER SHARE:
Basic and diluted
$
(0.00
)
$
(0.00
)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted
6,882,273
6,882,273
The accompanying notes are an integral part of these financial statements
Management Discussoin and Analysis
General and administrative expenses increased 211.8% to $32,967 during the year ended September 30, 2014 as compared to $10,573 for the comparable period in 2013. This increase was mainly due to an increase in professional fees.
For the year ended September 30, 2014 compared to the year ended September 30, 2013, we had a net loss of $34,254 compared to a net loss of $10,573, respectively. This 224% increase in net loss was primarily due to an increase in professional fees.
Reverse Merger Activity
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On September 8, 2014, we entered into a share exchange agreement (the “Exchange Agreement”) which we consummated on November 14, 2014, pursuant to which we acquired all of the issued and outstanding capital stock of 2340960 Ontario Inc. (“ECG”) from ECG’s stockholders, The Nick Bozza Family Trust, The John Bentivoglio Family Trust and The Sgro (2010) Family Trust. In exchange for all of the outstanding capital stock of ECG, we issued to ECG’s stockholders an aggregate of 79,500,000 shares of our Common Stock (the “Share Exchange”). As a result of the consummation of the Share Exchange, (i) ECG became our wholly owned subsidiary and (ii) the ECG’s former stockholders own an aggregate of 79,500,000 shares, constituting approximately 92.7% of the cumulative voting power, of our common stock.
Mr. John Bentivoglio, our sole director and chief executive officer is one of three trustees of The John Bentivoglio Family Trust, the beneficiaries of which are members of his family. In the future, we expect that Mr. Nick Bozza, one of the three trustees of The Nick Bozza Family Trust, the beneficiaries of which are members of his family, will be appointed to our Board of Directors and serve as one of our executive officers.
Deal Flow
ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES.
On November 7, 2014, the Company sold 700,000 shares of its common stock to an accredited investor for an aggregate purchase price of $100,000.
The securities issued in the foregoing transaction were exempt from registration under Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder as a transaction by an issuer not involving a public offering. The Company placed legends on the certificate stating that the securities were not registered under the Securities Act and set forth the restrictions on its transferability and sale. No general advertising or solicitation was used in selling the securities. No commissions or underwriting fees were paid to any placement agents in connection with the sale or issuances of the securities.
ITEM 8.01 Other Events.
On November 7, 2014, the Company amended its Certificate of Incorporation, as previously amended, to change its name to Event Cardio Group Inc.
As previously reported in the Company’s Definitive Information Statement filed with the Securities and Exchange Commission on October 15, 2014, the amendment listed above was approved by the holder of the majority of the voting power of the Company’s voting stock on October 2, 2014.
This corporate action took effect on the OTCQB at the open of business on 11/07/14. The Company’s new ticker symbol for its common stock is “ECGI”.
Comments & Business Outlook
NEW YORK, NY--(Marketwired - Oct 30, 2014) - Sunrise Holdings, Limited, a Nevada company in the medical device business (OTCQB : SUIP ), has entered into a licensing agreement, via its subsidiary Efil Sub of ECG Inc., with Life Medical Technologies, Inc. with respect to Life Medical's "BreastCare DTS� device" and certain other derivative technologies. The License Agreement grants Efil the exclusive right to distribute the BreastCare DTS� in the United States, Canada and certain countries in Asia, including China. The Agreement calls for payment by Efil to Life Medical of royalties of 5% on net sales by Efil and requires payment by Efil of minimum annual royalties of $100,000 in 2015 and $200,000 each year thereafter. The Agreement also calls for payment by Life Medical to Efil of royalites of 5% on net sales by Life Medical.
The BreastCare DTS� is a patented, non-invasive and FDA-cleared as an adjunct to mammography and other established procedures for the detection of breast disease, including breast cancer. DTS stands for "Differential Temperature Sensor," indicating the ability of the device to compare temperatures in one area of the breast with others in the same breast and the other breast.
John Bentivoglio, President and CEO of Sunrise Holdings, said, "This agreement brings a marvelous technology into our growing stable of medical devices, and it takes us into the very important field of breast cancer detection. Early detection is crucial to positive outcomes, and detection methods, while effective, can be improved. The BreastCare DTS� device represents such an improvement, and we believe that the potential market for it is immense."
Bentivoglio added, "The incidence of breast cancer is highest in the developed world, but by 2020, some estimates have as many as 70 percent of all cases will be found in the developing economies of the world. The BreastCare DTS� device is well-suited to addressing this trend. As these countries increase their incomes, as they develop, they will be able to spend more on medical care than they do now. This means that demand for effective cancer treatments rather than palliative care will rise, but at the same time, the resources will remain limited. A relatively low-cost device that can capture early stage potential breast cancer data which we believe is exactly what the market will need.
"The global Point of Care market in 2011, is in the order of $18.7 billion, up from $10.3 billion in 2005. In the U.S. alone, the combined breast cancer detection/diagnostic market was valued at more than $2.2 billion in 2008, and is expected to continue in a stable growth pattern over the next several years, Analysts have suggested a conservative growth rate of approximately 5.4% year on year."
BreastCare DTS� has received FDA 510K clearance for marketing in the United States and can used by physicians as an adjunct to routine physical examination including palpation, mammography and other established procedures for the detection of breast disease including breast cancer. Clinical studies have been conducted on over 5,000 women in prestigious cancer centers in the U.S., Europe and Latin America, including Memorial Sloan-Kettering in New York and M.D. Anderson in Houston.
The BreastCare DTS� device consists of two mirror image, lightweight and disposable foam pads with three wafer-thin foil sensors on each pad. Each of the three segments on each pad contains 18 rows of heat-sensitive chemical dots. The device is easy to use and requires no electricity or probes.
The test is completely non-invasive. The pads are easily placed on a woman's breasts inside the bra for 15 minutes. The device measures the deep heat energy that is transferred to the surface of the skin. Each heat-sensitive dot is calibrated to record the temperature of the surface of the breast. The dots themselves change color from blue to pink when exposed to specific temperatures. The results are clearly displayed and can be immediately evaluated. The heat-sensitive dots have embedded memory, which allows the results to be read after each test is completed.
Bentivoglio concluded, "We believe that BreastCare DTS� is an exceptional, low-cost Point of Care device that has the potential to save thousands upon thousands of lives. We are focused on bringing it to market by the beginning of 2015, and to that end, we are in final stage negotiations with two engineering firms to begin production in time to meet that deadline. Combined with the Now Cardio� advanced cardiac monitor being developed by Event Cardio Group Inc, a company we intend to acquire shortly, BreastCare DTS� represents a significant step forward for our shareholders as well as for patients."
Deal Flow
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION.
Shortly after entering into the License Agreement the Subsidiary entered into release agreements (the “Releases”) with certain creditors (the “Creditors”) of Life Medical Technologies, Inc. which held judgments against Life Medical in the aggregate amount of approximately $501,000. Pursuant to the Release Agreements, the Subsidiary agreed to pay the Creditors an aggregate of $501,000, of which $125,000 is to be paid in cash and the balance of which is to be satisfied by the issuance of shares of common stock of the Company valued at $376,000. The recipients of shares valued at $70,000 are also to be paid, at the option of the Company, in cash or shares of common stock, an amount equal to the excess, if any, of $70,000 over the value of such shares as of December 12, 2015.
As described more fully in Items 2.03 and 8.01, on October 22 and October 23, 2014, shortly after the receipt of a License Agreement from Life Medical, the Subsidiary of the Company entered into Release Agreements with certain creditors of Life Medical. Pursuant to such Agreements the Subsidiary has agreed to cause the Company to issue to certain creditors shares of common stock of the Company valued at $376,000. Such shares represent a portion of the consideration to be paid to the Creditors for the release of certain judgments they hold against Life Medical which aggregate approximately $501,000. The Company believes that the issuance of the Shares is exempt under Section 4(2) of the Securities Act in that the issuances were the result of individual negotiations with the Creditors and that there are no more than three creditors which will receive the Shares. Further, the certificates to be issued to represent the shares will have affixed thereon a restrictive “Securities Act” legend.
Reverse Merger Activity
Item 1.01 Entry into a Material Definitive Agreement.
COMPANY SHARES TO BE ISSUED AND DELIVERED
The Nick Bozza Family Trust
29,812,500
The John Bentivoglio Family Trust
29,812,500
The Sgro (2010) Family Trust
19,875,000
Mr.John Bentivoglio, our sole director and chief executive officer is one of three trustees of The John Bentivoglio Family Trust, the beneficiaries of which are members of his family. In the future, we expect that Mr. Nick Bozza, one of the three trustees of The Nick Bozza Family Trust, the beneficiaries of which are members of his family, will be appointed to our Board of Directors and serve as one of our executive officers.
ECG is developing a cardiac monitoring solution based on an wireless and leadless advance cardiac monitor which offers the duel functionality of both a holter and event recording monitor simultaneously. Upon completion of the development of its solution, ECG expects its cardiac monitoring solution to incorporate the collection of medical data and its transmission to physicians or to a control center for diagnostic evaluation.
The consummation of the transactions contemplated by the Exchange Agreement is subject to various conditions, the most significant of which is the completion of audited financial statements of ECG for its two most recent completed fiscal years. ECG expects its financial statements to be completed within 30 days. We intend to change our name and ticker symbol following the consummation of the Exchange Agreement to better reflect our future line of business.
Comments & Business Outlook
SUNRISE HOLDINGS LIMITED
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2014 AND 2013
FROM OCTOBER 25, 2005 (INCEPTION) THROUGH JUNE 30, 2014
(UNAUDITED)
October 25, 2005
Three Months Ended
Nine Months Ended
(Inception) to
June 30,
June 30,
June 30,
2014
2013
2014
2013
2014
EXPENSES:
Exploration costs
$
—
$
—
$
—
$
—
$
37,956
General and administrative expenses
2,619
2,427
10,608
9,354
252,737
TOTAL OPERATING EXPENSES
2,619
2,427
10,608
9,354
290,693
NET OPERATING LOSS
$
(2,619
)
$
(2,427
)
$
(10,608
)
$
(9,354
)
$
(290,693
)
OTHER INCOME (EXPENSE)
Interest income
—
—
—
—
64,960
Gain on extinguishment of debt
—
—
—
—
5,669
Interest expense
—
—
—
—
(8,085
)
TOTAL OTHER INCOME (EXPENSE)
—
—
—
—
62,544
NET LOSS
$
(2,619
)
$
(2,427
)
$
(10,608
)
$
(9,354
)
$
(228,149
)
LOSS PER SHARE:
Basic and diluted
$
(0.000
)
$
(0.000
)
$
(0.002
)
$
(0.001
)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted
6,882,273
6,882,273
6,882,273
6,882,273
Management Discussion and Analysis
General and administrative expenses increased 7.90% to $2,619 during the three month period ended June 30, 2014 as compared to $2,427 for the comparable period in 2013. This increase was mainly due to an increase in stock transfer agent fees.
For the three month period ended June 30, 2014 compared to the three month period ended June 30, 2013, Sunrise had a net loss of $2,619 compared to a net loss of $2,427, respectively. This 7.90% increase in net income was primarily due to an increase in stock transfer agent fees.
Comments & Business Outlook
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2013
o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
EXCHANGE ACT
Commission File Number: 0-52518
SUNRISE HOLDINGS LIMITED
Exact name of small business issuer as specified in its charter
Nevada
20 - 8051714
(State or other jurisdiction of incorporation or organization)
I.R.S. Employer Identification No.
1108 W. Valley Blvd, STE 6-399
Alhambra, CA 91803 United States
(Address of principal executive offices)
(626) 407-2618
Issuer's telephone number
Check whether the registrant (1) filed all documents and reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes x No o
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes o No o
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 6,882,273 shares as of January 17, 2014.
Transitional Small Business Disclosure Format (Check one): Yes o No x
Liquidity Requirements
Management is
currently looking for more capital to complete our corporate objectives. In addition, we may engage in joint activities with other companies. Sunrise cannot predict the extent to which its liquidity and capital resources will be diminished prior to the consummation of a business acquisition or whether its capital will be further depleted by its operating losses. Sunrise has some discussions concerning potential business cooperation or combination with other companies but no final agreement has been reached yet.
