NewCardio Announces Financial Results for its 2011 Third Quarter

PRINCETON, N.J., Nov. 15, 2011 /PRNewswire/ -- NewCardio, Inc., (OTC BB: NWCI) a cardiac diagnostic technology provider, today announced financial results for the third quarter ended September 30, 2011. More details on the financial results are available in the Company's Quarterly Report on Form 10-Q, filed yesterday with the Securities and Exchange Commission.

Highlights

QTinno® was selected by a top 5 global pharmaceutical company for an upcoming Phase I drug safety study. Fully automated ECG analysis, empowered by QTinno, will be delivered by the ECG core lab of a top 3 Clinical Research Organization under the terms of an existing Master Services Agreement with NewCardio.
NewCardio's strategic partner, Clinilabs, will utilize QTinno to conduct a Phase I trial of an investigational new drug under development for a central nervous system indication. The assessment of cardiac safety will be one important aspect of the trial.

Financial Results

Revenues were $10,000 for the three months ended September 30, 2011 compared to $99,000 in the three months ended September 30, 2010. There were no new studies in this latest quarter; 2010 represented 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 two such studies. Gross profit (loss) was $(18,000) for the third quarter of 2011 compared to $53,000 for the third quarter of 2010. Operating expenses decreased 21% to $1,541,000 for the three months ended September 30, 2011, a decrease of $405,000 from $1,946,000 in 2010. The change is made up of both cash and non-cash (stock-based compensation and depreciation) expense. Non-cash expense totaled $966,000 in the third quarter of 2011, down $83,000 from $1,049,000 in the third quarter of 2010. Spending for the three months ended September 30, 2011 of $575,000 decreased $322,000 from $897,000 in the same period last year. This spending is primarily for human resources, both employees and consultants, and related travel expenses.

As of September 30, 2011, NewCardio had $13,000 in cash and the Company currently has no commitments for any additional capital beyond $100,000 that was received in October 2011 from a shareholder that invested in NewCardio's Series D Preferred stock last year. Management continues to work on an immediate source of financing, with this promissory note serving as a bridge in this effort. Management believes the Company requires substantial additional financing. At this time, the lack of funding is adversely impacting the Company's ability to continue operations until such time, if ever; we were to obtain additional financing. The Company continues to work with its creditors and larger shareholders to explore sources of financing to meet the Company's working capital requirements. However, there is no guarantee that such financing will become available or, if it does, that it will become available on acceptable terms, or that any additional capital we may obtain will be sufficient to meet our long-term needs. If additional capital is not available or is not available on acceptable terms, we will have to fully curtail our operations.

Management believes that current sales slowdown is primarily due to market factors and that QTinno's product features effectively meet, if not exceed, the requirements for performing cardiac safety testing for compounds in clinical development.

Shareholder Update Conference Call

NewCardio management has scheduled a conference call for Tuesday November 15, 2011, at 9 a.m. Eastern Time. To access the call dial 1-877-941-4775, or 1-480-629-9761 for international callers, and reference "NewCardio, Inc. Third Quarter 2011 Financial Results Conference Call." A replay will be available for one week following the call by dialing 1-877-870-5176, or 1-858-384-5517 for international callers; reference pin number 4487430. A live and replay Webcast of the call will be available at http://viavid.net/dce.aspx?sid=00008FFD.

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 3-D 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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Tables follow


NEWCARDIO, INC
CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,	December 31,
	2011	2010
	(unaudited)
ASSETS
Current assets:
Cash	$ 13,064	$ 584,974
Accounts receivable, trade	-	42,905
Prepaid expenses	21,750	32,303
Prepaid commitment fees	-	1,958,654
Total current assets	34,814	2,618,836

Property, plant and equipment, net of accumulated depreciation of $220,349 and $158,950 as of September 30, 2011 and December 31, 2010, respectively	96,561	156,261

Other assets:
Patent costs, net	86,321	55,357
Deposits	22,600	22,600
Total other assets	108,921	77,957

	$ 240,296	$ 2,853,054

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$ 1,256,017	$ 618,413
Unearned revenue	-	1,500
Advances, $138,500 from related parties	256,000	-
Line of credit, $2,200,000 and $1,900,000 to a related party as of September 30, 2011 and December 31, 2010, respectively	3,900,000	3,000,000
Total current liabilities	5,412,017	3,619,913

Warrant derivative liability	344,174	2,141,871
Preferred stock derivative liability	15,634	250,863
Long term liabilities	359,808	2,392,734

Total liabilities	5,771,825	6,012,647

Temporary equity:
Preferred shares subject to liability conversion	-	-

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; 12,116 and 12,250 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively	12	12
Preferred stock Series C, $0.001 par value; 7,000 shares designated; 2,295 shares issued and outstanding as of September 30, 2011 and December 31, 2010	2	2
Preferred stock Series D, $0.001 par value; 1,000 shares designated; 1,000 and 800 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively	1	1
Common stock, $0.001 par value, 500,000,000 shares authorized; 32,590,716 and 30,688,902 shares issued as of September 30, 2011 and December 31, 2010, respectively; 32,528,216 and 30,563,902 shares outstanding as of September 30, 2011 and December 31, 2010, respectively	32,591	30,689
Additional paid in capital	42,490,906	39,236,320
Deficit	(48,055,041)	(42,426,617)
Total stockholders' deficit	(5,531,529)	(3,159,593)

	$ 240,296	$ 2,853,054


NEWCARDIO, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	Three months ended September 30,		Nine months ended September 30,
	2011	2010	2011	2010
Revenue	$ 9,883	$ 99,210	$ 150,511	$ 169,328
Cost of sales	27,461	46,325	125,106	109,632
Gross profit (loss)	(17,578)	52,885	25,405	59,696

Operating expenses:
Selling, general and administrative	962,411	1,185,170	3,267,878	4,732,292
Depreciation	11,752	12,058	35,998	34,027
Research and development	566,350	748,401	1,983,536	2,674,089
Total operating expenses	1,540,513	1,945,629	5,287,412	7,440,408

Net loss from operations	(1,558,091)	(1,892,744)	(5,262,007)	(7,380,712)

Other income (expense)
(Loss) gain on change in fair value of warrant derivative liability and preferred stock derivative liability	(14,313)	97,473	2,069,957	711,706
Amortization of commitment fees	(550,910)	(626,352)	(1,976,412)	(1,407,795)
Other financing costs	(35,685)	(1,655)	(136,123)	(86,655)
Interest, net	(119,600)	(80,360)	(323,839)	(121,473)
Total other income (expense):	(720,508)	(610,894)	(366,417)	(904,217)

Net loss before income taxes	(2,278,599)	(2,503,638)	(5,628,424)	(8,284,929)

Provision for income taxes	-	-	-	-

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$ (2,278,599)	$ (2,503,638)	$ (5,628,424)	$ (8,284,929)

Net (loss) per share-basic and fully diluted	$ (0.07)	$ (0.08)	$ (0.18)	$ (0.29)

Weighted average number of shares-basic and fully diluted	32,571,537	29,520,144	31,853,724	28,126,775