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Delaware		26-4333375
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
12424 Wilshire Boulevard, Suite 745 Los Angeles, California	90025	(310) 820-8100
(Address of principal executive office)	(Zip Code)	(Registrant’s telephone number, Including area code)

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
(Do not check if a smaller reporting company)

 

				PAGE
PART I
Item 1.		Business		3
Item 1A.		Risk Factors		16
Item 1B.		Unresolved Staff Comments		31
Item 2.		Properties		31
Item 3.		Legal Proceedings		31
Item 4.		Mine Safety Disclosures		31
PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		32
Item 6.		Selected Financial Data		32
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Item 7A.		Quantitative and Qualitative Disclosures about Market Risk		37
Item 8.		Financial Statements and Supplementary Data		F-1 – F-25
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosures		38
Item 9A.		Controls and Procedures		38
Item 9B.		Other Information		38
PART III
Item 10.		Directors, Executive Officers and Corporate Governance		39
Item 11.		Executive Compensation		42
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		45
Item 13.		Certain Relationships and Related Transactions, and Director Independence		47
Item 14.		Principal Accounting Fees and Services		49
PART IV
Item 15.		Exhibits, Financial Statement Schedules		50
		Signatures		51

 

 

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Higher quality cardiac signal acquisition  for accurate and more efficient electrophysiology studies;

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Precise, uninterrupted, real time evaluations of electrograms;

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Reliable cardiac recordings to better determine precise ablation targets, strategy and end point of procedures; and

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A portable device that can be fully integrated into existing electrophysiology lab environments.

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Initial system concept validation has been performed in collaboration with physicians at the Texas Cardiac Arrhythmia Institute at St. David’s Medical Center in Austin, Texas in June 2011.  The Texas Cardiac Arrhythmia Institute provided challenging recordings obtained with electrophysiology recording systems presently in use at the institute during various electrophysiology studies. Our technology team successfully imported the data into the PURE EP System software and using proprietary signal processing, the PURE EP System software was able to reduce baseline wander, noise, and artifacts from the data and therefore provide better diagnostic quality signals.

 

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We have established clinical and/or advisory relationships for both technology development and validation studies with physicians and researchers affiliated with the following medical centers: Texas Cardiac Arrhythmia Institute, Austin, TX; Cardiac Arrhythmia Center at the University of California at Los Angeles, Los Angeles, CA; Mount Sinai Medical Center, New York, NY; Beaumont Medical Center, Detroit, MI; University Hospitals Case Medical Center, Cleveland, OH; The Heart Rhythm Institute, University of Oklahoma Health Sciences Center, Oklahoma City, OK; and Mayo Clinic in Rochester, MN.

 

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As part of our pre-clinical trials, physicians affiliated with the Texas Cardiac Arrhythmia Institute, University Hospitals Case Medical Center and Mount Sinai Medical Center provide us with recordings from challenging ablation procedures, mainly for ventricular tachycardia and atrial fibrillation, where the attending electrophysiologists face clinical dilemmas with the recordings obtained by their current recording systems. We believe that the recordings that the PURE EP System software has provided them, which show a reduction in baseline wander, noise, and artifacts, are of higher diagnostic value than the original recordings.

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The Cardiac Arrhythmia Center at the University of California at Los Angeles and Dr. Kalyanam Shivkumar have played a significant role in the initial functional testing of our hardware.  Dr. Shivkumar and his team have enabled us to learn the connectivity of the lab and its devices that pertain to where our PURE EP System will fit in. In June 2013, we commenced our first proof of concept animal study with the assistance of Dr. Shivkumar in order to further test the components of the PURE EP System hardware, as further explained below.

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We are developing a confidence index that will assist electrophysiologists in further differentiating true signals from noise, which may potentially provide guidance in identifying ablation targets.  The confidence index is expected to be an integral part of the software of the PURE EP System, which we believe will significantly facilitate the locating of ablation targets.

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In the second and third quarters of 2013, we performed and finalized testing of our proof of concept unit by initially using an electrocardiogram/intracardiac simulator at our lab, and subsequently by obtaining animal recordings from the animal lab at the University of California at Los Angeles.  As part of the testing, we simultaneously recorded electrocardiogram and intracardiac signals on our proof of concept unit and GE’s CardioLab recording system. An identical signal was applied to the input of both systems and the monitor of our proof of concept unit was positioned next to the monitor of GE’s CardioLab recording system to allow for visual comparison. We believe that our proof of concept unit performed well as compared to GE’s CardioLab recording system, in that the electrocardiogram and intracardiac signals displayed on our proof of concept unit showed less baseline wander, noise and artifacts compared to signals displayed on GE’s CardioLab recording system.  However, because this was a proof of concept test, without any clearly established protocols, we cannot present this data for publication and we do not have any independent verification or peer review of these findings.

 

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In the third quarter of 2013, we analyzed the results of our proof of concept unit to determine the final design of the PURE EP System prototype.  Because the proof of concept unit was designed to verify the capabilities of the main components of the PURE EP System, we established a list of tasks necessary to complete the prototype (which we intend to use for end-user preference studies, animal studies and in-human recordings).  The PURE EP System prototype is presently assembled.

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In the fourth quarter of 2014, we appointed Dr. Samuel J. Asirvatham from Mayo Clinic as a member of our Scientific Advisory Board and initiated plans for animal studies at Mayo Clinic. We expect to perform our initial study there in April 2015.

 

 

 

 

We intend to bring to the electrophysiology market the PURE EP System, an electrocardiogram/intracardiac recorder that will be coupled with an array of software tools intended for electrophysiology studies and procedures ranging from simple diagnostic tests to ablation for the most complex cases of arrhythmias.  We believe that this system will provide unique recording capabilities because we are developing it to allow precise, uninterrupted, real-time evaluations of electrocardiograms and electrograms, and allow electrophysiologists to obtain data that cannot be acquired from present day recorders.

 

 

The PURE EP System prototype is presently assembled and operational.

 

 

	●	GE’s CardioLab Recording System was developed in the early 1990s by Prucka Engineering and was acquired by GE in 1999.
	●	Bard’s LabSystem PRO EP Recording System was originally designed in the late 1980s. CR Bard’s electrophysiology business was acquired by Boston Scientific in 2013.

	●	Siemens developed the Axiom Sensis XP in 2002.
	●	St. Jude Medical’s EP-WorkMate Recording System was acquired from EP MedSystems in 2008, which had received approval for the product from the U.S. Food and Drug Administration in 2003.

 

	●	Product design and development;
	●	Product testing;

	●	Product manufacturing;
	●	Product labeling and packaging;

	●	Product handling, storage, and installation;
	●	Pre-market clearance or approval;

	●	Advertising and promotion; and
	●	Product sales, distribution, and servicing.

 

	●	Quality System regulation, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures during the manufacturing process;
	●	Establishment Registration, which requires establishments involved in the production and distribution of medical devices intended for commercial distribution in the U.S. to register with the U.S. Food and Drug Administration;

	●	Medical Device Listing, which requires manufacturers to list the devices they have in commercial distribution with the U.S. Food and Drug Administration;
	●	Labeling regulations, which prohibit “misbranded” devices from entering the market, as well as prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and

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Medical Device Reporting regulations, which require that manufacturers report to the U.S. Food and Drug Administration if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur.

	●	Fines, injunctions, and civil penalties;
	●	Mandatory recall or seizure of our products;

	●	Administrative detention or banning of our products;
	●	Operating restrictions, partial suspension or total shutdown of production;

	●	Refusing our request for 510(k) clearance or pre-market approval of new product versions;
	●	Revocation of 510(k) clearance or pre-market approvals previously granted; and

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Criminal penalties.

 

 

 

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successful completion of the preclinical and clinical development of our products;

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obtaining necessary regulatory approvals from the U.S. Food and Drug Administration or other regulatory authorities;

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establishing manufacturing, sales, and marketing arrangements, either alone or with third parties; and

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raising sufficient funds to finance our activities.

 

 

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the U.S. Food and Drug Administration may not approve a clinical trial protocol or a clinical trial, or may place a clinical trial on hold;

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subjects may not enroll in clinical trials at the rate we expect or we may not follow up on subjects at the rate we expect;

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subjects may experience events unrelated to our products;

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third-party clinical investigators may not perform our clinical trials consistent with our anticipated schedule or the clinical trial protocol and good clinical practices, or other third-party organizations may not perform data collection and analysis in a timely or accurate manner;

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interim results of any of our clinical trials may be inconclusive or negative;

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regulatory inspections of our clinical trials may require us to undertake corrective action or suspend or terminate the clinical trials if investigators find us not to be in compliance with regulatory requirements; or

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governmental regulations or administrative actions may change and impose new requirements, particularly with respect to reimbursement.

 

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restrictions on our products, manufacturers or manufacturing processes;

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warning letters and untitled letters;

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civil penalties and criminal prosecutions and penalties;

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fines;

 

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injunctions;

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product seizures or detentions;

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import or export bans or restrictions;

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voluntary or mandatory product recalls and related publicity requirements;

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suspension or withdrawal of regulatory approvals;

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total or partial suspension of production; and

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refusal to approve pending applications for marketing approval of new products or of supplements to approved applications.

 

 

 

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we may not be able to attract and build an effective marketing or sales force;

 

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the cost of establishing, training and providing regulatory oversight for a marketing or sales force may be substantial; and

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there are significant legal and regulatory risks in medical device marketing and sales that we have never faced, and any failure to comply with applicable legal and regulatory requirements for sales, marketing and distribution could result in an enforcement action by the U.S. Food and Drug Administration, European regulators or other authorities that could jeopardize our ability to market the system or could subject us to substantial liability.

 

 

 

 

 

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the degree and range of protection any patents will afford us against competitors, including whether third parties will find ways to invalidate or otherwise circumvent our patents;

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if and when such patents will be issued, and, if granted, whether patents will be challenged and held invalid or unenforceable;

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whether or not others will obtain patents claiming aspects similar to those covered by our patents and patent applications; or

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whether we will need to initiate litigation or administrative proceedings which may be costly regardless of outcome.

 

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obtain licenses, which may not be available on commercially reasonable terms, if at all;

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abandon an infringing product candidate;

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redesign our product candidates or processes to avoid infringement;

 

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cease usage of the subject matter claimed in the patents held by others;

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pay damages; and/or

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defend litigation or administrative proceedings which may be costly regardless of outcome, and which could result in a substantial diversion of our financial and management resources.

 

 

 

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incur additional indebtedness;

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permit liens on assets;

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repay, repurchase or otherwise acquire more than a de minimis number of shares of common stock, Series A Preferred Stock or Series B Preferred Stock;

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pay cash dividends to our stockholders; and

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engage in transactions with affiliates.

 

 

 

 

 

		Fiscal Year 2013
		High				Low
First Quarter		$	-			$	-
Second Quarter		$	-			$	-
Third Quarter		$	-			$	-
Fourth Quarter		$	-			$	-

		Fiscal Year 2014
		High				Low
First Quarter		$	-			$	-
Second Quarter		$	-			$	-
Third Quarter		$	-			$	-
Fourth Quarter		$	3.50			$	2.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets as of December 31, 2014 and 2013	F-3
Statements of Operations for the Years Ended December 31, 2014 and 2013	F-4
Statements of Changes in Stockholders’ Deficit for the Years Ended December 31, 2014 and 2013	F-5
Statements of Cash Flows for the Years Ended December 31, 2014 and 2013	F-7
Notes to Financial Statements	F-8

 

 

 

 

 

	/s/ Liggett, Vogt & Webb, P.A.
	Liggett, Vogt & Webb, P.A.