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NEXT GENERATION HEALTHCARE BLUEPRINTMANAGEMENT PRESENTAT ION NOVEMBER , 2012
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SAFE HARBOR STATEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY SUCH STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT
MEMORANDUM. THIS PRIVATE PLACEMENT MEMORANDUM DOES NOT CONSTITUTE AN
OFFER IN ANY JURISDICTION IN WHICH AN OFFER IS NOT AUTHORIZED.
The Information Contained Herein is Confidential and Proprietary; Intended Only for the Entity or Person to Which or Whom it is Given or To Whom it is Transmitted Electronically
Innova Medical Technologies, Inc. All Rights Reserved.
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COMPANY
Through market leading External Counter Pulsation (ECP) technology Innova
Medical provides a clinically relevant, FDA Cleared, non-surgical alternative
for millions of cardiovascular disease (CVD) care patients. Innova has
adopted a proven distribution program which offers physicians the potential
for six figure revenue gains with no out of pocket expense, while reducing
total health care costs to 75% of surgical interventions.
In September of 2012, IMT acquired 31 year ECP industry founder, Cardiomedics, Inc. (CM)
together hereafter referred to as the “Company”.
1 http://www.cdc.gov/nchs/fastats/heart.htm2 http://www.biomerieux-diagnostics.com/servlet/srt/bio/clinical-diagnostics/dynPage?node=cardiovascular_diseases_2
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EXTERNAL COUNTER PULSATION (ECP)
External Counter Pulsation (ECP) is a non-invasive, outpatient
procedure to relieve or eliminate Congestive Heart Failure and
Angina.
Clinical Studies indicate that ECP can cause the recruitment and
expansion of collateral arteries to areas of the heart deprived of a
normal blood supply.
Acts as a ‘natural bypass’ around areas of the heart and throughout
the body.
Forces the peripheral benefits of exercise without any effort or risk
Restores vital blood flow to all organs.
Now clinically proven to effective treat up to 16 other serious health
conditions.
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MANAGEMENT TEAM Founders
George P. Nelson
Principal Partner
Innova Capital Holdings, Inc.
Chief Strategic Officer
Innova Medical Technologies, Inc.
Lisa R. Terry, MBA
Managing Partner
Innova Capital Holdings, Inc.
Chief Executive Officer
Innova Medical Technologies, Inc.
Located In:Corporate/Sales: 1005 Alderman Drive
Alpharetta, GA 30005
R&D / Logistics: 19186 E. Prentice Circle
Centennial, CO 80015
Manufacturing: Spectrum Assembly Inc.
6300 Yarrow Drive, Suite 100
Carlsbad, California, 92011
2011: Founded Innova Medical Technologies, Inc.
2012: Acquired 31 yr mfr. Cardiomedics, Inc.
Key Employees
John McCallumCOO & President
Former CEO Cardiomedics, Inc.
David GregoryCSO / Worldwide Sales
Former Industry Sales Leader
Applied Cardiac Systems, Inc.
Irwin Zucker, MSECTO / R&D Director
Former President & COO
Innovative Medical Systems, Inc.
Steve PorterCMO / Marketing Director
Former CEO
Porter Design Group, Inc.
Peter Helander, MBAPR Director / Online & SEO
Former SVP Branding
Ikea Corporation, Sweden
Kaleigh KohrsOperations Director
Board of Directors
Chairman
R. Richard Schwindt, M.D., FACCCardiovascular Disease Specialists, Inc.
- Diplomat, American Board of Internal Medicine
- Fellow, American College of Cardiology
George NelsonCo-Chair
Lisa TerryExecutive Director
Kaleigh KohrsBoard Secretary
Tom Ulie, CEO First Island CapitalBoard Treasurer
Board Members:
Allan Rubinstein, GlobeDent
Gray Bishop, Nursing Home Association of America
John McCallum
David Gregory
2 Seats Open
Medical Advisors
Dr Kris Vijay
Director of the Heart Failure Program and
Director of Cardiovascular Research at
Scottsdale Healthcare and an Invasive
Cardiologist at Scottsdale Cardiovascular
Center, Scottsdale, Arizona. Serves as Governor
of the American College of Cardiology, Arizona
Chapter. Serves as a Board member of the
South West Lipid Association and is the past
President of the American Diabetes Association
(Arizona Affiliate). A Fellow of the American
College of Cardiology, the American College of
Physicians, National Lipid association and the
American College of Chest Physicians.
Dr Marc Silver
Board certified Cardiologist , Christ Hospital
Oak Lawn Chicago. Past President of American
Heart Failure Society
Dr. Ivo Buschmann
Associate professor at Charité Berlin
Dr Yuri Bushvellia
Head of Cardiology Bacleuv, Moscow,
Leading Hospital in Moscow
Dr. Samuel K. Mathew MBBS, MD, DM
President of the Cardiology Society of India
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CLINICAL ACCEPTANCE
ECP is recognized as an effective primary (pre-surgery), secondary (post-surgery),integrative, or wellness therapy which effectively treats patients suffering from a variety ofdiseases and health conditions.
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PRIMARY MARKETThe Company has traditionally provided ECP devices to its Physician Targets asa reimbursable treatment for:
Angina:
Angina is one of the serious causes of chest pain. "Angina" is an abbreviation of anginapectoris, a Latin term for "squeezing of the chest." Angina occurs when there is decreasedblood oxygen supply to an area of the heart muscle. In most cases, the lack of blood supplyis due to a narrowing of the coronary arteries as a result of arteriosclerosis.
Congestive Heart Failure:
Congestive heart failure (CHF) is a condition in which the heart's function as a pump isinadequate to deliver oxygen rich blood to the body.
Congestive heart failure can be caused by: diseases that weaken the heart muscle, diseasesthat cause stiffening of the heart muscles, or diseases that increase oxygen demand by thebody tissue beyond the capability of the heart to deliver adequate oxygen-rich blood.
Blockage of the coronary arteries by plaque may cause a heart attack (myocardialinfarction) or a fatal rhythm disturbance (sudden cardiac arrest).
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12
25
927
27
Percent of U.S. Population with ECP Treatable Disease Conditions
(Yr 2010)
Cardiovascular Disease
Hypertension
Diabetes
Obesity
Healthy or Other Diagnosis
U.S. MARKET
Source: http://www.cdc.gov/nchs/fastats/heart.htm
Number of non-institutionalized adults with diagnosed heart disease
Number of visits (to physician offices, hospital outpatient and emergency departments) with heart disease as primary diagnosis
Number of discharges with heart disease as first-listed diagnosis
Number of Annual U.S. Deaths from Heart Disease
27.1MM
16.7MM
4.0MM
In the U.S., CVD’s are responsible for one in every three deaths,
equal to 2,200 deaths per day, or one person every 34 seconds.“
“803M
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PROPRIETARY OFFERINGS
CardioAssist 4500gs
Beneficial Clinical response rate between
80-87%
Facilitates expansion of collateral blood
vessels/arterial pathways VS. surgical
interventions which target only individual
blockages
Eliminates or reduces recurrent events
Reduces or eliminates nitrate
medications
Sustainable up to five years+ over each
of three (3) 5-year follow-up study
periods
Patent Position 4 patents
3 pending filings
Proprietary Offerings
ONLY portable device VS. competitors’ exam bed unit (removes space requirement as barrier to entry)
ONLY ECP manufactured device with a ZERO adverse effects rate
ONLY FREE ECP device Physician Utilization Lease program in industry
ONLY Patented “Graduated-Pressure” regimen which calibrates precise patient experience
ONLY iPad Wi-Fi remote utilization, and video monitoring capability
Certifications:
FDA Cleared
CE Certification
ISO 13485 Compliant
Made in the U.S.A.
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COMPETITIVE SNAPSHOT
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REIMBURSEMENT
The FDA and U.S. Health & Human Services Office has approved ECP for use in treating a variety of cardiac conditions, and is currently covered for the following conditions by Medicaid, Medicare and/or private insurers as follows:
ANGINA ICD-9 CM (covered by all insurance)
- 411.1 Intermediate Coronary Syndrome
- 413.0 Angina Decubitus
- 413.1 Prinzmetal angina
- 413.9 Other/unspecified angina pectoris
- 414.9 Chronic ischemic heart disease, unspecified
CONGESTIVE HEART FAILURE ICD-9 CM Codes (covered by Medicare Advantage plans and certain private insurers; covered by Medicaid if filed as secondary diagnosis to Angina)
- 428.0 Congestive Heart Failure
- 428.1 Left heart failure
- 428.9 Heart failure unspecified
- 402.01 Hypertensive heart disease, malignant with CHF
- 402.11 Hypertensive heart disease, benign with CHF
- 402.91 Hypertensive heart disease, unspecified with CHF
- 494.01 Hypertensive heart and renal disease, malignant with CHF
- 404.11 Hypertensive heart and renal disease, benign with CHF
- 404.91 Hypertensive heart and renal disease, unspecified with CHF
Primary CPT Code G0166
AVERAGE THERAPY REIMBURSEMENT
$5,285.00
• Average Medicaid Reimbursement Rate is $151
nationwide per treatment hour, with minimum 35 hrs.
approved, and an additional 12 hours if necessary.
• Rates vary by regional demographic, with the lowest
reported at $142.
• Atlanta Region is $164 p/hour.
• Private insurers sometimes pay up to $232 p/hr.
• Rates have increased year to year an average of 5% vs.
declines in most every other medical service.
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NEW PHYSICIAN INCOME STREAMS
$85,440$102,528$104,580
$139,440
$190,020
$241,968
3 NEW PATIENTS P/MO 4 NEW PATIENTS P/MO
Additional New Revenue Streams to Physician from ECP(Annual Average)
Min. Insurance Reimbursement from Testing Net ECP Treatment Income Avg. Annual Combined Income
Assumptions:
• Net Reimbursable ECP
Treatment Income Retained by
Physician = $2,905 p/Patient
• 7 Minimum Standard
Reimbursable ECP Qualifying
Tests = $712 p/Patient
• Industry Ratio of Qualifying
Tests to Qualified Patients =
10:3 or 12:4
Source: www.cms.gov/ecp_reimbursement _guide/
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ECP VS. SURGICAL INTERVENTIONS
ECP GROUP IABP GROUP
LIMA Doppler Velocity VTI Velocity VTI
Baseline 18 6 20 6
Counter pulsation 98 19 95 15
The study referenced above presented ECP as a non-invasive alternative to atraumatic
Intra-Aortic Balloon Pump (IABP) invasive procedures, to produce a persistent improvement
in cardiac blood flow. The studies cited demonstrate that ECP works in angina and heart
attack patients, with and without prior bypass, in part by transmitting an IABP-like diastolic
pressure wave through the coronary arteries and/or their bypass grafts, then utilizing this
pressure wave to recruit and enlarge collateral vessels.
Clinical Study: Effects of Enhanced External Counter Pulsation on Internal Artery
Flow: Comparison With Intra-Aortic Balloon Counter Pulsation. Katz, WE et al.
Oral Presentation 825-1, American Heath Association Meeting 3/31/98.
Diastolic pressure waves generated by ECP can indeed transmit a collateral
producing pressure, the invasive IABP device offers no advantage over
non-invasive ECP, and in fact ECP is more capable of achieving the
desired outcomes over surgical alternatives.
Doppler ultrasound was used to compare the effects of ECP and IABP on
the direction and velocity of blood flow within the LIMA.
Velocity refers to the speed, for our purposes the collateral producing
thrust, of blood flow within the LIMA. VTI, the velocity-time integral, refers
to the "area under the curve" or quantity of blood that flows forward with
each heartbeat. You can see that baseline flow parameters were similar in
both patient groups. Blood flow velocity increased by a factor of five, and
quantity of flow tripled during counter pulsation, both in the invasive IABP
and non-invasive EECP groups.
ECP PROVEN MORE BENEFICIAL THAN SURGERY Clinical Trial Method & Baseline
Study Outcome
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CLINICAL EVIDENCEThe first randomized, double-blinded, placebo-controlled study was completed in 1997 (MUST-EECP, 6 1995-1997). Itevaluated the effect of external counter pulsation therapy, testing the reproducibility of benefits from earlier studies.
Schecter, Hod et al (Circ. 2003) investigated the influence of short-term external counter pulsation (ECP) therapy on flow-mediated dilation (FMD) in patients with coronary artery disease (CAD). They found that in patients with CAD, thevascular endothelium is usually impaired and modification or reversal of endothelial dysfunction may significantly enhancetreatment.
SUMMARY OF STUDY RESULTS 1-17
Clinically Biochemically Functionally
Long Term sustained benefit Decrease in BNP levels Increase in Exercise Tolerance
Reduction in Angina episodes Increase in VEGF levels Increase in Ejection Fraction
Improvement in CCSF class Decrease in Endothelin levels Increase in ST depression
Improvement in QOL Increase in Nitric Oxide levels Increase in Cardiac Output
Reduction in Nitrate use Increase in Intracoronary pressure
Increase in Blood Flow Velocity
Increase in Cardiac Contractility
Increase in Peak Oxygen Consumption
Decrease in Systolic Pressure
Reduction in Systemic Vascular Resistance
“External counter pulsation therapy
resulted in significant improvement in
post-intervention FMD (8.2 • 2.1%, p •
0.01), compared with controls (3.1 •
2.2%, p • 0.78). There was no
significant effect of treatment on NTG-
induced vasodilation between ECP and
controls (10.7 • 2.8% vs. 10.2 • 2.4%,
p • 0.85). External counter pulsation
significantly improved anginal symptoms
assessed by reduction in mean sublingual
daily nitrate consumption, compared
with controls (4.2 • 2.7 nitrate tablets
vs. 0.4 • 0.5 nitrate tablets, p 0.001
and 4.5 • 2.3 nitrate tablets vs. 4.4 •
2.6 nitrate tablets, p • 0.87,
respectively) and in mean CCS angina
class compared with controls (3.5 • 0.5
vs. 1.9 • 0.3, p 0.0001 and 3.3 • 0.6
vs. 3.5 • 0.5, p • 0.89, respectively).”
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CLINICAL SNAPSHOT
Cardiomedics currently has FDA 510(k) clearance to market the CardiAssist Counterpulsation System (K022107) and the CardiAssist ECP System (K010261).
ECP Clinical Data Supporting both the Company’s Primary and Expanded Markets, which trials will be utilized to seek additional FDA clearances.
4,288 total clinical trials are available on ECP, with study data evidenced in both primary and secondary outcomes.
http://www.ncbi.nlm.nih.gov/pubmed?term=external%20counterpulsation
9 current clinical trials are in process
http://clinicaltrials.gov/ct2/results?term=external+counterpulsation&Search
Source: The National Library of Medicine via PubMed.gov & National Institute of Health via ClinicalTrials.gov
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INDUSTRY ESTABLISHMENTIndustry Inception to Cardiomedics, Inc.
1966: ECP’s first patent issued by Harvard Researchers, Birtwell and Clauss, who produced counter pulsation by introducing a
catheter with a balloon into the ascending aorta via the femoral artery. The Intra-aortic Balloon Pump was thus invented and used still today.
Several Harvard and other scientists were involved in the evolution of counter pulsation to a completely non-invasive technique using externally
applied pressure generated by hydraulic systems.
1987: ECP Cleared by FDA
1999: Medicare approves reimbursement for various classes of Angina patients
1999: Competitor Vasomedical enters ECP market. Known since for sponsoring more than 80% of all of the clinical studies performed.These trials have played a critical role demonstrating the viability of External Counterpulsation Therapy for Angina, Heart Failure anda vast array of other medical conditions.
2002: ECP cleared by FDA as a treatment for Congestive Heart Failure
2012: Innova Medical acquires Cardiomedics.
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MARKETING PROGRAM
The Company’s primary distribution model is Fee-for-service device
usage charge where the physician will retain 60% of the billable, and
the Company will receive 40% via EFT auto-draft on a monthly basis.
Usage data is stored, and uploaded real-time via cloud based
features built-into the CardiAssist 4500gs unit. This ensures efficient
cash flow, and ensures the correct residual revenue.
This fee based income program will be marketed under the name The
Pulse program.
This ‘Medical Vending’ model will not require a physician to layout
capital of $65-85,000 in advance.
On a conservative 3 new patients per month basis, in addition to
testing revenue, physicians will average $180,000 of gross revenue
from this program per year per machine in service.
Bed utilization per bed is 4.5 patients per month, and bed life is an
average 7 years.
The Pulse
Program
15 Physicians with 800+ p/mo patients selected
p/market
Unit placed under 3 yr.
agreement on 60/40 split on
income on hourly usage
In office video stand/ECP
commercials/ brochures/ iPad
appointment terminals provided
Monthly Account Management,
Patient Identification Retention &
Loyalty Programs provided by IMT
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CHANNEL DEVELOPMENTMULTIPLE PRIMARY CHANNELS
Channel development of the Company’s Physician Targets shall include:
- Hospitals & Specialty Clinics
- Cardiologists
- General Practitioners
- Internists, Osteopathy (D.O.’s)
- Naturopathy (N.D.’s)
- Sports Medicine Professionals
- Alternative and Holistic practitioner’s, and certain other physician groups.
MULTIPLE TERTIARY CHANNELS
ECP therapy to a broad range of patients as a:
- Preventive
- First
- Secondary, lines of treatment
- And, as part of an integrative health, wellness and/or maintenance plan.
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U.S. PATIENT BASE
65,800,000
1,900,000
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
CARDIOVASCULARDISEASE
DIABETES ERECTILEDYSFUNCTION
ALL NCD'S
Nu
mb
er
of
Peop
le
U.S. Target Patient Base
11%
12%
27%
50%
% of U.S. Target Patients to Total Population
CARDIOVASCULARDISEASE
DIABETES
ERECTILE DYSFUNCTION
ALL NCD'S
Annual Growth Rate of all NCD’s in Target Patients = 2.9%
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KEY MEASURABLE
0
1,000
2,000
3,000
4,000
FY1 FY2 FY3 FY4 FY5
ECP
DEV
ICES
IN S
ERV
ICE
FY1 FY2 FY3 FY4 FY5
New ECP Installs 81 193 401 930 1,608
Cumulative in Service 81 268 652 1,541 3,054
ECP NEW DEVICE INSTALLATIONS AND CUMULATIVE IN SERVICE(Factors Annual 5% Attrition Rate)
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PRE-SALES & PLACEMENTS
11
14
88
61
38
0 10 20 30 40 50 60 70 80 90 100
WITHIN 60 DAYS
WITHIN 120 DAYS
INTL DISTRIBUTOR P.O.S TO HOSPITALS - 12 MO'S
Company Pre-Sales & Pulse Program Placements(Within 60 days Delivery Date = 12/31/12)
(8 week Production Cycle Requirement)
Pulse Program Placements - Hosp & Physicians Direct Sales/P.O.'s - Intl Clinics/Hospitals
11 Units X Distributor Price of $45,000 = $495,000 Rev. or
$330,000 Gross Profit
14 Units X Distributor Price of $45,000 = $630,000 Rev. or
$420,000 Gross Profit
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PRIMARY REVENUE MODEL
* Does not reflect actual financial model, and is shown here for illustrative purposes only and is based upon gross revenues at 900 units in the market
Top Medical Markets
Physicians p/Market
ECP Devices
p/Physician
New Patients
Per Device p/year
ECP Patients/ Therapy Sessions Per Year
20 14,40036210
Annual ECP
Therapy Sessions
Net $ Per Patient
Therapy Session to Company
Total Gross Revenues to Company*
14,400 $2,380 $34,272,000
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5 YR. REVENUE PROJECTIONS
FY 1 FY 2 FY 3 FY 4 FY 5
Revenue $6,476,520 $20,561,485 $48,559,671 $109,840,951 $231,572,563
EBITDA $1,476,508 $9,446,726 $40,093,784 $65,124,281 $159,756,995
Net Income $278,891 $6,352,890 $19,298,661 $46,923,192 $115,036,592
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
Revenue EBITDA Net Income
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
Millions
Revenue By Sales Channel
ECP PROFIT SHARE INCOME PER TREATMENT
ECP UNITS (INDV DIRECT SALES)
SOFTWARE PACKAGE ON DIRECT SALE UNITS
WARRANTY/MAINTENANCE 13TH MO AFTER PLACEMENT DATE
Total Revenues
Income Projections
FY 1 2 3 4 5
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PARTNERS & ALLIES
2
4
Alliances and partnershipsdeveloped with industry, national,local, civic and community partnersto advance its business and healthcare reform and patient centeredhealth care initiatives.
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MARKET EXPANSION OPPORTUNITIES
The Company shall provide ECP devices to its
Physician Targets as both a reimbursable procedure,
and an elective treatment option. As the Company
secures additional 510(k) clearances, it will provide
reimbursable treatment in any or all of these 16
additional areas where clinical support has
evidenced its beneficial effects.
With or without 510(k) clearances, clinical efficacy
and safety statistics will allow the Company to
market ECP beyond CVD patients and expand
elective, preventative and maintenance benefits as
part of an Complementary, Alternative and/or
Integrative Medicine approach.
ECP Clinical Benefits:
1. Cardiac: Angina, CVD, Hypertension, Congestive Heart Failure, Stroke
2. Metabolic: Diabetes
3. Circulatory: Erectile Dysfunction in men
4. Biological: Infertility in men with low sperm count
5. Brain: Multiple Sclerosis, Alzheimer’s, Parkinson’s, Memory
6. Renal: Kidney Disease, Renal Insufficiency
7. Respiratory: COPD, Improved Lung Function & Oxygen Uptake Capacity
8. Stem Cell: Creation of new stem cells uses in repair of damaged organ tissue
9. Digestive: Detoxification of all vital organs and improved elimination
10. Cellular: Eliminates cellular toxins, improves cell strength
11. Immunity: Improves immune function
12. Circulatory: Phlebitis, Restless Leg Syndrome, Thrombosis
13. Macular: Macular Eye Degeneration; Cataracts
14. Metabolism: Increased metabolic rate resulting in weight loss*
15. Mental: Decreases depression and improves overall sense of well-being
16. Energy:
Improved stamina, exercise tolerance, duration and
effectiveness of exercise through improved oxygen and
blood flow
“Many Americans use complementary and alternative medicine (CAM) in pursuit of health and well-being. The 2007 National Health Interview
Survey (NHIS), which included a comprehensive survey of CAM use by Americans, showed that approximately 38 percent of adults use CAM.”
Source: http://nccam.nih.gov/
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INVESTMENT OPPORTUNITY
Round Details
Funding Amount: $2.75MM
Series: Expansion Round
Valuation: $8,000,000
Company Age at Funding:
Less than 1 yr
Convertible Debt
15% Interest
Redemption at Investor’s Option
Anti-Dilution Protection
No Cumulative Dividends
Warrants up to 4%
Equity
25% Stake
Valuation: $8,000,000
Board Seats: 1 out of 2
Multiple of Liquidation Preference: 1X
No Capped Participating Preference
Anti-Dilution Protection
Cumulative Dividends