CardioComm Solutions Announces Royalty-Based Financing Deal

Core Viewpoint - CardioComm Solutions has entered into a royalty-based financing agreement to support the commercialization of its flagship 14-day Holter and Event GEMS software platform, which is expected to be a major revenue source for the company [1][2]. Financing Arrangement - The Royalty Agreement, valued at $1,036,958.49, will provide $432,000 in new capital, with contributions of $350,000 from Xemxija and $82,000 from ITF [2]. - The agreement will also facilitate the conversion of existing interest-bearing loans totaling $604,958.49 into royalties [2][3]. Royalty Structure - Lenders will receive royalties based on 33% of the annualized gross revenue earned for the preceding 12 months, minus $700,000, with payments starting at the end of the third financial quarter in 2026 [3][5]. - If the company fails to meet a repayment threshold by October 1, 2031, the royalty obligation will increase to 300% of the aggregate loan amounts [5]. Equity Compensation - As part of the financing, the company will issue 829,566 common shares and 16,591,335 common share purchase warrants to the lenders, with an exercise price of $0.05 until October 1, 2030 [6][8]. Security and Compliance - The company has granted a security interest in all present and after-acquired personal property to the lenders and has executed a general security agreement [7]. - The transaction is classified as a related party transaction under MI 61-101, exempt from formal valuation and minority shareholder approval due to financial hardship [9]. Financial Position - Despite financial constraints, the company remains confident in its ability to generate revenue upon the launch of its flagship product, reflecting the lenders' confidence in the company's strategy [10][12].