RICHMOND, BC, Aug. 29 Neovasc-Q2-Results
--Final Results Prior to Re-Emergence as New Medical Device Company--
--Medical Device Product Sales Almost Doubled Year-over-Year and
Total Revenues Increased More than 25% during the Same Period--
--New Company Has Expanded Product Pipeline and Sharpened
Commercial Focus--
TSX Venture Exchange: NVC
RICHMOND, BC, Aug. 29 /PRNewswire-FirstCall/ - Neovasc Inc. (TSXV: NVC), a new specialty vascular device company comprised of the former Medical Ventures Corp., Neovasc Medical Ltd. and B-Balloon Ltd., today announced financial results for the second quarter and six months ended June 30, 2008, the final period of operations of Medical Ventures Corp.
Neovasc Chief Executive Officer Alexei Marko noted, "With these second quarter results, we have formally closed the books on Medical Ventures. The consolidation of the three companies is solidly underway and Neovasc is now well positioned as an innovative vascular intervention company with an exciting pipeline of products and technologies."
Financial Results
Results for the three and six months ended June 30, 2008 follow. All amounts are in Canadian dollars.
Revenues
Revenues increased 25% year-over-year from $345,811 for the quarter ended June 30, 2007 to $433,061 for the quarter ended June 30, 2008 and increased 29% year-over-year from $672,059 for the six months ended June 30, 2007 to $866,546 for the six months ended June 30, 2008. The increase in revenues was primarily the result of growth in product sales, which increased 97% year-over-year for the quarter and 60% for the six months ending June 30, 2008.
Expenses
The cost of sales and services for the three and six months ended June 30, 2008 was $220,344 and $428,604 as compared to $201,189 and $320,740 in the comparative periods of 2007. The gross margin for the second quarter of 2008 was about 49%, compared to 42% in the second quarter of 2007, reflecting changes in the product mix sold during the respective periods. The 51% gross margin in the first half of 2008 was almost unchanged from the gross margin of 52% recorded in 2007. Total expenses excluding cost of sales and services for the second quarter of 2008 were $2,149,886, down from $2,544,375 in the comparative period of 2007, primarily as a result of decreases in research and development and clinical trial costs. Total expenses for the six months ended June 30, 2008 and 2007 were $4,105,186 and $4,211,916, respectively.
Net Losses
The consolidated net loss for the three and six months ended June 30, 2008 was $1,915,673 and $3,657,248, or $0.02 and $0.03 per share as compared with a net loss of $2,308,497 and $3,728,549, or $0.02 and $0.04 per share for the comparative periods in 2007. The decrease in net loss in the second quarter of 2008 was primarily the result of increased revenues from medical device sales and decreased total expenses.
Cash Position
At June 30, 2008, the Company had cash and cash equivalents of $118,847 and restricted cash related to a security on long-term debt of $50,000, offsetting a bank overdraft of $234,346 as compared to cash of $3,242,404 as of December 31, 2007. At June 30, 2008 the Company had a working capital deficit of $99,826 as compared to working capital of $3,431,266 at December 31, 2007. Cash reserves were bolstered by an $8,325,000 equity financing the Company completed after the close of the second quarter, on July 1, 2008.
Acquisition Background
On January 30, 2008 the Company entered into an agreement to acquire Neovasc Medical Ltd and B-Balloon Ltd, two pre-commercial medical device development companies based in Israel. The acquisitions were completed on July 1, 2008 and Neovasc Medical and B-Balloon became wholly-owned subsidiaries of the expanded new company, which was renamed Neovasc Inc.
Warrant and Option Offer
In connection with the acquisitions, the Company made an offer to all holders of warrants and options outstanding at April 30, 2008, to repurchase those warrants in exchange for a lesser number of common shares of the Company and to reduce the options to a lesser number of nominally priced options.
Share Consolidation
Concurrent with the acquisitions, the Company consolidated its shares, warrants and options on a 1 for 20 basis. Any warrants and options that were not tended pursuant to the Warrant and Option Offer were also consolidated on a 1 for 20 basis.
Issuance of Securities
Following the acquisitions, the Company had 17,574,000 shares outstanding on a fully-diluted basis (including common shares issued and outstanding and common shares reserved for issuance upon the exercise of warrants and options.)
Financing
The Company raised $8,325,000 on July 1, 2008 through a private placement of units. The units were issued at a price of $4.00 each and consisted of one common share and 0.62 warrants, each whole warrant exercisable for one common share at $5.00 for a period of 18 months.
NEOVASC INC. (Formerly Medical Ventures Corp.)
Interim Consolidated Balance Sheets
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June 30, December 31,
2008 2007
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(Unaudited)
ASSETS
CURRENT
Cash and cash equivalents $118,847 $ 3,242,404
Accounts receivable 340,648 568,964
Inventory377,754 384,124
Prepaid expenses and other assets188,34018,755
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1,025,589 4,214,247
RESTRICTED CASH AND CASH EQUIVALENTS50,00050,000
PROPERTY AND EQUIPMENT 1,317,809 1,425,553
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$ 2,393,398 $ 5,689,800
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LIABILITIES
CURRENT
Bank overdraft $234,346 $ -
Accounts payable and accrued liabilities 840,803 735,310
Current portion of long-term debt 19,96419,559
Current portion of repayable contribution
agreement30,30228,112
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1,125,415 782,981
LONG-TERM DEBT 429,100 441,540
REPAYABLE CONTRIBUTION AGREEMENT 285,071 283,959
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1,839,586 1,508,480
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SHAREHOLDERS' EQUITY
Share capital 28,592,62028,835,081
Contributed surplus 1,248,838 976,637
Deficit(29,287,646) (25,630,398)
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553,812 4,181,320
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$ 2,393,398 $ 5,689,800
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NEOVASC INC. (Formerly Medical Ventures Corp.)
Interim Consolidated Statements of Operations and Deficit
For the three and six months ended June 30
-------------------------------------------------------------------------
Three months endedSix months ended
2008 2007 2008 2007
-------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
SALES
Product sales $433,061 $219,325 $837,924 $523,443
Consulting
services - 126,48628,622 148,616
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433,061 345,811 866,546 672,059
COST OF SALES,
including
underutilized
capacity of
$25,144 220,344 201,189 428,604 320,740
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GROSS PROFIT 212,717 144,622 437,942 351,319
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EXPENSES
Selling 785,491 785,131 1,534,995 1,252,319
General and
administration 779,363 783,663 1,317,648 1,293,614
Product
development
and clinical
trials 414,958 790,643 1,036,703 1,442,563
Inventory write
down 94,404 124,17094,404 124,170
Amortization 75,67060,768 121,43699,250
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2,149,886 2,544,375 4,105,186 4,211,916
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LOSS BEFORE OTHER
INCOME (EXPENSES) (1,937,169) (2,399,753) (3,667,244) (3,860,597)
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OTHER INCOME
(EXPENSES)
Interest income 14,20840,54123,30382,080
Interest on
long-term debt (5,021) (2,858) (12,535) (5,736)
Accreted interest
on repayable
contribution
agreement(3,846)-(7,685)-
Gain on foreign
exchange 16,15553,573 6,91355,704
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21,49691,256 9,996 132,048
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NET LOSS AND
COMPREHENSIVE
LOSS FOR THE
PERIOD (1,915,673) (2,308,497) (3,657,248) (3,728,549)
DEFICIT, BEGINNING
OF PERIOD (27,371,973) (19,320,489) (25,630,398) (17,900,437)
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DEFICIT, END OF
PERIOD $(29,287,646) $(21,628,986) $(29,287,646) $(21,628,986)
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BASIC AND DILUTED
LOSS PER SHARE $ (0.02) $ (0.02) $ (0.03) $ (0.04)
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WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING 111,209,545 100,566,564 111,209,54585,952,975
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NEOVASC INC. (Formerly Medical Ventures Corp.)
Interim Consolidated Statements of Cash Flows
For the three and six months ended June 30
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Three months endedSix months ended
2008 2007 2008 2007
-------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
OPERATING
ACTIVITIES
Net loss for
the period $ (1,915,673) $ (2,308,497) $ (3,657,248) $ (3,728,549)
Items not
affecting cash
Inventory
write down 94,404 124,17094,404 124,170
Amortization75,67060,768 121,43699,250
Accreted
Interest on
repayable
contribution
agreement 3,846 - 7,685 -
Stock-based
compensation 16,45762,69329,74093,758
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(1,725,296) (2,060,866) (3,403,983) (3,411,371)
Change in
non-cash
operating assets
and liabilities
Accounts
receivable 38,235 (23,625) 228,316 (56,477)
Inventory 81,126 113,642 (88,034) 135,648
Prepaid expenses
and other assets (40,440) 63,530 (169,585) (6,278)
Accounts payable
and accrued
liabilities 118,393 108,468 105,493 306,888
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(1,527,982) (1,798,851) (3,327,793) (3,031,590)
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INVESTING ACTIVITY
Purchase of
property and
equipment(6,510) (12,324) (13,692) (33,142)
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(6,510) (12,324) (13,692) (33,142)
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FINANCING ACTIVITIES
Repayment of
long-term debt (7,265) (5,100) (12,035) (10,200)
Repayment of
repayable
contribution
agreement(2,655) (2,556) (4,383) (2,556)
Proceeds from share
issue, net of costs - 7,251,421 - 7,251,421
(9,920)7,243,765 (16,418)7,238,665
(DECREASE)/INCREASE
IN CASH(1,544,412)5,432,590(3,357,903)4,173,933
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD 1,428,913 1,440,078 3,242,404 2,698,735
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END OF PERIOD $ (115,499) $ 6,872,668 $ (115,499) $ 6,872,668
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REPRESENTED BY:
(Bank Overdraft)
/Cash (234,346) 524,676 (234,346) 524,676
Cashable
guaranteed
investment
certificates118,847 6,347,992 118,847 6,347,992
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$ (115,499) $ 6,872,668 $ (115,499) $ 6,872,668
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NON CASH
TRANSACTIONS
Change in Asset
Use-53,592 -53,952
SUPPLEMENTAL CASH
FLOW INFORMATION
Interest paid 5,021 3,13012,535 6,050
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About Neovasc Inc.
Neovasc Inc. develops, manufactures and markets medical devices for the rapidly growing vascular and surgical marketplace. The company's current products help doctors diagnose and treat a wide range of health conditions, including vascular diseases and obesity. They include the Metricath(R) arterial and in-stent measurement system, and PeriPatch(TM) surgical tissue and staple line reinforcement products. Neovasc also provides contract medical device development and manufacturing services as well as a pipeline of newly acquired technologies and products. For more information, visit: www.neovasc.com.
Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words "anticipates," "believes," "may," "continues," "estimates," "expects," and "will" and words of similar import, constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which the Company operates; history of losses and lack of and uncertainty of revenues, ability to obtain required financing, receipt of regulatory approval of product candidates, ability to properly integrate newly acquired businesses, technology changes; competition; changes in business strategy or development plans; the ability to attract and retain qualified personnel; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted against the Company; and other factors referenced in the Company's filings with Canadian securities regulators. Although the Company believes that expectations conveyed by the forward-looking statements are reasonable based on the information available to it on the date such statements were made, no assurances can be given as to the future results, approvals or achievements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not assume the obligation to update any forward-looking statements except as otherwise required by applicable law.
SOURCE Neovasc Inc.
