RICHMOND, BC, Dec. 1 Neovasc-Q3-Rslts-2008
-- Product Sales More Than Doubled Over Prior Year Quarter --
-- Fully Integrated New Company has Streamlined Operations
and Sharpened Commercial Focus --
TSX Venture Exchange: NVC
RICHMOND, BC, Dec. 1 /PRNewswire-FirstCall/ - Neovasc Inc. (TSXV: NVC), a new specialty vascular device company, today announced financial results for the third quarter and nine months ended September 30, 2008.
Neovasc Chief Executive Officer Alexei Marko noted, "These third quarter results, which reflect the first period of Neovasc's operations as a fully consolidated company, include encouraging signs of progress while also reflecting significant one-time, non-recurring charges and expenses associated with the acquisition and integration of the two Israeli companies now combined into Neovasc. We made important gains during the quarter in integrating our three constituent companies into one well-functioning unit, including significantly streamlining our operations for greater efficiency and maximum effectiveness. We also actively participated in several major interventional cardiology conferences during the quarter, working with key opinion leaders to conduct a number of educational programs that were well-received and reflect the increased marketing focus that we view as essential to our future growth. Our goal is to strengthen our positioning as an innovative vascular intervention company with an exciting pipeline of products and technologies, and we will continue to focus on advancing our existing and new products and expanding our commercial reach."
Financial Results
Results for the three and nine months ended September 30, 2008 follow. All amounts are in Canadian dollars.
Revenues
During the third quarter, revenues increased 169% year-over-year from $218,840 for the quarter ended September 30, 2007 to $587,884 for the quarter ended September 30, 2008. Revenues increased 63% year-over-year from $890,899 for the nine months ended September 30, 2007 to $1,454,430 for the nine months ended September 30, 2008. The increase in revenues was primarily the result of growth in product sales of Neovasc's tissue and surgical products and services.
Cost of Sales
The cost of sales and services for the three and nine months ended September 30, 2008 was $283,070 and $711,674 as compared to $105,897 and $426,637 in the comparative periods of 2007. Gross margins remained consistent during these periods. The gross margin for the third quarter of 2008 was 52%, compared to 52% in the third quarter of 2007.
Expenses
Total expenses excluding cost of sales and services for the third quarter of 2008 were $4,307,855, compared to $1,942,259 in the third quarter of 2007, primarily reflecting increased general and administrative costs associated with the acquisitions of the two Israeli companies and the formation of Neovasc, as well as increased investment in research and development. In addition, the Company began the amortization of the intangible, technology assets acquired in the acquisition of B-Balloon and Neovasc Medical. A non-cash amortization charge of $1,064,785 was incurred, which significantly impacted the Total Expense figure. Total expenses for the nine months ended September 30, 2008 and 2007 were $8,413,041 and $6,042,767, respectively.
Net Losses
The consolidated net loss for the three and nine months ended September 30, 2008 was $4,004,023 and $7,661,271 or $0.23 and $0.81 basic loss per share as compared with a net loss of $1,802,176 and $5,530,725, or $0.32 and $1.17 per share for the comparative periods in 2007. The increase in net loss in the third quarter of 2008 was primarily the result of increased general and administrative costs associated with the integration of the two companies and the formation of Neovasc, increased investment in research and development and initiation of amortization on the intangible technology assets acquired in the acquisitions.
Cash Position
At September 30, 2008, the Company had cash and cash equivalents of $5,106,522 and restricted cash related to a security on long-term debt of $50,000, as compared to cash of $3,242,404 as of December 31, 2007. At September 30, 2008 the Company had working capital of $4,784,455 as compared to working capital of $3,431,266 at December 31, 2007. Cash reserves were bolstered by an $8,325,004 equity financing the Company completed after the close of the second quarter, on July 1, 2008.
NEOVASC INC. (Formerly Medical Ventures Corp.)
Interim Consolidated Balance Sheets
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September 30, December 31,
2008 2007
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ASSETS
CURRENT
Cash and cash equivalents $ 5,106,522 $ 3,242,404
Accounts receivable 512,332 568,964
Inventory (Note 7) 496,205 384,124
Prepaid expenses and other assets (Note 8) 351,22918,755
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6,466,288 4,214,247
RESTRICTED CASH AND CASH EQUIVALENTS (Note 13) 50,00050,000
RETIREMENT ASSETS (Note 12) 54,010 -
TECHNOLOGY (Note 10)20,568,715 -
GOODWILL (Note 11) 3,557,082 -
PROPERTY AND EQUIPMENT (Note 9) 1,447,795 1,425,553
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$ 32,143,890 $ 5,689,800
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities$ 1,630,217 $735,310
Current portion of long-term debt 20,29719,559
Current portion of repayable contribution
agreement31,31928,112
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1,681,833 782,981
LONG-TERM DEBT (Note 13) 423,899 441,540
REPAYABLE CONTRIBUTION AGREEMENT (Note 14) 286,835 283,959
RETIREMENT LIABILITIES (Note 12)83,205 -
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2,475,772 1,508,480
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SHAREHOLDERS' EQUITY
Share capital (Note 15) 58,606,91628,835,081
Contributed surplus (Note 15)4,352,871 976,637
Deficit(33,291,669) (25,630,398)
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29,562,179 4,181,320
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$ 32,143,890 $ 5,689,800
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NEOVASC INC. (Formerly Medical Ventures Corp.)
Interim Consolidated Statements of Operations, Comprehensive Loss
and Deficit
For the three and nine months ended September 30
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Three months ended Nine months ended
2008 2007 2008 2007
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
SALES (Note 17)
Product sales $547,118 $185,375 $ 1,385,042 $707,818
Consulting
services 40,76633,46569,388 182,081
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587,884 218,840 1,454,430 890,899
COST OF SALES,
including
underutilized
capacity of
$25,144 283,070 105,897 711,674 426,637
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GROSS PROFIT 304,814 112,943 742,756 464,262
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EXPENSES
Selling 816,421 801,805 2,351,416 2,054,124
General and
administration1,297,333 475,247 2,614,981 1,657,453
Product
development and
clinical trials 1,087,292 618,971 2,123,995 2,061,534
Inventory write
down - -94,404 124,170
Amortization 1,106,80946,236 1,228,245 145,486
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4,307,855 1,942,259 8,413,041 6,042,767
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LOSS BEFORE OTHER
INCOME (EXPENSES) (4,003,041) (1,829,316) (7,670,285) (5,578,505)
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OTHER INCOME
(EXPENSES)
Interest income 36,50059,68959,803 141,769
Interest on
long-term debt (45,477) (2,808) (58,012) (8,544)
Accreted interest
on repayable
contribution
agreement
(Note 14)(3,880)- (11,565)-
Gain (Loss) on
foreign exchange 11,875 (29,741) 18,788 (85,445)
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(982) 27,140 9,01447,780
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NET LOSS AND
COMPREHENSIVE
LOSS FOR THE
PERIOD (4,004,023) (1,802,176) (7,661,271) (5,530,725)
DEFICIT, BEGINNING
OF PERIOD (29,287,646) (21,628,986) (25,630,398) (17,900,437)
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DEFICIT, END OF
PERIOD $(33,291,669) $(23,431,162) $(33,291,669) $(23,431,162)
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BASIC LOSS PER
SHARE$ (0.23) $ (0.32) $ (0.81) $ (1.17)
FULLY DILUTED
LOSS PER SHARE $ (0.21) $ (0.32) $ (0.77) $ (1.17)
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WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 17,701,276 5,560,477 9,607,410 4,725,886
WEIGHTED AVERAGE
NUMBER OF FULLY
DILUTED SHARES
OUTSTANDING18,901,403 5,560,47710,007,456 4,725,886
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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 ended Nine months ended
2008 2007 2008 2007
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OPERATING
ACTIVITIES
Net loss for the
period $ (4,004,023) $ (1,802,176) $ (7,661,271) $ (5,530,725)
Items not
affecting cash
Inventory write
down- -94,404 124,170
Amortization 1,106,80946,236 1,228,245 145,486
Interest on
repayable
contribution
agreement 3,880 -11,565 -
Stock-based
compensation 273,68744,770 303,427 138,528
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(2,619,647) (1,711,170) (6,023,630) (5,122,541)
Change in
non-cash
operating assets
and liabilities
Accounts
receivable (171,684) (53,382) 56,632 (109,859)
Inventory (118,451)5,570 (206,485) 141,218
Prepaid
expenses and
other assets 255,61048,88386,02542,605
Retirement assets 34,388 -34,388 -
Accounts payable
and accrued
liabilities (150,910) 30,018 (45,417) 336,906
Retirement
liabilities (25,604)- (25,604)-
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(2,796,298) (1,680,081) (6,124,091) (4,711,671)
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INVESTING ACTIVITY
Acquisition of
business, net
of cash of
$781,008
B-Balloon Ltd.(274,858)- (274,858)-
Neovasc Medical
Ltd. 210,625 - 210,625 -
Accounts payable
on acquisitions273,046 - 273,046 -
Purchase of
property and
equipment (59,175) (492,665) (72,867) (525,807)
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149,638 (492,665) 135,946 (525,807)
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FINANCING ACTIVITIES
Increase in
long-term debt- 298,911 - 298,911
Repayment of
long-term debt (4,868) (1,548) (16,903) (11,748)
Repayment of loan
from related party
of B-Balloon (356,440)- (356,440)-
Repayment of
repayable
contribution
agreement(1,099) (1,161) (5,482) (3,717)
Proceeds from
share issue, net
of costs 8,231,088 - 8,231,088 7,251,421
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7,868,681 296,202 7,852,263 7,534,867
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(DECREASE)/INCREASE
IN CASH 5,222,021(1,876,544)1,864,118 2,297,389
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD (115,499)6,872,668 3,242,404 2,698,735
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END OF PERIOD $ 5,106,522 $ 4,996,124 $ 5,106,522 $ 4,996,124
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REPRESENTED BY:
(Bank Overdraft)
/Cash 287,849 516,580 287,849 516,580
Cashable
guaranteed
investment
certificates 4,818,673 4,479,544 4,818,673 4,479,544
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$ 5,106,522 $ 4,996,124 $ 5,106,522 $ 4,996,124
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NON CASH
TRANSACTIONS
Change in Asset
Use (Note 9) - - -53,592
Issuance of
shares to
acquire -
B-Balloon and
Neovasc Medical
(Note 4) 24,613,554 -24,613,554 -
SUPPLEMENTAL CASH
FLOW INFORMATION
Interest paid 7,417 2,49419,952 8,544
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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.
