Neovasc Inc. Reports Q2 2008 Medical Ventures Corp. Financial 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 /CNW/ - 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

    -------------------------------------------------------------------------

                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
                                                    (Unaudited)

    ASSETS

    CURRENT
      Cash and cash equivalents                   $    118,847  $  3,242,404
      Accounts receivable                              340,648       568,964
      Inventory                                        377,754       384,124
      Prepaid expenses and other assets                188,340        18,755
    -------------------------------------------------------------------------
                                                     1,025,589     4,214,247
    RESTRICTED CASH AND CASH EQUIVALENTS                50,000        50,000
    PROPERTY AND EQUIPMENT                           1,317,809     1,425,553
    -------------------------------------------------------------------------
                                                  $  2,393,398  $  5,689,800
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Bank overdraft                              $    234,346  $          -
      Accounts payable and accrued liabilities         840,803       735,310
      Current portion of long-term debt                 19,964        19,559
      Current portion of repayable contribution
       agreement                                        30,302        28,112
    -------------------------------------------------------------------------
                                                     1,125,415       782,981
    LONG-TERM DEBT                                     429,100       441,540
    REPAYABLE CONTRIBUTION AGREEMENT                   285,071       283,959
    -------------------------------------------------------------------------
                                                     1,839,586     1,508,480
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

    Share capital                                   28,592,620    28,835,081
    Contributed surplus                              1,248,838       976,637
    Deficit                                        (29,287,646)  (25,630,398)
    -------------------------------------------------------------------------
                                                       553,812     4,181,320
    -------------------------------------------------------------------------
                                                  $  2,393,398  $  5,689,800
    -------------------------------------------------------------------------



    NEOVASC INC. (Formerly Medical Ventures Corp.)
    Interim Consolidated Statements of Operations and Deficit
    For the three and six months ended June 30
    -------------------------------------------------------------------------

                          Three months ended            Six months ended
                              2008          2007          2008          2007
    -------------------------------------------------------------------------
                        (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)

    SALES
      Product sales   $    433,061  $    219,325  $    837,924  $    523,443
      Consulting
       services                  -       126,486        28,622       148,616
    -------------------------------------------------------------------------
                           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
    -------------------------------------------------------------------------
    GROSS PROFIT           212,717       144,622       437,942       351,319
    -------------------------------------------------------------------------

    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       124,170        94,404       124,170
      Amortization          75,670        60,768       121,436        99,250
    -------------------------------------------------------------------------
                         2,149,886     2,544,375     4,105,186     4,211,916
    -------------------------------------------------------------------------
    LOSS BEFORE OTHER
     INCOME (EXPENSES)  (1,937,169)   (2,399,753)   (3,667,244)   (3,860,597)
    -------------------------------------------------------------------------
    OTHER INCOME
     (EXPENSES)
      Interest income       14,208        40,541        23,303        82,080
      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             16,155        53,573         6,913        55,704
    -------------------------------------------------------------------------
                            21,496        91,256         9,996       132,048
    -------------------------------------------------------------------------
    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)
    -------------------------------------------------------------------------
    DEFICIT, END OF
     PERIOD           $(29,287,646) $(21,628,986) $(29,287,646) $(21,628,986)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    BASIC AND DILUTED
      LOSS PER SHARE  $      (0.02) $      (0.02) $      (0.03) $      (0.04)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    WEIGHTED AVERAGE
     NUMBER OF
     COMMON SHARES
     OUTSTANDING       111,209,545   100,566,564   111,209,545    85,952,975
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NEOVASC INC. (Formerly Medical Ventures Corp.)
    Interim Consolidated Statements of Cash Flows
    For the three and six months ended June 30
    -------------------------------------------------------------------------

                          Three months ended            Six 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       124,170        94,404       124,170
        Amortization        75,670        60,768       121,436        99,250
        Accreted
         Interest on
          repayable
          contribution
          agreement          3,846             -         7,685             -
        Stock-based
         compensation       16,457        62,693        29,740        93,758
    -------------------------------------------------------------------------
                        (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
    -------------------------------------------------------------------------
                        (1,527,982)   (1,798,851)   (3,327,793)   (3,031,590)
    -------------------------------------------------------------------------
    INVESTING ACTIVITY
      Purchase of
       property and
       equipment            (6,510)      (12,324)      (13,692)      (33,142)
    -------------------------------------------------------------------------
                            (6,510)      (12,324)      (13,692)      (33,142)
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------
      END OF PERIOD   $   (115,499) $  6,872,668  $   (115,499) $  6,872,668
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    REPRESENTED BY:
      (Bank Overdraft)
       /Cash              (234,346)      524,676      (234,346)      524,676
      Cashable
       guaranteed
       investment
       certificates        118,847     6,347,992       118,847     6,347,992
    -------------------------------------------------------------------------
                      $   (115,499) $  6,872,668  $   (115,499) $  6,872,668
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    NON CASH
     TRANSACTIONS
      Change in Asset
      Use                        -        53,592             -        53,952

    SUPPLEMENTAL CASH
     FLOW INFORMATION
      Interest paid          5,021         3,130        12,535         6,050
    -------------------------------------------------------------------------
    

    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.





For further information:

For further information: Chief Financial Officer, Neovasc Inc, Chris
Clark, (604) 270-4344; U.S. Investor and Media Contact: GendeLLindheim BioCom
Partners, Barbara Lindheim, (212) 918-4650


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