VASOGEN INC. 
By
At
We incurred a net loss for the three months ended
Corporate Update
- To further reduce the rate at which we use our cash during our
strategic review process, in February 2009 we further reduced our
number of full-time employees to two. As part of this restructuring,
the employment of Chris Waddick, our President and CEO, was
terminated effective February 28, 2009. Mr. Waddick has agreed to
fulfill the role of CEO, in a consulting capacity at substantially
reduced compensation, to assist the Board in bringing closure to the
ongoing strategic review process.
- Pursuant to our restructuring plan, our Board of Directors and
Management has been actively involved in a process of screening,
reviewing, and short-listing potential opportunities including the
sale of the Company, or a merger or acquisition, and exploring the
monetization of certain tangible and intangible assets. The process
has also included a review of the potential out-licensing of assets,
lapsing of patents and patent applications, asset divestiture, or
liquidation of the Company. At this time, we have significantly
narrowed down the number of third party proposals under
consideration. If a definitive agreement that the Board believes is
in the best interest of our shareholders cannot be reached in the
near future, the Board will consider the other alternatives that it
has also been evaluating. These alternatives include the potential to
realize value from the monetization of certain intangible assets
either alone or potentially in combination with a strategic
transaction. The Board will continue to assess the merits of these
options relative to liquidating the Company and distributing the
remaining cash to the shareholders.
- As at February 28, 2009, we had cash and cash equivalents of $7.3
million and had 22.5 million common shares issued and outstanding.
Other than our accounts payable and accrued liabilities, we do not
have any debt.
- We sold a United States patent application and its related foreign
counterparts for US$0.4 million. This device-based intellectual
property has not been used to date in the Celacade System; however,
we have retained rights to this technology for any potential use as
it relates to our Celacade System.
- Subsequent to quarter end, on March 25, 2009, the NASDAQ Stock Market
further suspended the enforcement of the Minimum Bid Price Rule
requiring a minimum US$1.00 closing price until July 20, 2009.
Accordingly, the NASDAQ indicated that it will not take action to
delist any security, including our common shares, for a violation of
the minimum bid price rule during the suspension.
Certain statements in this document constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and/or "forward-looking information" under the Securities Act (
The unaudited interim consolidated financial statements, accompanying notes to the unaudited interim consolidated financial statements, and Management's Discussion and Analysis for the three months ended
Summary financial tables are provided below.
VASOGEN INC.
(A DEVELOPMENT STAGE COMPANY)
Interim Consolidated Balance Sheets
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
February 28, November 30,
2009 2008
-------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,333 $ 8,556
Tax credits recoverable 383 582
Prepaid expenses and deposits 64 188
-----------------------------------------------------------------------
7,780 9,326
Property and equipment 14 16
-------------------------------------------------------------------------
$ 7,794 $ 9,342
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 414 $ 101
Accrued liabilities 781 1,141
-----------------------------------------------------------------------
1,195 1,242
Shareholders' equity
Share capital:
Authorized:
Unlimited common shares, without par
value
Issued and outstanding:
22,519,737 common shares
(November 30, 2008 - 22,424,719) 365,701 365,677
Warrants 16,725 16,725
Contributed surplus 23,971 23,555
Deficit (399,798) (397,857)
-----------------------------------------------------------------------
6,599 8,100
-------------------------------------------------------------------------
$ 7,794 $ 9,342
-------------------------------------------------------------------------
-------------------------------------------------------------------------
VASOGEN INC.
(A DEVELOPMENT STAGE COMPANY)
Interim Consolidated Statements of Operations, Deficit and Comprehensive
Income
(In thousands of Canadian dollars, except per share amounts)
(Unaudited)
-------------------------------------------------------------------------
Period from
December 1,
Three months ended 1987 to
February 28, February 29, February 28,
2009 2008 2009
-------------------------------------------------------------------------
Expenses:
Research and development $ 36 $ 2,778 $ 247,747
General and administration 2,446 2,681 127,772
Foreign exchange loss (gain) (30) 203 10,635
-------------------------------------------------------------------------
Loss before the undernoted (2,452) (5,662) (386,154)
Interest expense on senior
convertible notes payable - - (1,279)
Accretion in carrying value
of senior convertible notes
payable - - (10,294)
Amortization of deferred
financing costs - - (3,057)
Loss on extinguishment of
senior convertible notes
payable - - (6,749)
Gain on sale of patents 487 - 487
Investment income 24 342 13,862
Change in fair value of
embedded derivatives - - 829
-------------------------------------------------------------------------
Loss and comprehensive loss
for the period (1,941) (5,320) (392,355)
Deficit, beginning of period (397,857) (381,783) (1,510)
Impact of change in accounting
for stock-based compensation - - (4,006)
Impact of change in accounting
for financial instruments - - (1,632)
Charge for acceleration
payments on equity component
of senior convertible notes
payable - - (295)
-------------------------------------------------------------------------
Deficit, end of period $ (399,798) $ (387,103) $ (399,798)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted loss per
common share $ (0.09) $ (0.24)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
VASOGEN INC.
(A DEVELOPMENT STAGE COMPANY)
Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
(Unaudited)
-------------------------------------------------------------------------
Period from
December 1,
Three months ended 1987 to
February 28, February 29, February 28,
2009 2008 2009
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Loss for the period $ (1,941) $ (5,320) $ (392,355)
Items not involving cash:
Amortization 2 62 6,379
Loss on disposition of
property and equipment - - 125
Gain on sale of patents (487) - (487)
Accretion in carrying
value of senior
convertible notes payable - - 10,294
Amortization of deferred
financing costs - - 3,057
Loss on extinguishment of
senior convertible notes
payable - - 6,749
Change in fair value of
embedded derivatives - - (829)
Stock-based compensation 416 235 10,806
Common shares issued for
services - - 2,485
Unrealized foreign
exchange gain (38) 192 11,381
Other - - (35)
Change in non-cash operating
working capital 299 1,398 737
-----------------------------------------------------------------------
(1,749) (3,433) (341,693)
Financing activities:
Shares and warrants issued
for cash - - 326,358
Warrants exercised for cash - - 16,941
Options exercised for cash - - 7,669
Share issue costs - - (24,646)
Repayment of senior
convertible notes payable,
net - - 38,512
Paid to related parties - - (234)
-----------------------------------------------------------------------
- - 364,600
Investing activities:
Purchases of property and
equipment - - (2,471)
Purchases of acquired
technology - - (1,283)
Proceeds on disposition of
patents 487 - 487
Purchases of marketable
securities - - (244,846)
Proceeds on disposition of
property and equipment - - 62
Settlement of forward foreign
exchange contracts - - (4,824)
Maturities of marketable
securities - - 240,677
-----------------------------------------------------------------------
487 - (12,198)
Foreign exchange gain (loss)
on cash held in foreign
currency 39 (182) (3,376)
-------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents (1,223) (3,615) 7,333
Cash and cash equivalents,
beginning of period 8,556 23,545 -
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 7,333 $ 19,930 $ 7,333
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SOURCE Vasogen Inc.
