VASOGEN INC. 
By
At
The net loss for the second quarter of 2009 was
We incurred a net loss for the six months ended
Corporate Update
- To further reduce the rate at which we use our cash during our
strategic review process, the employment of Graham Neil, our Vice-
President, Finance, and CFO, was terminated effective July 14, 2009.
Mr. Neil has agreed to fulfill the role of CFO, in a consulting
capacity at substantially reduced compensation, to assist the Board
in bringing closure to the ongoing strategic review process. As a
result of this termination the number of full-time employees has been
reduced to one.
- On April 24, 2009, we announced that Dr. Eldon R. Smith would succeed
Terrance H. Gregg as Chairman of our Board of Directors due to the
retirement of Mr. Gregg. Mr. Gregg's resignation from our Board is
due to the requirements of his role as President and CEO of DexCom,
Inc. In connection with his appointment, Dr. Smith's position as our
Senior Vice President, Scientific Affairs and Chief Medical Officer
was terminated.
- Pursuant to our restructuring plan, our Board of Directors and
Management had 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. The process involved narrowing down the
number of third-party proposals. At this time, we are in the process
of negotiating agreements that may result in one or more transactions
with regard to the foregoing. There can be no assurances that we will
be able to finalize any such agreements. The Board will also consider
alternatives to these that it has also been evaluating. The Board
will continue to assess the merits of these options relative to
liquidating the Company and distributing the remaining cash to the
shareholders.
The unaudited interim consolidated financial statements, accompanying notes to the unaudited interim consolidated financial statements, and Management's Discussion and Analysis for the three and six months ended
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 (
Summary financial tables are provided below.
VASOGEN INC.
(A DEVELOPMENT STAGE COMPANY)
Interim Consolidated Balance Sheets
(In thousands of Canadian dollars)
May November
31, 30,
2009 2008
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(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 5,834 $ 8,556
Tax credits recoverable 427 582
Prepaid expenses and deposits 396 188
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6,657 9,326
Property and equipment 14 16
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$ 6,671 $ 9,342
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 303 $ 101
Accrued liabilities 985 1,141
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1,288 1,242
Shareholders' equity:
Share capital:
Authorized:
Unlimited common shares, without par value
Issued and outstanding:
22,623,195 common shares
(November 30, 2008 - 22,424,719) 365,730 365,677
Warrants 16,725 16,725
Contributed surplus 24,121 23,555
Deficit (401,193) (397,857)
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5,383 8,100
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$ 6,671 $ 9,342
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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 Six months ended 1987 to
May 31, May 31, May 31,
2009 2008 2009 2008 2009
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Expenses:
Research and
development $ 320 $ 4,860 $ 356 $ 7,638 $ 248,067
General and
administration 998 2,929 3,444 5,610 128,770
Foreign
exchange
loss (gain) 84 (338) 54 (135) 10,719
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Loss before the
undernoted (1,402) (7,451) (3,854) (13,113) (387,556)
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 7 33 31 375 13,869
Change in fair
value of
embedded
derivatives - - - - 829
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Loss and
comprehensive
loss for the
period (1,395) (7,418) (3,336) (12,738) (393,750)
Deficit,
beginning of
period (399,798) (387,103) (397,857) (381,783) (1,510)
Impact of
change in
accounting
for
stock-based
compensation - - - - (1,632)
Impact of
change in
accounting
for financial
instruments - - - - (4,006)
Charge for
acceleration
payments on
equity
component of
senior
convertible
notes payable - - - - (295)
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Deficit, end
of period $(401,193) $(394,521) $(401,193) $(394,521) $(401,193)
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Basic and
diluted
loss per
common
share $ (0.06) $ (0.33) $ (0.15) $ (0.57)
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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 Six months ended 1987 to
May 31, May 31, May 31,
2009 2008 2009 2008 2009
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Cash provided
by (used in):
Operating
activities:
Loss for the
period $ (1,395) $ (7,418) $ (3,336) $ (12,738) $(393,750)
Items not
involving
cash:
Amortization - 125 2 187 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 150 316 566 551 10,956
Common
shares
issued for
services - - - - 2,485
Unrealized
foreign
exchange
gain (loss) 90 (33) 52 159 11,471
Other - - - - (35)
Change in
non-cash
operating
working
capital (257) (557) 42 841 480
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(1,412) (7,567) (3,161) (11,000) (343,105)
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)
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- - - - 364,600
Investing
activities:
Purchases
of property
and
equipment - (6) - (6) (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
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- (6) 487 (6) (12,198)
Foreign exchange
gain (loss) on
cash held in
foreign
currency (87) 32 (48) (150) (3,463)
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Increase
(decrease) in
cash and cash
equivalents (1,499) (7,541) (2,722) (11,156) 5,834
Cash and cash
equivalents,
beginning of
period 7,333 19,930 8,556 23,545 -
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Cash and cash
equivalents,
end of period $ 5,834 $ 12,389 $ 5,834 $ 12,389 $ 5,834
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SOURCE Vasogen Inc.
