Medical Ventures Corp.
TSX VENTURE : MEV

Medical Ventures Corp.

August 24, 2007 18:20 ET

Medical Ventures Reports Q2 2007 Financial Results

RICHMOND, BRITISH COLUMBIA--(Marketwire - Aug. 24, 2007) - MEDICAL VENTURES CORP. (MEV) (TSX VENTURE:MEV) announces the results of operations for the quarter ended June 30, 2007.

MEV's business highlights to date include:

- Completed minimum enrolment for the GAAME clinical trial that will support the Company's application to the U.S. Food & Drug Administration for coronary use of the Metricath Gemini® catheter. The U.S. FDA agreed to accept patient data from the trial based on a revised statistical analysis plan that reduced the study's minimum sample population to 107. The Company met the revised minimum of 107 enrolled patients (reduced from an initially projected 160) in Q2 2007. MEV expects to submit a pre-market approval (PMA) application to the FDA for coronary use of the Metricath Gemini catheter in Q4 2007.

- Initiated changes to improve sales performance and expanded the reach of the direct sales staff for the Metricath product line. To support these changes, MEV appointed Gene Starr to the board of directors and retained him to work with the Company's existing sales management on a consulting basis. Mr. Starr was formerly president and CEO of Venetec International (San Diego, CA), where he successfully managed market introduction of the firm's medical device products, leading to the acquisition of Venetec by C.R. Bard in 2006 for $168M. Subsequent to the quarter-end, MEV also hired Sean Moore as the U.S. national sales director for the Metricath product line. Prior to joining Medical Ventures, Sean was an Area Manager for Conmed Corporation where he successfully turned the worst performing sales region in the U.S. into their number one sales region.

- Launched a new Metricath Libra® product model in the U.S. market. The Company's new "small peripheral" model vascular-measurement catheter is designed to enable doctors to measure the size of arteries in patients' lower legs during angioplasty procedures. These measurements will help physicians to determine the correct size of balloons, stents and other devices to use when repairing diseased arteries and to confirm the results of these treatments. Left untreated, diseased arteries in the lower limbs can result in significant pain and loss of mobility for the patient, and often leads to amputation.

- Closed a short form public prospectus offering, issuing 38,709,110 units of the Company at a price of $0.20 per unit for aggregate net proceeds, after share issue costs of $6,865,214. Each unit consisted of one common share and one-half of one non-transferable common share purchase warrant entitling the holder to purchase one additional common share for every whole warrant at a price of $0.25 per share expiring on October 24, 2008. On closing, the Agent received non-transferable share purchase warrants to purchase up to 1,935,456 common shares at a price of $0.20 per share exercisable until October 24, 2008. Subsequent to closing, the Agent exercised 1,161,549 warrants for net proceeds of $232,310.

"Completing minimum patient enrolment in the GAAME trial was an exciting milestone for Medical Ventures," said Paul Geyer, president and CEO. "With the enrolment phase complete, we are now looking ahead to submitting our FDA application for the Gemini in the latter part of the year."

"We are also very happy to have added significant experience in the area of sales management by welcoming Gene Starr and Sean Moore to our team. Each of them has a successful history in managing the introduction of new medical technologies, and we expect they will serve us well as we focus our efforts on bringing Metricath to the U.S. market."

Financial Information

The consolidated net loss for the three and six month periods ended June 30, 2007 were $2,308,497 and $3,728,549 or $0.02 and $0.04 per share, respectively, as compared with a net loss of $1,342,054 and $2,212,510 or $0.02 and $0.03 per share for the comparative period in 2006.

Revenues for the three and six month periods ended June 30, 2007, were $345,811 and $672,059 respectively. These amounts compare to $349,012 and $725,513 in the same periods in 2006. In Q2 2006, MEV changed its sales approach for Metricath products in the United States, moving from a distributor network to a direct sales force. The anticipated period of lower revenues during the sales channel transition has persisted longer than forecast primarily as result of issues relating to reimbursement and inertia among specialists.

Total expenses for the three and six month periods ended June 30, 2007 were $2,490,802 and $4,156,212, respectively, a substantial increase over expenses incurred in the comparative periods in 2006 of $1,619,961 and $2,751,382, respectively. The increase in expenses relate principally to increased sales and marketing activities, increased costs associated with the GAAME trial and a $124,170 inventory write down in Q2 2007.

At June 30, 2007, the Company had cash and cash equivalents of $6,922,668 and working capital of $7,701,591 as compared to cash of $2,748,735 and working capital of $4,065,561 as at December 31, 2006.

Medical Ventures also announces it has granted five-year stock options to directors of the company during 2007 as follows: 125,000 options exercisable at a price of $0.15 per share.

The following is a summary of MEV's Results of Operations and Financial Condition for the quarter ended June 30, 2007. Full financials are available on Sedar and at www.medical-ventures.com.



MEDICAL VENTURES CORP.
Interim Consolidated Balance Sheets
June 30, 2007 and December 31, 2006
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June 30, December 31,
2007 2006
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(Unaudited) (Audited)

ASSETS

CURRENT
Cash and cash equivalents $ 6,922,668 $ 2,748,735
Accounts receivable 257,559 201,082
Inventory (Note 5) 977,888 1,291,658
Prepaid expenses and deposits 94,466 88,188
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8,252,581 4,329,663
PROPERTY AND EQUIPMENT (Note 6) 944,738 956,894
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$ 9,197,319 $ 5,286,557
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LIABILITIES

CURRENT
Accounts payable and accrued liabilities $ 515,590 $ 208,702
Current portion of long-term debt (Note 7) 20,400 20,400
Current portion of repayable
contribution agreement (Note 8) 15,000 35,000
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550,990 264,102

LONG-TERM DEBT (Note 7) 150,689 160,889
REPAYABLE CONTRIBUTION AGREEMENT (Note 8) 386,035 368,591
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1,087,714 793,582
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SHAREHOLDERS' EQUITY

Share capital (Note 9) 28,859,277 21,607,856
Contributed surplus (Note 9) 879,314 785,556
Deficit (21,628,986) (17,900,437)
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8,109,605 4,492,975
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$ 9,197,319 $ 5,286,557
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MEDICAL VENTURES CORP.
Interim Consolidated Statements of Operations and Deficit
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Three month Six month
period ended period ended
June 30, June 30,
2007 2006 2007 2006
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

SALES $ 345,811 $ 349,012 $ 672,059 $ 725,513
COST OF SALES 201,189 123,829 320,740 272,280
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GROSS PROFIT 144,622 225,183 351,319 453,233
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EXPENSES
Selling 785,131 460,827 1,252,319 688,278
General and
administration 730,090 678,622 1,237,910 1,153,805
Product
development
and clinical
trials 790,643 441,701 1,442,563 843,732
Inventory
write down
(Note 5) 124,170 - 124,170 -
Amortization 60,768 38,811 99,250 65,567
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2,490,802 1,619,961 4,156,212 2,751,382
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LOSS BEFORE
OTHER INCOME
(EXPENSES) (2,346,180) (1,394,778) (3,804,893) (2,298,149)
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OTHER INCOME
(EXPENSES)
Interest
income 40,541 55,854 82,080 91,689
Interest on
long-term
debt (2,858) (3,130) (5,736) (6,050)
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37,683 52,724 76,344 85,639
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NET LOSS FOR
THE PERIOD (2,308,497) (1,342,054) (3,728,549) (2,212,510)
DEFICIT,
BEGINNING
OF PERIOD (19,320,489) (13,286,931) (17,900,437) (12,416,475)
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DEFICIT, END
OF PERIOD $(21,628,986) $(14,628,985) $(21,628,986) $(14,628,985)
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BASIC AND
DILUTED LOSS
PER SHARE $ (0.02) $ (0.02) $ (0.04) $ (0.03)
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WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING 100,566,564 71,166,578 85,952,975 66,515,240
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MEDICAL VENTURES CORP.
Interim Consolidated Statements of Cash Flows
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Three month Six month
period ended period ended
June 30, June 30,
2007 2006 2007 2006
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)

OPERATING
ACTIVITIES
Net loss for
the period $ (2,308,497) $ (1,342,054) $ (3,728,549) $ (2,212,510)
Items not
affecting
cash
Inventory
write down 124,170 - 124,170 -
Amortization 60,768 38,811 99,250 65,567
Stock-based
compensation 62,693 46,577 93,758 90,342
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(2,060,866) (1,256,666) (3,411,371) (2,056,601)
Change in non-cash
operating assets
and liabilities
Accounts
receivable (23,625) (19,883) (56,477) (200,964)
Inventory 113,642 (69,456) 135,648 (148,908)
Prepaid expenses
and deposits 63,530 66,190 (6,278) 52,906
Accounts payable
and accrued
liabilities 108,468 44,797 306,888 29,531
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(1,798,851) (1,235,018) (3,031,590) (2,324,036)
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INVESTING ACTIVITY
Purchase of
property and
equipment (12,324) (115,882) (33,142) (151,451)
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(12,324) (115,882) (33,142) (151,451)
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FINANCING ACTIVITIES
Repayment of
long-term
debt (5,100) (8,700) (10,200) (17,400)
Repayment of
repayable
contribution
agreement (2,556) (1,179) (2,556) (1,179)
Proceeds from
share issuance,
net of costs 7,251,421 (21,165) 7,251,421 6,848,895
Proceeds from
exercise of
stock options - 54,000 - 54,000
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7,243,765 22,956 7,238,665 6,884,316
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INCREASE (DECREASE)
IN CASH 5,432,590 (1,327,944) 4,173,933 4,408,829
CASH AND CASH
EQUIVALENTS,
BEGINNING
OF PERIOD 1,490,078 6,957,713 2,748,735 1,220,940
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END OF PERIOD $ 6,922,668 $ 5,629,769 $ 6,922,668 $ 5,629,769
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REPRESENTED BY:
Cash 574,676 118,106 574,676 118,106
Cashable
guaranteed
investment
certificates 6,347,992 5,511,663 6,347,992 5,511,663
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$ 6,922,668 $ 5,629,769 $ 6,922,668 $ 5,629,769
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NON CASH
TRANSACTIONS
Change in
Asset Use
(Note 4) 54,074 - 54,074 -

SUPPLEMENTAL CASH
FLOW INFORMATION
Interest paid 3,130 3,501 6,050 7,315
Income taxes paid - - - -
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About Medical Ventures Corp.

Medical Ventures Corp. is a medical device company dedicated to developing products that address clinical needs in the quickly growing vascular and surgical marketplace. MEV products help doctors treat a wide range of health concerns, including heart and vascular disease and obesity. The company develops and manufactures the Metricath® System catheter technology for use in angioplasty procedures, and PeriPatch™, a range of surgical tissue products. For more information, please visit www.medical-ventures.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; 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. 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.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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