Vaso Active's Claims Prompt SEC to Step In

Last week, in a conference call with investors, Vaso Active Chief Executive John Masiz read a statement predicting that the company's annual sales will climb from $53,000 in 2003 to a "run rate" of $12 million next year because of a number of strategic deals it has reached. The conference call sparked controversy, because Masiz abruptly ended it without fielding questions, even though more than 100 people were listening in.

Controversy is nothing new to Vaso Active. The company has had to fend off questions about an endorsement for its athlete's foot lotion Termin8 and the authorship of a six-year-old clinical study of the foot lotion.

Regulators also have raised questions about the high level of trading in the stock. In the weeks before the stock split, the shares skyrocketed from $8 to $39. The trading volume rose from just a few thousand shares changing hands each day to several million.

Despite all the controversy, Vaso Active was able to ink a $7.5 million private placement with Millennium Partners, a big New York hedge fund led by Wall Street impresario Israel Englander. The financing arrangement consisted of an 18-month convertible 2% note that can be turned into roughly 833,000 shares of Vaso Active stock, if the share price reaches $9. The deal also included warrants to purchase 166,667 shares of Vaso stock at an exercise price of $8.75.

A Millennium spokesman declined to comment on the trading suspension.

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