Federal securities regulators have begun asking questions about Vaso Active Pharmaceuticals ( VAPH), a tiny company that has seen its stock soar 600% since going public late last year. A Bronx, N.Y. podiatrist, who is president of The American Association of Medical Foot Specialists, said he received a telephone call Monday from the Securities and Exchange Commission about the association's endorsement of Vaso Active's main product. Dr. David Z. Ascher said the SEC official inquired about the association's endorsement of Termin8 -- a foot cream that Vaso Active claims is "remarkably effective" in curing Athlete's Foot. Ascher didn't discuss the specifics of the phone conversation, but said his association stands behind its endorsement. Two weeks ago, Ascher created a bit of controversy when he told Barrons he didn't recall endorsing Termin8. But a few days later, he amended those remarks. In an interview with the TheStreet.com, Ascher said he was confused when he talked to a Barron's reporter because Termin8 used to be called deFEET before Vaso Active changed the name a few months ago. Ascher blamed the confusion on Vaso Active, but said the association would stick by its endorsement. The doctor, however, said he now wanted Vaso Active to make a donation to an association scholarship program. He declined to say how many members belong to the association, which appears to have no headquarters. An SEC spokesman declined to comment on whether it is investigating Vaso Active. A spokesman for the Massachusetts-based company didn't return telephone calls. The SEC inquiries come at a time that some on Wall Street are expressing bewilderment at the surge in Vaso Active stock, which was priced at $5 a share in a December initial public offering. Trading in the 1.6 million shares Vaso sold to the public has been frenzied, with often more than 1 million shares changing hands each day recently.
The demand for the limited supply of Vaso Active stocks strikes some on Wall Street as unusual since the company has no profits, less than $100,000 in annual sales and just seven employees. But Vaso Active's supporters contend the company is poised to deliver big profits down the road because it has developed a "revolutionary transdermal" method for delivering over-the-counter drugs. It's worth noting that Vaso Active's parent, Biochemics, which owns about half of the company's outstanding shares, didn't have much success selling Termin8 when it was called deFeet. However, the new name for the product should end one controversy. For several years, Biochemics has had to license the deFeet name from deFeet International, a North Carolina athletic wear company. A deFeet company official said the licensing agreement came about after the clothing retailer discovered that Biochemics was using the name without its permission. "We saw it in some stores here and that's why we brought it up with them," said Paul Willerton, a deFeet International vice president. Meanwhile, the surge in Vaso Active's stock could mean big bucks for a Colorado marketing executive who is supposed to be helping the company sell Termin8 and its handful of other creams and lotions. Greg Gorman, founder and president of Commotion, a Golden, Colo.-based marketing firm, owns warrants to buy 75,000 shares of the tiny company, according to a regulatory filing Feb. 13. Vaso Active issued the warrants in January, which are priced well below the stock's current price, as part of the firm's marketing contract. Two weeks ago, Vaso Active filed a registration statement for those 75,000 shares, which gives Gorman the right to sell them once he exercises the warrants at a total cost of $450,000. Gorman could not be reached for comment. It's not known if he has exercised those warrants, but under securities regulations he was free to do so any time after the February filing. But with Vaso Active's shares selling for around $35, those 75,000 shares are worth $2.6 million on paper.