Vaso Active Pharmaceuticals ( VAPH), one of the hottest stocks of the year, was stopped dead in its tracks Thursday by securities regulators.

The Securities and Exchange Commission suspended trading in shares of the tiny Massachusetts company, which claims to have developed a miracle treatment for athlete's foot and a "revolutionary" transdermal delivery system for over-the-counter drugs.

The SEC imposed the suspension "because of questions regarding the accuracy of assertions" by the company in press releases, its annual report and other corporate filings. SEC officials have been investigating the company, which went public in a mid-December IPO, for a little over month.

The action followed a series of articles on TheStreet.com questioning the company's statements about its clinical trials and medical endorsements and noting troubling aspects of its corporate pedigree.

In a press release announcing the temporary suspension, the SEC says the questions surround statements Vaso Active made about Food and Drug Administration approval of "certain key products" and "the regulatory consequences of the future application of their primary product."

The trading suspension expires at midnight on April 15, and it gives time for the SEC to gather information and possibly bring an emergency enforcement action against a company.

Mark Kreitman, an SEC assistant chief litigation counsel, declined to comment on the suspension, but he said the investigation is continuing. The company did not return telephone calls seeking comment.

Matt Meister, president of Kashner Davidson, the small Florida brokerage that was the underwriter on the IPO, declined to comment.

Shares of Vaso Active were frozen at $7.59 a share. The stock is up 314% since its December 2003 initial public offering, after adjusting for a 3-for-1 stock split last month.

The past few months have been a helter-skelter ride for Vaso Active, a money-losing company with just seven employees and less than $60,000 in annual sales. The stock soared on the company's claim that its Termin8 foot lotion and its patented transdermal technology system will revolutionize the over-the-counter drug market.

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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