CHAD Suspends Operations, Inovo Not Affected

CHATSWORTH, Calif., and NAPLES, Fla. — CHAD Therapeutics
announced Oct. 29 that that it has suspended operations due to the
inability to raise additional capital. Following the sale of its
oxygen business to Inovo in February, the company had been looking
for capital to market products it was developing for the sleep
disorder market, including its proprietary FloCHANNEL Diagnostic
System, which received FDA clearance in July.

But in a statement, the company said current prospects aren’t
promising and that it may be unable to restart operations. CHAD’s
board is considering other options, including declaring
bankruptcy.

The company said it had recently reached an agreement for a $2
million investment by a private equity group, but among terms of
the proposed deal, the investor required that all back salary and
severance obligations to officers and former officers be settled
for no more than $250,000 in cash plus stock in the company.

Earl Yager, CHAD’s CEO, and Thomas Jones, CHAD’s chairman, who
together are owed $293,750 in back salary, had agreed to settle the
obligation, as well as their severance contracts, for stock, and
the independent members of the company’s board of directors had
agreed to defer director fees. Three of the four other officers and
former officers agreed to receive pro-rata shares of the $250,000
in cash plus stock, but one former officer would not agree. As a
result, the private equity group said it was unwilling to
proceed.

Immediately following the announcement, Naples, Fla.-based
Inovo, which purchased CHAD’s oxygen conserving assets along with
the right to maket under the name “CHAD Therapeutics,” issued its
own statement to clarify that the company “is in no way affiliated
with CHAD Therapeutics.”

Inovo successfully moved the production of CHAD’s oxygen
conserving devices to its Naples facility in June of this year.

“We continue to emphasize our commitment ot both the delivery of
high-quality, clinically effective oxygen conservers and the growth
of our business for many years to come,” said George Harris, Inovo
CEO.