Chad Therapeutics, Inc. Suspends Operations

Published: Oct 29, 2008

CHATSWORTH, Calif.--(BUSINESS WIRE)--CHAD Therapeutics, Inc. (OTCBB:CHAD - News) announced today that it has suspended operations due to its inability to raise additional capital.

As previously reported, following the sales of the assets of its oxygen business in February and March 2008, the Company has been seeking additional capital to support the marketing of the products it has been developing for the sleep disorder market, including its proprietary FloCHANNEL? Diagnostic System which received FDA marketing clearance in July 2008.

Despite current difficult conditions in the capital markets, the Company recently reached an agreement in principle for a $2,000,000 investment by a private equity group. Among the terms of the proposed investment, the private equity group 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 this obligation, as well as their severance contracts, for stock in the Company. The independent members of the Company's Board of Directors, who had agreed to defer director fees, would also receive no cash for unpaid director's fees. Three of the four other officers and former officers agreed to receive pro-rata shares of the $250,000 in cash plus stock in the Company, but one former officer would not agree. As a result, the private equity group advised the Company that it was unwilling to proceed with the contemplated financing.

The Company is exploring other potential funding sources, but current prospects are not promising and the Company can offer no assurance that it will be successful in raising the funds it requires to restart operations or that it will be able to restore its business operations if funding is secured. The Board of Directors is considering appropriate actions in light of the Company's current circumstances, including liquidation of the Company under Chapter 7 of the federal bankruptcy laws.

About CHAD Therapeutics

CHAD Therapeutics, Inc. develops and markets innovative products for the sleep disorder market. For more information, visit

Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995.

The foregoing statements regarding prospects for future earnings and revenues, future sales trends and the introduction of products under development are forward-looking statements that involve certain risks and uncertainties. A number of important factors could cause actual results to differ materially from those contemplated by such forward-looking statements. These include the introduction of new products with perceived competitive advantages over the Company's products, changes or proposed changes in health care reimbursement, which affect home care providers, and DORMIO's ability to anticipate and respond to technological and economic changes in the sleep market. Moreover, the success of the Company's products and products under development will depend on their efficacy, reliability and the health care community's perception of the products' capabilities and benefits, the degree of acceptance the products achieve among sleep labs and patients, and, with respect to products under development, obtaining timely regulatory approval. Additional factors that could cause actual results to differ materially from those contemplated in this press release can be found in the Company's annual and quarterly reports filed with the Securities and Exchange Commission under the caption "Outlook: Issues and Risks."


Company Contact: CHAD Therapeutics, Inc. Earl L. Yager, President and CEO 800-871-8484 or 818-882-0883 or Investor Contact: Neil Berkman Associates 310-826-5051

Source: CHAD Therapeutics, Inc.

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