CHAD Therapeutics Completes $3.5 Million Financing Package

  
    
  
  
    
      CHAD Therapeutics, Inc. (AMEX:CTU) today announced the completion 
      of a $3,500,000 financing package with a private investor that provides 
      funding for the development and commercial roll-out of the Company's 
      initial products for the sleep disorder market and enhances the 
      Company's working capital.
    
    
      The financing package is comprised of a $750,000 convertible term note 
      and a $2,750,000 revolving credit line, all secured by the Company's 
      assets. The term note is payable in equal installments over 33 months 
      and bears interest at prime plus 2%, and the revolving credit line bears 
      interest at prime plus 1.5%. A portion of the financing was used to pay 
      all outstanding obligations on the Company's factoring arrangement with 
      a commercial bank.
    
    
      At the investor's option, the convertible note may be converted into 
      shares of the Company's common stock any time during the term of the 
      note at a conversion price of $1.18. In addition, warrants to purchase 
      up to 976,744 shares of CHAD's common stock were issued to the investor 
      with an exercise price of $1.24 per share. The investor was granted 
      registration rights with respect to the shares underlying the warrants. 
      The warrants include a lock-up feature for a period of 12 months after 
      any warrants are exercised. In connection with the financing, CHAD 
      incurred brokerage and related fees of approximately $400,000 and issued 
      20,958 warrants with an exercise price of $1.24 to a brokerage firm that 
      introduced the investor.
    
    
      Earl Yager, CHAD's President and CEO, said, "As previously announced, we 
      currently are launching several new products for the oxygen market and 
      expect to launch our initial products for the sleep disorder market this 
      fall. We also are pursuing outsourcing and other cost-cutting measures 
      to reduce manufacturing costs for many of our established products. We 
      believe this financing package gives us the resources to complete these 
      programs while maintaining our current operations."
    
    
      About CHAD Therapeutics
    
    
      CHAD Therapeutics, Inc. develops, manufactures and markets respiratory 
      care devices designed to improve the efficiency of oxygen delivery 
      systems for home health care and hospital treatment of patients 
      suffering from pulmonary diseases. For more information, visit www.CHADtherapeutics.com.
    
    
      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 loss of one or more 
      major customers, increased competition, 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 CHAD's ability to anticipate and respond to 
      technological and economic changes in the home oxygen 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 homecare providers 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."