6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of April, 2009

Commission File Number: 000-53363

NEOVASC INC.
(Exact name of Registrant as specified in its charter)

Suite 2135 - 13700 Mayfield Place
Richmond, British Columbia, Canada, V6V 2E4
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[ x ] Form 20-F   [] Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): []

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): []

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes [] No [ x ]

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _________

SUBMITTED HEREWITH

Exhibits

99.1	Annual Financial Statements for the years ended December 31, 2008, and 2007
99.2	Management's Discussion and Analysis for the years ended December 31, 2008
99.3	Statement of Executive Compansation for the years ended December 31, 2008, 2007 and 2006
99.4	Form 52-109FV1 - Certification of annual filings - venture issuer basic certificate - CEO
99.5	Form 52-109FV1 - Certification of annual filings - venture issuer basic certificate - CFO
99.6	News Release Dated April 24, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NEOVASC INC.
	(Registrant)
Date: April 24, 2009	By:	/s/ Alexei Marko
		Alexei Marko
	Title:	Chief Executive Officer

EX-99.1

Neovasc Inc.
(Formerly Medical Ventures Corp.)
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED
 December 31, 2008 AND 2007

(Expressed in Canadian Dollars)

CONTENTS

	Page
Report of Independent Registered Public Accounting Firm	1 - 2
Consolidated Balance Sheets	3
Consolidated Statements of Operations, Comprehensive Loss and Deficit	4
Consolidated Statements of Cash Flows	5
Notes to the Consolidated Financial Statements	6 – 30

Report of independent registered public accounting firm

Grant Thornton LLP
Suite 1600, Grant Thornton Place
333 Seymour Street
Vancouver, BC
V6B 0A4

T (604) 687-2711
F (604) 685-6569
www.GrantThornton.ca

To the shareholders of Neovasc Inc. (formerly Medical Ventures Corp.)

We have audited the accompanying consolidated balance sheets of Neovasc Inc. as at December 31, 2008 and 2007 and the consolidated statements of operations, comprehensive loss and deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and auditing standards generally accepted in Canada. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2008 and 2007 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain respects from accounting principles generally accepted in the United States of America. Information related to the nature and effect of such differences is presented in Note 23 to the consolidated financial statements.

Vancouver, Canada
March 15, 2009, except as to note 22(b)
which is as of April 23, 2009	Independent registered public accounting firm

1

Audit • Tax • Advisory
Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd

Comment by independent registered public accountants
for US readers on Canada-US reporting differences

Grant Thornton LLP
Suite 1600, Grant Thornton Place
333 Seymour Street
Vancouver, BC
V6B 0A4

T (604) 687-2711
F (604) 685-6569
www.GrantThornton.ca

The standards of the Public Company Accounting Oversight Board (United States) require the addition of an explanatory paragraph (following the opinion paragraph) when there are changes in accounting principles that have a material effect on the comparability of the Company’s consolidated financial statements, such as those discussed in Note 3(q), as well as when the consolidated financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 2 to the consolidated financial statements. Although we conducted our audits in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), our report to the shareholders dated March 15, 2009, except as to note 22(b) which is as of April 23, 2009, is expressed in accordance with Canadian reporting standards, which do not require references to such change in accounting policies in the report of the independent registered public accounting firm when the change is properly accounted for and adequately disclosed in the financial statements, nor permit a reference to such events and conditions in the report of the independent registered public accounting firm when these are adequately disclosed in the financial statements.

Vancouver, Canada
March 15, 2009, except as to note 22(b)
which is as of April 23, 2009	Independent registered public accounting firm

2

Audit • Tax • Advisory
Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd

NEOVASC INC. (Formerly Medical Ventures Corp.)

Consolidated Balance Sheets

As at December 31

		2008			2007
ASSETS
CURRENT
Cash and cash equivalents		2,498,439		$	3,242,404
Accounts receivable		470,200			568,964
Inventory (Note 7)		341,564			384,124
Prepaid expenses		52,356			18,755
		3,362,559			4,214,247
RESTRICTED CASH AND CASH EQUIVALENTS (Note 12)		50,000			50,000
RETIREMENT ASSETS (Note 8)		8,320			-
TECHNOLOGY (Note 9)		-			-
GOODWILL (Note 10)		-			-
PROPERTY AND EQUIPMENT (Note 11)		1,399,644			1,425,553
	$	4,820,523		$	5,689,800
LIABILITIES
CURRENT
Accounts payable and accrued liabilities	$	1,218,405		$	735,310
Current portion of long-term debt		20,635			19,559
Current portion of repayable contribution agreement		-			28,112
		1,239,040			782,981
LONG-TERM DEBT (Note 12)		418,612			441,540
REPAYABLE CONTRIBUTION AGREEMENT (Note 13)		-			283,959
RETIREMENT LIABILITIES (Note 8)		8,964			-
		1,666,616			1,508,480
SHAREHOLDERS’ EQUITY
Share capital (Note 15)		58,607,066			28,835,081
Contributed surplus (Note 15)		4,436,804			976,637
Deficit		(59,889,963	)		(25,630,398	)
		3,153,907			4,181,320
	$	4,820,523		$	5,689,800
CONTINUING OPERATIONS (Note 2)
SUBSEQUENT EVENTS (Note 22)

APPROVED BY THE DIRECTORS:

(Signed) Alexei Marko

Alexei Marko, Director

(Signed) Steven Rubin

Steven Rubin, Director

See accompanying Notes to the Audited Consolidated Financial Statements

3

NEOVASC INC. (Formerly Medical Ventures Corp.)

Consolidated Statements of Operations, Comprehensive Loss and Deficit

For the years ended December 31

		2008			2007
SALES (Note 20)
Product sales	$	1,452,854			1,209,832
Consulting services		93,385			308,041
		1,546,239			1,517,873
COST OF GOODS SOLD
including underutilized capacity of $32,136 (2007: $155,888)		708,300			799,593
GROSS PROFIT		837,939			718,280
EXPENSES
Selling (Note 16)		3,245,886			2,839,897
General and administration (Note 17)		3,459,800			2,282,283
Product development and clinical trials (Note 18)		3,101,869			2,744,913
Impairment of intangible assets (Notes 9 & 10)		23,061,012			-
Inventory write down (Note 7)		626,925			559,131
Recovery on repayable contribution agreement (Note 13)		(320,445	)		-
Amortization on intangible assets (Note 9)		2,129,570			-
Amortization		194,291			205,451
		35,498,908			8,631,675
LOSS BEFORE OTHER
INCOME (EXPENSES)		(34,660,969	)		(7,913,395	)
OTHER INCOME (EXPENSES)
Interest income		153,277			165,562
Interest on long-term debt		(27,288	)		(14,136	)
Accreted interest on repayable contibution agreement (Note 13)		(15,479	)		(14,891	)
Gain (Loss) on foreign exchange		290,894			(54,094	)
		401,404			82,441
NET LOSS AND COMPREHENSIVE
LOSS FOR THE YEAR		(34,259,565	)		(7,830,954	)
DEFICIT, BEGINNING OF YEAR		(25,630,398	)		(17,900,437	)
ADJUSTMENT FOR CHANGE IN ACCOUNTING POLICY (Note 3)		-			100,993
DEFICIT, END OF YEAR	$	(59,889,963	)	$	(25,630,398	)
BASIC AND DILUTED
LOSS PER SHARE	$	2.94		$	1.59
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING		11,630,939			4,936,248
WEIGHTED AVERAGE NUMBER OF
FULLY DILUTED SHARES OUTSTANDING		12,172,746			4,936,248

See accompanying Notes to the Audited Consolidated Financial Statements

4

NEOVASC INC. (Formerly Medical Ventures Corp.)

Consolidated Statements of Cash Flows

For the years ended December 31

		2008			2007
OPERATING ACTIVITIES
Net loss for the period		(34,259,565	)		(7,830,954	)
Items not affecting cash
Intangible assets impairment		23,061,012			-
Inventory write down		626,925			559,131
Recovery of repayable contribution agreement		(320,445	)		-
Amortization		2,323,861			205,451
Accreted Interest on repayable contribution agreement		15,479			14,891
Stock-based compensation		387,360			166,885
		(8,165,373	)		(6,884,596	)
Change in non-cash operating assets and liabilities
Accounts receivable		508,038			(367,882	)
Inventory		(584,365	)		216,609
Prepaid expenses and other assets		(24,376	)		69,433
Retirement assets		72,295			-
Accounts payable and accrued liabilities		(184,183	)		526,608
Retirement liabilities		(99,844	)		-
		(8,477,808	)		(6,439,828	)
INVESTING ACTIVITY
Acquisition of business, net of cash acquired of $781,008 (Note 4)
B-Balloon Ltd.		(274,858	)		-
Neovasc Medical Ltd.		210,625			-
Purchase of property and equipment		(47,765	)		(542,316	)
		(111,998	)		(542,316	)
FINANCING ACTIVITIES
Increase in long-term debt		-			298,911
Repayment of long-term debt		(21,852	)		(19,101	)
Repayment of loan from related party of B-Balloon		(356,440	)		-
Repayment of repayable contribution agreement		(7,105	)		(5,418	)
Proceeds from share issue, net of costs of $93,916		8,231,088			7,019,111
Proceeds on exercise of agents warrants		-			232,310
Proceeds from exercise of stock options		150			-
		7,845,841			7,525,813
(DECREASE)/INCREASE IN CASH		(743,965	)		543,669
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR		3,242,404			2,698,735
END OF YEAR	$	2,498,439		$	3,242,404
REPRESENTED BY:
Cash		181,228			93,649
Cashable guaranteed investment certificates		2,317,211			3,148,755
	$	2,498,439		$	3,242,404
NON CASH TRANSACTIONS
Change in Asset Use (Note 11)		-			131,794
Issuance of shares to acquire B-Balloon and Neovasc Medical (Note 4)		24,613,554			-
Issue of Warrants					111,518
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid		27,288			14,136

See accompanying Notes to the Audited Consolidated Financial Statements

5

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

1.	INCORPORATION AND NATURE OF BUSINESS
	The Company was incorporated as Medical Ventures Corp. under the Company Act (British Columbia) on November 2, 2000 and was continued under the Canada Business Corporations Act on April 19, 2002. On July 1, 2008, the Company changed its name to Neovasc Inc. (“Neovasc” or the “Company”). Neovasc develops, manufactures and distributes medical devices.
	The Company’s commercialized products include a catheter-based technology called the Metricath as well as products using a pericardial tissue processing technology to produce a number of patch products used in cardiac reconstruction and repair.
2.	CONTINUING OPERATIONS
	These consolidated financial statements have been prepared on a going concern basis that contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred operating losses of $34,259,565 for the year ended December 31, 2008 (2007: $7,830,954) and has a deficit of $59,889,963 as at December 31, 2008 (2007: $25,630,398). The Company’s ability to continue as a going concern is dependent on the profitable commercialization of its products or obtaining additional debt or equity financing to fund ongoing operations until profitability is achieved.
	If the going concern basis was not appropriate for these consolidated financial statements, significant adjustments would be necessary to the carrying values of the Company’s assets and liabilities, reported expenses and balance sheet classifications.
3.	SIGNIFICANT ACCOUNTING POLICIES
	These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and reflect the following significant accounting policies:
	(a)	Basis of consolidation
		These consolidated financial statements include the accounts of the Company and its wholly- owned subsidiaries, Neovasc Medical Inc. (formerly PM Devices Inc.), Angiometrx Inc., Neovasc Medical Ltd. (“Neovasc Medical”), and B-Balloon Ltd. (“B-Balloon”). All intercompany balances and transactions have been eliminated upon consolidation.
	(b)	Use of estimates
		The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. The recoverable amounts of accounts receivable, inventories, property and equipment and the fair value of share-based payments are the significant items subject to estimates in these consolidated financial statements.
	(c)	Foreign currency translation
		The functional currency of the Company and its subsidiaries is the Canadian dollar. Foreign currency denominated monetary assets and liabilities are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the average rate of exchange for the month in which such transactions occur.

6

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(d)	Cash and cash equivalents
		Cash and cash equivalents include cash on hand, demand deposits and short term, highly liquid investments that are readily convertible to known amounts of cash within ninety days of purchase. As at December 31, 2008 the Company has restricted cash of $50,000 (2007 - $50,000) representing security for the Company’s long-term debt (Note 12).
		The Company has an operating line of credit secured on its accounts receivable with an interest rate of Prime Rate per year. The maximum line of credit is the lesser of $200,000 or 75% of North American trade receivables under 90 days old. At December 31, 2008 the Company had drawn $nil (2007: $nil) on the line of credit.
	(e)	Inventory
		Inventory is valued at the lower of cost and net realizable value for finished goods and work in progress and at the lower of cost and replacement cost for raw materials. Cost is determined on a first-in, first-out basis. Cost of finished goods and work in progress includes direct material and labour costs and an allocation of manufacturing overhead and applicable shipping and handling costs. In determining net realizable value, we consider factors such as obsolescence, future demand for inventory and contractual arrangements with customers.
	(f)	Property and equipment
		Property and equipment are recorded at cost less accumulated amortization and are amortized over their estimated useful lives using the following rates and method:

Building	4% declining balance
Production equipment	30% declining balance
Assets in the field	12 months straight line
Computer hardware	30% declining balance
Computer software	100% declining balance
Office equipment, furniture and fixtures	20% declining balance

(g)	Technology
	Costs related to the acquisition of technologies include certain patents. Technology is amortized over the shorter of the life of the major patents for the technologies and the expected period of technological obsolescence.
	Technology is tested for impairment whenever events or circumstances indicate that a carrying amount may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds the estimated discounted cash flows used in determining the fair value of the assets. The amount of the impairment loss is calculated by the excess of the asset’s carrying value over its fair value. As at December 31, 2008, Neovasc recognized an impairment charge of $19,503,930 and wrote down its acquired technology to zero (Note 9).
(h)	Goodwill
	Goodwill represents the excess of the cost of investments in subsidiaries over the fair value of the net identifiable assets acquired. The Company reviews the goodwill of all of its reporting units on at least an annual basis to ensure its fair value is in excess of its carrying value in the financial statements. Any impairment in the value of goodwill is charged to income in the period such impairment is determined. As at December 31, 2008, Neovasc recognized an impairment charge of $3,557,082 and wrote down its acquired goodwill to zero (Note 10).

7

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(i)	Revenue recognition
		The Company earns revenue from three sources: product sales, research and development and design services and contract manufacturing. Revenues from these three sources are recognized as follows:
		(i) Product Sales
		Revenue from product sales, including shipments to distributors, is recognized when the product is shipped from the Company’s facilities to the customer when the price is fixed and determinable and collection is reasonably assured.
		(ii) Research and development and design contracts
		Revenue from research and development and design contracts is recognized under the terms of the related contract as services are rendered and collection is reasonably assured.
		(iii) Contract manufacturing
		Revenue from manufacturing contracts is recognized under the terms of the shipment to customers, when the price is fixed or determinable and collection is reasonably assured.
		Cash received in advance of product sales or in advance of the provision of services is recorded as deferred revenue.
	(j)	Research and development
		The Company is engaged in research and development. Research costs are expensed as incurred. Development costs are expensed in the period incurred, unless they meet the criteria for deferral established by Canadian GAAP. Further, in accordance with Canadian GAAP, development costs are deferred only to the extent that their recovery can reasonably be regarded as assured. Management reviews the applicable criteria on a regular basis and if the criteria are no longer met, any remaining unamortized balance is written off as a charge to income. Research and development costs are reduced by any scientific research tax credits to which the Company is entitled.
	(k)	Government assistance
		Government assistance, consisting of grants and research tax credits, is recorded as a reduction of either the related expense or the cost of the asset to which it relates. The assistance is recorded in the accounts when reasonable assurance exists that the Company has complied with the terms and conditions of the approved government assistance program and when there is reasonable assurance that the assistance will be realized.
	(l)	Share capital
		From time to time, the Company issues units consisting of common shares and warrants. The Company records the issuance as a whole in share capital and does not bifurcate the warrants.
	(m)	Acquisition and share issue costs
		Professional, consulting, regulatory fees and other costs that are directly attributable to acquisition and financing transactions are deferred until such time as the transactions are completed. Acquisition costs are added to the cost of the acquisition. Share issue costs are charged to share capital when the related shares are issued. Costs relating to acquisition and financing transactions that are not completed are charged to operations.

8

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(n)	Stock-based compensation
		The Company has a stock option plan as disclosed in Note 15. The Company follows the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870 Stock-Based Compensation and Other Stock-Based Payments to account for grants under this plan. As recommended by Section 3870, the Company has adopted the fair value method for stock-based compensation granted to employees and non-employees and all direct awards of stock.
		The fair value of stock options is determined by the Black-Scholes Option Pricing Model with assumptions for risk-free interest rates, dividend yields, volatility factors of the expected market price of the Company's common shares and an expected life of the options.
		The fair value of direct awards of stock is determined by the quoted market price of the Company's stock.
	(o)	Income taxes
		The Company follows the liability method of accounting for income taxes. Under this method, future income taxes assets and liabilities reflect the tax effect of differences between the carrying amount of balance sheet items and their corresponding tax values and unutilized losses carried forward. Future income tax assets are only recognized to the extent it is more likely than not that the related benefit will be realized.
	(p)	Earnings (loss) per share
		Earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period on a diluted basis using the treasury stock method.
	(q)	Adoption of new accounting standards
		On January 1, 2008, the Company adopted the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 1400, General Standards of Financial Statement Presentation, CICA Handbook Section 1535, Capital Disclosures, CICA Handbook Section 3862 Financial Instruments – Disclosures, and CICA Handbook Section 3863, Financial Instruments – Presentation.
		CICA Handbook 1400, General Standards of Financial Statement Presentation
		In June 2007, the CICA amended Handbook Section 1400.08A-.08C, General Standards of Financial Presentation to change the guidance related to Management’s responsibility to assess the ability to continue as a going concern. Management is required to make an assessment of the Company’s ability to continue as a going concern and should take into account all available information about the future, which is at least, but not limited to 12 months from the balance sheet date. Disclosure is required of material uncertainties related to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern.
		The adoption of Handbook Section 1400 did not have an impact on the Company’s financial results, position or ongoing disclosure.

9

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(q)	Adoption of new accounting standards (Continued)
		CICA Handbook 1535, Capital Disclosures
		Handbook Section 1535 requires the disclosure of both qualitative and quantitative information that enables users of financial information to evaluate (i) an entity’s objectives, policies and process for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance.
		For new disclosures refer to Note 5. The adoption of Handbook Section 1535 did not have an impact on the Company’s financial results or position but certain disclosures have been enhanced.
		CICA Handbook 3862 and 3863, Financial Instruments – Disclosure and Presentation
		The Handbook Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments – Disclosure and Presentation, revising and enhancing its disclosure requirements and carrying forward unchanged its presentation requirements for financial instruments. Handbook Section 3862 and 3863 place increased emphasis on disclosures about the nature and extent of the risks arising from financial instruments and how the entity manages those risks.
		For new disclosures refer to Note 6. The adoption of Handbook Section 3862 and 3863 did not have an impact on the Company’s financial results or position, but certain disclosures have been enhanced.
		CICA Handbook Section 3855
		The Company adopted CICA 3855, Financial Instruments – Recognition and Measurement in its 2007 fiscal year. Upon standards, the Company designated its cash and cash equivalents as held- for-trading. Accounts receivable are classified as loans and receivables. Accounts payable and accrued liabilities, long-term debt and repayable contribution agreement are classified as other financial liabilities. The Company had neither available-for-sale, nor held-to-maturity instruments during the year ended December 31, 2008. Upon initial adoption of these standards, the Company valued the repayable contribution agreement at amortized cost using the effective interest rate method. There was an adjustment of $100,993 to opening retained earnings in 2007 to reflect this change in measurement as required by Section 3855.
	(r)	Recently released accounting standards
		CICA 3064 – Goodwill and Intangible Assets
		CICA 3064 replaces CICA 3062 and establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The provisions relating to the definition and initial recognition of intangible assets are equivalent to the corresponding provisions of IAS 38, Intangible Assets. The Section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. The Company is currently evaluating what impact the adoption CICA 3064 will have on the Company’s consolidated financial condition, results of operations or cash flows.

10

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(r)	Adoption of new accounting standards (Continued)
		Conversion to IFRS
		In February 2008, the Canadian Accounting Standards Board confirmed that the use of International Financial Reporting Standards (“IFRS”) would be required for Canadian publicly accountable enterprises for fiscal years beginning on or after January 1, 2011. In preparation for the conversion to IFRS, the Company has developed an IFRS changeover plan. We are currently reviewing the differences between current Canadian GAAP and IFRS and assess the impacts on the other key elements of our conversion plan in this phase. These key elements include: accounting policy changes, information technology changes, education and training requirements, internal control over financial reporting, and impacts on business activities. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.
4.	ACQUISITION
	On July 1, 2008, the Company acquired 100% of the issued and outstanding common shares and other securities of two Israeli companies, Neovasc Medical and B-Balloon in exchange for issuing an aggregate of 5,858,000 Neovasc securities to the securityholders of each of Neovasc Medical and B-Balloon.
	Neovasc Medical was incorporated and commenced its operations in April 2002 under the laws of Israel. The company develops and commercializes proprietary stent technology for the treatment of patients suffering from recurring temporary shortage of blood to the heart muscle, known as refractory angina. It has a single technology in development, the Reducer.
	B-Balloon was incorporated and commenced operations in April 2004 under the laws of Israel. B-Balloon is a medical device company specializing in the development of unique catheters and vascular stent delivery systems which are intended to solve specific clinical problems encountered by physicians implanting stents to open blockages at ostial locations (where an artery first originates from a larger blood vessel) or bifurcation locations (where an artery splits into two branches). The Company has a suite of products in development. Development of a number of B-Balloon’s products has been temporarily suspended until further resources are available to recommence the development activities.
	The acquisition has been accounted for using the purchase method with Neovasc identified as the acquirer. Accordingly, the consolidated entity is considered to be a continuation of Neovasc with the net assets of Neovasc Medical and B-Balloon being acquired and recorded at their fair market value. The Company’s Statements of Operations include the results of Neovasc for the year ended December 31, 2008 and those of Neovasc Medical and B-Balloon from July 1 to December 31, 2008.

11

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

4.	ACQUISITION (Continued)
	Total consideration paid by Neovasc for all outstanding common shares, convertible preferred shares, stock options, and warrants is as follows:

	Issued to acquire			Issued to acquire
	B-Balloon			Neovasc Medical			Total
	Number		$	Number		$	Number		$
TOTAL CONSIDERATION PAID
Common shares	5,273,800	$	11,602,360	4,610,091	$	10,142,200	9,883,891	$	21,744,560
Replacement warrants	-		-	735,394		875,119	735,394		875,119
Replacement stock options	503,161		1,101,923	407,284		891,952	910,445		1,993,875
	5,776,961		12,704,283	5,752,769		11,909,271	11,529,730		24,613,554
Transaction costs			422,621			422,620			845,241
		$	13,126,904		$	12,331,891		$	25,458,795

The total consideration paid for all outstanding common shares, convertible preferred shares, stock options, and warrants of each of B-Balloon and Neovasc consists of 11,529,730 securities, comprising 9,883,891 common shares, 735,394 warrants for the purchase of Neovasc common shares and 910,445 nominally priced options for the purchase of Neovasc common shares.

The table excludes 186,270 replacement options issued by Neovasc to the former employees and consultants of B-Balloon and Neovasc Medical which include a service requirement as a condition of vesting. These options which represent additional compensation for service not yet received, have been excluded from the calculation of total consideration and will be expensed as compensation for services rendered over the remaining vesting period of the options.

The fair value of the shares issued to acquire B-Balloon and Neovasc Medical was $2.20. The value of the shares is based on their market price over a reasonable period before and after the date the terms of the business combination were agreed to and announced, January 30, 2008, adjusted to recognize the effects of price fluctuations and quantities traded during extraordinary trading activity immediately after the announcement.

The fair value of options and warrants of the Company issued to effect the acquisitions were estimated using the Black-Scholes model and the following assumptions:

Volatility	82 %
Risk-free interest rate	4 %
Expected life	1-10 years
Dividend yield	Nil %

The warrants had an exercise price of $1.38 and an expected life of 1.45 years. The options had a nominal ($0.01) exercise price and an expected life of between 4.5 and 9.6 years on July 1, 2008.

12

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

4.	ACQUISITION (Continued)
	In accordance with the purchase method, the fair value of the consideration paid has been allocated to the fair value of the identifiable assets and liabilities acquired on July 1, 2008.

		B-Balloon			Neovasc			Total
					Medical
BOOK VALUE AND FAIR VALUE
OF NET TANGIBLE ASSETS ACQUIRED
Cash and cash equivalents	$	147,763		$	633,245		$	781,008
Accounts receivable		51,193			358,081			409,274
Prepaid expenses		-			9,225			9,225
Funds for employee rights on retirement		30,397			29,988			60,385
Property and equipment		50,627			90,221			140,848
Accounts payable and accrued liabilities		(299,414	)		(367,864	)		(667,278	)
Loans from related parties		(356,440	)		-			(356,440	)
Liability for employee rights on retirement		(72,601	)		(36,208	)		(108,809	)
		(448,475	)		716,688			268,213
FAIR VALUE OF
INTANGIBLE ASSETS ACQUIRED
Technology		10,907,300			10,726,200			21,633,500
Goodwill		2,668,079			889,003			3,557,082
FAIR VALUE OF NET ASSETS ACQUIRED	$	13,126,904		$	12,331,891		$	25,458,795

5.	MANAGING CAPITAL
	The Company’s objectives, when managing capital, are to safeguard cash as well as maintain financial liquidity and flexibility in order to preserve its ability to meet financial obligations and deploy capital to grow its business.
	In the definition of capital, the Company includes, as disclosed on its balance sheet: deficit, share capital, cash and cash equivalents and long-term debt. There has been no change in the definition since the prior period.
	The Company’s financial strategy is designed to maintain a flexible capital structure consistent with the objectives stated above and to respond to business growth opportunities and changes in economic conditions. In order to maintain or adjust its capital structure, the Company may issue new shares, issue new debt (secured, unsecured, convertible and/or other types of available debt instruments), acquire or dispose of assets, or adjust the amount of cash or short-term investment balances.
	As at December 31, 2008, the Company was in compliance with externally imposed capital requirements.
6.	FINANCIAL INSTRUMENTS
	Financial Instruments
	The Company classifies its cash and cash equivalents and bank overdraft as held-for-trading and carries them at fair-value. Accounts receivable are classified as loans and receivables. Accounts payable and accrued liabilities, long-term debt and repayable contribution agreement are classified as other financial liabilities. The Company had neither available-for-sale, nor held-to-maturity instruments as at December 31, 2008 and at December 31, 2007. Loans and receivables and other financial liabilities have been recorded at amortized cost using the effective interest rate method.

13

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

6.	FINANCIAL INSTRUMENTS (Continued)
	Cash equivalents
	The Company holds cashable guaranteed investment certificates (“GIC”) returning a fixed rate of interest of 3.00%. The GIC has an initial term of one year and matures on July 1, 2009 and is renewed annually.
	Foreign exchange risk
	The majority of the Company’s revenues are derived from product sales in the United States, primarily denominated in United States currency. Management has considered the stability of the foreign currency and the impact a change in the exchange rate may have on future earnings during the forecasting process.
	Interest rate risk
	The Company makes fixed repayments on its long term debt as described in Note 12. Included in the repayments is an interest payment with an interest rate floating at prime rate. Management has considered the risks to cash flows from this variable interest portion and considers it unlikely that the interest rates will increase sufficiently to exceed the fixed monthly payment due on the loan.
	Liquidity risk
	The Company has incurred operating losses since inception, as described in Note 2. The Company’s ability to continue as a going concern is dependent on the profitable commercialization of its products or obtaining additional debt or equity financing to fund ongoing operations until profitability is achieved. The Company reviews its cash flows on a quarterly basis and forecasts expected break even points and the timing of additional cash flows.
	The maturity of the Company’s long term debt is described in Note 12. The Company has minimal risk associated with the maturity of its long term debts.
	As at December 31, 2008 the Company had working capital of $2,123,519 as compared to working capital of $3,431,266 at December 31, 2007.
7.	INVENTORY

		December 31		December 31,
		2008		2007
Materials	$	48,053	$	194,240
Work in progress		25,525		37,437
Finished goods		267,986		152,447
	$	341,564	$	384,124

During the last quarter of 2008, Neovasc terminated its distribution agreement with a third party who distributed the Peripatch and Aegis products in the United States and severed its direct sales force employees who sold the Company’s Metricath products. On termination of the distribution agreement Neovasc was required to repurchase $198,838 of Peripatch inventory and $200,383 of Aegis Inventory. On December 22, 2008, Neovasc signed a new third party distribution contract for its Peripatch products in the United States and Europe and continues to supply a number of other Peripatch distributors in the rest of the world. The Metricath and Aegis products do not currently have an established sales channel and Neovasc cannot predict whether or not it will be able to establish a suitable channel for either product and generate revenue from these products in 2009. As a result, the Company wrote down $626,925 of Catheter and Aegis inventory, including raw materials, work in progress, and finished goods.

14

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

8.	EMPLOYEE RIGHTS UPON RETIREMENT
	Pursuant to Israeli severance pay law, Israeli employees are entitled to severance pay upon termination of their employment. The Company's liability for employee rights upon retirement is calculated, based on the most recent salary of each employee multiplied by the number of years of employment, as of the balance sheet date. Employees are entitled to one month's salary for each year of employment, or a portion thereof. The Company makes monthly deposits to insurance policies and severance pay funds. As of December 31, 2008, the retirement liability is $8,964 (2007: $Nil).
	The deposited funds include profits accumulated up to the balance sheet date. The deposited funds may be withdrawn upon the fulfillment of the obligation pursuant to Israeli severance pay laws or labor agreements. The value of the deposited funds is based on the cash surrender value of these policies, and includes immaterial profits. As of December 31, 2008, the retirement asset is $8,320 (2007: $Nil).
9.	TECHNOLOGY
	In connection with the acquisition of B-Balloon and Neovasc Medical on July 1, 2008 (Note 4), the Company acquired technology, including certain patents. The total amount acquired was $10,907,300 and $10,726,200 and for B-Balloon and Neovasc Medical respectively.
	During the fourth quarter of 2008, the Company reviewed its estimates and judgments regarding forecasts on the success and lifecycle of the technologies and future cash flows generated by the acquired technologies. As a result of market indicators and its impairment testing, the Company recorded an impairment charge of $19,503,930 and wrote down the net book value of acquired technologies to $Nil. Prior to this charge being recognized, the acquired technologies were being amortized over the shorter of the life of the major patents for the technologies and the expected period of technological obsolescence.

		December 31,								December 31,
		2008								2007
				Accumulated		Impairment		Net Book		Net Book
		Cost		Amortization		Charge		Value		Value
Technology acquired from
B-Balloon		10,907,300		1,363,413		9,543,887		-		-
Neovasc Medical		10,726,200		766,157		9,960,043		-		-
	$	21,633,500	$	2,129,570	$	19,503,930	$	-	$	-

10.	GOODWILL
	As a result of the acquisition of B-Balloon and Neovasc Medical on July 1, 2008 (Note 4), the Company recorded $2,668,079 and $889,003 goodwill for B-Balloon and Neovasc Medical respectively.
	During the fourth quarter of 2008, the Company’s fair value, as measured by its market capitalization, remained below the value of the shareholders equity for a significant period of time, indicating a potential goodwill impairment. As a result of market indicators and its impairment testing, the Company recorded an impairment charge of $3,557,082 and wrote down the net book value of acquired goodwill to $Nil.

15

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

11. PROPERTY AND EQUIPMENT

		December 31,
		2008
				Accumulated		Net Book
		Cost		Depreciation		Value
Land	$	207,347		-	$	207,347
Building		1,056,705		160,131		896,574
Production equipment		498,030		377,608		120,422
Field assets		131,794		131,794		-
Computer hardware		181,914		114,664		67,250
Computer software		181,511		180,930		581
Office equipment, furniture and fixtures		217,937		110,467		107,470
	$	2,475,238	$	1,075,594	$	1,399,644

Included within field assets at December 31, 2008 are $Nil (December 31, 2007: $77,842) representing assets that are not currently in use and are not being amortized. Amortization on these assets will begin when the assets are brought into use. Field assets consist of Company-owned Metricath consoles placed in customer locations for demonstration purposes. During the year, assets transferred from inventory to fixed assets were $Nil (2007: $131,794).

		December 31 ,
		2007
				Accumulated		Net Book
		Cost		Depreciation		Value
Land	$	207,347	$	-	$	207,347
Building		1,013,633		123,267		890,366
Production equipment		450,920		339,509		111,411
Field assets		131,794		53,952		77,842
Computer hardware		152,750		85,446		67,304
Computer software		180,738		169,598		11,140
Office equipment, furniture and fixtures		155,334		95,191		60,143
	$	2,292,516	$	866,963	$	1,425,553

16

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

12. LONG-TERM DEBT

		December 31			December 31,
		2008			2007
Bank instalment loan	$	439,247		$	461,099
Less current portion		(20,635	)		(19,559	)
	$	418,612		$	441,540

Repayments will consist of 180 regular blended payments of $4,095 each month, including interest and principal, commencing on September 1, 2007 and ending on August 1, 2022. The loan is collateralized by a first charge over the Company’s land and buildings, a liquid security agreement of $50,000 to be held in cash equivalent investments and a general security agreement over all personal property of the business now owned and all personal property acquired in the future. The loan bears interest at prime.

Principal maturities in the next five years and thereafter are approximately as follows:

2009	$	20,635
2010		22,045
2011		23,552
2012		25,162
2013		26,883
Thereafter		320,970
	$	439,247

13.	REPAYABLE CONTRIBUTION AGREEMENT
	In 2003, the Company entered into an Industrial Research Assistance Program (“IRAP”) Repayable Contribution Agreement with the National Research Council of Canada (“NRC”) and received funding of $409,363. The Company agreed to repay this funding through future royalties on the gross revenues of its Metricath products at a rate of 2.1%. If the Company does not generate $409,363 in royalties before July 1, 2015, the unpaid balance of the funding contribution will be forgiven. In 2005, Management determined that it was likely that royalties in excess of $409,363 would be generated over the period to July 1, 2015 from the sales of the Company’s Metricath products and as such had recorded a liability to reflect this obligation.
	The fair value at inception was estimated as the present value of all future expected cash receipts discounted using the prevailing market rates of interest for a similar instrument and with a similar credit rating. Subsequent measurement of the repayable contribution agreement was at amortized net cost.

		December 31,			December 31,
		2008			2007
Balance, beginning of period	$	312,071		$	403,591
Adjustment for change in accounting policy		-		$	(100,993	)
Royalties paid or accrued in the current period		(7,105	)		(5,418	)
Accreted interest		15,479			14,891
		320,445			312,071
Less: current portion		-			(28,112	)
Less: write-back		(320,445	)		-
Balance, end of period	$	-		$	283,959

17

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

13.	REPAYABLE CONTRIBUTION AGREEMENT (Continued)
	During the last quarter of 2008 Neovasc severed its direct sales force employees who sold the Company’s Metricath products. The Metricath products do not currently have an established sales channel and Neovasc cannot predict whether or not it will be able to establish a suitable channel in the future and generate revenue from these products in 2009. As a result, the Company released the $320,445 liability for the repayable contribution agreement.
14.	INCOME TAXES
	Reported income tax expense differs from the amounts computed by applying current income tax rates to the loss before income taxes due to the following:

		Year ended December 31,
		2008			2007
Canadian basic statutory rate		30.8%			27.0%
Expected income tax recovery	$	(10,540,740	)	$	(2,114,358	)
Stock based compensation		120,175			41,800
Impairment and amortization of intangible assets		7,809,081			-
Effect of other non-deductible expenses		58,817			8,803
Effect of rate change		589,832			1,296,019
Other		(101,712	)
Change in valuation of allowance		2,064,547			767,736
Income tax expense		-			-

Future income taxes result principally from temporary differences in the recognition of certain revenue and expense items for financial and income tax reporting purposes. Significant components of the Company’s future tax assets are as follows:

		Year ended December 31,
		2008			2007
Future income tax assets
Capital assets	$	265,736		$	232,277
Non-capital loss carry forwards
Share issue costs		214,649			-
Loss carry forwards		10,436,832			5,226,133
Research and development expenditures		991,834			1,512,056
Valuation allowance for future income tax assets		(11,909,051	)		(6,970,466	)
Future income tax assets		-			-

As at December 31, 2008, the Company has $3,800,000 of research and development expenditures available for deduction in future tax years, with no expiry date. The Company has loss carry forward balances for income tax purposes of $38,000,000 that are available to offset future taxable income, if any, expiring at various times through to the year 2028. The Company also has investment tax credits of $1,500,000 available to offset future income taxes, if any, expiring at various times through to the year 2028.

The future tax benefit of these expenditures, losses and tax credits is ultimately subject to final determination by taxation authorities. In 2008, the Company has not recognized any future income tax assets in respect of the amounts noted.

18

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

15.	SHARE CAPITAL
	All share data and per share amounts have been adjusted to retroactively restate the impact of the reverse stock split on a 20 for 1 basis that took place on July 1, 2008.

(a)	Authorized
	Unlimited number of common shares without par value Unlimited number of preferred shares without par value

		Common Shares					Contributed
	Issued and outstanding	Number		Amount			Surplus
(b)	Balance, December 31, 2006	3,566,942	$	21,607,856		$	785,556
	Issued for cash pursuant to a private placement (i)
	Shares	1,935,457		7,741,824
	Agents warrants			111,558
	Share issue costs			(834,271	)
	Issued for cash on exercise of agent's warrants (ii)	58,078		232,310
	Stock-based compensation						166,885
	Expiry of agent's warrants			(24,196	)		24,196
	Balance, December 31, 2007	5,560,477	$	28,835,081		$	976,637
	Issued for repurchasing warrants (iii)	175,657		38,648			(38,648	)
	Issued on acquistion of B-Balloon (iv)	5,273,800		11,602,360			1,101,923
	Issued on acquistion of Neovasc Medical (iv)	4,610,091		10,142,200			1,767,071
	Issued for cash pursuant to a private placement (v)	2,081,251		8,325,004
	Share issue costs (v)			(93,916	)
	Stock-based compensation						387,360
	Expiry of agent's warrants			(242,461	)		242,461
	Issued for cash on exercise of options	750		150
	Balance, December 31, 2008	17,702,026	$	58,607,066		$	4,436,804

(i)	On April 24, 2007, pursuant to a public offering under a short form prospectus dated April 13, 2007, the Company issued 1,935,456 units of the Company at a price of $4.00 per unit for aggregate gross proceeds of $7,741,824. Each unit consisted of one common share and one-half of one non-transferable common share purchase warrant entitling the holder to purchase one additional common share for every whole warrant at a price of $5.00 per share expiring on October 24, 2008. On closing, the Agents received non-transferable share purchase warrants to purchase up to 82,968 common shares at a price of $4.00 per share exercisable until October 24, 2008.
(ii)	On May 4, 2007, the Agent exercised 58,077 agent warrants at $4.00 per share for gross proceeds of $232,310 and the remaining agent warrants were repriced to $5.00 per share.
(iii)	In connection with, and contingent upon the completion of the acquisition of Neovasc Medical and B-Balloon, the Company made an offer to all of the holders of warrants outstanding as at April 30, 2008 to repurchase those warrants in exchange for a lesser number of common shares in the Company. The offer to repurchase was made based on the value of the warrants ($38,648) calculated immediately prior to the exchange using a Black Scholes valuation method. 976,868 warrants were repurchased in exchange for common shares at a ratio of one common share for 5.75 warrants and 27,356 were repurchased at one common share for 4.75 warrants. An aggregate of 175,657 common shares were issued for the repurchase of the warrants. The warrant and option offer was completed immediately prior to the acquisitions on July 1, 2008.

19

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

15.	SHARE CAPITAL (Continued)
	(b)	Issued and Outstanding (Continued)
		(iv)	Pursuant to the acquisition agreement, the Company issued 5,273,800 and 4,610,091 common shares to the securityholders of B-Balloon and Neovasc Medical respectively.
		(v)	As a condition of the acquisitions the Company was required to complete a concurrent non- brokered private placement of units to raise minimum gross proceeds of $6,000,000. The actual proceeds raised on July 1, 2008 were $8,325,004. The units were issued at a price of $4.00 per unit and consist of one common share of the Company and 0.62 of a warrant. Each whole warrant is exercisable to purchase one additional common share of the Company at a price of $5.00 for a period of 18 months from July 1, 2008. Share issue costs related to the concurrent financing were $93,916.
	(c)	Stock-based compensation
		The Company adopted a stock option plan under which the directors of the Company may grant options to purchase common shares to directors, officers, employees and service providers (the “optionees”) of the Company on terms that the directors of the Company may determine within the limitations set forth in the Stock Option Plan. Effective November 22, 2005, the board of directors of the Company approved an amendment to the Company's incentive Stock Option Plan to increase the number of options available for grant under the plan to 10% of the number of common shares of the Company outstanding from time to time.
		Options under the Company’s Stock Option Plan granted to directors may vest immediately and options granted to employees and officers vest over a four year term. The directors of the Company have discretion within the limitations set forth in the Stock Option Plan to determine other vesting terms on options granted to directors, officers, employees and others. The minimum exercise price of a stock option cannot be less than the applicable market price of the common shares on the date of the grant and the options have a maximum exercise period of five years.

20

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

15.	SHARE CAPITAL (Continued)
	(c)	Stock-based compensation (Continued)
		The following table summarizes stock option activity for the respective periods as follows:

					Weighted	Average
					Average	Remaining
		Number of			Exercise	Contractual
		Options			Price	Life (years)
Options outstanding, December 31, 2006		139,629		$	9.00	1.98
Granted		96,438			3.40	4.04
Exercised		-			-
Cancelled		(18,750	)		10.20	-
Options outstanding, December 31, 2007		217,316		$	6.40	3.29
Granted before June 30, 2008		2,500		$	2.00	4.73
Forfeited before June 30, 2008		(16,750	)	$	7.00
Options outstanding, June 30, 2008		203,066
Option amendment (i)		(96,950	)	$	-	-
Options assumed on acquisition of
B-Balloon Ltd. (ii)		584,200		$	0.01	6.48
Neovasc Medical Ltd. (ii)		512,515		$	0.01	8.41
Granted on Oct. 31, 2008		1,157,077		$	1.15	4.84
Forfeited		(181,976	)	$	0.63	-
Exercised		(750	)
Options outstanding December 31, 2008		2,177,182		$	0.57	6.01
Options exercisable December 31, 2008		1,227,304		$	0.22	6.56
Weighted average grant date fair value of stock
options awarded during period	$	0.12

(i)

In connection with, and contingent upon the completion of the acquisition of B-Balloon and Neovasc Medical, the Company made an offer to all of the holders of options outstanding as at April 30, 2008 to amend those options for a lesser number of $0.20 options to acquire common shares of the Company. The offer to amend the options was structured so that the estimate fair value of the replacement options issued equaled that of the options they replaced, calculated on the date of the exchange using a Black Scholes valuation method. All holders of options accepted the offer and as a result all the outstanding market priced options were amended into 106,116 $0.20 options on July 1, 2008. All of these amended options vested immediately on the date of the acquisition.

(ii)

As part of the consideration paid to acquire B-Balloon and Neovasc Medical 1,096,715 options were assumed by Neovasc and replaced by an equal number of options of the Company. Of these, 81,039 unvested options issued to the option holders of B-Balloon and 105,231 unvested options issued to the option holders of Neovasc Medical are held by active employees or consultants and have been excluded from the purchase price to be expensed as compensation cost over their remaining vesting period. In addition, 11,058 options included as part of the calculation of total consideration have been cancelled as the employees were terminated during the period and their vesting period ceased. The options issued by Neovasc as part of the consideration are excluded from the Company’s stock option plan, and they have an exercise price of less than $0.01 and a maximum exercise period of 10 years.

21

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

15.	SHARE CAPITAL (Continued)
	(c)	Stock-based compensation (Continued)
		During the year ended December 31, 2008, the Company recorded $387,360 (2007 – $166,885) as compensation expense for stock-based compensation awarded to employees. The Company used the Black-Scholes option-pricing model to estimate the value of the options at each grant date using the following weighted average assumptions:

	2008	2007
Dividend yield	nil	nil
Annualized volatility	85%	81%
Risk-free interest rate	3.50%	4.00%
Expected life	5 years	5 years

(d)	Warrants
	The following table summarizes the share warrant activity for the respective periods as follows:

	Number of Warrants
Balance, December 31, 2006	566,411
Issued	1,050,695
Exercised	(58,077	)
Expired	(11,680	)
Balance, December 31, 2007	1,547,349
Expired	(527,375	)
Balance, June 30, 2008	1,019,974
Repurchase of warrants (i)	(1,004,224	)
Issued pursuant to a private placement (ii)	1,330,375
Replacement warrants issued on acquisition of Neovasc Medical Ltd. (iii)	735,394
Expired	(15,750	)
Balance, December 31, 2008	2,065,769

(i)	In connection with the transaction described in note 15 (b) (iii), all but 15,760 of the Company’s warrants outstanding as at April 30, 2008 were exchanged for common shares of the Company. The warrant and option offer was completed immediately prior to the acquisitions on July 1, 2008.
(ii)	Pursuant to the acquisition agreement, the Company assumed 735,394 warrants from the securityholders of Neovasc Medical.
(iii)	As a condition of the acquisitions the Company was required to complete the concurrent non- brokered private placement of units (see note 15 (b) (v)). An aggregate of 1,330,375 warrants were issued. Each whole warrant is exercisable to purchase one additional common share of the Company at a price of $5.00 for a period of 18 months from July 1, 2008.

The following table summarizes the warrants outstanding and exercisable at December 31, 2008:

	Average Remaining	Weighted Average Exercise
Number Outstanding	Contractual Life	Price
735,394	0.95 yrs	1.38
1,330,375	1 yrs	5.00
2,065,769	0.98	$3.71

22

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

15. SHARE CAPITAL (Continued)

(d) Warrants (Continued)

The Company used the Black-Scholes option pricing model to estimate the value of the agents’ warrants at each grant date using the following weighted average assumptions:

	2008	2007
Dividend yield	nil	nil
Annualized volatility	82%	82%
Risk-free interest rate	3.50%	4.00%
Expected life	5 years	5 years

16. SELLING

		For the years ended
		December 31,
		2008		2007
Selling expense	$	1,355,205	$	1,272,778
Wages and consulting		1,890,681		1,567,119
	$	3,245,886	$	2,839,897

17. GENERAL AND ADMINISTRATIVE EXPENSES

		For the years ended
		December 31,
		2008		2007
Audit and accounting	$	332,234	$	106,087
Insurance		89,058		85,463
Legal		321,282		97,994
Office		928,663		833,729
Regulatory		77,034		51,879
Rent		4,000		24,891
Repayments to contribution agreement		7,105		5,418
Royalties		10,846		3,673
Wages and consulting		1,689,578		1,073,149
	$	3,459,800	$	2,282,283

23

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

18. PRODUCT DEVELOPMENT AND CLINICAL TRIALS

		For the years ended
		December 31,
		2008		2007
Clinical trials	$	780,258		1,558,262
Other direct costs		1,209,387		415,067
Wages and Consulting		1,112,224		771,584
	$	3,101,869	$	2,744,913

19.	RELATED PARTY TRANSACTIONS
	Related party transactions are entered into in the normal course of operations and are recorded at amounts established and agreed on between the related parties.

		For the years ended,
		December 31,
		2008		2007
Income
Contract Manufacturing	$	269,090	$	79,109
Expenses
Services of the Chairman		99,838		174,242
Financial Services		-		29,853
Legal Services
General expenses		7,899		30,337
Acquisition costs		186,763		-
Financing costs		-		75,199
Consulting Services		133,312		74,050
		As at
		December 31,
Accounts Receivable		2008		2007
Contract Manufacturing		120,654		20,498
Accounts Payable
Service of the Chairman		2,730		11,925
Legal Services		338		-
Consulting Services		-		10,000

(i)	Contract Manufacturing
	The Company performs contract manufacturing services for a related corporation. One of the directors of this corporation is a significant shareholder in the Company. On July 1, 2008 the shareholder ceased to be a significant shareholder of the Company.
(ii)	Services of the Chairman
	The services of the Chairman are provided to the Company by a corporation controlled by the Chairman. The Company and the corporation have a director in common. These fees are included in general and administration expenses. The Chairman resigned as CEO on July 1, 2008, but remains Chairman of the board of Directors.

24

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

19. RELATED PARTY TRANSACTIONS (Continued)

(iii)	Financial Services
	The Company contracted for the services of the former CFO and some accounting functions from an accounting firm. A partner of that firm acted as the CFO of the Company. The agreement was terminated on September 30, 2007 and the partner resigned as CFO.
(iv)	Legal Services
	Legal and corporate secretarial services were provided by a legal firm. A partner of that firm is a director of the Company. The director resigned as a director of the Company on July 1, 2008.
(iv)	Consulting Services
	Sales and marketing consulting services are provided by a director of the Company. The director resigned as a director of the Company on July 1, 2008.

The carrying amounts of the accounts receivable and accounts payable approximate fair values due to their short term nature.

20.       SEGMENT INFORMATION

The Company’s operations are in one business segment; the development, manufacture and marketing of medical devices. Each of the Company’s product lines has similar characteristics, customers, distribution and marketing strategies, and are subject to similar regulatory requirements.

Substantially all of the Company’s long-lived assets are located in Canada. The Company carries on business in Canada and to a lesser extent in Israel. It earns revenue from sales to customers in the following geographic locations:

		For the years ended
		December 31,
		2008		2007
SALES
Canada	$	202,148	$	175,651
United States		753,508		1,182,238
Other		590,583		159,984
	$	1,546,239	$	1,517,873

	49% and 78% of the Company’s revenues for the years ended December 31, 2008 and 2007, respectively, were derived from customers located in the United States. Sales to the Company’s largest customer accounted for approximately 26% and 15% of the Company’s sales for the years ended December 31, 2008 and 2007, respectively.
21.	CONTINGENCIES
	On November 14, 2008, the Company received a claim from an ex-employee claiming wrongful dismissal on October 22, 2008. The employee was made redundant as part of the rationalization process undertaken by the Company. The maximum amount of the claim is $25,000.
22.	SUBSEQUENT EVENTS

(a) On February 2, 2009, pursuant to the Company’s stock option plan, the Company issued 487,500 stock options at an exercise price of $0.40 including 60,000 granted to employees of the Company and 427,500 granted to directors of the Company.

25

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

(b) On April 23, 2009, the Company completed a non-brokered private placement of 9,523,810 units at the price of $0.21 per unit for aggregate gross proceeds of $2.0 million. Each unit consists of one common share of Neovasc stock and one-half of one common share purchase warrant of Neovasc stock. Each whole warrant will entitle the holder thereof to purchase one common share of Neovasc stock at the exercise price of $0.30 per share for a period of one year after the closing date of the offering.

26

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

23.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), which differ in certain respects from those principles and practices that the Company would have followed had its consolidated financial statements been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). Material issues that could give rise to differences to these consolidated financial statements are as follows:

a)	Stock-based compensation
	Under US GAAP, effective January 1, 2006, the Company adopted FASB Statement of Accounting Standards No. 123(R), Share-Based Payment, a revision to FAS 123, Accounting for Stock-Based Compensation. FAS 123 (R) requires the Company to recognize in the income statement the grant date fair value of stock-based compensation awards granted to executive officers, directors, employees and consultants over the requisite service period, which cannot be less than the term of vesting. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of stock based compensation and amortizes the fair value to stock-based compensation expense over the vesting period. Compensation expense recognized reflects estimates of award forfeitures as discussed below.
	Pursuant to the provisions of FAS 123 (R), the Company applied the modified-prospective transition method. Under this method, the fair value provisions of FAS 123 (R) are applied to new employee share-based payment awards granted or awards modified, repurchased, or cancelled after January 1, 2006. Measurement and attribution of compensation costs for unvested awards at January 1, 2006 granted prior to the adoption of FAS 123 (R) are recognized based on the provisions of FAS 123.
	Under US GAAP, the Company is required to estimate the number of forfeitures over the life of each award. The Company has elected to record the actual number of forfeitures incurred. The Company has determined that the effect of estimated forfeitures upon the adoption on stock compensation expense, including the effect of estimating forfeitures on options granted, but not fully vested, prior to the adoption of FAS 123 (R), is not material.
	Accordingly, on a modified prospective basis, there is no material difference in the recognition of stock- based compensation awards under Section 3870 (Canadian GAAP) and FAS 123 (R).
b)	Comprehensive loss
	Under US GAAP, the Company follows FASB Statement of Accounting Standards No. 130, Reporting Comprehensive Income, which requires the Company to report and display information related to comprehensive income for the Company. Comprehensive income consists of net income and all other changes in shareholders’ equity that do not result from transactions with shareholders, such as cumulative foreign currency translation adjustments and unrealized gains or losses on securities or short-term investments. There were no adjustments to the net loss, reported under US GAAP, required to reconcile to the comprehensive loss.
c)	Future income tax assets and liabilities
	Under Canadian GAAP, future income tax assets and liabilities are calculated based on enacted or substantially enacted tax rates applicable to future years. Under US GAAP, only enacted rates are used in the calculation of deferred income taxes. This difference in Canadian GAAP and US GAAP did not have a material effect on the financial position or the results of operations of the Company for the years ended December 31, 2008, and 2007.

27

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

23. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

d) Additional disclosure required under US GAAP

(i)	Allowance for doubtful accounts:
	Under Canadian GAAP, trade receivables are presented in the consolidated financial statements net of allowance for doubtful accounts. US GAAP requires that the trade receivable allowance be separately disclosed in the consolidated financial statements as follows:

		December 31,			December 31,
		2008			2007
Trade receivables	$	260,427		$	553,190
Allowance for doubtful accounts		(20,721	)		(14,388	)
Trade receivables, net	$	239,706		$	538,802
Other receivables		230,494			30,162
Accounts receivables, net	$	470,200		$	568,964

(ii)	Accounts payable and accrued liabilities
	Under Canadian GAAP, accounts payable and accrued liabilities are presented in the consolidated financial statements on an aggregated basis. US GAAP requires that the accounts payable and accrued liabilities be presented in the consolidated financial statements as follows:

		December 31,		December 31,
		2008		2007
Trade accounts payable	$	784,578	$	529,765
Employee-related accruals		176,358		109,848
Deferred Revenue		-		5,709
Other accrued liabilities		257,469		89,988
	$	1,218,405	$	735,310

(iii)

Stock-based compensation

As of December 31, 2008, there was $251,552 of total unrecognized compensation cost related to unvested stock options. That cost is expected to be recognized over a weighted average period of 3.98 years. The aggregate intrinsic value of the vested and exercisable stock options at December 31, 2008 was $175,608. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2008 was $Nil (2007 – $Nil).

28

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

23. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

e) Impact of differences

		December 31,		December 31,
		2008		2007
Consolidated Balance Sheets
Assets - Canadian and US GAAP basis		4,820,523		5,689,800
Liabilities - Canadian and US GAAP basis		1,666,616		1,508,480
Liabilities and shareholders Equity - Canadian and US GAAP
basis	$	4,820,523	$	5,689,800

		For the years ended
		December 31,
		2008		2007
Consolidated Statements of Operations and Deficit
Net loss and comprehensive loss - Canadian and US GAAP
basis	$	34,259,565	$	7,830,954
Deficit, beginning of year - Canadian and US GAAP basis	$	25,630,398	$	17,799,444
Deficit, end of year - Canadian and US GAAP basis	$	59,889,963	$	25,630,398

	There are no differences between Canadian GAAP and US GAAP in amounts reported as cash flows from (used in) operations, financing or investing activities.
f)	Recently released accounting standards
	United States
	Effective January 1, 2008, the Company adopted, on a prospective basis, SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) as amended by FASB Staff Position SFAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (“FSP FAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and provides for expanded disclosure about fair value measurements. SFAS 157 applies prospectively to all other accounting pronouncements that require or permit fair value measurements. FSP FAS 157-1 amends SFAS 157 to exclude from the scope of SFAS 157 certain leasing transactions accounted for under SFAS No. 13, “Accounting for Leases.” FSP FAS 157-2 amends SFAS 157 to defer the effective date of SFAS 157 for all non-financial assets and non-financial liabilities except those that are recognized or disclosed at fair value in the financial statements on a recurring basis to fiscal years beginning after November 15, 2008. The adoption of SFAS 157 did not have a material impact on the Company’s audited consolidated financial statements. Management is evaluating the impact that SFAS 157 will have on its non-financial assets and non-financial liabilities since the application of SFAS 157 for such items was deferred to January 1, 2009. The Company believes that the impact of these items will not be material to its consolidated financial statements.
	Effective January 1, 2008, the Company adopted, on a prospective basis, SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to provide entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company did not elect to apply the fair value option for any of its eligible financial instruments or other items on the January 1, 2008 effective date.

29

NEOVASC INC. (Formerly Medical Ventures Corp.)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2008 and 2007

23.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
	f)	Recently released accounting standards (Continued)
		In December 2007, the Financial Accounting Standard Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 141(R), “Business Combinations” (“SFAS No. 141(R)”) which requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values and changes other practices under SFAS No. 141, some of which could have a material impact on how we account for business combinations. These changes include, among other things expensing acquisition costs as incurred as a component of selling, general and administrative expense. The Company presently capitalizes these acquisition costs. SFAS No. 141(R) also requires additional disclosure of information surrounding a business combination, such that users of the entity’s financial statements can fully understand the nature and financial impact of a business combination. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating what impact the adoption of SFAS No. 141 (R) will have on the Company’s consolidated financial condition, results of operations or cash flows.
		In December 2007, FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS No. 160”) which requires entities to report non-controlling (minority) interest in subsidiaries as equity in the consolidated financial statements. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The adoption of SFAS No. 160 is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows.
		In March 2008, the FASB issued SFAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No.133." SFAS No. 161 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," to amend and expand the disclosure requirements of SFAS No. 133 to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under SFAS No. 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity's financial position, results of operations and cash flows. To meet those objectives, SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 is effective for the Company on January 1, 2009 and is not expected to have a significant impact on the Company's financial condition or results of operations.

30

EX-99.2

Neovasc Inc.
Management’s Discussion
and Analysis
Form 51-102F2

For the Years ended
December 31, 2008 and 2007

Year End
2008

Neovasc Management’s Discussion & Analysis 1 of 12

FORM 51-102F1: MANAGEMENT’S DISCUSSION AND ANALYSIS

This discussion and analysis covers the audited consolidated financial statements for the years ended December 31, 2008 and 2007.

The Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations should be read in conjunction with the audited consolidated financial statements and notes thereto for year ended December 31, 2008 (included as part of Neovasc Inc.’s annual filing) as well as the audited consolidated financial statements and notes thereto and the MD&A for the fiscal year ended December 31, 2007 (collectively known as the “Financial Statements”).

FORWARD-LOOKING STATEMENTS

This discussion and analysis, contains forward-looking statements that are not based on historical fact, including without limitation statements containing the words “believes”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipates”, “intends”, “expects”, and similar expressions, including the negative of such expressions. These statements are only predictions.

Forward-looking statements and information should be considered carefully. Undue reliance should not be placed on forward-looking statements and information as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements and information involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements and information will not occur and may cause actual results or events to differ materially from those anticipated in such forward-looking statements and information. The assumptions made by Neovasc include the ability of the Company to obtain and enforce timely patent protection for its technologies, the development of products; the timing of receipt of regulatory approvals; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services (see ‘Risks and Uncertainties’).

More particularly and without limitation, this discussion and analysis contains forward-looking statements and information concerning the potential of Neovasc and the timing of market acceptance of the Company’s technology products.

There are also other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements and information. Such factors include, among others, the stage of development of Neovasc, additional capital requirements, the impact of the global economic downturn, the ability to develop, manufacture and commercialize its products in a cost-effective manner, the ability to integrate newly-acquired businesses and the ability to protect Neovasc’s intellectual property.

A more complete discussion of the risks and uncertainties facing Neovasc appears in Neovasc’s management information circular available at www.sedar.com. Neovasc disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements or information contained herein to reflect future results, events or developments, except as required by law.

All financial information is prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) and is expressed in Canadian dollars.

Date: April 24, 2009

OVERVIEW

Description of the Business
Neovasc Inc. (formerly Medical Ventures Corp.) (“Neovasc” or the “Company”) develops, manufactures and commercializes medical devices, focusing on products that address clinical needs in the vascular and surgical marketplace.

Neovasc was established to develop and commercialize a portfolio of medical devices from which the Company generates revenue from the distribution, licensing or sale of each of these products.

Neovasc’s business operations started in March 2002, with the acquisition of Neovasc Medical Inc. (formerly PM Devices Inc. (“PMD”). PMD manufactures a line of collagen based surgical patch products made for use in cardiac reconstruction and vascular repair procedures as well as other surgeries. The products are made from chemically treated bovine and equine pericardial tissue.

In May 2003, Neovasc acquired Angiometrx Inc. (“ANG”). ANG has developed a technology called the “Metricath^® System,” a catheter-based device that allows clinicians to measure artery and stent size and confirm stent deployment during interventional treatment of coronary and peripheral artery disease.

New Acquisitions
On January 30, 2008, Neovasc announced its intent to acquire two pre-commercial vascular device companies based in Israel: Neovasc Medical Ltd. (“Neovasc

Neovasc Management’s Discussion & Analysis 2 of 12

Medical”) and B-Balloon Ltd. (“B-Balloon”) (the “Acquisitions”). Neovasc Medical is developing a novel catheter-based treatment for refractory angina, a debilitating condition resulting from inadequate blood flow to the heart muscle. Refractory angina affects millions of patients and at present there is no effective cure. B-Balloon is developing a suite of vascular catheter products to solve problems physicians frequently encounter when attempting to place vascular stents at locations where an artery branches from the aorta (the “ostium”) or where an artery splits into multiple branches (a “bifurcation”). Neovasc Medical and B-Balloon offer a potential pipeline of technologies that complement Neovasc’s existing products and sales call points.

The Acquisitions were completed on July 1, 2008. Neovasc issued 4,610,091 and 5,273,800 (post-consolidation) common shares for each of Neovasc Medical and B-Balloon.

Concurrently with the Acquisitions, the Company undertook:

a)

a private placement of units, each unit consisting of one common share priced at $4.00 per share and a warrant to purchase 0.62 of a common share at price of $5.00 per share for a period of 18 months from the date of closing. This price represented a significant premium to the market for Neovasc shares from the day prior to the announcement of the proposed transaction. The Frost Group, a shareholder of Neovasc Medical and B-Balloon, acted as lead investor for the private placement financing and, together with other investors, invested an aggregate of $8,325,004 for approximately 11.76 per cent of Neovasc’s common shares (post-Acquisitions). The Frost Group is led by Dr. Phillip Frost, MD, a prominent U.S. pharmaceutical entrepreneur and managing director of the Frost Group, a Miami, Florida based private equity firm.

b)

a consolidation of its outstanding 111 million shares (136 million fully diluted), at 20 old shares for one new share.

Completing the Acquisitions significantly broadened the Company’s vascular device product and IP portfolio.

In conjunction with the completion of the Acquisitions, the Company changed its name to Neovasc Inc. to better reflect the focus of its ongoing operations as a specialty vascular device company.

Valuation of Goodwill and Technology
Subsequent to the completion of the Acquisitions, an independent valuation of the fair value of the acquired tangible assets and identifiable intangible assets was conducted. The purchase price was allocated among acquired tangible assets, identifiable intangible assets and goodwill in accordance with Canadian GAAP. As a result of the valuation and related purchase price allocation, $448,475, $10,907,300, and $2,668,079 was initially allocated to liabilities, proprietary technologies and goodwill for B-Balloon, and $716,688, $10,726,200, and $889,003 was initially allocated to tangible assets, proprietary technology and goodwill for Neovasc Medical.

Amortization of Technology
The Company’s policy is to amortize the acquired technologies over the shorter of the life of the major patents for the technologies and the expected period of technological obsolescence. All the significant patents have at least 10 years to expiration and therefore the technologies are being amortized over the term until estimated technological obsolescence: 4 years for the B-Balloon technology and 7 years for the Neovasc technology. The ostial and bifurcation technologies acquired from B-Balloon are competing against other products to improve the treatment of disease at ostial and bifurcation sites. Management is aware of several competitive companies developing products for these types of disease and there is an increased risk that our technologies will be made obsolete by a competitor. The technology acquired from Neovasc Medical is a unique technology that is targeting a treatment for an end stage disease when other currently available procedures and/or medications having limited incremental impact on the patient. We are unaware of any direct competitors to the Neovasc product at this time.

An amortization charge of $2,129,570 has been incurred in the year ended December 31, 2008. As at December 31, 2008, the net book value of the acquired technologies, before any impairment charges was $9,543,887 for technology acquired from B-Balloon and $9,960,043 for technology acquired from Neovasc Medical.

Impairment of Goodwill and Technology
Goodwill is tested for impairment annually or more frequently if circumstances suggest impairment may exist. Definite-lived intangibles such as the acquired technologies are tested for recoverability whenever facts or circumstances suggest the possibility of impairment. During the fourth quarter of 2008, the Company’s market capitalization remained below the value of the shareholders equity for a significant period of time, indicating potential impairment of the Company’s goodwill and other intangible assets.

As a result of these market indicators and the Company’s impairment testing, the Company recorded an impairment charge of $3,557,082 to write down goodwill to $nil.

During the fourth quarter of 2008, the company reviewed its estimates and judgments regarding forecasts on the

Neovasc Management’s Discussion & Analysis 3 of 12

success and lifecycle of the technologies and future cash flows generated by acquired the technologies.

Neovasc has been through a significant cost rationalization process, including a 40% reduction in personnel, a reduction in the scale of the Israeli operations and the suspension of development on three of the four technologies acquired from B-Balloon: the Ostial Stent, the Ballerina and the BOSS. Together these technologies had an initial valuation on July 1, 2008 of $8.8 million. Neovasc is uncertain when it will be able to recommence development of these technologies and does not anticipate any revenues from these technologies in the next three years. Neovasc has fully written down these technologies.

Both the Reducer, from Neovasc Medical, initially valued at $10.7 million and the Ostial Balloon device, from B-Balloon, which has evolved into the Ostial D3, initially valued at $2.1 million are still under development. Their amortized valuation before any impairment testing at December 31, 2008 was $10.0 million and $1.8 million respectively. Their combined valuation of $11.8 million before impairment is 17 times greater than the capital market valuation of the intangible assets of the Company and there is strong evidence to suggest that the assets have been impaired.

When comparing the forecasts for the two technologies prepared in January 2009 to those prepared in June 2008 there are some marked differences: The start of revenue from each product has been deferred by as much as a year, as the development process has slowed because of cost restrictions, and the revenue projections have been revised down as Neovasc believes that adoption may be slower, demand may be lower and selling price may be impacted by the economic crisis.

As a result of the market indicators and the Company’s impairment testing, the Company recorded an impairment charge of $19,503,930 to write down the net book value of acquired technologies to $nil.

Termination of Distribution Agreement
On December 22, 2008, the distribution agreement between Neovasc and a third party distributor was terminated. On termination the Company was required to repurchase inventory held by the distributor less a 25% restocking fee. As a result, Neovasc repurchased $198,838 of Peripatch inventory and $200,383 of Aegis inventory. To recognize the liability for the repurchase of the inventory the Company offset $305,831 of accounts receivable and interest due from the distributor (the right of offset being specifically allowed under the terms of the agreement) and set up an additional liability of $301,788 for the balance remaining.

Under EIC-156 Accounting by a vendor for consideration given to a customer, Neovasc is required to recognize the inventory repurchase as a reduction in revenue and the income statement impact of the termination was to reverse revenue of $516,601, decrease cost of goods sold by $308,203 and recognize interest income of $45,024 (for the interest due on accounts receivable.)

On March 26, 2009, once the inventory had been received and passed quality control inspection Neovasc notified the distributor of the value of the inventory returned. As at the date of this filing the Company has not received any notice of litigation or arbitration from the distributor regarding this termination.

Inventory Write Down
During the fourth quarter of the 2008 Neovasc severed its direct sales force employees who sold the Company’s Metricath products and terminated its distributor of Aegis products. As a result, the Company has limited sales channels through which to sell the Metricath and Aegis product lines. While Management continues to look for new distributors to carry these products there is no certainty, when, or if, they will be able to find a suitable partner.

The Company values inventory at the lower of cost and net realizable value. With no certain sales in 2009 from these products the Company could not reasonably estimate the net realizable value for these product lines and attributed a $nil value to all Metricath and Aegis inventory. As a result the Company incurred an inventory write down of $626,925, including the Aegis product returned by Medsurg.

Repayable contribution write back
As noted above, the Metricath products do not currently have an established sales channel and Neovasc cannot predict whether or not it will be able to establish a suitable channel in the future and generate revenue from these products in 2009. As a result, the Company released the $320,445 liability for the repayable contribution agreement. The repayable contribution agreement is an Industrial Research Assistance Program forgivable loan which is repayable at a royalty rate of 2.1% of gross revenues from Metricath products and which is wholly forgiven on July 1, 2015 if not already paid out through royalties.

Product Portfolio

Peripatch Products
Neovasc manufactures the PeriPatch™ line of surgical tissue products. The Peripatch line consists of several flexible, biomaterial tissue products made from animal sources. They are chemically treated with proprietary technology to prevent their degradation and to maintain their biocompatibility. Peripatch products are used for vascular repair and reconstruction, as well as in other soft tissue repair. The products are biocompatible, allowing optimal incorporation with the body’s host

Neovasc Management’s Discussion & Analysis 4 of 12

tissue, and no special sutures are required to make a secure seal.

The product line includes: the PeriPatch™ Sheet, MatrixBP and PeriPatch™ EQ Sheet, rectangular patches made from bovine (cow) or equine (horse) tissue, that are applied as internal bandages to repair weak or damaged organs or vessels; and the PeriPatch™ Aegis, and PeriPatch™ Aegis EQ, new (products for staple line reinforcement used during endoscopic (minimally invasive) surgical procedures.) There are approximately two million surgical procedures performed annually around the world where tissue products may be applied.

Regulatory Status
The Peripatch Sheet and MatrixBP are cleared for sale in the U.S., Canada and Mexico. The Peripatch EQ Sheet is approved for sale in the European Union and in Canada. The Aegis is cleared for sale in the United States.

Distribution
As discussed above, on December 22, 2008 the existing distribution agreement for the Peripatch and Aegis products was terminated and Neovasc subsequently signed a new third party distribution contract to distribute certain Peripatch products in the United States and Europe and continues to supply a number of other Peripatch distributors in the rest of the world.

Going forward Neovasc intends to find strategic partners and distributors to market the Peripatch products to specific market segments. For example, the Company has signed a distribution agreement with a company which specifically focused on vascular surgical call points.

The Company provides training and promotional materials to its current distributors and is working to find new distributors in selected target markets. The Company’s goal is to steadily increase its distribution reach in new target markets, while increasing market share in current markets and in particular in the U.S.

Currently, the Company has distribution agreements for its Peripatch products covering the United States and Canada as well as selected countries in Europe and elsewhere.

Metricath System
The Metricath product line consists of a small, pole-mounted console unit and two distinct catheter models: the Metricath Libra^® measure-only catheter, and the Metricath Gemini^® measure-and-treat catheter.

Metricath catheters are used during angioplasty, a procedure used to open arteries where blood flow is restricted by plaque (the accumulation of fats and cholesterol). To perform angioplasty, doctors thread a balloon-tipped catheter through the vasculature and inflate the balloon at the site of the blockage, opening the narrowed vessel. Once the vessel is open, doctors often implant a stent (a small metal mesh tube) to prevent it from re-closing and to maintain proper blood flow.

Metricath provides the user with precise measurements of an artery by inflating the balloon at the catheter’s tip and monitoring its volume and pressure as it comes up against the artery walls. These measurements allow doctors to quickly diagnose artery blockages and treat them with balloons and stents that are optimally sized for the artery. As an added benefit, Metricath catheters can also take measurements inside an implanted stent to ensure that it is fully open. In the case of the Metricath Gemini, a second, high-pressure balloon on the catheter may be used to expand under-deployed stents.

Accurate measurement is believed to be an important factor in patients’ post-procedure outcomes, as it helps doctors confirm that stents are deployed properly within arteries. In 2006, the medical community identified a link between the use of drug-coated stents and an increased risk of blood clotting, or “thrombosis,” as compared to situations where bare-metal (uncoated) stents are used. While it has not been determined definitively why this is the case, there are clinical indications that factors include the under-sizing of stents and/or under-expansion of stents against the artery wall in conjunction with the stents’ drug coating or polymer. As a result, there has been increased clinical focus on proper stent selection and expansion to help minimize the risk of stent thrombosis. Anecdotal evidence from the field suggests that physician awareness of the need to accurately size and place stents is continuing to increase, for reasons of potential liability as well as clinical utility. Metricath has the potential to offer improved care by reducing the risk of thrombosis associated with drug-coated stents. By using Metricath to confirm artery and stent size, doctors can be more confident that stents fit correctly within the arteries in which they are placed.

The Metricath System was developed in response to the limitations of existing measurement technologies that are either insufficiently accurate or prohibitively expensive and time-consuming to gain widespread market acceptance. Obtaining accurate measurements is problematic using conventional imaging techniques such as angiography. Intravascular ultrasound (IVUS) catheters can provide precise vascular measurements; however, IVUS is comparatively expensive and time-consuming to use. IVUS takes approximately three times longer to set up and use than Metricath and has a disposable cost of between two and three times that of Metricath. In addition, where IVUS requires the purchase or lease of a complex image acquisition and analysis

Neovasc Management’s Discussion & Analysis 5 of 12

system, Metricath imposes minimal capital costs on users.

Current estimates are that approximately 2.5 million stent implantation procedures are performed globally each year. The Metricath System is intended to be a simple and cost-effective vascular measurement tool that can be adopted easily into standard treatment practices.

Regulatory Status
The Metricath Libra is cleared for sale in the United States, Canada, the European Union, Australia, Brazil and Israel. The Metricath Gemini is cleared for sale for peripheral artery use in the United States, for coronary arteries in Canada, and for all vascular applications in the European Union. In the fourth quartet of 2007 the Company filed a Pre-Market Approval (“PMA”) application for U.S Food and Drug Administration (“FDA”) approval of the Metricath Gemini for coronary procedures in the U.S. This application followed completion of the Gemini Angioplasty and Arterial Measurement Evaluation (“GAAME”) clinical trial which was undertaken to provide the clinical data required to support this application (see “Product Development and Clinical Trials”). In April 2008, the Company received an initial FDA response to this application completed its response to the FDA and submitted additional supporting data in the first quarter of 2009.

Distribution
During 2008, the Metricath line was sold via direct sales in the U.S. and Canada and via distributors in other countries. As part of a larger cost reduction exercise the direct sales force staff were terminated and as discussed above there is currently a limited sales channel for the Metricath product.

Additional Products and Third Party Sales
Neovasc provides consulting and original equipment manufacturing services to other medical device companies when these services fall within the scope of its expertise and capabilities. This includes provision of treated tissue for incorporation into products such as percutaneous heart valves and covered stents. Revenue earned from various contract agreements varies throughout the year depending on customer needs.

Regulatory Affairs and Clinical Trials
In the fourth quarter of 2007, the Company submitted a PMA application to the FDA to approve the Metricath Gemini for coronary applications in the U.S. The Company supported its application with data from the GAAME trial which was completed in the third quarter of 2007. In April 2008, Neovasc announced that it had received an interim response to its PMA application from the FDA. The response requested additional information related to clinical and non-clinical aspects of the application. Neovasc has submitted the requested information and is awaiting response from the FDA. The FDA has also completed an inspection of Neovasc’ manufacturing and sterilization facility as part of the PMA application process. The FDA inspection took place at the beginning of June, 2008 and the Company successfully passed the inspection with no deviations or warnings.

Product Development
Product development at the Company is presently focused on the commercialization of key technologies obtained through the Acquisitions, as well as extension of the tissue product lines to specialty applications.

The primary focus of Neovasc’s product development activities is on the Reducer product. Reducer is an hourglass shaped stent which is implanted in the coronary sinus to treat refractory angina – chronic heart pain resulting from inadequate blood flow to the heart muscle which typically does not respond well to conventional treatments. The Reducer acts to restrict outflow of de-oxygenated blood from the heart muscle which may provide relief of symptoms of refractory angina in certain patients. Reducer prototypes have demonstrated positive results in multiple animal trials and in human trials published in peer-reviewed journals and Neovasc intends to file for a CE mark approval of the device in 2009. Receipt of approval for this CE mark application would enable the Company to begin marketing the product in the European Union.

Sales & Marketing
The Company’s sales and marketing activities for 2009 are being focused on serving tissue product customers and distributors, and contract manufacturing clients as well as maintaining the existing client base for Metricath products.

TRENDS, RISKS AND UNCERTAINTIES

The Company has incurred operating losses of $34,259,565 for the year ended December 31, 2008 (2007: $7,830,954) and has a deficit of $59,889,963 as at December 31, 2008 (2007: $25,630,398). The Company’s ability to continue as a going concern is dependent on the profitable commercialization of its products or obtaining additional debt or equity financing to fund ongoing operations until profitability is achieved. The current economic crisis which has significantly tighten the credit and equity markets may result in required funds not being available to the Company at the time required or on terms acceptable to the Company and may reduce demand for the Company’s products.

Neovasc has a limited operating history which makes it difficult to predict how its business will develop or its future operating results. The Company has a history of fiscal losses since its inception and will need to generate

Neovasc Management’s Discussion & Analysis 6 of 12

significantly greater revenues than it has to date to achieve and maintain profitability. There is no certainty of future profitability, and results of operations in future periods cannot be predicted based on results of operations in past periods. Generally, the securities of the Company should be considered a highly speculative investment.

Neovasc is subject to risks and uncertainties associated with operating in the life sciences industry and as a company engaged in a significant level of development, regulatory, production and commercialization activity. Other than the standard operating risks associated with such a venture, the Company’s management is not aware of any trend, commitment, event or uncertainty in the life science industry that is presently known or is reasonably expected to have a material effect on the Company’s business, financial condition or results of operations. Neovasc cannot anticipate or prevent all of the potential risks to its success, nor predict the impact of any such risk. To the extent possible, management implements strategies aimed at reducing or mitigating risks and uncertainties associated with the business.

Operating risks include but are not limited to: market acceptance of the Company’s technology and products; the Company’s ability to obtain and enforce timely patent protection of its technology and products; the Company’s ability to develop, manufacture and commercialize its products cost-effectively and according to regulatory standards of numerous governments; the competitive environment and impact of technological change and/or product obsolescence; the continued availability of capital to finance the Company’s activities; the Company’s ability to conduct and complete successful clinical trials; the Company’s ability to garner regulatory approvals for its products in a timely fashion; the Company’s ability to attract and retain key personnel, effectively manage growth, and smoothly integrate newly acquired businesses or technologies; limitations on third-party reimbursement; instances of product or third-party liability; dependence on a single supplier for some products; animal disease or other factors affecting the quality and availability of raw materials; conflicts of interest among the Company’s directors, officers, promoters and members of management; fluctuations in the values of relative foreign currencies; volatility of the Company’s share price; fluctuations in quarterly financial results; unanticipated expenses; changes in business strategy; impact of any negative publicity; general political and economic conditions; and Acts of God and other unforeseeable events, natural or human-caused.

A portion of Metricath catheter sales efforts are targeting use in renal artery stenting procedures. In addition, certain ostial catheter products under development also target use in renal artery stenting procedures. In 2007, the Centers of Medicare and Medicaid Services (CMS), the largest U.S. health care payer, generated a national coverage analysis and initiated reconsideration of its coverage policy for percutaneous transluminal angioplasty of the renal arteries. On February 14, 2008, CMS issued its final decision memo to make no changes, continuing to leave coverage and reimbursement decisions to the discretion of regional Medicare contractors. Individual contractor decisions may adversely affect this market by reducing the number of renal stent implantations undertaken in the U.S.

FOREIGN OPERATIONS

The majority of the Company’s revenues are derived from product sales in the United States, primarily denominated in United States currency. The Company expects that international sales will continue to account for a significant portion of its revenues that are denominated in foreign currencies. Consequently, a decrease in the value of a relevant foreign currency in relation to the Canadian dollar, occurring after establishment of prices and before receipt of payment by Neovasc, has an adverse effect on the Company’s results of operations. During the year ended December 31, 2008, the increase in the value of US dollar to Canadian dollar has had a positive effect on the Company’s results of operation. However, the fluctuation of foreign exchange may impose an adverse effect on the Company’s results of operations and cash flows in the future. Additionally, Neovasc may be materially and adversely affected by increases in duty rates, exchange or price controls, repatriation restrictions, or other restrictions on foreign currencies. The Company’s international operations are subject to certain other risks common to international operations, including, without limitation: government regulations; import restrictions and, in certain jurisdictions, reduced protection for the Company’s intellectual property rights.

Foreign currency translation gains and losses arising from normal business operations are credited to or charged to operations in the period incurred. To date, Neovasc has not entered into any foreign exchange forward contracts.

SELECTED ANNUAL FINANCIAL INFORMATION

The following discussion should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2008 and 2007.

DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION

This section analyzes the significant changes in the audited consolidated financial statements of operations and deficit and cash flows for years ended December 31, 2008, compared to those for the same period ended December 31, 2007 and compares the financial

Neovasc Management’s Discussion & Analysis 7 of 12

condition at December 31, 2008 to that at December 31, 2007.

The Statements of operations include the results of Neovasc for the year ended December 31, 2008 and those of Neovasc Medical and B-Balloon from July 1 to December 31, 2008. Comparatively, the results of operations for the year ended December 31, 2007 only reflected the results of operation of Neovasc.

Results of Operations
Results for the year ended December 31, 2008 and 2007 follow:

Net Losses
The consolidated net loss for the year ended December 31, 2008 was $34,259,565 or $2.94 basic loss per share as compared with a net loss of $7,830,954 or $1.59 basic loss per share for the comparative period in 2007.

Revenues
Revenues increased 2% year over year from $1,517,873 for the year ended December 31, 2007 to $1,546,239 for the year ended December 31, 2008.

Sales of catheter products for the year ended December 31, 2008 were $262,118 a marginal increase over sales of $258,017 in the comparable period in 2007, despite a heavy investment in a direct sales force and a substantial marketing effort. As described above the direct sales force has been terminated and the Company is looking for a new distributor to carry its Metricath product.

Sales of tissue and surgical products and services for the year ended December 31, 2008 were $1,284,121, as compared to sales of $1,259,856 for the year ended December 31, 2007, a marginal increase of approximately 2%. These revenues were derived from the sales of Peripatch products and contract manufacturing revenues. In the fourth quarter the Company reduced revenues by $516,601 associated with the repurchase of inventory from a terminated distribution agreement. Revenue in the prior quarters was correctly recognized at that time and the reduction in revenue arises solely from the termination of the distribution agreement in accordance with EIC 156 Accounting by a vendor for consideration given to a Customer.

Cost of Sales
The cost of sales for the year ended December 31, 2008 were $708,300 as compared to $799,593 in 2007, and the overall gross margin for 2008 was 54% as compared to 47% in 2007. The gross margin for 2008 has been positively impacted by termination of the distribution agreement discussed above. Due to the existence of the 25% restocking fee only 75% of the inventory returned resulted in a payment obligation of the Company and a corresponding revenue reduction, while 100% of the reacquired inventory was recognized and resulted in a reversal of cost of goods sold. The 25% of revenue remaining effectively has a zero cost of goods and positively impacts the gross margin for 2008.

Expenses
Total expenses for the year ended December 31, 2008 and 2007 were $33,175,047 and $8,426,224 respectively. The increase in expenses for 2007 to 2008 can be explained by an increase in operating expenses associated with additional costs incurred by the newly acquired activities in Israel of $1,940,462, an impairment of intangible assets of $23,061,012, inventory write down of $626,925, and an offsetting recovery on the repayable contribution agreement of $320,445.

Sales and marketing expenses were $3,245,886 for the year ended December 31, 2008 as compared to $2,839,897 for the same periods in 2007, and increase of 14%. Despite the increased sales and marketing efforts revenues were not increasingly significantly and the direct sales force continued to be a drain on cash resources. Without additional products to sell and without significant growth in the Metricath sales the Company terminated the direct sales force in the fourth quarter of 2008 and will continue to minimize sales and marketing costs until new products from the acquisitions and other sources are ready for market.

General and administrative expenses for the year ended December 31, 2008 were $3,459,800 as compared to $2,282,283 in 2007, an increase of 52%. In 2008, the increase in general and administrative costs of $1,177,517 over the comparative period can largely be explained by $514,797 incurred in Israel, a large and unusual stock compensation charge relating to the immediate vesting of all of the Medical Ventures options existing at the time of the Acquisitions of $174,853 and one-time expenses related to the integration and consolidation of the new subsidiaries.

Product development and clinical trial expenses of $3,101,869 for the year ended December 31, 2008 as compared to $2,744,913 for the year ended December 31, 2007, an increase of 13%. The $1,345,987 product development and clinical trial expense incurred in Israel to develop the newly acquired technologies contributed to the increase in this period.

Amortization and Other expenses
Amortization and other expenses for the year ended December 31, 2008 were $1,922,457 as compared to other expense of $123,010 for the same periods in 2007. An amortization charge on the acquired technologies of $2,129,570 has been incurred in 2008.

During the fourth quarter of 2008, we have taken significant steps to control the expenditures of the

Neovasc Management’s Discussion & Analysis 8 of 12

Company. Since the initial combination of the acquired companies on July 1, 2008 over 45% of the staff have been made redundant and all work on development projects without projected revenues within the next 18 months has been suspended.

Results for the quarter ended December 31, 2008 and 2007 follow:

Net Losses
The consolidated net loss for the quarter ended December 31, 2008 was $26,598,294 or $1.50 basic loss per share as compared with a net loss of $2,300,229 or $0.47 basic loss per share for the comparative period in 2007.

Revenues
Revenues for the quarter ended December 31, 2008 were $91,809 compared to $626,974 for the comparative period in 2007.

In the fourth quarter of 2009 the Company reduced revenues by $516,601 associated with the repurchase of inventory from a terminated distribution agreement in accordance with EIC 156 Accounting by a vendor for consideration given to a Customer.

Cost of Sales
The cost of sales for the quarter ended December 31, 2008 were positively impacted by termination of the distribution agreement (as discussed above as described in the annual results analysis) resulting in a net income from cost of sales of $3,374 in comparison to $372,956 expense in the fourth quarter of 2008.

Expenses
Total expenses for the quarter ended December 31, 2008 and 2007 were $25,990.251 and $2,387,794 respectively. The increase in expenses between the fourth quarter of 2007 to 2008 can be explained by an increase in operating expenses associated with additional costs incurred by the newly acquired activities in Israel as they were wound up during the quarter of $736,124, an impairment of intangible assets of $23,061,012, inventory write down of 532,521, and an offsetting recovery on the repayable contribution agreement of $320,445.

Sales and marketing expenses were $894,470 for the quarter ended December 31, 2008 as compared to $785,773 for the same periods in 2007, and increase of 14%. During prior quarters in 2008, the Company had increased the size of its sales force and marketing effort but during the quarter took the decision to terminated its direct sales force.

General and administrative for the quarter ended December 31, 2008 were $844,819 as compared to $483,681 in 2007, an increase of 75%. In 2008, the increase in general and administrative costs over the comparative period can largely be explained by costs incurred in Israel.

Product development and clinical trial expenses of $977,874 for the quarter ended December 31, 2008 as compared to $683,379 for the quarter ended December 31, 2007, an increase of 43%. The development and clinical trial expense incurred in Israel to develop the newly acquired technologies contributed to the increase in this period.

Amortization and Other expenses
Amortization and other expenses for the quarter ended December 31, 2008 were $703,225 as compared to other expense of $166,453 for the same period in 2007. An amortization charge on the acquired technologies of $1,064,785 has been incurred in the fourth quarter of 2008, offset by a $273,568 foreign exchange gain in the same period.

Annual Information
The following is a summary of selected financial information for the three fiscal years to December 31, 2008:

		Years ended December 31
		2008			2007			2006
Sales	$	1,546,239		$	1,517,873		$	1,082,830
Net loss		(34,259,565	)		(7,830,954	)		(5,483,962	)
Basic and diluted loss per share		(2.94	)		(0.08	)		(0.08	)
Total assets		4,820,523			5,689,800			5,286,557
Total long term liabilities		427,576			725,499			529,480
Cash dividend declared per share	$	nil		$	nil		$	nil

Neovasc Management’s Discussion & Analysis 9 of 12

Quarterly Information
The following is a summary of selected unaudited financial information for the eight fiscal quarters to December 31, 2008:

		Quarter Ended - Unaudited
		December 31,			September 30,			June 30,			March 31,
		2008			2008			2008			2008
Sales
Catheter products	$	75,920		$	53,687		$	45,904		$	80,236
Tissue and surgical products and services		15,889			534,197			387,157			353,249
		91,809			587,884			433,061			433,485
Cost of sales		(3,374	)		283,070			220,344			208,260
Expenses
Selling		894,470			816,421			785,491			749,504
General and administration		844,819			1,297,333			779,363			538,285
Product development and clinical trials		977,874			1,087,292			414,958			621,745
Impairment of intangible assets		23,061,012			-			-			-
Inventory Write Down		532,521			-			94,404			-
Repayable contribution write back		(320,445	)		-			-			-
		25,990,251			3,201,046			2,074,216			1,909,534
EBITDA		(25,895,068	)		(2,896,232	)		(1,861,499	)		(1,684,309	)
Amortization/Other expenses		703,225			1,107,791			54,174			57,266
Net loss		(26,598,294	)		(4,004,023	)		(1,915,673	)		(1,741,575	)
Basic loss per share		(1.50	)		(0.23	)		(0.34	)		(0.31	)

		Quarter Ended - Unaudited
		December 31,			September 30,			June 30,			March 31,
		2007			2007			2007			2007
Sales
Catheter products	$	81,004		$	55,306		$	51,432		$	70,275
Tissue/surgical products		545,970			163,534			294,379			255,973
		626,974			218,840			345,811			326,248
Cost of sales		372,956			105,897			201,189			119,551
Expenses
Selling		785,773			801,805			785,131			467,188
General and administration		483,681			504,988			783,663			509,951
Product development and clinical trials		683,379			618,971			790,643			651,920
Inventory Write Down		434,961			-			124,170			-
		2,387,794			1,925,764			2,483,607			1,629,059
EBITDA		(2,133,776	)		(1,812,821	)		(2,338,985	)		(1,422,362	)
Amortization/Other expenses		166,453			(10,645	)		(30,488	)		(2,310	)
Net loss		(2,300,229	)		(1,802,176	)		(2,308,497	)		(1,420,052	)
Basic loss per share		(0.47	)		(0.32	)		(0.46	)		(0.41	)

Neovasc Management’s Discussion & Analysis 10 of 12

LIQUIDITY AND CAPITAL RESOURCES

The Company finances its operations and capital expenditures with cash generated from operations, lines of credit, long-term debt and equity financings. At December 31, 2008, the Company had cash and cash equivalents of $2,498,439 as compared to cash of $3,242,404 as of December 31, 2007. At December 31, 2008 the Company had working capital of $2,123,519 as compared to working capital of $3,431,266 at December 31, 2007. In addition, at December 31, 2008 the Company had restricted cash related to a security on long-term debt of $50,000 (December 31, 2007 - $50,000) included in long-term assets.

Cash used in operations was $8,477,808 for the year ended December 31, 2008, as compared to $6,439,828 for the year ended December 31, 2007, an increase of $2,037,980. The increase in cash usage was related to the increase in expenses borne by the Company at the newly acquired operations in Israel and in the increase sales and marketing expenditures.

Net cash used in investing activities was $111,998 for year ended December 31, 2008 compared to cash used of $542,316 in 2007. On July 1, 2008, the Company completed the Acquisitions. The cash spent to acquire the companies was $845,241. On the completion of the Acquisitions Neovasc acquired $781,008 of cash and cash equivalents. During the year ended December 31, 2008 $47,765 was spent on capital additions. In 2007 the comparative expenditure was $542,316 as an additional building was acquired during the year.

Concurrent with the Acquisitions, the Company issued 2,081,251 units of common shares at a price of $4.00 per unit for gross proceeds of $8,325,004 less issue costs of 93,916, net $8,231,088. Each unit consisted of one common share of the Company and 0.62 of a warrant. Each whole warrant is exercisable to purchase one additional common share of the Company at a price of $5.00 for a period of 18 months from July 1, 2008. From the proceeds of the financing the Company repaid $356,440 of loans from parties related to B-Balloon.

On April 24, 2007, the Company closed a public offering by way of a short form prospectus dated April 13, 2007, the Company issued 1,935,456 units of the Company at a price of $4.00 per unit (on a consolidated basis) for aggregate gross proceeds of $7,741,824, net of share issue costs of $834,271. Each unit consisted of one common share and one-half of one non-transferable common share purchase warrant entitling the holder to purchase one additional common share for every whole warrant at a price of $5.00 per share, expiring on October 24, 2008. On closing, the Agents received non-transferable share purchase warrants to purchase up to 82,968 common shares at a price of $4.00 per share exercisable until October 24, 2008. Subsequent to the financing on May 4, 2007, the Agent exercised 58,077 agent warrants at $4.00 per share for gross proceeds of $232,310 and the remaining agent warrants were repriced to $5.00 per share.

Since its inception the Company has had negative cash flows from operations as it continues its product development activities The Company anticipates that it will require additional funding in 2009 to support its ongoing operations and product development. However, the current financial market conditions have increased the risk that such funding will not be possible. There is no assurance that such additional funds will be available for the Company. If adequate funds are not available, the Company may be required to scale back or abandon some activities and may in a worst case impact the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from this uncertainty.

CONTINGENCIES

On November 14, 2008, the Company received a claim from an ex-employee claiming wrongful dismissal. The employee was made redundant as part of the rationalization process undertaken subsequent to the period end. The maximum amount of the claim is $25,000.

SUBSEQUENT EVENTS

On February 2, 2009, pursuant to the Company’s stock option plan, the Company issued 487,500 stock options at an exercise price of $0.40 including 60,000 granted to named officers of the Company and 427,500 granted to directors of the Company.

On April 23, 2009, the Company completed a non-brokered private placement of 9,523,810 units at the price of $0.21 per unit for aggregate gross proceeds of $2.0 million. Each unit consists of one common share of Neovasc stock and one-half of one common share purchase warrant of Neovasc stock. Each whole warrant will entitle the holder thereof to purchase one common share of Neovasc stock at the exercise price of $0.30 per share for a period of one year after the closing date of the offering.

OUTSTANDING SHARE DATA

Pursuant to the Acquisitions, the Company issued 5,273,800 and 4,610,091 common shares to the securityholders of B-Balloon and Neovasc Medical respectively and assumed 584,200 options from B-Balloon and 512,515 options and 735,394 share purchase warrants from Neovasc Medical. In addition, through a private equity financing, the Company issued 2,081,251 units of common shares. Each unit consists of

Neovasc Management’s Discussion & Analysis 11 of 12

one common share of the Company and 0.62 of a warrant.

As at December 31, 2008, the Company had 17,702,026 common voting shares issued and outstanding. Further, the following securities are convertible into exercisable or exchangeable for common shares of the Company: 2,177,182 stock options with a weighted average price of $0.57, and 2,065,769 share purchase warrants with exercise prices ranging from $1.38 to $5.00. The fully diluted share capital of the Company at December 31, 2008 is 12,172,746.

OFF BALANCE SHEET ARRANGEMENTS

The Company has no off balance sheet arrangements.

RELATED PARTY TRANSACTIONS

Related party transactions are disclosed in Note 19 of the audited annual consolidated financial statements. Neovasc has a contract with a corporation owned by its Chairman for his services that are invoiced monthly. All other related party transactions are invoiced to Neovasc on a month-to-month basis for services rendered. There are no potential material termination clauses in any of the related party agreements.

PROPOSED TRANSACTIONS

The Company is not party to any transaction requiring additional disclosure.

CONTROLS AND PROCEDURES

The Chief Executive Officer (CEO) and Chief Financial Officer (CFO), in cooperation with the other members of senior management and Directors, are responsible for the Company’s disclosure policy. The effectiveness of the Company’s internal disclosure controls have been evaluated by the CEO and the CFO, and they have concluded that the Company’s control procedure provides reasonable assurance that (i) information required to be disclosed by the Company in its annual and interim reports or other reports filed or submitted by it under applicable securities legislation is recorded, processed, summarized and reported within the prescribed time periods, and (ii) material information regarding the Company is accumulated and communicated to the Company’s management, including its CEO and CFO, in a timely manner.

The CEO and CFO are responsible for the design of internal controls over financial reporting in order to provide reasonable assurance that the Company’s financial reporting is reliable and that financial statements prepared for external purposes are prepared in accordance with Canadian GAAP and for the safeguarding of Company assets. The CEO and CFO are aware that internal controls relating to the accounting function could be strengthened by adhering to a strict policy of segregating the duties of accounting staff to reduce the risk of unauthorized journal entries being made or a misappropriation of cash. At the Company’s current size, adoption of such a policy is impractical. To reduce these risks, the CFO reviews bank reconciliation statements and performs periodic reviews of nonstandard entries after they have been recorded; all cheque payments require two signing authorities. The CEO periodically reviews recorded financial information. The CEO and CFO believe that these reviews are an adequate compensating control; accordingly, there are no plans to remediate this internal control weakness.

No material changes were made to the Company’s system of internal controls relating to financial reporting during the year ended December 31, 2008.

INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")

In February 2008, the Canadian Accounting Standards Board confirmed that the use of International Financial Reporting Standards (“IFRS”) would be required for Canadian publicly accountable enterprises for fiscal years beginning on or after January 1, 2011. In preparation for the conversion to IFRS, the Company has developed an IFRS changeover plan. We are currently in the process of reviewing the differences between current Canadian GAAP and IFRS and assessing the impacts on the other key elements of our conversion plan in this phase. These key elements include: accounting policy changes, information technology changes, education and training requirements, internal control over financial reporting, and impacts on business activities. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.

Neovasc Management’s Discussion & Analysis 12 of 12

EX-99.3

Neovasc Inc.
Statement of
Executive Compensation
Form 51-102F6

For the Years ended
December 31, 2008, 2007 and 2006

Year End
2008

Neovasc Statement of Executive Compensation 1 of 9

FORM 51-102F6: STATEMENT OF EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Committee

The Compensation Committee of Neovasc Inc. (“Neovasc’) is composed of Dr. Jane Hsiao (Chair), Doug Janzen and Dr. William O’Neill, all of whom are independent directors. The Compensation Committee provides, on behalf of the Board, detailed review, oversight and approval of the Company’s policies, practices and procedures relating to human resources to ensure ongoing, long-term development and deployment of high-caliber senior management resources. The committee:

• reviews the performance of the Chief Executive Officer (“CEO”) and succession planning for the CEO;
• reviews compensation to ensure the relationship between senior management performance and compensation is appropriate and set with reference to competitive benchmarks and broader market data;
• reviews human resource matters with emphasis on overall strategy and programs relating to the recruitment, development and retention of personnel;
• reviews overall compensation programs;
• monitors succession planning for senior management; and
• Approves investment policies and oversees the administration of the pension plan to ensure fiduciary obligations are met in accordance with established rules, policies and guidelines.

Compensation Discussion and Analysis

Compensation is set to attract and retain the best available talent while efficiently utilizing available resources. The Company compensates executive management with a package typically including a base salary, an incentive compensation plan and equity compensation designed to be competitive with comparable employers in Vancouver and to align management’s compensation with the long-term interests of shareholders. In considering executive management’s compensation, the Board also takes into consideration the financial condition of the Company.

The base salary and total compensation for the Company’s Named Executive Officers (CEO and Chief Financial Officer (“CFO”)) was determined by the Compensation Committee. The Compensation Committee set the compensation of the CEO and CFO using generally available market data and their combined industry experience. The Compensation Committee delegated to the CEO and CFO the responsibility to set the compensation packages for all other senior management and staff.

Prior to June 30, 2008 the Company maintained an incentive compensation plan – a bonus plan, which was approved by the Board and administered by the Compensation Committee. The Company’s Named Executive Officers had 50% of their potential bonus based on revenue objectives and 50% based on individual objectives that the Compensation Committee considered important to the overall success of the Company. This bonus plan was cancelled at the end of June 2008 and the Named Executive Officers waived their incentive compensation plan for the six months to December 31, 2008. The Company is implementing a new non-cash stock-based bonus scheme for the year ended December 31, 2009 which will include the all Named Executive Officers. The exact performance goals for this scheme have not yet been established. All other cash bonus plans for other staff have been terminated effective January 1, 2009.

The Board of Directors has the authority to award equity incentive compensation, including stock options, to the Company’s Named Executive Officers in such amounts and on such terms as the Board of Directors determines in its sole discretion. Neovasc has a 10% rolling stock option plan in which the Board of Directors can grant up to 10% of the issued and outstanding share capital as stock options. The Compensation Committee reviews each executive’s contribution to the Company’s strategic goals periodically and makes recommendation to the Board of Directors. The Board of Directors will take factors such as, changes in control provisions, performance criteria and previous grants into accounts in granting these executives’ options. The CEO and CFO were

Neovasc Statement of Executive Compensation 21 of 9

consulted; making recommendations to grant options, but the actual compensation amount was recommended by the compensation committee and approved by the Board of Directors.

SUMMARY COMPENSATION TABLE

Compensation of Named Executive Officers

Set out below are particulars of compensation paid to the following persons (“Named Executive Officers”):

(a)	the CEO of Neovasc or any person that acted in a similar capacity during the most recently completed fiscal year;
(b)	the CFO of Neovasc or any person that acted in a similar capacity during the most recently completed fiscal year;
(c)	each of Neovasc’s three most highly compensated executive officers, other than the CEO and the CFO, who were serving as executive officers at the end of the most recently completed fiscal year and whose total compensation was more than $150,000 per year; and
(d)	any additional individuals for whom disclosure would have been provided under (c) except that the individual was not serving as an executive officer of Neovasc at the end of the most recently completed financial year.

During the most recently completed financial year of Neovasc, Neovasc had three Named Executive Officers, being Paul Geyer, Chairman of the Board and Former CEO, Alexei Marko, CEO, and Chris Clark, CFO.

Neovasc Statement of Executive Compensation 3 of 9

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Share- based Awards ($)	Option- based Awards ($)(5)	Non-equity Incentive Plan Compensation ($)		All other Compensation ($)	Total Compensation ($)
					Annual Incentive Plans(1)	Long-term Incentive Plan
Paul Geyer Chairman and Former CEO(2)	2008 2007 2006	$Nil $28,000 $28,000	N/A N/A N/A	$23,105 - -	N/A N/A N/A	N/A N/A N/A	$130,051(3) $155,250 $194,391	153,156 183,250 222,391
Alexei Marko CEO(4)	2008 2007 2006	$225,000 $170,000 $115,000	N/A N/A N/A	$39,882 $15,545 $392	$25,000 $38,000 $Nil	N/A N/A N/A	NIL NIL NIL	289,882 223,545 115,392
Chris Clark CFO	2008 2007 2006	$175,000 $92,500 N/A	N/A N/A N/A	$16,032 $11,708 N/A	$17,625 $17,375 N/A	N/A N/A N/A	NIL NIL N/A	$208,657 $121,583 N/A

(1)	The annual incentive plan award paid to Mr. Marko and Mr. Clark was a board approved plan administered by the Compensation Committee. Both Mr. Marko and Mr. Clark had 50% of their potential bonus based on revenue objectives and 50% based on individual objectives that the Compensation Committee considered important to the overall success of the Company. The bonus includes both amounts paid in the year and amounts accrued for a previous year and paid in the following year. In 2008, Mr. Marko and Mr. Clark were the only Named Executive Officers who received bonuses and each of them waived their bonuses for the second half of 2008. The Company is implementing a new non-cash stock-based bonus scheme in 2009.
(2)	Mr. Geyer resigned as CEO as July 1, 2008, but remained Chairman of the Board.
(3)	Including consulting fees $99,838 to Geyer Engineering Ltd., a private company controlled by Paul Geyer, and director’s fees $30,213 to Paul Geyer as the Chairman of the Board.
(4)	Mr. Marko was appointed as Chief Executive Officer on July 1, 2008.
(5)	On July 1, 2008 the Company repurchased certain warrants and amended certain options in a scheme designed to reduce the outstanding dilutive securities of the Company prior to the merger by acquisition of Neovasc Medical Ltd and B-Balloon Ltd. Neither the warrant repurchase nor the option amendment resulted in incremental fair value being created for the warrant and option holders. The fair value of the shares issued to purchase warrants was equal to the fair value of the warrants valued using the Black Scholes valuation model and the fair value of the lesser number of lower priced options was equal to the fair value of the options they replaced.

Neovasc Statement of Executive Compensation 4 of 9

INCENTIVE PLAN AWARDS

The following options were held by the Named Executive Officers at December 31, 2008.

Name	Option-based Awards				Share-based Awards
	Number of securities underlying unexercised options (#)(1)	Option Exercise Price ($)	Option Expiration Date	Value of unexercised in-the-money Options ($)	Numbers of shares or units of shares that has not vested (#)(1)	Market or payout value of share-based awards that have not vested ($)
Paul Geyer Chairman and Former CEO(2)	20,000 15,000	$0.20 $1.15	July 1, 2013 October 31, 2013	N/A N/A	N/A N/A	N/A N/A
Alexei Marko CEO	9,750 290,250	$0.20 $1.15	July 1, 2013 October 31, 2013	N/A N/A	N/A N/A	N/A N/A
Chris Clark CFO	6,250 118,750	$0.20 $1.15	July 1, 2013 October 31, 2013	N/A N/A	N/A N/A	N/A N/A

(1)	Subsequent to the Neovasc Warrant and Option Offer, Mr. Geyer was granted the equivalent of 20,000 $0.20 options, Mr. Marko was granted the equivalent of 9,750 $0.20 options, and Mr. Clark would was the equivalent of 6,250 $0.20 options Theses numbers are presented on a post share consolidation basis.
(2)	Resigned as CEO on July 1, 2008.

The following table summarizes the value vested or earned for incentive plan awards.

Name	Option-based awards – Value vested during the year ($)	Share-based awards – Value vested during the year	Non-equity incentive plan compensation – Value earned during the year
Paul Geyer Chairman and Former CEO(1)	$42,000	N/A	N/A
Alexei Marko CEO	$20,475	N/A	N/A
Chris Clark CFO	$13,125	N/A	N/A

(1) Resigned as CEO on July 1, 2008.

PENSION PLAN BENEFITS

Neovasc does not provide a pension plan for Named Executive Officers, but matches 50% of the contributions paid by Named Executive Officers into their Registered Retirement Savings Plans (“RRSP”). The Executive Officers contribute 5% of their salaries to their respective RRSPs and receive a benefit of a 2.5% contribution paid by the Company. An identical scheme is available to all members of staff once they have passed their probationary period.

Neovasc Statement of Executive Compensation 5 of 9

TERMINATION AND CHANGE OF CONTROL BENEFITS

Termination of Employment, Change in Responsibilities and Employment Contracts

Neovasc has not entered into any contracts, agreements, plans or arrangements that provide to a Named Executive Officer at, following or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Company or a change in a Named Executive Officer’s responsibilities.

The following is a summary of the employment agreements Neovasc has entered into with its Named Executive Officers:

1.	Neovasc has a management contract with Geyer Engineering Ltd. (“GEL”), a company controlled by Paul Geyer, pursuant to which GEL provides Paul Geyer’s services to Neovasc on an 80% time basis. GEL receives $200,000 per year under this contract. GEL is also entitled to reimbursement of certain out-of-pocket expenses under the management contract. On July 1, 2008, Paul Geyer resigned as CEO, and the payment for his services as CEO was ceased accordingly.
2.	Neovasc’s subsidiary Angiometrx Inc. had an employment contract with Alexei Marko, President of Angiometrx Inc. which terminated in 2006. Mr. Marko continued to receive compensation at the rate specified in subsequent written offers by Neovasc. In October 2007, Mr. Marko was promoted to the position of President and COO with a gross salary of $200,000 per annum plus a bonus of up to 30% of gross salary based on meeting certain operational objectives. On July 1, 2008, Mr. Marko was promoted to the position of CEO with a gross salary of $250,000 per annum plus a new non-cash stock- based bonus scheme of up to 30% of gross salary based on meeting certain operational objectives.
3.	Mr. Clark was hired on April 2, 2007 as Director of Finance under an offer of employment letter and continued to receive compensation at the rate offered by Neovasc. In October 2007, Mr. Clark was promoted to the position of CFO with a gross salary of $150,000 per annum plus a bonus of up to 30% of gross salary based on meeting certain operational objectives. On July 1, 2008, Mr. Clark’s gross salary was raised to $200,000 per annum plus a new non-cash stock-based bonus scheme of up to 30% of gross salary based on meeting certain operational objectives.

Neovasc Statement of Executive Compensation 6 of 9

DIRECTORS COMPENSATION

In the first half of 2008, effective January 1, 2008, the Directors of Neovasc (excluding any Executive Officers) were paid an annual retainer of $15,000 each (payable in cash or options at the election of the director), a meeting fee of $1,000 per full Board meeting attended in person, a meeting fee of $500 per committee meeting attended, and a meeting fee of $250 for weekly update calls. In addition the Chairman of the Board and the Chairman of the Audit Committee were paid an extra annual retainer of $5,000.

In the second half of 2008, effective July 1, 2008, the Directors of Neovasc (excluding any Executive Officers) were paid an annual retainer of US$10,000, without any meeting fees. In addition the Chairman of the Board and the Chairman of the Audit Committee were paid an extra annual retainer of US$5,000.

During the most recently completed financial year, the compensation of directors who are not Named Executive Officers is summarized as follows:

Name	Fees earned	Share- based awards ($)	Option- based Awards ($)	Non-equity incentive plan compensation	Pension Value ($)	All other compensation ($)	Total ($)
Barry Allen(1)	$11,250	N/A	$Nil	N/A	N/A	N/A	$11,250
Daniel Nixon(1)	$15,000	N/A	$13,636	N/A	N/A	N/A	$28,636
Eugene Starr(1)	$11,088	N/A	$9,430	N/A	N/A	N/A	$20,518
James Miller(1)	$8,750	N/A	$6,753	N/A	N/A	N/A	$15,503
Lindsay Machan(1)	$10,250	N/A	$7,525	N/A	N/A	N/A	$17,775
Michael Varabioff(1)	$9,750	N/A	$Nil	N/A	N/A	N/A	$9,750
Douglas Janzen(2)	$19,891	N/A	$10,264	N/A	N/A	N/A	$30,155
Boaz Lifschitz(3)	$6,094	N/A	$1,200	N/A	N/A	N/A	$7,294
Efrem Kamen(4)	$993	N/A	$Nil	N/A	N/A	N/A	$993
Jane Hsiao(3)	$9,141	N/A	$1,800	N/A	N/A	N/A	$10,941
Steven Rubin(3)	$9,264	N/A	$1,800	N/A	N/A	N/A	$11,064
William O’Neill(3)	$6,094	N/A	$1,200	N/A	N/A	N/A	$7,294

(1)	Resigned as a director of the Company on July 1, 2008.
(2)	Douglas Janzen served as a director of the Company through all of 2008.
(3)	Appointed as a director of the Company on July 1, 2008.
(4)	Appointed as a director of the Company on December 9, 2008.

In 2008, $194,662 was paid to Axium Law Corporation, a law firm of which Michael Varabioff Law Corporation (wholly-owned by Michael Varabioff) is a partner, for legal services to Neovasc.

In 2008, US$128,000 (CDN$133,312) was paid to ETS Consulting, a consulting firm of which Eugene Starr is a director, for marketing and sales consulting services to Neovasc.

Neovasc Statement of Executive Compensation 7 of 9

Option-based Awards

The following options were held by the Named Executive Officers at December 31, 2008.

Name	Option-based Awards				Share-based Awards
	Number of securities underlying unexercised options (#)	Option Exercise Price ($)	Option Expiration Date	Value of unexercised in-the-money Options ($)	Numbers of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($)
Daniel Nixon	6’343(1)	$0.20	July 1, 2013	N/A	N/A	N/A
Eugene Starr	4,375(1)	$0.20	July 1, 2013	N/A	N/A	N/A
James Miller	3,144(1)	$0.20	July 1, 2013	N/A	N/A	N/A
Lindsay Machan	3,488(1)	$0.20	July 1, 2013	N/A	N/A	N/A
Douglas Janzen	3,938(1) 15,000	$0.20 $1.15	July 1, 2013 October 31, 2013	N/A N/A	N/A N/A	N/A N/A
Boaz Lifschitz	10,000	$1.15	October 31, 2013	N/A	N/A	N/A
Efrem Kamen	Nil	N/A	N/A	N/A	N/A	N/A
Jane Hsiao	15,000	$1.15	October 31, 2013	N/A	N/A	N/A
Steven Rubin	15,000	$1.15	October 31, 2013	N/A	N/A	N/A
William O’Neill	10,000	$1.15	October 31, 2013	N/A	N/A	N/A

(1) These numbers are presented on a post-consolidation basis and after giving effect to the Neovasc Warrant and Option offer.

Neovasc Statement of Executive Compensation 8 of 9

The following table summarizes the value vested or earned for incentive plan awards.

Name	Option-based awards – Value vested during the year ($)	Share-based awards – Value vested during the year	Non-equity incentive plan compensation – Value earned during the year
Daniel Nixon	$13,320	N/A	N/A
Eugene Starr	$9,188	N/A	N/A
James Miller	$6,602	N/A	N/A
Lindsay Machan	$7,325	N/A	N/A
Douglas Janzen	$8,270	N/A	N/A
Boaz Lifschitz	$Nil	N/A	N/A
Efrem Kamen	$Nil	N/A	N/A
Jane Hsiao	$Nil	N/A	N/A
Steven Rubin	$Nil	N/A	N/A
William O’Neill	$Nil	N/A	N/A

No directors of Neovasc exercised options during the fiscal year ended December 31, 2008.

Neovasc Statement of Executive Compensation 0 of 9

EX-99.4

Form 52-109FV1
Certification of annual filings - venture issuer basic certificate

I, Alexei Marko, Chief Executive Officer of Neovasc Inc certify the following:

1.	Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Neovasc Inc (the “issuer”) for the financial year ended December 31, 2008.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

Date: April 24, 2009

(signed) Alexei Marko
_______________________
Alexei Marko
Chief Executive Officer

NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i)	controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

EX-99.5

Form 52-109FV1
Certification of annual filings - venture issuer basic certificate

I, Chris Clark, Chief Financial Officer of Neovasc Inc certify the following:

1.	Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Neovasc Inc (the “issuer”) for the financial year ended December 31, 2008.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

Date: April 24, 2009

(signed) Chris Clark
_______________________
Chris Clark
Chief Financial Officer

NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i)	controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

EX-99.6

 

13700 Mayfield Place, Suite 2135
Richmond BC V6V 2E4 Canada
P:604.270.4344 F:604.270.4384
www.neovasc.com

NEWS RELEASE
TSX Venture Exchange: NVC

Neovasc Inc. Reports Year 2008 Financial Results

--Major Actions Implemented During 2008 Position the Company for Future Growth--

April 24, 2009 - Vancouver, BC, Canada - Neovasc Inc. (TSXV: NVC), today announced financial results for the year ended December 31, 2008.

“The fundamental changes Neovasc implemented during the past year have involved hard choices, but we believe they have resulted in a lean and highly focused company that is well-positioned for the future,” said Neovasc chief executive officer Alexei Marko. “We have wrung major costs out of every part of the firm, from closing facilities and reducing headcount to shelving those products and distribution channels with little chance of contributing meaningfully to near-term growth. Going forward, we are concentrating on those business segments with the greatest growth potential over the next 18 months and where we believe we can be successful without incurring significant costs. These include our tissue business, which in 2009 should benefit from our recent distribution agreement with vascular leader LeMaitre Vascular, as well as from other agreements with strategic partners that are in place or under discussion.”

Mr. Marko continued, “We remain very optimistic about the clinical and commercial potential of our Reducer™ stent, a development stage product with the potential to revolutionize the treatment of refractory angina, which currently affects over two million patients, and we look forward to filing a CE Mark application for this important product during 2009. We continue to be proactive in seeking near-term revenue opportunities that are synergistic with our current business and that provide strong returns on investment. We believe our current businesses and our revamped strategy play to Neovasc’s strengths, and we look forward to reporting on our progress over the course of the year.”

Neovasc chief financial officer Chris Clark noted, “Actions we took in 2008 to rationalize our staffing and cost structure and re-organize our balance sheet resulted in a number of sobering financial figures at year end. We believe that recognizing these required non-cash impairment charges now should be advantageous to our financial results in the future. On April 23, 2009, we also completed a non-brokered private placement that resulted in gross proceeds to Neovasc of $2 million, reinforcing the company’s cash position as we advance our most promising products and technologies.”

Financial Results
Results for the year ended December 31, 2008 follow. All amounts are in Canadian dollars.

Net Losses
The consolidated net loss for the year ended December 31, 2008 was $34,259,565 or $2.94 basic loss per share as compared with a net loss of $7,830,954 or $1.59 basic loss per share for the comparative period in 2007. The increase in loss of approximately $26 million is substantially due to a non-cash $23 million impairment charge on technology and goodwill, a non-cash $2 million increase in amortization expense on technology and a $1 million increase in other losses.

Impairment of Goodwill and Technology
During the fourth quarter of 2008, the Company’s market capitalization remained below the value of the shareholders equity for a significant period of time, indicating potential impairment of the Company’s goodwill and other intangible assets. As a result of these market indicators and the Company’s impairment testing, the Company recorded an impairment charge of $3,557,082 to write down acquired goodwill to $nil and an impairment charge of $19,503,930 to write down the net book value of acquired technologies to $nil.

Termination of Distribution Agreement
On December 22, 2008, the distribution agreement between Neovasc and a third party distributor was terminated. On termination the Company was required to repurchase inventory held by the distributor less a 25% restocking fee. Under EIC-156 Accounting by a vendor for consideration given to a Customer, Neovasc is required to recognize the inventory repurchase as a reduction in revenue and the income statement impact of the termination was to reduce revenue by $516,601, decrease cost of goods sold by $308,203 and recognize interest income of $45,024 (for the interest due on accounts receivable from the distributor).

Inventory Write Down
During the last quarter of the year, Neovasc severed its direct sales force employees who sold the Company’s Metricath products and terminated its distributor of Aegis products. As a result, the Company has limited sales channels through which to sell the Metricath and Aegis product lines. While management continues to look for new distributors to carry these products, there is no certainty, when, or if, they will be able to find a suitable partner. With no certain sales in 2009 from these products the Company incurred an inventory write down of $626,925.

Repayable Contribution Write Back
As noted above, the Metricath products do not currently have an established sales channel and Neovasc cannot predict whether or not it will be able to establish a suitable channel in the future or generate revenue from these products in 2009. As a result, the Company released $320,445 liability for the repayable contribution agreement repayable from royalties generated from future Metricath sales.

Revenues
Revenues increased 2% year over year from $1,517,873 for the year ended December 31, 2007 to $1,546,239 for the year ended December 31, 2008. Sales of catheter products for the year ended December 31, 2008 were $262,118 a marginal increase over sales of $258,017 in the comparable period in 2007, despite a heavy investment in a direct sales force and a substantial marketing effort. As described above, the direct sales force has been terminated and the Company is looking for a new distributor to carry its Metricath product. Sales of tissue and surgical products and services for the year ended December 31, 2008 were $1,284,121, as compared to sales of $1,259,856 for the year ended December 31, 2007, a marginal increase of approximately 2%. These revenues were derived from the sales of Peripatch products and contract manufacturing revenues. In the fourth quarter the Company reduced revenues by $516,601 associated with the repurchase of inventory from a terminated distribution agreement. Revenue in the prior quarters was correctly recognized at that time and the reduction in revenue arises solely from the termination of the distribution agreement in accordance with EIC 156 - Accounting by a vendor for consideration given to a Customer.

Cost of Sales
The cost of sales for the year ended December 31, 2008 were $708,300 as compared to $799,593 in 2007, and the overall gross margin for 2008 was 54% as compared to 47% in 2007. The gross margin for 2008 has been positively impacted by termination of the distribution agreement discussed above. Due to the 25% restocking fee, only 75% of the inventory returned resulted in a payment obligation of the Company and a corresponding revenue reduction, while 100% of the reacquired inventory was recognized and resulted in a reversal of cost of goods sold. The 25% of revenue remaining effectively has a zero cost of goods and positively impacts the gross margin for 2008.

Expenses
Total expenses for the year ended December 31, 2008 and 2007 were $35,498,908 and $8,631,675 respectively. The increase in expenses from 2007 to 2008 can be explained by an increase in operating expenses associated with additional costs incurred by the newly acquired activities in Israel of $1,940,462, an increase in amortization on intangible assets of $2,129,570, an impairment of intangible assets of $23,061,012, inventory write down of 626,925, and an offsetting recovery on the repayable contribution agreement of $320,445.

Liquidity and Capital Resources
The Company finances its operations and capital expenditures with cash generated from operations, lines of credit, long-term debt and equity financings. At December 31, 2008, the Company had cash and cash equivalents of $2,498,439 as compared to cash of $3,242,404 as of December 31, 2007. At December 31, 2008 the Company had working capital of $2,123,519 as compared to working capital of $3,431,266 at December 31, 2007. In addition, at December 31, 2008 the Company had restricted cash related to a security on long-term debt of $50,000 (December 31, 2007 - $50,000) included in long-term assets. Cash used in operations was $8,477,808 for the year ended December 31, 2008, as compared to $6,439,828 for the year ended December 31, 2007, an increase of $2,037,980. The increase in cash usage was related to the increase in expenses borne by the Company at the newly acquired operations in Israel and in increased sales and marketing expenditures.

Neovasc Inc. (formerly Medical Ventures Corp.)

Consolidated Balance Sheets

As at December 31

		2008			2007
ASSETS
CURRENT
Cash and cash equivalents	$	2,498,439		$	3,242,404
Accounts receivable		470,200			568,964
Inventory		341,564			384,124
Prepaid expenses and other assets		52,356			18,755
		3,362,559			4,214,247
RESTRICTED CASH AND CASH EQUIVALENTS		50,000			50,000
RETIREMENT ASSETS		8,320			-
TECHNOLOGY		-			-
GOODWILL		-			-
PROPERTY AND EQUIPMENT		1,399,644			1,425,553
	$	4,820,523		$	5,689,800
LIABILITIES
CURRENT
Accounts payable and accrued liabilities	$	1,218,405		$	735,310
Current portion of long-term debt		20,635			19,559
Current portion of repayable contribution agreement		-			28,112
		1,239,040			782,981
LONG-TERM DEBT		418,612			441,540
REPAYABLE CONTRIBUTION AGREEMENT		-			283,959
RETIREMENT LIABILITIES		8,964			-
		1,666,616			1,508,480
SHAREHOLDERS’ EQUITY
Share capital		58,607,066			28,835,081
Contributed surplus		4,436,804			976,637
Deficit		(59,889,963	)		(25,630,398	)
		3,153,907			4,181,320
	$	4,820,523		$	5,689,800

Neovasc Inc. (formerly Medical Ventures Corp.)

Consolidated Statements of Operations, Comprehensive Loss and Deficit

For the year ended December 31

		2008			2007
SALES
Product sales	$	1,452,854		$	1,209,832
Consulting services		93,385			308,041
		1,546,239			1,517,873
COST OF SALES,
including underutilized capacity of $32,166
(2007: $155,888)		708,300			799,593
GROSS PROFIT		837,939			718,280
EXPENSES
Selling		3,245,886			2,839,897
General and administration		3,459,800			2,282,283
Product development and clinical trials		3,101,869			2,744,913
Impairment of intangible assets		23,061,012			-
Inventory write down		626,925			559,131
Recovery on repayable contribution agreement		(320,445	)		-
Amortization on intangible assets		2,129,570			-
Amortization		194,291			205,451
		35,498,908			8,631,675
LOSS BEFORE OTHER
INCOME (EXPENSES)		(34,660,969	)		(7,913,395	)
OTHER INCOME (EXPENSES)
Interest income		153,277			165,562
Interest on long-term debt		(27,288	)		(14,136	)
Accreted interest on repayable
contribution agreement		(15,479	)		(14,891	)
Gain (Loss) on foreign exchange		290,894			(54,094	)
		401,404			82,441
NET LOSS AND COMPREHENSIVE
LOSS FOR THE PERIOD		(34,259,565	)		(7,830,954	)
DEFICIT, BEGINNING OF PERIOD		(25,630,398	)		(17,900,437	)
ADJUSTMENT FOR CHANGE IN ACCOUNTING POLICY		-			100,993
DEFICIT, END OF PERIOD	$	(59,889,963	)	$	(25,630,398	)
BASIC AND DILUTED LOSS PER SHARE	$	(2.94	)	$	(1.59	)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING		11,630,939			4,936,248
WEIGHTED AVERAGE NUMBER OF
FULLY DILUTED SHARES OUTSTANDING		12,172,746			4,936,248

Neovasc Inc. (formerly Medical Ventures Corp.)

Consolidated Statements of Cash Flows

For the year ended December 31

		2008			2007
OPERATING ACTIVITIES
Net loss for the period	$	(34,259,565	)	$	(7,830,954	)
Items not affecting cash
Intangible assets impairment		23,061,012			-
Inventory write down		626,925			559,131
Recovery of repayable contribution agreement		(320,445	)		-
Amortization		2,323,861			205,451
Interest on repayable contribution agreement		15,479			14,891
Stock-based compensation		387,360			166,885
		(8,165,373	)		(6,884,596	)
Change in non-cash operating assets and liabilities
Accounts receivable		508,038			(367,882	)
Inventory		(584,365	)		216,609
Prepaid expenses and other assets		(24,376	)		69,433
Retirement assets		72,295			-
Accounts payable and accrued liabilities		(184,183	)		526,608
Retirement liabilities		(99,844	)		-
		(8,477,808	)		(6,439,828	)
INVESTING ACTIVITY
Acquisition of business, net of cash of $781,008
B-Balloon Ltd.		(274,858	)		-
Neovasc Medical Ltd.		210,625			-
Purchase of property and equipment		(47,765	)		(542,316	)
		(111,998	)		(542,316	)
FINANCING ACTIVITIES
Increase in long-term debt		-			298,911
Repayment of long-term debt		(21,852	)		(19,101	)
Repayment of loan from related party of B-Balloon		(356,440	)		-
Repayment of repayable contribution agreement		(7,105	)		(5,418	)
Proceeds from share issue, net of costs		8,231,088			7,091,111
Proceeds on exercise of agents warrants		-			232,310
Proceeds from exercise of stock options		150			-
		7,845,841			7,525,813
(DECREASE)/INCREASE IN CASH		(743,965	)		543,669
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD		3,242,404			2,698,735
END OF PERIOD	$	2,498,439		$	3,242,404
REPRESENTED BY:
Cash		181,228			93,649
Cashable guaranteed investment certificates		2,317,211			3,148,755
	$	2,498,439		$	3,242,404
NON CASH TRANSACTIONS
Change in Asset Use		-			131,794
Issuance of shares to acquire
B-Balloon and Neovasc Medical		24,613,554			-
Issue of Warrants					111,518
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid		27,288			14,136

About Neovasc Inc.
Neovasc Inc. is a new specialty vascular device company that develops, manufactures and markets medical devices for the rapidly growing vascular and surgical marketplace. The company's current products include the Neovasc Reducer™, a novel stent in development to treat refractory angina, as well as a line of advanced biological tissue technologies that are used to enhance surgical outcomes and as key components in a variety of third party medical products. For more information, visit: www.neovasc.com.

Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words “anticipates,” “believes,” “may,” “continues,” “estimates,” “expects,” and “will” and words of similar import, constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which the Company operates; history of losses and lack of and uncertainty of revenues, ability to obtain required financing, receipt of regulatory approval of product candidates, ability to properly integrate newly acquired businesses, technology changes; competition; changes in business strategy or development plans; the ability to attract and retain qualified personnel; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted against the Company; and other factors referenced in the Company’s filings with Canadian securities regulators. Although the Company believes that expectations conveyed by the forward-looking statements are reasonable based on the information available to it on the date such statements were made, no assurances can be given as to the future results, approvals or achievements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not assume the obligation to update any forward-looking statements except as otherwise required by applicable law.

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Corporate contact:	U.S. media & investor contact:
Neovasc Inc.	GendeLLindheim BioCom Partners
Chris Clark	Barbara Lindheim
604 248-4138	212 918-4650