enVVeno Medical Corp 10-Q

ITEM 1 – Financial Statements ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. CONDENSED BALANCE SHEETS (Unaudited) September 30, December 31, 2021 2020 Assets Current Assets: Cash and cash equivalents $ 57,896,922 $ 9,334,584 Prepaid expenses and other current assets 310,046 234,467 Total Current Assets 58,206,968 9,569,051 Property and equipment, net 598,976 398,967 Operating lease right-of-use assets, net 311,790 539,974 Security deposits and other assets 54,493 29,843 Total Assets $ 59,172,227 $ 10,537,835 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 394,191 $ 1,390,362 Accrued expenses and other current liabilities 358,644 1,135,969 Note Payable - 312,700 Deferred revenue - related party 33,000 33,000 Current portion of operating lease liabilities 332,297 314,202 Total Current Liabilities 1,118,132 3,186,233 Long-term operating lease liabilities - 253,746 Total Liabilities 1,118,132 3,439,979 Commitments and Contingencies - - Stockholders’ Equity: Preferred stock, par value $ 0.00001 , 10,000,000 shares authorized: no shares issued or outstanding - - Common stock, par value $ 0.00001 , 250,000,000 shares authorized, 9,468,324 and 2,541,529 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 95 25 Additional paid-in capital 130,917,501 72,421,242 Accumulated deficit ( 72,863,501 ) ( 65,323,411 ) Total Stockholders’ Equity 58,054,095 7,097,856 Total Liabilities and Stockholders’ Equity $ 59,172,227 $ 10,537,835 See Notes to these Unaudited Condensed Financial Statements 1 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) 2021 2020 2021 2020 For the Three Months Ended For the Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Operating Expenses: Selling, general and administrative expenses 1,481,972 1,164,089 3,954,174 3,001,720 Research and development expenses 1,224,559 758,198 3,946,070 1,974,995 Loss from Operations ( 2,706,531 ) ( 1,922,287 ) ( 7,900,244 ) ( 4,976,715 ) Other (Income) Expense: Gain on extinguishment of note payable ( 312,700 ) - ( 312,700 ) - Interest (income) expense, net ( 4,522 ) ( 564 ) ( 14,182 ) ( 3,425 ) Change in fair value of derivative liabilities - 53,046 - ( 211,807 ) Other expense - - ( 33,272 ) - Total Other (Income) Expense ( 317,222 ) 52,482 ( 360,154 ) ( 215,232 ) Net Loss ( 2,389,309 ) $ ( 1,974,769 ) $ ( 7,540,090 ) $ ( 4,761,483 ) Deemed dividend to Series C Preferred Stockholders - ( 23,859 ) - ( 23,859 ) Net Loss Attributable to Common Stockholders $ ( 2,389,309 ) $ ( 1,998,628 ) $ ( 7,540,090 ) $ ( 4,785,342 ) Net Loss Per Basic and Diluted Common Share: $ ( 0.26 ) $ ( 1.38 ) $ ( 0.96 ) $ ( 4.70 ) Weighted Average Number of Common Shares Outstanding: Basic and Diluted 9,179,524 1,445,820 7,840,482 1,018,420 See Notes to these Unaudited Condensed Financial Statements 2 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY) (Unaudited) Series C Convertible Additional Total Preferred Stock Common Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance at January 1, 2021 - - 2,541,529 $ 25 $ 72,421,242 $ ( 65,323,411 ) $ 7,097,856 Common stock issued in at the market transactions Common stock issued in at the market transactions, shares Common stock issued in registered direct offering Common stock issued in registered direct offering, shares Common stock issued in public offering - - 5,914,284 59 38,127,717 - 38,127,776 Preferred stock issued in private placement Preferred stock issued in private placement, shares Warrant Exercised Warrant Exercised, shares Common stock issued for exercise of warrants 52,077 1 239,999 - 240,000 Common stock issued in private placement offering Common stock issued in private placement offering, shares Reclassification of Warrant Derivatives to Equity Shared-Based Compensation - - 106,850 - 106,850 Warrants granted to consultants Shares issued in satisfaction of trade payable Shares issued in satisfaction of trade payable, shares Fair Value of Warrants Issued - - 211,976 - 211,976 Net loss - - - ( 2,772,886 ) ( 2,772,886 ) Balance at March 31, 2021 - - 8,507,890 $ 85 $ 111,107,784 $ ( 68,096,297 ) $ 43,011,572 Shared-Based Compensation - - 202,983 - 202,983 Shares issued in satisfaction of trade payable - 5,772 - 37,576 - 37,576 Net loss - - - ( 2,377,895 ) ( 2,377,895 ) Balance at June 30, 2021 - - 8,513,662 85 111,348,343 ( 70,474,192 ) 40,874,236 Common stock issued in at the market transactions 170,963 2 970,573 - 970,575 Common stock issued in registered direct offering 781,615 8 18,273,583 18,273,591 Shared-Based Compensation - - - - 325,002 - 325,002 Net loss - - - ( 2,389,309 ) ( 2,389,309 ) Balance at September 30, 2021 - - 9,466,240 95 130,917,501 ( 72,863,501 ) 58,054,095 Series C Convertible Additional Total Preferred Stock Common Stock Paid-in Accumulated Stockholders Shares Amount Shares Amount Capital Deficit Equity Balance at January 1, 2020 - - 717,274 $ 7 $ 57,177,858 $ ( 56,187,925 ) $ 989,940 Common stock issued in private placement offering - - 52,000 1 24,304 - 24,305 Share-based compensation: - - - - 116,820 - 116,820 Warrants granted to consultants - - - - 14,070 - 14,070 Net loss - - - - - ( 1,159,758 ) ( 1,159,758 ) Balance at March 31, 2020 - - 769,274 $ 8 $ 57,333,052 $ ( 57,347,683 ) $ ( 14,623 ) Common stock issued in public offering - - 192,688 2 1,973,306 - 1,973,308 Share-Based Compensation - - - - 37,717 - 37,717 Net loss - - - - - ( 1,626,956 ) ( 1,626,956 ) Balance at June 30, 2020 - - 961,962 $ 10 $ 59,344,075 $ ( 58,974,639 ) $ 369,446 Common stock issued in public offering - - 575,000 6 3,881,901 - 3,881,907 Preferred stock issued in private placement 4,205,406 42 - 1,358,060 - 1,358,102 Warrant Exercised - - 72,747 1 631,625 - 631,626 Reclassification of Warrant Derivatives to Equity - - - - 334,229 - 334,229 Share-Based Compensation - - - - 194,420 - 194,420 Net loss - - - - - ( 1,974,769 ) ( 1,974,769 ) Balance at September 30, 2020 4,205,406 $ 42 1,609,709 $ 17 $ 65,744,310 $ ( 60,949,408 ) $ 4,794,961 See Notes to these Unaudited Condensed Financial Statements 3 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended September 30, 2021 2020 Cash Flows from Operating Activities Net loss $ ( 7,540,090 ) $ ( 4,761,483 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 656,283 363,027 Depreciation and amortization 103,134 71,252 Amortization of right-of-use assets 228,184 216,741 Gain on extinguishment of note payable ( 312,700 ) - Change in fair value of derivatives - ( 211,807 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 35,579 ) ( 232,006 ) Security deposit and other assets ( 24,650 ) - Accounts payable ( 998,595 ) ( 246,960 ) Accrued expenses and other current liabilities ( 586,797 ) ( 45,766 ) Payments on lease liabilities ( 235,651 ) ( 216,514 ) Total adjustments ( 1,206,371 ) ( 302,033 ) Net Cash Used in Operating Activities ( 8,746,461 ) ( 5,063,516 ) Cash Flows from Investing Activities Purchase of property and equipment ( 303,143 ) ( 152,751 ) Net Cash Used in Investing Activities ( 303,143 ) ( 152,751 ) Cash Flows from Financing Activities Proceeds from private placements of common stock and warrants, net - 570,341 Preferred stock issued in private placement - 1,358,102 Proceeds from shares issued under ATM, net 970,575 - Proceeds from registered direct offering, net 18,273,591 - Proceeds from public offering, net 38,127,776 5,855,215 Proceeds from issuance of note payable - 312,700 Proceeds from Warrant Exercises 240,000 631,626 Net Cash Provided by Financing Activities 57,611,942 8,727,984 Net Increase in Cash, Cash Equivalent, and Restricted Cash 48,562,338 3,511,717 Cash, cash equivalents and restricted cash - Beginning of period 9,334,584 2,117,286 Cash, cash equivalents and restricted cash - End of period $ 57,896,922 $ 5,629,003 See Notes to these Unaudited Condensed Financial Statements 4 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. CONDENSED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) For the Nine Months Ended September 30, 2021 2020 Supplemental Disclosures of Cash Flow Information: Cash Paid (Received) During the Years For: Interest, net $ ( 14,182 ) $ ( 3,425 ) Non-Cash Financing Activities: Fair value of warrants issued in connection with common stock included in derivative liabilities $ - $ 513,534 Fair value of placement agent warrants issued in connection with common stock included in derivative liabilities $ - $ 32,502 Fair value of common stock issued in satisfaction of trade payable $ 37,576 $ - Fair value of warrants issued $ 211,976 $ - Reclassification of warrant derivatives to equity $ - $ ( 334,229 ) See Notes to these Unaudited Condensed Financial Statements 5 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1 – Business Organization and Nature of Operations enVVeno Medical Corporation is a med-tech company focused on improving the standard of care in the treatment of venous disease. We are developing tissue-based solutions that are designed to be life sustaining or life enhancing for patients with deep venous Chronic Venous Insufficiency (CVI). CVI occurs when valves inside of the veins of the leg fail, resulting in insufficient blood being returned to the heart. Our products are being developed to address large unmet medical needs by either offering treatments where none currently exist or by substantially increasing the current standards of care. Our lead product is a porcine based device to be surgically implanted in the deep venous system of the leg, and is called the VenoValve®. The VenoValve is currently being evaluated in the SAVVE U.S. pivotal trial for the purpose of obtaining approval to market and sell the device from the U.S. Food and Drug Administration (“FDA”). Our team of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and have been commercially successful. We currently lease a 14,507 sq. ft. manufacturing facility in Irvine, California, where we manufacture medical devices for our clinical trials, and which has capacity for commercial manufacturing. On September 21, 2021, we announced that we were changing our name from Hancock Jaffe to enVVeno Medical Corporation and that our development strategy is to focus on the treatment of venous disease. In addition to the VenoValve, we announced that we have begun development of a second device for the treatment of venous disease which we are calling enVVe. In connection with this change in strategy, we indicated that we are deferring further development of the CoreoGraft, which is now outside of our primary focus area. 6 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 2 – Going Concern and Management’s Liquidity Plan The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Although we expect to continue incurring losses for the foreseeable future, may never earn revenues large enough to support operations, and may need to raise additional capital to sustain operations, pursue product development initiatives, and penetrate markets for the sale of products, Management believes that our capital resources at September 30, 2021, are sufficient to meet our obligations as they become due within one year after the date of this interim filing, and sustain operations. 7 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 3 – Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed financial statements of the Company as of September 30, 2021 and December 31, 2020, and for the three and nine months ended September 30, 2021 and 2020. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results for the full year. These unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Form 10-K filed with the SEC on March 31, 2021. The condensed balance sheet as of December 31, 2020 has been derived from the Company’s audited financial statements. Concentrations The Company maintains cash with major financial institutions. Cash held in United States bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 at each institution. There was an aggregate uninsured cash balance of $ 57,646,922 as of September 30, 2021. Net Loss per Share The Company computes basic and diluted loss per share by dividing net loss attributable to common stockholders by the weighted average number of common stock outstanding during the period, including warrants exercisable for little or no cash consideration. Basic and diluted net loss per common share are the same since the inclusion of common stock issuable pursuant to the exercise of warrants and options, would have been anti-dilutive. Subsequent Events The Company evaluated events that have occurred after the balance sheet date through the date the financial statements were issued. Based upon the evaluation and transactions, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements. Recent Accounting Standards In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. There was not a significant impact to the financial statements from the adoption of this standard. 8 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 4 – Property and Equipment As of September 30, 2021 and December 31, 2020, property and equipment consist of the following: Schedule of Property and Equipment September 30, December 31, 2021 2020 Laboratory equipment $ 501,346 320,830 Furniture and fixtures 124,093 98,392 Computer software and equipment 124,823 65,078 Leasehold improvements 188,589 158,092 Construction Work in Progress – Software 251,163 244,479 Property and equipment, gross 1,190,014 886,871 Less: accumulated depreciation ( 591,038 ) ( 487,904 ) Property and equipment, net $ 598,976 398,967 Depreciation expense amounted to $ 44,076 and $ 66,857 for the nine months ended September 30, 2021 and 2020, respectively. Depreciation expense is reflected in general and administrative expenses in the accompanying statements of operations. Note 5 – Right-of-Use Assets and Lease Liability On September 20, 2017, the Company renewed its operating lease for its manufacturing facility in Irvine, California, effective October 1, 2017, for five years with an option to extend the lease for an additional 60 -month term at the end of lease term. The initial lease rate was $ 26,838 per month with escalating payments. In connection with the lease, the Company is obligated to pay $ 7,254 monthly for operating expenses for building repairs and maintenance. The Company has no other operating or financing leases with terms greater than 12 months . The Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (Topic 842) effective January 1, 2019 using the modified-retrospective method and elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of previous conclusions related to contracts containing leases, lease classification and initial direct costs, and therefore the comparative periods presented are not adjusted. In addition, the Company elected to adopt the short-term lease exception and not apply Topic 842 to arrangements with lease terms of 12 months or less. On January 1, 2019, upon adoption of Topic 842, the Company recorded right-of-use assets of $ 1,099,400 , lease liabilities of $ 1,121,873 and eliminated deferred rent of $ 22,473 . The Company determined the lease liabilities using the Company’s estimated incremental borrowing rate of 8.5 % to estimate the present value of the remaining monthly lease payments. 9 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Our operating lease cost is as follows: Schedule of Operating Lease Cost For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2021 Operating lease cost $ 85,492 $ 256,475 Supplemental cash flow information related to our operating lease is as follows: Schedule of Supplemental Cash Flow Information Related to Operating Lease For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2021 Operating Cash Flow Information: Cash paid for amounts in the measurement of lease liabilities $ 87,981 $ 263,943 Schedule of Operating Remaining Lease Term and Discount Rate Remaining lease term and discount rate for our operating lease is as follows: September 30, 2021 Remaining lease term 1 year Discount rate 8.5 % Maturity of our lease liabilities by fiscal year for our operating lease is as follows: Schedule of Maturity of Lease Liabilities September 30,2021 Three months ended December 31, 2020 $ 90,618 Year ended December 31, 2021 271,854 Total $ 362,472 Less: Imputed Interest ( 30,175 ) Present value of our lease liability $ 332,297 10 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 6 – Accrued Expenses and Other Current Liabilities As of September 30, 2021, and December 31, 2020, accrued expenses and other current liabilities consist of the following: Schedule of Accrued Expenses September 30, December 31, 2021 2020 Accrued compensation costs $ 252,374 $ 473,799 Accrued professional fees 82,500 79,650 Accrued franchise taxes 23,770 25,607 Accrued research and development - 368,809 Other accrued expenses - 188,104 Accrued expenses $ 358,644 $ 1,135,969 Note 7 – Note Payable On April 12, 2020, the Company obtained a loan (the “Loan”) in the amount of $ 312,700 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a Note dated April 12, 2020, was to mature on April 12, 2022 , and bore interest at a rate of 1 % per annum, payable monthly commencing on November 12, 2020. On September 8, 2021, the Company was notified the Loan and any accrued interest had been forgiven. In connection with this, the Company recorded a gain on extinguishment of debt of $ 312,700 . Note 8 – Commitments and Contingencies Litigations Claims and Assessments In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements. Robert Rankin Complaints On July 9, 2020, the Company was served with a civil complaint filed in the Superior Court for the State of California, County of Orange by a former employee, Robert Rankin, who resigned his employment on or about March 30, 2020. The case is entitled Rankin v. Hancock Jaffe Laboratories, Inc. et al., Case No. 30-2020-01146555-CU-WR-CJC and was filed on May 27, 2020. On September 3, 2020 the Company and its Chief Executive Officer were served with a second complaint filed in the Superior Court for the State of California, County of Orange by Mr. Rankin. The case is entitled Rankin v. Hancock Jaffe Laboratories, Inc. et al., Case No. 30-2020-01157857 and was filed on August 31, 2020. The complaints assert several causes of action including a cause of action for failure to timely pay Mr. Rankin’s accrued and unused vacation and three months’ severance under his July 16, 2018 employment agreement, defamation, unlawful labor code violations, sex-based discrimination, and unfair competition, and seeks damages for lost wages, emotional and mental distress, consequential damages, punitive damages and attorney’s fees and costs. The Company intends to vigorously defend the claims, investigate the allegations, and assert counterclaims. As of the date of these financial statements, the amount of loss associated with these complaints, if any, cannot be reasonably estimated. Accordingly, no amounts related to these complaints are accrued as of September 30, 2021. 11 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 10 – Stockholders’ Equity Common Stock On February 11, 2021, the Company raised $ 41,400,000 in gross proceeds, with cash offering costs of approximately $ 3,300,000 , in a public offering of 5,914,284 shares of its common stock for a purchase price of $ 7.00 per share and warrants to purchase 2,957,142 shares of its common stock. The exercise price of the warrants is $ 7.00 per share, subject to customary adjustments and they expire on February 11, 2026 . The warrants had grant date fair value of $ 4.84 per share for an aggregate grant date fair value of $ 14,312,567 , using the Black Scholes method with the following assumptions used: stock price of $ 7.53 , risk-free interest rate of 0.11 %, volatility of 113.1 %, annual rate of quarterly dividends of 0 %, and a contractual term of 2.5 years. We determined that equity classification of the warrants was appropriate. Accordingly, their value is included in additional paid-in capital. On April 26, 2021, the Company issued 5,772 shares with a value of $ 6.51 per share, or $ 37,576 , in satisfaction of a trade payable. On August 12, 2021, the Company entered into an At-the-Market Offering Agreement to create an at-the-market equity program under which it may sell up to $ 25,000,000 of shares of the Company’s common stock from time to time. During the quarter ending September 30, 2021, the Company sold 170,963 shares for aggregate net proceeds of approximately $ 971,000 . On September 9, 2021, the Company entered a securities purchase agreement pursuant to which it completed a registered direct offering in which it sold 781,615 shares of common stock and Pre-Funded Warrants to purchase 1,759,035 shares of common stock, for aggregate net proceeds of approximately $ 18,300,000 . We determined that equity classification of the warrants was appropriate. Accordingly, their value is included in additional paid-in capital. In connection with this transaction, the Company also issued to the placement agent as compensation a warrant to purchase up to 152,439 shares of common stock with substantially the same terms as the warrants issued in the registered direct offering. The warrants are exercisable immediately upon issuance, have an initial exercise price of $ 9.84 per share, subject to customary adjustments, and expire in April 2025. Warrants In November 2020 the Company’s Board of Directors approved the issuance of warrants to purchase 6,400 shares of common stock to an advisor and warrants to purchase 20,000 shares of common stock to certain participants in the preferred share exchange. Separately the Company agreed to re-price warrants issued to the placement agent for the Company’s February 25, 2020 private placement. These warrants and the re-priced warrant were issued in February 2021. The value of these warrants when they were issued was $ 211,976 . The Company determined their value using the Black-Scholes method with the following assumptions: stock price of $ 8.91 - $ 9.31 , risk-free interest rate of 0.47 %, volatility of 113 %, annual rate of quarterly dividends of 0 %, and an expected term of 2.5 to 3.5 years. Stock Options From time to time, the Company issues options for the purchase of its common stock to employees and others. Share-based compensation related to stock options is included in selling, general and administrative expenses on the accompanying statement of operations, and was $ 0.6 and $ 0.4 million of during the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, there was $ 1.6 million of unrecognized stock-based compensation expense related to outstanding stock options that will be recognized over the weighted average remaining vesting period of 1.7 years. 12 ENVVENO MEDICAL CORPORATION f/k/a HANCOCK JAFFE LABORATORIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 10 – Net Loss per Share The following table summarizes the number of potentially dilutive common stock equivalents excluded from the calculation of diluted net loss per common share as of September 30, 2021 and 2020: Summary of Potentially Dilutive Common Stock Equivalents Excluded from Diluted Net Loss Per Share September 30, 2021 2020 Shares of common stock issuable upon exercise of warrants 4,554,471 1,360,883 Shares of common stock issuable upon exercise of options 485,212 212,622 Potentially dilutive common stock equivalents excluded from diluted net loss per share 5,039,683 1,573,504 Note 11 – Related Party Transactions On June 8, 2021, the Company updated its agreement with the vendor affiliated by common ownership and control with a shareholder holding approximately 10 % of the Company’s outstanding common stock. The Company engaged this vendor to provide support in the VenoValve U.S. pivotal trial. Expenditures to that vendor were approximately $ 0.6 million during the nine months ending September 30, 2021, and are included in in Research and Development expenses in the accompanying statement of operations. 13