enVVeno Medical Corp 10-Q

ITEM 1 – Financial Statements ENVVENO MEDICAL CORPORATION CONDENSED BALANCE SHEETS (unaudited) March 31, December 31, 2022 2021 (In thousands except par values, unless otherwise indicated) Assets Current Assets: Cash and cash equivalents $ 51,338 $ 54,728 Prepaid expenses and other current assets 312 312 Total Current Assets 51,650 55,040 Property and equipment, net 635 618 Operating lease right-of-use assets, net 1,908 1,987 Security deposits and other assets 31 54 Total Assets $ 54,224 $ 57,699 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 557 $ 560 Accrued expenses and other current liabilities 416 729 Current portion of operating lease liabilities 297 291 Total Current Liabilities 1,270 1,580 Long-term operating lease liabilities 1,637 1,715 Total Liabilities 2,907 3,295 Commitments and Contingencies - - Stockholders’ Equity: Preferred stock, par value $ 0.00001 , 10,000 shares authorized: no shares issued or outstanding - - Common stock, par value $ 0.00001 , 250,000 shares authorized, 9,470 shares issued and outstanding as of March 31, 2022 and December 31, 2021 - - Additional paid-in capital 138,498 136,255 Accumulated deficit ( 87,181 ) ( 81,851 ) Total Stockholders’ Equity 51,317 54,404 Total Liabilities and Stockholders’ Equity $ 54,224 $ 57,699 See Notes to these Unaudited Condensed Financial Statements 1 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF OPERATIONS (unaudited) 2022 2021 For the Three Months Ended March 31, 2022 2021 (In thousands, except per share data) Operating Expenses: Selling, general and administrative expenses 3,783 1,176 Research and development expenses 1,552 1,632 Loss from Operations ( 5,335 ) ( 2,808 ) Other Income: Interest income, net ( 5 ) ( 3 ) Other expense - ( 32 ) Total Other Income ( 5 ) ( 35 ) Net Loss $ ( 5,330 ) $ ( 2,773 ) Net Loss Per Basic and Diluted Common Share: $ ( 0.47 ) $ ( 0.48 ) Weighted Average Number of Common Shares Outstanding: Basic and Diluted 11,229 5,741 See Notes to these Unaudited Condensed Financial Statements 2 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY) (In thousands, unless otherwise indicated) (unaudited) Additional Total Common Stock Paid-in Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance at January 1, 2022 9,470 $ - $ 136,255 $ ( 81,851 ) $ 54,404 Common stock issued in public offering - Common stock issued in public offering, shares - Common stock issued for exercise of warrants - Common stock issued for exercise of warrants, shares - Fair Value of Warrants Issued - Shared-Based Compensation - - 2,243 - 2,243 Net loss - - - ( 5,330 ) ( 5,330 ) Balance at March 31, 2022 9,470 $ - $ 138,498 $ ( 87,181 ) $ 51,317 Additional Total Common Stock Paid-in Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance at January 1, 2021 2,542 $ - $ 72,421 $ ( 65,323 ) $ 7,098 Common stock issued in public offering 5,914 - 38,128 - 38,128 Common stock issued for exercise of warrants 52 - 240 - 240 Shared-Based Compensation - - 107 - 107 Fair Value of Warrants Issued - - 212 - 212 Net loss - - - ( 2,773 ) ( 2,773 ) Balance at March 31, 2021 8,508 $ - $ 111,108 $ ( 68,096 ) $ 43,012 See Notes to these Unaudited Condensed Financial Statements 3 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (In thousands, unless otherwise indicated) (unaudited) 2022 2021 For the Three Months Ended March 31, 2022 2021 Cash Flows from Operating Activities Net loss $ ( 5,330 ) $ ( 2,773 ) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation 2,243 129 Depreciation and amortization 51 28 Amortization of right of use assets 78 76 Deposit applied to consulting services 25 - Changes in operating assets and liabilities: Prepaid expenses and other current assets - ( 54 ) Accounts payable ( 3 ) ( 681 ) Accrued expenses and other current liabilities ( 313 ) ( 488 ) Operating lease liabilities ( 72 ) ( 79 ) Total adjustments 2,009 ( 1,069 ) Net Cash Used in Operating Activities ( 3,321 ) ( 3,842 ) Cash Flows from Investing Activities Purchase of property and equipment ( 69 ) ( 24 ) Net Cash Used in Investing Activities ( 69 ) ( 24 ) Cash Flows from Financing Activities Proceeds from public offering of common stock and warrants, net - 38,128 Proceeds from Warrant Exercises - 240 Net Cash Provided by Financing Activities - 38,368 Net (Decrease) Increase in Cash ( 3,390 ) 34,502 Cash, cash equivalents - Beginning of period 54,728 9,335 Cash, cash equivalents - End of period $ 51,338 $ 43,837 For the Three Months Ended March 31, 2022 2021 Supplemental Disclosures of Cash Flow Information: Cash Received During the Period For: Interest, net $ ( 5 ) $ ( 3 ) Non-Cash Financing Activities Fair value of warrants issued $ - $ ( 212 ) See Notes to these Unaudited Condensed Financial Statements 4 ENVVENO MEDICAL CORPORATION 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 our 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. Note 2 – Management’s Liquidity Plan As of March 31, 2022, the Company had a cash balance of $ 51.3 million and working capital of $ 50.4 million. Although the Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital to sustain its operations, pursue its product development initiatives and penetrate markets for the sale of its products, Management believes that our capital resources at March 31, 2022 are sufficient to meet our obligations as they become due within one year after the date of this Quarterly Report, and sustain operations. 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 March 31, 2022 and December 31, 2021, and for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 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, 2021 included in the Company’s Form 10-K filed with the SEC on March 28, 2022. The condensed balance sheet as of December 31, 2021 has been derived from the Company’s audited financial statements. 5 ENVVENO MEDICAL CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 4 – 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 at each institution. There were aggregate uninsured cash balances of $ 51.1 and $ 54.5 million as of March 31, 2022 and December 31, 2021, respectively. Note 5 – Property and Equipment As of March 31, 2022 and December 31, 2021, property and equipment consist of the following: Schedule of Property and Equipment March 31, December 31, 2022 2021 Laboratory equipment $ 523 523 Furniture and fixtures 155 124 Computer software and equipment 185 164 Leasehold improvements 209 193 Construction Work in Progress – Software 251 251 Total property and equipment 1,323 1,255 Less: accumulated depreciation ( 688 ) ( 637 ) Property and equipment, net $ 635 618 Depreciation expense amounted to $ 0.1 million for the three months ended March 31, 2022 and 2021. Depreciation expense is reflected in general and administrative expenses in the accompanying statements of operations. 6 ENVVENO MEDICAL CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 6 – Accrued Expenses and Other Current Liabilities As of March 31, 2022, and December 31, 2021, accrued expenses and other current liabilities consist of the following: Schedule of Accrued Expenses and Other Current Liabilities March 31, December 31, 2022 2021 Accrued compensation costs $ 294 $ 525 Accrued professional fees 62 84 Accrued research and development - 60 Other accrued expenses 60 60 Total accrued expenses and other current liabilities $ 416 $ 729 Note 7 – 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 has denied all claims in both matters (which have now been consolidated) and has filed a counterclaim asserting that Rankin has breached his employment agreement with the Company to the Company’s damage. The Company continues to believe it has meritorious defenses to both matters. 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 March 31, 2022. 7 ENVVENO MEDICAL CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 8 – Stockholders’ Equity Stock Options From time to time, the Company issues options for the purchase of its common stock to employees and others. The Company recognized $ 2.2 million and $ 0.1 million of share-based compensation related to stock options during the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, there was $ 13.0 million of unrecognized stock-based compensation expense related to outstanding stock options that will be recognized over the weighted average remaining vesting period of 1.9 years. Note 9 – 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 March 31, 2022 and 2021: Schedule of Dilutive Net Loss Per Common Share March 31, 2022 2021 Shares of common stock issuable upon exercise of warrants 6,312 4,402 Shares of common stock issuable upon exercise of options 3,454 257 Potentially dilutive common stock equivalents excluded from diluted net loss per share 9,766 4,659 8