enVVeno Medical Corp 10-Q

ITEM 1 – Financial Statements ENVVENO MEDICAL CORPORATION CONDENSED BALANCE SHEETS (unaudited) June 30, December 31, 2022 2021 (In thousands except par values, unless otherwise indicated) Assets Current Assets: Cash and cash equivalents $ 9,070 $ 54,728 Short-term investments 28,413 - Accrued interest receivable 38 - Prepaid expenses and other current assets 239 312 Total Current Assets 37,760 55,040 Property and equipment, net 606 618 Operating lease right-of-use assets, net 1,829 1,987 Long-term investments 9,706 - Security deposits and other assets 31 54 Total Assets $ 49,932 $ 57,699 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 1,034 $ 560 Accrued expenses and other current liabilities 479 729 Current portion of operating lease liabilities 303 291 Total Current Liabilities 1,816 1,580 Long-term operating lease liabilities 1,558 1,715 Total Liabilities 3,374 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 June 30, 2022 and December 31, 2021 - - Additional paid-in capital 140,801 136,255 Accumulated deficit ( 94,243 ) ( 81,851 ) Total Stockholders’ Equity 46,558 54,404 Total Liabilities and Stockholders’ Equity $ 49,932 $ 57,699 See Notes to these Unaudited Condensed Financial Statements 1 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF OPERATIONS (unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 2022 2021 2022 2021 (In thousands, except per share data) Operating Expenses: Selling, general and administrative expenses 3,913 1,296 7,696 2,472 Research and development expenses 3,073 1,090 4,625 2,722 Loss from Operations ( 6,986 ) ( 2,386 ) ( 12,321 ) ( 5,194 ) Other (Income) Expense: Interest (income) expense, net ( 37 ) ( 7 ) ( 42 ) ( 10 ) Unrealized loss from investments 113 - 113 - Other expense - ( 1 ) - ( 33 ) Total Other (Income) Expense 76 ( 8 ) 71 ( 43 ) Net Loss $ ( 7,062 ) $ ( 2,378 ) $ ( 12,392 ) $ ( 5,151 ) Net Loss Per Basic and Diluted Common Share: $ ( 0.63 ) $ ( 0.28 ) $ ( 1.10 ) $ ( 0.72 ) Weighted Average Number of Common Shares Outstanding: Basic and Diluted 11,229 8,512 11,229 7,160 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) Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at January 1, 2022 9,470 $ - $ 136,255 $ ( 81,851 ) $ 54,404 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 Shared-Based Compensation - - 2,238 - 2,238 Fair value of warrants issued 65 65 Net loss - - - ( 7,062 ) ( 7,062 ) Balance at June 30, 2022 9,470 $ - $ 140,801 $ ( 94,243 ) $ 46,558 Shares Amount Capital Deficit Equity Common Stock Additional Paid-in Accumulated Total 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 Share-Based Compensation - - 203 - 203 Shares issued in satisfaction of trade payable 6 - 37 - 37 Net loss - - - ( 2,378 ) ( 2,378 ) Balance at June 30, 2021 8,514 $ - $ 111,348 $ ( 70,474 ) $ 40,874 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 Six Months Ended June, 2022 2021 Cash Flows from Operating Activities Net loss $ ( 12,392 ) $ ( 5,151 ) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation 4,481 331 Issuance of warrants for services 65 - Depreciation and amortization 104 59 Amortization of right of use assets 158 152 Deposit applied to consulting services 23 - Unrealized loss from investments 113 - Changes in operating assets and liabilities: Prepaid expenses and other current assets 73 ( 125 ) Accrued interest receivable 16 - Security deposit and other assets - ( 5 ) Accounts payable 474 ( 1,084 ) Accrued expenses and other current liabilities ( 250 ) ( 533 ) Operating lease liabilities ( 145 ) ( 157 ) Total adjustments 5,112 ( 1,362 ) Net Cash Used in Operating Activities ( 7,280 ) ( 6,513 ) Cash Flows from Investing Activities Purchase of property and equipment ( 92 ) ( 151 ) Purchases of investments ( 38,286 ) - Net Cash Used in Investing Activities ( 38,378 ) ( 151 ) 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 ( 45,658 ) 31,704 Cash, cash equivalents - Beginning of period 54,728 9,335 Cash, cash equivalents - End of period $ 9,070 $ 41,039 For the Six Months Ended June 30, 2022 2021 Supplemental Disclosures of Cash Flow Information: Cash Received During the Period For: Interest, net $ 42 $ 5 Non-Cash Financing Activities Fair value of common stock issued in satisfaction of trade payable - 37 Fair value of warrants issued in satisfaction of trade payables and accrued expenses $ ( 65 ) $ ( 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 June 30, 2022, the Company had a cash balance of $ 9.1 million, investments of $ 38.1 million and working capital of $ 35.6 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 June 30, 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 June 30, 2022 and December 31, 2021, and for the three and six months ended June 30, 2022 and 2021. The results of operations for the three and six months ended June 30, 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. Investments We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. Investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year are classified as long-term investments. Debt investments are classified as trading securities and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in unrealized gains (losses) from investments. Fair value is calculated based on publicly available market information. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. We recognize interest income based on the stated coupon rate of the investments purchased. 5 ENVVENO MEDICAL CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 4 – Investments The components of investments were as follows at June 30, 2022: Schedule of Investments (In thousands) Cash Equivalents Short-Term Investment Long Term Investment Fair Value Level 1 U.S. Government securities $ 2,248 $ 28,413 $ 9,706 Total debt investments $ 2,248 $ 28,413 $ 9,706 Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Management does not believe any remaining unrealized losses represent impairments based on our evaluation of available evidence. There were no similar investments at December 31, 2021. Note 5 – 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 $ 8.8 and $ 54.5 million as of June 30, 2022 and December 31, 2021, respectively. 6 ENVVENO MEDICAL CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 6 – Accrued Expenses and Other Current Liabilities As of June 30, 2022, and December 31, 2021, accrued expenses and other current liabilities consist of the following: Schedule of Accrued Expenses and Other Current Liabilities June 30, December 31, (In thousands) 2022 2021 Accrued compensation costs $ 374 $ 525 Accrued professional fees 46 84 Accrued research and development - 60 Other accrued expenses 59 60 Total accrued expenses and other current liabilities $ 479 $ 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 which are currently set for trial on October 24, 2022. 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 June 30, 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. During the six-months ended June 30, 2022, the Company granted options to employees for the purchase of thirty-thousand shares with a weighted average exercise price of $ 6.83 per share. The Company recognized $ 4.5 million and $ 0.3 million of share-based compensation related to stock options during the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, there was $ 10.6 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. 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 June 30, 2022 and 2021: Schedule of Dilutive Net Loss Per Common Share 2022 2021 June 30, (In thousands) 2022 2021 Shares of common stock issuable upon exercise of warrants 4,578 4,402 Shares of common stock issuable upon exercise of options 3,445 386 Potentially dilutive common stock equivalents excluded from diluted net loss per share 8,023 4,788 8