enVVeno Medical Corp 10-Q

ITEM 1 – Financial Statements ENVVENO MEDICAL CORPORATION CONDENSED BALANCE SHEETS (unaudited) March 31, December 31, 2023 2022 (In thousands except par values, unless otherwise indicated) Assets Current Assets: Cash and cash equivalents $ 2,273 $ 4,555 Short-term investments 31,934 34,489 Prepaid expenses and other current assets 312 392 Total Current Assets 34,519 39,436 Property and equipment, net 472 521 Operating lease right-of-use assets, net 1,591 1,673 Security deposits and other assets 31 31 Total Assets $ 36,613 $ 41,661 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable, accrued expenses and other current liabilities $ 847 $ 1,216 Current portion of operating lease liabilities 320 314 Total Current Liabilities 1,167 1,530 Long-term operating lease liabilities 1,317 1,402 Total Liabilities 2,484 2,932 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, 9,472 shares issued and outstanding as of March 31, 2023 and December 31, 2022 - - Additional paid-in capital 147,041 145,249 Accumulated deficit ( 112,912 ) ( 106,520 ) Total Stockholders’ Equity 34,129 38,729 Total Liabilities and Stockholders’ Equity $ 36,613 $ 41,661 See Notes to these Unaudited Condensed Financial Statements 1 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF OPERATIONS (unaudited) 2023 2022 For the Three Months Ended March 31, 2023 2022 (In thousands, except per share data) Operating Expenses: Selling, general and administrative expenses $ 3,202 $ 3,783 Research and development expenses 3,595 1,552 Loss from Operations ( 6,797 ) ( 5,335 ) Other Income: Realized gain from sales of trading securities ( 82 ) - Unrealized gain from trading securities ( 278 ) - Interest income, net ( 45 ) ( 5 ) Total Other Income ( 405 ) ( 5 ) Net Loss $ ( 6,392 ) $ ( 5,330 ) Net Loss Per Basic and Diluted Common Share: $ ( 0.57 ) $ ( 0.47 ) Weighted Average Number of Common Shares Outstanding: Basic and Diluted 11,231 11,229 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, 2023 9,472 $ - $ 145,249 $ ( 106,520 ) $ 38,729 Shared-Based Compensation - - 1,792 - 1,792 Net loss - - - ( 6,392 ) ( 6,392 ) Balance at March 31, 2023 9,472 $ - $ 147,041 $ ( 112,912 ) $ 34,129 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 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 See Notes to these Unaudited Condensed Financial Statements 3 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (In thousands, unless otherwise indicated) (unaudited) 2023 2022 For the Three Months Ended March 31, 2023 2022 Cash Flows from Operating Activities Net loss $ ( 6,392 ) $ ( 5,330 ) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation 1,792 2,243 Depreciation and amortization 54 51 Amortization of right of use assets 82 78 Unrealized gain from Investments ( 277 ) Deposit applied to consulting services - 25 Changes in operating assets and liabilities: Prepaid expenses and other current assets 80 - Accounts payable ( 268 ) ( 3 ) Accrued expenses and other current liabilities ( 101 ) ( 313 ) Operating lease liabilities ( 79 ) ( 72 ) Total adjustments 1,283 2,009 Net Cash Used in Operating Activities ( 5,109 ) ( 3,321 ) Cash Flows from Investing Activities Maturities of investments 11,460 - Purchase of property and equipment ( 5 ) ( 69 ) Purchase of investments ( 8,628 ) - Net Cash Provided by (Used in) Investing Activities 2,827 ( 69 ) Net Decrease in Cash ( 2,282 ) ( 3,390 ) Cash, cash equivalents - Beginning of period 4,555 54,728 Cash, cash equivalents - End of period $ 2,273 $ 51,338 For the Three Months Ended March 31, 2023 2022 Supplemental Disclosures of Cash Flow Information: Cash Received During the Period For: Interest, net $ 45 $ 5 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 late clinical-stage med-tech company focused on the advancement of innovative bioprosthetic (tissue-based) solutions to improve the standard of care for the treatment of venous disease. The Company is developing surgical and non-surgical replacement venous valves for patients suffering from severe Chronic Venous Insufficiency (CVI) of the deep venous system of the leg. CVI most often occurs when valves inside the veins of the leg become damaged, resulting in the backwards flow of blood (reflux), blood pooling in the lower leg, increased pressure in the veins of the leg (venous hypertension) and in severe cases, venous ulcers that are difficult to heal. The Company’s lead product is the VenoValve® which is currently being evaluated in a U.S. pivotal study. The Company is also developing a second product called enVVe™, which is a transcatheter based replacement venous valve. Both the VenoValve and enVVe are designed to act as one-way valves, to help assist in propelling blood up the veins of the leg, and back to the heart and lungs. Our team of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and that have been commercially successful. We develop and manufacture our products in a 14,507 sq. ft. leased manufacturing facility in Irvine, California, which has been ISO 13485-2020 certified for the design, development and manufacturing of tissue based implantable medical devices. Note 2 – Management’s Liquidity Plan As of March 31, 2023, the Company had a cash and investment balance of $ 34.2 million and working capital of $ 33.4 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, 2023 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, 2023 and December 31, 2022, and for the three months ended March 31, 2023 and 2022. The results of operations for the three months ended March 31, 2023 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, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2023. The accompanying condensed balance sheet as of December 31, 2022 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 $ 250,000 at each institution. There were aggregate uninsured cash balances of $ 2.0 million and $ 4.3 million as of March 31, 2023 and December 31, 2022, respectively. Note 5 – Property and Equipment As of March 31, 2023 and December 31, 2022, property and equipment consist of the following: Schedule of Property and Equipment (In thousands) March 31, December 31, 2023 2022 Laboratory equipment $ 524 $ 524 Furniture and fixtures 160 160 Computer equipment 227 222 Leasehold improvements 213 213 Software 251 251 Total property and equipment 1,375 1,370 Less: accumulated depreciation ( 903 ) ( 849 ) Property and equipment, net $ 472 $ 521 Depreciation expense amounted to $ 0.1 million for the three months ended March 31, 2023 and 2022. 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 – Accounts Payable Accrued Expenses and Other Current Liabilities As of March 31, 2023, and December 31, 2022, accounts payable, accrued expenses and other current liabilities consist of the following: Schedule of Accrued Expenses and Other Current Liabilities (In thousands) March 31, December 31, 2023 2022 Accounts payable $ 380 $ 648 Accrued compensation costs 362 391 Accrued professional fees 22 62 Accrued research and development - 56 Other accrued expenses 83 59 Total accrued expenses and other current liabilities $ 847 $ 1,216 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 30, 2023. 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, 2023. 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 $ 1.8 million and $ 2.2 million of share-based compensation related to stock options during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, there was $ 6.6 million of unrecognized share-based compensation expense related to outstanding stock options that will be recognized over the weighted average remaining vesting period of 1.7 years. Share-based compensation is reflected in selling, general and administrative expenses in the accompanying condensed statements of operations. 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, 2023 and 2022: Schedule of Dilutive Net Loss Per Common Share 2023 2022 (In thousands) March 31, 2023 2022 Shares of common stock issuable upon exercise of warrants 4,589 4,553 Shares of common stock issuable upon exercise of options 4,206 3,454 Potentially dilutive common stock equivalents excluded from diluted net loss per share 8,795 8,007 8