What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-03-02 · 74 added, 105 removed, 44 unchanged (80% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere

5 unchanged sentences

materially from any future performance suggested below.

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.

Chronic Venous Disease (CVD) is the world’s most prevalent

chronic disease, impacting approximately 71% of the adult population of the U.S.

Chronic Venous Insufficiency (CVI), is a large subset

of CVD, which most often occurs when valves inside of 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 is developing surgical and non-surgical replacement venous valves for patients suffering from severe

CVI of the deep venous system of the leg.

Medical Corporation is a late clinical-stage medical device company focused on the advancement of innovative bioprosthetic (tissue-based)

solutions to improve the standard of care for the treatment of venous disease.

Chronic Venous Disease (CVD) is the world’s most

prevalent chronic disease, impacting approximately 71% of the adult population of the U.S.

Chronic Venous Insufficiency (CVI), is a large

subset of CVD, which most often occurs when valves inside of 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 is developing surgical and non-surgical replacement venous valves for patients

suffering from severe CVI of the deep venous system of the leg.

Company’s lead product is the VenoValve®, which is a first-in-class surgical replacement venous valve that is currently being

3 unchanged sentences

transcatheter based replacement venous valve.

The Company is currently waiting for regulatory approval to begin a first-in-human study

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.

The Company is currently conducting pre-clinical testing on enVVe.

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.

VenoValve and enVVe are being developed first for approval by the U.S.

2 unchanged sentences

be eligible for FDA approval first, followed two to three years later by enVVe.

Once approved, we expect the VenoValve and enVVe to co-exist,

with the VenoValve as a surgical replacement venous valve option and enVVe as a non-surgical replacement venous valve option.

currently no devices approved as surgical or non-surgical replacement venous valves, and there are no effective treatments for deep venous

CVI caused by incompetent valves.

If approved, we expect the VenoValve and enVVe to co-exist,

with the VenoValve as a surgical replacement venous valve option and enVVe as a non-surgical replacement venous valve option, although

we cannot provide any assurance that either the VenoValve or enVVe will receive approval from the FDA (see the section entitled “Risk

Factors” in our Annual Report on Form 10-K).

There are currently no devices approved as surgical or non-surgical replacement venous

valves, and there are currently no effective treatments for deep venous CVI caused by incompetent valves.

team of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and that

5 unchanged sentences

of the year ended December 31, 2023 to the year ended December 31, 2022

As a late-stage clinical med tech Company, we are not currently generating revenue and our future revenue, if any,

is dependent on our ability to commercialize our product candidates.

do not expect to begin generating revenue with respect to any of our product candidates in the near term.

We hope to eventually achieve

revenues by commercializing and selling our products or licensing our technologies to companies that have the resources and infrastructure

in place to manufacture, market and sell our products.

The commercialization and/or licensing of any of our products may take several

years, if it is to occur at all, and depends on our ability to obtain regulatory approval.

reported net losses of $24.7 million and $16.5 million for the years ended December 31, 2022 and 2021, respectively, representing an

increase in net loss of $8.2 million or 50%, resulting from, as described in further detail below, an increase in operating expenses

of $8.0 million, and a decrease in other expense (income) of $0.2 million.

a late-stage clinical medical device Company, we are not currently generating revenue and our future revenue, if any, is dependent on our ability

to commercialize our product candidates.

We do not expect to begin generating revenue with respect to any of our product candidates in

the near term.

We hope to eventually achieve revenues by commercializing and selling our products or licensing our technologies to companies

that have the resources and infrastructure in place to manufacture, market and sell our products.

The commercialization and/or licensing

of any of our products may take several years, if it is to occur at all, and depends on our ability to obtain regulatory approval.

reported net losses of $23.5 million and $24.7 million for the years ended December 31, 2023 and 2022, respectively, representing a decrease

in net loss of $1.2 million or 5%, resulting from, as described in further detail below, an increase in operating expenses of $0.3 million,

and an increase in other income of $1.5 million.

General and Administrative Expenses

the year ended December 31, 2022, selling, general and administrative expenses increased by $3.8 million or 34%, to $15.0 million

the year ended December 31, 2023, selling, general and administrative expenses decreased by $3.3 million or 22%, to $11.7 million

from $15.0 million for the year ended December 31, 2022.

Of this increase, $2.8 million was due to share-based compensation from

grants made during 2021, and $0.2 million from warrants issued to a vendor in 2022 which together increased share-based compensation

cost to $9.0 million in 2022 from $6.0 million in 2021.

remaining $0.8 million increase reflects $0.5 million from higher information technology and other office expense to support

increases in staff, $0.2 million from consulting for

reimbursement codes for the Company’s product once commercially approved, and an increase in insurance expense of $0.1 million

primarily from the Company’s D&O and cyber insurance policies.

This decrease is primarily driven by share-based compensation.

related to grants made in 2021 was $4.2 million lower in 2023 than in 2022.

This decrease was partially offset by the expense from

grants made in 2022, resulting in a net reduction of $3.6 million in share-based compensation from 2022 to 2023.

Selling, general

and administrative expenses also decreased $0.2 million from warrants issued to a vendor in 2022 with no similar warrants issued in 2023, and $0.1 million from lower

insurance cost in 2023.

These decreases were partially offset by $0.6 million of higher cash

compensation related to management bonuses paid during 2023 compared to 2022 when no bonus was paid.

and Development Expenses

1 unchanged sentence

million for the year ended December 31, 2022.

The increase is primarily due to an increase of $2.5 million in costs for the SAVVE

trial and preparation for the enVVe first-in-human trial, $1.1 million in higher lab quality testing to prepare for regulatory

audits, support the SAVVE trial and support enVVe product development, $0.3 million in compensation from the increases in staffing

also to support the SAVVE trial and continued product development, and $0.3 million in higher travel costs primarily for the SAVVE

on Extinguishment of Note Payable

the year ended December 31, 2021 the Company recorded a one-time $0.3 million gain on extinguishment of note payable due to the forgiveness

of the loan it had obtained under the PPP program authorized by the CARES act.

income in 2022 was $0.3 million consisting of $0.2 million in interest income and realized gains, and $0.1 million of unrealized losses,

The increase is due to an increase of $2.7 million in costs for the SAVVE trial from $3.5 million in 2022 to $6.2 million in 2023, and $1.1 million in compensation from the increases in staffing

also to support the SAVVE trial, partially offset by a decrease of $0.1 million in other lab costs for development and other preparation for the enVVe

income in 2023 was $1.7 million consisting of $1.2 million in interest income and realized gains, and $0.5 million of unrealized gains,

all related to our investments in US Treasury securities.

Interest income and realized gains were $0.2 million, and unrealized gains

were $0.1 million in 2022.

and Capital Resources

the twelve-months ended December 31, 2022, the Company incurred losses from operations of $24.7 million and used $15.6 million cash in

operating activities.

The net cash used in operating activities during 2022 increased by $3.8 million from $11.8 million for the year

ended December 31, 2021.

operating losses and the uses of cash are primarily due to the Company’s product research and development and administrative

Administrative functions relate to costs to support the Company’s public reporting and investor relations

activities as well as internal administrative functions.

Research and development activities are for continued product development

and clinical trials for the VenoValve and for the enVVe.

The Company will continue to incur these costs to complete its clinical

trials, enhance products, develop new products, and operate as a public company.

Although we have discretion in how we use the

Company’s cash resources, we expect to continue these activities for the foreseeable future as we seek to obtain regulatory

approval for our studies and product candidates.

the year ended December 31, 2023, the Company incurred losses from operations of $25.2 million and used $18.9 million cash in operating

The net cash used in operating activities during 2023 increased by $3.3 million from $15.6 million for the year ended December

31, 2022, primarily due to the increase in research and development expenses from 2022 to 2023.

Our cash balance as of December 31, 2023, is $3.6 million.

In addition, we have $42.8 million in investments, for

total cash and investments of $46.4 million.

operating losses and the uses of cash are primarily due to the Company’s product research and development and administrative activities.

Administrative functions relate to costs to support the Company’s public reporting and investor relations activities as well as

internal administrative functions.

Research and development activities are for continued product development and clinical trials for

the VenoValve and for the enVVe.

The Company will continue to incur these costs to complete its clinical trials, enhance products, develop

new products, and operate as a public company for the foreseeable future as we seek to obtain regulatory approval for our studies and product candidates.

We are not currently generating revenue.

cash flows from investing activity have historically consisted of purchases of property and equipment for our lab and offices.

during 2022, we commenced a program to invest excess cash in US Treasury bills.

During the year we purchased $48.1 million of these investments

and $13.7 million of them matured generating $0.2 million in realized gains and interest income.

We expect to continue investing as the

treasury bills mature and as allowed by the cash requirements of our operations.

Also, during 2022, we purchased $0.1 million of property

and equipment consisting primarily of lab and test equipment.

do not currently have material commitments for capital expenditures or other expenditures with the exception of our facility lease commitment

of $0.3 million per year.

However, we expect a modest increase in purchases of property and equipment as we continue SAVVE and plan for

We expect a modest increase in purchases of property and equipment as we continue SAVVE, commence TAVVE, and plan for

commercialization of the VenoValve.

Company has historically funded its operations through financing activities such as the capital raises completed in 2021.

the Company raised an aggregate of $57.4 million in net proceeds in private and public placements of its securities.

Our cash balance

as of December 31, 2022, is $4.6 million.

In addition, we have $34.5 million in investments, for total cash and investments of $39.1

future capital requirements will remain dependent upon a variety of factors, especially including the success of our clinical trials

and related product development costs and our ability to successfully bring products to market.

At our existing cash burn rate of

approximately $4 million to $5 million per quarter, we should have sufficient cash to fund operations through the end of 2024 and

With primary endpoints following full enrollment in the SAVVE pivotal trial of thirty (30) days for safety, and six (6)

months for effectiveness, we expect to have primary endpoint data well in advance of the need to raise additional capital.

inability to raise additional financing would have a material adverse effect on us.

We anticipate that our cash burn

rate will increase from current levels of approximately $4 million to $5 million per quarter to $5 million to $6 million per quarter in 2025.

Even after considering this increase, we should have sufficient cash to

fund operations through late 2025.

have historically funded our operations through financing activities such as the capital raise completed in 2023 and will need to raise additional capital in the future.

Any inability to

raise additional financing would have a material adverse effect on us.

upon our cash and working capital as of December 31, 2023, we have sufficient capital resources to meet our obligations as they become

due within one year after the date of this Annual Report and sustain operations.

due within at least one year after the date of this Annual Report and sustain operations.

Sheet Arrangements

1 unchanged sentence

by paragraph (a)(5) of this Item.

Accounting Policies and Estimates

of Presentation

accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America (“GAAP”).

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent

liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from these estimates.

Significant estimates and assumptions include the valuation allowance related to the

Company’s deferred tax assets, and the valuation of warrants.

Company measures the cost of services received in exchange for awards of equity instruments based on the grant date fair value of the

award and recognized on a straight-line basis over the period services are provided in exchange for the award, usually the vesting period.

The fair value of the Company’s stock options is estimated at the date of grant using the Black-Scholes based option valuation

The inputs for determining fair value are expected term, volatility, expected dividend yield and the risk-free interest rate.

The Company estimated the expected term of the options using the simplified method.

The Company uses its stock’s historical market

information to calculate volatility.

The dividend yield assumption is based on the Company’s history and expectation of future

dividend payouts on the common stock.

The risk-free interest rate is based on the implied yield available on U.S.

treasury zero-coupon

issues with an equivalent remaining expected term.

Forfeitures of unvested stock options are recorded when they occur.

and Qualitative Disclosure About Market Risk

Quantitative and Qualitative Disclosure About Market

a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required

by this Item.

Statements and Supplementary Data

Financial Statements

and Supplementary Data

see the financial statements beginning on page F-1 following the signature pages in this Annual Report on Form 10-K and incorporated

herein by reference.

in and Disagreements with Accountants on Accounting and Financial Disclosure

Changes in and Disagreements with Accountants on

Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis