enVVeno Medical Corp 10-Q

ITEM 1 – Financial Statements ENVVENO MEDICAL CORPORATION CONDENSED BALANCE SHEETS (unaudited) March 31, 2024 December 31, 2023 (In thousands except par values, unless otherwise indicated) Assets Current Assets: Cash and cash equivalents $ 2,314 $ 3,620 Short-term investments 40,628 42,792 Prepaid expenses and other current assets 306 511 Total Current Assets 43,248 46,923 Property and equipment, net 289 334 Operating lease right-of-use assets, net 1,261 1,347 Security deposits and other assets 31 31 Total Assets $ 44,829 $ 48,635 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable, accrued expenses and other current liabilities $ 1,143 $ 1,033 Current portion of operating lease liabilities 344 338 Total Current Liabilities 1,487 1,371 Long-term operating lease liabilities 973 1,064 Total Liabilities 2,460 2,435 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, 13,330 and 13,317 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively - - Additional paid-in capital 177,397 176,236 Accumulated deficit ( 135,028 ) ( 130,036 ) Total Stockholders’ Equity 42,369 46,200 Total Liabilities and Stockholders’ Equity $ 44,829 $ 48,635 See Notes to these Unaudited Condensed Financial Statements 1 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF OPERATIONS (unaudited) 2024 2023 For the Three Months Ended March 31, 2024 2023 (In thousands, except per share data) Operating Expenses: Research and development expenses $ 3,052 $ 3,595 Selling, general and administrative expenses 2,451 3,202 Loss from Operations ( 5,503 ) ( 6,797 ) Other Income: Realized gain from sales of trading securities 408 82 Unrealized gain from trading securities 44 278 Interest income, net 59 45 Total Other Income 511 405 Net Loss $ ( 4,992 ) $ ( 6,392 ) Net Loss Per Basic and Diluted Common Share: $ ( 0.31 ) $ ( 0.57 ) Weighted Average Number of Common Shares Outstanding: Basic and Diluted 16,057 11,231 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) Shares Amount Capital Deficit Equity Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at January 1, 2024 13,317 $ - $ 176,236 $ ( 130,036 ) $ 46,200 Stock-based compensation - - 1,115 - 1,115 Options exercised 13 - 46 - 46 Net loss - - - ( 4,992 ) ( 4,992 ) Balance at March 31, 2024 13,330 $ - $ 177,397 $ ( 135,028 ) $ 42,369 Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at January 1, 2023 9,472 $ - $ 145,249 $ ( 106,520 ) $ 38,729 Balance 9,472 $ - $ 145,249 $ ( 106,520 ) $ 38,729 Stock-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 Balance 9,472 $ - $ 147,041 $ ( 112,912 ) $ 34,129 See Notes to these Unaudited Condensed Financial Statements 3 ENVVENO MEDICAL CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (In thousands, unless otherwise indicated) (unaudited) 2024 2023 For the Three Months Ended March 31, 2024 2023 Cash Flows from Operating Activities Net loss $ ( 4,992 ) $ ( 6,392 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 1,115 1,792 Depreciation and amortization 55 54 Amortization of right of use assets 86 82 Unrealized gain from Investments ( 43 ) ( 277 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets 205 80 Accounts payable, accrued expenses and other current liabilities 110 ( 369 ) Operating lease liabilities ( 85 ) ( 79 ) Net Cash Used in Operating Activities ( 3,549 ) ( 5,109 ) Cash Flows from Investing Activities Maturities of investments 17,342 11,460 Purchase of investments ( 15,135 ) ( 8,628 ) Purchase of property and equipment ( 10 ) ( 5 ) Net Cash Provided by Investing Activities 2,197 2,827 Cash Flows from Financing Activities Proceeds from Stock Option Exercises 46 - Net Cash Provided by Financing Activities 46 - Net Decrease in Cash ( 1,306 ) ( 2,282 ) Cash, cash equivalents - Beginning of period 3,620 4,555 Cash, cash equivalents - End of period $ 2,314 $ 2,273 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 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. 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. The Company’s lead product is the VenoValve®, which is a potential first-in-class surgical replacement venous valve that is currently being evaluated in a U.S. pivotal study. The Company is also developing a second product called enVVe®, which is a potential first-in-class, non-surgical, transcatheter based replacement venous valve system consisting of the enVVe valve, the enVVe delivery system, and the delivery system accessories. 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. The VenoValve and enVVe are being developed first for approval by the U.S. Food and Drug Administration (FDA). We expect the VenoValve to be eligible for FDA approval first, followed two to three years later by enVVe. 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. Note 2 – Management’s Liquidity Plan As of March 31, 2024, the Company had a cash and investment balance of $ 42.9 million and working capital of $ 41.8 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 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, 2024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023. The results of operations for the three months ended March 31, 2024 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, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2024. The accompanying condensed balance sheet as of December 31, 2023 has been derived from the Company’s audited financial statements. 5 ENVVENO MEDICAL CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 4 – Investments The components of investments were as follows at March 31, 2024 and December 31, 2023: Schedule of Components of Investments (In thousands) March 31, 2024 December 31, 2023 Cash Equivalents Short-Term Investment Cash Equivalents Short-Term Investments Fair Value Level 1 U.S. Government securities $ 1,655 $ 40,628 $ 3,187 $ 42,792 Total debt investments $ 1,655 $ 40,628 $ 3,187 $ 42,792 Unrealized and realized gains and losses on the accompanying statement of operations result from fixed-income securities and 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. 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 $ 250,000 at each institution. There were aggregate uninsured cash balances of $ 2.1 million and $ 3.4 million as of March 31, 2024 and December 31, 2023, respectively. Note 6 – Property and Equipment As of March 31, 2024 and December 31, 2023, property and equipment consist of the following: Schedule of Property and Equipment (In thousands) March 31, 2024 December 31, 2023 Laboratory equipment $ 554 $ 548 Computer equipment and software 486 482 Leasehold improvements, furniture and fixtures 373 373 Total property and equipment 1,413 1,403 Less: accumulated depreciation ( 1,124 ) ( 1,069 ) Property and equipment, net $ 289 $ 334 Depreciation expense amounted to $ 0.1 million for the three months ended March 31, 2024 and 2023. 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 7 – Accounts Payable Accrued Expenses and Other Current Liabilities As of March 31, 2024, and December 31, 2023, accounts payable, accrued expenses and other current liabilities consist of the following: Schedule of Accounts Payable Accrued Expenses and Other Current Liabilities (In thousands) March 31, 2024 December 31, 2023 Accounts payable $ 604 $ 427 Accrued compensation costs 396 478 Other accrued expenses 143 128 Total accrued expenses and other current liabilities $ 1,143 $ 1,033 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 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 July 22, 2024. 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, 2024. 7 ENVVENO MEDICAL CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 9 – Stockholders’ Equity Stock Options Stock-based compensation is reflected in selling, general and administrative expenses in the accompanying condensed statements of operations and was $ 1.1 million and $ 1.8 million during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there was $ 5.9 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 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 March 31, 2024 and 2023: Schedule of Dilutive Net Loss Per Common Share 2024 2023 (In thousands) March 31, 2024 2023 Shares of common stock issuable upon exercise of warrants 14,384 4,589 Shares of common stock issuable upon exercise of options 5,159 4,206 Potentially dilutive common stock equivalents excluded from diluted net loss per share 19,543 8,795 8