Vivos Therapeutics(VVOS) - 2021 Q1 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements Cautionary Note Regarding Forward-Looking Statements The report's forward-looking statements are subject to risks and uncertainties, with actual results potentially differing materially from expectations - The report's forward-looking statements are qualified by cautionary statements and involve known and unknown risks, which could cause actual results to differ materially from expectations[9][11] - Key areas covered by forward-looking statements include: * Implementation of the business plan, including recruitment for the Vivos Integrated Practice (VIP) program * Adoption and effectiveness of the Vivos System for treating mild-to-moderate obstructive sleep apnea * Ability to drive revenue growth through sales, marketing, and strategic initiatives * Compliance with government regulations, including those from the U.S. Food and Drug Administration * Ability to generate cash flow, maintain profitability, and continue as a going concern[13] PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) This section presents Vivos Therapeutics' unaudited condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 Condensed Consolidated Balance Sheets Total assets decreased from $25.3 million to $22.0 million, and total liabilities decreased from $8.4 million to $7.6 million, impacting stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2021 ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | Total Current Assets | $16,735,185 | $20,394,315 | | Total Assets | $21,953,902 | $25,327,469 | | Total Current Liabilities | $7,295,471 | $7,823,049 | | Total Liabilities | $7,613,453 | $8,410,110 | | Total Stockholders' Equity | $14,340,449 | $16,917,359 | Condensed Consolidated Statements of Operations Total revenue increased to $3.45 million, but the operating loss widened to $3.41 million, leading to a higher net loss of $3.40 million due to increased expenses Condensed Consolidated Statement of Operations (Unaudited, for the three months ended March 31) | Metric | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Total Revenue | $3,447,881 | $3,196,507 | | Gross Profit | $2,689,885 | $2,416,051 | | Operating Loss | ($3,406,905) | ($2,557,724) | | Net Loss Attributable to Common Stockholders | ($3,399,242) | ($2,830,567) | | Net Loss Per Share (basic and diluted) | ($0.19) | ($0.23) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $3.86 million, resulting in a $4.15 million net decrease in cash and an ending balance of $14.06 million Consolidated Statement of Cash Flows Highlights (Unaudited, for the three months ended March 31) | Cash Flow Activity | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($3,860,937) | ($436,910) | | Net Cash Used in Investing Activities | ($261,703) | ($5,204) | | Net Cash Provided by (Used in) Financing Activities | ($25,000) | $79,515 | | Net Decrease in Cash | ($4,147,640) | ($362,599) | | Cash and cash equivalents, end of period | $14,058,028 | $106,754 | Notes to Consolidated Financial Statements This section details accounting policies, business operations, and financial components, including revenue recognition, debt, equity transactions, and subsequent events - The company's business model focuses on training dentists through its Vivos Integrated Practice ("VIP") program to use its patented Vivos System for treating sleep-disordered breathing[29] - In December 2020, the company completed its IPO, raising net proceeds of approximately $21.6 million[37] - The company received a PPP loan of approximately $1.265 million in May 2020 and submitted a forgiveness application in January 2021, though forgiveness is not guaranteed[38][39] - Subsequent to the quarter end, the company completed a follow-on public offering on May 11, 2021, raising net proceeds of approximately $25.2 million[129] - In April 2021, the company acquired medical billing and practice management software assets from Lyon Management and Consulting, LLC for $225,000 cash and a warrant to purchase 25,000 shares[128] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2021 financial results, noting an 8% revenue increase and a widening net loss due to higher operating expenses, with liquidity strengthened by recent offerings Results of Operations Total revenue grew 8% to $3.4 million, driven by service revenue, but operating expenses increased by $1.1 million, resulting in a $3.4 million operating loss Results of Operations Comparison (Three Months Ended March 31) | Metric | 2021 ($) | 2020 ($) | Increase (Decrease) ($) | | :--- | :--- | :--- | :--- | | Total Revenue | $3,447,881 | $3,196,507 | $251,374 | | Gross Profit | $2,689,885 | $2,416,051 | $273,834 | | Gross Profit % | 78% | 76% | 2pp | | Operating Loss | ($3,406,905) | ($2,557,724) | ($849,181) | | Net Loss | ($3,399,242) | ($2,580,567) | ($818,675) | - Revenue growth was driven by an increase in VIP enrollments (53 in Q1 2021 vs. 32 in Q1 2020) and higher Billing Intelligence Service (BIS) revenues[139] - General and administrative expenses increased by $0.8 million due to a significant increase in personnel, from approximately 70 employees at March 31, 2020, to over 110 at March 31, 2021[141] Liquidity and Capital Resources Cash and cash equivalents reached $14.1 million by March 31, 2021, further bolstered by a $25.2 million May 2021 offering, providing liquidity for at least 24 months - Cash and cash equivalents stood at $14.1 million as of March 31, 2021, primarily due to the December 2020 IPO[145] - A follow-on public offering in May 2021 raised an additional $25.2 million in net proceeds, significantly enhancing the company's capital resources[146] - Net cash used in operations increased to $3.9 million in Q1 2021 from $0.4 million in Q1 2020, driven by a higher net loss and a $2.1 million increase in cash used to pay down accounts payable[148] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as Vivos Therapeutics, Inc. qualifies as a smaller reporting company - Disclosure about market risk is not required for smaller reporting companies[156] Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of March 31, 2021, due to a material weakness, with remediation efforts underway - The CEO and CFO concluded that disclosure controls and procedures were not effective due to a previously identified material weakness in internal control over financial reporting[157] - The company is implementing a remediation plan, which includes hiring an Assistant Controller in Q1 2021 to strengthen the accounting team and improve internal controls[158][159] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ongoing litigation with Ortho-Tain, Inc. regarding false statements and business interference, with Vivos believing claims against it lack merit - The company is engaged in legal disputes with Ortho-Tain, Inc., with both parties having filed lawsuits against each other concerning false advertising and business interference[164][165] - Vivos believes the allegations made by Ortho-Tain lack merit and is defending against them vigorously[165] Risk Factors This section is not applicable as Vivos Therapeutics, Inc. qualifies as a smaller reporting company - Disclosure of risk factors is not required for smaller reporting companies in a Form 10-Q[167] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None reported for the period[168] Exhibits, Financial Statement Schedules This section lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The report includes standard exhibits such as corporate governance documents and officer certifications (31.1, 31.2, 32.1, 32.2)[175]