Vivos Therapeutics(VVOS) - 2025 Q1 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section highlights forward-looking statements, primarily in the MD&A, cautioning that actual results may differ due to risks related to business model execution, product adoption, financial viability, and market conditions - The company's forward-looking statements cover critical aspects of its strategy and operations, including[8] - Business Model Execution: Ability to establish and grow its new marketing and distribution model, including acquiring or forming alliances with sleep treatment centers, such as the pending acquisition of The Sleep Center of Nevada[9] - Product Adoption: Acceptance of its proprietary oral appliances by healthcare professionals for treating OSA and other conditions[9] - Financial Viability: Ability to generate cash flow, achieve profitability, and continue as a going concern, along with future financing plans[12] - Market Conditions: Capacity to adapt to changing market conditions, including volatile capital markets[12] PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for Q1 2025 reveal a net loss of $3.9 million and reduced cash to $2.3 million, indicating a weakened financial position and raising substantial doubt about the company's going concern Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $11.3 million from $15.3 million, mainly due to reduced cash, while total liabilities slightly decreased to $6.9 million and stockholders' equity fell to $4.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $2,342 | $6,260 | | Total current assets | $3,607 | $7,473 | | Total assets | $11,282 | $15,284 | | Liabilities & Equity | | | | Total current liabilities | $4,701 | $4,978 | | Total liabilities | $6,875 | $7,330 | | Accumulated deficit | $(108,051) | $(104,187) | | Total stockholders' equity | $4,407 | $7,954 | Condensed Consolidated Statements of Operations For Q1 2025, total revenues decreased to $3.0 million from $3.4 million in Q1 2024, resulting in a net loss of $3.9 million, slightly higher than the $3.8 million loss in the prior year Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Product revenue | $1,813 | $1,674 | | Service revenue | $1,203 | $1,745 | | Total revenue | $3,016 | $3,419 | | Gross profit | $1,509 | $1,937 | | Operating loss | $(3,918) | $(3,785) | | Net loss | $(3,864) | $(3,763) | | Net loss per share (basic and diluted) | $(0.45) | $(1.63) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $3.8 million in Q1 2025, with no financing activities, leading to a $3.9 million decrease in cash and equivalents, ending at $2.3 million Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,796) | $(2,516) | | Net cash used in investing activities | $(122) | $(151) | | Net cash provided by financing activities | $- | $3,635 | | Net (decrease) increase in cash | $(3,918) | $968 | | Cash and cash equivalents at end of period | $2,342 | $2,611 | Notes to the Condensed Consolidated Financial Statements Key notes detail a strategic pivot from the VIP enrollment model to sleep center acquisitions, highlight a significant going concern risk due to recurring losses, and disclose the planned $9.0 million acquisition of The Sleep Center of Nevada - The company is pivoting its business strategy away from its prior dependence on enrolling dentists (VIPs) towards a model focused on contractual alliances with and acquisitions of sleep specialty providers and centers[33] - There is substantial doubt about the company's ability to continue as a going concern, as its $2.3 million cash balance as of March 31, 2025, is insufficient to fund operations for the next twelve months without additional financing[76][73] - Subsequent to quarter-end, on April 15, 2025, the company agreed to acquire The Sleep Center of Nevada (SCN) for $6.0 million in cash, $1.5 million in restricted stock, and $1.5 million in contingent earn-out stock[129] Revenue Breakdown (in thousands) | Revenue Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Product Revenue | | | | Appliances | $1,273 | $1,145 | | Guides | $540 | $529 | | Service Revenue | | | | VIP | $223 | $907 | | Billing intelligence services | $181 | $225 | | Sleep testing services | $323 | $307 | | Total Revenue | $3,016 | $3,419 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic pivot from the VIP enrollment model to acquiring sleep medicine centers, exemplified by the pending SCN acquisition, noting a 12% revenue decrease in Q1 2025 due to reduced VIP recruitment, and acknowledging significant liquidity challenges and going concern risks requiring additional financing - The company has strategically pivoted away from its VIP model, ceasing new VIP dentist recruitment, which is expected to lead to a substantial decline in future VIP enrollment revenue[138] - A definitive agreement was signed on April 15, 2025, to acquire the assets of Sleep Center of Nevada (SCN), an acquisition expected to drive revenue growth and potential profitability[140] - The company faces potential Nasdaq delisting risk due to minimum stockholders' equity requirements, despite regaining compliance in July 2024, and maintaining compliance remains a risk[149][152][153] Q1 2025 vs Q1 2024 Operations Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $3,016 | $3,419 | $(403) | | Gross Profit | $1,509 | $1,937 | $(428) | | Gross Profit % | 50% | 57% | -7% | | Operating Loss | $(3,918) | $(3,785) | $(133) | | Net Loss | $(3,864) | $(3,763) | $(101) | - Revenue decreased by 12% primarily due to a $0.7 million (75%) drop in VIP enrollment revenue, reflecting the strategic shift, partially offset by a small increase in product revenue[159][160] - The company's $2.3 million cash as of March 31, 2025, is insufficient to fund operations and strategic objectives, including the $6 million cash portion for the SCN acquisition, for the next twelve months, raising substantial doubt about its going concern ability[170][171] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - Not applicable to smaller reporting companies[179] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the period end, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[180] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[181] PART II. OTHER INFORMATION Legal Proceedings The company is engaged in ongoing litigation with Ortho-Tain, Inc., involving a suit filed by Vivos in Colorado for false statements and a countersuit by Ortho-Tain in Illinois alleging Lanham Act violations and breach of contract, with both cases proceeding through the legal system - Vivos filed a suit against Ortho-Tain, Inc. in Colorado in June 2020, alleging false statements and interference with a business relationship, with the case currently in the appeals process after a denied motion to dismiss[184][185] - Ortho-Tain, Inc. filed a complaint against Vivos and its CEO in Illinois in July 2020, alleging Lanham Act violations and breach of contract; this case, previously stayed, had its stay lifted in March 2023, and parties are now in the discovery phase[186][188][190] Risk Factors This section is not applicable as the company qualifies as a smaller reporting company - Not applicable to smaller reporting companies[191] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[192] Other Information No other information was reported for the period - None[195] Exhibits, Financial Statement Schedules This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files