See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY)

(In thousands, unless otherwise indicated)

(unaudited)

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

CONDENSED STATEMENTS OF OPERATIONSCASH FLOWS

(In thousands, unless otherwise indicated)

(unaudited)

(Unaudited)

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY)

(Unaudited)

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS(Continued)

(Unaudited)

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)(unaudited)

Note 1 – Business Organization and Nature of Operations

enVVeno Medical Corporation is a med-tech company focused on improving the standard of care in the treatment of venous disease. We are developing tissue-based solutions that are designed to be life sustaining or life enhancing for patients with deep venous Chronic Venous Insufficiency (CVI). CVI occurs when valves inside of the veins of the leg fail, resulting in insufficient blood being returned to the heart. Our products are being developed to address large unmet medical needs by either offering treatments where none currently exist or by substantially increasing the current standards of care. Our lead product is a porcine based device to be surgically implanted in theour deep venous system of the leg, and is called the VenoValve®. The VenoValve is currently being evaluated in the SAVVE U.S. pivotal trial for the purpose of obtaining approval to market and sell the device from the U.S. Food and Drug Administration (“FDA”). Our team of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and have been commercially successful. We currently lease a 14,507 sq. ft. manufacturing facility in Irvine, California, where we manufacture medical devices for our clinical trials, and which has capacity for commercial manufacturing.

On September 21, 2021, we announced that we were changing our name from Hancock Jaffe to enVVeno Medical Corporation and that our development strategy is to focus on the treatment of venous disease. In addition to the VenoValve, we announced that we have begun development of a second device for the treatment of venous disease which we are calling enVVe. In connection with this change in strategy, we indicated that we are deferring further development of the CoreoGraft, which is now outside of our primary focus area.

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – Going Concern and Management’s Liquidity Plan

The accompanying unaudited condensed financial statements have been prepared onAs of March 31, 2022, the Company had a going concern basis, which contemplatescash balance of $51.3million and working capital of $50.4 million. Although the realization of assets and the satisfaction of liabilities in the normal course of business.

Although we expectCompany expects to continue incurring losses for the foreseeable future may never earn revenues large enough to support operations, 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 September 30, 2021,March 31, 2022 are sufficient to meet our obligations as they become due within one year after the date of this interim filing,Quarterly Report, and sustain operations.

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

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 September 30, 2021March 31, 2022 and December 31, 2020,2021, and for the three and nine months ended September 30, 2021March 31, 2022 and 2020.2021. The results of operations for the three and nine months ended September 30, 2021March 31, 2022 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, 20202021 included in the Company’s Form 10-K filed with the SEC on March 31, 2021.28, 2022. The condensed balance sheet as of December 31, 20202021 has been derived from the Company’s audited financial statements.

Concentrations

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 $250,000250 at each institution. There was anwere aggregate uninsured cash balancebalances of $57,646,92251.1 and $54.5 million as of September 30, 2021.

Net Loss per Share

The Company computes basicMarch 31, 2022 and diluted loss per share by dividing net loss attributable to common stockholders by the weighted average number of common stock outstanding during the period, including warrants exercisable for little or no cash consideration. Basic and diluted net loss per common share are the same since the inclusion of common stock issuable pursuant to the exercise of warrants and options, would have been anti-dilutive.

Subsequent Events

The Company evaluated events that have occurred after the balance sheet date through the date the financial statements were issued. Based upon the evaluation and transactions, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.

Recent Accounting Standards

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. There was not a significant impact to the financial statements from the adoption of this standard.31, 2021, respectively.

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 45 – Property and Equipment

As of September 30, 2021March 31, 2022 and December 31, 2020,2021, property and equipment consist of the following:

Schedule of Property and Equipment

Depreciation expense amounted to $44,0760.1 and $66,857million for the ninethree months ended September 30, 2021March 31, 2022 and 2020, respectively.2021. Depreciation expense is reflected in general and administrative expenses in the accompanying statements of operations.

Note 5 – Right-of-Use Assets and Lease Liability

On September 20, 2017, the Company renewed its operating lease for its manufacturing facility in Irvine, California, effective October 1, 2017, for five years with an option to extend the lease for an additional 60-month term at the end of lease term. The initial lease rate was $26,838 per month with escalating payments. In connection with the lease, the Company is obligated to pay $7,254 monthly for operating expenses for building repairs and maintenance. The Company has no other operating or financing leases with terms greater than 12 months.

The Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (Topic 842) effective January 1, 2019 using the modified-retrospective method and elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of previous conclusions related to contracts containing leases, lease classification and initial direct costs, and therefore the comparative periods presented are not adjusted. In addition, the Company elected to adopt the short-term lease exception and not apply Topic 842 to arrangements with lease terms of 12 months or less. On January 1, 2019, upon adoption of Topic 842, the Company recorded right-of-use assets of $1,099,400, lease liabilities of $1,121,873 and eliminated deferred rent of $22,473. The Company determined the lease liabilities using the Company’s estimated incremental borrowing rate of 8.5% to estimate the present value of the remaining monthly lease payments.

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)(unaudited)

Our operating lease cost is as follows:

Schedule of Operating Lease Cost

Supplemental cash flow information related to our operating lease is as follows:

Schedule of Supplemental Cash Flow Information Related to Operating Lease

Schedule of Operating Remaining Lease Term and Discount Rate

Maturity of our lease liabilities by fiscal year for our operating lease is as follows:

Schedule of Maturity of Lease Liabilities

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 6 – Accrued Expenses and Other Current Liabilities

As of September 30, 2021,March 31, 2022, and December 31, 2020,2021, accrued expenses and other current liabilities consist of the following:

 Schedule of Accrued Expenses and Other Current Liabilities

Note 7 – Note Payable

On April 12, 2020, the Company obtained a loan (the “Loan”) in the amount of $312,700, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

The Loan, which was in the form of a Note dated April 12, 2020, was to mature on April 12, 2022, and bore interest at a rate of 1% per annum, payable monthly commencing on November 12, 2020. On September 8, 2021, the Company was notified the Loan and any accrued interest had been forgiven. In connection with this, the Company recorded a gain on extinguishment of debt of $312,700.

Note 87 – 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 intendshas 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 vigorously defend the claims, investigate the allegations, and assert counterclaims.Company’s damage. The Company continues to believe it has meritorious defenses to both matters. 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 September 30, 2021.March 31, 2022.

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)(unaudited)

Note 108 –Stockholders’ Equity

Common Stock

On February 11, 2021, the Company raised $41,400,000 in gross proceeds, with cash offering costs of approximately $3,300,000, in a public offering of 5,914,284 shares of its common stock for a purchase price of $7.00 per share and warrants to purchase 2,957,142 shares of its common stock. The exercise price of the warrants is $7.00 per share, subject to customary adjustments and they expire on February 11, 2026. The warrants had grant date fair value of $4.84 per share for an aggregate grant date fair value of $14,312,567, using the Black Scholes method with the following assumptions used: stock price of $7.53, risk-free interest rate of 0.11%, volatility of 113.1%, annual rate of quarterly dividends of 0%, and a contractual term of 2.5 years. We determined that equity classification of the warrants was appropriate. Accordingly, their value is included in additional paid-in capital.

On April 26, 2021, the Company issued 5,772 shares with a value of $6.51 per share, or $37,576, in satisfaction of a trade payable.

On August 12, 2021, the Company entered into an At-the-Market Offering Agreement to create an at-the-market equity program under which it may sell up to $25,000,000 of shares of the Company’s common stock from time to time. During the quarter ending September 30, 2021, the Company sold 170,963 shares for aggregate net proceeds of approximately $971,000.

On September 9, 2021, the Company entered a securities purchase agreement pursuant to which it completed a registered direct offering in which it sold 781,615 shares of common stock and Pre-Funded Warrants to purchase 1,759,035 shares of common stock, for aggregate net proceeds of approximately $18,300,000. We determined that equity classification of the warrants was appropriate. Accordingly, their value is included in additional paid-in capital.

In connection with this transaction, the Company also issued to the placement agent as compensation a warrant to purchase up to 152,439 shares of common stock with substantially the same terms as the warrants issued in the registered direct offering. The warrants are exercisable immediately upon issuance, have an initial exercise price of $9.84 per share, subject to customary adjustments, and expire in April 2025.

Warrants

In November 2020 the Company’s Board of Directors approved the issuance of warrants to purchase 6,400 shares of common stock to an advisor and warrants to purchase 20,000 shares of common stock to certain participants in the preferred share exchange. Separately the Company agreed to re-price warrants issued to the placement agent for the Company’s February 25, 2020 private placement. These warrants and the re-priced warrant were issued in February 2021. The value of these warrants when they were issued was $211,976. The Company determined their value using the Black-Scholes method with the following assumptions: stock price of $8.91 - $9.31, risk-free interest rate of 0.47%, volatility of 113%, annual rate of quarterly dividends of 0%, and an expected term of 2.5 to 3.5 years.

Stock Options

From time to time, the Company issues options for the purchase of its common stock to employees and others. Share-basedThe Company recognized $2.2 million and $0.1 million of share-based compensation related to stock options is included in selling, general and administrative expenses on the accompanying statement of operations, and was $0.6 and $0.4 million of during the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively.

As of September 30, 2021,March 31, 2022, there was $1.613.0 million of unrecognized stock-based compensation expense related to outstanding stock options that will be recognized over the weighted average remaining vesting period of 1.71.9 years.

ENVVENO MEDICAL CORPORATION

f/k/a HANCOCK JAFFE LABORATORIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 109 – 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 September 30, 2021March 31, 2022 and 2020:2021:

SummarySchedule of Potentially Dilutive Common Stock Equivalents Excluded from Diluted Net Loss Per Common Share

Note 11 – Related Party Transactions

On June 8, 2021, the Company updated its agreement with the vendor affiliated by common ownership and control with a shareholder holding approximately 10% of the Company’s outstanding common stock. The Company engaged this vendor to provide support in the VenoValve U.S. pivotal trial. Expenditures to that vendor were approximately $0.6 million during the nine months ending September 30, 2021, and are included in in Research and Development expenses in the accompanying statement of operations.

Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited condensed financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Such forward-looking statements involve significant risks and uncertainties. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. Such forward-looking statements also involve other factors which may cause our actual results, performance or achievements to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this Quarterly Report. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Unless the context requires otherwise, references in this document to “enVVeno”“NVNO”, “we”, “our”, “us” or the “Company” are to enVVenoEnVVeno Medical Corporation.Corporation

Overview

enVVeno Medical Corporation is a med-tech company focused on improving the standard of care in the treatment of venous disease. We are developing tissue-based solutions that are designed to be life sustaining or life enhancing for patients with deep venous Chronic Venous Insufficiency (CVI). CVI occurs when valves inside of the veins of the leg fail, resulting in insufficient blood being returned to the heart. OurWe aim to develop products are being developed to address large unmet medical needs by either offering treatments where none currently exist or by substantially increasing the current standards of care. Our lead product is a porcine based device to be surgically implanted in the deep venous system of the leg and is called the VenoValve®. The VenoValve is currently being evaluated in the SAVVE U.S. pivotal trial for the purpose of obtaining approval to market and sell the device from the U.S. Food and Drug Administration (“FDA”). 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 currently leasedevelop and manufacture our products in a 14,507 sq. ft. leased manufacturing facility in Irvine, California, where we manufacture medical devices for our clinical trials, and which has capacitybeen ISO 13485-2016 certified for commercial manufacturing.

On September 21, 2021, we announced that we were changing our name from Hancock Jaffe to enVVeno Medical Corporationthe design, development and that our development strategy is to focus on the treatmentmanufacturing of venous disease. In addition to the VenoValve, we announced that we have a second product in the early stages of development called enVVe. In connection with this change in strategy, we indicated that we are deferring further development of the CoreoGraft, which is now outside of our primary focus area.tissue based implantable medical devices.

Each of our products will be required to successfully complete significant clinical trials to demonstrate safety and efficacy before it will be able to be approved by the FDA.

VenoValve

The VenoValve is a porcine based valve developed at enVVeno Medical to be implanted in the deep venous system of the leg to treat severe CVI. By reducing reflux, and lowering pressure (venous hypertension) within the deep venous hypertension,system of the leg, the VenoValve has the potential to reduce or eliminate the symptoms of severe deep venous severe CVI, including the potential to heal recurring venous leg ulcers. The current version of the VenoValve is designed to be surgically implanted into the femoral vein of the patient in an open surgical procedure via a 5 to 6 inch5-to-6-inch incision in the upper thigh.

There are presently no FDA approved medical devices to address valvular incompetence in the deep venous system, or effective treatments for deep venous CVI. Current treatment options include compression garments, or constant leg elevation.elevation, and wound care for venous ulcers. These treatments are generally ineffective, as they attempt to alleviate the symptoms of CVI without addressing the underlying causes of the disease. In addition, we believe compliance with compression garments and leg elevation is extremely low, especially among the elderly. The premise behind the VenoValve is that by reducing the underlying causes of CVI, reflux and venous hypertension, the debilitating symptoms of CVI will decrease, resulting in improvement in the quality of the lives of CVI sufferers.

We estimate that there are approximately 2.4 million people in the U.S. that suffer from deep venous CVI due to valvular incompetence.

VenoValve Clinical Status

After consultation with the FDA, and as a precursor to the U.S. pivotal trial, we conducted a small first-in-human study for the VenoValve in Colombia. The first-in-human trialColombia which included eleven (11) patients. In addition to providing safety and efficacy data, the purpose of the first-in-human study was to provide proof of concept, and to provide valuable feedback to make any necessary product modifications or adjustments to our surgical implantation proceduresprocedure for the VenoValve prior to conducting the U.S. pivotal trial. Endpoints for the VenoValve first-in-human study includeincluded safety (device related adverse events), reflux, measured by doppler, a VCSS score used by the clinician to measure disease severity and progress, a VAS score used by the patient to measure pain, and a quality of life measurement.

Final results from the one (1) year first-in-human study were presented at the Charing Cross International Symposium in April of 2021. Among the eleven (11) patients in the study, reflux improved an average of 54%, Venous Clinical Severity Scores (“VCSSs”) improved an average of 56%, and visual analog scale (VAS) scores, which are used by patients to measure pain, improved an average of 76%, all at one (1) year when compared to pre-surgery levels. VCSS scores are commonly used by clinicians in practice and in clinical trials to objectively assess outcomes in the treatment of venous disease, and include ten characteristics including pain, inflammation, skin changes such as pigmentation and induration, the number of active ulcers, and ulcer duration. The improvement in VCSS scores is significant and indicates the VenoValve patients who had severe CVI pre-surgery, had mild CVI or the complete absence of disease at one-year post surgery. Quality of life measured by a VEINES score showed statistically significant improvement.

VenoValveThere were no device related safety incidences during the one (1) year first-in-human studystudy. Non-device related safety incidences were minor with no reported device related adverse events. Minor non-device related adverse safety issuesand included one (1) fluid pocket (which was aspirated), intolerance from Coumadin anticoagulation therapy, three (3) minor wound infections (treated with antibiotics), and one occlusion due to patient non-compliance with anti-coagulation therapy.

In preparation for the VenoValve U.S. pivotal trial, on March 5, 2021, we submitted an IDE application with the FDA.

An investigational device exemption or IDE from the FDA is required before a medical device company can proceed with a pivotal trial for a class III medical device. On April 1, 2021, twenty-seven days after filing the IDE application, we received notification from the FDA that our IDE application was approved. We have named the U.S. pivotal trial for the VenoValve the SAVVE (Surgical Anti-reflux Veno Valve Endoprosthesis) study. It is a prospective, non-blinded, single arm, multi-center study of seventy-five (75) CVI patients to be enrolled at up to 20twenty (20) U.S. sites.

No product modifications for the VenoValve were necessary following the first-in-human study and the SAVVE trial will evaluateis evaluating the same device that was used in the first-in-human study. Endpoints for the SAVVE trial mirror those endpoints used for the first-in-human trial.study. The primary safety endpoint for the pivotal trial is the absence ofa material adverse safety eventsevent (mortality, deep wound infection, major bleeding, ipsilateral deep vein thrombosis, pulmonary embolism) in no more than twenty six percent (26%) or less of the patients at one (1) month post implantation, and the primary effectiveness endpoint for the pivotal trial is improvement in reflux of at least thirty percent (30%), measured at six (6) months post VenoValve implantation. In the first-in-human study there were no reported material adverse safety events at one (1) month post implantation, and reflux improved an average of fifty six percent (56%) at six (6) months post implantation. VCSS scoring to measure disease manifestations, VAS scores to measure pain, and quality of life measurements will also be monitored in the study.

On August 3, 2020, we announced that the FDA granted Breakthrough Device Designation status to the VenoValve. The FDA’s Breakthrough Devices Program was established to enable priority review for devices that provide more effective treatment or diagnosis of life threatening or irreversibly debilitating diseases or conditions. The goal of the FDA’s Breakthrough Devices Program is to provide patients and health care providers with timely access to medical devices by speeding up their development, assessment, and review, while preserving the FDA’s mission to protect and promote public health.

At the end of the VenoValve first-in-human study, we asked theeight (8) study participants if we could continue to monitor them for an additional one (1) year period. Eight patients agreed to be monitored and inadditional monitoring. In August of 2021, two (2) yearlonger term follow-up data was presented at the Society of Vascular Surgery Conference in San Diego, for the cohort of eight (8) patients. That data indicated no recurrences of the severe CVI that was present pre-VenoValve, including no ulcer recurrences for those patients whose venous ulcers had healed following VenoValve surgery. There were no reported safety issues from the end of one (1) year first-in-human study to the end of the two (2) year reporting period. In addition, the patients continued to improve, reporting 63%, 60%, and 93%, average improvements in reflux, VCSS, and VAS scores, respectively, at an average of two (2) years post VenoValve surgery compared to pre-VenoValve levels.

In October of 2021, we announced that the first patient in the SAVVE pivotal trial underwent successful VenoValve implantation surgery and had been discharged from the hospital. The surgery was performed by Dr. Adriana Laser, associate professor of surgery at Albany Medical College and a vascular surgeon with Albany Med Vascular Surgery. At the time of the first implantation, we had five (5) clinical sites that are actively enrolling patientsDuring April 2022 our twentieth site in the SAVVE study became active and is eligible to enroll patients.

The resurgence of COVID and the Omicron variant had both direct and indirect consequences on our clinical trial. Several of our clinical sites put elective surgeries on hold and prohibited potential study subjects from coming to the hospital for screening. Further, as reported in the media, COVID resurgences put an enormous strain on all hospital resources including clinical staffs. In addition to caring for the influx of COVID patients, hospitals become short staffed due to their own employees’ COVID sicknesses, resulting in clinical staff being reassigned to cover the shortfall. The lack of available clinical personnel both slows enrollment and impacts the speed at which we can activate clinical sites.

Finally, COVID impacts our patient population. Patients with COVID or who have had COVID within ninety (90) days of their screening, are excluded from our study until after the ninety (90) day period has passed. In addition, concerns about getting COVID impact the patients’ willingness to undergo an elective surgical procedure with a one-night hospital stay. As hospital clinical operations return to more normal levels, our goal is to fully enroll the SAVVE pivotal trial by the end of 2022 or the beginning of 2023. We continue to monitor the ongoing overall impact of COVID on the SAVVE clinical trial and will issue updates when appropriate.

In February of 2021, we raised $41.4 million of capital in a public offering of our common stock. In September of 2021, we raised $20 million dollars of capital in a registered direct offering priced at the market under Nasdaq rules and purchased by a fund managed by Perceptive Advisors, a leading life sciences investment firm. We finished 2021 with approximately $55 million of cash and had approximately $51.3 million of cash at March 31, 2022. At our existing cash burn rate of approximately $4 million per quarter, we should have sufficient cash to fund operations through the end of 2024 and into 2025. 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 sites will become active on a rolling basis over the next several weeks.capital.

Results of Operations

Comparison of the three months ended September 30,March 31, 2022 and 2021 and 2020

Overview

We reported net losses of $2.4$5.3 million and $2.0$2.8 million for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, representing an increase in net loss of $0.4$2.5 million, or 21%89%, due toresulting from an increase in operating expenses of $0.8 million, and a net increase in other income and expense of $0.4 million.expenses.

Revenues

As a developmental stage Company, our revenue, if any, is expected to be diminutive and dependent on our ability to commercialize our product candidates. We are not currently generating revenue and do not expect significant revenue until we successfully commercialize our lead product candidate.

Selling, General and Administrative Expenses

For the three months ended September 30, 2021,March 31, 2022, selling, general and administrative expenses increased by $0.3$2.6 million or 27%222%, to $1.5$3.8 million from $1.2 million for the three months ended September 30, 2020. The netMarch 31, 2021. Of this increase, reflects increases of $0.2$2.1 million was due to share based compensation from grants made during 2021, which increased share-based compensation cost to $2.2 million in compensation due to higher share-based compensation in 2021,2022 from $0.1 million in outside services related2021.

The remaining $0.5 million increase reflects $0.2 million from consulting for reimbursement codes for the Company’s product once commercially approved, $0.1 million from higher Delaware franchise taxes in 2022 which increased due to human resources andchanges in our capital structure, $0.1 million from higher information technology and other office expense to support fees which were higher primarily because of increases in personnel,staff, and $0.1 million in higher insurance and other office expense duepremiums related to higherour D&O, cyber security and product liability insurance premiums, travel, and cleaning, all mainly due to increases in personnel and returning to full time use of the office in the 2021 period. These increases were partially offset by lower legal expenses, which were $0.1 million lower in 2021 because of the resolution of a number of legal matters during 2020.coverages.

Research and Development Expenses

For the three months ended September 30, 2021,March 31, 2022, research and development expenses increaseddecreased by $0.5$0.1 million or 62%5%, to $1.2$1.5 million from $0.8$1.6 million for the three months ended September 30, 2020. The increase isMarch 31, 2021. This decrease primarily due to increases ofresulted from $0.3 million in compensation andcosts related costs due to a larger teamthe Coreograft product development in 2021, and $0.1 millionwhich we did not incur in higher consulting costs and $0.1 million in lab testing, both related to preparations for SAVVE.

Gain on Extinguishment of Note Payable

For the quarter ended September 30, 2021 the Company recorded a one-time $0.3 million gain on extinguishment of note payable2022 due to the forgiveness of the loan it had obtained under the PPP program authorized by the CARES act.

Change in Fair Value of Derivative Liability

For the quarter ended September 30, 2020, we recorded a loss on the change in fair value of derivative liabilities of $0.1 million. Our derivative liabilities were relatedour strategic direction and decision to warrants issued in connection with our Bridge Offering in February 2020. There were no similar instruments outstanding during the quarter ended September 30, 2021.

Comparisonfocus on development of the nine months ended September 30, 2021 and 2020

Overview

We reported net losses of $7.5 million and $4.8 million for the nine months ended September 30, 2021 and 2020, respectively, representing an increase in net loss of $2.8 million, or 58%, due to an increase in operating expenses of $2.9 million, and an increase in other income and expense of $0.1 million.

Revenues

AsVenoValve, partially offset by a developmental stage Company, our revenue, if any, is expected to be diminutive and dependent on our ability to commercialize our product candidates.

Selling, General and Administrative Expenses

For the nine months ended September 30, 2021, selling, general and administrative expenses increased by $1.0 million or 32%, to $4.0 million from $3.0 million the nine months ended September 30, 2020. The increase is primarily due to increases of approximately $0.3 million in stock-based compensation expense, $0.3 million in other compensation primarily from the additional personnel and directors’ cash compensation in 2021, $0.3 million in other administrative expenses due to higher Delaware franchise tax resulting from changes in the Company’s capital structure, and increases in cleaning and other office related expenses due to returning to full time use of the office in the 2021 period, $0.1 million in higher insurance due to higher D&O insurance premiums, and $0.1$0.2 million increase in outside services related to the Company’s increased investor outreach in 2021. These increases were partially offset by lower legal expenses, which were $0.1 million lower in 2021 because of the resolution of a number of legal matters during 2020.

Researchlab and Development Expenses

For the nine months ended September 30, 2021, research and development expenses increased by $2.0 million or 100%, to $4.0 million from $2.0 million for the nine months ended September 30, 2020. The increase is due to expanded activity related to SAVVE and includes $0.8 million in higher compensation from additional personnel $0.5 million in consulting costs for SAVVE, $0.4 million for testing related to FDA submissions and SAVVE preparation, and $0.3 million in lab supplies and other related lab costs to support those activities.

Change in Fair Value of Derivative Liability

For the nine months ended September 30, 2020, we recorded a gain on the change in fair value of derivative liabilities of $0.2 million. Our derivative liabilities were related to warrants issued in connection with our Bridge Offering in February 2020. There were no similar instruments outstanding during the period ended September 30, 2021.

Gain on Extinguishment of Note Payable

For the nine months ended September 30, 2021 the Company recorded a $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.VenoValve pivotal trial and continued development.

Liquidity and Capital Resources

We haveFor the three-months ended March 31, 2022, the Company incurred losses since inceptionfrom operations of $5.3 million and negativeused $3.3 million cash flows fromin operating activities. The net cash used in operating activities during the 2022 period decreased by $0.5 from $3.8 million for the nine monthsquarter ended September 30,March 31, 2021. Since inception, we have funded our operations primarily through our public and private offerings of equity and private placement of convertible debt securities as well as modest revenues from royalties, contract research and sales of the ProCol Vascular Bioprosthesis.

AsThe losses and the uses of November 8, 2021,cash are primarily due to the Company’s administrative and product research and development 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. 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 had ahave discretion in how we use the Company’s cash balance of approximately $56,900,000.resources, we expect to continue these activities for the foreseeable future as we seek to obtain regulatory approval for our lead product candidate. We are not currently generating revenue and do not expect significant revenue until we successfully commercialize our lead product candidate.

Our cash flows from investing activity have historically consisted of purchases of property and equipment for our lab and offices. In the quarter ended March 31, 2022, we purchased $0.1 million of property and equipment consisting primarily of lab and test equipment. We measuredo not currently have material commitments for capital expenditures or other expenditures with the exception of our liquidityfacility lease commitment of $0.4 million per year. However, we expect a modest increase in purchases of property and equipment as we continue SAVVE and plan for commercialization of the VenoValve.

The Company has historically funded its operations through financing activities such as the capital raises completed in 2021. During 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 March 31, 2022, is $51.3 million.

Our future capital requirements will remain dependent upon a variety of ways,factors, especially including the following: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 per quarter, we should have sufficient cash to fund operations through the end of 2024 and into 2025. 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. Any inability to raise additional financing would have a material adverse effect on us.

Based upon our cash and working capital as of September 30, 2021,March 31, 2022, we have sufficient cashcapital resources to sustain the Company’s operationsmeet our obligations as they become due for at least one year after the date of this Report. We have historically funded our operations through publicReport and private issuancessustain operations.

As of debt and equity. Our currentApril 28, 2022, we had a cash on hand is the result equity issuances completed in February and Septemberbalance of this year. We expect to use this cash to fund continued research and trials for our products such as the SAVVE for our VenoValve. If our trials are successful, we believe it may be necessary to raise additional capital to take our products to market. If this is necessary, we believe the Company could have access to additional capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means. However, there can be no assurance the Company will be able to raise additional capital or obtain new financing when needed on commercially acceptable terms, if at all.$50.5 million.

The COVID-19 pandemic has disruptedcontinues to disrupt the global economy and has negatively impacted large populations including people and businesses that may be directly or indirectly involved with the operation of our Company and the manufacturing, development, and testing of our product candidates. The full scoperesurgence of COVID and economicthe Omicron variant had both direct and indirect consequences on our clinical trial. Several of our clinical sites put elective surgeries on hold and prohibited potential study subjects from coming to the hospital for screening. Further COVID resurgences put an enormous strain on all hospital resources including clinical staffs. The lack of available clinical personnel both slows enrollment and impacts the speed at which we can activate clinical sites.

COVID has also impacted our patient population. Patients with COVID or who have had COVID within ninety (90) days of their screening, are excluded from our study until after the ninety (90) day period has passed. In addition, concerns about getting COVID impact the patients’ willingness to undergo an elective surgical procedure with a one-night hospital stay. As hospital clinical operations return to more normal levels, our goal is to fully enroll the SAVVE pivotal trial by the end of 2022 or the beginning of 2023. We continue to monitor the ongoing overall impact of COVID-19 is still unknownCOVID on the SAVVE clinical trial and there are many risks from the COVID-19 that could generally and negatively impact economies and healthcare providers in the countries where we do business, the medical device industry as a whole, and development stage, pre-revenue companies such as enVVeno.will issue updates when appropriate.

Off-Balance Sheet Arrangements

None.

Contractual Obligations

As a smaller reporting company, we are not required to provide the information requested by paragraph (a)(5) of this Item.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies, see Note 43 – Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

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

Item 4: Controls and Procedures

Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of September 30, 2021,March 31, 2022, pursuant to Exchange Act Rule 13a-15(b). Based onupon that evaluation, our ChiefPrincipal Executive Officer and ChiefPrincipal Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2021 because of the material weakness in internal control over financial reporting discussed below.March 31, 2022.

Notwithstanding the material weakness in internal control over financial reporting described below, our management has concluded that our consolidated financial statements included in the Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with accounting principles generally accepted in the United States of America.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not maintain effective controls over accounting for warrants issued in connection with our February 25, 2020 financing, and, as a result, did not record an associated derivative liability on a timely basis. At the time of issuance, the Company sought and received technical accounting guidance on the accounting treatment for the derivative liability. However, due to personnel changes, the existence of the guidance was not known to new finance personnel. This deficiency did not result in the revision of any of our previously issued financial statements. However, if not addressed, the deficiency could result in material misstatement in the future. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Remediation Plan

We are in the process of developing a detailed plan for remediation of the material weakness, including developing and maintaining a transition process for new finance executives to review existing critical accounting policies and judgments. We will continue to assess the effectiveness of our remediation efforts in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

Other thanDuring the material weakness discussed above,three months ended March 31, 2022, there waswere no changechanges in our internal controlcontrols over financial reporting, (as definedor in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation of our internal controlother factors that occurred during the quarter ended September 30, 2021could significantly affect these controls, that has materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we may be subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by our insurance coverage, and even if they are, if claims against us are successful, they may exceed the limits of applicable insurance coverage.

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. The complaint asserts 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 with the Company. Mr. Rankin alleges that he was forced to resign, however, we believe that he did not give the Company notice or an opportunity to cure the allegations. The complaint seeks, inter alia, back pay, unpaid wages, compensatory damages, punitive damages, attorneys’ fees, and costs. 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 complaint asserts several causes of action, including defamation, unlawful labor code violations, sex-based discrimination, unfair competition, and seeks damages for lost wages, emotional and mental distress, consequential damages, punitive damages and attorney’s fees and costs. The Company intends to vigorously defend the claims, investigate the allegations, and assert counterclaims. Mr. Rankin resigned as the Company’s Chief Financial Officer, Secretary and Treasurer on March 30, 2020. 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 June 27, 2022.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, in addition to ourOur current risk factors are set forth in our Form 10-K, filed with the SEC on March 31, 2021, we have also identified the following additional risks to our company.28, 2022.