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What changed in Vivos Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Vivos Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+618 added−555 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-30)

Top changes in Vivos Therapeutics, Inc.'s 2023 10-K

618 paragraphs added · 555 removed · 418 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

140 edited+44 added−84 removed154 unchanged
Biggest changeWe believe the following strategies will play a critical role in achieve this goal and in establishing more predictable and growing revenue leading, ultimately, to cash flow positive and profitable operations: ● Expand public awareness of the life-threatening and debilitating nature of OSA and its prevalence throughout the world, while letting the world know of our proprietary and highly effective treatment as an alternative to CPAP.
Biggest changeWe believe the following strategies will play a critical role in achieving this goal and in establishing more predictable and growing revenue leading, ultimately, to cash flow positive and profitable operations: ● Expand public awareness of the life-threatening and debilitating nature of OSA and its prevalence throughout the world, while letting the world know of our proprietary and highly effective treatment as an alternative to CPAP. ● Cultivate Active Referral Sources Among Physicians, Sleep Specialists, Dentists and Other Healthcare Providers. ● Drive more qualified new patients to our VIP practices and teach VIPs how to better present and close Vivos treatment via the “Boost” and “Kick-Off” programs. ● Achieve full payment by in network major insurance carriers for Vivos Method treatment. ● Make it easy for both dental and medical professionals to interact and do business with Vivos. -6- ● Continue to drive medical and dental community awareness of The Vivos Method and build bridges between medical doctors and dentists through DSO marketing and our Medical Integration Division. ● Expand our market penetration with DME distribution agreements. ● Invest in research and development to drive innovation and expand indications. ● Pursue strategically adjacent markets and international opportunities.
In 2022, we modified our agreement with MyCardio LLC relating to our SleepImage ® HST for sleep apnea, which creates the potential for revenue from our leasing of SleepImage ® HST ring recorders to our VIPs as part of the VivoScore Program. ● The Vivos Institute (TVI). Our TVI provides product-specific training for the use of our products and services.
In 2022, we modified our agreement with MyCardio LLC relating to our SleepImage HST for sleep apnea, which creates the potential for revenue from our leasing of SleepImage HST ring recorders to our VIPs as part of the VivoScore Program. ● The Vivos Institute. Our TVI provides product-specific training for the use of our products and services.
On July 30, 2020, prior to the transfer of our corporate domicile from Wyoming to Delaware, Vivos Wyoming we implemented a one-for-three reverse stock split of our outstanding common stock pursuant to which holders of Vivos Wyoming’s outstanding common stock received one share of common stock for every three shares of common stock held.
On July 30, 2020, prior to the transfer of our corporate domicile from Wyoming to Delaware, we implemented a one-for-three reverse stock split of our outstanding common stock pursuant to which holders of Vivos Wyoming’s outstanding common stock received one share of common stock for every three shares of common stock held.
The government may assert that claim includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statute; ● clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of a supplement for certain modifications to PMA devices; ● medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; ● correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; ● complying with the new federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID); ● the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and -18- ● post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
The government may assert that claim includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statute; ● clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of a supplement for certain modifications to PMA devices; ● medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; ● correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; ● complying with the new federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID); ● the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and ● post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
A person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; ● the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government.
A person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; -16- ● the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government.
See “ Risk Factors- The misuse or off-label use of The Vivos Method may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.” The FDA has broad regulatory compliance and enforcement powers.
See “ Risk Factors— The misuse or off-label use of The Vivos Method may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.” -17- The FDA has broad regulatory compliance and enforcement powers.
Class I and II devices are often cleared for sale after they are CE marked or listed on the company’s ISO certification and filed via fax-back applications for a Medical Device License (“MDL”). Obtaining an MDL is comparable to the FDA 510(k) process. Higher classification risk devices (Class III and IV) require filing dossiers that resemble FDA 510(k) applications.
Class I and II devices are often cleared for sale after they are CE marked or listed on the company’s ISO certification and filed via fax-back applications for a Medical Device License (MDL). Obtaining an MDL is comparable to the FDA 510(k) process. Higher classification risk devices (Class III and IV) require filing dossiers that resemble FDA 510(k) applications.
In addition, certain states in which we operate are periodically considering various healthcare reform proposals. -22- Since their passage in 2010, the Health Reform Laws have triggered many changes to the U.S. healthcare system, some of which took effect (e.g., the subsequently eliminated individual mandate penalty) while others have continued to be delayed and subsequently repealed (e.g., the medical device tax).
In addition, certain states in which we operate are periodically considering various healthcare reform proposals. Since their passage in 2010, the Health Reform Laws have triggered many changes to the U.S. healthcare system, some of which took effect (e.g., the subsequently eliminated individual mandate penalty) while others have continued to be delayed and subsequently repealed (e.g., the medical device tax).
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. -17- Post-market Regulation After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Post-market Regulation After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
We believe our proprietary diagnostic tools, oral appliances, myofunctional therapy, clinical treatments, continuing education, and practice solutions represent a powerful and highly effective set of resources for healthcare providers of all disciplines who treat patients suffering from debilitating and even life-threatening breathing related sleep disorders and their comorbidities.
We believe our proprietary oral appliances, diagnostic tools, myofunctional therapy, clinical treatments, continuing education, and practice solutions represent a powerful and highly effective set of resources for healthcare providers of all disciplines who treat patients suffering from debilitating and even life-threatening breathing and sleep disorders and their comorbidities.
This management software enables healthcare professionals to diagnose, treat and monitor patients with OSA and its related conditions more effectively. Developed in collaboration with Lyon Dental, AireO2 contains features that enhance a VIP’s billing services and practice management systems. AireO2 is a complement to our BIS software system. -7- ● Medical Integration Division (MID).
This management software enables healthcare professionals to diagnose, treat and monitor patients with OSA and its related conditions more effectively. Developed in collaboration with Lyon Dental, AireO2 contains features that enhance a VIP’s billing services and practice management systems. AireO2 is a complement to our BIS software system. ● Medical Integration Division (MID) .
Our Mission Our mission is to rid the world of sleep apnea by being a leading technology platform and go-to resource for the latest and most effective treatment modalities, products, and clinical education available to healthcare providers of all specialties who treat patients suffering from breathing related sleep disorders and their comorbidities.
Our Mission Our mission is to rid the world of sleep apnea by being a leading technology platform and go-to resource for the latest and most effective treatment modalities, products, and clinical education available to healthcare providers of all specialties who treat patients suffering from breathing and sleep disorders and their comorbidities.
We sell the VIP Program to dentists through a direct sales force that primarily targets general dentists in the United States and Canada. Our sales effort is developed through social media initiatives, and our new website with over 150 videos, and the production of over 350 new content creation projects.
We continue to sell the VIP Program to dentists through a direct sales force that primarily targets general dentists in the United States and Canada. Our sales effort is developed through social media initiatives, and our new website with over 150 videos, and the production of over 350 new content creation projects.
If the FDA resolves that the product is not substantially equivalent to a predicate device, then the device acquires a Class III designation, and a PMA must be approved before the device can be commercialized. -15- The Vivos Guides are registered with the FDA as Class I devices for orthodontic tooth positioning.
If the FDA resolves that the product is not substantially equivalent to a predicate device, then the device acquires a Class III designation, and a PMA must be approved before the device can be commercialized. The Vivos Guides are registered with the FDA as Class I devices for orthodontic tooth positioning.
Intent to deceive is not required to establish liability under the civil federal civil False Claims Act. -20- In addition, private parties may initiate “qui tam” whistleblower lawsuits against any person or entity under the federal civil False Claims Act in the name of the government and share in the proceeds of the lawsuit.
Intent to deceive is not required to establish liability under the civil federal civil False Claims Act. In addition, private parties may initiate “qui tam” whistleblower lawsuits against any person or entity under the federal civil False Claims Act in the name of the government and share in the proceeds of the lawsuit.
Dentists typically pay set fees to us for this service. ● Vivos Billing Intelligence Service (BIS) is our medical and dental billing service. It is both a subscription and fee for service program for healthcare practitioners who wish to optimize their insurance reimbursement by leveraging both medical and dental benefits.
Dentists typically pay set fees to us for this service. -2- ● Vivos Billing Intelligence Service (BIS) is our medical and dental billing service. It is both a subscription and fee for service program for healthcare practitioners who wish to optimize their insurance reimbursement by leveraging both medical and dental benefits.
Our website and the information on or that can be accessed through such website are not part of this Annual Report on Form 10-K. Available Information We maintain a website at www.vivos.com .
Our website and the information on or that can be accessed through such website are not part of this Annual Report on Form 10-K. -24- Available Information We maintain a website at www.vivos.com .
Our sales program to target medical doctors is our MID program, which was developed to assist VIP practices to establish clinical collaboration ties to local primary care physicians, sleep specialists, ENTs, pediatricians, pulmonologists and other healthcare professionals who routinely see or treat patients with sleep and breathing disorders. -9- In countries outside of North America we typically offer a modified training and support program at a lower cost.
Our sales program to target medical doctors is our MID program, which was developed to assist VIP practices to establish clinical collaboration ties to local primary care physicians, sleep specialists, ENTs, pediatricians, pulmonologists and other healthcare professionals who routinely see or treat patients with sleep and breathing disorders. -8- In countries outside of North America we typically offer a modified training and support program at a lower cost.
The mmRNA appliance® has 510(k) clearance from the FDA as a Class II medical device for jaw repositioning, and for the treatment of snoring, and mild-to-moderate OSA in adults.
The mRNA appliance® has 510(k) clearance from the FDA as a Class II medical device for the treatment of snoring, and mild-to-moderate OSA in adults. The mmRNA appliance® has 510(k) clearance from the FDA as a Class II medical device for jaw repositioning, and for the treatment of snoring, and mild-to-moderate OSA in adults.
We believe the combination and integration of such diagnostic tools and equipment as particularly taught to and practiced by Vivos-trained providers constitutes a key trade secret of our company. -1- ● Vivos AireO 2 is an Electronic Health Record (EHR) software program specifically designed for use as a full practice management software program in a medical or dental practice environment where treating breathing related sleep disorders is performed.
We believe the combination and integration of such diagnostic tools and equipment as particularly taught to and practiced by Vivos-trained providers constitutes a key trade secret of our company. ● Vivos AireO 2 is an Electronic Health Record (EHR) software program specifically designed for use as a full practice management software program in a medical or dental practice environment where treating breathing and sleep disorders is performed.
To be conservative and based on available data and our internal market analysis, we estimate that over 80% of individuals diagnosed with OSA in the North American addressable market may be candidates for The Vivos Method, leaving us with a total addressable consumer market of approximately 64 million adults. -4- We currently charge clinicians an average sales price of approximately $1,500 per adult case for The Vivos Method.
To be conservative and based on available data and our internal market analysis, we estimate that over 80% of individuals diagnosed with OSA in the North American addressable market may be candidates for The Vivos Method, leaving us with a total addressable consumer market of approximately 64 million adults. -5- We currently charge clinicians an average sales price of approximately $1,500 per adult case for The Vivos Method.
We believe the rapid growth of our VivoScore program confirms our belief that the SleepImage ® HST offers significant commercial advantages and ease of use over existing home sleep apnea products and technologies in the market and allows healthcare providers to screen, diagnose and initiate treatment for OSA in their patients more efficiently.
We believe the rapid growth of our VivoScore program confirms our belief that the SleepImage ® HST offers significant commercial advantages over existing home sleep apnea products and technologies in the market and allows healthcare providers to more efficiently screen, diagnose and initiate treatment for OSA in their patients.
Sales and Marketing We have established a methodical approach to market development which centers on active engagement directly with members of the medical community, including general dentists and medical doctors who treat dentofacial abnormalities and/or mild to moderate OSA and snoring, to educate them on The Vivos Method and its benefits.
Sales and Marketing We have established a methodical approach to market development which centers on active engagement directly with members of the medical community, including general dentists and medical doctors who treat dentofacial abnormalities and/or mild to severe OSA and snoring, to educate them on The Vivos Method and its benefits.
Our Growth Strategy Our goal is to be the global leader in providing a clinically effective non-surgical, non-invasive, non-pharmaceutical, and low-cost alternative for patients with dentofacial abnormalities and/or mild to moderate OSA and snoring in adults.
Our Growth Strategy Our goal is to be the global leader in providing a clinically effective non-surgical, non-invasive, non-pharmaceutical, and low-cost alternative for patients with dentofacial abnormalities and/or mild to severe OSA and snoring in adults.
FDA Regulatory Status The Vivos Method offers treatment modalities that uses nonsurgical, noninvasive, and cost-effective oral appliance technology prescribed by trained dentists and medical professionals to treat dentofacial abnormalities and/or mild to moderate OSA and snoring.
FDA Regulatory Status The Vivos Method offers treatment modalities that uses nonsurgical, noninvasive, and cost-effective oral appliance technology prescribed by trained dentists and medical professionals to treat dentofacial abnormalities and/or mild to severe OSA and snoring.
Nevertheless, our experience continues to be that using our patented, non-surgical treatment we are able to target and evoke a resizing of the oral cavity and upper airways to address dentofacial abnormalities and/or mild to moderate OSA and snoring. Using various assessment techniques, we have previously reported surface area, volumetric and functional changes of the upper airway.
Our experience continues to be that using our patented, non-surgical treatment we are able to target and evoke a resizing of the oral cavity and upper airways to address dentofacial abnormalities and/or mild to severe OSA and snoring. Using various assessment techniques, we have previously reported surface area, volumetric and functional changes of the upper airway.
These products are used in a collaborative multidisciplinary treatment model comprised of dentists, general practice physicians, sleep specialist physicians, myofunctional therapists, nutritionists, chiropractors, physical therapists, and healthcare professionals. Our subscription-based program to train dentists and offer them other value-added services is called the Vivos Integrated Practice (VIP) program.
These products and services are used in a collaborative multidisciplinary treatment model comprising dentists, general practice physicians, sleep specialist physicians, myofunctional therapists, nutritionists, chiropractors, physical therapists, and healthcare professionals. Our subscription-based program to train dentists and offer them other value-added services is called the Vivos Integrated Practice (VIP) program.
The primary objective of our MID is to promote The Vivos Method to medical providers and thus facilitate the potential for additional mild to moderate OSA patients gaining access to The Vivos Method while offering continuum of care.
The primary objective of our MID is to promote The Vivos Method to medical providers and thus facilitate the potential for additional mild to severe OSA patients gaining access to The Vivos Method while offering continuum of care.
We have not yet seen a corresponding increase in patient enrollment in The Vivos Method treatment, however, and based on feedback from our Vivos-trained providers, we believe this to be a function of staffing turnover and labor shortages that continue to adversely impact the dental workplace.
We have not yet seen a corresponding increase in patient enrollment in The Vivos Method treatment, however, and based on feedback from our Vivos-trained providers, we believe this to be a function of staffing turnover and labor shortages that continue to plague the dental workplace.
Several more retrospective data sets have been presented at scientific meetings in the past year that further corroborate clinical efficacy of Vivos CARE treatment in adult OSA, pediatric OSA, and also in adult headache severity. The results of these presentations are in various stages of medical journal submission.
Several more retrospective data sets have been presented at scientific meetings in the past year that further corroborate clinical efficacy in adult OSA, pediatric OSA, and also in adult headache severity. The results of these presentations are in various stages of medical journal submission.
We currently have approximately 25 direct sales representatives in the United States and Canada. Our direct sales force engages in sales efforts and promotional activities focused on referring physicians, as well as directly to the over 200,000 professionally active general dentists in the United States and 20,000 general dentists in Canada.
We currently have approximately 15 direct sales and support representatives in the United States and Canada. Our direct sales force engages in sales efforts and promotional activities focused on referring physicians, as well as directly to the over 200,000 professionally active general dentists in the United States and 20,000 general dentists in Canada.
The Vivos Method is estimated to be indicated and potentially effective (within the scope of the FDA cleared uses) in approximately 80% of cases of OSA where patients are compliant with clinical treatments. Our patented oral appliances have been utilized in over 33,000 patients treated worldwide by more than 1,700 trained dentists.
The Vivos Method is estimated to be indicated and potentially effective (within the scope of the FDA cleared uses) in approximately 80% of cases of OSA where patients are compliant with clinical treatments. Our patented oral appliances have been utilized in over 42,000 patients treated worldwide by more than 1,900 trained dentists.
We fully recognize that breathing related sleep disorders, including OSA, are often complex conditions with multiple contributing factors that require more than a single solution.
We fully recognize that breathing and sleep disorders, including OSA, are often complex conditions with multiple contributing factors that require more than a single solution.
On May 20, 2009, the Fraud Enforcement Recovery Act of 2009 (“FERA”), was enacted, which modifies and clarifies certain provisions of the federal civil False Claims Act.
On May 20, 2009, the Fraud Enforcement Recovery Act of 2009 (FERA), was enacted, which modifies and clarifies certain provisions of the federal civil False Claims Act.
During 2022, we continued to expand and grow our screening and home sleep test (“HST”) program (which we call our VivoScore Program ) featuring SleepImage ® technology, a 510(k) cleared ring-based recorder and diagnostic platform for home sleep apnea testing.
During 2022, we continued to expand and grow our screening and home sleep test (or HST) program (which we call our VivoScore Program ) featuring SleepImage ® technology, a 510(k) cleared ring-based recorder and diagnostic platform for home sleep apnea testing.
Our VivoScore testing routinely results in approximately 50% of patients testing positive OSA, a number consistent with a recent study published in the Journal of the American Heart Association on a sample consisting of ~2000 middle-aged to older adults from the Multi-Ethnic Study of Atherosclerosis, where 47% had moderate-to-severe sleep apnea (OSA).
Our VivoScore testing routinely results in approximately 50% of patients testing positive OSA, a number consistent with a recent study published in the Journal of the American Heart Association on a sample consisting of ~2000 middle-aged to older adults from the Multi-Ethnic Study of Atherosclerosis (MESA), where 47 percent had moderate-to-severe OSA.
Throughout 2022, we continued to address this by conducting additional regional dental team training sessions on integrating Vivos products and treatments.
Throughout 2023, we continued to address this by conducting additional regional dental team training sessions on integrating Vivos products and treatments.
The primary products used in The Vivos Method CARE treatment are the DNA appliance ® , the mRNA appliance ® , and the mmRNA appliance ® , each of which is a specifically designed, customized oral appliance that is worn primarily in the evening hours and overnight.
The primary products used in The Vivos Method are our CARE devices – the DNA appliance ® , the mRNA appliance ® , and the mmRNA appliance ® – each of which is a specifically designed, customized oral appliance that is worn primarily in the evening hours and overnight.
The treatment time may range from 10 to 24 months, with 12 to 18 months being typical. Our appliances may require periodic adjustments some of which can be performed by the patient and others that are typically rendered at the dental office where treatment was initiated.
The treatment time may range from 9 to 18 months, with 12 to 15 months being typical. Our appliances may require periodic adjustments some of which can be performed by the patient and others that are typically rendered at the dental office where treatment was initiated.
Since 2009, our technology has been the subject of over 60 peer-reviewed articles in the medical, dental and orthodontic literature. While most of these papers have been small uncontrolled case series, their results were reflected in our retrospective database review of 220 patients undergoing CARE treatment for Obstructive Sleep Apnea published in July 2022 in Sleep Medicine .
Since 2009, our technology has been the subject of over 60 peer-reviewed articles in the medical, dental and orthodontic literature. While most of these papers have been small uncontrolled case series’, their results were reflected in our retrospective database review of 220 patients undergoing CARE treatment for Obstructive Sleep Apnea recently published in Sleep Medicine .
Our Treatment Alternative for OSA - The Vivos Method The Vivos Method is a non-invasive, non-surgical, non-pharmaceutical, multi-disciplinary treatment modality for the treatment of dentofacial abnormalities in adults and children and/or mild to moderate OSA and snoring in adults.
Our Treatment Alternative for OSA – The Vivos Method The Vivos Method is a non-invasive, non-surgical, non-pharmaceutical, multi-disciplinary treatment modality for the treatment of dentofacial abnormalities and/or mild, moderate and severe OSA and snoring in adults.
Studies have shown our comprehensive and multidisciplinary approach represents a significant improvement in the treatment of mild to moderate OSA in comparison to or when combined with other largely palliative treatments such as continuous positive airway pressure (or CPAP). We call our solution The Vivos Method .
Studies have shown our comprehensive and multidisciplinary approach represents a significant improvement in the treatment of mild to severe OSA in comparison to or when combined with other largely palliative treatments such as continuous positive airway pressure (or CPAP) or oral myofunctional therapy. We call our solution The Vivos Method .
Dental offices who wish to avail themselves of this service pay Vivos enrollment fees and per case fees for the service, thus adding an important new revenue line and profit center to the business. As of December 31, 2022, there are approximately 70 Vivos-trained (VIP) dental offices who are at some stage of onboarding with our Treatment Navigator program.
Dental offices who wish to avail themselves of this service pay Vivos enrollment fees and per case fees for the service, thus adding an important new revenue line and profit center to the business. As of December 31, 2023, there were 57 Vivos-trained (VIP) dental offices who are at some stage of onboarding with our Treatment Navigator program.
This study will test the hypothesis that treatment of the upper airway associated with functional improvements of sleep parameters in adults with mild to moderate OSA. ● Commenced January 2019 - Treatment of OSA with an intraoral device in a pediatric population.
This study will test the hypothesis that treatment of the upper airway associated with functional improvements of sleep parameters in adults with mild to moderate OSA. ● Treatment of SDB with an intraoral device in a pediatric population.
Overview We are a revenue stage medical technology company focused on the development and commercialization of a suite of innovative diagnostic and multi-disciplinary treatment modalities for patients with cranial and/or dentofacial abnormalities and the wide array of medical conditions that may result from them, including mild to moderate obstructive sleep apnea (known as OSA) and snoring in adults.
Item 1. Business. Overview We are a revenue stage medical technology company focused on the development and commercialization of a suite of innovative diagnostic and multi-disciplinary treatment modalities for patients with dentofacial abnormalities and the wide array of medical conditions that may result from them, including mild to severe obstructive sleep apnea (known as OSA) and snoring in adults.
The Guides are a Class I FDA-registered product for orthodontic tooth positioning typically used by dentists in children to address malocclusions and promote proper guided growth and development of the mouth and jaws. ● Vivos Versa is an FDA 510k cleared Class II device for treating mild to moderate OSA.
The Guides are FDA Class I registered product for orthodontic tooth positioning typically used by dentists in children to address malocclusions and promote proper guided growth and development of the mouth and jaws. ○ Vivos Versa TM is an FDA 510(k) cleared Class II device for treating mild to moderate OSA in adults.
We also are subject to similar anticorruption legislation implemented in Europe under the Organization for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Human Capital Resources As of December 31, 2022, we had 154 full-time employees and 9 part-time employees. None of our employees are represented by a union.
We also are subject to similar anticorruption legislation implemented in Europe under the Organization for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. -22- Human Capital Resources As of December 31, 2023, we had 114 full-time employees. None of our employees are represented by a union.
The goals of our sales and marketing efforts are (i) to secure new VIP dentists and provide them with the tools to treat patients with our products and (ii) more broadly educate the medical community regarding our products with a view towards expanding our number of VIPs as well as medical professionals who could refer patients to our VIPs for treatment.
The goals of our sales and marketing efforts are (i) to secure new patient referrals for our VIP dentists from medical doctors and other healthcare professionals; (ii) provide them with the tools to treat patients with our products; and (iii) more broadly educate the medical community regarding our products with a view towards expanding our number of VIPs as well as medical professionals who could refer patients to our VIPs for treatment.
The Vivos Method’s CARE devices alter the size, shape and position of the tissues that surround and define the functional space known as the upper airway. Our treatment also improves nasal breathing, reduces mouth breathing, reduces Apnea Hypopnea Index (AHI) scores, and generally facilitates better breathing and sleep.
The Vivos Method alters the size, shape and position of the tissues that surround and define the functional space known as the upper airway. Our treatment also improves nasal breathing, reduces mouth breathing, reduces Apnea Hypopnea Index (AHI) scores, and generally facilitates better breathing and sleep.
We consider our relations with our employees to be good but we do have a Whistleblower Hotline setup for employees to confidentially report concerns. Of our current employees, approximately, seven are part of finance and accounting, seven are involved in senior management, 20 in sales and marketing, one in research, development and regulatory and 128 in operations.
We consider our relations with our employees to be good but we do have a Whistleblower Hotline setup for employees to confidentially report concerns. Of our current employees, approximately three are part of finance and accounting, nine are involved in senior management, 10 in sales and marketing, one in research, development and regulatory and 91 in operations.
However, President Biden revoked this Executive Order on January 28, 2021 (as part of President Biden’s Executive Order on Strengthening Medicaid and the Affordable Care Act) and directed heads of departments to “consider whether to suspend, revise, or rescind - and, as applicable, publish for notice and comment proposed rules suspending, revising, or rescinding” actions taken by the Trump Administration which may hinder the operation of the Health Reform Laws.
However, President Biden revoked this Executive Order on January 28, 2021 (as part of President Biden’s Executive Order on Strengthening Medicaid and the Affordable Care Act) and directed heads of departments to “consider whether to suspend, revise, or rescind — and, as applicable, publish for notice and comment proposed rules suspending, revising, or rescinding” actions taken by the Trump Administration which may hinder the operation of the Health Reform Laws. -21- Nevertheless, the core tenets of the Health Reform Laws remain in effect with several exceptions.
We own two Canadian patents and one European patent that has been validated in Belgium, Switzerland, Germany, Denmark, Spain, France, United Kingdom, Hungary, Italy and the Netherlands, all of which expire in 2029. We also have three pending utility patents. Our U.S. trademark portfolio consists of 10 registered marks and one pending trademark applications.
We also own two Canadian patents and a European patent that has been validated in Belgium, Switzerland, Germany, Denmark, Spain, France, United Kingdom, Hungary, Italy and the Netherlands, all of which expire in 2029. Our U.S. trademark portfolio consists of 13 registered marks.
Regulation of Medical Devices in Canada Canada regulates the import and sale of medical devices through Health Canada (or HC). HC reviews medical devices to assess their safety, effectiveness, and quality before being authorized for sale in Canada. HC classifies medical devices into four classifications, with Class I being the lowest risk and Class IV being the highest.
HC reviews medical devices to assess their safety, effectiveness, and quality before being authorized for sale in Canada. HC classifies medical devices into four classifications, with Class I being the lowest risk and Class IV being the highest.
We thus have created both a diverse and highly skilled workforce. We will continue to promote a work environment that is based on the fundamental principles of human dignity, equality and mutual respect. In addition, we are committed to providing a safe and healthy work environment for all of our employees.
We will continue to promote a work environment that is based on the fundamental principles of human dignity, equality and mutual respect. In addition, we are committed to providing a safe and healthy work environment for all of our employees.
With some exceptions, the information that manufacturers report is made publicly available. -21- Data Privacy and Security Laws We are also subject to various federal, state and foreign laws that protect the confidentiality of certain patient health information, including patient medical records, and restrict the use and disclosure of patient health information by healthcare providers, such as HIPAA, as amended by HITECH, in the United States.
Data Privacy and Security Laws We are also subject to various federal, state and foreign laws that protect the confidentiality of certain patient health information, including patient medical records, and restrict the use and disclosure of patient health information by healthcare providers, such as HIPAA, as amended by HITECH, in the United States.
Recognizing that the federal Anti-Kickback Statute is broad and may prohibit many innocuous or beneficial arrangements within the healthcare industry, the United State Department of Health and Human Services (“DHHS”) issued regulations in July 1991, which DHHS has referred to as “safe harbors.” These safe harbor regulations set forth certain provisions which, if met in form and substance, will assure medical device manufacturers, healthcare providers and other parties that they will not be prosecuted under the federal Anti-Kickback Statute.
The term “remuneration” has been broadly interpreted to include anything of value, including stock, stock options, and the compensation derived through ownership interests. -18- Recognizing that the federal Anti-Kickback Statute is broad and may prohibit many innocuous or beneficial arrangements within the healthcare industry, the United State Department of Health and Human Services (“DHHS”) issued regulations in July 1991, which DHHS has referred to as “safe harbors.” These safe harbor regulations set forth certain provisions which, if met in form and substance, will assure medical device manufacturers, healthcare providers and other parties that they will not be prosecuted under the federal Anti-Kickback Statute.
In light of the ongoing efforts to alter the Health Reform Laws, we are unable at this time to predict the full impact that potential changes will have on our business, including provisions in the Health Reform Laws related to Medicare payments, mechanisms to foster alternative payment and reimbursement methodologies focused on outcomes, quality and care coordination, Medicare enrollment and claims submission requirements and revisions to other federal healthcare laws such as the federal Anti-Kickback Statute, the Stark Law and the federal False Claims Act. -23- We anticipate, however, that federal and state governments will continue to review and assess alternative healthcare delivery systems and payment methodologies, and that public debate regarding these issues will continue in the future.
In light of the ongoing efforts to alter the Health Reform Laws, we are unable at this time to predict the full impact that potential changes will have on our business, including provisions in the Health Reform Laws related to Medicare payments, mechanisms to foster alternative payment and reimbursement methodologies focused on outcomes, quality and care coordination, Medicare enrollment and claims submission requirements and revisions to other federal healthcare laws such as the federal Anti-Kickback Statute, the Stark Law and the federal False Claims Act.
Our VIP program was developed to train independent dentists to identify and treat dental conditions that may be associated with mild to moderate sleep apnea.
Our VIP program was developed to train independent dentists to identify and treat dental conditions that may be associated with OSA.
Once we train the VIP on how dentists can help treat OSA, the goal is to have them initiate “new case starts” with patients, which leads to sales of our appliances and guides. ● Recurring VIP subscription fees.
Once we train the VIP on how dentists can help treat OSA, the goal is to have them initiate “new case starts” with patients, which leads to sales of our appliances and guides. We are also seeking to drive appliance sales through our distribution arrangements with DMEs. ● Recurring VIP subscription fees.
Combining technologies that typically expand the upper airway by altering the size, shape and position of its defining tissues, Vivos CARE represents a completely new treatment modality in the treatment of dentofacial abnormalities that often lead to OSA and many other health conditions.
Combining treatment technologies that impact the upper airway by altering the size, shape, patency and position of corresponding hard and soft tissues, Vivos CARE represents a completely new treatment modality in the treatment of dentofacial abnormalities that often lead to OSA and many other health conditions.
The child subjects enrolled in this study will be using the Vivos Grow/Vivos Way appliance to correct orthodontic issues. They will also present with midfacial hypoplasia suitable for arch development. During orthodontic treatment and arch development, the devices will be studied to determine whether they can also reduce symptoms of sleep related breathing disorders in children.
The children enrolled in this study will be using the Vivos Grow/Vivos Way appliance to correct orthodontic issues. They will also present with midfacial hypoplasia suitable for palatal expansion. During orthodontic treatment and palatal expansion, the devices will be studied to determine whether they can also reduce symptoms of SDB in children.
Our primary focus has been on expanding awareness of, and providing treatment options for OSA for, the dentistry market, which we believe represents a large and relatively untapped market for OSA treatment.
Up to this point, our primary focus has been on expanding awareness of, and providing treatment options for OSA for and through the dental industry, which we believe represents a large and relatively untapped market for OSA treatment.
We further believe our dentist and medical doctor marketing efforts have been effective in facilitating contact via our Vivos introduction and online training webinars, despite significant headwinds throughout our core customer base, mostly driven by COVID-19 Delta and Omicron variant resurgences in the early and middle part of the year. -10- Potential Economics for Trained VIP Clinicians Dentists that enroll in our VIP program have the potential for compelling economics.
We further believe our dentist and medical doctor marketing efforts have been effective in facilitating contact via our Vivos introduction and online training webinars, despite significant headwinds throughout our core customer base, mostly driven by COVID-19 Delta and Omicron variant resurgences in the middle and latter part of the year.
On June 18, 2020, our stockholders approved an amendment and restatement of the 2019 Plan to increase the number shares or our common stock available for issuance thereunder by 833,333 share of common stock such that, after amendment and restatement of the 2019 Plan, 1,166,667 shares of common stock will be available for issuance under the 2019 Plan.
On June 18, 2020, our stockholders approved an amendment and restatement of the 2019 Plan to increase the number shares or our common stock available for issuance thereunder by 33,334 share of common stock such that, after amendment and restatement of the 2019 Plan, for a total of 46,667 shares of common stock available for issuance under the 2019 Plan.
The VIP program provides dentists with compelling clinical reasons coupled with strong economic incentives to provide their breathing and sleep disordered patients the best care possible. -3- We have recently expanded our mission and product line positioning to extend the reach and scope of The Vivos Method beyond the dental profession and to allow for greater collaboration and mutual referrals from other healthcare practitioners, including primary care physicians, medical specialists, chiropractors, nutritionists, physical therapists, and others who see and treat patients with breathing and sleep disorders.
We have recently expanded our mission and product line positioning to extend the reach and scope of The Vivos Method beyond the dental profession and to allow for greater collaboration and mutual referrals from other healthcare practitioners, including primary care physicians, medical specialists, chiropractors, nutritionists, physical therapists, and others who see and treat patients with breathing and sleep disorders.
In addition, on December 20, 2019, the Further Consolidated Appropriations Act, 2020 was signed into law which repealed several provisions that were included in the Health Reform Laws to pay for the increased federal spending associated with the Health Reform Laws.
The individual mandate penalty was eliminated beginning in 2019 through the Tax Cuts and Jobs Act of 2017. In addition, on December 20, 2019, the Further Consolidated Appropriations Act, 2020 was signed into law which repealed several provisions that were included in the Health Reform Laws to pay for the increased federal spending associated with the Health Reform Laws.
The 2019 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors. Approval of Transfer of Corporate Domicile and Reverse Stock Split On April 18, 2019, our stockholders voted to authorize our Board of Directors to recapitalize our common stock by way of reverse stock split at a ratio of up to one for three.
Approval of Transfer of Corporate Domicile and Reverse Stock Split On April 18, 2019, our stockholders voted to authorize our board of directors to recapitalize our common stock by way of reverse stock split at a ratio of up to one for three.
The Civil Monetary Penalty Act of 1981 imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and penalties ranging from $11,181 to $22,363 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs. -19- The Civil Monetary Penalty Act of 1981 imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier.
The program is very well suited to handle both medical and dental billing and is integral in our Treatment Navigator program. ● Treatment Navigator is our most recent program to assist a clinician’s patients who may have a breathing related sleep disorder to get screened, diagnosed by a board-certified sleep specialist, obtain insurance verification of benefits and preauthorization (where required), have their questions answered, and receive assistance with scheduling, financing, medical billing or any other concerns regarding treatment options best suited to their individual situation.
The program is very well suited to handle both medical and dental billing and is integral in our Treatment Navigator program. ● Adjunctive Treatment from specialty chiropractors and other healthcare providers according to a very specific set of particular integrated protocols has also proven to enhance and improve clinical outcomes using CARE and other Vivos devices. ● Treatment Navigator is our most recent program to assist a clinician’s patients who may have a breathing or sleep disorder to get screened, diagnosed by a board-certified sleep specialist, obtain insurance verification of benefits and preauthorization (where required), have their questions answered, and receive assistance with scheduling, financing, medical billing or any other concerns regarding treatment options best suited to their individual situation.
According to a 2016 report by Frost & Sullivan, OSA has an annual societal cost of over $149.6 billion. According to the study “ Global Prevalence of Obstructive Sleep Apnea (OSA) ” conducted by an international panel of leading researchers, nearly 1 billion people worldwide have sleep apnea, and as many as 80% remain undiagnosed.
According to the study “ Global Prevalence of Obstructive Sleep Apnea (OSA) ” conducted by an international panel of leading researchers, nearly 1 billion people worldwide have sleep apnea, and as many as 80% remain undiagnosed.
Our U.S. trademark portfolio consists of ten registered marks and one pending trademark application. Extensive online and in-person training, multiple touch point support systems, specific fabrication materials, customized appliance designs, and multi-disciplinary treatment modalities are all considered proprietary trade secrets and competitive advantages with no known counterparts.
Extensive online and in-person training, multiple touch point support systems, specific fabrication materials, customized appliance designs, and multi-disciplinary treatment modalities are all considered proprietary trade secrets and competitive advantages with no known counterparts.
The MID seeks to fulfill that objective by meeting with VIP dentists and medical providers in their local areas who will establish airway centric clinics using the trademarked name “Pneusomnia “ (which are referred to as Pneusomnia and Pneusomnia Plus Centers).
The MID seeks to fulfill that objective by meeting with VIP dentists and medical providers in their local areas to establish physician practices using the trademarked name “Pneusomnia Sleep Reimagined Center” (which are referred to as Pneusomnia Centers).
The aim of this study is to investigate structural and functional effects of using the DNA appliance ® in the treatment of mild to moderate OSA in adults.
The aim of this randomized clinical trial conducted with Stanford University is to investigate structural and functional effects of using the DNA appliance ® in the treatment of mild to moderate OSA in adults.
When combined with Vivos’ CARE products and treatments, OMT can deliver an enhanced effect in many patients using our appliances. MyoCorrect treatment services are cost-effective for providers and convenient for patients.
Studies have shown OMT to be a clinically valuable adjunctive treatment for patients with breathing and sleep disorders. When combined with Vivos’ CARE products and treatments, OMT can deliver an enhanced effect in many patients using our appliances. MyoCorrect treatment services are cost-effective for providers and convenient for patients.
When Medicare reimbursement is desired by Vivos providers they are typically registered with Medicare DME as a non-participating DME supplier, allowing the provider to balance bill patients like they would when billing as an out-of- network provider to commercial policies and are not limited to accepting Medicare reimbursement rates as payment in full.
When Medicare reimbursement is desired by Vivos providers they are typically registered with Medicare DME as a non-participating DME supplier, allowing the provider to balance bill patients like they would when billing as an out-of- network provider to commercial policies and are not limited to accepting Medicare reimbursement rates as payment in full. -10- We have seen an increase in the ability for Reimbursement for our other FDA registered oral appliances such as the Vivos Guides for children and the DNA appliance for adults.
In August 2021 510(k) for Class II clearance from the FDA for the mmRNA appliance with indications to treat jaw repositioning and mild to moderate OSA and snoring in adults was approved. In December 2021, the mmRNA was accepted by the CMS Pricing, Data Analysis and Coding (“PDAC”).
In August 2021 510(k) for Class II clearance from the FDA for the mmRNA appliance with indications to treat mild to moderate OSA and snoring in adults was approved.
According to a study conducted by ResMed in 2018, around 175 million people in Europe were suffering from sleep apnea. We therefore believe that effective diagnostic and treatment strategies are needed to minimize the negative health impacts of OSA and to maximize cost-effectiveness.
According to a study conducted by ResMed in 2018, around 175 million people in Europe were suffering from sleep apnea. We therefore believe that effective diagnostic and treatment strategies are needed to minimize the negative health impacts of OSA and to maximize cost-effectiveness. Based on our direct experience with our Vivos-trained providers, approximately 61,000 VivoScore HSTs were performed during 2023.
Vivos appliances with indications for treatment of OSA are billable with these code, however dental benefits for these codes are nascent at present and secondary to medical coverage.
Vivos appliances with indications for treatment of OSA are billable with these codes, however dental benefits for these codes are nascent at present and secondary to medical coverage. Orthodontic coverage and benefits are also available for Vivos appliances registered with indication of jaw expansion and tooth movement.
Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. -16- Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a new PMA application or a PMA supplement.
Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a new PMA application or a PMA supplement.
The regulatory status of our products is as follows: ● Our mmRNA (Pat.Pend.) appliance has a 510(k) clearance from the FDA as a Class II medical device for the treatment of jaw repositioning, snoring and mild to moderate OSA in adults. -13- ● Our mRNA appliance ® has a 510(k) clearance from the FDA as a Class II medical device for the treatment of snoring and mild to moderate OSA in adults. ● The DNA appliance ® has a 510(k) clearance from the FDA as a Class II medical device for the treatment of jaw repositioning, snoring and mild to moderate OSA in adults. ● The Vivos Guides are an FDA-registered Class I product for orthodontic tooth positioning.
The regulatory status of our products is as follows: ● Our mmRNA appliance® has a 510(k) clearance from the FDA as a Class II medical device for the treatment of jaw repositioning, snoring and mild to moderate OSA in adults.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor the years ended December 31, 2022 and 2021, the Company incurred a net loss of approximately $23.8 and $20.3 million, respectively. Net cash used in operating activities amounted to approximately $19.6 million and $15.7 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company had total liabilities of approximately $8.9 million.
Biggest changeSince our inception, we have not been profitable and have incurred significant losses and cash flow deficits. For the fiscal years ended December 31, 2023 and 2022, we reported net losses of $13.6 million and $23.8 million respectively, and negative cash flow from operating activities of $11.9 million and $19.6 million, respectively.
You should not rely on our past revenue growth as any indication of future growth rates or operating results. Our valuation and the price of our securities likely will fall in the event our operating results (notably our revenue growth, with the goal of achieving cash flow positive and profitable operations) do not meet the expectations of analysts and investors.
You should not rely on our past revenue growth as any indication of future growth rates or operating results. Our valuation and the price of our securities will likely fall in the event our operating results (notably our revenue growth, with the goal of achieving cash flow positive and profitable operations) do not meet the expectations of analysts and investors.
The number and timing of new VIPs enrolled during any given period may be negatively impacted by several factors including, without limitation: ● the identification and availability of attractive practices to be VIPs; ● our ability to successfully identify and address pertinent risks and benefits during the onboarding process, including designing, implementing and as necessary modifying pricing programs for VIP enrollment and subscription fees that are acceptable to dental practices; ● the proximity of VIPs to one of our or our competitors’ existing centers; ● our VIP’s ability to obtain required governmental licenses, permits and authorizations on a timely basis; and ● our VIP’s ability to recruit qualified dentists, dental hygienists, physicians, physician assistants, medical technologists and other personnel to staff their practices using The Vivos Method.
The number and timing of new VIPs enrolled during any given period may be negatively impacted by several factors including, without limitation: ● the identification and availability of attractive practices to be VIPs; -29- ● our ability to successfully identify and address pertinent risks and benefits during the onboarding process, including designing, implementing and as necessary modifying pricing programs for VIP enrollment and subscription fees that are acceptable to dental practices; ● the proximity of VIPs to one of our or our competitors’ existing centers; ● our VIP’s ability to obtain required governmental licenses, permits and authorizations on a timely basis; and ● our VIP’s ability to recruit qualified dentists, dental hygienists, physicians, physician assistants, medical technologists and other personnel to staff their practices using The Vivos Method.
Our ability to generate international sales is subject to several risks, including: ● our ability to obtain appropriate regulatory approvals to market The Vivos Method in certain countries; ● our ability to identify new independent third-party distributors in international markets where we do not currently have distributors; ● the impact of recessions in economies outside the United States; ● greater difficulty in negotiating with socialized medical systems, maintaining profit margins comparable to those achieved in the United States, collecting accounts receivable, and longer collection periods; ● unexpected changes in regulatory requirements, tariffs or other trade barriers; ● weaker intellectual property rights protection in some countries; ● potentially adverse tax consequences; and ● political and economic instability.
Our ability to generate international sales is subject to several risks, including: ● our ability to obtain appropriate regulatory approvals to market The Vivos Method in certain countries; ● our ability to identify new independent third-party distributors in international markets where we do not currently have distributors; ● the impact of recessions in economies outside the United States; ● greater difficulty in negotiating with socialized medical systems, maintaining profit margins comparable to those achieved in the United States, collecting accounts receivable, and longer collection periods; -34- ● unexpected changes in regulatory requirements, tariffs or other trade barriers; ● weaker intellectual property rights protection in some countries; ● potentially adverse tax consequences; and ● political and economic instability.
The Patient Protection and Affordable Care Act, as amended (or the PPACA), amended the intent requirement of the federal Anti-Kickback Statute and, as a result, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it; -43- ● federal civil and criminal false claims laws, including, without limitation, the False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
The Patient Protection and Affordable Care Act, as amended (or the PPACA), amended the intent requirement of the federal Anti-Kickback Statute and, as a result, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it; ● federal civil and criminal false claims laws, including, without limitation, the False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to Avoid, decrease or conceal an obligation to pay money to the federal government.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ● costs of litigation; -38- ● distraction of management’s attention from our primary business; ● the inability to commercialize our appliances or new products; ● decreased demand and brand reputation for our appliances; ● product recalls or withdrawals from the market; ● withdrawal of clinical trial participants; ● substantial monetary awards to patients or other claimants; or ● loss of sales.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ● costs of litigation; ● distraction of management’s attention from our primary business; ● the inability to commercialize our appliances or new products; ● decreased demand and brand reputation for our appliances; ● product recalls or withdrawals from the market; ● withdrawal of clinical trial participants; ● substantial monetary awards to patients or other claimants; or ● loss of sales.
If we are unable to compete effectively with any of these entities or groups, or we are unable to implement our business strategies, there could be a material adverse effect on our business, prospects, results of operations and financial condition. -41- We have limited clinical evidence to support patient compliance with the use our products is superior to competitive products.
If we are unable to compete effectively with any of these entities or groups, or we are unable to implement our business strategies, there could be a material adverse effect on our business, prospects, results of operations and financial condition. We have limited clinical evidence to support patient compliance with the use our products is superior to competitive products.
We are required to: ● obtain clearance from the FDA and certain international regulatory bodies before we can market and sell our products; -33- ● satisfy all content requirements for the sales and promotional materials associated with The Vivos Method; and ● undergo rigorous inspections of our facilities, manufacturing and quality control processes, records and documentation.
We are required to: ● obtain clearance from the FDA and certain international regulatory bodies before we can market and sell our products; ● satisfy all content requirements for the sales and promotional materials associated with The Vivos Method; and ● undergo rigorous inspections of our facilities, manufacturing and quality control processes, records and documentation.
Conversely, we may not always be able to successfully pursue our claims against others that infringe upon our technology. Thus, the proprietary nature of our technology or technology licensed by us may not provide adequate protection against competitors. In addition to patents, we rely on trademarks to protect the recognition of our company and product in the marketplace.
Conversely, we may not always be able to successfully pursue our claims against others that infringe upon our technology. Thus, the proprietary nature of our technology or technology licensed by us may not provide adequate protection against competitors. -36- In addition to patents, we rely on trademarks to protect the recognition of our company and product in the marketplace.
If we are unable to find and onboard attractive VIPs in existing markets or new markets, our revenue and profitability may be harmed, we may not be able to implement our growth strategy and our financial results may be negatively affected. Moreover, we have begun to expand marketing and related efforts to medical professional beyond the dentistry community.
If we are unable to find and onboard VIPs in existing markets or new markets, our revenue and profitability may be harmed, we may not be able to implement our growth strategy and our financial results may be negatively affected. Moreover, we have begun to expand marketing and related efforts to medical professional beyond the dentistry community.
Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our ability to market our products and our business. We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our ability to market our products and our business. -37- We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a material adverse effect on our business, financial condition and results of operations. We bear the risk of warranty claims on our appliances. We bear the risk of warranty claims on our appliances.
A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a material adverse effect on our business, financial condition and results of operations. -38- We bear the risk of warranty claims on our appliances. We bear the risk of warranty claims on our appliances.
No advice of counsel has been obtained with respect any potential operations of the MID in Canada. -50- We may not be able to prohibit or limit our dentists, physicians and other healthcare professionals from competing with us in our local markets.
No advice of counsel has been obtained with respect any potential operations of the MID in Canada. We may not be able to prohibit or limit our dentists, physicians and other healthcare professionals from competing with us in our local markets.
Comparisons of our quarterly operating results are an unreliable indication of our future performance because they are likely to vary significantly based on many factors, including: ● our inability to attract demand for and obtain acceptance of The Vivos Method for the treatment of dentofacial abnormalities and/or mild to moderate OSA and snoring by both medical professionals and their patients; ● the success of alternative therapies and surgical procedures to treat individuals, and the possible future introduction of new products and treatments; ● our ability to design, implement and as necessary modifying pricing programs for VIP enrollment and subscription fees; ● our ability to expand by adding additional VIPs in leading major metro areas; ● the expansion and rate of success of our marketing and advertising efforts to both consumers and dentists as well as other medical professionals, and the rate of success of our direct sales force in the United States and internationally; ● Failure of third-party contract manufacturers to deliver products or provide services in a cost effective and timely manner; ● our failure to develop, find or market new products; ● the successful completion of current and future clinical studies, and the possibility that the results of any future study may be adverse to our product and services, or reveal some heretofore unknown risk to patients from treatment in The Vivos Method; the failure by us to make professional presentation and publication of positive outcomes data from these clinical studies, and the increased adoption of The Vivos Method by dentists as a result of the data from these clinical studies; ● actions relating to ongoing FDA compliance; ● the size and timing of orders from dentists and independent distributors; ● our ability to obtain reimbursement for The Vivos Method (i.e., billable oral appliances and orofacial myofunctional therapy) in the future from third-party healthcare insurers; ● the willingness of patients to pay out-of-pocket for treatment in The Vivos Method in the absence of reimbursement from third-party healthcare insurers, for; decisions by one or more commercial health insurance companies to preclude, deny, limit, reduce, eliminate, or curtain reimbursement for treatment in whole or part by The Vivos Method; ● unanticipated delays in the development and introduction of our current and future products and/or our inability to control costs; ● the effects of global or local pandemics or epidemics and governmental responses, such as COVID-19; -31- ● seasonal fluctuations in revenue due to the elective nature of sleep related breathing disorder treatments for mild to moderate OSA, as well as seasonal fluctuations resulting from adverse weather conditions, earthquakes, floods or other acts of nature in certain areas or regions that result in power outages, transportation interruptions, damages to one or more of our facilities, food shortages, or other events which may cause a temporary or long-term disruption in patient priorities, finances, or other matters; and ● general economic conditions as well as those specific to our customers and markets.
Comparisons of our quarterly operating results are an unreliable indication of our future performance because they are likely to vary significantly based on many factors, including: ● our inability to attract demand for and obtain acceptance of The Vivos Method for the treatment of dentofacial abnormalities and/or mild to severe OSA and snoring by both medical professionals and their patients; ● the success of alternative therapies and surgical procedures to treat individuals, and the possible future introduction of new products and treatments; ● our ability to design, implement and as necessary modifying pricing programs for VIP enrollment and subscription fees; ● our ability to expand by adding additional VIPs in leading major metro areas; ● the expansion and rate of success of our marketing and advertising efforts to both consumers and dentists as well as other medical professionals, and the rate of success of our direct sales force in the United States and internationally; ● Failure of third-party contract manufacturers to deliver products or provide services in a cost effective and timely manner; ● our failure to develop, find or market new products; ● the successful completion of current and future clinical studies, and the possibility that the results of any future study may be adverse to our product and services, or reveal some heretofore unknown risk to patients from treatment in The Vivos Method; the failure by us to make professional presentation and publication of positive outcomes data from these clinical studies, and the increased adoption of The Vivos Method by dentists as a result of the data from these clinical studies; -30- ● actions relating to ongoing FDA compliance; ● the size and timing of orders from dentists and independent distributors; ● our ability to obtain reimbursement for The Vivos Method (i.e., billable oral appliances and orofacial myofunctional therapy) in the future from third-party healthcare insurers; ● the willingness of patients to pay out-of-pocket for treatment in The Vivos Method in the absence of reimbursement from third-party healthcare insurers, for; decisions by one or more commercial health insurance companies to preclude, deny, limit, reduce, eliminate, or curtain reimbursement for treatment in whole or part by The Vivos Method; ● unanticipated delays in the development and introduction of our current and future products and/or our inability to control costs; ● the effects of global or local pandemics or epidemics and governmental responses, such as COVID-19; ● seasonal fluctuations in revenue due to the elective nature of sleep-disordered breathing treatments for mild to severe OSA, as well as seasonal fluctuations resulting from adverse weather conditions, earthquakes, floods or other acts of nature in certain areas or regions that result in power outages, transportation interruptions, damages to one or more of our facilities, food shortages, or other events which may cause a temporary or long-term disruption in patient priorities, finances, or other matters; and ● general economic conditions as well as those specific to our customers and markets.
If we are not successful in these efforts, we will have incurred expenses without materially increasing revenue. The OSA market is highly competitive, including competition for patients, strategic relationships, and commercial payor contracts. The market for providing treatment for OSA is highly competitive.
If we are not successful in these efforts, we will have incurred expenses without materially increasing revenue. -40- The OSA market is highly competitive, including competition for patients, strategic relationships, and commercial payor contracts. The market for providing treatment for OSA is highly competitive.
The PPACA provides, and recent government cases against medical device manufacturers support, the view that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate the False Claims Act; ● the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, and as amended again by the final HIPAA omnibus Rule, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under HITECH and the Genetic Information Nondiscrimination Act; Other Modifications to HIPAA, published in January 2013, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses and health care providers, and their respective business associates; ● Federal transparency laws, including the federal Physician Payments Sunshine Act, which is part of the PPACA, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (or CMS), information related to: (i) payments or other “transfers of value’’ made to physicians and teaching hospitals; and (ii) ownership and investment interests held by physicians and their immediate family members; ● state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state laws that require medical device companies to comply with the specific industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; and -44- ● state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
The PPACA provides, and recent government cases against medical device manufacturers support, the view that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate the False Claims Act; ● the federal Health Insurance Portability and Accountability Act of 1996 (or HIPAA), which created new federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (or HITECH), and its implementing regulations, and as amended again by the final HIPAA omnibus Rule, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under HITECH and the Genetic Information Nondiscrimination Act; Other Modifications to HIPAA, published in January 2013, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses and health care providers, and their respective business associates; -43- ● Federal transparency laws, including the federal Physician Payments Sunshine Act, which is part of the PPACA, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (or CMS), information related to: (i) payments or other “transfers of value” made to physicians and teaching hospitals; and (ii) ownership and investment interests held by physicians and their immediate family members; ● state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state laws that require medical device companies to comply with the specific industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; and ● state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
In connection with the audit of our consolidated financial statements for the years ended December 31, 2022 and 2021, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting.
In connection with the audit of our consolidated financial statements for the years ended December 31, 2023, 2022 and 2021, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting.
We may incur costs resulting from security risks in connection with the electronic data processing by our partner banks. Because we accept electronic payment cards for payments at our facilities and the facilities of our VIPs, we may incur costs resulting from related security risks in connection with the electronic processing of confidential information by our partner banks.
Because we accept electronic payment cards for payments at our facilities and the facilities of our VIPs, we may incur costs resulting from related security risks in connection with the electronic processing of confidential information by our partner banks.
We will remain an EGC until the earlier of: (i) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
We will remain an EGC until the earlier of: (i) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
For us to be successful: ● our dentist customers and referring physicians must believe that The Vivos Method offers meaningful clinical and economic benefits for the treating provider and for the patient as compared to the other surgical and non-surgical procedures or devices currently being used to treat individuals with dentofacial abnormalities and/or mild to moderate OSA and referring physicians must write a prescription for the use of a Class II Vivos appliance; -28- ● our dentist customers must believe patients will pay for The Vivos Method out-of-pocket, and patients must believe that paying out-of-pocket for treatment in The Vivos Method is the best alternative to either doing nothing or entering into another treatment option; and ● Our dentist customers must be willing to pay us for the right to become VIPs and to commit the time and resources required to learn the new clinical and technical skills and invest in the technology required to treat patients with dentofacial abnormalities and/or mild to moderate OSA using The Vivos Method.
For us to be successful: ● our dentist customers and referring physicians must believe that The Vivos Method offers meaningful clinical and economic benefits for the treating provider and for the patient as compared to the other surgical and non-surgical procedures or devices currently being used to treat individuals with dentofacial abnormalities and/or mild to severe OSA and referring physicians must write a prescription for the use of a Class II Vivos appliance; ● our dentist customers must believe patients will pay for The Vivos Method out-of-pocket, and patients must believe that paying out-of-pocket for treatment in The Vivos Method is the best alternative to either doing nothing or entering into another treatment option; and ● Our dentist customers must be willing to pay us for the right to become VIPs and to commit the time and resources required to learn the new clinical and technical skills and invest in the technology required to treat patients with dentofacial abnormalities and/or mild to severe OSA using The Vivos Method.
Further, if we or any third party have difficulty enrolling a sufficient number of patients in a timely or cost-effective manner to conduct clinical trials as planned, or if enrolled patients do not complete the trial as planned, we or a third party may need to delay or terminate ongoing clinical trials, which could negatively affect our business. -48- The results of our clinical trials may not support either further clinical development or the commercialization of any new product candidates or modifications to existing products.
Further, if we or any third party have difficulty enrolling a sufficient number of patients in a timely or cost-effective manner to conduct clinical trials as planned, or if enrolled patients do not complete the trial as planned, we or a third party may need to delay or terminate ongoing clinical trials, which could negatively affect our business. -47- The results of our clinical trials may not support either further clinical development or the commercialization of any new product candidates or modifications to existing products.
The cost of treatments for dentofacial abnormalities and/or mild to moderate OSA, such as CPAP, and most surgical procedures generally are covered and reimbursed in whole or part by third-party healthcare insurers. The Vivos Method is a customized protocol often combined with custom oral appliance therapy, some of which currently qualify for reimbursement.
The cost of treatments for dentofacial abnormalities and/or mild to severe OSA, such as CPAP, and most surgical procedures generally are covered and reimbursed in whole or part by third-party healthcare insurers. The Vivos Method is a customized protocol often combined with custom oral appliance therapy, some of which currently qualify for reimbursement.
Our ability to generate revenue from additional sales of The Vivos Method for the treatment of dentofacial abnormalities and/or mild to moderate OSA may be materially limited by the extent to which reimbursement of The Vivos Method is available in the future. In addition, third-party healthcare insurers are increasingly challenging the prices charged for medical products and procedures.
Our ability to generate revenue from additional sales of The Vivos Method for the treatment of dentofacial abnormalities and/or mild to severe OSA may be materially limited by the extent to which reimbursement of The Vivos Method is available in the future. In addition, third-party healthcare insurers are increasingly challenging the prices charged for medical products and procedures.
Currently, dentists learn to use The Vivos Method through hands-on, on-site training or virtual training by our representatives. However, to receive this training, dentists must be aware of The Vivos Method as a treatment option for dentofacial abnormalities and/or mild to moderate OSA and snoring in adults and be interested in using the protocol in their practice.
Currently, dentists learn to use The Vivos Method through hands-on, on-site training or virtual training by our representatives. However, to receive this training, dentists must be aware of The Vivos Method as a treatment option for dentofacial abnormalities and/or mild to severe OSA and snoring in adults and be interested in using the protocol in their practice.
The Vivos Method is different from current surgical and non-surgical treatments dentofacial abnormalities and/or mild to moderate OSA and snoring, therefore we cannot assure you that dentists in corroboration with physicians will use The Vivos Method or become VIPs, and demand for The Vivos Method may decline or may not increase as quickly as we expect.
The Vivos Method is different from current surgical and non-surgical treatments dentofacial abnormalities and/or mild to severe OSA and snoring, therefore we cannot assure you that dentists in corroboration with physicians will use The Vivos Method or become VIPs, and demand for The Vivos Method may decline or may not increase as quickly as we expect.
Since The Vivos Method currently represents our primary product, and since our VIP program is our primary means of commercialization, we are significantly reliant on the level of recurring sales of The Vivos Method treatment and decreased or lower than expected sales or recruitment and integration of new VIPs would cause us to lose all or substantially all of our revenue.
Since The Vivos Method currently represents our primary product, and since our VIP program is our primary means of commercialization, we are significantly reliant on the level of recurring sales of The Vivos Method treatment and decreased or lower than expected sales or recruitment and maintenance of new VIPs would cause us to lose all or substantially all of our revenue.
Although we offer The Vivos Method through our VIPs, our domestic sales organization does not generally call on sleep specialists or third-party sleep centers to sell The Vivos Method, and we do not believe that most qualified sleep specialists today would recommend The Vivos Method to their patients with mild to moderate OSA.
Although we offer The Vivos Method through our VIPs, our domestic sales organization does not generally call on sleep specialists or third-party sleep centers to sell The Vivos Method, and we do not believe that most qualified sleep specialists today would recommend The Vivos Method to their patients with mild to severe OSA.
Our success depends both on the sufficient acceptance and adoption by the medical/dental community of The Vivos Method as a non-invasive treatment for the treatment of dentofacial abnormalities and/or mild to moderate OSA. Currently, a relatively limited number of dentists and other medical clinicians provide treatment with The Vivos Method.
Our success depends both on the sufficient acceptance and adoption by the medical/dental community of The Vivos Method as a non-invasive treatment for the treatment of dentofacial abnormalities and/or mild to severe OSA. Currently, a relatively limited number of dentists and other medical clinicians provide treatment with The Vivos Method.
Whenever practical, The Vivos Method is paid for primarily out-of-pocket by patients, with any available health insurance coverage being reimbursed if and as paid at a later date, where the patient is being treated for dentofacial abnormalities and/or mild to moderate OSA.
Whenever practical, The Vivos Method is paid for primarily out-of-pocket by patients, with any available health insurance coverage being reimbursed if and as paid at a later date, where the patient is being treated for dentofacial abnormalities and/or mild to severe OSA.
Therefore, the market for our common stock is relatively new, and has experience periods of inactivity as well as significant volatility. We cannot assure you that an orderly and liquid trading market for our common stock will develop, or if it does develop, it may not be maintained.
Therefore, the market for our common stock is relatively new, and has experienced periods of inactivity as well as significant volatility. We cannot assure you that an orderly and liquid trading market for our common stock will develop, or if it does develop, it may not be maintained.
The outcome of these matters could have a material adverse effect on our financial position, results of operations, and cash flows. -46- We depend on certain key personnel. We substantially rely on the efforts of our current senior management, including our Chief Executive Officer, R.
The outcome of these matters could have a material adverse effect on our financial position, results of operations, and cash flows. -45- We depend on certain key personnel. We substantially rely on the efforts of our current senior management, including our Chief Executive Officer, R.
We believe certain of our competitors are attempting to develop innovative approaches and new products for diagnosing and treating OSA and other sleep related breathing disorder conditions. We cannot predict the extent to which ENTs, oral maxillofacial surgeons, primary care physicians or pulmonologists would or will recommend The Vivos Method over new or other established devices, treatments or procedures.
We believe certain of our competitors are attempting to develop innovative approaches and new products for diagnosing and treating OSA and other sleep disordered breathing conditions. We cannot predict the extent to which ENTs, oral maxillofacial surgeons, primary care physicians or pulmonologists would or will recommend The Vivos Method over new or other established devices, treatments or procedures.
We have conducted, and continue to conduct, a number of clinical studies of the use of The Vivos Method to treat patients with dentofacial abnormalities and/or mild to moderate OSA in the United States and Canada.
We have conducted, and continue to conduct, a number of clinical studies of the use of The Vivos Method to treat patients with dentofacial abnormalities and/or mild to severe OSA in the United States and Canada.
Independent dentists as well as dentists affiliated with a DSO may not desire to continue to enroll in our VIP or DSO program. In reference to the treatment of mild to moderate OSA and snoring, studies have shown that a significant percentage of people who have OSA remain undiagnosed and therefore do not seek treatment.
Independent dentists as well as dentists affiliated with a DSO may not desire to continue to enroll in our VIP or DSO program. -27- In reference to the treatment of mild to severe OSA and snoring, studies have shown that a significant percentage of people who have OSA remain undiagnosed and therefore do not seek treatment.
A material portion of our future revenue is expected to derive from sales and enrollments of new dentists into our Vivos Integrated Practice (VIP) program, including dentists who are part of a Dental Service Organization (DSO) which leaves us reliant on the willingness of dentists and/or DSO groups to continue to enroll.
A material portion of our future revenue is expected to derive from sales and enrollments of new dentists into our Vivos Integrated Practice (VIP) program, including dentists who are part of a DSO which leaves us reliant on the willingness of dentists and/or DSO groups to continue to enroll.
We believe that The Vivos Method is the first commercially available treatment based on our proprietary technology for the treatment of dentofacial abnormalities and/or mild to moderate OSA.
We believe that The Vivos Method is the first commercially available treatment based on our proprietary technology for the treatment of dentofacial abnormalities and/or mild to severe OSA.
Our business and prospects have been and could continue to be materially adversely affected by the COVID-19 pandemic or recurrences of COVID-19 (such as has occurred in the fall of 2020 and into 2021 and the first half of 2022) or any other similar diseases in the future.
Our business and prospects have been and could continue to be materially adversely affected by the COVID-19 pandemic or recurrences of COVID-19 (such as has occurred in the fall of 2020 and into 2021) or any other similar diseases in the future.
Our inability to implementing. -30- Our future operating results are difficult to predict and may vary significantly from quarter to quarter, which may adversely affect the price of our common stock. Our limited history of sales of The Vivos Method and VIP enrollments and subscriptions, together with our history of losses, make prediction of future operating results difficult.
Our future operating results are difficult to predict and may vary significantly from quarter to quarter, which may adversely affect the price of our common stock. Our limited history of sales of The Vivos Method and VIP enrollments and subscriptions, together with our history of losses, make prediction of future operating results difficult.
The failure of large U.S. customers or Dental Service Organizations (DSO) to pay for their purchases of The Vivos Method products and services on a timely basis could reduce our future sales revenue and negatively impact our liquidity.
The failure of large U.S. customers or DSO to pay for their purchases of The Vivos Method products and services on a timely basis could reduce our future sales revenue and negatively impact our liquidity.
Specifically: (a) from January 5, 2023 until May 9, 2023, neither our company nor any subsidiary of our company shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or securities convertible into or exercisable for common stock or (ii) file any registration statement or any amendment or supplement thereto, in each case other than as contemplated by the Registration Rights Agreement we entered into with the investor; or (b) from January 5, 2023 until November 8, 2023, we shall be prohibited from effecting or entering into an agreement to effect any issuance by us or any of our subsidiaries of any shares of common stock or securities convertible into or exercisable for common stock (or a combination of units thereof) involving a “variable rate transaction”, meaning a transaction in which we (i) issue or sell any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of common stock either (i) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of such debt or equity securities or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for the common stock or (ii) enter into, or effect a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby we may issue securities at a future determined price.
Specifically: (a) from November 2, 2023 until forty-five (45) days after the effective date of the registration statement, neither our company nor any subsidiary of our company shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or securities convertible into or exercisable for common stock or (ii) file any registration statement or any amendment or supplement thereto, in each case other than as contemplated by the Registration Rights Agreement we entered into with the investor; or (b) from November 2, 2023 until twelve (12) months after the effective date of the registration statement, we shall be prohibited from effecting or entering into an agreement to effect any issuance by us or any of our subsidiaries of any shares of common stock or securities convertible into or exercisable for common stock (or a combination of units thereof) involving a “variable rate transaction”, meaning a transaction in which we (i) issue or sell any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of common stock either (i) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of such debt or equity securities or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for the common stock or (ii) enter into, or effect a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby we may issue securities at a future determined price.
Kirk Huntsman, our Chief Financial Officer, Brad Amman, Susan McCullough, our EVP of Operations, and Patrick Kircher, our EVP of Sales and Marketing, among others. Our business would be impeded or harmed if we were to lose their services.
Kirk Huntsman, our Chief Financial Officer, Brad Amman and Susan McCullough, our EVP of Operations, among others. Our business would be impeded or harmed if we were to lose their services.
We expect to derive a substantial portion of our prospective future revenue from sales of our appliances and treatments, which leaves us reliant on the commercial viability of The Vivos Method. Currently, our primary product is The Vivos Method, inclusive of MyoCorrect, our SleepImage ® HST, and our multidisciplinary protocols for adjunctive therapy.
We expect to derive a substantial portion of our prospective future revenue from sales of our appliances and treatments, which leaves us reliant on the commercial viability of The Vivos Method. Currently, our primary product is The Vivos Method, inclusive of MyoCorrect and our SleepImage HST.
In addition, other marketing efforts like MID and our collaborations with Candid and Empower Sleep may not increase revenue to the extent we currently anticipate. In addition, we conduct our targeted marketing efforts in neighborhoods through channels such as direct mail, billboards, radio advertisements, physician open houses, community sponsorships and various social media.
In addition, other marketing efforts like MID and our collaborations with Candid, Ormco and On Demand Orthodontist may not increase revenue to the extent we currently anticipate. In addition, we conduct our targeted marketing efforts in neighborhoods through channels such as direct mail, billboards, radio advertisements, physician open houses, community sponsorships and various social media.
We have undertaken and plan to continue to explore acquisitions of complementary businesses or technologies, which could divert the attention of management, and which may not be integrated successfully into our existing business. We have undertaken and plan to continue to explore acquisitions or licenses of technology to, among other things, expand the scope of products services we provide.
We have engaged in and may continue to pursue acquisitions of complementary businesses or technologies, which could divert the attention of management, and which may not be integrated successfully into our existing business. We have engaged in and may continue to pursue acquisitions or licenses of technology to, among other things, expand the scope of products and services we provide.
Our ability to recruit and enroll VIPs depends on many factors, including our ability to: ● achieve brand awareness in new and existing markets; ● convince potential VIPs of the value of our products and services and to make the required investments in becoming a VIP and using The Vivos Method; ● manage costs, which could give rise to delays or cost overruns; ● recruit, train, and retain qualified dentists, dental hygienists, physicians, physician assistants, medical technologists and other staff in our local markets; ● obtain favorable reimbursement rates for services rendered at VIP offices; ● outperform competitors; and ● maintain adequate information systems and other operational system capabilities. ● demonstrate convincingly that the investment of time, training, and money in becoming a VIP will have a tangible and significant ROI for the provider.
Our ability to recruit and enroll VIPs depends on many factors, including our ability to: ● achieve brand awareness in new and existing markets; ● convince potential VIPs of the value of our products and services and to make the required investments in becoming a VIP and using The Vivos Method; ● manage costs, which could give rise to delays or cost overruns; ● recruit, train, and retain qualified dentists, dental hygienists, physicians, physician assistants, medical technologists and other staff in our local markets; ● obtain favorable reimbursement rates for services rendered at VIP offices; ● outperform competitors; and ● maintain adequate information systems and other operational system capabilities.
If the FDA finds that we have failed to comply, the agency can institute a wide variety of enforcement actions, ranging from a public warning letter to more severe sanctions such as: ● fines, injunctions and civil penalties; ● recall, detention or seizure of our products; ● the issuance of public notices or warnings; ● operating restrictions, partial suspension or total shutdown of production; ● refusing our requests for a 510(k) clearance of new products or new uses of existing products; ● withdrawing a 510(k) clearance already granted; and ● criminal prosecution. -49- We have received an FDA warning letter in the past when such a letter was received by our subsidiary BioModeling Solutions, Inc.
If the FDA finds that we have failed to comply, the agency can institute a wide variety of enforcement actions, ranging from a public warning letter to more severe sanctions such as: ● fines, injunctions and civil penalties; -48- ● recall, detention or seizure of our products; ● the issuance of public notices or warnings; ● operating restrictions, partial suspension or total shutdown of production; ● refusing our requests for a 510(k) clearance of new products or new uses of existing products; ● withdrawing a 510(k) clearance already granted; and ● criminal prosecution.
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of PCAOB Auditing Standard AS 2201, 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.
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.
Despite these efforts, if our vendors are unable to provide us with an adequate supply of components in a timely manner, or if we are unable to locate qualified alternate vendors for components at a reasonable cost, the cost of our products would increase, the availability of our products to our customers would decrease and our ability to generate revenue could be materially limited. -35- There are risks associated with outsourced production that may hurt our results of operations.
Despite these efforts, if our vendors are unable to provide us with an adequate supply of components in a timely manner, or if we are unable to locate qualified alternate vendors for components at a reasonable cost, the cost of our products would increase, the availability of our products to our customers would decrease and our ability to generate revenue could be materially limited.
In addition, we may borrow money or issue capital stock to finance acquisitions. Such borrowings might not be available on terms as favorable to us as our current borrowing terms and may increase our leverage, and the issuance of capital stock could dilute the interests of our stockholders. Our business is seasonal, which impacts our results of operations.
Such borrowings might not be available on terms as favorable to us as our current borrowing terms and may increase our leverage, and the issuance of capital stock could dilute the interests of our stockholders. Our business is seasonal, which impacts our results of operations.
(“BioModeling” or “BMS”) in January 2018 following a routine FDA audit. In its letter, the FDA noted matters such as inadequate documentation of certain FDA-required procedures, not keeping certain records and materials in paper format and in triplicate, and using certain descriptive words and phrases on its website and in marketing materials that were unapproved in advance by FDA.
In its letter, the FDA noted matters such as inadequate documentation of certain FDA-required procedures, not keeping certain records and materials in paper format and in triplicate, and using certain descriptive words and phrases on its website and in marketing materials that were unapproved in advance by FDA.
Our future success depends in part on our ability to anticipate and respond to changes in consumer preferences. Failure to anticipate and respond to changing consumer preferences in the products we market could lead to, among other things, lower sales of products, significant markdowns or write-offs of inventory, increased product returns and lower margins.
Failure to anticipate and respond to changing consumer preferences in the products we market could lead to, among other things, lower sales of products, significant markdowns or write-offs of inventory, increased product returns and lower margins.
The medical device industry is subject to rapid technological innovation and, consequently, the life cycle of any particular product can be short. Alternative products, procedures or other discoveries and developments to treat dentofacial abnormalities and/or OSA may render The Vivos Method obsolete.
The Vivos Method may become obsolete if we are unable to anticipate and adapt to rapidly changing technology. The medical device industry is subject to rapid technological innovation and, consequently, the life cycle of any particular product can be short. Alternative products, procedures or other discoveries and developments to treat dentofacial abnormalities and/or OSA may render The Vivos Method obsolete.
Also, we are subject to many risks associated with the VIP business model, some of which we have faced and some which we may be unable to presently identify, such as risks associated pricing, competition, marketing and regulatory matters.
As a result, our historical financial results may not be comparable to future results. Also, we are subject to many risks associated with the VIP business model, some of which we have faced and some which we may be unable to presently identify, such as risks associated pricing, competition, marketing and regulatory matters.
In order to fund and grow our business, we will need to obtain additional financing, either through borrowings, private offerings, public offerings, or some type of business combination, such as a merger, or buyout, and there can be no assurance that we will be successful in such pursuits.
We will need to obtain additional financing either through borrowings, private offerings, public offerings, or some type of business combination, such as a merger, or buyout, and there can be no assurance that we will be successful in such pursuits. We may be unable to acquire the additional funding necessary to fund our growth or to continue operating.
For the year ended December 31, 2021, our material weakness related to the operating effectiveness of our review controls. Specifically, we did not put the appropriate resources in place to be able to identify technical accounting issues and perform review functions appropriately.
The material weakness in our case related to the operating effectiveness of our review controls in that we did not put the appropriate resources in place to be able to identify technical accounting issues and perform review functions appropriately.
Both the patent application process and the process of managing patent disputes can be time consuming and expensive. If we were to initiate legal proceedings against a third party to enforce a patent related to one of our products, the defendant in such litigation could counterclaim that our patent is invalid and/or unenforceable.
If we were to initiate legal proceedings against a third party to enforce a patent related to one of our products, the defendant in such litigation could counterclaim that our patent is invalid and/or unenforceable.
Our marketing activities may not be successful. We incur costs and expend other resources in our marketing efforts to attract and retain VIPs and other medical professionals. Our marketing activities to date have had limited impact in terms of overall market penetration, and have been principally focused on increasing brand awareness in the communities in which we provide services.
Our marketing activities may not be successful. We incur costs and expend other resources in our marketing efforts to attract and retain VIPs and other medical professionals. Our marketing activities are principally focused on increasing brand awareness in the communities in which we provide services.
Our results may change from period to period due to fluctuations in our VIPs’ payor mix. Payor mix refers to the relative amounts we receive from the mix of persons or entities that pay or reimburse our VIPs for healthcare services.
Payor mix refers to the relative amounts we receive from the mix of persons or entities that pay or reimburse our VIPs for healthcare services.
The complexity associated with billing for The Vivos Method procedures may lead to delays in cash collections by our VIPs, resulting in increased carrying costs associated with the aging of our accounts receivable as well as the increased potential for bad debt expense.
The complexity associated with billing for The Vivos Method procedures may lead to delays in cash collections by our VIPs, resulting in increased carrying costs associated with the aging of our accounts receivable as well as the increased potential for bad debt expense. -42- We may incur costs resulting from security risks in connection with the electronic data processing by our partner banks.
In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could reduce the demand for our products and impair our business prospects including as a result of being unable to raise additional capital on acceptable terms to us, if at all. -29- We may not be able to successfully implement our growth strategy for our VIPs on a timely basis or at all, which could harm our business, financial condition, and results of operations.
In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could reduce the demand for our products and impair our business prospects including as a result of being unable to raise additional capital on acceptable terms to us, if at all.
After analyzing contracts using the five-step process in ASC 606, we have determined that for both VIP enrollment contracts and Orofacial Myofunctional Therapy (MyoCorrect), modifications to our revenue recognition policies were required in order to identify the performance obligations and recognize the revenue as the performance obligations are satisfied or over the customer life as applicable. -27- Additionally, we did not put the appropriate resources in place to be able to identify technical accounting issues and perform review functions appropriately.
After analyzing contracts using the five-step process in ASC 606, we have determined that for both VIP enrollment contracts and Orofacial Myofunctional Therapy (MyoCorrect), modifications to our revenue recognition policies were required in order to identify the performance obligations and recognize the revenue as the performance obligations are satisfied or over the customer life as applicable.
Moreover, our ability to onboard new VIPs may be impeded by the investments VIPs must make in adapting their practices to the use of The Vivos Method. We cannot assure you that management will be able to recruit and adopt new VIPs. Any such failure may have an adverse impact on our business, financial condition and results of operations.
Moreover, our ability to onboard new VIPs may be impeded by the investments VIPs must make in adapting their practices to the use of The Vivos Method. We cannot assure you that management will be able to recruit and adopt new VIPs.
We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies, treatments and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets. -36- Any patents we have obtained or do obtain may be challenged by re-examination or otherwise invalidated or eventually found unenforceable.
We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies, treatments and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets.
You may not be able to sell your common stock quickly or at the market price if trading in our securities is not active. The market price of our common stock has been and may continue to be highly volatile, which creates the risk of substantial losses for investors.
You may not be able to sell your common stock quickly or at the market price if trading in our securities is not active. The market price of our common stock has been and may continue to be highly volatile, and you could lose all or part of your investment.
We cannot guarantee that we will be able to establish alternative relationships on similar terms, without delay or at all. -40- Establishing additional or replacement suppliers for any of these materials, components or services, if required, could be time-consuming and expensive, may result in interruptions in our operations and product delivery, may affect the performance specifications of our appliances or could require that we modify its design.
Establishing additional or replacement suppliers for any of these materials, components or services, if required, could be time-consuming and expensive, may result in interruptions in our operations and product delivery, may affect the performance specifications of our appliances or could require that we modify its design.
Therefore, we face the risks associated with establishing a new revenue center as the VivoScore Program itself (under which we lease the SleepImage ® ring recorder to dentists) may not attract a following sufficient to make the program a successful revenue generator for us.
Therefore, we face the risks associated with establishing a new revenue center as the VivoScore Program itself (under which we lease the SleepImage ring recorder to dentists) may not attract a following sufficient enough to make the program a successful revenue generator for us. -31- We may not be able to respond in a timely and cost-effective manner to changes in consumer preferences.
These marketing and sales efforts may not be successful in increasing awareness and sales of The Vivos Method, and if we are not successful in these efforts, we will have incurred expenses without materially increasing revenue. Furthermore, other marketing efforts like MID and the VivoScore Program may not increase revenue to the extent we currently anticipate.
These marketing and sales efforts may not be successful in increasing awareness and sales of The Vivos Method, and if we are not successful in these efforts, we will have incurred expenses without materially increasing revenue.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or our collaborators are not able to maintain regulatory compliance, our products may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or our collaborators are not able to maintain regulatory compliance, our products may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business. -41- If payments from commercial or governmental payors are significantly delayed, reduced or eliminated, our business, prospects, results of operations and financial condition could be adversely affected.
There is therefore a risk that we will be unable to operate our business in a manner that generate positive cash flow or profit, and our failure to increase our revenues, generate positive cash flow and operate our business profitably would damage our reputation and stock price. -26- Our VIP program is a relatively new business model for us, and management has limited experience operating this model.
There is therefore a risk that we will be unable to operate our business in a manner that generate positive cash flow or profit, and our failure to increase our revenues, generate positive cash flow and operate our business profitably would damage our reputation and stock price.
We outsource the manufacture of substantially all our products to third-party manufacturers on a case-by-case basis. By law, the selection of the manufacturer is at the sole discretion of the treating dentist.
There are risks associated with outsourced production that may hurt our results of operations. We outsource the manufacture of substantially all our products to third-party manufacturers on a case-by-case basis. By law, the selection of the manufacturer is at the sole discretion of the treating dentist.
We believe that our non-surgical treatment of limited duration is preferable relative to mild to moderate OSA CPAP users or other oral appliance or surgical therapies, resulting in improved patient compliance.
We believe that our non-surgical treatment of limited duration is preferable relative to mild to severe OSA CPAP users or other oral appliance or surgical therapies, resulting in improved patient compliance. However, we have limited clinical evidence to support our beliefs that patient compliance in the use of our products is superior to competitive products.
The loss or dilution of the trade secrets and other intellectual property that comprises this key technology would seriously impair our business and future viability, and could result in delays in developing, introducing or maintaining our treatments/products until equivalent technology, if available, is identified, licensed and integrated.
We depend, in large part, on The Vivos Method technology. The loss of this key technology would seriously impair our business and future viability, and could result in delays in developing, introducing or maintaining our treatments/products until equivalent technology, if available, is identified, licensed and integrated.
Delays and uncertainties in the reimbursement process may be out of our control and may adversely affect our business, prospects, results of operations and financial condition. -42- Significant changes in our payor mix resulting from fluctuations in the types of patients seen by our VIPs could have a material adverse effect on our business, prospects, results of operations and financial condition.
Significant changes in our payor mix resulting from fluctuations in the types of patients seen by our VIPs could have a material adverse effect on our business, prospects, results of operations and financial condition. Our results may change from period to period due to fluctuations in our VIPs’ payor mix.
We rely on third-party suppliers and contract manufacturers for the manufacture and assembly of our products, and a loss or degradation in performance of these suppliers and contract manufacturers could have a material adverse effect on our business, financial condition and results of operations.
If dentists do not continue to accept and recommend The Vivos Method, our revenue could be materially and adversely affected. -39- We rely on third-party suppliers and contract manufacturers for the manufacture and assembly of our products, and a loss or degradation in performance of these suppliers and contract manufacturers could have a material adverse effect on our business, financial condition and results of operations.
Our VIP program is a relatively new business model for us, and members of our management team have only a few years of experience in operating our company through this model. As a result, our historical financial results may not be comparable to future results.
Our VIP program is a relatively new business model for us, and management has limited experience operating this model. Our VIP program is a relatively new business model for us, and members of our management team have only a few years of experience in operating our company through this model.
We may not be able to obtain additional capital on commercially reasonable terms in a timely manner or at all, which could adversely affect our liquidity, financial position, and ability to continue operations.
We may not be able to obtain additional capital on commercially reasonable terms in a timely manner or at all, which could adversely affect our liquidity, financial position, and ability to continue operations. We have a present need for additional capital to fund and grow our business, as well as to bolster our stockholders’ equity for Nasdaq Stock Market purposes.
We are involved in a number of ongoing clinical studies evaluating clinical outcomes from the use of The Vivos Method including prospective, randomized, placebo-controlled studies, as well as clinical studies that are structured to obtain additional clearances from the FDA for expanded clinical indications for use of The Vivos Method. -32- We cannot assure you that these clinical studies will continue to demonstrate that The Vivos Method provides clinical effectiveness for individuals with dentofacial abnormalities and patients diagnosed with mild to moderate OSA, nor can we assure you that the use of The Vivos Method will prove to be safe and effective in clinical studies under United States or international regulatory guidelines for any expanded indications.
We cannot assure you that these clinical studies will continue to demonstrate that The Vivos Method provides clinical effectiveness for individuals with dentofacial abnormalities and patients diagnosed with mild to severe OSA, nor can we assure you that the use of The Vivos Method will prove to be safe and effective in clinical studies under United States or international regulatory guidelines for any expanded indications.
Even if a dentist is well versed in The Vivos Method, he or she may be unwilling to require patients to pay for it out-of-pocket. If dentists do not continue to accept and recommend The Vivos Method, our revenue could be materially and adversely affected.
Even if a dentist is well versed in The Vivos Method, he or she may be unwilling to require patients to pay for it out-of-pocket.
Under the BMS model, the independent treating dentists generated and maintained all records of treatment and ordered their appliances directly from one of the BMS designated labs.
Both began under the prior business model of our predecessor (and now subsidiary) BMS, and well before our formation. Under the BMS model, the independent treating dentists generated and maintained all records of treatment and ordered their appliances directly from one of the BMS designated labs.
We expect to continue to undertake aggressive marketing campaigns to increase medical and dental community awareness about our product and service capabilities. We conduct our marketing efforts in local areas primarily through various social media and online channels, radio advertisements, physician referrals, other professional referrals, and community event sponsorships.
We expect to continue to undertake aggressive marketing campaigns to increase medical and dental community awareness about our product and service capabilities. We conduct our marketing efforts in neighborhoods through channels such as direct mail, billboards, radio advertisements, physician open houses, community sponsorships and various social media.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

11 edited+9 added−10 removed8 unchanged
Biggest changeSingh’s sole remedy or relief against the Company is what was agreed upon in the Employment Agreement. On December 7, 2022, Dr. Singh filed a Cross-Complaint in the Arbitration alleging claims against the Company for breach of contract, employment discrimination, and violation of the Colorado Wage Act.
Biggest changeSingh filed a Cross-Complaint in the Arbitration alleging claims against the Company for breach of contract, employment discrimination, and violation of the Colorado Wage Act. On August 18, 2023, the Company filed an Amended Demand for Arbitration to add two claims for breach of contract of the restrictive covenants for Dr. Singh’s work with Koala Plus and with Stimcore.
Brian Kraft, Dr. Ben Miraglia, and Dr. Mark Musso. The Ortho-Tain complaint alleges violation of the Lanham Act and an alleged civil conspiracy among the defendants to violate the Lanham Act by an alleged false designation of origin related to a presentation given by Dr. Brian Kraft at an event sponsored by the Company and Benco Dental.
The Ortho-Tain complaint alleges violation of the Lanham Act and an alleged civil conspiracy among the defendants to violate the Lanham Act by an alleged false designation of origin related to a presentation given by Dr. Brian Kraft at an event sponsored by the Company and Benco Dental.
In light of the stay, the Court denied, without prejudice, the Company’s pending motion to dismiss. On September 3, 2021, on December 2, 2021, on April 4, 2022, on July 5, 2022, on September 19, 2022, and on November 22, 2022 the Court extended the stay. On March 20, 2023, the Parties submitted their joint status report.
In light of the stay, the Court denied, without prejudice, the Company’s pending motion to dismiss. On September 3, 2021, on December 2, 2021, on April 4, 2022, on July 5, 2022, on September 19, 2022, and on November 22, 2022 the Court extended the stay. On March 2, 2023, the Court lifted the stay.
Singh is alleging, including a mandatory arbitration clause and exclusive remedy provisions. However, no assurances can be given that our positions regarding the Demand Letter or the Employment Agreement will be upheld by an arbitrator. The parties engaged in voluntary mediation, with no resolution reached. On November 3, 2022, the Company initiated arbitration with the American Arbitration Association against Dr.
However, no assurances can be given that our positions regarding the Demand Letter or the Employment Agreement will be upheld by an arbitrator. The parties engaged in voluntary mediation, with no resolution reached. -58- On November 3, 2022, the Company initiated arbitration with the American Arbitration Association against Dr. Gurdev Dave Singh. The Company’s Demand for Arbitration alleged that Dr.
Singh and other money relief if Dr. Singh’s claims are upheld in arbitration. We believe that Dr. Singh’s assertions completely lack merit in fact or law and further believes that Dr. Singh will be unable to establish actionable damages. Further, we believe that several provisions of Dr. Singh’s Employment Agreement limit or restrict claims Dr.
Singh’s assertions completely lack merit in fact or law and further believes that Dr. Singh will be unable to establish actionable damages. Further, we believe that several provisions of Dr. Singh’s Employment Agreement limit or restrict claims Dr. Singh is alleging, including a mandatory arbitration clause and exclusive remedy provisions.
Singh’s amended and restated employment agreement with us (the “Employment Agreement”). In the Demand Letter, Dr. Singh also asserted certain potential claims against us and/or R. Kirk Huntsman, our Chairman and Chief Executive Officer, including for breach of contract, breach of fiduciary duty, defamation and other civil claims and remedies which could include severance payments to Dr.
Singh also asserted certain potential claims against us and/or R. Kirk Huntsman, our Chairman and Chief Executive Officer, including for breach of contract, breach of fiduciary duty, defamation and other civil claims and remedies which could include severance payments to Dr. Singh and other money relief if Dr. Singh’s claims are upheld in arbitration. We believe that Dr.
The parties are currently awaiting further action from the district court, including a new decision on Ortho-Tain’s motion to dismiss. On July 22, 2020 Ortho-Tain, Inc. filed a Complaint at Law in the United States District Court for the Northern District of Illinois naming Vivos, along with the Company’s Chief Executive Officer, R. Kirk Huntsman, Benco Dental Supply Co., Dr.
On July 22, 2020 Ortho-Tain, Inc. filed a Complaint at Law in the United States District Court for the Northern District of Illinois naming Vivos, along with the Company’s Chief Executive Officer, R. Kirk Huntsman, Benco Dental Supply Co., Dr. Brian Kraft, Dr. Ben Miraglia, and Dr. Mark Musso.
The Demand Letter asserted certain allegations, including an assertion that contested our decision to terminate Dr. Singh’s employment for cause in March 2022. As previously disclosed, on March 1, 2022, with the unanimous approval of our Board of Directors, we provided notice of termination of Dr. Singh’s employment with our company “for cause” pursuant to the terms Dr.
As previously disclosed, on March 1, 2022, with the unanimous approval of our Board of Directors, we provided notice of termination of Dr. Singh’s employment with our company “for cause” pursuant to the terms Dr. Singh’s amended and restated employment agreement with us (the “Employment Agreement”). In the Demand Letter, Dr.
Gurdev Dave Singh. The Company’s Demand for Arbitration alleges that Dr. Singh’s behaviors and actions constituted a breach of the Employment Agreement as well as a breach of a fiduciary duty to which he owed the Company, and requests that the Arbitrator declare that Dr.
Singh’s behaviors and actions constituted a breach of the Employment Agreement as well as a breach of a fiduciary duty to which he owed the Company, and requests that the Arbitrator declare that Dr. Singh’s sole remedy or relief against the Company is what was agreed upon in the Employment Agreement. On December 7, 2022, Dr.
Litigation is subject to inherent uncertainties and an adverse result in the below described or other matters may arise from time to time that may harm our business. -57- On April 13, 2021, the Washington State Department of Financial Institutions (“WSDFI”) sent a letter and subpoena requesting that we produce certain documents and records.
Litigation is subject to inherent uncertainties and an adverse result in the below described or other matters may arise from time to time that may harm our business. -57- On June 5, 2020, we filed suit against Ortho-Tain, Inc.
According to the court’s docket, this lawsuit was dismissed for lack of prosecution on June 15, 2022. -58- On May 23, 2022, Dr. G. David Singh (“Dr. Singh”), the founder and former director and Chief Medical Officer of our company, through his legal counsel, sent a demand letter (the “Demand Letter”) to us.
Singh”), the founder and former director and Chief Medical Officer of our company, through his legal counsel, sent a demand letter (the “Demand Letter”) to us. The Demand Letter asserted certain allegations, including an assertion that contested our decision to terminate Dr. Singh’s employment for cause in March 2022.
Removed
WSDFI is investigating certain sales of our common stock by a previous employee and independent contractor in Washington prior to our initial public offering.
Added
On July 26, 2023, the District Court reopened the case. On February 14, 2024, the District Court issued an order denying Ortho-Tain’s motion to dismiss after analyzing the issue of litigation privilege under the standard ordered by the Tenth Circuit. In response, Ortho-Tain filed a notice of appeal of the District Court’s order on February 14, 2024.
Removed
This subject matter in general (including activities of such previous employee and independent contractor) had been among the issues previously investigated by a joint committee of our Board of Directors and internal and external legal counsel that commenced in February 2020 and, pursuant to the findings and recommendations of the joint committee, led to the company implementing in April 2020 certain enhanced corporate governance policies (in the form of a formal written policy on private stock sales requiring prior approval of our internal or external legal counsel and changes to certain organizational matters).
Added
The appeal has been docketed in the Tenth Circuit, and the record has been completed. On March 5, 2024, Vivos filed a motion to dismiss the appeal for lack of jurisdiction. Ortho-Tain filed its response to the motion to dismiss on March 19, 2024.
Removed
We have cooperated with WSDFI regarding this investigation, but during and subsequent to the year ended December 31, 2022, we have not been made aware of any developments with the investigation. On June 5, 2020, we filed suit against Ortho-Tain, Inc.
Added
Vivos’ reply in support of the motion to dismiss is to be filed by March 26, 2024.
Removed
In their status report, the Parties requested that the Court reconsider Defendants’ motions to dismiss and Plaintiff’s motion to strike which were fully briefed at the time the case was stayed. Defendants also requested a stay of discovery pending a ruling on the motions to dismiss. The Parties are awaiting further direction from the Court.
Added
On March 20, 2024, the Court ordered that Vivos’ motion to dismiss for lack of jurisdiction will be referred to the panel of judges to be assigned to the appeal, that no ruling on the motion to dismiss would issue at this time, and that Ortho-Tain is to file its opening brief on or before April 29, 2024.
Removed
On May 17, 2021, plaintiff Steven Rospond (“Rospond”) filed a lawsuit against an entity called Proceed Finance asserting claims for breach of contract and violation of the Kansas Consumer Protection Act against Defendants Proceed Finance and Security First Bank regarding a $50,000 loan Rospond took to pay for services provided by our company.
Added
On April 13, 2023, the Court ordered the parties to exchange Rule 26(a) disclosures by May 1, 2023 and issue initial written discovery by May 15, 2023. Further, the Court referred the matter to the Magistrate Judge to conduct a settlement conference. On April 28, 2023, the Court clarified that Dr.
Removed
Rospond sent us a subpoena seeking various documents relating to the services provided by us to which it responded and provided documents on December 21, 2021.
Added
Musso’s court ordered participation in settlement and discovery did not waive his objections to personal jurisdiction and venue, and that Defendants did not need to file a response to the Complaint at this time. On June 2, 2023, the case was reassigned to the Hon. LaShonda A. Hunt.
Removed
In an Order dated October 26, 2021, the court granted Rospond an extension of up to seven days after we delivered documents to Rospond within which to amend his lawsuit, including to assert claims against us. To date, we have no knowledge of Rospond asserting any claims against us.
Added
On July 11, 2023, the Magistrate Judge scheduled a settlement conference for September 1, 2023. On August 1, 2023, Judge Hunt set a deadline to refile motions to dismiss as August 15, 2023, stayed discovery pending resolution of the motions, and authorized the parties to cancel the settlement conference.
Removed
The Arbitrator has been selected and pursuant to a scheduling conference held on February 15, 2023, the case has been tentatively set for a four-day Arbitration commencing on January 16, 2024. On January 23, 2023, we filed a complaint against Dr. Singh and Dr. Rod Willey in the United States District Court for the District of Colorado alleging that Dr.
Added
The Company filed a motion to dismiss on August 15, 2023, and a reply brief on October 3, 2023. The Parties are currently awaiting a decision on the motion to dismiss. On May 23, 2022, Dr. G. Dave Singh (“Dr.
Removed
Singh violated his employment agreement with Vivos when he and Dr. Willey formed a competing venture, named Koala Plus. Additionally, we contend that both defendants violated state and federal trade secret laws when they formed this competing business and attempted to unlawfully use our trade secrets to divert business away from Vivos.
Added
On January 8, 2024, the Company and Dr. Singh reached a settlement and the arbitration has been closed, with the arbitrator maintaining jurisdiction for any issues that may arise from the enforcement of the settlement agreement. Item 4. Mine Safety Disclosures. Not applicable. PART II
Removed
We believe the defendants actions have caused unspecified monetary damages. Dr. Singh’s responsive pleading is due on March 31, 2023. Dr. Willey failed to timely respond and Vivos moved for a Clerk’s Entry of Default, which was granted on March 24, 2023. Item 4. Mine Safety Disclosures. Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

24 edited+7 added−2 removed4 unchanged
Biggest changeOn March 29, 2021 and as part of the acquisition of certain assets from, and the entry into related agreements with, MyoCorrect, LLC and its affiliates, Vivos Therapeutics issued three-year warrants to purchase 200,000 shares of our common stock with an exercise price of $7.50 per share. 25,000 of these warrants vested initially upon issuance, but the remainder only vest and become exercisable upon the achievement of pre-determined performance metrics related to the utilization of MyoCorrect.
Biggest changeOn March 12, 2021, Vivos Therapeutics granted options to purchase up to 5,800 shares of common stock at an exercise price of $187.50 share in the following amounts to employees and consultants, 4,800 to two employees (4,000 and 800 respectively) with standard vesting on each of the following dates: (i) 20% as of the date of grant and (ii) 20% at the end of each year following the date of grant, and 1,000 to a consultant with standard vesting on each of the following dates: (i) 20% as of the date of grant and (ii) 20% at the end of each year following the date of grant. -59- On March 29, 2021 and as part of the acquisition of certain assets from, and the entry into related agreements with, MyoCorrect, LLC and its affiliates, Vivos Therapeutics issued three-year warrants to purchase 8,000 shares of our common stock with an exercise price of $187.50 per share. 1,000 of these warrants vested initially upon issuance, but the remainder only vest and become exercisable upon the achievement of pre-determined performance metrics related to the utilization of MyoCorrect.
These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection. On January 5, 2023, the Company, closed a private placement (the “Private Placement”) pursuant to which the Company agreed sell up to an aggregate of $8,000,000 of securities of the Company of units.
These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection. On January 9, 2023, the Company, closed a private placement (the “Private Placement”) pursuant to which the Company agreed sell up to an aggregate of $8,000,000 of securities of the Company of units.
Securities Authorized for Issuance under Equity Compensation Plans The following information is provided as of December 31, 2022, regarding our common stock that may be issued under our 2017 stock and option award plan (the “2017 Plan”), and our 2019 stock and option award plan (the “2019 Plan”).
Securities Authorized for Issuance under Equity Compensation Plans The following information is provided as of December 31, 2023, regarding our common stock that may be issued under our 2017 stock and option award plan (the “2017 Plan”), and our 2019 stock and option award plan (the “2019 Plan”).
Our Board of Directors and stockholders have approved a total reserve of 1,333,333 shares for issuance under the 2017 Plan. (2) The 2019 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.
Our board of directors and stockholders have approved a total reserve of 53,333 shares for issuance under the 2017 Plan. (2) The 2019 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.
These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection. During the period from March 12, 2021 through March 30, 2021, Vivos Therapeutics issued warrants to purchase an aggregate of 95,000 shares of common stock to contractors and consultants in exchange for services.
These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection. During the period from March 12, 2021 through March 30, 2021, Vivos Therapeutics issued warrants to purchase an aggregate of 3,800 shares of common stock to contractors and consultants in exchange for services.
Additionally, the Company issued warrants to purchase 80,000 shares of the Company’s common stock to certain consultants for sales consulting services with an exercise price of $3.27 per share, vesting monthly over one year term of the agreement. These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection.
Additionally, the Company issued warrants to purchase 3,200 shares of the Company’s common stock to certain consultants for sales consulting services with an exercise price of $81.75 per share, vesting monthly over one year term of the agreement. These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection.
On April 14, 2021 and as part of the acquisition of certain assets from, and the entry into related agreements with, Lyon Management & Consulting, LLC and its affiliates, we issued three year warrants to purchase 25,000 shares of our common stock with an exercise price of $8.90 per share. 5,000 of these warrants vested initially upon issuance, but the remainder only vest and become exercisable at the end of each anniversary year following the issuance date.
On April 14, 2021 and as part of the acquisition of certain assets from, and the entry into related agreements with, Lyon Management & Consulting, LLC and its affiliates, we issued three year warrants to purchase 1,000 shares of our common stock with an exercise price of $222.50 per share. 200 of these warrants vested initially upon issuance, but the remainder only vest and become exercisable at the end of each anniversary year following the issuance date.
These warrants have an exercise price of $7.50 per share. 45,000 of these warrants vested initially upon issuance, but the remainder only vest and become exercisable at the end of each anniversary year following the issuance date. These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection.
These warrants have an exercise price of $187.50 per share. 1,800 of these warrants vested initially upon issuance, but the remainder only vest and become exercisable at the end of each anniversary year following the issuance date. These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is currently listed on the Nasdaq Capital Market under the symbol “VVOS”. On March 28, 2023, the last reported sale price of the shares of our common stock as reported on NASDAQ was $0.32 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is currently listed on the Nasdaq Capital Market under the symbol “VVOS”. On March 26, 2024, the last reported sale price of the shares of our common stock as reported on NASDAQ was $4.47 per share.
The purchase price per Share and associated Common Stock Purchase Warrant was $1.20, and the purchase price per Pre-Funded Warrant and associated Common Stock Purchase Warrant was $1.1999. Each Common Stock Purchase Warrant entitles the holder, for a period of five years and 6 months, to purchase one share of Common Stock at an exercise price of $1.20 per share.
The purchase price per Share and associated Common Stock Purchase Warrant was $30.00, and the purchase price per Pre-Funded Warrant and associated Common Stock Purchase Warrant was $29.9998. Each Common Stock Purchase Warrant entitles the holder, for a period of five years and 6 months, to purchase one share of Common Stock at an exercise price of $30.00 per share.
On February 25, 2022 the Company issued 290,000 stock options to certain employees and officers with an exercise price of $3.27 per share, one-fifth vested on the date of grant, and one-fifth vests annually through February 25, 2026.
On February 25, 2022 the Company issued 11,600 stock options to certain employees and officers with an exercise price of $81.75 per share, one-fifth vested on the date of grant, and one-fifth vests annually through February 25, 2026.
On May 12, 2022, the Company issued 265,000 stock options to certain employees and officers with an exercise price of $1.29 per share, one-fifth vested on the date of grant, and one-fifth vests annually through May 12, 2027.
On May 12, 2022, the Company issued 10,600 stock options to certain employees and officers with an exercise price of $32.25 per share, one-fifth vested on the date of grant, and one-fifth vests annually through May 12, 2027.
Shares to be Issued Upon Exercise of Outstanding Options, and Rights Securities Number of Weighted Average Available For Future Plan Category: Shares Exercise Price Issuance Equity compensation plans approved by security holders: 2017 Plan 1,333,333 (1) $ - - 2019 Plan 2,366,667 (2) - 80,846 Total 3,700,000 2.90 80,846 (1) The 2017 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.
Shares to be Issued Upon Exercise of Outstanding Options, and Rights Securities Number of Weighted Average Available For Future Plan Category: Shares Exercise Price Issuance Equity compensation plans approved by security holders: 2017 Plan 53,333 (1) $ - - 2019 Plan 174,667 (2) - 100,750 Total 228,000 72.50 100,750 (1) The 2017 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.
Each unit consists of one share of the Company’s common stock, $0.0001 par value (or a pre-funded warrant to purchase one share of Common Stock) (the “Pre-Funded Warrants”) and one warrant exercisable for one share Common Stock (the “Common Stock Purchase Warrants” and together with the Pre-Funded Warrants, the “Warrants”). No actual units will be issued in the Private Placement.
Each unit consists of one share of the Company’s common stock, $0.0001 par value (or a pre-funded warrant to purchase one share of Common Stock) (the “Pre-Funded Warrants”) and one warrant exercisable for one share Common Stock (the “Common Stock Purchase Warrants” and together with the Pre-Funded Warrants, the “Warrants”).
Additionally, the Company issued warrants to purchase 130,000 shares of the Company’s common stock to certain consultants for sales consulting services with an exercise price of $1.29 per share. 40,000 of these warrants vested immediately upon issuance, 60,000 of these warrants vest monthly over a six month term and 30,000 of these warrants vest monthly over one year term of the agreement.
Additionally, the Company issued warrants to purchase 5,200 shares of the Company’s common stock to certain consultants for sales consulting services with an exercise price of $32.25 per share. 1,600 of these warrants vested immediately upon issuance, 2,400 of these warrants vest monthly over a six month term and 1,200 of these warrants vest monthly over one year term of the agreement.
Additionally, the Company issued warrants to purchase 850,000 shares of the Company’s common stock to certain consultants for sales consulting services with an exercise price of $0.48 per share. 557,500 of these warrants vested immediately upon issuance, 27,500 of these warrants vest quarterly over one year term, 115,000 of these warrants vest quarterly over two year term of the agreement, 50,000 of these warrants vest annually over two year term, and 100,000 of these warrants exercisable upon the achievement of pre-determined performance metrics.
Additionally, the Company issued warrants to purchase 34,000 shares of the Company’s common stock to certain consultants for sales consulting services with an exercise price of $12.00 per share. 22,300 of these warrants vested immediately upon issuance, 1,100 of these warrants vest quarterly over one year term, 4,600 of these warrants vest quarterly over two year term of the agreement, 2,000 of these warrants vest annually over two year term, and 4,000 of these warrants exercisable upon the achievement of pre-determined performance metrics.
Our Board of Directors and stockholders have approved a total reserve of 2,366,667 shares for issuance out of which 250,000 shares have been exercised under the 2019 Plan. -61- Dividend Policy As of the date of this Annual Report on Form 10-K, we have not paid any cash dividends to stockholders.
Our board of directors and stockholders have approved a total reserve of 174,667 shares for issuance out of which 10,000 shares have been exercised under the 2019 Plan. -61- Dividend Policy As of the date of this Annual Report on Form 10-K, we have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
All of the sales listed below were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act and/or Regulation D thereunder in that (i) none of the offers and sales constituted a public offering of securities and/or (ii) the securities were only offered and sold to accredited investors. -59- In November 2020, Vivos Therapeutics issued warrants to certain shareholders to purchase an aggregate of 325,000 shares of common stock.
All of the sales listed below were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act and/or Regulation D thereunder in that (i) none of the offers and sales constituted a public offering of securities and/or (ii) the securities were only offered and sold to accredited investors.
Pursuant to the Purchase Agreement, the Company agreed to issue and sell in the Private Placement 2,000,000 Shares, Pre-Funded Warrants to purchase up to an aggregate of 4,666,667 shares of Common Stock and Common Stock Purchase Warrants to purchase up to an aggregate of 6,666,667 shares of Common Stock (collectively with the shares of Common Stock underlying the Pre-Funded Warrants and the Warrants, the “Warrant Shares”).
No actual units will be issued in the Private Placement. -60- Pursuant to the Purchase Agreement, the Company agreed to issue and sell in the Private Placement 80,000 Shares, Pre-Funded Warrants to purchase up to an aggregate of 186,666 shares of Common Stock and Common Stock Purchase Warrants to purchase up to an aggregate of 266,667 shares of Common Stock (collectively with the shares of Common Stock underlying the Pre-Funded Warrants and the Warrants, the “Warrant Shares”).
Recent Sales of Unregistered Securities The following is a summary of transactions by us within the past three years involving sales or our securities that were not registered under the Securities Act.
In addition, we believe that a significant number of beneficial owners of our common stock hold their shares in street name Recent Sales of Unregistered Securities The following is a summary of transactions by us within the past three years involving sales or our securities that were not registered under the Securities Act.
On July 8, 2022, the Company issued 15,000 stock options to a certain employee with an exercise price of $1.45 per share, one-fifth vested on the date of grant, and one-fifth vests annually through July 8, 2027. -60- On December 23, 2022, the Company issued 1,404,168 stock options to certain employees and officers with an exercise price of $0.48 per share, 787,500 of these options vested one-fifth on the date of grant, and one-fifth vests annually through December 23, 2026, 160,000 of these options vested 50% on the date of grant, and 25% vest on March 23, 2023, and the remaining 25% vest on June 23, 2023, and 456,668 of these options vested immediately upon issuance.
On December 23, 2022, the Company issued 56,167 stock options to certain employees and officers with an exercise price of $12.00 per share, 31,500 of these options vested one-fifth on the date of grant, and one-fifth vests annually through December 23, 2026, 6,400 of these options vested 50% on the date of grant, and 25% vest on March 23, 2023, and the remaining 25% vest on June 23, 2023, and 18,267 of these options vested immediately upon issuance.
These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection.
These warrants may be exercised only for cash, and the exercise price is subject to customary, stock-based anti-dilution protection. On July 8, 2022, the Company issued 600 stock options to a certain employee with an exercise price of $36.25 per share, one-fifth vested on the date of grant, and one-fifth vests annually through July 8, 2027.
It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. None. Item 6. Reserved.
Our future ability to pay cash dividends on our stock may also be limited by the terms of any future debt or preferred securities or future credit facility. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. None. Item 6. Reserved.
Holders of Record On March 28, 2023, we had approximately 560 stockholders of record. On March 28, 2023, there were 29,678,786 shares of our common stock issued and outstanding. In addition, we believe that a significant number of beneficial owners of our common stock hold their shares in street name.
Holders of Record On March 26, 2024, we had approximately 7,309 stockholders of record. On March 26, 2024, there were 2,731,270 shares of our common stock issued and outstanding.
Removed
On March 12, 2021, Vivos Therapeutics granted options to purchase up to 145,000 shares of common stock at an exercise price of $7.50 share in the following amounts to employees and consultants, 120,000 to two employees (100,000 and 20,000 respectively) with standard vesting on each of the following dates: (i) 20% as of the date of grant and (ii) 20% at the end of each year following the date of grant, and 25,000 to a consultant with standard vesting on each of the following dates: (i) 20% as of the date of grant and (ii) 20% at the end of each year following the date of grant.
Added
In November 2020, Vivos Therapeutics issued warrants to certain shareholders to purchase an aggregate of 13,000 shares of common stock.
Removed
The declaration of any future cash dividend will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, the general economic conditions, and other pertinent conditions.
Added
On November 2, 2023, the Company closed a private placement (the “November 2023 Private Placement”) with an institutional investor pursuant to which the Company sold an aggregate of $4,000,003 of securities in a private placement consisting of (i) 130,000 shares of Common Stock, (ii) a pre-funded warrant to purchase 850,393 shares of Common Stock at an exercise price of $0.0001 per share, (iii) a five-year Series A Common Stock Purchase Warrant to purchase up to 980,393 shares of Common Stock with an exercise price of $3.83 per share and (iii) an 18-month Series B Common Stock Purchase Warrant (the “Series B Warrant”) to purchase up to 980,393 shares of Common Stock with an exercise price of $3.83 per share.
Added
On February 14, 2024, we entered into a warrant inducement letter agreement (the “Inducement Agreement”) with the same institutional investor in the November 2023 Private Placement pursuant to which the investor agreed to exercise for cash the entirety of the Series B Warrant at an exercise price of $4.02 per share (with such exercise price being established for purposes of compliance with the listing rules of the Nasdaq Stock Market), resulting in gross proceeds to the Company of approximately $4.0 million.
Added
Pursuant to the Inducement Agreement, in consideration for the immediate exercise of the Series B Warrant in full, we agreed to issue to the investor, in a new private placement transaction (the “Inducement Transaction”): (i) a 5-year, Series B-1 Common Stock Purchase Warrant to purchase 735,296 shares of our common stock at an exercise price of $5.05 per share, and (ii) an 18-month, Series B-2 common stock purchase warrant to purchase 735,296 shares of our common stock at an exercise price of $5.05 per share (collectively, the “Inducement Warrants” and such aggregate 1,470,592 shares of Common Stock underlying the Inducement Warrants, the “Inducement Warrant Shares”).
Added
The Inducement Warrants are identical to each other, other than their dates of expiration, and are substantially identical to the Series B Warrant.
Added
We intend to retain all available funds and any future earnings to fund the development and expansion of our business.
Added
Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

122 edited+96 added−19 removed42 unchanged
Biggest changeWe identified a material weakness related to the operating effectiveness of our review controls in that we did not put the appropriate resources in place to be able to identify technical accounting issues and perform review functions appropriately for the revenue recognition issue described above and for those items which we had previously identified in Part II, Item 9A of our Form 10-K for the fiscal year ended December 31, 2021. -65- Results of Operations Comparison of Years ended December 31, 2022 and 2021 Our consolidated statements of operations for the years ended December 31, 2022 and 2021 are presented below (dollars in thousands): 2022 2021 Change Revenue Product revenue $ 8,381 $ 6,520 $ 1,861 Service revenue 7,643 10,365 (2,722 ) Total revenue 16,024 16,885 (861 ) Cost of sales (exclusive of depreciation and amortization shown separately below) 6,005 4,281 1,724 Gross profit 10,019 12,604 (2,585 ) Gross profit % 63 % 75 % Operating expenses General and administrative 29,041 25,791 3,250 Sales and marketing 5,340 5,551 (211 ) Impairment loss - 911 (911 ) Depreciation and amortization 669 733 (64 ) Operating loss (25,031 ) (20,382 ) (4,649 ) Non-operating income (expense) Interest expense - (14 ) 14 Other expense (190 ) (9 ) (181 ) PPP loan forgiveness 1,287 - 1,287 Other income 89 117 (28 ) Net loss $ (23,845 ) $ (20,288 ) $ (3,557 ) Revenue Revenue decreased approximately $0.8 million, or 5%, to approximately $16 million for the year ended December 31, 2022 compared to $16.9 million for year ended December 31, 2021.
Biggest changeResults of Operations Comparison of Years ended December 31, 2023 and 2022 Our consolidated statements of operations for the years ended December 31, 2023 and 2022 are presented below (dollars in thousands): 2023 2022 Change Revenue Product revenue $ 6,270 $ 8,381 $ (2,111 ) Service revenue 7,531 7,643 (112 ) Total revenue 13,801 16,024 (2,223 ) Cost of sales (exclusive of depreciation and amortization shown separately below) 5,530 6,005 (475 ) Gross profit 8,271 10,019 (1,748 ) Gross profit % 60 % 63 % Operating expenses General and administrative 22,479 29,041 (6,562 ) Sales and marketing 2,467 5,340 (2,873 ) Depreciation and amortization 621 669 (48 ) Operating loss (17,296 ) (25,031 ) 7,735 Non-operating income (expense) Other expense (212 ) (190 ) (22 ) PPP loan forgiveness - 1,287 (1,287 ) Excess warrant fair value (6,453 ) - (6,453 ) Change in fair value of warrant liability, net of issuance costs of $645 10,231 - 10,231 Other income 147 89 58 Net loss $ (13,583 ) $ (23,845 ) $ 10,262 Revenue Revenue decreased approximately $2.2 million, or 14%, to approximately $13.8 million for the year ended December 31, 2023 compared to $16 million for the year ended December 31, 2022.
After analyzing our contracts using the five-step process in ASC 606, we have determined that for VIP enrollment contracts, it is necessary for us to separately identify the performance obligations and recognize the revenue as the performance obligations are satisfied or over the customer life as applicable.
After analyzing our contracts using the five-step process in ASC 606, we have determined that for VIP enrollment contracts, it is necessary for us to separately identify the performance obligations and recognize the revenue as the performance obligations are satisfied over the customer life as applicable.
Since the beginning of the VIP program, just under one-third of new VIP members fall into this category, and the revenue allocated to the right to sell for those VIPs is accelerated at the time in which it becomes remote that a VIP will continue in the program.
Since the beginning of the Premier VIP program, just under one-third of new VIP members fall into this category, and the revenue allocated to the right to sell for those VIPs is accelerated at the time in which it becomes remote that a VIP will continue in the program.
The identifiable intangible assets acquired from First Vivos and Lyon Dental for customer contracts are amortized using the straight-line method over the estimated life of the assets, which approximates 5 years (See Note 6).
The identifiable intangible assets acquired from First Vivos and Lyon Dental for customer contracts are amortized using the straight-line method over the estimated life of the assets, which approximates 5 years (See Note 5).
Enrolling denta1 practices as VIPs is the first step in our ability to generate new revenue. As part of the VIP enrollment fee, we enter into a service contract with VIPs under which they receive training on the use of the Vivos treatment modalities. VIPs have the ability to start generating revenue for us and themselves after this training.
Enrolling dental practices as VIPs is the first step in our ability to generate new revenue. As part of the VIP enrollment fee, we enter into a service contract with VIPs under which they receive training on the use of the Vivos treatment modalities. VIPs have the ability to start generating revenue for us and themselves after this training.
We believe our technologies and conventions represent a significant improvement in the treatment of mild to moderate OSA versus other treatments such as continuous positive airway pressure (“CPAP”) or palliative oral appliance therapies. Our alternative treatments are part of The Vivos Method .
We believe our technologies and conventions represent a significant improvement in the treatment of mild to severe OSA versus other treatments such as continuous positive airway pressure (“CPAP”) or palliative oral appliance therapies. Our alternative treatments are part of The Vivos Method .
Accordingly, the contract liability for unearned revenue is a significant liability for the Company. Provisions for discounts are provided in the same period that the related revenue from the products and/or services is recorded. -69- The Company enters into programs that may provide for multiple performance obligations.
Accordingly, the contract liability for unearned revenue is a significant liability for the Company. Provisions for discounts are provided in the same period that the related revenue from the products and/or services is recorded. -72- The Company enters into programs that may provide for multiple performance obligations.
“Item 1A. Risk Factors’’ and elsewhere in this Annual Report on Form 10-K. Overview We are a revenue stage medical technology company focused on the development and commercialization of innovative treatment alternatives for patients with cranial and/or dentofacial abnormalities and/or patients diagnosed with mild to moderate obstructive sleep apnea (“OSA”) and snoring in adults.
“Item 1A. Risk Factors’’ and elsewhere in this Annual Report on Form 10-K. Overview We are a revenue stage medical technology company focused on the development and commercialization of innovative treatment alternatives for patients with dentofacial abnormalities and/or patients diagnosed with mild to severe obstructive sleep apnea (“OSA”) and snoring in adults.
This program is designed to attract the vast majority of the estimated 200,000 U.S. and Canadian dentists who are being strongly encouraged by the American Dental Association to screen their patients for sleep apnea. The AAP gives these dentists the simple yet profitable way to screen their patients for mild to moderate OSA using the SleepImage ® home sleep test.
This program is designed to attract the vast majority of the estimated 200,000 U.S. and Canadian dentists who are being strongly encouraged by the American Dental Association to screen their patients for sleep apnea. The AAP gives these dentists a simple yet profitable way to screen their patients for OSA using the SleepImage ® home sleep test.
As such, the observable prices of other performance obligations under a VIP contract will be deducted from the contract price, with the residual being allocated to the right to sell performance obligation. Our management uses significant judgements in revenue recognition including an estimation of customer life over which it recognizes the right to sell.
As such, the observable prices of other performance obligations under a VIP contract will be deducted from the contract price, with the residual being allocated to the right to sell performance obligation. The Company uses significant judgements in revenue recognition including an estimation of customer life over which it recognizes the right to sell.
Revenue from the appliance sale is recognized when control of product is transferred to the VIP in an amount that reflects the consideration it expects to be entitled to in exchange for those products.
Revenue from appliance sales is recognized when control of product is transferred to the VIP in an amount that reflects the consideration it expects to be entitled to in exchange for those products.
Diluted net loss per common share is computed by giving effect to all potential shares of Common Stock, including stock options, convertible debt, preferred stock (if any), and warrants, to the extent dilutive.
Diluted net loss per common share is computed by giving effect to all potential shares of Common Stock, including stock options, convertible debt, Preferred Stock, and warrants, to the extent dilutive.
We believe the U.S. has entered a period of inflation which has increased (and may continue to increase) our and our suppliers’ costs as well as the end cost of our products to consumers. To date, we have been able to manage inflation risk without a material adverse impact on our business or results of operations.
The U.S has been experiencing a period of inflation which has increased (and may continue to increase) our and our suppliers’ costs as well as the end cost of our products to consumers. To date, we have been able to manage inflation risk without a material adverse impact on our business or results of operations.
Commencing in 2018, the Company began enrolling medical and dental professionals in a one-year program (later known as the VIP Program) which includes training in a highly personalized, deep immersion workshop format which provides the VIP dentist access to a team who is dedicated to creating a successful integrated practice.
Commencing in 2018, the Company began enrolling medical and dental professionals in a one-year program (now known as the Premier VIP Program) which includes training in a highly personalized, deep immersion workshop format which provides the Premier VIP dentist access to a team who is dedicated to creating a successful integrated practice.
Those VIPs who complete training typically remain active for a much longer period, and revenue from the right to sell for those VIPs is recognized over the estimated period of which those VIPs will remain active. Because of various factors occurring year to year, our management has estimated customer life for each year a contract is initiated.
Those VIPs who complete training typically remain active for a much longer period, and revenue from the right to sell for those VIPs is recognized over the estimated period of which those VIPs will remain active. Because of various factors occurring year to year, the Company has estimated customer life for each year a contract is initiated.
For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
The Company currently expects to retain its status as an emerging growth company until the year ending December 31, 2026, but this status could end sooner under certain circumstances. Revenue Recognition The Company generates revenue from the sale of products and services.
The Company currently expects to retain its status as an EGC until the year ending December 31, 2026, but this status could end sooner under certain circumstances. Revenue Recognition The Company generates revenue from the sale of products and services.
Our management bases its estimates and assumptions on existing facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources.
The Company bases its estimates and assumptions on existing facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources.
Research and Development Costs related to research and development are expensed as incurred and include costs associated with research and development of new products and enhancements to existing products. Research and development costs incurred were approximately $0.2 million and less than $0.1 million for the years ended December 31, 2022 and 2021, respectively.
Research and Development Costs related to research and development are expensed as incurred and include costs associated with research and development of new products and enhancements to existing products. Research and development costs incurred were less than $0.1 million and less than $0.2 million for the years ended December 31, 2023 and 2022, respectively.
Because the right to sell is never sold outside of VIP contracts, and VIP contracts are sold for varying prices, we believes it is appropriate to estimate the standalone selling price of this performance obligation using the residual method.
Because the right to sell is never sold outside of VIP contracts, and VIP contracts are sold for varying prices, the Company believes that it is appropriate to estimate the standalone selling price of this performance obligation using the residual method.
Industry peers consist of several public companies in the bio-tech industry similar to us in size, stage of life cycle and financial leverage.
Industry peers consist of several public companies in the bio-tech industry similar to the Company in size, stage of life cycle and financial leverage.
An estimated loss contingency is accrued when it is probable that an asset has been impaired, or a liability has been incurred, and the amount of loss can be reasonably estimated. If some amount within a range of loss appears to be a better estimate than any other amount within the range, we accrue that amount.
An estimated loss contingency is accrued when it is probable that an asset has been impaired, or a liability has been incurred, and the amount of loss can be reasonably estimated. If some amount within a range of loss appears to be a better estimate than any other amount within the range, the Company accrues that amount.
Revenue is recognized in accordance with each individual performance obligation unless it becomes remote the VIP would continue, at which time the remainder of review is accelerated and recognized in the following month.
Revenue is recognized in accordance with each individual performance obligation unless it becomes remote the VIP will continue, at which time the remainder of revenue is accelerated and recognized in the following month.
As a result, nearly all of these Orders have been relaxed or lifted, but there is considerable uncertainty about whether the Orders will be reinstated should a new COVID-19 variant or entirely new virus emerge. -62- Our business was materially impacted by COVID-19 in 2020 and to some extent in 2021due to the actions of governmental bodies that mandated quarantines and lockdowns that resulted in many of our VIPs and potential VIPs having to close their offices.
As a result, nearly all of these Orders have been relaxed or lifted, but there is considerable uncertainty about whether the Orders will be reinstated should a new COVID-19 variant or entirely new virus emerge. -62- Our business was materially impacted by COVID-19 in 2020 and to some extent thereafter through the early part of 2023 due to the actions of governmental bodies that mandated quarantines and lockdowns that resulted in many of our VIPs and potential VIPs having to close their offices.
Revenue is recognized when control of the products or services is transferred to customers (i.e., VIP dentists ordering such products or services for their patients) in a way that reflects the consideration the Company expects to be entitled to in exchange for those products and services.
For each VIP program, revenue is recognized when control of the products or services is transferred to customers (i.e., VIP dentists ordering such products or services for their patients) in a manner that reflects the consideration the Company expects to be entitled to in exchange for those products and services.
The impact of COVID-19 on our business diminished somewhat as 2022 progressed. However, it appears that the latest COVID-19 subvariants evoke generally milder symptoms and do not pose the same health or economic threat as previous strains.
The impact of COVID-19 on our business diminished somewhat as 2023 has progressed. It appears that the latest COVID-19 subvariants evoke generally milder symptoms and do not pose the same health or economic threat as previous strains.
Revenue for MyoCorrect services is recognized over the 12-month performance period as therapy sessions occur. Allocation of Revenue to Performance Obligations We identify all goods and services that are delivered separately under a sales arrangement and allocates revenue to each performance obligation based on relative fair values.
Revenue for MyoCorrect services is recognized over the 12-month performance period as therapy sessions occur. -73- Allocation of Revenue to Performance Obligations The Company identifies all goods and services that are delivered separately under a sales arrangement and allocates revenue to each performance obligation based on relative fair values.
If we cannot estimate the range of loss, we will disclose the reason why we cannot estimate the range of loss. Our management regularly evaluates current information available to it to determine whether an accrual is required, an accrual should be adjusted and if a range of possible loss should be disclosed.
If the Company cannot estimate the range of loss, it will disclose the reason why it cannot estimate the range of loss. The Company regularly evaluates current information available to it to determine whether an accrual is required, an accrual should be adjusted and if a range of possible loss should be disclosed.
Prior to the sale, the customer and we agree upon the amount of consideration that the customer will pay in exchange for the services we provide. The net consideration that the customer has agreed to pay is the expected value that is recognized as revenue over the service period.
Prior to the sale, the customer and the Company agree upon the amount of consideration that the customer will pay in exchange for the services the Company provides. The net consideration that the customer has agreed to pay is the expected value that is recognized as revenue over the service period.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-EGC but any such election to opt out is irrevocable.
We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.
The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.
We recognize revenue on VIP enrollments once the contract is executed, payment is received, and as the Company’s performance obligations are satisfied in accordance with ASC 606. New VIP Case Starts (Product Revenue).
We recognize revenue on VIP enrollments once the contract is executed, payment is received, and as the Company’s performance obligations are satisfied in accordance with ASC 606. Product Sales Revenue.
Our management has determined that VIPs who do not complete sessions 1 and 2 of training rarely complete training at all and fail to participate in the VIP program long term.
The Company has determined that Premier VIPs who do not complete sessions 1 and 2 of training rarely complete training at all and fail to participate in the Premier VIP program long term.
Share-Based Compensation We measure the cost of employee and director services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. We compute the fair value of stock options using the Black-Scholes-Merton (“BSM”) option pricing model.
Share-Based Compensation The Company measures the cost of employee and director services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. The Company computes the fair value of stock options using the Black-Scholes-Merton (“BSM”) option pricing model.
Our significant accounting estimates include, but are not necessarily limited to, assessing collectability on accounts receivable, the determination of customer life and breakage related to recognizing revenue for VIP contracts, notes receivable, impairment of goodwill and long-lived assets; valuation assumptions for assets acquired in business combinations; valuation assumptions for stock options, warrants and equity instruments issued for goods or services; deferred income taxes and the related valuation allowances; and the evaluation and measurement of contingencies.
The Company’s significant accounting estimates include, but are not necessarily limited to, assessing collectability on accounts receivable, the determination of customer life and breakage related to recognizing revenue for VIP contracts, impairment of goodwill and long-lived assets; valuation assumptions for assets acquired in asset acquisitions; valuation assumptions for stock options, warrants, warrant liabilities and equity instruments issued for goods or services; deferred income taxes and the related valuation allowances; and the evaluation and measurement of contingencies.
The manufacturer designated by us produces the appliance in strict adherence to our patents, design files, protocols, processes and procedures and under the direction and specific instruction of the Company, ships the appliance to the VIP who ordered the appliance from us.
The manufacturer designated by the Company produces the appliance in strict adherence to the Company’s patents, design files, treatments, processes and procedures and under the direction and specific instruction of the Company, ships the appliance to the VIP who ordered the appliance from the Company.
We recognize the impact of forfeitures and cancellations in the period that the forfeiture or cancellations occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based compensation.
The Company recognizes the impact of forfeitures and cancellations in the period that the forfeiture or cancellation occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based compensation.
In general, revenues are separated between durable medical equipment (product revenue) and education and training services (service revenue). Treatment of Discounts and Promotions From time to time, we offer various discounts to its customers.
In general, revenues are separated between durable medical equipment (product revenue) and education and training services (service revenue). Treatment of Discounts and Promotions From time to time, the Company offers various discounts to its customers.
Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies.
Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies.
Additionally, the full impact of COVID-19 and its variants is unknown and cannot be reasonably estimated. However, we have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are material differences between our estimates and the actual results, our future consolidated results of operations will be affected.
Additionally, the full impact of COVID-19 is unknown and cannot be reasonably estimated. However, the Company has made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future consolidated results of operations will be affected.
At the end of each reporting period, we update the transaction price to represent the circumstances present at the end of the reporting period and any changes in circumstances during the reporting period.
At the end of each reporting period, the Company updates the transaction price to represent the circumstances present at the end of the reporting period and any changes in circumstances during the reporting period.
We contract with VIPs for the sale of the appliance and is not involved in the sale of the products and services from the VIP to the VIP’s patient. The appliance is similar to a retainer that is worn after braces are removed. Each appliance is unique and is fitted to the patient.
The Company contracts with VIPs for the sale of the appliance and is not involved in the sale of the products and services from the VIP to the VIP’s patient. The Company’s appliances are similar to a retainer that is worn in the mouth after braces are removed. Each appliance is unique and is fitted to the patient.
As of the end of 2022, we believe we have made important progress in penetrating this market, but as we cautioned previously, DSOs tend to move slowly when adopting new technologies or programs.
As of December 31, 2023, we believe we have made important progress in penetrating this market, but as we cautioned previously, DSOs tend to move slowly when adopting new technologies or programs.
This is done to help encourage Clinical Advisors, who help the VIPs with technical aspects of our products and to purchase our products for their own practices. In addition, from time to time, we offer credits to incentivize VIPs to adopt our products and increase Vivos Method case volume within their practices.
This is done to help encourage Clinical Advisors, who help the VIPs with technical aspects of the Company’s products, to purchase Company products for their own practices. In addition, from time to time, the Company offers credits to incentivize VIPs to adopt the Company’s products and increase case volume within their practices.
We utilize our network of certified VIPs throughout the United States and in some non-U.S. jurisdictions to sell the appliances to their customers as well as in two dental centers that we operate. We utilize third party contract manufacturers or labs to produce its customized, patented appliances and preformed guides.
The Company utilizes its network of certified VIPs throughout the United States and in some non-U.S. jurisdictions to sell the appliances to their customers as well as in two dental centers that the Company operates. The Company utilizes third party contract manufacturers or labs to produce its unique, patented appliances and preformed guides.
All of our contract manufacturers are required to follow our master design files in production of appliances or the lab will be in violation of the FDA’s rules and regulations. We performed an analysis under ASC 606-10-55-36 through 55-40 and concluded that we are the principal in the transaction and are reporting revenue on a gross basis.
All of the Company’s contract manufacturers are required to follow the Company’s master design files in production of appliances or the lab will be in violation of the FDA’s rules and regulations. The Company performed an analysis under ASC 606-10-55-36 through 55-40 and concluded it is the principal in the transaction and is reporting revenue gross.
AIS is provided as part of the price of each appliance and is not a separate revenue stream. Following the year of training and support, a VIP may pay for seminars and training courses that meet the Provider’s needs on a subscription or a course-by-course basis.
AIS is provided as part of the price of each appliance and is not a separate revenue stream. Following the year of training and support, a VIP may pay for seminars and training courses that meet the Provider’s needs on a subscription or a course-by-course basis. VIP enrollment fees include multiple performance obligations which vary on a contract-by-contract basis.
We recognize the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period.
The Company recognizes the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period.
Upon scheduling the patient (which is our customer in this case), the center takes a deposit and reviews the patient’s insurance coverage. Revenue is recognized differently for our owned centers than for revenue we recognize form VIPs.
Upon scheduling the patient (which is the Company’s customer in this case), the center takes a deposit and reviews the patient’s insurance coverage. Revenue is recognized differently for Company owned centers than for revenue from VIPs.
Goodwill is not amortized but tested for impairment annually or whenever indicators of impairment exist. These indicators may include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. We test for impairment annually as of December 31.
These indicators may include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. We test for impairment annually as of December 31.
Depreciation and amortization expense is comprised of depreciation expense related to property and equipment, amortization expense related to leasehold improvements, and amortization expense related to identifiable intangible assets. Other income. Other income relates to the PPP loan forgiven in January 2022 by the SBA.
Depreciation and amortization expense is comprised of depreciation expense related to property and equipment, amortization expense related to leasehold improvements, and amortization expense related to identifiable intangible assets. Other income. Other income relates to the PPP loan forgiven in January 2022 by the SBA, as well as excess warrant fair value and change in fair value of warrant liability.
Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, we accrue the lowest amount in the range. If we determine that a loss is reasonably possible and the range of the loss is estimable, then we disclose the range of the possible loss.
Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, the Company accrues the lowest amount in the range. If the Company determines that a loss is reasonably possible and the range of the loss is estimable, then the Company discloses the range of the possible loss.
We recognize revenue from our centers after the appliance is received from the manufacturer and once the appliance is fitted and provided to the patient. We offer certain dentists (known as Clinical Advisors) discounts from standard VIP pricing.
The Company recognizes revenue in the centers after the appliance is received from the manufacturer and once the appliance is fitted and provided to the patient. The Company offers certain dentists (known as Clinical Advisors) discounts from standard VIP pricing.
We estimate the expected term using the simplified method which is the average of the vesting term and the contractual term of the respective options. We determine the expected price volatility based on the historical volatilities of shares of our peer group as we do not have a sufficient trading history for our Common Stock.
The Company estimates the expected term using the simplified method which is the average of the vesting term and the contractual term of the respective options. The Company determines the expected price volatility based on the historical volatilities of shares of the Company’s peer group as the Company does not have a sufficient trading history for its Common Stock.
Patients with mild to moderate OSA can be referred to a fully trained local VIP dentist for treatment. The AAP program did not contribute meaningfully to revenue during 2022. Inflation .
Patients with OSA can be referred to a fully trained local VIP dentist for treatment. The AAP program did not contribute meaningfully to revenue during 2023. Clinical Trial Work .
There was no impairment of goodwill recognized at December 31, 2021. There were no quantitative or qualitative indicators of impairment that occurred for the year ended December 31, 2022 and accordingly, no impairment was required.
There were no quantitative or qualitative indicators of impairment that occurred for the year ended December 31, 2023, and no impairment was required.
For the year ended December 31, 2022, net cash used in investing activities consisted of capital expenditures for software of $0.9 million related to the development of software for internal use, which is expected to be placed in service in mid-2023.
For the year ended December 31, 2023, net cash used in investing activities consisted of capital expenditures for software of $0.9 million related to the development of software for internal use, expected to be placed in service in 2024, as well as a purchase of a patent portfolio in February 2023.
Cash Flows The following table presents a summary of our cash flow for the years ended December 31, 2022 and 2021 (in thousands): 2022 2021 Net cash provided by (used in): Operating activities $ (19,587 ) $ (15,735 ) Investing activities (924 ) (2,608 ) Financing activities - 24,167 Net cash used in operating activities of approximately 19.6 million for the year ended December 31, 2022 is an increase of approximately $3.9 million compared to net cash used in operating activities of approximately $15.7 million for the year ended December 31, 2021.
Cash Flows The following table presents a summary of our cash flow for the years ended December 31, 2023 and 2022 (in thousands): 2023 2022 Net cash provided by (used in): Operating activities $ (11,946 ) $ (19,587 ) Investing activities (853 ) (924 ) Financing activities 10,923 - Net cash used in operating activities of approximately $11.9 million for the year ended December 31, 2023 is a decrease of approximately $7.6 million compared to net cash used in operating activities of approximately $19.6 million for the year ended December 31, 2022.
Restatement of March 30, 2022 Financial Statements As described in the Explanatory Note and Note 2, “Restatement of Consolidated Financial Statement,” in Item 1 of Part 1 of Amendment No. 1 to our Quarterly Report on Form 10-Q for the three months ended March 31, 2022, originally filed with the SEC on May 16, 2022 and such Amendment No. 1 being filed on November 25, 2022 (the “10-Q/A”), we determined it was necessary to restate our financial statements for the three months ended March 31, 2022.
Restatement of March 31, 2022 Financial Statements As described in Note 2, “Restatement of Consolidated Financial Statement,” in Item 1 of Part 1 of Amendment No. 1 to our Quarterly Report on Form 10-Q for the three months ended March 31, 2022, originally filed with the SEC on May 16, 2022 and such Amendment No. 1 filed on November 25, 2022 (the “10-Q/A”), we determined it was necessary to restate our financial statements for the three months ended March 31, 2022. -67- The restatement of the previously filed financial statements was due to our management (with the concurrence of the Audit Committee of our Board of Directors) determining that our existing revenue recognition policy was not consistent with the guidance in ASC 606.
As of December 31, 2022, we had an accumulated deficit of $79.5 million, and approximately $3.5 million in cash, which will not be sufficient to fund our operations and strategic objectives over the next twelve months from the date of issuance of these financial statements.
As of December 31, 2023, the Company had total liabilities of approximately $10.3 million. As of December 31, 2023, we had approximately $1.6 million in cash and cash equivalents, which will not be sufficient to fund operations and strategic objectives over the next twelve months from the date of issuance of these financial statements.
Cash and Cash Equivalents All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s immediate and general business use are classified as cash and cash equivalents. Accounts Receivable, Net The accounts receivable in the accompanying financial statements are stated at the amounts management expects to collect.
Cash and Cash Equivalents All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s immediate and general business use are classified as cash and cash equivalents.
Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable.
In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement.
We presently have a concentration of active VIPs who regularly start new Vivos Method treatment cases, with approximately forty-eight percent (48%) of VIPs accounting for all new case starts during the year ended December 31, 2022. We are working not only to increase the number of VIPs overall, but the number of active VIPs in terms of case starts.
We presently have a concentration of active VIPs who regularly start new Vivos Method treatment cases. Approximately 38% of our VIPs initiated a new case as of December 31, 2023. We are working not only to increase the number of VIPs overall, but the number of active VIPs in terms of case starts.
Typically, the fourth quarter tends to be one where we see higher enrollment levels for new VIP dentists, however, as previously mentioned, in Q4 of 2022 we did not see that same pattern emerge.
We believe that the patient volumes of our VIPs will be sensitive to seasonal fluctuations in urgent care and primary care activity. Typically, the fourth quarter tends to be one where we see higher enrollment levels for new VIP dentists, however, as previously mentioned reported, in the fourth quarter of 2022 we did not see that same pattern emerge.
Other Service Revenue In addition to VIP enrollment service revenue, in 2020 we launched BIS, an additional service on a monthly subscription basis, which includes our AireO2 medical billing and practice management software.
Other Service Revenue In addition to VIP enrollment service revenue, in 2020 the Company launched BIS, an additional service on a monthly subscription basis, which includes the Company’s AireO2 medical billing and practice management software. Revenue for these services is recognized monthly during the month the services are rendered.
Lease agreements with a noncancelable term of less than 12 months are not recorded on our balance sheets. -74- Income Taxes We account for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes, under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws.
Income Taxes The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes, under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws.
However, the residual effects of the pandemic on dental workforce availability as well as patient precautionary measures continued to negatively impact our VIP dental practices and our revenue across the U.S. and Canada during 2022. We believe new enrollments during the fourth quarter of 2022 were negatively impacted by the ongoing overall workforce uncertainties in the dental market.
However, the residual effects of the pandemic on dental workforce availability as well as patient precautionary measures continued to negatively impact our VIP dental practices and our revenue across the U.S. and Canada during 2022 and into 2023.
Marketing to DSOs creates an opportunity to enroll and onboard multiple dental practices as VIPs under one common ownership structure. This would allow us to leverage training and support across multiple VIP practices and gain economies of scale with the goal of faster growth, both in VIP enrollments and in Vivos case starts.
This would allow us to leverage training and support across multiple VIP practices and gain economies of scale with the goal of faster growth, both in VIP enrollments and in Vivos case starts.
For the year ended December 31, 2022, we sold 12,281 oral appliance arches for a total of approximately $7.8 million, a 29% increase from the year ended December 31, 2021 when we sold 11,355 oral appliance arches for a total of approximately $6.0 million.
For the year ended December 31, 2023, we sold 8,240 oral appliance arches for a total of approximately $6.1 million, a 22% decrease in revenue from the year ended December 31, 2022 when we sold 12,281 oral appliance arches for a total of approximately $7.8 million.
Service Revenue VIP Enrollment Revenue The Company reviews its VIP enrollment contracts from a revenue recognition perspective using the 5-step method outlined above. Once it is determined that a contract exists (a VIP enrollment agreement is executed and payment is received), service revenue related to VIP enrollments is recognized when the underlying services are performed.
Once it is determined that a contract exists (i.e., a VIP enrollment agreement is executed and payment is received), service revenue related to VIP enrollments is recognized when the underlying services are performed.
We do not begin depreciating assets until they are placed in service. -72- Intangible Assets, Net Intangible assets consist of assets acquired from First Vivos and costs paid to (i) MyoCorrect, LLC (“MyoCorrect LLC”), from whom we acquired certain assets related to our OMT service in March 2021 and (ii) Lyon Management and Consulting, LLC and its affiliates (“Lyon Dental”), from whom we acquired certain medical billing and practice management software, licenses and contracts in April 2021 (including the software underlying AireO2) for work related to our acquired patents, intellectual property and customer contracts.
Intangible assets consist of assets acquired from First Vivos and costs paid to (i) MyoCorrect, from whom the Company acquired certain assets related to its OMT service in March 2021, (ii) Lyon Management and Consulting, LLC and its affiliates (“Lyon Dental”), from whom the Company acquired certain medical billing and practice management software, licenses and contracts in April 2021 (including the software underlying AireO2) for work related to the Company’s acquired patents, intellectual property and customer contracts and (iii) AFD, from whom the Company acquired certain U.S. and international patents, trademarks, product rights, and other miscellaneous intellectual property in March 2023.
Other drivers of the increase in general and administrative expenses included an increase of approximately $1.4 million to general corporate costs such as consulting and professional fees, an increase of approximately $1.0 million related to travel expenses, and an increase of approximately $0.6 million for information and technology supplies, equipment, rent, research as well as corporate expenses such as filing fees, subscriptions, and office expenses, offset by a decrease of approximately $0.9 million in bad debt expense and approximately $0.3 million in bank and merchant fees.
Other drivers of the decrease in general and administrative expenses included a decrease of approximately $0.9 million related to travel expenses, a decrease of approximately $0.7 million on bad debt expense, a decrease of approximately $0.5 million related to insurance, a decrease of approximately $0.4 million in professional fees, and a decrease of approximately $0.4 million related to research and development, office supplies, bank charges and merchant fees as well as equipment repairs and maintenance, offset by an increase of $0.1 million for annual meeting and proxy related fees.
Impact of COVID-19 In December 2019, a novel strain of coronavirus known as COVID-19 was reported to have surfaced in China, and by March 2020 the spread of the virus resulted in a world-wide pandemic.
See Note 1 to the accompanying financial statements for additional background information on our Company and current product and service offerings. Impact of COVID-19 In December 2019, a novel strain of coronavirus known as COVID-19 was reported to have surfaced in China, and by March 2020 the spread of the virus resulted in a world-wide pandemic.
The estimated customer lives are calculated separately for each year and have been estimated at 15 months for 2020, 14 months for 2021 and 18 months for 2022.
The estimated customer lives are calculated separately for each year and have been estimated at 15 months for 2020, 14 months for 2021, 18 months for 2022, and 23 months for 2023, as a result of customers staying active for longer periods of time.
The increase is due to the PPP loan forgiven by the SBA in its entirety. -67- Liquidity and Capital Resources The financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation of our company as a going concern.
Liquidity and Capital Resources The financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern.
We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
If such funds are not available in the future, we may be required to delay, significantly modify or terminate some or all of its operations, all of which could have a material adverse effect on us and our stockholders. -70- We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources.
During the year ended December 31, 2022, we enrolled 196 VIPs and recognized VIP revenue of approximately $4.8 million, a decrease of 43% in enrollment revenue, compared to the year ended December 31, 2021, when we enrolled 197 VIPs for a total of approximately $8.5 million.
Myofunctional therapy remained relatively unchanged at $0.9 million for the year ended December 31, 2023 and 2022. -68- During the year ended December 31, 2023, we enrolled 150 VIPs and recognized VIP revenue of approximately $3.9 million, a decrease of 19% in enrollment revenue, compared to the year ended December 31, 2022, when we enrolled 196 VIPs for a total of approximately $4.8 million.
The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. Our evaluation of long-lived assets completed for the years ended December 31, 2021 resulted in no impairment loss.
The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. There were no quantitative or qualitative indicators of impairment that occurred for the year ended December 31, 2023, and no impairment was required.
Product Revenue In addition to revenue from services, we also generate revenue from the sale of its patented oral devices and preformed guides (known as appliances or systems) to its customers, the VIP dentists.
Product Revenue In addition to revenue from services, the Company also generates revenue from the sale of its line of oral devices and preformed guides (known as appliances or systems) to its customers, the VIP dentists. These include the DNA appliance ® , mRNA appliance ® , the mmRNA appliance, the Versa, the Vida, the Vida Sleep, and others.
The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.
The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe balances in these accounts exceed the amounts insured by the Federal Deposit Insurance Corporation. -75-
Biggest changeThe balances in these accounts exceed the amounts insured by the Federal Deposit Insurance Corporation. -80-

Other VVOS 10-K year-over-year comparisons