UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C 20549


FORM 10-Q


(Mark One)


[X]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 201531, 2014rch 31, 2014


[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____ to ____


Commission File No. 333-144226


ARTVENTIVE MEDICAL GROUP, INC.

(Exact name of registrant as specified in its charter)

                 Nevada

                                      26-0148468

               (State or other jurisdiction

                         (IRS Employer

                          of incorporation or organization)

               Identification No.)


2766 Gateway Road, Carlsbad, California, 92009

(Address of principal executive offices)

(760) 471-7700

(Registrant’s telephone number)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

[x]

No  [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  

Yes

[X]

No

[  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer, “accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[  ]

Smaller reporting company

[ X ]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ]  No [x]


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:


As of May 12, 2015 there were 60,406,286 shares of the Company’s common stock issued and outstanding.




PART I – FINANCIAL INFORMATION


Item 1.  Financial Statements.



ArtVentive Medical Group, Inc.

Consolidated Financial Statements (Unaudited)

For the Three Month Periods ended March 31, 2015 and March 31, 2014



Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014

Statement 1


Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three month periods ended March 31, 2015 and March 31, 2014  Statement 2


Consolidated Statements of Cash Flows (unaudited) for the three month periods ended March 31, 2015

and March 31, 2014

Statement 3



Notes to Consolidated Financial Statements (unaudited)





Statement 1

ArtVentive Medical Group, Inc.

Consolidated Balance Sheets

March 31, 2015 and December 31, 2014


ASSETS

March 31,

 

 

2015

(unaudited)

December 31,

2014

CURRENT



Cash and cash equivalents

$

80,480

$ 104,030

      Accounts receivable

             22,610

22,662

      Prepaid expenses

               1,048

1,048

      Inventory

             61,687

23,738

TOTAL CURRENT ASSETS

 165,825

         151,478

PROPERTY, PLANT AND EQUIPMENT


 

Office equipment

20,893

 17,953

       Accumulated depreciation

(6,397)

 (5,467)

NET PROPERTY, PLANT AND EQUIPMENT

14,496

 12,486

OTHER ASSETS

 

 

        Deposits

              28,869

25,007

TOTAL OTHER ASSETS

              28,869

25,007

 

 

 

TOTAL ASSETS

$

209,190

$ 188,971

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

CURRENT LIABILITES



Accounts payable

$

483,522

$ 221,397

 Accrued expenses

1,070,800

 1,043,300

 Payroll taxes payable

61

 -

TOTAL CURRENT LIABILITIES

1,554,383

 1,264,697

 



LONG-TERM LIABILITES



Notes payable

$

500,000

$ 500,000

TOTAL LONG-TERM LIABILITIES

500,000

 500,000

 

 

 

TOTAL LIABILITIES

$

2,054,383

$ 1,764,697

 



 





(See accompanying notes)





ArtVentive Medical Group, Inc.

Consolidated Balance Sheets

March 31, 2015 and December 31, 2014


STOCKHOLDERS’ EQUITY (DEFICIT)



Common stock, par value $.001, 100,000,000 shares



authorized, 60,156,286 and 59,506,286 shares issued and   outstanding at March 31, 2015 and December 31, 2014, respectively

$

60,156

$ 59,506

Additional paid in capital

13,498,047

 12,879,982

Retained deficit

(15,403,396)

  (14,515,214)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

(1,845,193)

 (1,575,726)

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

$

209,190

$ 188,971



(See accompanying notes)



Statement 2

ArtVentive Medical Group, Inc.

Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

For the Three Months Ended March 31, 2015 and March 31, 2015



 




For the three months ended March 31,

2015




For the three months ended

March 31, 2014

REVENUES

$

64,187

$

10,165

COST OF GOODS SOLD

64,187

10,165

GROSS PROFIT

-

-

 



OPERATING EXPENSES



Exploration costs

-

-

Research and development

301,926

289,522

Selling, general and administrative

585,327

1,466,676

Depreciation expense

930

771

TOTAL OPERATING EXPENSES

(888,183)

(1,756,969)

OPERATING LOSS BEFORE OTHER ITEMS AND INCOME TAX


(888,183)


(1,756,969)

OTHER INCOME/(EXPENSE)



      Interest income

1

477

Income taxes

-

-

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS

 (888,182)

(1,756,492)

COMPREHENSIVE LOSS FOR THE PERIOD

$     (888,182)

$

(1,756,492)

BASIC AND DILUTED LOSS PER COMMON SHARE

  $            (0.01)

 $          (0.03)

WEIGHTED AVERAGE SHARES OUTSTANDING

  59,765,175

 56,022,953



(See accompanying notes)



Statement 3

ArtVentive Medical Group, Inc.

Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2015 and March 31, 2014



 

For the three months ended March 31,

 2015

For the three months ended March 31,

 2014

CASH FLOW FROM OPERATING ACTIVITIES



Net loss

$ (888,182)

$ (1,756,492)

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY OPERATING ACTIVITIES

 

 

 

Non-cash expenses

 33,715

 -

Depreciation expense

 930

 771

 

 

 

CHANGES IN OPERATING ASSETS AND LIABILITIES

 

 

       Accounts receivable

 52

 (10,165)

       Prepaid expenses

 -

 8,050

       Inventory

 (37,949)

 (253,242)

       Deposits

 (3,862)

 -

Accounts payable

 262,125

 (127,825)

      Payroll taxes payable

 61

 -

Accrued expenses

 (37,500)

 -

NET CASH USED BY OPERATING ACTIVITIES

 (670,610)

 (2,138,903)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

Purchase of equipment

 (2,940)

 -

NET CASH USED BY INVESTING ACTIVITIES

 (2,940)

 -

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

Issuance of common stock for cash

 650,000

 1,100,000

Issuance of notes payable

 -

 500,000

Convertible note payable (see Note 4)

 -

 -

NET CASH PROVIDED BY FINANCING ACTIVITIES

 650,000

 1,600,000

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 (23,550)

 

 (538,903)

CASH, BEGINNING OF PERIOD

 104,030

 1,626,521

CASH, END OF PERIOD

$ 80,480

$       1,087,618

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

STOCK ISSUED UPON CONVERSION OF NOTE PAYABLE

$ -

$ -

FORGIVENESS OF RELATED PARTY NOTE; APPLIED TO PAID IN CAPITAL


$ -


$ -

ACCRUAL OF STOCK ISSUANCE COST

     $          65,000

$ 110,000




(See accompanying notes)



ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015


1.

BASIS OF FINANCIAL STATEMENT PRESENTATION


The accompanying unaudited condensed consolidated financial statements have been prepared by ArtVentive Medical Group, Inc. “the Company” pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim condensed financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company's audited financial statements and notes thereto included in its Form 10-K filed on March 31, 2015.  Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the fiscal year ended December 31, 2015.


2.

ORGANIZATION


ArtVentive Medical Group, Inc. (the “Company”), is a Nevada Corporation traded on the OTCQB (symbol AVTD).  On January 9, 2010, the Company completed the acquisition of all of the assets of ArtVentive Medical Inc., a California company.

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is December 31.


The Company is a medical device corporation, focused on developing, manufacturing and marketing a family of Endoluminal Occlusion Devices (EOS TM).  Through its innovative, proprietary technology the Company has developed unique minimally invasive occlusion devices and procedures, bringing the current interventional, image guided techniques to a new level of sophistication, potentially resolving significant and unaddressed health issues. The EOS device being developed by the Company targets a substantive market demand in several major clinical areas, including women's health, peripheral and neurological vascular disorders, and interventional cardiology procedures.


To date, the Company’s activities have been committed to the development of the EOSTM, intellectual property, animal studies, human studies, patent filings, manufacturing, sales, marketing and implementing its regulatory strategy for clinical indications pertinent to European and FDA







ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015


Submissions and approvals, corporate operations and the raising of equity capital.


The Company conducted the required human clinical studies during 2011 achieving 100% clinical and procedural success, validating the safety and efficiency of the ArtVentive EOSTM device.

 

On August 3, 2011, the Company incorporated ArtVentive Women’s Health Group, Inc., a wholly owned subsidiary of the Company.


The Company received its CE Mark certification for the ArtVentive EOS™ Peripheral device on May 30, 2013, and implemented the planned EOS™ peripheral device transfer from Research and Development to commercialization, marketing, and distribution throughout Europe, simultaneous to making its FDA application.   The Company received FDA approval for the ArtVentive EOS™ Peripheral device on December 3, 2014.

 

The Company filed additional patent applications expanding its patent reach of the ArtVentive EOS™ device to 24 patents or patent applications.




3.

SIGNIFICANT ACCOUNTING POLICIES


PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the transactions of the Company and its subsidiary.

All inter-company accounts and transactions have been eliminated in consolidation.



USE OF ESTIMATES

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.









ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015



COMMON STOCK ISSUED FOR OTHER THAN CASH

Services purchased and other transactions settled in the Company’s common stock and stock options are recorded at the estimated fair value of the stock issued and options granted if that value is more readily determinable than the fair value of the consideration received.


EARNINGS PER SHARE OF COMMON STOCK

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period.


Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.


The Company had the following potential common stock equivalents at March 31, 2015:


Common stock warrants                 

3,750,000

Common stock options

   365,000

Convertible notes payable

   515,835

Total common stock equivalents

4,630,835


Since the Company reflected a net loss as of March 31, 2015 and 2014, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive.  A separate computation of diluted earnings (loss) per share is not presented.


The following table sets forth the computation of earnings per share:


                                 

                  March 31, 2015              March 31, 2014


Net income (loss)                                                     $     (888,182)           $      (1,756,492)

  

Weighted average common shares outstanding          59,765,175                   56,022,953

 

Net (loss) per share                                                  $       (0.01)               $            (0.03)

                       








ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015




PROPERTY AND EQUIPMENT

The Company records property and equipment at cost and uses straight-line depreciation methods.


 

  Estimated Useful Lives

March 31, 2015

December 31, 2014

Computer equipment


Office furniture                           

5 years


7 years

$     16,147


         4,746                          

$    13,207


        4,746                          

 

 

 

 

Less accumulated depreciation

 

        (6,397)

        (5,467)

 

 

 

 

Net property and equipment

 

 $     14,496

 $     12,486



INVENTORY

The Company’s inventory is valued at the lower of cost or market using the first-in, first-out (FIFO) method.  As of March 31, 2015 and December 31, 2014, all inventory  consisted of finished goods.


As the Company begins its transition from the Research and Development phase to production, management has estimated the cost of units sold to be equal to the revenue generated on those units.  Other direct costs that may be associated with the production of these units has been reflected in Research and Development expenses.



FOREIGN CURRENCY TRANSLATIONS

The Company’s functional and reporting currency is the US dollar.  All transactions initiated in other currencies are translated into US dollars using the exchange rate prevailing on the date of transaction.  


Monetary assets and liabilities denominated in foreign currencies are translated into the US dollar at the rate of exchange in effect at the balance sheet date.  Unrealized exchange gains and losses arising from such transactions are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of other comprehensive income or loss. Upon realization, the amount deferred is recognized in income in the period when it is realized.

























ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015





CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist principally of funds on hand, deposit with banks and liquid investment funds having maturity of three months or less at the time of the purchase.  The Company has no cash equivalents.  The Company had funds on deposit of $80,480 at March 31, 2015.



REVENUE RECOGNITION

Revenue for the sale of goods in the course of the ordinary activities is measured at the fair value of the consideration received or receivable, net of returns.  Revenue for sale of goods is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of the goods can be estimated reliably, there is no continuing involvement with the goods, and the amount of the revenue can be measured reliably.




CONCENTRATION OF RISK

Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash.  The Company maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits of $250,000. As of March 31, 2015 and December 31, 2014, the Company had no deposits in excess of federally insured limits in its US bank.  The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash in bank accounts.





















ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015



4.

NOTE PAYABLE


On April 1, 2014, the Company borrowed $250,000 from an unrelated party and issued a note payable on or before December 31, 2014, with interest at 3% per annum.  On December 31, 2014, the Company and the lender executed an extension of the note, which is now due on or before December 31, 2017.  The interest remains at 3%.  The lender may convert all or part of the debt, including interest, into common stock of the Company at any time at the rate of $1 per share.


On April 1, 2014, the Company borrowed $250,000 from an unrelated party and issued a note payable on or before December 31, 2014, with interest at 3% per annum.  On December 31, 2014, the Company and the lender executed an extension of the note, which is now due on or before December 31, 2017.  The interest remains at 3%.  The lender may convert all or part of the debt, including interest, into common stock of the Company at any time at the rate of $1 per share.



 

March 31, 2015

December 31, 2014

Note payable to private party, with interest at 3.0%, with the balance, interest and principal, due December 31, 2017

$   250,000

$       250,000

Note payable to private party, with interest at 3.0%, with the balance, interest and principal, due December 31, 2017

   250,000

        250,000

Total

500,000

500,000

Less current maturities of long-term debt

-

-

Noncurrent maturities of long-term debt

$   500,000

$        500,000


Maturities on long-term debt are as follows:


2015

$              -

2016

-

2017

  $  500,000

 

  $  500,000













ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015


5.

SHARE CAPITAL


Effective January 7, 2014, 400,000 shares were issued in a private placement for the receipt of $400,000.

Effective February 11, 2014, 400,000 shares were issued in a private placement for the receipt of $400,000.

Effective March 6, 2014, 300,000 shares were issued in a private placement for the receipt of $300,000.

Effective May 23, 2014, 100,000 shares were issued in a private placement for the receipt of $100,000.

Effective June 24, 2014, 1,000,000 shares were issued in a private placement for the receipt of $1,000,000.

Effective July 23, 2014, 500,000 shares were issued in a private placement for the receipt of $500,000.

Effective August 29, 2014, 250,000 shares were issued in a private placement for the receipt of $250,000.

Effective September 29, 2014, 150,000 shares were issued in a private placement for the receipt of $150,000.

Effective September 30, 2014, 100,000 shares were issued in a private placement for the receipt of $100,000.

Effective October 15, 2014, 100,000 shares were issued in a private placement for the receipt of $100,000

Effective November 7, 2014, 80,000 shares were issued in a private placement for the receipt of $80,000.

Effective November 28, 2014, 70,000 shares were issued in a private placement for the receipt of $70,000.

Effective December 4, 2014, 250,000 shares were issued in a private placement for the receipt of $250,000.





Effective December 15, 2014, 250,000 shares were issued in a private placement for the receipt of $250,000






ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015



Effective December 29, 2014, 250,000 shares were issued in a private placement for the receipt of $250,000

Effective January 23, 2015, 250,000 shares were issued in a private placement for the receipt of $250,000.

Effective February 27, 2015, 150,000 shares were issued in a private placement for the receipt of $250,000

Effective March 15, 2015, 100,000 shares were issued in a private placement for the receipt of $100,000

Effective March 31, 2015, 150,000 shares were issued in a private placement for the receipt of $150,000




6.

GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.  As of March 31, 2015, the Company has a negative working capital balance of $1,388,558 and an accumulated deficit of $15,403,396.  The Company intends to fund operations through equity financing arrangements, which should be sufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months.


The ability of the Company to implement its business plan is dependent upon, among other things, obtaining additional financing to continue operations, research and development and production of its product.


The Company has a present offering to a shareholder for 15,000,000 shares, of which 9,858,000 has been subscribed to date.  The Company continues to offer the remaining 5,142,000 shares to that shareholder.  With other potential future financing, management believes these initiatives alleviate the substantial doubt regarding the Company’s ability to continue as a going concern.











ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015




7.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS


Accounting Standards Updates (“ASU”) ASU No. 2015-07 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.  



8.

PROVISION FOR INCOME TAXES

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes.  Deferred taxes are provided in the financial statements under ASC Topic 740 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years. Minimal exploration stage deferred tax assets arising as a result of net operating loss carry forwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods.  The Company adopted the provisions of ASC Topic 740 Accounting for Uncertainty in Income Taxes, on January 23, 2007 (inception date).  As a result of the implementation of ASC 740, the Company recognized no increase in the liability for unrecognized tax benefits.

Operating loss carry-forwards generated during the period of January 23, 2007 (date of inception), through March 31, 2015, of approximately $15.3 million, will begin to expire in 2027.  Accordingly, deferred tax assets of approximately $6.4 million related to net operating loss carry-forwards, and approximately $150,000 related to stock-based compensation were offset by the valuation allowance in the same amount.  For the three months ended March 31, 2015 and 2014, the allowance increased by approximately $370,000 and $750,000, respectively.

The Company adopted the provisions of FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes, on January 23, 2007.  As a result of the implementation of Interpretation 48, the Company recognized no increase in the liability for unrecognized tax benefits.

The Company has no tax positions at March 31, 2015, or December 31, 2014, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.








ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015



The Company’s tax returns for the years ended December 31, 2014, 2013, 2012 and 2011 are open for examination under Federal Statute of Limitations and for the years ended December 31, 2014, 2013 and 2012 under the State of California Statute of Limitations.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company had no accruals for interest and penalties since inception.


Components of income tax benefits are as follows:


Years Ended December 31,

2014

2013

$         -

$       -

         -

     -

         -

       -

         -

       -

         -

       -




9.

WARRANTS AND OPTIONS


Warrants:

During the fiscal year ended December 31, 2014, the Company granted 4,200,000 warrants to purchase shares of Common Stock which all have a 1 year exercise term, of which 3,100,000 remain outstanding at March 31, 2015.  During the quarter ended March 31, 2015, 650,000 warrants were issued.  The Company valued all warrants utilizing a Black-Scholes option pricing model and the fair value was recorded in additional paid-in capital.








ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015

The following is a summary of the Company’s warrant activity:


 

 



Warrants

 

Weighted Average Exercise Price

Exercisable – December 31, 2013

 

 

4,358,000

 

$           1.50

Granted-2014

 

4,200,000

 

             1.50

Exercised-2014

 

-

 

-

Forfeited-2014

 

(4,358,000)

 

-

Outstanding – December 31, 2014

 

4,200,000

 

$           1.50

Exercisable – December 31, 2014

 

4,200,000

 

$           1.50

 

 

 

 

 

 

 



Warrants

 

Weighted Average Exercise Price

Granted-2015 (at March 31, 2015)

 

650,000

 

$           1.50

Exercised-2015 (at March 31,2015)

 

-

 

-

Forfeited-2015 (at March 31, 2015)

 

(1,100,000)

 

$           1.50

Outstanding – March 31, 2015

 

3,750,000

 

$           1.50

Exercisable – March 31, 2015

 

3,750,000

 

$           1.50













Warrants outstanding and exercisable at March 31, 2015 are as follows:


Warrants Outstanding

 

Warrants Exercisable

 

Range of

Exercise Price

 

Number

Outstanding

 

Weighted Average

Remaining Contractual

Life (in Years)

 

Weighted Average

Exercise Price

 

 

Number

Exercisable

 

 

Weighted Average

Exercise Price

 

$

1.50

 

100,000

 

0.14 years

 

$

1.50

 

 

 

100,000

 

 

$

1.50

 

$

1.50

 

1,000,000

 

0.23 years

 

$

1.50

 

 

 

1,000,000

 

 

$

1.50

 

$

1.50

 

500,000

 

0.31 years

 

$

1.50

 

 

 

500,000

 

 

$

1.50

 

$

1.50

 

250,000

 

0.40 years

 

$

1.50

 

 

 

250,000

 

 

$

1.50

 

$

1.50

 

150,000

 

0.46 years

 

$

1.50

 

 

 

150,000

 

 

$

1.50

 

$

1.50

 

100,000

 

0.50 years

 

$

1.50

 

 

 

100,000

 

 

$

1.50

 

$

1.50

 

100,000

 

0.54 years

 

$

1.50

 

 

 

100,000

 

 

$

1.50

 

$

1.50

 

80,000

 

0.61 years

 

$

1.50

 

 

 

80,000

 

 

$

1.50

 

$

1.50

 

70,000

 

0.66 years

 

$

1.50

 

 

 

70,000

 

 

$

1.50

 

$

1.50

 

250,000

 

0.67 years

 

$

1.50

 

 

 

250,000

 

 

$

1.50

 


$

1.50

 

250,000

 

0.71 years

 

$

1.50

 

 

 

250,000

 

 

$

1.50

 

$

1.50

 

250,000

 

0.75 years

 

$

1.50

 

 

 

250,000

 

 

$

1.50

 

$

1.50

 

250,000

 

0.78 years

 

$

1.50

 

 

 

250,000

 

 

$

1.50

 

$

1.50

 

150,000

 

0.91 years

 

$

1.50

 

 

 

150,000

 

 

$

1.50

 

$

1.50

 

100,000

 

0.96 years

 

$

1.50

 

 

 

100,000

 

 

$

1.50

 

$

1.50

 

150,000

 

1.00 years

 

$

1.50

 

 

 

150,000

 

 

$

1.50

 










ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015


Warrant activity is as follows:

Effective May 23 2014, 100,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective June 24, 2014, 1,000,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective July 23 2014, 500,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective August 29 2014, 250,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective September 29, 20144, 150,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective September 30, 2013, 100,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective October 15 2014, 100,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective November 7, 2014, 80,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective November 28, 2014, 70,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective December 4, 2014, 250,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective December 15, 2014, 250,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year







ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015


Effective January 3, 2015, 250,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective January 23, 2015, 250,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective January 30, 2015, 150,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective March 15, 2015, 100,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year

Effective March 31, 2015, 150,000 warrants were issued.  The warrants allow the purchase of common shares at an exercise price of $1.50.  There is no vesting period, and the warrants expire in 1 year



Stock Options:


During the period that the options were issued, the Company had no public trading activity for the Company’s common stock.  However, the majority shareholder sold in private transactions shares at $.90 per share.  In order to value the Company’s options, the Company chose to use the minimum value method, even though the Company is a public company since there was no measurable trading activity.  The fair value of the options was recorded in additional paid-in capital.

















ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015



Options outstanding and exercisable at March 31, 2015 are as follows:

 

 

 



Options

 

Weighted

Average Exercise Price

Outstanding – December 31, 2013

 

     305,000

 

$

0.836

Exercisable – December 31, 2013

 

     105,000

 

$

0.524

Granted-2014

 

-

 

$

-

Exercised-2014

 

-

 

-

Forfeited-2014

 

-

 

-

Outstanding – December 31, 2014

 

305,000

 

$

0.836

Exercisable – December 31, 2014

 

155,000

 

$

0.678

 

 



Options

 

Weighted Average Exercise Price

Granted-2015 (at March 31, 2015)

 

60,000

 

$

-

Exercised-2014 (at March 31, 2015)

 

-

 

-

Forfeited-2014 (at March 31, 2015)

 

-

 

$

-

Outstanding – March 31, 2015

 

365,000

 

$

0.863

Exercisable – March 31, 2015

 

215,000

 

$

0.767















Options outstanding and exercisable at March 31, 2015 are as follows:


Options Outstanding

 

Options Exercisable

 

Range of

Exercise Price

 

Number

Outstanding

 

Weighted Average

Remaining Contractual

Life (in Years)

 

Weighted Average

Exercise Price

 

 

Number

Exercisable

 

 

Weighted Average

Exercise Price

 

$

0.001

 

50,000

 

 1.59 years

 

$

0.001

 

 

 

50,000

 

 

       $

0.001

$

1.000

 

35,000

 

2.84 years

 

$

1.000

 

 

 

35,000

 

 

       $

1.000

$

1.000

 

10,000

 

2.92 years

 

$

1.000

 

 

 

10,000

 

 

       $

1.000

$

1.000

 

200,000

 

8.67 years

 

$

1.000

 

 

 

50,000

 

 

       $

1.000

$

1.00

 

10,000

 

3.74 years

 

$

1.000

 

 

 

10,000

 

 

       $

1.000

$

1.00

 

50,000

 

9.76 years

 

$

1.000

 

 

 

50,000

 

 

       $

1.000

$

1.00

 

10,000

 

9.82 years

 

$

1.000

 

 

 

10,000

 

 

       $

1.000



 


















ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015


Stock option activity is as follows:

Effective November 2, 2010 the Board of Directors of the Company granted 50,000 non-statutory stock options to a former consultant at an exercise price of $.001 per share with the vesting date of November 2, 2013 and an expiration date of November 2, 2016.

Effective February 1, 2013 the Board of Directors of the Company granted 20,000 non-statutory stock options to a current consultant at an exercise price of $1.00 per share with the vesting date of February 1, 2013 and an expiration date of February 1, 2018.


Effective February 1, 2013 the Board of Directors of the Company granted 5,000 non-statutory stock options to a current consultant at an exercise price of $1.00 per share with the vesting date of February 1 2013 and an expiration date of February 1, 2018.


Effective February 1, 2013 the Board of Directors of the Company granted 10,000 non-statutory stock options to a current consultant at an exercise price of $1.00 per share with the vesting date of February 1 2013 and an expiration date of February 1, 2018.


Effective March 1, 2013 the Board of Directors of the Company granted 10,000 non-statutory stock options to a current consultant at an exercise price of $1.00 per share with the vesting date of March 1, 2013 and an expiration date of March 1, 2018.


Effective December 27, 2013 the Board of Directors of the Company granted 10,000 non-statutory stock options to a current consultant at an exercise price of $1.00 per share with the vesting date of December 27, 2013 and an expiration date of December 27, 2018.


Effective January 1, 2015 the Board of Directors of the Company granted 50,000 non-statutory incentive stock options to a current employee at an exercise price of $1.00 per share with 25% of the shares vested on January 1, 2016 and an additional 25% of shares exercisable on each of the next succeeding three anniversaries of January 1, with the full portion exercisable on and after January 1, 2019.  These shares have an expiration date of January 1, 2025.


Effective January 23, 2015 the Board of Directors of the Company granted 10,000 non-statutory stock options to a current consultant at an exercise price of $1.00 per share with the vesting date of January 23, 2015 and an expiration date of January 23, 2025.










ArtVentive Medical Group, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015




10.  SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after March 31, 2015, up through the date these consolidated financial statements were issued.


Effective April 24, 2015, 150,000 shares were issued in a private placement for the receipt of $150,000


Effective May 5, 2015, 100,000 shares were issued in a private placement for the receipt of $100,000



































Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations


ArtVentive Medical Group, Inc. (the “Company”), is a Nevada Corporation traded on the OTCQB (symbol AVTD).  On January 9, 2010, the Company completed the acquisition of all of the assets of ArtVentive Medical Inc., a California company.


The Company remains focused on developing, manufacturing and marketing a family of Endoluminal Occlusion devices (EOS™).  The Company, through its proprietary technology has developed minimally invasive occlusion devices and procedures, allowing for the current interventional, image guided techniques to resolve potentially significant and unaddressed health issues.  The ArtVentive EOS™ Peripheral device was developed by the Company to target the arterial and venous embolization peripheral vasculature markets.  The Company is currently expanding its EOS™ development to encompass several additional major clinical areas, including, but not limited to neuro vascular disorders, interventional oncology, women's health and interventional cardiology procedures.


The Company is expanding its product portfolio to include a proprietary Catheter-Assisted Endovascular Tumor Treatment (CAETT™) system to deliver drugs and agents for minimally invasive, controlled and localized treatment of tumors as the Company enters the interventional oncology arena.


The Company is also continuing its ongoing expansion of the ArtVentive EOS™ peripheral device by developing a second generation of the device in enhancing the profile reductions from the current 6fr to a 5fr and 4fr (for some applicable sizes) catheter, while expanding the opportunity to advance into new areas in treating a larger range of vessel sizes, expanding clinical applications and market opportunities.   The Generation II EOS™ technology will add additional sizes to its current EOS™ portfolio of 5mm, 8mm and 11mm to include the ability of treating vessels in the range of 2-20mm, while achieving a lower profile for the device.


The Company has contracted, and expects to continue contracting with specific American and European corporations and consulting groups to assist in the implementation of an ongoing strategic plan for the successful international market development, commercialization and manufacturing of the Company’s products.  The Company entered into an agreement with Chicago, Illinois based Medical Murray Inc., a leader in the field of medical device development and manufacturing.  Medical Murray Inc. is recognized as being ISO certified and FDA registered.


The Company entered into an agreement with the Northwest Clinical Research Group, Inc. (NCRG), located in Seattle, Washington.  NCRG has played an intricate role in building the complex infrastructure and support necessary for outlining the regulatory and clinical strategy, in addition to providing a platform of quality controls parallel and synergistic to what Medical






Murray is providing.  Their responsibility also extends to encompass communication with the FDA and the European Notified Body (FDA counterpart).


The Company implemented its Quality Management System (QMS), based on the requirements of, and is intended to comply with, the following regulations and international standards:

·

US FDA Quality System Regulation, 21 CFR 820


·

EU Medical Device Directive (MDD), EEC 93/42


·

Canada Medical Devices Regulations (CMDR), SOR/98-282


·

ISO 13485:2003 Medical Devices – Quality Management Systems - Requirements Regulatory Purposes


A Document Control System and Design History File for the EOS project are in a continuous process of implementation.  The secured system utilizes Egnyte software and is hosted on the NCRG’s server.


The Company completed a comprehensive ISO Certification audit performed by BSI Product Services.  BSI is an international ISO 9000/ISO Registrar and CE Mark Notified Body required for the European Regulatory approval and subsequent CE Mark certification.  The audit confirmed that the Company’s Document and Quality control systems were to ISO standards, and in compliance with international requirements for the maintaining quality of the products without non-conformities.


The Company received its CE Mark certification for the ArtVentive EOS™ Peripheral device on May 30, 2013, and implemented the planned EOS™ peripheral device transfer from Research and Development to commercialization, marketing, and distribution throughout Europe, simultaneous to making its FDA application.   The Company received FDA approval for the ArtVentive EOS™ Peripheral device on December 3, 2014.

 

The Company filed additional patent applications expanding its patent reach of the ArtVentive EOS™ device to 24 patents or patent applications.


The Company filed an International patent application expanding the patent reach of its ArtVentive EOS™ device for contraception as it prepares the foundation for the launch of the Women’s Health division during 2015.  In addition, the Company received confirmation of its registration of the ArtVentive™ trademark for China.


The Company launched a Post Market Human Surveillance initiative throughout Europe, Australia and New Zealand. This clinical program is progressing, and designed to collect confirmatory data in support of the safety and performance of the ArtVentive Medical Group Endoluminal Occlusion System – EOS™.  Additional post market studies will commence in the US following FDA approval and commercialization.







The OCCLUDE I registry will be dedicated to venous indications with a planned 40 subjects to be enrolled with a maximum of 10 subjects per center. The OCCLUDE II registry will focus on arterial indications with up to 40 subjects to be enrolled in each study with a maximum of 10 subjects per center.


The Company currently has agreements encompassing twenty European countries.  Management is in the process of executing similar distribution agreements for several other European countries.


On August 3, 2011, the Company incorporated the ArtVentive Women’s Health Group, Inc., a wholly owned subsidiary of the Company.  


Management reported that Mr. van der Laak joined the Company in September 2014 as the Director of Sales for Europe.  Mr. Harsa was added to the Company’s sales organization as Regional Sales Director for the Eastern Region of the U.S. effective January 1, 2015.

The Company has developed a customized, comprehensive technology platform that will support management, distribution, sales and marketing globally by implementing a far-reaching Customer Relation Management (CRM) System. 


The integrated Sales and Management Platform is comprised of three modules, each designed to be complimentary to the others, cloud-based and providing a high level of controlled information and intelligence to advance the Company’s information platform, marketing, sales and services to the interventional markets.


Management also reports that it had contracted with SalesForce.com, a global leader in CRM solutions and Financial Force, a leading provider of accounting, supply chain, human capital management and other solutions. This cloud-based platform eliminates the need for the Company to make a significant investment in hardware, software and personnel to manage customer information.   The Company’s management can access the customized applications via their laptop, iPad or iPhone.  

Management showcased the ArtVentive EOS™ system during the its launch into the US markets  when it attended the Society of Interventional Radiology (“SIR”) Annual Scientific Meeting in Atlanta, Georgia in early March, and through its distribution partners when it attended the 18th European Vascular Conference in Maastricht, the Netherlands during mid-March 2015.The Company will continue  its directive to expand its reach into global markets by participating in the Charing Cross International Symposium (CX) in London during April 2015 and the CIRSE conference in Lisbon, Portugal during September 2015.


Results of Operations


During the first quarter of 2015, Management amended Research and Development expenditures in line with its final phase of development and regulatory submission of the ArtVentive EOS™ Peripheral device.  The Company has continued its focus on the European market expansion and USA launch of the EOS™ device, which requires the raising of additional financing for its






continued  business development, including reimbursement, sales, marketing, branding, distribution, clinical studies, commercialization and ongoing Regulatory submissions.


The following summary are the results of operations, for the three-month periods ended March 31, 2015 and 2014, and should be read in conjunction with the audited consolidated financial statements, for the year ended December 31, 2014, as included in our Form 10-K.  


Financial results for the three-month periods ended March 31, 2015 and 2014, are summarized as follows:


  

 

For the three months

ended March 31,

 

  

 

2015

 

 

2014

 

Operating revenues

$

64,187

 

$

10,165

 

Operating expenses

 

888,183

 

 

1,756,969

 

Operating income (loss)                           

 

(888,183)

 

 

(1,756,969)

 

Other income (expense)               

 

1

 

 

477

 

Provision for income tax

 

-

 

 

-

 

Net Income (Loss)

$

(888,182)

 

$

(1,756,492

)


Revenue


Revenue commenced during first quarter 2014 and is derived solely from the sales of EOS devices.  The Company’s revenues of $64,187 was for the three months ending March 31, 2015, compared to revenues of $10,165 for the three months ending March 31, 2014.  


Expenses


The Company’s total operating expenses for the three-month periods ended March 31, 2015 and 2014 are outlined in the table below:


  

 

For the three months

ended March 31,

 

  

 

2015

 

 

2014

 

Research and development

 

301,926

 

 

289,522

 

Salaries and wages

 

-

 

 

-

 

Depreciation

 

930

 

 

771

 

Professional fees

 

-

 

 

-

 

Selling, General and administrative

 

585,327

 

 

1,466,676

 

Total

$

888,183

 

$

1,756,969

 


Research and development costs increased by $12,404 for the three months ending March 31, 2015 from the comparative period of 2014.  Management expects research and development costs to be maintained in the future due to the enhancement of current products and the development of new devices.  The Company expects wages and salaries to increase substantially in the next three and twelve months as it adds additional employees and sales consultants for its






sales, marketing and manufactured products.  Management projects   manufacturing costs to decrease over the next twelve months as it perfects its production capabilities. The Company anticipates continued professional fees, mainly from regulatory, legal and accounting, due to ongoing SEC reporting requirements.  General and administrative fees are for ongoing office expenses and other operating costs not directly related to the manufacturing costs.   Such fees decreased by $881,349 for the three months ended March 31, 2015 from the comparative period 2014.


Liquidity and Capital Resources


General


As of March 31, 2015, the Company had $80,480 in cash and cash equivalents.  The Company does not expect its current cash and operating income to be sufficient to meet its financial needs for continuing operations over the next twelve months.  To meet its need for cash management will need to raise additional funds.  Management anticipates that it will require an additional $10,000,000 over the next twelve months to further develop its devices and increased manufacturing projections.


Liquidity and Financial Condition


Working Capital

 

  

 

 

  

 

 

  

 

  

 

At

 

 

At

 

 

  

 

  

 

March 31,

 

 

December,

 

 

Increase/

 

  

 

2015

 

 

2014

 

 

(Decrease)

 

Current Assets

$

165,825

 

$

151,478

 

$

14,347

 

Current Liabilities

$

1,554,383

 

$

1,264,697

 

$

289,686

 

Working Capital/( Deficit)

$

(1,388,558)

 

$

(1,113,219)

 

$

(275,339)

 


Cash Flows

 

  

 

 

  

 

  

 

Three Months Ended March,

 

  

 

2015

 

 

2014

 

Net Cash Used in Operating Activities

$

(670,610)

 

$

(2,138,903)

 

Net Cash Used in Investing Activities

$

(2,940)

 

$

-

 

Net Cash Provided by (Used in) Financing Activities

$

650,000

 

$

1,600,000

 

Net Increase (decrease) in Cash During the Period

$

(23,550)

 

$

(538,903)

 


The Company has no known demands or commitments and is not aware of any events or uncertainties as of March 31, 2015, that will result in or that are reasonably likely to materially increase or decrease our current liquidity.


Limited Operating History


There is no historical financial information about the Company on which to base an evaluation of our performance.  The Company has generated minimal revenues from operations.  Management cannot guarantee that it will be successful in its business operations.  The business is subject to






risks inherent in the medical device business enterprise in a highly competitive industry, including limited capital resources, and possible cost overruns due to the price and cost increases in supplies and services.


The Company believes it does not have enough cash on hand or will be able to generate enough income from operations to pay operating costs for the next twelve months.  In order to carry out our business plan, including manufacturing our medical devices, we will be required to seek equity or debt financing. If management is to raise sufficient funds to increase its manufacturing and deliver products, as well as enhance and develop new innovative devices, the Company will have to curtail its operations until such funds are received.  There is no guarantee that the Company will be successful in raising such funds.


Item 3. Quantitative and Qualitative Disclosure about Market Risk


Not required by smaller reporting companies.


Item 4.  Controls and Procedures


As of the end of the period covered by this report, AVTD carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined by Rule 13-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) under the supervision and with the participation of ArtVentive Medical Group’s President and Principal Financial Officer.  Based on and as of the date of such evaluation, the aforementioned officers have concluded that ArtVentive Group’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.


There were no significant changes in AVTD’s internal controls or in other factors that could significantly affect these controls during the first quarter ended March 31, 2015.  There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken.  It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.  In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.  Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.


PART II – INFORMATION


Item 1.  Legal Proceedings


None


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds


None.














Item 3.  Defaults Upon Senior Securities


None


Item 4.  Mine Safety Disclosures


Not Applicable.


Item 5.  Other Information


None


Item 6.  Exhibits


Exhibit No.

Document

Location

31

Rule 13a-41(a)/15d-14(a) Certifications

Included

32

Section 1350 Certifications

Included

101.INS(1)

XBRL Instance Document

Included

101.SCH(1)

XBRL Taxonomy Schema Document

Included

101.CAL(1)

XBRL Taxonomy Calculation Linkbase

Included

101.DEF(1)

XBRL Taxonomy Definition Linkbase Document

Included

101.LAB(1)

XBRL Taxonomy Label Linkbase Document

Included

101.PRE(1)

XBRL Taxonomy Label Presentation Linkbase Document

Included

 (2)

XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under the sections.






SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


ARTVENTIVE MEDICAL GROUP, INC.


May 15, 2015



/s/ H. JamesGraham

                 

H. James Graham

Chief Executive Officer

Chief Financial Officer



/s/ Leon Rudakov

Dr. Leon Rudakov

President