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EXCEL - IDEA: XBRL DOCUMENT - ARTVENTIVE MEDICAL GROUP, INC.Financial_Report.xls
EX-31 - CERTIFICATION - ARTVENTIVE MEDICAL GROUP, INC.exhibit31.htm
EX-32 - CERTIFICATION - ARTVENTIVE MEDICAL GROUP, INC.exhibit32.htm



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 September 30, 201431, 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 October 8, 2014 there were 58,506,286 shares of the Company’s common stock issued and outstanding.






PART I – FINANCIAL INFORMATION


Item 1.  Financial Statements.



ArtVentive Medical Group, Inc.

A Development Stage Company

Consolidated Financial Statements (Unaudited)

For the Period from January 23, 2007 (Inception) to September 30, 2014



Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013

Statement 1


Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three and nine-month periods ended September 30, 2014 and September 30, 2013;

and for the period from January 23, 2007 (Inception) through September 30, 2014

Statement 2


Consolidated Statements of Cash Flows (unaudited) for the nine-month periods ended September 30, 2014

and September 30, 2013; and for the period from January 23, 2007 (Inception)

to September 30, 2014

Statement 3



Notes to Consolidated Financial Statements (unaudited)







Statement 1

ArtVentive Medical Group, Inc.

A Development Stage Company

Consolidated Balance Sheets

September 30, 2014 and December 31, 2013


ASSETS

September 30,

 

 

2014

(unaudited)

December 31,

2013

CURRENT



Cash and cash equivalents

$

207,471

$ 1,626,521

      Accounts receivable

               9,450

-

      Prepaid expenses

               1,048

9,098

      Inventory

           239,754

26,903

TOTAL CURRENT ASSETS

457,723

         1,662,522

PROPERTY, PLANT AND EQUIPMENT


 

Office equipment

16,380

 16,380

       Accumulated depreciation

(4,617)

 (2,303)

NET PROPERTY, PLANT AND EQUIPMENT

11,763

 14,077

OTHER ASSETS

 

 

        Deposits

              80,497

51,048

TOTAL OTHER ASSETS

              80,497

51,048

 

 

 

TOTAL ASSETS

$

549,983

$ 1,727,647

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

CURRENT LIABILITES



Accounts payable

$

286,402

$ 272,509

 Accrued expenses

905,800

 585,800

TOTAL CURRENT LIABILITIES

1,192,202

 858,309

 



LONG-TERM LIABILITES



Notes payable

$

500,000

$ -

TOTAL LONG-TERM LIABILITIES

500,000

 -

 

 

 

TOTAL LIABILITIES

$

1,692,202

$ 858,309


 

 



(See accompanying notes)







 



ArtVentive Medical Group, Inc.

A Development Stage Company

Consolidated Balance Sheets

September 30, 2014 and December 31, 2013


STOCKHOLDERS’ EQUITY (DEFICIT)



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



authorized, 58,506,286 and 55,306,286 shares issued and   outstanding at September 30, 2014 and December 31, 2013, respectively

$

58,506

$ 55,306

Additional paid in capital

11,933,079

 9,056,279

Deficit accumulated during the development stage

(13,133,804)

  (8,242,247)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

(1,142,219)

 869,338

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

$

549,983

$ 1,727,647



(See accompanying notes)





Statement 2

ArtVentive Medical Group, Inc.

A Development Stage Company

Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

For the Three and Nine Months Ended September 30, 2014 and September 30, 2013; and for the Period from January 23, 2007 (Inception) to September 30, 2014


 




For the three months ended September 30, 2014




For the three months ended

September 30, 2013




For the nine months ended September 30, 2014




For the nine months ended September 30, 2013

For the period from January 23, 2007 (Inception) to September 30, 2014

REVENUES

$  31,865

$ NIL

$           67,500

$               NIL

$ 67,500

COST OF GOODS SOLD

 31,865

 -

 67,500

 -

 67,500

GROSS PROFIT

 -

 -

 -

 -

 -

OPERATING EXPENSES



 

 


Exploration costs

-

-

 -

 -

45,533

Research and development

1,111,526

434,955

 2,770,964

 1,317,089

7,787,604

Selling, general and administrative

466,874

393,679

 2,118,973

 933,723

5,301,231

Depreciation expense

771

583

 2,314

 1,747

5,133

OPERATING LOSS BEFORE OTHER ITEMS AND INCOME TAX


(1,579,171)


(829,217)

  (4,892,251)

 (2,252,559)


(13,139,501)

OTHER INCOME/(EXPENSE)



 

 


INTEREST INCOME

76

82

 694

 501

 5,697

Income tax expense (benefit)

-

-

 -

 -

-

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS

 (1,579,095)

 (829,135)

 (4,891,557)

 (2,252,058)

 (13,133,804)

COMPREHENSIVE LOSS FOR THE PERIOD

$  (1,579,095)

$

   (829,135)

$ (4,891,557)

$    (2,252,058)

$ (13,133,804)

BASIC AND DILUTED LOSS PER COMMON SHARE

   (0.03)

 (0.02)

 (0.09)

 (0.04)

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 58,005,199

 52,234,857

 56,776,286

 51,706,494

 



(See accompanying notes)







Statement 3

ArtVentive Medical Group, Inc.

A Development Stage Company

Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 30, 2014 and September 30, 2013; and for the Period from January 23, 2007 (Inception) to September 30, 2014



 

For the nine months ended September 30,

 2014

For the nine months ended September 30,

 2013

For the period  from January 23, 2007 (Inception) to   

September 30, 2014

CASH FLOW FROM OPERATING ACTIVITIES




Net loss

$ (4,891,557)

$ (2,252,058)

$ (13,133,804)

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

 

 

 

 

Non-cash expenses

 -

 -

 60,805

Depreciation expense

 2,314

 1,747

 5,133

      Issuance of common stock and options for services

 -

 20,169

 103,482

CHANGES IN OPERATING ASSETS AND LIABILITIES

 

 

 

       Accounts receivable

 (9,450)

 -

 (9,450)

       Prepaid expenses

 8,050

 5,000

 (1,048)

       Inventory

 (212,851)

 -

 (239,754)

       Deposits

 (29,449)

 -

 (80,497)

Accounts payable

 13,893

 183,125

 286,402

      Payroll taxes payable

 -

 (42)

 -

Accounts payable – related party

 -

 -

 39,000

NET CASH USED BY OPERATING ACTIVITIES

 (5,119,050)

 (2,042,059)

 (12,969,731)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Disposal of equipment

 -

 -

 745

Purchase of equipment

 -

 (3,551)

 (17,623)

NET CASH USED BY INVESTING ACTIVITIES

 -

 (3,551)

 (16,878)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Issuance of common stock for cash

 3,200,000

 2,058,000

 12,544,080

Issuance of notes payable

 500,000

 -

 500,000

Convertible note payable (see Note 4)

 -

 -

 150,000

NET CASH PROVIDED BY FINANCING ACTIVITIES

 3,700,000

 2,058,000

 13,194,080

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 (1,419,050)

 

 12,390

 

 207,471

CASH, BEGINNING OF PERIOD

 1,626,521

 517,831

 -

CASH, END OF PERIOD

$ 207,471

$       530,221

$ 207,471

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

STOCK ISSUED UPON CONVERSION OF NOTE PAYABLE

$ -

$ -

$     150,000

FORGIVENESS OF RELATED PARTY NOTE; APPLIED TO PAID IN CAPITAL


$ -


$ -


$ 39,000

ACCRUAL OF STOCK ISSUANCE COST

$         320,000

$ 205,800

$         905,800




(See accompanying notes)





ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


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 26, 2014.  Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the fiscal year ended December 31, 2014.


2.

ORGANIZATION


The Company was originally incorporated under the name of Big Bear Resources, Inc. a USA Company registered in the State of Nevada on January 23, 2007.   The Company changed its name to Uranium Plus Resources Inc. on March 21, 2008, and following the acquisition of the assets of ArtVentive, Inc. the Company changed its name on January 26, 2010, to ArtVentive Medical Group, Inc.  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™).  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.










ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


To date, the Company’s activities have been committed to the development of the EOS™, intellectual property, animal studies, human studies, patent filings, and developing a regulatory strategy for initial clinical indications pertinent to European, manufacturing and FDA 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.  The Company received its CE Mark certification for the ArtVentive EOS™ Peripheral device on May 30, 2013.  In 2014 the Company began commercialization and commenced shipping to its European distributors and preparing the foundation for marketing and sales into the USA markets following regulatory approval.


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


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.


DEVELOPMENT STAGE COMPANY

The Company is considered to be in the development stage as defined in FASC 915-10-05, “Development Stage Entity”.   The Company is devoting substantially all of its efforts to the execution of its business plan.

 

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.


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.











ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


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 September 30, 2014:


Common stock warrants                 

5,500,000

Common stock options

   105,000

Total common stock equivalents

5,605,000


Since the Company reflected a net loss as of September 30, 2014 and December 31, 2013, 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:


 

 

For the three

months ended

September 30, 2014

For the three

months ended

September 30, 2013

For the nine

months ended

September 30, 2014

For the nine

months ended

September 30, 2013

Net income (loss)

(1,579,095)

(829,135)

(4,891,557)

(2,252,058)

Weighted average common shares outstanding

58,005,199

52,234,857

56,776,286

51,706,494

Net (loss) per share

(.03)

(.02)

(.09)

(.04)











ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


PROPERTY AND EQUIPMENT

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


 

  Estimated Useful Lives

September 30, 2014

December 31, 2013

Computer equipment


Office furniture                           

5 years


7 years

$     11,634


         4,746                          

$    11,634


        4,746                          

 

 

 

 

Less accumulated depreciation

 

        (4,617)

        (2,303)

 

 

 

 

Net property and equipment

 

 $     11,763

 $     14,077



ACCOUNTS RECEIVABLE

The Company had accounts receivable of $9,450 and $0 as of September 30, 2014 and December 31, 2013, respectively.  These receivables consisted of current trade receivables only and Management has estimated no allowance for bad debts on these amounts.


INVENTORY

The Company has estimated its inventory valued at the lower of cost or market using the first-in, first-out (FIFO) method.  As of September 30, 2014 and December 31, 2013, inventory consisted of the following:


 

September 30, 2014

December 31, 2013

Inventories

 

 

   Raw materials

$ 163,509

$ 26,903

   Work in Process

52,615

-

   Finished goods

23,630

-

     Total Inventory

$ 239,754

$ 26,903


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.  












ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


REVENUE RECOGNITION

Sales revenues are generally recognized when an agreement exists and price is determinable, the products are shipped to the customers, and allowance and collectability is reasonable assured.


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.


The Company recorded an unrealized foreign currency translation gain, totaling $0 for the period from January 23, 2007 (Inception) to September 30, 2014, in accumulated other comprehensive income.


CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of funds on deposit with banks.  The Company has no cash equivalents.  The Company had funds on deposit of $207,471 at September 30, 2014.



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 September 30, 2014 and December 31, 2013, the Company had $0 and $1,415,194, respectively, in 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.


4.

LONG-TERM DEBT


The details concerning long-term debt for the three months ended September 30, 2014, and the year ended December 31, 2013, follow:













ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


 

September 30,

2014

December 31, 2013

Note payable to a private party, with interest at 3.0%, with interest only payments due December 31, 2014 and June 30, 2015, with the balance, interest and principal, due December 31, 2015

$   250,000

$              -

Note payable to a Private Party, with interest at 3.0%, with interest only payments due December 31, 2014 and June 30, 2015, with the balance, interest and principal, due December 31, 2015

   250,000

        -

Total

500,000

-

Less current maturities of long-term debt

-

-

Noncurrent maturities of long-term debt

$   500,000

$              -


The Principal Maturities of Notes Payable, by year, are as follows:


2014

-

2015

  $  500,000

 

  $  500,000


5.

SHARE CAPITAL

Effective April 22, 2008, the Company forward-split its issued capital stock on a ratio of 5.8 shares for each prior share.  As a result of this transaction, 11,078,000 shares were issued. Effective February 12, 2010, the Company forward-split its issued capital stock on a ratio of 1.65 a share for each 1 old share. As a result of this transaction 8,442,200 shares were issued. Effective February 19, 2010, 3,767,051 shares were issued in a private placement.  Consideration for the issue of additional shares has been charged against additional paid in capital.  The forward stock splits adjustments have been reflected retroactively.


Effective April 16, 2010, the Board of Directors of the Company authorized issuance of 20,000 shares to the members of its Scientific Board at a deemed value per share of $.90.

Effective June 2, 2011, and December 30, 2011, the Board of Directors of the Company authorized issuance of 3,888 and 13,611 shares to the former consultants at a deemed value per share of $.90.


Effective June 26, 2012, 200,000 shares were issued in a private placement for the receipt of $200,000.











ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


Effective July 5, 2012, the Company’s subscription agreement was amended to include finder’s fee of 10% of the amount raised in the future in the form of shares of restricted common stock.

Effective September 12, 2012, 500,000 shares were issued in a private placement for the receipt of $500,000.

On October 3, 2012, October 12, 2012, November 5, 2012, and December 12, 2012, 250,000 shares each were issued in a private placement for the total receipt of $1,000,000.

Effective February 7, 2013, 500,000 shares were issued in a private placement for the receipt of $500,000.  

Effective March 5, 2013, 150,000 shares were issued in a private placement for the receipt of $150,000.

Effective April 22, 2013, 100,000 shares were issued in a private placement for the receipt of $100,000.

Effective June 4, 2013, 308,000 shares were issued in a private placement for the receipt of $308,000.

Effective July 16, 2013, 300,000 shares were issued in a private placement for the receipt of $300,000.

Effective August 30, 2013, 200,000 shares were issued in a private placement for the receipt of $200,000.

Effective September 11, 2013, 200,000 shares were issued in a private placement for the receipt of $200,000.

Effective September 22, 2013, 300,000 shares were issued in a private placement for the receipt of $300,000.

Effective October 4, 2013, 300,000 shares were issued in a private placement for the receipt of $300,000.

Effective November 8, 2013, 400,000 shares were issued in a private placement for the receipt of $400,000.

Effective December 2, 2013, 400,000 shares were issued in a private placement for the receipt of $400,000.

Effective December 10, 2013, 400,000 shares were issued in a private placement for the receipt of $400,000.

Effective December 30, 2013, 400,000 shares were issued in a private placement for the receipt of $400,000.

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











ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


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.


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 September 30, 2014, the Company has a working capital deficit of $734,479 and an accumulated deficit of $13,133,804.  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 emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, research, development and production of its product.


In response to these challenges, management intends to raise additional funds through public or private placement offerings.


The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.


7.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS


Accounting Standards Updates (“ASU”) ASU No. 2014-16 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.  











ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


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 September 30, 2014, of approximately $13,030,322 will begin to expire in 2027.  Accordingly, deferred tax assets of approximately $5,502,973 related to net operating loss carry-forwards, and $44,332 related to stock-based compensation were offset by the valuation allowance in the same amount.  For the nine months ended September 30, 2014 and 2013, the allowance increased by approximately $2,095,543 and $955,821, respectively.

The Company has no tax positions at September 30, 2014, or December 31, 2013, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

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.

The Company is subject to taxation in the United States and California.  As of September 30, 2014, the Company’s tax years for 2011, 2012 and 2013 are subject to examination by the U.S. and California tax authorities.  In addition, the 2010 tax year remains subject to examination by California tax authorities.

 

9.

CONTRACTUAL OBLIGATIONS

Effective March 1, 2010, the Company entered into Management Agreements with Dr. Leon Rudakov and H. James Graham.

Under the terms of the Employment Agreement with its then Chief Executive Officer (CEO) and Chief Technology Officer (CTO), Dr. Rudakov was compensated with an annual salary of $120,000, plus benefits. As of February 1, 2011, the base salary was









ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


amended to $170,000 per annum to reflect his current positions as the President and CTO.  The agreement includes other employment benefits. Effective June 1, 2013, the agreement was amended to reflect a term to December 31, 2018, with an annual salary of $250,000 per annum.


Under the terms of a consulting Agreement, effective March 1, 2010, Mr. Jim Graham was compensated with annual base fee of $100,000 per annum, plus benefits.   As of February 1, 2011, the agreement was amended to reflect Mr. Graham’s current positions of Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors to reflect a base annual fee of $180,000 per annum. Effective June 1, 2013, the agreement was amended to reflect a term to December 31, 2018, with an annual fee of $260,000 per annum.


Effective September 2013, the Company (“Supplier”) executed revised Amended and Restated Distribution Agreements (the “Agreements”) with its current European Distributors (“Distributors”) in the Netherlands, Germany, Austria, Switzerland and Italy.  The Agreements grant the Distributor the exclusive right to offer for sale and sell the EOS Systems in the respective territories covered by each of the Agreements.  There is a minimum purchase of products included in each of the Agreements. The new Agreements incorporate a quality agreement provision as a part of the original Distribution Agreement.


10.

PURCHASE AGREEMENT


On January 8, 2010, the Company entered into an asset purchase agreement with Artventive, Inc. a privately held company.  The Company purchased substantially all of the assets of Artventive, Inc., which consisted entirely of patents.  The patents were accounted for under SAB Topic 5G using the historical cost basis of zero.  The combination was accounted for under ASC 805 as a business combination.  


11.

WARRANTS AND OPTIONS

During the fiscal year ended December 31, 2013, the Company has granted 4,358,000 warrants to purchase shares of Common Stock which all have a 1 year exercise term, of which 2,300,000 remain outstanding at September 30, 2014.  During the nine months ended September 30, 2014, 3,200,000 warrants were issued.  The issuance of outstanding warrants is detailed below.  

Effective July 16 2013, 300,000 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.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


Effective October 4 2013, 300,000 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 25, 2013, 400,000 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 8, 2013, 400,000 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 2, 2013, 400,000 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 10, 2013, 400,000 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 30, 2013, 400,000 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 7, 2014, 400,000 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 February 11, 2014, 400,000 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.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


Effective March 6, 2014, 300,000 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 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, 2014, 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, 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

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.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014

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


 

 



Warrants

 

Weighted Average Exercise Price

Exercisable – December 31, 2012

 

1,500,000

 

$           1.50

Granted-2013

 

4,358,000

 

$           1.50

Exercised-2013

 

-

 

-



Forfeited-2013

 

(1,500,000)

 

$           1.50

Outstanding – December 31, 2013

 

4,358,000

 

$           1.50

Exercisable – December 31, 2013

 

4,358,000

 

$           1.50

 

 

 

 

 

 

 



Warrants

 

Weighted Average Exercise Price

Granted-2014 (at September 30, 2014)

 

3,200,000

 

$           1.50

Exercised-2014 (at September 30, 2014)

 

-

 

-

Forfeited-2014 (at September 30, 2014)

 

(2,058,000)

 

$           1.50

Outstanding – September 30, 2014

 

5,500,000

 

$           1.50

Exercisable – September  30, 2014

 

5,500,000

 

$           1.50




Warrants outstanding and exercisable at September 30, 2014 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

 

300,000

 

0.01 years

 

$

1.50

 

 

 

300,000

 

 

$

1.50

 

$

1.50

 

400,000

 

0.06 years

 

$

1.50

 

 

 

400,000

 

 

$

1.50

 

$

1.50

 

400,000

 

0.11 years

 

$

1.50

 

 

 

400,000

 

 

$

1.50

 

$

1.50

 

400,000

 

0.16 years

 

$

1.50

 

 

 

400,000

 

 

$

1.50

 

$

1.50

 

400,000

 

0.18 years

 

$

1.50

 

 

 

400,000

 

 

$

1.50

 

$

1.50

 

400,000

 

0.23 years

 

$

1.50

 

 

 

400,000

 

 

$

1.50

 

$

1.50

 

400,000

 

0.26 years

 

$

1.50

 

 

 

400,000

 

 

$

1.50

 

$

1.50

 

400,000

 

0.35 years

 

$

1.50

 

 

 

400,000

 

 

$

1.50

 

$

1.50

 

300,000

 

0.43 years

 

$

1.50

 

 

 

300,000

 

 

$

1.50

 

$

1.50

 

100,000

 

0.64 years

 

$

1.50

 

 

 

100,000

 

 

$

1.50

 


$

1.50

 

1,000,000

 

0.73 years

 

$

1.50

 

 

 

1,000,000

 

 

$

1.50

 

$

1.50

 

500.000

 

0.81 years

 

$

1.50

 

 

 

500,000

 

 

$

1.50

 

$

1.50

 

250.000

 

0.90 years

 

$

1.50

 

 

 

250,000

 

 

$

1.50

 

$

1.50

 

150.000

 

0.96 years

 

$

1.50

 

 

 

150,000

 

 

$

1.50

 

$

1.50

 

100,000

 

1.00 years

 

$

1.50

 

 

 

100,000

 

 

$

1.50









ArtVentive Medical Group, Inc.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


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.


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.

A Development Stage Company

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014


Options outstanding and exercisable at September 30, 2014 are as follows:

 

 

 



Options

 

Weighted

Average Exercise Price

Exercisable – December 31, 2012

 

     50,000

 

$

0.001

Granted-2013

 

55,000

 

$

1.00

Exercised-2013

 

-

 

-

Forfeited-2013

 

-

 

-

Outstanding – December 31, 2013

 

105,000

 

$

0.524

Exercisable – December 31, 2013

 

105,000

 

$

0.524

 

 



Options

 

Weighted Average Exercise Price

Granted-2014 (at September 30, 2014)

 

-

 

$

-

Exercised-2014 (at September 30, 2014)

 

-

 

-

Forfeited-2014 (at September 30, 2014)

 

-

 

$

-

Outstanding – September 30, 2014

 

105,000

 

$

0.524

Exercisable – September 30, 2014

 

105,000

 

$

0.524









Options outstanding and exercisable at September 30, 2014 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

 

2.09 years

 

$

0.001

 

 

 

50,000

 

 

       $

0.001

$

1.000

 

35,000

 

3.34 years

 

$

1.000

 

 

 

35,000

 

 

       $

1.000

$

1.000

 

10,000

 

3.42 years

 

$

1.000

 

 

 

10,000

 

 

       $

1.000

$

1.000

 

10,000

 

4.24 years

 

$

1.000

 

 

 

10,000

 

 

       $

1.000



 









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.

(A Development Stage Company)

Notes to Consolidated Financial Statements

September 30, 2014





12.  SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after September 30, 2014, up through the date these consolidated financial statements were issued and determined there are no significant events to disclose.










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 March 21, 2008, the Company changed its name from Big Bear Resources Inc. to Uranium Plus Resource Corporation and subsequently, on January 26, 2010, the Company changed its name to ArtVentive Medical Group, Inc. 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 neurological vascular disorders, interventional cardiology, interventional oncology and women's health 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 4fr 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 12 mm to include an 18mm device with 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 launch, 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 up 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 filed additional patent applications expanding its patent reach of the ArtVentive EOS™ device to 25 patents or patent applications.


The Company launched a Post Market Human Surveillance initiative throughout Europe, Australia and New Zealand. This clinical program is progressing well 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 Company currently has agreements encompassing eleven European countries.  Management is in the process of executing similar distribution agreements for several other European countries, in addition to Australia and New Zealand during the fourth quarter of 2014.


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 join the Company in September 2014 as the Director of Sales for Europe. With a strong track record of success, Henk van der Laak brings extensive experience to his new role. He was most recently with Hemocue AB, a producer of diagnostic testing devices for the healthcare industry, and previously served in European sales leadership roles with both SenoRx, Inc. and the Cordis Corporation, a Johnson and Johnson Company.

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. 


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


Management also reported 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™ through its distribution partners when it attended the 17th European Vascular Conference in Maastricht, the Netherlands during March 2014, Charing Cross International Symposium (CX) in London during April 2014.    The Company continued its directive to expand its reach as it prepares to launch into the US and global markets following regulatory approval by participating in the US Society of Interventional Radiology (SIR) conference in San Diego, California in March 2014 and the CIRSE conference in Glasgow, Scotland during September 2014.


Results of Operations


During the third quarter of 2014, 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 launch or the EOS™ device and raising additional financing for the next phase of its planned business development, including reimbursement, sales, marketing, branding, distribution, clinical studies, commercialization and FDA submission.


The following summary are the results of operations, for the three and nine month periods ended September 30, 2014 and 2013, and should be read in conjunction with the audited consolidated financial statements, for the year ended December 31, 2013, as included in our Form 10-K.  













Financial results for the three and nine-month periods ended September 30, 2014 and 2013 are summarized as follows:


  

 

For the three months

ended September 30th

 

 

For the nine months

ended September 30th

 

  

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Operating revenues

$

-

 

$

-

 

$

-

 

$

-

 

Operating expenses

 

1,579,171

 

 

829,217

 

 

4,892,251

 

 

2,252,559

 

Operating income (loss)                           

 

(1,579,171)

 

 

(829,217)

 

 

(4,892,251)

 

 

(2,252,559)

 

Other income (expense)               

 

76

 

 

82

 

 

694

 

 

501

 

Provision for income tax

 

-

 

 

-

 

 

-

 

 

-

 

Net Income (Loss)

$

(1,579,095)

 

$

(829,135)

 

$

(4,891,557)

 

$

(2.252,058)

 


Revenue


Revenue commenced during first quarter 2014 and is derived solely from the sales of EOS devices.  The Company’s revenues of $31,865 was for the three months ending September 30, 2014, compared to revenues of $0 for the three months ending September 30, 2013.  The Company earned revenues of $67,500 for the nine months ending September 30, 2014, compared to revenues of $0 for the nine months ending September 30, 2013.    


For the nine months ending September 30, 2014, the Company earned $67,500 from the EOS device sale revenues, as compared to $0 from sale for the nine months ended September 30, 2013.  Company revenues increased $67,500 due to the changeover from research and development to commercialization.  


For the three months ending September 30, 2014, the Company earned $31,865 from sales, as compared to $0 for the three months ended September 30, 2013.  


Expenses


The Company’s total operating expenses for the three and nine month periods ended September 30, 2014 and 2013 are outlined in the table below:


  

 

For the three months

ended September 30,

 

 

For the nine months

ended September 30,

 

  

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Research and development

 

1,111,526

 

 

434,955

 

 

2,770,964

 

 

1,317,089

 

Salaries and wages

 

57,500

 

 

-

 

 

152,500

 

 

-

 

Manufacturing

 

31,865

 

 

-

 

 

67,500

 

 

-

 

Professional fees

 

29,994

 

 

240,207

 

 

357,343

 

 

496,799

 

General and administrative

 

348,286

 

 

154,055

 

 

1,543,944

 

 

438,671

 

Total

$

1,579,171

 

$

829,217

 

$

4,892,251

 

$

2,252,559

 












Nine Months


Research and development costs increased by $1,453,875 for the nine month period ended September 30, 2014 from the comparative period of 2013.  Management expects research and development costs to be ongoing due to the enhancement of current products and the development of new devices.  Management expects wages and salaries to increase substantially in the next nine and twelve months as it expands its management, support staff and sales team.  Manufacturing costs increased by $67,500 for the nine months ending September 30, 2014.  The increase was due to the initialization and transfer of the EOS device from research and development to commercialization.  Management projects   manufacturing costs to decrease over the next nine and 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 increased by $1,185,250 for the nine months ended September 30, 2014 from the comparative period 2013.


Three Months


Research and development costs increased by $676,571 for the three months ending September 30, 2014 from the comparative period of 2013. 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.  Manufacturing costs increased by $31,865 for the three months ending September 30, 2014.  The increase was due to the initialization and transfer of the EOS device from research and development to commercialization.  Management projects   manufacturing costs to decrease over the next nine and 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 increased by $73,195 for the three months ended September 30, 2014 from the comparative period 2013.


Liquidity and Capital Resources


General


As of September 30, 2014, the Company had $207,471 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

 

 

  

 

  

 

September 30,

 

 

December,

 

 

Increase/

 

  

 

2014

 

 

2013

 

 

(Decrease)

 

Current Assets

$

457,723

 

$

1,662,522

 

$

(1,204,799)

 

Current Liabilities

$

1,192,202

 

$

858,309

 

$

333,893

 

Working Capital/( Deficit)

$

(734,479)

 

$

804,213

 

$

(1,538,692)

 


Cash Flows

 

  

 

 

  

 

  

 

Nine Months Ended September 30,

 

  

 

2014

 

 

2013

 

Net Cash Used in Operating Activities

$

(5,119,050)

 

$

(2,042,059)

 

Net Cash Used in Investing Activities

$

-

 

$

(3,551)

 

Net Cash Provided by (Used in) Financing Activities

$

3,700,000

 

$

2,058,000

 

Net Increase (decrease) in Cash During the Period

$

(1,419,050)

 

$

12,390

 


The Company has no known demands or commitments and is not aware of any events or uncertainties as of September 30, 2014, 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 is a development stage corporation and 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 Medical 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 third quarter ended September 30, 2014.  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.


November 13, 2014



/s/ H. James Graham

                 

H. James Graham

Chief Executive Officer

Chief Financial Officer



/s/ Leon Rudakove

Dr. Leon Rudakov

President