Amendment to Annual Report Form 10 K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

☒	Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
	For the Fiscal Year Ended December 31, 2023
☐	Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
	For the Transition Period from to

Commission File Number: 001-39796

Vivos Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		81-3224056
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
7921 Southpark Plaza, Suite 210, Littleton, CO		80120
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number, including area code:		(844)672-4357

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of exchange on which registered
Common stock, par value $0.0001 per share		VVOS		NasdaqCapital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Smaller reporting company ☒
	Emerging growth company ☒

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of June 30, 2023, the last business day of the second fiscal quarter, the aggregate market value of the registrant's voting stock held by non-affiliates, was approximately $15.3million based on the last reported sales price of $12.75 as quoted on the Nasdaq Capital Market on such date.

The registrant had 2,731,270shares of its common stock, $0.0001par value per share, outstanding as of March 26, 2024.

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A ("Amendment No. 1") to the Annual Report on Form 10-K of Vivos Therapeutics, Inc. for the fiscal year ended December 31, 2023, originally filed with the Securities and Exchange Commission ("SEC") on March 28, 2024 (the "Original Filing"), is being filed solely to correct a typographical error in an internal cross reference within the Report of Independent Registered Public Accounting Firm and Exhibit 23.2, the consent of Plante & Moran, PLLC, which read "except for Note 9" instead of "except for Note 8".

This Amendment No. 1 includes: Item 8 of Part II, "Financial Statements and Supplementary Data" in its entirety and without change from the Original Filing other than the correction described above.

Except for the foregoing amended information, this Amendment No. 1 does not amend or update any other information contained in the Original Filing or reflect any events that have occurred after the filing date of the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing.

Item 8. Financial Statements and Supplementary Data.

TABLE OF CONTENTS

		Page
Reports of Independent Registered Public Accounting Firms		-3-
Financial Statements:
Consolidated balance sheets as of December 31, 2023 and 2022		-5-
Consolidated statements of operations for the years ended December 31, 2023 and 2022		-6-
Consolidated statements of stockholders' equity (deficit) for the years ended December 31, 2023 and 2022		-7-
Consolidated statements of cash flows for the years ended December 31, 2023 and 2022		-8-
Notes to consolidated financial statements		-9-

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Vivos Therapeutics, Inc. and Subsidiaries (PCAOB ID No. 166)

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Vivos Therapeutics, Inc. and Subsidiaries (the "Company") as of December 31, 2022, the related consolidated statement of operations, stockholders' equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Plante & Moran, PLLC

Denver, Colorado

March 30, 2023, except for Note 8, as to which the date is November 22, 2023

We served as the Company's auditor from 2018 - 2023.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Vivos Therapeutics, Inc. and Subsidiaries (PCAOB ID No. 659)

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Vivos Therapeutics, Inc. and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide a reasonable basis for our opinion.

/s/ Moss Adams, LLP

Denver, Colorado

March 28, 2024

We have served as the Company's auditor since 2023.

VIVOS THERAPEUTICS INC.

Consolidated Balance Sheets

December 31, 2023 and 2022

(In Thousands, Except Per Share Amounts)

		2023			2022
Current assets
Cash and cash equivalents		$	1,643			$	3,519
Accounts receivable, net of allowance of $250and $712, respectively			202				457
Prepaid expenses and other current assets			616				1,448
Total current assets			2,461				5,424
Long-term assets
Goodwill			2,843				2,843
Property and equipment, net			3,314				3,082
Operating lease right-of-use asset			1,385				1,695
Intangible assets, net			420				302
Deposits and other			307				374
Total assets		$	10,730			$	13,720
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	2,145			$	1,411
Accrued expenses			2,334				1,912
Current portion of contract liabilities			2,138				2,926
Current portion of operating lease liability			474				419
Other current liabilities			198				145
Total current liabilities			7,289				6,813
Long-term liabilities
Contract liabilities, net of current portion			289				112
Employee retention credit liability			1,220				-
Operating lease liability, net of current portion			1,521				1,994
Total liabilities			10,319				8,919
Commitments and contingencies (Note 12)
Stockholders' equity
Preferred Stock, $0.0001par value per share. Authorized 50,000,000shares; noshares issued and outstanding			-				-
Common Stock, $0.0001par value per share. Authorized 200,000,000shares; issued and outstanding 1,833,877shares as of December 31, 2023 and 920,592shares as December 31, 2022			-				-
Additional paid-in capital			93,462				84,269
Accumulated deficit			(93,051	)			(79,468	)
Total stockholders' equity			411				4,801
Total liabilities and stockholders' equity		$	10,730			$	13,720

The accompanying notes are an integral part of these consolidated financial statements.

VIVOS THERAPEUTICS INC.

Consolidated Statements of Operations

Years Ended December 31, 2023 and 2022

(In Thousands, Except Per Share Amounts)

		2023			2022
Revenue
Product revenue		$	6,270			$	8,381
Service revenue			7,531				7,643
Total revenue			13,801				16,024
Cost of sales (exclusive of depreciation and amortization shown separately below)			5,530				6,005
Gross profit			8,271				10,019
Operating expenses
General and administrative			22,479				29,041
Sales and marketing			2,467				5,340
Depreciation and amortization			621				669
Total operating expenses			25,567				35,050
Operating loss			(17,296	)			(25,031	)
Non-operating income (expense)
Other expense			(212	)			(190	)
PPP loan forgiveness			-				1,287
Excess warrant fair value			(6,453	)			-
Change in fair value of warrant liability, net of issuance costs of $645			10,231				-
Other income			147				89
Loss before income taxes			(13,583	)			(23,845	)
Net loss		$	(13,583	)		$	(23,845	)
Net loss per share (basic and diluted)		$	(11.14	)		$	(25.90	)
Weighted average number of shares of Common Stock outstanding (basic and diluted)			1,219,381				920,592

The accompanying notes are an integral part of these consolidated financial statements.

VIVOS THERAPEUTICS INC.

Consolidated Statements of Stockholders' Equity

Years Ended December 31, 2023 and 2022

(In Thousands)

					Additional
		Common Stock			Paid-in			Accumulated
		Shares			Amount			Capital			Deficit			Total
Balances, December 31, 2021			920,592			$	-			$	81,162			$	(55,623	)		$	25,539
Issuance of warrants to consultants for services			-				-				711				-				711
Stock-based compensation expense			-				-				2,396				-				2,396
Net loss			-				-				-				(23,845	)			(23,845	)
Balances, December 31, 2022			920,592			$	-			$	84,269			$	(79,468	)		$	4,801
Issuance of common stock and warrants in private placement, net of issuance costs			210,000				-				2,764				-				2,764
Issuance of common stock and warrants to consultants for services			30,000				-				824				-				824
Issuance of common stock for purchase of assets			10,000								116				-				116
Issuance of commons stock upon exercise of warrants			624,059				-				3,652				-				3,652
Shares added for fractional shares pursuant to reverse stock split			39,226
Reclassification of liability-classified warrants to equity			-				-				731				-				731
Stock-based compensation expense			-				-				1,106				-				1,106
Net loss			-				-				-				(13,583	)			(13,583	)
Balances, December 31, 2023			1,833,877			$	-			$	93,462			$	(93,051	)		$	411

The accompanying notes are an integral part of these consolidated financial statements.

VIVOS THERAPEUTICS INC.

Consolidated Statements of Cash Flows

Years Ended December 31, 2023 and 2022

(In Thousands)

		2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(13,583	)		$	(23,845	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense			1,106				2,396
Depreciation and amortization			621				669
Loss on disposal of assets			-				36
Fair value of common stock issued for services			87				-
Fair value of warrants issued for services			737				711
Change in fair value of warrant liability, net of issuance costs of $645			(10,231	)			-
Excess warrant fair value			6,453				-
Forgiveness of indebtness income			-				(1,265	)
Changes in operating assets and liabilities:
Accounts receivable			255				746
Operating lease liabilities, net			(109	)			7
Tenant improvement allowance			-				516
Prepaid expenses and other current assets			832				126
Deposits			80				(16	)
Accounts payable			734				491
Accrued expenses			422				(941	)
Employee retention credit liability			1,220				-
Other liabilities			41				144
Contract liability			(611	)			638
Net cash used in operating activities			(11,946	)			(19,587	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment			(803	)			(924	)
Payment for asset purchase			(50	)			-
Net cash used in investing activities			(853	)			(924	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the private placement of common stock and pre-funded warrants			12,000				-
Payments for issuance costs			(1,077	)			-
Net cash provided by financing activities			10,923				-
Net increase (decrease) in cash and cash equivalents			(1,876	)			(20,511	)
Cash and cash equivalents at beginning of year			3,519				24,030
Cash and cash equivalents at end of year		$	1,643			$	3,519
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest		$	-			$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fair value of warrants issued in asset purchase		$	116			$	-

The accompanying notes are an integral part of these consolidated financial statements.

VIVOS THERAPEUTICS INC.
Notes to the Consolidated Financial Statements

NOTE 1 - ORGANIZATION, DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

BioModeling Solutions, Inc. ("BioModeling") was organized on March 20, 2007 as an Oregon limited liability company, and subsequently incorporated in 2013. On August 16, 2016, BioModeling entered into a share exchange agreement (the "SEA") with First Vivos, Inc. ("First Vivos"), and Vivos Therapeutics, Inc. ("Vivos"), a Wyoming corporation established on July 7, 2016 to facilitate this share exchange combination transaction. Vivos was formerly named Corrective BioTechnologies, Inc. until its name changed on September 6, 2016 to Vivos Biotechnologies and on March 2, 2018 to Vivos Therapeutics, Inc. and had no substantial pre-combination business activities. First Vivos was incorporated in Texas on November 10, 2015. Pursuant to the SEA, all of the outstanding shares of common stock and warrants of BioModeling and all of the shares of common stock of First Vivos were exchanged for newly issued shares of common stock and warrants of Vivos, the legal acquirer.

The transaction was accounted for as a reverse acquisition and recapitalization, with BioModeling as the acquirer for financial reporting and accounting purposes. Upon the consummation of the merger, the historical financial statements of BioModeling became the Company's historical financial statements and recorded at their historical carrying amounts.

On August 12, 2020, Vivos reincorporated from Wyoming to become a domestic Delaware corporation under Delaware General Corporate Law. Accordingly, as used herein, the term "the Company," "we," "us." "our" and similar terminology refer to Vivos Therapeutics, Inc., a Delaware corporation and its consolidated subsidiaries. As used herein, the term "Common Stock" refers to the common stock, $0.0001par value per share, of Vivos Therapeutics, Inc., a Delaware corporation.

Reverse Stock Split

On October 25, 2023, the Company effected a reverse stock split of its outstanding shares of common stock at a ratio of 1-for-25(the "Reverse Stock Split"). The Reverse Stock Split, which was approved by the Company's Board of Directors under authority granted by the Company's stockholders at the Company's 2023 Annual Meeting of Stockholders held on September 22, 2023, was consummated pursuant to a Certificate of Amendment filed with the Secretary of State of Delaware on October 25, 2023 (the "Certificate of Amendment"). Unless the context otherwise requires, all references in the accompanying financial statements, these footnotes to the financial statements in general to shares of the Company's common stock, including prices per share of the common stock, reflect the Reverse Stock Split. Fractional shares were not issued, and the final number of shares were rounded up to the next whole share.

Description of Business

We are a medical technology and services company that features a comprehensive suite of proprietary oral appliances and therapeutic treatments. Our products non-surgically treat certain maxillofacial and developmental abnormalities of the mouth and jaws that are closely associated with breathing and sleep disorders such as, mild to severe obstructive sleep apnea ("OSA") and snoring in adults. The Company offers three separate clinical pathways or programs to providers-Guided Growth and Development, Lifeline, and Complete Airway Repositioning and Expansion ("CARE"). Each program features certain oral appliances coupled with specific therapeutic treatments, and each clinical pathway is intended to address the specific needs of a diverse patient population with different patient journeys. For example, the Guided Growth and Development program features the Vivos Guide and PE^x appliances along with CO₂ laser treatments and other adjunctive therapies designed for treating palatal growth and expansion in pediatric patients as they grow. The mid-range priced Lifeline program features a selection of mandibular advancement devices ("MADs") such as the Versa and Vida Sleep which are FDA 510(k) cleared for mild-to-moderate OSA in adults, along with the patented Vida appliance, which is FDA 510(k) cleared as unspecified classification for the alleviation of Temporomandibular Joint Dysfunction ("TMD") symptoms, bruxism, migraine headaches, and nasal dilation.

The Company's flagship CARE program, which is part of The Vivos Method, features the Company's patented DNA, mRNA and mmRNA appliances, which are also FDA 510(k) cleared for mild-to-severe OSA and snoring in adults. The Vivos Method may also include adjunctive myofunctional, chiropractic/physical therapy, and laser treatments that, when properly used with the CARE appliances, constitute a powerful non-invasive and cost-effective means of reducing or eliminating OSA symptoms. In a small subset of a study, the data has actually shown that The Vivos Method can reverse OSA symptoms in a large portion (up to 80%) of patients. The primary competitive advantage of The Vivos Method over other OSA therapies is that The Vivos Method's typical course of treatment is limited in most cases to 12 to 15 months, and it is possible not to need lifetime intervention, unlike CPAP and neuro-stimulation implants. Additionally, out of approximately 42,000 patients treated to date worldwide with the Company's entire current suite of products, there have been very few instances of relapse.

The Company offers a suite of diagnostic and support products and services to dental and medical providers and distributors who service patients with OSA or related conditions. Such products and services include (i) VivoScore home sleep screenings and tests (powered by SleepImage^® technology), (ii) AireO2 (an electronic health record program designed specifically for use by dentists treating sleep patients), (iii) Treatment Navigator (a concierge service to assist a provider in educating and supporting the doctors as they navigate insurance coverage, diagnostic indications and treatment options), (iv) Billing Intelligence Services (which optimizes medical and dental reimbursement), (v) advanced training and continuing education courses at the Company's Vivos Institute in Denver, Colorado, (vi) MyoCorrect, a service through which Vivos-trained providers can provide orofacial myofunctional therapy ("OMT") to patients via a telemedicine platform, and (vii) the Company's Medical Integration Division ("MID"), which manages independent medical practices under management and development agreement which pays the Company from six (6%) to eight (8%) percent of all net revenue from sleep-related services as well as development fees.

The Company's business model is to teach, train, and support dentists, medical doctors, and distributors in the use of the Company's products and services. Dentists who use the Company's products and services typically enroll in a variety of live or online training and educational programs offered through the Company's Vivos Institute-an 18,000 sq. ft. facility located near the Denver International Airport. Dentists are able to select the specific program or clinical pathway that they want to focus on, such as Guided Growth and Development or Lifeline or both. They may also enroll in the VIP program for the complete set training, educational, and support services available in all three clinical pathway programs. Dentists enrolled in the VIP Program are referred to as "VIPs." The Company charges up front enrollment fees to educate and train new providers. The Company also charges for the ancillary support services listed above, and views each product and service as a revenue/profit center.

Basis of Presentation and Consolidation

The accompanying consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries (BioModeling, First Vivos, Vivos Therapeutics (Canada) Inc., Vivos Management and Development, LLC, Vivos Del Mar Management, LLC, Vivos Modesto Management, LLC, Vivos Therapeutics DSO LLC, a Colorado limited liability company, and Vivos Airway Alliances, LLC, a Colorado limited liability company), are prepared in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP"). All significant intercompany balances and transactions have been eliminated in consolidation.

Emerging Growth Company Status

The Company is an "emerging growth company" (an "EGC"), as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and as a result, the Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. These include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-EGC but any such election to opt out is irrevocable. The Company currently expects to retain its status as an EGC until the year ending December 31, 2026, but this status could end sooner under certain circumstances.

Revenue Recognition

The Company generates revenue from the sale of products and services. A significant majority of the Company's revenues are generated from enrolling dentists as either (i) Guided Growth and Development VIPs; (ii) Lifeline VIPs; (iii) combined Guided Growth and Development and Lifeline VIPs; or Premier Vivos Integrated Providers (Premier VIPs). Prior to the second quarter of 2023, the majority of VIP enrollments were Premier VIPs. The other, lower priced enrollments were piloted in prior fiscal quarters on a limited basis. They were officially adopted during the second quarter of 2023. For each VIP program, revenue is recognized when control of the products or services is transferred to customers (i.e., VIP dentists ordering such products or services for their patients) in a manner that reflects the consideration the Company expects to be entitled to in exchange for those products and services.

Following the guidance of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") and the applicable provisions of ASC Topic 842, Leases ("ASC 842"), the Company determines revenue recognition through the following five-step model, which entails:

	1)	identification of the promised goods or services in the contract;
	2)	determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract;
	3)	measurement of the transaction price, including the constraint on variable consideration;
	4)	allocation of the transaction price to the performance obligations; and
	5)	recognition of revenue when, or as the Company satisfies each performance obligation.

Service Revenue

VIP Enrollment Revenue

The Company reviews its VIP enrollment contracts from a revenue recognition perspective using the 5-step method outlined above. All program enrollees, irrespective of their level of enrollment, are commonly referred to as VIPs, unless it is necessary to specify their particular program. Once it is determined that a contract exists (i.e., a VIP enrollment agreement is executed and payment is received), service revenue related to VIP enrollments is recognized when the underlying services are performed. The price of the Premier VIP enrollment that the VIP pays upon execution of the contract is significant, running at approximately $26,200, with different entry levels for the various programs described above. Unearned revenue reported on the balance sheet as contract liability represents the portion of fees paid by VIP customers for services that have not yet been performed as of the reporting date and are recorded as the service is rendered. The Company recognizes this revenue as performance obligations are met. Accordingly, the contract liability for unearned revenue is a significant liability for the Company. Provisions for discounts are provided in the same period that the related revenue from the products and/or services is recorded.

The Company enters into programs that may provide for multiple performance obligations. Commencing in 2018, the Company began enrolling medical and dental professionals in a one-year program (now known as the Premier VIP Program) which includes training in a highly personalized, deep immersion workshop format which provides the Premier VIP dentist access to a team who is dedicated to creating a successful integrated practice.

VIP enrollment fees include multiple performance obligations which vary on a contract-by-contract basis. The performance obligations included with enrollments may include sleep apnea rings, a six or twelve months BIS subscription, a marketing package, lab credits and the right to sell our appliances. The Company allocates the transaction price of a VIP enrollment contract to each performance obligation under such contract using the relative standalone selling price method. The relative standalone price method is based on the proportion of the standalone selling price of each performance obligation to the sum of the total standalone selling prices of all the performance obligations in the contract.

The right to sell is similar to a license of intellectual property because without it the VIP cannot purchase appliances from the Company. The right to sell performance obligation includes the Vivos training and enrollment materials which prepare dentists for treating their patients using The Vivos Method.

Because the right to sell is never sold outside of VIP contracts, and VIP contracts are sold for varying prices, the Company believes that it is appropriate to estimate the standalone selling price of this performance obligation using the residual method. As such, the observable prices of other performance obligations under a VIP contract will be deducted from the contract price, with the residual being allocated to the right to sell performance obligation.

The Company uses significant judgements in revenue recognition including an estimation of customer life over which it recognizes the right to sell. The Company has determined that Premier VIPs who do not complete sessions 1 and 2 of training rarely complete training at all and fail to participate in the Premier VIP program long term. Since the beginning of the Premier VIP program, just under one-third of new VIP members fall into this category, and the revenue allocated to the right to sell for those VIPs is accelerated at the time in which it becomes remote that a VIP will continue in the program. Revenue is recognized in accordance with each individual performance obligation unless it becomes remote the VIP will continue, at which time the remainder of revenue is accelerated and recognized in the following month. Those VIPs who complete training typically remain active for a much longer period, and revenue from the right to sell for those VIPs is recognized over the estimated period of which those VIPs will remain active. Because of various factors occurring year to year, the Company has estimated customer life for each year a contract is initiated. The estimated customer lives are calculated separately for each year and have been estimated at 15 months for 2020, 14 months for 2021, 18 months for 2022, and 23 months for 2023, as a result of customers staying active for longer periods of time. The right to sell is recognized on a sum of the years' digits method over the estimated customer life for each year as this approximates the rate of decline in VIPs purchasing behaviors we have observed.

Other Service Revenue

In addition to VIP enrollment service revenue, in 2020 the Company launched BIS, an additional service on a monthly subscription basis, which includes the Company's AireO2 medical billing and practice management software. Revenue for these services is recognized monthly during the month the services are rendered.

The Company also offers its VIPs the ability to provide MyoCorrect to the VIP's patients as part of treatment with The Vivos Method. The program includes packages of treatment sessions that are sold to the VIPs, and resold to their patients. Revenue for MyoCorrect services is recognized over the 12-month performance period as therapy sessions occur.

Allocation of Revenue to Performance Obligations

The Company identifies all goods and services that are delivered separately under a sales arrangement and allocates revenue to each performance obligation based on relative fair values. These fair values approximate the prices for the relevant performance obligation that would be charged if those services were sold separately, and are recognized over the relevant service period of each performance obligation. After allocation to the performance obligations, any remainder is allocated to the right to sell under the residual method and is recognized over the estimated customer life. In general, revenues are separated between durable medical equipment (product revenue) and education and training services (service revenue).

Treatment of Discounts and Promotions

From time to time, the Company offers various discounts to its customers. These include the following:

1)

Discount for cash paid in full

	2)	Conference or trade show incentives, such as subscription enrollment into the SleepImage® home sleep test program, or free trial period for the SleepImage® lease program
	3)	Negotiated concessions on annual enrollment fee
	4)	Credits/rebates to be used towards future product orders such as lab rebates

The amount of the discount is determined up front prior to the sale. Accordingly, measurement is determined before the sale occurs and revenue is recognized based on the terms agreed upon between the Company and the customer over the performance period. In rare circumstances, a discount has been given after the sale during a conference which is offering a discount to full price. In this situation revenue is measured and the change in transaction price is allocated over the remaining performance obligation.

The amount of consideration can vary by customer due to promotions and discounts authorized to incentivize a sale. Prior to the sale, the customer and the Company agree upon the amount of consideration that the customer will pay in exchange for the services the Company provides. The net consideration that the customer has agreed to pay is the expected value that is recognized as revenue over the service period. At the end of each reporting period, the Company updates the transaction price to represent the circumstances present at the end of the reporting period and any changes in circumstances during the reporting period.

Product Revenue

In addition to revenue from services, the Company also generates revenue from the sale of its line of oral devices and preformed guides (known as appliances or systems) to its customers, the VIP dentists. These include the DNA appliance^®, mRNA appliance^®, the mmRNA appliance, the Versa, , the Vida, the Vida Sleep and others. The Company expanded its product offerings in the first quarter of 2023 via the acquisition of certain U.S. and international patents, product rights, and other miscellaneous intellectual property from Advanced Facialdontics, LLC, a New York limited liability company ("AFD"). Revenue from appliance sales is recognized when control of product is transferred to the VIP in an amount that reflects the consideration it expects to be entitled to in exchange for those products. The VIP in turn charges the VIP's patient and or patient's insurance a fee for the appliance and for his or her professional services in measuring, fitting, installing the appliance and educating the patient as to its use. The Company contracts with VIPs for the sale of the appliance and is not involved in the sale of the products and services from the VIP to the VIP's patient.

The Company's appliances are similar to a retainer that is worn in the mouth after braces are removed. Each appliance is unique and is fitted to the patient. The Company utilizes its network of certified VIPs throughout the United States and in some non-U.S. jurisdictions to sell the appliances to their customers as well as in two dental centers that the Company operates. The Company utilizes third party contract manufacturers or labs to produce its unique, patented appliances and preformed guides. The manufacturer designated by the Company produces the appliance in strict adherence to the Company's patents, design files, treatments, processes and procedures and under the direction and specific instruction of the Company, ships the appliance to the VIP who ordered the appliance from the Company. All of the Company's contract manufacturers are required to follow the Company's master design files in production of appliances or the lab will be in violation of the FDA's rules and regulations. The Company performed an analysis under ASC 606-10-55-36 through 55-40 and concluded it is the principal in the transaction and is reporting revenue gross. The Company bills the VIP the contracted price for the appliance which is recorded as product revenue. Product revenue is recognized once the appliance ships to the VIP under the direction of the Company.

In support of the VIPs using the Company's appliances for their patients, the Company utilizes a team of trained technicians to measure, order and fit each appliance. Upon scheduling the patient (which is the Company's customer in this case), the center takes a deposit and reviews the patient's insurance coverage. Revenue is recognized differently for Company owned centers than for revenue from VIPs. The Company recognizes revenue in the centers after the appliance is received from the manufacturer and once the appliance is fitted and provided to the patient.

The Company offers certain dentists (known as Clinical Advisors) discounts from standard VIP pricing. This is done to help encourage Clinical Advisors, who help the VIPs with technical aspects of the Company's products, to purchase Company products for their own practices. In addition, from time to time, the Company offers credits to incentivize VIPs to adopt the Company's products and increase case volume within their practices. These incentives are recorded as a liability at issuance and deducted from the related product sale at the time the credit is used.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on existing facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company's significant accounting estimates include, but are not necessarily limited to, assessing collectability on accounts receivable, the determination of customer life and breakage related to recognizing revenue for VIP contracts, impairment of goodwill and long-lived assets; valuation assumptions for assets acquired in asset acquisitions; valuation assumptions for stock options, warrants, warrant liabilities and equity instruments issued for goods or services; deferred income taxes and the related valuation allowances; and the evaluation and measurement of contingencies. Additionally, the full impact of COVID-19 is unknown and cannot be reasonably estimated. However, the Company has made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are material differences between the Company's estimates and the actual results, the Company's future consolidated results of operations will be affected.

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company's immediate and general business use are classified as cash and cash equivalents.

Accounts Receivable, Net

Accounts receivable represents amounts due from customers in the ordinary course of business and are recorded at the invoiced amount and do not bear interest. Accounts receivable are stated at the net amount expected to be collected, using an expected credit loss methodology to determine the allowance for expected credit losses. The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for expected credit losses based on a combination of factors, including the aging of the receivables, historical collection trends, and charge-offs. When the Company is aware of a customer's inability to meet its financial obligation, the Company may individually evaluate the related receivable to determine the allowance for expected credit losses. The Company uses specific criteria to determine uncollectible receivables to be charged-off, including bankruptcy filings, the referral of customer accounts to outside parties for collection, and the length that accounts remain past due.

Property and Equipment, Net

Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which ranges from 4to 5years. Amortization of leasehold improvements is recognized using the straight-line method over the shorter of the life of the improvement or the term of the respective leases which range between 5and 7years. The Company does not begin depreciating assets until assets are placed in service.

Intangible Assets, Net

Goodwill is the excess of acquisition cost of an acquired entity over the fair value of the identifiable net assets acquired. Goodwill is not amortized but tested for impairment annually or whenever indicators of impairment exist. These indicators may include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. We test for impairment annually as of December 31. There were no quantitative or qualitative indicators of impairment that occurred for the year ended December 31, 2023, and no impairment was required.

Intangible assets consist of assets acquired from First Vivos and costs paid to (i) MyoCorrect, from whom the Company acquired certain assets related to its OMT service in March 2021, (ii) Lyon Management and Consulting, LLC and its affiliates ("Lyon Dental"), from whom the Company acquired certain medical billing and practice management software, licenses and contracts in April 2021 (including the software underlying AireO2) for work related to the Company's acquired patents, intellectual property and customer contracts and (iii) AFD, from whom the Company acquired certain U.S. and international patents, trademarks, product rights, and other miscellaneous intellectual property in March 2023. The identifiable intangible assets acquired from First Vivos and Lyon Dental for customer contracts are amortized using the straight-line method over the estimated life of the assets, which approximates 5years (See Note 5). The costs paid to MyoCorrect, Lyon Dental and AFD for patents and intellectual property are amortized over the life of the underlying patents, which approximates 15years.

Intangible assets consist of assets acquired from First Vivos and costs paid to (i) MyoCorrect, from whom the Company acquired certain assets related to its OMT service in March 2021, (ii) Lyon Management and Consulting, LLC and its affiliates ("Lyon Dental"), from whom the Company acquired certain medical billing and practice management software, licenses and contracts in April 2021 (including the software underlying AireO2) for work related to the Company's acquired patents, intellectual property and customer contracts and (iii) AFD, from whom the Company acquired certain U.S. and international patents, trademarks, product rights, and other miscellaneous intellectual property in March 2023. The identifiable intangible assets acquired from First Vivos and Lyon Dental for customer contracts are amortized using the straight-line method over the estimated life of the assets, which approximates 5years (See Note 5). The costs paid to MyoCorrect, Lyon Dental and AFD for patents and intellectual property are amortized over the life of the underlying patents, which approximates 15years.

Impairment of Long-lived Assets

We review and evaluate the recoverability of long-lived assets whenever events or changes in circumstances indicate that an asset's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an adverse action or assessment by a regulator. We measure the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. There were no quantitative or qualitative indicators of impairment that occurred for the year ended December 31, 2023, and no impairment was required.

Equity Offering Costs

Commissions, legal fees and other costs that are directly associated with equity offerings are capitalized as deferred offering costs, pending a determination of the success of the offering. Deferred offering costs related to successful offerings are charged to additional paid-in capital in the period it is determined that the offering was successful. Deferred offering costs related to unsuccessful equity offerings are recorded as expense in the period when it is determined that an offering is unsuccessful.

Accounting for Payroll Protection Program Loan

The Company accounted for its U.S. Small Business Administration's ("SBA") Payroll Protection Program ("PPP") loan as a debt instrument under ASC 470, Debt. The Company recognized the original principal balance as a financial liability with interest accrued at the contractual rate over the term of the loan. On January 21, 2022, the PPP loan received by the Company on May 8, 2020 was forgiven by the SBA in its entirety, which includes approximately $1.3million in principal. As a result, the Company recorded a gain on the forgiveness of the loan in the quarter ended March 31, 2022 under non-operating income (expense).

Employee Retention Tax Credit

The employee retention tax credit ("ERTC") for 2020 was established under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the "CARES Act") and amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the "Relief Act"). The ERTC provided for changes in the employee retention credit for 2020 and provided an additional credit for the first, second and third calendar quarters of 2021. Employers are eligible for the credit if they experienced either a full or partial suspension of operations during any calendar quarter because of governmental orders due to the COVID-19 pandemic or if they experienced a significant decline in gross receipts based on a comparison of quarterly revenue results for 2020 and/or 2021 and the corresponding quarters in 2019. The ERTC is a refundable credit that employers can claim on qualified wages paid to employees, including certain health insurance costs.

According to the Internal Revenue Service ("IRS") Notice 2021-20, "Guidance on the Employee Retention Credit under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act," the period during which there is a significant decline in gross receipts is determined by identifying the first quarter in 2020 in which the gross receipts are less than 50% of its gross receipts for the same period in 2019. The employee retention credit is available only to eligible employers. Section 2301(c)(2)(A) of the CARES Act defines the term "eligible employer" as any employer carrying on a trade or business during calendar year 2020, and, with respect to any calendar quarter, for which (1) the operation of the trade or business carried on during calendar year 2020 is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19, or (2) such calendar quarter is within the period in which the employer had a significant decline in gross receipts, as described in section 2301(c)(2)(B) of the CARES Act. VIP dentists and potential VIPs were forced to close their offices during 2020 as a result of COVID-19. Therefore, the Company qualifies as an eligible employer under this under the CARES Act.

Section 2301(c)(3)(A)(ii) of the CARES Act also provides that if an eligible employer averaged 100 or fewer employees in 2019 (a "small eligible employer"), qualified wages are those wages paid by the eligible employer with respect to an employee during any period described in section 2301(c)(2)(A)(ii)(I) of the CARES Act (relating to a calendar quarter for which the operation of a trade or business is fully or partially suspended due to a governmental order) or during a calendar quarter within the period described in section 2301(c)(2)(A)(ii)(II) of the CARES Act (relating to a significant decline in gross receipts). The Company averaged fewer than 80 employees in 2019 and is therefore considered a small eligible employer under the CARES Act.

Healthcare plan expenses were not included in the analysis, although they are eligible if an employee has paid health insurance through their paycheck. Section 2301(c)(5)(B) of the CARES Act provides that "wages" include amounts paid by an eligible employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the Code), but only to the extent that the amounts are excluded from the gross income of employees by reason of section 106(a) of the Code. The Company pays the first $500 of healthcare insurance for each employee, which generally covers the monthly cost of their insurance. Because of this, the Company conservatively did not include any of the cost of insurance in its analysis. Additionally, PPP loan amounts were deducted from the amount of total wages paid before calculating the qualified ERTC wages. The Company applied for the ERTC using Vivos Therapeutics Inc.'s payroll, which covers 95% of its employees.

As indicated above, for 2020, companies were eligible for a credit equal to 50 percent of the first ten thousands of qualified wages paid per employee in the aggregate of each eligible quarter. Therefore, the maximum ERTC for the Company for 2020 is five thousand ($5,000) per employee. For the second and fourth quarters of 2020, the total eligible credit was limited to approximately $0.5 million.

For 2021, the ERTC was 70% of the first ten thousand qualified wages paid per employee each quarter. Accordingly, the credit was limited to approximately $0.7million. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounted for the ERTC by analogy to ASC 450, Contingencies. Accordingly, under ASC 450, entities would treat the ERTCs (whether received in cash or as an offset to current or future payroll taxes) as if they were gain contingencies. When applying ASC 450-30, entities would not consider the probability of complying with the terms of the ERC program but, rather, would defer any recognition in the income statement until all uncertainties are resolved and the income is "realized" or "realizable" (i.e., upon receipt of the funds or formal notice by the IRS that the company is entitled to such funds). In our case, the Company elected to follow a more conservative approach and instead of recognizing a receivable for amounts to be received when the amended tax forms were filed in 2022, it was decided to wait for the notice from IRS and cash was received. As for financial statement presentation, it is believed that either classifying the amounts as a reduction to payroll tax expense (expense off-set is however contrary to U.S. GAAP) or as other income to be acceptable with appropriate disclosure of the election made by the company. However, the IRS issued a renewed warning regarding the ERTC on March 7, 2023 urging taxpayers to carefully review the ERTC guidelines. The Company continues to evaluate additional information from the IRS, and elected to disclose the funds received as a separate line item under long-term liabilities on the balance sheet, until more information becomes available from the IRS. As a result, for the period ending December 31, 2023, approximately $1.2million was recorded under long-term liabilities.

Loss and Gain Contingencies

The Company is subject to the possibility of various loss contingencies arising in the ordinary course of business. An estimated loss contingency is accrued when it is probable that an asset has been impaired, or a liability has been incurred, and the amount of loss can be reasonably estimated. If some amount within a range of loss appears to be a better estimate than any other amount within the range, the Company accrues that amount. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, the Company accrues the lowest amount in the range. If the Company determines that a loss is reasonably possible and the range of the loss is estimable, then the Company discloses the range of the possible loss. If the Company cannot estimate the range of loss, it will disclose the reason why it cannot estimate the range of loss. The Company regularly evaluates current information available to it to determine whether an accrual is required, an accrual should be adjusted and if a range of possible loss should be disclosed. Legal fees related to contingencies are charged to general and administrative expense as incurred. Contingencies that may result in gains are not recognized until realization is assured, which typically requires collection in cash.

Share-Based Compensation

The Company measures the cost of employee and director services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. The Company computes the fair value of stock options using the Black-Scholes-Merton ("BSM") option pricing model. The Company estimates the expected term using the simplified method which is the average of the vesting term and the contractual term of the respective options. The Company determines the expected price volatility based on the historical volatilities of shares of the Company's peer group as the Company does not have a sufficient trading history for its Common Stock. Industry peers consist of several public companies in the bio-tech industry similar to the Company in size, stage of life cycle and financial leverage. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company's own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. The Company recognizes the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period. For awards granted which contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award were, in substance, a single award. The Company recognizes the impact of forfeitures and cancellations in the period that the forfeiture or cancellation occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based compensation.

Research and Development

Costs related to research and development are expensed as incurred and include costs associated with research and development of new products and enhancements to existing products. Research and development costs incurred were less than $0.1million and less than $0.2million for the years ended December 31, 2023 and 2022, respectively. These are recorded on the statement of operations under general and administrative expense.

Leases

Operating leases are included in operating lease right-of-use ("ROU") asset, accrued expenses, and operating lease liability - current and non-current portion in our balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements entered into after the adoption of ASC 842 that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on our balance sheets.

Income Taxes

The Company accounts for income taxes in accordance with Accounting Standards Codification ("ASC") 740, Income Taxes, under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized. The recorded valuation allowance is based on significant estimates and judgments and if the facts and circumstances change, the valuation allowance could materially change. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

Basic and Diluted Net Loss Per Share

Basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding for each period presented. Diluted net loss per common share is computed by giving effect to all potential shares of Common Stock, including stock options, convertible debt, Preferred Stock, and warrants, to the extent dilutive.

Warrant Accounting

The Company accounts for its warrants and financial instruments as either equity or liabilities based upon the characteristics and provisions of each instrument, in accordance with ASC 815, Derivatives and Hedging. Warrants classified as equity are recorded at fair value as of the date of issuance on the Company's consolidated balance sheets and no further adjustments to their valuation are made. Warrants classified as liabilities and other financial instruments that require separate accounting as liabilities are recorded on the Company's consolidated balance sheets at their fair value on the date of issuance and will be revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. Management estimates the fair value of these liabilities using the Black-Scholes model and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for future financings, expected volatility, expected life, yield, and risk-free interest rate.

Segment Information

We manage our business within one reportable segment. The Company's Chief Executive Officer, who is considered to be the chief operating decision maker (CODM), reviews financial information presented on a consolidated basis, accompanied by information about operations for purposes of making operating decisions and assessing financial performance.

Recent Accounting Pronouncements

Presented below is a discussion of new accounting standards including deadlines for adoption assuming that the Company retains its designation as an EGC.

Recently Adopted Standards. The following recently issued accounting standards were adopted by the Company during the period ended December 31, 2023:

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the guidance on the impairment of financial instruments. This guidance requires use of an impairment model (known as the "current expected credit losses", or CECL model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. The Company adopted the new accounting standard on January 1, 2023. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

NOTE 2 - LIQUIDITY AND ABILITY TO CONTINUE AS A GOING CONCERN

The financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has incurred losses since inception, including $13.6and $23.8million for the years ended December 31, 2023 and 2022, respectively, resulting in an accumulated deficit of approximately $93.1million as of December 31, 2023.

Net cash used in operating activities amounted to approximately $11.9and $19.6million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had total liabilities of approximately $10.3million.

As of December 31, 2023, the Company had approximately $1.6million in cash and cash equivalents, which will not be sufficient to fund operations and strategic objectives over the next twelve months from the date of issuance of these financial statements. Without additional financing, these factors raise substantial doubt regarding the Company's ability to continue as a going concern. See Note 16 for additional information regarding the Company's financing activity following the period ended December 31, 2023.

Until a state of cash flow positivity is reached, management is reviewing all options to obtain additional financing to fund operations. This financing is expected to come primarily from the issuance of equity securities in order to sustain operations until the Company can achieve profitability and positive cash flows, if ever. There can be no assurances, however, that adequate additional funding will be available on favorable terms, or at all. If such funds are not available in the future, the Company may be required to delay, significantly modify or terminate some or all of its operations, all of which could have a material adverse effect on the Company and stockholders.

NOTE 3 - REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

Net Revenue

For the years ended December 31, 2023 and 2022, the components of revenue from contracts with customers and the related timing of revenue recognition is set forth in the table below (in thousands):

		2023			2022
Product revenue:
Appliance sales to VIPs		$	6,081	(1)		$	7,820	(1)
Center revenue			189				561
Total product revenue			6,270				8,381
Service revenue
VIP			3,922				4,838	(2)
Billing intelligence services			887	(3)			1,170	(3)
Sleep testing services			1,185				594
Myofunctional therapy services			861				927
Sponsorship/seminar/other			676				114
Total service revenue			7,531				7,643
Total revenue		$	13,801			$	16,024

(1)	Appliance revenue from the sale of products is typically fixed at inception of the contract and is recognized at the point in time when shipment of the related products occurs.
(2)	VIP revenue disclosed above for the year ended December 31, 2022, includes a cumulative adjustment from prior years of approximately $0.4million decrease.
(3)	BIS revenue from subscription contracts is typically fixed at inception of the contract and is recognized ratably over time as the services are performed and the performance obligations completed. Revenue disclosed above for year ended December 31, 2022, includes a cumulative adjustment from prior years of approximately $0.1million increase.

Changes in Contract Liabilities

The key components of changes in contract liabilities for the years ended December 31, 2023 and 2022 are as follows (in thousands):

		2023			2022
Beginning balance, January 1		$	3,038			$	2,399
New contracts, net of cancellations			3,730				6,567
Revenue recognized			(4,341	)			(5,928	)
Ending balance, December 31		$	2,427			$	3,038

Current portion of deferred revenue is approximately $2.1million, which is expected to be recognized over the next 12 months from the date of the period presented. Additionally, revenue from breakage on contract liabilities was approximately $0.5and $1.6million for the years ended December 31, 2023 and 2022.

Changes in Accounts Receivable

Our customers are billed based on fees agreed upon in each customer contract. Receivables from customers were $0.2million at December 31, 2023, a decrease of $0.3million from $0.5million at December 31, 2022. An allowance is maintained for accounts receivable which is generally based on a combination of factors, including the aging of the receivables, historical collection trends, and charge-offs. Adjustment to the allowance are recorded in bad debt expense under general and administrative expenses in the consolidated statement of operations. An allowance of $0.3and $0.7million existed as of December 31, 2023 and 2022.

Shipping Costs

Shipping costs for product deliveries to customers are expensed as incurred and totaled approximately $0.2million for the year ended December 31, 2023, and approximately $0.2million for the year ended December 31, 2022. Shipping costs for product deliveries to customers are included in cost of goods sold in the accompanying consolidated statement of operations.

NOTE 4 - PROPERTY AND EQUIPMENT, NET

As of December 31, 2023 and 2022, property and equipment consist of the following (in thousands):

		2023			2022
Furniture and equipment		$	1,321			$	1,265
Leasehold improvements			2,479				2,479
Construction in progress			1,435				948
Molds			405				143
Gross property and equipment			5,640				4,835
Less accumulated depreciation			(2,326	)			(1,753	)
Net Property and equipment		$	3,314			$	3,082

Leasehold improvements relate to the Vivos Institute (the Company's 15,000square foot facility where the Company provides advanced post-graduate education and certification to dentists, dental teams, and other healthcare professionals in a live and hands-on setting) and the two Company-owned dental centers in Colorado. Total depreciation and amortization expense was $0.7and $0.6million for the years ended December 31, 2023 and 2022, respectively.

NOTE 5 - GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill of $2.8million as of December 31, 2023 and 2022, consist of the following acquisitions (in thousands):

Acquisitions		2023			2022
BioModeling		$	2,619			$	2,619
Empowered Dental			52				52
Lyon Dental			172				172
Total goodwill		$	2,843			$	2,843

Intangible Assets

As of December 31, 2023 and 2022, identifiable intangible assets were as follows (in thousands):

		2023			2022
Patents and developed technology		$	2,302			$	2,136
Trade name			330				330
Other			27				27
Total intangible assets			2,659				2,493
Less accumulated amortization			(2,239	)			(2,191	)
Net intangible assets		$	420			$	302

Amortization expense of identifiable intangible assets was less than $0.1million for the years ended December 31, 2023 and 2022. The estimated future amortization of identifiable intangible assets is as follows (in thousands):

As of December 31,
2024			50
2025			50
2026			35
2027			29
2028			29
Thereafter			227
Total		$	420

NOTE 6 - OTHER FINANCIAL INFORMATION

Accrued Expenses

As of December 31, 2023 and 2022, accrued expenses consist of the following (in thousands):

		2023			2022
Accrued payroll		$	1,498			$	1,358
Accrued legal and other			798				473
Lab rebate liabilities			38				81
Total accrued expenses		$	2,334			$	1,912

NOTE 7 - PREFERRED STOCK

The Company's Board of Directors has authority to issue up to 50,000,000shares of Preferred Stock. At December 31, 2020, all previously issued shares of Preferred Stock had been redeemed or converted to shares of Common Stock. As of December 31, 2023, the Company's Board of Directors continues to have the authority to designate up to 50,000,000shares of Preferred Stock in various series that provide for liquidation preferences, and voting, dividend, conversion, and redemption rights as determined at the discretion of the Board of Directors.

NOTE 8 - COMMON STOCK

The Company is authorized to issue 200,000,000shares of Common Stock. Holders of Common Stock are entitled to one vote for each share held. The Company's Board of Directors may declare dividends payable to the holders of Common Stock.

On January 9, 2023, the Company closed a private placement (the "January 2023 Private Placement") pursuant to which the Company agreed to issue and sell 80,000shares of Common Stock, Pre-Funded Warrants to purchase up to an aggregate of 186,667shares of Common Stock and Common Stock Purchase Warrants to purchase up to an aggregate of 266,667shares of Common Stock for net proceeds of approximately $7.4million. Issuance costs associated with the January 2023 Private Placement were approximately $0.6million.

On February 28, 2023, the Company acquired certain U.S. and international patents, patent applications, trademarks, product rights, and other miscellaneous intellectual property from AFD. Pursuant to the asset acquisition the Company agreed to issue 10,000shares of Common Stock in addition to cash consideration of $50,000. As a result of this transaction the Company recorded intangible assets of approximately $0.2million. As part of the Asset Purchase Agreement, the Company agreed to a future earnout payment consideration based on a sliding-scale percentage on the volume of future sales, as well as a cash payment of $0.2million upon the achievement of specified milestones. Per the Company's accounting policy, the contingent consideration obligation will be recorded as the contingency is resolved and the consideration is paid or becomes payable.

In addition, the Company entered into an employment agreement with Dr. Scott Simonetti, DDS, the founder and Chief Executive Officer of AFD, as part-time Senior Director of Research and Development for an annual salary of approximately $0.1million and a five-year warrant to purchase up to 16,000shares of Common Stock with an exercise price of $15.25per share; provided, however, that the shares of Common Stock underlying such warrant are subject to vesting only upon the achievement of specified milestones related to new FDA authorizations for the intangible assets acquired.

As disclosed above, on October 25, 2023 (the "Effective Date"), the Company effected a Reverse Stock Split of its outstanding shares of common stock at a ratio of 1-for-25. As of the Effective Date, every twenty-five shares of the Company's issued and outstanding Common Stock was combined into one share of Common Stock. As a result, the Company's issued and outstanding Common Stock on the Effective Date was proportionally reduced from approximately 29,928,786shares to approximately 1,197,258shares. The ownership percentage of each of the Company's stockholders remained unchanged, other than as a result of fractional shares. No fractional shares of Common Stock were issued in connection with the Reverse Stock Split, and stockholders that would hold a fractional share of Common Stock as a result of the Reverse Stock Split had such fractional shares of Common Stock rounded up to the nearest whole share of Common Stock.

On November 2, 2023, the Company closed a private placement (the "November 2023 Private Placement") with an institutional investor pursuant to which the Company sold an aggregate of $4,000,003of securities in a private placement consisting of (i) 130,000shares of Common Stock, (ii) a pre-funded warrant to purchase 850,393shares of Common Stock at an exercise price of $0.0001per share, (iii) a five-year Series A Common Stock Purchase Warrant to purchase up to 980,393shares of Common Stock with an exercise price of $3.83per share and (iii) an 18-month Series B Common Stock Purchase Warrant (the "Series B Warrant") to purchase up to 980,393shares of Common Stock with an exercise price of $3.83per share. Issuance costs associated with the November 2023 Private Placement were approximately $0.5million.

On February 14, 2024, the Company entered into a warrant inducement letter agreement (the "Inducement Agreement") with the same institutional investor in the November 2023 Private Placement pursuant to which the investor agreed to exercise for cash the entirety of the Series B Warrant at an exercise price of $4.02per share (with such exercise price being established for purposes of compliance with the listing rules of the Nasdaq Stock Market), resulting in gross proceeds to the Company of approximately $4.0million. Pursuant to the Inducement Agreement, in consideration for the immediate exercise of the Series B Warrant in full, the Company agreed to issue to the investor, in a new private placement transaction (the "Inducement Transaction"): (i) a 5-year, Series B-1 Common Stock Purchase Warrant to purchase 735,296shares of the Company's common stock at an exercise price of $5.05per share, and (ii) an 18-month, Series B-2 common stock purchase warrant to purchase 735,296shares of our common stock at an exercise price of $5.05per share (collectively, the "Inducement Warrants" and such aggregate 1,470,592shares of the Company's common stock underlying the Inducement Warrants, the "Inducement Warrant Shares"). The Inducement Warrants are identical to each other, other than their dates of expiration, and are substantially identical to the Series B Warrant.

The number of shares of Common Stock available for issuance under the Company's equity incentive plans and the Common Stock issuable pursuant to outstanding equity awards and common stock purchase warrants immediately prior to the Reverse Stock Split were proportionately adjusted by the ratio of the Reverse Stock Split. The exercise prices of such outstanding options and warrants were also adjusted in accordance with their respective terms. The number of authorized shares of common stock was not affected by the Reverse Stock Split.

NOTE 9 - STOCK OPTIONS AND WARRANTS

Stock Options

In 2017, the Company's shareholders approved the adoption of a stock and option award plan (the "2017 Plan"), under which shares were reserved for future issuance for Common Stock options, restricted stock awards and other equity awards. The 2017 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors. The Company's shareholders have approved a total reserve of 53,333shares of Common Stock for issuance under the 2017 Plan.

In April 2019, the Company's shareholders approved the adoption of a stock and option award plan (the "2019 Plan"), under which shares were reserved for future issuance for Common Stock options, restricted stock awards and other equity awards. The 2019 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors. The Company's shareholders originally approved a total reserve of 13,333shares of Common Stock for issuance under the 2019 Plan. At each of the Company's annual meeting of stockholders held in 2020 and 2021, the Company's stockholders approved amendments to the 2019 Plan to increase the number of shares of Common Stock available for issuance thereunder by an aggregate of 81,334shares of Common Stock such that, after such amendments, and prior to any grants, 94,667shares of Common Stock were available for issuance.

On September 22, 2023, stockholders approved an amendment to the Company's 2019 Plan to increase the number of shares of Company common stock authorized to be issued pursuant to the 2019 Plan by 80,000shares from an aggregate of 94,667shares to an aggregate of 174,667shares.

During the years ended December 31, 2023 and 2022, the Company issued stock options to purchase 16,000and 78,967shares of Common Stock at a weighted average exercise price of $9.98and $25.25per share respectively, to certain members of the Board of Directors, employees and consultants. The stock options allow the holders to purchase shares of Common Stock at prices between $8.50and $187.50per share. Options for the purchase of 33,553and 48,254shares of common stock expired as of December 31, 2023 and 2022, respectively. The following table summarizes all stock options as of December 31, 2023 and 2022 (shares in thousands):

		2023			2022
		Shares			Price (1)			Term (2)			Shares			Price (1)			Term (2)
Outstanding, at December 31,			145			$	72.25				3.3				114			$	124.00				3.3
Granted			16				9.89								79				25.25
Forfeited			(34	)			-								(48	)			-
Exercised			-				-								-				-
Outstanding, at December 31			127	(3)			62.45				3.4				145	(4)			72.25				3.3
Exercisable, at December 31			89	(4)			68.67				3.1				90	(5)			75.50				3.4

(1)	Represents the weighted average exercise price.
(2)	Represents the weighted average remaining contractual term until the stock options expire.
(3)	As of December 31, 2023, and 2022 the aggregate intrinsic value of stock options outstanding was approximately $65,500.
(4)	As of December 31, 2023, and 2022 the aggregate intrinsic value of exercisable stock options was approximately $24,600.

For the year ended December 31, 2023 and 2022, the valuation assumptions for stock options granted under the 2017 Plan and the 2019 Plan were estimated on the date of grant using the BSM option-pricing model with the following weighted-average assumptions:

			2023				2022
Grant date closing price of Common Stock		$	9.89			$	25.25
Expected term (years)			3.5				3.5
Risk-free interest rate			3.9	%			3.4	%
Volatility			102	%			112	%
Dividend yield			0	%			0	%

Based on the assumptions set forth above, the weighted-average grant date fair value per share for stock options granted for the years ended December 31, 2023 and 2022 was $9.89and $25.25, respectively.

For the years ended December 31, 2023 and 2022, the Company recognized approximately $1.1and $2.4million, respectively, of share-based compensation expense relating to the vesting of stock options. Unrecognized expense relating to these awards as of December 31, 2023 and 2022 was approximately $1.8and $3.0million, respectively, which will be recognized over the weighted average remaining term of 3.7and 4.1years, respectively.

Warrants

The following table sets forth activity with respect to the Company's warrants to purchase Common Stock for the years ended December 31, 2023 and 2022 (shares in thousands):

	2023			2022
		Shares			Price (1)			Term (2)			Shares			Price (1)			Term (2)
Outstanding, at December 31			144			$	137.50				2.6				102			$	186.00				3.1
Grants of warrants:
Consultants for services			86	(3)											42
Private placement			3,265	(4)											-
Exercised			(624	)(5)											-
Forfeited			(50	)											-
Outstanding, at December 31			2,821	(6)		$	13.15				4.6				144	(6)		$	137.50				2.6
Exercisable, at December 31			2,760	(7)		$	9.30				3.5				124	(7)		$	145.00				2.5

(1)	Represents the weighted average exercise price.
(2)	Represents the weighted average remaining contractual term until the warrants expire.
(3)	In February 2023, the Company granted warrants to consultants in exchange for business development, product development and distribution. Warrants issued in February 2023 provide for the purchase of an aggregate of 84,000shares of common stock at an exercise price of $22.75and $15.25per share with a fair value of approximately $1.3million which will be recognized upon the achievement of performance metrics and milestones. In June 2023, the Company granted warrants to consultants in exchange for services. Warrants issued in June 2023 provide for the purchase of an aggregate of 1,500shares of common stock at an exercise price of $10.25per share at a fair value of approximately $0.1million which will be recognized upon the achievement of performance metrics and milestones. In August 2023, the Company granted warrants to consultants in exchange for services. Warrants issued in August 2023 provide for the purchase of an aggregate of 900shares of common stock at an exercise price of $8.50per share at a fair value of approximately less than $0.1million which will be recognized per the vesting schedule. For the years ended December 31, 2023 and 2022, the Company recognized expense of $0.7million, respectively.

(4)	In January 2023, the Company granted warrants in connection with a private placement consisting of pre-funded warrants to purchase up to an aggregate of 186,667shares of common stock at an exercise price of $0.0001per share, and warrants to purchase up to an aggregate of 266,667shares of common stock at an exercise price of $30per share with a fair value of approximately $14.5million which was recognized as warrant liability at the time of issuance. In November 2023, the Company amended the warrants to modify the provisions that had required them to be previously classified as liabilities and enabled them to be classified as equity under the relevant accounting standards (see note 14). Additionally, in November 2023, the Company granted warrants in connection with a private placement consisting of pre-funded warrants to purchase up to an aggregate of 850,393shares of common stock at an exercise price of $0.0001per share, and warrants to purchase up to an aggregate of 1,960,786shares of common stock at an exercise price of $3.83per share with a relative fair value of approximately $3.8million which was recorded to additional paid-in capital at the time of issuance.
(5)	In March 2023, the Company issued an aggregate of 186,667shares of common stock from the exercise of warrants previously issued in January 2023. In December 2023, the Company issued an aggregate of 437,393shares of common stock from the exercise of warrants previously issued in November 2023.
(6)	As of December 31, 2023 and 2022, the aggregate intrinsic value of warrants outstanding was $19.2million, and $0, respectively.
(7)	As of December 31, 2023 and 2022, the aggregate intrinsic value of warrants exercisable was $19.2million, and $0respectively.

For the years ended December 31, 2023 and 2022, the valuation assumptions for warrants issued were estimated on the measurement date using the BSM option-pricing model with the following weighted-average assumptions:

		2023			2022
Measurement date closing price of Common Stock (1)		$	3.83			$	19.75
Contractual term (years) (2)			3.4				5.0
Risk-free interest rate			4.7	%			3.6	%
Volatility			100	%			102	%
Dividend yield			0	%			0	%

	(1)	Weighted average grant price.
	(2)	The valuation of warrants is based on the expected term.

NOTE 10 - RELATED PARTY TRANSACTIONS

For the years ended December 31, 2023 and 2022, options for the purchase of 16,000and 79,000, respectively, of common stock were granted to the Company's directors, officers, employees and consultants.

NOTE 11 - INCOME TAXES

For the years ended December 31, 2023 and 2022, the domestic and foreign components of loss before income taxes consist of the following (in thousands):

		2023			2022
Domestic		$	(13,626	)		$	(23,945	)
International			43				100
Loss before income taxes		$	(13,583	)		$	(23,845	)

For the years ended December 31, 2023 and 2022, , the Company did not recognize any current or deferred income tax expense due to a valuation allowance against all of its net deferred income tax assets.

A reconciliation between the income tax benefit computed by applying the statutory U.S. federal income tax rate of 21% to the pre-tax loss, and the income tax benefit recognized in the consolidated financial statements is as follows for the years ended December 31, 2023 and 2022 (in thousands):

		2023			2022
Income tax (benefit) computed at federal statutory rate		$	(2,852	)		$	(5,007	)
PPP loan forgiveness			-				(270	)
Other permanent differences			174				346
State tax expenses			(365	)			(510	)
Prior year adjustment to state net operating loss carryforward			(200	)			(44	)
Nontaxable gain on change in fair value of warrants, net of issuance costs			(793	)			-
Non-qualified stock option cancellations			260				613
Other			86				-
Change in valuation allowance			3,690				4,872
Total income tax benefit		$	-			$	-

As of December 31, 2023 and 2022, the principal components of deferred tax assets and liabilities were as follows (in thousands):

		2023			2022
Deferred tax assets:
Net operating loss carryforwards			17,354				13,786
Stock based compensation			532				776
Lease liability			472				561
Property, equipment and intangibles			662				458
Other			649				452
Total deferred tax assets before valuation allowance			19,669				16,033
Valuation allowance			(19,329	)			(15,639	)
Total deferred income tax assets after valuation allowance			340				394
Deferred tax liabilities:
Goodwill			(12	)			-
ROU asset			(328	)			(394
Total deferred income tax liabilities			(340	)			(394	)
Net deferred tax assets and liabilities		$	-			$	-

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred since inception. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. On the basis of this evaluation, as of December 31, 2023, a valuation allowance of $19.3million has been recorded to record the deferred tax asset that is more likely than not to be realized. For the years ended December 31, 2023 and 2022, the valuation allowance increased by $3.7million and $4.8million, respectively.

As of December 31, 2023, the Company has federal net operating loss ("NOL") carryforwards of $72.4million. The Company also has various state NOL carry forwards. The determination of the state NOL carryforwards is dependent upon the apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards. If federal NOL carryforwards are not utilized, approximately $3.3million will expire in 2036 and 2037. As of December 31, 2023, the remaining federal NOL carryforward of $69.1million has no expiration date.

Federal and state laws impose substantial restrictions on the utilization of NOL carryforwards if the Company experiences significant ownership changes as defined in Section 382 of the Internal Revenue Code ("IRC"). Pursuant to IRC Section 382, annual use of the Company's NOL carryforwards may be limited in the event a cumulative change in ownership of more than 50% among 5% or greater shareholders (or shareholder groups) over any three-year period. The Company is not currently utilizing its federal and state NOL carryforwards and has not completed a formal study to determine if any past ownership changes may have triggered limitations under IRC Section 382.. The Company's ability to use its remaining NOL carryforwards may be further limited if the Company experiences an IRC Section 382 ownership change in connection with future changes in the Company's stock ownership.

Management does not believe there are any significant uncertain tax positions as of and for the years ended December 31, 2023 and 2022. Accordingly, nointerest and penalties related to uncertain tax positions have been recognized for the years ended December 31, 2023 and 2022.

The Company files income tax returns in the United States federal and various state jurisdictions. The Company is no longer subject to income tax examinations for federal income taxes before 2020 or for states before 2019. Net operating loss carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOL's generated as such NOL's are utilized. As of December 31, 2023, the Company has filed all appropriate foreign operation tax returns.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus known as COVID-19 was reported to have surfaced in China, and by March 2020 the spread of the virus resulted in a world-wide pandemic. By March 2020, the U.S. economy had been largely shut down by mass quarantines and government mandated stay-in-place orders (the "Orders") to halt the spread of the virus, now widely acknowledged to have been generally ineffective, and in many ways, harmful. As a result, nearly all of these Orders have been relaxed or lifted, but there is considerable uncertainty about whether the Orders will be reinstated should a new COVID-19 variant or entirely new virus emerge.

Our business was materially impacted by COVID-19 in 2020 and to some extent thereafter and through the early part of 2023 due to the actions of governmental bodies that mandated quarantines and lockdowns that resulted in many of our VIPs and potential VIPs having to close their offices. The impact of COVID-19 on our business diminished somewhat as 2023 has progressed. However, it appears that the latest COVID-19 subvariants evoke generally milder symptoms and do not pose the same health or economic threat as previous strains. However, the residual effects of the pandemic on dental workforce availability as well as patient precautionary measures continued to negatively impact our VIP dental practices and our revenue across the U.S. and Canada during 2022 and into 2023. We believe new enrollments during 2023 continue to be negatively impacted by the ongoing overall workforce uncertainties in the dental market. In addition, new variants of COVID-19 continue to arise, and such variants may in the future cause an adverse effect on the dental market. As such, the long-term financial impact on our business of COVID-19 as well as these other matters cannot reasonably be fully estimated at this time.

Inflation, the War in Ukraine and Middle East Hostilities

The Company believes that as the U.S. experiences a period of inflation, which has increased (and may continue to increase), the Company and its suppliers' costs as well as the end cost of the Company's products to consumers may also increase. The worldwide supply chain constraints and economic and capital markets uncertainty arising out of Russia's invasion of Ukraine in February 2022 and Hamas attacks on Israel in October of 2023 and Israel's response have emerged as new barriers to long-term economic recovery. If an economic recession or depression commences and is sustained, it could have a material adverse effect on our business as demand for our products could decrease. To date, the Company has been able to manage inflation risk without a material adverse impact on its business or results of operations, and inflation has begun to abate somewhat during 2023. However, inflationary pressures (including increases in the price of raw material components of the Company's appliances) made it necessary for the Company to adjust its standard pricing for its appliance products effective May 1, 2022. The full impact of such price adjustments on sales or demand for the Company's products is not fully known at this time and may require the Company to adjust other aspects of its business as it seeks to grow revenue and, ultimately, achieve profitability and positive cash flow from operations.

An additional inflation-related risk is the Federal Reserve's response, which up to this point has been to raise interest rates. Such actions have, in times past, created unintended consequences in terms of the impact on housing starts, overall manufacturing, capital markets, and banking. If such disruptions become systemic, like in the recession of 2008, then the impact on the Company's revenue, earnings potential and access to capital of both inflation and inflation-fighting responses would be impossible to know or calculate.

These conditions could cause an economic recession or depression to commence, and if such recession or depression is sustained, it could have a material adverse effect on the Company's business as demand for its products could decrease. Such conditions have also had, and may continue to have, an adverse effect on the capital markets, with public stock price decreases and volatility, which could make it more difficult for the Company to raise needed capital at the appropriate time.

Operating Leases

The Company has entered into various operating lease agreements for certain offices, medical facilities and training facilities. These leases have original lease periods expiring between 2022 and 2029. Most leases include an option to renew and the exercise of a lease renewal option typically occurs at the discretion of both parties. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease until it is reasonably certain that the Company will exercise that option.

In January 2017, the Company entered into a commercial lease agreement for 2,220square feet of office in Johnstown, Colorado that was to commence on March 1, 2018 and end February 28, 2025. As of January 1, 2022, the Company recorded an operating lease right of use asset and lease liabilities of $0.3million in the consolidated balance sheet representing the present value of minimum lease payments using the Company's incremental borrowing rate of 6.0%.

In May 2018, the Company entered into a commercial lease agreement for 3,643square feet of office in Highlands Ranch, Colorado that was to commence on November 1, 2018 and end on January 1, 2029. As of January 1, 2022, the Company recorded an operating lease right of use asset and lease liabilities of $0.8million in the consolidated balance sheet representing the present value of minimum lease payments using the Company's incremental borrowing rate of 7.3%.

In October 2020, the Company entered into a commercial lease agreement for 4,800square feet of office in Orem, Utah that was to commence on January 1, 2021 and end on December 1, 2025. As of January 1, 2022, the Company recorded an operating lease right of use asset and lease liabilities of $0.6million in the consolidated balance sheet representing the present value of minimum lease payments using the Company's incremental borrowing rate of 6.6%.

In April 2019, the Company entered into a commercial lease agreement for 3,231square feet of office in Highlands Ranch, Colorado that was to commence on May 1, 2019 and end on May 31, 2022. As of January 1, 2022, the Company recorded an operating lease right of use asset and lease liabilities of less than $0.1million in the consolidated balance sheet representing the present value of minimum lease payments using the Company's incremental borrowing rate of 6.7%.

In April 2019, the Company entered into a commercial lease agreement for 14,732square feet of office space for its former corporate headquarters in Denver, Colorado that was to commence on September 23, 2020 and end on March 22, 2028. As of January 1, 2022, the Company recorded an operating lease right of use asset and lease liabilities of less than $1.4million in the consolidated balance sheet representing the present value of minimum lease payments using the Company's incremental borrowing rate of7.1%.

In April 2022, the Company entered into a commercial lease agreement for 8,253square feet of office space for its corporate headquarters in Littleton, Colorado that commenced May 16, 2022 and ends on November 15, 2027. As of May 16, 2022, the Company recorded an operating lease right of use asset and lease liabilities of less than $1.5million in the consolidated balance sheet representing the present value of minimum lease payments using the Company's incremental borrowing rate of 10.6%.

As of December 31, 2023 and 2022, the components of lease expense are as follows (in thousands):

Lease cost:		2023			2022
Operating lease cost		$	481			$	487
Total net lease cost		$	481			$	487

Rent expense is recognized on a straight-line basis over the lease term. Lease expense, including real estate taxes and related costs for the years ended December 31, 2023 and 2022 aggregated approximately $0.5million, respectively. This is included under general and administrative expense.

As of December 31, 2023 and 2022, the remaining lease terms and discount rate used are as follows (in thousands):

		2023			2023
Weighted-average remaining lease term (years)			3.7				4.6
Weighted-average discount rate			8.3	%			8.3	%

Supplemental cash flow information related to leases as of December 31, 2023 and 2022 is as follows (in thousands):

		2023			2022
Cash flow classification of lease payments:
Operating cash flows from operating leases			602				438

As of December 31, 2023 and 2022, the maturities of the Company's future minimum lease payments were as follows (in thousands):

As of December 31,
2024			621
2025			594
2026			507
2027			493
2028			133
Thereafter			7
Total lease payments			2,355
Less: Imputed interest			(360	)
Total		$	1,995

NOTE 13 - NET LOSS PER SHARE OF COMMON STOCK

Basic and diluted net loss per share of Common Stock ("EPS") is computed by dividing (i) net loss (the "Numerator"), by (ii) the weighted average number of shares of Common Stock outstanding during the period (the "Denominator").

The calculation of diluted EPS is also required to include the dilutive effect, if any, of stock options, unvested restricted stock awards, convertible debt and Preferred Stock, and other Common Stock equivalents computed using the treasury stock method, in order to compute the weighted average number of shares outstanding. As of December 31, 2023 and 2022, all Common Stock equivalents were antidilutive.

Presented below are the calculations of the Numerators and the Denominators for basic and diluted EPS (dollars in thousands, except per share amounts):

		2023			2022
Calculation of Numerator:
Net loss		$	(13,583	)			(23,845	)
Loss applicable to common stockholders		$	(13,583	)		$	(23,845	)
Calculation of Denominator:
Weighted average number of shares of Common Stock outstanding			1,219,381				920,592
Net loss per share of Common Stock (basic and diluted)		$	(11.14	)		$	(25.90	)

As of December 31, 2023 and 2022, the following potential Common Stock equivalents were excluded from the computation of diluted net loss per share of Common Stock since the impact of inclusion was antidilutive (in thousands):

		2023			2022
Common stock warrants			2,822				145
Common stock options			127				145
Total			2,949				290

NOTE 14 - FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the measurement of fair value:

Level 1-Quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date

Level 2-Other than quoted prices included in Level 1 that are observable for the asset and liability, either directly or indirectly through market collaboration, for substantially the full term of the asset or liability

Level 3-Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any market activity for the asset or liability at measurement date

As of December 31, 2023 and 2022, the fair value of the Company's cash and cash equivalents, accounts receivable, accounts payable, and other accrued liabilities approximated their carrying values due to the short-term nature of these instruments.

As discussed in Note 8, on January 9, 2023, the Company closed on the Private Placement for the sale by the Company of shares of the Company's common stock and the issuance of pre-funded warrant to purchase up to an aggregate of 186,667shares of common stock at an exercise price of $0.0001per share, and the issuance of warrant to purchase up to an aggregate of 266,667shares of common stock at an exercise price of $30per share. The warrants are initially exercisable commencing January 9, 2023 through their expiration date of July 9, 2028. In addition, as part of the November 2023 Private Placement, we agreed to amend the existing outstanding common stock purchase warrant held by the purchaser and issued in January 2023 to purchase up to an aggregate of 266,667shares of Common Stock at an exercise price of $30.00per share with an expiration date of July 5, 2028. Such amendment, which became effective upon the closing of the November 2023 Private Placement, reduced the exercise price of the January warrant to $3.83per share and extended the expiration date of such warrant to November 2, 2028. The amendment also restated in its entirety the definition of "Black Scholes Value" contained in the January warrant which resulted in the classification of the warrant from liability to equity. The liability associated with those warrants was initially recorded at fair value in the Company's consolidated balance sheet upon issuance, and subsequently re-measured as of March 31, 2023, June 30, 2023, September 30, 2023, and November 2, 2023 when the November 2023 Private Placement closed. The changes in the fair value between issuance, the March 31, 2023 measurement date, the June 30, 2023 measurement date, the September 30, 2023, and the November 2, 2023 measurement date are recorded as a component of other income (expense), in the consolidated statement of operations.

Recurring Fair Value Measurements

For the years ended December 31, 2023 and 2022, the Company did not have any assets and liabilities classified as Level 1, Level 2 or Level 3. The Company has concluded that the warrants issued in connection with the private placement, met the definition of a liability under ASC 480, Distinguishing Liabilities from Equity and has classified the liability as Level 3.

The following table represent a reconciliation of the Company's liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2023:

		Warrant Liability
		(In thousands)
Beginning balance, January 1		$	-
Issuance of warrants			14,453
Exercise of warrants			(2,847	)
Change in fair value upon re-measurement			(10,875	)
Reclassification of warrant liabilities to additional paid-in-capital			(731	)
Ending balance, December 31		$	-

The Company has re-measured the liability to estimate fair value at November 2, 2023 as a result of the amendment described above, using the Black-Scholes option pricing model with the following assumptions:

		January 9, 2023			March 31, 2023			June 30, 2023			September 30, 2023			November 2, 2023
Measurement date closing price of Common Stock (1)		$	36.00			$	8.50			$	12.75			$	4.75			$	3.62
Contractual term (years) (2)			5.5				5.3				5.0				4.8				5.0
Risk-free interest rate			3.6	%			3.5	%			4.1	%			4.5	%			4.6	%
Volatility			100	%			100	%			100	%			100	%			100	%
Dividend yield			0	%			0	%			0	%			0	%			0	%

	(1)	Based on the trading value of common stock of Vivos Therapeutics, Inc. as of January 9, 2023 and each presented period ending date.
	(2)	The valuation of warrants is based on the expected term.

The Company's policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer. During the years ended December 31, 2023 and 2022, the Company had no transfers of its assets or liabilities between levels of the fair value hierarchy.

Significant Concentrations

Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents on deposit with financial institutions, the balances of which frequently exceed federally insured limits. Management monitors the soundness of these financial institutions and believes the Company's risk is negligible. The Company has not experienced any losses in such accounts. If any of the financial institutions with whom the Company does business was to be placed into receivership, the Company may be unable to access the cash they have on deposit with such institutions. If the Company were unable to access cash and cash equivalents as needed, the financial position and ability to operate the business could be adversely affected. As of December 31, 2023, the Company had cash and cash equivalents with three financial institutions in the United States with an aggregate balance of $1.6million.

Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company's customer base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain customers and generally does not require collateral on accounts receivable. No single customer represented more than 10% of our accounts receivable as of December 31, 2023. The Company maintains reserves for potential bad debts.

Supplier Concentration

As previously disclosed, the Company relies on third-party suppliers and contract manufacturers for the raw materials and components used in our appliances and to manufacture and assemble our products. As of December 31, 2023, the Company had five suppliers that accounted for approximately 80% of the Company's total purchases during the year. The Company expects to maintain existing relationships with these vendors.

NOTE 15 - SUBSEQUENT EVENTS

On October 30, 2023, the Company entered into a Securities Purchase Agreement with an institutional investor (the "Holder") pursuant to which the Company sold an aggregate of approximately $4.0million of securities of the Company in a private placement, such securities consisting of shares of the Company's common stock, par value $0.0001(or, in lieu of a Share, a pre-funded warrant to purchase one share of Common Stock), (ii) a Series A Warrant to purchase up to 980,393shares of Common Stock and (iii) a Series B Warrant to purchase up to 980,393shares of Common Stock with an exercise price of $3.83per share. The private placement closed on November 2, 2023. As of January 31, 2024, all of the pre-funded warrants granted as part of the private placement were exercised.

On February 14, 2024, the Company entered into a warrant inducement letter agreement (the "Inducement Agreement") with the Holder pursuant to which the Holder agreed to exercise for cash the entirety of the Series B Warrant at an exercise price of $4.02per share (with such exercise price being established for purposes of compliance with the listing rules of the Nasdaq Stock Market), resulting in gross proceeds to the Company of approximately $4.0million. The resale of the shares of Common Stock underlying the Series B Warrant has been registered pursuant to a Registration Statement on Form S-1 (File No. 333-275726), which became effective with the Securities and Exchange Commission ("SEC") on December 1, 2023.

Pursuant to the Inducement Agreement, in consideration for the immediate exercise of the Series B Warrant in full, the Company agreed to issue to the Holder, in a new private placement transaction (the "Inducement Transaction"): (i) a 5-year, Series B-1 Common Stock Purchase Warrant to purchase735,296shares of Common Stock at an exercise price of $5.05per share, and (ii) an 18-month, Series B-2 Common Stock Purchase Warrant to purchase 735,296shares of Common Stock at an exercise price of $5.05per share (collectively, the "Inducement Warrants" and such aggregate 1,470,592shares of Common Stock underlying the Inducement Warrants, the "Inducement Warrant Shares"). The Inducement Warrants are identical to each other, other than their dates of expiration, and are substantially identical to the Series B Warrant.

The Inducement Transaction closed on February 20, 2024. The Company intends to use the net proceeds received for general working capital and general corporate purposes.

The terms of the Inducement Agreement require the Company to file a registration statement registering the Inducement Warrant Shares for resale ("Resale Registration Statement") no later than April 5, 2024 and to use commercially reasonable best efforts to cause the Resale Registration Statement to be effective within 60 calendar days following the filing.

The Company further agreed that until forty-five (45) days after the closing date of the Inducement Transaction, it will not (other than in connection with limited enumerated exceptions) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock equivalents or file any registration statement or any amendment or supplement (other than the Resale Registration Statement). The Company is further prohibited from entering into any "variable rate transaction" for a period of six months from the effective date of the Resale Registration Statement.

The Inducement Warrants contain (i) customary stock-based anti-dilution protection, (ii) a cashless exercise provision in the event the Inducement Warrant Shares are not registered for resale at the time of exercise, (iii) beneficial ownership limitations that may be waived at the option of the Holder upon 61 days' notice to the Company, (iv) a put right granting the Holder the right to require the Company or its successor to redeem the Inducement Warrants in cash for their Black-Scholes value in the event of a Fundamental Transaction (as defined in the Inducement Warrants) and (v) other customary provisions for warrants of this type.

PART IV

Item 15. Exhibits and Financial Statement Schedules and Reports on Form 10-K

(a) List of documents filed as part of this Amendment No. 1:

(1) Financial Statements

For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page 2 of this Annual Report on Form 10-K/A, incorporated into this Item by reference.

(2) Financial Statement Schedules

None.

(3) The following exhibits are either filed as part of this Annual Report on Form 10-K/A:

EXHIBIT INDEX

Exhibit No.		Description
23.1*		Consent of Plante & Moran, PLLC.
23.2*		Consent of Moss Adams LLP, Independent Registered Public Accounting Firm
31.1*		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Chief Executive Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of the Chief Financial Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Inline Cover Page Interaction Data File (embedded within the Inline XBLR document)

*	Filed herewith.
**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K/A (Amendment No. 1) to be signed on its behalf by the undersigned.

	VIVOS THERAPEUTICS, INC.
Date: July 29, 2024	By:	/s/ R. Kirk Huntsman
		R. Kirk Huntsman
		Chairman and Chief Executive Officer
Date: July 29, 2024	By:	/s/ Bradford Amman
		Bradford Amman
		Chief Financial Officer

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