美國
證券交易委員會
華盛頓特區 20549
表格
（修訂案第1號）
(標記一個)
| 根據1934年證券交易法第13或15(d)條款的季度報告。 |
截至季度結束的期間
或
| 根據1934年證券交易法第13或15(d)條款的過渡報告 |
委員會檔案編號
（依憑章程所載的完整登記名稱） |
| ||
(成立州) |
| （聯邦稅號） |
(總部辦公地址) (郵遞區號)
(
(註冊人電話號碼，包括區號)
根據法案第12(b)條規定註冊的證券：
每種類別的名稱 |
| 交易標的（s） |
| 每個註冊交易所的名稱 |
|
| 股市 |
請回答以下問題：（1）公司是否在過去12個月內依據 1934年交易所法第13條或第15(d)條呈報了所有要求呈報的報告（或者在更短的期限內公司是否需要呈報此類報告），（2）公司是否在過去90天內需要呈報此類報告。
請用勾記號表示公司是否在過去12個月內（或申報對象所需提交的較短期間內）已遞交所有應遞交的交互式資料檔案，根據S-t法規405條款(本章規232.405節)的要求。
請打勾選取適用的類別，即公司是否為大型加速提名者、加速提名者、非加速提名者、較小的報告公司或新興成長公司。請參見交易所法第120億2條中對「大型加速提名者」、「加速提名者」、「較小的報告公司」和「新興成長公司」的定義：
大型加速歸檔人 | ☐ | 加速歸檔人 | ☐ |
☒ | 小型報告公司 | ||
|
| 新興成長型企業 |
如果是新興成長型企業，在符合任何依據證券交易法第13(a)條所提供的任何新的或修改的財務會計準則的遵循的延伸過渡期方面，是否選擇不使用核准記號進行指示。☐
請用勾選表示是否申報人為外殼公司（定義見《交易所法》第120億2條）。 是
截至2024年11月19日，共有
說明註釋：
登記人的10-Q表格於2024年11月19日提交給證券交易委員會，未包含內嵌XBRL標記。本次修訂號1的目的僅為在登記人的10-Q表格中增加內嵌XBRL標記，此為依據S-t規則405的要求，針對截至2024年9月30日的季度期間所作。
對登記人提交的10-Q表格沒有進行任何更改。此修正案第1號並不反映原始提交日期之後發生的任何後續事件，亦不以任何方式修改或更新原始提交中的披露。
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目錄
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| 目錄 |
第I部分 - 財務資訊
項目1. 財務報表
endra life sciences公司
簡明合併資產負債表
|
| 九月三十日， |
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| 十二月三十一日， |
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資產 |
| 2024 |
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| 2023 |
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流動資產 |
| (未經審計) |
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現金 |
| $ |
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| $ |
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預付費用 |
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所有流動資产總額 |
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非流動資產 |
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存貨淨額 |
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固定資產，扣除累計折舊和攤銷 |
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租賃資產 |
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預付費用，長期 |
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其他資產 |
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總資產 |
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550,714 |
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流動負債 |
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應付帳款及應計負債 |
| $ |
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| $ |
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租賃負債，流動部分 |
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貸款 |
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全部流动负债 |
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長期負債 |
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租賃負債 |
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認股權負債 |
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總長期債務 |
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總負債 |
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股東權益 |
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A系列可轉換優先股，$ |
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可轉換優先B股，$ |
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可轉換優先C股，$ |
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0.01 |
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額外資本贈与金 |
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應付股票 |
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累積虧損 |
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股東權益總計 |
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負債總額和股東權益總額 |
| $ |
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| $ |
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附註是這些未經審計的簡明綜合財務報表的一個組成部分。
| 4 |
| 目錄 |
endra life sciences公司
損益綜合表簡明合併報表
(未經審計)
|
| 截至三個月 |
|
| 截至三個月 |
|
| 九個月結束 |
|
| 九個月結束 |
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|
| 九月三十日， |
|
| 九月三十日， |
|
| 九月三十日， |
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| 九月三十日， |
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| 2024 |
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| 2023 |
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| 2024 |
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| 2023 |
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營運費用 |
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研發 |
| $ |
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| $ |
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| $ |
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銷售和市場推廣 |
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一般及行政費用 |
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營業費用總額 |
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營運虧損 |
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其他費用 |
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其他收入（費用） |
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認股權費用 |
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認股權責任公平價值的變動 |
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認股權證行使結算的盈虧 |
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其他費用總計 |
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營業損失（稅前） |
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所得稅準備 |
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淨虧損 |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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基本和稀釋每股淨損失 |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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普通股權加權平均值-基本和稀釋 |
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附註是這些未經審計的簡明綜合財務報表的一個組成部分。
| 5 |
| 目錄 |
endra life sciences公司
股東權益簡明合併報表
(未經審計)
截至2023年9月30日止九個月 |
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| A系可換股 |
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| 乙系列可轉換 |
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| 追加 |
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| 總計 |
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| 優先股 |
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| 優先股 |
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| 普通股 |
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| 已付入 |
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| 股票 |
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| 累積的 |
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| 股東的 |
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| 股份 |
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| 金額 |
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| 股份 |
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| 金額 |
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| 股份 |
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| 金額 |
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| 資本 |
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| 支付 |
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| 赤字 |
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| 權益 |
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截至2022年12月31日的余额 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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以現金發行普通股，除去籌資成本後的凈額 |
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| - |
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| - |
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發行現金認股權證，扣除資金成本後淨額 |
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| - |
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| - |
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| - |
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已授予股權的公允價值 |
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| - |
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| - |
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| - |
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股份支付優先股息 |
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| - |
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| - |
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| - |
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淨虧損 |
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| - |
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| - |
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| - |
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截至2023年9月30日的餘額 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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截至2024年9月30日的九個月份 |
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| A系可換股 |
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| 乙系列可轉換 |
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| 追加 |
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| 總計 |
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| 優先股 |
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| 優先股 |
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| 普通股 |
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| 已付入 |
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| 股票 | 累積的 | 股東的 |
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| 股份 |
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| 金額 |
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| 股份 |
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| 金額 |
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| 股份 |
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| 金額 |
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| 資本 |
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| 支付 |
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| 赤字 |
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| 權益 |
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截至2023年12月31日的餘額 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ |
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優先股轉換為普通股 |
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| - |
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以現金發行普通股 |
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為權證行使而發行的普通股 |
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為無現金權證行使而發行的普通股 |
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已獲得普通股的公平價值（與被終止員工的期權取消相抵消） |
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已授予股權的公允價值 |
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股份支付優先股息 |
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淨虧損 |
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截至2024年9月30日的餘額 |
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| $ |
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| 6 |
| 目錄 |
2023年9月30日結束的三個月 |
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| A系可換股 |
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| 追加 |
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| 總計 |
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| 優先股 |
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| 優先股 |
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| Paid in |
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| 股票 |
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| 累積的 |
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| 股東的 |
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| 股份 |
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| 金額 |
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| 股份 |
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| 金額 |
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| 股份 |
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| 金額 |
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| 資本 |
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| 支付 |
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| 赤字 |
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| 權益 |
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截至2023年6月30日的餘額 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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以現金發行普通股，除去籌資成本後的凈額 |
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| - |
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| $ |
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| - |
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| $ |
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已授予股權的公允價值 |
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截至2023年9月30日的餘額 |
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2024年9月30日止三個月 |
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截至2024年6月30日的結餘 |
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為權證行使而發行的普通股 |
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授予股票期權的公平價值（扣除已終止員工的期權） |
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股份支付優先股息 |
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淨虧損 |
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截至2024年9月30日的餘額 |
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| 7 |
| 目錄 |
endra life sciences公司
簡明合併現金流量量表
(未經審計)
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經營活動現金流量 |
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淨虧損 |
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調整為使淨虧損轉化為經營活動所使用現金： |
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折舊及攤銷 |
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固定資產注銷 |
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存貨儲備 |
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租賃資產攤提 |
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認股權費用 |
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認股權責任公平價值的變動 |
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認股權證行使結算的盈虧 |
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營運資產和負債的變化： |
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預付費用減少 |
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存貨增加 |
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投資活動產生的現金流量 |
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固定資產的購買 |
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固定資產出售所得 |
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來自融資活動的現金流量 |
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普通股發行所得款項 |
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來自發行warrants的收益 |
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現金無息認股權證發行所得 |
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還款貸款 |
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籌資活動提供的淨現金 |
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現金流量淨增加（減少） |
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現金項目的補充披露 |
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支付利息 |
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非現金項目的補充披露 |
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股票現金股利應付 |
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租賃負債 |
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附註是這些未經審計的簡明綜合財務報表的一個組成部分。
| 8 |
| 目錄 |
endra life sciences公司
附註至簡明綜合財務報表
截至2024年和2023年9月底的九個月
(未經審計)
備註1 - 業務的性質
endra life sciences公司（“endra”或 “公司”）已研發並繼續發展科技，進行非侵入式組織特徵分析，可在病人護理的現場，擴大病人對多種重大醫療狀況安全診斷和治療的接觸範圍，在昂貴的X光電腦斷層掃描（CT）、核磁共振影像（MRI）或其他科技不可用或不切實際的情況下。
ENDRA成立於2007年7月18日，是一家特拉華州的公司。
附註2 - 重大會計政策摘要
估計的使用
根據美國一般公認會計原則編制基本報表，要求管理層進行估算和假設，這些估算和假設會影響所報告的資產和負債的數額，以及在基本報表日期披露的或有負債，和報告期間的費用報告數額。實際結果可能與這些估算有所不同。
管理層對影響某些賬戶的估計進行了評估，包括推遲所得稅資產、應計費用、股權工具的公允價值以及其他承諾或可能負債的儲備金。對估計數字進行的任何調整均在確定該等調整的期間內認可。
合併原則
公司的合併基本報表包括截至報告期結束日期和截至該報告期的公司的所有帳目及其合併子公司和/或實體。所有板塊之間的餘額和交易均已被消除。
報告基礎
附表所列的未經審核的總體財務基本報表及相關附註是根據證券交易委員會（“SEC”）的規則和法規編制的。 因此，根據該等規則和法規，已省略了通常包括在按照通行會計原則編制的財務報表中的某些資訊和註腳披露。 在管理層的意見中，為了公平呈現，被認為必要的所有調整（包括正常的週期應計數）已經包含在內。 截至2024年9月30日止九個月的營運結果並不能必然反映出截至2024年12月31日結束的年度可能期待的結果。 2024年9月30日的資產負債表是根據該日期的已審核財務報表獲得的。 更多信息，請參閱公司年度財務報表中包括2023年12月31日結束的十二個月的財務報表和註腳，該公司在2024年3月28日向SEC提交的年度報告第10-K表中包括的。
現金及約當現金
該公司將所有手頭現金以及存放在銀行中的資金，包括帳戶透支部位中的賬目、定期存單以及購買時剩餘期限一年或一年以下的其他高度流動性投資，視為現金。現金等價物包括投資於機構貨幣型基金的投資，該基金投資於美國國庫券、票據和債券，以及/或回購協議，並以此等債務擔保。帳面價值接近公平價值。該公司將現金存入銀行存款帳戶，有時可能超出聯邦保險限制。該公司未在該等帳戶中遭受任何損失，並定期評估金融機構的信用質素，已確定信用風險可忽略不計。該公司在多家銀行保留現金存款，以減輕任何特定銀行失敗所帶來的風險。
存貨
公司的存貨按成本或預估淨實現價值中的較低者記載，成本主要根據加權平均成本基礎和先進先出法確定。公司定期確定是否應對存貨減值或陳舊採取儲備。公司於2024年9月30日評估了其存貨，並確定了某些挑戰，包括潛在的損壞和初始銷售的時間長，需要設立存貨縮水儲備。因此，公司認列了一項存貨儲備，金額為
| 9 |
| 目錄 |
固定資產的資本化
公司對與物業和設備相關的支出進行資本化，受最低標準規則規定，對於具有超過一年以上使用壽命的資產：(1) 已購買的資產；(2) 被替換、改善或使用壽命已延長的現有資產；或(3) 所有土地，無論成本如何。新資產的收購、增加、更換和改善（不包括土地）的成本低於最低規則的，以及維護和維修成本，包括任何計劃的主要維護活動，均按照發生支出的方式列支。
租賃
會計準則更新（"ASU"）第2016-02號要求承租人在資產負債表上對所有期限超過12個月的租賃記錄使用權資產及相應的租賃負債。對於在財務報表中所呈現的最早期間開始時存在的或在之後簽訂的資本租賃和營運租賃，承租人需採用修改後的追溯過渡方法。截至2024年9月30日及2023年12月31日，公司記錄的使用權資產為$
收入確認
ASU No. 2014-09，《來自顧客合約的營業收入》（“ASC主題606”）提供了一套統一的營業收入確認指導方針，適用於所有行業並要求額外的披露。更新的指導方針引入了一個五步驟模型，以實現其核心原則：實體確認營業收入以反映向顧客轉移商品或服務的價值，金額反映實體預期因這些商品或服務而應得的酬金。
根據ASC主題606，為了確認營業收入，公司需要識別一份已批准的合同，承諾履行各自的義務，識別交易中每一方有關待轉移貨物的權利，識別轉移貨物的付款條款，核實合同具有商業實質，以及核實收款幾乎所有對價均是可能的。採用ASC主題606對公司的運營或現金流沒有影響。
研發成本
公司遵循FASB會計標準編纂（"ASC"）子主題730-10，"研究與開發"。研究與開發費用在發生時計入營運報表。於截至2024年9月30日及2023年9月30日的三個月內，公司承擔了$
每股普通股淨收益（虧損）
公司根據ASC 亞題 260-10“每股盈利”計算每股盈利。基本每股盈(損)利由歸屬於普通股股東的凈利潤(分子)除以在報告期間內普通股股份的加權平均數(分母)計算。每股摊薄損益則通過增加分母，以用通過可轉換為普通股的證券(使用“庫存股份”方法)的加權平均數增加的額外股份的加權平均數計算，除非其對每股淨損益有稀釋作用。這是有潛在稀釋份額，包括截至2024年9月30日和2023年12月31日分別尚未行使的普通股期權和warrants。
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購買普通股的期權 |
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購買普通股的認股權證 |
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可轉換A系列可換股溢數股份 |
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排除的潛在等值股份 |
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| 10 |
| 目錄 |
Fair Value Measurements
關於金融工具公允價值的披露要求披露公允價值資訊，無論是否在資產負債表中確認，只要能夠合理估計該價值。
根據ASC主題820，"公允價值測量和披露"，本公司定期以公允價值測量某些金融工具。ASC主題820定義了公允價值，確立了根據美國通用會計原則測量公允價值的框架，並擴展了關於公允價值測量的披露。
公允價值被定義為，在測量日期，以有秩序的交易方式在市場參與者之間進行資產出售時可獲得的價格，或者轉移負債時應支付的金額。ASC主題820確立了一個三層次的公允價值層次結構，優先考量在衡量公允價值時使用的輸入。此層次給予最高優先順位於活躍市場上未經調整的相同資產或負債的報價價格（1級別測量），並給予最低優先順位於無法觀察的輸入（3級別測量）。這些層次包括：
· | 第一級，定義為可觀察的輸入，例如活躍市場中相同工具的報價。 |
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· | 第二級，定義為在活躍市場中除了報價外的輸入，這些輸入可以直接或間接觀察，例如在活躍市場中相似工具的報價或在不活躍市場中相同或相似工具的報價;以及 |
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· | 3級，被定義為不可觀察的輸入，其中幾乎沒有市場數據存在，因此要求實體開發自己的假設，例如源自估值方法的估值，其中一個或多個重要輸入或重要價值驅動因素是不可觀察的。 |
如果金融資產使用定價模式、折扣現金流方法或類似技術確定其公平價值，而至少一個重要模型假設或輸入無法觀察，則視為第 3 級。
公司的財務資產和負債，包括現金、應收帳款、預付費用、應付帳款、應計費用和其他流動負債的攜帶金額，由於這些工具的短期性，與其公允價值接近。 由於目前的利率期貨和條款與這些債務的市場利率相同，因此應付票據和可轉換票據的公允價值與其公允價值相當。
股份報酬
公司的2016年綜合激勵計劃（“綜合計劃”）允許向其員工、顧問以及非僱員的董事會成員授予期權和其他以股份為基礎的獎勵。每年的1月1日，根據綜合計劃可發行的股份池自動增加，增加的數量等於以下兩者中的較小者：(i) 必要的股份數量，使得綜合計劃下可發行的股份總數等於增加日完全攤薄流通股總數的25%（假設將所有流通中的優先股和其他可轉換證券轉換，以及行使所有流通中的期權和warrants以購買股份）和 (ii) 如果董事會採取行動設定較低的金額，則由董事會確定的金額。
公司依照FASB Codification的《股份基礎報酬》主題條款記錄股份基礎報酬，指南要求使用需要輸入高度主觀假設的期權定價模型，包括期權的預期壽命和基礎股票價格波動性。每個期權授予的公平價值是根據授予當日使用Black-Scholes期權定價模型估計，結果費用使用直線分攤法在執行期內分攤。
期權費用再認列期間是根據預期在期間內才能授予的股份獎勵的價值，並考慮估計的取消。若適用，公司對非員工發放的股票期權和認股權的估計公平價值會在基本報表中予以費用化。這些期權的取得方式與上述股票激勵計劃下授予的員工期權相同。
| 11 |
| 目錄 |
經營概念
公司的基本報表是根據美國一般會計準則（“U.S. GAAP”）編製的，適用於持續經營，預期在業務正常運作過程中實現資產和清償負債。公司具有有限的商業經驗，從成立至2024年9月30日累計凈損失為$
最近的會計聲明
公司考慮了由FASB、包括其新興問題工作組、美國註冊會計師協會和SEC發布的最近的會計準則，據管理層意見，這些準則對公司目前或未來的綜合基本報表不會造成重大影響。
備註 3 - 存貨
截至2024年9月30日及2023年12月31日，庫存包括原材料、將用於TAEUS系統組裝的子組件以及成品。截止2024年9月30日，該公司沒有待售的TAEUS系統訂單。
截至2024年9月30日，公司記錄了存貨備抵。
截至2024年9月30日和2023年12月31日，該公司的庫存價值為$
備註 4 - 固定資產
截至2024年9月30日和2023年12月31日，固定資產包括以下：
|
| 九月30日， 2024 |
|
| 十二月三十一日， 2023 |
| ||
財產、租賃和資本化的軟體 |
| $ |
|
| $ |
| ||
TAEUS的開發和測試 |
|
|
|
|
|
| ||
累計折舊 |
|
| ( | ) |
|
| ( | ) |
固定資產，扣除累計折舊和攤銷 |
| $ |
|
| $ |
| ||
2024年和2023年截至9月30日三個月的折舊費分別為美元。
截至2024年9月30日及2023年的九個月折舊費用為$
註解 5 - 應付帳款及應計負債
截至2024年9月30日和2023年12月31日，流動負債包括以下項目：
|
| 九月三十日 2024 |
|
| 十二月三十一日 2023 |
| ||
應付帳款 |
| $ |
|
| $ |
| ||
累計薪酬 |
|
|
|
|
|
| ||
累積獎金 |
|
|
|
|
|
| ||
累計員工福利 |
|
|
|
|
|
| ||
保險費融資 |
|
|
|
|
|
| ||
總計 |
| $ |
|
| $ |
| ||
| 12 |
| 目錄 |
附註6 - 銀行貸款
多倫多道明銀行貸款
於2020年4月27日，公司根據加拿大緊急業務賬戶與TD銀行簽署承諾貸款，本金總額為CAD
備註 7 - 資本股
股本
截至2024年9月30日，公司的授權資本包括
截至2024年9月30日，已發行股票，
截至2024年9月30日止的九個月內，本公司共發行了
已登記發行（下文詳述）：
-
-
其他發行：
-
-
-
-
系列B權證行使：
-
截至2023年9月30日的九個月內，本公司共發行了
註冊發售
在2024年6月4日，公司與Craig-Hallum Capital Group LLC（以下稱「配售代理」）簽訂了一份配售代理協議（以下稱「配售協議」），根據該協議，配售代理將以最佳努力的方式，協助發行及銷售（以下稱「發行」）3,490股普通股和預先資助的認購權證，購買總數為
公司在扣除由公司支付的發售費用後，從發售中獲得的淨收益為$
| 13 |
| 目錄 |
該發行是根據該公司於2024年6月4日由SEC宣佈生效的表格S-1（文件編號333-278842）的登記聲明進行的。
系列認股權是在2024年8月20日生效的逆向股票分割中首次行使的。每個A系列認股權將在最初行使日期後五年到期。每個B系列認股權將在最初行使日期後兩年半到期。
根據B系列認股權的可替代無現金行使選項，B系列認股權持有人有權利收到之股份總數等於(x)在假設以$為行使價值進行B系列認股權的無現金行使時可能發行的普通股份總數和(y)3.0的乘積。
此外，這些序列認股權包括一項條款，在公司普通股進行逆向拆分至價格等於（i）當時的行使價格及（ii）在公司進行逆向股票拆分當日前五個交易日起始及當日起始的五個交易日內的最低成交量加權平均價格（VWAP）（該較低價格為“底價”），前提是該底價不得低於0.0434美元（受逆向與正向拆分、歸併及類似交易的調整影響），並對序列認股權所包括的股份數進行比例調整。公司於2024年8月及2024年11月進行的逆向拆分導致序列A認股權及序列b認股權的基礎股份總數分別為178,255。
根據某些例外情況，A系列warrants提供在公司發行普通股或普通股等價物時，根據其價格低於A系列warrants的執行價格，對執行價格和基於A系列warrants的股份數量進行調整，前提是該調整後的價格不得低於$
持有人如其（連附屬公司）持有的公司普通股數量在行使後將超過公司已發行的股份數的4.99%，則無權行使任何Series A認股權或Series B認股權。
根據配售協議，除了上述描述的配售代理權證外，
公司已同意，根據某些例外情況，不會在發行協議中定義的變量利率交易期間內進行任何普通股或可轉換為普通股的證券的發行，該期間始於發行協議之日，持續至發行結束後的180天。
市場定向股本發行計畫
公司於2021年6月21日與Ascendiant（「2021年6月ATM協議」）簽訂了大宗發行銷售協議，賣出普通股股份，總毛收益高達$
Reverse Stock Split
在2024年8月16日，公司向特拉華州的國務卿提交了一份修訂證書（"修訂證書"），該修訂證書於2024年8月20日東部時間凌晨12:01（"生效時間"）生效，實施公司普通股的1比50反向拆股（"2024年8月反向拆股"）。所有每股金額（包括行使價格）和合併基本報表及其附註中的股份數量已追溯重述，以反映2024年8月反向拆股及2024年11月反向拆股（如下文第13條所述）。在2024年8月反向拆股中，沒有發行碎股，也不會發行碎股。
2024年8月的反向股票拆分導致每股轉換或行使價格及可轉換或行使的優先股、期權和warrants所發行的普通股數量的按比例調整，以及根據綜合計劃可發行的普通股數量。
| 14 |
| 目錄 |
備註 8 - 普通股期權及受限股票
普通股期權
根據綜合計劃，股票期權被授予公司的員工、顧問以及董事會的非員工成員，通常以授予日期公司普通股票的市場價格作為行使價格。2024年9月30日截至的九個月內，公司授予的這些股票期權的總公平價值被確定為 $
|
| 數量 期權 |
|
| 加權 平均值 行使 價格 |
|
| 加權 平均值 剩餘 合約上的 期限（年） |
| |||
2023年12月31日的未償餘額 |
|
|
|
| $ |
|
|
|
| |||
已授予 |
|
|
|
|
|
|
|
|
| |||
已行使 |
|
| - |
|
|
|
|
|
| - |
| |
放棄 |
|
|
|
|
|
|
|
| - |
| ||
取消或到期 |
|
| ( | ) |
|
|
|
|
| - |
| |
2024年9月30日尚未償還的餘額 |
|
|
|
| $ |
|
|
|
| |||
可在2024年9月30日行使 |
|
|
|
| $ |
|
|
|
| |||
受限普通股
於2023年11月30日，公司發行了受限普通股（“受限股票”）給PatentVest, Inc.（“PatentVest”），根據一項受限股票協議和諮詢服務協議，每項協議均與PatentVest簽訂，以交換為公司的專利組合提供的某些服務。受限股票的公允價值確定為$
筆記9 - 普通股認股權證
如“註冊發行”（註釋7）所述，公司發行了可預先資助的warrants，可購買多達合計的
Additionally, the Series B Warrants contain an alternative cashless exercise option whereby the holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant using $
In connection with the Offering, the Company also issued placement agent warrants (“Placement Agent Warrants” and, together with the pre-funded warrants and the Series Warrants, the “Warrants”) to purchase up to
Warrant Exercises
On May 2, 2023, the Company conducted a registered offering in which the Company issued
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| Table of Contents |
Between June 4, 2024 and June 7, 2024,
Between August 19, 2024 and September 3, 2024, the Company issued a total of
The following table summarizes all warrant activity of the Company for the nine months ended September 30, 2024:
|
| Number of Warrants |
|
| Weighted Average Exercise Price |
|
| Weighted Average Contractual Term (Years) |
| |||
Balance outstanding at December 31, 2023 |
|
|
|
| $ |
|
|
|
| |||
Issued |
|
|
|
|
|
|
|
|
| |||
Exercised |
|
| ( | ) |
|
|
|
|
|
| ||
Forfeited |
|
| - |
|
|
| - |
|
|
| - |
|
Expired |
|
| - |
|
|
|
|
|
| - |
| |
Balance outstanding at September 30, 2024 |
|
|
|
| $ |
|
|
|
| |||
Exercisable at September 30, 2024 |
|
|
|
| $ |
|
|
|
| |||
Common Stock Warrants
On August 20, 2024 (the “Issuance Date”), the Company issued
Series A Warrants
Each Series A Warrant entitles the holder to purchase one share of the Company’s common stock at $
In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series A Warrant on the Issuance Date then outstanding shall remain unchanged.
Series B Warrants
Each Series B Warrant entitles the holder to purchase one share of the Company’s common stock at $
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| Table of Contents |
In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series B Warrant on the Issuance Date then outstanding shall remain unchanged.
Alternative Cashless Exercise for Series B Warrants
The holders of the Series B Warrants may exercise their warrants at the alternative cashless exercise price of $1.75 per share. Also, upon cashless exercise, the holder receives three underlying common shares for each warrant exercised.
Redemption Right
Recurring Fair Value Measurements
The Company’s warrant liability for the Series A and Series B Warrants is based on the Black-Scholes option pricing model utilizing management judgement and pricing inputs from observable and unobservable markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the warrant liability is classified within Level 2 of the fair value hierarchy because the Company uses observable inputs like market prices for its common stock and risk-free interest rate, but requires estimations for factors like the Company’s own volatility, which is not directly quoted in active markets.
Measurement
The Company established the initial fair value for the warrant liability on August 20, 2024, the date the warrants were issued. Upon exercise, the instrument is marked to its fair value upon exercise, and the shares delivered are recorded at fair value in the Company’s statement of stockholders’ equity. The warrant liability was valued based on the following inputs for the Series A and Series B Warrants, respectively:
Input |
| August 20, 2024 (Initial Measurement) |
| September 30, 2024 | ||
Exercise price |
|
| $ |
|
| $ |
Stock price |
| $ |
|
| $ | |
Volatility |
|
|
|
| ||
Discount rate |
|
|
|
| ||
Expected dividend |
|
|
|
| ||
Expected life (years) |
|
|
|
| ||
Note 10 - Related Party Transactions
On October 17, 2023, the Company entered into a consulting agreement with one of its directors, Alex Tokman, pursuant to which Mr. Tokman provided commercialization services. Under the terms of the agreement, Mr. Tokman was compensated at a rate of $
On November 30, 2023, the Company entered into a Restricted Stock Agreement and Consulting Services Agreement, each with PatentVest, in exchange for certain services related to the Company’s patent portfolio. PatentVest is a wholly-owned subsidiary of MDB Capital Holdings, LLC (“MDB”). Anthony DiGiandomenico, a member of the Company’s board of directors, is the Chief of Transactions and a director of MDB. Lou Basenese, a member of our board of directors, is President and Chief Market Strategist at Public Ventures LLC, a wholly-owned subsidiary of MDB.
There were no related party transactions during the quarter ended September 30, 2024.
Note 11 - Commitments and Contingencies
Office Lease
Effective January 1, 2015, the Company entered into an office lease agreement with Green Court, LLC, a Michigan limited liability company, for approximately
| 17 |
| Table of Contents |
On March 15, 2021, the Company entered into an amendment to the lease, adding approximately
The Company records the lease asset and lease liability at the present value of lease payments over the lease term. The lease typically does not provide an implicit rate; therefore, the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments. The Company’s discount rate for operating leases at September 30, 2024 was
As of September 30, 2024, the maturities of operating lease liabilities are as follows:
|
| Operating Lease |
| |
2024 |
|
|
| |
2025 and beyond |
|
|
| |
Total |
| $ |
| |
Less: amount representing interest |
|
| ( | ) |
Present value of future minimum lease payments |
|
|
| |
Less: current obligations under leases |
|
| ( | ) |
Long-term lease obligations |
| $ |
| |
For the nine months ended September 30, 2024 and 2023, the Company incurred rent expenses of $
Employment and Consulting Agreements
Alexander Tokman - Effective August 13, 2024, the Board appointed Alexander Tokman as the Company’s acting Chief Executive Officer and Chairman of the Board of Directors. In connection with his appointment, Mr. Tokman and the Company entered into an employment agreement, dated August 13, 2024 (the “Employment Agreement”). Mr. Tokman’s employment with the Company is “at will” and may be terminated by him or the Company at any time and for any reason. Pursuant to the Employment Agreement, Mr. Tokman will receive an annual base salary of $
If Mr. Tokman’s employment is terminated by the Company without cause (as defined in the Omnibus Plan), if Mr. Tokman resigns for good reason (as defined in the Employment Agreement), or if Mr. Tokman’s employment ends following the hiring no later than February 13, 2026 of a replacement chief executive officer whom Mr. Tokman assists in recruiting, Mr. Tokman will be entitled to receive, subject to his execution of a standard release agreement, 12 months’ continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control). Additionally, under the Employment Agreement, Mr. Tokman is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.
The foregoing description of the Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by the full text of the Employment Agreement, which is filed as an exhibit with this Report.
Michael Thornton - The Company has an employment agreement with Michael Thornton, the Company’s Chief Technology Officer, dated May 12, 2017, as amended December 27, 2019. The employment agreement provides for an annual base salary that is subject to adjustment at the board of directors’ discretion. Effective January 1, 2022, the Compensation Committee increased Mr. Thornton’s annual salary to $
If Mr. Thornton’s employment is terminated by the Company without cause or Mr. Thornton terminates his employment for good reason,
Under his employment agreement, Mr. Thornton is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.
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| Table of Contents |
Richard Jacroux - On August 7, 2024, the Company’s Board of Directors appointed Richard Jacroux as Chief Financial Officer. Mr. Jacroux works in a part-time capacity for the Company through Impact Solve, LLC (dba Impact Solutions) an accounting and chief financial officer service firm. Mr. Jacroux receives a base monthly fee of $
Litigation
From time to time the Company may become a party to litigation in the normal course of business. As of September 30, 2024, there were no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.
Note 12– Subsequent Events
Reverse Stock Split
At a Special Meeting of Stockholders of the Company held on October 28, 2024 (the “Special Meeting”), the stockholders of the Company approved amendments to the Company’s Fourth Amended and Restated Certificate of Incorporation effecting reverse stock splits of the Company’s common stock, and authorized the Company’s Board of Directors, in its discretion, to effect a reverse stock split of Common Stock , whereby each issued and outstanding share of Common Stock would be reclassified and converted into a fraction of a share between ¼ and 1/35 (the “Ratios” and each, a “Ratio”), inclusive (the “November 2024 Reverse Stock Split”). Following the Special Meeting, the Board approved a Ratio of 1/35.
The November 2024 Reverse Stock Split resulted in a proportionate adjustment to the per share conversion or exercise price and the number of shares of common stock issuable upon the conversion or exercise of outstanding preferred stock, stock options and warrants, as well as the number of shares of common stock eligible for issuance under the Omnibus Plan. All per share amounts (including exercise prices) and numbers of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the November 2024 Reverse Stock Split. No fractional shares were, or shall be, issued in connection with the November 2024 Reverse Stock Split.
Issuance of Shares
The company issued
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| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
As used in this Quarterly Report on Form 10-Q (this “Form 10-Q”), unless the context otherwise requires, the terms “we,” “us,” “our,” “ENDRA” and the “Company” refer to ENDRA Life Sciences Inc., a Delaware corporation, and its direct and indirect subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical financial statements and related notes thereto in this Form 10-Q. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “would,” “seek,” “intend,” “plan,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this Form 10-Q, including those regarding our strategies, prospects, financial condition, operations, costs, plans and objectives, are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expectations for revenues, cash flows and financial performance, the anticipated results of our development efforts and the timing for receipt of required regulatory approvals and product launches. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in, or implied by, the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our limited commercial experience, limited cash and history of losses; our ability to obtain adequate financing to fund our business operations in the future; our ability to achieve profitability; our ability to develop a commercially feasible application based on our Thermo-Acoustic Enhanced Ultrasound (“TAEUS”) technology; market acceptance of our technology; uncertainties associated with any future pandemic, including possible effects on our operations; results of our human studies, which may be negative or inconclusive; our ability to find and maintain development partners; our reliance on collaborations and strategic alliances and licensing arrangements; the amount and nature of competition in our industry; our ability to protect our intellectual property; potential changes in the healthcare industry or third-party reimbursement practices; delays and changes in regulatory requirements, policy and guidelines including potential delays in submitting required regulatory applications for Food and Drug Administration (“FDA”) approval; our ability to obtain and maintain CE mark certification and secure required FDA and other governmental approvals for our TAEUS applications; our ability to regain compliance with the listing standards of the Nasdaq Capital Market and maintain the listing of our common stock on such exchange; our ability to comply with regulation by various federal, state, local and foreign governmental agencies and to maintain necessary regulatory clearances or approvals; and the other risks and uncertainties described in the Risk Factors section of our Annual Report on Form 10-K for the period ended December 31, 2023, as filed with the SEC on March 28, 2024, and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Available Information
From time to time, we use press releases, X (formerly) Twitter (@endralifesci) and LinkedIn (www.linkedin.com/company/endra-inc) to distribute material information. Our press releases and financial and other material information are routinely posted to and accessible on the Investors section of our website, www.endrainc.com. Accordingly, investors should monitor these channels, in addition to our SEC filings and public conference calls and webcasts. In addition, investors may automatically receive e-mail alerts and other information about the Company by enrolling their e-mail addresses by visiting the “Email Alerts” section of our website at investors.endrainc.com. Information that is contained in and can be accessed through our website, X posts and LinkedIn are not incorporated into, and do not form a part of, this Quarterly Report or any other report or document we file with the SEC.
Overview
We are leveraging experience with pre-clinical enhanced ultrasound devices to develop technology for increasing the capabilities of clinical diagnostic ultrasound and other types of capital equipment, to broaden patient access to the safe diagnosis and treatment of a number of significant medical conditions in circumstances where expensive X-ray CT and MRI technology, or other diagnostic technologies such as surgical biopsy, are unavailable or impractical. Building on our expertise in thermoacoustics, we have developed a next-generation technology platform-Thermo Acoustic Enhanced Ultrasound, or TAEUS-which is intended to enhance the capability of clinical ultrasound technology and support the diagnosis and treatment of a number of significant medical conditions that currently require the use of expensive CT or MRI imaging or where imaging is not practical using existing technology.
The first-generation TAEUS application is a standalone ultrasound accessory designed to cost-effectively quantify fat in the liver and stage progression of nonalcoholic fatty liver disease (“NAFLD”), which can otherwise only be achieved today with impractical surgical biopsies or MRI scans. Subsequent TAEUS offerings are expected to be implemented via a second-generation hardware platform that can run multiple clinical software applications that we will offer TAEUS users for a licensing fee-adding ongoing customer value to the TAEUS platform and a growing software revenue stream for our Company.
Each of our TAEUS platform applications will require regulatory approvals before we are able to sell or license the application. Based on certain factors, such as the installed base of ultrasound systems, availability of other imaging technologies, such as CT and MRI, economic strength and applicable regulatory requirements, we intend to seek initial approval of our applications for sale in the European Union and the United States, followed by China.
In March 2020, we received CE mark approval for our TAEUS FLIP (“Fatty Liver Imaging Probe”) System, enabling its marketing and sales in the European Union and other CE mark geographies, including the 27 EU member states.
In June 2020, we submitted a 510(k) Application to the FDA for our TAEUS Fatty Liver Imaging Probe (“FLIP”) System. In February 2022, we announced that we would pursue FDA reclassification and clearance of our TAEUS FLIP System through the FDA’s “de novo” process. We subsequently voluntarily withdrew our 510(k) Application submitted a de novo request for the TAEUS system to the FDA in the third quarter of 2023. In the fourth quarter of 2023, the FDA sent us an Additional Information (“AI”) request related to our de novo application. After we received the AI request, we have had several interactions with the FDA and have provided additional information. In order to fully respond to the FDA’s questions, we will need to compile additional clinical data, provide additional device test data, and respond to cybersecurity related questions in a new de novo submission. We had an in-person pre-submission meeting with the FDA on May 16, 2024. We currently anticipate completing the necessary clinical studies by the fourth quarter of 2024 or first quarter of 2025 and submitting the new de novo request to the FDA in the first half of 2025.
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Financial Operations Overview
Revenue
No revenue has been generated by our TAEUS technology, which we have not commercially sold as of September 30, 2024.
Research and Development Expenses
Our research and development expenses primarily include wages, fees and equipment for the development of our TAEUS technology platform and the proposed applications. Additionally, we incur certain costs associated with the protection of our products and inventions through a combination of patents, licenses, applications and disclosures. These costs and expenses include:
· | employee-related expenses, such as salaries, bonuses and benefits, consultant-related expenses such as consultant fees and bonuses, stock-based compensation, overhead related expenses and travel-related expenses for our research and development personnel; |
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· | expenses incurred under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”) as well as consultants that support the implementation of our clinical and non-clinical studies; |
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· | manufacturing and packaging costs in connection with conducting clinical trials; |
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· | formulation, research and development expenses related to our TAEUS technology; and |
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· | costs for sponsored research. |
We plan to incur research and development expenses for the foreseeable future as we expect to continue the development of TAEUS and pursue FDA approval of the NAFLD TAEUS system. At this time, due to the inherently unpredictable nature of clinical development and regulatory approvals, we are unable to estimate with certainty the costs we will incur and the timelines we will require in our continued development efforts.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of headcount and consulting costs, and marketing and tradeshow expenses. Currently, our marketing efforts are through our website and attendance of key industry meetings and conferences. During the second quarter, we restructured our European sales operations to better align with the Company’s near-term sales prospects. We expect to add to our sales representation and support headcount for operations in the EU as demand and resources permit in the future, and plan to begin staffing our sales efforts in the United States once we have obtained FDA approval for the sale of the NAFLD TAEUS device in that region.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related expenses for our management and personnel, and professional fees, such as for accounting, consulting and legal services. We anticipate continued costs associated with being a public company, including expenses related to services associated with maintaining compliance with The Nasdaq Capital Market and SEC requirements, directors and officers insurance, increased legal and accounting costs and investor relations costs.
Critical Accounting Policies and Estimates
Warrant Liability
The Company accounts for the liability classified warrants in accordance with the guidance contained in ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging. Such guidance provides criteria for instruments do not meet the criteria for equity treatment thereunder. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
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Management makes estimates that affect certain accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.
Share-based Compensation
Our Omnibus Plan permits the grant of stock options and other stock awards to our employees, consultants and non-employee members of our board of directors. Each January 1 the pool of shares available for issuance under the Omnibus Plan automatically increases by an amount equal to the lesser of (i) the number of shares necessary such that the aggregate number of shares available under the Omnibus Plan equals 25% of the number of fully-diluted outstanding shares on the increase date (assuming the conversion of all outstanding shares of preferred stock and other outstanding convertible securities and exercise of all outstanding options and warrants to purchase shares) and (ii) if the board of directors takes action to set a lower amount, the amount determined by the board. On January 1, 2024, the pool of shares issuable under the Omnibus Plan automatically increased by 982 shares from 756 shares to 1,737 shares. As of September 30, 2024, there were 1,458 shares of common stock remaining available for issuance under the Omnibus Plan.
We record share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification. The guidance requires the use of option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends, and the resulting charge is expensed using the straight-line attribution method over the vesting period.
Recent Accounting Pronouncements
See Note 2 of the accompanying financial statements for a discussion of recently issued accounting standards.
Results of Operations
Three months ended September 30, 2024 and 2023
Revenue
We had no revenue during the three months ended September 30, 2024 and 2023.
Cost of Goods Sold
We had no cost of goods sold during the three months ended September 30, 2024 and 2023.
Research and Development
Research and development expenses were $794,444 for the three months ended September 30, 2024, as compared to $1,632,849 for the three months ended September 30, 2023, a decrease of $838,405 or 51%. The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line. Research and development expenses decreased from the prior year as we complete development of our initial TAEUS product and began focusing our spending on clinical trials and commercialization of the product that has been developed.
Sales and Marketing
Sales and marketing expenses were $83,157 for the three months ended September 30, 2024, as compared to $243,332 for the three months ended September 30, 2023, a decrease of $160,175, or 66%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased largely due to our restructuring in the second quarter. Currently, our marketing efforts are through our website and attendance of key industry meetings.
General and Administrative
Our general and administrative expenses for the three months ended September 30, 2024 were $631,413, compared to $1,252,881 for the three months ended September 30, 2023, a decrease of $621,468, or 49%. Our wage and related expenses for the three months ended September 30, 2024 were $(142,536), compared to $565,639 for the three months ended September 30, 2023. Wage and related expenses in the three months ended September 30, 2024 included $(144,445) of cancellation of equity awards in connection with the departure of an executive officer, compared to $67,932 of stock compensation expense related to the issuance and vesting of options for the three months ended September 30, 2023. Our professional fees, which include legal, audit, and investor relations, for the three months ended September 30, 2024 were $598,255, compared to $447,515 for the three months ended September 30, 2023.
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Other Income
Other income (expense) was $(845,076) for the three months ended September 30, 2024 was primarily due to accounting for warrants. Other income was $28,226 for the three months ended September 30, 2023, a decrease of $873,302 or 3,094%.
Net Loss
As a result of the foregoing, for the three months ended September 30, 2024, we recorded a net loss of $2,354,090, compared to a net loss of $3,100,836 for the three months ended September 30, 2023.
Nine months ended September 30, 2024 and 2023
Revenue
We had no revenue during the nine months ended September 30, 2024 and 2023.
Cost of Goods Sold
We had no cost of goods sold during the nine months ended September 30, 2024 and 2023.
Research and Development
Research and development expenses were $2,552,336 for the nine months ended September 30, 2024, as compared to $4,424,345 for the nine months ended September 30, 2023, a decrease of $1,872,009 or 42%. The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line. Research and development expenses decreased from the prior year as we completed development of our initial TAEUS product and began focusing our spending on commercialization of the product that has been developed.
Sales and Marketing
Sales and marketing expenses were $484,769 for the nine months ended September 30, 2024, as compared to $672,721 for the nine months ended September 30, 2023, a decrease of $187,952, or 28%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased largely due to the decrease in consulting fees. Currently, our marketing efforts are through our website and attendance of key industry meetings.
General and Administrative
Our general and administrative expenses for the nine months ended September 30, 2024 were $3,483,303 compared to $3,965,889 for the nine months ended September 30, 2023, a decrease of $482,586, or 12%. Our wage and related expenses for the nine months ended September 30, 2024 were $1,079,942, compared to $1,735,526 for the nine months ended September 30, 2023. Wage and related expenses in the nine months ended September 30, 2024 included $93,545 of stock compensation expense related to the issuance and vesting of options, compared to $252,948 of stock compensation expense related to the issuance and vesting of options, for the nine months ended September 30, 2023. Our professional fees, which include legal, audit, and investor relations, for the nine months ended September 30, 2024 were $1,820,454, compared to $1,471,850 for the nine months ended September 30, 2023.
Other Income
Other income (expense) was $(838,535) for the nine months ended September 30, 2024 was primarily due to accounting for warrants. Other income was $462,241 for the nine months ended September 30, 2023 and resulted mostly from the completion of the Employer Retention Tax Credit for employee retention in 2021 and 2022 of $413,844. Other income (expense) decreased $1,300,776 or 281% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Net Loss
As a result of the foregoing, for the nine months ended September 30, 2024, we recorded a net loss of $7,358,943, compared to a net loss of $8,600,714 for the nine months ended September 30, 2023.
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Near-Term Liquidity and Capital Resources
We are experiencing financial and operating challenges. As of September 30, 2024, we had an accumulated deficit of $99,289,095 and had $4,745,187 in cash. To date we have funded our operations through private and public sales of our securities and will need to raise additional funds in order to execute on our business plan, fully commercialize our TAEUS technology, and generate revenues.
We need additional capital to allow us to continue to execute our commercialization plans. We are considering potential financing options that may be available to us, such as sales of our common stock, including through our at-the-market sales program. Except for the at-the-market sales program, we have no commitments to obtain any additional funds, and there can be no assurance funds will be available in sufficient amounts or on acceptable terms. In addition, the Company agreed, subject to certain exceptions, not to effect any issuance of common stock or securities convertible into common stock involving a Variable Rate Transaction, as defined in the Placement Agreement and which includes sales of common stock under the at-the-market sales program, for a period commencing on the date of the Placement Agreement until 180 days following the closing of our June 2024 public offering. If we are unable to obtain sufficient additional financing in a timely fashion and on terms acceptable to us, our financial condition and results of operations may be materially adversely affected and we may not be able to continue operations or execute our stated commercialization plan.
The consolidated financial statements included in this Form 10-Q have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the nine months ended September 30, 2024, we incurred net losses of $7,358,943 and used cash in operations of $5,884,842. In light of our cash balance as of September 30, 2024, we will need to raise additional capital in order to fund operations through the next twelve months, and prior to any ability to fund operations from revenue generated from the sale of our products. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.
Operating Activities
During the nine months ended September 30, 2024, we used $5,884,842 of cash in operating activities primarily as a result of our net loss of $7,358,943, offset by share-based compensation of $467,240, amortization of right of use assets of $124,320, inventory reserve of $4,687, depreciation expense of $35,489, fixed assets write-off of $8,808, warrant expense of $7,323,685, change in fair value of warrant liability of $(3,341,829), gain on settlement of warrant exercises of $(3,071,252), and net in operating assets and liabilities of $77,047.
During the nine months ended September 30, 2023, we used $7,374,197 of cash in operating activities primarily as a result of our net loss of $8,600,714, offset by share-based compensation of $745,873, depreciation expense of $101,839, amortization of right of use assets of $112,365, and net changes in operating assets and liabilities of $266,440.
Investing Activities
During the nine months ended September 30, 2024, we used $16,000 in investing activities related to purchases of fixed assets, and received $3,204 in proceeds from sale of fixed assets.
During the nine months ended September 30, 2023, we used $27,000 in investing activities related to purchases of fixed assets.
Financing Activities
During the nine months ended September 30, 2024, our financing activities provided $1,148,470 in proceeds from issuances of common stock,$5,368,363 in proceeds from issuance of warrants, and $1,320,568 in proceeds from the issuance of cashless warrants. We also used $28,484 to repay a loan from TD Bank under the Canadian Emergency Business Account.
During the nine months ended September 30, 2023, our financing activities provided $5,846,635 in proceeds from issuances of common stock and warrants.
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Long-Term Liquidity
We have not completed the commercialization of any of our TAEUS technology platform applications. We expect to continue to incur significant expenses for the foreseeable future. We anticipate that our expenses will increase substantially as we:
| · | advance the engineering design and development of our TAEUS technology; |
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| · | acquire parts and build finished goods inventory of the TAEUS FLIP system; |
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| · | complete regulatory filings required for marketing approval of our NAFLD TAEUS application in the United States, including clinical studies to advance our de novo application with the FDA; |
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| · | seek to hire a small internal marketing team to engage and support channel partners and clinical customers for our NAFLD TAEUS application; |
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| · | expand marketing of our NAFLD TAEUS application; |
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| · | advance development of our other TAEUS applications; and |
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| · | add operational, financial and management information systems and personnel, including personnel to support our product development, planned commercialization efforts and our operation as a public company. |
It is possible that we will not achieve the progress that we expect because the actual costs and timing of completing the development and regulatory approvals for a new medical device are difficult to predict and are subject to substantial risks and delays. We have no committed external sources of funds except for the February 2024 ATM Agreement, the use of which may be limited due to registration statement rules relating to public float. We do not expect that our existing cash will be sufficient for us to complete the commercialization of our NAFLD TAEUS application or to complete the development of any other TAEUS application and we will need to raise substantial additional capital for those purposes. As a result, we will need to finance our future cash needs through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in the Risk Factors section of this Annual Report on Form 10-K. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.
Until we can generate a sufficient amount of revenue from our TAEUS platform applications, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaborations and licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs or our commercialization efforts or perhaps even cease the operation of our business. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaborations and licensing arrangements, it may be necessary to relinquish some rights to our technologies or applications or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.
Off-Balance Sheet Transactions
At September 30, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item 3.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Form 10-Q, management performed, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2024, our disclosure controls and procedures were not effective.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We identified the following material weakness as of September 30, 2024: insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting.
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To remediate the material weakness, management intends to implement the following measures during 2024, as the Company’s resources and financial means allow:
· | Add additional accounting personnel or outside consultants, such as a new controller, to properly segregate duties and to effect timely, accurate preparation of the financial statements; and |
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· | Continue the development of adequate written accounting policies and procedures. |
The additional hiring is contingent upon our efforts to obtain additional funding and the results of our operations.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting or in other factors that could affect these controls during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial condition. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in this section and under “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on March 28, 2024. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this report.
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended September 30, 2024.
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Item 6. Exhibits
Exhibit Number |
| Description |
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| Employment Agreement, dated August 13, 2024, by and between the Company and Alexander Tokman | |
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101.INS# |
| XBRL Instance Document |
101.SCH# |
| XBRL Taxonomy Schema |
101.CAL# |
| XBRL Taxonomy Extension Calculation Linkbase |
101.DEF# |
| XBRL Taxonomy Extension Definition Linkbase |
101.LAB# |
| XBRL Taxonomy Extension Label Linkbase |
101.PRE# |
| XBRL Taxonomy Extension Presentation Linkbase |
* Indicates management compensatory plan, contract or arrangement.
† Previously filed.
# Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ENDRA LIFE SCIENCES INC. |
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Date: November 21, 2024 | By: | /s/ Alexander Tokman |
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| Alexander Tokman |
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| Chief Executive Officer and Chairman (Principal Executive Officer) |
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| ENDRA LIFE SCIENCES INC. |
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Date: November 21, 2024 | By: | /s/ Richard Jacroux |
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| Richard Jacroux |
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| Chief Financial Officer (Principal Financial and Accounting Officer) |
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