ndra_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-37969

ENDRA LIFE SCIENCES INC.

(Exact name of registrant as specified in its charter)

Delaware		26-0579295
(State of incorporation)		(I.R.S. Employer Identification No.)

3600 Green Court, Suite 350, Ann Arbor, MI		48105-1570
(Address of principal executive office)		(Zip code)

(734) 335-0468

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	NDRA	The Nasdaq Stock Market LLC
Warrants, each to purchase one share of Common Stock	NDRAW	The Nasdaq Stock Market LLC

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, 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	☒	Smaller reporting company	☒
		Emerging growth company	☒

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. ☐

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 November 15, 2021, there were 42,165,726 shares of our common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets – September 30, 2021 (unaudited) and December 31, 2020	3

	Condensed Consolidated Statements of Operations – Three and Nine Months ended September 30, 2021 and 2020 (unaudited)	4

	Condensed Consolidated Statements of Equity – Three and Nine Months ended September 30, 2021 and 2020 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows – Nine Months ended September 30, 2021 and 2020 (unaudited)	6

	Notes to the Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosure	25

Item 5.	Other Information	25

Item 6.	Exhibits	26

	Signatures	27

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ENDRA Life Sciences Inc.

Condensed Consolidated Balance Sheets

	September 30,			December 31,
	2021			2020
	(Unaudited)
Assets
Current Assets
Cash	$	11,793,189		$	7,227,316
Prepaid expenses		1,177,201			390,800
Inventory		1,499,743			589,620
Total Current Assets		14,470,133			8,207,736
Non-Current Assets
Fixed assets, net		162,265			212,242
Right of use assets		675,822			339,012
Other assets		5,986			5,986
Total Assets	$	15,314,206		$	8,764,976

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities	$	1,449,130		$	910,183
Lease liabilities, current portion		127,696			76,480
Total Current Liabilities		1,576,826			986,663

Long Term Debt
Loans		28,484			337,084
Lease liabilities		552,830			271,908
Total Long Term Debt		581,314			608,992

Total Liabilities		2,158,140			1,595,655

Stockholders’ Equity
Series A Convertible Preferred Stock, $0.0001 par value; 10,000 shares authorized; 141.397 and 190.288 shares issued and outstanding, respectively		1			1
Series B Convertible Preferred Stock, $0.0001 par value; 1,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.0001 par value; 80,000,000 shares authorized; 42,165,726 and 34,049,704 shares issued and outstanding, respectively		4,215			3,404
Additional paid in capital		78,695,367			64,493,611
Stock payable		42,665			10,794
Accumulated deficit		(65,586,182	)		(57,338,489	)
Total Stockholders’ Equity		13,156,066			7,169,321
Total Liabilities and Stockholders’ Equity	$	15,314,206		$	8,764,976

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

Table of Contents

ENDRA Life Sciences Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2021			2020			2021			2020
Operating Expenses
Research and development	$	1,173,319		$	1,769,339		$	4,059,730		$	4,774,534
Sales and marketing		275,565			139,751			693,263			389,469
General and administrative		1,201,851			1,346,360			3,673,771			4,083,572
Total operating expenses		2,650,735			3,255,450			8,426,764			9,247,575

Operating loss		(2,650,735	)		(3,255,450	)		(8,426,764	)		(9,247,575	)

Other Expenses
Amortization of debt discount		-			-			-			(232,426	)
Gain on extinguishment of debt		-			-			308,600			-
Other income (expense)		(7,507	)		(2,621	)		(8,458	)		5,261
Total other expenses		(7,507	)		(2,621	)		300,142			(227,165	)

Loss from operations before income taxes		(2,658,242	)		(3,258,071	)		(8,126,622	)		(9,474,740	)

Provision for income taxes		-			-			-			-

Net Loss	$	(2,658,242	)	$	(3,258,071	)	$	(8,126,622	)	$	(9,474,740	)

Deemed dividend		-			(395,551	)		(121,071	)		(395,551	)

Net loss attributable to common stockholders	$	(2,658,242	)	$	(3,653,622	)	$	(8,247,693	)	$	(9,870,291	)

Net loss per share – basic and diluted	$	(0.06	)	$	(0.15	)	$	(0.20	)	$	(0.41	)

Weighted average common shares – basic and diluted		41,912,535			23,889,591			40,471,906			23,808,012

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

Table of Contents

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

Three Months Ended September 30, 2020

	Series A Convertible					Series B Convertible								Additional									Total
	Preferred Stock					Preferred Stock				Common stock				Paid in			Stock			Accumulated			Stockholders'
	Shares			Amount		Shares		Amount		Shares		Amount		Capital			Payable			Deficit			Equity
Balance as of June 30, 2020		896,225		$	1		-	$	-		16,437,491	$	1,644	$	52,227,904			181,437			(51,434,106	)		976,880
Series A Convertible Preferred Stock converted to common stock		(705,937	)		-		-		-		811,423		81		4,709			(4,790	)		-			-
Common stock issued for cash		-			-		-		-		539,365		54		530,362			-			-			530,416
Common Stock issued for warrant exercise		-			-		-		-		7,040,133		702		4,948,897			(85,626	)		-			4,863,973
Common stock issued for services		-			-		-		-		30,000		3		27,297			(27,300	)		-			-
Common stock issued for RSUs		-			-		-		-		157,298		16		110,093			-			-			110,109
Cost of funding		-			-		-		-		-		-		(243,028	)		-			-			(243,028	)
Fair value of vested stock options		-			-		-		-		-		-		282,419			-			-			282,419
Deemed dividend		-			-		-		-		-		-		395,551			-			(395,551	)		-
Stock Payable for:																								-
- Preference Dividend		-			-		-		-		-		-		(2,531	)		2,531			-			-
- Consultants		-			-		-		-		-		-		-			30,000			-			30,000
- RSUs to board and management		-			-		-		-		-		-		-			42,284			-			42,284
Net loss		-			-		-		-		-		-		-			-			(3,258,071	)		(3,258,071	)
Balance as of September 30, 2020		190,288		$	1		-	$	-		25,015,710	$	2,500	$	58,281,673		$	138,536		$	(55,087,728	)	$	3,334,982

Three Months Ended September 30, 2021

	Series A Convertible				Series B Convertible								Additional									Total
	Preferred Stock				Preferred Stock				Common stock				Paid in			Stock			Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Payable			Deficit			Equity
Balance as of June 30, 2021		141,397	$	1		-	$	-		41,857,352	$	4,185	$	77,838,745			74,907			(62,927,940	)		14,989,898
Common stock issued for cash, net of funding costs		-		-		-		-		283,953		28		496,585			-			-			496,613
Common stock issued for option exercise		-		-		-		-		1,606		-		-			-			-			-
Fair value of vested stock options		-		-		-		-		-		-		327,797			-			-			327,797
Stock payable for preference dividend		-		-		-		-		-		-		(4,218	)		4,218			-			-
Common stock issued for RSU		-		-		-		-		22,815		2		36,458			(36,460	)		-			-
Net loss		-		-		-		-		-		-		-			-			(2,658,242	)		(2,658,242	)
Balance as of September 30, 2021		141,397	$	1		-	$	-		42,165,726	$	4,215	$	78,695,367		$	42,665		$	(65,586,182	)	$	13,156,066

Table of Contents

Nine Months Ended September 30, 2020

	Series A Convertible					Series B Convertible									Additional									Total
	Preferred Stock					Preferred Stock					Common stock				Paid in			Stock			Accumulated			Stockholders'
	Shares			Amount		Shares			Amount		Shares		Amount		Capital			Payable			Deficit			Equity
Balance as of December 31, 2019		6,338,490		$	1		351,711		$	-		8,421,401	$	842	$	49,933,736			43,528			(45,217,437	)		4,760,670
Series A Convertible Preferred Stock converted to common stock		(6,148,202	)		-		-			-		7,173,226		717		75,207			(75,924	)		-			-
Series B Convertible Preferred Stock converted to common stock		-			-		(351,711	)		-		360,279		36		1,634			(1,670	)		-			-
Common stock issued for cash		-			-		-			-		1,421,858		142		1,321,748			-			-			1,321,890
Common stock issued for note conversions		-			-		-			-		331,441		33		493,814			-			-			493,847
Common stock issued for warrant exercise		-			-		-			-		7,098,108		709		4,999,328			(85,626	)		-			4,914,411
Common stock issued for services		-			-		-			-		52,099		5		67,295			-			-			67,300
Common stock issued for RSU		-			-		-			-		157,298		16		110,093			-			-			110,109
Cost of funding		-			-		-			-		-		-		(270,328	)		-			-			(270,328	)
Fair value of vested stock options		-			-		-			-		-		-		1,196,445			-			-			1,196,445
Fair value adjustment related to warrants repricing		-			-		-			-		-		-		395,551			-			(395,551	)		-
Stock payable for:
- Preference Dividend		-			-		-			-		-		-		(42,850	)		42,850			-			-
- Consultants		-			-		-			-		-		-		-			30,000			-			30,000
- RSU to board and management		-			-		-			-		-		-		-			185,378			-			185,378
Net loss		-			-		-			-		-		-		-			-			(9,474,740	)		(9,474,740	)
Balance as of September 30, 2020		190,288		$	1		-		$	-		25,015,710	$	2,500	$	58,281,673		$	138,536		$	(55,087,728	)	$	3,334,982

Nine Months Ended September 30, 2021

	Series A Convertible					Series B Convertible								Additional								Total
	Preferred Stock					Preferred Stock				Common stock				Paid in			Stock		Accumulated			Stockholders'
	Shares			Amount		Shares		Amount		Shares		Amount		Capital			Payable		Deficit			Equity
Balance as of December 31, 2020		196,794		$	1		-	$	-		34,049,704	$	3,404	$	64,493,611			10,795		(57,338,489	)		7,169,322
Series A Convertible Preferred Stock converted to common stock		(55,397	)		-		-		-		67,889		7		(7	)		-		-			-
Common stock issued for cash, net of funding costs		-			-		-		-		4,198,170		420		10,294,479			-		-			10,294,899
Common stock issued for warrant exercise		-			-		-		-		3,770,786		377		2,785,250			-		-			2,785,627
Common stock issued for option exercise		-			-		-		-		23,835		2		(2	)		-		-			-
Fair value of vested stock options		-			-		-		-		-		-		922,375			-		-			922,375
Stock payable for preference dividend		-			-		-		-		-		-		(31,870	)		31,870		-			-
Common stock issued for services		-			-		-		-		32,527		3		74,997			-		-			74,000
Common stock issued for RSU		-			-		-		-		22,815		2		36,458			-		-			36,460
Deemed dividend		-			-		-		-		-		-		121,071			-		(121,071	)		-
Net loss		-			-		-		-		-		-		-			-		(8,126,622	)		(8,126,622	)
Balance as of September 30, 2021		141,397		$	1		-	$	-		42,165,726	$	4,215	$	78,695,367		$	42,665	$	(65,586,182	)	$	13,156,066

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

Table of Contents

ENDRA Life Sciences Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended			Nine Months Ended
	September 30,			September 30,
	2021			2020
Cash Flows from Operating Activities
Net loss	$	(8,126,622	)	$	(9,474,740	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		94,977			45,114
Stock compensation expense including common stock issued for RSUs		1,032,835			1,559,232
Amortization of debt discount		-			232,426
Amortization of right of use assets		75,768

SEC Form 10-Q filed by ENDRA Life Sciences Inc.