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 JUNE 30, 2023 

OR

 

     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

 

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 August 14, 2023, there were 7,481,603 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 - June 30, 2023 (unaudited) and December 31, 2022

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2023 and 2022 (unaudited)

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Equity – Three and Six Months Ended June 30, 2023 and 2022 (unaudited)

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2023 and 2022 (unaudited)

 

7

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (unaudited)

 

8

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

20

 

 

 

 

 

Item 4.

Controls and Procedures

 

21

 

 

 

 

 

Item 1.

Legal Proceedings

 

22

 

 

 

 

 

Item1A.

Risk Factors

 

22

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

22

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

22

 

 

 

 

 

Item 4.

Mine Safety Disclosure

 

22

 

 

 

 

 

Item 5.

Other Information

 

22

 

 

 

 

 

 

Item 6.

Exhibits

 

23

 

 

 

 

 

 

 

Signatures

 

24

 

 

 
2

Table of Contents

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

ENDRA Life Sciences Inc.

Condensed Consolidated Balance Sheets

 

 

 

June 30,

 

 

December 31,

 

Assets

 

2023

 

 

2022

 

Current Assets

 

(Unaudited)

 

 

 

 

Cash

 

$4,819,459

 

 

$4,889,098

 

Prepaid expenses

 

 

506,914

 

 

 

490,299

 

Inventory

 

 

2,757,633

 

 

 

2,644,717

 

Total Current Assets

 

 

8,084,006

 

 

 

8,024,114

 

Non-Current Assets

 

 

 

 

 

 

 

 

Fixed assets, net

 

 

192,874

 

 

 

235,655

 

Right of use assets

 

 

431,842

 

 

 

505,816

 

Prepaid expenses, long term

 

 

530,068

 

 

 

502,576

 

Other assets

 

 

5,986

 

 

 

5,986

 

Total Assets

 

$9,244,776

 

 

$9,274,147

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$1,841,562

 

 

$1,523,012

 

Lease liabilities, current portion

 

 

163,013

 

 

 

152,228

 

Loans

 

 

28,484

 

 

 

28,484

 

Total Current Liabilities

 

 

2,033,059

 

 

 

1,703,724

 

 

 

 

 

 

 

 

 

 

Long Term Debt

 

 

 

 

 

 

 

 

Lease liabilities

 

 

281,154

 

 

 

365,919

 

Total Long Term Debt

 

 

281,154

 

 

 

365,919

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

2,314,213

 

 

 

2,069,643

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Series A Convertible Preferred Stock, $0.0001 par value; 10,000 shares authorized; 141.397 shares issued and outstanding

 

 

1

 

 

 

1

 

Series B Convertible Preferred Stock, $0.0001 par value; 1,000 shares authorized; no shares issued and outstanding

 

 

-

 

 

 

-

 

Series C Convertible Preferred Stock, $0.0001 par value; 100,000 shares authorized; no shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; 80,000,000 shares authorized; 7,481,603 and 3,169,103 shares issued and outstanding, respectively

 

 

748

 

 

 

317

 

Additional paid in capital

 

 

94,297,167

 

 

 

89,068,015

 

Stock payable

 

 

2,427

 

 

 

6,073

 

Accumulated deficit

 

 

(87,369,780)

 

 

(81,869,902)

Total Stockholders’ Equity

 

 

6,930,563

 

 

 

7,204,504

 

Total Liabilities and Stockholders’ Equity

 

$9,244,776

 

 

$9,274,147

 

 

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

 

 
3

Table of Contents

 

ENDRA Life Sciences Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$1,400,182

 

 

$1,847,560

 

 

$2,791,496

 

 

$3,060,582

 

Sales and marketing

 

 

247,773

 

 

 

342,039

 

 

 

429,389

 

 

 

681,942

 

General and administrative

 

 

1,346,610

 

 

 

1,382,094

 

 

 

2,713,008

 

 

 

2,684,438

 

Total operating expenses

 

 

2,994,565

 

 

 

3,571,693

 

 

 

5,933,893

 

 

 

6,426,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(2,994,565)

 

 

(3,571,693)

 

 

(5,933,893)

 

 

(6,426,962)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

437,433

 

 

 

(19,374)

 

 

434,015

 

 

 

(22,307)

Total other expenses

 

 

437,433

 

 

 

(19,374)

 

 

434,015

 

 

 

(22,307)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations before income taxes

 

 

(2,557,132)

 

 

(3,591,067)

 

 

(5,499,878)

 

 

(6,449,269)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$(2,557,132)

 

$(3,591,067)

 

$(5,499,878)

 

$(6,449,269)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share – basic and diluted

 

$(0.43)

 

$(1.17)

 

$(1.20)

 

$(2.46)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares – basic and diluted

 

 

5,996,186

 

 

 

3,082,209

 

 

 

4,582,645

 

 

 

2,617,878

 

 

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

 

 
4

Table of Contents

 

ENDRA Life Sciences Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

 

Three Months Ended June 30, 2022

 

Series A Convertible

Preferred Stock

 

 

Series B Convertible

Preferred Stock

 

 

Common stock

 

 

Additional

 Paid in

 

 

 Stock

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

 Shares

 

 

Amount

 

 

 Shares

 

 

Amount

 

 

 Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

Deficit

 

 

 Equity

 

Balance as of March 31, 2022

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

2,227,971

 

 

$223

 

 

$80,608,647

 

 

$8,774

 

 

$(71,549,012)

 

$9,068,633

 

Common stock issued for cash, net of funding costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

930,752

 

 

 

93

 

 

 

7,545,367

 

 

 

-

 

 

 

-

 

 

 

7,545,460

 

Fair value of vested stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

311,349

 

 

 

-

 

 

 

-

 

 

 

311,349

 

Stock payable towards preference dividend

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,960

 

 

 

(2,960)

 

 

-

 

 

 

-

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,591,067)

 

 

(3,591,067)

Balance as of June 30, 2022

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

3,158,723

 

 

$316

 

 

$88,468,323

 

 

$5,814

 

 

$(75,140,079)

 

$13,334,375

 

 

Three Months Ended June 30, 2023

 

Series A Convertible

Preferred Stock

 

 

Series B Convertible

 Preferred Stock

 

 

Common stock

 

 

Additional

Paid in

 

 

Stock

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

Deficit

 

 

Equity

 

Balance as of March 31, 2023

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

3,169,103

 

 

$317

 

 

$89,307,675

 

 

 

3,692

 

 

 

(84,812,648)

 

 

4,499,037

 

Common stock issued for cash, net of funding costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,312,500

 

 

 

431

 

 

 

4,712,319

 

 

 

-

 

 

 

-

 

 

 

4,712,750

 

Warrants issued for cash, net of funding costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20,053

 

 

 

-

 

 

 

-

 

 

 

20,053

 

Fair value of vested stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

255,855

 

 

 

-

 

 

 

-

 

 

 

255,855

 

Stock payable towards preference dividend

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,265

 

 

 

(1,265)

 

 

-

 

 

 

-

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,557,132)

 

 

(2,557,132)

Balance as of June 30, 2023

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

7,481,603

 

 

$748

 

 

$94,297,167

 

 

$2,427

 

 

$(87,369,780)

 

$6,930,563

 

 

 
5

Table of Contents

 

Six Months Ended June 30, 2022

 

Series A Convertible

Preferred Stock

 

 

Series B Convertible

Preferred Stock

 

 

Common stock

 

 

Additional

Paid in

 

 

Stock

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

 Shares

 

 

Amount

 

 

 Shares

 

 

Amount

 

 

 Shares

 

 

Amount

 

 

 Capital

 

 

Payable

 

 

Deficit

 

 

 Equity

 

Balance as of December 31, 2021

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

2,127,726

 

 

$213

 

 

$79,460,979

 

 

 

13,863

 

 

 

(68,690,810)

 

 

10,784,246

 

Common stock issued for cash, net of funding costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,030,997

 

 

 

103

 

 

 

8,399,409

 

 

 

-

 

 

 

-

 

 

 

8,399,512

 

Fair value of vested stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

599,886

 

 

 

-

 

 

 

-

 

 

 

599,886

 

Stock payable towards preference dividend

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,049

 

 

 

(8,049)

 

 

-

 

 

 

-

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,449,269)

 

 

(6,449,269)

Balance as of June 30, 2022

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

3,158,723

 

 

$316

 

 

$88,468,323

 

 

$5,814

 

 

$(75,140,079)

 

 

13,334,375

 

     

Six Months Ended June 30, 2023

 

Series A Convertible

Preferred Stock

 

 

Series B Convertible

Preferred Stock

 

 

Common stock

 

 

Additional

Paid in

 

 

Stock

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2022

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

3,169,103

 

 

$317

 

 

$89,068,015

 

 

 

6,073

 

 

 

(81,869,902)

 

 

7,204,504

 

Common stock issued for cash, net of funding costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,312,500

 

 

 

431

 

 

 

4,712,319

 

 

 

-

 

 

 

-

 

 

 

4,712,750

 

Warrants issued for cash, net of funding costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20,053

 

 

 

-

 

 

 

-

 

 

 

20,053

 

Fair value of vested stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

493,134

 

 

 

-

 

 

 

-

 

 

 

493,134

 

Stock payable towards preference dividend

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,646

 

 

 

(3,646)

 

 

-

 

 

 

-

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,499,878)

 

 

(5,499,878)

Balance as of June 30, 2023

 

 

141.397

 

 

$1

 

 

 

-

 

 

$-

 

 

 

7,481,603

 

 

$748

 

 

$94,297,167

 

 

$2,427

 

 

$(87,369,780)

 

$6,930,563

 

 

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

 

 
6

Table of Contents

 

ENDRA Life Sciences Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net loss

 

$(5,499,878)

 

$(6,449,269)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

69,781

 

 

 

40,739

 

Fixed assets write off

 

 

-

 

 

 

599,886

 

Stock compensation expense including common stock issued for RSUs

 

 

493,134

 

 

 

-

 

Amortization of right of use assets

 

 

73,974

 

 

 

67,158

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in prepaid expenses

 

 

(44,107)

 

 

513,140

 

Increase in inventory

 

 

(112,916)

 

 

(1,090,150)

Increase in accounts payable and accrued liabilities

 

 

318,550

 

 

 

(51,072)

Decrease in lease liability

 

 

(73,980)

 

 

(64,284)

Net cash used in operating activities

 

 

(4,775,442)

 

 

(6,433,852)

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Purchases of fixed assets

 

 

(27,000)

 

 

(149,153)

Net cash used in investing activities

 

 

(27,000)

 

 

(149,153)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

4,712,750

 

 

 

8,399,512

 

Proceeds from issuance of warrants

 

 

20,053

 

 

 

-

 

Net cash provided by financing activities

 

 

4,732,803

 

 

 

8,399,512

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

(69,639)

 

 

1,816,507

 

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

4,889,098

 

 

 

9,461,534

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$4,819,459

 

 

$11,278,041

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash items

 

 

 

 

 

 

 

 

Interest paid

 

$-

 

 

$-

 

Income tax paid

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of non-cash items

 

 

 

 

 

 

 

 

Stock dividend payable

 

$(3,646)

 

$(8,049)

Right of use asset

 

$431,842

 

 

$576,255

 

Lease liability

 

$444,167

 

 

$586,193

 

 

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

 

 
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ENDRA Life Sciences Inc.

Notes to Condensed Consolidated Financial Statements

For the three and six months ended June 30, 2023 and 2022

(Unaudited)

 

Note 1 - Nature of the Business

 

ENDRA Life Sciences Inc. (“ENDRA” or the “Company”) has developed and is continuing to develop technology for increasing the capabilities of clinical diagnostic ultrasound to broaden patient access to the safe diagnosis and treatment of a number of significant medical conditions in circumstances where expensive X-ray computed tomography (“CT”) and magnetic resonance imaging (“MRI”) technology is unavailable or impractical.

 

ENDRA was incorporated on July 18, 2007 as a Delaware corporation.

 

Certain reclassifications have been made to the 2022 consolidated financial statements in order to conform to the current period presentations. These classifications did not impact the net loss for period ended June 30, 2023.

 

Note 2 - Summary of Significant Accounting Policies

 

Reverse Stock Split

 

All per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the Reverse Split (as defined and described under Note 7 below).

 

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.

 

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.

 

Principles of Consolidation

 

The Company’s consolidated financial statements include all accounts of the Company and its consolidated subsidiaries and/or entities as of reporting period ending date(s) and for the reporting period(s) then ended. All inter-company balances and transactions have been eliminated.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The balance sheet at December 31, 2022 has been derived from the audited financial statements at that date. For further information, refer to the financial statements and footnotes thereto included in ENDRA Life Sciences Inc. annual financial statements for the twelve months ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2023.

 

Cash and Cash Equivalents

 

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of one year or less, when purchased, to be cash. As of June 30, 2023 and December 31, 2022, the Company had no cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. In light of the liquidity concerns in the banking system arising from the closure of Silicon Valley Bank and appointment of the Federal Deposit Insurance Corporation as receiver, the Company maintains cash deposits at multiple banks to mitigate the risk associated with a failure of any specific bank.

 

 
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Inventory

 

The Company’s inventory is stated at the lower of cost or estimated net realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out method. The Company periodically determines whether a reserve should be taken for devaluation or obsolescence of inventory.

 

Capitalization of Fixed Assets

 

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.

 

Leases

 

Accounting Standards Update (“ASU”) No. 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. As of June 30, 2023 and December 31, 2022, the Company recorded a right of use asset of $431,842 and $505,816, respectively. As of June 30, 2023 and December 31, 2022, the Company recorded a lease liability of $444,167 and $518,147, respectively.

 

Revenue Recognition

 

ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”) provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

Under ASC Topic 606, in order to recognize revenue, the Company is required to identify an approved contract with commitments to perform respective obligations, identify rights of each party in the transaction regarding goods to be transferred, identify the payment terms for the goods transferred, verify that the contract has commercial substance and verify that collection of substantially all consideration is probable. The adoption of ASC Topic 606 did not have an impact on the Company’s operations or cash flows.

 

Research and Development Costs

 

The Company follows FASB Accounting Standards Codification (“ASC”) Subtopic 730-10, “Research and Development”. Research and development costs are charged to the statement of operations as incurred. During the three months ended June 30, 2023 and 2022, the Company incurred $1,400,182 and $1,847,560 of expenses related to research and development costs, respectively. During the six months ended June 30, 2023 and 2022, the Company incurred $2,791,496 and $3,060,582 of expenses related to research and development costs, respectively.

 

Net Earnings (Loss) Per Common Share

 

The Company computes earnings per share under ASC Subtopic 260-10, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive. There were 3,123,030 and 410,358 potentially dilutive shares, which include outstanding common stock options, and warrants, as of June 30, 2023 and December 31, 2022, respectively.

 

 

 

June 30,

2023

 

 

December 31,

2022

 

Options to purchase common stock

 

 

646,449

 

 

 

391,902

 

Warrants to purchase common stock

 

 

2,468,455

 

 

 

10,330

 

Shares issuable upon conversion of Series A Convertible Preferred Stock

 

 

8,126

 

 

 

8,126

 

Potential equivalent shares excluded

 

 

3,123,030

 

 

 

410,358

 

 

 
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Fair Value Measurements

 

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value.

 

In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” the Company measures certain financial instruments at fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

 

·

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 

·

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

·

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The carrying amounts of the Company’s financial assets and liabilities, including cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities, approximate their fair values because of the short maturity of these instruments. The fair value of notes payable approximates their fair values since the current interest rates and terms on these obligations are the same as prevailing market rates.

 

Share-based Compensation

 

The Company’s 2016 Omnibus Incentive Plan (the “Omnibus Plan”) permits the grant of stock options and other share-based awards to its employees, consultants and non-employee members of the 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, 2023, the pool of shares issuable under the Omnibus Plan automatically increased by 867,966 shares from 454,203 shares to 1,322,169 shares.

 

The Company records 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, and the resulting charge is expensed using the straight-line attribution method over the vesting period.

 

Stock compensation expense recognized during the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures. The estimated fair value of grants of stock options and warrants to non-employees of the Company is charged to expense, if applicable, in the financial statements. These options vest in the same manner as the employee options granted under the stock incentive plan as described above.

 

 
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Going Concern

 

The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has limited commercial experience and had a cumulative net loss from inception to June 30, 2023 of $87,369,780. The Company had working capital of $6,050,947 as of June 30, 2023. The Company has not established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern and will require additional financing to fund its future planned operations, including research and development and commercialization of its products. The accompanying financial statements for the three and six months ended June 30, 2023 have been prepared assuming the Company will continue as a going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be required to delay, reduce the scope of, or eliminate one or more of the Company’s research and development activities or commercialization efforts or perhaps even cease the operation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 

 

Recent Accounting Pronouncements

 

The Company considered recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, and concluded that they did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.

 

Note 3 - Inventory

 

As of June 30, 2023 and December 31, 2022, inventory consisted of raw materials, subassemblies to be used in the assembly of TAEUS systems, and finished goods. As of June 30, 2023, the Company had no orders pending for the sale of a TAEUS system.

 

As of June 30, 2023 and December 31, 2022, the Company had inventory valued at $2,757,633 and $2,644,717, respectively.

 

Note 4 - Fixed Assets

 

As of June 30, 2023 and December 31, 2022, fixed assets consisted of the following:

 

 

 

June 30,

2023

 

 

December 31,

2022

 

Property, leasehold and capitalized software

 

$658,682

 

 

$738,720

 

TAEUS development and testing

 

 

140,617

 

 

 

140,617

 

Accumulated depreciation

 

 

(606,425 )

 

 

(643,682 )

Fixed assets, net

 

$192,874

 

 

$235,655

 

 

Depreciation expense for the three months ended June 30, 2023 and 2022 was $35,265 and $21,701, respectively.

Depreciation expense for the six months ended June 30, 2023 and 2022 was $69,781 and $40,739, respectively.

 

Note 5 - Accounts Payable and Accrued Liabilities

 

As of June 30, 2023 and December 31, 2022, current liabilities consisted of the following:

 

 

 

June 30,

2023

 

 

December 31,

2022

 

Accounts payable

 

 

414,935

 

 

$613,961

 

Accrued payroll

 

 

202,226

 

 

 

60,638

 

Accrued bonuses

 

 

928,029

 

 

 

683,738

 

Accrued employee benefits

 

 

5,750

 

 

 

5,750

 

Insurance premium financing

 

 

290,622

 

 

 

158,925

 

Total

 

$1,841,562

 

 

$1,523,012

 

 

Note 6 - Bank Loans

 

Toronto-Dominion Bank Loan

 

On April 27, 2020, the Company entered into a commitment loan with TD Bank under the Canadian Emergency Business Account, in the principal aggregate amount of CAD 40,000, due and payable upon the expiration of the initial term on December 31, 2022, which was later extended to December 31, 2023. This note bears interest on the unpaid balance at the rate of zero percent (0%) per annum during the initial term. Under this note no interest payments are due until January 1, 2024. Under the conditions of the loan, twenty-five percent (25%) of the loan will be forgiven if seventy-five percent (75%) is repaid prior to the initial term date.

 

 
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Note 7 - Capital Stock

 

Reverse Stock Split

 

On December 7, 2022, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment (the “Certificate of Amendment”) to its certificate of incorporation, which Certificate of Amendment effectuated as of December 19, 2022 at 12:01 a.m. Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-20 (the “Reverse Split”). All per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the Reverse Split. No fractional shares were, or shall be, issued in connection with the Reverse Split. A stockholder who would otherwise be entitled to receive a fractional share of common stock is entitled to receive the fractional share rounded up to the next whole share. The Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Company’s common or preferred stock.

 

The Reverse 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 Company’s 2016 Omnibus Incentive Plan.

 

Capital Stock

 

As of June 30, 2023, the authorized capital of the Company consisted of 90,000,000 shares of capital stock, comprised of 80,000,000 shares of common stock with a par value of $0.0001 per share, and 10,000,000 shares of preferred stock with a par value of $0.0001 per share. The Company has designated 10,000 shares of its preferred stock as Series A Convertible Preferred Stock (“Series A Preferred Stock”), 1,000 shares of its preferred stock as Series B Convertible Preferred Stock (“Series B Preferred Stock”), 100,000 shares of its preferred stock as Series C Preferred Stock, and the remainder of the 9,889,000 preferred shares remain authorized but undesignated.

 

As of June 30, 2023, there were 7,481,603 shares of common stock, 141.397 shares of Series A Preferred Stock, and no shares of Series B Preferred Stock or Series C Preferred Stock issued and outstanding, and a stock payable balance of $2,427.

 

On April 27, 2023, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Newbridge Securities Corporation (the “Underwriter”), relating to the issuance and sale (the “Offering”) of 3,750,000 shares of our common stock and warrants to purchase up to 1,875,000 shares of our common stock. The warrants were offered and sold at the rate of one warrant to purchase one share for every two shares of common stock purchased in the Offering. The public offering price for each set of two shares of common stock and accompanying warrant to purchase one share of common stock was $2.41 per set of securities, yielding an effective price of $1.20 per share and $0.01 per warrant. Under the terms of the Underwriting Agreement, the Company also granted to the Underwriter an option (the “Over-allotment Option”) to purchase up to an additional 562,500 shares of common stock and additional warrants to purchase 281,250 shares of common stock.

 

The Offering closed on May 2, 2023. The Company conducted the Offering pursuant to a Registration Statement on Form S-1 (File Nos. 333-271003 and 333-271483) (the “Registration Statement”), which was declared effective by the SEC on April 27, 2023. At the closing of the Offering, the Underwriter fully exercised the Over-allotment Option. The net proceeds to the Company from the Offering were approximately $4.7 million, after deducting underwriting discounts and commissions and other offering expenses.  

 

During the six months ended June 30, 2023, the Company issued a total of 4,312,500 shares of its common stock in return for aggregate net proceeds of $4,712,750.

 

During the six months ended June 30, 2022, the Company issued a total of 1,030,997 shares of its common stock in return for aggregate net proceeds of $8,399,512 under the June 2021 ATM Agreement.

 

At-the-Market Equity Offering Program

 

On June 21, 2021, the Company entered into the At-The-Market Issuance Sales Agreement with Ascendiant (the “June 2021 ATM Agreement”) to sell shares of common stock for aggregate gross proceeds of up to $20.0 million, from time to time, through an “at-the-market” equity offering program under which Ascendiant acts as sales agent. As of June 30, 2023, under the June 2021 ATM Agreement the Company has issued an aggregate of 1,064,634 shares of common stock in return for net proceeds of $9,216,618, resulting in approximately $286,289 of compensation paid to Ascendiant.

 

 
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Note 8 - Common Stock Options

 

Common Stock Options

 

Stock options are awarded to the Company’s employees, consultants and non-employee members of the board of directors under the Omnibus Plan and are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. The aggregate fair value of these stock options granted by the Company during the six months ended June 30, 2023 was determined to be $1,017,235 using the Black-Scholes-Merton option-pricing model based on the following assumptions: (i) volatility rate of 106% to 107%, (ii) discount rate of 0%, (iii) zero expected dividend yield, (iv) risk free rate of 3.68% to 3.72%, and (v) expected life of 10 years. A summary of option activity under the Company’s Omnibus Plan as of June 30, 2023, and changes during the year then ended, is presented below:

 

 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Term (Years)

 

Balance outstanding at December 31, 2022

 

 

391,902

 

 

$31.47

 

 

 

7.41

 

Granted

 

 

273,878

 

 

 

4.02

 

 

 

9.60

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

Cancelled or expired

 

 

(19,331 )

 

 

-

 

 

 

-

 

Balance outstanding at June 30, 2023

 

 

646,449

 

 

$19.69

 

 

 

7.93

 

Exercisable at June 30, 2023

 

 

248,233

 

 

$33.29

 

 

 

5.93

 

 

Note 9 - Common Stock Warrants

 

Warrant Conversions and Consent Solicitation

 

On May 2, 2023, the Company conducted the Offering in which the Company issued 2,156,250 warrants to purchase shares of common stock for an exercise price per share equal to $1.40. The warrants expire May 2, 2028. The Company also issued to the placement agent and its designees warrants exercisable for an aggregate of 301,875 shares of common stock for an exercise price per share equal to $1.50. The warrants expire November 2, 2026.

 

The following table summarizes all stock warrant activity of the Company for the six months ended June 30, 2023:

 

 

 

Number of

Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Contractual

Term (Years)

 

Balance outstanding at December 31, 2022

 

 

10,330

 

 

$25.01

 

 

 

1.78

 

Issued

 

 

2,458,125

 

 

 

1.41

 

 

 

4.66

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

-

 

 

 

-

 

 

 

-

 

Balance outstanding at June 30, 2023

 

 

2,468,455

 

 

$1.51

 

 

 

4.65

 

Exercisable at June 30, 2023

 

 

2,166,580

 

 

$1.51

 

 

 

4.83

 

 

Note 10 - Related Party Transactions

 

On May 2, 2023, the Company conducted the Offering in which the Company issued 83,333 shares of its common stock and 41,667 warrants to the Company’s director, Anthony DiGiandomenico, for cash, which was less than 5% of beneficial ownership in the Company.

 

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 3,657 rentable square feet of space, for the initial monthly rent of $5,986, which commenced on January 1, 2015 for an initial term of 60 months. On October 10, 2017 this lease was amended increasing the rentable square feet of space to 3,950 and the monthly rent to $7,798.      

 

On March 15, 2021, the Company entered into an amendment to the lease, adding approximately 3,248 rentable square feet, increasing the initial monthly rent to $15,452 effective May 2021, and extending the term of the lease to December 31, 2025.

 

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 June 30, 2023 was 10%. Lease expense is recognized on a straight-line basis over the lease term to the extent that collection is considered probable. As a result, the Company has been recognizing rents as they become payable based on the adoption of ASC Topic 842. The weighted-average remaining lease term is 2.5 years.

 

 
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As of June 30, 2023, the maturities of operating lease liabilities are as follows:

 

 

 

Operating

Lease

 

 

 

 

 

2023

 

 

98,361

 

2024

 

 

202,624

 

2025 and beyond

 

 

202,624

 

Total

 

$503,608

 

Less: amount representing interest

 

 

(59,441 )

Present value of future minimum lease payments

 

 

444,168

 

Less: current obligations under leases

 

 

(163,013 )

Long-term lease obligations

 

$281,154

 

 

For the six months ended June 30, 2023 and 2022, the Company incurred rent expenses of $108,187 and $106,604, respectively.

 

Litigation

 

From time to time the Company may become a party to litigation in the normal course of business. As of June 30, 2023, there were no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.

 

 
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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 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, 2022, as filed with the SEC on March 16, 2023, 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, 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, Twitter 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 developing a next-generation enhanced ultrasound devices to develop technology for increasing the capabilities of clinical diagnostic ultrasound, to broaden patient access to the safe diagnosis and treatment of a number of significant medical conditions in circumstances where expensive X-ray computed tomography (“CT”), magnetic resonance imaging (“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.

 

 
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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 one-time 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 (the “EU”) 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 EU 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 FLIP System. In February 2022, we announced that we will pursue FDA reclassification and clearance of our TAEUS® FLIP System through the FDA’s “de novo” process. We voluntarily withdrew our 510(k) application and plan to submit an application for de novo review, which will include additional clinical data, as soon as practicable in 2023.

 

Financial Operations Overview

 

Revenue

 

No revenue has been generated by our TAEUS technology, which we have not commercially sold as of June 30, 2023.

 

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;

 

 

·

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;

 

 

·

manufacturing and packaging costs in connection with conducting clinical trials;

 

 

·

formulation, research and development expenses related to our TAEUS technology; and

 

 

·

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. In connection with the commercialization of our TAEUS applications, we are building a small sales and marketing team to train and support global ultrasound distributors, and expect to execute traditional marketing activities such as promotional materials, electronic media and participation in industry events and conferences. As of June 30, 2023, we had a full-time sales representative in each of the United Kingdom, France and Germany. We expect to continue actively adding to our sales representation and support headcount for operations in the EU in the coming quarters, 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, in each case as our financial resources permit.

 

 
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Table of Contents

 

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 that our general and administrative expenses will increase in the future as we support our continued research and development activities, expand our sales and marketing operations, and continue as a public company. These increases would likely include increased costs related to the hiring of personnel, including compensation and employee-related expenses, including stock-based compensation, and fees to outside consultants, lawyers and accountants, among other expenses. Additionally, 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

 

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.

 

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, 2023, the pool of shares issuable under the Omnibus Plan automatically increased by 867,966 shares from 454,203 shares to 1,322,169 shares. As of June 30, 2023, there were 675,520 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.

 

Stock compensation expense recognized during the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures. The estimated fair value of grants of stock options and warrants to non-employees is charged to expense, if applicable, in the financial statements.

 

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 June 30, 2023 and 2022

 

Revenue

 

We had no revenue during the three months ended June 30, 2023 and 2022.

 

Cost of Goods Sold

 

We had no cost of goods sold during the three months ended June 30, 2023 and 2022.

 

 
17

Table of Contents

 

Research and Development

 

Research and development expenses were $1,400,182 for the three months ended June 30, 2023, as compared to $1,847,560 for the three months ended June 30, 2022, a decrease of $447,378, or 24%. The costs include primarily wages, fees and equipment for the development of our TAEUS product line. Research and development expenses decreased from the same period for 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 $247,773 for the three months ended June 30, 2023, as compared to $342,039 for the three months ended June 30, 2022, a decrease of $94,266, or 28%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased due to the departure of our Chief Commercial Officer. 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 June 30, 2023 were $1,346,610, compared to $1,382,094 for the three months ended June 30, 2022, a decrease of $62,868, or 3%. Our wage and related expenses for the three months ended June 30, 2023 were $558,068, compared to $569,712 for the three months ended June 30, 2022. Wage and related expenses in the three months ended June 30, 2023 included $67,932 for accrued bonuses and $88,200 of stock compensation expense related to the issuance and vesting of options, compared to $67,932 for bonuses and $111,819 of stock compensation expense related to the issuance and vesting of options, for the three months ended June 30, 2022. Our professional fees, which include legal, audit, and investor relations, for the three months ended June 30, 2023 were $503,697, compared to $545,614 for the three months ended June 30, 2022.

 

Other Income

 

Other income for the three months ended June 30, 2023 was $437,433, and resulted mostly from the completion of the Employer Retention Tax Credit for employee retention in 2021 and 2022 of $ 413,844.

 

Net Loss

 

As a result of the foregoing, for the three months ended June 30, 2023, we recorded a net loss of $2,557,132, compared to a net loss of $3,591,067 for the three months ended June 30, 2022.

 

Six months ended June 30, 2023 and 2022

 

Revenue

 

We had no revenue during the six months ended June 30, 2023 and 2022.

 

Cost of Goods Sold

 

We had no cost of goods sold during the six months ended June 30, 2023 and 2022.

 

Research and Development

 

Research and development expenses were $2,791,496 for the six months ended June 30, 2023, as compared to $3,060,582 for the six months ended June 30, 2022, a decrease of $269,086, or 9%. The costs include primarily wages, fees and equipment for the development of our TAEUS product line. Research and development expenses decreased from the same period for 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 $429,389 for the six months ended June 30, 2023, as compared to $681,942 for the six months ended June 30, 2022, a decrease of $252,553, or 37%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased due to the departure of our Chief Commercial Officer. Currently, our marketing efforts are through our website and attendance of key industry meetings.

 

 
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Table of Contents

 

General and Administrative

 

Our general and administrative expenses for the six months ended June 30, 2023 were $2,713,008, compared to $2,684,438 for the six months ended June 30, 2022, an increase of $28,570, or 1%. Our wage and related expenses for the six months ended June 30, 2023 were $1,169,887, compared to $1,121,025 for the six months ended June 30, 2022. Wage and related expenses in the six months ended June 30, 2023 included $135,864 for accrued bonuses and $166,065 of stock compensation expense related to the issuance and vesting of options, compared to $113,475 for bonuses and $200,775 of stock compensation expense related to the issuance and vesting of options, for the six months ended June 30, 2022. Our professional fees, which include legal, audit, and investor relations, for the six months ended June 30, 2023 were $1,024,335, compared to $1,049,109 for the six months ended June 30, 2022.

 

Other Income

 

Other income for the six months ended June 30, 2023, was $434,015, and resulted mostly from the completion of the Employer Retention Tax Credit for employee retention in 2021 and 2022 of $413,844.

 

Net Loss

 

As a result of the foregoing, for the six months ended June 30, 2023, we recorded a net loss of $5,499,878, compared to a net loss of $6,449,269 for the six months ended June 30, 2022.

 

Near-Term Liquidity and Capital Resources

 

Since inception, we have incurred losses and expect to continue to incur losses for the foreseeable future. As of June 30, 2023, we had an accumulated deficit of $87,369,780 and had $4,819,459 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 continue to evaluate and manage our capital needs to support our clinical, regulatory and operational activities, progress EU commercialization, and prepare for U.S. commercialization upon FDA approval of our NAFLD TAEUS device. In April 2023, we completed a public underwritten offering of 4,312,500 shares of our common stock and warrants to purchase an aggregate 2,156,250 shares of our common stock for aggregate net proceeds of $4.7 million. However, we expect that we will need additional capital to allow us to continue to execute our commercialization plans beyond the fourth quarter of 2023. We are considering potential financing options that may be available to us such as additional sales of our common stock, including through our At-The-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC, dated June 21, 2021 (the “June 2021 ATM Agreement”). Except for the June 2021 ATM Agreement, 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. 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 six months ended June 30, 2023, we incurred net losses of $5,499,878 and used cash in operations of $4,775,442. In light of our cash balance as of June 30, 2023, 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 six months ended June 30, 2023, we used $4,775,442 of cash in operating activities primarily as a result of our net loss of $5,499,878, offset by share-based compensation of $493,134, depreciation expense of $69,781, amortization of right of use assets of $73,974, and net changes in operating assets and liabilities of $87,547.

 

During the six months ended June 30, 2022, we used $6,433,852 of cash in operating activities primarily as a result of our net loss of $6,449,269, offset by share-based compensation of $599,886, depreciation expense of $40,739, amortization of right of use assets of $67,158, and net changes in operating assets and liabilities of $(692,366).

 

Investing Activities

 

During the six months ended June 30, 2023, we used $27,000 in investing activities related to purchases of fixed assets.

 

During the six months ended June 30, 2022, we used $149,153 in investing activities related to purchases of equipment.

 

 
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Table of Contents

 

Financing Activities

 

During the six months ended June 30, 2023, our financing activities provided $4,732,803 in proceeds from issuances of common stock and warrants.

 

During the six months ended June 30, 2022, our financing activities provided $8,399,512 in proceeds from issuances of common stock.

 

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 NAFLD TAEUS application;

 

 

·

acquire parts and build finished goods inventory of the TAEUS FLIP system;

 

 

·

complete regulatory filings required for marketing approval of our NAFLD TAEUS application in the United States;

 

 

·

seek to hire a small internal marketing team to engage and support channel partners and clinical customers for our NAFLD TAEUS application;

 

 

·

expand marketing of our NAFLD TAEUS application;

 

 

·

advance development of our other TAEUS applications; and

 

 

·

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 June 2021 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 our Annual Report on Form 10-K for the year ended December 31, 2022. 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. Additionally, a recession or other unfavorable market conditions, including economic slowdowns, recessions, inflation, instability in the banking system, rising interest rates and tightening of credit markets, the conflict in Ukraine or otherwise, may limit our access to capital. 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 June 30, 2023, 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.

 

 
20

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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 June 30, 2023, 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 June 30, 2023: insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting.

 

To remediate the material weakness, management intends to implement the following measures during 2023, as the Company’s 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

 

 

·

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 June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, our management is currently seeking to improve our controls and procedures in an effort to remediate the deficiency described above.

 

 
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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 under “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on March 16, 2023. 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 June 30, 2023.

 
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Item 6. Exhibits

 

Exhibit

Number

 

Description

3.1

 

Fourth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 12, 2017)

3.2

 

Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 18, 2020)

3.3

 

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-1 (File No. 333-214724), as amended, originally filed on November 21, 2016)

4.1

 

Form of Warrant issued in April 2023 Underwritten Public Offering (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1/A filed on April 18, 2023)

4.2

 

Form of Underwriter’s Warrant issued in April 2023 Underwritten Public Offering (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1/A filed on April 18, 2023)

4.3

 

Form of Warrant Agency Agreement (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-1/A filed on April 18, 2023)

31.1

 

Certification of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

31.2

 

Certification of Periodic Report by Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1

 

Certification of Periodic Report by Chief Executive Officer and Principal Financial Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101.INS

 

XBRL Instance Document (filed herewith)

101.SCH

 

XBRL Taxonomy Schema (filed herewith)

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase (filed herewith)

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase (filed herewith)

101.LAB

 

XBRL Taxonomy Extension Label Linkbase (filed herewith)

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase (filed herewith)

 

* Indicates management compensatory plan, contract or arrangement.

 

 
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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.

 

 

 

 

Date: August 14, 2023

By:

/s/ Francois Michelon

 

 

 

Francois Michelon

 

 

 

Chief Executive Officer and Chairman

(Principal Executive Officer)

 

 

 

ENDRA LIFE SCIENCES INC.

 

 

 

 

 

Date: August 14, 2023

By:

/s/ Irina Pestrikova

 

 

 

Irina Pestrikova

 

 

 

Senior Director, Finance

(Principal Financial and Accounting Officer)

 

 

 
24

 

 

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Aug. 14, 2023
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Condensed Consolidated Balance Sheets - USD ($)
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Dec. 31, 2022
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Prepaid expenses 506,914 490,299
Inventory 2,757,633 2,644,717
Total Current Assets 8,084,006 8,024,114
Non-Current Assets    
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Right of use assets 431,842 505,816
Prepaid expenses, long term 530,068 502,576
Other assets 5,986 5,986
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Current Liabilities    
Accounts payable and accrued liabilities 1,841,562 1,523,012
Lease liabilities, current portion 163,013 152,228
Loans 28,484 28,484
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Lease liabilities 281,154 365,919
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Additional paid in capital 94,297,167 89,068,015
Stock payable 2,427 6,073
Accumulated deficit (87,369,780) (81,869,902)
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Preferred Stock Shares, Outstanding 0 0
v3.23.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Operating Expenses        
Research and development $ 1,400,182 $ 1,847,560 $ 2,791,496 $ 3,060,582
Sales and marketing 247,773 342,039 429,389 681,942
General and administrative 1,346,610 1,382,094 2,713,008 2,684,438
Total operating expenses 2,994,565 3,571,693 5,933,893 6,426,962
Operating loss (2,994,565) (3,571,693) (5,933,893) (6,426,962)
Other Expenses        
Other income (expense) 437,433 (19,374) 434,015 (22,307)
Total other expenses 437,433 (19,374) 434,015 (22,307)
Loss from operations before income taxes (2,557,132) (3,591,067) (5,499,878) (6,449,269)
Provision for income taxes 0 0 0 0
Net Loss $ (2,557,132) $ (3,591,067) $ (5,499,878) $ (6,449,269)
Net loss per share - basic and diluted $ (0.43) $ (1.17) $ (1.20) $ (2.46)
Weighted average common shares - basic and diluted 5,996,186 3,082,209 4,582,645 2,617,878
v3.23.2
Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($)
Total
Common Stock
Additional Paid-In Capital
Stock Payable
Accumulated Deficit
Convertible Preferred Stock Series B
Convertible Preferred Stock Series A
Balance, shares at Dec. 31, 2021   2,127,726         141
Balance, amount at Dec. 31, 2021 $ 10,784,246 $ 213 $ 79,460,979 $ 13,863 $ (68,690,810) $ 0 $ 1
Common stock issued for cash, net of funding costs, shares   1,030,997          
Common stock issued for cash, net of funding costs, amount 8,399,512 $ 103 8,399,409 0 0 0 0
Fair value of vested stock options 599,886 0 599,886 0 0 0 0
Stock payable towards preference dividend 0 0 8,049 8,049 0 0 0
Net loss (6,449,269) $ 0 0 0 (6,449,269) 0 $ 0
Balance, shares at Jun. 30, 2022   3,158,723         141
Balance, amount at Jun. 30, 2022 13,334,375 $ 316 88,468,323 5,814 (75,140,079) 0 $ 1
Balance, shares at Mar. 31, 2022   2,227,971         141
Balance, amount at Mar. 31, 2022 9,068,633 $ 223 80,608,647 8,774 (71,549,012) 0 $ 1
Common stock issued for cash, net of funding costs, shares   930,752          
Common stock issued for cash, net of funding costs, amount 7,545,460 $ 93 7,545,367 0 0 0 0
Fair value of vested stock options 311,349 0 311,349 0 0 0 0
Stock payable towards preference dividend 0 0 2,960 (2,960) 0 0 0
Net loss (3,591,067) $ 0 0 0 (3,591,067) 0 $ 0
Balance, shares at Jun. 30, 2022   3,158,723         141
Balance, amount at Jun. 30, 2022 13,334,375 $ 316 88,468,323 5,814 (75,140,079) 0 $ 1
Balance, shares at Dec. 31, 2022   3,169,103         141
Balance, amount at Dec. 31, 2022 7,204,504 $ 317 89,068,015 6,073 (81,869,902) 0 $ 1
Common stock issued for cash, net of funding costs, shares   4,312,500          
Common stock issued for cash, net of funding costs, amount 4,712,750 $ 431 4,712,319 0 0 0 0
Fair value of vested stock options 493,134 0 493,134 0 0 0 0
Stock payable towards preference dividend 0 0 3,646 3,646 0 0 0
Net loss (5,499,878) 0 0 0 (5,499,878) 0 0
Warrants issued for cash, net of funding costs 20,053 $ 0 20,053 0 0 0 $ 0
Balance, shares at Jun. 30, 2023   7,481,603         141
Balance, amount at Jun. 30, 2023 6,930,563 $ 748 94,297,167 2,427 (87,369,780) 0 $ 1
Balance, shares at Mar. 31, 2023   3,169,103         141
Balance, amount at Mar. 31, 2023 4,499,037 $ 317 89,307,675 3,692 (84,812,648) 0 $ 1
Common stock issued for cash, net of funding costs, shares   4,312,500          
Common stock issued for cash, net of funding costs, amount 4,712,750 $ 431 4,712,319 0 0 0 0
Fair value of vested stock options 255,855 0 255,855 0 0 0 0
Stock payable towards preference dividend 0 0 1,265 (1,265) 0 0 0
Net loss (2,557,132) 0 0 0 (2,557,132) 0 0
Warrants issued for cash, net of funding costs 20,053 $ 0 20,053 0 0 0 $ 0
Balance, shares at Jun. 30, 2023   7,481,603         141
Balance, amount at Jun. 30, 2023 $ 6,930,563 $ 748 $ 94,297,167 $ 2,427 $ (87,369,780) $ 0 $ 1
v3.23.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Cash Flows from Operating Activities    
Net loss $ (5,499,878) $ (6,449,269)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 69,781 40,739
Fixed assets write off 0 599,886
Stock compensation expense including common stock issued for RSUs 493,134 0
Amortization of right of use assets 73,974 67,158
Changes in operating assets and liabilities:    
Increase in prepaid expenses (44,107) 513,140
Increase in inventory (112,916) (1,090,150)
Increase in accounts payable and accrued liabilities 318,550 (51,072)
Decrease in lease liability (73,980) (64,284)
Net cash used in operating activities (4,775,442) (6,433,852)
Cash Flows from Investing Activities    
Purchases of fixed assets (27,000) (149,153)
Net cash used in investing activities (27,000) (149,153)
Cash Flows from Financing Activities    
Proceeds from issuance of common stock 4,712,750 8,399,512
Proceeds from issuance of warrants 20,053 0
Net cash provided by financing activities 4,732,803 8,399,512
Net increase (decrease) in cash (69,639) 1,816,507
Cash, beginning of period 4,889,098 9,461,534
Cash, end of period 4,819,459 11,278,041
Supplemental disclosures of cash items    
Interest paid 0 0
Income tax paid 0 0
Supplemental disclosures of non-cash items    
Stock dividend payable (3,646) (8,049)
Right of use asset 431,842 576,255
Lease liability $ 444,167 $ 586,193