As
filed with the Securities and Exchange Commission on October 6, 2016
Registration
No.
333-213365
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1/A
Amendment
No. 1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ENDONOVO
THERAPEUTICS, INC.
(Exact
name of registrant as specified in its charter)
DELAWARE
(State
or other jurisdiction of incorporation or organization)
2834
(Primary
Standard Industrial Classification Code Number)
45-2552528
(I.R.S.
Employer Identification Number)
6320
Canoga Avenue, 15th Floor, Woodland Hills, CA 91367, Tel : (800) 489-4774
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Alan
Collier, 6320 Canoga Avenue, 15th Floor, Woodland Hills, CA 91367 (800) 489-4774
(Name,
address, including zip code, and telephone number, including area code, of agent of service)
Copies
of communications to:
Frank
J. Hariton, Esq.
1065
Dobbs Ferry Road
White
Plains, NY 10607
Tel:
(914) 674-4373
Fax
(914) 693-2963
From
time to time after the effective date of this Registration Statement
(Approximate
date of commencement of proposed sale to the public)
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the
same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following
box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering.
[ ]
If
delivery of the prospectus is expected to be made pursuant to Rule 424, check the following box. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[ ]
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Smaller
reporting company
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[X]
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(Do
not check if a smaller reporting company)
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CALCULATION
OF REGISTRATION FEE
Title
of Each Class Of Securities To Be Registered
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Amount
To Be Registered (1)
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Proposed
Maximum Offering Price Per Share (2)
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Proposed
Maximum Aggregate Offering Price (1)
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Amount
of Registration Fee (3) *
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Common stock, $0.0001
par value per share
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16,676,057 shares
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$
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0.17
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$
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2,834,760
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$
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285.46
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1) In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of shares that may be
issued and resold resulting from stock splits, stock dividends or similar transactions.
2)
Estimated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration
fee based on the closing market price of the Registrant’s common stock on the OTCQB on August 25, 2016.
3)
Calculated under Section 6(b) of the Securities Act of 1933.
*
Previously Paid
The
registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT
TO COMPLETION, DATED October 6, 2016
PRELIMINARY
PROSPECTUS
ENDONOVO
THERAPEUTICS, INC.
16,500,000
Shares of Common Stock
This
prospectus relates to the offer and resale of up to 16,676,057 shares of our common stock, par value $0.0001 per share, by the
selling stockholder, Bellridge Capital, LP (“Bellridge”), and represent shares that Bellridge may acquire upon conversion
of up to $1,000,000 principal amount of our 6% Senior Convertible Notes (the “Notes”) issued or to be issued to Bellridge.
For more information on the selling stockholder, please see the section of this prospectus entitled “Selling Security Holder”
beginning on page 37. We will not receive any proceeds from the resale of these shares of common stock offered by Bellridge. We
have, however, received proceeds from the sale of Notes to Bellridge. When Bellridge converts a Note, the per share purchase price
that Bellridge will receiving respect of such conversion will be determined in accordance with a formula set forth in the Note.
We have paid or will pay a 10% fee to Aegis Capital, LP upon the issuance of each of the Notes. The conversion price of the Notes
is equal to 75% of the lowest trading price of our stock during the 20-day period preceding the conversion as reported by Bloomberg,
LP. Bellridge has agreed, with certain exceptions set forth herein, to limit its resales of our stock to 22.5% of the reported
trading volume on any day. However, the number of shares to be issued to Bellridge shall not exceed the number of such shares
that, when added to the number of shares of our common stock then beneficially owned by Bellridge, would exceed 4.99% of the number
of shares of our common stock outstanding. Bellridge may sell any shares offered under this prospectus at prevailing market prices
or privately negotiated prices. Bellridge is an “underwriter” within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”), in connection with the resale of our common stock under the EPA.
For
more information, please see the section of this prospectus titled “Plan of Distribution” beginning on page 38. Our
common stock became eligible for trading on the OTC Bulletin Board on March 8, 2012 and is currently quoted on the OTCQB. Our
common stock is quoted on the OTCQB under the symbol “ENDV”. The closing price of our stock on August 25, 2016, was
$0.17. You should understand the risks associated with investing in our common stock. Before making an investment, read the “Risk
Factors,” which begin on page 5 of this prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is October 6, 2016
Table
of Contents
You
should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information
different from that which is contained in this prospectus. This prospectus may be used only where it is legal to sell these securities.
The information in this prospectus may only be accurate on the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of securities.
PART
I
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider
before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this
prospectus, the terms, the “Company”, “Endonovo”, “we,” “us,” “our,”
and “our company” refer to Endonovo Therapeutics, Inc., a Delaware corporation.
Company
Overview
The
Offering
Up
to 16,500,000 shares of our common stock that may be offered by the selling stockholder
Shares
Outstanding:
123,743,549
shares of Common Stock are outstanding on the date of this prospectus. 1,000 shares of Series AA Super voting preferred stock
are outstanding on the date of this prospectus.
Total
proceeds:
We
will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling shareholder.
We have or will receive an aggregate of approximately $845,000 from Bellridge upon purchase of the Notes which represents the
$1,000,000 face value of the Notes less a 5.5% original issue discount and fees paid to Aegis Capital, LP. The conversion price
that Bellridge will be entitled to upon each conversion of the Notes will be determined in accordance with a formula set forth
in the Notes. The purchase price to be paid by Bellridge will be equal to 75% of the lowest trading price for our common stock
reported by Blumberg LP during the 20 trading days. Conversions are limited to such number of shares as would bring Bellridge’s
ownership of our stock up to 4.99% of the issued and outstanding common stock. Resales of our stock by Bellridge are generally
limited in volume to 22.5% of the total traded on any day. Bellridge may sell our stock at prevailing market prices or privately
negotiated prices. Bellridge received 176,057 shares of our stock as a commitment fee in connection with a Securities Purchase
Agreement related to the Notes and these shares are included in this prospectus.
To date Bellridge has purchased $600,000 of
the $1,000,000 of Notes and the Company has realized net proceeds of $507,000. The NSPA requires that Bellridge purchase $400,000
of Notes on the effective date of the registration statement of which this prospectus forms a part
.
Risk
Factors
There
are significant risks involved in investing in our company. For a discussion of risk factors you should consider before buying
our common stock, see “Risk Factors” section.
Company
Overview
Endonovo
Therapeutics, Inc., formerly called “Hanover Portfolio Acquisitions, Inc. (the “Company” or “HPA”)”
was comprised of two business segments: (1) a debt portfolio management company and (2) an intellectual property management and
commercialization company. During the year ended December 31, 2013, we discontinued our efforts in debt portfolio management and
concentrated in intellectual property development, particularly in the medical device and regenerative medicine industries. Management
believes that we are developing several therapies that may be safer and more commercially viable than stem cell therapies currently
being developed by competitors. In particular, we own a unique type of square-waveform. Our proprietary square wave form is used
to stimulate and activate the body’s natural repair mechanisms to repair tissues. However, we have not been granted patent
protection and have not completed clinical testing. Accordingly, none of our proposed therapies may ever be fully developed by
us, clinically tested, or prove to be commercially viable. Our corporate headquarters is located at 6320 Canoga Avenue - 15
th
Floor, Woodland Hills, CA 91367 and our telephone number is (800) 489-4774.
RISK
FACTORS
An
investment our common stock is highly speculative and involves a high degree of risk. The risk factors described below summarize
some of the material risks inherent in an investment in us. These risk factors are not presented in any particular order of significance.
Each prospective investor should carefully consider the following risk factors inherent in and affecting our business and the
Offering before making an investment decision. You should also refer to the other information set forth in this Memorandum and
to the risk factors in our SEC filings.
Risks
Relating to our Financial Condition
We
are a company with a limited operating history and our future profitability is uncertain. We anticipate future losses and negative
cash flow, which may limit or delay our ability to become profitable.
We
are a company with a limited operating history and have not generated significant revenues to date. We may never generate significant
revenues. Our predecessor company, Hanover Asset Management, Inc. was incorporated in November 2008 in California. For the purpose
of reincorporating in Delaware, we merged with a newly incorporated successor company, now called Endonovo Therapeutics, Inc.,
in July 2011. We have incurred losses since our inception and expect to experience operating losses and negative cash flow for
the foreseeable future. As of June 30, 2016, we had a total accumulated deficit of $(7,258,480). Due to certain risks, we anticipate
our losses will continue to increase from current levels. Such risks include, but are not limited to, dependence on the growth
of use of technology and services, the need to establish the viability of our technologies through clinical testing and through
acceptance by healthcare practitioners and third party payers. To address these risks, we must conduct clinical trials, obtain
FDA approvals and seek recognition of our therapies within the healthcare industry. We must also attract, retain, and motivate
qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so could
lead to an inability to meet our financial obligations and therefore result in bankruptcy and the loss of your entire investment
in our common shares.
Our
internal controls are not effective, which could cause our financial reporting to be unreliable and lead to misinformation being
disseminated to the public.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange
Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal
executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance
of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance
regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.
We
currently have a limited executive management group managing the financial controls of the Company.
We
have a Chief Executive Officer, Alan Collier, who is responsible for monitoring and ensuring compliance with our internal control
procedures. As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to
be unreliable and lead to misinformation being disseminated to the public. Investors relying upon the reporting may make an uninformed
investment decision.
Risks
Relating to our Business and our Industry
We
may encounter numerous difficulties frequently encountered by companies in the early stage of operations.
We
have a limited operating history upon which an investor can evaluate our current business and future prospects. Any potential
investor must consider the risks and difficulties frequently encountered by early-stage companies. Historically, there has been
a high failure rate among early-stage companies. Our future performance will depend upon a number of factors, including our ability
to:
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generate
revenues and implement our business plan and growth strategy;
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attract
and retain marketing and commercial sponsors;
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aggressively
counter and respond to actions by our competitors;
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maintain
adequate control of our expenses;
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attract,
retain and motivate qualified personnel;
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react
to member preferences and demands;
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maintain
regulatory compliance; and
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generate
sufficient working capital through our operations or through issuance of additional debt or equity financing, and to continue
as a going concern.
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We
cannot assure investors that we will successfully address any of these factors, and our failure to do so could have a material
adverse effect on our business, financial condition, results of operations and future prospects
.
The
loss of the services of our key management and personnel or the failure to attract additional key personnel could adversely affect
our ability to operate our business.
A
loss of one or more of our current officers or key employees could severely and negatively impact our operations. We have no present
intention of obtaining key-man life insurance on any of our executive officers or management. Additionally, competition for highly
skilled technical, managerial and other personnel is intense. As our business develops, we might not be able to attract, hire,
train, retain and motivate the highly skilled managers and employees we need to be successful. If we fail to attract and retain
the necessary technical and managerial personnel, our business will suffer and might fail.
Our
limited operating history could delay our growth and result in the loss of your investment.
We
were incorporated in 2011. However, our prospects must be considered in light of the risks, expenses and difficulties frequently
encountered by companies in their growth stage of development. Such risks include, but are not limited to, dependence on the growth
of use of technology and services, complete product development, clinical trials and obtain industry acceptance while responding
to competitive developments and attracting, retaining, and motivating qualified personnel. There can be no assurance that we will
be successful in addressing such risks, and the failure to do so could lead to an inability to meet our financial obligations
and therefore result in bankruptcy and the loss of your entire investment in our common shares.
Our
ability to implement and manage growth strategy is uncertain.
We
plan on expanding the market segments in which we acquire approval of medical indications. Implementation of our growth strategy
may impose significant strain on our management, operating systems and financial resources.
Failure
by the Company to manage its growth, or unexpected difficulties encountered during expansion into different markets, could have
a materially adverse impact on our results of operations or financial condition. Our ability to continue to operate our business
depends upon a number of factors, including (i) generating sufficient funds for operations, (ii) our executive management team
and our financial and accounting controls, and (iii) staffing, training and retaining skilled on-site management personnel. Certain
of these factors are beyond our control and may be affected by the economy or actions taken by competing companies. Further, there
can be no assurance that our market analysis and proprietary business data will continue to support our current marketing plans.
We
may not be able to retain our key personnel or attract additional personnel, which could affect our ability to complete necessary
clinical trials and obtain approvals so that we can generate revenue sufficient to continue as a going concern diminishing your
return on investment.
Our
performance is substantially dependent on the services and on the performance of our Management. Endonovo Therapeutics is, and
will be, heavily dependent on the skill, acumen and services of our key executives. Our performance also depends on our ability
to attract, hire, retain and motivate our officers and key employees. The loss of the services of our executives could result
in lost revenue depending on the length of time and effort required to find qualified replacements. We have not entered into long-term
employment agreements with all of our key personnel and currently have no “Key Employee” life insurance policies.
Our
future success may also depend on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical,
managerial, marketing and customer service personnel.
Competition
for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain
sufficiently qualified personnel. If we are unable to attract, retain, and train the necessary technical, managerial, marketing
and customer service personnel, our expectations of increasing our clientele could be hindered, and the profitability of Endonovo
Therapeutics reduced.
As
the Company intends to be conducting international business transactions, it will be exposed to local business risks in different
countries, which could have a material adverse effect on its financial condition or results of operations.
The
Company intends to promote and sell its products internationally by virtue of the global access to its products line and it expects
to have customers located in several countries. The Company’s international operations will be subject to risks inherent
in doing business in foreign countries, including, but not necessarily limited to:
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New
and different legal and regulatory requirements in local jurisdictions;
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Potentially
adverse tax consequences, including imposition or increase of taxes on transactions or withholding and other taxes on remittances
and other payments by subsidiaries;
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Risk
of nationalization of private enterprises by foreign governments;
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Legal
restrictions on doing business in or with certain nations, certain parties and/or certain products; and,
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Local
economic, political and social conditions, including the possibility of hyperinflationary conditions and political instability.
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The
Company may not be successful in developing and implementing policies and strategies to address the foregoing factors in a timely
and effective manner in the locations where it will do business. Consequently, the occurrence of one or more of the foregoing
factors could have a material adverse effect on its base operations and upon its financial condition and results of operations.
Since
our products may be available over the Internet in foreign countries and the Company may have customers residing in foreign countries,
foreign jurisdictions may require it to qualify to do business in their country. It will be required to comply with certain laws
and regulations of each country in which it conducts business, including laws and regulations currently in place or which may
be enacted related to Internet services available to the residents of each country from online sites located elsewhere.
The
Company’s operations in developing markets could expose it to political, economic and regulatory risks that are greater
than those it may face in established markets. Further, its international operations may require it to comply with additional
United States and international regulations.
For
example, it may be required to comply with the Foreign Corrupt Practices Act, or “FCPA,” which prohibits companies
or their agents and employees from providing anything of value to a foreign official or agent thereof for the purposes of influencing
any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any
person or corporate entity or obtain any unfair advantage. The Company may operate in some nations that have experienced significant
levels of governmental corruption. Its employees, agents and contractors, including companies to which it outsources business
operations, may take actions in violation of its policies and legal requirements. Such violations, even if prohibited by its policies
and procedures, could have an adverse effect on its business and reputation. Any failure by the Company to ensure that its employees
and agents comply with the FCPA and applicable laws and regulations in foreign jurisdictions could result in substantial civil
and criminal penalties or restrictions on its ability to conduct business in certain foreign jurisdictions, and its results of
operations and financial condition could be materially and adversely affected.
We
may not have the financial resources to litigate should actions arise involving our intellectual property rights or patent applications.
We
are in the process of licensing our intellectual property, future patent rights, and trademarks relating to our business model.
However, patent and intellectual property legal issues for our products are complex and currently evolving. We are not certain
that we will be able to maintain our patent rights and intellectual property. Patent applications are secret until patents are
issued in the United States, or published in other countries, therefore, we cannot be sure that we are first to file any patent
application for our technologies. Should any of our patent claims be compromised or if, for example, one of our competitors has
filed or obtained a patent before our claims have been protected, or should a competitor with more resources desire to litigate
and force us to defend or prosecute any future patent rights, our ability to develop the market for our products could be compromised,
for we do not have the financial resources to litigate actions involving our patents and copyrights.
We
may be subject to litigation that will be costly to defend or pursue and uncertain in its outcome.
Our
business may bring us into conflict with our licensees, licensors or others with whom we have contractual or other business relationships,
or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that
are satisfactory to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be
expensive and may require a significant amount of management’s time and attention, at the expense of other aspects of our
business. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us
to pay damages, enjoin us from certain activities, or otherwise affect our legal or contractual rights, which could have a significant
adverse effect on our business and financial condition.
We
may not be able to obtain third-party reimbursement or favorable product pricing, which would reduce our ability to operate profitably.
Our
ability to successfully commercialize certain of our proposed products may depend to a significant degree on reimbursement of
the costs of such products and related services at acceptable levels from government authorities and other organizations. We cannot
assure you that reimbursement in the United States or foreign countries will be available for any products we may develop or,
if available, will not be decreased in the future, or that reimbursement amounts will not reduce the demand for, or the price
of, our products with a consequent harm to our business. We cannot predict what additional regulation or legislation may be enacted
in the future or what effect such regulation or legislation may have on our business. If additional regulations are overly onerous
or expensive makes our business more expensive or burdensome than originally anticipated, we may be forced to significantly downsize
our business plans or completely abandon our business model.
We
have no liability insurance, which leaves us vulnerable to future claims we will be unable to satisfy.
The
testing, manufacturing, marketing and sale of products in the healthcare and technology industry entail an inherent risk of product
liability claims, and we cannot assure you that substantial product liability claims will not be asserted against us. In the event
we are forced to expend significant funds on defending product liability actions, and in the event those funds come from operating
capital, we will be required to reduce our business activities, which could lead to significant losses. We cannot assure you that
adequate insurance coverage will be available in the future on acceptable terms, if at all, or that, if available, we will be
able to maintain any such insurance at sufficient levels of coverage or that any such insurance will provide adequate protection
against potential liabilities. Whether or not a product liability insurance policy is obtained or maintained in the future, any
product liability claim could harm our business or financial condition.
We
have not adopted various corporate governance measures, and as a result stockholders may have limited protections against interested
director transactions, conflicts of interest and similar matters.
Federal
legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed
to promote the integrity of corporate management and the securities markets. Because our securities are not yet listed on a national
securities exchange, we are not required to adopt these corporate governance measures and have not done so voluntarily in order
to avoid incurring the additional costs associated with such measures. Furthermore, the absence of the governance measures referred
to above with respect to our Company may leave our stockholders with more limited protection in connection with interested director
transactions, conflicts of interest and similar matters.
Certain
provisions of Delaware law applicable to Endonovo could also delay a merger, tender offer, or proxy contest or make one more difficult.
As
a Delaware corporation, we are subject to Delaware law, including Section 203 of the Delaware General Corporation Law. In general,
Section 203 prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period
of three years following the date that the stockholder became an interested stockholder unless certain specific requirements are
met as set forth in Section 203. These provisions, alone or together, could have the effect of deterring or delaying changes in
incumbent management, proxy contests or changes in control.
Risks
Relating to Our Reliance on Third Parties
Because
our Business Involves Medical Technology, Our Business Tends to be Capital Intensive.
We
are likely to require additional capital to maintain operations or expand our business. We have not made any arrangements to obtain
any additional financing. Any additional financing may only be available on terms unfavorable to us and disadvantageous to our
shareholders
.
The
Protection from our Future Patents is Uncertain.
We
will rely on patents and trade secrets for the protection of our intellectual property. The issuance of a patent by the Patent
Office does not ensure that the patent will be upheld if it is challenged in litigation or that the patent will not be found to
infringe upon patents validly issued to others. We could be exposed to substantial litigation expense defending their intellectual
property as well as liability to others.
Our
Proposed Products may Become Technologically Obsolete.
The
medical products market is characterized by extensive research and development activities. New developments are expected to continue
at a rapid pace and there can be no assurance that new discoveries will not render our products, processes and devices uneconomical
or obsolete. The likelihood of success for our products must be considered in light of the problems, expenses, difficulties, complications
and delays frequently encountered in connection with the development of new medical processes, devices and products and their
level of acceptance by the medical community.
We
may Encounter Liabilities Involving Customers and Third Parties.
The
sale of medical devices can result in claims for injury if a product causes harm or fails to perform as promised. Although we
have not been subject to any such claim, no assurance can be given that such claims will not be made in the future or that we
can obtain any insurance coverage. If we were subject to an uncovered claim, our assets could be greatly reduced.
Government
Regulations May Result in Costs and Delays.
The
development, testing, production and marketing of our proprietary square wave form device, cell-free therapies and any future
products are subject to regulation by the FDA as devices under 1976 Medical Device Amendments to the Federal Food, Drug and Cosmetic
Act. Additionally, our products may be subject to regulation by similar agencies in other states and foreign countries. While
we believe that we have complied with all applicable laws and regulations, continued compliance with such laws or regulations,
including any new laws or regulations, might impose additional costs on us which could adversely affect its financial performance
and results of operations.
We
depend on our collaborators to help us develop and test our proprietary square wave form device, and our ability to develop and
commercialize that device may be impaired or delayed if collaborations are unsuccessful.
Our
strategy for the development, testing and commercialization of our proprietary square wave form device may require that we enter
into collaborations with consultants, corporate partners, licensors, licensees and others. We are dependent upon the subsequent
success of these other parties in performing their respective responsibilities and the continued cooperation of our partners.
Our collaborators may not cooperate with us or perform their obligations under our agreements with them. We cannot control the
amount and timing of our collaborators’ resources that will be devoted to our research and development activities related
to our collaborative agreements with them. Our collaborators may choose to pursue existing or alternative technologies in preference
to those being developed in collaboration with us.
Under
agreements with collaborators, we may rely significantly on such collaborators to, among other things, design prototypes for and
value our intellectual property, and market for us any commercial products that result from our collaborations.
The
development and commercialization of our proprietary square wave form device will be delayed if collaborators fail to conduct
these activities in a timely manner, or at all. In addition, our collaborators could terminate their agreements with us and we
may not receive any development or milestone payments. If we do not achieve milestones set forth in the agreements, or if our
collaborators breach or terminate their collaborative agreements with us, our business may be materially harmed.
For
initial or additional pre-clinical and clinical trials (“Clinical Trials”) required for our proprietary square wave
form device by the FDA or with respect to Clinical Trials relating to the development of our core technology for other applications,
we depend on clinical investigators and clinical sites and other third parties to manage the trials and to perform related data
collection and analysis, and, as a result, we may face costs and delays that are outside of our control.
With
respect to any additional clinical studies for our products which are required by the FDA or with respect to Clinical Trials relating
to the development of our core technology for other applications, we rely on clinical investigators and clinical sites, some of
which are private practices, and some of which are research university- or government-affiliated, to enroll patients in our Clinical
Trials. We may rely on: pathologists and pathology laboratories; a contract research organization to assist in monitoring, collection
of data, and ensuring FDA Good Clinical Practices (“GCP”) are observed at our sites; a consultant biostatistician;
and other third parties to manage the trial and to perform related data collection and analysis.
However,
we may not be able to control the amount and timing of resources that clinical sites and other third parties may devote to our
Clinical Trials. If these clinical investigators and clinical sites fail to enroll a sufficient number of patients in our Clinical
Trials, or if the clinical sites fail to comply adequately with the clinical protocols, we will be unable to complete these trials,
which could prevent us from obtaining regulatory approvals for our products or other products developed from our core technology.
Our agreements with clinical investigators and clinical sites for clinical testing place substantial responsibilities on these
parties and, if these parties fail to perform as expected, our trials could be delayed or terminated.
If
these clinical investigators, clinical sites or other third parties do not carry out their contractual duties or obligations or
fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain are compromised due to their failure
to adhere to our clinical protocols or for other reasons, our Clinical Trials may be extended, delayed or terminated, and we may
be unable to obtain regulatory approval for, or successfully commercialize, our products or other products developed from our
core technology.
In
addition to the foregoing, any initial or additional clinical studies for any of our products which are required by the FDA and
any Clinical Trials relating to the development of our core technology for other applications may be delayed or halted for numerous
other reasons, including, but not limited to, the following:
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the
FDA, an Institutional Review Board (“IRB”) or other regulatory authorities place our clinical trial on hold;
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patients
do not enroll in Clinical Trials at the rate we expect;
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patient
follow-up is not at the rate we expect;
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IRBs
and third-party clinical investigators delay or reject our trial protocol;
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third-party
organizations do not perform data collection and analysis in a timely or accurate manner;
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regulatory
inspections of our Clinical Trials or manufacturing facilities, among other things, require us to undertake corrective action
or suspend or terminate our Clinical Trials, or invalidate our Clinical Trials;
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changes
in governmental regulations or administrative actions; and
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the
interim or final results of the clinical trial are inconclusive or unfavorable as to safety or effectiveness.
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If
our products are approved for reimbursement, we anticipate experiencing significant pressures on pricing.
We
may not develop a substantial amount of commercialized products.
We
are a development stage company and currently have one commercialized product, our proprietary square wave form device. We have
invested substantially all of our time and resources since we have become a bioscience company in developing the proprietary square
wave form technology. Our proprietary square wave form device and cell-free therapies may require additional development and clinical
evaluation and it will require regulatory approval, significant marketing efforts and substantial additional investment before
it can provide us with any revenue. While we believe we will achieve the desired clinical results, commercialization of each of
our products remains subject to certain significant risks. Our efforts may not lead to commercially successful products for a
number of reasons, including:
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we
may not be able to obtain regulatory approvals for the proprietary square wave form device and/or cell-free therapy products,
or the approved indication may be narrower than we seek;
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any
of the cell-free therapy products may not prove to be safe and effective in Clinical Trials to the FDA’s satisfaction;
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physicians
may not receive any reimbursement from third-party payers, or the level of reimbursement may be insufficient to support widespread
adoption of the proprietary square wave form device;
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we
may experience delays in our continuing development program;
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any
products that are approved by regulators may not be accepted in the marketplace by physicians or patients;
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we
may not have adequate financial or other resources to complete the continued development or to commence the commercialization
of the proprietary square wave form device and/or cell-free therapies and we will not have adequate financial or other resources
to achieve significant commercialization of the proprietary square wave form device and/or cell-free therapies;
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we
may not be able to manufacture our products in commercial quantities or at an acceptable cost; and
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rapid
technological change may make our technology and products obsolete.
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If
we are unable to obtain regulatory approval for or successfully commercialize our products, we will be unable to generate revenue.
Non-FDA
Government Regulation may Affect our Results.
The
advertising of our proprietary square wave form device and cell-free therapies will be subject to both FDA and Federal Trade Commission
regulations. In addition, the sale and marketing of our proprietary square wave form device and cell-free therapies will be subject
to a complex system of federal and state laws and regulations intended to deter, detect, and respond to fraud and abuse in the
healthcare system. These laws and regulations restrict and may prohibit pricing, discounting, commissions and other commercial
practices that may be typical outside of the healthcare business. In particular, anti-kickback and self-referral laws and regulations
will limit our flexibility in crafting promotional programs and other financial arrangements in connection with the sale of our
products and related services, especially with respect to physicians seeking reimbursement through Medicare or Medicaid. These
federal laws include, by way of example, the following:
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the
anti-kickback statute prohibits certain business practices and relationships that might affect the provision and cost of healthcare
services reimbursable under Medicare, Medicaid and other federal healthcare programs, including the payment or receipt of
remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs;
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the
physician self-referral prohibition, commonly referred to as the Stark Law, which prohibits referrals by physicians of Medicare
or Medicaid patients to providers of a broad range of designated healthcare services in which the physicians or their immediate
family members have ownership interests or with which they have certain other financial arrangements;
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the
anti-inducement law, which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that
beneficiary to use items or services covered by either program;
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the
Civil False Claims Act, which prohibits any person from knowingly presenting or causing to be presented false or fraudulent
claims for payment by the federal government, including the Medicare and Medicaid programs; and
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the
Civil Monetary Penalties Law, which authorizes the US Department of Health and Human Services (“HHS”) to impose
civil penalties administratively for fraudulent or abusive acts.
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Sanctions
for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments,
money penalties, imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs,
or both. These laws also impose an affirmative duty on those receiving Medicare or Medicaid funding to ensure that they do not
employ or contract with persons excluded from the Medicare and other government programs.
Many
states have adopted or are considering legislative proposals similar to the federal fraud and abuse laws, some of which extend
beyond the Medicare and Medicaid programs to prohibit the payment or receipt of remuneration for the referral of patients and
physician self-referrals regardless of whether the service was reimbursed by Medicare or Medicaid. Many states have also adopted
or are considering legislative proposals to increase patient protections, such as limiting the use and disclosure of patient-specific
health information. These state laws typically impose criminal and civil penalties similar to the federal laws.
In
the ordinary course of their business, medical device manufacturers and suppliers have been and are subject regularly to inquiries,
investigations and audits by federal and state agencies that oversee these laws and regulations. Recent federal and state legislation
has greatly increased funding for investigations and enforcement actions, which have increased dramatically over the past several
years. This trend is expected to continue. Private enforcement of healthcare fraud also has increased, due in large part to amendments
to the Civil False Claims Act in 1986 that were designed to encourage private persons to sue on behalf of the government. These
whistleblower suits by private persons, known as qui tam relaters, may be filed by almost anyone, including physicians and their
employees and patients, our employees, and even competitors. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”),
in addition to its privacy provisions, created a series of new healthcare-related crimes
.
Our
Clinical Trials could be delayed by factors over which we have little control.
The
start or conduct of a clinical trial can be delayed by a number of factors that may include, but are not limited to, government
sequestration that could limit the availability of federal grants or delay in the approval and compliance process of where our
clinical trial will be conducted. As a result, the purchase of equipment necessary to prepare and optimize the prototype for the
clinical trial could be delayed.
The
FDA may require additional Clinical Trials and any adverse results in such Clinical Trials, or difficulties in conducting such
Clinical Trials, could have a material adverse effect on our business.
While
we are undertaking the Clinical Trials we believe to be compliant with FDA regulations, for our proprietary square wave form device.
The occurrence of unexpected findings in connection with any initial or subsequent clinical trial required by the FDA may prevent
or delay obtaining approval. In addition, subsequent clinical studies would require the expenditure of additional company resources
and could be a long and expensive process subject to unexpected delays. Any adverse results in such Clinical Trials, or difficulties
in conducting such Clinical Trials, could have a material adverse effect on our business.
If
any of our products are approved by the FDA, they may be approved only for narrow indications.
Even
if approved, our proprietary square wave form device and/or cell-free therapies may not be approved for the indications that are
necessary or desirable for successful commercialization.
If
we wish to modify any of our proprietary square wave form device and/or cell-free therapies after receiving FDA approval, including
changes in indications or other modifications that could affect safety and effectiveness, additional approvals could be required
from the FDA, we may be required to submit extensive pre-clinical and clinical data, depending on the nature of the changes. Any
request by the FDA for additional data, or any requirement by the FDA that we conduct additional clinical studies, could delay
the commercialization of our devices and require us to make substantial additional research, development and other expenditures.
We may not obtain the necessary regulatory approvals to market our proprietary square wave form device and/or cell-free therapies
in the U.S. or anywhere else. Any delay in, or failure to receive or maintain, approval for our proprietary square wave form device
and/or cell-free therapies could prevent us from generating revenue or achieving profitability, and our business, financial condition,
and results of operations would be materially adversely affected.
Management
of our Company is within the control of the board of directors and the officers. You should not purchase our common stock unless
you are willing to entrust management of our Company to these individuals.
All
decisions with respect to the management of the Company will be made by our board of directors and our officers, who will beneficially
own 32.40% of our common stock and all 1,000 shares super voting of Preferred AA, as calculated in accordance with Rule 13d-3
promulgated under the Securities Exchange Act of 1934. Holders of the common stock who purchase in this offering will not obtain
majority control of the Company. Therefore, management will retain the power to elect a majority of the board of directors who
shall, in turn, have the power to appoint the officers of the Company and to determine, in accordance with their fiduciary duties
and the business judgment rule, the direction, objectives and policies of the Company including, without limitation, the purchase
of businesses or assets; the sale of all or a substantial portion of the assets of the Company; the merger or consolidation of
the Company with another corporation; raising additional capital through financing and/or equity sources; the retention of cash
reserves for future product development, expansion of our business and/or acquisitions; the filing of registration statements
with the Securities and Exchange Commission for offerings of our capital stock; and transactions which may cause or prevent a
change in control of the Company or its winding up and dissolution. Accordingly, no investor should purchase the common stock
we are offering unless such investor is willing to entrust all aspects of the management of the Company to such individuals.
Our
reliance on the activities of our non-employee consultants whose activities are not wholly within our control, may lead to delays
in development of our proposed products.
We
rely extensively upon and have relationships with consultants. These consultants are not our employees and may have commitments
to, or consulting or advisory contracts with, other entities that may limit their availability to us. We have limited control
over the activities of these consultants and, except as otherwise required by our collaboration and consulting agreements to the
extent they exist, can expect only limited amounts of their time to be dedicated to our activities.
Risks
Related to Common Stock
The
large number of shares eligible for immediate and future sales may depress the price of our stock.
As
of the date of this prospectus we have 123,743,549 shares of common stock outstanding. Approximately 14,500,000 shares are “free
trading” and may serve to overhang the market and depress the price of our common stock.
There
is currently a limited public market for our common stock. Failure to develop or maintain a trading market could negatively affect
its value and make it difficult or impossible for you to sell your shares.
Our
common stock trades on the OTCQB under the Symbol ENDV. There has been a limited public market for our common stock and an active
public market for our common stock may not develop. Failure to develop or maintain an active trading market could make it difficult
for you to sell your shares or recover any part of your investment in us. Even if a market for our common stock does develop,
the market price of our common stock may be highly volatile. In addition to the uncertainties relating to future operating performance
and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable,
factors, many of which are beyond our control, may have a negative effect on the market price of our common stock.
“Penny
Stock” rules may make buying or selling our common stock difficult. Limitations upon Broker-Dealers Effecting Transactions
in “Penny Stocks”
Trading
in our common stock is subject to material limitations as a consequence of regulations which limit the activities of broker-dealers
effecting transactions in “penny stocks.” Pursuant to Rule 3a51-1 under the Exchange Act, our common stock is a “penny
stock” because it (i) is not listed on any national securities exchange or The NASDAQ Stock Market™, (ii) has a market
price of less than $5.00 per share, and (iii) its issuer (the Company) has net tangible assets less than $2,000,000 (if the issuer
has been in business for at least three (3) years) or $5,000,000 (if the issuer has been in business for less than three (3) years).
Rule
15g-9 promulgated under the Exchange Act imposes limitations upon trading activities on “penny stocks”, which makes
selling our common stock more difficult compared to selling securities which are not “penny stocks.” Rule 15a-9 restricts
the solicitation of sales of “penny stocks” by broker-dealers unless the broker first (i) obtains from the purchaser
information concerning his financial situation, investment experience and investment objectives, (ii) reasonably determines that
the purchaser has sufficient knowledge and experience in financial matters that the person is capable of evaluating the risks
of investing in “penny stocks”, and (iii) delivers and receives back from the purchaser a manually signed written
statement acknowledging the purchaser’s investment experience and financial sophistication.
Rules
15g-2 through 15g-6 promulgated under the Exchange Act require broker-dealers who engage in transactions in “penny stocks”
first to provide their customers with a series of disclosures and documents, including (i) a standardized risk disclosure document
identifying the risks inherent in investing in “penny stocks”, (ii) all compensation received by the broker-dealer
in connection with the transaction, (iii) current quotation prices and other relevant market data, and (iv) monthly account statements
reflecting the fair market value of the securities.
There
can be no assurance that any broker-dealer which initiates quotations for the Common Stock will continue to do so, and the loss
of any such broker-dealer likely would have a material adverse effect on the market price of our common stock.
FINRA
sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In
addition to the “penny stock” rules described below, FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other
information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers
to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse
effect on the market for our shares.
Because
our common stock is deemed a low-priced “penny stock,” it will be cumbersome for brokers and dealers to trade in our
common stock, making the market for our common stock less liquid and negatively affect the price of our stock.
We
will be subject to certain provisions of the Securities Exchange Act of 1934 (the “Exchange Act”), commonly referred
to as the “penny stock” rules as defined in Rule 3a51-1. A penny stock is generally defined to be any equity security
that has a market price less than $5.00 per share, subject to certain exceptions. Since our stock is deemed to be a penny stock,
trading is subject to additional sales practice requirements of broker-dealers. These require a broker-dealer to:
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Deliver
to the customer, and obtain a written receipts for, a disclosure document;
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Disclose
certain price information about the stock;
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Disclose
the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
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Send
monthly statements to customers with market and price information about the penny stock; and
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In
some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer
with information specified in the rules.
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Consequently,
penny stock rules and FINRA rules may restrict the ability or willingness of broker-dealers to trade and/or maintain a market
in our common stock. Also, prospective investors may not want to get involved with the additional administrative requirements,
which may have a material adverse effect on the trading of our shares.
We
Have Paid No Dividends
We
never have paid any dividends on our common stock and we do not intend to pay any dividends in the foreseeable future.
We
are an “emerging growth company” under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements
applicable to emerging growth companies will make our common stock less attractive to investors.
We
are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”),
and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor
attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors
will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less
attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying
with new or revised accounting standards.
We
will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues
exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of
our common stock that is held by non-affiliates exceeds $700 million as of any June 30.
Our
status as an “emerging growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and
when we need it.
Because
of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we
will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive
to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare
our business with other companies in our industry if they believe that our financial accounting is not as transparent as other
companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results
of operations may be materially and adversely affected.
Future
issuances of common shares may be adversely affected by the EPA.
The
market price of our common stock could decline as a result of issuances and sales by us, including pursuant to the EPA, or sales
by our existing shareholders, of common stock, or the perception that these issuances and sales could occur. Sales by our shareholders
might also make it more difficult for us to issue and sell common stock at a time and price that we deem appropriate. It is likely
that the sale of shares by Bellridge will depress the market price of our common stock.
We
have the right to issue shares of preferred stock. If we were to issue preferred stock, it is likely to have rights, preferences
and privileges that may adversely affect the common stock.
We
are authorized to issue 5,000,000 shares of “blank check” preferred stock, with such rights, preferences and privileges
as may be determined from time-to-time by our board of directors. We currently have 1000 shares of preferred stock outstanding.
Our board of directors is empowered, without shareholder approval, to issue preferred stock in one or more series, and to fix
for any series the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights,
and other rights, preferences and privileges for the preferred stock. The issuance of shares of preferred stock, depending on
the rights, preferences and privileges attributable to the preferred stock, could adversely reduce the voting rights and powers
of the common stock and the portion of the Company’s assets allocated for distribution to common stock holders in a liquidation
event, and could also result in dilution in the book value per share of the common stock we are offering. The preferred stock
could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging, delaying or preventing
a change in control of the Company, to the detriment of the investors in the common stock offered hereby. We cannot assure you
that the Company will not, under certain circumstances, issue shares of its preferred stock.
Conversions
of the Notes May Cause Dilution to Existing Shareholders and Depress the Market Price of Our Common Stock.
Bellridge
has committed to purchase or has purchased $1,000,000 principal amount of Notes. From time to time Bellridge may convert Notes
into shares of our common stock at prices below the market price quoted on the OTCQB pursuant to the terms of the Notes. As a
result, our existing shareholders could experience immediate dilution upon the conversion of Notes by Bellridge. The issuance
and sale of the shares upon conversion of the Notes may also have an adverse effect on the market price of the common shares.
Bellridge may resell some, if not all, of the shares that we issue to it on conversion of the Notes and such sales could cause
the market price of our common stock to decline significantly. To the extent of any such decline, any subsequent conversions could
require us to issue a greater number of shares to Bellridge in exchange for each dollar amount of Note converted. Under these
circumstances, the existing shareholders of our company will experience greater dilution. The effect of this dilution may, in
turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would
be caused by a large number of sales of our shares into the public market by Bellridge, and because our existing stockholders
may disagree with a decision to sell shares to Bellridge at a time when our stock price is low, and may in response decide to
sell additional shares, further decreasing our stock price. If we draw down amounts under the EPA when our share price is decreasing,
we will need to issue more shares to raise the same amount of funding.
Limitations
on director and officer liability and indemnification of our officers and directors by us may discourage stockholders from bringing
suit against a director.
Endonovo
Therapeutics’ Articles of Incorporation and Bylaws provide, with certain exceptions as permitted by governing state law,
that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director,
except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or unlawful payments of
dividends. These provisions may discourage stockholders from bringing suit against a director for breach of fiduciary duty and
may reduce the likelihood of derivative litigation brought by stockholders on our behalf against a director. In addition, Endonovo
Therapeutics’ Articles of Incorporation and Bylaws may provide for mandatory indemnification of directors and officers to
the fullest extent permitted by governing state law.
SHARES
ELIGIBLE FOR FUTURE SALE
The
sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect
prevailing market prices for our common stock. In addition, any such sale or perception could make it more difficult for us to
sell equity, or equity related, securities in the future at a time and price that we deem appropriate. If and when this Registration
Statement becomes effective and we become subject to the reporting requirements of the Exchange Act, we might elect to adopt a
stock option plan and file a Registration Statement under the Securities Act registering the shares of common stock reserved for
issuance there under. Following the effectiveness of any such Registration Statement, the shares of common stock issued under
such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without
restriction.
The
sale of shares of our common stock which are not registered under the Securities Act, known as “restricted” shares,
typically are effected under Rule 144. As of the date of this prospectus we have outstanding an aggregate of 123,743,549 shares
of common stock of which approximately 109,500,000 shares are restricted common stock. All of our shares of common stock might
be sold under Rule 144 after having been held for six months. No prediction can be made as to the effect, if any, that future
sales of “restricted” shares of our common stock, or the availability of such shares for future sale, will have on
the market price of our common stock or our ability to raise capital through an offering of our equity securities.
USE
OF PROCEEDS
We
will not receive any proceeds from the sale of the common stock by the selling security holder pursuant to this prospectus. All
proceeds from the sale of the shares will be for the account of the selling security holder.
We
have agreed to bear the certain expenses relating to the registration of the shares for the selling security holder. We have or
will receive net proceeds upon the purchase of the Notes by Bellridge of approximately $845,000. Such proceeds from the EPA are
intended to be used approximately as follows: as working capital, retirement of debt, product development and clinical testing.
However, we reserve the right to allocate the proceeds from any puts differently in accordance with management’s assessment
of our needs at that time.
DETERMINATION
OF OFFERING PRICE
The
conversion price for the shares issued to Bellridge upon conversion of the Notes will equal 75% of the lowest trade price reported
on Blumberg LP for the twenty trading days prior to the conversion. To the extent that the disparity between the conversion price
and market price of the common stock is material, such disparity was determined by us to be fair in consideration to Bellridge
for the purchase of the Notes.
Securities
Purchase Agreement and Notes
We
entered into the Securities Purchase Agreement and sold a Note in the principal amount of $400,000 on July 8, 2016. We sold a
further Note in the principal amount of $200,000 to Bellridge on August 15, 2016 and will sell a further Note in the Principal
Amount of $400,000 to Bellridge on the effective date of the registration statement of which this prospectus forms a part. The
Notes are convertible into shares of our common stock at a conversion price equal to 75% of the lowest reported trade price of
our common stock on Blumberg LP for the 20 trading days prior to the date of the conversion notice and Bellridge may not affect
any conversion where the result of the conversion will be to increase its ownership of our common stock beyond 4.99% of the outstanding
shares. Generally, Bellridge is limited to the resale of 22.5% of our trading volume as reported on the OTCQB for any given day,
provided, however, that if the dollar value of the trading volume in any day exceeds $130,000, then the volume limitation will
be increased to 30% for that day. To the extent there are no conversion notices outstanding, we have the right to prepay the Notes
in whole or in part at 125% of the principal and accrued interest on the Note prepaid. Furthermore, if we should receive a financing
of $5,000,000 or greater, we are required to repurchase all outstanding notes at such price. The Notes also provide that it the
dollar value of the trading volume in our common stock is below $620,000 for a thirty-day period, we are required to repay the
note for its face value in cash based on a formula set forth in the Notes. . Bellridge received 176,057 shares of our stock ass
a commitment fee in connection with a Securities Purchase Agreement related to the Notes and these shares are included in this
prospectus.
Dilutive
Effects
Under
the Notes, the conversion price of the shares to be issued to Bellridge would be at a price equal to 75% of the lowest price that
our stock traded at during the past 20 trading days. The table below illustrates an issuance of shares of common stock to Bellridge
upon conversion of the Notes for a hypothetical conversion amount of $10,000 at an assumed market price of $0.20.
Conversion
|
|
|
Conversion
Price
|
|
|
Shares
|
|
Amount
|
|
|
To
Bellridge
|
|
|
to
be Issued
|
|
$
|
10,000
|
|
|
$
|
0.15
|
|
|
|
66,667
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|
By
comparison, if the market price of our common stock was $0.15, the number of shares that we would be required to issue in order
to have the same conversion amount of $10,000 would be greater, as shown by the following table:
Conversion
|
|
|
Price
to be Paid by
|
|
|
Number
of Shares
|
|
Amount
|
|
|
Bellridge
|
|
|
to
be Issued
|
|
$
|
10,000
|
|
|
$
|
0.1125
|
|
|
|
88,889
|
|
Accordingly,
there would be dilution of an additional 22,222 shares issued due to the lower stock price of $0.15 per share. The effect of this
dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock
price that would be caused by a large number of sales of our shares into the public market by Bellridge, and because our existing
stockholders may be concerned by the issuance to Bellridge at a time when our stock price is low, and may in response decide to
sell additional numbers of shares, further decreasing our stock price.
The
actual number of shares that will be issued to Bellridge under the Notes will depend upon the market price of our common stock
at the time of Bellridge’s conversion and we have no control over the timing of such conversions.
BUSINESS
Overview
Endonovo
Therapeutics, Inc., formerly called “Hanover Portfolio Acquisitions, Inc. (the “Company” or “ENDV”
“we” “us” “our”) was comprised of two business segments: (1) a debt portfolio management company
and (2) an intellectual property management and commercialization company. In 2013 we discontinued our efforts in debt portfolio
management and initially concentrated in intellectual property development. Based on our assessment of the viability of our acquired
technologies we transitioned to be a biotechnology company, particularly in the medical device and regenerative medicine industries.
Our present primary focus is the development, patenting and regulatory approval of our biomedical proprietary technology.
Our
intellectual property management and commercialization segment was operated through our wholly-owned subsidiary, IP Resources
International, Inc. (“IPR”). IPR focused primarily on licensing various commercially desirable technologies and patents
from companies that need operating capital or that need help commercializing their technology and sublicense such technology in
designated territories. This segment acquires exclusive licenses for marketable technology normally without the payment of any
upfront license fee to the licensor and thereafter, to sub-license the technology in the designated markets, including Asia, Europe,
and Brazil. Our results depend upon our ability to locate available, licensable, and readily marketable technology, to negotiate
favorable licenses for such technology, and to sub-license the technology in the designated markets at a sufficient level of volume
in an effort to generate maximum revenues. Due to the history of our acquisitions, as set forth below, and management’s
assessment of what has been the most promising of our technologies, we have determine to focus ourselves as a developer of biotechnology,
particularly in regenerative medicine. We are in the development of a device utilizing a proprietary and patent pending square
wave form technology and that is presently our primary focus.
Our
subsidiary, IPR, established a portfolio of companies that it currently has licensing and marketing agreements with are:
a)
CPaiR, Inc., a California corporation (“CPaiR”), which has a technology that facilitates the safe and effective performance
of Cardiopulmonary Resuscitation.
b)
American CryoStem Corp., a Nevada corporation (“ACS”), which has technology that permits the harvesting and storage
of adult stem cells for later medical usage by the individual from whom the stem cells are harvested.
However,
these technologies, while promising to varying degrees are not our present primary focus.
Corporate
History
Our
predecessor company, Hanover Asset Management, Inc. was incorporated in November 2008 in California. For the purpose of reincorporating
in Delaware, we merged with a newly incorporated successor company, Hanover Portfolio Acquisitions, Inc., in July 2011 under which
we continue to operate as a debt portfolio management company.
IP
Resources International, Inc. began operations on September 1, 2011 and was formally incorporated on October 17, 2011.
Reverse
Acquisition
On
March 14, 2012, we entered into a Share Exchange Agreement (“Agreement”) with IPR and certain of its shareholders.
Under the Agreement, each participating IPR shareholder exchanged all of their issued and outstanding IPR common shares totaling
33,234,294, free and clear of all liens, and $155,000 for Company common shares equal to 1.2342 times the number of IPR shares
being transferred to the Company for a total of 410,177 of our shares. The $155,000 was not paid at closing. The Company recorded
the $155,000 as acquisition payable. IPR agreed to make payments of up to 25% of the proceeds from any private placement or gross
profits earned by IPR until the obligation is satisfied. The percentage of the proceeds to be paid is at the sole discretion of
IPR’s Chief Executive Officer and the ex-Chief Executive Officer of the Company based on the liquidity of the Company.
As
a result of the Agreement, the former shareholders of IPR, immediately post acquisition owned approximately 89% of the Company
and its officers and directors constituted the majority of the officers and directors of the Company. Since the shareholders,
offices and directors of IPR have control of the Company, the acquisition constitutes a reverse acquisition, so IPR was the accounting
acquirer and we were the accounting acquiree. For accounting purposes, IPR became the parent and we became a wholly owned subsidiary.
For legal purposes, we are the legal parent and IPR is the legal subsidiary.
Acquisition
of Aviva Companies Corporation
On
April 2, 2013, the Company entered into an Acquisition Agreement (the “Acquisition Agreement”) with (i) The Aviva
Companies Corporation (“Aviva”) and (ii) all of the shareholders of Aviva (the “Shareholders”) pursuant
to which the Company acquired all of the outstanding shares of Aviva in exchange for the issuance of 40,000 shares of our common
stock, par value $0.0001 per share to the Shareholders (the “Share Exchange”). As a result of the Share Exchange,
Aviva became a wholly-owned subsidiary of the Company.
Other
than in respect to the transaction, there is no material relationship among Aviva’s stockholders and any of the Company’s
affiliates, directors or officers. We are not currently actively pursuing the development of the Aviva Companies Corporation.
Acquisition
of WeHealAnimals, Inc.
On
November 16, 2013, the Company entered into an Acquisition Agreement (the “Acquisition Agreement”) with (i) WeHealAnimals
,Inc. (“WHA”) and (ii) the sole shareholder of WHA (the “Shareholder”) pursuant to which the Company acquired
all of the outstanding shares of WHA in exchange for the issuance of 3,000 shares of our common stock, par value $0.0001 per share
and $96,000 to the Shareholder (the “Share Exchange”). As a result of the Share Exchange, WHA became a wholly-owned
subsidiary of the Company and all of the equity of WHA including its and its sole shareholder’s intellectual property became
the property of the Company. This obligation was fully paid on December 15, 2015 through the issuance of 350,000 shares of stock
to Mr. Rudd. WHA is a Nevada corporation with intellectual property in the fields of bio-technology including its biologics and
time-varying electromagnetic frequencies with potential applications on people and animals that management believes can be developed
to the benefit of the Company and its shareholders. WHA’s sole shareholder was formerly Chairman and Chief Scientist of
Regenetech, Inc. Regenetech was acquired by a company that wanted its technology, biomolecules grown in microgravity, for use
in cosmetics. WHA’s sole shareholder left Regenetech with exclusive rights to this proprietary square wave form technology
and stem cell technologies, including the patents and patent applications relating thereto.
Other
than in respect to the transaction, there is no material relationship between WHA’s sole stockholder and any of the Company’s
affiliates, directors or officers.
Present
Development Plans
We
now are a biotechnology company developing bioelectronic devices and cell therapies for regenerative medicine. We are currently
developing two platforms that utilize our core technologies, Time-Varying Electromagnetic Fields (TVEMF). Our Immunotronics platform
is a non-implantable, non-invasive bioelectronic device that we are developing to target inflammatory conditions in vital organs.
Our initial concentration is developing our Immunotronics platform for the treatment of inflammatory conditions in the liver,
such as acute liver injury. Our second platform is Cytotronics, which uses our Time-Varying Electromagnetic Field (TVEMF) technology
for the creation of cell-based therapies. Our initial concentration is on the development of a cell-based treatment for Graft-Versus-Host
Disease.
Immunotronics
Platform:
Our
Immunotronics platform uses Time-Varying Electromagnetic Field (TVEMF) technology to create a non-implantable, non-invasive bioelectronic
device. These bioelectronics devices are also commonly referred to as “electroceuticals.”
These
products are part of an emerging field termed “Bioelectronic Medicine,” that seeks to harness electrical signals in
nerves and cells to alter the course of diseases and conditions. Whereas our competitors are primarily using implantable electrical
stimulators, we are developing devices that are not implantable and use electromagnetic pulses to deliver electrical stimulation
to cells and nerves.
We
are developing these bioelectronic devices for the treatment of inflammatory conditions in vital organs, such as the human liver.
The Company is currently in the process of commencing its pre-clinical studies to assess the effectiveness of its technology in
treating acute inflammation in the liver using a rodent model.
Cytotronics
Platform
:
Our
Cytotronics platform uses our Time-Varying Electromagnetic Field (TVEMF) technology to expand and enhance the biological properties
of stem cells for the creation of cell based therapies. Our platform builds upon the original work conducted at the National Aeronautics
and Space Administration (NASA) using TVEMF technology for the expansion of stem cells and expands this work to the development
of cell based therapies. Our initial concentration is on the development of our proprietary cell therapy that is created using
the co-culture of stem cells from the human umbilical cord with adipose-derived stem cells to create a cell mixture that displays
neither class I nor class II cell-surface major histocompatibility markers (MHC -/-) and can be administered without a tissue
match. We are initially seeking to develop this cell therapy for the treatment of Graft-Versus-Host Disease.
Graft-Versus-Host
Disease:
Graft-Versus-Host
Disease (GVHD) is a complication that can occur following a stem cell, bone marrow or tissue transplant. In GVHD, the newly transplanted
donor cells attack the transplant recipient’s body. GVHD does not occur when a patient receives his/her own cells during
a transplant. Therefore, GVHD is associated with allogeneic transplants, requiring that tissue and cells from possible donors
be checked to see how closely they match the person having the transplant. GVHD is less likely to occur, or the symptoms milder,
when the tissue match is closer. GVHD is a very rare condition that affects fewer than 20,000 persons in the US per year.
Intellectual
Property:
We
will continue to strengthen our portfolio of intellectual property by filing additional patents around uses of our core technologies,
such as Time-Varying Electromagnetic Fields (TVEMF). We will continue to develop applications of our technologies that we may
license out to our competitors in the drug/pharmaceutical and life sciences industry. To date, we have filed four patent applications
covering our Time-Varying Electromagnetic Field (TVEMF) technology, the production of biomolecules, the creation of an allogeneic
mesenchymal stem cell product and a method of expanding cord blood stem cells.
Our
business strategy is aimed at building value by positioning each of our technologies and therapies to treat specific diseases
that lack effective treatment or whose current standard of treatment involves invasive procedures and/or potentially harmful side
effects. We anticipate updating and refining the business strategy as new medical and/or clinical advancements are made as a result
of extensive research and development. In general, the component functions of the business model are to:
●
Internationally license stem cell expansion technologies;
●
License technologies for the production of biomolecules;
●
Develop medical indications for our Immunotronics device;
●
Develop other non-invasive, medical technologies;
●
Develop cell-based therapies for distribution and use;
●
Conduct pre-clinical and clinical human studies for FDA Approval of our medical devices and cell therapies;
●
Acquire subsidiaries under the parent company, Endonovo Therapeutics, to assist in the development and distribution of medical
technologies;
●
Incrementally invest, market, and refine acquired and developed medical technologies and therapies.
Biotechnology
Licensing
We
will seek revenue by licensing certain technologies developed by WHA for the expansion of stem cells, which we believe will allow
both researchers and for-profit companies to grow difficult to expand stem cells, including hematopoietic stem cells. Furthermore,
we will seek to license certain technologies for the production of biomolecules for research purposes and for the development
of biologics. Licensing is a particularly attractive opportunity for the Company because of the few costs associated with signing
licensing agreements. By licensing WHA’s technologies, a net profit margin of 80% to 90% maybe achievable. However, we cannot
give any assurance that we will be able to enter any profitable licenses and the entry into any license may require that we first
receive FDA approval for our products.
Industry
Overview
Regenerative
Medicine
The
regenerative medicine/tissue engineering industry is a rapidly growing interdisciplinary field involving the life, physical and
engineering sciences and seeking to develop clinical therapies for the repair, maintenance, replacement and/or enhancement of
biological function. Regenerative medicine has a wide area of applications, such as musculoskeletal diseases, cardiovascular,
neurology, orthopedic, and other disorders. The regenerative medicine industry is now regarded as having begun with the advent
of cell culture in the very early part of the twentieth century, and continues to advance as technological advancements have been
made.
The
regenerative medicine industry is driven by several technological advancements in stem cell therapy and tissue engineering therapy.
The regenerative medicine market is expected to grow to a value of US$6.5 billion by 2019 from a value of US$2.6 billion in 2012,
according to Transparency Market Research.
The
global stem cell market, which is a segment of the regenerative medicine market is forecast to grow at a compounded annual growth
rate (CAGR) of 39.5% from 2015-2020, to reach a value of US$330 million by 2020, according to MarketsandMarkets. North America
is expected to hold the largest share of this market due to extensive government funding and increased fast-track approvals for
stem cell therapeutics by the FDA.
Competition
The
biotech and regenerative therapy industry is capital intensive and highly competitive and many of our competitors have far greater
assets than we have presently and will have even if all of the funding possibly available to us under the EPA is realized. We
will seek to compete by establishing the uniqueness, efficacy and other advantages of the proprietary square wave form device
and the therapies based upon it.
Our
competitors in the cell therapy market segment have years of research into their products including human clinical data, access
to government sponsored research and grants and have more capital at their disposal.
Furthermore,
our treatment for Graft-Versus-Host Disease may be limited by the FDA Approval of a competing cell therapy under the Orphan Drug
Act of 1983, which grants 7-year market exclusivity to a product approved for an rare disease. This would require us to demonstrate
that our cell therapy is therapeutically superior, when compared to the present drug indicated for the rare disease of interest.
Therefore, the FDA approval of a competing drug and/or cell therapy for the treatment of Graft-Versus-Host Disease would greatly
limit the Company’s ability to pursue this indication. There are currently many competitors seeking to develop drugs or
cell therapies for the treatment of GVHD at various stages of development from pre-clinical to Phase III clinical trials.
Employees
We
do not have any employees. However, we have retained approximately 10 individuals as independent contractors that are involved
in business development and administrative functions.
Properties
Our
corporate headquarters is located at 6320 Canoga Avenue - 15th Floor, Woodland Hills, CA 91367. We have a month-to-month contract
with Regus Management Group, LLC in the amount of $129 per month. Management believes this facility is appropriate for our current
needs and could be expanded at reasonable cost if our business required us to do so.
MARKET
PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS
Our
common stock is currently quoted on the OTCQB, which is sponsored by OTCMarkets, Inc. The OTCQB is a network of security dealers
who buy and sell stock. The dealers are connected by a computer network that provides information on current “bids”
and “asks,” as well as volume information. Our shares are quoted on the OTCQB under the symbol “ENDV.”
The
following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as
reported by the OTC-QB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may
not necessarily represent actual transactions.
Trading
Market
|
|
Closing
Price
|
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
Year Ended December, 2014
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
0.21
|
|
|
$
|
0.03
|
|
Second Quarter
|
|
$
|
10.00
|
|
|
$
|
0.10
|
|
Third Quarter
|
|
$
|
5.31
|
|
|
$
|
1.75
|
|
Fourth Quarter
|
|
$
|
2.40
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
|
Year Ended December, 2015
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
1.25
|
|
|
$
|
1.05
|
|
Second Quarter
|
|
$
|
1.10
|
|
|
$
|
0.51
|
|
Third Quarter
|
|
$
|
0.66
|
|
|
$
|
0.07
|
|
Fourth Quarter
|
|
$
|
0.80
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
Year Ended December, 2016
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.74
|
|
|
$
|
0.26
|
|
Second Quarter
|
|
$
|
0.81
|
|
|
$
|
0.13
|
|
The
high and low bid price for shares of our common stock on August 26, 2016, was $0.177 and $0.165, respectively, based upon bids
that represent prices quoted by broker-dealers on the OTCQB.
Approximate
Number of Equity Security Holders
As
of August 18, 2016, there were approximately 325 stockholders of record. Because shares of our common stock are held by depositaries,
brokers and other nominees, the number of beneficial holders of our shares is substantially larger than the number of stockholders
of record.
Dividends
Holders
of our common stock are entitled to receive dividends if, as and when declared by the Board of Directors out of funds legally
available therefore. We have never declared or paid any dividends on our common stock. We intend to retain any future earnings
for use in the operation and expansion of our business. Consequently, we do not anticipate paying any cash dividends on our common
stock to our stockholders for the foreseeable future.
Penny
Stock
Our
stock is considered to be a penny stock. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions
in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains
a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b)
contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available
to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief,
clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread
between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant
terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is
in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares
to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules,
the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and
receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to
transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These
disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may
have difficulty selling our securities.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We
do not have any equity compensation plans.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS.
Years
ended December 31, 2014 and December 31, 2015
The
information and financial data discussed below is derived from the audited financial statements of the Company for its fiscal
year ended December 31, 2015. The audited financial statements were prepared and presented in accordance with generally accepted
accounting principles in the United States. The information and financial data discussed below is only a summary and should be
read in conjunction with the historical financial statements and related notes contained elsewhere in this 10-K. The financial
statements contained elsewhere in this 10-K fully represent the Company’s financial condition and operations; however, they
are not indicative of the Company’s future performance. Although management believes that the assumptions made and expectations
reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact,
prove to be correct or that actual results will not be different from expectations expressed in this 10-K.
Cautionary
Notice Regarding Forward Looking Statements
The
information contained in Item 2 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. Actual results may materially differ from
those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although
management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different
from expectations expressed in this report.
This
filing contains a number of forward-looking statements, which reflect management’s current views and expectations with respect
to our business, strategies, products, future results and events, and financial performance. All statements made in this filing
other than statements of historical fact, including statements addressing operating performance, events, or developments which
management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume
growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about
future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “may,” variations of
such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements,
and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain
risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially
from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not
undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.
Readers
should not place undue reliance on these forward-looking statements, which are based on management’s current expectations
and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions
(including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements
could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause
or contribute to such differences include, but are not limited to, the risks discussed in this Annual Report on Form 10K, in press
releases and in other communications to shareholders issued by us from time to time which attempt to advise interested parties
of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise.
Critical
Accounting Policies and Estimates
We
prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP).
In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, and
expenses, as well as related disclosure of contingent assets and liabilities. In some cases, we could reasonably have used different
accounting policies and estimates. In some cases, changes in the accounting estimates are reasonably likely to occur from period
to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences
between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates
on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates
on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss
further below.
Use
of estimates
Preparing
financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenue, and expenses. The significant estimates were made for the fair value of common stock issued for services, with notes
payable arrangements, in connection with note extension agreements, and as repayment for outstanding debt, in estimating the useful
life used for depreciation and amortization of our long-lived assets, in the valuation of the derivative liability, and the valuation
of deferred income tax assets. Actual results and outcomes may differ from management’s estimates and assumptions.
Revenue
recognition
The
Company recognizes revenue from its technology licensing and commercialization activities in accordance with paragraph 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable
and earned.
The
Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence
of an arrangement exists, (ii) the services have been rendered to the customer and accepted by the customer as completed pursuant
to Company’s Licensing Agreements, (iii) collectability is reasonably assured. The Company has yet to realize any revenues
from its licensing agreements. All of our revenues in the current year are from the sale of the proprietary square wave form device.
Recently
Issued Accounting Pronouncements
The
Company is not aware of any recently issued accounting pronouncements that when adopted will have a material effect on the Company’s
financial position or result of its operations.
Results
of Operations
Three
Months ended June 30, 2016 and 2015
|
|
Three Months Ended June
30,
|
|
|
Favorable
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
(Unfavorable)
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
1,920
|
|
|
$
|
(1,920
|
)
|
|
|
-100.0
|
%
|
Cost of revenue
|
|
|
-
|
|
|
|
1,338
|
|
|
|
1,338
|
|
|
|
100.0
|
%
|
Gross profit
|
|
|
-
|
|
|
|
582
|
|
|
|
(582
|
)
|
|
|
-100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
2,065,241
|
|
|
|
494,266
|
|
|
|
(1,570,975
|
)
|
|
|
317.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2,065,241
|
)
|
|
|
(493,684
|
)
|
|
|
(1,571,557
|
)
|
|
|
318.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
611,704
|
|
|
|
(64,039
|
)
|
|
|
675,743
|
|
|
|
1115.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,453,537
|
)
|
|
$
|
(557,723
|
)
|
|
$
|
(895,814
|
)
|
|
|
160.6
|
%
|
Revenues
We
had no revenue for the three months ended June 30, 2016 compared to $1,920 for the three months ended June 30, 2015. We are in
an early stage and our revenues will be small and null until a device or biological license receives FDA approval or international
research licensing develops. The growth of our business is dependent on successfully raising additional capital to fund our growth.
Operating
Expenses
Our
operating expenses for the three months ended June 30, 2016 were approximately $2,065,241 compared to $494,266 for the corresponding
period of the previous year. The operating expenses were comprised primarily from consulting and professional fees for the development
of our intellectual property and expenses related to being a public company. A significant portion of these fees were paid for
with the issuance of restricted shares of common stock. During the three months ended June 30, 2016, 3,931,742 shares of common
stock were issued for consulting services valued at $1,200,549 as compared to 1,945,000 shares of common stock being issued for
consulting services valued at $1,945, during the corresponding period of the previous year.
Other
Income (Expense)
Other
income (expense) for the quarter ended June 30, 2016 was income of $611,704 compared to expense of $64,039 for the quarter ended
June 30, 2015. This change was due primarily to a change in valuation of our derivative liabilities, which did not exist as of
June 30, 2015, and net of interest expense resulting from the amortization of the discounts on notes payable also, which did not
exist as of June 30, 2015. In addition, we incurred a loss on extinguishment of debt of $526,156 for debt conversions during the
quarter ended June 30, 2016, which did not exist as of June 30, 2015. We anticipate continued large fluctuations in other income
(expense) as a result of quarterly re-evaluation of these derivative liabilities.
Six
Months ended June 30, 2016 and 2015
|
|
Six
Months Ended June 30,
|
|
|
Favorable
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
(Unfavorable)
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
4,665
|
|
|
$
|
(4,665
|
)
|
|
|
-100.0
|
%
|
Cost of revenue
|
|
|
-
|
|
|
|
2,162
|
|
|
|
2,162
|
|
|
|
100.0
|
%
|
Gross profit
|
|
|
-
|
|
|
|
2,503
|
|
|
|
(2,503
|
)
|
|
|
-100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
3,467,361
|
|
|
|
927,820
|
|
|
|
2,539,541
|
|
|
|
273.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(3,467,361
|
)
|
|
|
(925,317
|
)
|
|
|
(2,542,044
|
)
|
|
|
-274.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
1,110,361
|
|
|
|
(112,561
|
)
|
|
|
1,222,922
|
|
|
|
1086.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,357,000
|
)
|
|
$
|
(1,037,878
|
)
|
|
$
|
(1,319,122
|
)
|
|
|
-127.1
|
%
|
Revenues
We
had no revenue for the six months ended June 30, 2016 compared to $4,665 for the six months ended June 30, 2015. We are in an
early stage and our revenues will be small and null until a device or biological license receives FDA approval or international
research licensing develops. The growth of our business is dependent on successfully raising additional capital to fund our growth.
Operating
Expenses
Our
operating expenses for the six months ended June 30, 2016 were approximately $3,467,361 compared to $927,820 for the corresponding
period of the previous year. The operating expenses were comprised primarily from consulting and professional fees for the development
of our intellectual property and expenses related to being a public company. A significant portion of these fees were paid for
with the issuance of restricted shares of common stock. During the six months ended June 30, 2016, 4,833,246 shares of common
stock were issued for consulting services valued at $1,627,371 as compared to 4,249,286 shares of common stock being issued for
consulting services valued at $3,375, during the corresponding period of the previous year.
Other
Income (Expense)
Other
income (expense) for the six months ended June 30, 2016 was income of $1,110,361 compared to expense of $112,561 for the six months
ended June 30, 2015. This change was due primarily to a change in valuation of our derivative liabilities, which did not exist
as of June 30, 2015, and net of interest expense resulting from the amortization of the discounts on notes payable also, which
did not exist as of June 30, 2015. In addition, we incurred interest expense on the issuance of debt and a loss on extinguishment
of debt for debt conversions during the quarter ended June 30, 2016, neither of which existed as of June 30, 2015. We anticipate
continued large fluctuations in other income (expense) as a result of quarterly re-evaluation of these derivative liabilities.
Year
Ended December 31, 2015 vs. Year Ended December 31, 2014
|
|
Year
Ended December 31,
|
|
|
Favorable
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
(Unfavorable)
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
4,265
|
|
|
$
|
24,192
|
|
|
$
|
(19,927
|
)
|
|
|
-82.4
|
%
|
Cost of revenue
|
|
|
2,162
|
|
|
|
15,485
|
|
|
|
13,323
|
|
|
|
86.0
|
%
|
Gross profit
|
|
|
2,103
|
|
|
|
8,707
|
|
|
|
(6,604
|
)
|
|
|
-75.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
2,566,764
|
|
|
|
2,199,919
|
|
|
|
366,845
|
|
|
|
16.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2,564,661
|
)
|
|
|
(2,191,212
|
)
|
|
|
(373,449
|
)
|
|
|
-17.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
(4,201,075
|
)
|
|
|
1,231,718
|
|
|
|
(5,432,793
|
)
|
|
|
441.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,765,736
|
)
|
|
$
|
(959,494
|
)
|
|
$
|
(5,806,242
|
)
|
|
|
-605.1
|
%
|
Revenues
Our
net revenue was $4,265 for the fiscal year ended December 31, 2015. Our net revenue was $24,192 for the fiscal year ended December
31, 2014. We are in an early stage and our revenues will be small and erratic until a device or biological license receives FDA
approval or international research licensing develops. The growth of our business is dependent on successfully raising additional
capital to fund our growth.
Operating
Expenses
Our
operating expenses for 2015 were approximately $2,567,000 compared to $2,200,000 for 2014. The operating expenses were comprised
primarily of consulting and professional fees for the development of our intellectual property and expenses related to being a
public company.
Depreciation
We
incur depreciation expense for costs related to our assets, including our information technology and software.
Our
depreciation decreased to $14,773 in 2015 from $15,737 in 2014. There were no significant equipment purchases or sales during
2015.
Other
Income (Expense)
Our
Other Income (Expense) was expense of approximately $4,201,000 in 2015 compared to income of $1,232,000 in 2014. The expense in
2015 was primarily the result of changes in our financings to reflect liability accounting for convertible debt issued with variable
conversion rates compared to income in 2014 when we had income related to extinguishment of debt.
Liquidity
and Capital Resources
|
|
As
of
|
|
|
Increase
|
|
|
|
June
30, 2016
|
|
|
December
31, 2015
|
|
|
(Decrease)
|
|
Working Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
78,688
|
|
|
$
|
377,706
|
|
|
$
|
(299,018
|
)
|
Current liabilities
|
|
|
6,962,219
|
|
|
|
9,486,153
|
|
|
|
2,523,934
|
|
Working
capital deficit
|
|
$
|
(6,883,531
|
)
|
|
$
|
(9,108,447
|
)
|
|
$
|
2,224,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
390,689
|
|
|
$
|
199,270
|
|
|
$
|
191,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit
|
|
$
|
(7,250,480
|
)
|
|
$
|
(9,276,060
|
)
|
|
$
|
(2,025,580
|
)
|
|
|
Six
Months Ended June 30,
|
|
|
Increase
|
|
|
|
2016
|
|
|
2015
|
|
|
(Decrease)
|
|
Statements of Cash Flows Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
$
|
(1,028,042
|
)
|
|
$
|
(378,822
|
)
|
|
$
|
(649,220
|
)
|
Investing activities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Financing activities
|
|
$
|
1,065,257
|
|
|
$
|
396,230
|
|
|
$
|
669,027
|
|
|
|
As
of
|
|
|
Increase
|
|
|
|
June
30, 2016
|
|
|
December
31, 2015
|
|
|
(Decrease)
|
|
Balance Sheet Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
78,688
|
|
|
$
|
41,473
|
|
|
$
|
37,215
|
|
Accounts
payable and accrued expenses
|
|
$
|
4,379,989
|
|
|
$
|
3,990,185
|
|
|
$
|
389,804
|
|
Since
inception and through June 30, 2016, the Company has raised approximately $4.0 million in equity and debt transactions. These
funds have been used to commence the operations of the Company to acquire and begin the development of its intellectual property
portfolio. These activities include attending trade shows and corporate development. Our accompanying condensed consolidated financial
statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets
and the satisfaction of liabilities in the normal course of business for the twelve month period following the date of these condensed
consolidated financial statements. The Company has incurred substantial losses since inception. Its current liabilities exceed
its current assets and available cash is not sufficient to fund expected future operations. The Company is raising additional
capital through debt and equity securities in order to continue the funding of its operations. However, there is no assurance
that the Company can raise enough funds or generate sufficient revenues to pay its obligations as they become due, which raises
substantial doubt about our ability to continue as a going concern. To reduce the risk of not being able to continue as a going
concern, management is increasing the value of its intellectual property through regulatory approvals and obtaining additional
patent rights and has initiated a private placement offering to raise capital through the sale of its common stock. Although,
uncertainty exists as to whether the Company will be able generate enough cash from operations to fund the Company’s working
capital needs or raise sufficient capital to meet the Company’s obligations as they become due, no adjustments have been
made to the carrying value of assets or liabilities as a result of this uncertainty. Our cash on hand at June 30, 2016 was approximately
$78,608. This will be insufficient to fund operations if additional capital is not raised. The Company raised an aggregate of
approximately $1.2 million through the sale of equity and debt securities during the six months ended June 30, 2016.
|
|
As
of December 31,
|
|
|
Increase
|
|
|
|
2015
|
|
|
2014
|
|
|
(Decrease)
|
|
Working Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
377,706
|
|
|
$
|
2,988
|
|
|
$
|
374,718
|
|
Current liabilities
|
|
|
9,486,153
|
|
|
|
4,554,948
|
|
|
|
4,931,205
|
|
Working capital
deficit
|
|
$
|
(9,108,447
|
)
|
|
$
|
(4,551,960
|
)
|
|
$
|
4,556,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
199,270
|
|
|
$
|
183,646
|
|
|
$
|
15,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit
|
|
$
|
(9,276,060
|
)
|
|
$
|
(4,693,005
|
)
|
|
$
|
4,583,055
|
|
|
|
For
Year Ended December 31,
|
|
|
Increase
|
|
|
|
2015
|
|
|
2014
|
|
|
(Decrease)
|
|
Statements of Cash Flows Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
$
|
(1,019,334
|
)
|
|
$
|
(909,296
|
)
|
|
$
|
110,038
|
|
Investing activities
|
|
$
|
(3,829
|
)
|
|
$
|
-
|
|
|
$
|
3,829
|
|
Financing activities
|
|
$
|
1,063,648
|
|
|
$
|
907,029
|
|
|
$
|
156,619
|
|
|
|
As
of December 31,
|
|
|
Increase
|
|
|
|
2015
|
|
|
2014
|
|
|
(Decrease)
|
|
Balance Sheet Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
41,473
|
|
|
$
|
988
|
|
|
$
|
40,485
|
|
Accounts
payable and accrued expenses
|
|
$
|
3,990,185
|
|
|
$
|
3,167,346
|
|
|
$
|
822,839
|
|
Since
inception and through December 31, 2015, the Company has raised approximately $2.8 million in equity and debt transactions. These
funds have been used to advance the operations of the Company, build its bio-medical platform, patent work & general corporate
development. Our accompanying consolidated financial statements have been prepared assuming the Company will continue as a going
concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the
twelve month period following the date of these consolidated financial statements. However, the Company has incurred substantial
losses. Our current liabilities exceed our current assets and available cash is not sufficient to fund the expected future operation.
The Company is raising additional capital through debt and equity securities in order to continue the funding of its operations.
However, there is no assurance that the Company can raise enough funds or generate sufficient revenues to pay its obligations
as they become due, which raises substantial doubt about our ability to continue as a going concern. To reduce the risk of not
being able to continue as a going concern, management has initiated a private placement offering to raise capital through the
sale of its common stock. Although, uncertainty exists as to whether the Company will be able generate enough cash from operations
to fund the Company’s working capital needs or raise sufficient capital to meet the Company’s obligations as they
become due, no adjustments have been made to the carrying value of assets or liabilities as a result of this uncertainty. Our
cash on hand at December 31, 2015 was approximately $41,000. This will not be sufficient to fund operations if additional capital
is not raised. The Company raised an aggregate of $2,047,500 through the sale of equity and debt securities since December 31,
2015 through the date of this report.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts
or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase
our operating costs or cash requirements in the future.
Seasonality
Management
does not believe that our current business segment is seasonal to any material extent.
Securities
Authorized for Issuance under Equity Compensation Plans
We
do not have in effect any compensation plans under which our equity securities are authorized for issuance.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The
following table sets forth the name and age of officers and director as of the date of this prospectus. Our Executive officers
are elected annually by our Board of Directors. Our executive officers hold their offices until they resign, are removed by the
Board, or his successor is elected and qualified.
Name
|
|
Age
|
|
Position
|
Alan
Collier
|
|
51
|
|
Director,
Chief Executive Officer, Interim Chief Financial Officer, and Secretary
|
Michael
Mann
|
|
60
|
|
Executive
Vice-President–Shareholder Relations
|
Set
forth below is a brief description of the background and business experience of our executive officer and director, our Executive
Vice President and Beneficial Owner and our Past CFO for the past five years.
Alan
Collier
has been the Chief Executive Officer, Secretary, and a director of the Company Since March 2012. Mr. Collier has
more than twenty (20) years of experience in finance, telecommunications, and consumer products. Over the progression of his career,
he has specialized in the development and financing of early stage, high growth, and acquisitive companies (public and private).
He has structured, participated in, and completed numerous transactions including mergers and acquisitions, equity and debt placements,
capital restructuring, joint venture development, and channel partner procurement. Additionally, Mr. Collier was a Senior Managing
Director at Mid-Market Securities, a FINRA-registered Broker-Dealer. He is also the co-founder and a Managing Member of C2 Capital,
LLC, which provides management consulting services to companies preparing to go public. Prior to joining Mid-Market Securities,
Mr. Collier was a Managing Director of Mosaic Capital and co-managed its Capital Markets Group at Mosaic Capital. He was previously
a Vice President at Corporate Capital Group and Managing Director and CEO of Greenbridge Capital Group. He has held numerous board
and executive positions throughout his career. Mr. Collier holds FINRA Series 7, 24, 63, and 79 Licenses.
Michael
Mann
has been the President since January 2014. Mr. Mann was the Vice President of Shareholder Relations from March 2012
to January 2014 for the Company and he brings significant related experience in business operations and corporate finance. From
2008 to March 2012, Mr. Mann has served as the President and Chief Executive Officer of Hanover Portfolio Acquisitions, Inc. formerly
known as Hanover Asset Management, Inc. Immediately prior thereto, Mr. Mann was the Founder, President, and Chief Executive Officer
of U.S. Debt Settlement, Inc., a company listed on the Frankfurt Stock Exchange. Mr. Mann had personally overseen the growth and
development of U.S. Debt Settlement since 2003. From January 2002 to July 2003, Mr. Mann was the Chief Executive Officer of Shared
Vision Capital, a boutique investment banking firm that assisted emerging companies with early seed capital and bridge loans.
From October 1998 through December 2001, Mr. Mann was the Vice President of Investor Relations for JuriSearch.com, an online legal
research platform. During his tenure with JuriSearch.com, Mr. Mann was directly responsible for financing for the company’s
growth and development. In addition, Mr. Mann founded and served as the president of Universal Pacific Communications, a privately
owned telecommunications company. Under his leadership, Universal Pacific developed a fiber optic disaster recovery telecommunications
network. Mr. Mann has held Series 62 and 63 Securities Licenses.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, none of our directors or executive officers has, during the past ten years:
|
●
|
been
convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses);
|
|
|
|
|
●
|
had
any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two years prior to that time;
|
|
|
|
|
●
|
been
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement
in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity;
|
|
|
|
|
●
|
been
found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated;
|
|
|
|
|
●
|
been
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an
alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement
or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
|
|
|
●
|
been
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of
the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority
over its members or persons associated with a member.
|
Except
as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or
executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates
which are required to be disclosed pursuant to the rules and regulations of the Commission.
Term
of Office
Our
directors are elected for a one-year term to hold office until the next annual general meeting of our shareholders or until removed
from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed
by the board.
Code
of Ethics
We
do not have a code of ethics that applies to our officers, employees and directors.
Corporate
Governance
The
business and affairs of the company are managed under the direction of our board. We have a board consisting of one member. In
addition to the contact information in this annual report, each stockholder will be given specific information on how he/she can
direct communications to the officers and our director of the corporation. All communications from stockholders are relayed to
our board.
Role
in Risk Oversight
Our
board is primarily responsible for overseeing our risk management processes. The board receives and reviews periodic reports from
management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks.
The board focuses on the most significant risks facing our company and our company’s general risk management strategy, and
also ensures that risks undertaken by our company are consistent with the board’s appetite for risk. While the board oversees
our company’s risk management, management is responsible for day-to-day risk management processes. We believe this division
of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure
supports this approach.
Section
16(a) Beneficial Ownership Reporting Compliance
The
Company does not have a class of securities registered under the Exchange Act and therefore its directors, executive officers,
and any persons holding more than ten percent of the Company’s common stock are not required to comply with Section 16 of
the Exchange Act.
EXECUTIVE
COMPENSATION
The
following executives of the Company received compensation in the amounts set forth in the chart below for the fiscal years ended
December 31, 2015 and 2014. No other item of compensation was paid to any officer or director of the Company other than reimbursement
of expenses.
Summary
Compensation Table
Name and
|
|
Fiscal
|
|
|
|
|
|
|
|
Stock
|
|
|
All Other
|
|
|
|
|
Principal
Position
|
|
Year
|
|
Salary
($) (1)
|
|
|
Bonus
($)
|
|
|
Awards
($)
|
|
|
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Collier, CEO, Interim
|
|
2,015
|
|
$
|
270,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
270,000
|
|
CFO, Secretary and Director
|
|
2,014
|
|
$
|
270,000
|
|
|
$
|
-
|
|
|
$
|
617
|
|
|
$
|
-
|
|
|
$
|
270,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Mann, V.P., Former
|
|
2,015
|
|
$
|
270,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
270,000
|
|
President and CEO
|
|
2,014
|
|
$
|
270,000
|
|
|
$
|
-
|
|
|
$
|
19,695
|
|
|
$
|
-
|
|
|
$
|
289,695
|
|
(1)
This includes deferred compensation to Mr. Collier of $57,670 and $104,000 for 2015 and 2014 respectively.
This
includes deferred compensation to Mr. Mann of $259,900 and $225,000 for 2015 and 2014 respectively.
Outstanding
Equity Awards at Fiscal Year-End Table
There
were no outstanding equity awards at the date of this prospectus.
Compensation
of Directors
Directors
will receive no compensation for serving as directors. However, the Company may reimburse its directors for any out-of-pocket
cost reasonably incurred to attend a Board meeting.
Employment
and Other Compensatory Agreements
All
of the new officers pursuant to the terms of the Share Exchange Agreement dated March 14, 2012 have agreed to accrue and defer
payment of their compensation until the Company has generated sufficient financing proceeds or revenue to pay such compensation.
Initially, Messrs. Collier and Mann shall each receive compensation of $10,000 per month. In addition, each officer will get additional
compensation in connection with any company that such officer originates upon the finalization of a licensing arrangement with
such company.
Finally,
Messrs. Collier and Mann shall receive additional compensation in the form of shares of restricted Company common stock that vest
over time based upon their remaining with the Company.
Indemnification
of Directors and Executive Officers and Limitation of Liability
Delaware
law generally permits us to indemnify our directors, officers, employees and agents. We, as a corporation organized in Delaware,
may indemnify our directors, officers, employees and agents in accordance with Delaware Law. Our Certificate of Incorporation,
as amended, does not contain any specific language enhancing or limiting the general Delaware statutory provisions.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy and is, therefore, unenforceable.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The
following table sets forth certain information regarding our shares of common stock beneficially owned as of the date of this
prospectus, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock,
(ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered
to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment
power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise
of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the table
for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s
spouse or children.
For
purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common
stock that such person has the right to acquire within 60 days of the date of this prospectus. For purposes of computing the percentage
of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or
persons has the right to acquire within 60 days of the date of this prospectus is deemed to be outstanding, but is not deemed
to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares
listed as beneficially owned does not constitute an admission of beneficial ownership. Unless otherwise specified, the address
of each of the persons set forth below is care of the company at the address of: 6320 Canoga Avenue, 15th Floor Woodland Hills,
CA 91367.
Name
of Beneficial Owner
|
|
Amount
of Beneficial
Ownership (1)
|
|
|
Percent
of
Ownership
|
|
|
|
|
|
|
|
|
Alan Collier
|
|
|
20,406,867
|
|
|
|
16.5
|
%
|
Michael Mann
|
|
|
19,585,462
|
|
|
|
15.9
|
%
|
|
|
|
|
|
|
|
|
|
All officers & directors as a group
(2 persons)
|
|
|
|
|
|
|
|
|
(1)
This includes common shares controlled by Mr. Collier
(2)
Based on shares of common stock outstanding as of August 26, 2016
We
know of no contractual arrangements, which may at a subsequent date result in a change of control in the Company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
On
November 16, 2014, the Company acquired a promissory note to Donnie Rudd for a principal amount of $96,000 which along with accrued
interest was converted into 350,000 shares of common stock on December 21, 2015. On March 31, 2014, the Company issued a promissory
note to Michael Mann for a principal amount of $70,000. The Note carries an interest rate of 12% per annum and a maturity date
of September 30, 2016 with interest due monthly. On September 20, 2014, the Company issued a promissory note to Don Calabria for
a principal amount of $75,000. The note carries an interest rate of 10% per annum and a maturity date of September 20, 2016 with
interest due monthly. On October 29, 2014, the Company issued a promissory note to Michael Mann for a principal amount of $50,000.
The note carries an interest rate of 12% per annum and a maturity date of September 29, 2016 with interest due monthly. The notes
to Messrs. Calabria and Rudd have been paid in full. In the opinion of management, these notes were on terms no less favorable
to the lenders than the Company might have obtained from an unaffiliated party
.
Director
Independence
We
do not have any independent directors. Because our common stock is not currently listed on a national securities exchange, we
have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule
5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or
any other individual having a relationship, which in the opinion of the Company’s Board of Directors, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that
a director cannot be considered independent if:
|
●
|
the
director is, or at any time during the past three years was, an employee of the company;
|
|
|
|
|
●
|
the
director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period
of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including,
among other things, compensation for board or board committee service);
|
|
|
|
|
●
|
a
family member of the director is, or at any time during the past three years was, an executive officer of the company;
|
|
|
|
|
●
|
the
director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity
to which the company made, or from which the company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject
to certain exclusions);
|
|
|
|
|
●
|
the
director or a family member of the director is employed as an executive officer of an entity where, at any time during the
past three years, any of the executive officers of the company served on the compensation committee of such other entity;
or
|
|
|
|
|
●
|
the
director or a family member of the director is a current partner of the company’s outside auditor, or at any time during
the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s
audit.
|
Mr.
Alan Collier is not considered independent because he is the Company’s Chief Executive Officer.
We
do not currently have a separately designated audit, nominating or compensation committee.
SELLING
SECURITY HOLDER
The
shares to be offered by the selling security holder were or will be issued in private placement transactions by us, each of which
was exempt from the registration requirements of the Securities Act. The shares offered hereby are “restricted” securities
under applicable federal and state securities laws and are being registered under the Securities Act, to give the selling security
holder the opportunity to publicly sell these shares. This prospectus is part of a Registration Statement on Form S-1 filed by
us with the Securities and Exchange Commission under the Securities Act covering the resale of such shares of our common stock
from time to time by the selling security holder. No estimate can be given as to the amount or percentage of our common stock
that will be held by the selling security holder after any sales made pursuant to this prospectus because the selling security
holder is not required to sell any of the shares being registered under this prospectus. The following table assumes that the
selling security holder will sell all of the shares listed in this prospectus.
The
following table sets forth the name of each person who is offering for resale shares of common stock covered by this prospectus,
the beneficial ownership of each selling security holder, the number of shares of common stock that may be sold in this offering
and the number of shares of common stock each will own after the offering, assuming they sell all of the shares offered. Beneficial
ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. The Selling Security Holder owns no shares of common stock subject to options, warrants
and convertible securities other than the Notes.
Shareholder
and Name of Person Controlling
|
|
Amount
of Shares owned before Offering
|
|
|
Number
of shares offered
|
|
|
Amount
of shares owned after Offering
|
|
|
Percent
of shares held after Offering
|
|
Bellridge Capital LP (1)
|
|
|
2,260,999
|
|
|
|
16,676,057
|
|
|
|
2,084,942
|
|
|
|
1.7
|
%
|
Total
|
|
|
2,260,999
|
|
|
|
16,676,057
|
|
|
|
2,084,942
|
|
|
|
1.7
|
%
|
(1)
Bellridge
Capital LP is a limited partnership organized under the laws of Delaware and is controlled by Boris Klimov. Its address is
Bellridge Capital, LP 5149 W. Woodmill Drive, Suite 20 Wilmington, Delaware 19808.
RELATIONSHIP
BETWEEN THE ISSUER AND THE SELLING SECURITY HOLDER
The
selling security holder has not at any time during the past three years acted as one of our employees, officers or directors or
had a material relationship with us.
PLAN
OF DISTRIBUTION
The
selling security holder may, from time to time, sell any or all of its shares of common stock on the stock exchange, market or
trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices.
The selling security holder may use any one or more of the following methods when selling shares:
|
●
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
|
|
●
|
block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
|
|
|
|
|
●
|
privately
negotiated transactions
|
|
|
|
|
●
|
a
combination of such methods of sale; or
|
|
|
|
|
●
|
any
other method permitted by applicable law.
|
The
selling security holder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling security holder may arrange for other broker-dealers to participate in sales. Broker-dealers
may receive commissions or discounts from the selling security holder (or, if any broker-dealer acts as agent for the purchaser
of shares, from the purchaser) in amounts to be negotiated. The selling security holder does not expect these commissions and
discounts relating to its sales of shares, to exceed what is customary in the types of transactions involved. The selling security
holder and any broker-dealers or agents that are involved in selling the shares of common stock are deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the shares purchased by them is deemed to be underwriting commissions or discounts under
the Securities Act. Because selling security holder is deemed to be an underwriter within the meaning of the Securities Act, it
will be subject to the prospectus delivery requirements of the Securities Act. Discounts, concessions, commissions and similar
selling expenses, if any, that can be attributed to the sale of common stock will be paid by the selling security holder and/or
the purchasers. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares
by the selling security holder. We are required to pay certain fees and expenses incurred by us incident to the registration of
the shares. We have agreed to indemnify the selling security holder against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act. Upon our company being notified in writing by the selling security holder that any material
arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing: (i) the name of each such selling security holder and
of the participating broker-dealer(s); (ii) the number of shares involved; (iii) the price at which such the shares of common
stock were sold; (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable; (v)
that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in
this prospectus; and (vi) other facts material to the transaction.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to our common stock for a period of two business days prior to the commencement
of the distribution. In addition, the selling security holders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our
common stock by the selling security holders or any other person. We will make copies of this prospectus available to the selling
security holders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the
time of the sale.
DESCRIPTION
OF SECURITIES
The
Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”) authorize us to issue (a)
250,000,000 shares of Common Stock, par value $0.0001 per share, of which, 123,743,549 shares are issued and outstanding as of
the date of this prospectus, and (b) 5,000,000 shares of Preferred Stock, $0.001 par value per share, 1,000 of which are issued
or outstanding.
Common
Stock
Holders
of Common Stock are entitled to one vote for each share on all matters submitted to a vote of shareholders. Holders of Common
Stock do not have cumulative voting rights. Holders of Common Stock are entitled to share in all dividends that the Board of Directors,
in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up, subject
to the preferences of any shares of Preferred Stock which may then be authorized and outstanding, each outstanding share entitles
its holder to participate in all assets that remain after payment of liabilities and after providing for each class of stock,
if any, having preference over the Common Stock.
Holders
of Common Stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions for the Common
Stock. The rights of the holders of Common Stock are subject to any rights that may be fixed for holders of Preferred Stock, when
and if any Preferred Stock is authorized and issued. All outstanding shares of Common Stock are duly authorized, validly issued,
fully paid and non-assessable.
Preferred
Stock
Our
articles of incorporation authorized the issuance of up to 5,000,000 shares of Preferred Stock in one or more series with such
designations, voting powers, if any, preferences and relative, participating, optional or other special rights, and such qualifications,
limitations and restrictions, as are determined by resolution of our Board of Directors.
On
April 3, 2013, the Company filed a Certificate of Designation that authorized the issuance of up to one million (1,000,000) shares
of a new series designated “Series AA Super Voting Preferred Stock,” and established the rights, preferences and limitations
thereof.
Each
holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to one hundred thousand (100,000) votes
for each share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled
to vote at each meeting of stockholders of the Company.
There
are no rights to dividends, liquidation preferences or conversion rights associated with the Series AA Super Voting Preferred
Stock.
The
summary of the rights, privileges and preferences of the Series AA Super Voting Preferred Stock described above is qualified in
its entirety by reference to the Certificate of Designation, a copy of which is attached as Exhibit 3.4 to our Annual Report,
on Form 10-K, filed on April 16, 2013.
Dividend
Policy
We
have not declared dividends since our inception. Holders of Common Stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available. We presently anticipate that all earnings, if any,
will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements,
and other factors.
Transfer
Agent
The
transfer agent for our common stock is ClearTrust, LLC 16540 Pointe Village Drive - Suite 210, Lutz, Florida 33558; p
hone:
(813) 235-4490.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.
Under
Delaware Law and our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit,
because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance
expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding
as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With
respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding,
and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent
permitted by the laws of the State of Delaware.
Regarding
indemnification for liabilities arising under the Securities Act which may be permitted to directors or officers under Delaware
law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy,
as expressed in the Securities Act and is, therefore, unenforceable
EXPERTS
The
financial statements for the years ended December 31, 2015 and December 31, 2014, included in this prospectus have been audited
by Rose, Snyder & Jacobs LLP, Encino, California, to the extent and for the periods indicated in their report thereon. Such
financial statements have been included in this prospectus and Registration Statement in reliance upon the report of Rose Snyder
& Jacobs LLP and upon the authority of such firm as experts in auditing and accounting.
LEGAL
MATTERS
The
validity of our common stock offered hereby will be passed upon for us by Frank J. Hariton, Esq., White Plains, New York. Mr.
Hariton owns 4,282,925 shares of our common stock.
WHERE
YOU CAN FIND MORE INFORMATION
We
are subject to the informational requirements of the Exchange Act, and file annual and current reports, proxy statements and other
information with the Commission. These reports, proxy statements and other information filed by Endonovo Therapeutics, Inc. can
be read and copied at the Commission’s Public Reference Room at 100 F Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. We will provide to the
record holders of our securities a copy of our annual reports containing audited financial statements and such periodic and quarterly
reports free of charge upon request. The Commission also maintains a website that contains reports, proxy statements, information
statements and other information located at http://www.sec.gov. This prospectus does not contain all the information required
to be in the Registration Statement (including the exhibits), which we have filed with the Commission under the Securities Act
and to which reference is made in this prospectus.
Financial
Statements and Supplementary Data.
Condensed
Consolidated Balance Sheets for June 30, 2016 (unaudited) and December 31, 2015
|
|
42
|
Condensed Consolidated Statements
of Operations for the Three and Six Months Ended June 30, 2016 and 2015
|
|
43
|
Condensed Consolidated Statements
of Cash Flows for the Six Months Ended June 30, 2016 and 2015
|
|
44
|
Condensed Consolidated Statement of Stockholders’
Deficit for the Six Months Ended June 30, 2016
|
|
45
|
Notes to Condensed Consolidated
Financial Statements for the Six Months Ended June 30, 2016 and 2015
|
|
46
|
Report of Independent Registered
Public Accounting Firm
|
|
54
|
Consolidated Balance Sheets
for December 31, 2015 and 2014
|
|
55
|
Consolidated Statements of
Operations for the Years Ended December 31, 2015 and 2014
|
|
56
|
Consolidated Statement of Stockholders’
Deficit for the Years Ended December 31, 2015 and 2014
|
|
57
|
Consolidated Statements of
Cash Flows for the Years Ended December 31, 2015 and 2014
|
|
58
|
Notes to Consolidated Financial
Statements for the Years Ended December 31, 2015 and 2014
|
|
59
|
Endonovo
Therapeutics, Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
78,688
|
|
|
$
|
41,473
|
|
Other
current assets
|
|
|
-
|
|
|
|
336,233
|
|
Total current assets
|
|
|
78,688
|
|
|
|
377,706
|
|
|
|
|
|
|
|
|
|
|
Property, Plant
and Equipment, net
|
|
|
23,740
|
|
|
|
31,657
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
102,428
|
|
|
$
|
409,363
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued expenses
|
|
$
|
4,379,989
|
|
|
$
|
3,990,185
|
|
Short term advances,
related parties
|
|
|
3,823
|
|
|
|
3,605
|
|
Notes payable, net of discounts of
$256,653 as of June 30, 2016 and $321,961 as of December 31, 2015
|
|
|
1,213,848
|
|
|
|
1,261,790
|
|
Notes payable -
related parties
|
|
|
181,800
|
|
|
|
245,000
|
|
Derivative liability
|
|
|
1,170,547
|
|
|
|
3,973,542
|
|
Current
portion of long term loan
|
|
|
12,212
|
|
|
|
12,031
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
6,962,219
|
|
|
|
9,486,153
|
|
|
|
|
|
|
|
|
|
|
Notes payable, net of discounts of $407,276 as of June 30, 2016
and $477,346 of December 31, 2015
|
|
|
225,224
|
|
|
|
27,654
|
|
Long term loan
|
|
|
10,465
|
|
|
|
16,616
|
|
Acquisition payable
|
|
|
155,000
|
|
|
|
155,000
|
|
Total liabilities
|
|
|
7,352,908
|
|
|
|
9,685,423
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
Shareholders’ deficit
|
|
|
|
|
|
|
|
|
Super AA super voting
preferred stock, $0.0001 par value; 1,000,000 authorized and 1,000 issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.0001 par value; 250,000,000
shares authorized; 117,900,657 and 104,803,401 shares issued and outstanding as of June 30, 2016 and December 31, 2015
|
|
|
11,790
|
|
|
|
10,479
|
|
Additional paid-in
capital
|
|
|
8,154,911
|
|
|
|
3,773,642
|
|
Stock subscriptions
|
|
|
(1,570
|
)
|
|
|
(1,570
|
)
|
Accumulated
deficit
|
|
|
(15,415,611
|
)
|
|
|
(13,058,611
|
)
|
Total shareholders’
deficit
|
|
|
(7,250,480
|
)
|
|
|
(9,276,060
|
)
|
|
|
$
|
102,428
|
|
|
$
|
409,363
|
|
See
accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Condensed
Consolidated Statement of Operations
(Unaudited)
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, net
|
|
$
|
-
|
|
|
$
|
1,920
|
|
|
$
|
-
|
|
|
$
|
4,665
|
|
Cost of goods
sold
|
|
|
-
|
|
|
|
1,338
|
|
|
|
-
|
|
|
|
2,162
|
|
Gross profit
|
|
|
-
|
|
|
|
582
|
|
|
|
-
|
|
|
|
2,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
2,065,241
|
|
|
|
494,266
|
|
|
|
3,467,361
|
|
|
|
927,820
|
|
Loss from operations
|
|
|
(2,065,241
|
)
|
|
|
(493,684
|
)
|
|
|
(3,467,361
|
)
|
|
|
(925,317
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value
of derivative liability
|
|
|
1,574,082
|
|
|
|
29,446
|
|
|
|
2,598,684
|
|
|
|
29,446
|
|
Gain (loss) on extinguishment
of debt
|
|
|
(526,156
|
)
|
|
|
-
|
|
|
|
(393,118
|
)
|
|
|
-
|
|
Interest
expense, net
|
|
|
(436,222
|
)
|
|
|
(93,485
|
)
|
|
|
(1,095,205
|
)
|
|
|
(142,007
|
)
|
|
|
|
611,704
|
|
|
|
(64,039
|
)
|
|
|
1,110,361
|
|
|
|
(112,561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(1,453,537
|
)
|
|
|
(557,723
|
)
|
|
|
(2,357,000
|
)
|
|
|
(1,037,878
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,453,537
|
)
|
|
$
|
(557,723
|
)
|
|
$
|
(2,357,000
|
)
|
|
$
|
(1,037,878
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
Weighted average common share outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
111,155,833
|
|
|
|
97,996,920
|
|
|
|
108,861,547
|
|
|
|
91,364,222
|
|
See
accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Condensed
Consolidated Statement of Cash Flows
(Unaudited)
|
|
Six
Months ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(2,357,000
|
)
|
|
$
|
(1,037,878
|
)
|
Adjustments to reconcile
net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
|
7,917
|
|
|
|
7,280
|
|
Fair value of equity
issued for services
|
|
|
1,738,629
|
|
|
|
4,251
|
|
Non-cash expenses
paid in debt issuance
|
|
|
123,000
|
|
|
|
-
|
|
Gain (loss) on extinguishment
of debt
|
|
|
393,118
|
|
|
|
-
|
|
Non-cash interest
expense
|
|
|
438,587
|
|
|
|
49,145
|
|
Amortization of
note discount
|
|
|
456,763
|
|
|
|
3,521
|
|
Change in fair value
of derivative liability
|
|
|
(2,598,684
|
)
|
|
|
(29,446
|
)
|
Changes in assets
and liabilities:
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
346,133
|
|
|
|
2,000
|
|
Accounts
payable and accrued expenses
|
|
|
423,495
|
|
|
|
622,305
|
|
Net cash used
in operating activities
|
|
|
(1,028,042
|
)
|
|
|
(378,822
|
)
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of notes payable
|
|
|
477,000
|
|
|
|
290,500
|
|
Proceeds from issuance
of notes payable- related parties
|
|
|
-
|
|
|
|
50,000
|
|
Proceeds from short
term advances
|
|
|
5,618
|
|
|
|
73,205
|
|
Repayments on short
term advances
|
|
|
(15,300
|
)
|
|
|
(12,850
|
)
|
Proceeds from issuance
of common stock and units
|
|
|
818,329
|
|
|
|
220
|
|
Payment against
long term loan
|
|
|
(5,970
|
)
|
|
|
(4,845
|
)
|
Payment against
notes payable
|
|
|
(151,220
|
)
|
|
|
-
|
|
Payment
against notes payable- related parties
|
|
|
(63,200
|
)
|
|
|
-
|
|
Net cash provided
by financing activities
|
|
|
1,065,257
|
|
|
|
396,230
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
37,215
|
|
|
|
17,408
|
|
Cash, beginning
of year
|
|
|
41,473
|
|
|
|
988
|
|
Cash, end of
period
|
|
$
|
78,688
|
|
|
$
|
18,396
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
19,124
|
|
|
$
|
6,112
|
|
Cash paid for
income taxes
|
|
$
|
-
|
|
|
$
|
500
|
|
|
|
|
|
|
|
|
|
|
Non Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
Conversion
of notes payable and accrued interest to common stock
|
|
$
|
499,441
|
|
|
$
|
328,138
|
|
See
accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Condensed
Consolidated Statement of Shareholders’ Deficit
(Unaudited)
|
|
Series
AA
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
Stock
|
|
|
|
|
|
Total
|
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Retained
|
|
|
Shareholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Receivable
|
|
|
Earnings
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2015
|
|
|
1,000
|
|
|
$
|
-
|
|
|
|
104,803,401
|
|
|
$
|
10,479
|
|
|
$
|
3,773,642
|
|
|
$
|
(1,570
|
)
|
|
$
|
(13,058,611
|
)
|
|
$
|
(9,276,060
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
566,327
|
|
|
|
57
|
|
|
|
107,022
|
|
|
|
-
|
|
|
|
-
|
|
|
|
107,079
|
|
Private placement units
issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
2,786,621
|
|
|
|
279
|
|
|
|
710,972
|
|
|
|
-
|
|
|
|
-
|
|
|
|
711,251
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
4,833,246
|
|
|
|
483
|
|
|
|
1,627,371
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,627,854
|
|
Shares issued with notes
payable extensions and lock-up agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
259,917
|
|
|
|
27
|
|
|
|
110,748
|
|
|
|
-
|
|
|
|
-
|
|
|
|
110,775
|
|
Shares issued for conversion
of notes payable and accrued interest
|
|
|
-
|
|
|
|
-
|
|
|
|
3,681,492
|
|
|
|
368
|
|
|
|
1,500,886
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,501,254
|
|
Private placement units
issued for conversion of notes payable and accrued interest
|
|
|
-
|
|
|
|
-
|
|
|
|
969,653
|
|
|
|
97
|
|
|
|
284,270
|
|
|
|
-
|
|
|
|
-
|
|
|
|
284,367
|
|
Warrants issued with
notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,000
|
|
Net loss for the
period ended June 30, 2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,357,000
|
)
|
|
|
(2,357,000
|
)
|
Balance June 30,
2016
|
|
|
1,000
|
|
|
$
|
-
|
|
|
|
117,900,657
|
|
|
$
|
11,790
|
|
|
$
|
8,154,911
|
|
|
$
|
(1,570
|
)
|
|
$
|
(15,415,611
|
)
|
|
$
|
(7,250,480
|
)
|
See
accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
Note
1 - Organization and Nature of Business
Endonovo
Therapeutics, Inc. and Subsidiaries (the “Company” or “ETI”) is primarily focused in the business of biomedical
research and development, particularly in regenerative medicine, which has included the development of its proprietary square
wave form device. The Company has historically been involved with intellectual property licensing and commercialization.
Basis
of Presentation and Principles of Consolidation
The
accompanying unaudited interim condensed consolidated financial statements have been presented in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions
to Article 8 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required
by GAAP for complete financial statements. The condensed consolidated financial statements as of June 30, 2016 and 2015 are unaudited;
however, in the opinion of management such interim condensed consolidated financial statements reflect all adjustments, consisting
solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The results
of operations for the period presented are not necessarily indicative of the results that might be expected for future interim
periods or for the full year.
The
consolidated financial statements of the Company include the accounts of ETI and IPR as of March 14, 2012; Aviva as of April 2,
2013; and WeHealAnimals as of November 16, 2013. All significant intercompany accounts and transactions are eliminated in consolidation.
Going
Concern
These
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which
contemplates realization of assets and the satisfaction of liabilities in the normal course of business for a period following
the date of these consolidated financial statements. The Company has raised approximately $1.3 million in debt and equity financing
for the period January 1, 2016 to June 30, 2016. The Company is raising additional capital through debt and equity securities
in order to continue the funding of its operations. However, there is no assurance that the Company can raise enough funds or
generate sufficient revenues to pay its obligations as they become due, which raises substantial doubt about our ability to continue
as a going concern. No adjustments have been made to the carrying value of assets or liabilities as a result of this uncertainty.
To reduce the risk of not being able to continue as a going concern, management has initiated a private placement offering to
raise capital through the sale of its common stock and is seeking out profitable companies. Although, uncertainty exists as to
whether the Company will be able to generate enough cash from operations to fund the Company’s working capital needs or
raise sufficient capital to meet the Company’s obligations as they become due, no adjustments have been made to the carrying
value of assets or liabilities as a result of this uncertainty.
Net
Income (Loss) per Share
For
the six month period ending June 30, 2016, the Company had 7,536,612 of weighted average common shares relating to the convertible
debt, under the if-converted method, however, these shares are not dilutive because the Company recorded a loss during the six
month period ended June 30, 2016. For the six months ended June 30, 2015, the Company had no dilutive securities.
Recent
Accounting Standard Updates
The
Company is not aware of any recently issued accounting pronouncements that when adopted will have a material effect on the Company’s
financial position or results of its operations.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (continued)
Note
2 – Property, Plant and Equipment
The
following is a summary of equipment, at cost, less accumulated depreciation at June 30, 2016 and December 31, 2015:
|
|
June
30, 2016
|
|
|
December
31, 2015
|
|
|
|
|
|
|
|
|
Autos
|
|
$
|
64,458
|
|
|
$
|
64,458
|
|
Medical equipment
|
|
|
5,000
|
|
|
|
5,000
|
|
Other equipment
|
|
|
8,774
|
|
|
|
8,774
|
|
|
|
|
78,232
|
|
|
|
78,232
|
|
Less accumulated
depreciation
|
|
|
54,492
|
|
|
|
46,575
|
|
|
|
$
|
23,740
|
|
|
$
|
31,657
|
|
Note
3 - Notes Payable and Long Term Loan
Notes
Payable
During
the six months ended June 30, 2016, the Company issued two Convertible Notes (“Variable Notes”) with original terms
of one year and nine months, and one year, respectively, and with interest rates ranging from an add-on interest equal to 10%
of the initial principal, and 10%, respectively, and, a variable conversion rate with a discount of 30% of the Company’s
common stock based on the terms included in the Variable Notes. The Variable Notes contains a prepayment option which enables
the Company to prepay the note for a period of 0-180 days, and six months , respectively, subsequent to issuance at a premium
of 125%. In addition, 300,000 two-year warrants at $0.81 were issued with and to the holder of one of the Variable Notes. The
gross amount of these Variable Notes outstanding is $505,000 as of June 30, 2016.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (continued)
|
|
June
30, 2016
|
|
|
December
31, 2015
|
|
|
|
|
|
|
|
|
Notes payable at beginning
of period
|
|
$
|
2,333,751
|
|
|
$
|
1,377,416
|
|
Notes payable issued
|
|
|
605,000
|
|
|
|
1,586,250
|
|
Repayments of notes payable in cash
|
|
|
(188,200
|
)
|
|
|
(138,000
|
)
|
Less amounts
converted to equity
|
|
|
(465,750
|
)
|
|
|
(491,915
|
)
|
Notes payable at end of period
|
|
|
2,284,801
|
|
|
|
2,333,751
|
|
Less debt discount
|
|
|
(663,929
|
)
|
|
|
(799,307
|
)
|
|
|
$
|
1,620,872
|
|
|
$
|
1,534,444
|
|
|
|
|
|
|
|
|
|
|
Notes payable
issued to related parties
|
|
$
|
181,800
|
|
|
$
|
245,000
|
|
Notes payable
issued to non-related parties
|
|
$
|
1,439,072
|
|
|
$
|
1,289,444
|
|
The
maturity dates on the notes payable are as follows:
|
|
|
Notes
to
|
|
|
|
|
12 months ending,
|
|
|
Related
parties
|
|
|
Non-related
parties
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2017
|
|
|
$
|
181,800
|
|
|
$
|
1,470,501
|
|
|
$
|
1,652,301
|
|
June 30, 2018
|
|
|
$
|
-
|
|
|
$
|
632,500
|
|
|
$
|
632,500
|
|
June
30, 2019
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
$
|
181,800
|
|
|
$
|
2,103,001
|
|
|
$
|
2,284,801
|
|
Derivative
Liability
The
Company has issued Variable Debentures which contained variable conversion rates based on unknown future prices of the Company’s
common stock. This results in a conversion feature. The Company measures the conversion feature using the Black-Scholes option
valuation model using the following assumptions:
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (continued)
|
|
Three
months ended June 30,
|
|
|
Six
months ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected term
|
|
|
9
months - 3 years
|
|
|
|
9
months - 1 year
|
|
|
|
9
months - 3 years
|
|
|
|
9
months - 1 year
|
|
Exercise price
|
|
|
$0.0659-$0.28
|
|
|
|
$0.30-$0.52
|
|
|
|
$0.0659-$0.28
|
|
|
|
$0.30-$0.52
|
|
Expected volatility
|
|
|
221%-276%
|
|
|
|
158%-181%
|
|
|
|
199%-276%
|
|
|
|
158%-181%
|
|
Expected dividends
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
Risk-free
interest rate
|
|
|
0.45%
to 1.06%
|
|
|
|
0.28%
|
|
|
|
0.45%
to 1.06%
|
|
|
|
0.28%
|
|
Forfeitures
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
The
time period over which the Company will be required to evaluate the fair value of the conversion feature is nine to twenty-four
months or conversion.
The
assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties
and the application of management’s judgment. As a result, if factors change, including changes in the market value of the
Company’s common stock, managements’ assessment or significant fluctuations in the volatility of the trading market
for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.
The
Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded
as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock
price, which is subject to significant fluctuation and is not under its control. The resulting effect on net loss is therefore
subject to significant fluctuation and will continue to be so until the Company’s Variable Debentures, which the convertible
feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain
constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.
As
of June 30, 2016 and December 31, 2015, the balances of the Derivative Liability are as follows:
|
|
Derivative
|
|
|
|
Liability
|
|
Balance December 31, 2015
|
|
$
|
3,973,542
|
|
|
|
|
|
|
Issuance of convertible
debt
|
|
|
903,587
|
|
Settlements by debt
extinguishment
|
|
|
(1,107,898
|
)
|
Change
in estimated fair value
|
|
|
(2,598,684
|
)
|
|
|
|
|
|
Balance June 30, 2016
|
|
$
|
1,170,547
|
|
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (continued)
Long
Term Loan
The
Company has financed the purchase of an automobile. The maturity dates on the loan are as follows:
Maturity
dates of long term debt
Twelve months ending,
|
|
|
|
|
June 30, 2017
|
|
$
|
12,212
|
|
June 30, 2018
|
|
$
|
10,465
|
|
|
|
$
|
22,677
|
|
|
|
|
|
|
Current portion
|
|
$
|
12,212
|
|
Long term portion
|
|
$
|
10,465
|
|
Note
4 - Shareholders’ Deficit
Common
Stock
The
Company has entered into consulting agreements with various consultants for service to be provided to the Company. The agreements
stipulate a monthly fee and a certain number of shares that the consultant vests in over the term of the contract. The consultant
is issued a prorated number of shares of common stock at the beginning of the contract, which the consultant earns over a three-month
period. At the anniversary of each quarter, the consultant is issued a new allotment of common stock during the first 3 years
of engagement. In accordance with ASC 505-50 – Equity-Based Payment to Non-Employees, the common stock shares issued to
the consultant are valued upon their vesting, with interim estimates of value as appropriate during the vesting period. During
the six months ended June 30, 2016, the Company issued 1,500,000 shares of common stock with a value of $759,800 related to these
consulting agreements.
During
the six months ended June 30, 2016, the Company issued pursuant to a private placement offering 3,756,274 shares of common stock
and the same number of warrants for cash of $711,250 and conversion of notes and accrued interest in the amount of $284,367. The
Company also issued 566,327 shares of common stock for cash of $107,079 and 3,681,492 shares of common stock for the conversion
of notes and accrued interest in the amount of $1,501,254.
Also,
during the six months ended June 30, 2016, the Company issued 259,917 shares of common stock valued at $110,775 related to the
extension of outstanding notes and lock-up agreements. The Company also issued 3,333,246 shares of common stock with a value of
$868,054 for services provided to the Company.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (continued)
Series
AA Preferred Shares
On
February 22, 2013, the Board of Directors of the Company authorized an amendment to the Company’s Articles of Incorporation,
as amended (the “Articles of Incorporation”), in the form of a Certificate of Designation that authorized the issuance
of up to one million (1,000,000) shares of a new series of preferred stock, par value $0.0001 per share, designated “Series
AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
Each
holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to one hundred thousand (100,000) votes
for each share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled
to vote at each meeting of stockholders of the Company. As of June 30, 2016, there were 1,000 shares of Series AA Preferred stock
outstanding.
Warrants
During
the six months ended June 30, 2016, in conjunction with the sale of common stock and issuance of notes, the Company issued two
and five-year common stock purchase warrants to acquire up to 4,056,274 shares of common stock. These warrants have exercise prices
ranging from $0.195 to $0.81 per share. The balance of all warrants outstanding as of June 30, 2016 is as follows:
|
|
|
Outstanding
Warrants
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
|
Exercise Price
|
|
|
|
|
Shares
|
|
|
Per
Share
|
|
Outstanding at January
1, 2016
|
|
|
|
-
|
|
|
$
|
-
|
|
Granted
|
|
|
|
4,056,274
|
|
|
$
|
0.55
|
|
Cancelled
|
|
|
|
-
|
|
|
$
|
-
|
|
Exercised
|
|
|
|
-
|
|
|
$
|
-
|
|
Outstanding
at June 30, 2016
|
|
|
|
4,056,274
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at June 30, 2016
|
|
|
|
4,056,274
|
|
|
$
|
0.55
|
|
Note
5 – Related Party Transactions
Two
officers and executives of the Company have entered into note payable agreements with the Company. $63,200 of principal has been
repaid during the six months ended June 30, 2016. The balance of notes payable from related parties at June 30, 2016 is $181,800.
Note
6 – Fair Value Measurements
Accounting
guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring the fair value of
assets and liabilities using a hierarchy system, and defines required disclosures. It clarifies that fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the
market in which the reporting entity transacts business.
The
Company’s balance sheet contains derivative and warrant liabilities that are recorded at fair value on a recurring basis.
The three-level valuation hierarchy for disclosure of fair value is as follows:
Level
1: uses quoted market prices in active markets for identical assets or liabilities.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (continued)
Level
2: uses observable market-based inputs or unobservable inputs that are corroborated by market data.
Level
3: uses unobservable inputs that are not corroborated by market data.
The
fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated
by market data, which require a Level 3 classification. A Black-Scholes Option Valuation Model was used to determine the fair
value. The Company records derivative liability on the condensed consolidated balance sheets at fair value with changes in fair
value recorded in the condensed consolidated statements of operation.
The
following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the six months ended June
30, 2016:
|
|
Fair
Value Measurements Using
|
|
|
Quoted Prices in
|
|
Significant Other
|
|
|
Significant
|
|
|
|
|
|
|
Active Markets for
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
Identical Assets
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
|
|
(Level
1)
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liability
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
1,170,547
|
|
|
$
|
1,170,547
|
|
Total
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
1,170,547
|
|
|
$
|
1,170,547
|
|
Note
7 – Subsequent Events
Subsequent
to June 30, 2016, an aggregate of 2,000,000 shares of restricted common stock were issued for services.
Subsequent
to June 30, 2016, the Company issued 780,916 shares of its restricted common stock and 780,916 Warrants pursuant to a Private
Placement Memorandum and private offerings.
Subsequent
to June 30, 2016, the Company issued 2,263,514 commitment shares of its restricted common stock to Bellridge Capital, LLP pursuant
to the terms of the executed
Note Securities Purchase Agreement and Equity Line Securities
Purchase Agreement.
As
a result of these issuances the total number of shares outstanding is 122,945,087.
Subsequent
to June 30, 2016, the following transactions occurred:
On
July 9, 2016, the Company signed a binding letter agreement (“Letter Agreement”), dated July 8, 2016 for our acquisition
of all of the outstanding shares of
Rio Grande
Neurosciences, Inc. (RGN) from its existing shareholders. The Letter Agreement calls for a purchase price of $30,000,000 for all
of the shares of RGN, of which we have paid $500,000 through the delivery of a promissory note (the “Note”) which
is due on the earlier of January 8, 2017 or the closing of the acquisition of RGN and bears interest at 7.5%. The balance of the
purchase price will be paid as Pursuant to the Letter Agreement, Endonovo will be acquiring RGN for an aggregate purchase price
of $30,000,000, consisting of the Note, $1.0 million in cash, approximately $15 million in Endonovo common stock, the assumption
by us of $8.5 million in senior secured notes and approximately $5 million in Endonovo common stock warrants. Endonovo will also
be committed to paying RGN’s shareholders a 10% royalty on the sale of RGN commercialized products. The Letter Agreement
has been approved by the boards of directors of both the Company and RGN and is binding, but subject to the execution of a definitive
purchase agreement, shareholder approvals and Endonovo raising additional capital. The parties expect to sign a definitive agreement
within the third quarter ending September 30, 2016 and close at the same time or shortly thereafter. The Letter Agreement contemplates
a Board of Directors comprised of three designees from RGN and four from us.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (continued)
The
foregoing is only a brief summary of the Letter Agreement and the Note and the reader is referred to the Letter agreement and
the Note, which are exhibits to our current report on Form 8-K dated July 9, 2016, for a full understanding of their terms and
conditions of those documents.
On
July 12, 2016, the Company entered into several agreements with Bellridge Capital, LP (“BCLP”) relating to two financing
transactions. One transaction is for $1,000,000 of convertible promissory notes and the other is for a $9,000,000 equity line.
The
$1,000,000 note financing involves a Note Securities Purchase Agreement (“NSPA”) and a form of note to be issued by
us on funding. The notes will be purchased at a 5.5% original issue discount, bear interest at 6% per annum, are convertible into
our common stock at a 25% discount to our lowest trading price for the 20 days prior to the conversion. BCLP will not affect any
conversion which will result in its holding more than 4.99% of our common stock and has agreed to limit the sales of our stock
to 22.5% of the trading volume on the date of sale unless the trading volume exceeds $130,000 on a day, in which case the applicable
trading volume limitation will be 30%. The form of note provides for certain penalties for failure to timely deliver stock and
contains other protective provisions for BCLP. $400,000 principal amount of the Note has been funded, the next tranche of $200,000
will be due in 30 days and the final tranche of $400,000, less the commission fee, will be funded upon the effectiveness of a
registration statement that we will file covering the shares of our common stock issuable upon conversion of the notes.
The
$9,000,000 Equity Line is pursuant to an Equity Line Securities Purchase Agreement (“ELSPA”) which provides for a
3% origination fee also required BCLP to purchase shares of our stock which we will put to BCLP at a price equal to 75% of the
lowest bid price for our stock during the 10 trading days preceding the put notice. Our draw downs, or puts, have a minimum amount
of $25,000 and a maximum amount of $500,000 and can be no more than 300% of the average trading volume of our stock during the
ten day pricing period of the put. BCLP is not required to accept any put which will result in their becoming a holder of more
than 4.99% of our outstanding stock and its resales are subject to the same volume limitations as resales of our stock issued
on conversion of the notes. As a result of the restrictions and limitations on our right to put our shares to BCLP, we cannot
give any assurance as to whether we will be able to raise $9,000,000 under the ELSPA. The ELSPA has a term of 36 months or when
BCLP has purchased $9,000,0000 of our stock, whichever is earlier
.
In
connection with the foregoing financing agreements with BPLP, we also signed a Registration Rights Agreement (the “RRA”)
with BCLP which requires us to file a registration statement under the Securities Act of 1933, as amended, at our expense covering
the shares issuable on conversion of the notes and upon our exercise of puts. The funds under the ELSPA will not be available
to us until 30 days after the registration statement is ordered effective.
Aegis
Capital Corp. will receive a 10% commission on all funds raised and warrants to purchase 8% of the aggregate number of shares
sold under the NSPA and the ELSPA bringing the Company’s net proceeds under the NSPA to $900,000.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
Endonovo
Therapeutics, Inc. and Subsidiaries
We
have audited the accompanying consolidated balance sheets of Endonovo Therapeutics, Inc. and Subsidiaries (the “Company”)
as of December 31, 2015 and 2014, and the related consolidated statements of operations, stockholders’ deficit, and cash
flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Endonovo Therapeutics, Inc. and Subsidiaries as of December 31, 2015 and 2014, and the consolidated results
of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in
the United States of America.
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring net losses and has a working
capital deficit at December 31, 2015. These conditions raise substantial doubt about the Company’s ability to continue as
a going concern. Management’s plans regarding those matters also are described in Note 1. The accompanying consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Rose,
Snyder & Jacobs LLP
Encino,
California
April
1, 2016
(except
for Note 2, as to which is dated May 11, 2016)
Endonovo
Therapeutics, Inc. and Subsidiaries
Consolidated
Balance Sheets
As
of December 31,
|
|
2015
|
|
|
2014
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
41,473
|
|
|
$
|
988
|
|
Other
current assets
|
|
|
336,233
|
|
|
|
2,000
|
|
Total current assets
|
|
|
377,706
|
|
|
|
2,988
|
|
|
|
|
|
|
|
|
|
|
Property Plant and Equipment, net
|
|
|
31,657
|
|
|
|
42,601
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
409,363
|
|
|
$
|
45,589
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued expenses
|
|
$
|
3,990,185
|
|
|
$
|
3,167,346
|
|
Short term advances
|
|
|
3,605
|
|
|
|
900
|
|
Notes payable, net of discounts of
$321,961 as of December 31, 2015 and $2,391 as of December 31, 2014
|
|
|
1,261,790
|
|
|
|
1,084,025
|
|
Notes payable -
related parties
|
|
|
245,000
|
|
|
|
291,000
|
|
Derivative liability
|
|
|
3,973,542
|
|
|
|
-
|
|
Current
portion of long term loan
|
|
|
12,031
|
|
|
|
11,677
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
9,486,153
|
|
|
|
4,554,948
|
|
|
|
|
|
|
|
|
|
|
Notes payable, net of discounts of $477,346 as of December 31,
2015
|
|
|
|
|
|
|
|
|
and $0 as of December 31, 2014
|
|
|
27,654
|
|
|
|
-
|
|
Long term loan
|
|
|
16,616
|
|
|
|
28,646
|
|
Acquisition payable
|
|
|
155,000
|
|
|
|
155,000
|
|
Total liabilities
|
|
|
9,685,423
|
|
|
|
4,738,594
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
Shareholders’ deficit
|
|
|
|
|
|
|
|
|
Super AA super voting
preferred stock, $0.0001 par value; 1,000,000 authorized and 1,000 issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.0001 par value;
|
|
|
|
|
|
|
|
|
250,000,000 shares authorized; 104,803,401
and 81,425,957 shares issued and outstanding as of December 31, 2015 and December 31, 2014
|
|
|
10,479
|
|
|
|
8,143
|
|
Additional paid-in
capital
|
|
|
3,773,642
|
|
|
|
1,593,297
|
|
Stock subscriptions
|
|
|
(1,570
|
)
|
|
|
(1,570
|
)
|
Accumulated
deficit
|
|
|
(13,058,611
|
)
|
|
|
(6,292,875
|
)
|
Total shareholders’
deficit
|
|
|
(9,276,060
|
)
|
|
|
(4,693,005
|
)
|
|
|
$
|
409,363
|
|
|
$
|
45,589
|
|
See
accompanying summary of accounting policies and notes to consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Consolidated
Statements of Operations
For
the Years Ended December 31,
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Revenues, net
|
|
$
|
4,265
|
|
|
$
|
24,192
|
|
Cost of goods
sold
|
|
|
2,162
|
|
|
|
15,485
|
|
Gross profit
|
|
|
2,103
|
|
|
|
8,707
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
2,566,764
|
|
|
|
2,199,919
|
|
Loss from operations
|
|
|
(2,564,661
|
)
|
|
|
(2,191,212
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Other income
|
|
|
-
|
|
|
|
1,410,550
|
|
Change in fair value
of derivative liability
|
|
|
(2,531,477
|
)
|
|
|
-
|
|
Loss on extinguishment
of debt
|
|
|
(127,674
|
)
|
|
|
-
|
|
Interest
expense, net
|
|
|
(1,541,924
|
)
|
|
|
(178,832
|
)
|
|
|
|
(4,201,075
|
)
|
|
|
1,231,718
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(6,765,736
|
)
|
|
|
(959,494
|
)
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,765,736
|
)
|
|
$
|
(959,494
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per share
|
|
$
|
(0.07
|
)
|
|
$
|
(0.03
|
)
|
Weighted average common share outstanding:
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
96,844,533
|
|
|
|
30,288,009
|
|
See
accompanying summary of accounting policies and notes to consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Consolidated
Statement of Stockholders Deficit
For
the Years Ended December 31, 2015 and 2014
|
|
Series A
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common Stock
|
|
|
|
|
|
Total
|
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Retained
|
|
|
Shareholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Receivable
|
|
|
Earnings
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2013
|
|
|
1,000
|
|
|
$
|
-
|
|
|
|
834,723
|
|
|
$
|
83
|
|
|
$
|
1,201,085
|
|
|
$
|
-
|
|
|
$
|
(5,333,381
|
)
|
|
$
|
(4,132,213
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
1,362,803
|
|
|
|
136
|
|
|
|
1,434
|
|
|
|
(1,570
|
)
|
|
|
-
|
|
|
|
-
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
29,056,275
|
|
|
|
2,906
|
|
|
|
31,530
|
|
|
|
-
|
|
|
|
-
|
|
|
|
34,436
|
|
Shares issued with notes payable and
extensions
|
|
|
-
|
|
|
|
-
|
|
|
|
5,639,750
|
|
|
|
564
|
|
|
|
18,053
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,617
|
|
Shares issued for conversion of payables
|
|
|
-
|
|
|
|
-
|
|
|
|
5,036,453
|
|
|
|
504
|
|
|
|
4,532
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,036
|
|
Shares issued for conversion of notes
payable and accrued interest
|
|
|
-
|
|
|
|
-
|
|
|
|
1,744,906
|
|
|
|
175
|
|
|
|
301,429
|
|
|
|
-
|
|
|
|
-
|
|
|
|
301,604
|
|
Shares issued for conversion of accrued
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
38,793,547
|
|
|
|
3,879
|
|
|
|
34,915
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,794
|
|
Shares issued for equity line of credit
|
|
|
-
|
|
|
|
-
|
|
|
|
215,000
|
|
|
|
22
|
|
|
|
193
|
|
|
|
-
|
|
|
|
-
|
|
|
|
215
|
|
Shares forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,257,500
|
)
|
|
|
(126
|
)
|
|
|
126
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss for year ended December
31, 2014
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(959,494
|
)
|
|
|
(959,494
|
)
|
Balance December 31, 2014
|
|
|
1,000
|
|
|
$
|
-
|
|
|
|
81,425,957
|
|
|
$
|
8,143
|
|
|
$
|
1,593,297
|
|
|
$
|
(1,570
|
)
|
|
$
|
(6,292,875
|
)
|
|
$
|
(4,693,005
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
752,566
|
|
|
|
74
|
|
|
|
139,017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
139,091
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
6,519,286
|
|
|
|
652
|
|
|
|
728,098
|
|
|
|
-
|
|
|
|
-
|
|
|
|
728,750
|
|
Shares issued with notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
1,855,000
|
|
|
|
185
|
|
|
|
223,366
|
|
|
|
-
|
|
|
|
-
|
|
|
|
223,551
|
|
Shares issued on extension of notes
payable
|
|
|
-
|
|
|
|
-
|
|
|
|
800,000
|
|
|
|
80
|
|
|
|
61,670
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,750
|
|
Shares issued for conversion of notes
payable and accrued interest
|
|
|
-
|
|
|
|
-
|
|
|
|
13,450,592
|
|
|
|
1,345
|
|
|
|
1,028,194
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,029,539
|
|
Net loss for year ended December
31, 2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,765,736
|
)
|
|
|
(6,765,736
|
)
|
Balance December 31, 2015
|
|
|
1,000
|
|
|
$
|
-
|
|
|
|
104,803,401
|
|
|
$
|
10,479
|
|
|
$
|
3,773,642
|
|
|
$
|
(1,570
|
)
|
|
$
|
(13,058,611
|
)
|
|
$
|
(9,276,060
|
)
|
See
accompanying summary of accounting policies and notes to consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
For
the Years Ended December 31,
|
|
2015
|
|
|
2014
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(6,765,736
|
)
|
|
$
|
(959,494
|
)
|
Adjustments to reconcile
net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
|
14,773
|
|
|
|
15,737
|
|
Fair value of notes
issued for services
|
|
|
66,667
|
|
|
|
-
|
|
Fair value of equity
issued for services
|
|
|
728,749
|
|
|
|
34,436
|
|
Non-cash interest
|
|
|
1,374,487
|
|
|
|
18,832
|
|
Change in fair value
of derivative liability
|
|
|
2,531,477
|
|
|
|
-
|
|
Loss (gain) on extinguishment
of liabilities
|
|
|
127,674
|
|
|
|
(1,410,550
|
)
|
Changes in assets
and liabilities:
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
2,000
|
|
|
|
10,000
|
|
Accounts
payable and accrued expenses
|
|
|
900,575
|
|
|
|
1,381,743
|
|
Net
cash used in operating activities
|
|
|
(1,019,334
|
)
|
|
|
(909,296
|
)
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(3,829
|
)
|
|
|
-
|
|
Net
cash used in investing activities
|
|
|
(3,829
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of notes payable
|
|
|
1,036,200
|
|
|
|
935,500
|
|
Proceeds from issuance
of notes payable- related parties
|
|
|
50,000
|
|
|
|
-
|
|
Proceeds from short
term advances
|
|
|
100,755
|
|
|
|
-
|
|
Repayments on short
term advances
|
|
|
(100,950
|
)
|
|
|
(28,471
|
)
|
Proceeds from issuance
of common stock
|
|
|
139,092
|
|
|
|
-
|
|
Payment on notes
payable
|
|
|
(138,000
|
)
|
|
|
-
|
|
Payment on interest
payable
|
|
|
(11,773
|
)
|
|
|
-
|
|
Payment
against long term loan
|
|
|
(11,676
|
)
|
|
|
-
|
|
Net cash provided
by financing activities
|
|
|
1,063,648
|
|
|
|
907,029
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
40,485
|
|
|
|
(2,267
|
)
|
Cash, beginning
of year
|
|
|
988
|
|
|
|
3,255
|
|
Cash, end of
year
|
|
$
|
41,473
|
|
|
$
|
988
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
11,773
|
|
|
$
|
-
|
|
Cash paid for
income taxes
|
|
$
|
500
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
Conversion
of notes payable and accrued interest to common stock
|
|
$
|
544,538
|
|
|
$
|
301,604
|
|
See
accompanying summary of accounting policies and notes to consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2015 and 2014
Note
1 - Nature of Business and Summary of Significant Accounting Policies
Endonovo
Therapeutics, Inc. and Subsidiaries (the “Company” or “ETI”) is primarily focused in the business of biomedical
research and development, particularly in regenerative medicine, which has included the development of the proprietary square
wave form device. The Company has historically been involved with intellectual property licensing and commercialization.
On
January 22, 2014 Hanover Portfolio Acquisitions, Inc. (the "Company") received written consents in lieu of a meeting
of stockholders from holders of a majority of the shares of Common Stock representing in excess of 50% of the total issued and
outstanding voting power of the Company approving an amendment to the Company’s Certificate of Incorporation to change
the name of the Company from “Hanover Portfolio Acquisitions, Inc.” to “Endonovo Therapeutics, Inc.” The
name change was affected pursuant to a Certificate of Amendment (the “Certificate of Amendment”), filed with the Secretary
of State of Delaware on January 24, 2014.
Basis
of Presentation and Principles of Consolidation
The
consolidated financial statements of the Company include the accounts of ETI, IP Resources International, Inc., Aviva Companies
Corporation, and WeHealAnimals, Inc. All significant intercompany accounts and transactions are eliminated in consolidation.
Going
Concern
These
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which
contemplates realization of assets and the satisfaction of liabilities in the normal course of business for a period following
the date of these consolidated financial statements. The Company has recurring net losses and working capital deficits. The Company
has raised approximately $1.3 million in debt and equity financing for the year ended December 31, 2015. The Company is raising
additional capital through debt and equity securities in order to continue the funding of its operations. However, there is no
assurance that the Company can raise enough funds or generate sufficient revenues to pay its obligations as they become due, which
raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying value
of assets or liabilities as a result of this uncertainty. To reduce the risk of not being able to continue as a going concern,
management initiated a private placement offering to raise capital through the sale of its common stock, has engaged a broker/dealer
to raise additional capital and is seeking out profitable companies. Although, uncertainty exists as to whether the Company will
be able generate enough cash from operations to fund the Company’s working capital needs or raise sufficient capital to
meet the Company’s obligations as they become due, no adjustments have been made to the carrying value of assets or liabilities
as a result of this uncertainty.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements
and accompanying notes. Critical estimates include the value of shares issued for services, in connection with notes payable agreements,
in connection with note extension agreements, and as repayment for outstanding debt, the useful lives of property and equipment,
the valuation of the derivative liability, and the valuation of deferred income tax assets. Management uses its historical records
and knowledge of its business in making these estimates. Actual results could differ from these estimates.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
Property
plant and equipment
Property,
plant and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives
of the assets, which range between five and seven years. Expenditures for repairs and maintenance are expensed as incurred.
Impairment
of Long-lived Assets
The
Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying
amount of assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment
test is based on a comparison of the undiscounted future cash flows generated from the asset group to the recorded value of the
asset group. If impairment is indicated, the asset is written down to its estimated fair value.
Revenue
Recognition
The
Company recognizes revenue from its technology licensing and commercialization activities in accordance with paragraph 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable
and earned.
The
Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence
of an arrangement exists, (ii) the services have been rendered to the customer and accepted by the customer as completed, and
(iii) collectability is reasonably assured.
Stock-Based
Compensation
The
Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes it as expense,
net of estimated forfeitures, over the vesting or service period, as applicable, of the stock award using the straight-line method.
When our common stock is thinly traded, we have made estimates of the fair value of the common stock based not only on market
prices but other factors such as financial condition and results of operations.
Income
Taxes
The
Company records a tax provision for the anticipated tax consequences of its reported results of operations. The provision for
income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized
for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and
liabilities, and for operating losses and income tax credit carryforwards. Deferred tax assets and liabilities are measured using
the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to
be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely
than not to be realized.
The
Company has adopted ASC Topic 740, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements. ASC Topic 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition
and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition of
tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition.
The Company has determined that the adoption did not result in the recognition of any liability for unrecognized tax benefits
and that there are no unrecognized tax benefits that would, if recognized, affect the Company’s effective tax rate.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
Net
Income (Loss) per Share
Basic
net income (loss) per share is calculated based on the net income (loss) attributable to common shareholders divided by the weighted
average number of shares outstanding for the period excluding any dilutive effects of options, warrants, unvested share awards
and convertible securities. Diluted net income (loss) per common share assumes the conversion of all dilutive securities using
the if-converted method, and assumes the exercise or vesting of other dilutive securities, such as options, warrants and restricted
stock using the treasury stock method, when dilutive. For the year ended December 31, 2014 the Company did not have dilutive securities.
For the year ended December 31, 2015, the Company had 1,706,390 of weighted-average common shares relating to the convertible
debt, under the if-converted method, however, these shares are not dilutive because the Company recorded a loss during the fiscal
year.
Reclassifications
Certain
reclassifications have been made to the 2014 financial statements in order for them to conform to the 2015 presentation. Such
reclassifications have no impact on the Company’s financial position or results of operations.
Fair
Value of Financial Instruments
Accounting
guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring the fair value of
assets and liabilities using a hierarchy system, and defines required disclosures. It clarifies that fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the
market in which the reporting entity transacts business.
The
Company’s balance sheet contains derivative and warrant liabilities that are recorded at fair value on a recurring basis.
The three-level valuation hierarchy for disclosure of fair value is as follows:
Level
1: uses quoted market prices in active markets for identical assets or liabilities.
Level
2: uses observable market-based inputs or unobservable inputs that are corroborated by market data.
Level
3: uses unobservable inputs that are not corroborated by market data.
The
fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated
by market data, which require a Level 3 classification. A Black-Sholes option valuation model was used to determine the fair value.
The Company records derivative liability on the condensed consolidated balance sheets at fair value with changes in fair value
recorded in the condensed consolidated statements of operation.
The
following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the year ended December
31, 2015:
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
|
|
Fair
Value Measurements Using
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
Active Markets for
|
|
|
Other Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,973,542
|
|
|
$
|
3,973,542
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,973,542
|
|
|
$
|
3,973,542
|
|
The
following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the year ended December
31, 2015:
|
|
Derivative
|
|
|
|
Liability
|
|
Balance December 31, 2014
|
|
$
|
-
|
|
|
|
|
|
|
Issuance
of convertible debt
|
|
|
1,922,121
|
|
Settlements by debt
extinguishment
|
|
|
(480,056
|
)
|
Change
in estimated fair value
|
|
|
2,531,477
|
|
|
|
|
|
|
Balance December 31, 2015
|
|
$
|
3,973,542
|
|
Derivative
Liability
The
Company issued twelve Variable Debentures during the year ended December 31, 2015, which contained variable conversion rates based
on unknown future prices of the Company’s common stock. This resulted in a derivative liability. The Company measures the
derivative liability using the Black-Scholes option valuation model using the following assumptions:
|
|
For
Year Ending December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Expected term
|
|
9 months - 3 years
|
|
|
None
|
|
Exercise price
|
|
$0.03-$0.52
|
|
|
None
|
|
Expected volatility
|
|
159%-242%
|
|
|
None
|
|
Expected dividends
|
|
None
|
|
|
None
|
|
Risk-free interest rate
|
|
0.25%-1.06%
|
|
|
None
|
|
Forfeitures
|
|
None
|
|
|
None
|
|
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
The
assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties
and the application of management’s judgment. As a result, if factors change, including changes in the market value of the
Company’s common stock, managements’ assessment or significant fluctuations in the volatility of the trading market
for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.
The
Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded
as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock
price, which is subject to significant fluctuation and is not under its control, and the assessment of volatility. The resulting
effect on net loss is therefore subject to significant fluctuation and will continue to be so until the Company’s Variable
Debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming
all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash
income when its stock price decreases.
Recent
Accounting Standard Updates
In
August 2014, the FASB issued FASB ASU2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure
of Uncertainties about an Entity’s Ability to Continue as a Going Concern. FASB ASU 2014-15 changes to the disclosure of
uncertainties about an entity’s ability to continue as a going concern. These changes require an entity’s management
to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s
ability to continue as a going concern within one year after the date that financial statements are issued. Substantial doubt
is defined as an indication that it is probable that an entity will be unable to meet its obligations as they become due within
one year after the date that financial statements are issued. If management has concluded that substantial doubt exists, then
the following disclosures should be made in the financial statements: (i) principal conditions or events that raised the
substantial doubt, (ii) management’s evaluation of the significance of those conditions or events in relation to the
entity’s ability to meet its obligations, (iii) management’s plans that alleviated the initial substantial doubt
or, if substantial doubt was not alleviated, management’s plans that are intended to at least mitigate the conditions or
events that raise substantial doubt, and (iv) if the latter in (iii) is disclosed, an explicit statement that there
is substantial doubt about the entity’s ability to continue as a going concern. These changes become effective for the Company
for the 2016 annual period. Management is evaluating the impact of the adoption of these changes will have on the consolidated
financial statements. Subsequent to adoption, this guidance will need to be applied by management at the end of each annual period
and interim period therein to determine what, if any, impact there will be on the consolidated financial statements in a given
reporting period.
In
April 2015, the FASB issued ASU No 2015-3, Simplifying the Presentation of Debt Issuance Costs. This update changes the presentation
of debt issuance costs in the balance sheet. ASU 2015-03 requires debt issuance costs related to a recognized debt obligation
to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than
being presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. In August 2015,
the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit
Arrangements”. This ASU clarified guidance in ASC 2015-03 stating that the SEC staff would not object to a company presenting
debt issuance costs related to a line-of-credit arrangement on the balance sheet as a deferred asset, regardless of whether there
were any outstanding borrowings at period-end. This update is effective for annual and interim periods beginning after December
15, 2015, which will require us to adopt these provisions in the first quarter of 2016. This update will be applied on a retrospective
basis, wherein the balance sheet of each period presented will be adjusted to reflect the effects of applying the new guidance.
The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
In
November 2015, the FASB issued ASU No 2015-17, Income Taxes (Topic 740). The amendments in ASU 2015-17 change the requirements
for the classification of deferred taxes on the balance sheet. Currently, GAAP requires an entity to separate deferred income
tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the
presentation of deferred income taxes, the amendments in this ASU require that deferred tax liabilities and assets be classified
as noncurrent in a classified statement of financial position. The pronouncement is effective for fiscal years and interim periods
within those fiscal years beginning after December 15, 2016. Earlier application is permitted for all entities as of the beginning
of an interim or annual reporting period. The Company has early adopted this pronouncement for the fiscal reporting period ended
December 31, 2015, and has reclassified the presentation of deferred income taxes in the prior period to conform with the current
year classification in the consolidated balance sheets. As a result of the Company having recognized a valuation reserve for the
entire deferred tax liability balance at December 31, 2014 and 2015, there is no impact of the presentation of deferred income
taxes in our financial statements.
In
January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-01, Financial Instruments –
Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The update intends to enhance
the reporting model for financial instruments to provide users of financial statements with more decision-useful information and
addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new standard
affects all entities that hold financial assets or owe financial liabilities. For public business entities, the amendments in
this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
Management is evaluating the impact of the adoption of these changes will have on the consolidated financial statements.
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases
in "Leases (Topic 840)" and generally requires all leases to be recognized in the consolidated balance sheet.
ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018; early adoption is permitted.
The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. The Company is currently evaluating the
impact of the adoption of this standard on its consolidated financial statements.
Note
2 – Restatement of Previously Issued Financial Statements
The
Company subsequently discovered an inadvertent omission of two consulting agreements entered into in November and December 2015
which contained promissory notes with conversion privileges based on an undeterminable number of common stock shares as payment
for services under the agreements. These financial statements and notes have been updated to properly reflect these transactions.
The
following tables present a summary of the effects of the restatement adjustments on the Company’s consolidated balance sheet
at December 31, 2015 and the consolidated statement of operations and cash flows for the year ended December 31, 2015:
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
|
Consolidated
Balance Sheet
|
|
|
As Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
As
Restated
|
|
As of December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
$
|
2,900
|
|
|
$
|
333,333
|
|
|
$
|
336,233
|
|
Total current assets
|
|
$
|
44,373
|
|
|
$
|
333,333
|
|
|
$
|
377,706
|
|
Total assets
|
|
$
|
76,030
|
|
|
$
|
333,333
|
|
|
$
|
409,363
|
|
Derivative liability
|
|
$
|
1,970,241
|
|
|
$
|
2,003,301
|
|
|
$
|
3,973,542
|
|
Total current liabilities
|
|
$
|
7,482,852
|
|
|
$
|
2,003,301
|
|
|
$
|
9,486,153
|
|
Notes payable, net of discounts (non-current)
|
|
$
|
10,987
|
|
|
$
|
16,667
|
|
|
$
|
27,654
|
|
Total liabilities
|
|
$
|
7,665,455
|
|
|
$
|
2,019,968
|
|
|
$
|
9,685,423
|
|
Accumulated deficit
|
|
$
|
(11,371,976
|
)
|
|
$
|
(1,686,635
|
)
|
|
$
|
(13,058,611
|
)
|
Total shareholders’ deficit
|
|
$
|
(7,589,425
|
)
|
|
$
|
(1,686,635
|
)
|
|
$
|
(9,276,060
|
)
|
|
|
Consolidated
Statement of Operations
|
|
|
|
As Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
As
Restated
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
2,500,097
|
|
|
$
|
66,667
|
|
|
$
|
2,566,764
|
|
Loss from operations
|
|
$
|
(2,497,994
|
)
|
|
$
|
(66,667
|
)
|
|
$
|
(2,564,661
|
)
|
Interest expense, net
|
|
$
|
(1,348,244
|
)
|
|
$
|
(193,680
|
)
|
|
$
|
(1,541,924
|
)
|
Change in fair value of derivative liability
|
|
$
|
(1,105,189
|
)
|
|
$
|
(1,426,288
|
)
|
|
$
|
(2,531,477
|
)
|
Total other income (expense)
|
|
$
|
(2,581,107
|
)
|
|
$
|
(1,619,968
|
)
|
|
$
|
(4,201,075
|
)
|
Net loss
|
|
$
|
(5,079,101
|
)
|
|
$
|
(1,686,635
|
)
|
|
$
|
(6,765,736
|
)
|
LOSS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.05
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.07
|
)
|
|
|
Consolidated
Statement of Cash Flows
|
|
|
|
As Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
As
Restated
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,079,101
|
)
|
|
$
|
(1,686,635
|
)
|
|
$
|
(6,765,736
|
)
|
Fair value of notes issued for services
|
|
$
|
-
|
|
|
$
|
66,667
|
|
|
$
|
66,667
|
|
Non-cash interest
|
|
$
|
1,180,807
|
|
|
$
|
193,680
|
|
|
$
|
1,374,487
|
|
Change in fair value of derivative liability
|
|
$
|
1,105,189
|
|
|
$
|
1,426,288
|
|
|
$
|
2,531,477
|
|
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
Note
3 - License Agreements
CPAIR,
Inc.
Effective
November 11, 2011, IPR entered into an Exclusive License Agreement with CPAIR, Inc. (“CPaiR”) to acquire the rights
to market and distribute certain intellectual property on a worldwide basis except for the United States. The terms of the license
agreement shall be for the greater of the life of the provisional patents, for the technology, or twenty-one years. The term shall
automatically renew for an additional one year term unless either party notifies the other that it does not desire to renew the
license agreement ninety days before the then-current term of the license agreement expires. Under the Exclusive License Agreement,
if IPR enters into a sublicense agreement, IPR is required to pay CPaiR 20% of royalties received by IPR. If IPR elects to distribute
the product, without sublicenses, then CPaiR receives 10% of gross revenues. Also, IPR is required to pay to CPaiR 20% of any
upfront license fee actually received by IPR in connection with the CPaiR intellectual property and 20% of the quarterly revenue
actually received by IPR in connection with such intellectual property. If IPR does not pay a minimum of $1,000,000 to CPaiR within
a period of three years from the Effective date, the license agreement will terminate. IPR has the right to pay the difference
between the amounts paid by IPR and the minimum payment of $1,000,000. Under the terms of the agreement, IPR was not required
to pay an upfront license fee.
American
Cryostem Corp.
Effective
January 27, 2012, IPR entered into a License Agreement with American Cryostem Corp. ("ACSC") to acquire the rights to
and to distribute certain intellectual property in China and Brazil. The term of the License Agreement shall be for one year.
The term shall automatically renew for an additional one-year term unless either party notifies the other that it does not desire
to renew the License Agreement. Under the License Agreement, any distributer or sub-licensee, engaged by IPR, must pay 25% of
its quarterly gross revenue which shall be split 50/50 between IPR and ACSC. In the event that IPR receives any upfront license
fee from a sub-licensee, IPR is required to pay to ACSC 50% of that upfront license fee. Under the terms of the agreement, IPR
was not required to pay an upfront license fee.
Note
4 - Property and Equipment
The
following is a summary of equipment, at cost, less accumulated depreciation at December 31, 2015 and 2014:
|
|
As
of December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Autos
|
|
$
|
64,458
|
|
|
$
|
64,458
|
|
Medical equipment
|
|
|
5,000
|
|
|
|
5,000
|
|
Other equipment
|
|
|
8,774
|
|
|
|
4,945
|
|
|
|
|
78,232
|
|
|
|
74,403
|
|
Less accumulated
depreciation
|
|
|
46,575
|
|
|
|
31,802
|
|
|
|
$
|
31,657
|
|
|
$
|
42,601
|
|
Depreciation
expense for the years ended December 31, 2015 and 2014 was $14,773 and $15,737, respectively. Repairs and maintenance are charged
to expense as incurred while improvements are capitalized. Upon the sale, retirement or disposal of fixed assets, the accounts
are relieved of the cost and the related accumulated depreciation with any gain or loss recorded to the consolidated statements
of operations.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
Note
5 - Notes payable and Long Term Loan
Notes
Payable
In
October 2013, the Company initiated a private placement for up to $500,000 of financing by the issuance of notes payable
at a minimum of $25,000, one unit. The notes bear interest at 10% per annum and are due and payable with accrued interest one
year from issuance. Also, the Company agreed to issue 125,000 shares of its common stock for each unit. In July 2014, the Company
initiated a private placement for up to $500,000 of financing by the issuance of notes payable at a minimum of $25,000, one
unit. The notes bear interest at 10% per annum and are due and payable with accrued interest one year from issuance. Also, the
Company agreed to issue 50,000 shares of its common stock for each unit. In October 2014, the Company initiated a private placement
for up to $500,000 of financing by the issuance of notes payable at a minimum of $25,000, one unit. The notes bear interest
at 10% per annum and are due and payable with accrued interest one year from issuance. Also, the Company agreed to issue 50,000
shares of its common stock for each unit. In August 2015, the Company initiated a private placement for up to $500,000 of
financing by the issuance of notes payable at a minimum of $25,000, one unit. The notes bear interest at 10% per annum and are
due and payable with accrued interest one year from issuance. Also, the Company agreed to issue 100,000 shares of its common stock
for each unit. At issuance of each private placement note payable agreement, the Company records a discount at the greater of
the principal balance of the note payable or the fair value of the common stock issued in connection with the note. The discount
is amortized over the life of each note, one year. During the year ended December 31, 2015, the Company has issued promissory
notes for an aggregate principal of approximately $615,000 under these private placements, and recorded discounts amounting to
$223,551 in connection with these. During the year ended December 31, 2014, the Company issued promissory notes for an aggregate
principal of approximately $753,000, and recorded discounts amounting to $6,976 in connection with these. As of December 31, 2015,
notes payable outstanding under these private placements are $1,688,750.
As
of December 31, 2015, the Company had notes payable to related parties amounting to$245,000. Refer to Note 7 – Related Party
Transactions.
During
the year ended December 31, 2015, the Company issued twelve Convertible Debentures (“Variable Debentures”) for $921,250
with original terms of 9 months to three years and interest rates ranging from 0% to 10% which contain variable conversion rates
with a discount of ranging from 25% to 53% of the Company’s common stock based on the terms included in the Variable Debentures.
Certain of the Variable Debentures contain prepayment options which enable the Company to prepay the notes for periods of 0-180
days subsequent to issuance at premiums ranging from 120% to145%. The Company recorded a derivative liability as a result of the
conversion feature. The derivative liability was allocated between a note discount, up to the value of the Variable Debenture,
and interest expense for the excess, and the note discount is being amortized over the life of the Variable Debenture. During
the year ended December 31, 2015, the Company recorded $859,071 in discounts on these Variable Debentures. As of December 31,
2015, ten of these Variable Debentures are outstanding, with a gross amount of $783,250.
During
July 2015, the Company entered into a settlement agreement with the holder of a $100,000 Variable Debenture wherein the Note was
exchanged for 900,000 shares of common stock, with the restriction that the shares may be sold from time to time at various prices
of $0.60 and above. During December 2015, the Company entered into a settlement agreement with the holder of a $38,000 Variable
Debenture wherein the Company repaid in full the Note balance with a cash payment of $56,590. In accordance with ASC 470-50, Debt
Modifications and Extinguishments, the Company recognized a $127,674 net loss on extinguishment of debt in connection with these
settlement agreements.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
|
|
As
of December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Notes payable at beginning
of period
|
|
$
|
1,377,416
|
|
|
$
|
710,072
|
|
Notes payable issued
|
|
|
1,586,250
|
|
|
|
935,500
|
|
Repayments of notes payable in cash
|
|
|
(138,000
|
)
|
|
|
-
|
|
Less amounts
converted to stock
|
|
|
(491,915
|
)
|
|
|
(268,156
|
)
|
Notes payable at end of period
|
|
|
2,333,751
|
|
|
|
1,377,416
|
|
Less debt discount
|
|
|
(799,307
|
)
|
|
|
(2,391
|
)
|
|
|
$
|
1,534,444
|
|
|
$
|
1,375,025
|
|
|
|
|
|
|
|
|
|
|
Notes payable
issued to related parties
|
|
$
|
245,000
|
|
|
$
|
291,000
|
|
Notes payable
issued to non-related parties
|
|
$
|
1,289,444
|
|
|
$
|
1,084,025
|
|
The
maturity dates on the notes payable are as follows:
Twelve
months ending,
|
|
Non-related
parties
|
|
|
Related
parties
|
|
|
Total
|
|
December 31, 2016
|
|
$
|
1,583,751
|
|
|
$
|
245,000
|
|
|
$
|
1,828,751
|
|
December 31, 2017
|
|
$
|
455,000
|
|
|
$
|
-
|
|
|
$
|
455,000
|
|
December 31,
2018
|
|
$
|
50,000
|
|
|
$
|
-
|
|
|
$
|
50,000
|
|
Total
|
|
$
|
2,088,751
|
|
|
$
|
245,000
|
|
|
$
|
2,333,751
|
|
Long
Term Loan
The
Company has financed the purchase of an automobile. The maturity dates on the loan are as follows:
Twelve months ending,
|
|
|
|
|
December
31, 2016
|
|
$
|
12,031
|
|
December 31,
2017
|
|
$
|
12,395
|
|
December
31, 2018
|
|
$
|
4,221
|
|
|
|
$
|
28,647
|
|
|
|
|
|
|
Current portion
|
|
$
|
12,031
|
|
Long term
portion
|
|
$
|
16,616
|
|
Acquisition
Payable
In
connection with the Company’s acquisition of IPR in 2012, IPR recorded a $155,000 long-term acquisition payable for costs
that were not paid at closing. These payable is non-interest bearing and IPR agreed to make payments up to 25% of the proceeds
from any private placement or gross profits earned by IPR until the obligation is satisfied. The percentage of the proceeds to
be paid is at the sole discretion of IPR’s Chief Executive Officer and the ex-Chief Executive Officer of the Company based
on the liquidity of the Company.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
Effective
Interest Rate
During
the year ended December 31, 2015 and 2014, the Company’s effective interest rate was 95% and 11%, respectively.
Note
6 - Shareholders’ Deficit
Reverse
Spilt
On
April 28, 2014, we concluded the process of changing our corporate name to Endonovo Therapeutics, Inc. and began trading under
the symbol ENDV. The Company enacted a reverse stock split effective May 15, 2014. All share and per share numbers in this report
have been adjusted for the reverse stock split.
Common
Stock
The
Company has entered into consulting agreements with various consultants for service to be provided to the Company. The agreements
stipulate a monthly fee and a certain number of shares that the consultant vests in over the term of the contract. The consultant
is issued a prorated number of shares of common stock at the beginning of the contract, which the consultant earns over a three-month
period. At the anniversary of each quarter, the consultant is issued a new allotment of common stock. In accordance with ASC 505-50
– Equity-Based Payment to non-Employees, the common stock shares issued to the consultant are valued upon their vesting,
with interim estimates of value as appropriate during the vesting period.
During
2014 and the six months ended June 30, 2015, the Company revalued the shares based on low trading volume to $0.001. The fair value
of stock issued for services and as for non-cash consideration starting on July 1, 2015 was based on the market price of the stock
on the date of grant since significant trading started at that time.
During
the year ended December 31, 2015, the Company granted 6,519,286 shares for services performed by consultants and recorded expense
of $728,750.
During
the year ended December 31, 2015, the Company issued 1,855,000 shares of common stock to the purchasers of notes. The share issuance
was valued at $223,551. The fair value of stock issued to the purchasers of
notes
starting on July 1, 2015 was based on the market price of the stock on the date of grant since significant trading started at
that time.
During
the year ended December 31, 2015, the Company issued 800,000 shares of its common stock at a fair value of $61,750 on the extension
of notes payable. The fair value of stock issued on the extension of notes starting on July 1, 2015 was based on the market price
of the stock on the date of grant since significant trading started at that time.
In
addition, during the year ended December 31, 2015, the Company issued 13,450,592 shares of common stock on the conversion of notes
in an amount of $491,915 and accrued interest of $52,623.
The
Variable Debentures issued by the Company each have a provision requiring the Company to reserve a variable amount of shares of
common stock for when the holder of the Variable Debenture converts. As of December 31, 2015, the Company has reserved 7,527,853
of common shares related to the outstanding debentures.
On
January 15, 2015 the Company entered into an Equity Purchase Agreement (the “EPA” with Kodiak Capital Group. LLC (“KCG”)
and, pursuant thereto caused a registration statement on Form S-1 to become effective under the Securities Act of 1933, as amended.
To date the Company issued 2,000,000 shares of common stock to KCG and has received $81,738 in connection with KCG’s sale
of approximately 98,750 shares of common stock under the EPA. The Company has demanded (among other things) (i) an accounting
of shares sold by KCG under the EPA, (ii) a return of 1,901,250 shares that KCG holds against possible future put notices to its
transfer agent for cancellation as the Company does not anticipate future put notices; and (iii) return of the 215,000 shares
KCG received as a commitment fee for the EPA. As of the date of this filing, KCG has not complied with any of these demands and
has twice improperly sought to remove all transfer restrictions from the 215,000 shares, which have a minimum selling price of
$0.50 per share until June 30, 2016. KCG has sent written communications to the Company regarding the mechanisms and procedures
for returning the 1,901,250 shares, but has not followed through.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
As
of December 31, 2014, the total stock awards granted were 15,292,574 shares with 3,253,264 shares vested and issued, 376,324 forfeited
with the 11,662,986 shares unvested. The total expense recorded for the year ended December 31, 2014 was $2,991.
During
the year ended December 31, 2014, the Company issued an additional 26,064,490 shares of its common stock at a fair value of $26,064
for services rendered.
During
the year ended December 31, 2014, the Company had the following share issuances of its common stock at a current market value
of $0.001 per share:
●
Sold 1,362,803 shares of its common stock for total consideration of $1,570. The Company has recorded
the purchase price as a stock subscription receivable, which has been classified as stockholders equity as the Company has not
received the consideration as of the issuance of these financial statements.
●
Converted $5,036 of its accounts payable into 5,036,453 shares of its common stock.
●
Converted $38,794 of accrued compensation into 38,793,547 shares of its common stock
Series
AA Preferred Shares
On
February 22, 2013, the Board of Directors of the Company authorized an amendment to the Company’s Articles of Incorporation,
as amended (the “Articles of Incorporation”), in the form of a Certificate of Designation that authorized the issuance
of up to one million (1,000,000) shares of a new series of preferred stock, par value $0.0001 per share, designated “Series
AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
Each
holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to one hundred thousand (100,000) votes
for each share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled
to vote at each meeting of stockholders of the Company. As of December 31, 2015, there were 1,000 shares of Series AA Preferred
stock outstanding.
Note
7 – Related Party Transactions
From
time-to-time officers of the Company advance monies to the Company to cover costs. During the year ended December 31, 2015, officers
advanced $100,755 of funds to the Company of which $100,950 were repaid during the year. The balance of short-term advances due
to two officers and executives of the Company at December 31, 2015 is $3,605.
During
the year ended December 31, 2015, an officer and executive of the Company entered into a note payable agreement for $50,000, and
the principal and interest of a $96,000 note payable to another related party was converted into 350,000 shares of common stock.
During the year ended December 31, 2014, officers and executives of the Company entered into note payable agreements amounting
to $195,000. The balance of notes payable from two officers and executives of the Company at December 31, 2015 is $245,000.
Endonovo
Therapeutics, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements (continued)
Note
8 - Income taxes
The
Company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions. For jurisdictions
in which tax filings are prepared, the Company is subject to income tax examinations by state tax authorities and federal tax
authorities for all tax years.
The
deferred tax assets are mainly comprised of net loss carryforwards. As of December 31, 2015, the Company had approximately $5,080,000
of federal net operating loss carryforwards, that it can use to offset a certain amount of taxable income in the future. These
federal net operating loss carryforwards expire through 2035. The resulting deferred tax asset is offset by a 100% valuation allowance
due to the uncertainty of its realization.
A
reconciliation of the provision for income tax expense with the expected income tax computed by applying the federal statutory
income tax rate to income before provision for income taxes was as follows for the years ended December 31, 2015 and 2014:
|
|
2015
|
|
|
2014
|
|
Income tax computed at federal
statutory tax rate
|
|
|
-34.0
|
%
|
|
|
-34.0
|
%
|
Change in valuation allowance
|
|
|
39.8
|
%
|
|
|
39.8
|
%
|
State taxes, net of federal benefit
|
|
|
-5.8
|
%
|
|
|
-5.8
|
%
|
Total
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
primary difference between income tax expense attributable to continuing operations and the amount of income tax expense that
would result from applying domestic federal statutory rates to income before provision for income taxes relates to the change
in the valuation allowance.
The
Company has adopted the accounting standards that clarify the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company
must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the
technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to
include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for
the years ended December 31, 2015 and 2014.
Note
9 - Commitments and Contingencies
Legal
matters
The
Company may become involved in various legal proceedings in the normal course of business.
Note
10 - Subsequent Events.
Subsequent
to December 31, 2015, an aggregate of 901,504 shares of restricted common stock were issued as compensation to independent contractors.
Subsequent
to December 31, 2015, the Company issued $302,500 in Convertible with 300,000 warrants
Subsequent
to December 31, 2015, the Company raised $376,250 from 10 investors as part of a Private Placement and issued 975,827 restricted
shares of common stock with 975,827 warrants.
Subsequent
to December 31, 2015, the Company paid off $154,303 of Convertible Notes outstanding as of December 31, 2015.
Subsequent
to December 31, 2015, the Company converted $225,000 in Notes Payable outstanding at December 31, 2015 through the issuance of
876,150 of restricted shares of common stock and 876,150 warrants.
As
a result of these issuances the total number of shares outstanding is 108,026,664.
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item
13 - Other Expenses of Issuance and Distribution
We
estimate that expenses in connection with the distribution described in this Registration Statement (other than brokerage commissions,
discounts or other expenses relating to the sale of the shares by the selling security holders) will be as set forth below. We
will pay all of the expenses with respect to the distribution, and such amounts, with the exception of the Securities and Exchange
Commission registration fee, are estimates.
|
|
Amount
To be Paid
|
|
SEC registration fee
|
|
$
|
295.63
|
|
Accounting fees and expenses
|
|
$
|
*
|
|
Legal fees and expenses
|
|
$
|
*
|
|
Printing and related expenses
|
|
$
|
*
|
|
Transfer agent
fees and expenses
|
|
$
|
*
|
|
Miscellaneous
|
|
$
|
*
|
|
Total
|
|
$
|
*
|
|
*
To be provided by amendment.
Item
14 - Indemnification of Directors and Officers
The
Certificate of Incorporation and the Bylaws of our Company provide that our Company will indemnify, to the fullest extent permitted
by the Delaware law, each person who is or was a director, officer, employee or agent of our Company, or who serves or served
any other enterprise or organization at the request of our Company. Pursuant to Nevada law, this includes elimination of liability
for monetary damages for breach of the directors’ fiduciary duty of care to our Company and its stockholders. These provisions
do not eliminate the directors’ duty of care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject
to liability for breach of the director’s duty of loyalty to our Company, for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Nevada law. The
provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
We
have not entered into any agreements with our directors and executive officers that require us to indemnify these persons against
expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a derivative
action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason
of the fact that the person is or was a director or officer of our Company or any of our affiliated enterprises.
We
do not maintain any policy of directors’ and officers’ liability insurance that insures its directors and officers
against the cost of defense, settlement or payment of a judgment under any circumstances.
Item
15 - Recent Sales of Unregistered Securities
Unregistered
Sales of Equity Securities
During
the year ended December 31, 2015, we issued the following unregistered equity securities:
Number of
|
|
|
|
|
|
|
Common Shares
|
|
|
Source of
|
|
|
|
Issued
|
|
|
Payment
|
|
Amount
|
|
|
1,000,000
|
|
|
Services
|
|
$
|
78,750
|
|
|
1,000,000
|
|
|
Note issuance
|
|
$
|
54,850
|
|
|
350,000
|
|
|
Note conversion
|
|
$
|
116,400
|
|
|
250,000
|
|
|
Note extension
|
|
$
|
17,500
|
|
|
250,000
|
|
|
Cash
|
|
$
|
56,950
|
|
The
above issuances of were exempt from registration pursuant to Section 4(2), and/or Regulation D promulgated under the Securities
Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance securities by us did
not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial
number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did
not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these stockholders
had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a
legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these
securities would not be immediately redistributed into the market and therefore not be part of a “public offering.”
Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities
Act for this transaction.
During
the six months ending June 30, 2016 we issued the following unregistered equity securities:
Number of
|
|
|
|
|
|
|
Common Shares
|
|
|
Source of
|
|
|
|
Issued
|
|
|
Payment
|
|
Amount
|
|
|
3,352,948
|
|
|
Cash
|
|
$
|
818,330
|
|
|
4,833,246
|
|
|
Services
|
|
$
|
1,627,854
|
|
|
70,110
|
|
|
Note Extensions
|
|
$
|
25,651
|
|
|
189,807
|
|
|
Lock Up Agreements
|
|
$
|
85,124
|
|
|
4,651,145
|
|
|
Note Conversions
|
|
$
|
1,785,621
|
|
Item
16 - Exhibits
(a)(3)
|
Exhibits
|
|
|
|
The
following exhibits are filed as part of this report:
|
Exhibit
No.
|
|
Description
|
|
|
|
2.1
|
|
Share
Exchange Agreement, dated March 14, 2012 between the Company and IP Resources International, Inc.(1)
|
3.1
|
|
Articles
of Incorporation (2)
|
3.2
|
|
By-Laws
(2)
|
3.3
|
|
Agreement
and Plan of Merger (Delaware reincorporation) (2)
|
3.4
|
|
Certificate
of Designation (Super AA Voting Preferred) (3)
|
3.5
|
|
Articles
of Amendment -Name Change (4)
|
3.6
|
|
Articles
of Amendment – Increase Authorized Shares (4)
|
3.7
|
|
Articles
of Amendment – Reverse Stock Split
(8)
|
4.1
|
|
Specimen
Common Stock Certificate.
(8)
|
5.1
|
|
Opinion
regarding Legality (8)
|
10.1
|
|
Form
of Note (6)
|
10.2
|
|
Securities
Purchase Agreement Note (6)
|
10.3
|
|
Securities
Purchase Agreement Equity Credit Line (6)
|
10.4
|
|
Registration
Rights Agreement (6)
|
10.5
|
|
Acquisition
Agreement between the Company and We Heal Animals, Inc. (7)
|
10.6
|
|
Amended and Restated Securities
Repurchase Agreement Note (8)
|
21.1
|
|
Subsidiaries
(8)
|
23.1
|
|
Consent
of Rose Snyder & Jacobs (8)
|
23.2
|
|
Consent
of Frank J. Hariton, Esq. (included in exhibit 5.1)
|
(1)
Incorporated by reference to the exhibit to current report on Form 8-K filed with the Securities and Exchange Commission on March
21, 2012.
(2)
Incorporated by reference to the like numbered exhibit to the registration statement filed with the Securities and Exchange Commission
on September 22, 2011.
(3)
Incorporated by reference to the like numbered exhibit to the Annual Report on Form 10-K for the year ended December 31, 2012.
(4)
Incorporated by reference to Exhibit 3.1 to Form 8-K filed with the Securities and Exchange Commission on January 24, 2014
(5)
To be filed by amendment
(6)
Incorporated by reference to like numbered exhibits to Current Report Form 8-K filed July 15, 2016
(7)
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed November 19, 2013
(8)
Filed herewith
Item
17 - Undertakings
A.
Rule 415 Offering The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective
Registration Statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed
on the Registration Statement or any material change to such information in the Registration Statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose
of determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The
undersigned registrant undertakes that in a primary offering of the securities of the undersigned registrant pursuant to this
Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (230.424 of this chapter); (ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material
information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
B.
Request for Acceleration of Effective Date Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person
of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly authorized this amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Woodland Hills, State of California on
October 6, 2016 .
Endonovo
Therapeutics, Inc.
|
|
|
|
By
|
/s/
Alan Collier
|
|
|
Alan
Collier, CEO
|
|
Pursuant
to the requirements of the Securities Act of 1933, this Amendment to this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Alan Collier
|
|
CEO
and sole director
|
|
10/06/2016
|
Alan
Collier
|
|
(Principal
Executive Financial and Accounting Officer)
|
|
|