ENDRA Life Sciences Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements As used in this Quarterly Report on Form 10-Q (this “Form 10-Q”), unless the context otherwise requires, the terms “we,” “us,” “our,” “ENDRA” and the “Company” refer to ENDRA Life Sciences Inc., a Delaware corporation, and its direct and indirect subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical financial statements and related notes thereto in this Form 10-Q. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “would,” “seek,” “intend,” “plan,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this Form 10-Q, including those regarding our strategies, prospects, financial condition, operations, costs, plans and objectives, are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expectations for revenues, cash flows and financial performance, the anticipated results of our development efforts and the timing for receipt of required regulatory approvals and product launches. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in, or implied by, the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: expectations regarding our Digital Asset Treasury (“DAT”) strategy and ability to execute such strategy successfully, our limited commercial and DAT experience; limited cash and history of losses; our ability to obtain adequate financing to fund our business operations or DAT strategy in the future; risks relating to the treatment of crypto assets for U.S. and foreign tax purposes; regulatory developments related to crypto assets and crypto asset markets; a determination that we are an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); any changes in the accounting treatment of cryptocurrency holdings; the risk that the price of the Company’s common stock may be highly correlated to the price of the digital assets that it holds; our ability to achieve profitability; our ability to develop a commercially feasible application based on our Thermo-Acoustic Enhanced Ultrasound (“TAEUS”) technology; market acceptance of our technology; uncertainties associated with any future pandemic, including possible effects on our operations; results of our human studies, which may be negative or inconclusive; our ability to find and maintain development partners; our reliance on collaborations and strategic alliances and licensing arrangements; the amount and nature of competition in our industry; our ability to protect our intellectual property; potential changes in the healthcare industry or third-party reimbursement practices; delays and changes in regulatory requirements, policy and guidelines including potential delays in submitting required regulatory applications for Food and Drug Administration (“FDA”) approval; our ability to obtain and maintain CE mark certification and secure required FDA and other governmental approvals for our TAEUS applications; our ability to regain compliance with the listing standards of the Nasdaq Capital Market and maintain the listing of our common stock on such exchange; our ability to comply with regulation by various federal, state, local and foreign governmental agencies and to maintain necessary regulatory clearances or approvals; and the other risks and uncertainties described in the Risk Factors section of our Annual Report on Form 10-K for the period ended December 31, 2024, as filed with the Securities and Exchange Commission (“SEC”) on March 31, 2025, and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Available Information From time to time, we use press releases, X (formerly Twitter) (@endralifesci) and LinkedIn (www.linkedin.com/company/endra-inc) to distribute material information. Our press releases and financial and other material information are routinely posted to and accessible on the Investors section of our website, www.endrainc.com. Accordingly, investors should monitor these channels, in addition to our SEC filings and public conference calls and webcasts. In addition, investors may automatically receive e-mail alerts and other information about the Company by enrolling their e-mail addresses by visiting the “Email Alerts” section of our website at investors.endrainc.com. Information that is contained in and can be accessed through our website, X posts and LinkedIn are not incorporated into, and do not form a part of, this Quarterly Report or any other report or document we file with the SEC. 15 Overview We are developing a thermo-acoustic medical device designed specifically for accurate liver fat measurement for metabolic disease detection and management and GLP-1 drug eligibility and management. Our goal is to create the next-generation enhanced ultrasound technology platform designed to establish key biomarkers for metabolic diseases management and emerging GLP-1 therapies. Our medical device business model will primarily be a low barrier-to-entry, multi-year, subscription-based business model with monthly recurring revenue (MRR), while also offering a traditional product sale with annual upgrade and maintenance fees. These sales are expected to be made by a direct sales force to four markets: 1. Pharmaceutical Companies and Clinical Research Organizations (“CROs”) - to assist them in the efficient screening and monitoring subjects for new GLP-1, NASH/MASH and Insulin Sensitizers clinical trials. 2. High-End Primary Care Clinics - to assist them screening patients for obesity, diabetes and liver disease as well as monitor response to lifestyle changes and drug therapies. 3. Bariatric and Metabolic Clinics - for obesity and other metabolic diseases detection and therapies response monitoring. 4. Primary & Internal Medicine at Large - to screen patients for obesity, diabetes and liver disease and monitor response to lifestyle change and drug therapy. Each of our solutions will require regulatory approvals before we are able to sell or license the application. Based on certain factors, such as the installed base of ultrasound systems, availability of other imaging technologies, such as CT and MRI, economic strength and applicable regulatory requirements, we intend to seek initial approval of our applications for sale in the European Union and the United States. Digital Asset Treasury Strategy In 2025, the Company adopted a DAT strategy under which the principal holding in our treasury reserve on our balance sheet will be allocated to cryptocurrency, and specifically a strategy of holding one to five decentralized finance digital assets, beginning with $HYPE, the native digital asset of the Hyperliquid network (“HYPE”). Additionally, we intend to monitor ongoing developments in the regulatory environment around cryptocurrencies, including pending federal legislation, and may modify or expand our DAT strategy to the extent we determine compliant with federal rules and regulations and not giving rise to a requirement that the Company register as an investment company under the 1940 Act. While HYPE will initially serve as our primary treasury reserve asset and we are focused on accumulating a long-term position in one to five decentralized finance digital assets, including HYPE, our existing business operations will continue. On October 15, 2025, we closed a private placement of common stock, prefunded warrants, and common stock warrants for gross proceeds of approximately $4.9 million. The majority of net proceeds from the offering are intended to establish the Company’s DAT strategy and, on October 23, 2025, the Company announced that it had purchased 78,863.1 HYPE tokens with an estimated total value of approximately $3,000,000 as of October 21, 2025. A portion of net proceeds from the offering is for working capital purposes, including the pilot validation imaging study of the Company’s TAEUS liver device. Pursuant to the securities purchase agreement pursuant to which the offering was consummated, the Company may spend up to $750,000 of offering proceeds on the pilot validation study and no more than $1 million in the aggregate, including offering proceeds, on such study. Financial Operations Overview Revenue No revenue has been generated by our TAEUS technology, which we have not commercially sold as of September 30, 2025. Research and Development Expenses Our research and development expenses primarily include wages, fees and equipment for the development of our TAEUS technology platform and the proposed applications. Additionally, we incur certain costs associated with the protection of our products and inventions through a combination of patents, licenses, applications and disclosures. These costs and expenses include: ● employee-related expenses, such as salaries, bonuses and benefits, consultant-related expenses such as consultant fees and bonuses, stock-based compensation, overhead related expenses and travel-related expenses for our research and development personnel; ● expenses incurred under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”) as well as consultants that support the implementation of our clinical and non-clinical studies; 16 ● manufacturing and packaging costs in connection with conducting clinical trials; ● formulation, research and development expenses related to our TAEUS technology; and ● costs for sponsored research. We plan to incur research and development expenses for the foreseeable future as we expect to continue the development of TAEUS and pursue FDA approval of the NAFLD TAEUS system. At this time, due to the inherently unpredictable nature of clinical development and regulatory approvals, we are unable to estimate with certainty the costs we will incur and the timelines we will require in our continued development efforts. Sales and Marketing Expenses Sales and marketing expenses consist primarily of headcount and consulting costs, and marketing and tradeshow expenses. Currently, our marketing efforts are through our website and attendance of key industry meetings and conferences. During the second quarter of 2024, we restructured our sales operations to better align with the Company’s near-term sales prospects. We plan to begin staffing our sales efforts once we have obtained FDA approval for the sale of the NAFLD TAEUS device. General and Administrative Expenses General and administrative expenses consist primarily of salaries and related expenses for our management and personnel, and professional fees, such as for accounting, consulting and legal services. We anticipate continued costs associated with being a public company, including expenses related to services associated with maintaining compliance with The Nasdaq Capital Market and SEC requirements, directors and officers insurance, increased legal and accounting costs and investor relations costs. Critical Accounting Policies and Estimates Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Management makes estimates that affect certain accounts including inventory reserve, deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined. Warrant Liability The Company accounts for the liability classified warrants in accordance with the guidance contained in ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging. Such guidance provides criteria for instruments do not meet the criteria for equity treatment thereunder. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. Share-based Compensation Our Omnibus Plan permits the grant of stock options and other stock awards to our employees, consultants and non-employee members of our board of directors. Each January 1 the pool of shares available for issuance under the Omnibus Plan automatically increases by an amount equal to the lesser of (i) the number of shares necessary such that the aggregate number of shares available under the Omnibus Plan equals 25% of the number of fully-diluted outstanding shares on the increase date (assuming the conversion of all outstanding shares of preferred stock and other outstanding convertible securities and exercise of all outstanding options and warrants to purchase shares) and (ii) if the board of directors takes action to set a lower amount, the amount determined by the board. On January 1, 2025, the pool of shares issuable under the Omnibus Plan automatically increased by 178,033 shares from 1,738 shares to 179,771 shares. As of September 30, 2025, there were 32,336 shares of common stock remaining available for issuance under the Omnibus Plan. We record share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification. The guidance requires the use of option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends, and the resulting charge is expensed using the straight-line attribution method over the vesting period. Recent Accounting Pronouncements See Note 2 of the accompanying financial statements for a discussion of recently issued accounting standards. 17 Results of Operations Three months ended September 30, 2025 and 2024 Revenue We had no revenue during the three months ended September 30, 2025 and 2024. Cost of Goods Sold We had no cost of goods sold during the three months ended September 30, 2025 and 2024. Research and Development Research and development expenses were $432,113 for the three months ended September 30, 2025, as compared to $794,444 for the three months ended September 30, 2024, a decrease of $362,331, or 46%. The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line. Research and development expenses decreased from the prior year as we complete development of our initial TAEUS product and began focusing our spending on clinical trials and commercialization of the product that has been developed. Sales and Marketing Sales and marketing expenses were $45,285 for the three months ended September 30, 2025, as compared to $83,157 for the three months ended September 30, 2024, a decrease of $37,872, or 46%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased largely due to continued reductions in expenses resulting from our restructuring in the second quarter of 2024. Currently, our marketing efforts are through our website and attendance of key industry meetings. General and Administrative Our general and administrative expenses for the three months ended September 30, 2025 were $893,305, compared to $631,413 for the three months ended September 30, 2024, an increase of $261,892, or 41%. Our wage and related expenses for the three months ended September 30, 2025 were $356,788, compared to $(142,536) for the three months ended September 30, 2024. Wage and related expenses in the three months ended September 30, 2025 included $145,220 of stock compensation expense related to the issuance and vesting of options and RSUs for the three months ended September 30, 2025. Our professional fees, which include legal, audit, and investor relations, for the three months ended September 30, 2025 were $312,139, compared to $598,255 for the three months ended September 30, 2024. Other Income Other expense was $225,256 for the three months ended September 30, 2025 was primarily due to changes in fair value of warrant liability. Other expense was $845,076 for the three months ended September 30, 2024, an increase of $619,820, or 73%, due to changes in fair value of warrant liability. For the three months ended September 30, 2025, there were changes in fair value of warrant liability of $267,274. Net Loss As a result of the foregoing, for the three months ended September 30, 2025, we recorded a net loss of $1,595,959, compared to a net loss of $2,354,090 for the three months ended September 30, 2024. Nine months ended September 30, 2025 and 2024 Revenue We had no revenue during the nine months ended September 30, 2025 and 2024. Cost of Goods Sold We had no cost of goods sold during the nine months ended September 30, 2025 and 2024. Research and Development Research and development expenses were $1,341,859 for the nine months ended September 30, 2025, as compared to $2,552,336 for the nine months ended September 30, 2024, a decrease of $1,210,477, or 47%. The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line. Research and development expenses decreased from the prior year as we completed development of our initial TAEUS product and began focusing our spending on clinical trials and commercialization of the product that has been developed. 18 Sales and Marketing Sales and marketing expenses were $183,110 for the nine months ended September 30, 2025, as compared to $484,769 for the nine months ended September 30, 2024, a decrease of $301,659, or 62%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased largely due to continued reductions in expenses resulting from our restructuring in the second quarter of 2024. Currently, our marketing efforts are through our website and attendance of key industry meetings. General and Administrative Our general and administrative expenses for the nine months ended September 30, 2025 were $2,616,106, compared to $3,483,303 for the nine months ended September 30, 2024, a decrease of $867,197, or 25%. Our wage and related expenses for the nine months ended September 30, 2025 were $994,098, compared to $1,079,942 for the nine months ended September 30, 2024. Wage and related expenses in the nine months ended September 30, 2025 included $296,273 of stock compensation expense related to the issuance and vesting of options and RSUs. Our professional fees, which include legal, audit, and investor relations, for the nine months ended September 30, 2025 were $1,031,954, compared to $1,820,454 for the nine months ended September 30, 2024. Other Income Other income was $282,874 for the nine months ended September 30, 2025, compared to other expense of $838,535 for the nine months ended September 30, 2024, an increase of $1,121, 409, or 134%, due to increased interest income. For the nine months ended September 30, 2025, there were changes in fair value of warrant liability of $203,400. Net Loss As a result of the foregoing, for the nine months ended September 30, 2025, we recorded a net loss of $3,858,201, compared to a net loss of $7,358,943 for the nine months ended September 30, 2024. Near-Term Liquidity and Capital Resources We are experiencing financial and operating challenges. In the absence of immediate additional liquidity for our TAEUS program, we will be forced to delay or reduce our product development programs and commercialization efforts, materially curtail or cease our operations, sell or dispose of our rights or assets, pursue sale or other strategic transactions, or undergo restructuring or insolvency proceedings. As of September 30, 2025, we had an accumulated deficit of $107,296,300 and had $794,036 in cash. The majority of net proceeds from our October 2025 private placement is put towards our DAT strategy, while the amount of proceeds from such offering we put towards our TAEUS program is limited to $750,000. To date we have funded our operations through private and public sales of our securities and will need to raise additional funds in order to execute on our business plan, fully commercialize our TAEUS technology, execute on our DAT strategy, and generate revenues. We need additional capital to allow us to continue to execute our commercialization plans and to execute on our DAT strategy. We are considering potential financing options that may be available to us, such as sales of our common stock, including through our at-the-market sales program. Except for the at-the-market sales program, we have no commitments to obtain any additional funds, and there can be no assurance funds will be available in sufficient amounts or on acceptable terms. If we are unable to obtain sufficient additional financing in a timely fashion and on terms acceptable to us, our financial condition and results of operations may be materially adversely affected and we may not be able to continue operations or execute our stated commercialization plan. The consolidated financial statements included in this Form 10-Q have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the nine months ended September 30, 2025, we incurred net losses of $3,858,201 and used cash in operations of $3,570,847. In light of our cash balance as of September 30, 2025, we will need to raise additional capital in order to fund operations through the next twelve months, and prior to any ability to fund operations from revenue generated from the sale of our products. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Operating Activities During the nine months ended September 30, 2025, we used $3,570,847 of cash in operating activities primarily as a result of our net loss of $3,858,201, offset by share-based compensation of $316,531, amortization of right of use assets of $83,834, depreciation expense of $33,928, change in fair value of warrant liability of $(203,400), and net changes in operating assets and liabilities of $56,461. During the nine months ended September 30, 2024, we used $5,884,842 of cash in operating activities primarily as a result of our net loss of $7,358,943, offset by share-based compensation of $467,240, amortization of right of use assets of $124,320, inventory reserve of $4,687, depreciation expense of $35,489, fixed assets write-off of $8,808, warrant expense of $7,323,685, change in fair value of warrant liability of $(3,341,829), gain on settlement of warrant exercises of $(3,071,252), and net in operating assets and liabilities of $77,047. 19 Investing Activities During the nine months ended September 30, 2025, we used $17,280 in investing activities related to purchases of fixed assets. During the nine months ended September 30, 2024, we used $16,000 in investing activities related to purchases of fixed assets, and received $3,204 in proceeds from sale of fixed assets. Financing Activities During the nine months ended September 30, 2025, our financing activities provided $1,152,684 in proceeds from issuances of common stock. During the nine months ended September 30, 2024, our financing activities provided $1,148,470 in proceeds from issuances of common stock, $5,368,363 in proceeds from warrant exercises. We also used $28,484 to repay a loan from TD Bank under the Canadian Emergency Business Account. Long-Term Liquidity We have not completed the commercialization of any of our TAEUS technology platform applications. We expect to continue to incur significant expenses relating to the development of our TAEUS technology for the foreseeable future. We anticipate that our expenses will increase substantially as we: ● advance the engineering design and development of our TAEUS technology; ● acquire parts and build finished goods inventory of the TAEUS FLIP system; ● complete regulatory filings required for marketing approval of our NAFLD TAEUS application in the United States, including clinical studies to advance our de novo application with the FDA; ● seek to hire a small internal marketing team to engage and support channel partners and clinical customers for our NAFLD TAEUS application; ● expand marketing of our NAFLD TAEUS application; ● advance development of our other TAEUS applications; and ● add operational, financial and management information systems and personnel, including personnel to support our product development, planned commercialization efforts and our operation as a public company. It is possible that we will not achieve the progress that we expect because the actual costs and timing of completing the development and regulatory approvals for a new medical device are difficult to predict and are subject to substantial risks and delays. We have no committed external sources of funds except for our at-the-market offering program with Lucid Capital Markets, LLC, the use of which may be limited due to registration statement rules relating to public float. We do not expect that our existing cash will be sufficient for us to complete the commercialization of our NAFLD TAEUS application, or to complete the development of any other TAEUS application and we will need to raise substantial additional capital for those purposes. As a result, we will need to finance our future cash needs through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives. Our forecast of our financial resources is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in the Risk Factors section of this Annual Report on Form 10-K. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Until we can generate a sufficient amount of revenue from our TAEUS platform applications or through our DAT strategy, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaborations and licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs or our commercialization efforts or perhaps even cease the operation of our business. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaborations and licensing arrangements, it may be necessary to relinquish some rights to our technologies or applications or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. 20 Off-Balance Sheet Transactions At September 30, 2025, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements. Item 3. Quantitative and Qualitative Disclosure About Market Risk As a smaller reporting company, we are not required to provide the information required by this Item 3.