What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-14 · 228 added, 256 removed, 122 unchanged (80% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Forward-Looking Statements

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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;

our limited commercial experience, limited

cash and history of losses;

our ability to obtain adequate financing to fund our business operations or DAT strategy in the future;

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

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 obtain adequate financing to fund our business operations in the future;

our ability to achieve

profitability;

delays and changes in regulatory requirements, policy and guidelines, including potential delays in submitting required

regulatory applications or other submissions with respect to U.S.

Food and Drug Administration (“FDA”) or other regulatory

agency approval;

our ability to obtain and maintain required CE mark certifications and secure required FDA and other governmental approvals

for our Thermo-Acoustic Enhanced Ultrasound (“TAEUS”) applications;

our ability to develop any commercially feasible applications

based on our TAEUS technology;

market acceptance of our technology;

the effect of macroeconomic conditions on our business;

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

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”)

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

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.

our reliance on third

parties, collaborations, strategic alliances and licensing arrangements to complete our business strategy;

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

our ability to comply with regulation by various federal, state, local and foreign governmental agencies and to maintain necessary

regulatory clearances or approvals;

our ability to regain compliance with Nasdaq listing standards;

our ability to successfully execute

on our digital asset treasury strategy;

risks related to regulatory developments regarding digital assets and digital asset markets, which

could adversely affect our business, financial condition, and results of operations;

the volatile and unpredictable cycles in the digital

asset industry;

in the accounting treatment of digital assets;

our dependence on our senior management team;

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, 2025, as filed with the Securities

and Exchange Commission (“SEC”) on March 31, 2026, 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

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or document we file with the SEC.

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

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:

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.

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.

Bariatric and Metabolic Clinics - for obesity and other metabolic diseases detection and therapies response monitoring.

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.

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.

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.

We are developing a next-generation enhanced ultrasound

technology platform—Thermo- Acoustic Enhanced Ultrasound, or TAEUS®.

Our initial focus for the development and commercialization

of TAEUS is a solution for the assessment of liver fat, a key biomarker associated with metabolic diseases, including metabolic dysfunction-associated

steatotic liver disease (“MASLD”) and metabolic dysfunction-associated steatohepatitis (“MASH”).

Our objective is to develop a scalable biomarker

solution for metabolic disease assessment and management through a non-invasive, point- of-care approach.

We have periodically evaluated and refined our

vision, purpose, and go-to-market strategy with respect to TAEUS in response to evolving market conditions and development priorities.

To support adoption across targeted market segments,

we are focused on:

● Leveraging artificial intelligence and machine learning models to enhance measurement accuracy accuracy

and reproducibility;

● Integrating thermo-acoustic technology with conventional ultrasound to streamline workflows and reduce

operator variability;

● Reducing system size and cost to improve accessibility across care settings.

For our go-to-market strategy, we intend to focus

on serving these four markets:

Pharmaceutical Companies and Clinical Research Organizations (“CROs”);

High-end Primary Care Networks (Concierge Medicine);

Bariatric and Metabolic Clinics;

Primary and Internal Medicine Practices.

We plan to offer a multi-year, subscription-based

business model with recurring revenue, while continuing to support traditional capital equipment sales with associated service and upgrade

In 2025, the Company expanded its business strategy

to include a Digital Asset Treasury (“DAT”) initiative, managed in collaboration with Arca Investment Management (“Arca”),

which seeks to optimize capital preservation and generate non-dilutive returns through investments in decentralized finance (“DeFi”)

This financial strategy operates in tandem with the Company’s core medical technology mission:

the commercialization of

the TAEUS platform via a recurring subscription model, with a specific focus on the burgeoning GLP-1 and metabolic disease markets.

Financial Operations Overview

No revenue has been generated by our TAEUS technology,

which we have not commercially sold as of September 30, 2025.

No revenue has been generated by our TAEUS technology, which we have

not commercially sold as of March 31, 2026.

Research and Development Expenses

5 unchanged sentences

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;

● 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 CROs, contract manufacturing organizations (“CMOs”) as well as consultants that

support the implementation of our clinical and non-clinical studies;

● manufacturing and packaging costs in connection with conducting clinical trials;

10 unchanged sentences

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.

The company has decided to limit its marketing and sales activities until after we

have obtained FDA approval for the sale of the NAFLD TAEUS device.

General and Administrative Expenses

12 unchanged sentences

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

accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments

or contingencies.

Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.

Warrant Liability

7 unchanged sentences

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

The Company’s 2016 Omnibus Incentive Plan

(the “Omnibus Plan”) permits the grant of stock options and other share-based awards to its employees, consultants and non-employee

members of the board of directors.

Each January 1 the pool of shares available for issuance under the Omnibus Plan automatically increases

by an amount equal to the lesser of (i) the number of shares necessary such that the aggregate number of shares available under the Omnibus

Plan equals 25% of the number of fully-diluted outstanding shares on the increase date (assuming the conversion of all outstanding shares

of preferred stock and other outstanding convertible securities and exercise of all outstanding options and warrants to purchase shares)

and (ii) if the board of directors takes action to set a lower amount, the amount determined by the board.

On January 1, 2025, the pool

of shares issuable under the Omnibus Plan automatically increased by 178,033.

In addition, on December 9, 2025, the stockholders

of ENDRA Life Sciences Inc.

(the “Company”) approved the Second Amendment to the Company’s 2016 Omnibus Incentive Plan

(the “Omnibus Plan Amendment”) at the 2025 Annual Meeting of the Company’s Stockholders (the “Annual Meeting”).

That Amendment increased the pool of shares available for issuance by 3,200,000 shares of common stock.

Due to these increases,

the pool of shares issuable under the Omnibus Plan shares increased from 1,738 shares to 3,048,799 shares as of December

In light of the increase effected by the Omnibus Plan Amendment, no automatic increase to the pool was effected as of March

As of March 31, 2026, there were 3,019,525 shares of common stock remaining available for issuance under the Omnibus

The Company records share-based compensation in

accordance with the provisions of the Share-based Compensation Topic of the FASB Codification.

The guidance requires the use of

option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the

price volatility of the underlying stock.

The fair value of each option grant is estimated on the date of grant using the

Black-Scholes option valuation model 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.

The guidance requires the use of option-pricing

models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of

the underlying stock.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model,

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

Stock compensation expense recognized during the

period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures.

estimated fair value of grants of stock options and warrants to non-employees of the Company is charged to expense, if applicable, in

the financial statements.

These options vest in the same manner as the employee options granted under the stock incentive plan as described

Accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods

if actual forfeitures differ from those estimates.

The Company has limited historical experience with forfeitures and were based on management’s

Recent Accounting Pronouncements

See Note 2 of the accompanying financial statements

for a discussion of recently issued accounting standards.

See Note 2 of the accompanying financial statements for a discussion

of recently issued accounting standards.

Results of Operations

Three months ended September 30, 2025 and

We had no revenue during the three months ended

September 30, 2025 and 2024.

Three months ended March 31, 2026 and 2025

We had no revenue during the three months ended March 31, 2026 and

Cost of Goods Sold

We had no cost of goods sold during the three

months ended September 30, 2025 and 2024.

We had no cost of goods sold during the three months ended March 31,

2026 and 2025.

Research and Development

Research and development expenses were $776,410

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,

for the three months ended March 31, 2026, as compared to $528,685 for the three months ended March 31, 2025, an increase of $247,725,

The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line.

and development expenses decreased from the prior year as we complete development of our initial TAEUS product and began focusing our

and development expenses increased 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,

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.

Sales and marketing expenses were $4,278 for the

three months ended March 31, 2026, as compared to $68,991 for the three months ended March 31, 2025, a decrease of $64,713, or 94%.

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 and first quarter of 2026.

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.

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 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.

three months ended March 31, 2026 were $1,393,060, compared to $871,606 for the three months ended March 31, 2025, an increase of $521,454,

Our wage and related expenses for the three months ended March 31, 2026 were $779,125, compared to $368,607 for the three months

ended March 31, 2025.

Wage and related expenses in the three months ended March 31, 2026 included $574,451 of stock compensation expense

related to the issuance and vesting of options and RSUs for the three months ended March 31, 2026.

Our professional fees, which include

legal, audit, and investor relations, for the three months ended March 31, 2026 were $387,231, compared to $305,860 for the three months

ended March 31, 2025.

Other expense of $862,315 for the three months

ended March 31, 2026 was primarily due to changes in fair value of warrant liability and digital assets.

Other expense was $432,952 for

the three months ended March 31, 2025, an increase of $429,363, or 99%, due to changes in fair value of warrant liability and digital

For the three months ended March 31, 2026, there were changes in fair value of warrant liability of $(8,857) and changes in fair

value of digital assets of $859,761.

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

Nine months ended September

30, 2025 and 2024

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%.

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.

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,

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%.

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

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 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.

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.

ended March 31, 2026, we recorded a net loss of $1,311,433, compared to a net loss of $1,036,330 for the three months ended March 31,

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

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.

Since inception, we have incurred losses and expect to continue to incur losses for the foreseeable future.

As of March 31, 2026, we had

an accumulated deficit of $111,776,942 and had $356,462 in cash.

To date we have funded our operations through private and public

sales of our securities and will need to raise additional funds in order to execute on our business plan, fully commercialize our TAEUS

technology, and generate revenues.

In the three months ended March 31, 2026, we implemented cost reduction measures, including a reduction

in headcount and prioritization of development activities over clinical ones, to extend our operating runway and focus resources on product

improvements and regulatory strategy for our TAEUS liver application.

These actions are expected to impact the timing of certain development

activities, including delaying the timing of a future De Novo submission to the FDA relating to our TAEUS liver application.

Additionally,

in March 2026, we announced that the Board had initiated a process to evaluate a range of strategic alternatives including, but not limited

to strategic investments, mergers, business combinations, in-licensing or collaboration arrangements, asset sales, or sale or merger of

If we are unable to obtain adequate financing

or financings in the near term or if the strategic alternatives review process does not result in any transaction or other strategic outcome,

we will be forced to undertake additional measures, which may include materially curtailing or eliminating our operations, or undergoing

restructuring or insolvency proceedings.

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.

to execute our clinical trials and commercialization plans through 2026 and beyond.

We are considering potential financing options that

may be available to us, including sales of our common stock through our at-the-market sales program (the “ATM Program”) with

Lucid Capital Markets, LLC, which are limited due to registration statement rules relating to public float.

Except for the ATM 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 three months ended March 31, 2026, we incurred net losses of $1,311,433 and used cash in operations of $1,119,650.

of our cash balance as of March 31, 2026, 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,

During the three months ended March 31, 2026,

we used $1,119,650 of cash in operating activities primarily as a result of our net loss of $1,311,433, 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.

of $574,451, amortization of right of use assets of $30,223, depreciation expense of $9,492, change in fair value of warrant liability

of $8,857, digital asset staking compensation of $(11,060), change in fair value of digital assets of $(859,761) and net changes in operating

assets and liabilities of $439,581.

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.

During the three months ended March 31, 2026,

we received $450,000 in proceeds from the sale of digital intangible assets.

During the three months ended March 31, 2025, we used $17,280

in investing activities related to purchases 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.

During the three months ended March 31, 2026,

our financing activities provided $263,747 in proceeds from issuances of common stock.

During the three months ended March 31, 2025, our

financing activities provided $145,803 in proceeds from issuances of common stock.

Long-Term Liquidity

We have not completed the commercialization of

any of our TAEUS technology platform applications.

We expect to continue to incur significant expenses relating to the development of

our TAEUS technology for the foreseeable future.

We anticipate that our expenses will increase substantially as we:

any of our TAEUS technology platform applications and have reduced our headcount and R&D spending in order to conserve resources.

To the extent resources allow, we would expect to continue to incur significant expenses relating to the development of our TAEUS technology

for the foreseeable future in order to finalize the commercialization of our TAEUS liver product and develop further TAEUS products.

this case, we would anticipate that our expenses would 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;

● 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;

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● advance development of our other TAEUS applications;

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.

● 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

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offering program with Lucid Capital Markets, LLC, the use of which may be limited due to registration statement rules relating to public

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.

Our existing cash will not be sufficient for us to complete the commercialization of our 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 our Annual Report on Form 10-K for the year ended December 31, 2025.

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.

from our TAEUS platform applications, if ever, we expect to finance future cash needs through public or private equity offerings, debt

financings or corporate collaborations and licensing arrangements.

Additional funds may not be available when we need them on terms that

are acceptable to us, or at all.

If adequate funds are not available, we may be required to cease the operation of our business.

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

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.

As described above under “Near-Term Liquidity and Capital Resources,” the Board

initiated a process to review strategic alternatives for the Company.

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.

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.

At March 31, 2026, the Company did not have any transactions, obligations

or relationships that could be considered off-balance sheet arrangements.

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.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis