What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-12 · 79 added, 69 removed, 422 unchanged (26% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

Current Assets

Prepaid expenses

Other current assets

Total Current Assets

31 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended

September 30,

Operating Expenses

33 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Series A Convertible

3 unchanged sentences

Stockholders'

Balance as of March 31, 2020

Balance as of June 30, 2020

( 51,434,106 )

Series A Convertible Preferred Stock converted to common stock

( 1,545,695 )

Series B Convertible Preferred Stock converted to common stock

Common stock issued for cash

1 unchanged sentence

Common stock issued for services

Common stock issued for RSUs

Cost of funding

Fair value of vested stock options

Deemed dividend

Stock Payable for:

4 unchanged sentences

( 3,258,071 )

Balance as of June 30, 2020

Balance as of September 30, 2020

$ ( 55,087,728 )

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Series A Convertible

3 unchanged sentences

Stockholders'

Balance as of March 31, 2021

Balance as of June 30, 2021

( 62,927,940 )

Common stock issued for warrant exercise

Common stock issued for cash, net of funding costs

Common stock issued for option exercise

1 unchanged sentence

Stock payable for preference dividend

Stock payable for services

Common stock issued for RSU

( 2,658,242 )

Balance as of June 30, 2021

Balance as of September 30, 2021

$ ( 65,586,182 )

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Series A Convertible

6 unchanged sentences

Series A Convertible Preferred Stock converted to common stock

( 5,442,265 )

Series B Convertible Preferred Stock converted to common stock

3 unchanged sentences

Common stock issued for services

Common stock issued for RSU

Cost of funding

Fair value of vested stock options

Fair value adjustment related to warrants repricing

Stock payable for:

4 unchanged sentences

( 9,474,740 )

Balance as of June 30, 2020

Balance as of September 30, 2020

$ ( 55,087,728 )

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Series A Convertible

2 unchanged sentences

Preferred Stock

Stockholders'

Balance as of December 31, 2020

7 unchanged sentences

Common stock issued for services

Stock payable towards RSU's

Common stock issued for RSU

Deemed dividend

1 unchanged sentence

( 8,126,622 )

Balance as of June 30, 2021

Balance as of September 30, 2021

$ ( 65,586,182 )

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended

September 30,

Cash Flows from Operating Activities

3 unchanged sentences

Depreciation and amortization

Common stock, options and warrants issued for services

Stock compensation expense including common stock issued for RSUs

Amortization of debt discount

1 unchanged sentence

Gain on extinguishment of debt

Stock payable for investor relations

Changes in operating assets and liabilities:

1 unchanged sentence

Increase in inventory

Decrease in other current asset

Decrease in accounts payable and accrued liabilities

Decrease in other asset

Increase(decrease) in accounts payable and accrued liabilities

Decrease in lease liability

9 unchanged sentences

Proceeds from issuance of common stock

Payment for settlement of notes

Net cash provided by financing activities

8 unchanged sentences

Conversion of convertible notes and accrued interest

Exchange of balance in convertible notes and accrued interest for Series A preferred stock

Deemed dividend

2 unchanged sentences

Stock dividend payable

$ ( 137,909 )

Stock paid and payable for services

Stock issued for RSU

Right of use asset

2 unchanged sentences

ENDRA Life Sciences Inc.

N otes to Condensed Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2021 and 2020

Note 1 – Nature of the Business

11 unchanged sentences

the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions, the speed of the anticipated recovery, access to capital markets, and governmental and business reactions to the pandemic.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of June 30, 2021 and through the date of the filing of this Quarterly Report on Form 10-Q.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 30, 2021 and through the date of the filing of this Quarterly Report on Form 10-Q.

The accounting matters assessed included, but were not limited to, estimates related to the accounting for potential liabilities and accrued expenses, the assumptions utilized in valuing stock-based compensation issued for services, the realization of deferred tax assets, and assessments of impairment related to long-lived assets.

9 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The balance sheet at December 31, 2020 has been derived from the audited financial statements at that date.

3 unchanged sentences

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of one year or less, when purchased, to be cash.

As of June 30, 2021 and December 31, 2020, the Company had no cash equivalents.

As of September 30, 2021 and December 31, 2020, the Company had no cash equivalents.

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits.

13 unchanged sentences

A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements.

At June 30, 2021 and December 31, 2020 the Company recorded a lease liability of $ 709,385 and $ 348,388 , respectively.

At June 30, 2021 and December 31, 2020 the Company recorded a right of use asset of $ 707,504 and $ 339,012 , respectively.

At September 30, 2021 and December 31, 2020 the Company recorded a lease liability of $ 680,526 and $ 348,388 , respectively.

At September 30, 2021 and December 31, 2020 the Company recorded a right of use asset of $ 675,822 and $ 339,012 , respectively.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No.

2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”).

8 unchanged sentences

Research and development costs are charged to the statement of operations as incurred.

During the three months ended June 30, 2021 and 2020, the Company incurred $ 1,744,925 and $ 1,487,049 of expenses related to research and development costs, respectively.

During the six months ended June 30, 2021 and 2020, the Company incurred $ 2,886,411 and $ 3,005,195 of expenses related to research and development costs, respectively.

During the three months ended September 30, 2021 and 2020, the Company incurred $ 1,173,319 and $ 1,769,339 of expenses related to research and development costs, respectively.

During the nine months ended September 30, 2021 and 2020, the Company incurred $ 4,059,730 and $ 4,774,534 of expenses related to research and development costs, respectively.

Net Earnings (Loss) Per Common Share

2 unchanged sentences

Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive.

There were 7,668,899 and 10,047,010 potentially dilutive shares, which include outstanding common stock options, warrants and shares of convertible preferred stock as of June 30, 2021 and December 31, 2020, respectively.

There were 7,695,899 and 10,047,010 potentially dilutive shares, which include outstanding common stock options, warrants and shares of convertible preferred stock as of September 30, 2021 and December 31, 2020, respectively.

The potential shares, which are excluded from the determination of basic and diluted net loss per share as their effect is anti-dilutive, are as follows:

September 30,

Options to purchase common stock

29 unchanged sentences

GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has limited commercial experience and had a cumulative net loss from inception to June 30, 2021 of $ 62,927,940 .

The Company had working capital of $ 14,704,983 as of June 30, 2021.

The Company has limited commercial experience and had a cumulative net loss from inception to September 30, 2021 of $ 65,586,182 .

The Company had working capital of $ 12,893,307 as of September 30, 2021.

The Company has not established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern.

The accompanying financial statements for the period ended June 30, 2021 have been prepared assuming the Company will continue as a going concern.

The accompanying financial statements for the period ended September 30, 2021 have been prepared assuming the Company will continue as a going concern.

Although the Company’s cash resources will likely be sufficient to meet its anticipated needs during the next twelve months, the Company will require additional financing to fund its future planned operations, including research and development and commercialization of its products.

10 unchanged sentences

Note 3 – Inventory

As of June 30, 2021 and December 31, 2020, inventory consisted of raw materials and subassemblies to be used in the assembly of a TAEUS system.

As of June 30, 2021, the Company had no orders pending for the sale of a TAEUS system.

As of September 30, 2021 and December 31, 2020, inventory consisted of raw materials and subassemblies to be used in the assembly of a TAEUS system.

As of September 30, 2021, the Company had no orders pending for the sale of a TAEUS system.

Note 4 – Fixed Assets

As of June 30, 2021 and December 31, 2020, fixed assets consisted of the following:

As of September 30, 2021 and December 31, 2020, fixed assets consisted of the following:

September 30,

Property, leasehold and capitalized software

2 unchanged sentences

Fixed assets, net

Depreciation expense for the six months ended June 30, 2021 and 2020 was $ 65,154 and $ 44,014 , respectively.

Depreciation expense for the nine months ended September 30, 2021 and 2020 was $ 94,977 and $ 45,114 , respectively.

Note 5 – Accounts Payable and Accrued Liabilities

As of June 30, 2021 and December 31, 2020, current liabilities consisted of the following:

As of September 30, 2021 and December 31, 2020, current liabilities consisted of the following:

September 30,

Accounts payable

15 unchanged sentences

Note 7 – Capital Stock

At June 30, 2021, the authorized capital of the Company consisted of 90,000,000 shares of capital stock, comprised of 80,000,000 shares of common stock with a par value of $ 0.0001 per share, and 10,000,000 shares of preferred stock with a par value of $ 0.0001 per share.

At September 30, 2021, the authorized capital of the Company consisted of 90,000,000 shares of capital stock, comprised of 80,000,000 shares of common stock with a par value of $ 0.0001 per share, and 10,000,000 shares of preferred stock with a par value of $ 0.0001 per share.

The Company has designated 10,000 shares of its preferred stock as Series A Convertible Preferred Stock (“Series A Preferred Stock”) and 1,000 shares of its preferred stock as Series B Convertible Preferred Stock (“Series B Preferred Stock”), and the remainder of 9,989,000 shares remain authorized but undesignated.

As of June 30, 2021, there were 41,857,352 shares of common stock, 141,397 shares of Series A Preferred Stock, and no shares of Series B Preferred Stock issued and outstanding, and a stock payable balance of $ 74,907 .

During the six months ended June 30, 2021, the Company issued a total of 7,807,648 shares of its common stock, as follows:

As of September 30, 2021, there were 42,165,726 shares of common stock, 141,397 shares of Series A Preferred Stock, and no shares of Series B Preferred Stock issued and outstanding, and a stock payable balance of $ 42,665 .

During the nine months ended September 30, 2021, the Company issued a total of 8,116,023 shares of its common stock, as follows:

67,889 shares upon the conversion of 55.397 shares of its Series A Preferred Stock;

4 unchanged sentences

32,527 shares for services valued at $ 74,000 .

22,815 shares for RSUs valued at $ 36,460 .

At-the-Market Equity Offering Programs

During the six months ended June 30, 2021, the Company entered into at-the-market equity offering sales agreements with Ascendiant to sell shares of common stock.

During the nine months ended September 30, 2021, the Company entered into at-the-market equity offering sales agreements with Ascendiant to sell shares of common stock.

On February 19, 2021, the Company entered into the At-The-Market Issuance Sales Agreement with Ascendiant (the “February 2021 ATM Agreement”) to sell shares of common stock for aggregate gross proceeds of up to $ 12.6 million, from time to time, through an “at-the-market” equity offering program under which Ascendiant acted as sales agent.

1 unchanged sentence

The February 2021 ATM Agreement terminated upon the Company’s and Ascendiant’s entry into the June 2021 ATM Agreement.

As of June 30, 2021, under the February 2021 ATM Agreement the Company has issued an aggregate of 3,914,217 shares of common stock in return for net proceeds of $ 9,798,293 , resulting in approximately $ 303,243 of compensation paid to Ascendiant.

As of June 30, 2021, the Company had not sold any shares of common stock under the June 2021 ATM Agreement.

Prior to its termination in June 2021, under the February 2021 ATM Agreement the Company issued an aggregate of 3,914,217 shares of common stock in return for net proceeds of $ 9,798,293 , resulting in approximately $ 303,243 of compensation paid to Ascendiant.

As of September 30, 2021, under the June 2021 ATM Agreement the Company has issued an aggregate of 283,953 shares of common stock in return for net proceeds of $ 496,613 , resulting in approximately $ 15,461 of compensation paid to Ascendiant.

Note 8 – Common Stock Options and Restricted Stock Units (“RSU’s’’)

1 unchanged sentence

Stock options are awarded to the Company’s employees, consultants and non-employee members of the board of directors under the 2016 Omnibus Incentive Plan (the “Omnibus Plan”) and are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant.

The aggregate fair value of these stock options granted by the Company during the six months ended June 30, 2021 was determined to be $ 3,465,200 using the Black-Scholes-Merton option-pricing model based on the following assumptions:

The aggregate fair value of these stock options granted by the Company during the nine months ended September 30, 2021 was determined to be $ 3,511,662 using the Black-Scholes-Merton option-pricing model based on the following assumptions:

(i) volatility rate of 81 % to 99 %, (ii) discount rate of 0 %, (iii) zero expected dividend yield, and (iv) expected life of 8 - 10 years.

A summary of option activity under the Company’s Omnibus Plan as of June 30, 2021, and changes during the period then ended, is presented below:

A summary of option activity under the Company’s Omnibus Plan as of September 30, 2021, and changes during the period then ended, is presented below:

Average Exercise Price

2 unchanged sentences

Cancelled or expired

Balance outstanding at June 30, 2021

Exercisable at June 30, 2021

Balance outstanding at September 30, 2021

Exercisable at September 30, 2021

Restricted Stock Units

5 unchanged sentences

The total fair value of the RSU’s granted on January 28, 2021 was $ 45,858 , based on the grant date closing price of $ 2.01 per share.

As of June 30, 2021 the Company had issued and vested the following RSU’s:

As of September 30, 2021 the Company had issued and vested the following RSU’s:

Restricted Stock

5 unchanged sentences

Cancelled or expired

Balance outstanding at June 30, 2021

Balance outstanding at September 30, 2021

Note 9 – Common Stock Warrants

6 unchanged sentences

(i) volatility rate of 89 %, (ii) discount rate of 0 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years.

During the six months ended June 30, 2021, the Company issued an aggregate of 3,567,899 shares of its common stock upon Private Warrant exercises for net proceeds of $ 2,785,626 .

During the six months ended June 30, 2021, the Company issued an aggregate of 202,887 shares of its common stock upon the cashless exercise election by certain warrant holders.

The following table summarizes all stock warrant activity of the Company for the six months ended June 30, 2021:

During the nine months ended September 30, 2021, the Company issued an aggregate of 3,567,899 shares of its common stock upon Private Warrant exercises for net proceeds of $ 2,785,626 .

During the nine months ended September 30, 2021, the Company issued an aggregate of 202,887 shares of its common stock upon the cashless exercise election by certain warrant holders.

The following table summarizes all stock warrant activity of the Company for the nine months ended September 30, 2021:

Average Exercise

2 unchanged sentences

( 3,916,996 )

Balance outstanding at June 30, 2021

Exercisable at June 30, 2021

Balance outstanding at September 30, 2021

Exercisable at September 30, 2021

Note 10 – Commitments & Contingencies

6 unchanged sentences

therefore, the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments.

The Company’s discount rate for operating leases at June 30, 2021 was 10%.

The Company’s discount rate for operating leases at September 30, 2021 was 10%.

Lease expense is recognized on a straight-line basis over the lease term to the extent that collection is considered probable.

1 unchanged sentence

The weighted-average remaining lease term is 4.25 years.

As of June 30, 2021, the maturities of operating lease liabilities are as follows:

As of September 30, 2021, the maturities of operating lease liabilities are as follows:

Operating Lease

4 unchanged sentences

Long-term lease obligations

For the three months ended June 30, 2021 and 2020, the Company incurred rent expenses of $ 34,348 and $ 30,615 , respectively.

For the six months ended June 30, 2021 and 2020, the Company incurred rent expenses of $ 66,539 and $ 60,903 , respectively.

For the three months ended September 30, 2021 and 2020, the Company incurred rent expenses of $ 53,263 and $ 29,581 , respectively.

For the nine months ended September 30, 2021 and 2020, the Company incurred rent expenses of $ 119,802 and $ 90,484 , respectively.

Employment and Consulting Agreements

18 unchanged sentences

The employment agreement provides for an annual base salary that is subject to adjustment at the board of directors’ discretion.

The annual base salary in effect during the period covered by this Form 10-K was $ 267,800 .

The annual base salary in effect during the period covered by this Form 10-Q was $ 289,963 .

Under the employment agreement, Mr.

27 unchanged sentences

From time to time the Company may become a party to litigation in the normal course of business.

As of June 30, 2021, there were no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.

As of September 30, 2021, there were no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements