Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, management performed, with the participation of our principal executive and principal financial officers, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive and principal financial officers concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting, as described below.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance to the Company’s management and board of directors regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our consolidated financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial statement preparation and presentation.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following material weakness as of December 31, 2021: insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting. Because of this material weakness, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2021.
Continuing Remediation Efforts
During the year ended December 31, 2021, the Company appointed a new principal financial officer, its Senior Director, Finance, following the resignation of its Chief Financial Officer, which was not in connection with any disagreement relating to the Company’s operations, policies, or practices. Also, during the year ended December 31, 2021, the Company undertook the following remediation measures to correct the material weakness in its internal control over financial reporting:
·
continued drafting certain documents which outline operating procedures which it intends to adopt during the current year;
·
engaged on a project basis an outside firm with expertise in the area of proper controls and procedures;
·
installed software systems that support improved controls over accounts payable and payments; and
·
hired on a part-time basis additional staffing to support the financial reporting process.
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To remediate its internal control weakness, management intends to implement the following measures during 2022:
·
Add additional accounting personnel or outside consultants to properly segregate duties and to effect timely, accurate preparation of the financial statements; and
·
Complete the development of and maintain adequate written accounting policies and procedures.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm on our internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.”
Changes in Internal Control of Financial Reporting
During the quarter ended December 31, 2021, except as described above under “Continuing Remediation Efforts,” there were no changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this Item is incorporated by reference to our Proxy Statement on Schedule 14A relating to our 2022 annual meeting of stockholders to be filed pursuant to Regulation 14A of the Exchange Act within 120 days after the end of the Company’s fiscal year ended December 31, 2021.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to our Proxy Statement on Schedule 14A relating to our 2022 annual meeting of stockholders to be filed pursuant to Regulation 14A of the Exchange Act within 120 days after the end of the Company’s fiscal year ended December 31, 2021.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.
The information required by this Item is incorporated by reference to our Proxy Statement on Schedule 14A relating to our 2022 annual meeting of stockholders to be filed pursuant to Regulation 14A of the Exchange Act within 120 days after the end of the Company’s fiscal year ended December 31, 2021.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference to our Proxy Statement on Schedule 14A relating to our 2022 annual meeting of stockholders to be filed pursuant to Regulation 14A of the Exchange Act within 120 days after the end of the Company’s fiscal year ended December 31, 2021.
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated by reference to our Proxy Statement on Schedule 14A relating to our 2022 annual meeting of stockholders to be filed pursuant to Regulation 14A of the Exchange Act within 120 days after the end of the Company’s fiscal year ended December 31, 2021.
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PART IV
Item 15. Exhibits, Financial Statements and Schedules
(a) List of documents filed as part of this report:
1. Financial Statements (see “Financial Statements and Supplementary Data” at Item 8 and incorporated herein by reference)
2. Financial Statement Schedules (Schedules to the Financial Statements have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Financial Statements or notes thereto)
3. Exhibits
The following is a list of exhibits filed as part of this Annual Report:
Incorporated by Reference
Exhibit Number
Exhibit Description
Filed Herewith
Form
Exhibit
Filing Date
3.1
Fourth Amended and Restated Certificate of Incorporation of the Company
8-K
3.2
05/12/17
3.2
Amended and Restated Bylaws of the Company
S-1
3.4
12/06/16
4.1
Specimen Certificate representing shares of common stock of the Company
S-1
4.1
11/21/16
4.2
Form of Warrant Agreement and Warrant comprising a part of the Company’s units issued in its 2017 initial public offering
S-1
4.2
11/21/16
4.3
Form of Underwriters’ Warrant issued to certain designees of the underwriters in the Company’s 2017 initial public offering
S-1
4.3
11/21/16
4.5
Form of Underwriters’ Warrant issued to certain designees of the underwriters in the Company’s October 2018 offering
10-Q
4.6
11/05/18
4.7
Form of Warrant issued in July 2019 Private Placement
8-K
4.2
07/29/19
4.8
Certificate of Designations of Series A Convertible Preferred Stock
8-K
4.1
12/11/19
4.9
Form of Warrant issued in December 2019 Series A Convertible Preferred Stock Offering
8-K
4.2
12/11/19
4.10
Certificate of Designations of Series B Convertible Preferred Stock
8-K
4.1
12/26/19
4.11
Form of Warrant issued in December 2019 Series B Convertible Preferred Stock Offering
8-K
4.2
12/26/19
4.12
Description of Securities
x
10.1
ENDRA Life Sciences Inc. 2016 Omnibus Incentive Plan *
S-1
10.4
12/06/16
10.2
First Amendment to ENDRA Life Sciences Inc. 2016 Omnibus Incentive Plan*
DEF 14A
Appx. A
05/10/18
10.3
Form of Stock Option Award under 2016 Omnibus Incentive Plan*
S-1
10.5
12/06/16
10.4
Form of Restricted Stock Unit Award under 2016 Omnibus Incentive Plan*
S-1
10.6
12/06/16
10.5
Non-Employee Director Compensation Policy*
10-Q
10.2
08/14/2020
10.6
Form of Indemnification Agreement by and between the Company and each of its directors and executive officers*
S-1
10.8
11/21/16
10.7
Amended and Restated Employment Agreement, dated May 12, 2017, by and between the Company and Francois Michelon*
8-K
10.1
05/12/17
10.8
First Amendment to Employment Agreement, dated December 27, 2019, by and between the Company and Francois Michelon*
8-K
10.1
12/27/19
10.9
Amended and Restated Employment Agreement, dated May 12, 2017, by and between the Company and Michael Thornton*
8-K
10.2
05/12/17
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10.10
First Amendment to Employment Agreement, dated December 27, 2019, by and between the Company and Michael Thornton*
8-K
10.2
12/27/19
10.11
Collaborative Research Agreement, dated April 22, 2016, by and between the Company and General Electric Company
S-1
10.17
11/21/16
10.12
Amendment to Collaborative Research Agreement, dated April 21, 2017, by and between the Company and General Electric Company
S-1
10.21
05/03/17
10.13
Amendment 2 to Collaborative Research Agreement, dated January 30, 2018, by and between the Company and General Electric Company
8-K
10.1
01/30/18
10.14
Amendment 3 to Collaborative Research Agreement, dated January 13, 2020, by and between the Company and General Electric Company
8-K
10.1
01/15/20
10.15
Amendment 4 to Collaborative Research Agreement, dated December 16, 2020, by and between the Company and General Electric Company
8-K
10.1
12/21/20
10.16
Gross Lease, dated January 1, 2015, between the Company and Green Court LLC
S-1
10.18
11/21/16
10.17
Amendment to Gross Lease, dated October 10, 2017, by and between the Company and Green Court LLC
10-Q
10.2
05/15/18
10.18
Second Amendment to Lease, dated March 15, 2021, by and between the Company and Green Court LLC
10-K
10.18
03/25/2021
10.19
Sublicense Agreement, dated August 2, 2007, by and between the Company and Optosonics, Inc.
S-1
10.19
11/21/16
10.20
Amendment to Sublicense Agreement, dated January 18, 2011, by and between the Company and Optosonics, Inc.
S-1
10.20
11/21/16
10.21
Master Services Agreement, dated October 24, 2017, by and between the Company and CriTech Research, Inc.
10-K
10.15
03/20/18
10.22
Consulting Agreement, dated October 31, 2017, by and between the Company and StarFish Product Engineering, Inc.
10-K
10.16
03/20/18
10.23
Employment Agreement, dated May 13, 2019, by and between the Company and David Wells*
10-Q
10.2
05/14/19
10.24
Employment Agreement, dated April 20, 2019, by and between the Company and Renaud Maloberti*
10-Q
10.2
08/08/19
10.25
U.S. Small Business Administration Paycheck Protection Program Note, issued by the Company to First Republic Bank
10-Q
10.2
05/14/2020
21.1
Subsidiaries of the Company
x
23.1
Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Form S-3)
x
23.2
Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Form S-8)
x
24.1
Power of Attorney (included on signature page)
x
31.1
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
x
31.2
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
x
32.1
Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
x
101.INS
XBRL Instance Document
x
101.SCH
XBRL Taxonomy Schema
x
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
x
101.DEF
XBRL Taxonomy Extension Definition Linkbase
x
101.LAB
XBRL Taxonomy Extension Label Linkbase
x
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
x
________________
* Indicates management compensatory plan, contract or arrangement.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ENDRA Life Sciences Inc.
Dated: March 30, 2022
By:
/s/ Francois Michelon
Francois Michelon
Chief Executive Officer and Director
(Principal Executive Officer)
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of ENDRA Life Sciences Inc., hereby severally constitute and appoint Francois Michelon our true and lawful attorney, with full power to him to sign for us and in our names in the capacities indicated below, any amendments to this Annual Report on Form 10-K, and generally to do all things in our names and on our behalf in such capacities to enable ENDRA Life Sciences Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all the requirements of the Securities Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures
Title
Date
/s/ Francois Michelon
Chief Executive Officer and Director (Principal Executive Officer)
March 30, 2022
Francois Michelon
/s/ Irina Pestrikova
Senior Director, Finance (Principal Financial and Accounting Officer)
March 30, 2022
Irina Pestrikova
/s/ Louis J. Basenese
Director
March 30, 2022
Louis J. Basenese
/s/ Anthony DiGiandomenico
Director
March 30, 2022
Anthony DiGiandomenico
/s/ Michael Harsh
Director
March 30, 2022
Michael Harsh
/s/ Alexander Tokman
Director
March 30, 2022
Alexander Tokman
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