What changed in this filing

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Item 9A. Controls and Procedures

2024-03-28 compared with 2023-03-16 · 72 added, 75 removed, 385 unchanged (28% of the section changed)

1 unchanged sentence

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.

As of the end of the period covered by this report, management performed, with the participation of our principal executive and principal financial officer, 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, 2022, our disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting, as described below.

Based on the evaluation, our principal executive and principal financial officer concluded that, as of December 31, 2023, 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

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Continuing Remediation Efforts

During the year ended December 31, 2022, the Company undertook the following remediation measures to correct the material weakness in its internal control over financial reporting:

hired a Senior Director of Operations in October 2022 to assist with implementing operating procedures and policies expected to improve the Company’s disclosure controls and procedures, including with respect to segregation of duties;

engaged on a contract basis a controller with expertise in the area of proper controls and procedures.

Although this controller subsequently resigned due to unforeseen circumstances beyond her control, the Company intends to again fill the position.

To remediate its internal control weakness, management intends to implement the following measures during 2023, as the Company’s financial means allow:

To remediate its internal control weakness, management intends to implement the following measures, as the Company’s resources and financial means allow:

Add additional accounting personnel or outside consultants, such as a new controller, to properly segregate duties and to effect timely, accurate preparation of the financial statements;

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Irina Pestrikova

Senior Director of Finance

Senior Director, Finance

Anthony DiGiandomenico

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Michelon’s extensive industry and executive experience and his intimate understanding of our business as our Chief Executive Officer position him well to serve as a member of our Board of Directors.

Michael Thornton joined ENDRA as Chief Technology Officer in 2007.

Michael Thornton joined ENDRA as Chief Operating Officer in 2007 and became our Chief Technology Officer in 2008 and has served in that role since.

Prior to that, Mr.

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Thornton also holds a BASc in Electrical Engineering from the University of Toronto and is a member of the American Association of Physicists in Medicine.

Irina Pestrikova joined ENDRA as Senior Director of Finance in June 2021.

Irina Pestrikova joined ENDRA as Senior Director, Finance in June 2021.

From 2014 to 2021, Ms.

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DiGiandomenico served as President and CEO of the Digian Company, a real estate development company.

DiGiandomenico has also served on the board of directors of Cue Biopharma, Inc., an immunotherapy company, and currently serves on the board of directors of Provention Bio, Inc.

PRVB), a clinical-stage biopharmaceutical company.

DiGiandomenico has also served on the board of directors of Cue Biopharma, Inc., an immunotherapy company, and on the board of directors of Provention Bio, Inc., a clinical-stage biopharmaceutical company.

DiGiandomenico holds an MBA from the Haas School of Business at the University of California, Berkeley and a BS in Finance from the University of Colorado.

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Additionally, Mr.

Harsh is a member of the boards of directors of Compute Health Acquisition Corp.

CPUH), Imagion Biosystems (ASX:

Harsh is a member of the boards of directors of Magnetic Insights, Imagion Biosystems (ASX:

IBX.AX), and EmOpti, Inc., as well as a member of the Radiological Society of North America (RSNA), Research & Education Foundation Board of Trustees.

He had previously served as a director for FloDesign Sonics until its acquisition by MilliporeSigma, a division of the Merck Group.

He had previously served as a director for Compute Health Acquisition Corp.

until its merger with Allurion Technologies and as a director for FloDesign Sonics until its acquisition by MilliporeSigma, a division of the Merck Group.

He is also a McKinsey Senior Advisor and a consultant in the medical device industry.

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Tokman serves as Chairperson of the Compensation Committee.

Effective as of the 2022 Annual Meeting, Mr.

Basenese will assume the Chairperson position.

The Compensation Committee (1) discharges the responsibilities of the Board of Directors relating to the compensation of our directors and executive officers, (2) oversees the Company’s procedures for consideration and determination of executive and director compensation, and reviews and approves all executive compensation, and (3) administers and implements the Company’s incentive compensation plans and equity-based plans.

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Such persons are required by SEC regulations to furnish us with copies of all such filings.

Based solely on our review of the copies of the reports that we received and written representations that no other reports were required, we believe that our executive officers, directors and greater than 10% stockholders complied with all applicable filing requirements on a timely basis during 2022, except for one Form 4 for Michael Thornton related to a purchase of shares May 18, 2022, which was reported on May 23, 2022.

Code of Business Conduct and Ethics

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We intend to disclose any amendments to or waivers of a provision of the Code of Ethics required to be disclosed by applicable SEC rules by posting such information on our website available at www.endrainc.com and/or in our public filings with the SEC.

Nasdaq Rule 5608 Clawback Policy

The Company has adopted an incentive-based compensation recovery policy as required by the rules of the Nasdaq Stock Market, which is filed as Exhibit 97 to this report.

Executive Compensation

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Incentive Plan Compensation ($)

Compensation ($)(2)

All Other Compensation ($)(2)

Francois Michelon (3)

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Chief Technology Officer

Renaud Maloberti

Former Chief Commercial Officer

Irina Pestrikova

Senior Director, Finance

______________

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Represents insurance premiums paid by the Company with respect to life insurance for the benefit of the named executive officer.

In consideration of the Company’s limited resources, in September 2023, Mr.

Michelon and Mr.

Thornton each agreed to a 30% reduction in each of their base salaries received for the remainder of 2023 in order to preserve cash for the Company’s operations.

Employment Agreements and Change of Control Arrangements

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Effective January 1, 2022, the Compensation Committee increased Mr.

Michelon’s annual salary to $376,991 and, effective January 1, 2022, it increased Mr.

Michelon’s annual salary to $423,000.

Michelon is also eligible for an annual cash bonus based upon achievement of performance-based objectives established by the Board of Directors.

In September 2023, Mr.

Michelon agreed to a 30% reduction of his base salary received for the remainder of 2023 in order to preserve cash for the Company’s operations.

Michelon is also eligible for an annual cash bonus based upon the achievement of performance-based objectives established by the Board of Directors.

Michelon’s employment is terminated by the Company without cause (as defined in the 2016 Plan) or if Mr.

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Effective January 1, 2022, the Compensation Committee increased Mr.

Thornton’s annual salary to $289,963 and, effective January 1, 2022, it increased Mr.

Thornton’s annual salary to $324,000.

In September 2023, Mr.

Thornton agreed to a 30% reduction of his base salary received for the remainder of 2023 in order to preserve cash for the Company’s operations.

Thornton’s employment is terminated by the Company without cause (as defined in the 2016 Plan) or if Mr.

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Thornton is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.

Renaud Maloberti.

On April 15, 2019, the Company entered into an employment agreement with Renaud Maloberti that provides for an annual base salary of $250,000 and eligibility for an annual cash bonus to be paid based on attainment of Company and individual performance objectives to be established by the Board of Directors.

Effective January 1, 2021, the Compensation Committee increased Mr.

Maloberti’s annual salary to $266,255 and, effective January 1, 2022, it increased Mr.

Maloberti’s annual salary to $296,000.

The employment agreement also provides for eligibility to receive benefits substantially similar to those of the Company’s other senior executive officers.

On December 21, 2022, Renaud Maloberti notified the Company of his resignation as the Company’s Chief Commercial Officer, effective January 13, 2023.

Pursuant to his employment agreement, on May 28, 2019, Mr.

Maloberti was granted stock options to purchase 1,750 shares of the Company’s common stock.

The stock options have an exercise price of $20.80 per share, and vested in three equal annual installments beginning on the first anniversary of the grant date.

Irina Pestrikova .

Pestrikova is employed by the Company pursuant to an Offer Letter by and between the Company and Ms.

Pestrikova, dated as of June 9, 2021.

Pestrikova’s employment is “at will” and may be terminated by the Company at any time and for any reason.

Effective as of December 31, 2023, Ms.

Pestrikova’s annual salary was set by the Board at $185,000.

Per the terms of her offer letter, Ms.

Pestrikova is eligible to receive employee benefits plans including medical, dental, vision, and 401(k) plans.

Additionally, our named executive officers are eligible to participate in our health and welfare programs and 401(k) plan, and other benefit programs on the same basis as other employees.

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The following table provides information regarding equity awards held by the named executive officers as of December 31, 2023.

The number of securities underlying the equity awards and option exercise prices reflect the reverse stock split of our common stock at a ratio of 1-for-20, which was effective as of December 9, 2022.

Option Awards

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Option Exercise

Expiration Date

Unexercisable

Francois Michelon

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Chief Technology Officer

Renaud Maloberti

Former Chief Commercial Officer

Irina Pestrikova

Senior Director, Finance

Represents unvested portion of stock option award which vests in three equal annual installments beginning on April 5, 2022.

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Represents unvested portion of stock option award which vests in three equal annual installments beginning on January 30, 2024.

Represents unvested portion of stock option award which vests in three equal annual installments beginning on February 5, 2022.

Represents unvested portion of stock option award which vests in three equal annual installments beginning on June 18, 2022.

Equity Compensation Plan Table

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Plan Category

Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Number of Securities

to Be Issued upon

Exercise of Outstanding

Options, Warrants

Weighted-Average

Exercise Price of

Outstanding Options,

Warrants and Rights

Number of Securities

Remaining Available

for Future Issuance

Compensation Plans

(Excluding Securities

Reflected in Column (a))

Equity compensation plans approved by security holders

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Director Compensation

Effective April 9, 2020, the Company adopted a non-employee director compensation policy (the “ Compensation Policy ”) pursuant to which each of our non-employee directors receives, upon his or her initial election to the Board of Directors, a stock option exercisable for 2,500 shares of common stock with a per share exercise price equal to the closing price of the common stock on the Nasdaq on the grant date.

Effective January 30, 2023, the Company adopted a non-employee director compensation policy (the “ Compensation Policy ”) pursuant to which each of our non-employee directors receives, upon his or her initial election to the Board of Directors, a stock option exercisable for 2,500 shares of common stock with a per share exercise price equal to the closing price of the common stock on the Nasdaq on the grant date.

All such stock options vest in three equal annual installments beginning on the one-year anniversary of the grant date.

Under the Compensation Policy, on the first trading day of each calendar year, each non-employee director is awarded a stock option exercisable for 600 shares of common stock, with a per share exercise price equal to the closing price of the common stock on the Nasdaq on the grant date, which becomes exercisable on the first anniversary of its grant date.

Additionally, pursuant to the Compensation Policy, each non-employee director is paid an annual cash retainer of $40,000, prorated for partial years of service and paid quarterly in arrears.

Effective January 30, 2023, the Board of Directors adopted a revised Compensation Policy, pursuant to which each annual option grant will become exercisable in three equal annual installments beginning on the first anniversary of the grant date.

The following table sets forth information with respect to compensation earned by or awarded to each of our non-employee directors who served on the Board of Directors during the fiscal year ended December 31, 2023:

Fees Earned or

Paid in Cash ($)

Awards ($) (1)

Louis Basenese

Fees Earned or Paid in Cash ($)

All Other Compensation ($)

Anthony DiGiandomenico

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Alexander Tokman

Louis Basenese

The amounts shown in this column indicate the grant date fair value of option awards granted in the subject year computed in accordance with FASB ASC Topic 718.

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The following table shows the number of shares subject to outstanding option awards held by each non-employee director as of December 31, 2023:

Shares Subject to Outstanding Option

Subject to Outstanding

Louis Basenese

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Alexander Tokman

In addition to annual awards granted pursuant to the Compensation Policy, in 2023 the Company awarded each director additional stock options in order to realign the incentive nature of the Company’s equity compensation with the price of the Company’s common stock.

Represent fees paid for consulting services pursuant to that certain Consulting Agreement, dated October 17, 2023, between the

Company and Mr.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.

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each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of any class of our voting stock;

each named executive officer included in the Summary Compensation Table below;

each named executive officer included in the Summary Compensation Table above;

each of our directors;

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Michael Thornton

Renaud Maloberti

Irina Pestrikova

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5% Stockholders

Michael Bryan, Sr.

Donald Kendall (11)

* Less than one percent.

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Consists of 34,139 shares of common stock, 100,770 shares of common stock issuable upon the exercise of options that are presently exercisable or becoming exercisable within 60 days of March 24, 2024 and 1,213 shares of common stock issuable upon the exercise of restricted warrants.

(3) Consists of 79 shares of common stock and 8,834 shares of common stock issuable upon the exercise of options that are presently exercisable or becoming exercisable within 60 days of March 16, 2023.

Consists of 6,950 shares of common stock issuable upon the exercise of options that are presently exercisable or becoming exercisable within 60 days of March 24, 2024.

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Consists of 8,143 shares of common stock and 17,786 shares of common stock issuable upon the exercise of options that are presently exercisable or becoming exercisable within 60 days of March 24, 2024.

(9) According to the Schedule 13G filed on March 10, 2023 by Michael Bryan, Sr., Mr.

Bryan beneficially owns 192,500 shares of common stock.

The address of Mr.

Bryan is 51 Wentworth Rd., Rye, New Hampshire 03870.

Shares jointly owned with spouse.

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Tryon St., Suite 1000, Charlotte, NC 28202.

Kendall’s address is 2000 Edwards Street, Suite B-100, Houston, TX 77007.

Shares jointly owned with spouse.

Busch’s address is 300 S.

Tryon St., Suite 1000, Charlotte, NC 28202.

Rivero’s address is 14521 Jockey Circle, N.

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(i) an executive officer, director or director nominee of the Company, (ii) a beneficial owner of more than 5% of any class of the Company’s voting securities, (iii) an immediate family member of an executive officer, director or director nominee or beneficial owner of more than 5% of any class of the Company’s voting securities, or (iv) any entity that is owned or controlled by any of the foregoing persons or in which any of the foregoing persons has a substantial ownership interest or control.

Since January 1, 2021, the Company has not participated in any such related party transaction.

Other than as set forth below, since January 1, 2022, the Company has not participated in any such related party transaction.

On May 2, 2023, the Company conducted a public offering in which Anthony DiGiandomenico, a director of the Company, purchased 83,333 shares of the Company’s common stock and 41,667 warrants at the public offering price, for an aggregate purchase price of approximately $100,000.

Principal Accountant Fees and Services

RBSM audited our financial statements for the year ended December 31, 2022.

RBSM LLP (“RBSM”) audited our financial statements for the year ended December 31, 2023.

The following table sets forth the aggregate fees billed or expected to be billed by RBSM for audit and non-audit services in 2023 and 2022, including “out-of-pocket” expenses incurred in rendering these services.

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Specimen Certificate representing shares of common stock of the Company

Form of Warrant Agreement and Warrant comprising a part of the Company’s units issued in its 2017 initial public offering

Form of Underwriters’ Warrant issued to certain designees of the underwriters in the Company’s 2017 initial public offering

Form of Underwriters’ Warrant issued to certain designees of the underwriters in the Company’s October 2018 offering

Form of Warrant issued in July 2019 Private Placement

Certificate of Designations of Series A Convertible Preferred Stock

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Certificate of Designations of Series C Preferred Stock

Form of Warrant issued in April 2023 Underwritten Public Offering

Form of Underwriter’s Warrant issued in April 2023 Underwritten Public Offering

Form of Warrant Agency Agreement

Description of Securities

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Form of Restricted Stock Unit Award under 2016 Omnibus Incentive Plan*

Non-Employee Director Compensation Policy, effective April 9, 2020*

Non-Employee Director Compensation Policy, effective January 30, 2023*

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Consulting Agreement, dated October 31, 2017, by and between the Company and StarFish Product Engineering, Inc.

Employment Agreement, dated April 20, 2019, by and between the Company and Renaud Maloberti*

Consulting Agreement, dated October 17, 2023, by and between the Company and Alexander Tokman*

Offer Letter, dated June 9, 2021, by and between the Company and Irina Pestrikova.*

Subsidiaries of the Company

Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Form S-3)

Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Form S-8)

Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Forms S-3)

Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Forms S-8)

Power of Attorney (included on signature page)

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Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Incentive-Based Compensation Recovery Policy

XBRL Instance Document

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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-K

Item 9A. Controls and Procedures