What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-14 compared with 2023-11-14 · 132 added, 137 removed, 249 unchanged (52% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

Current Assets

10 unchanged sentences

Total Current Liabilities

Lease liabilities, non-current

Total Long Term Liabilities

Long Term Debt

Loans, long term

Lease liabilities

Total Long Term Debt

Total Liabilities

2 unchanged sentences

10,000 shares authorized;

141 .397 shares issued and outstanding

34 .976 and 141 .397 shares issued and outstanding

Series B Convertible Preferred Stock, $ 0.0001 par value;

19 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating Expenses

6 unchanged sentences

( 2,939,328 )

( 9,062,955 )

( 9,844,178 )

Other Expenses

4 unchanged sentences

( 2,942,746 )

( 8,600,714 )

( 9,889,496 )

Provision for income taxes

1 unchanged sentence

$ ( 2,942,746 )

$ ( 8,600,714 )

$ ( 9,889,496 )

Net loss per share – basic and diluted

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended September 30, 2022

Series A Convertible

Series B Convertible

Preferred Stock

Stockholders'

Balance as of June 30, 2022

$ ( 75,140,079 )

Fair value of vested stock options

Stock payable towards preference dividend

( 3,440,227 )

Balance as of September 30, 2022

$ ( 78,580,306 )

Three Months Ended September 30, 2023

Series A Convertible

Series B Convertible

Preferred Stock

Stockholders'

Balance as of June 30, 2023

$ ( 87,369,780 )

Common stock issued for cash, net of funding costs

Fair value of vested stock options

Stock payable towards preference dividend

( 3,100,836 )

Balance as of September 30, 2023

$ ( 90,470,616 )

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Series A Convertible

Series B Convertible

Preferred Stock

Stockholders'

Stock Payable

Balance as of December 31, 2022

( 81,869,902 )

Common stock issued for cash, net of funding costs

Fair value of vested stock options

2 unchanged sentences

( 2,942,746 )

Balance as of September 30, 2022

Balance as of March 31, 2023

$ ( 84,812,648 )

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Series A Convertible

Series B Convertible

Preferred Stock

Stockholders'

Stock Payable

Balance as of December 31, 2023

( 91,930,152 )

Common stock issued for cash, net of funding costs

Warrants issued for cash, net of funding costs

Preferred stock conversion to common stock

Common stock issued for cash

Common stock issued for warrant exercise

Fair value of vested common stock for services

Fair value of vested stock options

2 unchanged sentences

( 2,775,700 )

Balance as of September 30, 2023

Balance as of March 31, 2024

$ ( 94,705,852 )

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

September 30,

Three Months Ended

Cash Flows from Operating Activities

3 unchanged sentences

Depreciation and amortization

Stock compensation expense including common stock issued for RSUs

Fixed assets write off

Inventory reserve

Stock compensation expense

Amortization of right of use assets

Gain on extinguishment of debt

Changes in operating assets and liabilities:

1 unchanged sentence

Increase in inventory

( 1,349,499 )

Increase in accounts payable and accrued liabilities

5 unchanged sentences

Purchases of fixed assets

Proceeds from sale of fixed assets

Net cash used in investing activities

Cash Flows from Financing Activities

Proceeds from issuance of common stock, net

Proceeds from issuance of warrants, net

Proceeds from issuance of common stock

Proceeds from warrant exercise

Repayment of loan

Net cash provided by financing activities

14 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2023 and 2022

For the three months ended March 31, 2024 and 2023

Note 1 - Nature of the Business

2 unchanged sentences

ENDRA was incorporated on July 18, 2007 as a Delaware corporation.

Certain reclassifications have been made to the 2022 consolidated financial statements in order to conform to the current period presentations.

These classifications did not impact the net loss for period ended September 30, 2023.

Note 2 - Summary of Significant Accounting Policies

Reverse Stock Split

All per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the Reverse Split (as defined and described under Note 7 below).

Use of Estimates

10 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 three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The balance sheet at December 31, 2022 has been derived from the audited financial statements at that date.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The balance sheet at March 31, 2024 has been derived from the audited financial statements at that date.

For further information, refer to the financial statements and footnotes thereto included in the Company’s annual financial statements for the twelve months ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024.

5 unchanged sentences

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

The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.

In light of the liquidity concerns in the banking system arising from the closure of Silicon Valley Bank and appointment of the Federal Deposit Insurance Corporation as receiver, the Company maintains cash deposits at multiple banks to mitigate the risk associated with a failure of any specific bank.

The Company has not experienced any losses in such accounts and periodically evaluates the creditworthiness of the financial institutions and has determined the credit exposure to be negligible.

The Company maintains cash deposits at multiple banks to mitigate the risk associated with a failure of any specific bank.

The Company’s inventory is stated at the lower of cost or estimated net realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out method.

The Company periodically determines whether a reserve should be taken for devaluation or obsolescence of inventory.

The Company assessed its inventory at March 31, 2024 and determined that certain challenges, including potential damage and a longer timeframe for initial sales, warranted the establishment of an inventory shrinkage reserve.

As a result, the Company recognized an inventory reserve of 5 % amounting to $ 142,733 , which resulted in the net carrying value of inventory of $ 2,711,923 .

Capitalization of Fixed Assets

7 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.

As of September 30, 2023 and December 31, 2022, the Company recorded a right of use asset of $ 393,451 and $ 505,816 , respectively.

As of September 30, 2023 and December 31, 2022, the Company recorded a lease liability of $ 405,773 and $ 518,147 , respectively.

At March 31, 2024 and December 31, 2023 the Company recorded a right of use asset of $ 313,715 and $ 354,091 , respectively.

At March 31, 2024 and December 31, 2023 the Company recorded a lease liability of $ 324,064 and $ 365,919 , respectively.

Revenue Recognition

6 unchanged sentences

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

During the three months ended September 30, 2023 and 2022, the Company incurred $ 1,632,849 and $ 1,830,297 of expenses related to research and development costs, respectively.

During the nine months ended September 30, 2023 and 2022, the Company incurred $ 4,424,345 and $ 4,890,879 of expenses related to research and development costs, respectively.

During the three months ended March 31, 2024 and 2023, the Company incurred $ 1,041,526 and $ 1,391,314 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 3,100,429 and 410,358 potentially dilutive shares, which include outstanding common stock options, and warrants, as of September 30, 2023 and December 31, 2022, respectively.

September 30,

There were 1,444,742 and 1,514,715 potentially dilutive shares, which include outstanding common stock options, and warrants, as of March 31, 2024 and December 31, 2023, respectively.

Options to purchase common stock

15 unchanged sentences

The carrying amounts of the Company’s financial assets and liabilities, including cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities, approximate their fair values because of the short maturity of these instruments.

The fair value of notes payable approximates their fair values since the current interest rates and terms on these obligations are the same as prevailing market rates.

The fair value of notes payable and convertible notes approximates their fair values since the current interest rates and terms on these obligations are the same as prevailing market rates.

Share-based Compensation

1 unchanged sentence

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, 2023, the pool of shares issuable under the Omnibus Plan automatically increased by 867,966 shares from 454,203 shares to 1,322,169 shares.

Effective January 1, 2024, the pool of shares issuable under the Omnibus Plan automatically increased by 1,717,783 shares from 1,322,169 shares to 3,039,952 shares .

The Company records share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification.

7 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 September 30, 2023 of $ 90,470,616 .

The Company had working capital of $ 4,228,598 as of September 30, 2023.

The Company has limited commercial experience and had a cumulative net loss from inception to March 31, 2024 of $94,705,852.

The Company had working capital of $53,818 as of March 31, 2024.

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 and will require additional financing to fund its future planned operations, including research and development and commercialization of its products.

The accompanying financial statements for the three and nine months ended September 30, 2023 have been prepared assuming the Company will continue as a going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable.

These matters raise substantial doubt about the Company's ability to continue as going concern.

The accompanying financial statements for the three months ended March 31, 2024 have been prepared assuming the Company will continue as a going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable.

Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing.

4 unchanged sentences

Recent Accounting Pronouncements

The Company considered recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, and concluded that they did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.

The Company considered recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.

Note 3 - Inventory

As of September 30, 2023 and December 31, 2022, inventory consisted of raw materials, subassemblies to be used in the assembly of TAEUS systems, and finished goods.

As of September 30, 2023, the Company had no orders pending for the sale of a TAEUS system.

As of September 30, 2023 and December 31, 2022, the Company had inventory valued at $ 2,757,633 and $ 2,644,717 , respectively.

As of March 31, 2024 and December 31, 2023, inventory consisted of raw materials, subassemblies to be used in the assembly of TAEUS systems, and finished goods.

As of March 31, 2024, the Company had no orders pending for the sale of a TAEUS system.

As of March 31, 2024, the Company recorded inventory reserve of 5 % or $ 142,733 .

As of March 31, 2024 and December 31, 2023, the Company had inventory valued at $ 2,711,923 and $ 2,622,865 , respectively.

Note 4 - Fixed Assets

As of September 30, 2023 and December 31, 2022, fixed assets consisted of the following:

September 30,

As of March 31, 2024 and December 31, 2023, fixed assets consisted of the following:

Property, leasehold and capitalized software

2 unchanged sentences

Fixed assets, net

Depreciation expense for the three months ended September 30, 2023 and 2022 was $ 32,058 and $ 23,793 , respectively.

Depreciation expense for the nine months ended September 30, 2023 and 2022 was $ 101,839 and $ 64,532 , respectively.

Depreciation expense for the three months ended March 31, 2024 and 2023 was $ 15,300 and $ 34,516 .

Note 5 - Accounts Payable and Accrued Liabilities

As of September 30, 2023 and December 31, 2022, current liabilities consisted of the following:

September 30,

As of March 31, 2024 and December 31, 2023, current liabilities consisted of the following:

Accounts payable

7 unchanged sentences

This note bears interest on the unpaid balance at the rate of zero percent ( 0 %) per annum during the initial term.

Under this note no interest payments are due until January 1, 2024.

Under this note no interest payments were due until January 1, 2024.

Under the conditions of the loan, twenty-five percent (25%) of the loan will be forgiven if seventy-five percent (75%) is repaid prior to the initial term date .

As of September 30, 2023 and December 31, 2022, the loan had a balance of CAD 40,000 .

During the three months ended March 31, 2024, the loan was repaid in full.

As of March 31, 2024 and December 31, 2022, the loan had a balance of CAD 0 and CAD 40,000 .

Note 7 - Capital Stock

Reverse Stock Split

On December 7, 2022, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment (the “Certificate of Amendment”) to its certificate of incorporation, which Certificate of Amendment effectuated as of December 19, 2022 at 12:01 a.m.

Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-20 (the “Reverse Split”).

All per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the Reverse Split.

No fractional shares were, or shall be, issued in connection with the Reverse Split.

A stockholder who would otherwise be entitled to receive a fractional share of common stock is entitled to receive the fractional share rounded up to the next whole share.

The Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Company’s common or preferred stock.

The Reverse Split resulted in a proportionate adjustment to the per share conversion or exercise price and the number of shares of common stock issuable upon the conversion or exercise of outstanding preferred stock, stock options and warrants, as well as the number of shares of common stock eligible for issuance under the Company’s 2016 Omnibus Incentive Plan.

Capital Stock

As of September 30, 2023, 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”), 1,000 shares of its preferred stock as Series B Convertible Preferred Stock (“Series B Preferred Stock”), 100,000 shares of its preferred stock as Series C Preferred Stock (“Series C Preferred Stock”), and the remainder of the 9,889,000 preferred shares remain authorized but undesignated.

As of September 30, 2023, there were 8,411,777 shares of common stock, 141 .397 shares of Series A Preferred Stock, and no shares of Series B Preferred Stock or Series C Preferred Stock issued and outstanding, and a stock payable balance of $ 2,061 .

On April 27, 2023, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Newbridge Securities Corporation (the “Underwriter”), relating to the issuance and sale (the “Offering”) of 3,750,000 shares of the Company’s common stock and warrants to purchase up to 1,875,000 shares of the Company’s common stock.

The warrants were offered and sold at the rate of one warrant to purchase one share for every two shares of common stock purchased in the Offering.

The public offering price for each set of two shares of common stock and accompanying warrant to purchase one share of common stock was $ 2.41 per set of securities, yielding an effective price of $ 1.20 per share and $ 0.01 per warrant.

Under the terms of the Underwriting Agreement, the Company also granted to the Underwriter an option (the “Over-allotment Option”) to purchase up to an additional 562,500 shares of common stock and additional warrants to purchase 281,250 shares of common stock.

The Offering closed on May 2, 2023.

The Company conducted the Offering pursuant to a Registration Statement on Form S-1 (File Nos.

333-271003 and 333-271483) (the “Registration Statement”), which was declared effective by the SEC on April 27, 2023.

At the closing of the Offering, the Underwriter fully exercised the Over-allotment Option.

The net proceeds to the Company from the Offering were approximately $ 4.7 million, after deducting underwriting discounts and commissions and other offering expenses.

During the nine months ended September 30, 2023, the Company issued a total of 4,312,500 shares of its common stock in return for aggregate net proceeds of $ 4,712,750 under the Offering.

The Company issued an additional 930,174 shares of its common stock in return for aggregate net proceeds of $ 1,113,832 under the June 2021 ATM Agreement.

During the nine months ended September 30, 2022, the Company issued a total of 1,030,997 shares of its common stock in return for aggregate net proceeds of $ 8,399,512 under the June 2021 ATM Agreement.

At-the-Market Equity Offering Program

At March 31, 2024, 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”), 1,000 shares of its preferred stock as Series B Convertible Preferred Stock (“Series B Preferred Stock”), 100,000 shares of its preferred stock as Series C Preferred Stock, and the remainder of the 9,889,000 preferred shares remain authorized but undesignated.

As of March 31, 2024, there were 10,914,447 shares of common stock (which exclude 121,212 unvested shares of restricted stock described in Note 8 below), 34 .976 shares of Series A Preferred Stock, and no shares of Series B Preferred Stock or Series C Preferred Stock issued and outstanding, and a stock payable balance of $ 301 .

During the three months ended March 31, 2024, the Company issued a total of 443,489 shares of its common stock, as follows:

- 118,904 shares of its common stock upon warrant exercises for an aggregate net proceeds of $ 77,419 ;

- 316,963 shares of its common stock in return for aggregate net proceeds of $ 419,967 under the June 2021 ATM Agreement;

- 7,622 shares of its common stock upon conversion of 106 .421 shares of its Series A Preferred Stock.

During the three months ended March 31, 2024, a total of 80,808 shares of the previously issued restricted common stock vested.

The shares were issued for services and valued at $ 80,000 .

At-the-Market Equity Offering Programs

On June 21, 2021, the Company entered into the At-The-Market Issuance Sales Agreement with Ascendiant (the “June 2021 ATM Agreement”) to sell shares of common stock for aggregate gross proceeds of up to $ 20.0 million, from time to time, through an “at-the-market” equity offering program under which Ascendiant acts as sales agent.

As of September 30, 2023, under the June 2021 ATM Agreement the Company has issued an aggregate of 1,994,808 shares of common stock in return for net proceeds of $ 10,330,450 , resulting in $ 320,921 of compensation paid to Ascendiant.

Note 8 - Common Stock Options

As of March 31, 2024, under the June 2021 ATM Agreement the Company had issued an aggregate of 2,706,644 shares of common stock in return for net proceeds of $ 11,407,240 , resulting in $ 354,527 of compensation paid to Ascendiant.

On February 14, 2024, the Company entered into a new At-The-Market Issuance Sales Agreement with Ascendiant (the “February 2024 ATM Agreement”) to sell shares of common stock for aggregate gross proceeds of up to $ 6.2 million, which replaced the June 2021 ATM Agreement.

As of March 31, 2024, the Company had not sold any shares under the February 2024 ATM Agreement.

Note 8 - Common Stock Options and Restricted Stock

Common Stock Options

Stock options are awarded to the Company’s employees, consultants and non-employee members of the board of directors under 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 nine months ended September 30, 2023 was determined to be $ 1,017,534 using the Black-Scholes-Merton option-pricing model based on the following assumptions:

(i) volatility rate of 105 % to 107 %, (ii) discount rate of 0 %, (iii) zero expected dividend yield, (iv) risk free rate of 3.68 % to 3.86 %, and (v) expected life of 10 years.

A summary of option activity under the Company’s Omnibus Plan as of September 30, 2023, and changes during the year then ended, is presented below:

The aggregate fair value of these stock options granted by the Company during the three months ended March 31, 2024 was determined to be $ 77,418 using the Black-Scholes-Merton option-pricing model based on the following assumptions:

(i) volatility rate of 107 % to 111 %, (ii) discount rate of 0 %, (iii) zero expected dividend yield, (iv) risk free rate of 3.93 % to 4.21 %, (v) price of $ 1.13 to $ 1.59 , and (vi) expected life of 8 - 10 years.

A summary of option activity under the Company’s Omnibus Plan as of March 31, 2024, and changes during the year then ended, is presented below:

Balance outstanding at December 31, 2023

Cancelled or expired

Balance outstanding at September 30, 2023

Exercisable at September 30, 2023

Balance outstanding at March 31, 2024

Exercisable at March 31, 2024

Restricted Common Stock

On November 30, 2023, the Company issued 202,020 shares of restricted common stock (the “Restricted Stock”) of the Company to PatentVest, Inc.

(“PatentVest”) pursuant to a Restricted Stock Agreement and Consulting Services Agreement, each with PatentVest, in exchange for certain services related to the Company’s patent portfolio.

The fair value of the Restricted Stock was determined to be $ 200,485 using the market price of the stock on the date of the issuance.

The Restricted Stock is subject to a vesting schedule pursuant to the Restricted Stock Agreement and the shares may not be sold, assigned, transferred, pledged, hypothecated, disposed of or otherwise encumbered prior to becoming vested.

During the three months ended March 31, 2024, the Company recorded as vested 80,808 shares valued at $ 80,000 .

Note 9 - Common Stock Warrants

Warrant Conversions and Consent Solicitation

On May 2, 2023, the Company conducted the Offering in which the Company issued 2,156,250 warrants to purchase shares of common stock for an exercise price per share equal to $ 1.40 .

Warrant Exercises

On May 2, 2023, the Company conducted a registered offering in which the Company issued 2,156,250 warrants to purchase shares of common stock for an exercise price per share equal to $ 1.40 .

The warrants expire May 2, 2028 .

In December 2023, the Board approved a temporary reduction of the exercise price per share from $ 1.40 to $ 0.70 .

The Company also issued to the placement agent and its designees warrants exercisable for an aggregate of 301,875 shares of common stock for an exercise price per share equal to $ 1.50 .

The warrants expire November 2, 2026 .

The following table summarizes all stock warrant activity of the Company for the nine months ended September 30, 2023:

During the three months ended March 31, 2024, the Company issued a total of 118,904 shares of its common stock upon warrant exercises for an aggregate net proceeds of $ 83,233 .

The following table summarizes all stock warrant activity of the Company for the three months ended March 31, 2024:

Balance outstanding at December 31, 2023

Balance outstanding at September 30, 2023

Exercisable at September 30, 2023

Balance outstanding at March 31, 2024

Exercisable at March 31, 2024

Note 10 - Related Party Transactions

On May 2, 2023, the Company conducted the Offering in which the Company issued 83,333 shares of its common stock and 41,667 warrants to the Company’s director, Anthony DiGiandomenico, for cash, which was less than 5 % of beneficial ownership in the Company.

On October 17, 2023, the Company entered into a consulting agreement with one of its directors, Alex Tokman, pursuant to which Mr.

Tokman provides commercialization services.

Under the terms of the agreement, Mr.

Tokman is compensated at a rate of $ 150 per hour for his services

On November 30, 2023, the Company entered into a Restricted Stock Agreement and Consulting Services Agreement, each with PatentVest, in exchange for certain services related to the Company’s patent portfolio.

PatentVest is a wholly-owned subsidiary of MDB Capital Holdings, LLC (“MDB”).

Anthony DiGiandomenico, a member of the Company’s board of directors, is the Chief of Transactions and a director of MDB.

Lou Basenese, a member of our board of directors, is President and Chief Market Strategist at Public Ventures LLC, a wholly-owned subsidiary of MDB.

Note 11 - Commitments and Contingencies

5 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 September 30, 2023 was 10 %.

The Company’s discount rate for operating leases at March 31, 2024 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 2.0 years.

As of September 30, 2023, the maturities of operating lease liabilities are as follows:

As of March 31, 2024, the maturities of operating lease liabilities are as follows:

2025 and beyond

3 unchanged sentences

Long-term lease obligations

For the nine months ended September 30, 2023 and 2022, the Company incurred rent expenses of $ 163,104 and $ 160,302 , respectively.

For the three months ended March 31, 2024 and 2023, the Company incurred rent expenses of $ 54,839 and $ 53,809 , respectively.

Employment and Consulting Agreements

Francois Michelon - The Company has an employment agreement with Francois Michelon, the Company’s Chief Executive Officer and Chairman of the board of directors, dated May 12, 2017, as amended on December 27, 2019.

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

Michelon’s annual salary to $ 423,000 .

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 achievement of performance-based objectives established by the Board of Directors.

Upon termination without cause, any portion of Mr.

Michelon’s option award scheduled to vest within 12 months will automatically vest, and upon termination without cause within 12 months following a change of control, the entire unvested portion of the option award will automatically vest.

Upon termination for any other reason, the entire unvested portion of the option award will terminate.

Michelon’s employment is terminated by the Company without cause or Mr.

Michelon terminates his employment for good reason, Mr.

Michelon will be entitled to receive 12 months’ continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control).

Under his employment agreement, Mr.

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

Michael Thornton - The Company has an employment agreement with Michael Thornton, the Company’s Chief Technology Officer, dated May 12, 2017, as amended December 27, 2019 .

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

Effective January 1, 2022, the Compensation Committee 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.

Under the employment agreement, Mr.

Thornton is eligible for an annual cash bonus based upon achievement of performance-based objectives established by the board of directors.

Upon termination without cause, any portion of Mr.

Thornton’s option award scheduled to vest within 12 months will automatically vest, and upon termination without cause within 12 months following a change of control, the entire unvested portion of the option award will automatically vest.

Upon termination for any other reason, the entire unvested portion of the option award will terminate.

Thornton’s employment is terminated by the Company without cause or Mr.

Thornton terminates his employment for good reason, Mr.

Thornton will be entitled to receive 12 months’ continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control).

Under his employment agreement, Mr.

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

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

As of September 30, 2023, 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 March 31, 2024, there were no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.

Note 12 – Subsequent Events

Common Stock Issued

Subsequent to the three months ended September 30, 2023 through the date of this Quarterly Report on Form 10-Q, the Company issued a total of 43,145 shares of common stock in return for net proceeds of $ 44,451 under the June 2021 ATM Agreement.

On May 3, 2024, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $ 1.00 for 30 consecutive trading days , the Company no longer meets the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”).

The notification has no immediate effect on the listing of the Company’s common stock.

In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has a period of 180 calendar days from May 3, 2024, or until October 30, 2024, to regain compliance with the Minimum Bid Price Requirement.

If at any time before October 30, 2024, the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days , Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement.

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