What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2024-11-19 · 123 added, 195 removed, 327 unchanged (49% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

Current Assets

2 unchanged sentences

Non-Current Assets

Inventory, net

Fixed assets, net

18 unchanged sentences

no shares issued and outstanding

Series C Convertible Preferred Stock, $0.0001 par value;

Series C Preferred Stock, $ 0.0001 par value;

100,000 shares authorized;

15 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating Expenses

4 unchanged sentences

Operating loss

( 1,469,282 )

( 2,780,541 )

Other Expenses

Other income (expense)

Warrant expense

Changes in fair value of warrant liability

Gain or Loss on settlement of warrant exercise

Total other expenses

Loss from operations before income taxes

Provision for income taxes

( 1,036,330 )

( 2,775,700 )

Provision for income taxes

$ ( 1,036,330 )

1 unchanged sentence

Net loss per share – basic and diluted

$ (2,672.98 )

Weighted average common shares – basic and diluted

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 30,2023

Series A Convertible

Series B Convertible

Preferred Stock

Stockholders'

Balance as of December 31, 2022

$ (81,869,902 )

Common stock issued for cash, net of funding costs

Warrants issued for cash, net of funding costs

Fair value of vested stock options

Stock payable towards preference dividend

Balance as of September 30,2023

$ (90,470,616 )

Nine Months Ended September 30,2024

Three Months Ended March 31, 2024

Series A Convertible

8 unchanged sentences

Common stock issued for warrant exercise

Common stock issued for cashless warrant exercise

Fair value of vested common stock (netted off with cancellation of options for terminated employees)

Fair value of vested common stock for services

Fair value of vested stock options

Stock payable towards preference dividend

Balance as of September 30,2024

Stock payable toward preference dividend

( 2,775,700 )

Three Months Ended September 30,2023

Balance as of March 31, 2024

$ ( 94,705,852 )

Three Months Ended March 31, 2025

Series A Convertible

3 unchanged sentences

Stockholders’

Balance as of June 30,2023

Balance as of December 31, 2024

$ 105,998,412

Common stock issued for cash, net of funding costs

$ ( 103,438,099 )

Fair value of vested common stock

Fair value of vested stock options

Stock payable towards preference dividend

Balance as of September 30,2023

( 1,036,330 )

Three Months Ended September 30,2024

Series A Convertible

Series B Convertible

Preferred Stock

Stockholders'

Balance as of June 30,2024

( 1,036,330 )

$ (96,935,005 )

Common stock issued for warrant exercise

Fair value of vested stock options (netted off with cancellation of options for terminated employees)

Stock payable towards preference dividend

Balance as of September 30,2024

Balance as of March 31, 2025

$ 106,227,259

$ ( 104,474,429 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ENDRA Life Sciences Inc.

Condensed Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

Cash Flows from Operating Activities

7 unchanged sentences

Amortization of right of use assets

Warrant expense

Changes in fair value of warrant liability

Gain or Loss on settlement of warrant exercise

Changes in operating assets and liabilities:

4 unchanged sentences

Net cash used in operating activities

( 1,293,129 )

( 2,144,312 )

Cash Flows from Investing Activities

4 unchanged sentences

Proceeds from issuance of common stock

Proceeds from issuance of warrants

Proceeds from issuance of cashless warrants

Proceeds from warrant issuances and exercises

Repayment of loan

Net cash provided by financing activities

Net increase (decrease) in cash

Net decrease in cash

( 1,164,606 )

( 1,699,206 )

Cash, beginning of period

7 unchanged sentences

Lease liability

Cashless warrants

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

Note 1 - Nature of the Business

6 unchanged sentences

Actual results could differ from those estimates.

Management makes estimates that affect certain accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies.

Management makes estimates that affect certain accounts including inventory reserve, deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies.

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

6 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 nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The balance sheet at September 30, 2024 has been derived from the audited financial statements at that date.

Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

The balance sheet at March 31, 2025 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, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2025.

9 unchanged sentences

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

The Company assessed its inventory at September 30, 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.

The Company assessed its inventory at March 31, 2025 and the reserve remained at 100 % of the inventory.

As of March 31, 2025 and December 31, 2024, the Company had recorded reserves of $ 2,525,179 .

As of March 31, 2025 and December 31, 2024, the Company had inventory valued at $ 0 .

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.

At September 30, 2024 and December 31, 2023 the Company recorded a right of use asset of $229,771 and $354,091, respectively.

At September 30, 2024 and December 31, 2023 the Company recorded a lease liability of $237,162 and $365,919, respectively.

At March 31, 2025 and December 31, 2024 the Company recorded a right of use asset of $ 546,216 and $ 578,013 , respectively.

At March 31, 2025 and December 31, 2024 the Company recorded a lease liability of $ 587,303 and $ 584,419 , 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, 2024 and 2023, the Company incurred $794,444 and $1,632,849 of expenses related to research and development costs, respectively.

During the nine months ended September 30, 2024 and 2023, the Company incurred $2,552,336 and $ 4,424,345 of expenses related to research and development costs, respectively.

During the three months ended March 31, 2025 and 2024, the Company incurred $ 528,685 and $ 1,041,526 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 181,974 and 788 potentially dilutive shares, which include outstanding common stock options, and warrants, as of September 30, 2024 and December 31, 2023, respectively.

September 30,

There were 180,983 and 180,986 potentially dilutive shares, which include outstanding common stock options, and warrants, as of March 31, 2025 and December 31, 2024, respectively.

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 September 30, 2024 of $99,289,095.

The Company had working capital of $4,148,262 as of September 30, 2024.

The Company has limited commercial experience and had a cumulative net loss from inception to March 31, 2025 of $ 104,474,429 .

The Company had working capital of $ 1,614,421 as of March 31, 2025.

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.

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

The accompanying financial statements for the nine months ended September 30, 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.

The accompanying financial statements for the three months ended March 31, 2025 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.

6 unchanged sentences

Note 3 - Inventory

As of September 30, 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 September 30, 2024, the Company had no orders pending for the sale of a TAEUS system.

As of September 30, 2024, the Company recorded inventory reserve of 5% or $142,733.

As of September 30, 2024 and December 31, 2023, the Company had inventory valued at $2,711,923 and $2,622,865, respectively.

As of March 31, 2025 and December 31, 2024, inventory consisted of raw materials, subassemblies to be used in the assembly of TAEUS systems, and finished goods.

As of March 31, 2025, the Company had no orders pending for the sale of a TAEUS system.

As of March 31, 2025 and December 31, 2024, the Company had recorded reserves of $ 2,525,179 .

As of March 31, 2025 and December 31, 2024, the Company had inventory valued at $ 0 .

Note 4 - Fixed Assets

As of September 30, 2024 and December 31, 2023, fixed assets consisted of the following:

September 30,

As of March 31, 2025 and December 31, 2024, 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, 2024 and 2023 was $11,496 and $32,058.

Depreciation expense for the nine months ended September 30, 2024 and 2023 was $35,489 and $101,839.

Depreciation expense for the three months ended March 31, 2025 and March 31, 2024 was $ 13,786 and $ 15,300 , respectively.

Note 5 - Accounts Payable and Accrued Liabilities

As of September 30, 2024 and December 31, 2023, current liabilities consisted of the following:

September 30,

As of March 31, 2025 and December 31, 2024, current liabilities consisted of the following:

Accounts payable

Accrued payroll

Accrued bonuses

Payroll accrual

Accrued employee benefits

Insurance premium financing

Accrued expenses

Note 6 - Bank Loans

Toronto-Dominion Bank Loan

On April 27, 2020, the Company entered into a commitment loan with TD Bank under the Canadian Emergency Business Account, in the principal aggregate amount of CAD 40,000, due and payable upon the expiration of the initial term on December 31, 2022, which was later extended to December 31, 2023.

On April 27, 2020, the Company entered into a commitment loan with TD Bank under the Canadian Emergency Business Account, in the principal aggregate amount of CAD 40,000 , due and payable upon the expiration of the initial term mon December 31, 2022 which was later extended to December 31, 2023 .

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

1 unchanged sentence

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 .

During the nine months ended September 30, 2024, the loan was repaid in full.

As of September 30, 2024 and December 31, 2023, the loan had a balance of CAD 0 and CAD 40,000, respectively.

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

Note 7 - Capital Stock

Capital Stock

At September 30, 2024, the authorized capital of the Company consisted of 30,000,000 shares of capital stock, comprised of 20,000,000 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 March 31, 2025, the authorized capital of the Company consisted of 30,000,000 shares of capital stock, comprised of 20,000,000 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 September 30, 2024, there were 534,863 shares of common stock outstanding (which excludes both the 69 unvested shares of restricted stock described in Note 8 below and the conversion of Series A Preferred Stock into 1 shares of common stock and does include 12,857 shares of common stock due to exercise of warrants ), 17.488 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 $0.

During the nine months ended September 30, 2024, the Company issued a total of 528,926 shares of its common stock, as follows:

Registered offering (described below):

- 3,490 shares of its common stock in return for aggregate net proceeds of $728,503 under the Placement Agreement;

- 31,666 shares of its common stock upon exercise of pre-funded warrants for aggregate net proceeds of $6,609,831 under the Placement Agreement (includes net proceeds from sale and exercise of pre-funded warrants);

Other issuances:

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

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

- 5 shares of its common stock upon conversion of 123.909 shares of its Series A Preferred Stock;

- 46 shares of the previously issued restricted common stock vested.

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

Series B warrant exercises:

- 493,469 shares of its common stock upon cashless exercise of Series B Warrants

During the nine months ended September 30, 2023, the Company issued a total of 2,464 shares of its common stock in return for aggregate net proceeds of $4,712,750 under the Offering.

The company issued an additional 531 shares of its common stock in return for aggregate net proceeds of $1,113,832 under the June 2021 ATM Agreement.

Registered Offering

On June 4, 2024, the Company entered into a placement agency agreement (the “Placement Agreement”) with Craig-Hallum Capital Group LLC (the “Placement Agent”) pursuant to which the Placement Agent served, on a best efforts basis, in connection with the issuance and sale (the “Offering”) of 3,490 shares of common stock and pre-funded warrants to purchase up to an aggregate of 31,666 shares of common stock (the “pre-funded warrants”), together with Series A warrants to purchase up to an aggregate of 178,255 shares of common stock (the “Series A Warrants”) and Series B warrants to purchase up to an aggregate of 178,255 shares of common stock (the “Series B Warrants” and, together with the Series A Warrants, the “Series Warrants”).

The common stock, pre-funded warrants and Series Warrants were sold in a fixed combination, with each share of common stock or pre-funded warrant accompanied by a Series A Warrant to purchase one share of common stock and a Series B Warrant to purchase one share of common stock.

In connection with the Offering, the Company also issued to the Placement Agent warrants (“Placement Agent Warrants”) to purchase up to 1,758 shares of common stock.

The Offering closed on June 5, 2024.

The purchase price of each share of common stock and accompanying Series Warrants was $227.50 and the purchase price of each pre-funded warrant and accompanying common warrants was $227.325.

The Company received net proceeds from the Offering, after deducting offering expenses payable by the Company, of $7,338,333.

The Offering was made pursuant to the Company’s registration statement on Form S-1 (File No.

333-278842), declared effective by the SEC on June 4, 2024.

The Series Warrants were first exercised in connection with the reverse stock split effective on August 20, 2024.

Each Series A Warrant will expire five years from the Initial Exercise Date.

Each Series B Warrant will expire two and one-half years from the Initial Exercise Date.

Under the alternate cashless exercise option of the Series B Warrants, the holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant using $1.75 as the exercise price for that purpose and (y) 3.0.

In addition, the Series Warrants include a provision that resets their respective exercise prices in the event of a reverse split of the Company’s common stock to a price equal to the lesser of (i) the then current exercise price and (ii) lowest volume weighted average price (VWAP) during the period commencing five trading days immediately preceding and the five trading days commencing on the date the Company effects a reverse stock split, (such lower price, the “Floor Price”), provided that such Floor Price shall not be lower than $0.0434 (subject to adjustment for reverse and forward splits, recapitalizations and similar transactions), with a proportionate adjustment to the number of shares underlying the Series Warrants.

The effect of the Company’s August 2024 and November 2024 reverse splits are that the number of shares underlying the Series A Warrants and Series B Warrants totaled 178,255 each.

Subject to certain exceptions, the Series A Warrants provide for an adjustment to the exercise price and number of shares underlying the Series A Warrants upon the Company’s issuance of Common Stock or Common Stock equivalents at a price per share that is less than the exercise price of the Series A Warrants, provided that such adjusted price shall be no less than $75.95 (subject to adjustment for reverse and forward splits, recapitalizations and similar transactions).

A holder does not have the right to exercise any portion of the Series A Warrants or Series B Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series A Warrants and Series B Warrants.

However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days following notice from the holder to us.

Pursuant to the Placement Agreement, in addition to the Placement Agent Warrants described above, the Company paid the Placement Agent a cash placement fee equal to 7.0% of the aggregate gross proceeds raised in the Offering.

The Company reimbursed expenses of the Placement Agent in connection with the Offering, including but not limited to legal fees, of $100,000.

The Placement Agent Warrants have an expiration date of three and one-half years from the Initial Exercise Date and were immediately exercisable upon issuance.

The Company has agreed, subject to certain exceptions, not to effect any issuance of Common Stock or securities convertible into Common Stock involving a Variable Rate Transaction, as defined in the Placement Agreement, for a period commencing on the date of the Placement Agreement until 180 days following the closing of the Offering.

As of March 31, 2025, there were 562,213 shares of common stock outstanding (which excludes 69 unvested shares of restricted stock described in Note 8 below and 24,695 shares issued by the Company pursuant to the February 2024 ATM Agreement (as defined below) and includes the conversion of Series A Preferred Stock into 1 share of common stock and 12,857 shares of common stock due to exercise of warrants), 17.488 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 $ 0 .

During the three months ended March 31, 2025, the Company issued a total of 25,305 shares of its common stock under the February 2024 ATM Agreement in return for aggregate net proceeds of $ 145,803 , which takes into account $ 4,641 in compensation paid to Ascendiant Capital Markets, LLC (“Ascendiant”) in its role as Sales Agent under the February 2024 ATM Agreement.

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.

Prior to its replacement by the February 2024 ATM Agreement (as defined below), under the June 2021 ATM Agreement the Company issued an aggregate of 1,547 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 September 30, 2024, the Company had not sold any shares under the February 2024 ATM Agreement.

Under the February 2024 ATM Agreement, as of March 31, 2025, the Company has issued a total of 25,305 shares of its common stock in return for aggregate net proceeds of $ 145,803 , resulting in $ 4,641 of compensation paid to Ascendiant.

Reverse Stock Split

On August 16, 2024, 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 August 20, 2024 at 12:01 a.m.

Eastern Time (the “Effective Time”) a reverse split of the Company’s common stock by a ratio of one-for-50 (the “August 2024 Reverse Stock Split”).

All per share amounts (including exercise prices) and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the August 2024 Reverse Stock Split and the November 2024 Reverse Stock Split (as described in Note 13 below).

No fractional shares were, or shall be, issued in connection with the August 2024 Reverse Stock Split.

The August 2024 Reverse Stock 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 Omnibus Plan.

On August 16, 2024, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to its certificate of incorporation, which effectuated as of August 20, 2024 at 12:01 a.m.

Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-50 (the “August 2024 Reverse Stock Split”).

On November 4, 2024, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to its certificate of incorporation, which effectuated as of November 7, 2024 at 12:01 a.m.

Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-35 (the “November 2024 Reverse Stock Split”).

All per share amounts (including exercise prices) and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect both the August 2024 Reverse Stock Split and the November 2024 Reverse Stock Split.

The August 2024 Reverse Stock Split and the November 2024 Reverse Stock 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 Omnibus Plan.

Note 8 - Common Stock Options and Restricted Stock

1 unchanged sentence

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, 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 $1,9777.50 to $2,782.50, and (vi) expected life of 8-10 years.

A summary of option activity under the Company’s Omnibus Plan as of September 30, 2024, and changes during the year then ended, is presented below:

There were no issuances of stock options in the quarter ended March 31, 2025.

A summary of option activity under the Company’s Omnibus Plan as of March 31, 2025, and changes during the quarter then ended, is presented below:

Balance outstanding at December 31, 2024

Cancelled or expired

Balance outstanding at September 30, 2024

Exercisable at September 30, 2024

Balance outstanding at March 31, 2025

Exercisable at March 31, 2025

Restricted Common Stock

3 unchanged sentences

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 nine months ended September 30, 2024, the Company recorded as vested 46 shares valued at $80,000.

During the three months ended March 31, 2024, the Company recorded as vested 46 shares valued at $ 80,000 .

No services were provided by PatentVest, Inc.

in the quarter ended March 31, 2025.

Note 9 - Common Stock Warrants

As described above in “Registered Offering” (Note 7), the Company issued pre-funded warrants to purchase up to an aggregate of 31,666 shares of common stock (the “pre-funded warrants”), together with Series A Warrants to purchase up to an aggregate of 178,255 shares of common stock and Series B Warrants to purchase up to an aggregate of 178,255.

In June 2024, as part of a registered offering, the Company issued pre-funded warrants to purchase up to an aggregate of 31,666 shares of common stock (the “pre-funded warrants”), together with Series A Warrants to purchase up to an aggregate of 178,255 shares of common stock and Series B Warrants (together with the Series A Warrants, the “Series Warrants”) to purchase up to an aggregate of 178,255 shares of common stock.

Additionally, the Series B Warrants contain an alternative cashless exercise option whereby the holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant using $ 1.75 (after adjustment) as the exercise price for that purpose and (y) 3.0.

7 unchanged sentences

The warrants expire November 2, 2026 .

During the nine months ended September 30, 2024, the Company issued a total of 67 shares of its common stock upon warrant exercises for aggregate net proceeds of $83,233.

Between June 4, 2024 and June 7, 2024, 31,674 pre-funded warrants were exercised.

The company issued a total of 31,666 shares of its common stock upon the cash exercises of 25,339 pre-funded warrants and cashless exercises of 6,327 pre-funded warrants for aggregate net proceeds of $6,609,831 (includes net proceeds from sale and exercise of pre-funded warrants).

The remaining 8 pre-funded warrants were used to satisfy the exercise price under the warrants’ cashless exercise provision.

Between August 19, 2024 and September 3, 2024, the Company issued a total of 493,469 shares of its common stock upon the alternate cashless exercise of 177,000 Series B Warrants.

The following table summarizes all warrant activity of the Company for the nine months ended September 30, 2024:

During the three months ended March 31, 2025, no warrants were exercised.

The following table summarizes all warrant activity of the Company for the three months ended March 31, 2025:

Balance outstanding at December 31, 2024

Balance outstanding at September 30, 2024

Exercisable at September 30, 2024

Balance outstanding at March 31, 2025

Exercisable at March 31, 2025

Common Stock Warrants

On August 20, 2024 (the “Issuance Date”), the Company issued 178,225 Series A Warrants and 178,225 Series B Warrants.

In June 2024, as part of a registered offering, the Company issued 178,255 Series A Warrants and 178,255 Series B Warrants.

The Company accounts for the 356,510 warrants, in the aggregate, in accordance with the guidance in ASC 815 “Derivative and Hedging” whereby under that provision the warrants do not meet the criteria for equity treatment and must be recorded as a liability.

1 unchanged sentence

This liability will be re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations.

During the three and nine months ending September 30, 2024, the Company recognized $7,323,685 as warrant liability expense and income from the change in fair value of warrant liability of $3,341,829 in the statement of operations.

For the nine month period ended September 30, 2024, the Company recognized $3,071,252 as gain on settlement for the exercise of warrants during the period, and $910,556 as a warrant liability as of September 30, 2024.

Series A Warrants

Each Series A Warrant entitles the holder to purchase one share of the Company’s common stock at $28.70 per share, subject to antidilution adjustments, and expires on August 19, 2029.

In addition, if the Company sells or issues equity or an equity linked instrument for consideration per share less than the price equal to the exercise price then in effect, then the exercise price shall be reduced to an amount equal to the lower of (a) the new issuance price, or (b) the lowest volume weighted average price (“VWAP”) during the five consecutive trading days immediately following the dilutive issuance.

The reduced share price shall not be less than $75.95.

In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series A Warrant on the Issuance Date then outstanding shall remain unchanged.

Series B Warrants

Each Series B Warrant entitles the holder to purchase one share of the Company’s common stock at $28.70 per share, subject to antidilution adjustments, and expires on February 18, 2027.

The reduced share price shall not be less than $75.95.

In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series B Warrant on the Issuance Date then outstanding shall remain unchanged.

Alternative Cashless Exercise for Series B Warrants

The holders of the Series B Warrants may exercise their warrants at the alternative cashless exercise price of $1.75 per share.

Also, upon cashless exercise, the holder receives three underlying common shares for each warrant exercised.

Redemption Right

The Series A and Series B Warrants may be redeemed at the option of the Company any time after (i) the VWAP has equal or exceeded $16.50 for ten consecutive trading days and (ii) the average daily trading volume for such days exceeded $150,000.

During the three months ended March 31, 2025, the Company recognized income from the change in fair value of warrant liability of $ 408,562 in the statement of operations.

As of March 31, 2025, the Company recognized $ 390,722 as a warrant liability.

Recurring Fair Value Measurements

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The fair value of the warrant liability is classified within Level 2 of the fair value hierarchy because the Company uses observable inputs like market prices for its common stock and risk-free interest rate, but requires estimations for factors like the Company’s own volatility, which is not directly quoted in active markets.

The Company established the initial fair value for the warrant liability on August 20, 2024, the date the warrants were issued.

The Company established the initial fair value for the warrant liability on August 20, 2024, the date the warrants were initially exercisable.

Upon exercise, the instrument is marked to its fair value upon exercise, and the shares delivered are recorded at fair value in the Company’s statement of stockholders’ equity.

The warrant liability was valued based on the following inputs for the Series A and Series B Warrants, respectively:

August 20, 2024 (Initial Measurement)

September 30, 2024

March 31, 2025

December 31, 2024

Exercise Price

4 unchanged sentences

3.94 % and 3.91 %

3.58% and 3.63%

Expected Dividend

2 unchanged sentences

Note 10 - Related Party Transactions

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

Tokman provided commercialization services.

Under the terms of the agreement, Mr.

Tokman was 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.

There were no related party transactions during the quarter ended September 30, 2024.

In September 2024, the Company began using IS Bookkeeping & Payroll, which is a division of Impact Solve, LLC (dba Impact Solutions), an accounting and chief financial officer service firm.

The Company’s Chief Financial Officer works in a part-time capacity for the Company through Impact Solutions.

In the first quarter of 2025, Impact Solutions and IS Bookkeeping & Payroll provided services to the Company totaling $ 35,926 and $ 13,260 , respectively.

Note 11 - Commitments and Contingencies

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On March 15, 2021, the Company entered into an amendment to the lease, adding approximately 3,248 rentable square feet, increasing the initial monthly rent to $ 15,452 effective May 2021, and extending the term of the lease to December 31, 2025 .

On December 1, 2024, the Company entered into an amendment to the lease, decreasing the total rentable square feet to 6,513 , decreasing the initial monthly rent to $ 15,278 effective March 2025 (after three months of no rent) and extending the term of the lease to March 31, 2029 .

The Company records the lease asset and lease liability at the present value of lease payments over the lease term.

1 unchanged sentence

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, 2024 was 10%.

The Company’s discount rate for operating leases at March 31, 2025 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 3.92 years.

As of September 30, 2024, the maturities of operating lease liabilities are as follows:

As of March 31, 2025, the maturities of operating lease liabilities are as follows:

2026 and beyond

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Long-term lease obligations

For the nine months ended September 30, 2024 and 2023, the Company incurred rent expenses of $164,405 and $163,104, respectively.

For the three months ended March 31, 2025 and 2024, the Company incurred rent expenses of $ 51,733 and $ 54,839 , respectively.

Employment and Consulting Agreements

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

The foregoing description of the Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by the full text of the Employment Agreement, which is filed as an exhibit with this Report.

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.

17 unchanged sentences

Jacroux receives a base monthly fee of $ 8,650 plus expenses in respect of his services to the Company.

The Company’s needs have typically required more than the base fee., averaging $11,000 a month for the three months ending September 30, 2024.

The Company’s needs have typically required more than the base fee, averaging $11,975 a month for the three months ending March 31, 2025 .

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

As of September 30, 2024, 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, 2025, 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 – Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance.

The Company has one reportable segment:

The biotech segment consists of the development of clinical and preclinical product candidates for the development of the Company’s proprietary new enhanced thermoacoustic technology platform.

The Company’s chief operating decision maker (“CODM”) is the chief executive officer.

The accounting policies of the biotech segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance for the biotech segment based on net loss, which is reported on the income statement as consolidated net loss.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

To date, the Company has not generated any product revenue.

The Company expects to continue to incur significant expenses and operating losses for the foreseeable future as it advances product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval.

As such, the CODM uses cash forecast models in deciding how to invest into the biotech segment.

Such cash forecast models are reviewed to assess the entity-wide operating results and performance.

Net loss is used to monitor budget versus actual results.

Monitoring budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation, along with cash forecast models.

The table below summarizes the significant expense categories regularly reviewed by the CODM for the three months ended March 31, 2025, and 2024:

Operating Expenses

Three Months Ended March 31, 2025

Three Months Ended March 31, 2024

Research and development

Sales and marketing

General and administrative

Total operating expenses

Operating loss

( 1,469,282 )

( 2,780,541 )

Other segment items (a)

$ ( 1,036,330 )

$ ( 2,775,700 )

Reconciliation of net loss

Adjustments and reconciling items

Consolidated net loss

$ ( 1,036,330 )

$ ( 2,775,700 )

(a) Other segment items included in segment loss includes warrant expense, changes in warrant liability and interest income.

Note 13– Subsequent Events

Reverse Stock Split

At a Special Meeting of Stockholders of the Company held on October 28, 2024 (the “Special Meeting”), the stockholders of the Company approved amendments to the Company’s Fourth Amended and Restated Certificate of Incorporation effecting reverse stock splits of the Company’s common stock, and authorized the Company’s Board of Directors, in its discretion, to effect a reverse stock split of Common Stock , whereby each issued and outstanding share of Common Stock would be reclassified and converted into a fraction of a share between ¼ and 1/35 (the “Ratios” and each, a “Ratio”), inclusive (the “November 2024 Reverse Stock Split”).

Following the Special Meeting, the Board approved a Ratio of 1/35.

The November 2024 Reverse Stock 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 Omnibus Plan.

All per share amounts (including exercise prices) and numbers of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the November 2024 Reverse Stock Split.

No fractional shares were, or shall be, issued in connection with the November 2024 Reverse Stock Split.

The Company has assessed operations through, May 15, 2025, the filing date of this Quarterly Report on Form 10-Q and determined that there were no material subsequent events requiring adjustment to, or disclosure in, our consolidated financial statements for the three months ended March 31, 2025, other than the following:

Issuance of Shares

The company issued 2,007 shares on November 11, 2024 and an additional 38 shares on November 13, 2024, for a total of 2,045 shares, primarily due to the exercise of 988 warrants.

The Company issued a total of 176,157 shares of its common stock in return for aggregate gross proceeds of $ 834,353 under the February 2024 ATM Agreement.

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