Delaware
|
|
26-0579295
|
(State of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☐
|
Non-accelerated
filer
|
☑
|
Smaller
reporting company
|
☑
|
|
|
Emerging
growth company
|
☑
|
PAGE
|
|
|
|
Item 1. Financial
Statements
|
3
|
|
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|
15
|
|
|
Item 3. Quantitative and Qualitative Disclosure About Market
Risk
|
21
|
|
|
Item 4. Controls and Procedures
|
21
|
|
|
PART II – OTHER INFORMATION
|
|
|
|
Item 1. Legal
Proceedings
|
22
|
|
|
Item 1A. Risk Factors
|
22
|
|
|
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds
from Registered Securities
|
23
|
|
|
Item 3. Defaults Upon Senior Securities
|
23
|
|
|
Item 4. Mine Safety Disclosures
|
23
|
|
|
Item 5. Other
Information
|
23
|
|
|
Item 6.
Exhibits
|
24
|
|
|
SIGNATURES
|
25
|
|
|
EXHIBIT
INDEX
|
26
|
|
September
30
|
December
31,
|
Assets
|
2018
|
2017
|
Assets
|
(unaudited)
|
|
Cash
|
$
637,124
|
$
5,601,878
|
Accounts
receivable
|
12,275
|
6,850
|
Prepaid
expenses
|
328,046
|
67,496
|
Inventory
|
-
|
191,680
|
Other current
assets
|
21,166
|
14,249
|
Total Current
Assets
|
998,611
|
5,882,153
|
Other
Assets
|
|
|
Fixed assets,
net
|
293,303
|
241,549
|
Total
Assets
|
$
1,291,914
|
$
6,123,702
|
|
|
|
Liabilities and Stockholders’ (Deficit)
Equity
|
|
|
Current
Liabilities:
|
|
|
Accounts payable
and accrued liabilities
|
$
1,068,337
|
$
848,214
|
Convertible notes
payable, net of discount
|
681,187
|
-
|
Total
Liabilities
|
1,749,524
|
848,214
|
|
|
|
Stockholders’
(Deficit) Equity
|
|
|
Preferred stock,
$0.0001 par value; 10,000,000 shares authorized; no shares issued
or outstanding
|
-
|
-
|
Common stock,
$0.0001 par value; 50,000,000 shares authorized; 3,947,828 and
3,923,027 shares issued and outstanding, respectively
|
394
|
392
|
Additional paid in
capital
|
24,868,082
|
23,170,531
|
Accumulated
deficit
|
(25,326,086
)
|
(17,895,435
)
|
Total
Stockholders’ (Deficit) Equity
|
(457,610
)
|
5,275,488
|
Total
Liabilities and Stockholders’ (Deficit) Equity
|
$
1,291,914
|
$
6,123,702
|
|
Three Months Ended
|
Three Months Ended
|
Nine Months Ended
|
Nine Months Ended
|
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
$
-
|
$
287,000
|
$
6,174
|
$
344,772
|
|
|
|
|
|
Cost
of Goods Sold
|
-
|
118,270
|
-
|
169,697
|
|
|
|
|
|
Gross Profit
|
$
-
|
$
168,730
|
$
6,174
|
$
175,075
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
Research
and development
|
1,162,911
|
300,527
|
3,671,490
|
571,066
|
Sales
and marketing
|
72,179
|
47,375
|
220,713
|
55,403
|
General
and administrative
|
832,883
|
731,762
|
2,842,631
|
1,878,093
|
Impairment
of inventory
|
287,541
|
-
|
287,541
|
-
|
Total
operating expenses
|
2,355,514
|
1,079,664
|
7,022,375
|
2,504,562
|
|
|
|
|
|
Operating
loss
|
(2,355,514
)
|
(910,934
)
|
(7,016,201
)
|
(2,329,487
)
|
|
|
|
|
|
Other Expenses
|
|
|
|
|
Other
income (expense)
|
(403,061
)
|
2,026
|
(414,450
)
|
(752,835
)
|
Total
other expenses
|
(403,061
)
|
2,026
|
(414,450
)
|
(752,835
)
|
|
|
|
|
|
Loss
from operations before income taxes
|
(2,758,575
)
|
(908,908
)
|
(7,430,651
)
|
(3,082,322
)
|
|
|
|
|
|
Provision for
income taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net
Loss
|
$
(2,758,575
)
|
$
(908,908
)
|
$
(7,430,651
)
|
$
(3,082,322
)
|
|
|
|
|
|
Net
loss per share – basic and diluted
|
$
(0.70
)
|
$
(0.23
)
|
$
(1.89
)
|
$
(1.30
)
|
|
|
|
|
|
Weighted
average common shares – basic and diluted
|
3,927,933
|
3,907,027
|
3,924,662
|
2,367,452
|
|
Nine Months Ended
|
Nine Months Ended
|
|
September 30,
|
September 30,
|
|
2018
|
2017
|
Cash
Flows from Operating Activities
|
|
|
Net
loss
|
$
(7,430,651
)
|
$
(3,082,322
)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation and
amortization
|
48,246
|
46,121
|
Common stock,
options and warrants issued for services
|
1,060,012
|
600,514
|
Interest on
discount of convertible debt
|
-
|
711,472
|
Imputed interest on
promissory notes
|
-
|
1,480
|
Amortization of
debt discount
|
383,428
|
-
|
Impairment
of inventory
|
287,541
|
-
|
Changes in
operating assets and liabilities:
|
|
|
Increase in
accounts receivable
|
(5,425
)
|
-
|
Increase in prepaid
expenses
|
(260,550
)
|
(101,254
)
|
(Increase)/decrease
in inventory
|
(95,861
)
|
(91,574
)
|
Increase in other
asset
|
(6,918
)
|
(1,887
)
|
Increase/(decrease)
in accounts payable and accrued liabilities
|
220,124
|
(7,879
)
|
Net cash used in
operating activities
|
(5,800,054
)
|
(1,925,329
)
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
Purchases of fixed
assets
|
(100,000
)
|
(7,862
)
|
Net cash used in
investing activities
|
(100,000
)
|
(7,862
)
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
Proceeds from
issuance of common stock
|
-
|
8,590,700
|
Repayment of notes
payable
|
-
|
(50,000
)
|
Proceeds from
convertible notes
|
935,300
|
225,000
|
Net cash provided
by financing activities
|
935,300
|
8,765,700
|
|
|
|
Net
(Decrease)/Increase in cash
|
(4,964,754
)
|
6,832,509
|
|
|
|
Cash, beginning of
period
|
5,601,878
|
144,953
|
|
|
|
Cash,
end of period
|
$
637,124
|
$
6,977,462
|
|
|
|
Supplemental
disclosures:
|
|
|
Interest
paid
|
$
-
|
$
-
|
Income
tax paid
|
$
-
|
$
-
|
|
|
|
Supplemental
disclosures of non-cash Items:
|
|
|
Discount on
convertible notes
|
$
587,541
|
$
225,000
|
Conversion of
convertible notes and accrued interest
|
$
50,000
|
$
1,726,079
|
|
September 30,
2018
|
December 31,
2017
|
Options
to purchase common stock
|
978,911
|
940,121
|
Warrants
to purchase common stock
|
2,259,826
|
2,268,141
|
Potential
equivalent shares excluded
|
3,238,737
|
3,208,262
|
|
September
30,
2018
|
December
31,
2017
|
Computer equipment
and fixtures
|
$
679,179
|
$
579,179
|
Accumulated
depreciation
|
(385,876
)
|
(337,630
)
|
Fixed assets,
net
|
$
293,303
|
$
241,549
|
|
September
30,
2018
|
December
31,
2017
|
Accounts
payable
|
$
750,580
|
$
780,262
|
Accrued
payroll
|
8,843
|
40,578
|
Accrued
bonuses
|
197,623
|
-
|
Accrued employee
benefits
|
64,920
|
27,375
|
Insurance premium
financing
|
46,088
|
-
|
Accrued interest on
senior secured convertible promissory notes
|
283
|
-
|
Total
|
$
1,068,337
|
$
848,215
|
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual Term
(Years)
|
Balance outstanding
at December 31, 2017
|
940,121
|
$
5.65
|
6.46
|
Granted
|
49,790
|
4.44
|
8
|
Exercised
|
-
|
-
|
-
|
Forfeited
|
-
|
-
|
-
|
Cancelled or
expired
|
(2,000
)
|
2.50
|
-
|
Balance outstanding
at September 30, 2018
|
987,911
|
$
5.60
|
5.79
|
Exercisable at
September 30, 2018
|
455,080
|
$
6.44
|
4.82
|
|
Number of
Warrants
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining Contractual Term (Years)
|
Balance outstanding
at December 31, 2017
|
2,268,141
|
$
7.09
|
4.21
|
Granted
|
340,536
|
$
2.70
|
2.97
|
Exercised
|
-
|
-
|
-
|
Forfeited
|
-
|
-
|
-
|
Expired
|
(24,982
)
|
-
|
-
|
Balance outstanding
at September 30, 2018
|
2,583,695
|
$
6.38
|
3.39
|
Exercisable at
September 30, 2018
|
2,259,826
|
$
7.93
|
3.49
|
2018
|
23,814
|
2019
|
95,906
|
Total
|
$
119,720
|
Exhibit
Number
|
|
Description
|
|
Fourth Amended and
Restated Certificate of Incorporation of the Company (incorporated
by reference to Exhibit 3.2 to the Company’s Current Report
on Form 8-K filed on May 12, 2017)
|
|
|
Amended and
Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.4 to the Company’s Registration Statement on Form
S-1 (File No. 333-214724), as amended, originally filed on November
21, 2016)
|
|
|
Specimen
Certificate representing shares of common stock of the Company
(incorporated by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form S-1 (File No. 333-214724), as
amended, originally filed on November 21, 2016)
|
|
|
Form of Warrant
Agreement and Warrant comprising a part of the Company’s
units issued in its initial public offering (incorporated by
reference to Exhibit 4.2 to the Company’s Registration
Statement on Form S-1 (File No. 333-214724), as amended, originally
filed on November 21, 2016)
|
|
|
Form of
Underwriters’ Warrant issued to certain designees of the
underwriters in the Company’s 2017 initial public offering
(incorporated by reference to Exhibit 4.3 to the Company’s
Registration Statement on Form S-1 (File No. 333-214724), as
amended, originally filed on November 21, 2016)
|
|
|
Form of Convertible
Promissory Note issued in June 2018 Private Placement (incorporated
by reference to Exhibit 4.1 to the Company’s Current Report
on Form 8-K filed on July 2, 2018)
|
|
|
Form of Warrant
issued in June 2018 Private Placement (incorporated by reference to
Exhibit 4.2 to the Company’s Current Report on Form 8-K filed
on July 2, 2018)
|
|
|
Form of
Underwriters’ Warrant issued to certain designees of the
underwriters in the Company’s October 2018 offering (filed
herewith)
|
|
|
Certification of
Periodic Report by Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (filed herewith)
|
|
|
Certification of
Periodic Report by Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (filed herewith)
|
|
|
Certification of
Periodic Report by Chief Executive Officer and Chief Financial
Officer pursuant to U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
|
|
|
Earnings release
issued November 5, 2018 (furnished
herewith)
|
|
101.INS
|
|
XBRL Instance
Document (filed herewith)
|
101.SCH
|
|
XBRL Taxonomy
Schema (filed herewith)
|
101.CAL
|
|
XBRL Taxonomy
Extension Calculation Linkbase (filed herewith)
|
101.DEF
|
|
XBRL Taxonomy
Extension Definition Linkbase (filed herewith)
|
101.LAB
|
|
XBRL Taxonomy
Extension Label Linkbase (filed herewith)
|
101.PRE
|
|
XBRL Taxonomy
Extension Presentation Linkbase (filed herewith)
|
|
ENDRA LIFE SCIENCES INC.
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
Date:
November 5, 2018
|
By:
|
/s/
Francois Michelon
|
|
|
Name:
Francois Michelon
|
|
|
Title:
Chief Executive Officer and Chairman
(Principal
Executive Officer)
|
Date:
November 5, 2018
|
By:
|
/s/
David Wells
|
|
|
Name:
David Wells
|
|
|
Title:
Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
Exhibit
Number
|
|
Description
|
|
Fourth Amended and
Restated Certificate of Incorporation of the Company (incorporated
by reference to Exhibit 3.2 to the Company’s Current Report
on Form 8-K filed on May 12, 2017)
|
|
|
Amended and
Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.4 to the Company’s Registration Statement on Form
S-1 (File No. 333-214724), as amended, originally filed on November
21, 2016)
|
|
|
Specimen
Certificate representing shares of common stock of the Company
(incorporated by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form S-1 (File No. 333-214724), as
amended, originally filed on November 21, 2016)
|
|
|
Form of Warrant
Agreement and Warrant comprising a part of the Company’s
units issued in its initial public offering (incorporated by
reference to Exhibit 4.2 to the Company’s Registration
Statement on Form S-1 (File No. 333-214724), as amended, originally
filed on November 21, 2016)
|
|
|
Form of
Underwriters’ Warrant issued to certain designees of the
underwriters in the Company’s 2017 initial public offering
(incorporated by reference to Exhibit 4.3 to the Company’s
Registration Statement on Form S-1 (File No. 333-214724), as
amended, originally filed on November 21, 2016)
|
|
|
Form of Convertible
Promissory Note issued in June 2018 Private Placement (incorporated
by reference to Exhibit 4.1 to the Company’s Current Report
on Form 8-K filed on July 2, 2018)
|
|
|
Form of Warrant
issued in June 2018 Private Placement (incorporated by reference to
Exhibit 4.2 to the Company’s Current Report on Form 8-K filed
on July 2, 2018)
|
|
|
Form of
Underwriters’ Warrant issued to certain designees of the
underwriters in the Company’s October 2018 offering (filed
herewith)
|
|
|
Certification of
Periodic Report by Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (filed herewith)
|
|
|
Certification of
Periodic Report by Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (filed herewith)
|
|
|
Certification of
Periodic Report by Chief Executive Officer and Chief Financial
Officer pursuant to U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
|
|
|
Earnings release
issued November 5, 2018 (furnished
herewith)
|
|
101.INS
|
|
XBRL Instance
Document (filed herewith)
|
101.SCH
|
|
XBRL Taxonomy
Schema (filed herewith)
|
101.CAL
|
|
XBRL Taxonomy
Extension Calculation Linkbase (filed herewith)
|
101.DEF
|
|
XBRL Taxonomy
Extension Definition Linkbase (filed herewith)
|
101.LAB
|
|
XBRL Taxonomy
Extension Label Linkbase (filed herewith)
|
101.PRE
|
|
XBRL Taxonomy
Extension Presentation Linkbase (filed herewith)
|
|
Very truly yours,
|
|
|
|
ENDRA Life Sciences Inc
.
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
(City)
|
|
(State)
|
|
|
(Zip
Code)
|
|
(City)
|
|
(State)
|
|
|
(Zip
Code)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(City)
|
|
(State)
|
|
|
(Zip
Code)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Francois Michelon
|
|
Name:
Francois Michelon
|
|
Title:
Chief Executive Officer and Chairman
|
|
/s/
David R. Wells
|
|
Name:
David R. Wells
|
|
Title:
Chief Financial Officer
(Principal Financial and Accounting
Officer)
|
|
/s/
Francois Michelon
|
|
Name:
Francois Michelon
|
|
Title:
Chief Executive Officer and Chairman
|
|
Date:
November 5, 2018
|
|
|
|
/s/
David R. Wells
|
|
Name:
David R. Wells
|
|
Title:
Chief Financial Officer
Date:
November 5, 2018
|
|
|
September
30
|
December
31,
|
Assets
|
2018
|
2017
|
Assets
|
(unaudited)
|
|
Cash
|
$
637,124
|
$
5,601,878
|
Accounts
receivable
|
12,275
|
6,850
|
Prepaid
expenses
|
328,046
|
67,496
|
Inventory
|
-
|
191,680
|
Other current
assets
|
21,166
|
14,249
|
Total Current
Assets
|
998,611
|
5,882,153
|
Other
Assets
|
|
|
Fixed assets,
net
|
293,303
|
241,549
|
Total
Assets
|
$
1,291,914
|
$
6,123,702
|
|
|
|
Liabilities and
Stockholders’ (Deficit) Equity
|
|
|
Current
Liabilities:
|
|
|
Accounts payable and accrued
liabilities
|
$
1,068,337
|
$
848,214
|
Convertible notes payable, net of
discount
|
681,187
|
-
|
Total
Liabilities
|
1,749,524
|
848,214
|
|
|
|
Stockholders’
(Deficit) Equity
|
|
|
Preferred stock, $0.0001 par value;
10,000,000 shares authorized; no shares issued or
outstanding
|
-
|
-
|
Common stock, $0.0001 par value;
50,000,000 shares authorized; 3,947,828 and 3,923,027 shares issued
and outstanding
|
394
|
392
|
Additional paid in
capital
|
24,868,082
|
23,170,531
|
Accumulated
deficit
|
(25, 326,086
)
|
(17,895,435
)
|
Total Stockholders’ (Deficit)
Equity
|
(457,610
)
|
5,275,488
|
Total
Liabilities and Stockholders’ Equity
|
$
1,291,914
|
$
6,123,702
|
|
Three Months
Ended
|
Three Months
Ended
|
Nine Months
Ended
|
Nine Months
Ended
|
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
$
-
|
$
287,000
|
$
6,174
|
$
344,772
|
|
|
|
|
|
Cost of Goods
Sold
|
-
|
118,270
|
-
|
169,697
|
|
|
|
|
|
Gross
Profit
|
$
-
|
$
168,730
|
$
6,174
|
$
175,075
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
Research and
development
|
1,162,911
|
300,527
|
3,671,490
|
571,066
|
Sales and
marketing
|
72,179
|
47,375
|
220,713
|
55,403
|
General and
administrative
|
832,883
|
731,762
|
2,842,631
|
1,878,093
|
Impairment of
inventory
|
287,541
|
-
|
287,541
|
-
|
Total operating
expenses
|
2,355,514
|
1,079,664
|
7,022,375
|
2,504,562
|
|
|
|
|
|
Operating loss
|
(2,355,514
)
|
(910,934
)
|
(7,016,201
)
|
(2,329,487
)
|
|
|
|
|
|
Other
Expenses
|
|
|
|
|
Other income
(expense)
|
(403,061
)
|
2,026
|
(414,450
)
|
(752,835
)
|
Total other
expenses
|
(403,061
)
|
2,026
|
(414,450
)
|
(752,835
)
|
|
|
|
|
|
Loss from operations before income
taxes
|
(2,758,575
)
|
(908,908
)
|
(7,430,651
)
|
(3,082,322
)
|
|
|
|
|
|
Provision for income
taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net
Loss
|
$
(2, 758,575
)
|
$
(908,908
)
|
$
(7,430,651
)
|
$
(3,082,322
)
|
|
|
|
|
|
Net loss per
share – basic and diluted
|
$
(0.70
)
|
$
(0.23
)
|
$
(1.89
)
|
$
(1.30
)
|
|
|
|
|
|
Weighted average
common shares – basic and diluted
|
3,927,933
|
3,907,027
|
3,924,662
|
2,367,452
|
|
Nine Months
Ended
|
Nine Months
Ended
|
|
September
30,
|
September
30,
|
|
2018
|
2017
|
Cash Flows from
Operating Activities
|
|
|
Net loss
|
$
(7,430,651
)
|
$
(3,082,322
)
|
Adjustments to reconcile net loss
to net cash used in operating activities:
|
|
|
Depreciation and
amortization
|
48,246
|
46,121
|
Common stock, options and warrants
issued for services
|
1,060,012
|
600,514
|
Interest on discount of convertible
debt
|
-
|
711,472
|
Imputed interest on promissory
notes
|
-
|
1,480
|
Amortization of debt
discount
|
383,428
|
-
|
Impairment of
inventory
|
287,541
|
-
|
Changes in operating assets and
liabilities:
|
|
|
Increase in accounts
receivable
|
(5,425
)
|
-
|
Increase in prepaid
expenses
|
(260,550
)
|
(101,254
)
|
Increase in
inventory
|
(95,861
)
|
(91,574
)
|
Increase in other
asset
|
(6,918
)
|
(1,887
)
|
Increase/(decrease) in accounts
payable and accrued liabilities
|
220,124
|
(7,879
)
|
Net cash used in operating
activities
|
(5,800,054
)
|
(1,925,329
)
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
Purchases of fixed
assets
|
(100,000
)
|
(7,862
)
|
Net cash used in investing
activities
|
(100,000
)
|
(7,862
)
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
Proceeds from issuance of common
stock
|
-
|
8,590,700
|
Repayment of notes
payable
|
-
|
(50,000
)
|
Proceeds from convertible
notes
|
935,300
|
225,000
|
Net cash provided by financing
activities
|
935,300
|
8,765,700
|
|
|
|
Net (Decrease)/Increase in
cash
|
(4,954,754
)
|
6,832,509
|
|
|
|
Cash, beginning of
period
|
5,601,878
|
144,953
|
|
|
|
Cash, end of
period
|
$
637,124
|
$
6,977,462
|
|
|
|
Supplemental
disclosures:
|
|
|
Interest paid
|
$
-
|
$
-
|
Income tax paid
|
$
-
|
$
-
|
|
|
|
Supplemental disclosures of
non-cash Items:
|
|
|
Discount on convertible
notes
|
$
587,541
|
$
225,000
|
Conversion of convertible notes and
accrued interest
|
$
50,000
|
$
1,726,079
|