ENDRA Life Sciences(US:NDRA)2025-05-15 20:59PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) The unaudited condensed consolidated financial statements for the three months ended March 31, 2025, show a decrease in total assets and liabilities compared to year-end 2024, reporting a net loss of $1.04 million, a significant reduction from the $2.78 million loss in the same period of 2024, primarily due to lower operating expenses, with cash used in operations at $1.3 million and ending cash at $2.1 million, while notes highlight substantial doubt about the company's ability to continue as a going concern due to recurring losses and the need for additional financing Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $3.17 million, a decrease from $4.45 million at December 31, 2024, primarily driven by a reduction in cash, while total liabilities also decreased to $1.42 million from $1.89 million, mainly due to a lower warrant liability, consequently, total stockholders' equity declined to $1.75 million from $2.56 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash | $2,064,874 | $3,229,480 | | Total Current Assets | $2,180,206 | $3,433,665 | | Total Assets | $3,170,598 | $4,452,362 | | Total Current Liabilities | $565,785 | $605,230 | | Warrant Liability | $390,722 | $799,284 | | Total Liabilities | $1,417,713 | $1,891,996 | | Total Stockholders' Equity | $1,752,885 | $2,560,366 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, the company reported a net loss of $1.04 million, or ($1.86) per share, compared to a net loss of $2.78 million, or ($449.58) per share, for the same period in 2024, with the improvement driven by a significant reduction in total operating expenses to $1.47 million from $2.78 million year-over-year, and a $0.41 million gain from the change in fair value of warrant liability Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Research and development | $528,685 | $1,041,526 | | Sales and marketing | $68,991 | $238,660 | | General and administrative | $871,606 | $1,500,355 | | Total operating expenses | $1,469,282 | $2,780,541 | | Operating loss | ($1,469,282) | ($2,780,541) | | Changes in fair value of warrant liability | $408,562 | - | | Net Loss | ($1,036,330) | ($2,775,700) | | Net loss per share | ($1.86) | ($449.58) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased from $2.56 million at the end of 2024 to $1.75 million as of March 31, 2025, primarily due to the net loss of $1.04 million for the quarter, partially offset by equity issued for services and stock options valued at approximately $0.23 million - Stockholders' equity decreased by approximately $0.81 million during the first quarter of 2025, driven by the net loss of $1.04 million17 Condensed Consolidated Statements of Cash Flows For the first quarter of 2025, net cash used in operating activities was $1.29 million, net cash used in investing activities was minimal at $17,280, and net cash provided by financing activities was $145,803 from the issuance of common stock, resulting in a net decrease in cash of $1.16 million, with the company ending the period with $2.06 million in cash Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,293,129) | ($2,144,312) | | Net cash used in investing activities | ($17,280) | ($23,796) | | Net cash provided by financing activities | $145,803 | $468,902 | | Net decrease in cash | ($1,164,606) | ($1,699,206) | | Cash, end of period | $2,064,874 | $1,134,701 | Notes to the Condensed Consolidated Financial Statements The notes detail significant accounting policies and provide context for the financial statements, including a going concern warning citing cumulative losses of $104.5 million and the need for additional capital, full reservation of inventory at $0 value, details on capital stock structure including two reverse stock splits in 2024, an At-The-Market (ATM) equity offering program initiated in February 2024, and accounting for certain warrants as a liability re-measured to fair value each period - The company's financial statements are prepared on a going concern basis, but management has identified substantial doubt about its ability to continue due to a cumulative net loss of $104.5 million and the need to raise additional capital to fund operations51 - The company implemented two reverse stock splits in 2024: a one-for-50 split in August and a one-for-35 split in November, with all share and per-share amounts retroactively restated646566 - In February 2024, the company entered into an At-The-Market (ATM) sales agreement to sell up to $6.2 million in common stock, raising net proceeds of $145,803 through this program during Q1 20256162 - Certain warrants (Series A and Series B) are classified as a liability and re-measured to fair value each period, resulting in a non-cash income of $408,562 in Q1 2025 due to a decrease in the liability's fair value76 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing its TAEUS® technology platform as a biomarker solution for metabolic diseases, particularly for managing GLP-1 drug therapies, noting the company is pre-revenue with a history of losses and an accumulated deficit of $104.5 million, with operating expenses significantly reduced in Q1 2025 compared to Q1 2024 due to cost-cutting measures, but facing immediate liquidity challenges and requiring additional financing to continue operations, commercialize its technology, and fund development, raising substantial doubt about its ability to continue as a going concern - The company's strategic vision is to establish TAEUS as a leading biomarker solution for metabolic diseases and GLP-1 drug management, targeting pharmaceutical companies, specialty clinics, and primary care providers with a subscription-based business model107108109 Year-over-Year Operating Expense Comparison (Q1 2025 vs Q1 2024) | Expense Category | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Research & Development | $528,685 | $1,041,526 | -49% | | Sales & Marketing | $68,991 | $238,660 | -71% | | General & Administrative | $871,606 | $1,500,355 | -42% | - The company faces significant liquidity constraints with only $2.1 million in cash as of March 31, 2025, and without additional funding, it will be forced to delay or curtail operations, raising substantial doubt about its ability to continue as a going concern131133 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, ENDRA Life Sciences Inc. is not required to provide the information for this item - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company142 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, based on a material weakness in internal control over financial reporting related to insufficient accounting personnel to ensure proper segregation of duties, with plans to remediate this by hiring additional personnel or consultants as financial resources permit - The company identified a material weakness in its internal controls due to insufficient personnel resources within the accounting function, which prevents adequate segregation of duties over financial transaction processing and reporting144 - As a result of the material weakness, the principal executive and financial officers concluded that disclosure controls and procedures were not effective as of the end of the quarter143 - Remediation plans include hiring additional accounting personnel or consultants and developing written accounting policies, contingent upon obtaining additional funding145152 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any pending legal proceedings that are expected to have a material adverse effect on its business or financial condition - As of the filing date, there are no material legal proceedings against the company148 Item 1A. Risk Factors There are no new risk factors reported in this quarter, and the company directs investors to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - The report refers to the risk factors detailed in the company's Annual Report on Form 10-K filed on March 31, 2025149 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - No unregistered sales of equity securities occurred during the quarter150 Item 5. Other Information No directors or officers of the company adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended March 31, 2025 - There were no adoptions, modifications, or terminations of Rule 10b5-1 trading plans by directors or officers during the quarter154 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL interactive data files155