Amendment: SEC Form 10-K/A filed by ENDRA Life Sciences Inc.

4/4/25 6:42:30 PM ET

$NDRA

Biotechnology: Electromedical & Electrotherapeutic Apparatus

Health Care

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endra_10k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: December 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission file number: 001-37969

ENDRA Life Sciences Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		26-0579295
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

3600 Green Court, Suite 350, Ann Arbor, MI		48105-1570
(Address of Principal Executive Offices)		(Zip Code)

(734) 335-0468

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		NDRA		The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: Series C Preferred Stock, par value $0.0001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant, as of June 30, 2024, was approximately $7,011,552 based on the closing sales price of the common stock as reported on the Nasdaq Capital Market on June 28, 2024.

As of March 24, 2025, there were 562,213 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

This Amendment No. 1 (the “Amendment No. 1”) to the Annual Report on Form 10-K of ENDRA Life Sciences Inc. (the “Company”) for the year ended December 31, 2024, originally filed with the Securities and Exchange Commission on March 31, 2025 (the “Original Report”), is being filed solely to correct a typographical error in the report of RBSM LLP, the Company’s independent auditor for the fiscal year ended December 31, 2024 (the “Auditor’s Report”), relating to the date of the Auditor’s Report and RBSM LLP’s PCAOB ID number, which were inadvertently omitted in the EDGAR preparation process. Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, the entire text of Item 8 of the Form 10-K is repeated in this Amendment No. 1. However, there have been no changes to the text of such item other than the addition of the date of the Auditor’s Report and RBSM LLP’s PCAOB ID number.

The Company is including in this Amendment No. 1 currently dated certifications from its Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 and Exhibit 32.1, respectively. As a result, Item 15 “Exhibits and Financial Statement Schedules” has also been modified.

Except as expressly set forth above, this Amendment No. 1 speaks as of the filing date of the Original Report, and does not reflect events that may have occurred subsequent to that date, nor does it modify or update in any way disclosure made in the Original Report.

ENDRA LIFE SCIENCES INC.

TABLE OF CONTENTS

		Page
PART II
Item 8.	Financial Statements and Supplementary Data.	3
PART IV
Item 15.	Exhibits, Financial Statements and Schedules.	4

Table of Contents

Item 8. Financial Statements and Supplementary Data.

Index to Financial Statements

ENDRA Life Sciences Inc.

December 31, 2024

		Page

Report of Independent Registered Public Accounting Firm - (Firm ID 587)		F-1

Consolidated Balance Sheets as of December 31, 2024 and 2023		F-2

Consolidated Statements of Operations for the years ended December 31, 2024 and 2023		F-3

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023		F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023		F-5

Notes to Consolidated Financial Statements for the years ended December 31, 2024 and 2023		F-6

Table of Contents

RBSM LLP

Houston Office:

7915 FM 1960 West, Ste. 220

Houston, Texas 77070

www.rbsmllp.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

ENDRA Life Sciences Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ENDRA Life Sciences Inc. and Subsidiaries (collectively, the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024 and 2023 in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the accompanying consolidated financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, has an accumulated deficit and has stated that substantial doubt exists about Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans in regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

We determined that there are no critical audit matters.

/s/ RBSM LLP

We have served as the Company’s auditor since 2015.

Houston, TX

March 31, 2025

PCAOB ID Number 587

F-1

ENDRA Life Sciences Inc.

Consolidated Balance Sheets

	December 31,			December 31,
Assets	2024			2023
Current Assets
Cash	$	3,229,480		$	2,833,907
Prepaid expenses		204,185			198,905
Total Current Assets		3,433,665			3,032,812
Non-Current Assets
Inventory		-			2,622,865
Fixed assets, net		69,281			111,782
Right of use assets		578,013			354,091
Prepaid expenses, long term		365,417			626,610
Other assets		5,986			5,986
Total Assets	$	4,452,362		$	6,754,146

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities	$	508,293		$	700,754
Lease liabilities, current portion		96,937			173,857
Loans		-			28,484
Total Current Liabilities		605,230			903,095

Long Term Debt
Loans, long term		-			-
Lease liabilities		487,482			192,062
Warrant Liability		799,284			-
Total Long Term Debt		1,286,766			192,062

Total Liabilities		1,891,996			1,095,157

Stockholders’ Equity
Series A Convertible Preferred Stock, $0.0001 par value; 10,000 shares authorized; 17.488 and 141.397 shares issued and outstanding, respectively		-			1
Series B Convertible Preferred Stock, $0.0001 par value; 1,000 shares authorized; no shares issued and outstanding		-			-
Series C Preferred Stock, $0.0001 par value; 100,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.0001 par value; 20,000,000 shares authorized; 536,908 and 5,937 shares issued and outstanding, respectively		53			1
Additional paid in capital		105,998,412			97,583,906
Stock payable		-			5,233
Accumulated deficit		(103,438,099	)		(91,930,152	)
Total Stockholders’ Equity		2,560,366			5,658,989
Total Liabilities and Stockholders’ Equity	$	4,452,362		$	6,754,146

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

F-2

ENDRA Life Sciences Inc.

Consolidated Statements of Operations

	Year Ended			Year Ended
	December 31,			December 31,
	2024			2023
Operating Expenses
Research and development	$	3,190,293		$	5,003,695
Sales and marketing		571,040			820,554
General and administrative		7,055,814			4,696,486
Total operating expenses		10,817,147			10,520,735

Operating loss		(10,817,147	)		(10,520,735	)

Other (expenses) income
Other income		108,484			460,485
Warrant expense		(7,323,685	)
Changes in fair value of warrant liability		3,447,737
Gain on settlement of warrant exercise		3,076,664
Total other expenses		(690,800	)		460,485

Loss from operations before income taxes		(11,507,947	)		(10,060,250	)

Provision for income taxes		-			-

Net Loss	$	(11,507,947	)	$	(10,060,250	)

Net loss per share – basic and diluted	$	(56.94	)	$	(2,766.85	)

Weighted average common shares – basic and diluted		202,106			3,636

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

F-3

ENDRA Life Sciences Inc.

Consolidated Statements of Stockholders’ Equity

*Year Ended December 31, 2023*	Series A Convertible				Series B Convertible																Total
	Preferred Stock				Preferred Stock				Common stock				Additional					Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Paid in Capital		Stock Payable			Deficit			Equity
Balance as of December 31, 2022		141.397	$	1		-	$	-		1,811	$	-	$	89,068,332	$	6,073		$	(81,869,902	)	$	7,204,504
Common stock issued for cash, net of funding costs		-		-		-		-		3,221		1		6,483,392		-			-			6,483,393
Common stock issued for warrant exercise		-		-		-		-		905		-		1,014,859		-			-			1,014,859
Warrants issued for cash, net of funding costs		-		-		-		-		-		-		20,053		-			-			20,053
Fair value of vested stock options		-		-		-		-		-		-		996,430		-			-			996,430
Stock payable towards preference dividend		-		-		-		-		-		-		840		(840	)		-			-
Net loss		-		-		-		-		-		-		-		-			(10,060,250	)		(10,060,250	)
Balance as of December 31, 2023		141.397	$	1		-	$	-		5,937	$	1	$	97,583,906	$	5,233		$	(91,930,152	)	$	5,658,989

*Year Ended December 31, 2024*	Series A Convertible						Series B Convertible																Total
	Preferred Stock						Preferred Stock				Common stock				Additional					Accumulated			Stockholders’
	Shares			Amount			Shares		Amount		Shares		Amount		Paid in Capital		Stock Payable			Deficit			Equity
Balance as of December 31, 2023		141.397		$	1			-	$	-		5,937	$	1	$	97,583,906	$	5,233		$	(91,930,152	)	$	5,658,989
Preferred stock conversion to common stock		(123.909	)		(1	)		-		-		5		-		1		-			-			-
Common stock issued for cash		-			-			-		-		3,671		-		1,148,470		-			-			1,148,470
Common stock issued for warrant exercise		-			-			-		-		520,922		52		5,368,312		-			-			5,368,364
Common stock issued for cashless warrant exercise		-			-			-				6,327		-		1,320,567		-			-			1,320,567
Fair value of vested common stock		-			-			-		-		46		-		80,000		-			-			80,000
Fair value of vested stock options		-			-			-		-		-		-		491,924		-			-			491,924
Stock payable towards preference dividend		-			-			-		-		-		-		5,233		(5,233	)		-			-
Net loss		-			-			-		-		-		-		-		-			(11,507,947	)		(11,507,947	)
Balance as of December 31, 2024		17.488		$	-			-	$	-		536,908	$	53	$	105,998,412	$	-		$	(103,438,099	)	$	2,560,366

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

F-4

ENDRA Life Sciences Inc.

Consolidated Statements of Cash Flows

Cash Flows from Operating Activities	Year Ended December 31, 2024			Year Ended December 31, 2023
Net loss	$	(11,507,947	)	$	(10,060,250	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		46,489			123,726
Fixed assets write off		8,808			24,868
Inventory reserve		2,387,134			138,045
Stock compensation expense		571,924			996,430
Amortization of right of use assets		159,683			151,725
Warrant Expense		7,323,685
Changes in fair value of warrant liability		(3,447,737	)
Gain or Loss on Settlement of warrant exercise		(3,076,664	)
Changes in operating assets and liabilities:
Decrease in prepaid expenses		255,913			167,360
Decrease in inventory		235,731			(116,193	)
Decrease in accounts payable and accrued liabilities		(198,867	)		(822,258	)
Decrease in lease liability		(158,698	)		(152,228	)
Net cash used in operating activities		(7,400,547	)		(9,548,775	)

Cash Flows from Investing Activities
Purchases of fixed assets		(16,000	)		(33,884	)
Proceeds from sale of fixed assets		3,204			9,163
Net cash used in investing activities		(12,796	)		(24,721	)

Cash Flows from Financing Activities
Proceeds from issuance of common stock		1,148,470			6,483,393
Proceeds from warrant issuances and exercises		6,688,930			1,034,912
Repayment of loan		(28,484	)
Net cash provided by financing activities		7,808,917			7,518,305

Net increase (decrease) in cash		395,573			(2,055,191	)

Cash, beginning of period		2,833,907			4,889,098

Cash, end of period	$	3,229,480		$	2,833,907

Supplemental disclosures of cash items
Interest paid	$	31,910		$	44,985
Income tax paid	$	-		$	-

Supplemental disclosures of non-cash items
Stock dividend payable	$	(5,233	)	$	840
Right of use asset	$	578,013		$	354,091
Lease liability	$	584,419		$	365,919
Cashless warrants	$	3,076,664		$	-

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

ENDRA Life Sciences Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2024 and 2023

Note 1 - Nature of the Business

ENDRA Life Sciences Inc. (“ENDRA” or the “Company”) is designing a medical device for accurate liver fat measurement for use in metabolic disease detection and management and GLP-1 drug eligibility and management in circumstances where other technologies are unavailable or impractical.

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

Note 2 - Summary of Significant Accounting Policies and Going Concern

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Management makes estimates that affect certain accounts including inventory reserve, deferred income tax assets, accrued expenses, fair value of equity instruments, fair value of warrant liability and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.

Principles of Consolidation

The Company’s consolidated financial statements include all accounts of the Company and its consolidated subsidiaries and/or entities as of reporting period ending date(s) and for the reporting period(s) then ended. All inter-company balances and transactions have been eliminated.

Basis of Presentation

The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit, and other highly liquid investments with maturities of one year or less, when purchased, to be cash. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations. Carrying value approximates fair value. 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 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.

Inventory

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.

In 2024, The Company determined that it needed to redesign its system so that it requires less space, is simpler to use and is more cost effective. Based on this, the Company performed a thorough assessment of the valuation of inventory as of December 31, 2024 and reserved 100% of the inventory. This reserve totaled $2,525,179 as of December 31, 2024. Our reserve was 5% of inventory, or $138,045 as of December 31, 2023.

Capitalization of Fixed Assets

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.

Leases

Accounting Standards Update (“ASU”) No. 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. 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 December 31, 2024 and 2023 the Company recorded a right of use asset of $578,013 and $354,091, respectively. At December 31, 2024 and 2023 the Company recorded a lease liability of $584,419 and $365,919, respectively.

F-5

Revenue Recognition

ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”) provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. The updated guidance introduces a five-step model to achieve its core principle of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under ASC Topic 606, in order to recognize revenue, the Company is required to identify an approved contract with commitments to perform respective obligations, identify rights of each party in the transaction regarding goods to be transferred, identify the payment terms for the goods transferred, verify that the contract has commercial substance and verify that collection of substantially all consideration is probable. The adoption of ASC Topic 606 did not have an impact on the Company’s operations or cash flows.

Research and Development Costs

The Company follows FASB Accounting Standards Codification (“ASC”) Subtopic 730-10, “Research and Development”. Research and development costs are charged to the statement of operations as incurred. During the years ended December 31, 2024 and 2023, the Company incurred $3,190,293 and $5,003,695 of expenses related to research and development costs, respectively.

Net Earnings (Loss) Per Common Share

The Company computes earnings per share under ASC Subtopic 260-10, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. 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 180,986 and 788 potentially dilutive shares, which include outstanding common stock options, and warrants, as of December 31, 2024 and 2023, respectively.

	December 31, 2024		December 31, 2023
Options to purchase common stock		278		290
Warrants to purchase common stock		180,707		493
Shares issuable upon conversion of Series A Convertible Preferred Stock		1		5
Potential equivalent shares excluded		180,986		788

Fair Value Measurements

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value.

In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” the Company measures certain financial instruments at fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.

F-6

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

·	Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

·	Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

·	Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

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 options and warrants is estimated using the Black-Scholes option pricing model or other appropriate valuation techniques. Key assumptions include expected volatility, risk-free interest rate, expected term, and dividend yield. These inputs are based on observable market data where available (Level 2) or, when necessary, management’s estimates (Level 3). Fair value measurements are reassessed at each reporting date, and any changes are reflected in the financial statements.

Share-based Compensation

The Company’s 2016 Omnibus Incentive Plan (the “Omnibus Plan”) permits the grant of stock options and other share-based awards to its employees, consultants and non-employee members of the board of directors. 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. Effective January 1, 2025, the pool of shares issuable under the Omnibus Plan automatically increased by 178,033 shares from 1,738 shares to 179,771 shares.

The Company records share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification. The guidance requires the use of option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model, and the resulting charge is expensed using the straight-line attribution method over the vesting period.

Stock compensation expense recognized during the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures. The estimated fair value of grants of stock options and warrants to non-employees of the Company is charged to expense, if applicable, in the financial statements. These options vest in the same manner as the employee options granted under the stock incentive plan as described above. Accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has limited historical experience with forfeitures and were based on management’s estimates.

F-7

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. 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 December 31, 2024 of $103,438,099. The Company had working capital of $2,828,435 as of December 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. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements for the year ended December 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. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be required to delay, reduce the scope of, or eliminate one or more of the Company’s research and development activities or commercialization efforts or perhaps even cease the operation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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, 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 December 31, 2024 and 2023, inventory consisted of raw materials, subassemblies to be used in the assembly of TAEUS systems, and finished goods. As of December 31, 2024, the Company had no orders pending for the sale of a TAEUS system.

As of December 31, 2024 and 2023, the Company had recorded inventory reserves totaling $2,525,179 and $138,045, respectively.

As of December 31, 2024 and 2023, the Company had inventory valued at $0 and $2,622,865, respectively.

Note 4 - Fixed Assets

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

	December 31, 2024			December 31, 2023
Property, leasehold and capitalized software	$	579,954		$	587,030
TAEUS development and testing		125,151			125,151
Accumulated depreciation		(635,824	)		(600,399	)
Fixed assets, net	$	69,281		$	111,782

Depreciation expense for the years ended December 31, 2024 and 2023 was $46,489 and $123,726, respectively.

Note 5 - Accounts Payable and Accrued Liabilities

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

	December 31, 2024		December 31, 2023
Accounts payable	$	269,683	$	360,401
Accrued payroll		63,140		150,293
Accrued bonuses		-		35,518
Accrued employee benefits		5,750		5,750
Insurance premium financing		169,720		148,792
Total	$	508,293	$	700,754

F-8

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. 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 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 December 31, 2023, the loan had a balance of CAD 40,000. The loan was fully repaid in 2024.

Note 7 - Capital Stock

Reverse Stock Splits

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.

Capital Stock

At December 31, 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. 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 December 31, 2024, there were 536,908 shares of common stock (which excludes both the 69 unvested shares of restricted stock described in Note 8 below, the 1 share of common stock into which the outstanding shares of Series A Preferred Stock are convertible 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.

F-9

During the year ended December 31, 2024, the Company issued a total of 530,971 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; and
	·	46 shares of the previously issued restricted common stock vested. The shares were issued for services and valued at $80,000.
	·	39 shares of common stock issued as beneficial round up shares as a result of our reverse stock splits

Series B warrant exercises:

495,476 shares of its common stock upon cashless exercise of Series B Warrants

During the year ended December 31, 2023, the Company issued a total of 4,126 shares of its common stock, as follows:

	·	2,464 shares of its common stock in return for aggregate net proceeds of $4,712,750 in a registered underwritten offering that closed on May 2, 2023;
	·	757 shares of its common stock in return for aggregate net proceeds of $1,770,643 under the June 2021 ATM Agreement;
	·	905 upon warrant exercises for an aggregate net proceeds of $1,014,859.

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 31,674 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 effectiveness of the amendment to the Company’s certificate of incorporation filed for the August 2024 Reverse Stock Split (the “Initial Exercise Date”). 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.

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.

F-10

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.

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.

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.

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 December 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 year ended December 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 $1,977.50 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 December 31, 2024, and changes during the year then ended, is presented below:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Balance outstanding at December 31, 2023		290		$	33,685.41		7.25
Granted		27			3,710.00		7.00
Exercised		-			-		-
Forfeited		-			-		-
Cancelled or expired		(39	)		9,861.03		-
Balance outstanding at December 31, 2024		278		$	30,628.90		5.35
Exercisable at December 31, 2024		185		$	41,864.73		4.23

F-11

Restricted Common Stock

On November 30, 2023, the Company issued 115 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 year ended December 31, 2024, the Company recorded as vested 46 shares valued at $80,000. 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.

Note 9 - Common Stock Warrants

As described above in “Registered Offering” (Note 7), the Company issued 31,674 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 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.

In connection with the Offering, the Company also issued placement agent warrants (“Placement Agent Warrants” and, together with the pre-funded warrants and the Series Warrants, the “Warrants”) to purchase up to 1,758 shares of common stock. 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 Series Warrants was $227.325.

Warrant Exercises

On May 2, 2023, the Company conducted a registered offering in which the Company issued 1,232 warrants to purchase shares of common stock for an exercise price per share equal to $2,450. The warrants expire May 2, 2028. In December 2023, the Board approved a temporary reduction of the exercise price per share from $2,450 to $1,225. The Company also issued to the underwriter and its designees warrants exercisable for an aggregate of 172 shares of common stock for an exercise price per share equal to $2,625. The warrants expire November 2, 2026. During the year ended December 31, 2024, the Company issued a total of 67 shares of its common stock upon warrant exercises for aggregate net proceeds of $83,233.

F-12

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 December 31, 2024, the Company issued a total of 495,476 shares of its common stock upon the alternate cashless exercise of 177,987 Series B Warrants.

The following table summarizes all stock warrant activity of the Company for the year ended December 31, 2024:

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Contractual Term (Years)
Balance outstanding at December 31, 2023		493		$	2,758.09		3.80
Issued		389,937			89.95		3.20
Exercised		(209,723	)		99.58		2.01
Forfeited		-			-		-
Expired		-			-		-
Balance outstanding at December 31, 2024		180,707		$	85.38		4.58
Exercisable at December 31, 2024		180,707		$	85.38		4.58

Common Stock Warrants

As described above in “Registered Offering” (Note 7), 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. Accordingly, the Company classified the warrant instruments as a liability at fair value and adjusts the instruments to fair value each period. 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 year ending December 31, 2024, the Company recognized $7,323,685 as warrant liability expense and income from the change in fair value of warrant liability of $3,447,737 in the statement of operations. For the year ended December 31, 2024, the Company recognized $3,076,664 as gain on settlement for the exercise of warrants during the period, and $799,284 as a warrant liability as of December 31, 2024.

Series A Warrants

Each Series A Warrant entitles the holder to purchase one share of the Company’s common stock at $75.95 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 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. The reduced share price shall not be less than $75.95.

Series B Warrants

Each Series B Warrant entitles the holder to purchase one share of the Company’s common stock at $75.95 per share, subject to antidilution adjustments, and expires on February 18, 2027. 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 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 B Warrant on the issuance date then outstanding shall remain unchanged. The reduced share price shall not be less than $75.95.

F-13

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 $577.50 for ten consecutive trading days and (ii) the average daily trading volume for such days exceeded $150,000.

Recurring Fair Value Measurements

The Company’s warrant liability for the Series A and Series B Warrants is based on the Black-Scholes option pricing model utilizing management judgement and pricing inputs from observable and unobservable markets. Significant deviations from these estimates and inputs could result in a material change in fair value. 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.

Measurement

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:

Input	August 20, 2024 (Initial Measurement)	December 31, 2024
Exercise price	$28.70 and $1.75	$28.70 and $1.75
Stock price	$ 23.10	$ 7.26
Volatility	122% and 145%	131% and 167%
Discount rate	3.70% and 3.90%	4.36%
Dividends	-	-
Expected life (years)	5 and 2.5	4.64

Note 10 - Related Party Transactions

On May 2, 2023, the Company conducted a registered offering in which the Company sold 48 shares of its common stock and 24 warrants to the Company’s director, Anthony DiGiandomenico, for cash at the public offering price, 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 provided commercialization services. Under the terms of the agreement, Mr. Tokman was compensated at a rate of $150 per hour for his services. On August 13, 2024, this agreement was replaced with an employment agreement as described in Note 11.

F-14

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.

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. As described below in note 11, the Company’s Chief Financial Officer works in a part-time capacity for the Company through Impact Solutions. In 2024, IS Bookkeeping & Payroll provided human resources and payroll processing services to the Company totaling $18,693.

Note 11 - Commitments and Contingencies

Office Lease

Effective January 1, 2015, the Company entered into an office lease agreement with Green Court, LLC, a Michigan limited liability company, for approximately 3,657 rentable square feet of space, for the initial monthly rent of $5,986, which commenced on January 1, 2015 for an initial term of 60 months. On October 10, 2017, this lease was amended increasing the rentable square feet of space to 3,950 and the monthly rent to $7,798.

On March 15, 2021, the Company entered into an amendment to the lease, increasing the total rentable square feet to 7,198, 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. The lease typically does not provide an implicit rate; 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 December 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. As a result, the Company has been recognizing rents as they become payable based on the adoption of ASC Topic 842. The weighted-average remaining lease term is 4.2 years.

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

	Operating Lease
2025		152,784
2026 and beyond		579,966
Total	$	732,750
Less: amount representing interest		(148,332	)
Present value of future minimum lease payments		584,419
Less: current obligations under leases		(96,937	)
Long-term lease obligations	$	487,482

For the years ended December 31, 2024 and 2023, the Company incurred rent expenses of $203,265 and $218,815, respectively.

F-15

Employment and Consulting Agreements

Alexander Tokman - Effective August 13, 2024, the Board appointed Alexander Tokman as the Company’s acting Chief Executive Officer and Chairman of the Board of Directors. In connection with his appointment, Mr. Tokman and the Company entered into an employment agreement, dated August 13, 2024 (the “Employment Agreement”). Mr. Tokman’s employment with the Company is “at will” and may be terminated by him or the Company at any time and for any reason. Pursuant to the Employment Agreement, Mr. Tokman will receive an annual base salary of $300,000, subject to adjustment at the Board’s discretion. Mr. Tokman is also eligible for an annual cash bonus based upon the achievement of performance-based objectives established by the Board of Directors. If Mr. Tokman’s employment is terminated by the Company without cause (as defined in the Omnibus Plan), if Mr. Tokman resigns for good reason (as defined in the Employment Agreement), or if Mr. Tokman’s employment ends following the hiring no later than February 13, 2026 of a replacement chief executive officer whom Mr. Tokman assists in recruiting, Mr. Tokman will be entitled to receive, subject to his execution of a standard release agreement, 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). Additionally, under the Employment Agreement, Mr. Tokman 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.

If Mr. 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.

Richard Jacroux - On August 7, 2024, the Company’s Board of Directors appointed Richard Jacroux as Chief Financial Officer. Mr. Jacroux works in a part-time capacity for the Company through Impact Solve, LLC (dba Impact Solutions) an accounting and chief financial officer service firm. The Company pays Impact Solutions a base monthly fee of $8,650 plus expenses in respect of his services to the Company and any hours worked in excess of 20 hours per week are paid at a rate of $150 per hour

Litigation

From time to time the Company may become a party to litigation in the normal course of business. As of December 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 - Income Taxes

The components of earnings before income taxes for the years ended December 31, 2024 and 2023 were as follows:

	For the Years Ended December 31,
*Income (loss) before income taxes*	2024			2023

Domestic		(10,434,147	)		(8,466,950	)
Foreign		(1,073,700	)		(1,593,300	)
Total income (loss) before income taxes	$	(11,507,947	)	$	(10,060,250	)

F-16

Income tax provision (benefit) consists of the following for the years ended December 31, 2024 and 2023:

*Income tax provision (benefit):*	For the Years Ended December 31,
*Current*	2024		2023
Federal		-		-
State		-		-
Foreign		-		-
Total Current		-		-
*Deferred*
Federal		-		-
State		-		-
Foreign		-		-
Total Deferred		-		-

Total income tax provision (benefit)	$	-	$	-

A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows:

*Rate Reconciliation*	For the Years Ended December 31,
	2024					2023
Expected tax at statutory rates	$	(2,416,700	)	21	%	$	(2,099,400	)	21	%
Permanent Differences	$	(157,900	)	1	%		(83,000	)	1	%
State Income Tax, Net of Federal benefit	$	(822,500	)	7	%		(448,100	)	4	%
State Rate Change-Federal Impact	$	(42,300	)	0	%		-		0	%
State Rate Change Adjustment	$	201,300		-2	%		-		0	%
Foreign taxes at rate different than US Taxes	$	(58,900	)	1	%		(33,800	)	0	%
Current Year Change in Valuation Allowance	$	3,411,100		-30	%		2,630,700		-26	%
Prior Year True-Ups	$	(114,100	)	1	%		33,600		0	%
Income tax provision (benefit)	$	-		0	%	$	-		0	%

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows:

*Deferred Tax Assets/(Liabilities) Detail*	For the Years Ended December 31,
	2024			2023
Deferred Tax Assets (Liabilities):
Stock Based Compensation	$	1,546,400			1,406,400
Accrued Bonus	$	17,100			63,300
Accrued Expenses	$	36,000			-
Depreciation	$	900			(7,800
ROU (Asset)	$	(148,800	)		(92,600	)
ROU Liability	$	150,400			95,700
Capitalized R&D	$	1,967,800			1,960,100
R&D Credit	$	29,800			29,800
Net Operating Losses (US)	$	19,647,500			16,665,000
Net Operating Losses (Foreign)	$	1,327,000			1,042,600
Net deferred tax assets (liabilities)		24,573,700			21,162,500
Valuation allowance		(24,573,700	)		21,162,500
Net deferred tax assets (liabilities)	$	-			-

F-17

The domestic U.S. net operating loss carryforward increased from $62,032,405 at December 31, 2023 to $72,521,129 at December 31, 2024. After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2024 and 2023, due to the uncertainty of realizing the deferred income tax assets. Out of the $72,521,129 net operating losses carry forward, $16,012,698 will begin to expire in 2028 and $56,508,431 will have an indefinite life. The Company’s Total State net operating losses also increased from $74,926,792 at December 31,2023 to $84,972,922 at December 31, 2024. The State net operating losses will began to expire in 2028. There are also net operating losses from Canada, France, Germany, Netherlands and UK total to 5,498,797 as of December 31, 2024.

The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5% tax on certain income of controlled foreign corporations. We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. U.S. federal income tax returns for 2021 and after remain open to examination. We and our subsidiaries are also subject to income tax in multiple states and foreign jurisdictions. Generally, foreign income tax returns after 2021 remain open to examination. No income tax returns are currently under examination. As of December 31, 2024 and 2023, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2024 and 2023, there were no penalties or interest recorded in income tax expense.

Note 13 – 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: biotech. 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.

F-18

The table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024, and 2023:

	Year Ended			Year Ended
	December 31,			December 31,
	2024			2023
Operating Expenses
Research and development	$	3,190,293		$	5,003,695
Sales and marketing		571,040			820,554
General and administrative		7,055,814			4,696,486
Total operating expenses		10,817,147			10,520,735

Operating loss		(10,817,147	)		(10,520,735	)
Other segment items (a)		(690,800	)		460,485

Net loss	$	(11,507,947	)	$	(10,060,250	)

Reconciliation of net loss
Adjustments and reconciling items		-			-
Consolidated net loss	$	(11,507,947	)	$	(10,060,250	)

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

Note 14 - Subsequent Events

The Company has evaluated events through, March 31, 2025, the filing date of this Annual Report on Form 10-K, and determined that, other than as disclosed below, no other events have occurred that would require adjustment to or disclosures in these consolidated financial statements.

Subsequent to the year ended December 31, 2024, the Company issued a total of 25,305 shares of its common stock in return for aggregate gross proceeds of $150,416 under the February 2024 ATM Agreement.

F-19

PART IV

Item 15. Exhibits, Financial Statements and Schedules

(a) List of documents filed as part of this report:

1. Financial Statements (see “Financial Statements and Supplementary Data” at Item 8 and incorporated herein by reference)

2. Financial Statement Schedules (Schedules to the Financial Statements have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Financial Statements or notes thereto)

3. Exhibits

The following is a list of exhibits filed as part of this Annual Report:

Exhibit Number	Exhibit Description	Filed Herewith	Incorporation by Reference
Exhibit Number	Exhibit Description	Filed Herewith	Form	Exhibit	Filing Date
3.1	Fourth Amended and Restated Certificate of Incorporation of the Company, as amended [Restated for SEC filing purposes only]		10-K	3.1	03/31/25
3.2	Amended and Restated Bylaws of the Company		S-1	3.4	12/06/16
4.1	Specimen Certificate representing shares of common stock of the Company		S-1	4.1	11/21/16
4.2	Certificate of Designations of Series A Convertible Preferred Stock		8-K	4.1	12/11/19
4.3	Form of Warrant issued in December 2019 Series A Convertible Preferred Stock Offering		8-K	4.2	12/11/19
4.4	Certificate of Designations of Series B Convertible Preferred Stock		8-K	4.1	12/26/19
4.5	Form of Warrant issued in December 2019 Series B Convertible Preferred Stock Offering		8-K	4.2	12/26/19
4.6	Certificate of Designations of Series C Preferred Stock		8-K	3.1	09/27/22
4.7	Form of Warrant issued in April 2023 Underwritten Public Offering		S-1	4.2	03/30/23
4.8	Form of Underwriter’s Warrant issued in April 2023 Underwritten Public Offering		S-1/A	4.3	04/18/23
4.9	Form of Warrant Agency Agreement		S-1	4.4	03/30/23
4.10	Form of Placement Agent Warrant		S-1	4.5	05/10/24
4.11	Form of Series A Warrant		S-1	4.2	05/31/24
4.12	Form of Series B Warrant		S-1	4.3	05/31/24
4.13	Form of Pre-Funded Warrant		S-1	4.4	05/10/24
4.14	Amendment to Series A Warrant		10-Q	3.8	08/14/24
4.15	Amendment to Series B Warrant		10-Q	3.9	08/14/24
4.16	Description of Securities		10-K	4.12	03/30/22
10.1	ENDRA Life Sciences Inc. 2016 Omnibus Incentive Plan*		S-1	10.4	12/06/16
10.2	First Amendment to ENDRA Life Sciences Inc. 2016 Omnibus Incentive Plan*		DEF 14A	Appx. A	05/10/18
10.3	Form of Stock Option Award under 2016 Omnibus Incentive Plan*		S-1	10.5	12/06/16

Table of Contents

10.4	Form of Restricted Stock Unit Award under 2016 Omnibus Incentive Plan*		S-1	10.6	12/06/16
10.5	Non-Employee Director Compensation Policy, effective January 30, 2023*		10-K	10.6	03/16/23
10.6	Form of Indemnification Agreement by and between the Company and each of its directors and executive officers*		S-1	10.8	11/21/16
10.7	Amended and Restated Employment Agreement, dated May 12, 2017, by and between the Company and Francois Michelon*		8-K	10.1	05/12/17
10.8	First Amendment to Employment Agreement, dated December 27, 2019, by and between the Company and Francois Michelon*		8-K	10.1	12/27/19
10.9	Separation Agreement and Release, dated as of August 12, 2024, by and between the Company and Francois Michelon*		10-K	10-9	03/31/25
10.10	Amended and Restated Employment Agreement, dated May 12, 2017, by and between the Company and Michael Thornton*		8-K	10.2	05/12/17
10.11	First Amendment to Employment Agreement, dated December 27, 2019, by and between the Company and Michael Thornton*		8-K	10.2	12/27/19
10.12	Services Agreement, dated March 25, 2024, between the Company and Impact Solve, LLC*		10-K	10.12	03/31/25
10.13	Employment Agreement, dated August 13, 2024, by and between the Company and Alexander Tokman*		10-Q	10.1	11/19/24
10.14	Gross Lease, dated January 1, 2015, between the Company and Green Court LLC		S-1	10.18	11/21/16
10.15	Amendment to Gross Lease, dated October 10, 2017, by and between the Company and Green Court LLC		10-Q	10.2	05/15/18
10.16	Second Amendment to Lease, dated March 15, 2021, by and between the Company and Green Court LLC		10-K	10.18	03/25/21
10.17	Third Amendment to Lease, dated December 1, 2024, by and between the Company and Green Court LLC		10-K	10.17	03/31/25
10.18	Consulting Agreement, dated October 17, 2023, by and between the Company and Alexander Tokman*		10-K	10.21	03/28/24
10.19	Offer Letter, dated June 9, 2021, by and between the Company and Irina Pestrikova*		10-K	10.22	03/28/24
19.1	ENDRA Life Sciences Inc. Insider Trading Policy		10-K	19.1	03/31/25
21.1	Subsidiaries of the Company		10-K	21.1	03/30/22
23.1	Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Forms S-3)		10-K	23.1	03/31/25
23.2	Consent of RBSM LLP, Independent Registered Public Accounting Firm (with respect to Forms S-8)		10-K	23.2	03/31/25
24.1	Power of Attorney (included on signature page of Original Report)
31.1	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934	x
31.2	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934	x
32.1	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	x
97	Incentive-Based Compensation Recovery Policy		10-K	97	03/28/24
101.INS	XBRL Instance Document	x
101.SCH	XBRL Taxonomy Schema	x
101.CAL	XBRL Taxonomy Extension Calculation Linkbase	x
101.DEF	XBRL Taxonomy Extension Definition Linkbase	x
101.LAB	XBRL Taxonomy Extension Label Linkbase	x
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	x

________________

* Indicates management compensatory plan, contract or arrangement.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ENDRA Life Sciences Inc.

Dated: April 4, 2025	By:	/s/ Alexander Tokman
		Alexander Tokman
		Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)

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Amendment: SEC Form 10-K/A filed by ENDRA Life Sciences Inc.

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