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
|
$1,726,079
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 02, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | ENDRA Life Sciences Inc. | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Entity Central Index Key | 0001681682 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 5,425,578 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 |
Condensed Balance Sheets - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets | ||
Cash | $ 637,124 | $ 5,601,878 |
Accounts receivable | 12,275 | 6,850 |
Prepaid expenses | 328,046 | 67,496 |
Inventory | 0 | 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 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 1,068,337 | 848,214 |
Convertible notes payable, net of discount | 681,187 | 0 |
Total Liabilities | 1,749,524 | 848,214 |
Stockholders' Equity | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
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' Equity | (457,610) | 5,275,488 |
Total Liabilities and Stockholders' Equity | $ 1,291,914 | $ 6,123,702 |
Condensed Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock shares, par value | $ 0.0001 | $ 0.0001 |
Preferred stock shares, authorized | 10,000,000 | 10,000,000 |
Preferred stock shares, issued | 0 | 0 |
Preferred stock shares, outstanding | 0 | 0 |
Common stock shares, par value | $ 0.0001 | $ 0.0001 |
Common stock shares, authorized | 50,000,000 | 50,000,000 |
Common stock shares, issued | 3,947,828 | 3,923,027 |
Common stock shares, outstanding | 3,947,828 | 3,923,027 |
Condensed Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Statement [Abstract] | ||||
Revenue | $ 0 | $ 287,000 | $ 6,174 | $ 344,772 |
Cost of Goods Sold | 0 | 118,270 | 0 | 169,697 |
Gross Profit | 0 | 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 | 0 | 287,541 | 0 |
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 | 0 | 0 | 0 | 0 |
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 |
Nature of the Business |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Nature Of Business | |
Nature of the Business | ENDRA Life Sciences Inc. (“ENDRA” or the “Company”) is developing a medical imaging technology based on the thermoacoustic effect that improves the sensitivity and specificity of clinical ultrasound.
On May 8, 2017, the Company effected a 1-for-3.5 reverse stock split (the “Reverse Split”) of the Company’s common stock, with no reduction in authorized capital stock. In the Reverse Split, every 3.5 outstanding shares of common stock became one (1) share of common stock. All common stock and stock incentive plan information in these financial statements reflect the Reverse Split.
ENDRA was incorporated on July 18, 2007 as a Delaware corporation.
ENDRA Life Sciences Canada Inc. was organized under the laws of Ontario, Canada on July 6, 2017, and is wholly owned by the Company.
|
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | 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 deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.
Principles of Consolidation
The Company’s unaudited condensed consolidated financial statements include all accounts of the Company and its consolidated subsidiary for the reporting period(s) then ended. All inter-company balances and transactions have been eliminated.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ended December 31, 2018. The balance sheet at December 31, 2017 has been derived from the audited financial statements at such date. For further information, refer to the financial statements and footnotes thereto included in ENDRA Life Sciences Inc. annual financial statements for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2018.
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. As of September 30, 2018 and December 31, 2017, the Company had no cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.
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. As of September 30, 2018 the Company determined it should take a reserve equal to the full amount of its available inventory. As of December 31, 2017, no such reserve was taken.
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.
Capitalization of Intangible Assets
The Company records the purchase of intangible assets not purchased in a business combination in accordance with the ASC Topic 350.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”). This standard 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 principal 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. The Company adopted the updated guidance effective January 1, 2018 using the full retrospective method. The new standard did not have a material impact on its financial position and results of operations, as it did not change the manner or timing of recognizing revenue.
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 ASC Subtopic 730-10, “Research and Development”. Research and development costs are charged to the statement of operations as incurred. During the three and nine months ended September 30, 2018 and September 30, 2017, the Company incurred $1,162,911 and $3,671,490, and $300,527 and $571,066, 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” (“ASC 260-10”). 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 3,238,737 and 3,208,262 potentially dilutive shares, which include outstanding common stock options, warrants, and convertible notes, as of September 30, 2018 and December 31, 2017, respectively.
The potential shares, which are excluded from the determination of basic and diluted net loss per share as their effect is anti-dilutive, are as follows:
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.
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 notes payable and convertible notes approximates their fair values since the current interest rates and terms on these obligations are the same as prevailing market rates.
Share-based Compensation
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 covering up to 1,345,074 shares of common stock, of which approximately 350,000 remain available to be granted. Each January 1 the pool of shares available for issuance under the Omnibus Plan will automatically increase 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.
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. The Company has elected to use the calculated value method to account for the options it issued in 2017 (prior to commencement on June 28, 2017 of public trading in the Company’s common stock). Under the Share-based Compensation Topic of the FASB Codification, a nonpublic entity that is unable to estimate the expected volatility of the price of its underlying shares may measure awards based on a “calculated value,” which substitutes the volatility of appropriate public companies (representative of the company’s size and industry) as a benchmark for the volatility of the entity’s own share price. The Company has used the historical closing values of these companies to estimate volatility, which was calculated to be 90%, for periods prior to June 28, 2017, when there was no active market for the Company’s common stock.
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.
Beneficial Conversion Feature
If the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
Debt Discount
The Company determines if the convertible promissory notes should be accounted for as liability or equity under ASC Topic 480, Liabilities — Distinguishing Liabilities from Equity. ASC Topic 480 applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities: mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on:
● A fixed monetary amount known at inception (for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount);
● Variations in something other than the fair value of the issuer’s equity shares (for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares); or
● Variations inversely related to changes in the fair value of the issuer’s equity shares (for example, a written put that could be net share settled).
If the Company determines the instrument meets the guidance under ASC Topic 480, the instrument is accounted for as a liability with a respective debt discount. The Company has previously recorded debt discounts in connection with raising funds through the issuance of promissory notes. These costs are amortized to noncash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. See Note 6, Convertible Notes, for further discussion on the Company’s accounting treatment for the outstanding notes.
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 September 30, 2018 of $25,326,086. The Company had working capital deficit of $750,911 as of September 30, 2018. 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. The accompanying financial statements for the period ended September 30, 2018 have been prepared assuming the Company will continue as a going concern. The Company’s cash resources will likely be insufficient to meet its anticipated needs during the next twelve months. The Company will require additional financing to fund its future planned operations, including research and development and commercialization of its products.
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. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying financial statements. The accompanying 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
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that supersedes nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20, all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company has reviewed ASU 2014-09 and using the full retrospective method has determined that its adoption has had no impact on its financial position, results of operations or cash flows. The Company adopted the provisions of this statement in the first quarter of fiscal 2018.
In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 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. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. 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. The Company is currently evaluating the expected impact that the standard could have on its consolidated financial statements and related disclosures.
In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09, which is effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods, did not have any impact on the Company’s consolidated financial statement presentation or disclosures.
Other 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.
|
Inventory |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Inventory, Net [Abstract] | |
Inventory | As of September 30, 2018 and December 31, 2017, inventory consisted of raw materials to be used in the assembly of a Nexus 128 system. As of September 30, 2018 and December 31, 2017 the Company had no orders pending for the sale of a Nexus 128 system. On June 15, 2018, the Company reported that it would explore strategic alternatives with respect to its pre-clinical business, including a potential sale. As of September 30, 2018 the Company took a full reserve against its available inventory of parts for the Nexus 128 system.
|
Fixed Assets |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
Fixed Assets | As of September 30, 2018 and December 31, 2017, fixed assets consisted of the following:
Depreciation expense for the three and nine months ended September 30, 2018 and 2017 was $18,042 and $48,246, and $15,157 and $46,121, respectively.
|
Accounts Payable and Accrued Liabilities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities | As of September 30, 2018 and December 31, 2017, current liabilities consisted of the following:
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Convertible Notes |
9 Months Ended |
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Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes | On June 28, 2018, the Company conducted a private placement offering in which the Company sold $1,077,000 aggregate principal amount of senior secured convertible promissory notes (the “Notes”) to accredited investors and National Securities Corporation, which served as placement agent in the offering. Certain of the Company’s officers and directors participated in the offering.
The Notes are convertible into common stock at a conversion price equal to the lesser of (a) the lowest per share price at which common stock is sold in a Qualified Financing (as defined below), as applicable, less a discount of 20%, or (b) $2.016, but in any event no less than a conversion price floor of $1.40.
Each Note bears interest at a rate of 10% per annum until maturity on December 31, 2018 (the “Maturity Date”). Interest will be paid in arrears on the outstanding principal amount on the three month anniversary of the issuance of the Notes and each three month period thereafter and on the Maturity Date or on the date of conversion in full of each such Note. The principal amount of the Notes will automatically convert into shares of common stock (i) upon the consummation of a sale by the Company of common stock resulting in aggregate gross cash proceeds of at least $7.0 million (a “Qualified Financing”) or (ii) if the holders of a majority of the aggregate principal amount of outstanding Notes elect to convert the Notes at any time until three days prior to a Qualified Financing. Additionally, noteholders are entitled to convert the principal amount of Notes into common stock (i) at any time until three days prior to the consummation of a Qualified Financing or (ii) if a material Event of Default (as defined in the Notes) shall have occurred and be continuing. In each case, conversion is subject to the terms and provisions of the Notes.
The Notes provide for customary events of default. In the case of an event of default with respect to the Notes, each Noteholder may declare its Note to be due and payable immediately without further action or notice. If such an event of default occurs and be continuing, the rate of interest on the Notes will automatically be increased to 15% until the default is cured.
In addition, on June 28, 2018, the Company issued warrants exercisable for 267,113 shares of the Company’s common stock to accredited investors and issued to National Securities Corporation, which served as placement agent in the offering, and its designees warrants exercisable for 53,423 shares of common stock. Each warrant will entitle the holder to purchase shares of Common Stock for an exercise price per share equal to $2.52, which was the closing bid price of shares of Common Stock on the NASDAQ Capital Market on June 27, 2018. The warrants are exercisable commencing six months after the date of issuance and expire June 28, 2021. The fair value of these warrants was determined to be $587,541 using the Black-Scholes-Merton option-pricing model based on the following assumptions: (i) volatility rate of 99%, (ii) discount rate of 0%, (iii) zero expected dividend yield, and (iv) expected life of 3 years. The value of the warrants of $587,541 was considered as debt discount upon issuance and was being amortized as interest over the term of the notes or in full upon the conversion of the corresponding notes. During three and nine months ended September 30, 2018, the Company amortized $5,822 and $377,606 of such discount to interest expense, and the unamortized discount as of September 30, 2018 was $345,813.
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Capital Stock |
9 Months Ended |
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Sep. 30, 2018 | |
Stockholders' Equity | |
Capital Stock | At September 30, 2018, the authorized capital of the Company consisted of 60,000,000 shares of capital stock, consisting of 50,000,000 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. As of September 30, 2018, there were 3,947,828 shares of common stock issued and outstanding and no preferred stock outstanding.
During the nine months ended September 30, 2018, the Company issued 24,801 shares of common stock for the conversion of $50,000 of Notes.
During the year ended December 31, 2017, the Company issued 16,000 shares of common stock for services valued at $57,440, $47,865 of which was expensed during the nine months ended September 30, 2018, based on the duration of the contract. The certificates for these shares were issued in January 2018.
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Stock Options and Warrants |
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Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options and Warrants | Stock options are awarded to the Company’s employees, consultants and non-employee members of the board of directors under the 2016 Omnibus Incentive 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 fair value of these stock options granted by the Company during the three and nine months ended September 30, 2018 was determined to be $0 and $206,096, respectively, using the Black-Scholes-Merton option-pricing model based on the following assumptions: (i) volatility rate of 120% to 127%, (ii) discount rate of 0%, (iii) zero expected dividend yield, and (iv) expected life of 8 years. A summary of option activity under the Company’s stock options as of September 30, 2018, and changes during the nine months then ended is presented below:
On January 16, 2018, the Company granted warrants to purchase 20,000 shares of common stock with an exercise price of $5.50 per share for services. The warrants vest in six monthly installments beginning on February 16, 2018. The fair value of these warrants was determined to be $40,384 using the Black-Scholes-Merton option-pricing model based on the following assumptions: (i) volatility rate of 126%, (ii) discount rate of 0%, (iii) zero expected dividend yield, and (iv) expected life of 3 years. During the three and nine months ended September 30, 2018, $3,365 and $40,384, respectively, was expensed.
On June 28, 2018, the Company conducted a private placement offering (see note 6) in which the Company issued warrants exercisable for 267,113 shares of the Company’s common stock to accredited investors and issued to National Securities Corporation, which served as placement agent in the offering, and its designees warrants exercisable for 53,423 shares of common stock. Each warrant will entitle the holder to purchase shares of Common Stock for an exercise price per share equal to $2.52, which was the closing bid price of shares of Common Stock on the NASDAQ Capital Market on June 27, 2018. The warrants are exercisable commencing six months after the date of issuance and expire June 28, 2021. The fair value of these warrants was determined to be $587,541 using the Black-Scholes-Merton option-pricing model based on the following assumptions: (i) volatility rate of 99%, (ii) discount rate of 0%, (iii) zero expected dividend yield, and (iv) expected life of 3 years.
The following table summarizes all stock warrant activity of the Company for the nine months ended September 30, 2018:
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Commitments & Contingencies |
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Sep. 30, 2018 | ||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||
Commitments & 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. Under the terms of the lease the Company has an option on the same space for an additional 60-month term. Future minimum payments under this lease are as follows:
For the three and nine months ended September 30, 2018 and 2017, the Company incurred rent expenses of $27,332 and $79,580, and $20,758 and $52,457, respectively.
Employment and Consulting Agreements
Francois Michelon. Effective May 12, 2017, the Company entered into an amended and restated employment agreement with Francois Michelon, the Company’s Chief Executive Officer and Chairman of the board of directors. The term of the employment agreement runs through December 31, 2019. The employment agreement provides for an annual base salary that is subject to adjustment at the board of directors’ discretion. The annual base salary in effect during the period covered by this Form 10-Q was $345,000. Under the employment agreement, Mr. Michelon is eligible for an annual cash bonus based upon achievement of performance-based objectives established by the board of directors. Pursuant to Mr. Michelon’s employment agreement, in connection with the closing of the Company’s initial public offering he was granted options to purchase an aggregate 339,270 shares of common stock. The options have a weighted average exercise price of $4.96 per share of common stock and vest in three equal annual installments beginning on May 12, 2018. Upon termination without cause, any portion of Mr. Michelon’s options 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 options will automatically vest. Upon termination for any other reason, the entire unvested portion of the options will terminate.
If Mr. Michelon’s employment is terminated by the Company without cause, Mr. Michelon will be entitled to receive 12 months’ continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control).
Under his employment agreement, Mr. Michelon is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.
Michael Thornton. Effective May 12, 2017, the Company entered into an amended and restated employment agreement with Michael Thornton, the Company’s Chief Technology Officer. The term of the employment agreement runs through December 31, 2019. The employment agreement provides for an annual base salary that is subject to adjustment at the board of directors’ discretion. The annual base salary in effect during the period covered by this Form 10-Q was $260,000. 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. Pursuant to Mr. Thornton’s employment agreement, in connection with the closing of the Company’s initial public offering he was granted options to purchase an aggregate 345,298 shares of common stock. The options have a weighted average exercise price of $4.96 per share of common stock and vest in three equal annual installments beginning on May 12, 2018. Upon termination without cause, any portion of Mr. Thornton’s option 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 options will automatically vest. Upon termination for any other reason, the entire unvested portion of the options will terminate.
If Mr. Thornton’s employment is terminated by the Company without cause, 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.
David R. Wells. On May 12, 2017, the Company entered into a consulting agreement with StoryCorp Consulting (“StoryCorp”), pursuant to which David R. Wells provides services to the Company as its Chief Financial Officer. Pursuant to the consulting agreement, the Company pays to StoryCorp a monthly fee of $9,000. Additionally, pursuant to the consulting agreement, the Company granted to Mr. Wells a stock option to purchase 15,000 shares of common stock in connection with the closing of the Company’s initial public offering, having an exercise price per share equal to $5.00 and vesting in twelve equal quarterly installments, and, for so long as the consulting agreement is in place, will grant to Mr. Wells a stock option to purchase the same number of shares of common stock with the same terms on each annual anniversary of the date of the consulting agreement. In May, 2018 Mr. Wells and the Company agreed to renegotiate the annual stock option provision in the agreement of May 12, 2017. The parties are continuing their negotiations in good faith.
Litigation
From time to time the Company may become a party to litigation in the normal course of business. There are currently no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | On October 11, 2018, the Company entered into an underwriting agreement with National Securities Corporation (the “Underwriter”), relating to an underwritten public offering for the issuance and sale of 1,477,750 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), which amount includes the Underwriter's option to purchase up to an additional 192,750 shares of Common Stock to cover over-allotments. The Underwriter exercised in full its option to purchase the additional over-allotment shares on October 12, 2018. The offering, including the issuance of the shares of Common Stock sold pursuant to the Underwriter's over-allotment option, closed on October 15, 2018. The net proceeds to the Company from the offering were approximately $2.7 million, after deducting underwriting discounts and commissions, and other offering expenses. |
Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
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 deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.
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Principles of Consolidation | The Company’s unaudited condensed consolidated financial statements include all accounts of the Company and its consolidated subsidiary for the reporting period(s) then ended. All inter-company balances and transactions have been eliminated.
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Basis of Presentation | The accompanying unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ended December 31, 2018. The balance sheet at December 31, 2017 has been derived from the audited financial statements at such date. For further information, refer to the financial statements and footnotes thereto included in ENDRA Life Sciences Inc. annual financial statements for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2018.
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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. As of September 30, 2018 and December 31, 2017, the Company had no cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.
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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. As of September 30, 2018 the Company determined it should take a reserve equal to the full amount of its available inventory. As of December 31, 2017, no such reserve was taken.
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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.
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Capitalization of Intangible Assets | The Company records the purchase of intangible assets not purchased in a business combination in accordance with the ASC Topic 350.
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Revenue Recognition | In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”). This standard 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 principal 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. The Company adopted the updated guidance effective January 1, 2018 using the full retrospective method. The new standard did not have a material impact on its financial position and results of operations, as it did not change the manner or timing of recognizing revenue.
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.
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Research and Development Costs | The Company follows ASC Subtopic 730-10, “Research and Development”. Research and development costs are charged to the statement of operations as incurred. During the three and nine months ended September 30, 2018 and September 30, 2017, the Company incurred $1,162,911 and $3,671,490, and $300,527 and $571,066, of expenses related to research and development costs, respectively.
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Net Earnings (Loss) Per Common Share | The Company computes earnings per share under ASC Subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). 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 3,238,737 and 3,208,262 potentially dilutive shares, which include outstanding common stock options, warrants, and convertible notes, as of September 30, 2018 and December 31, 2017, respectively.
The potential shares, which are excluded from the determination of basic and diluted net loss per share as their effect is anti-dilutive, are as follows:
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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.
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 notes payable and convertible notes approximates their fair values since the current interest rates and terms on these obligations are the same as prevailing market rates.
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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 covering up to 1,345,074 shares of common stock, of which approximately 350,000 remain available to be granted. Each January 1 the pool of shares available for issuance under the Omnibus Plan will automatically increase 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.
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. The Company has elected to use the calculated value method to account for the options it issued in 2017 (prior to commencement on June 28, 2017 of public trading in the Company’s common stock). Under the Share-based Compensation Topic of the FASB Codification, a nonpublic entity that is unable to estimate the expected volatility of the price of its underlying shares may measure awards based on a “calculated value,” which substitutes the volatility of appropriate public companies (representative of the company’s size and industry) as a benchmark for the volatility of the entity’s own share price. The Company has used the historical closing values of these companies to estimate volatility, which was calculated to be 90%, for periods prior to June 28, 2017, when there was no active market for the Company’s common stock.
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.
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Beneficial Conversion Feature | If the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
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Debt Discount | The Company determines if the convertible promissory notes should be accounted for as liability or equity under ASC Topic 480, Liabilities — Distinguishing Liabilities from Equity. ASC Topic 480 applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities: mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on:
● A fixed monetary amount known at inception (for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount);
● Variations in something other than the fair value of the issuer’s equity shares (for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares); or
● Variations inversely related to changes in the fair value of the issuer’s equity shares (for example, a written put that could be net share settled).
If the Company determines the instrument meets the guidance under ASC Topic 480, the instrument is accounted for as a liability with a respective debt discount. The Company has previously recorded debt discounts in connection with raising funds through the issuance of promissory notes. These costs are amortized to noncash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. See Note 6, Convertible Notes, for further discussion on the Company’s accounting treatment for the outstanding notes.
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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 September 30, 2018 of $25,326,086. The Company had working capital deficit of $750,911 as of September 30, 2018. 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. The accompanying financial statements for the period ended September 30, 2018 have been prepared assuming the Company will continue as a going concern. The Company’s cash resources will likely be insufficient to meet its anticipated needs during the next twelve months. The Company will require additional financing to fund its future planned operations, including research and development and commercialization of its products.
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. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying financial statements. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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Recent Accounting Pronouncements | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that supersedes nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20, all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company has reviewed ASU 2014-09 and using the full retrospective method has determined that its adoption has had no impact on its financial position, results of operations or cash flows. The Company adopted the provisions of this statement in the first quarter of fiscal 2018.
In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 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. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. 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. The Company is currently evaluating the expected impact that the standard could have on its consolidated financial statements and related disclosures.
In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09, which is effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods, did not have any impact on the Company’s consolidated financial statement presentation or disclosures.
Other 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.
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Summary of Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Anti-dilutive shares |
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Fixed Assets (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
Fixed assets |
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Accounts Payable and Accrued Liabilities (Tables) |
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Accounts Payable and Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current liabilities |
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Stock Options and Warrants (Tables) |
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Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity |
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Warrant activity |
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Commitments & Contingencies (Tables) |
9 Months Ended | |||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||
Future minimum lease payments |
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Nature of the Business (Details Narrative) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Nature Of Business | |
Date of incorporation | Jul. 18, 2007 |
State of incorporation | Delaware |
Summary of Significant Accounting Policies (Details) - shares |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Anti-dilutive shares exluded from the calculation of earnings per share | 3,238,737 | 3,208,262 |
Options to purchase common stock | ||
Anti-dilutive shares exluded from the calculation of earnings per share | 978,911 | 940,121 |
Warrants to purchase common stock | ||
Anti-dilutive shares exluded from the calculation of earnings per share | 2,259,826 | 2,268,141 |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | |||||
Research and development | $ 1,162,911 | $ 300,527 | $ 3,671,490 | $ 571,066 | |
Anti-dilutive shares exluded from the calculation of earnings per share | 3,238,737 | 3,208,262 | |||
Cumulative net loss | (25,326,086) | $ (25,326,086) | $ (17,895,435) | ||
Working capital deficit | $ (750,911) | $ (750,911) |
Fixed Assets (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Computer equipment and fixtures | $ 679,179 | $ 579,179 |
Accumulated depreciation | (385,876) | (337,630) |
Fixed assets, net | $ 293,303 | $ 241,549 |
Fixed Assets (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 18,042 | $ 15,157 | $ 48,246 | $ 46,121 |
Accounts Payable and Accrued Liabilities (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Accounts payable | $ 750,580 | $ 780,262 |
Accrued payroll | 8,843 | 40,578 |
Accrued bonuses | 197,623 | 0 |
Accrued employee benefits | 64,920 | 27,375 |
Insurance premium financing | 46,088 | 0 |
Accrued interest on senior secured convertible promissory notes | 283 | 0 |
Total Current Liabilities | $ 1,068,337 | $ 848,215 |
Capital Stock (Details Narrative) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Stockholders' Equity | ||
Common stock shares, par value | $ 0.0001 | $ 0.0001 |
Common stock shares, authorized | 50,000,000 | 50,000,000 |
Common stock shares, issued | 3,947,828 | 3,923,027 |
Common stock shares, outstanding | 3,947,828 | 3,923,027 |
Preferred stock shares, par value | $ 0.0001 | $ 0.0001 |
Preferred stock shares, authorized | 10,000,000 | 10,000,000 |
Preferred stock shares, issued | 0 | 0 |
Preferred stock shares, outstanding | 0 | 0 |
Common stock issued for conversion, shares | 24,801 | |
Common stock issued for conversion, amount | $ 50,000 | |
Common stock issued for services, shares | 16,000 | |
Common itock issued for services, amount | $ 57,440 |
Commitments & Contingencies (Details) |
Sep. 30, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 23,814 |
2019 | 95,906 |
Total | $ 119,720 |
Commitments & Contingencies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 27,332 | $ 20,758 | $ 79,580 | $ 52,457 |
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