UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from _______ to _______.
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices, zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act: None
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
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 the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
As of August 19, 2022, there were shares of common stock, $0.0001 par value issued and outstanding.
ENDONOVO THERAPEUTICS, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
June 30, 2022
Page Number | ||
| PART I - FINANCIAL INFORMATION | ||
| Item 1. | Condensed Consolidated Financial Statements (unaudited). | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 20 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 24 |
| Item 4. | Controls and Procedures. | 24 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings. | 25 |
| Item 1A. | Risk Factors. | 25 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 25 |
| Item 3. | Defaults Upon Senior Securities. | 26 |
| Item 4. | Mine Safety Disclosures | 26 |
| Item 5. | Other Information. | 26 |
| Item 6. | Exhibits. | 26 |
| SIGNATURES | 27 | |
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Endonovo Therapeutics, Inc.
Condensed Consolidated Balance Sheets
| June
30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts
receivable, net of allowance for doubtful accounts of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Patents, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued interest | ||||||||
| Deferred compensation | ||||||||
| Notes
payable, net of discounts of $ | ||||||||
| Notes payable – former related party | ||||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| Acquisition payable | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES, note 9 | ||||||||
| Shareholders’ deficit | ||||||||
| Super AA super voting preferred stock, $ par value; authorized and issued and outstanding at June 30, 2022, and December 31, 2021 | ||||||||
| Series B convertible preferred stock, $ par value; shares authorized, shares issued and outstanding at June 30, 2022, and December 31, 2021 | ||||||||
| Series C convertible preferred stock, $ par value; shares authorized, shares issued and outstanding at June 30, 2022, and December 31, 2021 | ||||||||
| Series D convertible preferred stock, $ par value; shares authorized, issued and outstanding at June 30, 2022, and December 31, 2021 | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding as of June 30, 2022, and December 31, 2021 | ||||||||
| Additional paid-in capital | ||||||||
| Stock subscriptions | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and shareholders’ deficit | $ | $ | ||||||
See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.
| 3 |
Endonovo Therapeutics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on settlement of debt | ||||||||||||||||
| Other expense | ( | ) | ( | ) | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic Loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted Loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common share outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.
| 4 |
Endonovo Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Six Months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Stock compensation expense | ||||||||
| Fair value of commitment shares issued with debt | ||||||||
| Fair value of equity issued for services | ||||||||
| Gain on extinguishment of debt | ( | ) | ( | ) | ||||
| Amortization of note discount and original issue discount | ||||||||
| Change in fair value of derivative liability | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Account payable & accrued liabilities | ||||||||
| Accrued interest | ||||||||
| Deferred compensation | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Proceeds from the issuance of notes payable | ||||||||
| Repayments on former related-party of notes payable | ( | ) | ( | ) | ||||
| Repayments of convertible debt in cash | ( | ) | ||||||
| Proceeds from issuance of common stock and units | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash, beginning of year | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non-Cash Investing and Financing Activities: | ||||||||
| Conversion of notes payable and accrued interest to common stock | $ | $ | ||||||
| Conversion of Preferred C Stock to common stock | $ | $ | ||||||
| Debt discount from commitment shares issued with notes | $ | $ | ||||||
See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.
| 5 |
Endonovo Therapeutics, Inc.
Condensed Consolidated Statement of Shareholders’ Deficit
(Unaudited)
For three and six months ended June 30, 2022
| Series AA Preferred Stock | Series B Convertible Preferred Stock | Series C Convertible Preferred Stock | Series D Convertible Preferred Stock | Common Stock | Additional Paid-in | Subscription | Retained | Total Shareholder’s | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Earnings | Deficit | |||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable and accrued interest | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for settlement of debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of commitment shares in connection with promissory note | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the quarter ended March 31, 2022 | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable and accrued interest | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of commitment shares in connection with promissory note | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares issued for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the quarter ended June 30, 2022 | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2022 | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
| 6 |
For three and six months ended June 30, 2021
| Series AA Preferred Stock | Series B Convertible Preferred Stock | Series C Convertible Preferred Stock | Series D Convertible Preferred Stock | Common Stock | Additional Paid-in | Subscription | Retained | Total Shareholder’s | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Earnings | Deficit | |||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Shares issued as commitment to note holders | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable and accrued interest | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Valuation of stock options issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the quarter ended March 31, 2021 | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance March 31, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable and accrued interest | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of Preferred Series C to Common share | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares issued for debt settlement | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued as commitment to note holders | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued as settlement of debt with former related party | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Valuation of stock options issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the quarter ended June 30, 2021 | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.
| 7 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
Note 1 - Organization and Nature of Business
Endonovo Therapeutics, Inc. (Endonovo or the “Company”) is an innovative biotechnology company that has developed a bio-electronic approach to regenerative medicine. Endonovo is a growth stage company whose stock is publicly traded (OTCQB: ENDV).
The Company develops, manufactures, and distributes evolutionary medical devices focused on the rapid healing of wounds and reduction of pain, edema, and inflammation in the human body. The Company’s non-invasive bioelectric medical devices are designed to target inflammation, cardiovascular diseases, chronic kidney disease, and central nervous system disorders (“CNS” disorders).
The Company’s non-invasive Electroceutical® therapeutics device, SofPulse®, using pulsed short-wave radiofrequency at 27.12 MHz has been FDA-Cleared and CE Marked for the palliative treatment of soft tissue injuries and post-operative plain and edema, and has CMS National Coverage for the treatment of chronic wounds. The Company’s current portfolio of pre-clinical stage Electroceutical® therapeutics devices address chronic kidney disease, liver disease non-alcoholic steatohepatitis (NASH), cardiovascular and peripheral artery disease (PAD) and ischemic stroke.
Endonovo’s core mission is to transform the field of medicine by developing safe, wearable, non-invasive bioelectric medical devices that deliver the Company’s Electroceutical® Therapy. Endonovo’s bioelectric Electroceutical® devices harnesses bioelectricity to restore key electrochemical processes that initiate anti-inflammatory processes and growth factors in the body necessary for healing to rapidly occur.
Note 2 – Summary of significant accounting policies.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statements have been presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Article 8 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. The condensed consolidated financial statements as of June 30, 2022, and 2021, are unaudited; however, in the opinion of management such interim condensed consolidated financial statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The accompanying financial information should be read in conjunction with the financial statements and the notes thereto in the Company’s most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2022. The results of operations for the period presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year.
Liquidity and Going Concern
The Company’s unaudited condensed consolidated financial statements are prepared using 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 not yet established an ongoing source of revenues sufficient to cover its operating costs and to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to obtain adequate capital to fund operating losses until it becomes profitable.
As
of June 30, 2022, the Company had cash of $
| 8 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
During
the six months ended June 30, 2022, the Company has raised approximately $
No adjustments have been made to the carrying value of assets or liabilities as a result of this uncertainty. To reduce the risk of not being able to continue as a going concern, management is commercializing its FDA cleared and CE marked products and has commenced implementing its business plan to materialize revenues from potential future license agreements, and or diversifying its business activities with the potential acquisition of specialty construction company. The Company will continue to raise additional capital through the issuance of fixed-rate conversion feature promissory notes.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Critical estimates include the value of shares issued for services, in connection with notes payable agreements, in connection with note extension agreements, and as repayment for outstanding debt, the useful lives of property and equipment, the valuation of the derivative liability, the valuation of warrants and stock options, and the valuation of deferred income tax assets. Management uses its historical records and knowledge of its business in making these estimates. Actual results could differ from these estimates.
The Company utilizes Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260, “Earnings per Share.” Basic earnings (loss) per share is computed based on the earnings (loss) attributable to common shareholders divided by the weighted average number of shares outstanding for the period excluding any dilutive effects of options, warrants, unvested share awards and convertible securities. Diluted earnings (loss) per common share is calculated similar to basic earnings (loss) per share except that the denominator is increased to include additional common share equivalents available upon exercise of stock option, warrants, common shares issuable under convertible debt and restricted stock using the treasury stock method. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common share equivalents if their effect would be anti-dilutive. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. Securities that are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been antidilutive for the three months ended June 30, 2022, include stock options, warrants, and notes payable.
The Company has options and warrants to purchase common stock outstanding at June 30, 2022. The Company has options and warrants to purchase common stock outstanding at June 30, 2021
Accounts Receivable
The
Company uses the specific identification method for recording the provision for doubtful accounts, which was $
| 9 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
Newly Adopted Accounting Principles
In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. In addition, ASU 2020-06 amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The Amendments also affects the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods. The Company adopted the new standard update on January 1, 2021, which did not result in a material impact on the Company’s condensed consolidated results of operations, financial position, and cash flows.
The Company has evaluated all the recent accounting pronouncements and determined that there are no other accounting pronouncements that will have a material effect on the Company’s financial statements.
Note 3 - Revenue Recognition
Contracts with Customers
The Company adopted ASC 606, Revenue from Contracts with Customers effective January 1, 2019, using the modified retrospective method applied to those contracts which were not substantially completed as of January 1, 2019. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The Company routinely plan on entering into contracts with customers that include general commercial terms and conditions, notification requirements for price increases, shipping terms and in most cases prices for the products and services that we offer. The Company’s performance obligations are established when a customer submits a purchase order notification (in writing, electronically or verbally) for goods and services, and we accept the order. The Company identified performance obligations as the delivery of the requested product or service in appropriate quantities and to the location specified in the customer’s contract and/or purchase order. The Company generally recognize revenue upon the satisfaction of these criteria when control of the product or service has been transferred to the customer at which time, the Company has an unconditional right to receive payment. The Company’s sales and sale prices are final, and our prices are not affected by contingent events that could impact the transaction price.
Revenues for our SofPulse® product is typically recognized at the time the product is shipped, at which time the title passes to the customer, and there are no further performance obligations.
In connection with offering products and services provided to the end user by third-party vendors, the Company reviews the relationship between us, the vendor, and the end user to assess whether revenue should be reported on a gross or net basis. In asserting whether revenue should be reported on a gross or net basis, the Company considers whether the Company acts as a principal in the transaction and control the goods and services used to fulfill the performance obligation(s) associated with the transaction.
| 10 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
Sources of Revenue
The Company has identified the following revenues by revenue source:
| 1. | Medical care providers |
For the three and six months ended June 30, 2022, and 2021, the sources of revenue were as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Direct sales- medical care providers, gross | $ | $ | $ | $ | ||||||||||||
| Total sources of revenue | $ | $ | $ | $ | ||||||||||||
Warranty
Our general product warranties do not extend beyond an assurance that the product delivered will be consistent with stated specifications and do not include separate performance obligations.
Significant Judgments in the Application of the Guidance in ASC 606
There are no significant judgments associated with the satisfaction of our performance obligations. We generally satisfy performance obligations upon shipment of the product to the customer. This is consistent with the time in which the customer obtains control of the products. Performance obligations are also generally settled quickly after the purchase order acceptance, therefore the value of unsatisfied performance obligations at the end of any reporting period is generally immaterial.
We consider variable consideration in establishing the transaction price. Forms of variable consideration applicable to our arrangements include sales returns, rebates, volume-based bonuses, and prompt pay discounts. We use historical information along with an analysis of the expected value to properly calculate and to consider the need to constrain estimates of variable consideration. Such amounts are included as a reduction to revenue from the sale of products in the periods in which the related revenue is recognized and adjusted in future periods as necessary.
Practical Expedients
Our payment terms for sales direct to distributors are substantially less than the one-year collection period that falls within the practical expedient in determination of whether a significant financing component exists.
| 11 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
Note 4 – Patents.
In
December 2017, we acquired from Rio Grande Neurosciences, Inc. (RGN) a patent portfolio for $
| June
30, 2022 | December
31, 2021 | |||||||
| Patents | $ | $ | ||||||
| Less accumulated amortization | ||||||||
| Patents, net | $ | $ | ||||||
Amortization
expense associated with patents was $
The estimated future amortization expense related to patents as of June 30, 2022, is as follows:
| Twelve Months Ending June 30, | Amount | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| Total | $ | |||
Note 5- Notes Payable
Activity for the six months ended June 30, 2022
Fixed rates Notes
During
the six months ended June 30, 2022, the Company issued three (3) fixed rate promissory notes totaling $
As
of June 30, 2022, the Company has sixteen (16) fixed-rate promissory notes with an outstanding balance of $
In October 2013, July 2014, October 2014 and August 2015, the Company initiated
a series of private placements for up to $
During
the six months ended June 30, 2022, the Company converted $
As
of June 30, 2022, the Company has a total of sixteen (16) fixed-rate notes, of which twelve (12) for total principal amount of $
Certain
fixed-rate notes include a prepayment provision, which entitles the holder to a
Variable-rate notes
The
gross amount of all convertible notes with variable conversion rates outstanding as of June 30, 2022, is $
Activity for the six months ended June 30, 2021
During
the six months ended June 30, 2021, the Company issued four (4) fixed rate promissory notes totaling $
During
the six months ended June 30, 2021, the Company amended the terms of two of its promissory notes to accelerate the conversion feature
and amend the conversion price of the instruments. The Company recorded the modification in accordance with ASC 470-50 Debt-Modifications
and Extinguishments and recorded $
During
the six months ended June 30, 2021, the Company settled one of its promissory note by issuing
During
the six months ended June 30, 2021, the Company paid $
During
the six months ended June 30, 2021, the Company converted $
The
gross amount of all convertible notes with variable conversion rates outstanding at June 30, 2021 is $
| 12 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
Fixed Rate note (former related party)
Notes
payable to a former related party in the aggregate amount of $
As of June 30, 2022, and December 31, 2021, the notes payable activity was as follows:
| June
30, 2022 | December
31, 2021 | |||||||
| Notes payable at beginning of period | $ | $ | ||||||
| Notes payable issued | ||||||||
| Repayments of notes payable in cash | ( | ) | ( | ) | ||||
| Settlements on note payable | ( | ) | ||||||
| Less amounts converted to stock | ( | ) | ( | ) | ||||
| Notes payable at end of period | ||||||||
| Less debt discount | ( | ) | ( | ) | ||||
| $ | $ | |||||||
| Notes payable issued to a former related party | $ | $ | ||||||
| Notes payable issued to non-related parties | $ | $ | ||||||
The maturity dates on the notes-payable are as follows:
| Notes to | ||||||||||||
| 12 months ending, | Former Related party | Non-related parties | Total | |||||||||
| Past due | $ | $ | $ | |||||||||
| June 30, 2022 | ||||||||||||
| $ | $ | $ | ||||||||||
| 13 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
Note 6 - Shareholders’ Deficit
Preferred Stock
The Company has authorized shares of preferred stock which have been designated as follows:
| Number of Shares Authorized | Number of Shares Outstanding at June 30, 2022 | Par
Value | Liquidation
Value | |||||||||||||
| Series AA | $ | $ | ||||||||||||||
| Preferred Series B | $ | $ | ||||||||||||||
| Preferred Series C | $ | $ | ||||||||||||||
| Preferred Series D | $ | $ | ||||||||||||||
| Undesignated | ||||||||||||||||
Series AA Preferred Shares
On February 22, 2013, the Board of Directors of the Company authorized an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), in the form of a Certificate of Designation that authorized the issuance of up to one million () shares of a new series of preferred stock, par value $ per share, designated “Series AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
Series B Convertible Preferred Stock
On
February 7, 2017, the Company filed a certificate of designation for shares of Series B Convertible Preferred Stock designated
as Series B (“Series B”) which are authorized and convertible, at the option of the holder, commencing six months from the
date of issuance into common shares and warrants. For each share of Series B, the holder, on conversion, shall receive the stated value
divided by % of the market price on the date of purchase of Series B and a
Series C Convertible Redeemable Preferred Stock
On
December 22, 2017, the Company filed a certificate of designation for shares of Series C Secured Redeemable Preferred Stock (“Series
C”). Each share of the C Preferred is entitled to receive a $ quarterly dividend commencing March 31, 2018, and each quarter
thereafter and is to be redeemed for the stated value, $
Upon
liquidation, the holder of Series C, shall be entitled to receive an amount equal to the stated value, $
There was no activity during the six months ended June 30, 2022. As of June 30, 2022, there are shares of Series C outstanding
| 14 |
Endonovo Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
Series D Convertible Preferred Stock
On
November 11, 2019, the Company filed a certificate of designation for shares of Series D Convertible Preferred Stock designated
as Series D (“Series D”), which are authorized and convertible, at the option of the holder, at any time from the date of
issuance, into shares of common shares. On or prior to August 1, 2020, for each share of Series D, the holder, on conversion, shall receive
a number of common shares equal to
The
Series D holders have no voting rights. Upon liquidation, the holder of Series D, shall be entitled to receive an amount equal to the
stated value, $
Common Stock
Activity during the six months ended June 30, 2022
During
the six months ended June 30, 2022, the Company issued shares of common stock for the conversion of $