ENDRA Life Sciences Inc.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

As used in this Quarterly Report on Form 10-Q (this “Form 10-Q”), unless the context otherwise requires, the terms “we,” “us,” “our,” “ENDRA” and the “Company” refer to ENDRA Life Sciences Inc., a Delaware corporation, and its direct and indirect subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical financial statements and related notes thereto in this Form 10-Q. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “would,” “seek,” “intend,” “plan,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this Form 10-Q, including those regarding our strategies, prospects, financial condition, operations, costs, plans and objectives, are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expectations for revenues, cash flows and financial performance, the anticipated results of our development efforts and the timing for receipt of required regulatory approvals and product launches. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in, or implied by, the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our limited commercial experience, limited cash and history of losses; our ability to obtain adequate financing to fund our business operations in the future; our ability to achieve profitability; delays and changes in regulatory requirements, policy and guidelines, including potential delays in submitting required regulatory applications or other submissions with respect to U.S. Food and Drug Administration (“FDA”) or other regulatory agency approval; our ability to obtain and maintain required CE mark certifications and secure required FDA and other governmental approvals for our Thermo-Acoustic Enhanced Ultrasound (“TAEUS”) applications; our ability to develop any commercially feasible applications based on our TAEUS technology; market acceptance of our technology; the effect of macroeconomic conditions on our business; results of our human studies, which may be negative or inconclusive; our ability to find and maintain development partners; our reliance on third parties, collaborations, strategic alliances and licensing arrangements to complete our business strategy; the amount and nature of competition in our industry; our ability to protect our intellectual property; potential changes in the healthcare industry or third-party reimbursement practices; our ability to comply with regulation by various federal, state, local and foreign governmental agencies and to maintain necessary regulatory clearances or approvals; our ability to regain compliance with Nasdaq listing standards; our ability to successfully execute on our digital asset treasury strategy; risks related to regulatory developments regarding digital assets and digital asset markets, which could adversely affect our business, financial condition, and results of operations; the volatile and unpredictable cycles in the digital asset industry; in the accounting treatment of digital assets; our dependence on our senior management team; and the other risks and uncertainties described in the Risk Factors section of our Annual Report on Form 10-K for the period ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”) on March 31, 2026, and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Available Information

From time to time, we use press releases, X (formerly Twitter) (@endralifesci) and LinkedIn (www.linkedin.com/company/endra-inc) to distribute material information. Our press releases and financial and other material information are routinely posted to and accessible on the Investors section of our website, www.endrainc.com. Accordingly, investors should monitor these channels, in addition to our SEC filings and public conference calls and webcasts. In addition, investors may automatically receive e-mail alerts and other information about the Company by enrolling their e-mail addresses by visiting the “Email Alerts” section of our website at investors.endrainc.com. Information that is contained in and can be accessed through our website, X posts and LinkedIn are not incorporated into, and do not form a part of, this Quarterly Report or any other report or document we file with the SEC.

Overview

We are developing a next-generation enhanced ultrasound technology platform—Thermo- Acoustic Enhanced Ultrasound, or TAEUS®.

Our initial focus for the development and commercialization of TAEUS is a solution for the assessment of liver fat, a key biomarker associated with metabolic diseases, including metabolic dysfunction-associated steatotic liver disease (“MASLD”) and metabolic dysfunction-associated steatohepatitis (“MASH”).

Our objective is to develop a scalable biomarker solution for metabolic disease assessment and management through a non-invasive, point- of-care approach.

We have periodically evaluated and refined our vision, purpose, and go-to-market strategy with respect to TAEUS in response to evolving market conditions and development priorities.

To support adoption across targeted market segments, we are focused on:

For our go-to-market strategy, we intend to focus on serving these four markets:

We plan to offer a multi-year, subscription-based business model with recurring revenue, while continuing to support traditional capital equipment sales with associated service and upgrade offerings.

In 2025, the Company expanded its business strategy to include a Digital Asset Treasury (“DAT”) initiative, managed in collaboration with Arca Investment Management (“Arca”), which seeks to optimize capital preservation and generate non-dilutive returns through investments in decentralized finance (“DeFi”) assets. This financial strategy operates in tandem with the Company’s core medical technology mission: the commercialization of the TAEUS platform via a recurring subscription model, with a specific focus on the burgeoning GLP-1 and metabolic disease markets.

Financial Operations Overview

Revenue

No revenue has been generated by our TAEUS technology, which we have not commercially sold as of March 31, 2026.

Research and Development Expenses

Our research and development expenses primarily include wages, fees and equipment for the development of our TAEUS technology platform and the proposed applications. Additionally, we incur certain costs associated with the protection of our products and inventions through a combination of patents, licenses, applications and disclosures. These costs and expenses include:

We plan to incur research and development expenses for the foreseeable future as we expect to continue the development of TAEUS and pursue FDA approval of the NAFLD TAEUS system. At this time, due to the inherently unpredictable nature of clinical development and regulatory approvals, we are unable to estimate with certainty the costs we will incur and the timelines we will require in our continued development efforts.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of headcount and consulting costs, and marketing and tradeshow expenses. Currently, our marketing efforts are through our website and attendance of key industry meetings and conferences. The company has decided to limit its marketing and sales activities until after we have obtained FDA approval for the sale of the NAFLD TAEUS device.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related expenses for our management and personnel, and professional fees, such as for accounting, consulting and legal services. We anticipate continued costs associated with being a public company, including expenses related to services associated with maintaining compliance with The Nasdaq Capital Market and SEC requirements, directors and officers insurance, increased legal and accounting costs and investor relations costs.

Critical Accounting Policies and Estimates

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.

Warrant Liability

The Company accounts for the liability classified warrants in accordance with the guidance contained in ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging. Such guidance provides criteria for instruments do not meet the criteria for equity treatment thereunder. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.

Share-based Compensation

The Company’s 2016 Omnibus Incentive Plan (the “Omnibus Plan”) permits the grant of stock options and other share-based awards to its employees, consultants and non-employee members of the board of directors. Each January 1 the pool of shares available for issuance under the Omnibus Plan automatically increases by an amount equal to the lesser of (i) the number of shares necessary such that the aggregate number of shares available under the Omnibus Plan equals 25% of the number of fully-diluted outstanding shares on the increase date (assuming the conversion of all outstanding shares of preferred stock and other outstanding convertible securities and exercise of all outstanding options and warrants to purchase shares) and (ii) if the board of directors takes action to set a lower amount, the amount determined by the board. On January 1, 2025, the pool of shares issuable under the Omnibus Plan automatically increased by 178,033. In addition, on December 9, 2025, the stockholders of ENDRA Life Sciences Inc. (the “Company”) approved the Second Amendment to the Company’s 2016 Omnibus Incentive Plan (the “Omnibus Plan Amendment”) at the 2025 Annual Meeting of the Company’s Stockholders (the “Annual Meeting”). That Amendment increased the pool of shares available for issuance by 3,200,000 shares of common stock. Due to these increases, the pool of shares issuable under the Omnibus Plan shares increased from 1,738 shares to 3,048,799 shares as of December 31, 2025. In light of the increase effected by the Omnibus Plan Amendment, no automatic increase to the pool was effected as of March 31, 2026. As of March 31, 2026, there were 3,019,525 shares of common stock remaining available for issuance under the Omnibus Plan.

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

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

Recent Accounting Pronouncements

See Note 2 of the accompanying financial statements for a discussion of recently issued accounting standards.

Results of Operations

Three months ended March 31, 2026 and 2025

Revenue

We had no revenue during the three months ended March 31, 2026 and 2025.

Cost of Goods Sold

We had no cost of goods sold during the three months ended March 31, 2026 and 2025.

Research and Development

Research and development expenses were $776,410 for the three months ended March 31, 2026, as compared to $528,685 for the three months ended March 31, 2025, an increase of $247,725, or 47%. The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line. Research and development expenses increased from the prior year as we complete development of our initial TAEUS product and began focusing our spending on clinical trials and commercialization of the product that has been developed.

Sales and Marketing

Sales and marketing expenses were $4,278 for the three months ended March 31, 2026, as compared to $68,991 for the three months ended March 31, 2025, a decrease of $64,713, or 94%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased largely due to continued reductions in expenses resulting from our restructuring in the second quarter of 2024 and first quarter of 2026. Currently, our marketing efforts are through our website and attendance of key industry meetings.

General and Administrative

Our general and administrative expenses for the three months ended March 31, 2026 were $1,393,060, compared to $871,606 for the three months ended March 31, 2025, an increase of $521,454, or 60%. Our wage and related expenses for the three months ended March 31, 2026 were $779,125, compared to $368,607 for the three months ended March 31, 2025. Wage and related expenses in the three months ended March 31, 2026 included $574,451 of stock compensation expense related to the issuance and vesting of options and RSUs for the three months ended March 31, 2026. Our professional fees, which include legal, audit, and investor relations, for the three months ended March 31, 2026 were $387,231, compared to $305,860 for the three months ended March 31, 2025.

Other Income

Other expense of $862,315 for the three months ended March 31, 2026 was primarily due to changes in fair value of warrant liability and digital assets. Other expense was $432,952 for the three months ended March 31, 2025, an increase of $429,363, or 99%, due to changes in fair value of warrant liability and digital assets. For the three months ended March 31, 2026, there were changes in fair value of warrant liability of $(8,857) and changes in fair value of digital assets of $859,761.

Net Loss

As a result of the foregoing, for the three months ended March 31, 2026, we recorded a net loss of $1,311,433, compared to a net loss of $1,036,330 for the three months ended March 31, 2025.

Near-Term Liquidity and Capital Resources

We are experiencing financial and operating challenges. Since inception, we have incurred losses and expect to continue to incur losses for the foreseeable future. As of March 31, 2026, we had an accumulated deficit of $111,776,942 and had $356,462 in cash.  To date we have funded our operations through private and public sales of our securities and will need to raise additional funds in order to execute on our business plan, fully commercialize our TAEUS technology, and generate revenues. In the three months ended March 31, 2026, we implemented cost reduction measures, including a reduction in headcount and prioritization of development activities over clinical ones, to extend our operating runway and focus resources on product improvements and regulatory strategy for our TAEUS liver application. These actions are expected to impact the timing of certain development activities, including delaying the timing of a future De Novo submission to the FDA relating to our TAEUS liver application. Additionally, in March 2026, we announced that the Board had initiated a process to evaluate a range of strategic alternatives including, but not limited to strategic investments, mergers, business combinations, in-licensing or collaboration arrangements, asset sales, or sale or merger of the Company.

If we are unable to obtain adequate financing or financings in the near term or if the strategic alternatives review process does not result in any transaction or other strategic outcome, we will be forced to undertake additional measures, which may include materially curtailing or eliminating our operations, or undergoing restructuring or insolvency proceedings.

We need additional capital to allow us to continue to execute our clinical trials and commercialization plans through 2026 and beyond. We are considering potential financing options that may be available to us, including sales of our common stock through our at-the-market sales program (the “ATM Program”) with Lucid Capital Markets, LLC, which are limited due to registration statement rules relating to public float. Except for the ATM Program, we have no commitments to obtain any additional funds, and there can be no assurance funds will be available in sufficient amounts or on acceptable terms. If we are unable to obtain sufficient additional financing in a timely fashion and on terms acceptable to us, our financial condition and results of operations may be materially adversely affected and we may not be able to continue operations or execute our stated commercialization plan.

The consolidated financial statements included in this Form 10-Q have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the three months ended March 31, 2026, we incurred net losses of $1,311,433 and used cash in operations of $1,119,650. In light of our cash balance as of March 31, 2026, we will need to raise additional capital in order to fund operations through the next twelve months, and prior to any ability to fund operations from revenue generated from the sale of our products. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Operating Activities

During the three months ended March 31, 2026, we used $1,119,650 of cash in operating activities primarily as a result of our net loss of $1,311,433, offset by share-based compensation of $574,451, amortization of right of use assets of $30,223, depreciation expense of $9,492, change in fair value of warrant liability of $8,857, digital asset staking compensation of $(11,060), change in fair value of digital assets of $(859,761) and net changes in operating assets and liabilities of $439,581.

Investing Activities

During the three months ended March 31, 2026, we received $450,000 in proceeds from the sale of digital intangible assets. During the three months ended March 31, 2025, we used $17,280 in investing activities related to purchases of fixed assets.

Financing Activities

During the three months ended March 31, 2026, our financing activities provided $263,747 in proceeds from issuances of common stock. During the three months ended March 31, 2025, our financing activities provided $145,803 in proceeds from issuances of common stock.

Long-Term Liquidity

We have not completed the commercialization of any of our TAEUS technology platform applications and have reduced our headcount and R&D spending in order to conserve resources. To the extent resources allow, we would expect to continue to incur significant expenses relating to the development of our TAEUS technology for the foreseeable future in order to finalize the commercialization of our TAEUS liver product and develop further TAEUS products. In this case, we would anticipate that our expenses would increase substantially as we:

It is possible that we will not achieve the progress that we expect because the actual costs and timing of completing the development and regulatory approvals for a new medical device are difficult to predict and are subject to substantial risks and delays. We have no committed external sources of funds except for our at-the-market offering program with Lucid Capital Markets, LLC, the use of which may be limited due to registration statement rules relating to public float. Our existing cash will not be sufficient for us to complete the commercialization of our TAEUS application, or to complete the development of any other TAEUS application and we will need to raise substantial additional capital for those purposes. As a result, we will need to finance our future cash needs through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives. Our forecast of our financial resources is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2025. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

Until we can generate a sufficient amount of revenue from our TAEUS platform applications, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaborations and licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to cease the operation of our business. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaborations and licensing arrangements, it may be necessary to relinquish some rights to our technologies or applications or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. As described above under “Near-Term Liquidity and Capital Resources,” the Board initiated a process to review strategic alternatives for the Company.

Off-Balance Sheet Transactions

At March 31, 2026, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.