Cautionary Notice Regarding Forward Looking Statements

The information contained in Item 2 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. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

This filing contains a number of forward-looking statements which reflect management's current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words "believe," "expect," "intend," "anticipate," "estimate," "may," and variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these forward-looking statements, which are based on management's current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.





Overview

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.





20






Going Concern

Our independent registered auditors included an explanatory paragraph in their opinion on our consolidated financial statements as of and for the fiscal year ended December 31, 2021, that states that our ongoing losses and lack of resources causes doubt about our ability to continue as a going concern.

The World Health Organization declared the Coronavirus outbreak a pandemic on March 11, 2020, and in the United States various emergency actions have been taken on the National, State and Local levels. The effects of this pandemic on the Company's business are uncertain.





Critical Accounting Policies

A summary of our significant accounting policies is included in Note 1 of the "Notes to the Consolidated Financial Statements," contained in our Form 10-K for the year ended December 31, 2021. Management believes that the consistent application of these policies enables us to provide users of the financial statements with useful and reliable information about our operating results and financial condition. The summary condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require us to make estimates and assumptions. We did not experience any significant changes during the six months ended June 30, 2022, in any of our Critical Accounting Policies from those contained in our Form 10-K for the year ended December 31, 2021.





New Accounting Pronouncements

See Note 1 of Notes to Condensed Consolidated Financial Statements for further discussion of new accounting standards that have been adopted or are being evaluated for future adoption.





Results of Operations

Six Months ended June 31, 2022, and 2021:





                         Six Months Ended June 30,           Favorable
                           2022              2021          (Unfavorable)         %

Revenue                $       2,932     $     64,999     $       (62,067 )     -95.5 %
Cost of revenue                1,097            3,021               1,924        63.7 %
Gross profit                   1,835           61,978             (60,143 )     -97.0 %

Operating expenses         2,286,346        1,222,475          (1,063,871 )     -87.0 %

Loss from operations (2,284,511 ) (1,160,497 ) (1,124,014 ) -96.9 %



Other expense             (2,654,829 )     (2,817,053 )           162,224         5.8 %

Net loss               $  (4,939,340 )   $ (3,977,550 )   $      (961,790 )     -24.2 %




Revenue

Revenue of the Company's SofPulse® product during the six months ended June 30, 2022, was $2,932, a decrease of $62,067, or approximately 96%, compared to $64,999 for the six months ended June 30, 2021.

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. Revenue continues to be negatively impacted by the COVID-19 contagious disease outbreak in March 2020. We anticipate that revenue will increase in future periods as the roll out of the SofPulse® product continues.





21






Cost of Revenue

Cost of revenue during the six months ended June 30, 2022, was $1,097, a decrease of $1,924 or 63.7% compared to $3,021 for the six months ended June 30, 2021. Cost of revenue is recognized on those sales recorded as gross for which we are the principal in the transaction as opposed to net sales which reflect no cost of revenue. It is anticipated that cost of revenue will increase in future quarters as the roll out of the SofPulse® product continues.





Operating Expenses

Operating expenses increased by $1,063,871 or 87%, to $2,286,346 for the six months ended June 30, 2022, compared to $1,222,475 for the six months ended June 30, 2021. This change was due primarily to an increase in non-cash stock-based compensation related to the issuance of 62,250,000 of common shares for services for approximately $1.2 million.





Other Expense

Other expense for the six months ended June 30, 2022, was $2,654,829 compared to an expense of $2,817,053 for the six months ended June 30, 2021. This change was due primarily to a decrease in valuation of our derivative liabilities of approximately $0.6 million offset by an increase of approximately $0.2 million in interest expense and an increase of $0.2 million related to the accrual of the make good provision. We anticipate continued large fluctuations in other income/expense as a result of quarterly re-evaluation of derivative liabilities.

Three Months ended June 31, 2022, and 2021:





                         Three Months Ended June 30,            Favorable
                            2022               2021           (Unfavorable)          %

Revenue                $          650      $     30,284      $       (29,634 )       (97.9 )%
Cost of revenue                   383               500                  117          23.4 %
Gross profit                      267            29,784              (29,517 )       (99.1 )%

Operating expenses          1,799,016           599,837           (1,199,179 )      (199.9 )%

Loss from operations       (1,798,749 )        (570,053 )         (1,228,696 )      (215.5 )%

Other expense                (727,382 )        (726,616 )               (766 )        (0.1 )%

Net loss               $   (2,526,131 )    $ (1,296,669 )    $    (1.229,462 )       (94.8 )%




Revenue

Revenue of the Company's SofPulse® product during the three months ended June 30, 2022, was $650, a decrease of $29,634, or 97.9%, compared to $30,284 for the three months ended June 30, 2021. 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. Revenue has been negatively impacted by the COVID-19 contagious disease outbreak in March 2020. We anticipate that revenue will continue to increase in future periods as the roll out of the SofPulse® product continues.





Cost of Revenue

Cost of revenue during the three months ended June 30, 2022, was $383, a decrease of $117 or 23.4% compared to $500 for the three months ended June 30, 2021. Cost of revenue is recognized on those sales recorded as gross for which we are the principal in the transaction as opposed to net sales which reflect no cost of revenue. It is anticipated that cost of revenue will increase in future quarters as the roll out of the SofPulse® product continues.





Operating Expenses

Operating expenses increased by $1,199,179 or 199.9%, to $1,799,016 for the three months ended June 30, 2022, compared to $599,837 for the three months ended June 30, 2021. This change was due primarily to an increase in non-cash stock-based compensation related to the issuance of 62,250,000 of common shares for services for approximately $1.2 million.





Other Expense

Other expense for the three months ended June 30, 2022, was $727,382 compared to $726,616 for the three months ended June 30, 2021. This change was due primarily to a decrease in the valuation of our derivative liabilities of approximately $404,000 offset by an increase in interest expense of approximately $217,000, and an increase of $178,000 in make good provision related to out fixed-rate notes. We anticipate continued large fluctuations in other expense as a result of quarterly re-evaluation of derivative liabilities.





22

Liquidity and Capital Resources





                                       As of
                            June 30,        December 31,
                              2022              2021           Favorable (Unfavorable)
Working Capital

Current assets            $       5,945     $      94,855     $                 (88,910 )
Current liabilities          20,675,154        17,701,710                    (2,973,444 )
Working capital deficit   $ (20,669,209 )   $ (17,606,855 )   $              (3,062,354 )

Long-term debt            $      79,825     $      79,825     $                       -

Stockholders' deficit     $ (19,160,134 )   $ (15,774,324 )   $              (3,385,810 )




                                           Six Months Ended June 30,             Favorable
                                            2022                2021           (Unfavorable)
Statements of Cash Flows Select
Information

Net cash provided (used) by:
Operating activities                   $     (329,436 )     $    (425,882 )   $        96,446
Financing activities                   $      243,500       $     421,000     $      (177,500 )




                                                     As of                      Favorable
                                          June 30,         December 31,
                                            2022               2021           (Unfavorable)

Balance Sheet Select Information



Cash                                    $           -     $       85,936     $       (85,936 )

Accounts payable and accrued expenses $ 8,029,089 $ 7,078,283 $ (950,806 )

Since January 1, 2022, and through June 30, 2022, the Company has raised approximately $0.3 million in debt transactions. These funds have been used to fund on-going corporate operations. Our accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these condensed consolidated financial statements. Our cash on hand at June 30, 2022 was $0. The Company has incurred substantial losses since inception. Its current liabilities exceed its current assets and available cash is not sufficient to fund expected future operations. The Company is contemplating raising additional capital through debt and equity in order to continue the funding of its operations and to acquire a profitable business. However, there is no assurance that the Company can raise sufficient funds or generate sufficient revenues to pay its obligations as they become due, which raises substantial doubt about our ability to continue as a going concern.





23

The Company is not aware of any recently issued accounting pronouncements that when adopted will have a material effect on the Company's financial position or result of its operation.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

© Edgar Online, source Glimpses