ENDONOVO THERAPEUTICS, INC. - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021.

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

For the transition period from _______ to _______.

Commission File Number: 000-55453

ENDONOVO THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware		45-2552528
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

6320 Canoga Avenue, 15th Floor, Woodland Hills, CA 91367

(Address of principal executive offices, zip code)

(800) 489-4774

(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.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 ☐

Non-accelerated filer ☒	Smaller reporting company ☒

	Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of November 19, 2021, there were 72,013,761 shares of common stock, $0.0001 par value issued and outstanding.

ENDONOVO THERAPEUTICS, INC.

TABLE OF CONTENTS

FORM 10-Q REPORT

September 30, 2021

		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.	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	28
Item 4.	Controls and Procedures.	28

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	29
Item 1A.	Risk Factors.	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	29
Item 3.	Defaults Upon Senior Securities.	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information.	30
Item 6.	Exhibits.	30

SIGNATURES		31

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Endonovo Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30, 2021			December 31, 2020
	(Unaudited)			(Audited)

ASSETS
Current assets:
Cash	$	5,732		$	13,420
Accounts receivable, net of allowance for doubtful accounts of $0		7,092			942
Prepaid expenses and other current assets		49,725			31,825
Total current assets		62,549			46,187

Property, Plant and Equipment, net		-			1,580
Patents, net		2,074,084			2,559,268
Total assets	$	2,136,633		$	2,607,035

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	753,041		$	700,932
Accrued interest		2,334,302			1,904,136
Deferred compensation		3,970,056			3,384,117
Notes payable, net of discounts of $48,927 and $201,157 as of September 30, 2021, and December 31, 2020		6,639,056			6,491,039
Notes payable – former related party		132,600			143,000
Derivative liability		6,446,149			4,202,597

Total current liabilities		20,275,204			16,825,821

Acquisition payable		79,825			155,000
Total liabilities		20,355,029			16,980,821
COMMITMENTS AND CONTINGENCIES, note 10		-

Shareholders’ deficit
Super AA super voting preferred stock, $0.001 par value; 1,000,000 authorized and 25,000 issued and outstanding at September 30, 2021, and December 31, 2020		25			25
Series B convertible preferred stock, $0.0001 par value; 50,000 shares authorized, 600 shares issued and outstanding at September 30, 2021, and December 31, 2020		1			1

Series C convertible preferred stock, $0.0001 par value; 8,000 shares authorized, 738 and 763 shares issued and outstanding at September 30, 2021, and December 31, 2020		-			-

Series D convertible preferred stock, $0.0001 par value; 20,000 shares authorized, 305 issued and outstanding at September 30, 2021, and December 31, 2020		-			-
Preferred value		-

Common stock, $0.0001 par value; 2,500,000,000 shares authorized; 69,193,105 and 24,536,689 shares issued and outstanding as of September 30, 2021, and December 31, 2020		6,920			2,453
Additional paid-in capital		40,615,974			38,963,827
Stock subscriptions		(1,570	)		(1,570	)
Accumulated deficit		(58,839,746	)		(53,338,522	)
Total shareholders’ deficit		(18,218,396	)		(14,373,786	)
Total liabilities and shareholders’ deficit	$	2,136,633		$	2,607,035

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.

Endonovo Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

Revenue	$	7,790		$	39,980		$	72,789		$	154,296
Cost of revenue		3,103			760			6,124			18,320
Gross profit		4,687			39,220			66,665			135,976

Operating expenses		696,943			986,019			1,919,418			2,364,213
Loss from operations		(692,256	)		(946,799	)		(1,852,753	)		(2,228,237	)

Other income (expense)
Change in fair value of derivative liability		(542,346	)		416,370			(2,962,795	)		6,016,625
Gain (loss) on settlement of debt		(42,460	)		(47,602	)		28,536			(564,385	)
Other expense		-			(58,902	)		-			(58,902	)
Interest expense, net		(246,612	)		(432,108	)		(714,212	)		(1,530,375	)
Other income (expense)		(831,418	)		(122,242	)		(3,648,471	)		3,862,963

Income (Loss) before income taxes		(1,523,674	)		(1,069,041	)		(5,501,224	)		1,634,726

Provision for income taxes		-			-			-			-

Net Income (loss) income	$	(1,523,674	)	$	(1,069,041	)	$	(5,501,224	)	$	1,634,726

Basic Income (Loss) per share	$	(0.02	)	$	(0.07	)	$	(0.10	)	$	0.17
Diluted Income (Loss) per share	$	(0.02	)	$	(0.07	)	$	(0.10	)	$	(0.15	)
Weighted average common share outstanding:
Basic		66,291,292			16,137,373			55,303,026			9,621,530
Diluted		66,291,292			16,137,373			55,303,026			23,575,380

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.

Endonovo Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months ended September 30,
	2021			2020
Operating activities:
Net (Loss) Income	$	(5,501,224	)	$	1,634,726
Adjustments to reconcile net (loss) income to cash used in operating activities:
Depreciation and amortization expense		486,764			488,616
Stock compensation expense		61,453			400,108
Fair value of commitment shares issued with debt		70,971			-
Fair value of equity issued for services		95,250			13,067
Loss (gain) on extinguishment of debt		(28,536	)		564,385
Amortization of note discount and original issue discount		103,659			50,348
Amortization of discount on Series C Preferred stock liability		-			248
Non-cash interest expense		-			713,462
Change in fair value of derivative liability		2,962,795			(6,016,625	)
Changes in assets and liabilities:
Accounts receivable		(6,150	)		21,800
Deposit		-			(2,500	)
Prepaid expenses and other current assets		(17,900	)		18,320
Account payable		52,109			82,006
Accrued interest		539,582			766,319
Deferred compensation		585,939			716,986
Net cash used in operating activities		(595,288	)		(548,734	)

Financing activities:
Proceeds from the issuance of notes payable		475,000			401,424
Repayments to former related-party of notes payable		(10,400	)		(19,000	)
Repayments of convertible debt in cash		(3,000	)		-
Proceeds from issuance of common stock and units		126,000			100,000
Proceeds from issuance of preferred stock		-			50,000
Net cash provided by financing activities		587,600			532,424

Net decrease in cash		(7,688	)		(16,310	)
Cash, beginning of year		13,420			18,893
Cash, end of period	$	5,732		$	2,583

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	$	458,335		$	1,357,573
Issuance of common stock to settle debt	$	127,522		$	-
Conversion of Preferred C Stock to common stock	$	33,333		$	1,400,934
Issuance of common stock to Preferred C Stock inducement	$	-		$	8,152
Exchange of note and accrued interest to new convertible note	$	-		$	316,494

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.

Endonovo Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Deficit

(Unaudited)

For nine months ended September 30, 2020.


	Series AA				Series B Convertible				Series D Convertible				Series C Convertible									Additional									Total
	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock					Common Stock				Paid-in			Subscription			Retained			Shareholder’s
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount		Shares		Amount		Capital			Receivable			Earnings			Deficit

Balance December 31, 2019		25,000	$	25		600	$	1		255	$	-		-			-		1,189,204	$	118	$	32,432,392		$	(1,570	)	$	(52,934,786	)	$	(20,503,820	)

Reclassification Preferred Series C		-		-		-		-		-		-		1,814			-		-		-		2,418,269			-			-			2,418,269
Shares issued for Preferred Series D		-		-		-		-		50		-		-			-		-		-		50,000			-			-			50,000
Shares issued for conversion of notes payable and accrued interest		-		-		-		-		-		-		-			-		4,388,291		439		2,545,275			-			-			2,545,714
Shares issued for conversion of Preferred Series C to common share		-		-		-		-		-		-		(936	)		-		1,636,166		164		(164	)		-			-			-
Valuation of stock options issued for services		-		-		-		-		-		-		-			-		-		-		9,567			-			-			9,567
Restricted shares issued as inducement to Series C
Restricted shares issued as inducement to Series C, shares
Common stock issued for services
Common stock issued for services, shares
Commitment shares
Commitment shares, shares
Common stock issued with exchange of convertible notes
Common stock issued with exchange of convertible notes, shares
Shares issued for exchange of stock options
Shares issued for exchange of stock options, shares
Shares issued as inducement to note holder
Shares issued as inducement to note holder, shares
Common stock issued for cash
Common stock issued for cash, shares
Shares issued as commitment to note holders
Shares issued as commitment to note holders, shares
Common Shares issued for debt settlement
Common Shares issued for debt settlement, shares
Shares issued as settlement of debt with former related party
Shares issued as settlement of debt with former related party, shares
Stock-based compensation
Common shares issued pursuant to consulting agreement
Common shares issued pursuant to consulting agreement
Common shares issued as commitment to note holders
Common shares issued as commitment to note holders, shares
Net loss for the quarter ended March 31, 2020		-		-		-		-		-		-		-			-		-		-					-			4,338,418			4,338,418
Balance March 31, 2020		25,000		25		600		1		305		-		878			-		7,213,661		721		37,455,339			(1,570	)		(48,596,368	)		(11,141,852	)

Shares issued for conversion of Preferred Series C to Common share		-		-		-		-		-		-		(105	)		-		985,322		99		27			-			-			126
Shares issued for conversion of notes payable and accrued interest		-		-		-		-		-		-							3,353,044		335		475,627			-			-			475,962
Restricted shares issued as inducement to Series C		-		-		-		-		-		-		-			-		58,428		6		8,146			-			(8,152	)		-
Common stock issued for services		-		-		-		-		-		-							25,000		3		3,497			-			-			3,500
Commitment shares		-		-		-		-		-		-							385,963		39		55,501			-			-			55,540
Common stock issued with exchange of convertible notes		-		-		-		-		-		-							409,000		41		58,814			-			-			58,855
Net loss for the quarter ended June 30, 2020		-		-		-		-		-		-							-		-		-			-			(1,634,651	)		(1,634,651	)

Balance June 30, 2020		25,000		25		600		1		305		-		773			-		12,430,418		1,244		38,056,951			(1,570	)		(50,239,171	)		(12,182,520	)

Shares issued for conversion of Preferred Series C to Common share		-		-		-		-		-		-		(10	)		-		133,334		13		(13	)		-			-			-
Shares issued for exchange of stock options		-		-		-		-		-		-		-			-		1,500,000		150		164,850			-			-			165,000
Shares issued as inducement to note holder		-		-		-		-		-		-		-			-		500,000		50		54,950			-			-			55,000
Shares issued for conversion of notes payable and accrued interest		-		-		-		-		-		-		-			-		759,669		76		70,334			-			-			70,410
Common stock issued for cash		-		-		-		-		-		-		-			-		1,234,568		123		99,877			-			-			100,000
Common stock issued for services		-		-		-		-		-		-		-			-		360,000		36		35,964			-			-			36,000
Valuation of stock options issued for services		-		-		-		-		-		-		-			-		-		-		20,490			-			-			20,490
Commitment shares		-		-		-		-		-		-		-			-		385,963		39		42,340			-			-			42,379
Net loss for the quarter ended September 30, 2020		-		-		-		-		-		-		-			-		-		-		-			-			(1,069,041	)		(1,069,041	)

Balance September 30, 2020		25,000		25		600		1		305		-		763			-		17,303,952		1,731		38,545,743			(1,570	)		(51,308,212	)		(12,762,282	)

For nine months ended September 30, 2021.

	Shares		Amount		Shares		Amount		Shares			Amount		Shares		Amount		Shares		Amount		Capital			Receivable			Earnings			Deficit
	Series AA				Series B Convertible				Series C Convertible					Series D Convertible								Additional									Total
	Preferred Stock				Preferred Stock				Preferred Stock					Preferred Stock				Common Stock				Paid-in			Subscription			Retained			Shareholder’s
	Shares		Amount		Shares		Amount		Shares			Amount		Shares		Amount		Shares		Amount		Capital			Receivable			Earnings			Deficit

Balance December 31, 2020		25,000	$	25		600	$	1		763		$	-		305	$	-		24,536,689	$	2,453	$	38,963,827		$	(1,570	)	$	(53,338,522	)	$	(14,373,786

Shares issued as commitment to note holders		-		-		-		-		-			-		-		-		2,300,334		230		101,652			-			-			101,882
Common stock issued for cash																			7,000,000		700		125,300									126,000
Shares issued for conversion of notes payable and accrued interest		-		-		-		-		-			-		-		-		17,686,548		1,769		831,429			-			-			833,198
Valuation of stock options issued for services		-		-		-		-		-			-		-		-		-		-		20,471			-			-			20,471
Net loss for the quarter ended March 31, 2021		-		-		-		-		-			-		-		-		-		-					-			(2,680,881	)		(2,680,881
Balance March 31, 2021		25,000	$	25		600	$	1		763		$	-		305	$	-		51,523,571	$	5,152	$	40,042,679		$	(1,570	)	$	(56,019,403	)	$	(15,973,116

Shares issued for conversion of notes payable and accrued interest		-		-		-		-		-			-		-		-		3,804,103		381		116,165			-			-			116,546
Shares issued for conversion of Preferred Series C to Common share		-		-		-		-		(25	)		-		-		-		1,111,111		111		(111	)		-			-			-
Common Shares issued for debt settlement		-		-		-		-		-			-		-		-		1,515,152		152		57,576			-			-			57,728
Shares issued as commitment to note holders		-		-		-		-		-			-		-		-		200,000		20		6,280			-			-			6,300
Shares issued as settlement of debt with former related party		-		-		-		-		-			-		-		-		2,505,834		251		84,446			-			-			84,697
Valuation of stock options issued for services		-		-		-		-		-			-		-		-		-		-		20,491			-			-			20,491
Net loss for the quarter ended June 30, 2021		-		-		-		-		-			-		-		-		-		-		-			-			(1,296,669	)		(1,296,669	)
Balance June 30, 2021		25,000	$	25		600	$	1		738		$	-		305	$	-		60,659,771	$	6,067	$	40,327,526		$	(1,570	)	$	(57,316,072	)	$	(16,984,023	)

Common shares issued as commitment to note holders		-		-		-		-		-			-		-				1,833,334		183		46,917			-			-			47,100
Shares issued for conversion of notes payable and accrued interest		-		-		-		-		-			-		-				4,200,000		420		126,040			-			-			126,460
Stock-based compensation		-		-		-		-		-			-		-				-		-		20,491			-			-			20,491
Common shares issued pursuant to consulting agreement		-		-		-		-		-			-		-				2,500,000		250		95,000			-			-			95,250
Net loss for the quarter ended September 30, 2021		-		-		-		-		-			-		-				-		-		-			-			(1,523,674	)		(1,523,674	)
Net income (loss) for the quarter ended September 30, 2021		-		-		-		-		-			-		-				-		-		-			-			(1,523,674	)		(1,523,674	)
Balance September 30, 2021		25,000	$	25		600	$	1		738		$	-		305			$	69,193,105	$	6,920		40,615,974		$	(1,570	)	$	(58,839,746	)	$	(18,218,396	)

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements.

Endonovo Therapeutics, Inc. and Subsidiaries

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 September 30, 2021, and 2020, 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 13, 2021. 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 allow it to continue as a going concern. 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 becomes profitable.

As of September 30, 2021, the Company had cash of approximately $6,000 and a working capital deficiency of approximately $20.2 million. During the nine months ended September 30, 2021, the Company used approximately $0.6 million of cash in its operation. The Company has incurred recurring losses resulting in an accumulated deficit of approximately $58.8 million as of September 30, 2021. These conditions raise substantial doubt as to its ability to continue as going concern within one year from issuance date of these financial statements.

During the nine months ended September 30, 2021, the Company has raised approximately $0.6 million in debt and equity financing. The Company is raising additional capital through debt and equity securities to continue the funding of its operations. However, there is no assurance that the Company can raise enough 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.

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, has raised capital through the sale of its common stock, and the issuance of convertible promissory notes.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

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.

Earnings (Loss) Per Share

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 nine months ended September 30, 2021, include stock options, warrants, and notes payable. The Company has 3,013,730 options and 26,115 warrants to purchase common stock outstanding at September 30, 2021. The Company has 96,533 options and 56,914 warrants to purchase common stock outstanding at September 30, 2020.

The components of basic and diluted earnings per share for the nine months ended September 30, 2021, and 2020 were as follows:

Schedule of Earnings (Loss) Per Share

	2021			2020
	Nine months ended September 30,
	2021			2020
Numerator:
Net income (loss) attributable to common shareholders	$	(5,501,224	)	$	1,634,726

Effect of dilutive securities
Convertible notes		-			(5,063,936	)
Net loss for diluted earnings per share	$	(5,501,224	)	$	(3,429,210	)
Denominator:
Weighted-average number of common shares outstanding during the period		55,303,026			9,621,530
Dilutive effect of convertible notes payable		-			13,953,850
Common stock and common stock equivalents used for diluted earnings per share		55,303,026			23,575,380

Accounts Receivable

The Company uses the specific identification method for recording the provision for doubtful accounts, which was $0 as of September 30, 2021, and December 31, 2020. Account receivables are written off when all collection attempts have failed.

Research and Development

Costs relating to the development of new products are expensed as research and development as incurred in accordance with FASB Accounting Standards Codification (“ASC”) 730-10, Research and Development. Research and development costs amounted to $0 and $3,283 for the nine months ended September 30, 2021, and 2020, respectively, and are included in operating expenses in the condensed consolidated statements of operations.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Recently Issued Accounting Pronouncements

Accounting Principles Not Yet Adopted

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), which addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the effects, if any, of the adoption of ASU 2021-04 guidance on the Company’s financial position, results of operations and cash flows.

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.

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The objective of this standard update is to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. This ASU also attempts to improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This standard update is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted this ASU effective January 1, 2021, and the impact of adoption was not material to the Company’s financial position, results of operations 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.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

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.

Sources of Revenue

The Company has identified the following revenues by revenue source:

Medical care providers

As of September 30, 2021, and 2020, the sources of revenue were as follows:

Schedule of Source of Revenue

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020

Direct sales- Medical care providers, gross	$	7,790	$	39,980	$	72,789	$	154,296
Total sources of revenue	$	7,790	$	39,980	$	72,789	$	154,296

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

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.

Note 4 – Property, Plant and Equipment

The following is a summary of equipment, at cost, less accumulated depreciation at September 30, 2021, and December 31, 2020:

	September 30, 2021		December 31, 2020

Autos	$	64,458	$	64,458
Medical equipment		13,969		13,969
Other equipment		11,367		11,367
		89,794		89,794
Less accumulated depreciation		89,794		88,214
Property, Plant and Equipment, net	$	-	$	1,580

Depreciation expense for the nine months ended September 30, 2021, and 2020 was $1,580 and $3,432, respectively.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Note 5 – Patents.

In December 2017, we acquired from Rio Grande Neurosciences, Inc. (RGN) a patent portfolio for $4,500,000. The earliest patents expire in 2024. The following is a summary of patents less accumulated amortization at September 30, 2021, and December 31, 2020:

Schedule of Patents

	September 30, 2021		December 31, 2020

Patents	$	4,500,000	$	4,500,000

Less accumulated amortization		2,425,916		1,940,732

Patents, net	$	2,074,084	$	2,559,268

Amortization expense associated with patents was $485,184 for the nine months ended September 30, 2021, and 2020.

The estimated future amortization expense related to patents as of September 30, 2021, is as follows:

Twelve Months Ending September 30,	Amount

2021	$	646,910
2022		646,910
2023		646,910
2024		133,354

Total	$	2,074,084

Note 6- Notes Payable

Notes Payable

During the nine months ended September 30, 2021, the Company issued five (5) fixed rate promissory notes totaling $475,000 for funding of $475,000 with original terms of twelve months and interest rates of 15%. The holders of the promissory notes can convert the outstanding unpaid principal and accrued interest at a fixed conversion rate, subject to standard anti-dilution features.

During the nine months ended September 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 $58,407 as loss from debt extinguishment in the condensed consolidated statements of operations.

During the nine months ended September 30, 2021, the Company settled one of its promissory notes by issuing 1,515,152 restricted shares of the Company’s common stock with a fifteen percent (15%) make-whole provision. The Company recorded a gain on debt extinguishment of approximately $128,000.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

During the nine months ended September 30, 2021, the Company paid $3,000 in cash for one of its fixed rate promissory notes.

During the nine months ended September 30, 2021, the Company converted $358,443 in principal and $99,892 in accrued but unpaid interest into 25,690,651 shares of common stock.

The gross amount of all convertible notes with variable conversion rates outstanding as of September 30, 2021 is $4,770,926, of which $2,660,476 are past maturity.

Notes payable to a former related party in the aggregate amount of $132,600 were outstanding at September 30, 2021, which are past maturity date. The notes bear interest between 10% and 12% per annum. During the nine months ended September 30, 2021, the Company paid $10,400 in principal to this former related party.

As of September 30, 2021, fixed rate notes payable outstanding totaled $1,292,154, of which $85,154 is past maturity.

Schedule of Notes Payable

	September 30, 2021			December 31, 2020

Notes payable at beginning of period	$	6,835,196		$	6,874,795
Notes payable issued		475,000			1,364,611
Liquidated damages		-			452,095
Note modification		-			25,190
Loan fees added to note payable		-			120,389
Repayments of notes payable in cash		(13,400	)		(22,000	)
Settlements on note payable		(117,770	)		(697,253	)
Less amounts converted to stock		(358,443	)		(1,282,631	)
Notes payable at end of period		6,820,583			6,835,196
Less debt discount		(48,927	)		(201,157	)
	$	6,771,656		$	6,634,039

Notes payable issued to a former related party	$	132,600		$	143,000
Notes payable issued to non-related parties	$	6,639,056		$	6,491,039

The maturity dates on the notes-payable are as follows:

	Notes to
12 months ending,	Former Related party		Non-related parties		Total

Past due	$	132,600	$	3,370,533	$	3,503,133
September 30, 2022		-		3,317,450		3,317,450
	$	132,600	$	6,687,983	$	6,820,583

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Note 7 - Shareholders’ Deficit

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock which have been designated as follows:

Schedule of Preferred Stock

	Number of		Number of Shares Outstanding
	Shares Authorized		at September 30, 2021		Par Value		Liquidation Value
Series AA		1,000,000		25,000	$	0.0010	$	-
Preferred Series B		50,000		600	$	0.0001	$	100
Preferred Series C		8,000		738	$	0.0001	$	1,000
Preferred Series D		20,000		305	$	0.0001	$	1,000
Undesignated		3,922,000		-		-		-

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 (1,000,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.

Each holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to one hundred thousand (100,000) votes for each share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company. The Series AA Super Voting Preferred Stockholders will receive no dividends nor any value on liquidation. As of September 30, 2021, there were 25,000 shares of Series AA Preferred stock outstanding.

Series B Convertible Preferred Stock

On February 7, 2017, the Company filed a certificate of designation for 50,000 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 75% of the market price on the date of purchase of Series B and a three-year warrant exercisable into up to a like amount of common shares with an exercise price of 150% of the market price as defined in the Certificate of Designation. Dividends shall be paid only if dividends on the Company’s issued and outstanding Common Stock are paid, and the amount paid to the Series B holder will be as though the conversion shares had been issued. The Series B holders have no voting rights. Upon liquidation, the holder of Series B, shall be entitled to receive an amount equal to the stated value, $100 per share, plus any accrued and unpaid dividends thereon before any distribution is made to Series C Secured Redeemable Preferred Stock or common stockholders. As of September 30, 2021, 600 shares of Series B are outstanding.

Series C Convertible Redeemable Preferred Stock

On December 22, 2017, the Company filed a certificate of designation for 8,000 shares of Series C Secured Redeemable Preferred Stock (“Series C”). Each share of the C Preferred is entitled to receive a $20.00 quarterly dividend commencing March 31, 2018, and each quarter thereafter and is to be redeemed for the stated value, $1,000 per share, plus accrued dividends in cash (i) at the Company’s option, commencing one year from issuance and (ii) mandatorily as of December 31, 2019. Management determined that the Series C should be classified as liability per the guidance in ASC 480 Distinguishing Liabilities from Equity as of December 31, 2019. On January 29, 2020, the Company filed the amended and restated certificate of designation fort its Series C Secured Redeemable Preferred Stock. The amendment changed the rights of the Series C by (a) removing the requirement to redeem the Series C, (b) removing the obligation to pay dividends on the Series C, (c) Allowing the holders of shares of Series C to convert the stated value of their shares into common stock of the Company at 75% of the closing price of such common stock on the day prior to the conversion. The C Preferred does not have any rights to vote with the common stock.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Upon liquidation, the holder of Series C, shall be entitled to receive an amount equal to the stated value, $1,000 per share, plus any accrued and unpaid dividends thereon before any distribution is made to common stockholders but after distributions are made to holders of Series B.

During the nine months ended September 30, 2021, and 2020, the Company converted 25 and 1,051 shares of Series C into 1,111,111 and 2,754,822 shares of common stock. As of September 30, 2021, there are 738 shares of Series C outstanding.

Series D Convertible Preferred Stock

On November 11, 2019, the Company filed a certificate of designation for 20,000 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 0.01% of the Company’s issued and outstanding shares on conversion date and for conversion on or after August 2, 2020, the holder shall receive conversion shares as though the conversion date was August 1, 2020, with no further adjustments for issuances by the Company of common stock after August 1, 2020, except for stock split or reverse stock splits of the common stock. Management classified the Series D in permanent equity as of September 30, 2021.

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, $1,000 per share, plus any accrued and unpaid dividends thereon before any distribution is made to common stockholders. The Company did not issue any shares of Series D in the nine months ended September 30, 2021. As of September 30, 2021, there are 305 shares of Series D outstanding.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Common Stock

Equity Purchase Line Agreement

On May 18, 2020, the Company and Cavalry Fund I LP (the “investor”) entered into an Equity Line Purchase Agreement (“ELPA”) pursuant to which the investor committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 (the “Commitment”) worth of the Company’s common stock, over a period of 24 months from the effectiveness of the registration statement registering the resale of shares purchased by the investor pursuant to the ELPA.

The Company agreed to issue shares of its common stock (the “commitment shares”) to the investor having a market value of 5% of the commitment ($500,000 and 3,859,630 shares) based on the market price of the shares at the execution of the ELPA to be delivered in three tranches of 385,963 shares on: (i) the execution of the ELPA; (ii) thirty days after the effectiveness of the registration statement to be filed under the RRA (the “registration right agreement” or the “registration statement”), and (iii) 90 trading days after the effectiveness of the registration statement with the balance of the commitment shares to be issued pro-rata over the first $3,000,000 of puts in accordance with a formula set forth in the ELPA.

The ELPA provides that at any time after the effective date of the registration statement and provided the closing sale price of the common shares on the OTCQB is not below $0.01, from time to time on any business day selected by the Company (the “Purchase Date”), the Company shall have the right, but not the obligation, to direct the investor to buy up to 300,000 shares of the common stock (the “regular purchase amount”) at a purchase price equal to the lower of: (i) the lowest applicable sales price on the date of the put and (ii) 85% of the arithmetic average of the 3 lowest closing prices for the common stock during the 10 consecutive trading days ending on the trading day immediately preceding such put date. The regular purchase amount may be increased as follows: to up to 400,000 shares of common stock if the closing price of the common shares is not below $0.25 per share and up to 500,000 shares if the closing price is not below $0.40 per share.

Under the ELPA the Company has the right to submit a regular purchase notice to the investor as often as every business day. The payment for the shares covered by each put notice will generally occur on the day following the put notice. The ELPA contains provisions which allow for the Company to make additional puts beyond the regular purchase amount at greater discounts to the market price of the common stock as forth in the ELPA.

The ELPA requires the Company to apply at least 50% of the proceeds of puts to the payment of certain variable rate convertible notes issued by the Company. The Company does not anticipate that it will raise any funds under the ELPA.

Activity during the nine months ended September 30, 2021

During the nine months ended September 30, 2021, the Company issued 25,690,651 shares of common stock for the conversion of principal notes and accrued interest in the amount of $458,335.

During the nine months ended September 30, 2021, the Company issued 4,333,668 shares of common stock labeled as commitment shares in connection with the issuance of promissory notes.

During the nine months ended September 30, 2021, the Company issued 7,000,000 shares of common stock pursuant to securities purchase agreement for total consideration of $126,000.

During the nine months ended September 30, 2021, the Company issued 1,111,111 shares of common stock with a value of $33,333, related to the conversion of Series C.

During the nine months ended September 30, 2021, the Company issued 4,020,986 shares of common stock with a value of $142,424, related to the settlement of debts, of which 2,505,834 shares of common stock were issued with a fair value of $84,697 to a former related party.

During the nine months ended September 30, 2021, the Company issued 2,500,000 shares of common stock in connection with the consulting agreement.

Activity during the nine months ended September 30, 2020

During the nine months ended September 30, 2020, pursuant to the execution of the ELPA, the Company issued 771,926 shares of common stock with a value of $97,918.

During the nine months ended September 30, 2020, the Company issued 8,501,004 shares of common stock for the conversion of notes and accrued interest in the amount of $1,381,650.

During the nine months ended September 30, 2020, the Company issued 2,754,822 shares of common stock with a value of $1,400,934, related to the conversion of Series C.

During the nine months ended September 30, 2020, the Company issued 58,428 shares of common stock to Series C with a value of $8,152 to convert into shares of common stock.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

During the nine months ended September 30, 2020, the Company issued 385,000 shares of common stock with a value of $39,500 related to services.

During the nine months ended September 30, 2020, the Company issued 409,000 shares with a value of $58,855 to one investor to exchange one variable convertible note with remaining principal of $283,000 past maturity for a fixed rate convertible note with principal of $525,000 and maturing one year from issuance. The Company recorded a loss on debt extinguishment of $151,496 for the fair value of the shares issued in accordance with guidance in ASC 470-50 Debt-Modifications and Extinguishments.

During the nine months ended September 30, 2020, the Company issued 1,234,568 shares of common stock in exchange for $100,000 cash pursuant to the Securities Purchase Agreement.

During the nine months ended September 30, 2020, the Company issued 1,500,000 shares of common stock for total value of $165,000 in exchange for 34,690 stock options regarding the ambiguity of price adjustment in the event of a reverse split that the Company completed on December 20, 2019.

During the nine months ended September 30, 2020, the Company modified the terms of its promissory note with one investor, which extended the maturity date of its promissory note and the issuance of 500,000 restricted stock with a fair value of $55,000. The recording of this transaction resulted in a loss on debt extinguishment of $55,000 per ASC 470-60 Troubled Debt Restructurings.

Stock Options

The balance of all stock options outstanding as of September 30, 2021, is as follows:

Schedule of Stock Options Outstanding

				Weighted Average		Weighted Average Remaining		Aggregate
				Exercise Price		Contractual		Intrinsic
	Options			Per Share		Term (years)		Value
Outstanding at January 1, 2021		3,014,080		$	0.37		1.67		-
Granted		-		$	-		-		-
Cancelled		(350	)	$	47.00		-		-
Exercised		-		$	-		-		-
Outstanding at September 30, 2021		3,013,730		$	0.37		0.92	$	-

Exercisable at September 30, 2021		1,263,730		$	0.67		0.95	$	-

Share-based compensation expense for the nine months ended September 30, 2021, totaled approximately $61,000.

The total unrecognized compensation expense amounts to approximately $137,000 and should be recognized evenly over 1.65 years.

On June 11, 2020, the Board of Directors approved the issuance of 74,668,000 non-incentive stock options to officers, directors, and key consultants. The key terms and conditions of the award have not been mutually understood and agreed upon, and as a result, the Company has not recognized stock compensation for such award for the nine months ended September 30, 2021.

Warrants

A summary of the status of the warrants granted under these agreements at September 30, 2021, and changes during the nine months then ended is presented below:

Schedule of Warrants Outstanding

	Outstanding Warrants
				Weighted Average		Weighted Average Remaining
				Exercise Price		Contractual
	Shares			Per Share		Term (years)
Outstanding at January 1, 2021		39,295		$	200.72		0.93
Granted		-		$	-		-
Cancelled		(13,180	)	$	449.15		-
Exercised		-		$	-
Outstanding at September 30, 2021		26,115		$	76.76		0.51

Exercisable at September 30, 2021		26,115		$	76.76		0.51

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Note 8 – Related Party and former related parties Transactions.

One executive officer of the Company has agreed to defer a portion of his compensation until cash flow improves. As of September 30, 2021, the balance of the deferred compensation was $443,289, which reflects $225,000 accrual of deferred compensation and approximately $119,179 cash repayment of deferred compensation during the nine months ended September 30, 2021.

One former executive of the Company has agreed to defer a portion of his compensation until cash flow improves. As of September 30, 2021, the balance of his deferred compensation was $632,257. No activity occurred during the nine months ended September 30, 2021.

From time-to-time officer of the Company advance monies to the Company to cover costs. The balance of short-term advances due to one officer of the Company at September 30, 2021, was $6,529 and is included in the Company’s accounts payable balance as of September 30, 2021. During the nine months ended September 30, 2021, the Company’s executive officer advanced an aggregate amount of $13,405 for corporate expenses and notes repayment, of which $13,405 was repaid back as of September 30, 2021.

As of September 30, 2021, notes payable remain outstanding to the former President of the Company, in the amount of $132,600. As of September 30, 2021, accrued interests on these notes payable totaled $64,852, and are included in accrued expenses on the condensed consolidated balance sheet.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Note 9 – Fair Value Measurements

The Company has issued Variable Debentures which contained variable conversion rates based on unknown future prices of the Company’s common stock. This results in a conversion feature. The Company measures the conversion feature using the Black Scholes option pricing model using the following assumptions:

	Nine months ended September 30,
		2021	2020

Expected term		1 – 4 months	1 – 6 months
Exercise price		$0.012-$0.030	$0.05-$0.76
Expected volatility		177%-206%	157%-249%
Expected dividends		None	None
Risk-free interest rate		0.06% to 0.13%	0.03% to 1.54%
Forfeitures		None	None

The assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change, including changes in the market value of the Company’s common stock, managements’ assessment, or significant fluctuations in the volatility of the trading market for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.

The Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under its control. The resulting effect on net loss is therefore subject to significant fluctuation and will continue to be so until the Company’s Variable Debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

The following table presents changes in the liabilities with significant unobservable inputs (level 3) for the nine months ended September 30, 2021:

	Derivative
	Liability
Balance December 31, 2020	$	4,202,597

Extinguishment		(133,386	)
Debt conversion		(585,857	)
Change in estimated fair value		2,962,795

Balance September 30, 2021	$	6,446,149

Accounting guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system, and defines required disclosures. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

The Company’s balance sheet contains derivative liabilities that are recorded at fair value on a recurring basis. The three-level valuation hierarchy for disclosure of fair value is as follows:

Level 1: uses quoted market prices in active markets for identical assets or liabilities.

Level 2: uses observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: uses unobservable inputs that are not corroborated by market data.

The fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Black Scholes option pricing model was used to determine the fair value. The Company records derivative liability on the condensed consolidated balance sheets at fair value with changes in fair value recorded in the condensed consolidated statements of operation.

The following table presents balances in the liabilities with significant unobservable inputs (Level 3) as of September 30, 2021:

	Fair Value Measurements Using
		Quoted Prices in
		Active Markets for		Significant Other		Significant
		Identical Assets		Observable Inputs		Unobservable Inputs
		(Level 1)		(Level 2)		(Level 3)		Total

As of September 30, 2021
Derivative liability	$	-	$	-	$	6,446,149	$	6,446,149
Total	$	-	$	-	$	6,446,149	$	6,446,149

Note 10 – Commitments and Contingencies

Legal Matters

The Company is a defendant in a case brought by Auctus Fund, LLC seeking to enforce a variable rate convertible note dated in August 2019, which was in the original amount of $275,250 and claiming damages in excess of $500,000, including other unspecified damages and attorney fees. The Company is vigorously defending the action and has filed an answer with counterclaims. While the matter is in its early stages and there are always uncertainties in litigation, management does not believe that the litigation will have a result significantly adverse to the Company. As of September 30, 2021, the balance of the variable rate convertible note is approximately $164,000, excluding approximately $31,000 in accrued interest.

The Company is subject to certain legal proceedings, which it considers routine to its business activities. As of September 30, 2021, the Company believes, after consultation with legal counsel, that the ultimate outcome of such legal proceedings, whether individually or in the aggregate, is not likely to have a material adverse effect on the Company’s financial position, results of operations or liquidity.

Note 11 – Concentrations.

Sales

During the nine months ended September 30, 2021, we had two significant customers, which accounted for approximately 61% of sales.

Supplier

We also have a single source for our bioelectric medical devices, which account for 100% of our sales. The interruption of products provided by this supplier would adversely affect our business and financial condition unless an alternative source of products could be found.

Endonovo Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

Accounts Receivable

At September 30, 2021, we had one customer which accounted for approximately 64% of our account receivable balances.

Note 12 – Subsequent Events

Subsequent to September 30, 2021, an aggregate of 1,770,656 shares of restricted common stock were issued on the conversion of $35,153 of principal and $260 of accrued interest pursuant to fixed promissory notes.

Subsequent to September 30, 2021, the Company executed two convertible notes for aggregate principal of $175,000, carrying coupon of 15%, with due date one year from issuance date, convertible six months from issuance date at a fixed conversion rate.

Subsequent to September 30, 2021, the Company agreed to issue 1,225,000 commitment shares pursuant to securities purchase agreement executed in conjunction with the two convertible notes executed post September 30, 2021.

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no other reportable subsequent events to be disclosed besides those noted above.

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

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

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).

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, 2020, 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, 2020. 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 nine months ended September 30, 2021, in any of our Critical Accounting Policies from those contained in our Form 10-K for the year ended December 31, 2020.

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

Nine Months ended September 30, 2021, and 2020.

	Nine Months Ended September 30,						Favorable
	2021			2020			(Unfavorable)			%

Revenue	$	72,789		$	154,296		$	(81,507	)		-52.8	%
Cost of revenue		6,124			18,320			12,196			66.5	%
Gross profit		66,665			135,976			(69,311	)		-50.9	%

Operating expenses		1,919,418			2,364,213			444,795			18.9	%

Loss from operations		(1,852,753	)		(2,228,237	)		375,484			16.9	%

Other (expense) income		(3,648,471	)		3,862,963			(7,511,434	)		194.5	%

Net loss	$	(5,501,224	)	$	1,634,726		$	(7,135,950	)		436.5	%

Revenue

Revenue of the Company’s SofPulse® product during the nine months ended September 30, 2021, was $72,789, a decrease of $81,507, or approximately 53%, compared to $154,296 for the nine months ended September 30, 2020.

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 increase in future periods as the roll out of the SofPulse® product continues.

Cost of Revenue

Cost of revenue during the nine months ended September 30, 2021, was $6,124, a decrease of $12,196 or 66.5% compared to $18,320 for the nine months ended September 30, 2020. 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 decreased by $444,795 or 18.9%, to $1,919,418 for the nine months ended September 30, 2021, compared to $2,364,213 for the nine months ended September 30, 2020. This change was due primarily to a decrease in consulting fees of approximately $107,000 a decrease in stock-based compensation by approximately $244,000, a decrease in payroll expense by approximately $88,000.

Other Expense/Income

Other expense for the nine months ended September 30, 2021, was $3,648,471 compared an income of $3,862,963 for the nine months ended September 30, 2020. This change was due primarily to a change in valuation of our derivative liabilities of approximately $8.9 million offset by a decrease of approximately $0.9 million in interest expense and a decrease of approximately $0.6 million in loss from debt extinguishment. We anticipate continued large fluctuations in other income/expense following quarterly re-evaluation of derivative liabilities.

Three Months ended September 30, 2021, and 2020.

	Three Months Ended September 30,						Favorable
	2021			2020			(Unfavorable)			%

Revenue	$	7,790		$	39,980		$	(32,190	)		-80.5	%
Cost of revenue		3,103			760			2,343			308.2	%
Gross profit		4,687			39,220			(34,533	)		-88.0	%

Operating expenses		696,943			986,019			289,076			29.4	%

Loss from operations		(692,256	)		(946,799	)		254,543			26.9	%

Other income (expense)		(831,418	)		(122,242	)		(709,176	)		-580.2	%

Net income (loss)	$	(1,523,674	)	$	(1,069,041	)	$	(454,633	)		42.5	%

Revenue

Revenue of the Company’s SofPulse® product during the three months ended September 30, 2021, was $7,790, a decrease of $32,190, or 80.5%, compared to $39,980 for the three months ended September 30, 2020. 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 September 30, 2021, was $3,103, an increase of $2,343 or 308.2% compared to $760 for the three months ended September 30, 2020. 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 decreased by $289,076 or 29.4%, to $696,943 for the three months ended September 30, 2021, compared to $986,019 for the three months ended September 30, 2020. This change was due primarily to a decrease in stock-based compensation of approximately $230,000 and consulting fees by approximately $72,000.

Other Expense

Other expense for the three months ended September 30, 2021, was $831,418 compared to $122,242 for the three months ended September 30, 2020. This change was due primarily to a change in valuation of our derivative liabilities of approximately $962,000 coupled with a decrease in interest expense of approximately $207,000. We anticipate continued large fluctuations in other income (expense) as a result of quarterly re-evaluation of derivative liabilities.

Liquidity and Capital Resources

	As of
	September 30, 2021			December 31, 2020			Favorable (Unfavorable)
Working Capital

Current assets	$	62,549		$	46,187		$	(16,362	)
Current liabilities		20,275,204			16,825,821			3,449,383
Working capital deficit	$	(20,212,655	)	$	(16,779,634	)	$	(3,433,021	)

Long-term debt	$	79,825		$	155,000		$	(75,175	)

Stockholders’ deficit	$	(18,218,396	)	$	(14,373,786	)	$	(3,844,610	)

	Nine Months Ended September 30,						Favorable
	2021			2020			(Unfavorable)
Statements of Cash Flows Select Information

Net cash provided (used) by:
Operating activities	$	(595,288	)	$	(548,734	)	$	(46,554	)
Investing activities	$	-		$	-		$	-
Financing activities	$	587,600		$	532,424		$	55,176

	As of				Favorable
	September 30, 2021		December 31, 2020		(Unfavorable)
Balance Sheet Select Information

Cash	$	5,732	$	13,420	$	(7,688	)

Accounts payable and accrued expenses	$	7,057,399	$	5,989,185	$	(1,068,214	)

Since January 1, 2021, and through September 30, 2021, the Company has raised approximately $0.6 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 September 30, 2021 was less than $6,000. 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.

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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a Smaller Reporting Company and are not required to provide the information under this item.

Item 4. Controls and Procedures.

Disclosure of controls and procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As required by the SEC Rule 13a-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses which have caused management to conclude that as of September 30, 2021, our disclosure controls and procedures were not effective at the reasonable assurance level:

1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the quarter ended September 30, 2021. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the authorization of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. The recording of transactions function is maintained by a third-party consulting firm whereas authorization and custody remains under the Company’s Chief Executive Officer’s responsibility. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Changes in internal controls over financial reporting.

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

We are a Smaller Reporting Company (as defined in Rule 12b-2 of the Exchange Act) and are not required to provide the information under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Number of
Common Shares		Source of
Issued		Payment	Amount

	25,690,651	Conversion of notes	$	1,076,203
	1,111,111	Conversion of Preferred Series C		33,333
	7,000,000	Issuance for cash		126,000
	4,020,986	Settlement of debt		142,424
	2,500,000	Shares for services		95,250
	4,333,668	Commitment shares		155,282

The above issuances of securities during the nine months ended September 30, 2021, were exempt from registration pursuant to Section 4(2), and/or Regulation D promulgated under the Securities Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these stockholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

Item 3. Defaults upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

Exhibit Number		Exhibit Title

31.1		Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from the Company’s Quarterly report for the period ended September 30, 2021, formatted in Extensible Business Reporting Language (XBRL).

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 19, 2021	Endonovo Therapeutics, Inc.

	By:	/s/ Alan Collier
		Alan Collier
		Chief Executive Officer (Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)