Good day. And welcome to the ENDRA Life Sciences' Fourth Quarter and Full Year 2017 Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Chris Tyson, Managing Director of MZ North America, ENDRA Life Sciences' Investor Relations firm. Sir, please go ahead.

Good afternoon. I'd like thank you all for taking time to join us for ENDRA Life Sciences' fourth quarter and full year 2017 conference call. Your hosts today are Mr. Francois Michelon, Chief Executive Officer; as well as Mr. David Wells, the company's Chief Financial Officer; and Mr. Michael Thornton, the company's Chief Technology Officer. Francois and Michael will provide a business update which will cover partner announcements, product updates and operational milestones, while David will discuss the financial results. A press release detailing these results is across the wires today and is available on the company's website endrainc.com. Following management's prepared comments, we will open the floor to questions for those of you who are dialing in for today's call. Before we begin the formal presentation, please take note of the Safe Harbor paragraph that appears at the end of the press release covering the company's financial results. And that any forward-looking statements that we make only apply as of the date made and are subject to inherent risks and uncertainties including those described in the company's SEC filings and should not be unduly relied upon. Except as otherwise required by the federal securities laws, the company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements. We also would refer you to the company's website for more supporting industry information. At this time, I’d like to turn the call over to Francois Michelon. Francois, the floor is yours.

Thanks very much, Chris. And welcome everyone to ENDRA Life Sciences' fourth quarter and full year 2017 financial results conference call. 2017 was a pivotal year for ENDRA, as we successfully completed our IPO, strategically deployed our capital, expanded our team and achieved several operational milestones. On the heels of a renewed global collaboration agreement with GE Healthcare, the global ultrasound market leader, we raised $8.6 million in new capital, listed on the NASDAQ capital market and positioned ENDRA to commercialize a new tool in the fight against the global epidemic of liver disease in the European market in 2018. For those new to the ENDRA story, we're currently developing a next generation Thermo-Acoustic Enhanced UltraSound, or as welled it TAEUS, to enable clinicians to visualize human tissue composition, function and temperature in ways previously possible only with a CT or MRI but at a fraction of the cost and at the point of patient care. TAEUS is a platform with multiple clinical applications and our first focus will be on quantification of fat in the liver, for early detection and monitoring of Non-Alcoholic Fatty Liver Disease, also known as NAFLD, which affects over 1 billion people globally, is often asymptomatic, has no currently practical diagnostic tools, and if untreated can progress to liver inflammation, cirrhosis and cancer. ENDRA’s goal is to bring multiple new capabilities to ultrasound, a $13 billion addressable market opportunity and thereby broadened access to better healthcare. Now, let’s turn our attention to the progress we’ve made in 2017 since the IPO. During the course of the year, we executed key elements of our business plan, achieving all 2017 milestones in our TAEUS liver roadmap and we remain on track to achieve a European commercial launch in the second half of 2018. Since our initial public…

Thank you, Francois. During the full year 2017, we strengthened ENDRA’s total intellectual property assets to 33 patents and patent applications that are in preparation filed, issued or licensed, up from 24 at the beginning of 2017. Since our IPO, we have filed four new patents and received Notice of Allowance for two patents. Over the past several months, ENDRA has focused on protecting key enabling methodologies and technical innovations related to our TAEUS fatty liver application. We are preparing additional filings related to our first product. IP is a core strategic area of focus for ENDRA Life Sciences. We have dedicated personnel and work with an established network of patent law firms that will ensure that our innovations and products are protected in the global markets that we're targeting for our technologies. We are also expanding our patent portfolio in the first quarter of 2018, and we were recently granted two US patents for non-invasive fat assessment to support TAEUS clinical product targeting Non-Alcoholic Fatty Liver Disease. These are the first US patents issued to ENDRA for non-invasive fat assessment. And we expect to receive additional patents to protect our thermoacoustic intellectual property and directly support our plans to commercialize a transformative clinical application in the second half of 2017 focused on Non-Alcoholic Fatty Liver Disease. NAFLD can progress through non-alcoholic steatohepatitis, also known as NASH, fibrosis, cirrhosis and potentially cancer and it is largely driven by obesity, diabetes and hepatitis, our first applications for the assessment and surveillance of NAFLD in its earlier stages when it is reversible. As of today ENDRA’s support IP portfolio totals 39 patents and patent applications that are in preparation to be filed, issued or licensed, encompassing a range of devices and methods focused IP in targeted global markets. Now, moving on to…

Thank you, Michael. I’ll now provide a summary of our reported fourth quarter and fully year 2017 financial results. Our revenue for the year ended December 31, 2017 totaled approximately $350,000, compared to approximately $515,000 for the year ended December 31, 2016. Revenue earned in 2017 was the result of the sale of one of our Nexus 128 units, as well from service fees on the base of existing installed Nexus 128 systems. In 2016, we sold two Nexus 128 systems and had revenues from service fees as well, which accounts for the decline in revenue in 2017 over 2016. Our gross margin was 51% for the year ended December 31, 2017 as compared to 54% for the same period in 2016. The slight decline was due to the mix of revenue between Nexus 128 unit sales and service fees. Operating expenses increased to $4.8 million for the fiscal year 2017, from $2.1 million for the same period in 2016. The increase in operating expenses in 2017 as compared to 2016 was primarily due to higher research and development expenses and general and administrative expenses which included an increase in headcount, as well as one-time advisory and accounting fees, related to our initial public offering. Operating expenses for the year ended December 31, 2017 also included approximately $1 million in non-cash charges, related to the issuance of equity for compensation and services and approximately $710,000 in non-cash interest costs associated with convertible notes which were converted into common stock at the time of our IPO. Our net loss for the year ended December 31, 2017 was $5.4 million or a $1.95 per basic and diluted share as compared to a net loss of $2.8 million for the year ended December 31, 2016. Our cash as of December 31, 2017 totaled $5.6 million as compared to approximately $145,000 as of December 31, 2016. We had no long-term debt outstanding at December 31, 2017. The increase in our cash as of December 31, 2017 compared to 2016, is a result of the net proceeds of $8.6 million from our initial public offering in May 2017. For the year ended December 31, 2017, we used approximately $3.3 million in cash from operations and using roughly $1.4 million of the number in cash during the fourth quarter of 2017. This expected rise is due to the development of our TAEUS product discussed earlier on this call. We believe we have the necessary funds to support a commercialized product in the second half of 2018. In summary, we believe the combination of our asset-light operating model, clean capitalization structure and continued effective and efficient use of cash will position ENDRA to commercialize our TAEUS liver product in the European Union as scheduled. I'll now turn the call back over to Francois. Francois?

Thanks, David. 2017 was a big year indeed for ENDRA, capitalizing the company with the NASDAQ IPO and laying organizational and product development foundations that will support ENDRA’s growth in years to come. We’re confident based upon our conversations with clinicians and partners around the globe that the demand for our TAEUS clinical product for fatty liver as well as other clinical applications is strong and growing. Why do I say this? The first reason is because ENDRA’s Thermo-Acoustic Enhanced UltraSound addresses each of the top three needs of global healthcare. Patients, clinicians and insurers all want: Number one, to broaden access to higher quality care. Number two, to reduce costs by delivering healthcare. And number three, to improve safety. As it relates to ENDRA and regarding broadening access to higher quality care, ENDRA’s liver application will enable clinicians to easily diagnose and monitor a disease that affects over 1 billion people globally today using broadly available ultrasound, where today there are no practical diagnostic tools except for risky surgical biopsy or expensive and time consuming MRI. Regarding the second element, reducing costs, ENDRA’s technology leverages inexpensive ultrasound and can be brought to market with an estimated end user price of $40,000 to $50,000. That’s 50 times less expensive than a $2 million CT or MRI machine. Finally, regarding improving safety, again here, ENDRA’s technology leverages safe ultrasound with no ionizing X-ray radiation nor potentially toxic intravenous contrast agents. But the second fundamental reason I'm optimistic about ENDRA’s technology and the growth and adoption is when I sat down with some very smart people in the imaging space last week in Palo Alto, California and I was reminded of some of the important trends affecting radiology that also benefit ENDRA. Traditional radiology today if facing a paradigm shift due to…

We will now be conducting a question-and-answer-session. [Operator Instructions]. Our first question come from Dallas Salazar, Atlas Consulting. Please proceed with your questions.

Hi, can you guys hear me okay?

Yeah, thanks. Hi, Dallas.

Hi, Francois. Good quarter right around out the year on a strong note. I just -- you guys have sort of set the table where if you talk about something that is going to be some sort of mid-term expectation that is coming to fruition or it being a real value driver, whether intrinsic or not for the shareholders, right? Your comments with respect to AI, there is kind of round out the call, where a little -- to me again just given your overall track record it was a little off-centered. So can you provide some color around that? For instance, who the thought leaders that maybe you're echoing their sentiment or their lead in the space? And then just the conversation that you're hearing, can you give some background as to just AI in general and how that sort of came to be on this call?

Yes, sure. Well, I hope that in fact they complement the much more detailed operating details that we've been focused on Salazar. Because while we've been focused on the accomplishments of ENDRA, I always think it's important to keep a good eye on the strategic context of what we're trying to do. And that's really why I wanted to close in part with those trends. Those trends are not completely new, they in fact as we started digitizing images when I worked at GE and we were moving from film-based to digital based imaging that had already begun. But I think I’d love to get Michael Thornton’s input here in terms of the data feed and the appetite of AI and how beyond the workflow and the implications to radiology, how our product I think naturally ducktails into the data needs of AI. Mike, if you wouldn’t mind expanding on that for Dallas’ benefit, that’ll be great.

Sure. Thanks, Francois. And good to talk to you Dallas. Radiology has historically been at the leading edge of technology development. Some of the innovations in MRI and electronics for all the technologies that you see today in radiology departments around the country have really been leading edge and pushing technology limit. But the practice of radiology presenting an image and having it interpret by a radiologist initiating the report really hasn’t changed in a few decades. Obviously, the acceleration of computing and deep learning systems is having an impact in all our lives in just about every aspect and radiology is not immune to us. The overwhelming amount of data that’s coming in now from publications, research genetics, proteomics, blood diagnostic tests that weren’t available even five or 10 years ago, is quickly going to overwhelm radiologists and necessity them to have expertise in all these areas that they’ve never had to train in before. Our information that we’re going to add to existing ultrasound, such as measurements of -- or assessment of fat in liver and other indices of liver health are just one of the inputs to what will be deep learning networks that will become part of AI in radiology. I think the whole industry if you are reading any of the trade magazines or journals, this is really an accelerating field. I know I am going to the American Institute for Ultrasound and Medicine Meeting later this week and there are multiple talks talking about using AI, deep learning network. So, I look at our additive product to existing ultrasound as just being one of those inputs that’s going to drive the need and establishment of AI in radiology. I hope that answers your question.

No, it does, and fortunately I think it opens Pandora’s Box. You guys are sort of getting into my universe now when it comes to data and kind of monetizing that stream. So I just -- I don’t want you to put in a tough spot and kind of press you on it. But with the partnership with GE, backed you here in the diagnosis corner, if you will, of the map, and you’ve got just this massive total market from a warm body standpoint potentially in the fatty liver segment, how do you monetize this, where does -- what progress should we be looking for, where is this conversation state wise with potentially talks with GE? Obviously they have got a large one assumes data depot. So -- and then regulatory-wide, what hurdles are there towards monetization if that’s something you are thinking about? And I will jump back in the queue.

No, that’s fine Dallas. And you know Mike just before maybe you speak specifically then to AI, if you have other thoughts. I would remind our investors that TAEUS and ENDRA’s technology is a platform, we have been able to decode the various qualities of tissue and working to complement ultrasound render clinically value-added information as we are doing when we asses fat in the liver. But that's really just our first application and we have others that you can see in our investor presentation focused for example on seeing tissue temperature change in real-time during energy based surgical procedures for ablation of tumors, for atrial fibrillation and other applications. So this platform of ENDRA’s is much bigger in longer term and much more scalable than just the liver. The liver in and of itself is, you've heard me say before, I believe is big enough for ENDRA to build its whole business arm. But it's still encouraging and exciting to think of the other applications. So in terms of monetizing beyond the liver, certainly we've talked about the -- one of the goals of ENDRA to license this technology for inclusion into new systems. We've also mentioned that there are certainly some ideas and engineering pipeline concepts that are being looked at for disposables. ENDRA’s technology is software driven, but there is a hardware element obviously as we deploy it into the installed base. And I have to be honest with you, in my 20 years of executing as a commercial leader in healthcare, it's critical, Dallas, that we remain focused on executing a strong and simple liver product this year, get into the hands of clinicians, start generating revenue and knock the ball out of the park. I don't want to get too distracted by shiny lights to the left, to the right regarding AI or other things. I think the best way to grow this business and deliver shareholder value is to do a great job on the liver, repeat and scale thereafter. So I hope that's helpful. I think there's a lot of stuff that we could leverage and look to, but for now we're being extremely disciplined from an operations perspective to make sure this one product is very successful. Mike, any other thoughts maybe before we wrap up?

Yes. No, just that’s great, Francois. I just wanted to add that we’re really new to the game and in fact the whole idea of collecting patient data who owns it, patient rights, I mean this is an evolving space and we're watching it very carefully. We’ve recognized that an ultrasound system which is the base platform that our technology attaches to, is a wirelessly connected system to patient data records. It’s a portal for collecting additional data and we know that’s a key piece of the puzzle to deep learning networks and we see that as part of our future roadmap, but it's evolving and we're watching very closely and would love to participate.

As a reminder, we are now conducting a question-and-answer session [Operator Instructions] Our next question comes from [Bill Morrison] from National Securities. Please proceed with your question.

Hi, Bill. Thanks for joining the call.

Yes, thanks for answering my questions. I have a couple. Looking at the CE Mark and the pathway to commercial revenues, what kind of ramp are we looking in the training and how long does it take before you get fully ramped and productive sales and after you get the CE Mark till you’re generating revenues in Europe?

Yes, no, I think that's a great question. I'll let Mike speak a little more if he'd like to the CE regulatory status. But our approach is as I touched on through our investor presentations is really to get that CE Mark in Q3 in parallel to laying the groundwork with GE. Those discussions with GE in terms of who are we targeting? How do we position this offering? What systems does it work best with? Have started in late 2017. And in fact, we're going next month to the EASL, the European Association for Study of Liver Meeting in Paris in April to meet with some of those early adopters and also continue the discussions on the ground with GE. Our goal, Bill, is really to get this first generation product into the hands of early adopters. That I think you may remember from my last call I qualified as their GE ultrasound customers they’re focused on the liver, the abdomen. They have an early adopter profile meaning that they are eager to try new technology and help us with fine it and finally that they publish. I’ve built my markets that the way historically. You get it into the hands of key opinion leaders and influencers and you build concentric circles around that. So 2018 will be a commercial product but I also want to manage expectations that this is not going to be for sale on eBay and we're going to be selling thousands of these overnight. This is about building the market with GE's help going in to a GE customer with the GE sales rep along with the small ENDRA commercial team. Our thinking is three to four specialists on the ground in Europe that can help train the GE reps, can help support and co-sale to customers, and then make sure that the customers who are using the product are happy in using it correctly. But it's this hybrid approach complementing GE and making sure that we're leveraging their co-points and relationships to build the market. Certainly 2019 would be a lot more I would say traditional ramp-up in terms of volume. But I want to get it right, if we just launch this and hope they come, that's never been successful for me. We need to get it into these hands of these early adopters, have people say well, Dr. Smith at the -- this top institution in Germany, France, Italy, Spain, is using this ENDRA product, he's getting great results, I want to learn more and that's how I build markets. Is that helpful, Bill?

Yes. So I would imagine that the three or four specialists are already up the curve and maybe few of the GE people are up the curve. So how many…

Yes so the product. I'm sorry go ahead.

How many people in total do you think, once you ramped up in Europe on the sales front or need to be trained and certified on the product?

Well, one, I'm not at liberty to kind of discuss the number of headcount that GE has. But you can imagine it will be no doubt in 100 or more that are focused in the areas that we want to attack. But that list of customers that I mentioned, Bill, is already well built and we're meeting with some of those people next month in Paris. Train the trainer, which is the model that I've always used is an important one, where we train the sales force initially, how to use the product and then we go out and we continue to co-demonstrate with them. I would also I would also emphasize Bill that, this product is not much of a deviation from the current workflow. So there is not that much to learn, which is an important factor in terms of adoption from the existing clinical ultrasound workflow. Michael, could you jump in and maybe give us a little bit of a sense of how that workflow works and how it will facilitate adoption?

Yes, initially, we’re going to use advanced application specialist and downstream marketing support to actually go side-by-side with our distributors and distribution partners into the user site to actually provide training and ensure that they are using the equipment properly and getting the highest quality data. Overtime in keeping with the ultrasound training model that has evolved, it will largely be directed by training videos and lunch and learn sessions where you have group sessions and to actually introduce our technology. So, we are initially going to go with the traditional go right into the customers’ site and provide training and then eventually transition to the more modern just deploy devices and remote training support overtime.

It sounds great. Also, are there any country specific marketing approvals or anything there that you need to do? And if here the CE Mark works for the product, Europe would?

So without getting into the deep nitty-gritty of European law and so on, there’s the CE Mark process involves using a notifying body, that’s somebody who authorized to review all of our technical file information and essentially grant the CE Mark. And then the content authority in each country actually provides the authorization to distribute. That’s largely per country but I don’t want to go through every country, but yes the European Union sort of how homogenizes the process, so that you do it once and then have the ability to go into each country.

Very good, that’s great. That’s very helpful. Also on the AI front, I would imagine that you’re talking having APIs into your system or publishing APIs to big data platforms, correct? That’s what you’re talking about doing that in the next year or two anyway?

Well I think, well I was just going to clarify that we look at our device as an accessory to ultrasound as being one of those data collection points that’s going to increase the volume of data and burden on radiologists that will feed into deep learning networks. How we directly connect to them, how our data interfaces to them is something that’s largely not metrical yet but it’s clear that we’re just going to pile on more data on to it already, overburden radiologists with so much inputs starting with the symptoms, the referral and now all these other measurements that are quickly becoming overwhelming. So I think we recognize that we’re one of the sources of the mass amount of data and the data that we are providing is essentially a biochemical blood pressure cuff, it’s a metabolic measure of health. So it’s going to be very important and affects a huge portion of the population. So it's something we're going to have to think about as these deep learning networks become established.

Okay. My last question. So the AI aspect of the product and just the AI environment, is this like a key box that you’ve checked in order to enter these new adopters to penetrate …

No. I think -- no that's a great question and if I could clarify. I think what I was trying to say, Bill, is one of the key clinical segments that we're targeting commercially is radiology in addition to internal medicine, in addition to hepatology. But I was saying that the market and the practice of radiology is changing in the way I described it. And I think that benefits the hands-on nature of what we're presenting, meaning, we're not just presenting another simple image, if you remember as we described a product we're going to have a clip on device similar to a biopsy guide for ultrasound, that's going to require a radiologist in Europe to do something. It’s going to require that professional skill and we think that that bodes very well for the adoption from radiology, based on AI's impact to just reading burred images in this point-of-care ultrasound that's becoming more and more independent. So I hope I haven't opened a can of worms, I found the topic to be very interesting and very supportive of our type of product. It does open and I'm trying laughing at myself for now entertaining a host of different questions from you and Dallas, but it's exciting and I think it supports the kind of technology that ENDRA is bringing to market as it relates to radiology being very eager for this kind of continued value add from that specialty. Is that helpful?

Yes. It’s very helpful. I comprehend that it’s kind of exciting and sounds like your platform is somewhat of an enabler for AI in healthcare which would be great. So those are all my questions. I appreciate it. Thanks.

Thank you very much, Bill.

This concludes our question-and-answer session. I would now like to turn the call back over to Mr. Francois Michelon for closing remarks.

Well, thanks very much. Really what I want to say is thanks most of all to our team, all the people on our team, our engineers, scientists, patent specialists, clinical advisors who keep our photo and thermo-acoustic technologies evolving. A sincere thanks to you and our investors. Certainly we could not have gotten this far without us. And lastly if we weren't able to address some of your questions on the phone, please reach out to either Chris Tyson at MZ Group or myself directly and we'd be very happy to follow-up individually with you. Until then, we look forward to speaking with you on our upcoming Q1 2018 financial results call and wish you all a very good evening. Thank you again. Operator?

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.