Good day, and welcome to the ENDRA Life Sciences’ Third Quarter 2018 Conference Call and Webcast. Today’s conference call is being recorded. At this time, I would like to turn the conference over to Chris Tyson, Managing Director at MZ North America, ENDRA Life Sciences’ Investor Relations firm. Sir, please go ahead.

Good afternoon. I’d like to thank you all for taking time to join us for ENDRA Life Sciences’ third quarter 2018 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 product updates and operational milestones, while David will discuss the financial results. A press release detailing these results crossed 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 then any forward-looking statements that we make only apply as of today’s date 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 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 a more supporting industry information. At this time, I’d like to turn the call over to Francois Michelon. Francois, the floor is yours.

Thank you, Chris. And welcome everyone to ENDRA Life Sciences’ third quarter 2018 financial results conference call. The third quarter of 2018 demonstrated progress on the development of our first Thermo-Acoustic Enhanced Ultrasound product, growth of our intellectual property portfolio and positive progress on our Health Canada human study application. In October, we were thrilled to finally receive health Canada’s authorization to kickoff our human study. Comparing our TAEUS technology to an MRI baseline of liver fat in 25 volunteers. We've recruited study volunteers. The study is underway. The data collection is going well. And we plan to provide an update on the study no later than December of this year. Mike Thornton, ENDRA's CTO will provide more details in a few minutes. I want to take a moment to remind investors of ENDRA's business goals and how they apply to this human study. ENDRA's overarching goal is to broaden access to better healthcare through the enhancement of safe cost effective and broadly available ultrasound. Our first step towards this goal is the development of a practical and rigorous diagnostic tool for the epidemic of non-alcoholic fatty liver disease or NAFLD, which affects over 1 billion people globally. NAFLD is a big problem, but no practical tools for diagnosis and surveillance. This is a metabolic disorder in which fat accumulates in the liver, driven by lifestyle and obesity, diabetes, hepatitis, and certain drugs. NAFLD is often asymptomatic but can progress to inflammation, also known as NASH, scarring also known as fibrosis and eventually cell death or cirrhosis and cancer. There is no accepted blood test for NAFLD, currently, magnetic resonance imaging known as MRI and surgical liver biopsy are the only accepted procedures for accurate assessment of fat depositions in the liver at low levels. When NAFLD can be reversed…

Thanks Francois. As Francois mentioned, we received Health Canada’s Investigational Testing Authorization, also known as an ITA to conduct human studies with ENDRA's TAEUS clinical system targeted NAFLD. The ITA application was reviewed under a Class II designation and the study is being conducted in collaboration with the Imaging Laboratories at Robarts Research in London, Canada. The four key objectives of the first human study with our fatty liver imaging TAEUS technology are first determined a number of anatomical sites at which successful thermo-acoustic data measurements can be made from serial acquisitions. Second, obtain quantitative fat MRI sequences for each subject in this study to establish a true measure of liver fat content and to determine the correlation between fat measures obtained by the TAEUS device and those obtained from quantitative MRI. Third, insight into the sensitivity of thermo-acoustic liver fat assessment with the aim of detecting fat content and liver at 15% or less by volume. Fourth and finally, obtain critical insight into workflow and ergonomics for our fatty liver TAEUS device that will inform our product development and provide human factors data for our CE regulatory submission. This study is progressing well and to-date we've completed scanning for eight volunteer study subjects. We're on target to complete data acquisition in November. Once we've completed the data collection, will be able to test several of our methodologies for fat quantification. This process will involve adjustment of algorithm parameters, review of raw data and statistical analysis. In some cases, we may choose to rescan some of those study participants if we find the data collected was obstructed or rejected due to motion artifacts, this is a normal part of testing new technology. We're excited about this first of several human studies and will provide a study update in December. Now…

Thank you, Michael. I will now provide a summary of our reported third quarter 2018 financial results. We did not generate any revenue for the three months ended September 30, 2018, as compared to $287,000 of revenue for the comparable period in 2017, when we earned revenue from the sale of a Nexus 128 system. Our operating expenses increased to $2.4 million in the third quarter of 2018, up from $1.1 million for the same period in 2017. The increase in operating expenses was due primarily to increased research and development expenses related to the development of our TAEUS product, and increased general and administrative costs. As well during the quarter, we incurred an expense of approximately $300,000 for the impairment of inventory related to our Nexus 128 product line. Our net loss for the three months ended September 30, 2018 was $2.8 million or $0.70 per basic and diluted share as compared to a net loss of $910,000 in Q3 of 2017. Noting that approximately $1.1 million of the third quarter 2018 loss was due to non-cash compensation expenses related to stock option and warrant issuances. Our cash balance as of September 30, 2018 was approximately $640,000, as compared to approximately $2.2 million as of June 30, 2018. During the quarter, we used approximately $1.5 million in cash, which again was due mainly to continue development of the TAEUS product. Our spending remains on budget and on track with our internal projections. Subsequent to the quarter ended, we raised $3.1 million from the sale of 1,477,750 shares of common stock. The sale was completed at $2.10 per share and without the issuance of warrants to the purchasers. Although, we priced our offering on an unforeseen market downturn, we were pleased with the demand for our shares and for the subsequent appreciation in our share price and trading volume. We were also encouraged that multiple high quality institutional and retail investors participated in the transaction. As the market remains choppy and unpredictable, we are continually evaluating our capital needs in real-time to ensure adequate capital to support our clinical, regulatory and operational activities. And we'll continue to do so as we prepare for EU commercialization. As has been emphasized before and in summary, we believe the combination of our asset-light operating model and continued effective and efficient use of cash will position ENDRA to commercialize our TAEUS liver product in the European Union as scheduled. I will now turn the call back over to Francois. Francois?

Thanks David. Just briefly to summarize, as we now move towards the close of the fourth quarter of 2018, believe ENDRA’s position to deliver key milestones for ENDRA’s fatty liver application in 2018 and 2019, including our first human study completed by December, 2018 contributing safety and human factors for our CE mark application. Pre-commercialization awareness building the key industry conferences in Q4, 2018, quality management system implementation to support ISO certification and CE mark in the first half of 2019 and commercial launch of the TAEUS liver device in Europe in the first half of 2019. As evidenced by the recent positive developments in the liver disease and therapy landscape and based upon our conversations at industry trade shows. We continue to believe a diagnostic tool at the earliest stage of liver disease, NAFLD. Strategically positions ENDRA for substantial adoption, once human data is achieved and CE mark is granted. We look forward to speaking with investors and analysts at our upcoming investor and industry events in the months ahead. At this time, I'd like to open up the call to questions. Operator?

Thank you. At this time, we’ll now be conducting a question-and-answer session. [Operator Instructions] And thank you. Our first question comes from line of Brooks O’Neil with Lake Street Capital Markets. Please proceed.

Hi Brooks. Brooks O’Neil: Good afternoon, how are you, Francois?

Great to have you. Thanks for joining. Brooks O’Neil: Sure. So I was hoping you talked quite a bit about, the steps you're taking with the CE mark effort and getting regulatory approval for the European Union. Could you just help us to understand your assessment of the size and the attractiveness of the European market as well as the steps you need to take to get approval in the United States and sort of how you assess the market opportunity in the U.S.?

Sure. Thanks. I'll speak first to the European market opportunity. The reason we're going to Europe, first is multifold. Number one, if you look at our investor presentation, our addressable market in terms of ultrasound units on the ground in use that we could target and sell to is actually higher than in the U.S. We have about 78,000 estimated ultrasounds in the European Union alone. Number two, the regulatory path as many of you know, for the CE mark, while rigorous is mostly a safety designation and therefore slightly easier, I would say, than the 510(k) in the U.S., which is an efficacy designation. So that's another benefit. Thirdly, the reason we're going to Europe, there is a larger share of radiologists using ultrasound in Europe than in the U.S. where very often there are highly skilled technicians and scenographers. And for a small company that wants to establish a foothold, develop evaluation sites, having most of those early adopters and users and eventually publishers. Being radiologists is we believe, highly credible compared to perhaps relatively scenographers. And so that's really our third reason for going. Mike, if you're on the phone, perhaps you could speak a little bit to sort of a CE versus 510(k) and what we're thinking about there in terms of predicates and any other thoughts you might want to share.

Yes, thanks Francois. Thanks for the question. So there are a lot of parallel requirements between CE and FDA. So for instance, we mentioned our ISO 1345 audit and certification, that's going to be required for both submission. So it’s not like we're serially doing these. There are some of the efforts in parallel. As Francois mentioned, typically, the FDA submission, is a little bit more rigorous and typically requires a more clinical data. So we'll be conducting some clinical studies in addition to the one we have underway now. And we're looking forward to putting together the FDA submission shortly after our technical file for EU submitted. So they shouldn't fall too far further in time. Brooks O’Neil: Thank you.

Brooks, just to be a little more specific, we've committed to getting the CE mark in the first half and submitting shortly thereafter our application to the FDA for 510(k). Our understanding is that typically a Class II designation for 510(k) type of product like ours. It takes about 178 days. So we would foresee having on average a commercially approved product in the U.S. by the end of 2019. I hope that helps answer your questions. Brooks O’Neil: It does. That was extremely helpful. It would also help if you could clarify, I'm guessing that the work you're doing in Canada is perfectly applicable to both the CE mark application and the 510(k) submission. But could you just clarify what the requirements will be? Mike mentioned a couple more studies as well.

And Mike, please go ahead, Mike.

Sure. I was just going to say that they're depending on the way the submission is written and what the predicate devices are, that are being used for the 510(k). You may not need clinical studies for the FDA. It just helps to support the application. So it's not an absolute requirement. It's something we'd like to include, to just strengthen the application because it is a new technology.

And Mike – and Brooks, if I might just add, I think to underscore what we said on the last call, there are some things coming from this clinical study that are going to directly contribute to the CE mark. The human factors elements in terms of workflow and use of the product are an important element that we are going to refine and that will be needed for the CE application. And certainly as Mike has mentioned, a lot of the safety testing that went into our application for the Canadian study will be largely repurposed and therefore it was a very good investment for the CE application. So we think that there are several components of the Canadian study that will contribute and can be leveraged for CE and for 510(k). I hope that's helpful. Brooks O’Neil: Yes, that's very helpful. Thank you very much. Keep up the good work.

Thank you so much, Brooks.

Thank you. Our next question is coming from the line of Kyle Bauser with Dougherty & Company. Please proceed.

Hi, Kyle.

Hi everyone. How are you? Can you hear me okay?

Yes, sure can. Thanks for joining.

Absolutely. Congratulations on extremely productive quarter here on the IP on clinical, getting going in Canada, obviously building awareness and just kind of inching closer to commercialization. But I can – maybe I'll just ask a little bit of a follow-up from Brook’s question. So sounds like you're going to do some subsequent clinical studies that may or may not contribute to the FDA submission. The current study in Canada, 25 patients, it sounds like the turnaround time is very quick. You've already got kind of done there. What should we think about for sample size for some of these subsequent clinical studies and endpoints that would help support 510(k)'s submission?

Sure. I can take that question. So the 25 I’ll just clarify they’re volunteers otherwise not indicated for any liver disease. We would like to first of all expand to patients that that's and people who are have been triaged as having liver disease and NASH. So we would like to expand to that and obviously 25 is very small sample size. Looking to add studies and as our partners in research are amenable to grow the numbers. Obviously, wouldn't we have a CE marking some of the earlier sites we'll obviously publish and contribute to the published data pool of results in comparison against established results. I’m sorry, did I miss part of your question?

No, it sounds like, the volunteers, obviously sample size perhaps little bit larger and it sounds like maybe some of the endpoints would be pretty similar to what you're doing now. But kind of evolved and think of potentially other favorable ones that you could add to the subsequent one…

Sure. We'd like to demonstrate clear sensitivity advantage over the existing point-of-care techniques. And we feel like the comparison against MRI is critical because it is the excepted, I’ll call gold standards in the field. I know we talked about biopsy a lot. There's a lot of variation in how pathologist report results, but MRI has narrowed. So that all the vendors have applications that report fatty liver and they seem to have a widespread agreement between different systems. So that's where we're putting our focus.

Okay.

Kyle. Yes, Francois here. If I might just piggyback on what Mike was saying, it's important that investors think of this first human study, not as a binary event like a pharmaceutical trial. It works or it doesn't work. As I think Mike articulated on his earlier comments, we're looking to learn a lot about workflow, clinical placement, the quantitative abilities, several things. And this is really the first study comparing our technology versus the gold standard MRI. But we do look naturally to have several other studies going forward in Europe and the U.S. to both enlarge that data set of volunteers as well as continue to learn and compare it frankly to other potential entrants and products that we believe are inferior, that I won't name on today's call but that are routinely used because there's nothing else out there. And so I think it will be important for us to build our data and demonstrate the superiority of our TAEUS technology. So it's really, it's going to be a process over time. We're going to continue to build out as we commercialize next year. Kyle, with early adopters sites, further clinical publications and use. And we look forward to building a very rigorous base of data for humans. So, we're excited about Canada, but there's a lot more to come.

Yeah. Now that makes sense. Kind of get this data done that will help support clearance and commercialization and then generate additional clinical awareness to kind of get those early adopters, late majority onboard later on. So that makes sense. And then just final question, if I may, you've been doing a lot of awareness in showcasing TAEUS and you were recently in Geneva. Can you talk just about the feedback you're hearing both on an NAFLD but also just on potential further applications beyond this initial opportunity in anything, clinicians are saying about that.

I think I'll just reaffirm a couple of the comments that I made in my opening comments and then I'll turn it over to Mike as well. But these meetings for us starting at EASL in Paris in the spring September, the NAFLD conference, which was really focused on fatty liver with hematologists and subsequent conversations we've had just continue to confirm the need to identify and quantify fat in the liver, at the earlier stages. Why? Because it becomes toxic. It leads to that NASH, it leads to fibrosis and cirrhosis. And so if we're able to quantify cheaply, easily, safely with an ultrasound tool such as ENDRA's, it allows hepatologists and radiologists to intervene early, potentially reverse it and certainly monitor the efficacy of therapies that they're applying and that are coming online as we've discussed from the pharmaceutical world. So the appetite for NAFLD is there. There's a lot of interest naturally in NASH, I think NASH is a bit of a, I would say, an easier target because it's fatty-liver with inflammatory markers. And so there's a lot of work there, but we think that that entry point at the earlier stage of liver disease NAFLD is the sweet spot, that, that we're targeting for all the reasons I mentioned. And we think we're unique in that capacity. Mike, what feedback and what other research did you hear about it at the conference in Geneva that you like to share?

Yeah, I think, first of all, it's a great question, Kyle. In fact just socializing the idea that we're going to be quantifying fat and liver has brought up discussion about other tissue types and other organs where fat accumulation indicates the progress of a disease or onset or grade. So, we're still learning a bit about some of these other diseases. They're not specifically in the liver space, but, a couple of these applications are potentially a commensurate in terms of the analysis techniques that we're applying to liver. They would be very similar for analyzing fat in these other tissue types. Lot of the feedback that we received was that there was a real need that providing a patient with a number and the fact that, lifestyle and diet greatly affect and can reverse fatty liver disease. This is a key point that fatty liver disease is a reversible condition. So, providing a patient with a number gives them something to work towards. It's very hard in just grading it with ultrasound saying, well, you have some significant accumulation of fat because we detect it, but then when they come back you can't tell them whether what they're doing is working or not. So that's where physicians are really excited and that you can affect patient behavior and ultimately outcomes. And that's what excites us.

One more point that I think is interesting from a commercial perspective. We're targeting two primary clinical segments, radiologists and hepatologists, and it's become clear, although it's pretty intuitive once I say it, but it's become clear that radiologists are really comfortable using ultrasound, but they don't know that much about the liver per se because you can't do that much in terms of diagnosis or treatment of liver disease with the ultrasound. So we're going to have to educate radiologists on the new abilities that they're going to have with our technology regarding the liver. Hepatologists are coming at it from the other end of the spectrum, they are liver specialists, but because you for the same reason I just mentioned you can't – because you can't do a lot on the liver with ultrasound today they're not big users of ultrasounds. So we're going to have to train them more not on liver disease but on the use of ultrasound and so from a commercial messaging and go to market perspective, it's really helpful to segment the market and understand what we have to appeal to for each of those segments. I hope that's helpful also.

Yeah, that's very helpful. Thank you and thanks for the updates.

Thank you, Kyle. Operator, do we have another question.

Thank you. Our next question comes from the line of Michael Brcic with National Securities. Please proceed.

Hey Michael.

Just another company that I follow in NASH is Galectin Therapeutics and they’re talking about this thing called MBT, methacetin breath test on their ability to predict their sensation in compensated NASH cirrhosis. Is that something that's sort of the down the line from you or is that something that possibly could be.

So let me. Yeah, let me jump in and I'm going to turn it over to the brains of the outfit. Mike Thornton, but I've certainly seen some breath tests and they involve ingesting a pharmaceutical compound and then monitoring the exhalation and the metabolizing of that compound. I've only seen activity in the NASH area of liver disease, which would be downstream and more advanced than NAFLD. I think part of the reason, and I'll ask Mike again to confirm this, but those inflammatory markers of NASH, I believe, provide a bigger opportunity for identification of certain things, be it through a blood test or an exhalation product. Michael, what do you know about that?

Yeah. And thanks for the question. So like you, I've read a bit about it and not specifically related to Galectin but a by company that's developing the technology. It's interesting science, I think it's kind of complicated because it requires a diagnostic to be ingested and metabolized and then, as I understand the mass spectrometer to analyze the exhalation product. So, it's pretty complicated in its regulatory path. Is going to be a quite complicated, but we're going to stay on in parallel with the technology to see where it goes.

Yeah. So Mike, Michael, I think in summary, I think there are lots of things in the pipeline, but that particular technology along with blood tests to our knowledge are primarily focused on NASH, which I believe reinforces our position here. We'll never say never in NAFLD, but to our knowledge there aren't any fatty liver, blood tests or exhalation products. And so, I think we're well positioned to continue to progress on this path. And I also mentioned to everyone that this is really our first application. So, the liver is a big market. We think there's a big unmet need, but I want investors to continue to think a little bit around the corner for ENDRA. And beyond the liver we believe there are additional entirely new businesses, as I mentioned, with tissue temperature change, monitoring for guidance of surgery and other applications that we point to in our investor deck. So thank you Michael for that leading question.

Correct? I think I've asked this before, but there's no reason for this not to apply to ASH as well, right?

So NASH is inflammation of the liver from fat. So technically, you still have that fat in your liver, but now the more concerning condition is the inflammation, but technically you're right, we could contribute to that in terms of measuring how much fat is in the lever of a NASH patient, I think it's just compounded by the inflammation. Mike, any, any additional thoughts on the NASH usage?

Absolutely the Pharma’s that we've spoken to, they are absolutely interested in monitoring the fat along with the inflammation markers because an efficacy of a drug should show reversal in both indexes inflammation markers and fat content.

Thanks, Michael

And Michael. As always, appreciate your call and really appreciate everyone's interest and excellent questions. Operator, if you don't have any more caller's, perhaps we can close the call.

Thank you. We have no further questions in queue at this time allow me to hand the floor back over to Francois Michelon for closing remarks.