Hello everyone and welcome to this ENDRA Life Sciences First Quarter 2020 Earnings Conference Call. During today's prepared remarks all phone participants will remain in a listen-only mode but later you will have the opportunity to ask questions.As a reminder today's conference is being recorded. And to get us started with opening remarks and introductions, I am pleased to turn the floor to CFO, Mr. David Wells. Good afternoon Mr. Wells.

Thank, Jim. Good afternoon and welcome to ENDRA's first quarter 2020 business update and financial conference call. We issued a press release this afternoon. For those of you who don't have a copy of the release, you can access it in the Investors section of our website at www.endrainc.com.Before we begin, please note that today's presentation includes forward-looking statements. All statements other than statements of historical facts, including statements regarding our strategies, financial condition, operations, costs, plans and objectives, as well as anticipated results of our development and commercialization efforts and the timing for receipt of required regulatory approvals and product launches are forward-looking statements. Except as otherwise required by federal securities laws, the company disclaims any obligations or undertaking to update or revise any forward-looking statements.Please refer to our Form 10-K for the 2019 fiscal year filed with the SEC to get a better understanding of the risks and uncertainties related to forward-looking statements.I will now turn the call over to our Chairman and Chief Executive Officer, Francois Michelon. Francois?

Thank you, David. Good afternoon, everyone. And thank you for joining us today to review ENDRA’s first quarter 2020 performance and 2020 business update. Along with David and me on today's call are Renaud Maloberti, Chief Commercial Officer; and Michael Thornton, ENDRA's Chief Technology Officer.Let me quickly go through today's agenda. First, I'll highlight our recent achievements and David will review financials. Then I’ll provide an update on our key milestones and expectations for 2020, followed by Renaud who will provide additional commentary on commercial activities with a focus on Europe. And finally we'll open the call for Q&A.Before I begin, I want to acknowledge all the people who are dealing with COVID-19 as a patient, parent, a family member or friend, our thoughts and well wishes are with all of you and our particular appreciation goes out to the frontline caregivers providing help to those in need.On a corporate level, David will detail proactive actions we've taken to align the company's structure with this environment while also ensuring our ability to bring the TAEUS system to market in 2020.Right now I'd like to discuss the company's progress during the quarter on our stated 2020 objectives and commercial milestones.For those who may not be aware of ENDRA's story we are the pioneer of Thermo Acoustic Enhanced UltraSound known as TAEUS. TAEUS will allow clinicians to visualize tissue in ways similar to an MRI but at 50 times lower cost at the point of patient bedside. ENDRA's goal is to develop clinical applications for the TAEUS technology in areas of high unmet clinical need and our initial focus is on helping the more than 1 billion people globally affected by Non-Alcoholic Fatty Liver Disease known as NAFLD; and Non-Alcoholic Steatohepatitis, known as NASH, where there's an acute need for a practical…

Thank you, Francois. I will now provide a summary of our reported first quarter 2020 financial results. Our operating expenses increased to $3.1 million for the quarter ended March 31, 2020, up from $2.7 million for the same period in 2019. Our research and development spending decreased year-over-year by $255,000, while our sales and marketing costs increased $214,000 for the quarter. Our general and administrative costs were up by $551,000, due to employment related costs, including non-cash expenses for stock compensation, additional spending on costs associated with being a publicly traded company, including Investor Relations, and increased cost for insurance.Our net loss for the quarter ended March 31, 2020 was $3.3 million as compared to a net loss of $2.7 million for the quarter ended March 31, 2019. Our net loss included non-cash charges, which totaled $817,000, comprising expenses for equity-based compensation, and amortization of debt discount. Our net loss per share for the quarter ended March 31, 2020 was $0.29 per basic and diluted share.Our cash balance as of March 31, 2020, totaled approximately $3.1 million, as compared to approximately $6.2 million as of December 31, 2019. The decrease in cash for the first quarter is the result of our spending for normal operations, costs associated with submission of key regulatory filings, as well as the purchase of inventory in preparation for the sale of TAEUS systems. We do not expect this elevated level of spend to persist for the remainder of the year.In fact, during the last call, I reminded our shareholders of the advantages of our asset-light operating model. This is especially relevant and advantageous now in the uncertain and challenging economic environment that we find ourselves. As Francois mentioned earlier, as COVID-19 pandemic has unfolded, ENDRA has taken preemptive actions to align the company's cost structure with this environment, while also ensuring our ability to bring the TAEUS system to market in 2020. These actions include for the remainder of 2020, implementing a cash salary reduction of 33% for the company's management team, and paying non-employee directors annual retainers in the form of restricted stock units instead of cash.We also submitted an application under the Small Business Administration's Paycheck Protection Program or the PPP. The application was approved. And on May 22nd of this year -- excuse me, on April 22nd of this year, we received the proceeds of this PPP loan in the amount of approximately $308,000.We continue to actively pursue and evaluate opportunities to strengthen our balance sheet and position our company for the exciting commercial growth opportunities that lie ahead. This includes the exercise of outstanding warrants, various market-based funding opportunities, strategic partnerships, as well as non-dilutive academic research brands.I will now turn the call over to Renaud. Renaud?

Thank you, David. Since joining ENDRA in May 2019, we have made great progress in building awareness and seeding the market for sales of ENDRA's TAEUS technology ahead of key regulatory approval. With that in mind today, I'd like to update investors on our European commercialization strategy and key progress. Immediately upon securing CE Mark approval, we accelerated our efforts to establish clinical evaluation reference sites in each target European markets, including Germany, France, Switzerland, and the UK. The purpose of these reference sites is to get the TAEUS technology into the hands of early clinical adopters who will serve as commercial springboards. We believe this go-to-market strategy is the fastest way to establish clinical usage, secure initial sales as well as achieve a faster sales ramp.On the last call, we indicated that we plan to deploy our CE Mark TAEUS liver systems to the selected evaluation sites beginning in the second half of 2020. We remain on track with this goal and anticipate starting our first EU evaluation site this summer. These evaluation sites in Europe and the U.S. will serve two very important purposes to support our commercialization efforts. First, these sites will help build our clinical evidence, human data with our TAEUS liver device. As we've mentioned before, old medical technologies need to have a strong base of data on which to build a compelling clinical value proposition. Second, these evaluation sites will also serve as regional reference and anchor sites with commercial concrete teams, allowing them to bring in new potential customers to see the product in clinical use.We also discussed our adapted approach to engage with our target audiences in a digital format to maintain a high degree of market awareness and grow our clinical relationship despite the reformatting of key clinical and industry conferences…

Thanks very much, Renaud and David. I'll wrap up the call before Q&A with the following key points looking forward into 2020:First, we remain laser-focused on two key milestones; ramping up commercialization activities in Europe; and finalizing our 510(k) submission to the FDA in the U.S. We look forward to providing investors with updates in the coming weeks and months as we make specific progress on both fronts. Second, as I mentioned in the Q&A of our last quarterly call, we've definitely seen an uptick in the strategic partners approaching ENDRA from the pharmaceutical and contract research organization sectors involved in the development of therapies for NAFLD and NASH. I don't want to overstate the progress of these partnership discussions, but I believe ENDRA’s technology is a natural fit for these companies who are seeking to drive efficiencies in their clinical trials while facing the same impracticalities as clinicians with liver biopsy and MRI to screen and monitor patients during the studies. A partnership with one or several of these companies makes perfect sense for ENDRA and would nicely complement our GE partnership with the ultrasound equipment side.With that, I'd like to open the call for questions. Operator?

[Operator Instructions]. We'll here first from the line of Brooks O'Neil with Lake Street Capital.

So, as always, I guess I'm trying to understand how you think about the speed to commercialization, both in Europe and ultimately in the U.S.? And how do you balance that against your rate of cash burn and obviously your available cash? Just trying to think forward through the rest of the year and kind of assess how these two key factors balance up?

So I think building on what David mentioned earlier in terms of our asset-light historical operating model, we're clearly ramping down the engineering spending as the product is finalized and carefully ramping up the commercial spending. So you're not going to see a net doubling per se of our spend with commercialization underfoot. That's one of the benefits of having partnered with service providers and engineering. And as David and Renaud have also mentioned, we're being very careful about timing, the build out of a small commercial team in Europe. So right now, to be very clear, we've got a great pipeline with some final candidates. But we don't have any people on our payroll sitting idly in Europe. We're carefully engaged with the evaluation sites that we're talking to. And at the right time, starting in June, we're going to start building out that small team. I anticipate it'll be four to five people in Europe. And that, as I mentioned, historically is for a couple of reasons. One, we want to control our destiny for the company and investors sake. And having a small team there carefully managing evaluation sites, pursuing commercial opportunities locally is something that we want to control. But it also allows us to be complemented by our partner GE Healthcare, as we've mentioned. And GE has been very generous in their sharing of customer information, and will continue to introduce us to ultrasound customers focused on the abdomen and the liver. And we believe that that'll help us manage our cost structure commercially in Europe in partnership with GE. I hope that's helpful in answering your question.

Very helpful indeed. So second question. I'm just curious how you view the COVID-19 impact on U.S. regulatory approval pathway and do you see that slowing things down at all? Or do you think you can continue to move forward more or less on schedule as you head towards U.S. approval?

Yes, I can tell you what we control in terms of our submission this quarter is certainly in hand and there's no issue as we've discussed, or impact us for the submission from COVID. I can't speak for the FDA, but the signals we're getting Brooks are positive. Medicare, as David mentioned, has referenced returning to elective procedures and those elective procedures are not cosmetic procedures. They're all the bread and butter operations, orthopedic joints, general surgery and many, many other procedures.So, I am seeing that opening up. We're certainly getting the same feedback from our U.S. and European evaluation sites. And I have to imply, since I have not seen otherwise that the FDA is also remaining efficient in that regard and not being impacted or be focused, if you will, from game changing technology like ENDRA. So I remain confident that we will file the 510(k) in the U.S. in June and that will, according to historical timelines, position us to get approval by the end of the year in November. I hope that's helpful.

Yes, it's very helpful. And then the last question I had is, obviously, we see the value of the GE partnership, they have a huge brand organization in place. Can you begin to speculate on how you might envision the relationship extending beyond the deadline of the current agreement?

Yes, I think to be fair to both of us, what we have in hand already with them is what we need to focus on initially in terms of building out carefully the target markets working with a local GE teams. We are in regular contact with the global GE Healthcare teams. They've been very generous, as I said, in terms of introductions. But they've also provided us with demo systems and other ultrasound capital that are very helpful to a small company and further support our capital efficient process so that we don't have to invest in that. So without dodging the question Brooks, I think the best path to success and enlargement of a relationship and a contract with GE or other partners is proving that we're very successful executing this commercialization plan in the second half with GE's help. And I think that will prove to all parties and others who may be sitting on the sidelines that this product is indeed as attractive as we believe. So I hope that's helpful as well in answering the question.

Next, we'll hear from the line of [Joe G. Michael] at [Catalytic]. Please go ahead. Your line is open.

Just one question really. So, I think I understand the commercialization process in Europe well, where you’re focused around the early adopters and centers of influences with these reference centers. Can you walk me through -- I'm going to make a leap of assumption here in the sense that you should have your 510(k) approval this year, what the commercialization strategy in the U.S. look like?

Yes. Great question. Frankly, it's very similar to what we're putting in place in Europe. With the -- I would say exception that we've already started, we'll have started the evaluation and clinical data in the U.S. through UPMC and Rocky Vista. To answer your question specifically, as we approach 510(k), we will build out a small commercial team here regionally with probably a similar number of commercial people five or so throughout the U.S. working locally with the evaluation sites. We have the two that I mentioned. Others are in the pipeline. And we have confidence that we'll be announcing those over the coming months. And we will cultivate commercially the next round of adopters around those evaluation sites. So having the clinical data in hand from UPMC, Rocky Vista and European sites, you can now imagine a small U.S. commercial team, Joe, leveraging those reference sites, leveraging that data and reaching out to our and GE shared ultrasound customer database and offering the TAEUS liver device to enhance the utility of ultrasounds in use today. That's really -- it's going to be a repeat in a efficient way of the model that we're taking to Europe. Does that answer your question?

Our next question will come from the line of Vernon Bernardino with H.C. Wainwright. Please go ahead, Vernon.

Hi, guys. Thanks for taking my question and congrats on the CE Mark approval. I'm sure that was a lot of hard work and seems earlier than expected there. Definitely like to get good surprises especially in this environment. So I just wanted to ask a few questions about the digital format. Just wondering if you could provide a little kind of detail, I assume perhaps you already have the videos already ready for that presentation.

And by the way, Vernon, yes, just to emphasize, this is a build-out. Leveraging our website is the main repository, but we're also very proactively engaging through our own CRM of now 3,500 clinicians and engaging them directly with this new content. But it's publicly available at endrainc.com. And you'll see there, new animations that simply explain to clinicians how the product which we show for the first time in real format in the video can be integrated seamlessly and easily in their -- the clinical practices. And you’ll also start seeing a number of videos and interviews that I think articulate in our own voice, mine to begin, the current progress on our plans as a company.

Okay. And will there be -- and other companies that I cover data often have these live cases. I'm sure you can't -- I mean that wouldn't be possible, especially in a situation where everybody is protected and the procedures, especially in small centers, not in hospitals. Where -- is that something, for example, that you got in the plan?

Yes, I think as soon as -- in the case of our product in Europe, it is CE approved, so we are approved to sell and market it. And as soon as we get our product into the reference sites that we mentioned on this call in Europe, in each key market -- and by the way, we have verbal approvals and agreements with several of those, we're finalizing the paperwork, then it's absolutely possible for us to demonstrate. We fully intend to have testimonials and to have video demonstrations of the product, which is non-invasive, which is very easy. You don't have to be in a special room like an MRI or surgery. There's really nothing outside of the COVID limitations that would prevent us from sharing that. And so, we certainly intend to build out more content so that clinicians and investors can see our product in use, both in the U.S. and in Europe.

Okay. And I see from some of these companies I follow in the U.S. that especially with their clinical trials, that they're able to continue although at a slower pace work as far as clinical trials are concerned in these non-hospital small centers. Now for these procedures with TAEUS FLIP, is the target in the U.S. and do you see that also as indication that's where you're going to see initial commercialization in Europe?

Yes. So our investor presentation shares our targets in terms of clinical segments, Vernon. First and foremost, the radiologists that perform currently upwards of 50 million to 70 million abdominal and liver ultrasound scans for other reasons, they can't measure fat the way we do, but they do that for sort of other reasons. So there's an established clinical practice. And those radiologists are typically in a hospital or small clinic setting. Second clinical segment are the gastro hepatologists. Those are the liver specialists. And frankly, in Europe, quite a few of them use ultrasound already, in the U.S. less so. But they've expressed enormous appetite to have tools, especially with the new therapies that are starting to come online with Zydus and others to be approved later this year, for a tool that would allow them to assess and screening patients and then monitor the progression of that therapy on those new drugs. Those gastro hepatologists are also in both hospital clinic and private practice settings. And we clearly have messaging and outreach and awareness of where those clinicians are.I will say to answer the other part of your question, we are getting signals from both hepatologists and radiologists in our network that facilities, small and large are starting to consider, and in some cases, return to elective procedures. And so, we have confidence that in June and July, we'll start placing our systems at those first evaluation sites and continue through the summer. It is going to be institution dependent, but we have very good feedback from the clinicians we're talking to. I hope that's helpful and comprehensive.

And one more question. Renaud, if I missed it, so you mentioned that Germany, Switzerland, UK, and I think there was one other?

And France.

France, okay. That makes sense.

Next we'll hear from Ascendiant Capital and the line of Mr. Ed Woo.

My question is more on the U.S. When you do get approval and you do target these reference centers, will you be targeting certain geography or will it be pretty broad-based depending on the centers?

Yes. So our criteria for selecting evaluation sites are several, but they're clear. One, they have to be a center of excellence in the liver and have clear influencers in those facilities that can help us in that regard. So we're not just picking any community hospital that happens to have an ultrasound. University of Pittsburgh Medical Center, as a leading example is a world class liver transplant and liver health facility. It's in the Mid Atlantic, in my hometown of Pittsburgh. And so that'll be a great anchor account there. Our goal is to place our systems in the same vein in Europe -- but your question is focused on the U.S., in regional centers of excellence with early adopters and leading clinicians. And so you can look forward to having other announcements in the U.S. likely spread out geographically to support that regionalized model that I mentioned, with around five commercial people in the U.S. on ENDRA's payroll. And I think that will be centered around naturally urban centers very often that have a large population and adjacent clinicians that we could sell to. But you'll see a regional diversification, liver centers of excellence, and most importantly, early adopter influencer clinicians who can help us develop the clinical value proposition and help us influence the next round of customers to buy.

Great. And then have you set a timeframe for how long these evaluation periods will last?

Yes, great question. So it depends on how many patients we're doing. But just to put it in perspective, we are not talking about a pharmaceutical length type of study that could last several years. Typically, in the case of these evaluation sites, they have patients already. And targeting 75 to 100 patients as a base target is something that can be achieved in six to nine months typically. We're doing also everything we can to facilitate that with the evaluations by providing [loaner] equipment of ultrasound when the evaluation site says that it could accelerate the scan so that they don't necessarily have to depend on radiology in the department. So GE has been very helpful in that regard. And to answer that question, I think six to nine months is a good rule of thumb for 75 patients. And I believe we'll have strong success in recruiting those patients, because clearly we've established those. The hepatologists and radiologists already have that pipeline of existing patients that they can use in the study. I hope that's helpful.

Thank you very much. And operator, I think that seems to be the end of the questions. So after this final thank you to the investors, we can wrap it up. But I appreciate everyone calling in, listening to our story and all the support we're getting from both the analytical community, the investors directly, and we remain very optimistic and we'll continue to inform you of our progress over the coming weeks and months. And look forward to speaking with all of you again on our next quarterly call. Thank you.

Francois, thank you. And on behalf of the rest of the leadership team, Michael, Renaud and David, we thank you all for joining today. You may now disconnect your lines and we hope that you have a good evening.