Company: NDRA
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110887
Chunk: 262

Company: ENDRA Life Sciences Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part II, Item 1A
Chunk 262
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0 Act because, on a consolidated basis with respect to wholly-owned subsidiaries but otherwise on an unconsolidated basis,
no more than 45% of the value of the Company’s total assets (exclusive of U.S. government securities, shares of registered money
market funds under Rule 2a-7 of the 1940 Act, and cash items) consists of, and no more than 45% of the Company’s net income after
taxes (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered
money market funds under Rule 2a-7 of the 1940 Act, securities issued by employees’ securities companies, securities issued by qualifying
majority owned subsidiaries of the Company, and securities issued by qualifying companies that are controlled primarily by the Company.

23

Cryptocurrency and other digital assets, as well as new business models
and transactions enabled by blockchain technologies, present novel interpretive questions under the 1940 Act. There is a risk that assets
or arrangements that we have concluded are not securities could be deemed to be securities by the SEC or another authority for purposes
of the 1940 Act, which would increase the percentage of securities held by us for 1940 Act purposes. The SEC has requested information
from a number of participants in the digital assets ecosystem, regarding the potential application of the 1940 Act to their businesses.
For example, in an action unrelated to the Company, in February 2022, the SEC issued a cease-and-desist order under the 1940 Act to BlockFi
Lending LLC, in which the SEC alleged that BlockFi was operating as an unregistered investment company because it issued securities and
also held more than 40% of its total assets, excluding cash, in investment securities, including the loans of digital assets made by BlockFi
to institutional borrowers.

If we were deemed to be an investment company, Rule 3a-2 under the
1940 Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be
engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than
that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the company’s business
activities and an appropriate resolution of its board of directors. The grace period is available not more than once every