HeartBeam, Inc. — Q2 2023 Form 10-Q
Business context and period: This unaudited quarterly report covers the three and six months ended June 30, 2023. HeartBeam is developing ambulatory ECG products using its patented Vector Electrocardiography technology. Its products have not received FDA marketing clearance, and the company reported no revenue.
Financial results and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Operating expenses | $3.312 million | $3.535 million | $7.468 million | $5.683 million |
| Operating loss | $3.312 million | $3.535 million | $7.468 million | $5.683 million |
| Net loss | $3.154 million | $3.525 million | $7.290 million | $5.671 million |
| Net loss per share | $0.16 | $0.43 | $0.52 | $0.70 |
Amounts are in U.S. dollars; financial statement amounts above are shown in millions. No revenue or gross margin was reported, so revenue-based margin measures are not meaningful. Q2 operating expenses fell 6% year over year and net loss narrowed 11%; for the first half, operating expenses increased 31% and net loss widened 29%. First-half G&A rose 34%, primarily from noncash stock compensation and commercial-team transition costs; R&D rose 28%, mainly due to first-quarter development-provider, headcount and other costs. Q2 R&D declined 15% year over year.
At June 30, 2023, cash and cash equivalents were $17.401 million and short-term investments were $3.939 million, totaling approximately $21.3 million. Total assets were $21.632 million, current liabilities and total liabilities were $0.570 million, and stockholders’ equity was $21.062 million. The filing reports no debt outstanding at quarter-end. First-half operating cash use was $7.137 million; investing cash use was $3.939 million, reflecting purchases of short-term investments; financing provided $24.883 million. Short-term investments were scheduled to mature in September 2023.
Material changes, outlook and risks
- The company raised approximately $24.8 million net from equity issuance during the first half, including $23.2 million from a placement and $1.1 million from a registered direct offering. Common shares outstanding increased from 8.0 million at year-end 2022 to 26.0 million at June 30, 2023. The filing also describes an ATM facility with approximately $11.0 million available at quarter-end.
- Management said existing cash and short-term investments were expected to fund operations for the next 12 months following issuance of the financial statements, based on current plan assumptions and expected cash burn. Management expected no material commercial revenue in 2023 and said future operations depend on access to additional capital, strategic relationships and/or revenue; availability on acceptable terms is not assured.
- HeartBeam filed a 510(k) submission for its AIMIGo device in May 2023 and requested an FDA pre-submission meeting for software intended to synthesize a 12-lead ECG. The company plans a further 510(k) submission following that meeting. It withdrew the 510(k) application for its AIMI emergency-room product to focus resources on AIMIGo. FDA clearance, timing and commercialization remain uncertain.
- A $1.7 million device-cost-reduction project with Triple Ring Technologies remained open, with $0.8 million of commitment remaining at June 30. In July, shareholders approved increasing shares authorized under the 2022 Equity Incentive Plan from 1.9 million to 5.9 million. The August peer-reviewed VECG publication was a subsequent development, not a Q2 operating result.
- The company disclosed material weaknesses in internal control over financial reporting, including inadequate documentation and review processes, limited complex-GAAP expertise and insufficient staffing for segregation of duties. Management concluded disclosure controls were not effective as of June 30 and described remediation efforts.
Key investor verification points
- Confirm FDA review status, required clinical evidence, clearance timing and the milestones for both AIMIGo submissions.
- Track cash burn against management’s stated 12-month funding estimate, including the remaining Triple Ring commitment and any further financing needs.
- Assess the dilution and potential share supply from the substantial 2023 equity issuance, available ATM capacity, warrants and expanded equity-plan authorization.
- Monitor progress in remediating the disclosed control weaknesses and whether future filings report effective controls.
- Verify whether the company generates commercial revenue and whether its VECG technology and products achieve the stated clinical and market objectives.