HeartBeam, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. The company is a development-stage cardiovascular diagnostics business developing remote ECG and cardiac monitoring products. Its products were not yet FDA-cleared, and the filing reports no revenue.
Financial highlights
Amounts below are in thousands of dollars, except per-share data.
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| General and administrative expense | $1,793 | $312 | $3,208 | $446 |
| Research and development expense | $1,742 | $25 | $2,475 | $54 |
| Total operating expenses | $3,535 | $337 | $5,683 | $500 |
| Net loss | $(3,525) | $(945) | $(5,671) | $(1,155) |
| Basic and diluted loss per share | $(0.43) | $(0.26) | $(0.70) | $(0.31) |
| Operating cash used | Not presented quarterly | Not presented quarterly | $(4,268) | $(424) |
- Liquidity: Cash and cash equivalents were $9,274 at June 30, 2022, down from $13,192 at December 31, 2021. Prepaid expenses and other assets were $464; total assets were $9,738.
- Liabilities and equity: Total liabilities were $770, consisting of accounts payable and accrued expenses. The balance sheet reports no outstanding debt at June 30, 2022. Stockholders’ equity was $8,968; accumulated deficit was $14,895.
- Cash flows: Financing provided $350 during the first half of 2022, primarily from the private placement and option exercises. Cash decreased by $3,918 to $9,274. The filing reports no quarterly cash-flow figures.
- Margins: Not meaningful because the company reported no revenue.
Changes versus prior comparable periods
- Q2 operating expenses increased $3,198 (949%) year over year; first-half expenses increased $5,183 (1,037%). Management attributed the increases mainly to higher staffing and public-company/business-development costs in G&A, and development work with LIVMOR and Triple Ring in R&D.
- Q2 net loss widened by $2,580 to $3,525; first-half net loss widened by $4,516 to $5,671. Prior-year interest expense related to convertible notes was absent in 2022 because those notes converted into common stock in November 2021.
- First-half operating cash use rose to $4,268 from $424 in 2021. The company raised $348 in a February 2022 private placement of common stock and warrants.
Outlook, risks, and notable items
- Going concern: Management stated that existing cash was insufficient to fund operations for the 12 months following issuance of the financial statements, raising substantial doubt about the company’s ability to continue as a going concern. Continued operations depend on obtaining additional capital, strategic relationships, or revenue; no assurance was given that funding would be available on acceptable terms or at all.
- Product and regulatory outlook: HeartBeam was preparing for FDA submissions for its ED product, HeartBeam AIMI, and telehealth product, HeartBeam AIMIGo. The filing described an AIMI 510(k) submission target in late 2022 and AIMIGo submission in late 2022, with clearance anticipated in early 2023. These are plans, not assured outcomes.
- Commitments: The LIVMOR agreement included a $1.0 million 2022 commitment, accepted by June 30; $0.9 million was expensed as R&D and $0.1 million recorded as prepaid. The Triple Ring agreement included approximately $2.0 million of commitments through November 30, 2022; $0.8 million had been expensed and $0.1 million was accrued at June 30. On August 2, the company paid an additional $200,000 for LIVMOR source-code access and reported that related licenses would become perpetual, non-exclusive, royalty-free, and fully paid-up.
- Other risks: The company cited dependence on future financing and product development, FDA clearance, competition, and possible ongoing COVID-19 effects on operations and liquidity.
- Controls: Management concluded disclosure controls and procedures were not effective at June 30, 2022 due to material weaknesses, including inadequate documentation and review processes, limited GAAP expertise for complex reporting, and insufficient staffing and segregation of duties. Remediation efforts were ongoing.
- The filing reported no material legal proceedings. No tax provision was recorded.
Important facts for investors to verify
- Whether HeartBeam can raise sufficient capital to fund operations beyond the stated cash runway and address the going-concern uncertainty.
- Actual cash burn, remaining LIVMOR and Triple Ring commitments, and any additional financing or partnership needs.
- Progress and timing of FDA submissions and clearances for AIMI and AIMIGo, and whether expected launch and revenue timelines remain achievable.
- Remediation of the disclosed internal-control material weaknesses and whether controls become effective.
- Potential dilution from outstanding options and warrants; the filing reported 3,908,276 warrants outstanding at June 30, 2022.