UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
HEARTSCIENCES INC.
(Exact Name of Registrant as Specified in its Charter)
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| ( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of March 16, 2026, the registrant had
HEARTSCIENCES INC.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements relate to our future plans, objectives, expectations and intentions and may be identified by terminology such as “may,” “will,” “should,” “expects,” “aims,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “intends,” or “continue,” or the negative of these terms or other comparable terminology. Readers are cautioned that these forward-looking statements are based on our current beliefs, expectations and assumptions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under Part II, Item 1A “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and those risks identified under Part I, Item 1A of our Annual Report on Form 10-K for the year ended April 30, 2025 filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 24, 2025 (the “2025 Annual Report on Form 10-K”). Therefore, actual results may differ materially and adversely from those expressed, projected or implied in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.
These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our device, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:
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our expectation regarding the sufficiency of our existing cash and cash equivalents to fund our current operations; |
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our ability to receive regulatory clearances for the MyoVista wavECG or the MyoVista Insights platform (“MyoVista Insights”), and associated AI-ECG algorithms from the U.S. Food and Drug Administration (the “FDA”), state regulators, if any, or other similar foreign regulatory agencies, including approval to conduct clinical trials, the timing and scope of those trials and the prospects for regulatory approval or clearance of, or other regulatory action with respect to our current products or other future potential products; |
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our ability to further advance the development of MyoVista Insights, or our ECG device agnostic platform and to develop and incorporate AI-ECG algorithms on that platform, or the MyoVista wavECG, our 12-lead electrocardiograph (“ECG”) device and to incorporate an additional proprietary AI-ECG algorithm that we have been developing to detect cardiac dysfunction following changes in the ASE guidelines for the assessment of LVDD, as well as other future potential products; |
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our ability to launch sales of MyoVista Insights, and AI-ECG algorithms, the MyoVista wavECG, or any future potential products into the U.S.; |
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our assessment of the potential of MyoVista Insights, and AI-ECG algorithms, the MyoVista wavECG device, and any future potential products; |
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our planned level of capital expenditures and liquidity; |
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our plans to continue to invest in research and development to develop technology for new products; |
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our failure to maintain the continued listing requirements of Nasdaq (as defined below) could result in a de-listing of our shares and penny stock trading; |
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the regulatory environment and changes in the health policies and regimes in the countries in which we intend to operate, including the impact of any changes in regulation and legislation that could affect the medical device industry; |
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our ability to meet our expectations regarding the commercial supply of our current products and any future products; |
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our ability to retain key executives; |
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our ability to internally develop new inventions and intellectual property; |
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the overall global economic environment; |
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the ultimate impact of health epidemics, on our business, our clinical trials, our research programs, healthcare system or the global economy as a whole; |
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the impact of competition and new technologies; |
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general market, political and economic conditions in the countries in which we operate; |
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our ability to develop new products and intellectual property; |
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changes in our strategy; and |
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potential litigation. |
These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise for any reason.
The Company will continue to file annual, quarterly and current reports, proxy statements and other information with the SEC. Forward-looking statements speak only as of the dates specified in such filings. Except as expressly required under federal securities laws and the rules and regulations of the SEC, we do not undertake any obligation to update any forward-looking statements to reflect events or circumstances arising after any such date, whether as a result of new information or future events or otherwise. You should not place undue reliance on the forward-looking statements included in this report or that may be made elsewhere from time to time by us, or on our behalf. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
NOTE REGARDING COMPANY REFERENCES
Throughout this Quarterly Report on Form 10-Q, the “Company,” “we,” “us” and “our” refer to HeartSciences Inc. References to “Fiscal 2026” refer to the 12 months ending April 30, 2026 and references to “Fiscal 2025” refer to the 12 months ended April 30, 2025.
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| PART I. |
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| Item 1. |
Condensed Unaudited Financial Statements: |
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| Condensed Balance Sheets as of January 31, 2026 and April 30, 2025 |
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| Condensed Statements of Operations for the three and nine months ended January 31, 2026 and 2025 |
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| Condensed Statements of Cash Flows for the nine months ended January 31, 2026 and 2025 |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
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| Item 4. |
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| PART II. |
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| Item 1. |
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| Item 1A. |
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| Item 2. |
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| Item 3. |
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| Item 4. |
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| Item 5. |
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| Item 6. |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Balance Sheets
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses | ||||||||
| Deferred offering costs | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Capitalized software | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued interest expense | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Current portion of notes payable | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Notes payable | ||||||||
| Operating lease liabilities, long-term | ||||||||
| Total long-term liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 2, 4-6, and 7) | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Series C convertible preferred stock, $ par value, shares authorized and designated; shares issued and outstanding as of January 31, 2026 and April 30, 2025. | ||||||||
| Series D convertible preferred stock, $ par value, shares authorized and designated; shares issued and outstanding as of January 31, 2026 and shares issued and outstanding at April 30, 2025. | ||||||||
| Common stock, $ par value, shares authorized; shares issued and outstanding as of January 31, 2026 and shares issued and outstanding as of April 30, 2025. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
Condensed Statements of Operations (Unaudited)
| Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
Condensed Statements of Stockholders' Equity (Unaudited)
Three Month Periods Ended January 31, 2026 and 2025
| Series C Convertible | Series D Convertible | Additional | Total | |||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholder's | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| BALANCE AT OCTOBER 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Conversion of Series D Preferred Stock to Common Stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of restricted shares to management | ( | ) | ||||||||||||||||||||||||||||||||||
| Warrants issued to non-employees | — | — | — | |||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| BALANCE AT JANUARY 31, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| BALANCE AT OCTOBER 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Sale of Common Stock, net of fees | ||||||||||||||||||||||||||||||||||||
| Stock based compensation - management & other employees | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| BALANCE AT JANUARY 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
HeartSciences Inc.
Condensed Statements of Stockholders' Equity (Unaudited)
Nine Month Periods Ended January 31, 2026 and 2025
| Series C Convertible | Series D Convertible | Additional | Total | |||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholder's | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| BALANCE AT APRIL 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Issuance of Series D Preferred Stock and Warrants, net of fees | ||||||||||||||||||||||||||||||||||||
| Conversion of Series D Preferred Stock to Common Stock | — | — | ( | ) | ( | ) | — | — | — | |||||||||||||||||||||||||||
| Issuance of Common Stock upon exchange of debt and accrued interest | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted shares to management | ( | ) | ||||||||||||||||||||||||||||||||||
| Sale of Common Stock under ATM facility | ||||||||||||||||||||||||||||||||||||
| Warrants issued to non-employees | — | — | — | |||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| BALANCE AT JANUARY 31, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| BALANCE AT APRIL 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Sale of Common Stock, net of fees | ||||||||||||||||||||||||||||||||||||
| Common Stock issued resulting from Reverse Stock Split | ( | ) | ||||||||||||||||||||||||||||||||||
| Warrants issued to nonemployees | — | — | — | |||||||||||||||||||||||||||||||||
| Stock based compensation - management & other employees | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| BALANCE AT JANUARY 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
Statements of Cash Flows (Unaudited)
| Nine Months Ended | ||||||||
| January 31, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt discounts and deferred financing costs | ||||||||
| Amortization - Right-of-use assets, operating lease | ||||||||
| Stock-based compensation | ||||||||
| Warrants issued to non-employees | ||||||||
| Changes in current assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid and other current assets | ||||||||
| Deferred offering costs | ( | ) | ||||||
| Capitalized software | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ( | ) | ( | ) | ||||
| Lease liability, operating lease | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Acquisition of intellectual property - intangibles | ( | ) | ( | ) | ||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Issuance of Series D Preferred Stock and warrants, net of issuance costs | ||||||||
| Issuance of Common Stock, net of fees | ||||||||
| Principal repayments on the $2.5M Streeterville Note | ( | ) | ||||||
| Proceeds from $3.6M Streeterville Note, net | ||||||||
| Repayments of financed insurance premiums | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents during the period | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS: | ||||||||
| Issuance of Common Stock for Series D Preferred Stock conversions | $ | $ | ||||||
| Issuance of Common Stock for exchange of debt and accrued interest | $ | $ | ||||||
| Issuance of restricted shares to management | $ | $ | ||||||
| Issuance of Common Stock resulting from the Reverse Stock Split | $ | $ | ||||||
| Financed insurance premiums | $ | $ | ||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
Notes to Condensed Unaudited Financial Statements
Note 1. Basis of Presentation
HeartSciences Inc. (“HeartSciences” or the “Company”) is a healthcare information technology company focused on advancing electrocardiography (“ECG” or “EKG”) through the integration of artificial intelligence (“AI”). The Company has developed MyoVista Insights™, a cloud-native, vendor- and device-agnostic ECG management platform designed to improve workflow efficiency, streamline data management, and support the deployment of third-party AI-ECG algorithms. MyoVista Insights is classified as a Medical Device Data System (“MDDS”) and is exempt from U.S. Food and Drug Administration (“FDA”) 510(k) requirements. HeartSciences has also developed the MyoVista® wavECG™ device, which provides conventional ECG functionality and is designed to host AI-ECG algorithms. The Company submitted the MyoVista wavECG device to the FDA for 510(k) premarket clearance in December 2025 and has licensed or developed additional AI-ECG algorithms that may be submitted for regulatory clearance in the future. The Company is a Texas corporation and is headquartered in Southlake, Texas.
On May 6, 2024, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Formation with the Secretary of the State of the state of Texas to effect a 1-for-
All Common Stock share and per share data, and exercise price data for applicable Common Stock equivalents, included in these financial statements have been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.
Note 2. Liquidity, Going Concern and Other Uncertainties
The Company is subject to a number of risks similar to those of early-stage companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the need to obtain additional capital, competition from larger companies, and other technologies.
The Company has incurred losses each year since inception and has experienced negative cash flows from operations in each year since inception. At January 31, 2026 and April 30, 2025, the Company had an accumulated deficit of $
In January 2026, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with Streeterville Capital, LLC, an accredited investor (“Streeterville”), pursuant to which the Company issued to Streeterville an unsecured promissory note in the original principal amount of $
On March 10, 2025, the Company commenced an offering on a "best efforts" basis for a maximum of up to
On September 18, 2023, the Company entered into an Equity Distribution Agreement (the “EDA”) with an institutional investor, pursuant to which the Company may offer and sell an aggregate of up to $
In March 2023, the Company entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) providing for the purchase, from time to time at the Company’s discretion, of up to $
Based on the Company’s forecasts and cashflow projections, management believes that current resources would be insufficient to fund operations to achieve commercialization. Additionally, the FDA can delay, limit or deny clearance of a medical device for many reasons outside the Company’s control which may involve substantial unforeseen costs.
Management’s plans include raising capital through the sale of additional equity securities, debt, or capital inflows from strategic partnerships. Management can provide no assurance that such financing or strategic relationships will be available on acceptable terms, or at all, which would likely have a material adverse effect on the Company and its financial statements.
The condensed unaudited financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern for a reasonable period.
Note 3. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and in conformity with the instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the U.S. Securities and Exchange Commissions (“SEC”) and have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. In the opinion of management, the unaudited interim financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. The interim operating results are not necessarily indicative of results that may be expected for any subsequent period. The accompanying unaudited condensed financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the 2025 Annual Report on Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The fair value of cash and cash equivalents approximates carrying value. At times, the Company’s cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”).
Inventory
All inventories are stated at lower of cost or net realizable value, with cost determined substantially on a “first-in, first-out” basis. The following is a summary of the Company’s inventories at January 31, 2026 and April 30, 2025:
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Sub-assemblies | ||||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| Reserve for obsolescence | ( | ) | ( | ) | ||||
| Total Inventory | $ | $ | ||||||
Inventory consists mainly of raw materials and components used in the current hardware build of the MyoVista wavECG devices and components are used for research and development purposes and device sales, which to date have been in international markets as sale of the MyoVista wavECG in the U.S. is subject to FDA clearance. Management believes that its hardware platform is in final form, however, prior to FDA clearance and market acceptance of the MyoVista wavECG, further hardware changes could be necessary which could have an impact on net realizable values. The majority of the Company’s current inventory is intended for use to build finished products following regulatory clearance. Finished products do not contain materials that would degrade significantly over the useable life of the device and are considered to have a useable life of over seven years. Existing inventory related to finished devices are planned to be updated to the latest hardware revision and specifically allocated to a limited distribution for field reliability studies and are not slated for general purpose sales. The Company periodically evaluates inventory and makes specific write-offs and provides an allowance for inventory that is considered obsolete due to hardware and or software related changes. If the Company does not receive FDA clearance and/or obtain market acceptance of the MyoVista wavECG, the Company could have further material write-downs of inventory due to obsolescence in excess of the amount currently reserved.
Research and Development Expenses
In accordance with ASC Topic 730, Accounting for Research and Development Costs, the Company accounts for research and development expenditures, including payments to collaborative research partners and regulatory filing costs, as research and development expenses.
The Company also applies the principles of ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed (“ASC 985-20”). ASC 985-20 requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established.
Software Development Costs
The costs incurred for the development of computer software to be sold, leased, or otherwise marketed are capitalized in accordance with ASC 985-20, when technological feasibility has been established. Technological feasibility generally occurs when all planning, design, coding, and testing activities are completed that are necessary to establish that the product can be produced to meet its design specifications, including functions, features, and technical performance requirements. Based on our software development process, technological feasibility is established upon the completion of a working model that contains essentially all the functionality and features of a final model. The completeness and consistency of the working model have been confirmed through testing.
Costs incurred during the period of planning and design, prior to the period of determining technological feasibility, has been charged to operations in the period incurred as research and development costs. Capitalization of software development costs begins upon the establishment of technological feasibility and reported at the lower of unamortized cost or net realizable value. Capitalization is discontinued when the product is made available for sale.
Amortization of capitalized development costs for externally marketed software commences when the product is available for commercial release. Capitalized software development costs are amortized using the greater of (a) the amount computed using the ratio that current gross revenue for a product bear to total of current and anticipated future gross revenue for that product or (b) the straight-line method, beginning upon commercial release of the product, and continuing over the remaining estimated economic life of the product.
As of January 31, 2026, capitalized product development costs related to MyoVista Insights were $
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives. The range of estimated useful lives used to calculate depreciation is generally
The following is a summary of the Company’s property and equipment at January 31, 2026 and April 30, 2025:
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| Equipment | $ | $ | ||||||
| Furniture & fixtures | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Deferred Offering Costs
The Company capitalizes certain legal, professional, and other-third party charges related to its efforts to raise capital and other ongoing equity financings as deferred offering costs until fully consummated. These costs are deferred until the completion of the offerings at which time they are reclassified to additional paid-in-capital as a reduction of the offering proceeds. If the Company terminates the planned offering, all of the deferred offering costs will be immediately written off to operating expenses.
In March 2023, the Company entered into a purchase agreement and registration rights agreement with an institutional investor, providing for the sale, from time to time at the discretion of the Company, of up to $
In September 2023, the Company entered into an EDA to sell its Common Stock under the ATM Facility. Deferred offering costs associated with the ATM Facility are reclassified to additional paid in capital on a pro-rata basis.
In March 2025, the Company filed an offering statement on Form 1-A with the SEC for the sale of preferred stock and warrants. Deferred offering costs associated with this offering are reclassified to additional paid in capital on a pro-rata basis.
As of January 31, 2026 and April 30, 2025, $
Fair Value Measurements
The accounting guidance establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset transaction between market participants on the measurement date. Where available, fair value is based on observable market prices or is derived from such prices. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 – Observable inputs such as quoted prices in active markets; |
| ● | Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; |
| ● | Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the assignment of an asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Management’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The carrying amounts of the Company’s financial instruments, which primarily include cash and cash equivalents, accounts payable and accrued expenses, approximate their fair values due to their short-term nature. The carrying amounts of the Company’s existing notes payable approximate their fair values at the stated interest rates and are reflective of the prevailing market rates.
Long-Lived Assets
Long-lived assets, such as equipment, software development costs, and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is determined to not be recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying amount exceeds its fair value.
Leases
The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. The Company measures and records a right-of-use asset and lease liability based on the discount rate implicit in the lease, if known. In cases where the discount rate implicit in the lease is not known, the Company measures the right-of-use assets and lease liabilities using a discount rate equal to the Company’s estimated incremental borrowing rate for loans with similar collateral and duration.
The Company elected to not apply the recognition requirements to leases of all classes of underlying assets that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Instead, lease payments for such short-term leases are recognized in operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.
Stock-Based Compensation
The Company accounts for employee and non-employee share-based compensation in accordance with the provisions of ASC 718, Compensation – Stock Compensation. Under ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant).
The Company grants stock options, restricted stock units (“RSUs”), and restricted stock awards (“RSAs”) under its 2023 Equity Incentive Plan, as amended. The Company measures all share-based payment awards at their grant-date fair value. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate. These assumptions are primarily based on historical data, peer company data and the judgment of management regarding future trends and other factors.
Management has estimated the expected term of its Common Stock options using the “simplified” method, whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the option due to its lack of sufficient historical data. The risk-free interest rates for periods within the expected term of the option are based on the US Treasury securities with a maturity date that commensurate with the expected term of the associated award. There is no expected dividend yield since the Company has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future.
For stock options issued to employees and non-employees, the fair value of stock-based awards is recognized as compensation expense over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The Company uses a straight-line attribution method for all grants that include only a service condition. The Company accounts for forfeitures when they occur. Stock-based compensation expense recognized in the financial statements is reduced by actual awards forfeited. For RSUs issued to employees, the Company recognizes the grant date fair value of the RSUs over the requisite service period, which is generally the vesting term. For awards only subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis. For awards subject to performance-based vesting conditions, the Company recognizes stock-based compensation expense using the accelerated attribution method when the achievement of the performance condition becomes probable.
Net Loss Per Common Share
Basic net loss per share excludes the effect of dilution and is computed by dividing the net loss attributable to common shareholders by the weighted-average number of shares of Common Stock outstanding during the period, without consideration of potentially dilutive securities.
Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of Common Stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, convertible preferred stock, stock options, RSUs, Common Stock subject to repurchase related to early exercise of stock options, convertible stock warrants, and convertible notes are considered to be potentially dilutive securities. As the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.
Common Stock Warrants
The Company grants warrants to purchase Common Stock in connection with financing transactions. Warrants are valued based on Black-Scholes models and the fair value is recorded to additional paid-in-capital.
Revenue Recognition
In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The guidance focuses on the core principle for revenue recognition, which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company recognizes revenue in accordance with ASC 606, which provides a five-step model for recognizing revenue from contracts with customers as follows:
| ● | Step 1: Identify the contract(s) with a customer |
| ● | Step 2: Identify the performance obligations in the contract |
| ● | Step 3: Determine the transaction price |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract |
| ● | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation |
A contract with a customer exists when (i) the Company enters into a legally enforceable contract with a customer, through a purchase order, that defines each party’s rights regarding the products to be transferred and identifies the payment terms related to these products, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The only performance obligation is to create and ship the product and each product has separate, distinct pricing. Performance obligations are met and revenue is recognized at a point in time when the order for its goods are shipped FOB manufacturer and control is transferred.
The transaction price is determined based on the amount expected to be entitled to in exchange for transferring the product to the customer net of any transaction price adjustments. The Company’s payment terms to customers generally range from 30 to 60 days.
Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company accepts product returns at its discretion or if the product is defective as manufactured. Historically, the actual product returns have been immaterial to the Company’s financial statements. The Company elected to treat shipping and handling costs as a fulfillment cost and included them in the cost of goods sold as incurred. Costs associated with product sales include commissions. The Company applies the practical expedient and recognizes commissions as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year. Commissions are recorded as selling expense.
The Company did not recognize material revenues during the nine month periods ended January 31, 2026 and 2025. The Company’s revenues do not require significant estimates or judgments. The Company is not a party to contracts that include multiple performance obligations or material variable consideration. As of January 31, 2026 and April 30, 2025, the Company did have any contract assets or liabilities from contracts with customers and there were
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires recognition of deferred tax assets, subject to valuation allowances, and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Management considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent cumulative experience by taxing jurisdiction, expectations of future taxable income or loss, the carry-forward periods available to the Company for tax reporting purposes, and other relevant factors.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance is established if it is more likely than not that all or a portion of the net deferred tax assets will not be realized. Based upon the projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences, and therefore, a full valuation allowance has been recorded at January 31, 2026 and April 30, 2025.
Accruals for uncertain tax positions are provided for in accordance with applicable accounting standards. The Company may recognize the tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Judgment is required in assessing the future tax consequences of events that have been recognized in the financial statements or tax returns.
Based on its analysis, management has determined that it has not incurred any liability for unrecognized tax benefits as of January 31, 2026 and April 30, 2025.
The Company may be subject to potential examination by U.S. federal, U.S. states or foreign jurisdiction authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws.
The Company is subject to income taxes in the U.S. federal jurisdiction and franchise taxes in the State of Texas. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. Generally, the Company is no longer subject to income tax examinations by major taxing authorities for years before April 30, 2021.
Segments
Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company has determined that its CODM is its Chief Executive Officer. The Company's CODM reviews financial information presented for the purpose of making decisions, allocating resources and evaluating performance. The Company has determined it operates in operating and reportable segment.
Recent Accounting Standards
In December 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted. The Company does not expect that the standard will have a significant impact on its financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03 (updated ASU 2025-01 issued in January 2025), "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting ASU 2024-03.
Note 4. Debt
Debt consists of the following:
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| FRV Note | $ | $ | ||||||
| $3.6M Streeterville Note, net | ||||||||
| $2.5M Streeterville Note, net | ||||||||
| Less: current maturities | ( | ) | ( | ) | ||||
| Notes payable, long-term | $ | $ | ||||||
Loan and Security Agreement
In April 2020, the Company entered into a loan and security agreement (the “Loan and Security Agreement”) pursuant to which a secured promissory note in the original principal amount of $
The loan had an original maturity date of September 30, 2021, which was amended in September 2021 making the note repayable on demand. The loan was amended in November 2021, extending the maturity to September 30, 2022; further amended in May 2022 to extend the maturity to September 30, 2023; amended again in January 2023 to (i) further extend the maturity date of the FRV Note to September 30, 2024, on which date the principal amount and all accrued interest thereon would be due and payable; and (ii) amend the dates on which principal and accrued interest was due under the JQA Note, such that interest accrued would have been due and payable on September 30, 2023, and the principal amount together with all accrued interest after September 30, 2023 would be due and payable on March 31, 2024.
In October 2023, the Company issued to FRV and Mr. Adams warrants ("$1M Lender Warrants") to purchase an aggregate of
On August 19, 2024, the Company and FRV entered into Amendment No. 6 to the Loan and Security Agreement to further extend the maturity date of the FRV Note to September 30, 2025. As per the amendment, the Company paid approximately $
On September 26, 2025, the Company and FRV entered into Amendment No. 7 of the Loan and Security Agreement to further extend the maturity date to September 30, 2026 and pay the outstanding accrued interest as follows: (i) a payment of accrued interest on or before September 30, 2025 and (ii) thereafter all accrued interest due shall be payable at maturity. The Company may elect to repay all or any part of the FRV Note, as amended, in its sole discretion at any time prior to the extended maturity date, provided such repayment shall not be less than $
As of January 31, 2026 and April 30, 2025, accrued interest was approximately $
$2.5M and $3.6M Streeterville Notes
In September 2024, the Company entered into a Note Purchase Agreement with Streeterville, pursuant to which the Company issued to Streeterville an unsecured promissory note in the original principal amount of $
The Streeterville Note bears interest at the rate of
During the nine months ended January 31, 2026, the Company entered into agreements with Streeterville, pursuant to which Streeterville exchanged $
On March 11, 2026, the Company and Streeterville amended the $2.5M Streeterville Note to extend the maturity date to June 30, 2026.
In January 2026, the Company entered into a second Note Purchase Agreement with Streeterville, pursuant to which the Company issued to Streeterville an unsecured promissory note in the original principal amount of $
The Streeterville Note bears interest at the rate of
The $2.5M Streeterville Note and the $3.6M Streeterville Note contain customary events of default, including if the Company undertakes a fundamental transaction (including consolidations, mergers, and certain changes in control of the Company), without Streeterville’s prior written consent. Upon the occurrence of certain events of default, the outstanding balance of such notes will become automatically due and payable. Additionally, upon an event of default described in such notes (i.e., the failure to pay amounts under such notes when due or to observe any covenant under the Note Purchase Agreements), the outstanding balance of these notes automatically increase to the lesser of
As of January 31, 2026 and April 30, 2025, accrued interest was approximately $
Note 5. Stockholders’ Equity
Preferred Stock
The Company authorized
Series C Preferred Stock
The Series C Preferred Stock was originally issued at $
At January 31, 2026 and April 30, 2025, there were
Holders of the Series C Preferred Stock are entitled to receive dividends at an annual rate of $
Each share of Series C Preferred Stock is convertible, at the option of the holder at any time, into such number of fully paid and non-assessable shares of Common Stock determined by dividing the original issue price of $
At January 31, 2026, the outstanding shares of Series C Preferred Stock were convertible into
Series D Preferred Stock
On March 10, 2025, the Company entered into a selling agency agreement (the “Placement Agent Agreement”) with Digital offering LLC (“Digital Offering”) to act as sole placement agent (the “Placement Agent”) on a “best efforts” offering of up to
Pursuant to the Placement Agent Agreement, the Placement Agent is entitled to receive from each closing of the Offering (i) a cash fee of
On February 10, 2025, in connection with the Series D Preferred Stock Offering, the Company’s Board of Directors adopted a Certificate of Designations of Series D Preferred Stock, which was filed with the Secretary of State of the state of Texas (the “Texas Secretary of State”) on May 21, 2025, to create, out of the Company’s authorized but unissued preferred stock, the Series D Preferred Stock (the “Certificate of Designations of Series D Preferred Stock”). On May 28, 2025, the Company was notified by the Texas Secretary of State, that the Company’s Certificate of Designations of Series D Preferred Stock was made effective as of the filing date.
The Series D Preferred Stock has an initial stated value of $
Holders of the Series D Preferred Stock are entitled to receive dividends, when, as and if declared by the board of directors, in its sole discretion, out of funds legally available for that purpose. Any dividends that may be declared shall be non-cumulative.
The liquidation preference for each share of Series D Preferred Stock is $
Each share of Series D Preferred Stock is convertible into
The Company may not authorize or issue any class or series of equity securities ranking senior to the Series D Preferred Stock as to dividends or distributions upon liquidation (including securities convertible into or exchangeable for any such senior equity securities) or amend the Company's Amended and Restated Certificate of Formation, as amended (whether by merger, consolidation, or otherwise), to materially, and adversely change the terms of the Series D Preferred Stock without the affirmative vote of at least a majority of the votes entitled to be cast on such matter by holders of the Company's outstanding shares of Series D Preferred Stock, voting together as a class. Otherwise, holders of the Company's Series D Preferred Stock do not have any voting rights.
During the nine months ended January 31, 2026, the Company issued
Common Stock
The Company’s Certificate of Formation, as amended, authorizes
During the nine months ended January 31, 2026, the Company entered into multiple exchange agreements with Streeterville that exchanged $
During the nine months ended January 31, 2026, the Company issued
On September 18, 2023, the Company entered into an Equity Distribution Agreement (the “EDA”) with Maxim Group LLC as sales agent pursuant to which the Company may offer and sell up to $
On November 9, 2023, the Company entered into Amendment No. 1 to the EDA with Maxim, pursuant to which the Company may sell up to $
On November 17, 2023, the Company entered into Amendment No. 2 to the EDA with Maxim, pursuant to which the Company may sell up to $
On August 3, 2025, the Company entered into Amendment No. 3 to the EDA with Maxim Group pursuant to which the Company may offer and sell, from time to time, up to $
During the nine months ended January 31, 2026, the Company issued and sold
During the nine months ended January 31, 2026, the Company issued
The holders of Common Stock are entitled to receive dividends whenever funds and assets are legally available and when declared by the board of directors, subject to the rights of holders of Preferred Stock outstanding.
Common Stock Warrants
The Company has issued warrants to investors in connection with funding or for services rendered and these warrants are convertible into a number of shares of the Company’s Common Stock for a period of
The following is a summary of warrant activity during the nine months ended January 31, 2026:
| Warrants Outstanding and Exercisable | Exercise Price Per Share | Weighted Average Strike Price per Share | ||||||||||
| Balance, April 30, 2025 | $ | $ | ||||||||||
| Issued | $ | $ | ||||||||||
| Cancelled | ( | ) | — | — | ||||||||
| Forfeited | ( | ) | — | — | ||||||||
| Balance, January 31, 2026 | $ | $ | ||||||||||
During the nine months ended January 31, 2026, the Company issued warrants to purchase up to
In September 2025, the Company issued warrants to purchase an aggregate amount of
In December 2025, the Company issued Agent Unit Warrants to purchase an aggregate amount of
Note 6. Stock-based Compensation
The Company grants certain employees and board members stock option awards where vesting is contingent upon a service period, as it believes that such awards better align the interests of its employees with those of its shareholders. Stock option awards are granted with an exercise price equal to or above the market price of the Company’s stock at the date of grant. Certain stock option awards provide for accelerated vesting if there is a change in control, as defined in the Nonstatutory Stock Option Agreement. Unvested stock options forfeit when an employee leaves the Company.
Time-based grants generally vest quarterly based on
2023 Equity Incentive Plan
On March 15, 2023, the Company’s Board of Directors adopted the 2023 Equity Incentive Plan (as amended, the “Equity Incentive Plan”). The Company's shareholders approved the Equity Incentive Plan at the Company's 2023 annual shareholder meeting held on January 17, 2024. The Equity Incentive Plan provides for the grant of nonstatutory stock options, incentive stock options, restricted stock, RSUs, performance units, performance shares, and other share-based awards. On November 27, 2023, the Company's Board of Directors approved and entered into Amendment No. 1 to the Equity Incentive Plan to increase the initial number of shares issuable under the Plan from
On July 9, 2025, the Company’s Board of Directors approved an amendment to the Company’s 2023 Equity Incentive Plan, to increase the maximum aggregate number of shares of the Company’s Common Stock, $
On November 28, 2025, the Company’s Board of Directors approved an amendment to the Equity Incentive Plan to increase the maximum aggregate number of shares of the Company’s Common Stock, that may be issued under the Equity Incentive Plan to
During the nine months ended January 31, 2026, the Company granted
The following is a summary of service-based stock option activity during the nine months ended January 31, 2026:
| Average | ||||||||||||
| Weighted | Remaining | |||||||||||
| Number of | Average | Contractual | ||||||||||
| Options | Exercise | Life | ||||||||||
| Outstanding | Price | (in years) | ||||||||||
| Outstanding - April 30, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Forfeited | ( | ) | — | |||||||||
| Outstanding - January 31, 2026 | $ | |||||||||||
| Non-vested at January 31, 2026 | $ | |||||||||||
| Vested at January 31, 2026 | $ | |||||||||||
The following is a summary of performance-based stock option activity during the nine months ended January 31, 2026:
| Average | ||||||||||||
| Weighted | Remaining | |||||||||||
| Number of | Average | Contractual | ||||||||||
| Options | Exercise | Life | ||||||||||
| Outstanding | Price | (in years) | ||||||||||
| Outstanding - April 30, 2025 | $ | |||||||||||
| Forfeited | ( | ) | — | — | ||||||||
| Outstanding - January 31, 2026 | $ | |||||||||||
| Non-vested at January 31, 2026 | $ | |||||||||||
| Vested at January 31, 2026 | $ | |||||||||||
During the nine months ended January 31, 2026, management estimated the fair value of the awards utilizing the Black-Scholes Option Pricing model with the following weighted-average assumptions:
| Risk free interest rate | % | |||
| Volatility | % | |||
| Weighted average expected term (in years) |
During the nine months ended January 31, 2026 and 2025, the Company recognized stock-based compensation for stock options of $
As of January 31, 2026, there was approximately $
Restricted Stock Units and Restricted Shares Issued
In July 2025, the Company granted
In November 2025, the Company granted
In December 2025, the Company granted
In December 2025, the Company granted
Note 7. Commitments and Contingencies
Operating Leases
The Company has a long-term operating lease for office, industrial, and laboratory space which was entered into in May 2017. On September 27, 2022, the Company entered into the First Amendment to Lease (the “Lease Amendment”), which amended the Lease Agreement to document the exercise of its option to extend the term of the lease for an additional
The Company records right-of-use assets and liabilities at the present value of the fixed lease payments over the term at the commencement date. The Company uses its incremental borrowing rate of
Information related to the Company’s right-of-use assets and lease liabilities consist of the following:
| January 31, | ||||
| 2026 | ||||
| Right-of-use assets, net | $ | |||
| Lease liabilities, current | $ | |||
| Lease liabilities, net of current portion | ||||
| Total lease liabilities | $ | |||
| Weighted average remaining term (in years) | ||||
| Weighted average discount rate | % | |||
As of January 31, 2026, future maturities of lease liabilities due under lease agreements for the period ended are as follows:
| April 30, 2026 | ||||
| April 30, 2027 | ||||
| April 30, 2028 | ||||
| April 30, 2029 | ||||
| Total future lease payments | ||||
| Less imputed interest | ( | ) | ||
| Total operating lease liabilities | $ |
Litigation
From time to time, the Company may be subject to legal proceedings and claims that arise in the ordinary course of business. The Company does not believe that the outcome of those matters will have a material adverse effect to the financial position, operating results or cash flows. However, there can be no assurance such legal proceedings will not have a material impact.
The Company is not aware of any material claims outstanding or pending against the Company as of January 31, 2026.
Royalty Agreements
In 2013, the Company entered into an agreement (the “Technology Agreement”) with its founder, conveying ownership of all intellectual property and rights to the Company. As part of that agreement, the Company will make royalty payments, based upon paid MyoVista wavECG device unit sales, as follows:
| a) | $ |
| b) | $ |
The royalty obligation has a first priority security interest and pledge on the covered technology (as defined in the Technology Agreement, which essentially is comprised of the intellectual property of the MyoVista wavECG device) in priority to the debt holders of the Loan and Security Agreement as discussed further in Note 4.
Upon (i) the aggregate payment of $
In the event of a bankruptcy of the Company, any balance of the $
In December 2015, the Company entered into an agreement with The University Court of The University of Glasgow (“Glasgow”) for a non-exclusive license of the Glasgow algorithm interpretive analysis for the conventional ECG trace. The agreement was amended in March 2023, and as part of the agreement, the Company is required to make royalty payments, based upon MyoVista wavECG device unit sales dependent on sale volumes per year, subject to minimum annual fees. To date, such amounts have been expensed to research and development as the Glasgow algorithm has been part of the device development and will form part of the submission for FDA clearance of the MyoVista wavECG device.
Collaboration Agreements
Rutgers Collaboration Agreement
On November 29, 2022, the Company entered into a multi-year Collaboration Agreement with Rutgers, The State University of New Jersey, to develop AI-ECG algorithms for new or improved ECG indications, which is expected to accelerate our product development pipeline and further expand the clinical value of an ECG for low-cost detection of heart disease.
Mount Sinai Collaboration Agreement
On September 20, 2023, the Company entered into multiple definitive license agreements (each a “License Agreement” and collectively, the “License Agreements”) with Mount Sinai to commercialize a range of AI cardiovascular algorithms developed by Mount Sinai as well as a memorandum of understanding for ongoing cooperation encompassing de-identified data access, on-going research, and the evaluation of the MyoVista wavECG. The License Agreements, of which there are in total, cover rights to AI cardiovascular algorithms, data science methods for use with ECG waveforms and filed patents.
Note 8. Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the CODM in deciding how to allocate resources and in assessing performance. The Company has determined that its CODM is its Chief Executive Officer.
Management and the CODM view the Company’s operations and manage its business in
The following table summarizes the segment's financial information including the Company's significant segment expenses:
| Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Gross Margin | $ | $ | $ | $ | ||||||||||||
| Segment operating expenses: | ||||||||||||||||
| Clinical and regulatory | ||||||||||||||||
| Research and development | ||||||||||||||||
| Operations | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Note 9. Subsequent Events
Management has evaluated subsequent events after the balance sheet date of January 31, 2026, through the date of filing.
On March 11, 2026, the Company and Streeterville amended the $2.5M Streeterville Note to extend the maturity date to June 30, 2026.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our unaudited financial statements and the notes presented herein included in this Quarterly Report on Form 10-Q and the audited financial statements and the related notes set forth in our Annual Report on Form 10-K for the year ended April 30, 2025 filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 24, 2025 (the “2025 Annual Report on Form 10-K”). The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” as identified under Part 1, Item 1A of our 2025 Annual Report on Form 10-K.
Overview
HeartSciences is a healthcare information technology company focused on advancing electrocardiography (“ECG” or “EKG”) through the integration of artificial intelligence (“AI”). The Company has developed MyoVista Insights™, a cloud-native, vendor- and device-agnostic ECG management platform designed to improve workflow efficiency, streamline data management, and support the deployment of third-party AI-ECG algorithms. MyoVista Insights is classified as a Medical Device Data System (“MDDS”) and is exempt from U.S. Food and Drug Administration (“FDA”) 510(k) requirements. HeartSciences has also developed the MyoVista® wavECG™ device, which provides conventional ECG functionality and is designed to host AI-ECG algorithms. The Company submitted the MyoVista wavECG device to the FDA for 510(k) premarket clearance in December 2025 and has licensed or developed additional AI-ECG algorithms that may be submitted for regulatory clearance in the future.
The MyoVista Insights platform was initially launched in May mid-2025 and has been designed to streamline ECG study organization, enhance waveform analysis, and simplify clinical workflows, enabling more efficient interpretation of ECG data. It is also designed to host AI-ECG algorithms and make them easily available in clinical workflow. The Company expects to generate revenues from installation fees, software-as-a-service (“SaaS”) usage fees, and fees associated with AI-ECG algorithms made available through the platform’s AI-ECG marketplace.
The future success of the MyoVista® wavECG™ device is dependent on obtaining FDA clearance and the integration of an impaired cardiac relaxation (e’) AI-ECG algorithm under development. Following the publication of updated American Society of Echocardiography (“ASE”) guidelines for the assessment of Left Ventricular Diastolic Dysfunction (“LVDD”), including revised age-based thresholds for cardiac relaxation (e’), the Company elected to separate the FDA submissions for the MyoVista wavECG device and the impaired cardiac relaxation algorithm. Additional development and validation will be required for the impaired cardiac relaxation algorithm to align with the updated clinical standards.
The Company will require additional funding to support working capital, continued development and commercialization of MyoVista Insights, and regulatory clearance of the MyoVista wavECG device and the impaired cardiac relaxation AI-ECG algorithm.
MyoVista Insights is classified as a Medical Device Data System (“MDDS”) and is exempt from U.S. Food and Drug Administration (“FDA”) 510(k) premarket clearance requirements. In contrast, the MyoVista® wavECG™ device and related AI-ECG algorithms are regulated as Class II medical devices and are subject to FDA premarket review, generally through the 510(k) premarket notification process or, in certain cases, the De Novo classification process. In December 2025, the Company submitted the MyoVista wavECG device to the FDA for 510(k) premarket clearance.
Following the publication of updated guidelines by the American Society of Echocardiography (“ASE”) for the assessment of Left Ventricular Diastolic Dysfunction (“LVDD”), including revised age-based thresholds for cardiac relaxation (e’), the Company determined that additional development and validation will be required for its impaired cardiac relaxation AI-ECG algorithm to align with the updated clinical standards
Recent Developments
Going Concern
On July 24, 2025, our independent registered public accounting firm issued an opinion on our audited financial statements, included in our 2025 Annual Report on Form 10-K, that contained an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern because we have experienced recurring losses, negative cash flows from operations, and limited capital resources.
Compliance with Nasdaq Listing Requirements
On March 19, 2025, we received a letter from Nasdaq stating that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market, under Listing Rule 5550(b)(1) (the “Minimum Stockholders’ Equity Requirement”), because our stockholders’ equity of $1,786,689 as reported in our Quarterly Report on Form 10-Q for the period ending January 31, 2025, was below the required minimum of $2.5 million, and because, as of January 31, 2025, we did not meet the alternative compliance standards, relating to the market value of listed securities of $25 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or two of the last three most recently completed fiscal years.
On May 5, 2025, we submitted to Nasdaq a plan to regain compliance with the Minimum Stockholders’ Equity Requirement. On May 14, 2025, Nasdaq notified us that they granted us an extension of up to 180 calendar days from March 19, 2025, or through September 15, 2025, to regain compliance.
On September 16, 2025, we received a letter from Nasdaq informing the Company that the Nasdaq Listing Qualifications staff has confirmed that we have regained compliance with the Minimum Stockholders' Equity Requirement, and that we are therefore in compliance with Nasdaq's listing requirements. Our common stock, $0.001 par value per share (the “Common Stock”), and public warrants continue to be listed on Nasdaq.
FDA 510(k) Submission of MyoVista® wavECG™ Device
On December 15, 2025, we submitted our MyoVista® wavECG™ device to the FDA for 510(k) premarket clearance.
$3.6M Streeterville Note Purchase Agreement and Promissory Note
On January 13, 2026, we entered into a Note Purchase Agreement (the “Note Purchase Agreement”), with Streeterville Capital, LLC, an accredited investor (“Streeterville”), pursuant to which we issued to Streeterville an unsecured note in the original principal amount of $3,605,000 (the “$3.6M Streeterville Note”). The $3.6M Streeterville Note bears interest at a rate of 12% per annum and matures 18 months after its issuance date. The $3.6M Streeterville Note carried an OID of $600,000, and $5,000 was reimbursement for Streeterville's transaction expenses. As a result, we received aggregate net proceeds of $3.0 million in connection with the issuance of the $3.6M Streeterville Note. From time to time, beginning six months after issuance, Streeterville may require us to redeem a portion of the $3.6M Streeterville Note, not to exceed an amount of $405,000 per month. In the event we have not reduced the outstanding balance under the $3.6M Streeterville Note by at least $1,250,000 by the 12-month anniversary of the $3.6M Streeterville Note issuance date, then the outstanding balance of the $3.6M Streeterville Note at such time will automatically increase by 5%. Subject to the terms and conditions set forth in the $3.6M Streeterville Note, we may prepay all or any portion of the outstanding balance of the $3.6M Streeterville Note at any time.
The Note Purchase Agreement and the $3.6M Streeterville Note contain customary agreements, affirmative and restrictive covenants, representations and warranties and customary events of default, including if we undertake a fundamental transaction (including consolidations, mergers, and certain changes in control of our Company), without Streeterville’s prior written consent, subject to certain exceptions as provided in the $3.6M Streeterville Note. As described in the $3.6M Streeterville Note, upon the occurrence of certain events of default, the outstanding balance of the Note will become automatically due and payable. Additionally, upon an event of default described in the $3.6M Streeterville Note (i.e., the failure to pay amounts under the $3.6M Streeterville Note when due or to observe any covenant under the Note Purchase Agreement), the outstanding balance of the $3.6M Streeterville Note automatically increases to the lesser of 18% or the maximum rate permitted by law.
$2.5M Streeterville Note Extension
On March 11, 2026, the Company and Streeterville amended the $2.5M Streeterville Note to extend the maturity date to June 30, 2026.
Series D Preferred Stock Offering and Certificate of Designations of Series D Preferred Stock
On March 10, 2025, we entered into a selling agency agreement (the “Placement Agent Agreement”) with Digital Offering LLC (“Digital Offering”) to act as sole placement agent (the “Placement Agent”) on a "best efforts" offering of up to 4,285,714 Units, with each Unit consisting of (a) one share of our Series D Convertible Preferred Stock (the “Series D Preferred Stock”) and (b) one warrant to purchase one share of our Common Stock, for a total of 4,285,714 shares of our Series D Preferred Stock and warrants to purchase up to an aggregate of 4,285,714 shares of our Common Stock (collectively, the "Offering"), pursuant to certain subscription agreements with certain investors, upon which each investor must complete a Subscription Agreement and submit the applicable subscription price as set forth therein. The offering price is $3.50 per Unit, for a maximum offering amount of $15.0 million worth of Units. Each warrant is exercisable at any time from the date of issuance through the third anniversary from the date of issuance, unless earlier redeemed, and is exercisable to purchase one share of Common Stock at $5.00 per share, subject to customary adjustment.
Pursuant to the Placement Agent Agreement, the Placement Agent will be entitled to receive from each closing of the Offering (i) a cash fee of 7% of the gross proceeds received by our Company from such closing, (ii) warrants (the "Agent Unit Warrants") to purchase 3% of the total number of Units sold by our Company at such closing (the "Agent Units") at an exercise price of $4.375 per Agent Unit Warrant, with each Agent Unit consisting of one share of Series D Preferred Stock (the "Agent Preferred Shares") and one Warrant (the "Agent Warrants" and the shares of Common Stock underlying such Agent Warrants, the "Agent Warrant Shares"), and (iii) reimbursement of certain of its out-of-pocket expenses. Digital Offering is acting on a “reasonable best efforts” basis, in connection with the Offering and is under no obligation to purchase any of the Units or arrange for the sale of any specific number or dollar amount of shares of the Units.
The Company refers to the offering therein as the “Series D Preferred Stock Offering”. On February 10, 2025, in connection with the Series D Preferred Stock Offering, the Company’s board of directors adopted a Certificate of Designations of Series D Preferred Stock to be filed with the Secretary of State of the State of Texas (the “TX Secretary”) to create, out of the Company’s authorized but unissued preferred stock, the Series D Preferred Stock. The Company filed the Certificate of Designations of Series D Preferred Stock with the TX Secretary on May 21, 2025.
As of the date of this Quarterly Report, we have issued 1,912,383 Units consisting of shares of Series D Preferred Stock and Warrants to purchase shares of Common Stock for gross proceeds of approximately $6.7 million. As of the date of this Quarterly Report, 57,353 Agent Unit Warrants have been issued and 1,375,616 shares of Series D Preferred Stock have been converted into 1,375,616 shares of Common Stock.
Amendment No. 3 to the Equity Distribution Agreement
On August 3, 2025, the Company entered into Amendment No. 3 to the Original EDA (the “Third Amended EDA” and, collectively with the Amendments to the EDA, the “EDA”) with Maxim Group (“Maxim”) pursuant to which the Company may offer and sell, from time to time, up to $25,000,000 of shares of Common Stock and the parties further agreed that Maxim will be entitled to compensation at a commission rate equal to 4.0% of the gross sales price per share sold pursuant to the EDA up to a maximum of $11,036,310 in gross proceeds to the Company, and 3.0% of the gross sales price per share sold pursuant to the EDA from any gross proceeds to the Company in excess of such amount; provided, however, that in no event will the Company issue or sell through Maxim such number of shares of Common Stock that would cause the Company or the offering of its shares of Common Stock to not satisfy the eligibility and transaction requirements for use of Form S-3 (including General Instruction I.B.6 of Form S-3). During the nine months ended January 31, 2026, the Company issued and sold 48,858 shares under the EDA for net proceeds of approximately $0.2 million.
Results of Operations
Revenues
Revenues, which have been minimal to date, consist mainly of sales of devices, electrodes and other supplies in the establishment of distributor relationships outside the U.S. during the approval, development and improvement of the MyoVista wavECG.
Cost of Sales
Cost of sales consists primarily of costs related to materials, components and subassemblies. Cost of sales also includes certain direct costs such as those incurred for shipping and freight.
Operating Expenses
Our operating expenses have consisted solely of R&D expenses and selling, general and administrative expenses.
Research and Development Expenses
Our R&D activities primarily consist of clinical, regulatory, engineering and research work associated with our MyoVista wavECG device and MyoVista Insights platform. R&D expenses include payroll and personnel-related costs for our R&D, clinical and regulatory personnel, including expenses related to stock-based compensation for such employees, consulting services, clinical trial expenses, regulatory expenses, prototyping and testing. R&D expenses also include costs attributable to clinical trial expenses including clinical trial design, site development and study costs, data, related travel expenses, the cost of products used for clinical activities, internal and external costs associated with regulatory compliance and patent costs. We have expensed R&D costs as they have been incurred.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of payroll and personnel-related costs for field support personnel, business development, consulting, stock-based compensation, and for administrative personnel that support our general operations such as executive management and financial accounting. Selling, general and administrative expenses also include costs attributable to professional fees for legal and accounting services, premises costs, IT, insurance, consulting, recruiting fees, travel expenses and depreciation.
Interest Expense
Interest expense relates to our outstanding debt and related amortization of debt discount and deferred offering costs.
Other Income (Expense), Net
Other income (expense), net primarily consists of interest earned on cash balances.
The following table summarizes our results of operations for the periods presented on our statement of operations data.
| Three Months Ended January 31, |
Nine Months Ended January 31, |
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| 2026 |
2025 |
$ Change |
% Change |
2026 |
2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| (In thousands, except percentages, unaudited) |
(In thousands, except percentages, unaudited) |
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| Revenue |
$ | — | $ | — | $ | — | — | % | $ | 4 | $ | — | $ | 4 | — | % | ||||||||||||||||
| Cost of sales |
— | — | — | — | % | 2 | — | 2 | — | % | ||||||||||||||||||||||
| Gross margin |
— | — | — | — | % | 2 | — | 2 | — | % | ||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||||||
| Research and development |
639 | 1,033 | (395 | ) | (38 | )% | 2,363 | 3,457 | (1,094 | ) | (32 | )% | ||||||||||||||||||||
| Selling, general and administrative |
1,290 | 1,338 | (48 | ) | (4 | )% | 3,516 | 2,975 | 541 | 18 | % | |||||||||||||||||||||
| Total operating expenses |
1,929 | 2,371 | (443 | ) | (19 | )% | 5,879 | 6,432 | (553 | ) | (9 | )% | ||||||||||||||||||||
| Loss from operations |
(1,929 | ) | (2,371 | ) | 443 | (19 | )% | (5,876 | ) | (6,432 | ) | 556 | (9 | )% | ||||||||||||||||||
| Interest expense |
(62 | ) | (179 | ) | 118 | (66 | )% | (525 | ) | (320 | ) | (205 | ) | 64 | % | |||||||||||||||||
| Other income |
5 | 15 | (9 | ) | (64 | )% | 10 | 81 | (71 | ) | (87 | )% | ||||||||||||||||||||
| Other income (expense), net |
(56 | ) | (165 | ) | 109 | (66 | )% | (515 | ) | (239 | ) | (276 | ) | 116 | % | |||||||||||||||||
| Net loss |
$ | (1,985 | ) | $ | (2,536 | ) | $ | 551 | (22 | )% | $ | (6,391 | ) | $ | (6,671 | ) | $ | 280 | (4 | )% | ||||||||||||
Summary of Statements of Operations for the three and nine months ended January 31, 2026 compared with the three and nine months ended January 31, 2025:
Revenues were $4,000, and cost of sales were $2,000 for the nine months ended January 31, 2026, as compared to none in the same period in 2025. There were no revenues or cost of sales for the three months ended January 31, 2026 and three and nine months ended January 31, 2025. Our revenues in the fiscal years have been mainly generated from suppliers in the establishment of distributor relationships outside the United States as part of obtaining feedback during product development and improvement of the MyoVista wavECG.
Research and development expenses were $0.6 million and $2.4 million for the three and nine months ended January 31, 2026, respectively, representing a decrease of $0.4 million, or 38%, and a decrease of $1.1 million, or 32%, respectively, when compared to the same periods in 2025. The decreases are primarily due to reduced cloud consulting costs as we have completed phase 1 of our MyoVista Insights platform and lower costs due to capitalization of software costs associated with the MyoVista Insights platform.
Selling, general, and administrative expenses were approximately $1.3 million and $3.5 million for the three and nine months ended January 31, 2026, respectively, representing a decrease of $0.1 million, or 4%, and an increase of $0.5 million, or 18%, respectively, when compared to the same periods in 2025. The increase during the nine month period ended January 31, 2026 is primarily due to approximately $0.8 million increase in stock compensation expense incurred during such period, offset by reductions in professional fees related to the Reverse Stock Split and fees related to the withdrawal of the Company's S-1/A registration statement in Fiscal 2025, for an aggregate amount of approximately $0.3 million.
Interest expense was approximately $62 thousand and $0.5 million for the three and nine months ended January 31, 2026, respectively, representing a decrease of $0.1 million, or 66%, and an increase of $0.2 million, or 64%, respectively, when compared to the same periods in 2025. Interest expense in Fiscal 2026 is related to interest on the FRV Note and interest and debt service amortization on the Streeterville Notes. During the period ended January 31, 2026, the outstanding principal balance of the $2.5M Streeterville Note was repaid in full and as a result, the Company wrote off the remaining balance of unamortized original issue discount and debt issuance costs of approximately $264,000 to interest expense.
Other income of $5,000 and $10,000 during the three and nine months ended January 31, 2026, respectively, is related to interest earned on our cash balances.
Liquidity, Capital Resources, and Going Concern Considerations
We have incurred losses each year since inception and have experienced negative cash flows from operations in each year since inception. We incurred a net loss of $6.4 million for the period ended January 31, 2026. As of January 31, 2026, we had an accumulated deficit of $82.5 million and stockholder's equity of $2.7 million and working capital of $0.8 million.
Based on our current business plan assumptions and expected cash burn rate, we believe that the existing cash is insufficient to fund operations for the next twelve months following the issuance of these financial statements. These factors raise substantial doubt regarding our ability to continue as a going concern.
In January 2026, the Company entered into a Note Purchase Agreement with Streeterville, pursuant to which the Company issued to Streeterville an unsecured promissory note in the original principal amount of $3,605,000. The $3.6M Streeterville Note carried an OID of $600,000 and $5,000 was withheld from the $3.6M Streeterville Note for reimbursement of Streeterville's transaction expenses. As a result, the Company received aggregate net proceeds of approximately $3.0 million in connection with the issuance of the $3.6M Streeterville Note. The $3.6M Streeterville Note bears interest at the rate of 12.0% per annum and matures in July 2027. From time to time, beginning six months after issuance, Streeterville may redeem a portion of the $3.6M Streeterville Note, not to exceed $405,000 per month. In the event the Company has not reduced the outstanding balance under the $3.6M Streeterville Note by at least $1,250,000 by the 12-month anniversary following the issuance date, then the outstanding balance at such time will automatically increase by 5%. Subject to terms and conditions set forth in the $3.6M Streeterville Note, the Company may prepay all or any portion of the outstanding balance of the $3.6M Streeterville Note at any time.
On March 10, 2025, the Company commenced an offering on a "best efforts" basis for a maximum of up to 4,285,714 Units. Each Unit (each a "Unit" and collectively the “Units”) consists of one (1) share of Series D Convertible Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”), and one (1) warrant the (“Warrants”), each to purchase one (1) share of the Company's Common Stock. The Units will be sold at an offering price of $3.50 per Unit, for a maximum offering amount of $15.0 million worth of units. During the nine months ended January 31, 2026, the Company issued 1,912,383 Units for gross proceeds of approximately $6.7 million. There was approximately $8.3 million available for issuance as of the date of this Quarterly Report. We expect any proceeds received from the offering will be used for working capital and general corporate purposes.
In March 2023, the Company entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) providing for the purchase, from time to time at the Company’s discretion, of up to $15.0 million of the Company’s Common Stock, over the thirty-six (36) month term of the purchase agreement (“Equity Line”). There were no shares issued under the equity line during the nine months ended January 31, 2026. As of the date of this Quarterly Report, the Company has issued and sold an aggregate 253,617 shares of Common Stock, including 1,625 commitment shares, under the Equity Line receiving gross proceeds of approximately $2.2 million and there was approximately $12.8 million available for issuance under the Equity Line. We expect any proceeds received from the Equity Line will be used for working capital and general corporate purposes.
In September 2023, the Company entered into an Equity Distribution Agreement (the “EDA”) with an institutional investor, pursuant to which the Company may offer and sell an aggregate of up to $3.25 million of its shares of Common Stock in At-the-Market offerings (“ATM Facility”). In November 2023, the EDA was further amended increasing the aggregate amount of Common Stock that may be sold under the ATM Facility to up to $15.0 million, and further amended again in August 2025, increasing the aggregate amount of Common Stock that may be sold under the ATM Facility from to up to $25.0 million. The Company is eligible to sell up to $14.7 million worth of shares of Common Stock as the aggregate market value of the Company's shares of Common Stock eligible for sale under the EDA is subject to limitations of General Instruction I.B.6 of Form S-3 until such time that the Company's public float equals or exceeds $75.0 million. In the event the aggregate market value of the Company’s outstanding Common Stock held by non-affiliates equals or exceeds $75.0 million, then the one-third limitation on sales set forth in General Instruction I.B.6 of Form S-3 shall not apply to additional sales made pursuant to the EDA. During the nine months ended January 31, 2026, the Company issued and sold 48,858 shares under the ATM Facility for net proceeds of approximately $0.2 million. There was approximately $4.2 million available for issuance as of the date of this Quarterly Report. We expect any proceeds received from the ATM Facility will be used for working capital and general corporate purposes.
Our cash requirements are, and will continue to be, dependent upon a variety of factors. We expect to continue devoting significant capital resources to R&D, clinical studies and go-to-market strategies. We will need to continue to raise capital through the sale of additional equity securities, debt, or capital inflows from strategic partnerships, however we can provide no assurance that that we will be able to consummate the sale of any such securities or strategic relationships will be available on terms acceptable to us, if at all.
Since our inception, we have raised capital through the public and private sale of debt and equity. As of January 31, 2026, we had cash and cash equivalents balance of approximately $3.4 million, an increase of $2.3 million from $1.1 million as of April 30, 2025.
The table below presents our cash flows for the periods indicated:
| Nine Months Ended January 31, |
||||||||
| U.S. dollars, in thousands |
2026 |
2025 |
||||||
| (Unaudited) |
||||||||
| Net cash used in operating activities |
$ | (5,750 | ) | $ | (5,822 | ) | ||
| Net cash used in investing activities |
$ | (44 | ) | $ | (22 | ) | ||
| Net cash provided by financing activities |
$ | 8,094 | $ | 2,634 | ||||
| Net change in cash and cash equivalents during the period |
$ | 2,299 | $ | (3,211 | ) | |||
Operating Activities
Net cash used by our operating activities of $5.8 million during the nine months ended January 31, 2026 is primarily due to our net loss of $6.4 million, plus $1.6 million in non-cash expenses less $0.9 million of net changes in operating assets and liabilities.
Net cash used by our operating activities of $5.8 million during the nine months ended January 31, 2025 is primarily due to our net loss of $6.7 million, plus $437,000 in non-cash expenses plus $412,000 of net changes in operating assets and liabilities.
Financing Activities
Net cash provided by financing activities of $8.1 million during the nine months ended January 31, 2026 is primarily from the issuance of Series D Preferred Stock and warrants and net proceeds from the $3.6M Streeterville Note.
Net cash provided by financing activities of $2.6 million during the nine months ended January 31, 2025 is primarily from the issuance of Common Stock under the Equity Line, ATM Facility, and net proceeds from the $2.5M Streeterville Note.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2025 Annual Report on Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required to be provided by a smaller reporting company.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. The Company's disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. Based upon the most recent evaluation of internal controls over financial reporting, our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer) determined that our disclosure controls and procedures were not effective as of January 31, 2026 as a result of identified material weaknesses in our internal control over financial reporting. The identified material weaknesses were as follows: (i) lack of proper approval processes and review processes and documentation for such reviews; (ii) we did not maintain sufficient U.S. GAAP and SEC accounting resources commensurate with those required of a public company; and (iii) insufficient number of staff to maintain optimal segregation of duties and levels of oversight. We have taken and continue to take remedial steps to improve our internal controls over financial reporting, which includes designing and implementing effective processes and controls over significant accounts and disclosure, and the preparation of account reconciliations and review of journal entries. Our Chief Financial Officer frequently attends continuing education for updates on accounting policies and procedures. We cannot assure you that these measures will significantly improve or remediate the material weaknesses described above. Management is monitoring the effectiveness of these and other processes, procedures and controls and will make any further changes deemed appropriate. We are committed to ensuring that our internal controls over financial reporting are designed and operating effectively. Management believes the foregoing actions will effectively remediate the material weaknesses, however, our material weaknesses will not be considered remediated until controls are in place for a period of time, the controls are tested, and management concludes that the controls are properly designed and operating effectively.
Changes in Internal Control Over Financial Reporting
Except as described above with respect to the remediation steps we are taking, there have been no changes in our internal control over financial reporting during the quarter ended January 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
CEO and CFO Certifications
Exhibits 31.1 and 31.2 to this Quarterly Report are the Certifications of our Chief Executive Officer and Chief Financial Officer, respectively. These Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act (the “Section 302 Certifications”). This Item 4 of this Quarterly Report, which you are currently reading, is the information concerning the evaluation referred to above and in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
There are no actions, suits, proceedings, inquiries or investigations before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company, threatened against or affecting the Company, the Common Stock, any of the Company’s officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect on the Company.
For a discussion of risk factors, please refer to Item 1A of our 2025 Annual Report on Form 10-K. There have been no material changes to the risk factors contained in Item 1A of our 2025 Annual Report on Form 10-K. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition, and/or operating results
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no sales of our equity securities sold during the period covered by this Quarterly Report on Form 10-Q that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
On March 11, 2026, the Company and Streeterville amended the Streeterville Note to extend the maturity date to June 30, 2026.
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| 10.6 |
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| 10.7 |
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| 10.8 |
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| 10.9 |
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| 10.10 |
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| 10.11 |
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| 10.12 |
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| 10.13 |
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| 10.14 |
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| 10.15 |
| 10.16† |
||
| 10.17† |
||
| 10.18 |
||
| 10.19 |
||
| 10.20† |
||
| 10.21† |
||
| 10.22 |
||
| 10.23 |
||
| 10.24 |
||
| 10.25† |
||
| 10.26† |
||
| 10.27† |
||
| 10.28† |
||
| 10.29† |
||
| 10.30 |
||
| 10.31 |
||
| 10.32 |
||
| 10.33 |
||
| 10.34 |
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| 10.35 |
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| 10.36 |
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| 10.37 |
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| 10.38 |
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| 10.39 |
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| 10.40 |
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| 10.41 |
| 10.42 |
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| 10.43 |
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| 10.44 |
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| 10.45 |
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| 10.46 |
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| 10.47 |
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| 10.48 |
||
| 10.49 |
||
| 10.50† |
||
| 10.51 |
||
| 10.52 |
||
| 10.53† |
||
| 10.54 | Form of Indemnification Agreement (filed as Exhibit 10.1 on our Current Report on Form 8-K, filed with the SEC on December 16, 2025). | |
| 10.55 | Note Purchase Agreement, by and between the Company and Streeterville Capital, LLC dated January 13, 2026 (filed as Exhibit 10.1 on our Current Report on Form 8-K, filed with the SEC on January 13, 2026). | |
| 10.56 | Promissory Note dated January 13, 2026 (filed as Exhibit 10.2 on our Current Report on Form 8-K, filed with the SEC on January 13, 2026). | |
| 10.57* | Amendment dated March 11, 2026 to Promissory Note dated September 6, 2024 issued by the Company to Streeterville Capital, LLC | |
| 19.1 |
||
| 31.1* |
|
|
| 31.2* |
|
|
| 32.1** |
|
|
| 32.2** |
|
|
| 101.INS* |
Inline XBRL Instance Document |
|
| 101.SCH* |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
| 101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
| 101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
| 101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * |
Filed herewith |
| ** |
Furnished herewith |
| † |
Management contract or compensatory arrangement |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
HeartSciences Inc. |
|
|
|
|
|
| Date: March 16, 2026 |
By: |
/s/ Andrew Simpson |
|
|
Name: |
Andrew Simpson |
|
|
Title: |
President, Chief Executive Officer, and Chairman of the Board of Directors (Principal Executive Officer) |
|
|
|
|
| Date: March 16, 2026 |
By: |
/s/ Danielle Watson |
| Name: |
Danielle Watson |
|
| Title: |
Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
|