HeartSciences Inc S-1/A, filed Sep 27, 2024

HeartSciences Inc. (HSCS)

S-1/A 2024-09-27

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Texas		334510		26-1344466
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

	Per Share of Common Stock	Total
Public offering price	$	$
Placement agent fees(1)	$	$
Proceeds, before expenses, to us	$	$

		Page
ABOUT THIS PROSPECTUS		1
TRADEMARKS AND TRADE NAMES		2
INDUSTRY AND MARKET DATA		2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		3
PROSPECTUS SUMMARY		5
THE OFFERING		23
RISK FACTORS		25
USE OF PROCEEDS		34
DIVIDEND POLICY		35
CAPITALIZATION		36
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		38
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		40
DESCRIPTION OF OUR SECURITIES		45
DESCRIPTION OF THE SECURITIES WE ARE OFFERING		56
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF COMMON STOCK		57
PLAN OF DISTRIBUTION		62
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES		68
LEGAL MATTERS		68
EXPERTS		68
WHERE YOU CAN FIND ADDITIONAL INFORMATION		68
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE		69
GLOSSARY OF TERMS		70

Shares of Common Stock offered by us		Up to 1,882,353 shares of Common Stock.
Placement agent warrants		We have agreed to issue to the placement agent or its designees placement agent warrants to purchase up to 75,294 shares of Common Stock, 4.0% of the aggregate number of shares of our Common Stock to be sold in this offering, at an exercise price of $4.68, 110% of the assumed public offering price per share. The placement agent warrants will be exercisable, in whole or in part, commencing on the six-month anniversary of the date of this prospectus and will expire five years from such date.
Common Stock outstanding after this offering		2,796,174 shares of Common Stock (assuming the sale of all shares of Common Stock offered hereby, at an assumed public offering price of $4.25 per share, the closing sale price of our shares of Common Stock on the Nasdaq Capital Market on September 24, 2024).
Use of proceeds		We expect to receive net proceeds from this offering of approximately $6.9 million (assuming the sale of all securities offered hereby, at an assumed public offering price of $4.25 per share, the closing sale price of our Common Stock on the Nasdaq Capital Market on September 24, 2024), after deducting placement agent fees and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for costs directly related to obtaining FDA clearance for our products, commercially developing the Mount Sinai Licenses, for R&D, working capital and general corporate purposes, including personnel costs, capital expenditures, interest and debt repayments and the costs of operating as a public company. In addition, we may receive proceeds from the exercise of the placement agent warrants, to the extent such placement agent warrants are exercised for cash, but we will not receive any proceeds from any sale of the shares of our Common Stock underlying the placement agent warrants. See “Use of Proceeds” on page 34 of this prospectus.
Lock-up agreements		We have agreed with the placement agent not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any securities or file any registration statement or amendment or supplement thereto, other than this prospectus or filing a registration statement on Form S-8 in connection with any equity incentive plan, for a period from the date of this prospectus until sixty (60) days from the final closing date without the prior written consent of the placement agent. Our officers and directors have agreed with the placement agent not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our securities for a period from the date of this prospectus to six months from the final closing date without the prior written consent of the placement agent. See “Plan of Distribution — Lock-up Agreements.”
Transfer agent, warrant agent and registrar		The transfer agent and registrar for our Common Stock is Equiniti Trust Company, LLC.
Nasdaq symbol and trading		Our Common Stock is listed on the Nasdaq Capital Market under the symbol “HSCS”.

Risk factors		Investment in our shares of our Common Stock involves substantial risks. You should read this prospectus carefully, including the section entitled “Risk Factors” in this prospectus and the financial statements and the related notes to those statements included in this prospectus, before investing in our securities.
Reasonable best efforts		We have agreed to offer and sell the securities offered hereby to the purchasers through the placement agent. The placement agent is not required to buy or sell any specific number or dollar amount of the securities offered hereby, but it will use its reasonable best efforts to solicit offers to purchase the securities offered by this prospectus. See “Plan of Distribution” on page 62 of this prospectus.

	As of July 31, 2024
	Actual			Pro Forma			Pro Forma as Adjusted
	(Audited)			(Unaudited)			(Unaudited)
	(U.S. dollars in thousands)
Cash and cash equivalents	$	4,340		$	6,217		$	13,082
Indebtedness:
Loan and Security Agreement		500			500			500
Streeterville Note		—			2,510			2,510
Total indebtedness:		500			3,010			3,010
Shareholders’ (deficit) equity:
Series A convertible preferred stock, $0.001 par value, 10,000 shares designated, none issued		—			—			—
Series B convertible preferred stock, $0.001 par value, 10,000 shares designated, none issued		—			—			—
Series C convertible preferred stock, $0.001 par value, 600,000 shares designated, 380,440 issued actual, pro forma and pro forma as adjusted		—			—			—
Common stock, $0.001 par value, 500,000,000 shares authorized, 906,416 issued actual; 913,821 shares issued and outstanding, pro forma; and 2,796,174 shares issued and outstanding pro forma as adjusted		1			1			3
Additional paid-in-capital		75,347			77,224			84,087
Accumulated deficit		(69,414	)		(69,414	)		(69,414	)
Total shareholders’ equity		5,934			7,811			14,676
Total capitalization	$	6,434		$	10,821		$	17,686

	Beneficial Ownership
	Number of Shares(1)			Percentages(2)
Name of Beneficial Owner	Common Stock Prior to Offering	Common Stock After Offering	Series C Preferred Stock	Common Stock Prior to Offering		Common Stock After Offering		Series C Preferred Stock		Combined Voting Power Prior to Offering(3)		Combined Voting Power After Offering(3)
Holder of 5% or more of each class of our securities:
Front Range Ventures, LLC(4)	30,913	78,516	148,213	3.3	%	2.7	%	39.0	%	3.0	%	2.6	%
John H. Matthews(5)	52,419	52,419	—	5.7	%	1.9	%	—		5.2	%	1.7	%
Mount Sinai(6)	64,798	64,798	—	7.0	%	2.3	%	—		6.4	%	2.2	%

Related Party	Principal Amount of $1.5M Notes		Shares of Common Stock Issued upon Conversion of $1.5M Notes(2)	$1.5M Lender Warrants
John H. Matthews(1)	$	515,500	3,125	17
Brian Szymczak	$	10,000	61	1
Andrew Simpson	$	10,000	61	1
Mark Hilz	$	10,000	61	1

Related Party		Principal Amount of Bridge Notes			Shares of Common Stock Issued upon Conversion of Bridge Notes(2)		Warrants to Purchase the Following Number of Shares
John H. Matthews(1)		$	555,556		1,977		1,977

	Per Share of Common Stock	Total
Public offering price	$	$
Placement agent fees (7.0%)	$	$
Proceeds, before expenses, to us	$	$

SEC registration fee	$	920
FINRA filing fee	$	1,753
Transfer agent, warrant agent and registrar fees and expenses	$	30,000
Legal fees and expenses	$	395,000
Printing fees and expenses	$	50,000
Accounting fees and expenses	$	50,000
Miscellaneous fees and expenses	$	47,327
Total	$	575,000

Exhibit Number		Exhibit Description
1.1*		Form of Placement Agency Agreement by and between Heart Test Laboratories, Inc. and Maxim Group LLC, as exclusive placement agent thereunder.
3.1		Amended and Restated Certificate of Formation of Heart Test Laboratories, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
3.2		Certificate of Designations, Number, Voting Power, Preferences and Rights of Series C Convertible Preferred Stock of Heart Test Laboratories, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
3.3		Second Amended and Restated Bylaws of Heart Test Laboratories, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
3.4		Form of Certificate of Amendment to Amended and Restated Certificate of Formation of Heart Test Laboratories, Inc. (incorporated by reference to Exhibit 3.4 to Amendment No. 1 to the Company’s Registration Statement on Form S-1, filed with the SEC on June 6, 2022).
3.5		Certificate of Amendment to Amended and Restated Certificate of Formation of Heart Test Laboratories, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC June 23, 2022).
3.6		Certificate of Amendment to the Amended and Restated Certificate of Formation, dated as of May 6, 2024 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed May 6, 2024).
4.1		Form of Registration Rights Agreement by and between Heart Test Laboratories, Inc. and Buyers listed as signatories thereto, dated December 22, 2021 (incorporated by reference to Exhibit 4.2 to our Registration Statement on Form S-1 filed May 17, 2022).

Exhibit Number		Exhibit Description
10.7		$130K Note by and between Heart Test Laboratories, Inc. and Front Range Ventures, LLC, dated August 12, 2019 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.8		$1M Loan and Security Agreement by and among Heart Test Laboratories, Inc., Front Range Ventures, LLC and John Q. Adams, Sr., dated April 24, 2020 (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.9		Amendment No. 1 to the $1M Loan and Security Agreement, dated September 30, 2021 (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.10		Amendment No. 2 to the $1M Loan and Security Agreement, dated November 3, 2021 (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.11		Form of $1.5M Note (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.12		Form of Amendment No. 1 to the Form of $1.5M Note by and among Heart Test Laboratories, Inc. and the Requisite Noteholders, dated November 2, 2021 (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.13		Form of Securities Purchase Agreement by and between Heart Test Laboratories, Inc. and Purchasers listed as signatories thereto, dated December 22, 2021 (incorporated by reference to Exhibit 10.13 to our Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.14		Form of Bridge Note (incorporated by reference to Exhibit 10.14 to our Registration Statement on Form S-1 filed May 17, 2022).
10.15		Consulting Agreement by and between Heart Test Laboratories, Inc. and Kyngstone Limited, Inc., dated June 25, 2013 (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.16		FRV Side Letter by and between Heart Test Laboratories, Inc. and Front Range Ventures, LLC, dated April 10, 2019 (incorporated by reference to Exhibit 10.16 to Amendment No. 1 to the Company’s Registration Statement on Form S-1, filed with the SEC on June 6, 2022).
10.17†		Amended and Restated Employment Agreement by and between Heart Test Laboratories, Inc. and Mark Hilz, dated April 5, 2022 (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.18†		Employment Agreement by and between Heart Test Laboratories, Inc. and Andrew Simpson, dated April 5, 2022 (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.19		Form of Amendment No. 3 to the $1M Loan and Security Agreement, dated May 2022 (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.20		Form of Amendment No. 2 to the Form of $1.5M Note by and among Heart Test Laboratories, Inc. and the Requisite Noteholders, dated May 2022 (incorporated by reference to Exhibit 10.20 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.21†		Form of Time-Based Vesting Nonstatutory Stock Option Agreement of Heart Test Laboratories, Inc. (incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.22†		Form of Performance-Based Vesting Nonstatutory Stock Option Agreement of Heart Test Laboratories, Inc (incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form S-1, filed with the SEC on May 17, 2022).
10.23		Amendment No. 4 to the $1M Loan and Security Agreement, dated January 24, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 24, 2023).
10.24		Purchase Agreement, dated as of March 10, 2023, by and between the Company and Lincoln Park (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on March 10, 2023).
10.25		Registration Rights Agreement, dated as of March 10, 2023, by and between the Company and Lincoln Park (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the SEC on March 13, 2023).

Exhibit Number		Exhibit Description
10.26†		Heart Test Laboratories, Inc. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on March 16, 2023).
10.27†		Form of the Company’s Incentive Stock Option Agreement under the Company’s 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on March 23, 2023).
10.28†		Form of the Company’s Non-Qualified Stock Option Agreement under the Company’s 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the SEC on March 23, 2023).
10.29†		Amendment No. 1 to the Heart Test Laboratories, Inc. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.29 to the Registration Statement on Form S-8, filed with the SEC on February 26, 2024).
10.30		Amendment No. 2 License Agreement by and between Heart Test Laboratories, Inc. and The University Court of The University of Glasgow, dated March 31, 2023 (incorporated by reference to Exhibit 10.29 to the Annual Report on Form 10-K, filed with the SEC on July 19, 2023).
10.31		Senior Unsecured Promissory Drawdown Loan Note by and among Heart Test Laboratories, Inc., and Matthews Southwest Holdings, Inc., dated September 6, 2023 and executed on September 7, 2023 (incorporated by reference to Exhibit 10.1 our Current Report on Form 8-K, filed with the SEC on September 7, 2023).
10.32		Securities Purchase Agreement, dated as of September 20, 2023, by and between the Company and Icahn School of Medicine at Mount Sinai (incorporated by reference to Exhibit 10.1 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.33		License: Pulmonary Embolism Detection From the Electrocardiogram Using Deep Learning (incorporated by reference to Exhibit 10.2 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.34		License: Deep Learning Algorithm to Predict PVC-Related Cardiomyopathy (incorporated by reference to Exhibit 10.3 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.35		License: Deep Learning on ECGs to Derive Left and Right Ventricular Function (incorporated by reference to Exhibit 10.4 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.36		License: Prediction of right ventricular size and systolic function from the 12-lead ECG (incorporated by reference to Exhibit 10.5 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.37		License: Deep learning for electrocardiograms to identify left heart valvular dysfunction – aortic stenosis (incorporated by reference to Exhibit 10.6 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.38		License: Deep learning for electrocardiograms to identify left heart valvular dysfunction – mitral regurgitation (incorporated by reference to Exhibit 10.7 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.39		License: HeartBEiT: Vision Transformers improve diagnostic performance for electrocardiograms (incorporated by reference to Exhibit 10.8 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.40		License: Derivation of low Left Ventricular Ejection fraction based on a foundational vision transformer (HeartBEiT) (incorporated by reference to Exhibit 10.9 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.41		License: Diagnosis of Hypertrophic Cardiomyopathy using a model derived from a foundational vision transformer (HeartBEiT) (incorporated by reference to Exhibit 10.10 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.42		License: Diagnosis of STEMI using a model derived from a foundational vision transformer (HeartBEiT) (incorporated by reference to Exhibit 10.11 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.43		License: Electrocardiogram Deep Learning Interpretability Toolbox (incorporated by reference to Exhibit 10.12 our Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.44		Amendment No. 5 to the $1M Loan and Security Agreement, dated September 29, 2023 (incorporated by reference to Exhibit 10.45 to our Registration Statement on Form S-1 filed October 16, 2023).
10.45		Note Conversion Letter Agreement, dated November 16, 2023, by and between Heart Test Laboratories, Inc. and Matthews Southwest Holdings, Inc. (filed as Exhibit 10.1 on our Current Report on Form 8-K, filed with the SEC on November 17, 2023).

		Heart Test Laboratories, Inc.
		By:		/s/ Andrew Simpson
		Name:		Andrew Simpson
		Title:		President, Chief Executive Officer and Chairman of the Board of Directors

Signature	Title	Date
/s/ Andrew Simpson	President, Chief Executive Officer and	September 27, 2024
Andrew Simpson	Chairman of the Board of Directors (Principal Executive Officer)
/s/ Danielle Watson	Chief Financial Officer and Treasurer	September 27, 2024
Danielle Watson	(Principal Financial and Accounting Officer)
*	Chief Operating Officer, Secretary and	September 27, 2024
Mark Hilz	Director
*	Director	September 27, 2024
Bruce Bent
*	Director	September 27, 2024
David R. Wells
*	Director	September 27, 2024
Brian Szymczak

	Very truly yours,

	HEART TEST LABORTORIES, INC.

	By:
		Name:
		Title:

By:
	Name:
	Title:

Exhibit Number		Exhibit Description
10.46		Note Conversion Letter Agreement, dated November 16, 2023, by and between Heart Test Laboratories, Inc. and John Q. Adams (filed as Exhibit 10.2 on our Current Report on Form 8-K, filed with the SEC on November 17, 2023).
10.47		Warrant Amendment, dated November 16, 2023, by and between Heart Test Laboratories, Inc. and Matthews Southwest Holdings, Inc. (filed as Exhibit 10.3 on our Current Report on Form 8-K, filed with the SEC on November 17, 2023).
10.48		Warrant Amendment, dated November 16, 2023, by and between Heart Test Laboratories, Inc. and John Q. Adams (filed as Exhibit 10.4 on our Current Report on Form 8-K, filed with the SEC on November 17, 2023).
10.49†		Employment Agreement by and between Heart Test Laboratories, Inc. and Danielle Watson, dated October 15, 2021 (incorporated by reference to Exhibit 10.19 to our Registration Statement on Form S-1 filed October 16, 2023).
10.50		Equity Distribution Agreement, dated as of September 18, 2023 by and between the Company and Maxim Group LLC (incorporated by reference to Exhibit 1.2 to our Registration Statement on Form S-3, filed with the SEC on September 18, 2023).
10.51		Amendment No. 1 to Equity Distribution Agreement dated November 9, 2023 between Heart Test Laboratories, Inc. and Maxim Group LLC (incorporated by referred to Exhibit 1.1 to our Current Report on Form 8-K filed with the SEC on November 13, 2023).
10.52		Amendment No. 2 to Equity Distribution Agreement dated November 17, 2023 between Heart Test Laboratories, Inc. and Maxim Group LLC (filed as Exhibit 1.3 on our Current Report on Form 8-K filed with the SEC on November 17, 2023).
10.53		Amendment No. 6 to the $1M Loan and Security Agreement, dated August 15, 2024 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed August 21, 2024).
10.54		No. 2 Amended and Restated Secured Promissory Note by and between Heart Test Laboratories, Inc. and Front Range Ventures LLC dated August 19, 2024 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed August 21, 2024).
10.55		Note Purchase Agreement, by and between the Company and Streeterville Capital, LLC dated September 6, 2024 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed September 10, 2024).
10.56		Promissory Note dated September 6, 2024 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed September 10, 2024).
10.57*		Form of Securities Purchase Agreement.
10.58**		Form of Lock-up Agreement.
23.1*		Consent of Haskell & White LLP.
23.2*		Consent of Foley Shechter Ablovatskiy LLP (included in Exhibit 5.1).
24.1**		Power of Attorney.
107**		Filing Fee Table.