0001558370-23-018605 | 10-Q | XBRL Viewer | Helius Medical Technologies INC

LEASES

9 Months Ended

Sep. 30, 2023

4. LEASES

The Company has two operating leases for office space with lease terms expiring in January 2024 and March 2025. The leases do not contain any options to extend. Operating lease costs for the three and nine months ended September 30, 2023 and 2022 were $14 thousand, $41 thousand, $14 thousand and $42 thousand, respectively.

Maturities of operating lease liabilities as of September 30, 2023 were as follows (in thousands):


2023 (remaining)	$	14
2024		46
2025		12
Total lease payments		72
Less: imputed interest		(2)
Total lease liabilities	$	70

STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
STOCK-BASED COMPENSATION
Stock based compensation expense	$ 403	$ 1,441	$ 1,228	$ 2,022
Remaining unrecognized compensation expense related to nonvested awards	2,900		$ 2,900
Weighted-average remaining requisite service period			1 year 1 month 6 days
Cost of sales
STOCK-BASED COMPENSATION
Stock based compensation expense	5	4	$ 14	11
Selling, general and administrative
STOCK-BASED COMPENSATION
Stock based compensation expense	330	1,367	989	1,837
Research and development
STOCK-BASED COMPENSATION
Stock based compensation expense	$ 68	$ 70	$ 225	$ 174

COMMON STOCK, PREFERRED STOCK AND WARRANTS

9 Months Ended

Sep. 30, 2023

COMMON STOCK, PREFERRED STOCK AND WARRANTS

COMMON STOCK, PREFERRED STOCK AND WARRANTS

6. COMMON STOCK, PREFERRED STOCK AND WARRANTS

At-The-Market Offering

On June 23, 2023, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”) to create an at-the-market offering program (“ATM”) under which the Company may offer and sell shares having an aggregate offering price of up to $2.0 million. Roth is entitled to a commission at a fixed commission rate equal to up to 3% of the gross proceeds pursuant to the Sales Agreement. As of September 30, 2023, 27,875 share issuances of securities have occurred in connection with the ATM generating net proceeds of $0.3M.

Series B Preferred Stock

On March 23, 2023, the Board of Directors declared a dividend of one one-thousandth of a share of Series B Preferred Stock (“Series B Preferred Stock”) for each outstanding share of Common Stock held of record on April 3, 2023. The value of the Series B Preferred Stock issued in connection with the stock dividend was immaterial.

The outstanding shares of Series B Preferred Stock will vote together with the outstanding shares of the Company’s Common Stock, as a single class, exclusively with respect to a proposal giving the Board of Directors the authority, as it determines appropriate, to implement a reverse stock split within twelve months following the approval of such proposal by the Company’s stockholders (the “Reverse Stock Split Proposal”), as well as any proposal to adjourn any meeting of stockholders called for the purpose of voting on the foregoing matters (the “Adjournment Proposal”).

No shares of Series B Preferred Stock may be transferred by the holder except in connection with a transfer by such holder of any shares of Common Stock held by such holder.

Each share of Series B Preferred Stock will entitle the holder to 1,000,000 votes per share and each fraction of a share of Series B Preferred Stock will have a ratable number of votes. The holder of Series B Preferred Stock, as such, will not be entitled to receive dividends.

All shares of Series B Preferred Stock that are not present in person or by proxy at any meeting of stockholders held to vote on the Reverse Stock Split Proposal and the Adjournment Proposal as of immediately prior to the opening of the polls at such meeting (the “Initial Redemption Time”) will automatically be redeemed in whole, but not in part, by the Company at the Initial Redemption Time without further action on the part of the Company or the holder of shares of Series B Preferred Stock.

The Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Series B Preferred Stock has no stated maturity and is not subject to any sinking fund. The Series B Preferred Stock is not subject to any restriction on the redemption or repurchase of shares by the Company while there is any arrearage in the payment of dividends or sinking fund installments.

The Certificate of Designation was filed with the Delaware Secretary of State and became effective on March 24, 2023.

At the annual meeting of stockholders of the Company held on May 24, 2023, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of its outstanding Common Stock. All shares of Series B Preferred Stock that did not vote in person or by proxy were redeemed in whole by the Company. Shares of Series B Preferred Stock that did vote in person or by proxy will need to request redemption from the Company at a rate of $0.001 per share in cash. As of September 30, 2023, no shareholders of Series B Preferred Stock have requested such redemption.

Warrants

The Company issued warrants to purchase an aggregate of 720,000 shares of Common Stock (“Public Warrants”) in connection with the August 2022 Public Offering, as more fully described in the 2022 10-K. The Public Warrants did not meet the guidance for being classified as an equity instrument due to a potential price reset prompted by a change in an

unrelated instrument’s conversion rate or, in the event of a fundamental transaction, settlement rights that differ from those of the underlying common stockholders. Accordingly, the Public Warrants are being accounted for as a derivative liability instrument. As a result of the Company’s Reverse Stock Split on August 16, 2023, refer to Note 1, the exercise price on the Public Warrants was reset to $6.9135 per share based on the volume-weighted average price for the five stock trading days post-split.

The fair value of the Public Warrants as of September 30, 2023 and December 31, 2022 was determined using both a Monte Carlo simulation model, which uses multiple input variables to determine the probability of the occurrence of a price reset or a fundamental transaction and the Black-Scholes option pricing model. The following table includes the share price and the inputs used to estimate the fair value of the warrants:


	September 30,			December 31,
	2023			2022
Stock price	$	9.49		$	15.35
Warrant term (in years)		3.86			4.61
Expected volatility		88.70	%		80.90	%
Risk-free interest rate		4.71	%		4.04	%
Dividend rate		0.00	%		0.00	%

The fair value of the derivative liability as of September 30, 2023 and December 31, 2022 was $4.2 million and $6.9 million, respectively. The change in the fair value of the derivative liability was recognized as a component of nonoperating income (expense) in the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. Public Warrants were exercised to purchase of 92,910 shares of Common Stock at $6.9135 per share for $642 thousand in net proceeds and no Public Warrants were cancelled during the nine months ended September 30, 2023. Of the $642 thousand net proceeds, $207 thousand was received in cash as of September 30, 2023 and $435 thousand was due from the Company’s transfer agent and recorded as other receivables as of September 30, 2023. The portion of the derivative liability relating to the exercised warrants of $628 thousand was reclassified into stockholders’ equity based on the fair value on the date of reclassification. The remaining outstanding Public Warrants to purchase 627,090 shares of Common Stock are classified as a derivative liability at September 30, 2023, are exercisable upon issuance and will expire five years following the date of issuance.

The Company has outstanding equity-classified warrants to purchase 11,853 shares of Common Stock at a weighted average exercise price of $815.98, with expiration dates ranging from October 2023 to February 2026. During the nine months ended September 30, 2023, no equity-classified warrants were exercised or cancelled.

- Definition

The entire disclosure for equity.

+ References

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+ Details

SUPPLEMENTAL BALANCE SHEET DISCLOSURES

9 Months Ended

Sep. 30, 2023

SUPPLEMENTAL BALANCE SHEET DISCLOSURES

SUPPLEMENTAL BALANCE SHEET DISCLOSURES

3. SUPPLEMENTAL BALANCE SHEET DISCLOSURES

Components of selected captions in the unaudited condensed consolidated balance sheets consisted of the following:

Accounts receivable, net

Accounts receivable from product sales are net of allowance for credit losses of less than $1 thousand as of both September 30, 2023 and December 31, 2022.

Inventory, net (in thousands)


	September 30,		December 31,
	2023		2022
Raw materials	$	347	$	344
Work-in-process		87		284
Finished goods		153		39
Inventory, gross		587		667
Inventory reserve		(66)		(78)
Inventory, net	$	521	$	589

During the nine months ended September 30, 2023, $14 thousand of inventory was written off to the inventory reserve.

Prepaid expenses and other current assets (in thousands)


	September 30,		December 31,
	2023		2022
Prepaid expenses	$	421	$	817
Inventory related		312		399
Deferred offering costs		160		—
Total prepaid expenses and other current assets	$	893	$	1,216

Accrued and other current liabilities (in thousands)


	September 30,		December 31,
	2023		2022
Insurance payable	$	—	$	592
Employees benefits		602		509
Professional services		42		119
Franchise tax		126		—
Other		79		60
Total accrued and other current liabilities	$	849	$	1,280

Deferred revenue

Exclusive Distribution Agreement

Pursuant to an Exclusive Distribution Agreement with Health Tech Connex Inc. (“HTC”) (“Exclusivity Agreement”) entered into on March 3, 2023, subject to certain terms and conditions, the Company granted to HTC the exclusive right to provide PoNS Therapy in the Fraser Valley and Vancouver metro regions of British Columbia. HTC will purchase the PoNS devices for use in these regions exclusively from the Company and on terms no less favorable than the then-current standard terms and conditions. This Exclusivity Agreement replaced the previous Clinical Research and Co-Promotion Agreement (“Co-Promotion Agreement”) between the parties entered into in October 2019 that included a similar exclusive right provision. The exclusive right under the Exclusivity Agreement was granted for a value of CAD$273 thousand, which is represented by the unamortized up-front payment under the former Co-Promotion Agreement. The initial term of the Exclusivity Agreement expires on December 31, 2027, and is renewable by HTC for one additional five-year term upon sixty days’ written notice to the Company.

Deferred revenue as of both September 30, 2023 and December 31, 2022 is comprised of the remaining unamortized amount under these agreements. Revenue recognized is included in other revenue in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

BASIC AND DILUTED LOSS PER SHARE - Antidilutive securities (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Stock options
Anti-dilutive securities
Anti-dilutive outstanding securities not included in computation of diluted loss per share	245,972	23,490	245,972	23,490
Restricted Stock Units
Anti-dilutive securities
Anti-dilutive outstanding securities not included in computation of diluted loss per share	3,884	284	3,884	284
Warrants
Anti-dilutive securities
Anti-dilutive outstanding securities not included in computation of diluted loss per share	638,943	731,853	638,943	731,853

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (7,805)	$ (9,186)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability	(2,051)	(5,489)
Stock-based compensation expense	1,228	2,022
Common stock issued for services		34
Foreign exchange loss (gain)	(71)	907
Depreciation expense	32	74
Amortization expense	109	141
Goodwill and fixed asset impairment	159	757
Provision for (reversal of) inventory reserve	2	(37)
Non-cash operating lease expense	38	38
Changes in operating assets and liabilities:
Accounts receivable	(23)	43
Other receivables	236	(24)
Inventory	66	(97)
Prepaid expense and other current assets	323	159
Operating lease liabilities	(40)	(31)
Accounts payable	(130)	(472)
Accrued and other current liabilities	(431)	(881)
Deferred revenue	(24)	(125)
Net cash used in operating activities	(8,382)	(12,167)
Cash flows from investing activities:
Purchase of property and equipment	(26)	(19)
Proceeds from sale of property and equipment		6
Net cash used in investing activities	(26)	(13)
Cash flows from financing activities:
Proceeds from issuances of common stock	284	18,644
Proceeds from exercise of warrants	207
Share issuance costs	(36)	(775)
Net cash provided by financing activities	455	17,869
Effect of currency exchange rate changes on cash and cash equivalents		(6)
Net increase (decrease) in cash and cash equivalents	(7,953)	5,683
Cash and cash equivalents at beginning of period	14,549	11,005
Cash and cash equivalents at end of period	6,596	16,688
Supplemental cash flow information
Cash paid for interest (share issuance costs allocated to derivative liability)		927
Non-cash investing and financing transactions:
Right-of-use assets obtained in exchange for new lease liabilities		$ 151
Derivative warrant liability reclassified to equity on exercise of warrants	628
Warrant proceeds due from transfer agent	$ 435

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

5. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value of an asset or liability considers assumptions that market participants would use in pricing the asset or liability, including consideration of non-performance risk. The inputs used to determine fair values are categorized in one of the following three levels of the fair value hierarchy:

Level 1 – Quoted market prices in active markets for identical assets or liabilities.

Level 2 – Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.

Level 3 – Unobservable inputs that are not corroborated by market data.

The Unaudited Condensed Consolidated Financial Statements include financial instruments for which the fair market value of such instruments may differ from amounts reflected on a historical cost basis. Financial instruments of the Company consist of cash equivalents, which were comprised of deposits of excess cash in an unrestricted money market savings account and a money market mutual funds and as of September 30, 2023 and money market savings account and a certificate of deposit December 31, 2022. The carrying value of cash equivalents generally approximates fair value due to their short-term nature.

The Company’s derivative liability as of September 30, 2023 and December 31, 2022 is comprised of warrants issued in connection with the registered public offering completed in August 2022 (“August 2022 Public Offering”) discussed in Note 6. The derivative liability is classified as Level 3 within the fair value hierarchy and is required to be recorded at fair value on a recurring basis. See Note 6 for further information on the fair value of the derivative liability.

The majority of the Company’s non-financial instruments, which include intangible assets, lease assets, inventories and property and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value. See Note 11 – Goodwill and Fixed Asset Impairment for further detail.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

7. STOCK-BASED COMPENSATION

The Company may issue stock-based compensation awards under the Helius Medical Technologies, Inc. 2022 Equity Incentive Plan (“2022 Plan”) or the Helius Medical Technologies, Inc. 2021 Inducement Plan (as amended, the “Inducement Plan”), as described more fully in the 2022 10-K. On January 1, 2023, pursuant to the automatic increase provision of the 2022 Plan, the number of shares authorized for issuance increased from the initial 22,425 to 264,319. As of September 30, 2023, the remaining shares available for grant were 14,014 under the 2022 Plan and 9,205 under the Inducement Plan.

During the nine months ended September 30, 2023, the Company granted 222,768 stock options out of the 2022 Plan and 500 stock options out of the Inducement Plan at a weighted average exercise price of $14.63 per share. The options vest over one to four years and expire ten years after the grant date.

The following table includes the weighted-average assumptions used in the Black-Scholes option pricing model and the related weighted-average grant-date fair values of stock options granted during the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Risk-free interest rate		4.29	%		3.56	%		3.93	%		2.86	%
Expected volatility		75.26	%		75.75	%		79.43	%		74.94	%
Expected term (years)		5.76			5.74			5.70			5.65
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Fair value, per share	$	6.40		$	18.00		$	10.17		$	54.50

During the nine months ended September 30, 2023, the Company's non-employee directors received a grant of 6,644 restricted stock units at weighted average grant date fair value of $7.81 per share.

As of September 30, 2023, there were an aggregate of 245,972 stock options outstanding with a weighted average exercise price of $77.41 per share and 3,884 unvested restricted stock units outstanding with a weighted average grant date fair value of $7.81 per share.

Total stock-based compensation expense was as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Cost of sales	$	5	$	4	$	14	$	11
Selling, general and administrative		330		1,367		989		1,837
Research and development		68		70		225		174
Total stock-based compensation expense	$	403	$	1,441	$	1,228	$	2,022

As of September 30, 2023, the total remaining unrecognized compensation expense related to nonvested stock options and restricted stock units was $2.9 million which will be amortized over the weighted-average remaining requisite service period of 1.1 years.

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Unaudited Condensed Consolidated Balance Sheets
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares, issued	687,799	563,974
Common stock, shares, outstanding	687,799	563,974

LEASES (Details) $ in Thousands	3 Months Ended		9 Months Ended
LEASES (Details) $ in Thousands	Sep. 30, 2023 USD ($) lease	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) lease	Sep. 30, 2022 USD ($)
LEASES
Number of operating leases \| lease	2		2
Lessee options to extend lease			false
Operating lease costs	$ 14	$ 14	$ 41	$ 42
Maturities of operating lease liabilities
2023 (remaining)	14		14
2024	46		46
2025	12		12
Total lease payments	72		72
Less: imputed interest	(2)		(2)
Total lease liabilities	$ 70		$ 70

COMMON STOCK, PREFERRED STOCK AND WARRANTS - Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022	Aug. 09, 2022
Warrant activity
Fair value of derivative liability	$ 4,239	$ 6,917
Proceeds from exercise of warrants	207
Derivative warrant liability reclassified to equity on exercise of warrants	$ 628
Public Warrants
Warrant activity
Number of warrants outstanding	627,090
Exercise price	$ 6.9135
Shares of common stock purchasable with warrants			720,000
Number of days, warrants exercise price reset	5 days
Warrant expiration period	5 years
Number of warrants exercised	92,910
Number of warrants cancelled	0
Proceeds from exercise of warrants	$ 207
Net proceeds of warrant exercise amount	642
Receivable from transfer agents, warrants exercise value	$ 435,000
Equity-classified Warrants
Warrant activity
Number of warrants outstanding	11,853
Number of warrants exercised	0
Number of warrants cancelled	0
Equity-classified Warrants \| Weighted Average
Warrant activity
Exercise price	$ 815.98

BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2023

BASIS OF PRESENTATION

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

The accompanying interim Unaudited Condensed Consolidated Financial Statements of Helius Medical Technologies, Inc. (together with its wholly owned subsidiaries the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 that was filed with the Securities and Exchange Commission on March 9, 2023 (“2022 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted.

There have been no material changes to the Company's significant accounting policies from those described in the 2022 Form 10-K. Certain prior period amounts have been reclassified to conform to the current period presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates.

Reverse Stock Split

At the annual meeting of stockholders on May 24, 2023, our stockholders voted to approve a reverse stock split of our outstanding Class A common stock (“Common Stock”) at a ratio in the range of 1-for-10 to 1-for-80 to be determined at the discretion of the Company’s Board of Directors (the “Board”). On August 11, 2023, the Board approved a 1-for-50 reverse stock split of the Company’s issued and outstanding Common Stock (the “Reverse Stock Split”) that became effective 5:00 p.m. Eastern Time on August 16, 2023. Refer to Note 6 for additional information.

All issued and outstanding Common Stock and per share amounts contained in the financial statements have been retroactively adjusted to reflect this Reverse Stock Split for all periods presented. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options, restricted stock units and warrants to purchase shares of Common Stock. Per the warrant agreement for the Public Warrants as noted further in Note 6, the exercise price for these warrants was reset to the volume-weighted average price for the five days following the Reverse Stock Split. A proportionate adjustment was also made to the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans to reflect the Reverse Stock Split. Any fraction of a share of Common Stock that was created as a result of the Reverse Stock Split was rounded down to the next whole share and stockholders received cash settlement equal to the market value of the fractional share, determined by multiplying such fraction by the closing sales price of the Company’s Common Stock as reported on Nasdaq on the last trading day before the Reverse Stock Split effective date. The authorized shares and par value of the Common Stock and preferred stock were not adjusted as a result of the Reverse Stock Split.

Going Concern Uncertainty

As of September 30, 2023, the Company had cash, cash equivalents and warrant proceeds receivable from the issuance of Common Stock of $7.0 million. For the nine months ended September 30, 2023, the Company had an operating loss of $10.2 million, and as of September 30, 2023, its accumulated deficit was $158.9 million. For the nine months ended September 30, 2023, the Company had $0.5 million of net revenue from the commercial sale of products. The Company expects to continue to incur operating losses and net cash outflows until such time as it generates a level of revenue to support its cost structure. There is no assurance that the Company will achieve profitable operations, and, if achieved, whether it will be sustained on a continued basis. These factors indicate substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are filed. The Company’s Unaudited Condensed Consolidated Financial Statements have been prepared on the basis of continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business; no adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.

The Company intends to fund ongoing activities by utilizing its current cash and cash equivalents on hand, cash received from the sale of its PoNS device in the U.S. and Canada and by raising additional capital through equity or debt financings. There can be no assurance that the Company will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to the Company. If the Company is unable to raise sufficient additional capital, the Company may be compelled to reduce the scope of its operations.

Global Economic Conditions

Generally, worldwide economic conditions remain uncertain, particularly due to the conflict between Russia and Ukraine, as well as in the Middle East between Israel and Hamas, disruptions in the banking system and financial markets and increased inflation. The general economic and capital market conditions both in the United States and worldwide, have been volatile in the past and at times have adversely affected the Company’s access to capital and increased the cost of capital. The capital and credit markets may not be available to support future capital raising activity on favorable terms. If economic conditions decline, the Company’s future cost of equity or debt capital and access to the capital markets could be adversely affected.

Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the effects of conflicts in Ukraine and the Middle East, disruptions in the banking system and financial markets, high levels of inflation and an increase in interest rates have increased costs and have had and may continue to have a negative impact on the Company’s business. Although the Company has taken and may continue to take measures to mitigate these impacts, if these measures are not effective, the Company’s business, financial condition, results of operations, and liquidity could be materially adversely affected.

In the opinion of management, the Unaudited Condensed Consolidated Financial Statements reflect all adjustments necessary for a fair statement of the results for the interim periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

ENTERPRISE-WIDE DISCLOSURES

9 Months Ended

Sep. 30, 2023

ENTERPRISE-WIDE DISCLOSURES

ENTERPRISE-WIDE DISCLOSURES

10. ENTERPRISE-WIDE DISCLOSURES

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer. The Company operates and manages its business within one operating and reportable segment related to the sale of PoNS devices directly to patients in the United States and to clinics in Canada.

The following table presents the Company’s revenue disaggregated by geographic area (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Product sales, net:
United States	$	60	$	139	$	310	$	202
Canada		72		56		172		295
Total product sales, net		132		195		482		497
Other revenue		11		1		28		8
Total revenue	$	143	$	196	$	510	$	505

Two customers accounted for 91% and 57% of net product sales for the three and nine months ended September 30, 2023 and three customers accounted for 95% of accounts receivable, net as of September 30, 2023. A single customer accounted for 11% and 29% of net product sales for the three and nine months ended September 30, 2022 and a single customer accounted for 89% of accounts receivable, net as of December 31, 2022.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

COMMON STOCK, PREFERRED STOCK AND WARRANTS - Series B preferred stock and public warrants (Details)			9 Months Ended
	Jun. 23, 2023 USD ($)	Mar. 23, 2023 USD ($) Vote	Sep. 30, 2023 USD ($) shares	Sep. 30, 2022 USD ($)	May 24, 2023 $ / shares
Common stock, preferred stock and warrants
Proceeds from exercise of warrants			$ 207,000
Proceeds from issuances of common stock			284,000	$ 18,644,000
Public Warrants
Common stock, preferred stock and warrants
Proceeds from exercise of warrants			$ 207,000
At-The-Market Offering
Common stock, preferred stock and warrants
Aggregate offering amount	$ 2,000,000.0
Shares issued \| shares			27,875
Proceeds from issuances of common stock			$ 300,000
At-The-Market Offering \| Roth
Common stock, preferred stock and warrants
Maximum commission rate, percentage of gross proceeds pursuant to the Sales Agreement	3.00%
Series B Preferred Stock
Common stock, preferred stock and warrants
Dividend declared in shares of Series B Preferred Stock for each outstanding share of Class A common stock		0.001
Number of voting rights per share of preferred stock each holder is entitled to \| Vote		1,000,000
Preferred stock redemption rate (in dollars per share) \| $ / shares					$ 0.001

STOCK-BASED COMPENSATION - Plan information- (Details) - shares	Sep. 30, 2023	Jan. 01, 2023	Dec. 31, 2022
2022 Plan
STOCK-BASED COMPENSATION
Shares authorized for issuance	264,319	264,319	22,425
Shares of common stock available for issuance	14,014
Inducement Plan
STOCK-BASED COMPENSATION
Shares of common stock available for issuance	9,205

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Nov. 03, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Amendment Flag	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Trading Symbol	HSDT
Entity Registrant Name	HELIUS MEDICAL TECHNOLOGIES, INC.
Entity Central Index Key	0001610853
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		708,247
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-38445
Entity Tax Identification Number	36-4787690
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	642 Newtown Yardley Road, Suite 100
Entity Address, City or Town	Newtown
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	18940
City Area Code	215
Local Phone Number	944-6100
Title of 12(b) Security	Class A Common Stock, $0.001 par value per share
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

ENTERPRISE-WIDE DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2023

ENTERPRISE-WIDE DISCLOSURES

Schedule of revenue disaggregated by geographic area

The following table presents the Company’s revenue disaggregated by geographic area (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Product sales, net:
United States	$	60	$	139	$	310	$	202
Canada		72		56		172		295
Total product sales, net		132		195		482		497
Other revenue		11		1		28		8
Total revenue	$	143	$	196	$	510	$	505

BASIC AND DILUTED LOSS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Basic:
Net loss available to common stockholders - basic	$ (3,663)	$ (1,030)	$ (7,805)	$ (9,186)
Weighted average common shares outstanding - basic (in shares)	667,809	355,754	573,950	170,823
Loss per share - basic (in dollar per share)	$ (5.49)	$ (2.90)	$ (13.60)	$ (53.77)
Diluted:
Net loss available to common stockholders - diluted	$ (3,663)	$ (1,030)	$ (7,805)	$ (9,186)
Weighted average common shares outstanding - diluted (in shares)	667,809	355,754	573,950	170,823
Loss per share - diluted (in dollar per share)	$ (5.49)	$ (2.90)	$ (13.60)	$ (53.77)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities, and addition from assumption of issuance of common shares for dilutive potential common shares; of income (loss) available to common shareholders.

+ References + Details

GOODWILL AND FIXED ASSET IMPAIRMENT

9 Months Ended

Sep. 30, 2023

GOODWILL AND FIXED ASSET IMPAIRMENT

GOODWILL AND FIXED ASSET IMPAIRMENT

11. GOODWILL AND FIXED ASSET IMPAIRMENT

Fixed Asset Impairment

The Company identified an impairment indicator associated with its property and equipment and performed interim impairment tests on the long-lived tangible assets as a result of a planned change of the Company’s contract manufacturing partner to be completed in less than one year from September 30, 2023. The interim impairment tests were performed using estimated market prices. The Company has determined that the fair value of certain long-lived tangible assets is lower than the related book values. Additionally, for certain long-lived tangible assets, it is more likely than not that those long-lived assets will be disposed significantly before the end of their previously estimated useful lives. As a result, impairment charges of $159 thousand were recorded in the third quarter on its long-lived tangible assets.

Goodwill Impairment

Goodwill was allocated to and evaluated for impairment at the Company’s one identified reporting unit and was tested for impairment by performing a quantitative test rather than a qualitative evaluation. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. The Company may elect not to perform the qualitative assessment for its reporting unit and perform the quantitative impairment test. The quantitative goodwill impairment test requires the Company to compare the carrying value of the reporting unit’s net assets to the estimated fair value of the reporting unit.

The significant decline in the price of the Company’s Common Stock following the Company’s registered public offering in August 2022 was considered a triggering event for testing whether goodwill was impaired. The Company performed a quantitative assessment as of September 30, 2022 and determined that the carrying value of the reporting unit exceeded the estimated fair value. As a result, the Company recorded a goodwill impairment charge of $757 thousand, reducing the goodwill balance to zero.

LEASES (Tables)

9 Months Ended

Sep. 30, 2023

LEASES

Schedule of maturities of operating lease liabilities

Maturities of operating lease liabilities as of September 30, 2023 were as follows (in thousands):


2023 (remaining)	$	14
2024		46
2025		12
Total lease payments		72
Less: imputed interest		(2)
Total lease liabilities	$	70

COMMON STOCK, PREFERRED STOCK AND WARRANTS - Warrant fair value inputs (Details)	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Stock price
Fair value inputs
Derivative Liability, Measurement Input	9.49	15.35
Warrant term (in years)
Fair value inputs
Derivative Liability, Measurement Input	3.86	4.61
Expected volatility
Fair value inputs
Derivative Liability, Measurement Input	0.8870	0.8090
Risk-free interest rate
Fair value inputs
Derivative Liability, Measurement Input	0.0471	0.0404
Dividend rate
Fair value inputs
Derivative Liability, Measurement Input	0.0000	0.0000

SUPPLEMENTAL BALANCE SHEET DISCLOSURES - Accounts receivable, net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Maximum
Accounts receivable, net
Allowance for credit losses	$ 1	$ 1

SUPPLEMENTAL BALANCE SHEET DISCLOSURES - Inventory, net (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Inventory
Raw materials	$ 347	$ 344
Work-in-process	87	284
Finished goods	153	39
Inventory, gross	587	667
Inventory reserve	(66)	(78)
Inventory, net	521	$ 589
Work-in-process inventory written off to inventory reserve	$ 14

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

9. COMMITMENTS AND CONTINGENCIES

The Company is obligated under a license agreement with Advanced NeuroRehabilitation, LLC to pay a 4% royalty on net revenue collected from the sale of devices covered by the patent-pending technology. During the three and nine months ended September 30, 2023 and 2022, the Company recorded royalty expense from the sale of devices of approximately $5 thousand, $19 thousand, $8 thousand and $20 thousand, respectively, in its Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2023

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. As the Company meets the SEC definition of a Smaller Reporting Company filer, the guidance was effective for fiscal years beginning after December 15, 2022. The adoption of this guidance on January 1, 2023 did not have a material impact on the Company's unaudited condensed consolidated financial statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

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Reference 29: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (c)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-1

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-1

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 250
-Publisher FASB
-URI https://asc.fasb.org//250/tableOfContent

Reference 32: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 65
-Paragraph 1
-Subparagraph (e)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480175/815-40-65-1

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (d)(1)
-SubTopic 20
-Topic 310
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481925/310-20-65-2

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (d)(2)
-SubTopic 20
-Topic 310
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481925/310-20-65-2

+ Details

COMMITMENTS AND CONTINGENCIES - License agreement (Details) - Advanced NeuroRehabilitation, LLC - License Agreement for Exclusive Right on Patent Pending Technology - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
COMMITMENTS AND CONTINGENCIES
Percentage of royalty on net revenue			4.00%
Royalty expense	$ 5	$ 8	$ 19	$ 20

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 6,596	$ 14,549
Accounts receivable, net	94	71
Other receivables	472	272
Inventory, net	521	589
Prepaid expenses and other current assets	893	1,216
Total current assets	8,576	16,697
Property and equipment, net	182	347
Intangible assets, net	31	140
Operating lease right-of-use asset, net	65	103
Total assets	8,854	17,287
Current liabilities
Accounts payable	497	627
Accrued and other current liabilities	849	1,280
Current portion of operating lease liabilities	47	54
Current portion of deferred revenue	42	27
Total current liabilities	1,435	1,988
Operating lease liabilities, net of current portion	23	56
Deferred revenue, net of current portion	136	175
Derivative liability	4,239	6,917
Total liabilities	5,833	9,136
Commitments and contingencies (Note 9)
Stockholders' equity
Class A common stock, $0.001 par value; 150,000,000 shares authorized; 687,799 and 563,974 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	1	1
Additional paid-in capital	162,391	159,645
Accumulated deficit	(158,912)	(151,107)
Accumulated other comprehensive loss	(459)	(388)
Total stockholders' equity	3,021	8,151
Total liabilities and stockholders' equity	$ 8,854	$ 17,287

GOODWILL AND FIXED ASSET IMPAIRMENT (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($) item
GOODWILL AND FIXED ASSET IMPAIRMENT
Long-lived tangible assets impairment charges	$ 159
Number of reporting units \| item		1
Goodwill impairment charge		$ 757
Goodwill		$ 0

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2023

STOCK-BASED COMPENSATION

Schedule of weighted-average assumptions used in Black-Scholes option pricing model


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Risk-free interest rate		4.29	%		3.56	%		3.93	%		2.86	%
Expected volatility		75.26	%		75.75	%		79.43	%		74.94	%
Expected term (years)		5.76			5.74			5.70			5.65
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Fair value, per share	$	6.40		$	18.00		$	10.17		$	54.50

Schedule of stock-based compensation expense

Total stock-based compensation expense was as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Cost of sales	$	5	$	4	$	14	$	11
Selling, general and administrative		330		1,367		989		1,837
Research and development		68		70		225		174
Total stock-based compensation expense	$	403	$	1,441	$	1,228	$	2,022

Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock.	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Total
Beginning Balance at Dec. 31, 2021		$ 149,416	$ (137,035)	$ (1,125)	$ 11,256
Beginning Balance, Shares at Dec. 31, 2021	75,570
Common stock issued under equity line of credit		644			644
Common stock issued under equity line of credit, Shares	7,827
Issuance of common stock in public offering	$ 1	8,055			8,056
Issuance of common stock in public offering, Shares	480,000
Share issuance costs		(758)			(758)
Settlement of restricted stock units, Shares	244
Common stock issued for services		34			34
Common stock issued for services, Shares	173
Stock-based compensation		2,022			2,022
Stock-based compensation, Shares	160
Other comprehensive income (loss)				893	893
Net loss			(9,186)		(9,186)
Ending Balance at Sep. 30, 2022	$ 1	159,413	(146,221)	(232)	12,961
Ending Balance, Shares at Sep. 30, 2022	563,974
Beginning Balance at Jun. 30, 2022		150,669	(145,191)	(976)	4,502
Beginning Balance, Shares at Jun. 30, 2022	83,854
Issuance of common stock in public offering	$ 1	8,055			8,056
Issuance of common stock in public offering, Shares	480,000
Share issuance costs		(752)			(752)
Settlement of restricted stock units, Shares	120
Stock-based compensation		1,441			1,441
Other comprehensive income (loss)				744	744
Net loss			(1,030)		(1,030)
Ending Balance at Sep. 30, 2022	$ 1	159,413	(146,221)	(232)	12,961
Ending Balance, Shares at Sep. 30, 2022	563,974
Beginning Balance at Dec. 31, 2022	$ 1	159,645	(151,107)	(388)	8,151
Beginning Balance, Shares at Dec. 31, 2022	564,094
Issuance of common stock in public offering		284			284
Issuance of common stock in public offering, Shares	27,875
Share issuance costs		(36)			(36)
Exercise of warrants		1,270			1,270
Exercise of warrants, Shares	92,910
Settlement of restricted stock units, Shares	2,920
Stock-based compensation		1,228			1,228
Other comprehensive income (loss)				(71)	(71)
Net loss			(7,805)		(7,805)
Ending Balance at Sep. 30, 2023	$ 1	162,391	(158,912)	(459)	3,021
Ending Balance, Shares at Sep. 30, 2023	687,799
Beginning Balance at Jun. 30, 2023	$ 1	160,470	(155,249)	(650)	4,572
Beginning Balance, Shares at Jun. 30, 2023	565,358
Issuance of common stock in public offering		284			284
Issuance of common stock in public offering, Shares	27,875
Share issuance costs		(36)			(36)
Exercise of warrants		1,270			1,270
Exercise of warrants, Shares	92,910
Settlement of restricted stock units, Shares	1,656
Stock-based compensation		403			403
Other comprehensive income (loss)				191	191
Net loss			(3,663)		(3,663)
Ending Balance at Sep. 30, 2023	$ 1	$ 162,391	$ (158,912)	$ (459)	$ 3,021
Ending Balance, Shares at Sep. 30, 2023	687,799

COMMON STOCK, PREFERRED STOCK AND WARRANTS (Tables)

9 Months Ended

Sep. 30, 2023

COMMON STOCK, PREFERRED STOCK AND WARRANTS

Schedule of estimate the fair value of the warrants


	September 30,			December 31,
	2023			2022
Stock price	$	9.49		$	15.35
Warrant term (in years)		3.86			4.61
Expected volatility		88.70	%		80.90	%
Risk-free interest rate		4.71	%		4.04	%
Dividend rate		0.00	%		0.00	%

BASIC AND DILUTED LOSS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2023

BASIC AND DILUTED LOSS PER SHARE

Schedule of computation of basic and diluted loss per share

The table below presents the computation of basic and diluted loss per share (in thousands, except share and per share information):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Basic:
Net loss available to common stockholders — basic	$	(3,663)	$	(1,030)	$	(7,805)	$	(9,186)
Weighted average common shares outstanding — basic		667,809		355,754		573,950		170,823
Loss per share - basic	$	(5.49)	$	(2.90)	$	(13.60)	$	(53.77)

Diluted:
Net loss available to common stockholders — diluted ⁽¹⁾	$	(3,663)	$	(1,030)	$	(7,805)	$	(9,186)
Weighted average common shares outstanding — diluted ⁽¹⁾		667,809		355,754		573,950		170,823
Loss per share — diluted	$	(5.49)	$	(2.90)	$	(13.60)	$	(53.77)

(1)

For the three and nine months ended September 30, 2023, no adjustment was made to the numerator and no incremental shares were added to the denominator for the Public Warrants being accounted for as a derivative liability, as the Public Warrants were out-of-the-money during the periods. Refer to Note 6 for additional information about the Public Warrants.

Schedule of anti-dilutive securities


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2023	2022	2023	2022
Stock options	245,972	23,490	245,972	23,490
Restricted stock units	3,884	284	3,884	284
Warrants	638,943	731,853	638,943	731,853

SUPPLEMENTAL BALANCE SHEET DISCLOSURES - Deferred revenue (Details) - HTC - Exclusivity Agreement $ in Thousands	Mar. 03, 2023 CAD ($) item
Deferred Revenue
Value of exclusivity right granted \| $	$ 273
Number of additional terms \| item	1
Additional term	5 years
Period for written notice for renewal	60 days

SUPPLEMENTAL BALANCE SHEET DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2023

SUPPLEMENTAL BALANCE SHEET DISCLOSURES

Schedule of inventory, net

Inventory, net (in thousands)


	September 30,		December 31,
	2023		2022
Raw materials	$	347	$	344
Work-in-process		87		284
Finished goods		153		39
Inventory, gross		587		667
Inventory reserve		(66)		(78)
Inventory, net	$	521	$	589

Schedule of prepaid expenses and other current assets

Prepaid expenses and other current assets (in thousands)


	September 30,		December 31,
	2023		2022
Prepaid expenses	$	421	$	817
Inventory related		312		399
Deferred offering costs		160		—
Total prepaid expenses and other current assets	$	893	$	1,216

Schedule of accrued and other current liabilities


	September 30,		December 31,
	2023		2022
Prepaid expenses	$	421	$	817
Inventory related		312		399
Deferred offering costs		160		—
Total prepaid expenses and other current assets	$	893	$	1,216

SUPPLEMENTAL BALANCE SHEET DISCLOSURES - Prepaid expenses and other current assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
SUPPLEMENTAL BALANCE SHEET DISCLOSURES
Prepaid expenses	$ 421	$ 817
Inventory related	312	399
Deferred offering costs	160
Total prepaid expenses and other current assets	$ 893	$ 1,216

SUPPLEMENTAL BALANCE SHEET DISCLOSURES - Accrued and other current liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accrued and other current liabilities
Insurance payable		$ 592
Employees benefits	$ 602	509
Professional services	42	119
Franchise tax	126
Other	79	60
Total accrued and other current liabilities	$ 849	$ 1,280

STOCK-BASED COMPENSATION - Fair value assumptions (Details) - Stock options - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
STOCK-BASED COMPENSATION
Risk-free interest rate	4.29%	3.56%	3.93%	2.86%
Expected volatility	75.26%	75.75%	79.43%	74.94%
Expected term	5 years 9 months 3 days	5 years 8 months 26 days	5 years 8 months 12 days	5 years 7 months 24 days
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Fair value, per share	$ 6.40	$ 18.00	$ 10.17	$ 54.50

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

BASIS OF PRESENTATION (Details) $ in Thousands			3 Months Ended		9 Months Ended
BASIS OF PRESENTATION (Details) $ in Thousands	Aug. 11, 2023	May 24, 2023	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
BASIS OF PRESENTATION
Reverse stock split	0.02
Proceeds receivable from the issuance of common stock			$ 7,000		$ 7,000
Operating loss			3,153	$ 4,853	10,182	$ 12,847
Accumulated deficit			158,912		158,912		$ 151,107
Product sales, net			$ 132	$ 195	$ 482	$ 497
Public Warrants
BASIS OF PRESENTATION
Number of days, warrants exercise price reset					5 days
Class A Common Stock \| Minimum
BASIS OF PRESENTATION
Reverse stock split		0.10
Class A Common Stock \| Maximum
BASIS OF PRESENTATION
Reverse stock split		0.0125

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue
Product sales, net	$ 132	$ 195	$ 482	$ 497
Revenue from Contract with Customer, Product and Service [Extensible Enumeration]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Other revenue	$ 11	$ 1	$ 28	$ 8
Total revenue	143	196	510	505
Cost of revenue
Cost of revenue	$ 187	$ 101	$ 493	$ 313
Cost, Product and Service [Extensible Enumeration]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Gross profit (loss)	$ (44)	$ 95	$ 17	$ 192
Operating expenses
Selling, general and administrative expenses	2,196	3,393	7,639	8,673
Research and development expenses	722	751	2,292	3,468
Amortization expense	32	47	109	141
Goodwill and fixed asset impairment	159	757	159	757
Total operating expenses	3,109	4,948	10,199	13,039
Loss from operations	(3,153)	(4,853)	(10,182)	(12,847)
Nonoperating income (expense)
Interest income (expense), net	68	(919)	257	(919)
Change in fair value of derivative liability	(393)	5,489	2,051	5,489
Foreign exchange (loss) gain	(192)	(747)	62	(910)
Other income (expense), net	7		7	1
Nonoperating income (expense), net	(510)	3,823	2,377	3,661
Loss before provision for income taxes	(3,663)	(1,030)	(7,805)	(9,186)
Provision for income taxes
Net loss	(3,663)	(1,030)	(7,805)	(9,186)
Other comprehensive income (loss)
Foreign currency translation adjustments	191	744	(71)	893
Comprehensive loss	$ (3,472)	$ (286)	$ (7,876)	$ (8,293)
Loss per share
Basic (in dollar per share)	$ (5.49)	$ (2.90)	$ (13.60)	$ (53.77)
Diluted (in dollar per share)	$ (5.49)	$ (2.90)	$ (13.60)	$ (53.77)
Weighted average number of common shares outstanding
Basic (in shares)	667,809	355,754	573,950	170,823
Diluted (in shares)	667,809	355,754	573,950	170,823

ENTERPRISE-WIDE DISCLOSURES (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
ENTERPRISE-WIDE DISCLOSURES (Details) $ in Thousands	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) segment customer	Sep. 30, 2022 USD ($)	Dec. 31, 2022
Revenue disaggregated by geographic area
Number of operating segments \| segment			1
Number of reportable segments \| segment			1
Product sales, net	$ 132	$ 195	$ 482	$ 497
Other revenue	11	1	28	8
Total revenue	$ 143	$ 196	$ 510	$ 505
Net product sales \| Customer \| Two customers
Revenue disaggregated by geographic area
Concentration of risk (percent)	91.00%		57.00%
Net product sales \| Customer \| Single customer
Revenue disaggregated by geographic area
Concentration of risk (percent)		11.00%		29.00%
Accounts receivable, net \| Credit \| Single customer
Revenue disaggregated by geographic area
Concentration of risk (percent)					89.00%
Accounts receivable, net \| Credit \| Three customers
Revenue disaggregated by geographic area
Number of customers \| customer			3
Concentration of risk (percent)			95.00%
U.S.
Revenue disaggregated by geographic area
Product sales, net	$ 60	$ 139	$ 310	$ 202
Canada
Revenue disaggregated by geographic area
Product sales, net	$ 72	$ 56	$ 172	$ 295

BASIC AND DILUTED LOSS PER SHARE

9 Months Ended

Sep. 30, 2023

BASIC AND DILUTED LOSS PER SHARE

BASIC AND DILUTED LOSS PER SHARE

8. BASIC AND DILUTED LOSS PER SHARE

The table below presents the computation of basic and diluted loss per share (in thousands, except share and per share information):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Basic:
Net loss available to common stockholders — basic	$	(3,663)	$	(1,030)	$	(7,805)	$	(9,186)
Weighted average common shares outstanding — basic		667,809		355,754		573,950		170,823
Loss per share - basic	$	(5.49)	$	(2.90)	$	(13.60)	$	(53.77)

Diluted:
Net loss available to common stockholders — diluted ⁽¹⁾	$	(3,663)	$	(1,030)	$	(7,805)	$	(9,186)
Weighted average common shares outstanding — diluted ⁽¹⁾		667,809		355,754		573,950		170,823
Loss per share — diluted	$	(5.49)	$	(2.90)	$	(13.60)	$	(53.77)

(1)

The following outstanding securities, presented based on amounts outstanding as of the end of each period, were not included in the computation of diluted net loss per share for the periods indicated, as they would have been anti-dilutive due to the net loss in each period.


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2023	2022	2023	2022
Stock options	245,972	23,490	245,972	23,490
Restricted stock units	3,884	284	3,884	284
Warrants	638,943	731,853	638,943	731,853

STOCK-BASED COMPENSATION - Awards granted and outstanding (Details)	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Stock options
STOCK-BASED COMPENSATION
Granted (in dollars per share) \| $ / shares	$ 14.63
Expiration period	10 years
Outstanding stock options (in shares)	245,972
Weighted average exercise price (in dollars per share) \| $ / shares	$ 77.41
Stock options \| Minimum
STOCK-BASED COMPENSATION
Vesting period	1 year
Stock options \| Maximum
STOCK-BASED COMPENSATION
Vesting period	4 years
Restricted Stock Units
STOCK-BASED COMPENSATION
Outstanding unvested RSU (in shares)	3,884
Weighted average grant date fair value (in dollars per share) \| $ / shares	$ 7.81
Restricted Stock Units \| Share-Based Payment Arrangement, Nonemployee
STOCK-BASED COMPENSATION
Granted (in shares)	6,644
Weighted average grant date fair value (in dollars per share) \| $ / shares	$ 7.81
2022 Plan \| Stock options
STOCK-BASED COMPENSATION
Granted (in shares)	222,768
Inducement Plan \| Stock options
STOCK-BASED COMPENSATION
Granted (in shares)	500