0001558370-22-013668 | 10-Q | XBRL Viewer | Helius Medical Technologies INC

Recent Accounting Pronouncements	6 Months Ended
Jun. 30, 2022
Recent Accounting Pronouncements
Recent Accounting Pronouncements	3. RECENT ACCOUNTING PRONOUNCEMENTS In June 2016, the FASB issued ASU 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. In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which amends the effective date of ASU 2016-13. Public business entities that meeting the definition of an SEC filer, excluding entities eligible to be a Smaller Reporting Company (“SRC”) as defined by the SEC, are required to adopt the standard for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All other entities are required to adopt the standard for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of an SRC and therefore the standard will not be effective until the beginning of 2023. The Company is evaluating the effect that ASU 2016-13 will have on its condensed consolidated financial statements.

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2022

3. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 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. In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which amends the effective date of ASU 2016-13. Public business entities that meeting the definition of an SEC filer, excluding entities eligible to be a Smaller Reporting Company (“SRC”) as defined by the SEC, are required to adopt the standard for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All other entities are required to adopt the standard for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of an SRC and therefore the standard will not be effective until the beginning of 2023. The Company is evaluating the effect that ASU 2016-13 will have on its 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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+ Details

Subsequent Events	6 Months Ended
Jun. 30, 2022
Subsequent Events
Subsequent Events	11. SUBSEQUENT EVENTS On August 9, 2022, the Company closed on a registered public offering consisting of 18,560,000 shares of common stock, pre-funded warrants to purchase 5,440,000 shares of common stock and accompanying warrants to purchase an aggregate of 36,000,000 shares of common stock (“Public Warrants”) at a combined offering price of $0.75 per share and accompanying Public Warrants, or $0.749 per pre-funded warrant and accompanying Public Warrants. The pre-funded warrants had an exercise price of $0.001 per share and were all exercised on the closing date. Net proceeds from the public offering, after deducting placement agent fees and expenses and other offering costs, were approximately $16.4 million. The Public Warrants have an exercise price of $0.75 per share, are exercisable upon issuance and will expire five years following the date of issuance. In conjunction with this public offering, certain performance criteria were achieved for the outstanding performance-based stock options discussed in Note 8, resulting in the vesting of the performance-based stock options. For the three months ending September 30, 2022, the Company expects to recognize additional share-based compensation expense of $1.2 million associated with the vesting of the performance-based stock options.

Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events

Subsequent Events

11. SUBSEQUENT EVENTS

On August 9, 2022, the Company closed on a registered public offering consisting of 18,560,000 shares of common stock, pre-funded warrants to purchase 5,440,000 shares of common stock and accompanying warrants to purchase an aggregate of 36,000,000 shares of common stock (“Public Warrants”) at a combined offering price of $0.75 per share and accompanying Public Warrants, or $0.749 per pre-funded warrant and accompanying Public Warrants. The pre-funded warrants had an exercise price of $0.001 per share and were all exercised on the closing date. Net proceeds from the public offering, after deducting placement agent fees and expenses and other offering costs, were approximately $16.4 million.

The Public Warrants have an exercise price of $0.75 per share, are exercisable upon issuance and will expire five years following the date of issuance.

In conjunction with this public offering, certain performance criteria were achieved for the outstanding performance-based stock options discussed in Note 8, resulting in the vesting of the performance-based stock options. For the three months ending September 30, 2022, the Company expects to recognize additional share-based compensation expense of $1.2 million associated with the vesting of the performance-based stock options.

Supplemental Balance Sheet Disclosures - Accounts receivable, net (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Supplemental Balance Sheet Disclosures
Allowance for doubtful accounts	$ 351	$ 355

Stockholders' Equity - Additional Information (Details) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares
Stockholders' Equity
Common stock issued for services (in shares)	4,263	8,791
Common stock issued for services \| $	$ 14	$ 34
LPC Purchase Agreement
Stockholders' Equity
Common stock issued under purchase agreement (in shares)	391,363	391,363
Price per share \| $ / shares	$ 1.65	$ 1.65
Common Stock Warrants
Stockholders' Equity
Outstanding warrants (in shares)	593,924	593,924
Warrant exercisable price per share \| $ / shares	$ 16.32	$ 16.32
Number of warrants exercised		0
Number of warrants cancelled		0

Risks and Uncertainties	6 Months Ended
Jun. 30, 2022
Risks and Uncertainties
Risks and Uncertainties	2. RISKS AND UNCERTAINTIES Going Concern Uncertainty As of June 30, 2022, the Company had cash of $3.3 million. For the six months ended June 30, 2022, the Company had an operating loss of $8.0 million, and as of June 30, 2022, its accumulated deficit was $145.2 million. For the six months ended June 30, 2022, the Company had $0.3 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 financial statements are filed. The Company’s 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 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. As discussed in Note 11 to our unaudited condensed consolidated financial statements, on August 9, 2022, the Company closed on a public offering of its Class A common stock and warrants and received aggregate net proceeds of approximately $16.4 million. 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 and planned capital expenditures. COVID-19 and Worldwide Economic Conditions On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a global pandemic, which has spread throughout the U.S. and around the world. The Company’s business, results of operations and financial condition have been and may continue to be adversely impacted by the COVID-19 pandemic and global economic conditions. The outbreak and spread of COVID-19 has significantly increased economic uncertainty. Authorities implemented, and continue to implement, numerous measures to try to contain COVID-19, such as travel bans and restrictions, quarantines, shelter in place orders and business shutdowns. The COVID-19 pandemic initially led to the closure of PoNS Authorized clinic locations across Canada. While all clinics had re-opened, as of December 31, 2021, many were operating at reduced capacity well into the first half of 2022, and patients have been and may continue to be less willing to return to these clinics, impacting the Company’s commercial activities and customer engagement efforts. Moreover, the Company’s ability to conduct its ongoing clinical experience programs and clinical trials has been and may be impaired due to trial participants’ attendance being adversely affected by COVID-19. In addition, the COVID-19 pandemic has and may continue to cause delays in the Company’s suppliers’ ability to ship materials that the Company relies upon as well as manufacturing delays as the result of labor shortages. Two of the Company’s suppliers experienced significant labor shortages as a result of COVID-19 from the end of November 2021 through early January 2022 which reduced the available resources needed to build and test product resulting in production delays of the PoNS devices. During March 2022 and continuing into the second quarter of 2022, an increase in COVID-19 related cases in certain parts of China resulted in the re-imposition of widespread shutdowns and restrictions in China and additional supply chain disruptions. It is currently unclear how long this latest series of shutdowns will continue and the Company may experience future manufacturing delays, which could place constraints on the Company’s ability to produce or deliver its products and meet customer demand or increase its costs. Generally, worldwide economic conditions remain uncertain, particularly due to the COVID-19 pandemic. Access to capital markets is critical to our ability to operate. Declines and uncertainties in these markets in the past have severely restricted raising new capital and have affected companies’ ability to continue to expand or find existing development, manufacturing, regulatory and commercialization efforts. The Company requires significant capital for our current and expected operations. The general economic and capital market conditions both in the U.S. 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. Disruptions in business or governmental operations due to COVID-19 may delay the timing for the submission and approval of the Company’s marketing applications with regulatory agencies. Further, the economic impact of the COVID-19 pandemic could affect the Company’s ability to access the public markets and obtain necessary capital in order to properly capitalize and continue its operations. The extent to which the COVID-19 pandemic will continue to impact the Company’s business, including its U.S. commercial launch and sales in Canada, as well as the Company’s results of operations and its financial condition will depend on future developments, which are highly uncertain and cannot be predicted. The Company does not yet know the full extent of the impact of COVID-19 on its future business, operations or the global economy as a whole. Inflationary Environment The Company’s operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors that impact customer confidence and spending, including capital spending. Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the conflict in Ukraine, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus and spending programs, have led to higher inflation, which is likely, in turn, to lead to an increase in costs and may cause changes in fiscal and monetary policy, including increased interest rates. As a result of inflation, we have experienced and may continue to experience, cost increases. Although the Company may take measures to mitigate the impact of this inflation, if these measures are not effective, the Company’s business, financial condition, results of operations, and liquidity could be materially adversely affected.

Risks and Uncertainties

6 Months Ended

Jun. 30, 2022

Risks and Uncertainties

Risks and Uncertainties

2. RISKS AND UNCERTAINTIES

Going Concern Uncertainty

As of June 30, 2022, the Company had cash of $3.3 million. For the six months ended June 30, 2022, the Company had an operating loss of $8.0 million, and as of June 30, 2022, its accumulated deficit was $145.2 million. For the six months ended June 30, 2022, the Company had $0.3 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 financial statements are filed. The Company’s 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 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. As discussed in Note 11 to our unaudited condensed consolidated financial statements, on August 9, 2022, the Company closed on a public offering of its Class A common stock and warrants and received aggregate net proceeds of approximately $16.4 million. 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 and planned capital expenditures.

COVID-19 and Worldwide Economic Conditions

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a global pandemic, which has spread throughout the U.S. and around the world. The Company’s business, results of operations and financial condition have been and may continue to be adversely impacted by the COVID-19 pandemic and global economic conditions. The outbreak and spread of COVID-19 has significantly increased economic uncertainty. Authorities implemented, and continue to implement, numerous measures to try to contain COVID-19, such as travel bans and restrictions, quarantines, shelter in place orders and business shutdowns. The COVID-19 pandemic initially led to the closure of PoNS Authorized clinic locations across Canada. While all clinics had re-opened, as of December 31, 2021, many were operating at reduced capacity well into the first half of 2022, and patients have been and may continue to be less willing to return to these clinics, impacting the Company’s commercial activities and customer engagement efforts. Moreover, the Company’s ability to conduct its ongoing clinical experience programs and clinical trials has been and may be impaired due to trial participants’ attendance being adversely affected by COVID-19. In addition, the COVID-19 pandemic has and may continue to cause delays in the Company’s suppliers’ ability to ship materials that the Company relies upon as well as manufacturing delays as the result of labor shortages. Two of the Company’s suppliers experienced significant labor shortages as a result of COVID-19 from the end of November 2021 through early January 2022 which reduced the available resources needed to build and test product resulting in production delays of the PoNS devices. During March 2022 and continuing into the second quarter of 2022, an increase in COVID-19 related cases in certain parts of China resulted in the re-imposition of widespread shutdowns and restrictions in China and additional supply chain disruptions. It is currently unclear how long this latest series of shutdowns will continue and the Company may experience future manufacturing delays, which could place constraints on the Company’s ability to produce or deliver its products and meet customer demand or increase its costs.

Generally, worldwide economic conditions remain uncertain, particularly due to the COVID-19 pandemic. Access to capital markets is critical to our ability to operate. Declines and uncertainties in these markets in the past have severely restricted raising new capital and have affected companies’ ability to continue to expand or find existing development, manufacturing, regulatory and commercialization efforts. The Company requires significant capital for our current and expected operations. The general economic and capital market conditions both in the U.S. 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.

Disruptions in business or governmental operations due to COVID-19 may delay the timing for the submission and approval of the Company’s marketing applications with regulatory agencies. Further, the economic impact of the COVID-19 pandemic could affect the Company’s ability to access the public markets and obtain necessary capital in order to properly capitalize and continue its operations.

The extent to which the COVID-19 pandemic will continue to impact the Company’s business, including its U.S. commercial launch and sales in Canada, as well as the Company’s results of operations and its financial condition will depend on future developments, which are highly uncertain and cannot be predicted. The Company does not yet know the full extent of the impact of COVID-19 on its future business, operations or the global economy as a whole.

Inflationary Environment

The Company’s operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors that impact customer confidence and spending, including capital spending. Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the conflict in Ukraine, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus and spending programs, have led to higher inflation, which is likely, in turn, to lead to an increase in costs and may cause changes in fiscal and monetary policy, including increased interest rates. As a result of inflation, we have experienced and may

continue to experience, cost increases. Although the Company may take measures to mitigate the impact of this inflation, if these measures are not effective, the Company’s business, financial condition, results of operations, and liquidity could be materially adversely affected.

Supplemental Balance Sheet Disclosures - Inventory (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Inventory
Raw materials	$ 225	$ 171
Work-in-process	349	528
Finished goods	60	32
Inventory	634	731
Inventory reserve	(57)	(255)
Total inventory, net of reserve	577	$ 476
Inventory markdowns to net realizable value	(37)
Inventory reserves charged against work-in-process inventory	$ 161

Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Stock-Based Compensation
Number of Stock Options, Granted			443,170
Weighted Average Exercise Price, Granted			$ 3.88
Stock based compensation expense	$ 179	$ 2,629	$ 581	$ 3,156
Outstanding stock options (in shares)	1,070,404		1,070,404
Weighted average exercise price (in dollars per share)	$ 19.82		$ 19.82
Restricted Stock Units
Stock-Based Compensation
Outstanding unvested RSU (in shares)	20,281		20,281
Weighted average grant date fair value (in dollars per share)	$ 1.48		$ 1.48
Restricted Stock Units \| Directors
Stock-Based Compensation
Number of awards granted (in shares)			24,196
Weighted average grant date fair value of awards granted (in dollars per share)			$ 1.40
Unrestricted Common Stock \| Officer
Stock-Based Compensation
Number of awards granted (in shares)			8,011
Stock based compensation expense			$ 34
2022 Plan
Stock-Based Compensation
Common stock shares authorized for issuance under plan	1,121,272		1,121,272
Maximum number of shares of common stock that may be issued on the exercise of ISOs under the plan	11,212,720		11,212,720
Common stock remaining available for grant	95,672		95,672
2021 Inducement Plan
Stock-Based Compensation
Common stock remaining available for grant	31,000		31,000

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 22, 2013	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Commitments and Contingencies
Common stock issued for services (in shares)		4,263		8,791
License agreement with ANR
Commitments and Contingencies
Percentage of royalty on net revenue	4.00%
Royalty expense		$ 5	$ 3	$ 12	$ 6

Supplemental Balance Sheet Disclosures - Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accrued Expenses
Employees benefits	$ 462	$ 712
Professional services	24	174
Legal fees	44	23
Royalty fees	5	10
Franchise fees	20	193
Severance	37	258
Other	62	63
Total	$ 654	$ 1,433

Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Revenue from Contracts with Customers
Product sales, net	$ 119	$ 63	$ 302	$ 140
Contract with customer, assets	0		0		$ 0
Contract with customer, liabilities	0		0		$ 0
CANADA
Revenue from Contracts with Customers
Product sales, net	56	$ 63	239	$ 140
UNITED STATES
Revenue from Contracts with Customers
Product sales, net	$ 63		$ 63

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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Basic and Diluted Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator:
Net loss	$ (3,810)	$ (5,981)	$ (8,156)	$ (9,343)
Weighted average shares outstanding
Weighted average basic shares outstanding	3,928,704	2,317,389	3,858,676	2,179,878
Weighted average diluted shares outstanding	3,928,704	2,317,389	3,858,676	2,179,878
Loss per share attributable to common stock, basic	$ (0.97)	$ (2.58)	$ (2.11)	$ (4.29)
Loss per share attributable to common stock, diluted	$ (0.97)	$ (2.58)	$ (2.11)	$ (4.29)
Other disclosures
Common stock equivalents outstanding, excluded from computation of diluted loss per share	1,684,609	1,233,230	1,684,609	1,233,230

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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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+ Details

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net loss	$ (8,156)	$ (9,343)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	581	3,156
Common stock issued for services	34
Provision For Doubtful Accounts		(11)
Provision for (reversal of) inventory reserve	(37)
Foreign exchange loss (gain)	161	(323)
Depreciation expense	50	56
Amortization expense	94	106
Non-cash operating lease expense	26	30
Changes in operating assets and liabilities:
Accounts receivable	57	34
Other receivables	(4)	(13)
Inventory, net	(64)	(118)
Prepaid expenses	(134)	(98)
Other current assets	(22)
Operating lease liability	(19)	(31)
Accounts payable	(7)	229
Accrued liabilities	(779)	(366)
Deferred revenue	(127)	2
Net cash used in operating activities	(8,346)	(6,690)
Cash flows from investing activities:
Purchase of property and equipment	(12)	(19)
Proceeds from sale of property and equipment	6
Internally developed software		(2)
Net cash used in investing activities	(6)	(21)
Cash flows from financing activities:
Proceeds from issuances of common stock	644	11,037
Share issuance costs	(24)	(1,523)
Proceeds from the exercise of warrants and stock options		1,320
Net cash provided by financing activities	620	10,834
Effect of foreign exchange rate changes on cash		(29)
Net (decrease) increase in cash	(7,732)	4,094
Cash at beginning of period	11,005	3,331
Cash at end of period	3,273	$ 7,425
Supplemental cash flow information:
Right-of-use assets obtained in exchange for new lease liabilities	$ 151

Basic and Diluted Loss per Share (Tables)

6 Months Ended

Jun. 30, 2022

Basic and Diluted Loss per Share

Schedule of basic and diluted net loss per share


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Numerator:
Net loss attributable to common stock—basic and diluted	$	(3,810)	$	(5,981)	$	(8,156)	$	(9,343)
Denominator:
Weighted average basic and diluted shares outstanding		3,928,704		2,317,389		3,858,676		2,179,878

Loss per share attributable to common stock—basic and diluted	$	(0.97)	$	(2.58)	$	(2.11)	$	(4.29)

Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases

Schedule of lease information



Weighted average remaining lease term		2.75 years
Weighted average discount rate		4.4	%

Maturities of operating lease liabilities at June 30, 2022 were as follows (amounts in thousands):

2022 (remaining)	$	27
2023		58
2024		46
2025		12
Total future lease payments		143
Less: interest		(8)
Present value of lease liabilities	$	135

Organization, Consolidation and Presentation of Financial Statements

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements

Organization, Consolidation and Presentation of Financial Statements

1. ORGANIZATION, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTS

Helius Medical Technologies, Inc. (together with its wholly owned subsidiaries the “Company”) is a neurotech company focused on neurological wellness. The Company’s purpose is to develop, license or acquire non-implanted technologies targeted at reducing symptoms of neurological disease or trauma. The Company’s product, known as the Portable Neuromodulation Stimulator (“PoNS®”) has been commercially available in Canada since March 2019. The Company began accepting prescriptions for its PoNS product in the U.S. in the first quarter of 2022, and the first commercial sales began in April 2022. PoNS is authorized for sale as a Class IIa medical device in Australia. The Company is working to establish a distribution partner for Australia but currently does not expect to have commercial sales of PoNS in Australia in 2022. The Company operates and manages its business within one operating and reportable segment. The Company’s reporting currency is the U.S. Dollar (“USD$”).

The accompanying unaudited condensed consolidated financial statements 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 Company’s audited consolidated financial statements for the year ended December 31, 2021, included in its Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on March 14, 2022 (“2021 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. In the opinion of management, the information furnished in the consolidated condensed financial statements include all adjustments (consisting of only normal, recurring adjustments), considered necessary to present fairly the results of operations, financial position and cash flows of the Company.

Leases

6 Months Ended

Jun. 30, 2022

Leases

Leases

6. 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.

The following table presents information on the lease terms and discount rates:



Weighted average remaining lease term		2.75 years
Weighted average discount rate		4.4	%

Maturities of operating lease liabilities at June 30, 2022 were as follows (amounts in thousands):

2022 (remaining)	$	27
2023		58
2024		46
2025		12
Total future lease payments		143
Less: interest		(8)
Present value of lease liabilities	$	135

Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2022

Revenue from Contracts with Customers

Revenue from Contracts with Customers

4. REVENUE FROM CONTRACTS WITH CUSTOMERS

Product sales are derived from the sale of PoNS devices to clinics in Canada and directly to the patient in the U.S. For both Canada and U.S. customers, the Company’s performance obligation is met, and revenue is recognized, upon delivery to the customer and the customer’s acceptance. During the three and six months ended June 30, 2022 and 2021, Canada product net sales were $56 thousand, $239 thousand, $63 thousand and $140 thousand, respectively. For both the three and six months ended June 30, 2022, U.S. product net sales were $63 thousand. As of June 30, 2022 and December 31, 2021, the Company had no contract assets or liabilities on its condensed consolidated balance sheets.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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+ Details

Supplemental Balance Sheet Disclosures (Tables)

6 Months Ended

Jun. 30, 2022

Supplemental Balance Sheet Disclosures

Schedule of Inventories


	As of		As of
	June 30, 2022		December 31, 2021
Raw materials	$	225	$	171
Work-in-process		349		528
Finished goods		60		32
Inventory, gross	$	634	$	731
Inventory reserve		(57)		(255)
Inventory, net	$	577	$	476

Schedule of Accrued Expenses


	As of
	June 30, 2022		December 31, 2021
Employees benefits	$	462	$	712
Professional services		24		174
Legal fees		44		23
Royalty fees		5		10
Franchise fees		20		193
Severance		37		258
Other		62		63
Total	$	654	$	1,433

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Stock-Based Compensation
Share-based compensation expense	$ 179	$ 2,629	$ 581	$ 3,156
Tax benefit related to stock-based compensation	0	0	0	0
Non-Vested Time-Based Stock Options and Restricted Stock Units
Stock-Based Compensation
Unrecognized compensation cost related to unvested awards	2,600		$ 2,600
Weighted-average remaining vesting period			2 years 6 months
Performance-Based Stock Options
Stock-Based Compensation
Unrecognized compensation cost related to unvested awards	1,200		$ 1,200
Research And Development Expense.
Stock-Based Compensation
Share-based compensation expense	(49)	162	104	384
Cost Of Sales.
Stock-Based Compensation
Share-based compensation expense	4	3	7	3
Selling General And Administrative Expenses.
Stock-Based Compensation
Share-based compensation expense	$ 224	$ 2,464	$ 470	$ 2,769

Stock-Based Compensation - Fair Value Assumptions (Details) - Stock Options	6 Months Ended
	Jun. 30, 2022 $ / shares
Stock-Based Compensation
Risk-free interest rate	2.63%
Expected volatility	74.66%
Expected term	5 years 7 months 13 days
Expected dividend yield	0.00%
Fair value per option	$ 1.34

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue:
Product sales, net	$ 119	$ 63	$ 302	$ 140
Revenue from Contract with Customer, Product and Service [Extensible Enumeration]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Other revenue		$ 8	$ 7	$ 15
Total operating revenue	$ 119	71	309	155
Cost of sales:
Cost of product sales	$ 88	$ 67	$ 212	$ 83
Cost, Product and Service [Extensible Enumeration]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Gross profit	$ 31	$ 4	$ 97	$ 72
Operating expenses:
Research and development	953	1,377	2,717	2,694
Selling, general and administrative	2,461	4,744	5,280	6,939
Amortization expense	47	49	94	106
Total operating expenses	3,461	6,170	8,091	9,739
Operating loss	(3,430)	(6,166)	(7,994)	(9,667)
Other income (expense):
Other income			1
Foreign exchange (loss) gain	(380)	185	(163)	324
Net other income (expense)	(380)	185	(162)	324
Loss before provision for income taxes	(3,810)	(5,981)	(8,156)	(9,343)
Provision for income taxes
Net loss	(3,810)	(5,981)	(8,156)	(9,343)
Other comprehensive income (loss):
Foreign currency translation adjustments	351	(185)	149	(313)
Comprehensive loss	$ (3,459)	$ (6,166)	$ (8,007)	$ (9,656)
Net loss per share
Basic	$ (0.97)	$ (2.58)	$ (2.11)	$ (4.29)
Diluted	$ (0.97)	$ (2.58)	$ (2.11)	$ (4.29)
Weighted average shares outstanding
Basic	3,928,704	2,317,389	3,858,676	2,179,878
Diluted	3,928,704	2,317,389	3,858,676	2,179,878

Leases (Details)	Jun. 30, 2022 USD ($) lease
Leases
Number of operating leases \| lease	2
Weighted average remaining lease term	2 years 9 months
Weighted average discount rate	4.40%
Maturity of Lease Liabilities
2022 (remaining)	$ 27,000
2023	58,000
2024	46,000
2025	12,000
Total future minimum lease payments	143,000
Less: interest	(8,000)
Present value of lease liabilities	$ 135,000

Supplemental Balance Sheet Disclosures - Deferred Revenue (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 item	Dec. 31, 2021 USD ($)
Deferred Revenue
Amount of license fees not yet recognized under the Co-Promotion Agreement, included in deferred revenue	$ 200		$ 200
Amount of deferred revenue related to the fair value of the remaining poNS devices to be transferred that had been included as consideration in the Company's acquisition of Heuro			$ 100
Amount of deferred revenue recognized related to Product Sales	$ 100
Number Of Devices Resulted In Recognition Of Revenue \| item		0

Risks and Uncertainties - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Aug. 09, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Risks and Uncertainties
Cash		$ 3,273		$ 3,273		$ 11,005
Operating loss		3,430	$ 6,166	7,994	$ 9,667
Accumulated deficit		145,191		145,191		$ 137,035
Revenue from the sale of products or services		$ 119	$ 63	$ 302	$ 140
Subsequent Event \| Public Offering
Risks and Uncertainties
Net proceeds from issuance of common stock	$ 16,400

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

- Definition

+ References

+ Details

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Unaudited Condensed Consolidated Balance Sheets
Preferred stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	150,000,000	150,000,000
Common Stock, Shares, Issued	4,195,113	3,780,674
Common Stock, Shares, Outstanding	4,195,113	3,780,674

Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies

Commitments and Contingencies

10. COMMITMENTS AND CONTINGENCIES

The Company is obligated under a license agreement with Advanced NeuroRehabilitation, LLC (“ANR”) to pay a 4% royalty on net revenue from the sale of devices covered by the patent-pending technology. During the three months ended June 30, 2022 and 2021, the Company recorded royalty expense from the sale of devices of approximately $5 thousand and $3 thousand, respectively, in its condensed consolidated statement of operations and comprehensive loss. During the six months ended June 30, 2022 and 2021, the Company recorded royalty expense from the sale of devices of approximately $12 thousand and $6 thousand, respectively, in its condensed consolidated statement of operations and comprehensive loss.

Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Stockholders' Equity

Stockholders' Equity

7. STOCKHOLDERS’ EQUITY

During the three and six months ended June 30, 2022, the Company issued 391,363 shares of Class A common stock (“common stock”) at an average price of $1.65 per share to Lincoln Park Capital Fund, LLC (“Lincoln Park”) pursuant to a purchase agreement (the “LPC Purchase Agreement”) and registration rights agreement with Lincoln Park, as more fully described in the 2021 10-K. As of June 30, 2022, the Company does not intend to issue any additional shares under the LPC Purchase Agreement.

During the three and six months ended June 30, 2022, the Company issued common stock for services of 4,263 shares and 8,791 shares, respectively, with a value at issuance of $14 thousand and $34 thousand, respectively.

The Company has outstanding equity-classified warrants to purchase 593,924 shares of common stock at a weighted average exercise price of $16.32, with expiration dates ranging from March 2025 to February 2026. During the six months ended June 30, 2022, no warrants were exercised or cancelled.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2022	Aug. 09, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Amendment Flag	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
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		28,197,189
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

Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended			6 Months Ended
	Aug. 09, 2022	Sep. 30, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Subsequent Events
Stock based compensation expense			$ 179	$ 2,629	$ 581	$ 3,156
Subsequent Event \| Performance-Based Stock Options \| Forecast
Subsequent Events
Stock based compensation expense		$ 1,200
Subsequent Event \| Public Offering
Subsequent Events
Shares issued	18,560,000
Combined offering price (in dollars per share)	$ 0.75
Offering price per pre-funded warrant and accompanying Public Warrants (in dollars per share)	$ 0.749
Net proceeds from issuance of common stock	$ 16,400
Subsequent Event \| Pre-Funded Warrants \| Public Offering
Subsequent Events
Warrants to purchase number of common stock, shares	5,440,000
Exercise price (in dollars per share)	$ 0.001
Subsequent Event \| Public Warrants \| Public Offering
Subsequent Events
Warrants to purchase number of common stock, shares	36,000,000
Exercise price (in dollars per share)	$ 0.75
Warrants expiration period	5 years

Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Class A Common Stock.	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Total
Beginning Balance at Dec. 31, 2020	$ 1	$ 123,872	$ (118,903)	$ (1,099)	$ 3,871
Beginning Balance, Shares at Dec. 31, 2020	1,484,362
Issuance of common stock in February 2021 offering	$ 1	8,398			8,399
Issuance of common stock in February 2021 offering (in shares)	744,936
Issuance of warrants in February 2021 offering		2,638			2,638
Share issuance costs		(1,361)			(1,361)
Exercise of warrants		1,318			1,318
Exercise of warrants (in shares)	81,895
Exercise of stock options		2			2
Exercise of stock options (in shares)	214
Settlement of restricted stock units, Shares	1,028
Stock-based compensation		3,156			3,156
Stock-based compensation (in shares)	5,337
Other comprehensive income				(313)	(313)
Net loss			(9,343)		(9,343)
Ending Balance at Jun. 30, 2021	$ 2	138,023	(128,246)	(1,412)	8,367
Ending Balance, Shares at Jun. 30, 2021	2,317,772
Beginning Balance at Mar. 31, 2021	$ 2	135,388	(122,265)	(1,227)	11,898
Beginning Balance, Shares at Mar. 31, 2021	2,311,868
Exercise of warrants		4			4
Exercise of warrants (in shares)	262
Exercise of stock options		2			2
Exercise of stock options (in shares)	214
Settlement of restricted stock units, Shares	91
Stock-based compensation		2,629			2,629
Stock-based compensation (in shares)	5,337
Other comprehensive income				(185)	(185)
Net loss			(5,981)		(5,981)
Ending Balance at Jun. 30, 2021	$ 2	138,023	(128,246)	(1,412)	8,367
Ending Balance, Shares at Jun. 30, 2021	2,317,772
Beginning Balance at Dec. 31, 2021	$ 4	149,412	(137,035)	(1,125)	11,256
Beginning Balance, Shares at Dec. 31, 2021	3,780,674
Common stock issued under equity line of credit		638			638
Common stock issued under equity line of credit (in shares)	391,363
Settlement of restricted stock units, Shares	6,274
Common stock issued for services		34			$ 34
Common stock issued for services (in shares)	8,791				8,791
Stock-based compensation		581			$ 581
Stock-based compensation (in shares)	8,011
Other comprehensive income				149	149
Net loss			(8,156)		(8,156)
Ending Balance at Jun. 30, 2022	$ 4	150,665	(145,191)	(976)	4,502
Ending Balance, Shares at Jun. 30, 2022	4,195,113
Beginning Balance at Mar. 31, 2022	$ 4	149,834	(141,381)	(1,327)	7,130
Beginning Balance, Shares at Mar. 31, 2022	3,794,797
Common stock issued under equity line of credit		638			638
Common stock issued under equity line of credit (in shares)	391,363
Settlement of restricted stock units, Shares	4,690
Common stock issued for services		14			$ 14
Common stock issued for services (in shares)	4,263				4,263
Stock-based compensation		179			$ 179
Other comprehensive income				351	351
Net loss			(3,810)		(3,810)
Ending Balance at Jun. 30, 2022	$ 4	$ 150,665	$ (145,191)	$ (976)	$ 4,502
Ending Balance, Shares at Jun. 30, 2022	4,195,113

Supplemental Balance Sheet Disclosures

6 Months Ended

Jun. 30, 2022

Supplemental Balance Sheet Disclosures

Supplemental Balance Sheet Disclosures

5. SUPPLEMENTAL BALANCE SHEET DISCLOSURES

Components of selected captions in the condensed consolidated balance sheets consisted of the following (amounts in thousands):

Accounts receivable, net

Accounts receivable from product sales are net of allowance for doubtful accounts of $351 and $355 as of June 30, 2022 and December 31, 2021, respectively.

Inventory, net


	As of		As of
	June 30, 2022		December 31, 2021
Raw materials	$	225	$	171
Work-in-process		349		528
Finished goods		60		32
Inventory, gross	$	634	$	731
Inventory reserve		(57)		(255)
Inventory, net	$	577	$	476

During the six months ended June 30, 2022 existing reserves of $161 were charged against work-in-process inventory and inventory reserves were decreased by $37.

Accrued expenses


	As of
	June 30, 2022		December 31, 2021
Employees benefits	$	462	$	712
Professional services		24		174
Legal fees		44		23
Royalty fees		5		10
Franchise fees		20		193
Severance		37		258
Other		62		63
Total	$	654	$	1,433

Deferred revenue

License Revenue

The Company recorded deferred license fee revenue in connection with a Clinical Research and Co-Promotion Agreement with Health Tech Connex Inc. (“HTC”) (the “Co-Promotion Agreement”), as more fully described in the 2021 10-K. Deferred revenue as of both June 30, 2022 and December 31, 2021 included approximately $200 of license fees not yet recognized under the Co-Promotion Agreement. License fee revenue recognized is included in Other Revenue in the Condensed Consolidated Statements of Operations and Comprehensive Loss. On January 31, 2022, the Company notified HTC of its material breaches under the Co-Promotion Agreement which HTC failed to cure under the terms of the Co-Promotion Agreement and as such it is the Company’s position that this exclusivity right is no longer in effect. The Company and HTC are currently discussing opportunities to work together moving forward.

Product Sales

Deferred revenue as of December 31, 2021 included approximately $100 for the fair value of the remaining 16 PoNS devices to be transferred that had been included as consideration in the Company’s acquisition of Heuro Canada, Inc. (“Heuro”). During the six months ended June 30, 2022, the remaining 16 PoNS devices were transferred and the remaining $100 of deferred revenue was recognized in Product Sales in the Condensed Consolidated Statements of Operations and Comprehensive Loss. There were no PoNS devices, included as consideration in the Heuro acquisition, transferred during the six-month period ended June 30, 2021.

Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Stock-Based Compensation

Stock-Based Compensation

8. STOCK-BASED COMPENSATION

On May 23, 2022, the Company’s stockholders approved the Helius Medical Technologies, Inc. 2022 Equity Incentive Plan (“2022 Plan”), which had been adopted by the Company’s Board of Directors on February 16, 2022. The 2022 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of the Company’s affiliates. Vesting and the term of an option is determined at the discretion of the Company’s Board of Directors. Initially, a maximum of 1,121,272 shares of common stock may be issued. The automatic increase provision in the 2022 Plan provides for an annual increase to the maximum number of authorized shares on January 1 of each year beginning on January 1, 2023 through January 1, 2027, to an amount equal to (i) 20% of the fully diluted number of shares of common stock outstanding on December 31 of the fiscal year before the date of each automatic increase, or (ii) a lesser number of shares determined by the Board prior to the date of the increase. The maximum number of shares of common stock that may be issued on the exercise of ISOs under the 2022 Plan is 11,212,720. Effective with the approval of the 2022 Plan, the Company ceased granting awards under the 2018 Omnibus Incentive Plan. However, outstanding stock options granted prior to the effective date of the 2022 Plan are still governed by the respective predecessor plan under which they were granted, which are described more fully in the 2021 10-K. As of June 30, 2022, the remaining shares available

for grant were 95,672 shares under the 2022 Plan and 31,000 shares under the Helius Medical Technologies, Inc. 2021 Inducement Plan.

During the six months ended June 30, 2022, the Company granted 443,170 stock options at a weighted average exercise price of $3.88 per share. The grant date fair values of these stock options were estimated using the Black-Scholes option pricing model using the following weighted average assumptions:


	Six Months Ended
		June 30, 2022
Risk-free interest rate		2.63	%
Expected volatility		74.66	%
Expected term (years)		5.62
Expected dividend yield		0.00	%
Fair value per option	$	1.34

During the six months ended June 30, 2022, the Company’s non-employee directors received a grant of 24,196 restricted stock units at a weighted average grant date fair value of $1.40 per share. Share-based compensation expense for the six months ended June 30, 2022 includes a grant to an officer of the Company of 8,011 shares of unrestricted common stock valued at $34 thousand.

As of June 30, 2022, there were an aggregate of 1,070,404 stock options outstanding with a weighted average exercise price of $19.82 per share and 20,281 unvested restricted stock units outstanding with a weighted average grant date fair value of $1.48 per share.

Compensation expense related to all stock-based compensation, net of forfeitures, was as follows (amounts in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Research and development	$	(49)	$	162	$	104	$	384
Cost of sales	$	4	$	3		7		3
Selling, general and administrative		224		2,464		470		2,769
Total	$	179	$	2,629	$	581	$	3,156

There were no tax benefits recognized related to stock-based compensation expense during these periods.

As of June 30, 2022, the unrecognized compensation cost related to non-vested time-based stock options and restricted stock units was $2.6 million which will be recognized over a weighted-average remaining vesting period of approximately 2.5 years. As of June 30, 2022, the unrecognized compensation cost related to performance-based stock options was $1.2 million. Recognition of compensation expense for performance-based stock options will commence at the time it is determined to be probable that the performance conditions will be met. Compensation cost is not adjusted for estimated forfeitures, but instead is adjusted upon an actual forfeiture of an award.

Basic and Diluted Loss per Share

6 Months Ended

Jun. 30, 2022

Basic and Diluted Loss per Share

Basic and Diluted Loss per Share

9. BASIC AND DILUTED LOSS PER SHARE

Basic loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Diluted loss per share excludes, when

applicable, the potential impact of stock options, unvested restricted stock units and common stock warrants because their effect would be anti-dilutive due to the net loss.

The calculation of basic and diluted net loss per share attributable to common stock was as follows (amounts in thousands except share and per share data):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Numerator:
Net loss attributable to common stock—basic and diluted	$	(3,810)	$	(5,981)	$	(8,156)	$	(9,343)
Denominator:
Weighted average basic and diluted shares outstanding		3,928,704		2,317,389		3,858,676		2,179,878

Loss per share attributable to common stock—basic and diluted	$	(0.97)	$	(2.58)	$	(2.11)	$	(4.29)

Common stock equivalents outstanding of 1,684,609 for both the three and six months ended June 30, 2022 and 1,233,230 for both the three and six months ended June 30, 2021 were not included in the computation of diluted loss per share because the effect would have been anti-dilutive.

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets
Cash	$ 3,273	$ 11,005
Accounts receivable, net	9	66
Other receivables	187	185
Inventory, net	577	476
Prepaid expenses	996	862
Other current assets	22
Total current assets	5,064	12,594
Property and equipment, net	365	409
Other assets
Goodwill	753	763
Intangible assets, net	236	333
Operating lease right-of-use asset, net	128	3
Total other assets	1,117	1,099
TOTAL ASSETS	6,546	14,102
Current liabilities
Accounts payable	1,043	1,069
Accrued liabilities	654	1,433
Operating lease liability	52	3
Deferred revenue	28	148
Total current liabilities	1,777	2,653
Non-current liabilities
Operating lease liability	83
Deferred revenue	184	193
TOTAL LIABILITIES	2,044	2,846
Commitments and contingencies (Note 10)
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2022 and December 31, 2021
Class A common stock, $0.001 par value; 150,000,000 shares authorized; 4,195,113 and 3,780,674 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	4	4
Additional paid-in capital	150,665	149,412
Accumulated deficit	(145,191)	(137,035)
Accumulated other comprehensive loss	(976)	(1,125)
TOTAL STOCKHOLDERS' EQUITY	4,502	11,256
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 6,546	$ 14,102

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Stock-Based Compensation

Estimation Using Black-Scholes Option Pricing Model With Following Weighted Average Assumptions


	Six Months Ended
		June 30, 2022
Risk-free interest rate		2.63	%
Expected volatility		74.66	%
Expected term (years)		5.62
Expected dividend yield		0.00	%
Fair value per option	$	1.34

Summary of Stock-Based Compensation Expense is Classified in Condensed Consolidated Statements of Operations and Comprehensive Loss


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Research and development	$	(49)	$	162	$	104	$	384
Cost of sales	$	4	$	3		7		3
Selling, general and administrative		224		2,464		470		2,769
Total	$	179	$	2,629	$	581	$	3,156