HeartSciences (HSCS) risk factors, FY2026 10-K

Risks Related to Our Financial Condition and Capital Requirements

1. 01If we are unable to maintain compliance with all applicable continued listing requirements and standards of Nasdaq, our Common Stock could be delisted from Nasdaq30% rewritten
2. 05There is substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing either on reasonable terms or at allNew
3. 06We have a limited operating history and we have incurred significant operating losses since our inception, and anticipate that we will incur continued losses for the foreseeable future39% rewritten
4. 07experience any delays or encounter issues with respect to any of the above, including, but not limited to, failed studies, complex results, safety issues or other regulatory challenges that require longer follow-up of existing studies or additional supportive studies in order to pursue marketing approval92% rewritten
5. 08We may in the future be required to effect additional reverse stock splits or other corporate actions to maintain compliance with Nasdaq continued listing requirementsNew
6. 09we may face third-party claims of intellectual property infringement30% rewritten
7. 10We will need to raise substantial additional funding, which may not be available on acceptable terms, or at all. Failure to obtain funding on acceptable terms and on a timely basis may require us to curtail, delay or discontinue our development efforts and other operations
8. 11the level of revenue, if any, received from commercial sales of our products if we receive approval for sales launch of our products into the U.S
9. 12All of our assets are subject to security interests
10. 13We have identified weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future
11. 14insufficient number of staff to maintain optimal segregation of duties and levels of oversight37% rewritten

Risks Related to Our Business and Industry

1. 02Our AI-ECG algorithms may exhibit performance limitations, including mode drift basis, that could harm clinical adoption and expose us to liabilityNew
2. 15disruptions at the FDA caused by funding shortages, government shutdowns, organizational changes, or public health emergenciesNew
3. 16Our success will be dependent upon physician acceptance
4. 17time commitment and skill development that may be required to gain familiarity and proficiency with our products
5. 18Our products do not currently have coverage and reimbursement approved for third-party payor coverage or reimbursement. Such reimbursement, if and when approved, will vary based on the identity of the third-party
6. 19We will be dependent upon third-party manufacturers and suppliers, making us vulnerable to supply shortages and problems, increased costs and quality or compliance issues, any of which could harm our business
7. 20our suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements
8. 21Interruptions in computing and data management cloud systems could impair the delivery of our cardiac cloud-based diagnostic services67% rewritten
9. 22Our proprietary data analytics engine may not operate properly, which could damage our reputation, give rise to claims against us or divert application of our resources from other purposes, any of which could harm our business and operating resultsNew
10. 23Our AI-ECG algorithms may exhibit performance limitations, including model drift or bias, that could harm clinical adoption and expose us to liabilityNew
11. 24Medical device development is costly and involves continual technological change in order to remain competitive which may render our products obsolete
12. 25Our marketplace strategy depends on third-party AI-ECG algorithm developers, and our business could be harmed if we are unable to enter into or maintain commercial arrangements with such developers on acceptable termsNew
13. 26We face intense competition in the market and, as a result, we may be unable to effectively compete in our industry
14. 27If we are not able to attract and retain highly skilled managerial, scientific, technical and marketing personnel, we may not be able to implement our business model successfully
15. 28We may need to expand our organization and we may experience difficulties in recruiting additional employees and consultants, which could disrupt our operations
16. 29Our management team has limited experience managing a public company
17. 30We manage our business through a small number of employees and key consultants
18. 31We expect to conduct business outside of the U.S. and doing so exposes us to additional business, regulatory, political, operational, financial and economic risks
19. 32We could become subject to product liability, warranty or similar claims and product recalls that could be expensive, divert management ’ s attention and harm our business reputation and financial results
20. 33Our business and operations would suffer in the event of computer system failures, cyber-attacks or a deficiency in our cybersecurity
21. 34Our business may be impacted by changes in general economic conditions
22. 35Our business and operations, and the operations of our suppliers and customers, have been in the past, and may in the future be adversely affected by epidemics, pandemics or other public health crises

Risks Related to Product Development and Regulatory Approval

1. 03Evolving FDA regulatory frameworks for AI-and machine learning-enabled medical devices may impose additional requirements on our products and limit our ability to update or improve our algorithmsNew
2. 36Our products and operations are subject to extensive government regulation and oversight both in the U.S. and abroad, and our failure to comply with applicable requirements could harm our business
3. 37If and when our products are ready for sales launch into the U.S., modifications to our marketed products may require new 510(k) clearances or may require us to cease marketing or recall the modified products until clearances or approvals are obtained78% rewritten
4. 38Evolving FDA regulatory frameworks for AI- and machine learning-enabled medical devices, including Predetermined Change Control Plans, may impose additional requirements on our products and limit our ability to update or improve our algorithmsNew
5. 39Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates
6. 40Medical device development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results
7. 41If the third parties on which we rely to conduct our clinical studies and to assist us with pre-clinical development do not perform as required or expected, we may be delayed or unable to obtain regulatory clearance or approval for sales launch of our products in the U.S
8. 42We may encounter substantial delays in our clinical studies, or we may fail to demonstrate specificity and sensitivity to the satisfaction of applicable regulatory authorities
9. 43delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product for use in clinical studies or the inability to do any of the foregoing
10. 44The results of future clinical studies may not support additional or new claims for future products or may result in the discovery of adverse side effects
11. 45Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market
12. 46medical device reporting, sale, promotion, import, export, registration, and listing of devices
13. 47post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device
14. 48Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations
15. 49The MyoVista wav ECG device must be manufactured in accordance with federal, state and foreign regulations, and we could be forced to recall our devices or terminate production if we fail to comply with these regulations
16. 50Any of these actions could significantly and negatively affect supply of our device. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs
17. 51The MyoVista wav ECG device may in the future be subject to product recalls that could harm our reputation, business and financial results
18. 52We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties
19. 53Legislative or regulatory reforms in the United States or the European Union may make it more difficult and costly for us to obtain regulatory clearances or approvals for our devices or to manufacture, market or distribute our devices after clearance or approval is obtained
20. 54The EU Artificial Intelligence Act imposes additional regulatory obligations on AI-based medical devices, which could increase our compliance costs and delay or limit our ability to commercialize AI-ECG algorithms in the EUNew
21. 55Healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations

Risks Related to Our Intellectual Property

1. 04The EU Artificial Intelligence Act imposes additional regulatory obligations on AI-based medical devices that could increase our compliance costs and delay or limit our ability to commercialize AI-ECG algorithms in the EUNew
2. 56If we are unable to obtain and maintain effective patent rights for our products, we may not be able to compete effectively in our markets. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us
3. 57There is no guarantee that the patent applications that we submitted with regards to our technologies will result in patent grants. In the event of failure to obtain patent registration, our developments will not be proprietary, which might allow other entities to manufacture our device and compete with them
4. 58If we cannot obtain and maintain effective patent rights for our products, we may not be able to compete effectively, and our business and results of operations would be harmed
5. 59Intellectual property rights of third-parties could adversely affect our ability to market our products, and we might be required to litigate or obtain licenses from third parties in order to develop or market our products. Such litigation or licenses could be costly or not available on commercially reasonable terms
6. 60We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful
7. 61Third-party claims of intellectual property infringement may prevent or delay our development and marketing efforts
8. 62Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents
9. 63We may not be able to protect our intellectual property rights throughout the world63% rewritten

Risks Related to Our License Agreements with Mount Sinai

1. 64We depend in part on the Mount Sinai Licenses for certain of our planned AI-ECG algorithm offeringsNew
2. 65Our future financial performance will depend in part on the successful integration, improvement and software updates from the Mount Sinai algorithms
3. 66Failure to successfully introduce, improve or update our products on a cost-effective basis, or delays in customer decisions related to the evaluation of our products could cause us to lose market acceptance and could materially adversely affect our business, financial condition and results of operations84% rewritten
4. 67the manufacturing process or facilities we use or contract to use may not meet applicable requirements

Risks Related to Our Proposed Merger with Fortitude

1. 68potential negative reactions from the financial markets or from our customers, business partners, employees and/or shareholdersNew

Risks Related to the Ownership of our Securities

1. 69The market price of our Common Stock may be highly volatile, and you could lose all or part of your investment
2. 70other events or factors, including those resulting from war, incidents of terrorism or responses to these events
3. 71Future sales and issuances of our Common Stock or rights to purchase our Common Stock, including pursuant to our 2023 Equity Incentive Plan and other equity securities could result in dilution of the percentage ownership of our stockholders and could cause our stock price to fall36% rewritten
4. 72If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they publish negative reports regarding our business or our securities, our share price and trading volume could decline
5. 73Our Board of Directors is authorized to issue and designate shares of our preferred stock in additional series without shareholder approval
6. 74We may be subject to securities litigation, which is expensive and could divert management attention
7. 75We have never paid cash dividends on our Common Stock, and we do not anticipate paying any cash dividends in the foreseeable future
8. 76We are an “ emerging growth company ” and we cannot be certain if the reduced disclosure requirements applicable to “ emerging growth companies ” will make our Common Stock or IPO Warrants less attractive to investors
9. 77Anti-takeover provisions could make a third party acquisition of us difficult
10. 78Provisions of the IPO Warrants, the Remaining Bridge Warrants and our Series C Preferred Stock could discourage an acquisition of us by a third party
11. 79Financial Industry Regulatory Authority, Inc. ( “ FINRA ” ) sales practice requirements may limit a stockholder ’ s ability to buy and sell our shares Common Stock
12. 80If our shares become subject to the penny stock rules, it would become more difficult to trade our shares26% rewritten