HeartSciences Inc. (HSCS) is a pre-revenue medical device company developing AI-ECG diagnostic technology. Under a liquidation lens as of January 31, 2026, the recovery posture is deeply negative and deteriorating relative to the equity book value. Total assets are $7.6M against total liabilities of $4.9M, producing reported stockholders' equity of $2.7M. However, applying liquidation haircuts materially erodes the asset side: cash of $3.4M recovers at 100%; inventory of $0.66M (after existing $85.6K reserve) recovers at roughly $0.39M at 60%; PP&E net of $46K recovers at perhaps $23K-$32K; and intangible assets of $1.66M (primarily IP licenses and capitalized software of $0.46M) recover at zero under the intangibles-haircut lens. The $0.30M ROU asset is extinguished as the corresponding $0.35M lease liability remains at face. Against these haircut assets totaling approximately $3.9M, all liabilities stay at face value: current notes payable of $3.1M (Streeterville instruments with OID and acceleration provisions), long-term notes of $0.42M (FRV note), accounts payable of $0.41M, accrued interest of $0.20M, and operating lease liabilities of $0.35M, for a total liability load of approximately $4.9M. Estimated net liquidation recovery to equity is approximately negative $1.0M to negative $1.1M, consistent with the MFFAIS-reported CLV/LLV of negative $1.1M. The going concern disclosure from the July 2025 audit opinion remains operative; management restated the going concern risk in this filing, noting existing cash is insufficient to fund operations for the next twelve months. Key change versus the prior quarter (October 31, 2025): the $3.6M Streeterville Note (principal $3.61M, net proceeds $3.0M after $600K OID and $5K expenses, 12% interest, 18-month maturity to July 2027) was added to the liability stack in January 2026. The $2.5M Streeterville Note, previously outstanding, was repaid during the nine-month period and replaced by this new facility; its maturity was subsequently extended to June 30, 2026 via a post-balance-sheet amendment. The Technology Agreement with the founder carries a contingent royalty obligation up to $3.5M that accelerates to an immediately due secured debt in bankruptcy, sitting ahead of other creditors on the covered IP. This obligation is discussed in MD&A and the commitments note but is not separately tagged as a liability in XBRL — it represents a material off-balance-sheet claim in a liquidation scenario. Accumulated deficit stands at $82.5M. The Series D Preferred Stock offering (ongoing, up to $15M) had raised $6.7M gross through the filing date with 1.9M units issued and significant conversion activity, which has improved the equity cushion from the Nasdaq-deficiency level of early 2025 but does not materially change the liquidation recovery math.
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