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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39314

 

TALKSPACE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

84-4636604

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

Not applicable

Not applicable

(Address of principal executive offices)

(Zip Code)

(212) 284-7206

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.0001 per share

 

TALK

 

Nasdaq Stock Market

Warrants to purchase common stock

 

TALKW

 

Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of August 5, 2022, the registrant had 158,181,841 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 


Table of Contents

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

6

 

Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021

6

 

Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2022 and 2021

7

 

Condensed Consolidated Statements of Stockholder’s Equity (Deficit) (unaudited) for the three and six months ended June 30, 2022 and 2021

8

 

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2022 and 2021

9

 

Notes to Unaudited Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

26

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

Signatures

31

 

 

 

2


 

basis of presentation

 

As used in this Quarterly Report, unless the context otherwise requires, references to:

2021 Plan” are to the Talkspace, Inc. 2021 Incentive Award Plan;
Business Combination” are to, together, (i) the First Merger and (ii) the Second Merger;
2021 ESPP” are to the Talkspace, Inc. 2021 Employee Stock Purchase Plan;
Exchange Act” are to the Securities Exchange Act of 1934, as amended;
First Merger” are to the merger of First Merger Sub with and into Old Talkspace;
First Merger Sub” are to Tailwind Merger Sub I, Inc.;
HEC” are to Hudson Executive Investment Corp., a Delaware corporation;
HEC Forward Purchase Agreement” are to the forward purchase agreement, entered into as of June 8, 2020, by and between HEC and HEC Fund, as amended by that certain First Amendment to Forward Purchase Agreement, dated January 12, 2021;
HEC Fund” are to HEC Master Fund LP, a Delaware limited partnership;
HEC IPO” are to the initial public offering by HEC which closed on June 11, 2020;
Old Talkspace” are to Groop Internet Platform, Inc. (d/b/a “Talkspace”), a Delaware corporation;
private placement warrants” are to the warrants issued by HEC to the Sponsor in a private placement simultaneously with the closing of the HEC IPO and the warrants originally sold as part of the units in the HEC Forward Purchase;
public warrants” are to the warrants originally sold as part of the units in the HEC IPO (whether they were purchased in the HEC IPO or thereafter in the open market);
SEC” are to the United States Securities and Exchange Commission;
Second Merger Sub” are to Tailwind Merger Sub II, LLC;
Sponsor” are to HEC Sponsor LLC, a Delaware limited liability company;
Warrant Agreement” are to that certain Warrant Agreement, dated as of June 8, 2020, by and between HEC and Continental Stock Transfer & Trust Company; and

 

3


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements regarding our future results of operations and financial position, industry and business trends, stock-based compensation, revenue recognition, business strategy, plans and market growth.

 

The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: we have a history of losses, which we expect to continue, and we may never achieve or sustain profitability; our business and the markets we operate in are new and rapidly evolving which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter; we may not grow at the rates we historically have achieved or at all; the virtual behavioral health market is immature and volatile, and if it does not develop, if it develops more slowly than we expect, if it encounters negative publicity or if our services are not competitive, the growth of our business will be harmed; the outbreak of the novel coronavirus (COVID-19) and its impact on business and economic conditions; a deterioration in general economic conditions as a result of inflation, increased interest rates or otherwise could adversely affect our business, results of operations and financial condition, and the extent and duration of those effects are uncertain; we operate in a competitive industry, and if we are not able to compete effectively, our business, financial condition and results of operations will be harmed; if growth in the number of clients and members or providers on our platform decreases, or the number of products or services that we are able to sell to our clients and members decreases, due to legal, economic or business developments, our business, financial condition and results of operations will be harmed; we may be unsuccessful in achieving broad market education and changing consumer purchasing habits; our growth depends in part on the success of our strategic relationships with third parties that we provide services to; our virtual behavioral healthcare strategies depend on our ability to maintain and expand our network of therapists, psychiatrists and other providers; developments affecting spending by the healthcare industry could adversely affect our business; our business could be adversely affected by legal challenges to our business model or by actions restricting our ability to provide the full range of our services in certain jurisdictions; we are dependent on our relationships with affiliated professional entities, which we do not own, to provide physician and other professional services, and our business, financial condition and our ability to operate in certain jurisdictions would be adversely affected if those relationships were disrupted or if our arrangements with our providers or clients are found to violate state laws prohibiting the corporate practice of medicine or fee splitting; the impact on us of recent healthcare legislation and other changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition and results of operations; changes in consumer sentiment or laws, rules or regulations regarding the use of cookies and other tracking technologies and other privacy matters could have a material adverse effect on our ability to generate net revenues and could adversely affect our ability to collect proprietary data on consumer behavior; our use and disclosure of personal information, including PHI, personal data, and other health information, is subject to state, federal or other privacy and security regulations; any failure to protect, enforce or defend our intellectual property rights could impair our ability to protect our technology and our brand; legal proceedings could cause us to incur unforeseen expenses and could occupy a significant amount of our management’s time and attention; and the other important factors discussed in Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and described from time to time in our future reports filed with the SEC. The forward-looking statements in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

4


 

 

You should read this Quarterly Report and the risk factors discussed in Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events or otherwise.

5


Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

TALKSPACE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

June 30, 2022

 

 

December 31, 2021

 

(U.S. dollars in thousands, except share and per share data)

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 



 

CURRENT ASSETS:

 



 

 



 

Cash and cash equivalents

 

$

166,622

 

 

$

198,256

 

Accounts receivable, net of reserves of $4,698 and $4,918 as of June 30, 2022 and December 31, 2021, respectively

 

 

7,162

 

 

 

5,512

 

Other current assets

 

 

3,940

 

 

 

9,562

 

Total current assets

 

 

177,724

 

 

 

213,330

 

Property and equipment, net

 

 

623

 

 

 

624

 

Intangible assets, net

 

 

2,900

 

 

 

3,436

 

Goodwill

 

 

6,134

 

 

 

6,134

 

Other long-term assets

 

 

85

 

 

 

82

 

Total assets

 

$

187,466

 

 

$

223,606

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 



 

 



 

CURRENT LIABILITIES:

 



 

 



 

Accounts payable

 

$

7,810

 

 

$

7,429

 

Deferred revenues

 

 

5,950

 

 

 

7,186

 

Accrued expenses and other current liabilities

 

 

10,898

 

 

 

12,562

 

Total current liabilities

 

 

24,658

 

 

 

27,177

 

Warrant liabilities

 

 

5,287

 

 

 

4,070

 

Other long-term liabilities

 

 

267

 

 

 

86

 

Total liabilities

 

 

30,212

 

 

 

31,333

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 



 

 



 

Common stock of $0.0001 par value — Authorized: 1,000,000,000 shares at June 30, 2022 and December 31, 2021; Issued and outstanding: 157,372,616 and 152,862,447 shares at June 30, 2022 and December 31, 2021, respectively

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

372,151

 

 

 

363,788

 

Accumulated deficit

 

 

(214,912

)

 

 

(171,530

)

Total stockholders’ equity

 

 

157,254

 

 

 

192,273

 

Total liabilities and stockholders’ equity

 

$

187,466

 

 

$

223,606

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

6


Table of Contents

TALKSPACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(U.S. dollars in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

$

29,844

 

 

$

30,983

 

 

$

59,994

 

 

$

58,140

 

Cost of revenues

 

 

15,297

 

 

 

11,697

 

 

 

30,426

 

 

 

21,511

 

Gross profit

 

 

14,547

 

 

 

19,286

 

 

 

29,568

 

 

 

36,629

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development, net

 

 

5,576

 

 

 

4,781

 

 

 

10,611

 

 

 

7,745

 

Clinical operations

 

 

2,316

 

 

 

1,913

 

 

 

4,092

 

 

 

3,990

 

Sales and marketing

 

 

18,931

 

 

 

26,443

 

 

 

40,339

 

 

 

48,694

 

General and administrative

 

 

8,792

 

 

 

13,710

 

 

 

16,802

 

 

 

16,318

 

Total operating expenses

 

 

35,615

 

 

 

46,847

 

 

 

71,844

 

 

 

76,747

 

Operating loss

 

 

21,068

 

 

 

27,561

 

 

 

42,276

 

 

 

40,118

 

Financial expense, net

 

 

1,865

 

 

 

2,870

 

 

 

996

 

 

 

3,043

 

Loss before taxes on income

 

 

22,933

 

 

 

30,431

 

 

 

43,272

 

 

 

43,161

 

Taxes on income

 

 

89

 

 

 

10

 

 

 

110

 

 

 

18

 

Net loss

 

$

23,022

 

 

$

30,441

 

 

$

43,382

 

 

$

43,179

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share

 

$

0.15

 

 

$

1.15

 

 

$

0.28

 

 

$

2.15

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares used in computing basic and diluted net loss per share

 

 

155,709,901

 

 

 

26,362,369

 

 

 

154,901,165

 

 

 

20,097,094

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

7


Table of Contents

TALKSPACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(U.S. dollars in thousands, except share and per share data)

 

Convertible Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Three and Six Months Ended June 30, 2022

 

Number of Shares
Outstanding

 

 

Amount

 

 

Number of Shares
Outstanding

 

 

Amount

 

 

Additional paid-in
capital

 

 

Accumulated
deficit

 

 

Total

 

Balance as of December 31, 2021

 

 

 

 

$

 

 

 

152,862,447

 

 

$

15

 

 

$

363,788

 

 

$

(171,530

)

 

$

192,273

 

Exercise of stock options

 

 

 

 

 

 

 

 

2,164,870

 

 

*)

 

 

 

2,063

 

 

 

 

 

 

2,063

 

Restricted stock units vested, net of tax

 

 

 

 

 

 

 

 

77,338

 

 

*)

 

 

 

(67

)

 

 

 

 

 

(67

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,368

 

 

 

 

 

 

2,368

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,360

)

 

 

(20,360

)

Balance as of March 31, 2022 (unaudited)

 

 

 

 

 

 

 

 

155,104,655

 

 

 

15

 

 

 

368,152

 

 

 

(191,890

)

 

 

176,277

 

Exercise of stock options

 

 

 

 

 

 

 

 

1,092,515

 

 

*)

 

 

 

286

 

 

 

 

 

 

286

 

Restricted stock units vested, net of tax

 

 

 

 

 

 

 

 

1,175,446

 

 

*)

 

 

 

(126

)

 

 

 

 

 

(126

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,839

 

 

 

 

 

 

3,839

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,022

)

 

 

(23,022

)

Balance as of June 30, 2022 (unaudited)

 

 

 

 

$

 

 

 

157,372,616

 

 

$

15

 

 

$

372,151

 

 

$

(214,912

)

 

$

157,254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Three and Six Months Ended June 30, 2021

 

Number of Shares
Outstanding

 

 

Amount

 

 

Number of Shares
Outstanding

 

 

Amount

 

 

Additional paid-in
capital

 

 

Accumulated
deficit

 

 

Total

 

Balance as of December 31, 2020

 

 

94,582,550

 

 

$

111,282

 

 

 

13,413,431

 

 

$

1

 

 

$

9,889

 

 

$

(108,788

)

 

$

(98,898

)

Exercise of stock options

 

 

 

 

 

 

 

 

684,923

 

 

*)

 

 

 

797

 

 

 

 

 

 

797

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,513

 

 

 

 

 

 

1,513

 

Issuance of warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125

 

 

 

 

 

 

125

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,738

)

 

 

(12,738

)

Balance as of March 31, 2021 (unaudited)

 

 

94,582,550

 

 

$

111,282

 

 

 

14,098,354

 

 

$

1

 

 

$

12,324

 

 

$

(121,526

)

 

$

(109,201

)

Exercise of stock options

 

 

 

 

 

 

 

 

2,617,908

 

 

*)

 

 

 

1,128

 

 

 

 

 

 

1,128

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,196

 

 

 

 

 

 

15,196

 

Common stock issued related to exercise of warrants

 

 

 

 

 

 

 

 

98,871

 

 

*)

 

 

 

609

 

 

 

 

 

 

609

 

Acquisition of warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,945

 

 

 

 

 

 

27,945

 

Preferred stock conversion

 

 

(94,582,550

)

 

 

(111,282

)

 

 

94,582,550

 

 

 

10

 

 

 

111,272

 

 

 

 

 

 

111,282

 

Issuance of common stock in connection with
Business Combination and PIPE offering, net of issuance costs

 

 

 

 

 

 

 

 

40,858,053

 

 

 

4

 

 

 

185,739

 

 

 

 

 

 

185,743

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,441

)

 

 

(30,441

)

Balance as of June 30, 2021 (unaudited)

 

 

 

 

$

 

 

 

152,255,736

 

 

$

15

 

 

$

354,213

 

 

$

(151,967

)

 

$

202,261

 

*) Represents an amount lower than $1

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

8


Table of Contents

TALKSPACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended
June 30,

 

(U.S. dollars in thousands)

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(43,382

)

 

$

(43,179

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

697

 

 

 

955

 

Amortization of debt issuance cost

 

 

 

 

 

175

 

Stock-based compensation

 

 

6,207

 

 

 

16,709

 

Warrant issue costs and change in fair value

 

 

1,217

 

 

 

3,043

 

Increase in accounts receivable, net

 

 

(1,650

)

 

 

(703

)

Decrease (increase) in other current assets

 

 

5,622

 

 

 

(1,784

)

Increase in accounts payable

 

 

381

 

 

 

4,833

 

(Decrease) increase in deferred revenues

 

 

(1,236

)

 

 

2,377

 

Decrease in accrued expenses and other current liabilities

 

 

(1,145

)

 

 

(213

)

Increase in other long-term liabilities

 

 

178

 

 

 

 

Net cash used in operating activities

 

 

(33,111

)

 

 

(17,787

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(160

)

 

 

(449

)

Net cash used in investing activities

 

 

(160

)

 

 

(449

)

Cash flows from financing activities:

 

 

 

 

 

 

(Payments) proceeds from reverse capitalization, net of transaction costs

 

 

(645

)

 

 

251,325

 

Proceeds from borrowings

 

 

 

 

 

6,000

 

Repayment of borrowings

 

 

 

 

 

(6,000

)

Payment of debt issuance cost

 

 

 

 

 

(50

)

Proceeds from exercise of stock options

 

 

2,349

 

 

 

1,886

 

Payments for employee taxes withheld related to vested stock-based awards

 

 

(67

)

 

 

 

Net cash provided by financing activities

 

 

1,637

 

 

 

253,161

 

Net (decrease) increase in cash and cash equivalents

 

 

(31,634

)

 

 

234,925

 

Cash and cash equivalents at the beginning of the period

 

 

198,256

 

 

 

13,248

 

Cash and cash equivalents at the end of the period

 

$

166,622

 

 

$

248,173

 

Supplemental cash flow data:

 

 

 

 

 

 

Cash paid during the period for interest

 

$

25

 

 

$

101

 

Cash paid during the period for income taxes

 

$

97

 

 

$

 

Non-cash financing activity:

 

 

 

 

 

 

Conversion of preferred stock to common stock

 

$

 

 

$

111,282

 

Issuance of warrant and other costs related to the Credit Agreement

 

$

 

 

$

175

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

9


Table of Contents

TALKSPACE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

 

Talkspace, Inc. (together with its consolidated subsidiaries, the “Company” or “Talkspace”) is a leading behavioral healthcare company enabled by a purpose-built technology platform. Talkspace provides individuals and licensed therapists, psychologists and psychiatrists with an online platform for one-on-one therapy delivered via messaging, audio and video. Talkspace was originally incorporated as Hudson Executive Investment Corp. (“HEC”). In connection with the Business Combination completed in June 2021, HEC changed its name to “Talkspace, Inc.”

 

Operating Segments

The Company operates its business as a single segment and as one reporting unit, which is how the Company's chief operating decision maker (who is the interim chief executive officer) reviews financial performance and allocates resources.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. The Company’s interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2021, have been applied consistently in these unaudited condensed consolidated financial statements, unless otherwise stated. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The Company’s policy is to consolidate all subsidiaries in which it has a controlling financial interest, as well as any Variable Interest Entities (“VIEs”) where the Company is deemed to be the primary beneficiary when it has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE.

In the second quarter of 2022, the Company completed the transition of its structure with respect to its relationships with healthcare providers and certain affiliated professional association and professional corporations in which it holds a variable interest. These affiliated professional association and professional corporations are considered VIEs since they do not have sufficient equity to finance their activities without additional subordinated finan