Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to, those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K. See Cautionary Statement Regarding Forward-Looking Statements.”
Overview
We are a medical technology company focused on transforming cardiac care through the power of personalized insights. Our aim is to deliver innovative, higher resolution ambulatory cardiac monitoring solutions that can be used by patients anywhere to enable the detection and monitoring of cardiac disease outside of a healthcare facility. Our ability to develop higher resolution Electrocardiogram (“ECG”) solutions is achieved through the development of our proprietary and patented technology platform that allows us to collect heart’s electrical activity from three distinct directions and synthesize a 12-Lead (12L) ECG from these signals. Our approach has demonstrated comparable diagnostic capability to a traditional hospital-based 12L ECG system in recent studies. The data from these studies was also submitted to FDA as part of our recent FDA submission.
Our Products (“Product” or “Products”) require U.S. Food and Drug Administration (“FDA”) clearance. The HeartBeam System (defined below) was granted FDA clearance on December 13, 2024. We believe the HeartBeam System is the first FDA cleared cable-free, ambulatory ECG that captures the heart’s electrical signals from three distinct directions for high-fidelity data collection and advanced diagnostics.
We believe our Products and services will benefit many stakeholders, including patients, healthcare providers, and healthcare payors. We are developing our Product, (the “HeartBeam System”, previously referred to as “AIMIGoTM”), to address the rapidly growing field of ambulatory cardiac health monitoring. The HeartBeam System is comprised of a credit card sized electrocardiogram device, a patient application, a physician portal, and powerful cloud-based algorithms. We believe that we are uniquely positioned to play a central role in ambulatory cardiac monitoring including high-risk Coronary Artery Disease (“CAD”) patients, because the initial studies have shown that our ischemia detection tool may be more accurate than existing ambulatory monitoring solutions. CAD patients are at increased risk for a heart attack or Myocardial Infarction (“MI”).
In January 2025, the Company filed a 510(k) notification for the software algorithms that synthesize a 12L ECG from the HeartBeam System. This latest submission builds on HeartBeam’s recent FDA clearance for its patented technology, which captures the heart’s electrical signals from three distinct directions. The software synthesizes these signals into a familiar 12-lead ECG using a personalized transformation matrix.
The cumulative result of these two 510(k) submissions, once cleared by the FDA, will be an ambulatory device, carried by patients, which can synthesize a 12L ECG for physician review for arrhythmia assessment.
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In support of this recent submission, the Company held two pre-submission meetings with the FDA on this 12L synthesis submission. These meetings focused primarily on the performance goals of our clinical study designed to demonstrate the similarity between our synthesized 12L signal and the output of a standard 12L ECG for the intended use. Based on feedback from FDA and our clinical experts, the Company designed a prospective multicenter pivotal study, the VALID-ECG pivotal study, for clinical validation of the HeartBeam 12 Lead ECG Synthesis Software for Arrhythmia Detection.
This latest FDA submission is backed by robust data from the VALID-ECG study, which enrolled 198 patients across five clinical sites. The Company believes the study's findings support the clinical equivalence of HeartBeam's synthesized 12-lead ECG where the leads are similar to standard 12-lead ECGs for rhythm and arrhythmia assessment. Efforts were made to enroll patients with a diverse demographic profile reflective of the intended use population in the United States. The primary objective was to demonstrate the equivalence of ECG waveforms between the HeartBeam System Synthesized 12L ECG and Standard 12L ECG, recorded simultaneously in each subject, by assessing relevant ECG characteristics, i.e. intervals and amplitudes.
The Company is in the process of initiating an Early Access Program for the HeartBeam System. This program will provide the company with valuable feedback on the user experience, overall workflow and functionality of the system in a real-world setting. The Early Access Program will also help prepare the Company to commercialize the technology once we receive FDA clearance for our 12L synthesis algorithm. We do not anticipate that the HeartBeam System clearance will generate significant revenue before the clearance of the synthesized 12L algorithm.
We also have an active AI program underway. We have acquired approximately one million 12L ECGs from various sources, a key element in our fast-paced AI development efforts.
We have developed initial deep learning algorithms, focused on the ability to detect various cardiac arrhythmias. HeartBeam has had data on its deep learning algorithm presented at two prestigious Electrophysiology conferences. Data were presented at the European Heart Rhythm Association in Berlin, Germany in April 2024 and at the Heart Rhythm Society, in Boston, MA in May 2024. We believe that, when combined with our Products, HeartBeam’s AI will provide additional value to patients and physicians in several ways, including:
• Providing automated classification of cardiac conditions, including common arrhythmias,
• Potentially enhancing user experience and simplify the onboarding process, and
• In the longer run, we believe that applying deep learning algorithms on top of the rich data, especially with the longitudinal dataset from patients taking repeated readings, may result in unsurpassed predictive and diagnostic capabilities.
The custom software and hardware of our Products are classified as Class II medical devices by the FDA. Premarket review and clearance by the FDA for Class II devices is generally accomplished through the 510(k) premarket notification process or De Novo process. Given the proposed intended use of our device, the 510(k) submission or De Novo process is expected to require clinical data to support FDA clearance.
HeartBeam has 14 issued U.S. patents (U.S. 10,433,744, U.S. 10,117,592, U.S. 11,071,490, U.S. 11,419,538, U.S. 11,445,963, U.S. 11,701,049, U.S. 11,529,085, U.S. 10,980,433, U.S. 11,412,972, U.S. 11,234,658, U.S. 11,793,444, U.S. 11,877,853, U.S. 11,969,251 and U.S. US 12,207,908), and nine pending U.S applications. Outside of the U.S., HeartBeam has four issued patents in Germany, France, Netherlands and the United Kingdom and twenty-four pending applications in Canada, China, the European Union, Japan, South Korea and Australia. The issued patents are predicted to expire between April 11, 2036, and April 21, 2042.
As of December 31, 2024, we had 21 employees. We intend to strike a balance of managing our headcount in line with cash resources, while also, at the appropriate time, hiring or engaging additional full-time professionals, employees, and / or consultants in alignment with our growth strategy. Although the market is highly competitive for attracting and retaining highly qualified professionals in our industry, we continue our endeavor to find such candidates for our Company. Our management team and additional personnel that we may hire in the future will be primarily responsible for executing and implementing growth opportunities, making tactical decisions related to our strategy and pursuing opportunities to invest in new technologies through strategic partnerships and acquisitions.
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Significant Developments during 2024 and early 2025
New and Existing Patent Assignments
In 2024, we were granted two new U.S. patents:
•One patent covers apparatuses and methods that facilitate the comparison of cardiac signals over time for the automated or assisted detection of heart attacks.
•The other covers methods and apparatuses around HeartBeam’s wrist-based ECG system.
Thus far in 2025, we have been granted one new U.S. patent related to HeartBeam’s compact, mobile three-lead cardiac monitoring devices.
We now have fourteen (14) issued U.S. patents and nine (9) pending U.S applications. Outside of the U.S., we have four (4) issued patents in Germany, France, Netherlands and United Kingdom and twenty-four (24) pending applications in Canada, China, the European Union, Japan, South Korea and Australia. The issued patents are predicted to expire between April 11, 2036 and April 21, 2042.
Interactions with Industrial Players
We believe that our ECG technology has the potential to be the most advanced ambulatory cardiac monitoring solution and is applicable in a number of form factors. In anticipation of FDA clearance, we are refining our go-to-market strategy and are encouraged by our early discussions with industry players and their interest in our technology.
Presentations at AHA
In November 2024, two of our pilot studies were presented at American Heart Association meeting. The studies were designed to show early evidence of (1) clinical equivalence of the HeartBeam Synthesized 12L ECG to a standard 12L ECG for diagnosis of arrhythmia and (2) the use of the technology for heart attack detection.
At-the-Market Offering
On May 2, 2024, we entered into the PV Sales Agreement with Public Ventures, pursuant to which we may offer and sell from time to time, at our option, through or to Public Ventures, up to an aggregate of approximately $17 million of shares of the Company’s common stock, $0.0001 par value per share (the “Shares”). We will pay Public Ventures a commission at a fixed rate of 3.0% of the aggregate gross proceeds from each sale of the Shares under the PV Sales Agreement. There were 309,634 Shares issued under the ATM during the year ended December 31, 2024. As of December 31, 2024, there was approximately $16.2 million available for issuance under the ATM following the use of the shelf registration on Form S-3 for the Agreements and the ATM during the year.
Any Shares to be offered and sold under the PV Sales Agreement will be issued and sold pursuant to our Registration Statement on Form S-3 (File No. 333-269520), filed with the Securities and Exchange Commission on February 1, 2023 and the prospectus supplement included therein, relating to the Offering, by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or if specified by us, by any other method permitted by law.
In order to proceed with the PV Sales Agreement, we terminated the prior Sales Agreement with A.G.P/Alliance Global Partners.
Appointment of Additional Senior Management Team members
On September 10, 2024, we announced the appointment of Timothy Cruickshank as Chief Financial Officer (CFO). Mr. Cruickshank brings more than 15 years of public company experience with a focus on growing businesses with disruptive technologies through authentic leadership, strategic focus, data-driven decisions, and strong risk management and governance. He succeeds long-time CFO Richard Brounstein, who has been serving in an advisory capacity since retiring in February 2024.
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On September 24, 2024, we announced the appointment of Lance Myers, PhD, a pioneer in digital health data analytics and body-worn biosensor technologies, as Chief Artificial Intelligence (AI) Scientist. In this newly created position, Dr. Myers will play a pivotal role in guiding how AI is applied to the Company’s core technology. Most recently, Dr. Myers served as AI Advisor to HeartBeam until September 23, 2024.
On October 17, 2024, we announced the appointment of Robert Eno as Chief Executive Officer (CEO). Mr. Eno joined HeartBeam as President in January 2023 and will lead as the Company continues to work towards securing the foundational FDA 510(k) clearance for its vector-based technology and prepares for commercialization and growth. As part of a long-planned transition, Mr. Eno succeeds long-time CEO and founder, Branislav Vajdic, Ph.D. Dr. Vajdic will continue as President of HeartBeam, focused on innovating on the Company’s groundbreaking vector-based technology, driving research and development efforts, and advancing artificial intelligence (AI) applications.
February Public Offering under Form S-3
On February 12, 2025, we entered into an Underwriting Agreement with Public Ventures, LLC to consummate an offering of 5,882,353 shares of Common Stock at an offering price of $1.70 per share, which closed on February 14, 2025 (the “February Public Offering”). The Company received $9.08 million in net proceeds from the February Public Offering after deducting underwriter discounts and commission. In addition, pursuant to the Underwriting Agreement, as partial compensation for its service, we granted 588,235 underwriter warrants with an exercise price of $2.13 to Public Ventures, LLC. On February 21, 2025, the Underwriter exercised the bulk of the Over-allotment Option of 864,033 which closed on February 25, 2025. The Company received $1.3 million in net proceeds from the Over-allotment Option after deducting underwriter discounts and commission and we granted an additional 86,403 underwriter warrants with an exercise price of $2.13 as compensation to the Underwriter.
Results of operations for the years ended December 31, 2024 and 2023
The following table summarizes our results of operations for the periods presented on our statement of operations data. The year over year comparison of results of operations is not necessarily indicative of results of operations for future periods.
Years ended December 31,
(In thousands, except percentages)
Operating expenses:
Other Expense (7) — (7) 100 %
Income tax provision — — — — %
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Summary of Statements of Operations for the year ended December 31, 2024 compared with the year ended December 31, 2023:
General and administrative expenses (“G&A”) are largely related to personnel and professional services. G&A expense increased $0.3 million or 4% when compared to the same period in 2023. The $0.3 million increase is related to non-cash stock-based compensation expense amounting to $0.5 million associated with additional awards granted since December 31, 2023, higher consulting costs of $0.4 million related to finance consultants, higher board of director’s fees of $0.1 million related to new committees, primarily offset by decrease in payroll cost of $0.5 million related to lower costs associated with restructuring of G&A headcount, and a decrease of $0.3 million from lower investor relation costs, and legal costs incurred in this period compared to the prior period.
Research and development expenses (“R&D”) are primarily from software development and hardware related to our credit-card sized collection device for the HeartBeam System. R&D expense increased $4.3 million or 63% when compared with the same period in 2023. The $4.3 million increase is primarily related to increase in headcount of $1.8 million and non-cash stock-based compensation expense amounting to $0.6 million associated with additional awards granted since December 31, 2023, increase of clinical related costs of $0.7 million, increase in consulting and patent expense spend of $1.0 million, and a increase of $0.1 million in product development costs when compared to the prior year.
Other income is primarily interest income. The decrease is primarily related to our decreased cash balance used in operations.
Liquidity and Capital Resources
Our cash requirements are and will continue to be, dependent upon a variety of factors. We expect to continue devoting significant capital resources to R&D and following the proper FDA clearance for our HeartBeam System, our commercialization go to market strategies.
As of December 31, 2024, we had approximately $2.4 million in cash and cash equivalents, a decrease of $13.8 million from $16.2 million as of December 31, 2023.
During the year ended December 31, 2024, we raised $0.7 million from the sale of common stock under the ATM and $0.1 from the proceeds from exercise of stock options.
Subsequent to year end, the Company raised $11.5 million (before costs) via a $10 million underwritten Public Offering and a $1.5 million exercise of the Underwriter’s over-allotment option from the Public Offering.
Based on its current business plan assumptions, proceeds from the February Public Offering and expected cash burn rate, the Company believes that the existing cash is insufficient to fund operations for the next twelve months following the issuance of these financial statements. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
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Our cash is as follows (in thousands):
December 31
Cash flows for the year ended December 31, 2024 and 2023 (in thousands):
December 31
Net cash used in operating activities $ (14,471) $ (12,093)
Net cash used in investing activities (201) (256)
Net cash provided by financing activities 866 24,994
Operating Activities:
Net cash used in our operating activities of $14.5 million during the year ended December 31, 2024, was primarily due to our net loss of $19.5 million less $4.3 million in stock-based compensation expense and $0.7 million of net changes from changes in operating assets and liabilities.
Net cash used in our operating activities of $12.1 million during the year ended December 31, 2023, was primarily due to our net loss of $14.6 million less $3.2 million in stock based compensation expense and $0.7 million of net changes from changes in operating assets and liabilities.
Investing Activities:
Net cash used in investing activities during the year ended December 31, 2024, of $0.2 million, was primarily due to the purchase of property and equipment.
Net cash used in investing activities during the year ended December 31, 2023, of $0.3 million, was primarily due to the purchase of property and equipment.
Financing Activities:
During the year ended December 31, 2024, net cash provided by financing activities of $0.9 million, was primarily from net proceeds from sale of equity, net of issuance costs.
During the year ended December 31, 2023, net cash provided by financing activities of $24.9 million, was primarily from the issuance of common stock from the secondary financing in May 2023.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Estimates
The financial statements have been prepared in accordance with accounting principles generally accepted in the US, (“US GAAP”.) The preparation of these financial statements in accordance with US GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, assumptions and judgments. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions and the impact of such differences may be material to our financial statements.
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We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors.
Stock-based compensation
The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, determined using a Black-Scholes option pricing model for stock options and fair value on the date of grant for non-vested restricted stock, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments. Management has determined the vesting period of stock-based compensation to be a critical accounting estimate due to certain options containing performance-based vesting condition related to a milestone achievement date. Quarterly, the management performs its probability assessment regarding the achievement of the key milestone related to these awards. Based on this review, management modifies the vesting period if the expected regulatory approval date changes.
Research and Development: Clinical and Manufacturing Accruals
We record accruals for estimated costs of research, preclinical studies and clinical trials, and manufacturing development, which are a significant component of research and development expenses. A substantial portion of our ongoing research and development activities are conducted by one CRO. Our contract with this CRO include pass-through fees such as regulatory expenses, investigator fees, travel costs and other miscellaneous costs. We accrue the costs incurred under agreements with CRO based on estimates of actual work completed in accordance with the CRO agreement. We determine the estimated costs based on actual services performed by the CRO and clinical sites as at each period end. As actual costs become known, we adjust our accruals. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in our reporting amounts that are too high or too low in any particular period.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data of the Company required by this Item are described in Item 15 of this Annual Report on Form 10-K and are presented beginning on page F-1.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
None
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.
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Previously Identified Material Weaknesses in Internal Control Over Financial Reporting
We identified a material weaknesses in our internal control over financial reporting in prior years. These previously identified material weaknesses included: (i) lack of formal risk assessment under COSO framework (ii) policies and procedures which are not yet adequately documented, (iii) lack of proper approval processes and review processes and documentation for such reviews, (iv) insufficient GAAP experience regarding complex transactions and reporting, and (v) insufficient number of staff to maintain optimal segregation of duties and levels of oversight.
Commencing in July 2023 and during the 2024 fiscal year, we undertook specific remediation actions to address these material weaknesses in our financial reporting. We established more robust processes related to the review of complex accounting transactions, the preparation of account reconciliations and the review of journal entries. These remediation actions included hiring a Controller in July 2023; executing plans to remediate control deficiencies; performing a risk assessment under the COSO framework; ensuring optimal segregation of duties and levels of oversight; and hiring a Chief Financial Officer in September 2024, who has extensive experience leading public entities.
As a result of the remediation activities and controls in place as of December 31, 2024, as described above, we have remediated these previously disclosed material weaknesses. While completion of this remediation does not provide assurance that our remediated controls will continue to operate properly, that other material weaknesses will not arise or that our financial statements will be free from error, based on our assessment, the material weaknesses have been remediated as of December 31, 2024, and we will continue to refine our control policies and procedures.
Changes in Internal Control
Except as described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fourth quarter of the year ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections.
Not applicable
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Part III
Item 10. Directors, Executive Officers and Corporate Governance
Information About our Executive Officers and Directors
Our business and affairs are organized under the direction of our board of directors, which currently consists of five members.
The following table sets forth certain information with respect to the current directors of our Company:
NAME AGE POSITION
Richard Ferrari 71 Executive Chairman of the Board of Directors
Branislav Vajdic, PhD 70 President, Director
George A. de Urioste 69 Director
Marga Ortigas-Wedekind 63 Director
Willem Elfrink 72 Director
Mark Strome 67 Director
Kenneth Nelson 49 Director
Michael Jaff 66 Director
Richard Ferrari - Executive Chairman of the Board of Directors
Mr. Richard Ferrari, 71, joined our Board in 2019 and was appointed Executive Director of the Board of Directors in June 2021. Mr. Ferrari combines over 40 years of experience in Medical Device Start-ups as CEO, and entrepreneur. Also Mr. Ferrari is co-founder of De Novo Ventures which has $650M under management and has been Managing Director since 2000. Mr. Ferrari has also co-founded 6 more companies, two of which have been successful IPO’s and subsequent acquisitions, CTS one of the companies he co-founded was the fastest start-up to an IPO in the last 22 years in the medical device industry. Mr. Ferrari most recently from 2018 to 2021 was Chairman and CEO of PQ Bypass which was recently acquired by Endologix. Mr. Ferrari sits on the board of Pulmonx, a public company and is the Chairman of the Compensation Committee. Additionally, Mr. Ferrari is Executive Chairman of Tenon Medical, Vice-Chairman of ABS Interventional, and holds board positions with several other medical device start-ups. Mr. Ferrari has an undergraduate degree from Ashland University and an MBA from University of South Florida.
We believe that Mr. Ferrari is qualified to serve on our board of directors because of his experience in leadership and management roles in the field of medicine, as well as his experience as a member in the healthcare industry.
Branislav Vajdic, PhD - President, Director
Dr. Branislav Vajdic, 70, Founder of HeartBeam, Inc, combines over 30 years of experience in technology development and senior management positions. Dr. Vajdic has been deeply involved with the development of HeartBeam’s technology to fit his vision for the Company. Prior to HeartBeam from 2007 to 2010, Dr. Vajdic was CEO and Founder of NewCardio, a publicly traded company in the cardiovascular devices space, from 1984 to 2007, Dr. Vajdic was at Intel, where he held various senior management positions. At Intel, Dr. Vajdic was the designer of first Flash memory and two key inventions that enabled Flash as a product and led engineering groups responsible for Pentium 1 through Pentium 4 designs. Dr. Vajdic was awarded two Intel Achievement Awards, the highest level of award for outstanding contributions to Intel. Dr. Vajdic is author of numerous patents and publications in the fields of cardiovascular devices as well as chip design. Dr. Vajdic holds a PhD degree in Electrical Engineering from the University of Minnesota.
We believe that Dr. Vajdic is qualified to serve on our board of directors because of his experience in leadership and management roles in the field of medicine, as well as his experience as a member in the healthcare industry.
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George A. de Urioste - Director
Mr. de Urioste, 69, combines over 40 years of experience in high technology industry senior management. Previously, Mr. de Urioste has been involved in over 10 companies, holding positions including Board Director, Chief Operating Officer and Chief Financial Officer. Mr. de Urioste was Chief Financial Officer of Remedy Corporation (software) from 1992 to 1998 and led the IPO, Chief Executive Officer of Aeroprise, Inc., from 2000 to 2003 (software), from 2004 to 2006 he was Chief Operating Officer and Chief Financial Officer for Chordiant Software, Inc. (software), interim Chief Operating Officer and Chief Financial Officer for Marvell Technology, Inc. (semiconductors) during 2008, Chief Financial Officer for Pluribus Networks, Inc. (software) 2014 to 2018, Chief Financial Officer for 4iQ, Inc. (software) 2019 to 2020 and interim Chief Financial Officer for Mozilla, Inc. (software). Mr. de Urioste’s Board Director experience includes Audit Committee chairman roles for the following companies: Rainmaker Systems, Inc. (business outsourcing), from 2003 to 2005, Saba Software, Inc. (software) from 2008 to 2010, GCT, Inc. (semiconductors), from 2009 to 2011 Villa Montalvo (performing arts center), from 2011 to 2013, Bridgelux, Inc., from 2011 to 2016 (LED lighting), and Vendavo, Inc., from 2013 to 2014 (software). Mr. de Urioste was also chairman of the Board of Directors for Aeroprise, Inc. from 2000 to 2005 (software). Mr. de Urioste is currently a Board Director at Roambee Corporation (supply chain intelligence software), Blaize, Inc (NASDAQ: BZAI), semiconductor company for artificial intelligence processing at network edge, where he is chairman of the audit committee and member of the compensation committee, and Silicon Valley Directors Exchange, (a not-for-profit for Board education events). Mr. de Urioste has an undergraduate degree from University of Southern California and an MBA from University of California at Berkeley. Mr. de Urioste is also a Certified Public Accountant (inactive) in the State of California.
We believe that Mr. de Urioste is qualified to serve on our board of directors because of his experience in leadership and management roles in high technology industries, as well as his experience as a board member including Audit Committee Chairman roles.
Marga Ortigas-Wedekind - Director
Ms. Marga Ortigas-Wedekind, 63, Board member, has over 30 years of experience in health technology senior management. Ms. Ortigas-Wedekind has been Chief Commercial Strategy Officer of Fogarty Innovation, a non-profit educational incubator for early stage medtech companies since December 2019, Executive Vice President of Marketing and Payer Relations for iRhythm Technologies Inc., a publicly-traded digital healthcare company from July 2015 through July 2019, Executive Vice President, Global Marketing and Product Development of Omnicell Inc., a publicly-traded developer of automated medication dispensing and analytics systems where she led the Marketing, International and Engineering departments from 2009 to 2015, Senior Vice President, Marketing, Development, and Clinical Affairs at Xoft, Inc, a developer of disruptive technology to deliver radiation therapy with capital equipment and high-end disposables from 2002 to December 2008. She started her medtech career at Guidant Vascular, now Abbott Vascular.Ms. Ortigas-Wedekind was on the board of Itamar Medical (NASDAQ: ITMR), which provides digitally-enabled systems for sleep apnea management until its sale to Zoll Medical in December 2021, Total Flow Medical, an early stage company developing a mechanism to improve safety during on-pump open heart surgery and, the Bay Area Cancer Coalition, a non-profit organization that supports those affected by breast or ovarian cancer. Ms. Ortigas-Wedekind is a limited partner and advisory board member for Launchpad Digital Health, a venture fund focused on digital heath technologies and is also an angel investor with Health Tech Capital. Ms. Ortigas-Wedekind has an undergraduate degree from Wellesley College and an MBA from the Stanford Graduate School of Business.
We believe that Ms. Ortigas-Wedekind is qualified to serve on our board of directors because of her experience in leadership and management roles in the field of medicine, as well as her experience as a member in the healthcare industry.
Willem Elfrink - Director
Mr. Willem Elfrink, 72, was Chairman of the Board since our founding and in June 2021 stepped down from this position but remains a Board member. Mr. Elfrink has over 40 years of experience in bringing new technologies to the market. Mr. Elfrink actively contributes to portfolio companies via board participation, strategic marketing, governance and capital structure. Mr. Elfrink is also the Founder and President of WPE Ventures Digitized Solutions, a security and digitization solutions investment firm. Mr. Elfrink joined Cisco in 1997 and was Cisco’s Executive Vice President of Industry Solutions and Chief Globalization Officer from 2000 to 2006 and 2007 to 2015 respectively, where Mr. Elfrink made and contributed to key strategic and operational decisions of the Company. Widely recognized as Cisco’s Corporate Entrepreneur in residence, his global charter was to identify significant technology opportunities. Mr. Elfrink also led an industry initiative — called the Internet of Things World Forum. Before joining Cisco, Mr. Elfrink held management and senior management positions at Olivetti, Xerox, HP, Digital Equipment Corporation and Philips. Mr. Elfrink earned a Bachelor of Engineering degree from the Institute of Technology in Rotterdam, the Netherlands.
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We believe that Mr. Elfrink is qualified to serve on our board of directors because of his experience in leadership and management roles in bringing new technologies to the market, as well as his globalization experience.
Mark Strome - Director
Mr. Strome, 67, combines over 40 years of experience in the investment management and securities industry. Mr. Strome is the Founder, Chief Investment Officer, and Chairman at Strome Investment Management, L.P. and Strome Group, Inc. Under his leadership, Mr. Strome’s investment management company has managed private placement hedge fund investments focusing on non-traditional investments including commodities, currencies, bankruptcy reorganizations, and numerous venture capital and private equity investments. Previously, he was a Portfolio Manager at Kayne Anderson. Mr. Strome has also been involved in the founding and incubation of numerous publicly traded companies and several successful private companies. These include Pulse Biosciences, and iWood Studios, a company that creates original content for film and TV. Mr. Strome has been a member of the Board of Directors of multiple companies over the last three decades. Mr. Strome has served as a Director at Endurance Ventures, National Water and Power, Eco-Duro Corporation, NWP Services Corporation and Mobil Satellite Ventures. Mr. Strome serves as Member of Advisory Board at Global Analytics, Inc. Mr. Strome is a Trustee for New Roads School and Big Bear Foundation and serves on the Board of Advisors of John Hopkins Medical Center. Mark earned a Bachelor of Science in Engineering from Old Dominion University and Master of Science in Economics from the University of California at Berkeley.
We believe that Mr. Strome is qualified to serve on our board of directors because of his experience in leadership and management roles, as well as his experience as a member in the healthcare industry.
Kenneth Nelson - Director
Mr. Nelson, 49, is a 20 year digital health, medical device, and remote patient monitoring executive and innovator. Over the past 10 years, Mr. Nelson has led commercial efforts for disruptive technologies in the digital health, wearables, and cardiac remote patient monitoring industries for 3 of the top 4 market share players in cardiac digital health and remote patient monitoring including BioTelemetry as VP of Sales, iRhythm as VP of Sales & Marketing, and Bardy Diagnostics as Chief Commercial Officer. Most recently, he served as Head of Digital Health, Diagnostics, and Monitoring for Biotronik, a leading cardiac digital health and medical device company. Mr. Nelson currently serves as partner in the Medtech Advantage Fund, which has an exclusive partnership with Medtech Innovator, the largest medtech and digital health startup accelerator globally. In addition, he serves as Chairman of the Board for CardiaCare, and is an active board member in a handful of other disruptive cardiac digital health and medtech startups. Mr. Nelson earned a Bachelor of Arts in Economics from Vanderbilt University and is a graduate of Phillips Exeter Academy.
We believe that Mr. Nelson is qualified to serve on our board of directors because of his experience in leadership and management roles in the field of medicine, as well as his experience as a member in the healthcare industry.
Michael Jaff, MD - Director
Dr. Jaff, age 66, is currently Chief Medical Officer and Vice President of Clinical Affairs, Technology and Innovation of the Peripheral Interventions division at Boston Scientific Corporation. Previously, Dr. Jaff was a professor of medicine at Harvard Medical School and served as President of Newton-Wellesley Hospital. Prior to that, Dr. Jaff was the inaugural Paul and Phyllis Fireman Endowed Chair of Vascular Medicine and Medical Director of the Fireman Vascular Center at the Massachusetts General Hospital. Dr. is a recognized expert in all aspects of vascular medicine and is the founder of VasCore, the Vascular Ultrasound Core Laboratory. Dr. Jaff has published over 300 peer-reviewed publications and 10 textbooks and is the Past-President of the Society for Vascular Medicine. Dr. Jaff received a B.S. from Dickinson College, a D.O. from Kirksville College of Osteopathic Medicine, a Business degree from Harvard Business School and an honorary Doctorate of Arts from Harvard Medical School.
We believe that Mr. Jaff is qualified to serve on our board of directors because of his experience in leadership and management roles in the field of medicine, as well as his experience as a member in the healthcare industry.
There are no agreements or understandings for any of our executive officers or directors to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.
Directors are elected to serve until their successors are duly qualified and elected.
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Director Independence
The Board has affirmatively determined that seven of the directors are “independent directors” under NASDAQ Listing Rule 5605(a)(2) and the related rules of the U.S. Securities and Exchange Commission (the “SEC”). In making this determination, our Board considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. The Company’s independent directors conduct executive sessions at regularly scheduled meetings as required by NASDAQ Listing Rule 5605(b)(2).
Family Relationships
There are no family relationships among any of our directors and executive officers.
Board Leadership Structure
The Board does not have an express policy regarding the separation of the roles of Chief Executive Officer (“CEO”) and Board Chairman, as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. Currently, Robert Eno serves as the Company’s CEO and Richard Ferrari serves as the Chairman of the Board. The Board believes that its current leadership structure best serves the objectives of the Board’s oversight of management; the ability of the Board to carry out its roles and responsibilities on behalf of the stockholders; and the Company’s overall corporate governance. The Board also believes that the current separation of the Chairman and CEO roles allows the CEO to focus his time and energy on operating and managing the Company and leverages the experience and perspectives of the Chairman.
Board Oversight of Risk Management
The full Board has responsibility for general oversight of risks facing the Company. The Board is informed by senior management on areas of risk facing the Company and periodically conducts discussions regarding risk assessment and risk management. The Board believes that evaluating how the executive team manages the various risks confronting the Company is one of its most important areas of oversight. While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. For example, the Audit Committee reviews and assesses the Company’s processes to manage financial reporting risk and to manage investment, tax, and other financial risks; the Compensation Committee oversees risks relating to the compensation and incentives provided to our executive officers; and the Nominating and Governance Committee oversees risks associated with our overall compliance and corporate governance practices, as well as the independence and composition of our Board. Finally, management periodically reports to the Board or relevant committee, which provides guidance on risk assessment and mitigation. In December 2023 the Board also formed a Commercialization Committee to support the strategy development and implementation of all defined areas of commercialization.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of securities ownership and changes in such ownership with the SEC.
Based solely upon a review of such forms filed electronically with the SEC or written representations that no Form 5s were required, the Company believes that all Section 16(a) filing requirements were timely met during the year ended December 31, 2024, except for Mr. George de Urioste submitted one late Form 4 filing in regards to sale of vested RSU’s.
Code of Ethics
The Company has adopted a code of ethics policy during 2022 for its principal executive officer and senior financial officers and that is applicable to all directors, officers and employees, a copy of which is available online at www.Heartbeam.com. Stockholders may also request a free copy of this document from: HeartBeam, Inc., 2118 Walsh Avenue, Suite 210, Santa Clara, CA 95050, Attn: Corporate Secretary.
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Director Meeting Attendance
During the year ended December 31, 2024, the Board held six meetings of the full Board, The Board also took action by written consent on ten occasions. During the year ended December 31, 2024, each member of the Board attended at least 75% of the aggregate of all meetings of the Board and the meetings of the committees on which he or she served (during the periods for which he or she served).
The Company does not have a written policy requiring directors to attend the annual meeting.
Board Committees
Our board of directors has established an audit committee, a compensation committee, a nominating and governance committee, and a commercialization committee. Our board of directors may establish other committees to facilitate the management of our business. The composition and functions of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. The charter of each committee is available on our corporate website at https://ir.heartbeam.com/corporate-governance/governance-documents.
Committee Composition
The following description below outlines our current membership for each committee of our board of directors:
Audit Committee
The Audit Committee, among other things, will be responsible for:
•appointing; approving the compensation of; overseeing the work of; and assessing the independence, qualifications, and performance of the independent auditor;
•reviewing the internal audit function, including its independence, plans, and budget;
•approving, in advance, audit and any permissible non-audit services performed by our independent auditor;
•reviewing our internal controls with the independent auditor, the internal auditor, and management;
•reviewing the adequacy of our accounting and financial controls as reported by the independent auditor, the internal auditor, and management;
•overseeing our financial compliance system; and
•overseeing our major risk exposures regarding the Company’s accounting and financial reporting policies, the activities of our internal audit function, and information technology.
The Audit Committee will consist of Mr. de Urioste, Ms. Ortigas-Wedekind and Mr. Ferrari. Mr. de Urioste will chair the Audit Committee. We believe the Audit Committee will comply with the applicable requirements of the rules and regulations of the Nasdaq listing rules and the SEC.
Compensation Committee
The Compensation Committee will be responsible for:
•reviewing and making recommendations to the Board with respect to the compensation of our officers and directors, including the CEO;
•overseeing and administering the Company’s executive compensation plans, including equity-based awards;
•negotiating and overseeing employment agreements with officers and directors; and
•overseeing how the Company’s compensation policies and practices may affect the Company’s risk management practices and/or risk-taking incentives.
The Compensation Committee will consist of Mr. Ferrari, Mr. Elfrink, Mr. Strome and Mr. de Urioste, Mr. Ferrari will serve as chairman of the Compensation Committee. The board of directors has affirmatively determined that each member of the Compensation Committee meets the independence criteria applicable to compensation committee members under SEC rules and Nasdaq listing rules.
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Nominating and Governance Committee
The Nominating and Corporate Governance Committee, among other things, will be responsible for:
•reviewing and assessing the development of the executive officers and considering and making recommendations to the Board regarding promotion and succession issues;
•evaluating and reporting to the Board on the performance and effectiveness of the directors, committees and the Board as a whole;
•working with the Board to determine the appropriate and desirable mix of characteristics, skills, expertise and experience, including diversity considerations, for the full Board and each committee;
•annually presenting to the Board a list of individuals recommended to be nominated for election to the Board;
•reviewing, evaluating, and recommending changes to the Company’s Corporate Governance Principles and Committee Charters;
•recommending to the Board individuals to be elected to fill vacancies and newly created directorships;
•overseeing the Company’s compliance program, including the Code of Conduct; and
•overseeing and evaluating how the Company’s corporate governance and legal and regulatory compliance policies and practices, including leadership, structure, and succession planning, may affect the Company’s major risk exposures.
The Nominating and Corporate Governance Committee will consist of Ms. Ortigas-Wedekind, Mr. Elfrink and Mr. Jaff. Ms. Ortigas-Wedekind will serve as chairperson. The Company’s board of directors has determined that each member of the Nominating and Corporate Governance Committee is independent within the meaning of the independent director guidelines of Nasdaq listing rules.
Commercialization Committee
The Commercialization Committee, among other things, will be responsible for:
•advising on the Company’s overall business strategy of bringing products to markets and all aspects of the sales process;
•advising on the Company’s product strategy and roadmap;
•advising on the Company’s target markets and market segmentation;
•advising on cross-functional elements of the Company’s go-to-market effort, including the commercial support functions;
•reviewing, evaluating, and recommending changes to the Company’s Commercialization Committee Charter.
The Commercialization Committee will consist of Mr. Elfrink, Dr; Jaff, Mr. Strome and Mr. Nelson. Mr. Elfrink will serve as chairperson.
Stockholder Communications with the Board
The Company’s Stockholders who wish to communicate with the Board of Directors or with an individual director may do so by writing to the Corporate Secretary, HeartBeam, Inc., 2118 Walsh Avenue, Suite 210, Santa Clara, CA 95050. The letter should indicate that you are a stockholder and whether you own your shares in street name. Letters received will be reviewed by the Corporate Secretary and retained until the next Board meeting when they will be available to the addressed director. Such communications may receive an initial evaluation to determine, based on the substance and nature of the communication, a suitable process for internal distribution, review and response or other appropriate treatment. There is no assurance that all communications will receive a response.
Hedging, Short Sales and Related Policies
Pursuant to the Company’s insider trading policy, the Company prohibits all directors, officers and employees of the Company (collectively, “Team Members”), as well as their spouses, minor children, other persons living in their household and entities over which they exercise control, from engaging in the following transactions involving Company’s securities without the advance unanimous written approval from members of the compliance committee designated by the Board:
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•Hedging. Team Members may not enter into hedging or monetization transactions or similar arrangements with respect to the Company’s securities.
•Short sales. Team Members may not sell the Company’s securities short;
•Options trading. Team Members may not buy or sell puts or calls or other derivative securities on the Company’s securities; and
•Trading on margin. Team Members may not hold the Company’s securities in a margin account or pledge the Company’s securities as collateral for a loan.
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our Named Executive Officers (“NEOs”) for services rendered in all capacities during the noted periods. The fiscal years ended December 31, 2024 and December 31, 2023 are indicated below:
Chief Financial Officer
1.Cash bonuses awarded to the Chief Executive Officer, President, Chief Financial Officer and Chief System Deployment Officer in 2024 are expected to be paid early 2025.
2.Cash bonuses awarded to the Chief Executive Officer, President and Chief Business Officer, Chief Financial Officer and Chief Technology Officer in 2023 were paid early 2024.
3.Represents the full grant date fair value of the stock award or option grant, as applicable, calculated in accordance with FASB ASC Topic 718. Our policy and assumptions made in the valuation of share-based payments are contained in Note 5 to our December 31, 2024 financial statements. The value of stock awards presented in the Summary Compensation Table reflects the grant date fair value of the awards and does not correspond to the actual value that will be recognized by the named executive officers.
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Employment Agreements
We have entered into employment agreements, with Branislav Vajdic, the Company’s President, Robert Eno, the Company’s Chief Executive Officer, Kenneth Persen, the Company’s Chief System Deployment Officer, and Timothy Cruickshank, the Company’s Chief Financial Officer.
Branislav Vajdic Employment Agreement
On September 10, 2021 we entered into an employment agreement with Dr. Vajdic as its Chief Executive Officer and a member of the board of directors (“2021 Vajdic Agreement”), Dr. Vajdic will receive an annual salary of $325,000, commencing on September 15, 2021. During 2022 the Board of Directors approved an amendment to the 2021 Vajdic Agreement, whereby effective January 1, 2022 Dr. Vajdic’s annual salary increased to $428,000 and he was awarded 359,000 stock options. The stock option will vest as to 25% on the 1-year anniversary of the vesting commencement date, and the remainder will vest monthly thereafter on the same day of the month as the vesting commencement date until fully vested. During 2023 Dr. Vajdic was awarded a total of 1,194,000 options, these stock options vest as follows: Sixty percent (60%) are milestone based vesting on FDA clearance for marketing of HeartBeam’s synthesized 12L product and the remaining forty percent (40%) are time based vesting monthly over 48 months.Pursuant to the amended 2021 Vajdic Agreement, Dr. Vajdic will be eligible to receive an annual bonus up to 60% of his annual compensation, subject to adjustment on an annual basis, based on his performance and overall progress of the Company. Effective January 1, 2024 Dr. Vajdic’s annual salary increased to $449,000.
On October 17, 2024, the Board appointed Branislav Vajdic, PhD as President of the Company (the “President Appointment”) effective as of October 21, 2024. In connection with the President Appointment, the Company entered into an employment agreement with Dr. Vajdic dated October 17, 2024, (the “President Employment Agreement”). Pursuant to the President Employment Agreement, there will be no changes to Dr. Vajdic’s current compensation structure. This President Employment Agreement amends the previous employment agreement executed by Dr. Vajdic and the Company on September 10, 2021.
Robert Eno Employment Agreement
On January 18, 2023 we entered into an employment agreement with Mr. Eno as its President, Mr. Eno will receive an annual salary of $360,000, commencing on January 18, 2023 and was awarded 240,000 stock options. The stock option will vest as to 25% on the 1-year anniversary of the vesting commencement date, and the remainder will vest monthly thereafter on the same day of the month as the vesting commencement date until fully vested. Additionally, during 2023 Mr. Eno was awarded a total of 536,000 options, these stock options vest as follows: Sixty percent (60%) are milestone based vesting on FDA clearance for marketing of HeartBeam’s synthesized 12L product and the remaining forty percent (40%) are time based vesting monthly over 48 months. Mr. Eno will be eligible to receive an annual bonus up to 40% of his annual compensation, subject to adjustment on an annual basis, based upon his performance and overall progress of the Company. Effective January 1, 2024 Mr. Eno’s annual salary increased to $378,000.
On October 17, 2024, we announced the appointment of Robert Eno as Chief Executive Officer (CEO). Mr. Eno succeeds long-time CEO and founder, Branislav Vajdic, Ph.D. Dr. Vajdic. In connection with the CEO Appointment, the Company entered into an employment agreement with Mr. Eno dated October 15, 2024, (the “CEO Employment Agreement”). Pursuant to the CEO Employment Agreement, the Company will compensate Mr. Eno an annual fee of $400,000, which is to be paid in semi-monthly installments in accordance with the Company’s normal payroll procedures. Mr. Eno’s salary will be subject to adjustment pursuant to the Company's employee compensation policies in effect from time to time and he will also be eligible to receive certain employee benefits. Additionally, Mr. Eno may receive an annual bonus of 60% of his annual base salary determined by an agreed to set of corporate goals and objectives. In 2025, the Compensation Committee of the Board will do a full review of equity ownership, with the intent to establish long-term incentives for the role that align to peer group benchmarks and are in line with increasing shareholder value.
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Kenneth Persen Employment Agreement
On August 2, 2022 we entered into an employment agreement with Mr. Persen as its Chief Technology Officer (“2022 Persen Agreement”), Mr. Persen will receive an annual salary of $300,000, commencing on August 2, 2022 and was awarded 80,000 stock options. The stock option will vest as to 25% on the 1-year anniversary of the vesting commencement date, and the remainder will vest monthly thereafter on the same day of the month as the vesting commencement date until fully vested. During 2023 Mr. Persen was awarded a total of 481,000 options, of these stock options, 421,000 will vest as follows: Sixty percent (60%) are milestone based vesting on FDA clearance for marketing of HeartBeam’s synthesized 12L product and the remaining forty percent (40%) are time based vesting monthly over 48 months, and the remaining 60,000 will vest as to 25% on the 1-year anniversary of the vesting commencement date, and the remainder will vest monthly thereafter on the same day of the month as the vesting commencement date until fully vested. Mr. Persen will be eligible to receive an annual bonus up to 30% of his annual base salary, subject to adjustment on an annual basis, based upon his performance and overall progress of the Company. Pursuant to the 2022 Persen Agreement, at the Board of Directors meeting held on August 21, 2023, Mr. Persen’s annual eligible bonus was increased to 35% effective January 1, 2023. Effective January 1, 2024 Mr. Persen’s annual salary increased to $312,000.
Timothy Cruickshank Employment Agreement
On August 27, 2024, we entered into an employment agreement with Mr. Cruickshank as its Chief Financial Officer (“2024 Cruickshank Agreement”), Mr. Cruickshank will receive an annual salary of $385,000, commencing on September 9, 2024 and was awarded 400,000 stock options. The stock option will vest as to 25% on the 1-year anniversary of the vesting commencement date, and the remainder will vest monthly thereafter on the same day of the month as the vesting commencement date until fully vested. Mr. Cruickshank will be eligible to receive an annual bonus up to 45% of his annual base salary, subject to adjustment on an annual basis, based upon his performance and overall progress of the Company.
2024 Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information with respect to the value of all equity awards that were outstanding at December 31, 2024:
1.Dr. Vajdic was awarded 796,000 options on August 2, 2023, these options are scheduled to vest sixty percent (60%) upon FDA Clearance for marketing of HeartBeam’s synthesized 12L product and remainder forty percent (40%) one forty-eighth (1/48th) shall vest on each one-month anniversary of the vesting commencement date.
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2.Dr. Vajdic was awarded 398,000 options on May 14, 2023, these options are scheduled to vest sixty percent (60%) upon FDA Clearance for marketing of HeartBeam’s synthesized 12L product and remainder forty percent (40%) one forty-eighth (1/48th) shall vest on each one-month anniversary of the vesting commencement date.
3.Dr. Vajdic was awarded 359,000 options on June 15, 2022, these options are scheduled to vest over 4 years with 25% vesting on January 1, 2023 and the remainder vesting and exercisable monthly thereafter.
4.Mr. Eno was awarded 357,000 options on August 2, 2023, these options are scheduled to vest sixty percent (60%) upon FDA Clearance for marketing of HeartBeam’s synthesized 12L product and remainder forty percent (40%) one forty-eighth (1/48th) shall vest on each one-month anniversary of the vesting commencement date.
5.Mr. Eno was awarded 179,000 options on May 14, 2023, these options are scheduled to vest sixty percent (60%) upon FDA Clearance for marketing of HeartBeam’s synthesized 12L product and remainder forty percent (40%) one forty-eighth (1/48th) shall vest on each one-month anniversary of the vesting commencement date.
6.Mr. Eno was awarded 240,000 options on January 18, 2023, these options are scheduled to vest over 4 years with 25% vesting on January 18, 2024 and the remainder vesting and exercisable monthly thereafter
7.Mr. Eno was awarded 9,000 options on November 12, 2021, these options are scheduled to vest monthly over 4 years from the vesting commencement date.
8.Mr. Eno was awarded 36,363 options on November 1, 2020, these options are scheduled to vest monthly over 4 years from the vesting commencement date.
9.Mr. Persen was awarded 252,000 options on August 2, 2023, these options are scheduled to vest sixty percent (60%) upon FDA Clearance for marketing of HeartBeam’s synthesized 12L product and remainder forty percent (40%) one forty-eighth (1/48th) shall vest on each one-month anniversary of the vesting commencement date.
10.Mr. Persen was awarded 169,000 options on May 14, 2023, these options are scheduled to vest sixty percent (60%) upon FDA Clearance for marketing of HeartBeam’s synthesized 12L product and remainder forty percent (40%) one forty-eighth (1/48th) shall vest on each one-month anniversary of the vesting commencement date.
11.Mr. Persen was awarded 60,000 options on March 21, 2023, these options are scheduled to vest over 4 years with 25% vesting on January 18, 2024 and the remainder vesting and exercisable monthly thereafter.
12.Mr. Persen was awarded 80,000 options on September 17, 2022, these options are scheduled to vest over 4 years with 25% vesting on January 18, 2024 and the remainder vesting and exercisable monthly thereafter.
13.Mr. Cruickshank was awarded 400,000 options on September 25, 2024, these options are scheduled to vest over 4 years with 25% vesting on September 26, 2025 and the remainder vesting and exercisable monthly thereafter.
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Options Exercised and Stock Vested
The following table summarizes, with respect to our named executive officers, all options that were exercised on stock that was vested during fiscal 2024:
Name Option Awards
Number of Shares Acquired on Vesting (#) Value Realized on Exercise ($)(1)
Branislav Vajdic, PhD — $ —
Robert Eno — $ —
Kenneth Persen — $ —
Timothy Cruickshank $ — $ —
1.Based on the closing market price of our Common Stock as reported on the NASDAQ Capital Market on December 31, 2024.
DIRECTOR COMPENSATION
Directors who are also employees of the Company do not receive any separate compensation in connection with their Board service, and we pay cash fees to our non-employee directors. Prior to 2022, our non-employee directors received a non-qualified initial stock option award upon joining the Board, which vest monthly over a four-year period, beginning on the date of the director’s election to the Board.
On June 15, 2022, the Board of Directors approved a plan for the annual cash compensation of directors effective January 1, 2022:
Board Audit Committee Other Committees
The following table presents the total compensation for each person who served as a non-employee member of our board of directors and received compensation for such service during the fiscal year ended December 31, 2024. Other than as set forth in the table and described more fully below:
1.Represents director fees earned for the twelve month period to each of Messrs Ferrari, de Urioste, Elfrink, Strome, Nelson, Jaff and Mmes Ortigas-Wedekind.
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2.The annual RSU grants to Mr. Ferrari, de Urioste, Elfrink, Strome, Nelson and Mrs. Ortigas-Wedekind occur at each Annual Stockholder Meeting, vesting in full at the following annual meeting. The dollars convert to shares based on the FMV at the date of grant.
3.The RSU awarded to Dr. Jaff in 2023 will vest in equal annual installments over three years on the day following the annual shareholders’ meeting in 2024, 2025 and 2026. The dollars convert to shares based on the FMV at the date of grant.
Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters
The following table sets forth certain information regarding the Company’s Common Stock, beneficially owned as of December 31, 2024 by:
•each person known to the Company to beneficially own more than 5% of its Common Stock,
•each executive officer, director and director nominee
•all officers, directors and director nominees as a group.
The Company calculated beneficial ownership according to Rule 13d-3 of the Securities Exchange Act of 1934, as amended as of that date. Shares of the Company’s Common Stock issuable upon exercise of options or warrants or conversion of notes that are exercisable or convertible within 60 days after December 31, 2024 are included as beneficially owned by the holder, but not deemed outstanding for computing the percentage of any other stockholder for Percentage of Common Stock Beneficially Owned. For each individual and group included in the table below, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the 26,960,901 shares of Common Stock outstanding at December 31, 2024, plus the number of shares of Common Stock that such person or group had the right to acquire on or within 60 days after December 31, 2024. Beneficial ownership generally includes voting and dispositive power with respect to securities. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole dispositive power with respect to all shares beneficially owned.
Name Shares Beneficially Owned %
George A. de Urioste(3) 67,376 *
All directors and executive officers as a group (11 persons) 6,396,598 22.55 %
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* Less than 1 percent ownership
1.Includes (i) 65,653 shares acquired from the conversion of 2015 Convertible Notes (ii) 73,529 shares acquired from the vesting of RSUs in 2023, (iii) 31,948 shares acquired from the vesting of RSUs in 2024 and (iv) 7,576 options exercisable within 60 days after December 31, 2024, (v) 190,150 vested options. Does not include 209,090 unvested stock options and 44,247 unvested RSUs.
2.Includes (i) 794,545 shares acquired as founders equity, (ii) 115,559 shares acquired from the conversion of 2015 Convertible Notes, (iii) 34,858 options exercisable within 60 days after December 31, 2024, (iv) 1,287 shares acquired from the exercise of warrants acquired from the short-term loan investment program and (v) 35,000 BEATW exercisable warrants and (vi) 430,919 vested options. Does not include 1,553,000 unvested stock options.
3.Includes (i) 12,168 shares acquired from the vesting of RSUs in 2023, (ii) 23,961 shares acquired from the vesting of RSUs in 2024 and (ii) 1,914 options exercisable within 60 days after December 31, 2024, (iii) 37,027 vested options and (iv) shares sold of 7,694 in the 2024. Does not include 44,000 unvested stock options and 33,185 unvested RSUs.
4.Includes (i) 9,000 shares and 9,000 BEATW warrants purchased November 11, 2021, (ii) 7,824 shares acquired from the conversion of 2015 Convertible Notes, (iii) 55,147 shares acquired from the vesting of RSUs in 2023, (iv) 23,961 shares acquired from the vesting of RSUs in 2024, (v) 682 options exercisable within 60 days after December 31, 2024 and (vi) 41,930 vested options. Does not include 43,635 unvested stock options and 33,185 unvested RSUs.
5.Includes (i) 101,818 shares acquired under the 2015 Incentive Plan (ii) 207,056 shares acquired from the conversion of 2015 Convertible Notes, (iii) 55,147 shares acquired from the vesting of RSUs in 2023, (iv) 23,961 shares acquired from the vesting of RSUs in 2024, (v) 1,818 options exercisable within 60 days after December 31, 2024, (vi) 60,000 BEATW exercisable warrants, (vii) 3,640 shares acquired from the exercise of warrants acquired from the short-term loan investment program and (viii) 39,090 vested options. Does not include 43,636 unvested stock options and 33,185 unvested RSUs.
6.Includes (i) 3,150,000 shares purchased on May 2, 2023, and (ii) 23,961 shares acquired from the vesting of RSUs in 2024. Does not include 33,185 unvested RSUs.
7.Includes (i) 70,001 shares purchased on May 2, 2023 and (ii) 23,961 shares acquired from the vesting of RSUs in 2024 (iii) 3,889 options exercisable within 60 days after December 31, 2024 and (iv) 15,555 vested options. Does not include 70,000 unvested stock options and 33,185 unvested RSUs.
8.Includes (i) 13,978 shares acquired from the vesting of RSUs in 2024. Does not include 61,142 unvested RSUs.
9.Includes (i) 72,725 shares acquired under the 2015 Incentive Plan, (ii) 5,000 shares and 5,000 BEATW warrants purchased November 11, 2021, (iii) 5,000 shares and 10,000 BEATW warrants acquired on the open market, (iv) 29,197 shares acquired from the conversion of 2015 Convertible Notes, (v) 184 shares acquired from the exercise of warrants acquired from the short-term loan investment program and (vi) 80,000 vested options. Does not include 75,000 unvested stock options
10.Includes 19,308 options exercisable within 60 days after December 31, 2024 and (ii) 234,241 vested options. Does not include 821,363 unvested stock options.
11.Includes 12,850 options exercisable within 60 days after December 31, 2024 and (ii) 133,274 vested options. Does not include 561,000 unvested stock options.
12.Represents 1,058,633 shares issued pursuant to a subscription agreement of the Company dated May 2, 2023, 1,562,666 shares of Common Stock issuable under a warrant issued by the Issuer and 3,911 shares of Common Stock held by Christopher A. Marlett Living Trust.
13.Represents 1,833,334 shares issued pursuant to a subscription agreement of the Company dated May 2, 2023, 46,600 shares in open market purchases on May 4, 2023, and 19,602 shares in open market purchases on May 25, 2023.
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Item 13. Certain Relationships and Related Transactions, and Director Independence
The Company has established policies and other procedures regarding approval of transactions between the Company and any employee, officer, director, and certain of their family members and other related persons. These policies and procedures are generally not in writing but are evidenced by long standing principles adhered to by our Board. The disinterested members of the Board review, approve and ratify transactions that involve “related persons” and potential conflicts of interest. Related persons must disclose to the disinterested members of the Board any potential related person transactions and must disclose all material facts with respect to such transaction. All such transactions will be reviewed by the disinterested members of the Board and, in their discretion, approved or ratified. In determining whether to approve or ratify a related person transaction the disinterested members of the Board will consider the relevant facts and circumstances of the transaction, which may include factors such as the relationship of the related person with the Company, the materiality or significance of the transaction to the Company and the related person, the business purpose and reasonableness of the transaction, whether the transaction is comparable to a transaction that could be available to the Company on an arms-length basis, and the impact of the transaction on the Company’s business and operations.
Since the beginning of fiscal year 2024, the Company did not have any transactions to which it has been a participant that involved amounts that exceeded or will exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any of the Company’s directors, executive officers or any other “related person” as defined in Item 404(a) of Regulation S-K had or will have a direct or indirect material interest.
Item 14. Principal Accounting Fees and Services
Based on the Audit Committee's evaluation and determination that Marcum LLP (“Marcum”) is independent, our Audit Committee has retained the firm of Marcum as our independent registered public accounting firm for fiscal year 2024. In making this determination, the Company is requesting its stockholders to ratify the appointment of Marcum at its next Annual Stockholder Meeting. In the event the stockholders fail to ratify the appointment, the Audit Committee will consider in its direction to select other auditors for the subsequent year. Even if the selection is ratified, the Audit Committee, in its discretion, may select a new independent registered public accounting firm at any time during the year if it feels that such a change would be in the best interest of the Company and its stockholders. Representatives of Marcum will be present at the 2025 Annual Stockholders' Meeting and will have the opportunity to make a statement and be available to answer questions.
Fees to Independent Registered Public Accounting Firm.
The following table sets forth the fees that the Company was billed by Marcum, our independent registered public accountants for fiscal years 2024 and 2023:
Audit Related Fees — —
Tax Fees — —
1.Audit fees relate to professional services rendered in connection with the audit of the Company's annual financial statements, quarterly review of financial statements and audit services provided in connection with other statutory and regulatory filings.
Policy on Audit Committee Pre-Approval of Fees
The Audit Committee must pre-approve all services to be performed for us by our independent registered public accounting firm. Pre-approval is granted usually at regularly scheduled meetings of the Audit Committee. If unanticipated items arise between regularly scheduled meetings of the Audit Committee, the Audit Committee has delegated authority to the chairman of the Audit Committee to pre-approve services, in which case the chairman communicates such pre-approval to the full Audit Committee at its next meeting. The Audit Committee also may approve the additional unanticipated services by either convening a special meeting or acting by unanimous written consent.
67
Part IV
Item 15. Exhibits and Financial Statement Schedules
Incorporated by Reference Filed or Furnished Herewith
ExhibitNumber Exhibit Description Form Exhibit Filing Date
68
23.1 Consent of Marcum LLP Independent Registered Public Accounting Firm X
24.1 Power of Attorney * X
97.1 HeartBeam, Inc. Compensation Recovery Policy X
101.INS XBRL Instance Document+ X
101.SCH XBRL Taxonomy Extension Schema Document+ X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document+ X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document+ X
101.LAB XBRL Taxonomy Extension Label Linkbase Document+ X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document+ X
† Management or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None
69
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HEARTBEAM, Inc.
By: /s/Robert Eno
Name: Robert Eno
Title: Chief Executive Officer
Dated: March 13, 2025 (Principal Executive Officer)
By: /s/ Timothy Cruickshank
Name: Timothy Cruickshank
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert Eno his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Name Title Date
/s/ Richard Ferrari Executive Chairman March 13, 2025
Richard Ferrari
/s/ George de Urioste Director March 13, 2025
George de Urioste
/s/ Marga Ortigas-Wedekind Director March 13, 2025
Marga Ortigas-Wedekind
/s/ Willem Elfrink Director March 13, 2025
Willem Elfrink
/s/ Mark Strome Director March 13, 2025
Mark Strome
/s/ Kenneth Nelson Director March 13, 2025
Kenneth Nelson
/s/ Michael Jaff Director March 13, 2025
Michael Jaff
/s/ Branislav Vajdic Director March 13, 2025
Branislav Vajdic
/s/ Robert Eno Chief Executive Officer March 13, 2025
Robert Eno (Principal Executive Officer)
/s/ Timothy Cruickshank Chief Financial Officer March 13, 2025
Timothy Cruickshank (Principal Financial and Accounting Officer)
Contents
Page
Report of Independent Registered Public Accounting Firms (PCAOB ID No: 688) F-2
Statements of Operations for the years ended December 31, 2024 and 2023 F-5
Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-7
Notes to Financial Statements F-8
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
HeartBeam Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of HeartBeam, Inc. (the “Company”) as of December 31, 2024 and 2023, the related statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum LLP
We have served as the Company’s auditor since 2020
Morristown, New Jersey
March 13, 2025
F-2
HEARTBEAM, INC.
Balance Sheets
(In thousands, except share data)
December 31,
Assets
Current Assets:
Prepaid expenses and other current assets 393 636
Property and equipment, net 450 256
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable (includes related party $5 and $2, respectively) 531 556
Commitments (Note 7)
Stockholders’ Equity
Total Liabilities and Stockholders’ Equity $ 3,276 $ 17,131
See accompanying notes to the financial statements
F-3
HEARTBEAM, INC.
Statements of Operations
(In thousands, except share and per share data)
December 31,
Operating Expenses:
General and administrative $ 8,836 $ 8,516
Other income
Other expense (7) —
Loss before provision for income taxes (19,448) (14,639)
Income tax provision — —
Net loss per share, basic and diluted $ (0.73) $ (0.72)
See accompanying notes to the financial statements
F-4
HEARTBEAM, INC.
Statement of Changes in Stockholders’ Equity
(In thousands, except share data)
Shares Amount
Stock based compensation expense — — 3,208 — 3,208
Stock issuance upon exercise of stock options 180,072 — 214 — 214
Stock issuance upon vesting of restricted stock units 258,970 — — — —
Stock Issuance upon exercise of warrants 7,292 — 16 — 16
Stock based compensation expense 4,299 4,299
Sale of Common Stock, net of issuance costs 309,634 — 730 730
Stock issuance upon exercise of stock options 144,408 — 136 136
Stock issuance upon vesting of restricted stock units 177,827 — — — —
See accompanying notes to the financial statements
F-5
HEARTBEAM, INC.
Statements of Cash Flows
(In thousands)
December 31,
Cash Flows From Operating Activities
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation 7 —
Stock-based compensation expense 4,299 3,208
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 243 (191)
Accounts payable, accrued expenses and other current liabilities 428 (471)
Net cash used in operating activities (14,471) (12,093)
Cash Flows From Investing Activities
Purchase of property and equipment (201) (256)
Net cash used in investing activities (201) (256)
Cash Flows From Financing Activities
Proceeds from sale of common stock, net of issuance costs 730 24,764
Proceeds from exercise of stock options 136 214
Proceeds from exercise of warrants — 16
Net cash provided by financing activities 866 24,994
Net increase (decrease) in cash and restricted cash (13,806) 12,645
Cash, cash equivalents and restricted cash - beginning of the year 16,239 3,594
Cash, cash equivalents and restricted cash - at end of the year $ 2,433 $ 16,239
Supplemental Disclosures of Cash Flow Information:
Taxes paid $ — $ —
Reconciliation of cash, cash equivalents and restricted cash:
Restricted cash (included in other assets) $ 56 $ 50
Total cash, cash equivalents and restricted cash $ 2,433 $ 16,239
See accompanying notes to the financial statements
F-6
HEARTBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND OPERATIONS
HeartBeam, Inc. (“HeartBeam” or the “Company”) is a cardiac technology company focusing on developing and commercializing higher resolution ambulatory Electrocardiogram (“ECG”) solutions that enable the detection and monitoring of cardiac disease outside a healthcare facility setting. The Company’s ability to develop higher resolution ECG solutions is achieved through the development of the Company’s proprietary and patented Electrocardiography (“ECG”) technology platform. HeartBeam’s ECG is capable of developing three-dimensional (3D) representations of cardiac electrical activity by displaying the spatial locations of ECG waveforms that demonstrated in early studies to deliver diagnostic capability equal or superior to traditional hospital-based ECG systems.
The Company has validated this technology and has received U.S. Food and Drug Administration (“FDA”) clearance of its initial telehealth products. The Company filed a 510(k) submission in 2023 for its initial product, a patient-held ECG device and was granted FDA clearance on December 13, 2024. In January 2025, the Company filed a 510(k) notification for the software algorithms that synthesize a 12L ECG from the HeartBeam System. The cumulative result of these two 510(k) submissions, once cleared by the FDA, will be an ambulatory device, carried by patients, which can synthesize a 12L ECG for physician review for arrhythmia assessment.
The Company was incorporated in 2015 as a Delaware corporation. The Company operates as one segment and its operations are based in Santa Clara, California.
NOTE 2 – GOING CONCERN
The Company is subject to a number of risks similar to those of early stage companies, including dependence on key individuals and product candidates, the difficulties inherent in the development of a commercial market, the potential need to obtain additional capital, competition from larger companies, other technology companies and other technologies.
The Company has incurred losses each year since inception and has experienced negative cash flows from operations in each year since inception. As of December 31, 2024 the Company had approximately $2.4 million cash and cash equivalents.
Based on its current business plan assumptions, existing financing arrangements including the February 2025 capital raise (see Note 9, Subsequent Events) and expected cash burn rate, the Company believes that the existing cash is insufficient to fund operations for the next twelve months following the issuance of these financial statements. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
Therefore, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships until sufficient revenue can be generated to achieve positive cash flow from operations as the Company expects no material commercial revenue in 2025. The Company has an At-the-Money (ATM) sales agreement (See Note 4, Stockholders Equity) pursuant to which the Company may sell up to an aggregate of $17.0 million shares of the Company’s common stock. There were 309,634 shares issued under the ATM during the year ended December 31, 2024, and there was approximately $16.2 million available for issuance as of the financial statement issuance date.
The Company continues to maintain strong financial discipline as it achieves critical clinical and regulatory milestones in advance of an anticipated commercialization. Management believes the continued achievement of these milestones will provide the Company the ability to raise additional capital. However, management can provide no assurance that such financing or strategic relationships will be available on acceptable terms, or at all, which if not consummated would likely have a material adverse effect on the Company and its financial statements.
The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
F-7
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OFPRESENTATION
The accompanying audited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") and in conformity with the instructions on Form 10-K and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”) and have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Certain reclassifications have been made by the Company to the prior period’s financial statements in order to conform to the current year presentation of accounts payable and accrued expenses. This reclassification did not impact previously reported results from operations, changes in stockholders’ equity or cash flows.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP,requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based on amounts that differ from those estimates. On an ongoing basis, management evaluates its estimate related to probability and timing related to vesting of the stock-based compensation related to probability and timing related to vesting of milestone options.
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of December 31, 2024 the Company has $1.1 million held as cash equivalents and as of December 31, 2023 there were $15.9 million held as cash equivalents. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”) and has cash balances in accounts which exceed the federally insured limits as of December 31, 2024 and December 31, 2023. The Company has made a deposit to the bank for their credit cards in the amount of $56,000 and is classified as restricted cash included in other non-current assets as of December 31, 2024.
PROPERTY AND EQUIPMENT, NET
Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment, net, to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Maintenance and repairs are expensed as incurred.
During the year ended December 31, 2024, the Company capitalized tools amounting to $211,600, which is being depreciated based on useful life of 7 years. Depreciation and amortization expense for the year ended December 31, 2024 was nominal. The company has property and equipment, net represents machinery and equipment of $203,800 and $0 as of December 31, 2024, and December 31, 2023, respectively. Construction-in-progress related to tooling development that has not been placed into service amounted to $245,700 and $256,000 as of December 31, 2024, and December 31, 2023, respectively. Construction-in-progress amounts are not subject to depreciation as such assets are not yet available for their intended use.
RESEARCH AND DEVELOPMENT EXPENSE
The Company expenses the cost of research and development as incurred. Research and development expenses consist primarily of professional services costs associated with the development of cardiovascular technologies and products.
F-8
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s financial instruments consist primarily of cash, accounts payable and accrued liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset transaction between market participants on the measurement date. Where available, fair value is based on observable market prices or is derived from such prices. The Company uses the market approach valuation technique to value its investments. The market approach uses prices and other pertinent information generated from market transactions involving identical or comparable assets or liabilities. The types of factors that the Company may consider in fair value pricing the investments include available current market data, including relevant and applicable market quotes.
Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
•Level 1 - Observable inputs such as quoted prices in active markets.
•Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.
•Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the assignment of an asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
ACCOUNTING FOR WARRANTS
The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company accounts for its currently issued warrant instruments in conjunction with the Company’s common stock in permanent equity. These warrants are indexed to the Company’s stock and meet the requirements of equity classification as prescribed under ASC 815. Warrants classified as equity are initially measured at fair value, and subsequent changes in fair value are not recognized so long as the warrants continue to be classified as equity.
STOCK-BASEDCOMPENSATION
The Company periodically issues stock options and restricted stock awards (“RSUs”) to employees and non-employees for services. The Company accounts for such grants issued and vesting to employees and non-employees based on ASC 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense over the vesting period. Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments. For awards with performance-based conditions, the Company evaluates the probability that the performance condition will be achieved and recognizes compensation cost over the service period based on that probability. If it becomes probable that the performance condition will be met, the Company recognizes the related compensation expense over that time period and if the expected performance obligation timing is modified due to changes, the expense attribution period is also modified on a prospective basis. If the performance condition is not expected to be met, no compensation cost is recognized, and any previously recognized expense is reversed.
F-9
The fair value of stock options on the date of grant is calculated using the Black-Scholes option pricing model, based on key assumptions such as the fair value of common stock, expected volatility and expected term. These estimates require the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. These assumptions are primarily based on historical data, peer company data and the judgment of management regarding future trends and other factors. The Company has estimated the expected term of its employee stock options using the “simplified” method, whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the option due to its lack of sufficient historical data. The risk-free interest rates for periods within the expected term of the option are based on the US Treasury securities with a maturity date commensurate with the expected term of the associated award. The Company has never paid and does not expect to pay dividends in the foreseeable future. The Company accounts for forfeitures when they occur.
Compensation cost for RSUs issued to employees and non-employees is measured using the grant date fair value of the award, and expense is recognized over the service period, adjusted to reflect actual forfeitures.
INCOME TAXES
The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being recognized. Changes in recognition and measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are included in income tax expense.
NETLOSS PERCOMMONSHARE
Basic net loss per share excludes the effect of dilution and is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding.
Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options and warrants to the extent dilutive. Basic net loss per share was the same as diluted net loss per share for the years ended December 31, 2024 and 2023 as the inclusion of all potential common shares outstanding would have an anti-dilutive effect.
In accordance with ASC 260-10-45-13, exercisable penny options are included in the calculation of weighted average basic and diluted earnings per share. As of December 31, 2024, and 2023, 153,443 and 176,674 penny options have been included in the calculation of weighted average basic and diluted earnings per share.
The following is a summary of awards outstanding as of December 31, 2024 and 2023, which are not included in the computation of basic and diluted weighted average shares:
Year ended December 31,
Stock options (excluding exercisable penny stock options) 7,232,926 5,915,851
F-10
Segment Reporting
The Company operates in one reporting segment, The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM uses operating expenses to measure performance against progress in its clinical trials and its product development. The determination of a single business segment is consistent with the financial information regularly provided to the Company’s CODM. The Company’s CODM reviews and evaluates the total net loss for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.In addition to the significant expense categories included within the total net loss presented on the Company's Statements of Operations, the following table sets forth significant segment expenses:
(in thousands) Year ended December 31,
Research and Development (excluding employee expenses):
Consulting and professional fees 3,148 2,479
Clinical study expenses 736 —
Total Research and development expense $ 6,459 $ 4,586
General and administrative expense (excluding employee expenses):
General and administrative expenses 2,825 2,706
Commercialization readiness expenses 632 360
Total General and administrative expense 3,457 3,066
* Other primarily includes patent and testing expenses for years ended December 31, 2024 and 2023.
RECENTLY ISSUED ACCOUNTING STANDARDS
Not Yet Adopted as of December 31, 2024:
In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on the annual period ending December 31, 2025.
In November 2024, the FASB issued ASU 2024-03 (updated ASU 2025-01 issued in January 2025), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting ASU 2024-03.
F-11
Adopted as of December 31, 2024:
In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, which improves segment disclosure requirements, primarily through enhanced disclosure requirements for significant segment expenses. The improved disclosure requirements apply to all public entities that are required to report segment information, including those with only one reportable segment. The Company adopted the guidance in the fiscal year beginning January 1, 2024. There was no impact on the Company’s reportable segments identified and additional required disclosures have been included in Note 3.
NOTE 4 – STOCKHOLDERS’ EQUITY
COMMON STOCK
On May 2, 2023, the Company entered into a Securities Purchase Agreement with an accredited investor, for the purchase and sale in a registered direct offering of 1,000,000 shares of the Company’s common stock at a price of $1.50 per share, generating net proceeds from the offering of approximately $1.1 million after deducting financial advisory and legal fees as well as other estimated offering expenses.
On April 20, 2023, the Company entered into a Placement Agency Agreement with Public Ventures, LLC to consummate an offering of 16,666,666 shares of Common Stock at an offering price of $1.50 per share, which closed in accordance with the subscription agreement dated May 2, 2023. The Company received $23.2 million in net proceeds from the offering after deducting placement agent discounts and commission and other estimated offering expenses payable by the Company. In
addition, the subscription agreement grants placement agent warrants as part of this transaction. See Warrants section below.
On February 2, 2023, the Company entered into a securities purchase agreement and a note purchase agreement (“SPA”, NPA” or together “Agreements”) with Maverick Capital Partners, LLC (“Investor”). Pursuant to the terms of the Agreements, as amended, the Company agreed to sell up to $4,000,000 of the Company’s common stock at 75% of the average calculated Volume Weighted Average Price per share.
On February 28, 2023, the Company issued a $500,000 Convertible Note to the Investor pursuant to the NPA. On March 9, 2023, the Convertible Note was settled upon the execution of the SPA and related issuance of 200,105 shares of common stock pursuant to the SPA draw down notice dated March 9, 2023. These shares of common stock were registered under the Company’s registration statement on Form S-3 dated February 10, 2023 and the related prospectus supplement dated March 9, 2023, whereby, the Company receivedtotal proceeds of $500,000.
On February 1, 2023, the Company entered into an At-the-Market Sales Agreement (“ATM” or “Sales Agreement”) with A.G.P./ Alliance Global Partners as placement agent, to issue and sell shares of the Company’s common stock. The Company shall pay to the sales agent in cash, upon each sale of placement shares through the placement agent pursuant to the Sales Agreement, an amount equal to 3.00% of the aggregate gross proceeds from each sale of placement shares. In connection to the Sales Agreement, on February 17, 2023 and February 22, 2023, the Company sold 6,184 shares at $3.76 per share for gross proceeds of approximately $23,000. This agreement was terminated in May 2024.
On May 2, 2024, the Company entered into a Sales Agreement (“PV Sales Agreement”) with Public Ventures, LLC, as sales agent (“Public Ventures” or “Agent”), pursuant to which Company may sell up to an aggregate of approximately $17 million of shares of the Company’s common stock. There were 309,634 shares issued under the ATM during the year ended December 31, 2024. As of December 31, 2024, there was approximately $16.2 million available for issuance under the ATM.
Total stock issuance costs, which consist primarily of legal, accounting and underwriting fees in connection with the above stated transactions related to the offerings and SPA was approximately $174,000, which as of December 31, 2023, was recorded in additional paid in capital.
During the years ended December 31, 2024 and 2023 the Company issued 322,235 and 439,042 shares of common stock upon exercise of vested stock options and vesting of restricted stock units.
F-12
WARRANTS
On May 2, 2023 the Company issued 1,666,666 placement agent warrants to purchase shares of Common Stock sold in the offering, with an exercise price of $1.875 per share and are exercisable for five years from the date of issuance.
During the year ended December 31, 2023, 11,638 warrants were exercised, of which 5,817 were exercised in the form of a cashless exercise utilizing 4,346 warrants which resulted in the net issuance of 1,471 common shares. The remaining 5,821 warrants were exercised for cash for approximately $16,000.
A summary of the outstanding warrants as of December 31, 2024 and 2023 is as follows:
Issued — —
Exercised — $ —
Expired — —
NOTE 5 – STOCK-BASED COMPENSATION
In 2015, the Company’s Board of Directors approved the HeartBeam, Inc. 2015 Equity Incentive Plan ("2015 Plan"), to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors, and consultants, and to promote the success of the Company’s business. The 2015 Plan provides for the grant of stock options and RSU’s to purchase common stock of which 1,636,362 were authorized by the board of which 876,797 are outstanding as of December 31, 2024. The 2015 Plan was terminated upon shareholder approval of the 2022 Equity Incentive Plan (“2022 Equity Plan”) whereby no new awards can be issued under the 2015 Plan.
The Company’s shareholders approved the 2022 Equity Plan at the annual meeting of stockholders held on June 15, 2022, pursuant to which 1,900,000 shares of common stock were authorized for issuance. Under the 2022 Equity Plan, the number of shares available for issuance will be increased on the first day of each fiscal year beginning with the 2023 fiscal year, in an amount equal to the lesser of 3,800,000 shares, five percent (5%) of the total number of shares of all classes of common stock of the Company outstanding on the last day of the immediately preceding fiscal year, and a lesser number of shares determined by the administrator. On January 1, 2023 400,487 shares, equivalent to five percent (5%) of common stock outstanding were added to the shares available for issuance under the 2022 Equity Plan.
At the July 7, 2023, Annual Shareholders’ Meeting, the proposal to amend the 2022 Equity Incentive Plan to increase the number of authorized shares from 1,900,000 shares to 5,900,000 shares was approved.
At the June 12, 2024 annual stockholders’ meeting the 2022 Equity Incentive Plan was amended to increase the number of authorized shares from 5,900,000 shares to 8,900,000.
The 2022 Equity Plan includes a provision to add-back any cancelled options from the 2015 Plan up to 1,372,816 shares. As of December 31, 2024, there are 293,856 shares from the 2015 Plan that are included in the 2,167,562 shares available for issuance under the 2022 Equity Plan.
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During 2023, the Company granted 2,208,000 options to various executives and employees. Sixty percent (60%) of these options vest based on FDA Clearance for marketing of HeartBeam’s synthesized 12L product and the remaining forty percent (40%) vest monthly over a period of 48 months. The Company calculated the fair value for each of these grants using the Black-Scholes option pricing model and it is expensed based on management’s probability assessment of FDA clearance. During the year, management performed its probability assessment regarding the milestone achievement date and concluded that based on current status of discussion with FDA and planned V2 submission, the estimated clearance date has been shifted to December 31, 2025, resulting in lower stock based compensation expense of approximately $0.2 million. The 60% milestone options are issued and outstanding as of December 31, 2024.
The Company received proceeds of $0.1 million from the exercise of stock options during the year ended December 31, 2024 and $0.2 million during the year ended December 31, 2023.
STOCK OPTIONS
The following is a summary of stock option activity during the years ended December 31, 2024 and 2023:
(*) Intrinsic value is based on the fair market value of the Company's common stock.
For the years ended December 31, 2024 and 2023, the assumptions used in the Black-Scholes option pricing model, which was used to estimate the grant date fair value per option, were as follows:
Year ended December 31,
Weighted-average Black-Scholes option pricing model assumptions:
Expected dividend yield $ — $ —
Weighted average grant date fair value per share $1.81 - 2.85 $1.75 - 3.38
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RESTRICTED STOCK UNITS
The following is a summary of RSUs award activity during the years ended December 31, 2024 and 2023:
Year ended December 31,
STOCK BASED COMPENSATION
The following is a summary of stock-based compensation expense:
Year ended December 31,
General and administration
R&D
As of December 31, 2024 total compensation cost not yet recognized related to unvested stock options and unvested RSUs was approximately $7.4 million and $0.3 million, respectively, which is expected to be recognized over a weighted-average period of 2.85 years and 0.64 years, respectively.
NOTE 6 – RELATED PARTY TRANSACTIONS
During the course of business, the Company obtains accounting services from CTRLCFO, a firm in which a prior executive of the Company had significant influence. On December 29, 2023, this executive, informed the Company of his plans to retire from his position as of February 1, 2024 and as such ceased to be a related party as of February 1, 2024. The Company had balances due to this firm amounting to approximately $2,000 and expense of $20,000 for the year ended December 31, 2023.
During April 2024, the Company entered into consulting agreement with one of the independent Board of Directors to provide business development consulting services. For these consulting services, the Company agreed to pay $5,000 per month as remuneration and granted 70,000 options to vest during over a period of 36 months. During year ended December 31, 2024, the Company recognized approximately $75,800 related to these consulting services, which includes stock based compensation expense of approximately $30,800.
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NOTE 7 – COMMITMENTS
Lease Obligations
Prior to February 1, 2024, the Company was in a month-to-month lease agreement for its headquarters. The agreement was for an undefined term that could be cancelled at any time, given one month’s notice by either party. The Company’s monthly rent expense associated with this agreement was approximately $1,800. This headquarters lease was in the name of the Company’s Chief Executive Officer, and the cost was reimbursed monthly to CEO until January 31, 2024 when the Company terminated the month-to-month lease, and entered into a new lease in name of the Company with the same landlord. The new lease commenced on February 1, 2024, for initial period of 3 years. The Company performed an assessment and concluded that amount of operating lease right-of-use, or ROU assets was below the Company’s capitalization thresholds set in accordance with ASC 842. For the year ended December 31, 2024 and 2023 rent was approximately $21,000 and $17,000, respectively.
Professional Services Agreement
In March 2022, the Company entered into a professional services agreement with Triple Ring Technologies, Inc. (“TRT”), a co-development company and single source supplier for its initial product, to assist in the design and development of the Company’s complete solution 3D vector ECG collection device for remote heart attack or MI monitoring. This agreement was followed by several amendments. The agreement with TRT includes a commitment totaling $1.7 million. For the year ended December 31, 2024 and 2023, the Company has expensed approximately $0.3 million and $1.3 million, respectively.
As of December 31, 2024, the Company has a remaining commitment of $0.1 million.
Clinical Research Organization
On March 8, 2024, the Company has entered into an agreement with Clinical Research Organization (CRO) to perform certain services related to project set up, clinical trial management and monitoring. As per terms of the agreement, the Company will pay CRO approximately $0.5 million for these services. Additionally, the Company has signed a Clinical Study Agreement with first of five sites to carry out the clinical study for which CRO will act as Company sponsor in relation to payment for these services. The total cost of the clinical trial including the CRO cost is expected to approximate $0.8 million. For the year ended December 31, 2024, the Company has expensed $0.7 million based on actual services performed by the CRO and clinical sites, and has a prepaid balance of $0.1 million as of December 31, 2024.
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NOTE 8 - INCOME TAX
The reconciliation between the Company’s effective tax rate on income from continuing operations and the statutory tax rate for the years ended December 31, 2024 and December 31, 2023 is as follows:
For the Years ended December 31,
Increase (reduction) in income taxes resulting from):