Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following management's discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our condensed unaudited financial statements and the notes presented herein included in this Form 10-Q and the audited financial statements and the other information set forth in the 2024 Form 10-K. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. In addition to historical information, the following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties including, but not limited to, those set forth below under "Risk Factors" and elsewhere herein, and those identified under Part I, Item 1A of our 2024 Form 10-K. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports filed and to be filed with the Securities and Exchange Commission.

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 the heart's electrical activity from three dimensions and synthesize a 12-Lead ("12L") ECG from these signals. In recent studies, our approach has demonstrated diagnostic insights similar to a standard 12L ECG for arrhythmia assessment. The data from these studies was also submitted to the FDA as part of our recent FDA submission.

We believe our Products ("Products" or "Product") and services will benefit many stakeholders, including patients, healthcare providers, and healthcare payors, and will also address the rapidly growing field of ambulatory cardiac monitoring. As part of our long-term vision, we believe that we are uniquely positioned to play a central role in high-risk Coronary Artery Disease ("CAD") monitoring, given positive, proof-of-concept data from the initial feasibility studies that demonstrated comparable performance of the HeartBeam System and the standard 12L ECG in ischemia detection. CAD patients are at increased risk for a heart attack or Myocardial Infarction ("MI"). Additionally, our unique portable form-factor will make high-fidelity insights easily accessible, wherever patients are, compared to a standard 12L ECG, which is typically limited to a healthcare setting. The initial product and service offering is expected to be an ambulatory device, carried by patients, which can synthesize a 12L ECG for manual assessment of arrhythmia by physicians.

The HeartBeam System (previously referred to as "AIMIGOTM") was granted FDA clearance on December 13, 2024. The HeartBeam System is the first U.S. Food and Drug Administration ("FDA") cleared cable-free, ambulatory ECG that captures the heart's electrical signals from three dimensions for high-fidelity data collection and advanced diagnostics for arrhythmia assessment. The HeartBeam System is comprised of a credit card sized 3D 3-Lead ECG recording device, a patient application, a physician portal, and powerful cloud-based algorithms.

In January 2025, the Company filed a 510(k) application for the software algorithms that synthesize a 12L ECG from the 3-Lead ECG recorded signal obtained by the HeartBeam System. The software synthesizes these signals into a familiar 12L ECG display, using a personalized transformation matrix. This latest submission builds on HeartBeam's initial FDA clearance, and once cleared by the FDA, the cumulative result will be an ambulatory device, carried by patients, which can synthesize a 12L ECG for manual assessment of arrhythmia by physicians. The submission included results from the VALID-ECG Studyprospective multicenter pivotal trial, conducted to clinically validate of the HeartBeam 12L ECG synthesis software for arrhythmia assessment in comparison to a standard 12L ECG.

In April 2025, the VALID-ECG pivotal study results were presented at the Heart Rhythm Society conference. The study evaluated the mean difference in ECG intervals and amplitudes between HeartBeam's synthesized 12L ECG and a simultaneously collected standard 12L ECG. Intervals and amplitudes are important in assessing non-life-threatening arrhythmias. Data showed a 93.4% overall diagnostic agreement, indicating that HeartBeam's synthesized 12L ECG can support diagnosis of arrhythmias in a manner consistent with standard 12L ECGs. The VALID-ECG pivotal study was a multicenter trial that enrolled 198 patients across five clinical sites in the US, including Allegheny Health Network, Atlanta Heart Specialists, Mount Sinai Hospital, Northwell Health and Piedmont Heart Institute. Efforts were made to enroll patients with a diverse demographic profile reflective of the intended use population in the United States.

The Company is focused on commercial readiness activities, in advance of an anticipated commercial launch that will occur once we receive FDA clearance for our 12L synthesis software.

The Company initiated an early access program (the "Early Access Program") for the HeartBeam System. This program is providing the Company with valuable feedback on the user experience, overall workflow and functionality of the system in a real-world setting. We do not anticipate that the Early Access Program will generate revenue. The intent of the Early Access Program is to prepare the Company to commercialize the technology once we receive FDA clearance for our 12L synthesis software.

In April 2025, HeartBeam announced a strategic collaboration with AccurKardia to potentially add their FDA-cleared, automated ECG interpretation platform to our Product. Adding AccurKardia's FDA-cleared, automated ECG interpretation platform to HeartBeam's device will enhance HeartBeam's commercial offering for arrhythmia assessment by enabling patients and physicians to get an automated rhythm assessment, which will facilitate a quicker diagnosis and faster access to clinical care when needed. The strategic collaboration is expected to expedite HeartBeam's product development efforts, reducing both costs and timelines.

In addition, the Company also has an active AI program underway. We have acquired over six million standard 12L ECGs from various sources, a key element in our fast-paced AI development efforts. We believe that, when combined with our Products, these deep learning algorithms will provide additional value to patients and physicians in several ways.

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 future FDA clearances.

HeartBeam has 16 issued and 1 allowed 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, U.S. 12,207,908, U.S. 12,290,368, U.S. 12,402,823 and allowed U.S. app. no. 18/363,685). Outside of the U.S., HeartBeam holds seven issued patents across Japan, South Korea, Germany, France, the Netherlands, the United Kingdom and Australia, in addition to one European patent granted with unitary effect under Unitary Patent system.

As of September 30, 2025, we had 16 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.

Recent Developments

New and Existing Patent Assignments

We believe our intellectual property ("IP") protects our innovations, and our goal is to become a leader in the ambulatory ECG sector. For some aspects of our proprietary technology, we rely on trade secret protection, while for others we pursue patent protection. It is our view that the combination of these two methods of IP protection maximizes our chances for success.

Thus far in 2025, we have been granted seven new U.S. patents relating to its compact, mobile three-lead cardiac monitoring technologies and automated diagnostics, methods for atrial fibrillation detection, and photoplethysmogram data analysis and presentation. Furthermore, the company has received a Notice of Allowance for an additional U.S. patent application directed to electrocardiogram patch devices and methods. These patents significantly strengthen HeartBeam's intellectual property position surrounding its credit card-sized ECG device, reinforcing both the defensive and offensive moats around the company's core technology. They also expand the application of risk-based diagnostic algorithms across HeartBeam's wearable device portfolio and cover methods for automatically assessing a patient's risk of an acute cardiac event by evaluating clinical risk factors and generating a diagnostic report.

In addition, HeartBeam continues to expand its intellectual property portfolio and has recently filed two non-provisional, two provisional and one continuing U.S. patent applications intended to further strengthen the protection of its proprietary technologies.

The Company now holds a total of twenty-four (24) issued patents worldwide, including sixteen (16) issued U.S. patents. Within the United States, the Company has one (1) allowed U.S. patent application and twelve (12) pending U.S. patent applications (including the allowed case). Outside of the U.S., the Company owns seven (7) issued patents across Japan, South Korea, Germany, France, the Netherlands, Australia, and the United Kingdom, in addition to one European patent granted with unitary effect under Unitary Patent system. In addition, there are twenty-two (22) pending applications in jurisdictions including Canada, China, the European Union, Japan, South Korea, and Australia. The issued patents are expected to expire between April 11, 2036, and April 21, 2042.

The Company's issued and pending U.S. patent claims are directed to compact electrocardiogram (ECG) systems for remote detection and/or diagnosis of acute myocardial infarction ("AMI"). Outside of the U.S., the pending applications in the European Union, Canada ("CA"), Australia ("AU"), Japan ("JP"), South Korea ("KR"), and China ("CN") generally correspond to the Company's U.S. filings.

At-the-Market Offering

The Company has an At-the-Market (ATM) sales agreement with Public Ventures, pursuant to which we may offer and sell from time to time, at our option, 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. pursuant to which the Company may sell up to an aggregate of $17.0 million shares of the Company's common stock. There were 313,476 shares issued under the ATM during the nine months ended September 30, 2025, and there was approximately $15.5 million available for issuance as of the financial statement issuance date, potentially subject to other baby shelf limitations.

HeartBeam's Deep Learning Algorithms Demonstrate High Rates of Accuracy for Detecting Arrhythmias

A new study presented at HRX Live 2025 demonstrated continued advancement of HeartBeam's AI program. HeartBeam's AI algorithm performed equally well on the HeartBeam System compared to standard 12L ECGs in classifying atrial fibrillation, atrial flutter and sinus rhythm, with the study demonstrating that there were no significant differences in the detection of atrial fibrillation, atrial flutter and sinus rhythm when HeartBeam's deep learning algorithms were applied to the HeartBeam System or to standard 12-lead ECGs. The new data was presented by Dr. Joshua Lampert, Cardiac Electrophysiologist and Medical Director of Machine Learning at Mount Sinai Heart in the Mount Sinai Hospital, during HRX Live 2025 in September 2025. These deep learning algorithms are expected to be used for future FDA submissions to enhance the Company's product offerings.

Results of Operations

The following table summarizes our results of operations for the periods presented on our statement of operations data.

Summary of Statements of Operations for the three and nine months ended September 30, 2025 compared with the three and nine months ended September 30, 2024:

General and administrative ("G&A") expenses decreased by approximately $0.2 million or 8% during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease in G&A expense is primarily related to cost reduction efforts including lower consultant costs of $0.1 million.

General and administrative ("G&A") expenses decreased by approximately $1.0 million or 15% during the nine months ended September 30, 2025 as compared to nine months ended September 30, 2024. The decrease in G&A expense is primarily related to non-cash stock-based compensation expense amounting to $0.7 million primarily driven by change in estimate for recognition of milestone options, lower consultant costs of $0.2 million and lower employee costs of $0.2 million, partially offset by an increase in software expenses of $0.1 million.

Research and development expenses ("R&D") expenses increased by approximately $0.4 million or 13% during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The increase in R&D expense is primarily related to an increase in product development expense of $0.4 million related to the development of the HeartBeam System, non-cash stock-based compensation expense amounting to $0.4 million associated with additional awards granted since September 30, 2024, an increase in software costs of $0.1 million, partially offset by a decrease in consulting expenses of $0.6 million compared to the prior period.

Research and development expenses ("R&D") expenses increased by approximately $1.9 million or 24% during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase in R&D expense is primarily related to an increase in product development expense of $1.1 million, related to the development of the HeartBeam System, a net increase in headcount related costs of $1.2 million and non-cash stock-based compensation expense amounting to $1.2 million associated with additional awards granted since September 30, 2024, increase in software costs of $0.2 million, partially offset by a decrease in clinical related cost of $0.6 million driven by completion of clinical study and decrease in consulting expenses of $1.3 million compared to the prior period.

Other income during the three months ended September 30, 2025 and 2024 is related to interest earned on our cash and short term investments.

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 go-to-market strategies.

We have incurred losses each year since inception and have experienced negative cash flows from operations in each year since inception. As of September 30, 2025, we have cash of approximately $1.9 million. Based on our current business plan assumptions and expected cash burn rate, we believe 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 our ability to continue as a going concern.

Our continued operations and our commercialization plan will depend on the 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. We expect no material commercial revenue in 2025 nor can we provide assurance that a financing or strategic relationships will be available on acceptable terms.

Our cash is as follows (in thousands):

Cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):

Operating Activities:

Net cash used in our operating activities of $11.1 million during the nine months ended September 30, 2025 is primarily due to our net loss of $15.7 million less $3.7 million in non-cash expenses and $0.9 million of net changes in operating assets and liabilities.

Net cash used in our operating activities of $10.3 million during the nine months ended September 30, 2024, is primarily due to our net loss of $14.5 million less $3.3 million in non-cash expenses and $0.9 million of net changes in operating assets and liabilities.

Investing Activities:

Net cash used in investing activities during the nine months ended September 30, 2025, of $0.2 million is from the purchase of property and equipment.

Net cash used in investing activities during the nine months ended September 30, 2024 of $0.2 million, is from the purchase of property and equipment.

Financing Activities

During the nine months ended September 30, 2025, net cash provided by financing activities of $10.7 million is primarily from net proceeds from sale of common stock, net of issuance costs.

During the nine months ended September 30, 2024, net cash provided by financing activities of $0.1 million is primarily from net proceeds from sale of equity, net of issuance costs.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our 2024 Annual Report.