HeartBeam, Inc.BEAT
HeartBeam, Inc. Stock Compensation Disclosure
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.
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:
| Number of options outstanding | Weighted average exercise price | Average remaining contractual life (in years) | Aggregate intrinsic value (in thousands) (*) | ||||||||||||||||||||
| Outstanding – December 31, 2022 | 2,196,798 | $ | 1.76 | 8.7 | $ | 6,770 | |||||||||||||||||
| Options granted | 4,363,800 | 2.42 | |||||||||||||||||||||
| Forfeitures | (288,001) | 2.48 | |||||||||||||||||||||
| Options exercised | (180,072) | 1.19 | |||||||||||||||||||||
| Outstanding – December 31, 2023 | 6,092,525 | $ | 2.22 | 8.7 | $ | 2,945 | |||||||||||||||||
| Options granted | 1,505,000 | 2.36 | |||||||||||||||||||||
| Forfeitures | (66,748) | 2.41 | |||||||||||||||||||||
| Options exercised | (144,408) | 0.94 | |||||||||||||||||||||
| Outstanding – December 31, 2024 | 7,386,369 | 2.26 | 8.36 | $ | 2,627 | ||||||||||||||||||
| Exercisable – December 31, 2024 | 2,413,338 | $ | 2.01 | 7.36 | $ | 1,582 | |||||||||||||||||
(*) 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, | |||||||||||
| 2024 | 2023 | ||||||||||
| Weighted-average Black-Scholes option pricing model assumptions: | |||||||||||
| Volatility | 125.33% - 132.02% | 110.23% - 117.62% | |||||||||
| Expected term (in years) | 6.00 - 7.00 | 5.85 - 6.07 | |||||||||
| Risk-free rate | 3.59% - 4.60% | 3.54% - 4.77% | |||||||||
| Expected dividend yield | $ | — | $ | — | |||||||
| Weighted average grant date fair value per share | $1.81 - 2.85 | $1.75 - 3.38 | |||||||||
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, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||
| Non-Vested at beginning of period | 217,881 | $ | 3.12 | 253,970 | $ | 1.47 | ||||||||||||||||||||
| Shares granted | 243,357 | 2.26 | 222,881 | 3.11 | ||||||||||||||||||||||
| Shares vested | (177,827) | 3.13 | (258,970) | 1.48 | ||||||||||||||||||||||
| Non-vested at end of year | 283,411 | $ | 2.38 | 217,881 | $ | 3.12 | ||||||||||||||||||||
STOCK BASED COMPENSATION
The following is a summary of stock-based compensation expense:
| Year ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| General and administration | |||||||||||
| Stock options | $ | 2,362,385 | $ | 2,069,556 | |||||||
| RSUs | 581,150 | 488,971 | |||||||||
| Total general and administration | 2,943,535 | 2,558,527 | |||||||||
| R&D | |||||||||||
| Stock options | 1,316,775 | 629,092 | |||||||||
| RSUs | 38,426 | 20,457 | |||||||||
| Total R&D | 1,355,201 | 649,549 | |||||||||
| Total stock based compensation | $ | 4,298,736 | $ | 3,208,076 | |||||||
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.
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About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.