Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

v3.24.3
STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
At the June 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.
STOCK OPTIONS
The following is a summary of stock option activity during the nine months ended September 30, 2024:
Number of
options
outstanding		 Weighted
average
exercise
price		 Average
remaining
contractual life
(in years)		 Aggregate
intrinsic value
(in thousands)
Outstanding – December 31, 2023
 6,092,525  $ 2.22  8.7 $ 2,945 
Options granted
 1,435,000  2.32 
Options exercised
 (38,069) 0.77 
Options cancelled (66,748) 3.54 
Outstanding – September 30, 2024
 7,422,708  $ 2.24  8.6 $ 2,826 
Exercisable – September 30, 2024
 2,147,402  $ 1.96  7.5 $ 1,534 
The Company estimates the fair values of stock options using the Black-Scholes option-pricing model on the date of grant. For the nine months ended September 30, 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:

Nine Months ended September 30,
2024 2023
Weighted-average Black-Scholes option pricing model assumptions:
Volatility
125.33% - 128.85%
110.23% - 110.64%
Expected term (in years)
6.00 - 7.00
5.85 - 6.07
Risk-free rate
3.59% - 4.60%
3.54% - 3.95%
Expected dividend yield $ —  $ — 
Weighted average grant date fair value per share
$1.81 - $2.48
$1.75 - $3.38

RESTRICTED STOCK UNITS
The following is a summary of RSU’s awards activity during the nine months ended September 30, 2024:
Nine Months ended September 30, 2024
Numbers of Shares Weighted Average Grant Date Fair value
Non-Vested at beginning of period 217,881  $ 3.12 
Shares granted 243,357  2.26 
Shares vested (177,827) 3.13 
Non-vested at the end of period 283,411  $ 2.38 
STOCK BASED COMPENSATION

The following is a summary of stock-based compensation expense (rounded):
Three months ended September 30, Nine Months ended September 30,
2024 2023 2024 2023
General and administrative
Stock options 560,000  589,500  1,898,000  1,352,100 
RSU’s 149,000  153,000  433,000  323,000 
Total general and administrative 709,000  742,500  2,331,000  1,675,100 
Research and development
Stock options 334,000  173,600  941,000  336,100 
  RSU’s 10,000  10,200  28,000  10,200 
Total research and development 344,000  183,800  969,000  346,300 
Total 1,053,000  926,300  3,300,000  2,021,400 

During the nine months ended 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 the performance-based options are expensed beginning from date of grant to the expected FDA clearance, which is based on management’s probability assessment performed on a quarterly basis.

As of September 30, 2024, total compensation cost not yet recognized related to unvested stock options and unvested RSUs was approximately $8.3 million and $0.5 million, respectively, which is expected to be recognized over a weighted-average period of 2.9 years and 0.85 years, respectively.