What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-18 compared with 2024-02-09 · 51 added, 41 removed, 380 unchanged (19% of the section changed)

7 unchanged sentences

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.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated 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.

68 unchanged sentences

Net loss for the year ended December 31, 2023

Cumulative translation adjustment

Balances as of December 31, 2023

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Employee stock compensation

Issuance of common stock, net of costs

Issuance of common stock upon net exercise of common warrants

Net loss for the year ended December 31, 2024

Cumulative translation adjustment

Balances as of December 31, 2024

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Proceeds from Employee Stock Purchase Plan

Proceeds from the issuance of common stock

Proceeds from debt financing

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(the “Company”) was incorporated in Delaware and is headquartered in Minneapolis, Minnesota.

We have developed and is marketing a medical device, Barostim, for heart failure (“HF”) and resistant hypertension.

We are focused on the sale of our product in the U.S.

The Company has developed and is marketing a medical device, Barostim, for heart failure (“HF”) and resistant hypertension.

The Company is focused on the sale of its product in the U.S.

Management expects that operating losses and negative cash flows from operations could continue in the foreseeable future.

There is no assurance that we will generate sufficient product sales to produce positive earnings or cash flows.

There is no assurance that the Company will generate sufficient product sales to produce positive earnings or cash flows.

Summary of significant accounting policies

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In circumstances where we are aware of a specific customer's inability to meet its financial obligations to us, we record a specific allowance for bad debts against amounts due to reduce the carrying amount of accounts receivable to the amount we reasonably believe will be collected.

ASU 2016-13 became effective for us for interim and annual periods beginning January 1, 2023.

We have determined that the adoption of ASU 2016-13 did not have a material impact on our results of operations, cash flows, or financial position as we do not have a history of credit losses.

Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis.

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We recognize net revenue on product sales, adjusted for any applicable estimates of variable consideration, when the customer obtains control of our product, which generally occurs at a point in time upon delivery based on the contractual shipping terms of a contract.

All our contracts have a single performance obligation and our payment terms with customers are generally between 30 and 90 days.

Variable consideration related to certain customer rebates is estimated based on the amounts expected to be paid based on the agreement with the customer.

Our contracts have a single performance obligation, and our payment terms with customers are generally between 30 and 90 days.

Variable consideration related to certain customer rebates is estimated based on the amounts expected to be paid under the agreement with the customer.

Stock-Based Compensation

We recognize equity-based compensation expense for awards of equity instruments to employees and non-employees based on the grant date fair value of those awards in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”).

ASC 718 requires all equity-based compensation awards to employees and non-employee directors, including grants of restricted shares and stock options, to be recognized as expense in the statements of operations and comprehensive loss based on their grant date fair values.

ASC 718 requires all equity-based compensation awards to employees and non-employee directors, including grants of restricted shares and stock options, to be recognized as expense in the consolidated statements of operations and comprehensive loss based on their grant date fair values.

We estimate the grant date fair value of stock options using the Black-Scholes option pricing model.

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In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public companies to disclose for each reportable segment the significant expense categories and amounts for such expenses.

ASU 2023-07 is effective for annual periods beginning December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

This ASU will be effective for our annual period ended December 31, 2024.

ASU 2023-07 became effective for us for annual periods beginning December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Accordingly, we have expanded our financial statement disclosures in order to comply with the guidance.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public business entities to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

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(in thousands)

Clinical trial and other professional fees

401(k) employer match

Paid time off

Customer rebates

Accrued interest payable

Operating lease liability, current portion

Clinical trial and other professional fees

Innovatus Loan Agreement

On October 31, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Fund I, LP, as the collateral agent and a lender, under which we may borrow, subject to our achievement of certain milestones, up to a total of $ 50.0 million in a series of term loans.

On October 31, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Fund I, LP, as the collateral agent and a lender, allowing us to borrow, subject to our achievement of certain milestones, up to a total of $ 50.0 million in a series of term loans.

On the closing date, we borrowed the minimum amount of $ 7.5 million under the Loan Agreement.

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On December 15, 2023, we borrowed an additional $ 15.0 million under the second tranche of the Loan Agreement.

On September 30, 2024, we borrowed the remaining $ 20.0 million under the third and final tranche of the Loan Agreement.

The Loan Agreement initially requires interest only payments through November 2027, followed by three monthly principal and interest payments.

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The Term Loans are secured by substantially all of our personal property.

We have the option to draw down up to $ 20.0 million between September 1, 2024 and December 15, 2024 if we achieve trailing three months revenue of $ 9.0 million prior to June 30, 2024.

A performance covenant takes effect at the earlier of September 30, 2025 or the third tranche funding, requiring that we achieve 50 % of the trailing twelve months revenue target set in the Board-approved revenue plan in effect for such period.

A performance covenant took effect upon the third tranche funding, requiring that we achieve 50 % of the trailing twelve months revenue target set in the Board-approved revenue plan in effect for such period.

The Loan Agreement requires the payment of certain penalties if the Term Loans are paid off prior to maturity for any reason, including pursuant to an acceleration clause, and includes various restrictive covenants, including a restriction on the payment of dividends or making other distributions or payments on our capital stock, subject to limited exceptions.

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As of December 31, 2024, the remaining lease term was 3.7 years, and the weighted average discount rate was 6.7 %.

The operating cash outflows from our operating lease were $ 0.4 million for each of the years ended December 31, 2023 and 2022.

The operating cash outflows from our operating lease were $ 0.5 million and $ 0.4 million for the years ended December 31, 2024 and 2023, respectively.

Stockholders’ equity

We have common stock warrants exercisable for 716,131 shares of common stock upon conversion at a weighted average exercise price of $ 2.39 per share.

We had common stock warrants exercisable for 103,349 shares of common stock upon conversion at a weighted average exercise price of $ 12.92 per share and 716,131 shares of common stock upon conversion at a weighted average exercise price of $ 2.39 per share outstanding at December 31 2024 and 2023, respectively.

Johnson & Johnson Innovation – JJDC, Inc.

had common stock warrants exercisable for

607,725 shares of our common stock with an exercise price of $ 0.16 per share that were all exercised through a net exercise transaction for 604,000 shares of common stock during the year ended December 31, 2024.

At-the-Market (“ATM”) Offering

In January 2024, we commenced an ATM offering, which allows us to issue and sell shares of our common stock having an aggregate offering price of up to $ 50.0 million .

We issued 3,251,198 shares of common stock for gross proceeds of $ 33.8 million under the ATM offering during the year ended December 31, 2024.

We have remaining capacity to issue and sell up to approximately $ 16.2 million of additional shares of common stock under this ATM offering.

Stock-based compensation

20 unchanged sentences

Cancelled / Forfeited

( 1,665,515 )

Balance as of December 31, 2024

1 unchanged sentence

As of December 31, 2024, stock options outstanding included 4,402 options that were not granted under the 2001 Plan or the 2021 Plan.

For options outstanding as of December 31, 2023, the weighted average

remaining contractual life was 7.3 years.

For options outstanding as of December 31, 2024, the weighted average remaining contractual life was 7.0 years.

For options exercisable as of December 31, 2024, the weighted average remaining contractual life was 5.5 years.

5 unchanged sentences

employees to purchase shares of our common stock at a price per share not less than 85 % of the l ower of (i) the closing market price per share of our common stock on the first day of the applicable purchase period or (ii) the closing market price per share of our common stock on the purchase date at the end of the applicable six-month purchase period.

The first purchase date under the ESPP was June 30, 2022.

For the year ended December 31, 2024, 79,618 shares of common stock were purchased under the ESPP for $ 0.8 million of employee contributions.

2 unchanged sentences

We use the Black-Scholes option pricing model to determine the fair value of stock options and ESPP purchase rights on the grant date.

We measure stock-based compensation expense based on the grant date fair value of the award and recognizes compensation expense over the requisite service period, which is generally the vesting period for stock options and the offering period for ESPP purchase rights.

We measure stock-based compensation expense based on the grant date fair value of the award and recognize compensation expense over the requisite service period, which is generally the vesting period for stock options and the offering period for ESPP purchase rights.

The amount of stock-based compensation expense recognized for stock option awards during a period is based on the portion of the awards that are ultimately expected to vest.

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We utilize the simplified method to develop the estimate of the expected term for stock option awards and ESPP purchase rights.

The expected volatility is based upon observed volatility of comparable public companies.

The expected volatility is based upon our historical stock price.

The expected dividend yield is assumed to be zero , as we have never paid dividends and have no current plans to do so.

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As of December 31, 2024, the related weighted average period over which the expense is expected to be recognized is approximately 2.7 years.

On January 30, 2024, we amended the terms and conditions of certain stock option award agreements granted under the 2001 Plan and 2021 Plan between us and our former Chief Executive Officer in connection with his retirement, which occurred on February 11, 2024.

The option agreements were amended to provide that, if not already vested at the time of termination of his employment due to retirement, the options will continue to vest on the previously scheduled vesting dates following his retirement, subject to his compliance with certain covenants.

Additionally, the option agreements were modified so that the options may be exercised, to the extent vested, by our former Chief Executive Officer until the earlier of (a) five years following his retirement date, or (b) the applicable option expiration date.

The modification of these option awards resulted in an additional $ 8.4 million of non-cash stock-based compensation expense recognized during the year ended December 31, 2024.

As of December 31, 2024 and 2023, a valuation allowance was recorded against all deferred tax assets due to our cumulative net loss position.

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Accrued vacation

Property and equipment

Total deferred tax assets

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The amount of unrecognized tax benefits subjected to the valuation allowance was $ 1.8 million and $ 1.7 million for the years ended December 31, 2024 and 2023, respectively.

We recognized approximately $ 0.1 million of interest or penalties for each of the years ended December 31, 2023 and 2022.

As of December 31, 2023 and 2022, total accrued interest and penalties were $ 0.5 million and $ 0.4 million, respectively.

We recognized a nominal amount and approximately $ 0.1 million of interest or penalties for each of the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, total accrued interest and penalties were both $ 0.5 million.

We recognize accrued interest and penalties related to unrecognized tax positions as a component of income tax expense.

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federal income tax as well as income tax of multiple state and foreign jurisdictions.

Tax years from 2004 through present remain open for audit under the applicable statute of limitations due to the carryover of the unused NOLs and tax credit carryforwards.

Tax years from 2005 through present remain open for audit under the applicable statute of limitations due to

the carryover of the unused NOLs and tax credit carryforwards.

We do not have any tax audits or other proceedings pending.

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Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

We excluded the following potential common shares, presented based on amounts outstanding at each period end, from the

computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

We excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Options to purchase common stock

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Employee benefit plans

We sponsor a voluntary defined-contribution employee retirement plan (the “401(k) plan”) for its U.S.

We sponsor a voluntary defined-contribution employee retirement plan (the “401(k) plan”) for our U.S.

The 401(k) plan provides that each participant may contribute pre-tax or post-tax compensation up to the statutory limit allowable.

Under the 401(k) plan, each participant is fully vested in his or her deferred salary contributions when contributed.

We do not provide matching contributions to employees.

Beginning January 1, 2024, we adopted a policy to match a portion of employee contributions for all qualified employees participating in the 401(k) plan.

We recorded an expense for matching contributions of $ 1.1 million and $ 0 for the years ended December 31, 2024 and 2023, respectively.

Segment, geographic information and revenue disaggregation

We have determined that we have a single reportable and operating segment structure.

We have one business activity and there are no segment managers who are held accountable for operations, operating

results or plans for levels or components below the consolidated unit level.

Our chief operating decision maker is our Chief Executive Officer.

The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region, for purposes of allocating resources and evaluating financial performance.

We have one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level.

Accordingly, we have determined that we have a single reportable and operating segment structure.

We and our Chief Executive Officer evaluate performance based primarily on revenue in the geographic locations in which the Company operates.

Our Chief Executive Officer evaluates performance based primarily on revenue in the geographic locations in which the Company operates and consolidated net loss.

The Chief Executive Officer reviews financial information presented on a consolidated basis, including consolidated net loss, accompanied by information about revenue by geographic region, for purposes of allocating resources and evaluating financial performance.

Further, the financial information on expenses provided to the Chief Executive Officer is presented on a consolidated basis, as reported in the consolidated statements of operations and comprehensive loss in this Annual Report on Form 10-K.

We derive all our revenues from sales to customers in Europe and the U.S.

3 unchanged sentences

As of December 31, 2024 and 2023, long-lived assets were located primarily in the U.S.

Subsequent events

On January 31, 2024, we announced that our Board of Directors appointed Kevin Hykes as President and Chief Executive Officer, effective February 12, 2024 to succeed Nadim Yared, who previously announced his plans to retire upon the appointment of his successor.

In connection with a transition and consulting agreement we entered into with Mr.

Yared, we also modified certain terms and conditions of Mr.

Yared’s stock options granted under the 2001 Plan and 2021 Plan, however, the impact of this modification on the amount of stock-based compensation expense cannot yet be quantified.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data