Item 9A. Controls and Procedures
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, under the direction of the Chief Executive Officer and the Chief Financial Officer, we have evaluated our disclosure controls and procedures as defined in Rule 13a-15(e) or 15d-15(e) as of the end of the period covered by this Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Form 10-K.
Management’s Annual Report on Internal Control over Financial Reporting
We are responsible for establishing and maintaining adequate internal controls over financial reporting. Our management assessed the effectiveness of our internal controls over financial reporting as of December 31, 2024. In making this assessment, our management used the criteria described in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission and assessed the applicability of the principles within each component of internal control and determined whether or not they have been adequately addressed within the current system of internal control and adequately documented. Based on this assessment, management, under the supervision and with the participation of our principal executive officer and our principal financial officer, concluded that, as of December 31, 2024, our internal control over financial reporting was effective.
This Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting as required by Section 404(b) of the Sarbanes Oxley Act of 2002. As a non-
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accelerated filer, our management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Form 10-K.
Changes in Internal Control over Financial Reporting
We monitor our internal control over financial reporting on a continuous basis. There has not been any change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the year ended December 31, 2024 which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
N o n e .
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 is hereby incorporated by reference to the sections of the 2025 Proxy Statement under the captions “Information Regarding the Board of Directors and Corporate Governance,” “Proposal 1 - Election of Directors,” “Executive Officers”, and “Delinquent Section 16(a) Reports”.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by reference to the sections of the 2025 Proxy Statement under the captions “Executive Compensation” and “Information Regarding the Board of Directors and Corporate Governance– Non-Employee Director Compensation.”
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is hereby incorporated by reference to the sections of the 2025 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management" and "Executive Compensation.”
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 is hereby incorporated by reference to the sections of the 2025 Proxy Statement under the captions “Certain Relationships and Related Transactions” and “Information Regarding the Board of Directors and Corporate Governance - Independence of the Board of Directors.”
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 is hereby incorporated by reference to the sections of the 2025 Proxy Statement under the caption “Proposal 2 - Ratification of Appointment of Independent Registered Public Accounting Firm.”
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PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Form 10-K:
1. Financial Statements—See the Index to Consolidated Financial Statements on Page F-1.
2. Financial Statement Schedules—None. We have omitted financial statement schedules because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.
3. Exhibits.
Exhibit
Number
Exhibit
3.1
Certificate of Conversion filed with the Delaware Secretary of State on July 18, 2018 (incorporated by reference to Exhibit 3.1 to the Form 10-Q filed August 9, 2018)
3.2
Certificate of Incorporation, as corrected (incorporated by reference to Exhibit 3.1 to the Form 8-K filed October 30, 2018)
3.3
Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on December 31, 2020)
3.4
Certificate of Amendment to Certificate of Incorporation, as corrected (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on August 16, 2023)
3.5
Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.3 to the Form 8-K filed March 15, 2024)
4.1
Form of Warrant (incorporated by reference to Exhibit 4.1 to the Form S-1/A filed January 20, 2021)
4.2
Warrant Agency Agreement (incorporated by reference to Exhibit 4.2 to the Form S-1/A filed January 20, 2021)
4.3
Description of Registrant’s Securities (incorporated by reference to Exhibit 4.7 to the Form 10-K filed March 14, 2021)
4.4
Warrant Agency Agreement dated as of February 1, 2021 by and between Helius Medical Technologies, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.2 to the Form 8-K filed February 1, 2021)
4.5
Form of Warrant to purchase shares of common stock (incorporated by reference to Exhibit 4.1 to the Form 8-K filed August 9, 2022)
4.6
Warrant Agency Agreement dated as of August 9, 2022 by and between Helius Medical Technologies, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.2 to the Form 8-K filed August 9, 2022)
4.7
Form of Series A Warrant to purchase shares of Common Stock (incorporated by reference to Exhibit 4.1 to the Form 8-K filed May 9, 2024)
4.8
Form of Series B Warrant to purchase shares of Common Stock (incorporated by reference to Exhibit 4.2 to the Form 8-K filed May 9, 2024)
4.9
Form of Placement Agent Warrant to purchase shares of Common Stock (incorporated by reference to Exhibit 4.3 to the Form 8-K filed May 9, 2024)
4.10
Form of Pre-Funded Warrant to purchase shares of Common Stock (incorporated by reference to Exhibit 4.4 to the Form 8-K filed May 9, 2024)
4.11
Form of Inducement Warrant to purchase shares of Common Stock (incorporated by reference to Exhibit 4.1 to the Form 8-K filed January 24, 2025)
10.1
License Agreement between Advanced NeuroRehabilitation, LLC and Yuri Danilov, Mitchell Tyler, Kurt Kaczmarek and John Klus, dated June 29, 2011 (incorporated by reference to Exhibit 10.8 to the Amendment to Form S-1 filed with the SEC on September 23, 2014)
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Exhibit
Number
Exhibit
10.2
Amended and Restated Patent Sub-License Agreement between Advanced NeuroRehabilitation, LLC and Helius Medical, Inc, having an effective date of January 22, 2013 (incorporated by reference to Exhibit 10.1 to the Form S-1 filed with the SEC on July 14, 2014)
10.3
Second Amended and Restated Patent Sub-License Agreement between Advanced NeuroRehabilitation, LLC and Helius Medical, Inc, dated June 6, 2014, but having an effective date of January 22, 2013 (incorporated by reference to Exhibit 10.7 to the Form S-1 filed with the SEC on July 14, 2014)
10.4
Design and Manufacturing Consultant Agreement between Helius Medical, Inc and Clinvue, LLC, dated January 30, 2013 (incorporated by reference to Exhibit 10.3 to the Form S-1 filed with the SEC on July 14, 2014)
10.6‡
Asset Purchase Agreement between the Company and A&B (HK) Company Limited, dated as of October 9, 2015 (incorporated by reference to Exhibit 2.1 to the Form 8-K filed with the SEC on October 16, 2015)
10.6.1
Amendment to Asset Purchase Agreement between the Company and A&B (HK) Company Limited, dated as of October 30, 2017 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on November 2, 2017)
10.6.2
Supplemental Agreement to Asset Purchase Agreement dated October 9, 2015, between Helius Medical, Inc. and A&B (HK) Company Limited, dated as of August 15, 2018 (incorporated by reference to Exhibit 10.27 to the Form 10-K filed March 14, 2019)
10.7†
Amended and Restated June 2014 Equity Incentive Plan (incorporated by reference to Exhibit 4.3 to the Form 10-Q filed with the SEC on November 9, 2017)
10.7.1†
2014 Stock Incentive Plan Form of Option Grant Agreement (incorporated by reference to Exhibit 10.23.1 to the Transition Report on Form 10-K filed with the SEC on April 3, 2017)
10.8†
2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.25 to the Transition Report on Form 10-K filed with the SEC on April 3, 2017)
10.8.1†
Amendment Number 1 to the 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.25.1 to the Transition Report on Form 10-K filed with the SEC on April 3, 2017)
10.8.2†
Amendment Number 2 to the 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form S-8 filed with the SEC on May 18, 2017)
10.8.3†
2016 Omnibus Incentive Plan Form of U.S. Option Grant Agreement (incorporated by reference to Exhibit 4.8 to the Registration Statement on Form S-8 filed with the SEC on May 18, 2017)
10.8.4†
2016 Omnibus Incentive Plan Form of Canada Option Grant Agreement (incorporated by reference to Exhibit 4.9 to the Registration Statement on Form S-8 filed with the SEC on May 18, 2017)
10.9*
Commercial Lease Agreement, dated November 29, 2021 between Helius Medical, Inc and 660 Tudor Square, L.P.
10.9.1*
Lease Addendum #1, dated January 16, 2025 between Helius Medical Technologies, Inc. and 660 Tudor Square, L.P.
10.10†
2018 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed November 8, 2018)
10.10.1†
2018 Omnibus Incentive Plan Form of Option Grant Agreement (incorporated by reference to Exhibit 10.3 to the Form 10-Q filed November 8, 2018)
10.10.2†
2018 Omnibus Incentive Plan Form of Restricted Stock Unit Grant Agreement (incorporated by reference to Exhibit 10.4 to the Form 10 Q filed November 8, 2018)
10.10.3†
2018 Omnibus Incentive Plan Form of Option Grant Agreement – 2020 Retention Grant (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 7, 2020)
10.10.4†
2018 Omnibus Incentive Plan Form of Stock Grant Notice and Award Agreement (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on April 7, 2021)
10.10.5†
Amendment to the Helius Medical Technologies, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on May 27, 2021)
10.10.6†
2018 Omnibus Incentive Plan Form of Option Grant Agreement – Initial Grants to Dane C. Andreeff and Jeffrey S. Mathiesen (incorporated by reference to Exhibit 10.3 to the Form 8-K filed on June 15, 2021)
10.11†
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.24 to the Form 10-K filed March 10, 2021)
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Exhibit
Number
Exhibit
10.12
Non-employee Director Compensation Policy (incorporated by reference to Exhibit 10.7 to the Form 10-Q filed on May 17, 2021)
10.13†
Employment Agreement between Helius Medical Technologies, Inc. and Dane C. Andreeff, dated June 14, 2021 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on June 15, 2021)
10.14†
Employment Agreement between Helius Medical Technologies, Inc. and Jeffrey S. Mathiesen, dated June 14, 2021 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on June 15, 2021)
10.15†
Helius Medical Technologies, Inc. 2021 Inducement Plan (incorporated by reference to Exhibit 4.5 to the Form S-8 filed July 7, 2021)
10.16.1
Amendment to the Helius Medical Technologies, Inc. 2021 Inducement Plan (incorporated by reference to Exhibit 4.8 to the Form S-8 filed July 24, 2024)
10.16.2†
Form of Stock Option Grant Notice, Option Agreement and Notice of Exercise under the Helius Medical Technologies, Inc. 2021 Inducement Plan (incorporated by reference to Exhibit 4.6 to the Form S-8 filed July 7, 2021)
10.17†
Employment Agreement between Helius Medical Technologies, Inc. and Antonella Favit-Van Pelt, dated July 7, 2021 (incorporated by reference to Exhibit 10.31 to the Form S-1 filed on September 3, 2021)
10.18†
Helius Medical Technologies, Inc. 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on February 18, 2022)
10.18.1
Amendment to the Helius Medical Technologies, Inc. 2022 Equity Incentive Plan, effective as of June 27, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 28, 2024)
10.18.2†
Helius Medical Technologies, Inc. 2022 Equity Incentive Plan Form of Stock Option Agreement (incorporated by reference to Exhibit 10.3 to the Form 8-K filed on February 18, 2022)
10.18.3†
Sales Agreement between Helius Medical Technologies, Inc. and Roth Capital Partners, LLC, dated June 23, 2023 (incorporated by reference to Exhibit 1.1 to the Form 8-K filed on June 23, 2023)
10.19
Placement Agency Agreement dated as of May 6, 2024 by and between Helius Medical Technologies, Inc. and Craig-Hallum Capital Group LLC (incorporated by reference to Exhibit 10.1 to the Form 8-K filed May 9, 2024)
19.1*
Insider Trading Policy
21.1*
Subsidiaries of Helius Medical Technologies, Inc.
23.1*
Consent of Baker Tilly US, LLP
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
32.1*
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002
97.1
Clawback Policy
101.INS*
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith.
†
Indicates a management contract or compensatory plan.
‡
Confidential information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been granted with respect to this omitted information.
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ITEM 16.
FORM 10-K SUMMARY
None
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (BAKER TILLY US, LLP; MINNEAPOLIS, MN; PCAOB ID # 23 )
F-1
CONSOLIDATED BALANCE SHEETS
F-3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
F-4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
F-6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-7
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the board of directors of Helius Medical Technologies, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Helius Medical Technologies, Inc. (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows for the years ended December 31, 2024 and 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated 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 the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Uncertainty
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 of the consolidated financial statements, the Company has recurring losses from operations, an accumulated deficit, expects to incur losses for the foreseeable future and requires additional working capital. These are the reasons that raise substantial doubt about their ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not contain any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 audit 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 audit included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matter is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
F-1
Table of Contents
Critical Audit Matter Description
Valuation of warrants
As described in Note 8 to the consolidated financial statements, the Company completed an equity offering during the prior year which included the issuance of warrants. Management concluded the warrants met the criteria for the classification as liabilities. Given the liability treatment, the Company is required to determine the fair value of the warrants at each reporting period.
Due to the complexities in determining the fair value, including use of complex valuation techniques and management judgment and estimation in determining assumptions and inputs into the valuation model, we identified the valuation of the warrants issued as a critical audit matter.
How We Addressed the Matter in Our Audit
The primary procedures we performed to address this critical audit matter included:
◾ Evaluated the methodologies, with the assistance of a firm valuation specialist, and key assumptions used by management to assess the Company’s fair value of the warrant liability, including assessing the reasonableness of the source information underlying the valuation assumptions.
◾ Performed an independent calculation to test the reasonableness of the fair value of the warrant liability.
/s/ Baker Tilly US, LLP
We have served as the Company’s auditor since 2022.
Minneapolis, Minnesota
March 25, 2025
F-2
Table of Contents
Helius Medical Technologies, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
$
1,088
$
5,182
Accounts receivable, net
70
117
Other receivables
565
520
Inventory, net
1,036
457
Prepaid expenses and other current assets
665
1,162
Total current assets
3,424
7,438
Property and equipment, net
107
178
Intangible assets, net
—
24
Operating lease right-of-use asset, net
11
52
Total assets
$
3,542
$
7,692
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
873
$
531
Accrued and other current liabilities
1,239
1,260
Current portion of operating lease liabilities
12
45
Current portion of deferred revenue
39
43
Total current liabilities
2,163
1,879
Operating lease liabilities, net of current portion
—
12
Deferred revenue, net of current portion
79
128
Derivative liability
241
3,323
Total liabilities
2,483
5,342
Commitments and contingencies (Note 13)
Stockholders' equity
Class A common stock, $ 0.001 par value; 150,000,000 shares authorized; 3,728,172 and 714,590 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively
4
1
Additional paid-in capital
172,421
162,979
Accumulated deficit
( 171,699 )
( 159,957 )
Accumulated other comprehensive loss
333
( 673 )
Total stockholders' equity
1,059
2,350
Total liabilities and stockholders' equity
$
3,542
$
7,692
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Table of Contents
Helius Medical Technologies, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
Years Ended December 31,
2024
2023
Revenue
Product sales, net
$
476
$
605
Other revenue
44
39
Total revenue
520
644
Cost of revenue
582
583
Gross (loss) profit
( 62 )
61
Operating expenses
Selling, general and administrative expenses
10,118
9,271
Research and development expenses
3,659
2,942
Amortization expense
24
117
Fixed asset impairment
40
159
Total operating expenses
13,841
12,489
Loss from operations
( 13,903 )
( 12,428 )
Nonoperating income
Interest (expense) income, net
( 17 )
257
Change in fair value of derivative liability
2,981
2,966
Foreign exchange (loss) gain
( 1,006 )
275
Other income, net
203
80
Nonoperating income, net
2,161
3,578
Loss before provision for income taxes
( 11,742 )
( 8,850 )
Provision for income taxes
—
—
Net loss
( 11,742 )
( 8,850 )
Other comprehensive income (loss)
Foreign currency translation adjustments
1,006
( 285 )
Comprehensive loss
$
( 10,736 )
$
( 9,135 )
Loss per share
Basic
$
( 4.33 )
$
( 14.56 )
Diluted
$
( 4.33 )
$
( 14.56 )
Weighted average number of common shares outstanding
Basic
2,709,781
607,890
Diluted
2,709,781
607,890
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
Helius Medical Technologies, Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
Accumulated
Additional
Other
Class A Common Stock
Paid-In
Accumulated
Comprehensive
Shares
Amount
Capital
Deficit
Loss
Total
Balance as of January 1, 2023
564,094
$
1
$
159,645
$
( 151,107 )
$
( 388 )
$
8,151
Issuance of common stock in public offering
53,010
—
500
—
—
500
Share issuance costs
—
—
( 65 )
—
—
( 65 )
Exercise of warrants
92,910
—
1,270
—
—
1,270
Settlement of restricted stock units
4,576
—
—
—
—
—
Stock-based compensation
—
—
1,629
—
—
1,629
Other comprehensive income
—
—
—
—
( 285 )
( 285 )
Net loss
—
—
—
( 8,850 )
—
( 8,850 )
Balance as of December 31, 2023
714,590
$
1
$
162,979
$
( 159,957 )
$
( 673 )
$
2,350
Accumulated
Additional
Other
Class A Common Stock
Paid-In
Accumulated
Comprehensive
Shares
Amount
Capital
Deficit
Loss
Total
Balance as of January 1, 2024
714,590
$
1
$
162,979
$
( 159,957 )
$
( 673 )
$
2,350
Issuance of common stock in public offering
853,200
1
2,960
—
—
2,961
Issuance of warrants in public offering
—
—
4,829
—
—
4,829
Share issuance costs
—
—
( 1,132 )
—
—
( 1,132 )
Exercise of warrants
2,158,154
2
263
—
—
265
Settlement of restricted stock units
2,228
—
—
—
—
—
Stock-based compensation
—
—
2,522
—
—
2,522
Other comprehensive loss
—
—
—
—
1,006
1,006
Net loss
—
—
—
( 11,742 )
—
( 11,742 )
Balance as of December 31, 2024
3,728,172
$
4
$
172,421
$
( 171,699 )
$
333
$
1,059
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
Helius Medical Technologies, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Years Ended
December 31,
2024
2023
Cash flows from operating activities:
Net loss
$
( 11,742 )
$
( 8,850 )
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability
( 2,981 )
( 2,966 )
Stock-based compensation expense
2,522
1,629
Foreign exchange loss (gain)
999
( 286 )
Depreciation expense
36
45
Amortization expense
24
117
Fixed asset impairment
40
159
Provision for (reversal of) inventory reserve
28
( 5 )
Non-cash operating lease expense
41
52
Changes in operating assets and liabilities:
Accounts receivable
41
( 44 )
Other receivables
( 46 )
( 247 )
Inventory
( 607 )
137
Prepaid expense and other current assets
364
54
Operating lease liabilities
( 45 )
( 53 )
Accounts payable
344
( 103 )
Accrued and other current liabilities
( 18 )
( 20 )
Deferred revenue
( 41 )
( 35 )
Net cash used in operating activities
( 11,041 )
( 10,416 )
Cash flows from investing activities:
Purchase of property and equipment
( 5 )
( 29 )
Net cash used in investing activities
( 5 )
( 29 )
Cash flows from financing activities:
Proceeds from issuance of common stock
2,961
500
Proceeds from issuance of warrants
4,829
—
Proceeds from exercise of warrants
164
642
Share issuance costs
( 1,000 )
( 65 )
Net cash provided by financing activities
6,954
1,077
Effect of currency exchange rate changes on cash and cash equivalents
( 2 )
1
Net decrease in cash and cash equivalents
( 4,094 )
( 9,367 )
Cash and cash equivalents at beginning of period
5,182
14,549
Cash and cash equivalents at end of period
$
1,088
$
5,182
Supplemental cash flow information
Non-cash investing and financing transactions:
Derivative warrant liability reclassified to equity on exercise of warrants
$
101
$
628
Deferred offering costs reclassified to equity upon public offering
$
132
$
—
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
Helius Medical Technologies, Inc.
Notes to the Consolidated Financial Statements
1. DESCRIPTION OF BUSINESS
Helius Medical Technologies, Inc. (together with its wholly owned subsidiaries the “Company”) conducts operations in the United States and Canada. The Company’s product, known as the Portable Neuromodulation Stimulator (“PoNS®”) has been commercially available in Canada since March 2019. The Company began accepting prescriptions for its PoNS product in the United States in the first quarter of 2022, and the first commercial sales began in April 2022. PoNS is authorized for sale as a Class IIa medical device in Australia. The Company is working to establish a distribution partner for Australia but has not yet had any commercial sales of PoNS in Australia.
Going Concern Uncertainty
As of December 31, 2024, the Company had cash and cash equivalents of $ 1.1 million. For the year ended December 31, 2024, the Company had an operating loss of $ 13.9 million, and as of December 31, 2024, its accumulated deficit was $ 171.7 million. For the year ended December 31, 2024, the Company had $ 0.5 million of net revenue from the commercial sale of products. The Company expects to continue to incur operating losses and net cash outflows until such time as it generates a level of revenue to support its cost structure. There is no assurance that the Company will achieve profitable operations, and, if achieved, whether it will be sustained on a continued basis. These factors indicate substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are filed. The Company’s consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business; no adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.
The Company intends to fund ongoing activities by utilizing its current cash and cash equivalents on hand, cash received from the sale of its PoNS device in the U.S. and Canada and by raising additional capital through equity or debt financings. There can be no assurance that the Company will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to the Company. If the Company is unable to raise sufficient additional capital, the Company may be compelled to reduce the scope of its operations.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements reflect the operations of Helius Medical Technologies, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and disclosure of contingent assets and liabilities. Significant estimates include the assumptions used in the valuation of the fair value-pricing model for stock-based compensation, liability classified warrants and deferred income tax asset valuation allowance. Financial statements include estimates, which, by their nature, are uncertain. Actual results could differ from those estimates.
Foreign Currency Translation
The local currency, or CAD$, is the functional currency of the Company’s foreign operating subsidiary, Helius Medical Technologies (Canada), Inc. All assets and liabilities are translated into United States dollars at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the weighted-average exchange rate
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prevailing during the period. The effects of foreign currency translation adjustments are deferred and reported in stockholders' equity as a component of “Accumulated Other Comprehensive Loss.” The effects of foreign currency transactions denominated in a currency other than an entity's functional currency are included in “Foreign Exchange (Loss) Gain” in the Consolidated Statements of Operations and Comprehensive Loss.
Revenue Recognition
The Company generates nearly all revenue from product sales directly to patients, its e-commerce partner in the United States and to clinics in Canada. Revenue from product sales is recognized at a point in time as the performance obligation is satisfied and when the customer obtains control of the product at the established transaction price. Taxes that the Company collects concurrent with revenue-producing activities are excluded from revenue.
The Company requires some customers in the United States to prepay the full product selling price, net of cash discount, prior to shipment. The Company records a contract liability for any customer prepayment received for which delivery had not yet occurred as of the end of the period.
Concentration of Credit Risk
The Company deposits its cash and cash equivalents in demand commercial checking, unrestricted money market savings account, money market mutual funds, treasury bills or certificates of deposit at high-quality credit institutions. At times, such deposits may be in excess of federally insured limits. The Company has not experienced any losses.
Cash Equivalents
The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents are valued at cost, which approximates fair value.
Accounts Receivable
Accounts receivable arise primarily from product sales in Canada and generally require payment within 30 days. The Company provides reserves against accounts receivable for estimated credit losses that may result from a customer’s inability to pay based on a combination of factors, such as the aging of accounts receivable past the due date, the customer’s financial strength and payment history. Amounts determined to be uncollectible are charged or written off against the reserve.
Employee Retention Credit
The employee retention credit (“ERC”), as originally enacted through the Coronavirus Aid, Relief, and Economic Security Act, is a refundable credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees from March 17, 2020 to December 31, 2020. The Disaster Tax Relief Act extended the ERC for qualified wages paid from January 1, 2021 to June 30, 2021 and the credit was increased to 70% of qualified wages an eligible employer pays to employees during the extended period. The American Rescue Plan Act of 2021, enacted on March 11, 2021, further extended the ERC through December 31, 2021.
The Company qualified for the employee retention credit for the period from March 17, 2020 to September 30, 2021. The Company recognizes government credits for which there is a reasonable assurance of compliance with credit conditions and receipt of credits. The Company accounts for the ERC as government assistance and applies the grant accounting model by analogy to International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance. Under this approach, the Company recognizes the credit when there is reasonable assurance that it will comply with the conditions of the grant and that the credit will be received.
The Company recorded a credit of $ 0.5 million against operating expenses on the Consolidated Statement of Operations and Comprehensive Loss during the year ended December 31, 2023 and as a current asset on the consolidated balance
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sheets during the year ended December 31, 2024 and December 31, 2023 as an other receivable. The Company expects to receive the credit in the next twelve months.
Inventory
Inventories are stated at the lower of cost (average cost method) or net realizable value. The Company establishes inventory reserves for obsolescence based upon specific identification of expired or unusable units with a corresponding provision included in cost of revenue. The Company calculates provisions for excess inventory based on inventory on hand compared to anticipated sales or usage. Management uses its judgment to forecast sales or usage and to determine what constitutes a reasonable period. There can be no assurance that the amount ultimately realized for inventories will not be materially different than that assumed in the calculation of the reserves.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated for financial reporting purposes on the straight-line method over the estimated useful lives of the related assets, which are seven years for furniture and fixtures, five to fifteen years for equipment and three to five years for computer software and hardware. Depreciation expense is recorded in selling, general and administrative expenses. Expenditures for repairs and maintenance, which do not improve or extend the expected useful life of the assets, are expensed as incurred.
Long-Lived Assets
Management reviews the carrying amounts of definite-lived intangible assets and long-lived assets, including right-of-use (“ROU”) assets, property and equipment whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable. For purposes of assessing recoverability, definite-lived intangible assets and long-lived tangible assets are each deemed to be one asset group. The carrying amount of the asset group is compared to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset group being evaluated, an impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value.
Leases
The Company has an operating lease for its corporate office. The Company determines whether a contract is, or contains, a lease at inception. ROU assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments. The Company's incremental borrowing rate is determined based on the estimated rate of interest for collateralized borrowing over a similar term as the associated lease. The Company’s lease arrangement does not have any lease and non-lease components.
Stock-Based Compensation
The Company measures and recognizes compensation expense for all stock-based awards based on estimated fair values. Stock-based awards consist of stock options and restricted stock units. Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period (vesting period) on a straight-line basis. Forfeitures are not estimated, but instead stock-based compensation expense is adjusted upon an actual forfeiture of a stock option. Upon exercise of stock options or vesting of restricted stock units, the Company issues common stock.
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Income Taxes
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 bases and operating loss and tax credit 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 for deferred income tax assets is recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
Selling, General and Administrative Expenses
Selling, general and administrative expenses are charged to expense when incurred. Advertising expenses were $ 651 thousand and $ 670 thousand for the years ended December 31, 2024 and 2023, respectively.
Research and Development Expenses
Research and development costs are charged to expense when incurred.
Derivatives
The Company does not engage in hedging activities. The Company evaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that the fair value of the derivative is re-measured at each balance sheet date and recorded as a liability or asset and the change in fair value is recorded in the Consolidated Statements of Operations and Comprehensive Loss. Reclassifications or partial reclassifications to equity are recorded based on the fair value of the derivative on the transaction date. Refer to Note 8 for additional information about the derivative liability.
Basic and Diluted Loss per Share
Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is based on the weighted-average common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share.
Recent Accounting Pronouncements
Accounting Standards Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 modifies reportable segment disclosure requirements, primarily through enhanced disclosures about segment expenses categorized as significant or regularly provided to the CODM. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. This ASU is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted. Refer to Note 14 for additional information regarding implementation of this new standard.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires
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interim and annual tabular disclosure of disaggregated information for certain income statement expense captions. Specific expense categories required to be disclosed quantitatively include inventory purchases, employee compensation, depreciation, and intangible asset amortization, as well as other specified expense categories currently disclosed under existing disclosure requirements. Additionally, any remaining amounts that are not separately disaggregated are required to be described qualitatively. ASU 2024-03 also requires separate disclosure of total selling expenses incurred each reporting period, with annual disclosure of the entity's definition of selling expenses. The annual disclosures required by ASU 2024-03 are effective for the Company beginning in its fiscal year ending December 31, 2027, with interim disclosures effective beginning in its fiscal year ending December 31, 2028. The provisions of ASU 2024-03 are to be applied prospectively, although retrospective application is permitted. Early adoption is also permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance requires expanded annual disclosures including the standardization and disaggregation of income tax rate reconciliation categories and the amount of income taxes paid by jurisdiction. The guidance is effective for the Company beginning in its fiscal year ending December 31, 2025. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.
In March 2024, the SEC adopted rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires the disclosure of material Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports and registration statements. For non-accelerated filers and smaller reporting companies, disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2027, subject to legal challenges and the SEC's voluntary stay of the disclosure requirements. The Company is currently evaluating the impact these rules will have on its consolidated financial statements and related disclosures.
3. FIXED ASSETS IMPAIRMENT
In the fourth quarter of 2024, the Company made the decision to no longer utilize certain capitalized software associated with its enterprise resource planning system and as a result, impairment charges of $ 40 thousand were recorded in the fourth quarter of 2024 on its long-lived tangible assets.
In the third quarter of 2023, the Company identified an impairment indicator associated with its property and equipment and performed interim impairment tests on the long-lived tangible assets as a result of a planned change of the Company’s contract manufacturing partner to be completed in less than one year from September 30, 2023. The interim impairment tests were performed using estimated market prices. The Company had determined that the fair value of certain long-lived tangible assets was lower than the related book values. Additionally, for certain long-lived tangible assets, it is more likely than not that those long-lived assets will be disposed significantly before the end of their previously estimated useful lives. As a result, impairment charges of $ 159 thousand were recorded in the third quarter of 2023 on its long-lived tangible assets.
4 . SUPPLEMENTAL BALANCE SHEET DISCLOSURES
Components of selected captions in the Consolidated Balance Sheets are as follows:
Accounts receivable, net
Accounts receivable is net of allowance for doubtful accounts of $ 0 as of December 31, 2024 and 2023.
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Inventory, net (in thousands)
December 31,
December 31,
2024
2023
Raw materials
$
576
$
351
Work-in-process
402
67
Finished goods
145
96
Inventory, gross
1,123
514
Inventory reserve
( 87 )
( 57 )
Inventory, net
$
1,036
$
457
During the years ended December 31, 2024 and 2023, existing reserves of $ 2 thousand and $ 16 thousand were charged against inventory, respectively.
Prepaid expenses and other current assets (in thousands)
December 31,
December 31,
2024
2023
Prepaid expenses
$
603
$
689
Inventory related
55
333
Deferred offering costs
7
140
Total prepaid expenses and other current assets
$
665
$
1,162
Property and equipment, net (in thousands)
December 31, 2024
December 31, 2023
Furniture and fixtures
$
59
$
59
Equipment
247
243
Computer software and hardware
196
235
Property and equipment
502
537
Accumulated depreciation
( 395 )
( 359 )
Property and equipment, net
$
107
$
178
Accrued and other current liabilities (in thousands)
December 31,
December 31,
2024
2023
Insurance payable
$
356
$
446
Employees benefits
759
509
Professional services
24
52
Franchise tax
—
168
Other
100
85
Total accrued and other current liabilities
$
1,239
$
1,260
Deferred revenue
Exclusive Distribution Agreement
Pursuant to an Exclusive Distribution Agreement with Health Tech Connex Inc. (“HTC”) (“Exclusivity Agreement”) entered into on March 3, 2023, subject to certain terms and conditions, the Company granted to HTC the exclusive right to provide PoNS Therapy® in the Fraser Valley and Vancouver metro regions of British Columbia. HTC is to purchase the PoNS devices for use in these regions exclusively from the Company and on terms no less favorable than the then-current standard terms and conditions. This Exclusivity Agreement replaced the previous Clinical Research and Co-Promotion Agreement (“Co-Promotion Agreement”) between the parties entered into in October 2019 that included a similar exclusive right provision. The exclusive right under the Exclusivity Agreement was granted for a fixed value of CAD$ 273 thousand, which is represented by the unamortized up-front payment under the former Co-Promotion
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Agreement. The initial term of the Exclusivity Agreement expires on December 31, 2027, and is renewable by HTC for one additional five-year term upon sixty days ’ written notice to the Company.
Deferred revenue as of both December 31, 2024 and 2023 is comprised of the remaining unamortized amount under these agreements. Revenue recognized is included in other revenue in the Consolidated Statements of Operations and Comprehensive Loss. Revenue recognized for the years ended December 31, 2024 and 2023 were $ 41 thousand and $ 35 thousand, respectively.
5. LEASES
The Company has an operating lease for office space with lease terms that commenced in January 2022 and will expire in March 2025. The lease does not contain any options to extend . Operating lease costs for the years ended December 31, 2024 and 2023 were $ 41 thousand and $ 54 thousand, respectively.
On January 16, 2025, the Company entered into an agreement to extend the operating lease for the Newtown, PA office through March 31, 2026, at a rate of $ 4 thousand per month effective April 1, 2025.
Maturities of operating lease liabilities as of December 31, 2024 were as follows (in thousands):
2025
$
12
Total lease payments
12
Less: imputed interest
—
Total lease liabilities
$
12
The following table provides information on the lease term and discount rate for the operating lease as of December 31, 2024:
Remaining lease term (in years)
0.25
Discount rate
4.55
%
6. INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands):
December 31,
2024
2023
Net
Net
Useful Life
Accumulated
Carrying
Accumulated
Carrying
(in years)
Cost
Amortization
Value
Cost
Amortization
Value
Reacquired rights
3.87
$
447
$
( 447 )
$
—
$
486
$
( 486 )
$
—
Acquired proprietary software
5.00
134
( 134 )
—
145
( 121 )
24
Internally developed software
3.00
84
( 84 )
—
84
( 84 )
—
Total intangible assets
$
665
$
( 665 )
$
—
$
715
$
( 691 )
$
24
7 . FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value of an asset or liability considers assumptions that market participants would use in pricing the asset or liability, including consideration of non-performance risk. The inputs used to determine fair values are categorized in one of the following three levels of the fair value hierarchy:
Level 1 – Quoted market prices in active markets for identical assets or liabilities.
Level 2 – Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.
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Level 3 – Unobservable inputs that are not corroborated by market data.
The Consolidated Financial Statements include financial instruments for which the fair market value of such instruments may differ from amounts reflected on a historical cost basis. Financial instruments of the Company as of December 31, 2024 and 2023 consist of cash equivalents, which were comprised of deposits of excess cash in an unrestricted money market savings account, money market mutual funds, treasury bills and a certificate of deposit. The carrying value of cash equivalents generally approximates fair value due to their short-term nature.
The Company’s derivative liability as of December 31, 2024 and 2023 is comprised of warrants issued in connection with the registered public offering completed in August 2022 discussed in Note 8. The derivative liability is classified as Level 3 within the fair value hierarchy and is required to be recorded at fair value on a recurring basis. See Note 8 for further information on the fair value of the derivative liability.
The majority of the Company’s non-financial instruments, which include intangible assets, lease assets, inventories and property and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value. See Note 3 – Fixed Asset Impairment for further detail.
8. COMMON STOCK AND WARRANTS
The Company may issue common stock in connection with underwritten public offerings, registered direct public offerings or other financing transactions. Such issuances of common stock may include the issuance or sale of warrants to purchase common stock. As of December 31, 2024, the Company reserves 146,271,828 shares of Class A Common Stock and 10,000,000 shares of unissued preferred stock for future issuances and future exercises of outstanding warrants and stock-based compensation awards.
Equity Transactions
Public Offering
On May 9, 2024, the Company closed on a registered public offering consisting of 704,999 shares of Common Stock (the “2024 Public Offering”), pre-funded warrants to purchase 2,147,222 shares of Common Stock (the “Pre-funded Warrants”) and accompanying Series A Warrants to purchase up to 2,852,221 shares of its Common Stock (“Series A Warrants”) and Series B Warrants to purchase up to 2,852,221 shares of its Common Stock (“Series B Warrants”, and together with the Series A Warrants, the “2024 Public Warrants”). The 2024 Public Offering price per share of Common Stock and accompanying Series A Warrants and Series B Warrants was $ 2.25 , the public offering price per Pre-funded Warrant and accompanying Series A and Series B warrant was $ 2.249 .
The Pre-funded Warrants have an exercise price of $ 0.001 per share and 1,076,445 were exercised on the closing date. Net proceeds from the 2024 Public Offering, after deducting placement agent fees and expenses and other offering costs, were approximately $ 5.5 million.
The 2024 Public Warrants have an exercise price of $ 2.25 per share and are exercisable upon issuance. The Series A Warrants will expire five years following the date of issuance and the Series B Warrants will expire twelve months following the date of issuance. The Pre-funded Warrants are exercisable upon issuance and may be exercised at any time until the Pre-funded Warrants are exercised in full.
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At-The-Market Offering
On June 23, 2023, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”) to create an at-the-market offering program (“ATM”) under which the Company may offer and sell shares having an aggregate offering price of up to $ 2.0 million. Roth is entitled to a commission at a fixed commission rate equal to up to 3 % of the gross proceeds pursuant to the Sales Agreement. As of December 31, 2024, 201,211 share issuances of securities have occurred in connection with the ATM generating net proceeds of $ 1.3 million and $ 0.4 million inclusive of share issuance costs in 2024 and 2023, respectively. On January 17, 2025, 93,300 shares were issued with the ATM, generating net proceeds of $ 0.1 million inclusive of share issuance costs.
Series B Preferred Stock
On March 23, 2023, the Board of Directors declared a dividend of one one -thousandth of a share of Series B Preferred Stock (“Series B Preferred Stock”) for each outstanding share of Common Stock held of record on April 3, 2023. The value of the Series B Preferred Stock issued in connection with the stock dividend was immaterial.
The outstanding shares of Series B Preferred Stock voted together with the outstanding shares of the Company’s Common Stock, as a single class, exclusively with respect to a proposal giving the Board of Directors the authority, as it determines appropriate, to implement a reverse stock split within twelve months following the approval of such proposal by the Company’s stockholders as well as any proposal to adjourn any meeting of stockholders called for the purpose of voting on the foregoing matters.
Each share of Series B Preferred Stock entitled the holder to 1,000,000 votes per share and each fraction of a share of Series B Preferred Stock had a ratable number of votes. The holder of Series B Preferred Stock, as such, are not entitled to receive dividends.
At the annual meeting of stockholders of the Company held on May 24, 2023, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of its outstanding Common Stock. All shares of Series B Preferred Stock that did not vote in person or by proxy were redeemed in whole by the Company. Shares of Series B Preferred Stock that did vote in person or by proxy will need to request redemption from the Company at a rate of $ 0.001 per share in cash. As of December 31, 2024, no shareholders of Series B Preferred Stock have requested such redemption.
Reverse Stock Split
At the annual meeting of stockholders on May 24, 2023, our stockholders voted to approve a reverse stock split of our outstanding Class A common stock at a ratio in the range of 1-for- 10 to 1-for- 80 to be determined at the discretion of the Board of Directors. On August 11, 2023, the Board approved a 1-for- 50 reverse stock split of the Company’s issued and outstanding Common Stock (the “Reverse Stock Split”).
Warrants
August 2022 Warrants
In connection with the Company’s registered public offering that closed on August 9, 2022, the Company issued warrants to purchase an aggregate of 720,000 shares of common stock (“2022 Public Warrants”). The Company performed an analysis of the provisions of the Public Warrants and concluded that the Public Warrants did not meet the guidance for being classified as an equity instrument due to a potential price reset prompted by a change in an unrelated instrument’s conversion rate or, in the event of a fundamental transaction, settlement rights that differ from those of the underlying common stockholders.
The fair value of the derivative liability as of December 31, 2024 and 2023 was $ 0.2 million and $ 3.3 million, respectively. The change in the fair value of the derivative liability was recognized as a component of nonoperating income in the Company’s Consolidated Statements of Operations and Comprehensive Loss.
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The fair value of the 2022 Public Warrants was determined using both a Monte Carlo simulation model, which uses multiple input variables to determine the probability of the occurrence of a price reset or a fundamental transaction and the Black-Scholes option pricing model. The following table includes the stock price and the inputs used to estimate the fair value of the warrants:
December 31,
December 31,
2024
2023
Stock price
$
0.67
$
8.04
Warrant term (in years)
2.61
3.61
Expected volatility
98.92
%
84.10
%
Risk-free interest rate
4.26
%
3.96
%
Dividend rate
0.00
%
0.00
%
The 603,690 of outstanding liability classified Public Warrants have an exercise price that was reset to $ 1.6163 per share as a result of the 2024 Public Offering are exercisable upon issuance and will expire five years following the date of issuance. 23,400 Public Warrants were exercised and the Company received gross proceeds of $ 0.2 million during the year ended December 31, 2024. No warrants were cancelled during the year ended December 31, 2024.
Equity-classified Warrants
The Company has outstanding equity-classified warrants to purchase 5,869,244 shares of common stock at a weighted average exercise price of $ 3.64 , with expiration dates ranging from March 2025 to May 2029. The weighted average exercise price includes 12,222 Pre-funded Warrants with a nominal exercise price of $ 0.001 outstanding as of December 31, 2024. The weighted average exercise price excluding the outstanding Pre-funded Warrants is $ 3.65 as of December 31, 2024. During the year ended December 31, 2024, 2,135,000 Pre-funded Warrants were exercised for 2,134,754 common shares as the result of the cashless exercise provision and no warrants were cancelled due to expiration.
9 . STOCK-BASED COMPENSATION
The Company may issue stock-based compensation awards under The Helius Medical Technologies, Inc. 2022 Equity Incentive Plan (“2022 Plan”) or the Helius Medical Technologies, Inc. 2021 Inducement Plan (as amended, the “Inducement Plan”). The 2022 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants. Options to purchase shares of the Company’s common stock granted under the 2022 Plan are awarded at a price equal to the fair market value at the date of grant based upon the closing price on that date. Options granted under the 2022 Plan generally vest over periods of between one to three years and expire no later than ten years from the date of grant .
On May 30, 2024, the Board adopted a First Amendment (the “Amendment”) to the 2022 Plan. On June 27, 2024, at the annual meeting of stockholders, the stockholders of the Company approved the Amendment. Pursuant to the terms and conditions of the Amendment, the 2022 Plan was amended to increase the aggregate number of shares of Common Stock that may be issued under the 2022 Plan to 2,089,000 new shares with an automatic increase on January 1st of each year by an amount equal to 5 % of the Fully Diluted Shares (as defined in the 2022 Plan) as of the last day of the preceding calendar year. As of January 1, 2025, the number of shares authorized for issuance increased from 2,089,000 to 2,703,678 and there were 637,237 shares of common stock available for issuance under the 2022 Plan.
The Inducement Plan permits the grant of non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock and cash awards and other share‑based awards The Inducement Plan is used exclusively for grants of awards to individuals who were not previously employees or directors of the Company. Options granted under the Inducement Plan generally vest over four years and expire after ten years . The exercise price of each option is equal to the fair market value of the common stock at the date of grant. On July 2, 2024, the Company approved an amendment to the Inducement Plan pursuant to which, the Inducement Plan was amended to increase the
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aggregate number of shares of Common Stock that may be issued under the Inducement Plan to 150,000 new shares. As of December 31, 2024, there were 123,980 shares of common stock available for issuance under the Inducement Plan.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following tables. The risk-free interest rate is estimated using the United States Treasury yield curve and is based on the expected term of the award. The expected term of stock option awards granted is estimated based on the “simplified” method described in the SEC Staff Accounting Bulletin, Topic 14: Share-Based Payment. Expected volatility is calculated using historical volatility over the expected term.
The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the years ended December 31, 2024 and 2023:
Years Ended December 31, 2024
2024
2023
Risk-free interest rate
4.38
%
3.93
%
Expected volatility
128.73
%
79.43
Expected term (years)
5.27
5.70
Expected dividend yield
0.00
%
0.00
%
Fair value, per share
$
0.84
$
10.17
During the year ended December 31, 2024 and 2023, 1,335,623 options with a total grant date fair value of $ 2.5 million and 86,580 options with a total grant date fair value of $ 1.6 million vested, respectively.
The fair value of restricted stock units granted during the years ended December 31, 2024 and 2023 was based on the closing price of the Company’s common stock on the Nasdaq Capital Market on the day of the grant.
Stock option activity during the year ended December 31, 2024 was as follows:
Weighted Average
Aggregate
Weighted
Remaining
Intrinsic
Average
Contractual
Value
Shares
Exercise Price
Term (in years)
(in thousands)
Outstanding as of December 31, 2023
245,830
$
76.28
9.03
5.00
Granted
1,856,000
0.96
—
—
Exercised
—
—
—
—
Expired
( 5,747 )
176.61
—
—
Forfeited
( 3,622 )
16.27
—
—
Outstanding as of December 31, 2024
2,092,461
9.30
9.33
$
—
Exercisable as of December 31, 2024
1,428,221
12.14
9.31
$
—
The following table summarizes nonvested restricted stock unit activity during the year ended December 31, 2024:
Weighted Average
Grant Date
Shares
Fair Value
Nonvested as of December 31, 2023
2,228
$
7.81
Granted
—
—
Vested
( 2,228 )
7.81
Forfeited
—
—
Nonvested as of December 31, 2024
—
$
—
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Total stock-based compensation expense was as follows (in thousands):
Years Ended
December 31,
2024
2023
Cost of sales
$
28
$
18
Selling, general and administrative
2,008
1,320
Research and development
486
291
Total stock-based compensation expense
$
2,522
$
1,629
As of December 31, 2024, the total remaining unrecognized compensation expense related to nonvested stock options was $ 1.5 million which will be amortized over weighted-average remaining requisite service period of 0.7 years.
10 . BASIC AND DILUTED LOSS PER SHARE
The table below presents the computation of basic and diluted loss per share (in thousands, except share and per share information):
Years Ended
December 31,
2024
2023
Basic:
Net loss available to common stockholders — basic
$
( 11,742 )
$
( 8,850 )
Weighted average common shares outstanding — basic (1)
2,709,781
607,890
Loss per share - basic
$
( 4.33 )
$
( 14.56 )
Diluted:
Net loss available to common stockholders — diluted (2)
$
( 11,742 )
$
( 8,850 )
Weighted average common shares outstanding — diluted (1)
2,709,781
607,890
Loss per share — diluted
$
( 4.33 )
$
( 14.56 )
(1)
In May 2024, in connection with the 2024 Public Offering, the Company issued and sold Pre-funded Warrants exercisable for an aggregate of 2,147,222 shares of Common Stock. The total price of the Pre-funded Warrants is $ 2.25 per share, $ 2.249 of which was pre-funded and paid to the Company upon issuance of the Pre-funded Warrants. The exercise price of the Pre-funded Warrants is $ 0.001 per share. The Pre-funded Warrants are immediately exercisable and do not expire. As of December 31, 2024, 2,052,703 Pre-funded Warrants were exercised and 12,222 Pre-funded Warrants remained outstanding. As the remaining shares underlying the Pre-funded Warrants are exercisable for nominal consideration of $ 0.001 per share, 12,222 in common shares underlying the unexercised Pre-funded Warrants were considered outstanding for purposes of the calculation of loss per share for the year ended December 31, 2024. Refer to Note 8 for additional information about the Pre-funded Warrants.
(2)
For the years ended December 31, 2024 and 2023, no adjustment was made to the numerator.
The following outstanding securities, presented based on amounts outstanding as of the end of each period, were not included in the computation of diluted loss per share for the periods indicated, as they would have been anti-dilutive due to the net loss in each period.
Years Ended
December 31,
2024
2023
Stock options
2,092,461
245,830
Restricted stock units
—
2,228
Warrants (1)
6,460,712
637,059
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11. INCOME TAXES
The Company's loss before provision for income taxes was generated from operations in the United States and outside of the United States as follows (in thousands):
Years Ended December 31,
2024
2023
U.S.
$
( 11,303 )
$
( 8,689 )
Non-U.S.
( 439 )
( 161 )
$
( 11,742 )
$
( 8,850 )
A reconciliation of the United States federal statutory income tax rate to the Company's effective income tax rate is as follows (in thousands):
Years Ended December 31,
2024
2023
Income tax benefit at United States federal statutory rate
$
( 2,466 )
$
( 1,858 )
Derivative liability
( 626 )
( 623 )
Share based payments
125
( 791 )
Tax credits
( 189 )
( 142 )
Foreign income taxed at foreign rate
( 24 )
( 9 )
Other permanent difference
119
126
Other
7
144
Increase in valuation allowance
3,054
3,153
Income tax expense
$
—
$
—
The components of deferred tax assets and liabilities are as follows (in thousands):
As of December 31,
2024
2023
Deferred tax assets
Net operating loss carryforwards
$
32,635
$
30,642
Stock-based compensation
3,967
3,316
Research and development
2,486
2,164
Tax credit carryforwards
1,419
1,267
Compensation and benefits
195
120
Unrealized foreign currency losses
320
33
Deferred revenue
31
45
Other
36
26
Total deferred tax assets
41,089
37,613
Deferred tax liabilities
Property and equipment
( 4 )
( 16 )
Other
( 3 )
( 19 )
Total deferred tax liabilities
( 7 )
( 35 )
Valuation allowance
( 41,082 )
( 37,578 )
Net deferred tax assets
$
—
$
—
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Net operating loss carryforwards and the related carryforward expiration periods as of December 31, 2024 are summarized as follows (in thousands):
Carryforward
Amount
Expiration
United States federal net operating losses
$
39,561
2032 - 2037
United States federal net operating losses
83,378
Indefinite
United States state net operating losses
74,624
2033 - 2044
United States state net operating losses
12,053
Indefinite
Canada federal net operating losses
6,384
2034 - 2044
The gross tax credit carryforwards and the related carryforward expiration periods as of December 31, 2024 are summarized as follows (in thousands):
Carryforward
Amount
Expiration
United States federal research expenditure tax credits
$
986
2034 - 2044
Canada federal research expenditure tax credits
432
2034 - 2037
Under the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Section 382 of the Code, as well as similar state provisions. This could substantially limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. Although a formal Section 382 analysis has not yet been completed, the Company believes it is possible ownership changes have occurred. The annual limitation may result in the expiration of United States net operating losses and credits before utilization; however, due to the valuation allowance against deferred tax assets as of December 31, 2024, the net effect of any limitation will have no impact on results of operations.
The accounting guidance related to uncertain tax positions prescribes a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of both December 31, 2024 and 2023, the Company does not have an accrual relating to uncertain tax positions. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.
The Company files income tax returns in the United States and Canada. The Company’s tax returns are subject to tax examinations by United States federal and state tax authorities, or examinations by foreign tax authorities until the expiration of the respective statutes of limitation. The Company currently has no tax years under examination.
12 . DEFINED CONTRIBUTION PLAN
The Company’s employees in the United States are eligible to participate in the Helius Medical Inc. Savings Plan, as amended, a safe harbor 401(k) plan (“401(k) Plan”). The 401(k) Plan allows eligible employees to make contributions through payroll deductions up to IRS limits. The Company matches the first 3 % of the participant's annual eligible compensation contributed to the plan on a dollar-for-dollar basis and matches the next 2 % of the participant's annual eligible compensation to the plan on a 50 % basis. Pursuant to the 401(k) safe harbor provisions, the Company’s matching contributions are 100 % vested. For the years ended December 31, 2024 and 2023, the Company’s defined contribution plan expense was $ 137 thousand and $ 148 thousand, respectively.
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13 . COMMITMENTS AND CONTINGENCIES
The Company is obligated under a license agreement with Advanced NeuroRehabilitation, LLC (“ANR”) to pay a 4 % royalty on net revenue collected from the sale of devices covered by ANR’s patent pending technology, claims and knowhow. For the years ended December 31, 2024 and 2023, the Company recorded royalty expense from the sale of devices of approximately $ 19 thousand and $ 24 thousand, respectively, in its Consolidated Statements of Operations and Comprehensive Loss.
14 . SEGMENT AND GEOGRAPHIC INFORMATION
Segment Information
Operating segments are components of an enterprise for which separate financial information is available and are evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The Company’s CODM is its Chief Executive Officer. The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is the business of development and commercialization of products related to PoNS® devices. The Company has a single reporting segment and the determination of the single segment is consistent with the information provided to the CODM. The CODM evaluates performance and allocates resources based on the Company’s consolidated financial results.
Geographic Information
The following table presents the Company’s revenue disaggregated by geographic area (in thousands):
Years Ended
2024
2023
Product sales, net:
United States
$
181
$
324
Canada
295
281
Total product sales, net
476
605
Other revenue
44
39
Total revenue
$
520
$
644
Two customers accounted for 72 % and 65 % of net product sales for the years ended December 31, 2024 and 2023, respectively. Two customers accounted for 100 % of accounts receivable, net as of December 31, 2024 and a single customer accounted for 83 % of accounts receivable, net as of December 31, 2023.
Long-lived assets are held in the United States and Canada with the majority of long-lived assets being held in the United States as of December 31, 2024 and 2023. As of December 31, 2024, the carrying value of long-lived assets held in Canada is $ 0 .
15. SUBSEQUENT EVENTS
Warrant inducement
On January 21, 2025, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders (the “Holders”) of its existing 2024 Public Warrants to purchase shares of the Company’s Class A common stock (the “Existing Warrants”), pursuant to which the Holders agreed to exercise for cash their Existing Warrants to purchase an aggregate of 4,971,110 shares of the Company’s common stock, in the aggregate, at a reduced exercise price of $ 0.751 per share, in exchange for the Company’s agreement to issue new Series C Warrants and Series D Warrants (the “Inducement Warrants”) on substantially the same terms as the Existing Warrants described below, to purchase up to 6,213,888 shares of the Company’s common stock (the “Inducement Warrant Shares”). The Company received aggregate gross proceeds of approximately $ 3.7 million from the exercise of the Existing Warrants by the
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Holders. The Company engaged Roth to act as its financial advisor with the transactions summarized above and has paid Roth $ 0.2 million for its services, in addition to reimbursement for certain expenses along with other legal and regulatory expenses resulting in net proceeds of $ 3.4 million.
The Company has filed a registration statement on Form S-3 covering the resale of the Inducement Warrants Shares issued or issuable upon the exercise of the Inducement Warrants. In the Inducement Letters, the Company agreed not to issue any shares of common stock or common stock equivalents or to file any other registration statement with the SEC (in each case, subject to certain exceptions) for sixty (60) calendar days. The Company also has agreed not to effect or agree to effect any variable rate transaction (as defined in the Inducement Letters) for seventy-five (75) calendar days from the date of the Inducement Letters.
The Company has agreed to hold an annual or special meeting of stockholders on or prior to the date that is ninety (90) calendar days following the date of the Inducement Letters for the purpose of obtaining stockholder approval, with the recommendation of the Company’s board of directors that such proposals are approved. If the Company does not obtain stockholder approval at the first meeting, the Company has agreed to call a meeting to seek stockholder approval every ninety (90) calendar days until the date that the Inducement Warrants are no longer outstanding.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HELIUS MEDICAL TECHNOLOGIES, INC.
Dated: March 25, 2025
By:
/s/ Dane C. Andreeff
Dane C. Andreeff
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By
/s/ Dane C. Andreeff
Date: March 25, 2025
Dane C. Andreeff
President, Chief Executive Officer (Principal Executive Officer) and Director
By
/s/ Jeffrey S. Mathiesen
Date: March 25, 2025
Jeffrey S. Mathiesen
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), Treasurer, Secretary and Director
By
/s/ Paul Buckman
Date: March 25, 2025
Paul Buckman
Director
By
/s/ Blane Walter
Date: March 25, 2025
Blane Walter
Director
By
/s/ Sherrie Perkins
Date: March 25, 2025
Sherrie Perkins
Director
By
/s/ Edward M. Straw
Date: March 25, 2025
Edward M. Straw
Director
84