NONE- 10-K & 10-Q changes, risk factors and insider trading
EBR Systems, Inc. (also EBRCZ) · Surgical & Medical Instruments & Apparatus · CIK 1347123 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We are subject to ongoing FDA post-marketing obligations concerning our WiSE CRT System, which may result in significant additional expense, and we may be subject to penalties or product withdrawal if we fail to comply with these regulatory requirements and commitments or if we experience unanticipated regulatory issues with WiSE CRT System.”
New heading “If our information technology systems or those third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.”
New heading “There is substantial doubt regarding our ability to continue as a going concern. If we are unable to raise additional capital when needed, we may be forced to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.”
Removed heading “If we are unable to complete clinical trials, obtain regulatory approval and ultimately commercialize our WiSE technology, or experience significant delays in doing so, our business will be materially harmed.”
Removed heading “Coverage and adequate reimbursement may not be available for the procedures that utilize our products, which could diminish our sales or affect our ability to sell our products profitably.”
Removed heading “We may not be able to achieve or maintain satisfactory pricing and margins for our products.”
Removed heading “Our customers may not be able to achieve adequate reimbursement for using our products in the United States or in key foreign jurisdictions.”
Removed heading “We may not be able to develop, license or acquire new products, enhance the capabilities of our existing products to keep pace with rapidly changing technology and customer requirements or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our business, financial condition, and results of operations.”
Removed heading “Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or our customers’ patients or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.”
Removed heading “Clinical trials may be delayed, suspended, or terminated for many reasons, which will increase our expenses and delay the time it takes to develop our current or new products or seek new indications.”
Removed heading “Our current capital reserves may not be adequate.”
Removed heading “We have capitalized pre-launch inventories prior to receiving FDA approval. If either FDA approval or market acceptance post-approval do not occur at all or on a timely basis, we will be required to write-off pre-launch inventories which could materially and adversely affect our business, financial condition and stock price.”
Removed heading “Any barriers or delays to us obtaining future regulatory approvals would limit the size of the market opportunity for WiSE CRT.”
Removed heading “Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws.”
Largest changes
“If our information technology systems or those third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.”see in full comparison
“We may not be able to obtain additional funding on acceptable terms, or at all. As a result of geopolitical events, including the conflicts in Ukraine, Iran and Gaza, inflation, rising interest rates and other conditions, the global credit and financial markets have experienced volatility and disruptions. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all.”see in full comparison
“If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us. …”see in full comparison
“Trade disputes, tariffs, restrictions and other political tensions between the United States and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns. Notwithstanding the U.S. …”see in full comparison
“There is substantial doubt regarding our ability to continue as a going concern. If we are unable to raise additional capital when needed, we may be forced to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.”see in full comparison
“We have outsourced significant elements of our IT infrastructure and, as a result, we manage relationships with third-party providers who may or could have access to our sensitive and confidential information. We rely on technology developed, supplied and/or maintained by third-parties that has made, and may make the Company in the future, vulnerable to “supply chain” style cyber-attacks. Further, technology and security vulnerabilities of acquisitions, business partners or third-party providers may not be identified during due diligence or soon enough to mitigate exploitation. …”see in full comparison
Full comparison: every changed paragraph (120)
If we are unable to complete clinical trials,
obtain regulatory approval and ultimately commercialize our WiSE technology, or experience significant delays in doing so, our business
will be materially harmed.
Our business is dependent
on successful approval and marketing of our WiSE CRT technology that is still under development and subject to FDA approval. While our
WiSE CRT System and has been granted Breakthrough Device Designation by the FDA, the premarket review of our WiSE CRT System by the FDA
is still subject to final review and approval of our submission of information garnered from our pivotal trial, SOLVE-CRT, which is intended
to assess the safety and efficacy of our WiSE technology.
Until FDA approval is received,
we do not have regulatory approval to market WiSE in the United States, and we will be unable to generate revenue in the United States.
Our business model and growth strategy is dependent on obtaining FDA approval as well as approvals from regulatory bodies in other key
jurisdictions, including the Australian market. If FDA approval is not received within the expected timeframe, or not received at all,
we will be unable to implement our business model, and our business and financial condition will be harmed.
Furthermore, even if we receive
FDA approval, we are not assured of receiving future regulatory approvals for other indications or approval or notified body certification
in other jurisdictions and cannot predict with certainty the timelines for such approvals or certifications, or other requirements that
may be imposed by regulatory authorities (e.g. further clinical trials or other requirements to prove the safety and effectiveness of
its products). In addition, future changes or updates to our products, which affect their safety or efficacy, may require new regulatory
approvals or notified body certification in some jurisdictions before we may sell the revised product.
Coverage and adequate reimbursement may
not be available for the procedures that utilize our products, which could diminish our sales or affect our ability to sell our products
profitably.
In both U.S. and non-U.S.
markets, our ability to successfully commercialize and achieve market acceptance of our products depends, in significant part, on the
availability of adequate financial coverage and reimbursement from third-party payors, including governmental payors (such as the Medicare
and Medicaid programs in the United States), managed care organizations and private health insurers. Third-party payors decide which treatments
they will cover and establish reimbursement rates for those treatments. Our products are purchased by hospitals and other providers who
will then seek reimbursement from third-party payors for the procedures performed using our products. Reimbursement systems in international
markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country
basis. In certain non-U.S. markets, a product must be approved for reimbursement before it can be approved for sale in that country. Furthermore,
many non-U.S. markets have government-managed healthcare systems that control reimbursement for new devices and procedures. In most markets
there are private insurance systems as well as government-managed systems.
We can give no assurance
that these third-party payors will provide coverage and adequate reimbursement for procedures using our products, permit hospitals and
doctors to offer procedures using our products to patients requiring treatment, or that current reimbursement levels for procedures using
our products will continue. If sufficient coverage and reimbursement is not available for the procedures using our products, in either
the United States or non-U.S. markets, the demand for our products and our revenue will be adversely affected. Furthermore, although we
believe there is potential to improve on the current reimbursement profile for our products in the future, the overall amount of reimbursement
available for procedures intended to diagnose and treat complex heart arrhythmias could remain at current levels or decrease in the future.
Failure by hospitals and other users of our products to obtain and maintain coverage and adequate reimbursement for the procedures using
our products would materially adversely affect our business, financial condition, and results of operations.
Third-party payors are also
increasingly examining the cost effectiveness of products, in addition to their safety and efficacy, when making coverage and payment
decisions. Third-party payors have also instituted initiatives to limit the growth of healthcare costs using, for example, price regulation
or controls and competitive pricing programs. Some third-party payors also require demonstrated superiority, on the basis of randomized
clinical trials, or pre-approval of coverage, for new or innovative devices or procedures before they will reimburse healthcare providers
who use such devices or procedures. Additionally, no uniform policy for coverage and reimbursement exists in the United States, and coverage
and reimbursement can differ significantly from payor to payor. Third-party payors often rely upon Medicare coverage policy and payment
limitations in setting their own reimbursement rates but also have their own methods and approval process apart from Medicare determinations.
It is uncertain whether our current products or any planned or future products will be viewed as sufficiently cost effective to warrant
coverage and adequate reimbursement levels for procedures using such products in any given jurisdiction. Similar inconsistency exists
on non-U.S. markets.
In addition, for reasons
of quality assurance, cost effectiveness, or availability, some of the components needed to manufacture our products are obtained from
sole suppliers. For instance, our piezo electric crystal is a single source component purchased from CTS Advanced Materials. We
do not currently have a formal master supplier agreement in place with CTS as we generally procure on a purchase order basis. Although
we work closely with our suppliers to try to ensure continuity of supply while maintaining high quality and reliability, the supply of
these components may, at times, be interrupted or insufficient. In addition, due to the stringent regulations and requirements of the
regulatory agencies like the FDA, we may not be able to quickly establish additional or replacement sources. Further, dependence
on a sole source for certain key components of our products may allow such sole source suppliers to command increased leverage in negotiating
prices and other terms of sale, which could adversely affect our potential future profitability. As a result, we may be left with little
choice but to accept such higher prices or other fees for key components in order to ensure continuity of supply. This could affect our
potential profitability or if we choose to push back against more onerous terms, could lead to inadequate supply, which could materially
affect our business. It could be difficult, costly and time consuming to obtain alternative sources for these components, or to change
product designs to make use of alternative components.
The commercial success of our productsWiSE will depend
depend upon attaining significant market acceptance of these products among hospitals, physicians, patients, and payors.
Our success will depend,
in part, on the acceptance of our productsWiSE as safe, effective and, with respect to providers, cost-effective. We cannot predict how quickly, if
if at all, hospitals, physicians, patients, or payors will accept our productsproduct or, if accepted, how frequently theyit will be used. Our product
products and planned or future products we may develop, or market may never gain broad market acceptance for some or all of our targeted indications.
indications. Hospitals, physicians, patients, and payors must believe that our productsproduct offeroffers benefits over alternative treatment methods.
Our future
growth and profitability largely depend on our ability to increase physician awareness of our system and our productsWiSE and on
the willingness of hospitals, physicians,
patients, or payors to adopt them.it. These parties may not adopt our productsproduct unless they are
able to determine, based on experience, clinical
data, medical society recommendations and other analyses, that our productsproduct areis safe,
effective and, with respect to providers, cost- effective,
on a stand-alone basis and relative to competitors’ products. Healthcare
providers must believe that our productsproduct offeroffers benefits
over alternative treatment methods. Even if we are able to raise awareness, physicians
tend to be slow in changing their medical treatment
practices and may be hesitant to select our productsproduct for recommendationrecommendations to their hospitals
or patients for a variety of reasons, including:
The process for determining whether a payor will provide coverage for a product is typically separate from the process for setting the reimbursement rate that the payor will pay for the product. A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be available. Our product may not be reimbursed separately but their cost may instead be bundled as part of the payment received by the provider for the procedure only. Separate reimbursement for the product itself or the treatment or procedure in which our product is used may not be available. Commercial third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies but also have their own methods and approval process apart from Medicare coverage and reimbursement determinations. As such, one third-party payor’s determination to provide coverage for a product does not ensure that other payors will also provide coverage for the product. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for our product, less favorable coverage policies and reimbursement rates may be implemented in the future. A decision by a third-party payor not to cover or separately reimburse for our product or procedures using our product, could reduce physician utilization of our products.
We cannot assure you that our
productsproduct will achieve broad market acceptance among hospitals and physicians. Additionally, even if our productsproduct achieveachieves market acceptance,
theyit may not maintain that market acceptance over time if competing products, proceduresprocedures, or technologies are considered safer or more cost-effective
cost-effective or otherwise superior. Any failure of our productsproduct to generate sufficient demand or to achieve meaningful market acceptance
and penetration
will harm our future prospects and have a material adverse effect on our business, financial condition, and results of
operations.
Our reputation among our current
or potential customers, as well as among electrophysiologists, could also be negatively affected by safety or customer satisfaction issues
involving us or our products,product, including product recalls. Future product recalls or other safety or customer satisfaction issues relating
to our reputation could negatively affect our ability to establish or maintain broad adoption of our products, which would harm our future
prospects and have a material adverse effect on our business, financial condition, and results of operations.
In most cases, before a hospital
can purchase our system for the first time, our system must be approved for use by a hospital’s new product or value analysis committee,
or the staff of a hospital or health system. Such approvals could deter or delay the use of our products by physicians. We cannot provide
assurance that our efforts to obtain such approvals or generate adoption will be successful or increase the use of our products, and if
we are not successful, it could have a material adverse effect on our business, financial condition, and results of operations.
Adoption of our products depends upon appropriate
physician training, and inadequate training may lead to negative patient outcomes, affect adoption of our productsproducts, and adversely affect
our business.
We have limited sales and marketing resources.
If we are unable to establishgrow our marketing and sales capabilities or enter into agreements with third parties to market and sellsupport our CRT
products,commercialization efforts, we may not be able to effectively
market and sell our WiSE CRT productsSystem or generate product revenue.
We currently have limited
sales and marketing resources. In order to successfully launch
commercialize our WiSE CRT products commercially afterSystem, we receive marketing approval, we will
need to, among other things, buildgrow marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements
with third parties to perform these services,capabilities, and we may not be successful in doing so. We mayhave electelected to build a targeted specialty sales
force which will beis expensive and
time-consuming. Any failure or delay in the development of our internal sales, marketing and distribution
capabilities would adversely
impact the commercialization of our CRT products. If we choose to partner with third parties that have direct
sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own
sales force and distribution systems. If we are unable to enter into collaborations with third parties for the commercialization of approved
products, if any, on acceptable terms or at all, or if any such partner does not devote sufficient resources to the commercialization
of our products or otherwise fails in commercialization efforts, we may not be able to successfully commercialize any of our WiSE CRT
system that receive regulatory approval. If we are not successful in commercializing our WiSE CRT system, either on our own or through
collaborations with one or more third parties,System our future revenue will
be materially and adversely impacted.
In addition, our manufacturing
facilityfacility, and processes and those of our third-party suppliers must meet stringent quality standards and are subject to unannounced FDA
and state regulatory inspections for compliance with the QSR.QMSR. Developing and maintaining a compliant quality system is time consuming
and expensive. Failure to maintain compliance with, or not fully complying with the requirements of the FDA and state regulators, could
result in enforcement actions against us or our third-party suppliers, which could include the issuance of warning letters, seizures,
prohibitions on product sales, recalls, temporary manufacturing shutdowns, and civil and criminal penalties, any one of which could significantly
impact our manufacturing supply and impair our financial results. For example, to maintain Notified Body certification permitting us to
affix the CE Mark to our devices in the E.U., the Company’s Notified Body is expected to regularly audit the Company and its suppliers.
In 2018, while our device was CE Marked under the prior EU MDD, we received a warning notice from the Company’s Notified Body, BSI
Group (“BSI”) for non-conformance with manufacturing
standards. In 2020, we identified manufacturing process issues with our
contract manufacturer of the Transmitter Model 4100, which were
subsequently ratified in 2021. Although the process improvements were
reviewed and approved by BSI and by the FDA, any failure to comply
with the applicable regulatory requirements in the future can result
in such enforcement actions noted above and a damaged brand name.
In addition, for reasons of quality assurance, cost effectiveness, or availability, some of the components needed to manufacture our products are obtained from sole suppliers. For instance, our piezo electric crystal is a single source component purchased from CTS Advanced Materials. We do not currently have a formal master supplier agreement in place with CTS as we generally procure on a purchase order basis. Although we work closely with our suppliers to try to ensure continuity of supply while maintaining high quality and reliability, the supply of these components may, at times, be interrupted or insufficient. In addition, due to the stringent regulations and requirements of regulatory agencies like the FDA, we may not be able to quickly establish additional or replacement sources. Further, dependence on a sole source for certain key components of our products may allow such sole source suppliers to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our potential future profitability. As a result, we may be left with little choice but to accept such higher prices or other fees for key components in order to ensure continuity of supply. This could affect our potential profitability or if we choose to push back against more onerous terms, could lead to inadequate supply, which could materially affect our business. It could be difficult, costly and time-consuming to obtain alternative sources for these components, or to change product designs to make use of alternative components.
Changes in economic conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business, operations, and financial condition.
Our operations and performance are impacted by global, regional and U.S. economic and geopolitical conditions. There is inherent risk, based on the complex relationships among the U.S. and the countries in which we conduct our business, that political, diplomatic, and national security factors can lead to global trade restrictions and changes in trade policies and export regulations that may adversely affect our business and operations. The current international trade and regulatory environment is subject to significant ongoing uncertainty. The U.S. government has announced substantial new tariffs affecting a wide range of products and jurisdictions and has indicated an intention to continue developing new trade policies, including with respect to the medical device industry. In response, certain foreign governments have announced or implemented retaliatory tariffs and other protectionist measures. These developments have created a dynamic and unpredictable trade landscape, which may adversely impact our business, results of operations, financial condition and prospects.
The complexity of announced or future tariffs may also increase the risk that we or our customers or suppliers may be subject to civil or criminal enforcement actions in the United States or foreign jurisdictions related to compliance with trade regulations. Foreign governments may also adopt non-tariff measures, such as procurement preferences or informal disincentives to engage with, purchase from or invest in U.S. entities, which may limit our ability to attract non-U.S. investment, employees, customers, and suppliers. Foreign governments may also take other retaliatory actions against U.S. entities, such as decreased intellectual property protection, increased enforcement actions, or delays in regulatory approvals, which may result in heightened international legal and operational risks. In addition, the United States and other governments have imposed and may continue to impose additional sanctions, such as trade restrictions or trade barriers, which could restrict us from doing business directly or indirectly in or with certain countries or parties and may impose additional costs and complexity to our business.
Trade disputes, tariffs, restrictions and other political tensions between the United States and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns. Notwithstanding the U.S. Supreme Court’s recent decision invalidating tariffs imposed under the International Emergency Economic Powers Act, the magnitude and the ultimate impact of current or future tariffs and trade restrictions remains uncertain and are subject to a variety of factors, including the effective date and duration of additional tariffs, changes in the amount, scope and nature of tariffs in the future, including as a result of litigation or other challenges, any retaliatory tariffs that other countries may impose in response to tariffs levied by the United States and any mitigating actions that may become available. While we actively monitor these risks, any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, ability to access the capital markets or other financing sources, results of operations, financial condition, and prospects.
We are subject to ongoing FDA post-marketing obligations concerning our WiSE CRT System, which may result in significant additional expense, and we may be subject to penalties or product withdrawal if we fail to comply with these regulatory requirements and commitments or if we experience unanticipated regulatory issues with WiSE CRT System.
Our WiSE CRT System’s regulatory approval in the United States is subject to certain post-marketing obligations and commitments to the FDA. We are required to conduct a prospective, real-world, observational study aimed at understanding acute and long-term product performance, including patient safety, clinical outcomes, and CRT response information associated with the use of the market released WiSE. We began enrollment for this post-marketing study in November 2025, and it is scheduled to be concluded in December 2027. Participants enrolled in the study will be monitored at one month, six month, and annual follow-up visits for up to five years post implant. Failure to meet enrollment requirements or complete the study to the satisfaction of the FDA could result in withdrawal of WiSE’s application approval, which would have a material adverse effect on our business, results of operations, financial condition and prospects. The results of the post-marketing study may also result in additional warnings or precautions for the WiSE CRT System label, or expose additional safety concerns that may result in product liability, reputational damage with physicians and/or withdrawal of the product from the market, any of which would have a material adverse effect on our business, results of operations, financial condition and prospects.
In addition, the manufacturing processes, labelling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for WiSE are subject to extensive and ongoing regulatory requirements in the United States. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practices (“cGMP”), good clinical practices (“GCP”), and good laboratory practices (“GLP”). If we are not able to meet and maintain regulatory compliance for WiSE, we may lose marketing approval and be required to withdraw our product. Withdrawal of our product would have a material adverse effect on our business.
Even though the preliminary
clinical data from SOLVE-CRT met our primary endpointsendpoints, and has been submitted in supportApril of2025 thewe Company’s application forreceived FDA approval,approval to commercialize WiSE CRT System in
the U.S, it may not necessarily be predictive of the results of future clinical trials that will need to be conducted to support regulatory
approval approval
in other jurisdictions.
WiSE CRT is a relatively
new potential solution for treating heart failure with CRT, so the Company hashave performed clinical trials only with limited patient populations. The
The long-term effects of using our WiSE CRT System in a large number of patients have not been studied and the results of short-term clinical
use do not necessarily predict long-term clinical benefits or reveal long-term adverse effects. The results of preclinical studies, completed
clinical trials, ongoing trials, and future studies of our current, planned, or future technology may not be predictive of the results
of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.
The interpretation of data
and results from the Company’s clinical trials do not ensure that it will achieve similar results in future clinical trials in other
patient populations. In addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many
companies that have believed their products performed satisfactorily in preclinical studies and early clinical trials have nonetheless
failed to replicate results in later clinical trials and subsequently failed to obtain marketing approval. Products in later stages of
clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and earlier clinical
trials.
There is no assurance that future trials will meet their endpoints or that regulatory bodies such as the FDA and TGA will agree that our products are sufficiently safe and effective to support ongoing regulatory approval.
The Company’sOur estimates
of the annual
total addressable markets for WiSE CRT are based on internal and third-party estimates, including the number of patients
with heart failure
requiring Cardiac Resynchronization Therapy and our internally derived average selling price expectations at which
we anticipate selling products for but has not been definitively established.price. While we consider the assumptions and the data underlying our
our estimates as reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates
may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual
total addressable market for our current or future products may prove to be incorrect. If the actual number of patients who would benefit
from our products, the price at which we can sell future products, or the annual total addressable market for our products is smaller
than we have estimated, it may impair our sales
growth and have an adverse impact on our business.
We may not be able to achieve or maintain
satisfactory pricing and margins for our products.
Manufacturers of medical
devices have a history of price competition, and we can give no assurance that we will be able to achieve satisfactory prices for our
products or maintain prices at the levels we have historically achieved. Any decline in the amount that payors reimburse our customers
for procedures involving the use of our products could make it difficult for customers to continue using, or to adopt, our products and
could create additional pricing pressure for us. If we are forced to lower the price we charge for our products, our revenue and gross
margins will decrease, which will adversely affect our ability to invest in and grow our business. If we are unable to maintain our prices,
or if our costs increase and we are unable to offset such an increase with an increase in our prices, our margins could erode. We will
continue to be subject to significant pricing pressure, which could harm our business, financial condition, and results of operations.
Our customers may not be able to achieve
adequate reimbursement for using our products in the United States or in key foreign jurisdictions.
Even if we are able to receive
approval from the FDA to market our WiSE CRT System technology, we may not be able to achieve adequate reimbursement for our business
to succeed. We expect to derive our revenue in the United States from sales to hospital and medical centers, which typically bill all
or a portion of the costs and fees associated with a company’s products to various third-party payors, including Medicare, Medicaid,
private commercial insurance companies, health maintenance organizations and other healthcare-related organizations, and then bill patients
for any applicable deductibles or co-payments. As a result, access to adequate coverage and reimbursement for our products by third-party
payors is essential to the acceptance of our products by its customers.
However, in the United States,
there is no uniform policy of coverage and reimbursement for medical device products and services among third-party payors, so coverage
and reimbursement can differ significantly from payor to payor, and each coverage decision and level of reimbursement is independent.
As a result, third-party reimbursement may not be available or adequate for the Company’s products, and there is no guarantee that
the Company will be able to achieve adequate reimbursement for using our products.
Further, payors continually
review new technologies for possible coverage and can, without notice, deny coverage for products and procedures or delay coverage approval
until further clinical data is available. As a result, the coverage determination process is often a time-consuming and costly process
that may require the Company to provide scientific and clinical support for the use of its products to each payor separately, with no
assurance that coverage and adequate reimbursement will be obtained or maintained if obtained. If third-party reimbursement is not available
or adequate for the Company’s products, or if there is any decline in the amount that payors are willing to reimburse customers,
new customers may not adopt, or may reduce their rate of adoption of, the Company’s products and we could experience additional
pricing pressure, any of which could have a material adverse effect on our business, financial condition, and results of operations.
Internationally, reimbursement
systems in foreign markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained
on a country-by-country basis. In certain international markets, a product must be approved for reimbursement before it can be approved
for sale in that country. Additionally, many international markets have government-managed healthcare systems that control reimbursement
for products and procedures. In most markets there are both private insurance systems and government-managed systems. If sufficient levels
of coverage and reimbursement are not available for our WiSE CRT System, in either the United States or internationally, particularly
in key European Union jurisdictions targeted by us, the demand for our products and its revenues will be adversely affected.
Defects or failures associated with our
products could lead to recalls, safety alertsalerts, or litigation, as well as significant costs and negative publicity.
Although we carry product
liability insurance, including for clinical trials and product marketing, we can give no assurance that such coverage will be available
or adequate to satisfy any claims. Product liability insurance is expensive, subject to significant deductibles and exclusions, and may
not continue to be available on acceptable terms, if at all. Any product liability claims brought against us, with or without merit, could
increase our product liability insurance rates or prevent us from securing continuing coverage, harm our reputation, significantly increase
our expenses, and reduce product sales. If we are unable to obtain or maintain insurance at an acceptable cost or on acceptable terms
with adequate coverage or otherwise protect against potential product liability claims, we could be exposed to significant liabilities.
Product liability claims could cause us to incur significant legal fees and deductibles and claims in excess of our insurance coverage
would be paid out of cash reserves, harming our financial condition and operating results. Defending a suit, regardless of its merit or
eventual outcome, could be costly, could divert management’s attention from our businessbusiness, and might result in adverse publicity,
which could result in reduced acceptance of our products in the market, product recallsrecalls, or market withdrawals.
We are required to file adverse event reports under Medical Device Reporting, or MDR, regulations with the FDA and analogous regulatory bodies outside the United States, which reports are publicly available on the competent authority’s website. We are required to file MDRs if our products may have caused or contributed to a serious injury or death or malfunctioned in a way that could likely cause or contribute to a serious injury or death if it were to recur. Any such MDR that reports a significant adverse event could result in negative publicity, which could harm our reputation and future sales. See “—Risks Related to Government Regulation—If any of our products cause or contribute to a death or a serious injury or malfunction in certain ways, we will be required to report under applicable medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.”
We are experiencing substantial
growth in our operations, and we expect to experience continued substantial growth in our business. This growth has placed and will continue
to place significant demands on our management and our operational infrastructure. Any growth that we experience in the future could require
us to expand our sales and marketing personnel and manufacturing operations and general and administrative infrastructure. In addition
to the need to scale our organization, future growth will impose significant added responsibilities on management, including the need
to identify, recruit, train and integrate additional employees. We cannot assure you that any increases in scale, related improvements
and quality assurance will be successfully implemented or that appropriate personnel will be available to facilitate the growth of our
business. Rapid expansion in personnel could mean that less experienced people manufacture, market and sell our products, which could
result in inefficiencies and unanticipated costs, reduced qualityquality, and disruptions to our operations. In addition, rapid and significant
growth may strain our administrative and operational infrastructure and could require significant capital expenditures that may divert
financial resources from other projects, such as research and development of potential future products. Our ability to manage our business
and growth will require us to continue to improve our operational, financial and management controls, and reporting systems and procedures.
If we are unable to manage our growth effectively, including by failing to implement necessary procedures, transition to new processes
or hire necessary personnel, it may be difficult for us to execute our business strategy, and our business could be adversely affected.
We may not be able to develop, license or
acquire new products, enhance the capabilities of our existing products to keep pace with rapidly changing technology and customer requirements
or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our business, financial
condition, and results of operations.
Our success is influenced
by our ability to develop new applications for our technologies in existing and new markets, while improving the performance and cost-effectiveness
of our existing products, in each case in ways that address current and anticipated customer requirements. We may develop and commercialize
additional products through our research and development program and by licensing or acquiring additional products and technologies from
third parties. Such success is dependent upon several factors, including functionality, competitive pricing, ease of use, the safety and
efficacy of our products and our ability to identify, select and acquire the rights to products and technologies on terms that are acceptable
to us.
The medical device industry
is characterized by rapid technological change and innovation. New technologies, techniques or products could emerge that might offer
better combinations of price and performance, or better address customer requirements as compared to our current or future products. Competitors,
who may have greater financial, marketing and sales resources than we do, may be able to respond more quickly and effectively than we
can to new or changing opportunities, technologies, standards, or customer requirements. Any new product we identify for internal development,
licensing or acquisition may require additional development efforts prior to commercial sale, including extensive clinical testing and
approval or clearance by the FDA and comparable foreign regulatory authorities. Due to the significant lead time and complexity involved
in bringing a new product to market, we are required to make a number of assumptions and estimates regarding the commercial feasibility
of a new product. These assumptions and estimates may prove incorrect, resulting in our introduction of a product that is not competitive
at the time of launch. We anticipate that we will face increased competition in the future as existing companies and competitors develop
new or improved products and as new companies enter the market with new technologies. Our ability to mitigate downward pressure on our
selling prices will be dependent upon our ability to maintain or increase the value we offer to hospitals, physicians, patients, and payors.
All new products are prone to the risks of failure inherent in medical device product development, including the possibility that the
product will not be shown to be sufficiently safe and effective for approval or clearance by regulatory authorities. In addition, we cannot
assure you that any such products that are approved or cleared will be manufactured or produced economically, successfully commercialized,
or widely accepted in the marketplace. The expenses or losses associated with unsuccessful product development or launch activities, or
a lack of market acceptance of our new products, could adversely affect our business, financial condition, and results of operations.
The typical development cycle
of new medical device products can be lengthy and complicated and may require complex technology and engineering. Such developments may
involve external suppliers and service providers, making the management of development projects complex and subject to risks and uncertainties
regarding timing, timely delivery of required components or services and satisfactory technical performance of such components or assembled
products. If we do not achieve the required technical specifications or successfully manage new product development processes, or if development
work is not performed according to schedule, then such new technologies or products may be adversely impacted, and our business and operating
results may be harmed.
The continuing development of our products
depends upon it maintaining strong working relationships with physicians.
In an effort to reduce costs,
many hospitals in the U.S. have become members of Group Purchasing Organizations (“GPOs”), and Integrated Delivery
Networks (“IDNs”). GPOs and IDNs negotiate pricing arrangements with medical device companies and distributors and
then offer these negotiated prices to affiliated hospitals and other members. GPOs and IDNs typically award contracts on a category-by-category
basis through a competitive bidding process. Bids are generally solicited from multiple providers with the intention of driving down pricing
or reducing the number of vendors. Due to the highly competitive nature of the GPO and IDN contracting processes, we may not be able to
obtain new, or maintain existing, contract positions with major GPOs and IDNs. Furthermore, the increasing leverage of organized buying
groups may reduce market prices for itsour products, thereby reducing our revenue and margins.
As of December 31, 2024,
we had U.S. federal and state net operating loss, or NOL, carryforwards of approximately $220.0 million and $217.3 million, respectively.
Subject to certain limitations, we may use these NOL carryforwards to offset our taxable income for U.S. federal and state income tax
purposes. If not utilized, our U.S. federal NOL carryforwards (and our state NOL carryforwards in conforming states) arising in taxable
years beginning before 2018 will begin to expire in 2027. Under current law, U.S. federal NOL carryforwards arising in taxable years beginning
after 2017 may be carried forward indefinitely, but their deductibility in any tax year is limited to 80% of our taxable income in such
year before the deduction for such NOL carryforwards. Additionally, Section 382 of the Internal Revenue Code of 1986, as amended, may
limit the NOL carryforwards we may use in any year for U.S. federal income tax purposes in the event we undergo an “ownership change.”
A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5%
of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a
rolling three-year period. Similar rules may apply under state tax laws. We have not conducted any study with respect to the impact of
Section 382 on our NOL carryforwards. We may have previously undergone an “ownership change.” In addition, any future issuances
or sales of our stock, including certain transactions involving our stock that are outside of our control, could result in future “ownership
changes.” “Ownership changes” that have occurred in the past or that may occur in the future, could result in the imposition
of an annual limit on the amount of pre-ownership change NOL carryforwards and other tax attributes we can use to reduce our taxable income,
potentially increasing and accelerating our liability for income taxes, and also potentially causing certain of those tax attributes to
expire unused. Any limitation on our ability to use NOL carryforwards could, depending on the extent of such limitation and the NOL carryforwards
previously used, result in our retaining less cash after payment of U.S. federal and state income taxes during any year in which we have
taxable income, than we would retain if such NOL carryforwards were available as an offset against such income for U.S. federal and state
income tax reporting purposes, which could adversely impact operating results.
As of December 31, 2025, we had U.S. federal and state net operating loss, or NOL, carryforwards of approximately $251.2 million and $254.8 million, respectively. Subject to certain limitations, we may use these NOL carryforwards to offset our taxable income for U.S. federal and state income tax purposes. If not utilized, our U.S. federal NOL carryforwards (and our state NOL carryforwards in conforming states) arising in taxable years beginning before 2018 will begin to expire in 2027. Under current law, U.S. federal NOL carryforwards arising in taxable years beginning after 2017 may be carried forward indefinitely, but their deductibility in any tax year is limited to 80% of our taxable income in such year before the deduction for such NOL carryforwards. Additionally, Section 382 of the Internal Revenue Code of 1986, as amended, may limit the NOL carryforwards we may use in any year for U.S. federal income tax purposes in the event we undergo an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. We have not conducted any study with respect to the impact of Section 382 on our NOL carryforwards. We may have previously undergone an “ownership change.” In addition, any future issuances or sales of our stock, including certain transactions involving our stock that are outside of our control, could result in future “ownership changes.” “Ownership changes” that have occurred in the past or that may occur in the future, could result in the imposition of an annual limit on the amount of pre-ownership change NOL carryforwards and other tax attributes we can use to reduce our taxable income, potentially increasing and accelerating our liability for income taxes, and also potentially causing certain of those tax attributes to expire unused. Any limitation on our ability to use NOL carryforwards could, depending on the extent of such limitation and the NOL carryforwards previously used, result in our retaining less cash after payment of U.S. federal and state income taxes during any year in which we have taxable income, than we would retain if such NOL carryforwards were available as an offset against such income for U.S. federal and state income tax reporting purposes, which could adversely impact operating results.
If our information technology systems or those third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
In the ordinary course of business, we, and the third parties with whom we work, collect and store sensitive and confidential data, including intellectual property, personal information, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information of employees in our data centers and on our networks. Secure maintenance and transmission of this information is critical to our operations business strategy. We generally rely on commercially available systems, software, tools and domestically available monitoring to provide security for processing, transmitting and storing this sensitive and confidential data.
Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties with whom we work. Further, some threat actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, the third parties with whom we work, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, attacks enhanced or facilitated by AI, and other similar threats. These, and other similar threats, could result in unauthorized access to our computer systems or our third-party IT service providers' systems and, if successful, misappropriate personal, sensitive, or confidential information. We have had in the past and may in the future experience cybersecurity incidents. If successful, these attacks could lead to service interruptions, extortion, theft of confidential, personal or proprietary information, the compromise of data integrity or unauthorized information disclosure.
In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to provide our products or services, loss of sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
We have outsourced significant elements of our IT infrastructure and, as a result, we manage relationships with third-party providers who may or could have access to our sensitive and confidential information. We rely on technology developed, supplied and/or maintained by third-parties that has made, and may make the Company in the future, vulnerable to “supply chain” style cyber-attacks. Further, technology and security vulnerabilities of acquisitions, business partners or third-party providers may not be identified during due diligence or soon enough to mitigate exploitation. Additionally, remote work has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations. A contractor or other third party with whom we do business may attempt to circumvent its security measures or obtain such information and may purposefully or inadvertently cause an incident involving sensitive information. While we continue to evaluate and implement additional protective measures to reduce the risk and detect cybersecurity incidents, cyberattacks are becoming more sophisticated and frequent and the techniques used in such attacks change rapidly. Despite our cybersecurity measures, information technology networks and infrastructure may still be vulnerable to damage, disruptions or shutdowns due to cybersecurity incidents, compromises, or malfeasance.
Even the most well protected IT networks, systems and facilities remain potentially vulnerable because the techniques used in attempted cybersecurity incidents are continually evolving and generally are not recognized until launched against a target or, in some cases, are designed not to be detected and, in fact, may not be detected. Any such compromise of our or our third party’s IT service providers’ data security and access, public disclosure, or loss of personal, sensitive, or confidential business information, could result in legal claims and proceedings, liability under laws to protect privacy of personal information, and regulatory penalties, and could disrupt our operations, require significant management attention and resources to remedy any damages that result, and damage our reputation and customers willingness to transact business with us, any of which could adversely affect our business.
As our activities continue to evolve and expand, it may be subject to additional laws which impose further restrictions on the transfer, access, use, and disclosure of health and other personal information which may impact EBR either directly or indirectly. Our failure to comply with applicable privacy or security laws or significant changes in these laws could significantly impact our business and future business plans.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.
Management's Discussion & Analysis (MD&A)
New heading “Cost of Goods Sold and Gross Margin”
New heading “Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin:”
New heading “Revenue and Cost of Goods Sold”
New heading “Gross Profit, and Gross Margin”
New heading “Going Concern Consideration”
New heading “Future Funding Requirements”
Removed heading “Pre-launch inventory”
Removed heading “Clinical trial accrual”
Largest changes
“If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us. …”see in full comparison
“Despite recent FDA approval of WiSE CRT System, the outcome of any clinical activities and/or regulatory approval process is highly uncertain, we cannot reasonably estimate whether our future development activities may succeed; or whether we will be able to effectively commercialize WiSE CRT System in the U.S. and generate sufficient revenue. We may never recoup our investment in any WiSE CRT System development which would adversely affect our financial condition and our business and business prospects. …”see in full comparison
“To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and cash and other requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. …”see in full comparison
“The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. For the years ended December 31, 2025 and 2024, we incurred a net loss of $48.8 million and $40.8 million, respectively. During the years ended December 31, 2025 and 2024, we had negative cash flows from operations of $53.2 million and $41.2 million, respectively. As of December 31, 2025, we had working capital of $59.1 million and accumulated deficit of $402.2 million. …”see in full comparison
Full comparison: every changed paragraph (68)
EBR
is a U.S. based medical
device company that is developingdeveloped the WiSE CRT System,System (“WiSE”), an implantable cardiac pacing system able to provide stimulation
to endocardial heart tissue for the correction of heart rhythm conditions without requiring the use of leads. That implantable investigationaldevice
device is part of a cardiac CRT,resynchronization potentiallytherapy (“CRT”), offering endocardial heart tissue stimulation without the complications
associated with traditional
lead-based systems. Cardiac rhythm management (“CRM”) systems use leads to conduct electricity
from an implantable pulse generator (“IPG”) to electrodes that deliver therapeutic electric pulses to
heart tissue. While
leads are a critical part of most CRM systems, they have long been recognized as a primary shortcoming of these systems
and are a leading
cause of device failure.
We initially developed WiSE for use in conjunction with another implanted pacemaker to provide CRT to patients who are unable to receive CRT from a traditional lead-based system or are at high risk of complications from an upgrade procedure. WiSE CRT technology is engineered to benefit patients who have not seen success with conventional CRT or face high complication risks. By eliminating lead requirements for left ventricular pacing, WiSE CRT introduces a novel approach to cardiac pacing, with the potential to transform CRT delivery.
On April 11, 2025, we received notification that the Center for Devices and Radiological Health (“CDRH”) of the Food and Drug Administration (“FDA”) had completed its review of our premarket approval application (“PMA”) for WiSE and approved WiSE for commercial distribution in the U.S. for adult patients who are at least 22 years of age, are indicated for CRT, have an existing or are eligible for an implanted right ventricular pacing system, and are in one of the following two categories: 1) patients in whom previous coronary sinus (“CS”) lead implantation was unsuccessful, or where an implanted lead has been turned off, referred to as "previously untreatable"; or 2) patients with previously implanted pacemakers or Implantable Cardioverter-Defibrillators (“ICDs”) in whom standard CRT upgrade is not advisable due to known relative contraindications for CS lead or CRT device implantation, referred to as "high risk upgrades".
We have launched WiSE with the focus on driving adoption of WiSE at key, high-volume, hospitals or medical facilities within the U.S. to be followed by select, high-volume hospitals or medical facilities in markets outside the U.S. (“OU”) that we would target after evaluating regulatory and reimbursement considerations.
Our WiSE CRT System received approval from the FDA for commercial distribution in April 2025, and we began commercializing WiSE during the second quarter of 2025. During the year ended December 31, 2025, we had commercial implants at eleven hospitals in the US, and recognized revenue of $1.6 million. A total of 33 physicians were trained to implant the WiSE CRT System, and 21 purchase agreements were signed with target LMR sites during the year ended December 31, 2025. The commercial potential of and our ability to successfully commercialize WiSE is unproven and will require, among other things, effective sales, marketing, manufacturing, distribution, information systems and pricing strategies, as well as compliance with applicable laws and regulations.
Since
inception, we have incurred significant net losses and expect to continue to incur net losses foruntil thewe foreseeableare future.able to generate sufficient
revenue. Since our inception,
our operations have been financed primarily by net proceeds from the sale of our CDIs, common stock, convertible
preferred stock, and
indebtedness. As of December 31, 2024,2025, we had $66.0$54.2 million in cash, cash equivalents, and marketable securities
and an accumulated deficit
of $353.5$402.2 million. For a more comprehensive discussion see “Liquidity and Capital Resources” and
“Future Funding Requirements” below.
In May 2025, we completed an institutional placement of 55,900,000 CDIs representing the same number of common stock at $0.64 per share, for proceeds of $33.5 million, net of $2.5 million of related issuance costs. In June 2025, we completed a non-underwritten rights offering to existing stockholders, or Securities Purchase Plan, and issued an additional 20,000,000 CDIs representing the same number of common stock at $0.64 per share, for proceeds of $12.8 million, net of $0.1 million of related issuance costs.
On
September 25, 2024, we issued 55,856,325 shares of common stock, in connection with an institutional placement and
the institutional component of a 1-for-20 pro-rata accelerated non-renounceable entitlement offer on the ASX, at a purchase price
of $0.56 per share. We raised approximately $29.4 million, net of issuance costs of approximately $1.9 million. On October 16, 2024, we
issued 5,075,733 shares of common stock, in connection with the retail component of a 1-for-20 pro-rata non-renounceable entitlement offer
on the ASX, at a purchase price of $0.54 per share. We raised approximately $2.6 million, net of issuance costs of approximately $0.2
million.
Revenue
We derive most of our revenue from sales of WiSE to the hospital facilities that implant our WiSE CRT System. We recognize revenue upon the transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. Specifically, revenue from the sale of WiSE is recognized at an amount that reflects the expected consideration upon notice that our products have been used in a surgical procedure. Our revenue fluctuates primarily based on the volume of procedures performed. Our revenue is expected to continue to fluctuate in the future from quarter-to-quarter due to a variety of factors, including the success of our sales force in expanding adoption of WiSE in new accounts and the number of physicians who are aware of and implant WiSE.
Nearly all our revenue results from sales in the United States, but we also have limited sales of replacement batteries for our WiSE CRT System to hospital facilities with patients who have been or are currently enrolled in our clinical study in the United Kingdom (“UK”).
Cost of Goods Sold and Gross Margin
Cost of goods sold consists primarily of costs related to materials, components and subassemblies, personnel-related expenses for our manufacturing and quality assurance employees, manufacturing overhead and charges for excess, obsolete and non-sellable inventories. Overhead costs include the cost of quality assurance, testing, material procurement, inventory control, operations supervision and management personnel, an allocation of facilities and information technology expenses, including rent and utilities, and equipment depreciation. Cost of goods sold also includes certain indirect costs such as those incurred for shipping our WiSE CRT System. We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions.
We calculate gross margin as gross profit divided by revenue. Our gross margin has been and will continue to be affected by a variety of factors, primarily by our manufacturing costs, pricing, and the use of inventory that was previously expensed during our clinical trial. Our gross margin is expected to decrease over the near term as we continue to utilize inventory that was previously expensed as research and development costs, but over the long term our gross margin may increase to the extent our production volume increases as our fixed manufacturing costs would be spread over a larger number of units, thereby reducing our per-unit manufacturing costs. We expect our gross margin will fluctuate from period to period based upon the factors described above.
Research
and development expenses primarily consist of personnel-related expenses, including salaries, bonuses, fringe benefits and other compensation-related
costs, including stock-based compensation expense, for employees engaged in research and development functions. Research and development
expenses also include costs of conducting our ongoingpost-approval clinical studies,study, such as expenses associated with our clinical research organization,
or CRO, who providesprovided project management and other services related to our SOLVE-CRT study,management, outside service fees paid to third
party consultants and contractors related to our product candidateWiSE engineering,
quality assurance and regulatory approval, as well as
contract manufacturing of our product candidateWiSE and allocated facility costs.
The successful development
of product candidates is subject to numerous risks and uncertainties. For a discussion of certain risks related to the development of
product candidates and costs of clinical trials, see “Item 1A. Risk Factors” herein.
Selling, General and Administrative Expenses
GeneralSelling,
general and administrative expenses primarily consist of personnel-related costs, including salaries, bonuses, fringe benefits and other
compensation-related compensation-related
costs, including stock-based compensation expense, for our personnel and external contractors involved in our sales
and marketing, executive, finance, legal
and other administrative functionsfunctions. asSelling, well as our commercial function, who is involved in market access related activities. Generalgeneral and
administrative expenses also include
costs incurred for outside services associated with such functions, including costs associated with
obtaining and maintaining our patent
portfolio and professional fees for accounting, auditing, tax, legal services, and other consulting
expenses.
We anticipate
anticipate that our selling, general and administrative expenses will increase significantly in the future as we:
Other Income(expense) (Expenses), netincome
Gain/(Loss) (loss)gain on foreign currency
Pre-launch
inventory
We capitalized pre-launch
inventory costs associated with its products prior to regulatory approval when, based on management judgement, future commercialization
was considered probable and future economic benefit was expected to be realized. We assess the regulatory approval process and where the
product stands in relation to that approval process including any known constraints or impediments to approval. Pre-launch inventory costs
associated with products that have not yet received regulatory approval are capitalized if there is probable future commercial use and
future economic benefit. If future commercial use and future economic benefit are not considered probable, then costs associated with
pre-launch inventory that has not yet received regulatory approval are expensed as research and development expense during the period
the costs are incurred. The determination to capitalize pre-launch inventory is based on the specific facts and circumstances relating
to the product.
Capitalization of pre-launch
inventory began during the year ended December 31, 2024 when we determined that: (i) positive clinical trial results had been obtained,
as evidenced by meeting both the primary efficacy and safety endpoints at the interim analysis, which supported our belief that regulatory
approval is probable; (ii) uncertainties regarding regulatory approval had been significantly reduced, as evidenced by our submission
of all modules of the pre-market approval application and ongoing communication with the regulatory bodies; and (iii) it is probable that
these capitalized costs will provide future economic benefit, in excess of capitalized costs, as evidenced by the lack of alternative
therapies for our target market and the anticipated average selling price of the WiSE CRT System.
Once we capitalize pre-launch
inventory for a product candidate that is not yet approved, we monitor, on a quarterly basis, the status of this candidate within the
regulatory approval process. We could be required to expense previously capitalized costs related to pre-launch inventory upon a change
in management’s judgment of future commercial use and net realizable value, due to a denial or delay of approval by regulatory bodies,
a delay in the timeline for commercialization or other potential factors. On a quarterly basis, the Company evaluates all inventory, including
capitalized pre-launch inventory for which regulatory approval has not yet been obtained, to determine if any lower of cost or net realizable
value adjustment is required. As it relates to pre-launch inventory, we consider several factors including expected timing of FDA approval,
projected sales volume and estimated selling price.
Clinical trial accrual
The clinical trial accrual
involves identifying services that third parties, contracted by us, have performed and estimating the associated cost incurred for these
services which remain uninvoiced as of the balance sheet date. In addition, the clinical trial accrual involves the measurement of milestone
achievements achieved by the patients participating in the clinical trial and the associated costs which have not been invoiced as of
the balance sheet date. Our objective is to reflect the appropriate clinical trial expenses in our consolidated financial statements by
matching the appropriate expenses with the period in which services are provided. We account for these expenses according to the progress
of the trial as measured by patient progression and the timing of various aspects of the trial. Our clinical trial accrual is dependent,
in part, upon the receipt of timely and accurate reporting from the third parties. We estimate our liability using our judgment based
upon the facts and circumstances known at the time. During the course of a clinical trial, we adjust our clinical expense recognition
if actual results differ from our estimates.
We use the Black-Scholes option pricing model, which incorporates assumptions and estimates, to measure the fair value of its option awards on the date of grant of each stock option award. We determined the assumptions for the Black-Scholes option-pricing model as discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.
We determined the assumptions
for the Black-Scholes option-pricing model as discussed below. Each of these inputs is subjective and generally requires significant judgment
to determine.
Adjusted earnings before
interest, income taxes, depreciation and amortization (“Adjusted EBITDA”), a non-GAAP measure used by management to assess
operating operating
performance, is defined as net loss, excluding interest expense, net, depreciation and amortization, stock-based compensation,
and expenses
associated with our Form 10 filling. Adjusted EBITDA is intended as a supplemental measure of our performance and provides
useful information
to management and investors regarding our operating results. Adjusted net loss per common share is defined as Adjusted EBITDA divided
by the weighted-average number of shares outstanding.
A reconciliation between
net loss and adjusted EBITDA,EBITDA and net loss per common share and adjusted net loss per common share areis presented below:
We
recorded a net loss of
$40.8 $48.8 million in 2024,2025, an increase of $5.8$8.0 million, or 16.4%,19.5 % from 2023.2024. The increased loss in 20242025 was primarily due to
an increase in
selling, general and administrative expenses andin interest2025, expensewhich was partially offset by a decrease in 2024,research and development
expenses, as discussed below. We expect to continue reporting losses until such
time as we obtain FDA approval, commercialize our WiSE CRT System, and are able to generate revenue and gross margin sufficient to offset
our operating expenses.
We derive the majority of our revenue from sales to customers in the United States. International revenue is attributable to the battery replacements for clinical trial patients in the UK. Revenue by geography is based on the billing address of the customer. The table below summarizes our revenue by geography:
Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin:
Revenue and Cost of Goods Sold
Revenue and cost of goods sold was $1.6 million and $1.1 million, respectively, during the year ended December 31, 2025, resulting from the FDA approval of our WiSE CRT System in April 2025. During the year ended December 31, 2025, we had commercial implants at eleven hospitals in the US. There was no revenue or cost of goods sold during the year ended December 31, 2024.
Gross Profit, and Gross Margin
Gross profit and gross margin was $0.5 million and 30.3%, respectively, during the year ended December 31, 2025, resulting from the FDA approval of our WiSE CRT System in April 2025. Our gross margin was positively affected and will continue to be affected in the near future by the use of inventory that was previously expensed during our clinical trial. Excluding the use of previously expensed inventory, we would have had a negative gross margin of 26.8%. There was no gross profit and gross margin during the year ended December 31, 2024.
Research and development expenses
decreased by $0.1$3.1 million, or 0.3%,11.5%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The decrease
was primarily due to a $2.5$3.4 million decrease in contract manufacturing, materials and components, resulting from the capitalization of
inventory, as well as a decrease in professional
services related to the development testing of the WiSE CRT System,System. as well as capitalization of certain inventory purchases. ClinicalFacility-related
trial related expenses decreased by $1.4 million, primarilyas duewe capitalized certain overhead costs to completinginventory enrollment induring the SOLVE-CRTyear Studyended inDecember July31, 2022.2025. ThisThese
decreases decrease
waswere partially offset by a $3.5$1.2 million increase in personnel-related expenses, including salaries, bonuses, and certain fringe
benefits, benefitsresulting asfrom the normal annual salary increases and a result
of the expansion of our workforce expansion, and a $0.3 million increase in clinical expenses
to support the ongoing development of the WiSE CRT System.post-approval study.
Selling, General and Administrative Expenses
GeneralSelling, general and administrative
expenses increased by $3.9$11.4 million, or 52.0%,101.1%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024.
ProfessionalPersonnel-related fees increased by $2.4 million, primarily resulting from higher audit, legal, regulatory,
and tax-related services in connection with preparation for our filing of a registration statement on Form 10. Personnel-related
expenses,expenses including salaries, bonusesbonuses, stock-based compensation and certain fringe benefits increased by $1.1$8.1 million
as a result of the expansion of our workforce to support increased adoption of our WiSE CRT System. Travel-related expenses increased
by $2.1 million due to the expansion of our workforce to support our businesssales needs.and marketing efforts. Facility-related and other expenses
increased by $0.5 million, primarily resulting from the higher non-cash rent expense due to a new lease agreement entered in 2025 for
our new corporate headquarters and manufacturing facility. Corporate expenses increased by $0.4$0.7 million, whichprimarily resultedresulting from the
an increase inhigher expenses related to investor relations, insurance premiums, and computer supplieshardware and software as a result of the expansion
of our workforce.software.
Other expense, net increased by $0.2 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024. Interest expense decreased by $0.4 million, and interest income earned on investments in marketable securities, including the accretion of discounts on marketable securities has decreased by $0.5 million. Additionally, other income decreased by $0.1 million, primarily resulting from a decrease in refundable tax incentive.
Other expense, net increased
by $2.0 million during the year ended December 31, 2024, as compared to the year ended December 31, 2023. The change was caused by increased
interest expense, decreased interest income, and decreased refundable tax incentives in 2024 as compared to 2023. Interest expense increased
by $1.5 million, which resulted from an additional $20.0 million in borrowings on June 30, 2023. Refundable tax incentives decreased by
$0.4 million in 2024, compared to 2023, which included two years of refundable tax incentives due to the timing of tax filings. During
the year ended December 31, 2024, we earned interest income, including the accretion of discounts, from investment in marketable securities
of $3.2 million, a decrease of $0.1 million as compared to the year ended December 31, 2023.
We believe that we maintain
a level of liquidity sufficient to allow us to meet our financial obligations as they become due for the next twelve months. We manage
our cash and capital
structure to maximize shareholder return, maintain ourits financial condition and maintain flexibility for future strategic initiatives.
initiatives. We continuously assess our working capital needs, debt and leverage levels, debt maturity schedule, capital expenditure requirements and
and future investments. As of December 31, 20242025 and 2023,2024, we had approximately $66.0$54.2 million and $73.4$66.0 million, respectively, in cash,
cash equivalents, and marketable securities. InBased on our cash, cash equivalents, and marketable securities as of December 31, 2025, and
our expectation to generate operating losses and negative operating cash flows in the long-term,foreseeable future, substantial doubt exists regarding
our ability to supportcontinue ouras workinga capitalgoing andconcern capitalfor expenditurea requirements
willperiod dependof onat manyleast factors,twelve including:months from the date of this Form 10-K.
Going Concern Consideration
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. For the years ended December 31, 2025 and 2024, we incurred a net loss of $48.8 million and $40.8 million, respectively. During the years ended December 31, 2025 and 2024, we had negative cash flows from operations of $53.2 million and $41.2 million, respectively. As of December 31, 2025, we had working capital of $59.1 million and accumulated deficit of $402.2 million. These factors raise substantial doubt about our ability to continue as a going concern. Until we are able to generate consistent and sufficient revenue from sales of our WiSE CRT System, our ability to continue as a going concern is dependent on our ability to raise additional capital through the issuance of additional common stock or borrowings from financial institutions. Our ability to obtain additional capital in the equity capital markets is subject to several factors, including market and economic conditions, our performance, and investor sentiment with respect to our company and our industry; however, no assurance can be given as to whether additional needed financing will be available on terms acceptable to the Company, or at all.
In May 2025, we completed an institutional placement of 55,900,000 CDIs representing the same number of common stock at $0.64 per share, for proceeds of $33.5 million, net of $2.5 million of related issuance costs. In June 2025, we completed a non-underwritten rights offering to existing stockholders, or Securities Purchase Plan, and issued an additional 20,000,000 CDIs representing the same number of common stock at $0.64 per share, for proceeds of $12.8 million, net of $0.1 million of related issuance costs.
To
the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and cash and
other requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional
dilution to our stockholders. The incurrence of additional debt financing would result in debt service obligations and the instruments
governing such debt could provide for operating and financing covenants that would restrict our operations. In the event that additional
financing is required from outside sources, there is a possibility we may not be able to raise it on terms acceptable to us or at all.
Further, the current macroeconomic environment may make it difficult for us to raise capital on terms favorable to us or at all. If we
are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.
On June 30, 2022, we entered into a loan and security agreement with Runway Growth Finance Corp. The debt is secured against substantially all of our assets, except for intellectual property, but includes all proceeds from the sale of intellectual property.
As of December 31, 2025 and 2024, the outstanding principal balance was $41.8 million, which includes the final payment of 4.5% of the principal borrowings to date.
On June 30, 2022, we entered
into a loan and security agreement with Runway Growth Finance Corp. The debt is secured against substantially all of our assets, except
for intellectual property, but includes all proceeds from the sale of intellectual property. The loan agreement provides three term loan
tranches. We received the initial draw of $20,000,000 in June 2022. We received positive interim analysis data, sufficient to proceed
with the clinical trial and premarket approval submission to the U.S. Food and Drug Administration, which allowed us to draw the second
tranche of $20,000,000 in June 2023. The final tranche provided $10,000,000 from the date of approval from the FDA for the WiSE CRT System
and ended on June 30, 2024. We did not receive FDA approval by June 30, 2024, and therefore did not meet the draw requirements of the
third and final tranche.
As of December 31, 2024 and
2023, the outstanding principal balance was $41,800,000, which included the principal borrowings under tranche one and tranche two, as
well as the final payment of 4.5% of the principal borrowings to date.
Future Funding Requirements
Despite recent FDA approval of WiSE CRT System, the outcome of any clinical activities and/or regulatory approval process is highly uncertain, we cannot reasonably estimate whether our future development activities may succeed; or whether we will be able to effectively commercialize WiSE CRT System in the U.S. and generate sufficient revenue. We may never recoup our investment in any WiSE CRT System development which would adversely affect our financial condition and our business and business prospects. In addition, our plans and timing expectations could be further delayed or interrupted by the effects of macroeconomic or other global conditions, including those resulting from inflation, rising interest rates, prospects of a recession, bank failures and other disruptions to financial systems, civil or political unrest, military conflicts, pandemics or other health crises and supply chain and resource issues.
To date we have not generated significant commercial product revenue. We will continue to require additional capital to successfully commercialize WiSE CRT System and fund operations for the foreseeable future. Our primary uses of cash are to fund our operations, which consist primarily of research and development expenses, manufacturing automation and scaleup, and selling, general and administrative expenses. We expect our expenses to continue to increase in connection with our ongoing activities as we continue to commercialize WiSE CRT System.
We may seek to raise capital through equity offerings or debt financings, collaboration agreements, or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our consolidated financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:
If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us. If we raise funds through collaborations, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials or delay investments in our manufacturing scale-up and automation. In addition, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets. Furthermore, this Annual Report on Form 10-K contains statements expressing substantial doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all.
On June 28, 2023, we issued
27,472,527 CDIs in connection with the first tranche of an institutional placement on the ASX, and on July 10, 2023, we issued 5,494,506
CDIs in connection with the second and final tranche of the institutional placement. On July 25, 2023, we issued 2,921,307 shares of common
stock in connection with a Security Purchase Plan (“SPP”). We raised a total of approximately $20.6 million, net of issuance
costs of approximately $1.0 million. Of this amount, $18.9 million were net cash proceeds from the institutional placement, and $1.7 million
were cash proceeds from the SPP.
On September 25, 2024, we
issued 55,856,325 CDIs in connection with an institutional placement and the institutional component of a 1-for-20 pro-rata accelerated
non-renounceable entitlement offer on the ASX. We raised approximately $29.4 million, net of issuance costs of approximately $1.9 million.
On October 16, 2024, we issued 5,075,733 CDIs in connection with the retail component of a fully underwritten 1-for-20 pro-rata non-renounceable
entitlement offer. We raised approximately $2.6 million, net of issuance costs of approximately $0.2 million.
As of December 31, 2024,2025, we
had $1.1$0.6 million in operating lease liabilitiesobligations for our corporate headquarters and laboratory space,space located in Sunnyvale, California.
InAdditionally, in January 2025, we entered into a new lease agreement to leasefor our new corporate headquarters.headquarters, Seelaboratory Noteand 6, “Leases”,manufacturing
facility in the
notesSanta toClara, consolidated financial statementsCalifornia, for additionalwhich informationwe regardinghad leasedrecorded properties.$17.1 million in operating lease obligations as of December 31, 2025.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Annual Report. The risk factors described in our 2025 Annual Report, as well as other information set forth in this Quarterly Report on Form 10-Q, could materially adversely affect our business, financial condition, results of operations and prospects, and should be carefully considered. The risks and uncertainties that we face, however, are not limited to those described in the 2025 Annual Report. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the Six Months Ended June 30, 2026, to the Six Months Ended June 30, 2025”
New heading “Net Sales, Cost of Goods Sold, Gross Profit, and Gross Margin:”
New heading “Net Sales and Cost of Goods Sold”
New heading “Gross Profit, and Gross Margin”
New heading “Operating Expenses”
New heading “Research and Development”
New heading “Selling, General and Administrative Expenses”
New heading “Other expense, net”
Largest changes
“Comparison of the Six Months Ended June 30, 2026, to the Six Months Ended June 30, 2025”see in full comparison
Full comparison: every changed paragraph (54)
Our
WiSE CRT System received approval from the FDA for commercial distribution in April 2025, and we began commercializing WiSE during the
second quarter of 2025. During the three months ended MarchJune 31,30, 2026, we had 4146 commercial implants at 1923 hospitals in the US, and recognized
revenuenet sales of $2.4$2.6 million. During the six months ended June 30, 2026, we had 87 commercial implants at 29 hospitals in the US, and recognized
net sales of $5.0 million. An additional 2248 physicians were trained to implant the WiSE CRT System, and 1632 additional purchase agreements
were signed with target Limited Market Release (“LMR”) sites during the threesix months ended MarchJune 31,30, 2026. The commercial potential
of and our ability to successfully
commercialize WiSE is unproven and will require, among other things, effective sales, marketing, manufacturing,
distribution, information
systems and pricing strategies, as well as compliance with applicable laws and regulations.
Since
inception, we have incurred significant net losses and expect to continue to incur net losses until we are able to generate sufficient
revenue. Since our inception, our operations have been financed primarily by net proceeds from the sale of our CDIs, common stock, convertible
preferred stock, and indebtedness. As of MarchJune 31,30, 2026, we had $30.9$86.9 million in cash, cash equivalents, and marketable securities and
an accumulated deficit of $419.3$436.7 million. For a more comprehensive discussion see “Liquidity and Capital Resources” and “Future
Funding Requirements” below.
In June 2026, the Company completed a fully underwritten institutional placement to institutional and sophisticated investors (“Institutional Placement”), comprising: (a) an institutional placement to institutional and sophisticated investors (“Tranche 1”); and (b) a conditional placement to BCP3 Pty Ltd, a related party of Dr. Chris Nave, a non-executive director of the Company, subject to shareholder approval at a Special Meeting of Stockholders to be held on August 18, 2026 (“Tranche 2”). Under the Tranche 1 Institutional Placement, we issued 77,352,890 CDIs, representing 7,735,289 shares of common stock, at a purchase price of A$0.38 per CDI (A$3.80 per share of common stock), for proceeds of $19.5 million, net of $1.2 million of related issuance costs. Subject to shareholder approval, the Company will issue 92,105,270 CDIs, representing 9,210,527 shares of common stock, at a purchase price of A$0.38 per CDI (A$3.80 per share of common stock), no later than thirty days from the date of the Special Meeting of Stockholders.
In June 2026, we completed a 1-for-2 accelerated non-renounceable pro rata entitlement offer, with an institutional and retail component, at a purchase price of A$0.38 per CDI (A$3.80 per share of common stock). Under the institutional entitlement offering, we issued 110,582,160 CDIs, representing 11,058,216 shares of common stock, for proceeds of $28.0 million, net of $1.5 million of related issuance costs. Under the retail entitlement offering, we issued 114,699,930 CDIs, representing 11,469,993 shares of common stock, for proceeds of $28.3 million, net of $1.7 million of related issuance costs.
Net Sales
Revenue
We derive most of our
revenue from sales of WiSE
to the hospital facilities that implant our WiSE CRT System. We recognize revenue upon the transfer of goods
or services to a customer
at an amount that reflects the expected consideration to be received in exchange for those goods or services.services, net of rebates. Specifically,
Specifically, revenue from the sale of WiSE is recognized at an amount that reflects the expected consideration upon notice that our products
have been
used in a surgical procedure. We account for rebates as a reduction to revenue, calculated based on the terms agreed with the customer.
Our revenue fluctuates primarily based on the volume of procedures performed. Our revenue is expected
to continue to fluctuate in the
future from quarter-to-quarter due to a variety of factors, including the success of our sales force in
expanding adoption of WiSE in
new hospitals and the number of physicians who are aware of and implant WiSE.
We calculate gross margin
as gross profit divided
by revenue.net sales. Our gross margin has been and will continue to be affected by a variety of factors, primarily by our
manufacturing costs,
pricing, and the use of inventory that was previously expensed during our clinical trial. Our gross margin is expected
to decrease over
the near term as we continue to utilize inventory that was previously expensed as research and development costs, but
over the long term
our gross margin may increase to the extent our production volume increases as our fixed manufacturing costs would
be spread over a larger
number of units, thereby reducing our per-unit manufacturing costs. We expect our gross margin will fluctuate
from period to period based
upon the factors described above.
Interest income consists of interest income, including amortization of premiums and accretion of discounts, generated from our cash, cash equivalent, and marketable securities.
Comparison of the Three Months Ended MarchJune
31,30, 2026, to the Three Months Ended MarchJune 31,30, 2025
We recorded a net loss of $17.1$17.5 million in the
three-monththree periodmonths ended MarchJune 31,30, 2026, an increase of $6.5$5.5 million, or 61.8%,45.8%, from the three-monththree periodmonths ended MarchJune 31,30, 2025. The
increased loss
in 2026 was due to an increase in selling, general and administrative expenses, and research and development expenses,
as discussed below.
Other (expense),expense, net also increased in 2026,2026 primarily due to a decrease in interest income, as discussed below.
The following table summarizes our operating results
for the three months ended MarchJune 31,30, 2026 and 2025:
Revenue,Net Sales, Cost of Goods Sold, Gross Profit,
and Gross Margin:
RevenueNet Sales and Cost of Goods Sold
RevenueNet sales and cost of goods sold was $2.4$2.6 million
and $2.2$2.3 million, respectively, during the three-monththree periodmonths ended MarchJune 31,30, 2026, resulting from the Company completing commercial implants
at nineteentwenty-three hospitals in the US. ThereNet wassales no revenue orand cost of goods sold were significantly lower during the three-monththree periodmonths ended MarchJune 31, 30,
2025, resulting
from thethen-recent FDA approval of our WiSE CRT System in April 2025. During the three months ended June 30, 2025,
we had commercial implants at three hospitals in the US.
Gross profit increased by $0.3 million, or 303.5% during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, resulting from an increase in sales volume and a higher average selling price. Our gross margin was positively affected and will continue to be affected in the near future by the use of inventory that was previously expensed during our clinical trial, although the benefit continues to decrease over time as previously expensed inventory is utilized. Gross margin was 13.0% for the three months ended June 30, 2026, compared to 50% for the three months ended June 30, 2025. Excluding the use of previously expensed inventory, we would have had a negative gross margin of 16.9% for the three months ended June 30, 2026, compared to a negative gross margin of 51.2% for the three months ended June 30, 2025. The improvement in gross margin, excluding the use of previously expensed inventory, is the result of a higher average selling price, a lower standard cost, and increased manufacturing efficiencies during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.
Gross profit increased to $0.2 million, or 100%
during the three-month period ended March 31, 2026, as compared to the three-month period ended March 31, 2025, resulting from the FDA
approval of our WiSE CRT System in April 2025. Gross margin was 7.8% for the three-month period ended March 31, 2026. Our gross margin
was positively affected and will continue to be affected in the near future by the use of inventory that was previously expensed during
our clinical trial. Excluding the use of previously expensed inventory, we would have had a negative gross margin of 25.4%.
Research and development expenses increased by
$1.0$0.7 million, or 18.4%11.2%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The increase
was primarily due to a $0.4 million increase in contract manufacturing, materials and components as a result of higher expenses related
to research and development projects. Clinical expenses
increased by $0.2$0.6 million as a result of higher expenses related to WiSE CRT post-approval
study. Facility-related expenses and depreciation
increased by $0.3 million in support of our continuing expansion of research and development activities. These increases were offset by
$0.2 million decrease in personnel-related expenses due to an increase in capitalized labor costs during the three months ended June 30,
2026, as compared to the three months ended June 30, 2025.
Selling, generalGeneral and administrative expenses increased
by $5.6$4.9 million, or 127.8%,92.2%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. Personnel-related
expenses including salaries, bonuses, stock-based compensation and certain fringe benefits increased by $2.8$2.7 million as a result of the
expansion of our workforce to support increased adoption of our WiSE CRT System. Travel-related expenses increased by $1.7$1.2 million due
to increased travel to support our sales and marketing efforts. Professional fees increased by $0.4$0.3 million, primarily resulting from
higher accountinglegal fees and legalservice servicesfees fees.related Facility-related and other expenses increased by $0.4 million, primarily resulting fromto the
higher rentreverse andstock commonsplit areadiscussed maintenancein costsNote for1 to our newunaudited corporatecondensed headquartersconsolidated andfinancial
statements manufacturingincluded facility.elsewhere in this Quarterly Report on Form 10-Q. Corporate expenses increased
by $0.2 million, primarily resulting
from the higher expenses related to investor relations, and computer software licenses. Facility related and other expenses increased
by $0.5 million, primarily resulting from the higher expenses for our new corporate headquarters and manufacturing facility.
Other (expense) income,expense, net
Other (expense) income,expense, net increased by $0.2
million during
the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. This increase primarily resulted
from a $0.2 $0.3
million decrease in interest income earned on investments in marketable securities, including the accretion of discounts on marketable
marketablesecurities, securities.which was partially offset by a $0.1 million decrease in interest expense.
Comparison of the Six Months Ended June 30, 2026, to the Six Months Ended June 30, 2025
We recorded a net loss of $34.5 million in the six months ended June 30, 2026, an increase of $12.0 million, or 53.3%, from the six months ended June 30, 2025. The increased loss in 2026 was due to an increase in selling, general and administrative expenses, and research and development expenses, as discussed below. Other expense, net also increased in 2026 primarily due to a decrease in interest income, as discussed below.
The following table summarizes our operating results for the six months ended June 30, 2026 and 2025:
We derive the majority of our revenue from sales to customers in the United States. International revenue is attributable to the battery replacements for clinical trial patients in the UK. Net sales by geography is based on the billing address of the customer.
The table below summarizes our revenue by geography:
Net Sales, Cost of Goods Sold, Gross Profit, and Gross Margin:
Net Sales and Cost of Goods Sold
Net sales and cost of goods sold was $5.0 million and $4.5 million, respectively, during the six months ended June 30, 2026, resulting from the Company completing commercial implants at twenty-nine hospitals in the US. Net sales and cost of goods sold were significantly lower during the six months ended June 30, 2025, resulting from then-recent FDA approval of our WiSE CRT System in April 2025. During the six months ended June 30, 2025, we had commercial implants at three hospitals in the US.
Gross Profit, and Gross Margin
Gross profit increased by $0.4 million, or 520.0% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, resulting from an increase in sales volume and a higher average selling price. Our gross margin was positively affected and will continue to be affected in the near future by the use of inventory that was previously expensed during our clinical trial, although the benefit continues to decrease over time as previously expensed inventory is utilized. Gross margin was 10.5% for the six months ended June 30, 2026, compared to 50% for the six months ended June 30, 2025. Excluding the use of previously expensed inventory, we would have had a negative gross margin of 20.90% and 51.18% for the six months ended June 30, 2026 and 2025, respectively. The improvement in gross margin, excluding the use of previously expensed inventory, is the result of a higher average selling price, a lower standard cost, and increased manufacturing efficiencies during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.
Operating Expenses
Research and Development
The following table presents our total research and development expenses by category:
Research and development expenses increased by $1.7 million, or 14.7%, during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. Clinical expenses increased by $0.8 million as a result of higher expenses related to WiSE CRT post-approval study. Facility-related expenses and depreciation increased by $0.6 million, as a result of our expansion of research and development activities. Quality assurance and contract manufacturing expenses increased by $0.5 million primarily due to expenses incurred to support product development activities. These increases were partially offset by a $0.2 million decrease in personnel-related expenses due to an increase in capitalized labor costs during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.
Selling, General and Administrative Expenses
Selling, General and administrative expenses increased by $10.4 million, or 108.3%, during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. Personnel-related expenses including salaries, bonuses, stock-based compensation and certain fringe benefits increased by $5.5 million, as a result of the expansion of our workforce to support increased adoption of our WiSE CRT System. Travel-related expenses increased by $2.9 million due to increased travel to support our sales and marketing efforts. Professional fees increased by $0.7 million, primarily resulting from higher legal and consulting services fees. Corporate expenses increased by $0.5 million, primarily resulting from the higher expenses related to insurance premiums, investor relations, and computer software licenses. Facility related and other expenses increased by $0.8 million, primarily resulting from the higher expenses for our new corporate headquarters and manufacturing facility.
Other expense, net
Other expense, net increased by $0.3 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This increase primarily resulted from a $0.5 million decrease in interest income earned on investments in marketable securities, including the accretion of discounts on marketable securities, which was partially offset by a $0.2 million decrease in interest expense.
We manage our cash and capital structure to maximize
shareholder return, maintain itsour financial conditioncondition, and maintain flexibility for future strategic initiatives. We continuously assess
our working capital needs, debt and leverage levels, debt maturity schedule, capital expenditure requirements and future investments.
As of MarchJune 31,30, 2026 and December 31, 2025, we had approximately $30.9$86.9 million and $54.2 million, respectively, in cash, cash equivalents,
and marketable securities. Based on our cash, cash equivalents, and marketable securities as of MarchJune 31,30, 2026, and our expectation to
generate operating losses andlosses, negative operating cash flows in the foreseeable future, and the repayment of notes payable, there exists substantial
doubt regarding our ability
to continue as a going concern for a period of at least twelve months from the date of this Form 10-Q.
The accompanying unaudited condensed consolidated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities during the normal course of business. For the threesix months ended MarchJune 31,30, 2026 and 2025, we incurred a net loss of $17.1$34.5 million
million and $10.6$22.5 million, respectively. During the threesix months ended MarchJune 31,30, 2026 and 2025, we had negative cash flows from operations
of $20.3 $37.4
million and $13.6$25.0 million, respectively. As of MarchJune 31,30, 2026, we had working capital of $42.0$58.1 million and accumulated deficit
of $419.3$436.7
million. million.Additionally, the Company has $41.8 million of debt obligations coming due within the next twelve months. These factors raise
substantial doubt about our ability to continue as a going concern. Until we are able to generate
consistent and sufficient revenue from
sales of our WiSE CRT System, our ability to continue as a going concern is dependent on our ability
to raise additional capital through
the issuance of additional common stock or borrowings from financial institutions. The
Company has received an irrevocable commitment to purchase 92,105,270 CDIs, representing 9,210,527 shares of common stock, at a purchase
price of $0.38 Australian dollars (“A$”) per CDI (A$3.80 per share of common stock), from BCP3 Pty Ltd, a related party of
Dr. Chris Nave, a non-executive director of the Company, subject to shareholder approval at the Special Meeting of Stockholders to be
held on August 18, 2026. In addition, the Company expects to refinance its
long-term debt obligations prior to scheduled maturity date. Our ability to
obtain additional capital in the equity capital marketsfinancing is subject to several factors,
including market and economic conditions, our performance,
and investor sentiment with respect to our company and our industry.industry, however
no assurance can be given as to whether additional needed financing will be available on terms acceptable to the Company, or at all.
As of MarchJune 31,30, 2026 and December 31, 2025, the
outstanding principal balance was $41.8 million, which included the principal borrowings under tranche one and tranche two, as well as
the final payment of 4.5% of the principal borrowings to date.
We are subject to customary financial and reporting
covenants under the loan and security agreement. As of MarchJune 31,30, 2026 and December 31, 2025, we were in compliance with all debt covenants.
As of MarchJune 31,30, 2026, we had $0.4$0.3 million in operating
lease obligations for our corporate headquarters and laboratory space located in Sunnyvale, California. Additionally, in January 2025,
we entered into a new lease agreement for our new corporate headquarters, laboratory and manufacturing facility in Santa Clara, California,
for which we had recorded $18.1$18.2 million in operating lease obligations as of MarchJune 31,30, 2026.
As of MarchJune 31,30, 2026, the outstanding principal
balance under our loan and security agreement described above was $41.8 million, which included the principal borrowings under tranche
one and tranche two, as well as the final payment of 4.5% of the principal borrowings to date.
In addition, we have agreements with suppliers
and other parties to purchase inventory. Product inventory obligations consist primarily of purchase order commitments for raw materials
and sub-assemblies used in the production of the WiSE CRT System. In certain instances, our purchase agreements allow us to cancel, reschedule,
or adjust our purchase requirements based on our business needs prior to firm orders being placed. As of MarchJune 31,30, 2026, our obligations
under such arrangements were approximately $14.0$10.6 million.
MarchJune 31,30, 2026, Compared to December 31, 2025
As of MarchJune 31,30, 2026, we had working capital of
$42.0$58.1 million, comprised of current assets of $54.0$110.1 million and current liabilities of $12.0$52.0 million. Current assets, consisting of cash
and cash equivalents, marketable securities, accounts and other receivables, inventory, prepaid expenses, and other current assets, decreasedincreased
by $19.1$37.0 million as of MarchJune 31,30, 2026, compared to December 31, 2025. The recent capital raise completed in June 2026 contributed to the
overall increase in cash, cash equivalents and marketable securities, resulting in a $32.8 million increase in working capital as of June
30, 2026. The capitalization of inventory resulted in a $1.7$3.8 million increase
in working capital. AnA $0.5 million increase in accounts
receivable and other receivables,was primarily due to thea $1.0 million increase in amounts outstanding from customers and contract manufacturers, offset by a
$0.5 million decrease accounts receivable from sales
of Company’s product, as well as the reimbursements for leasehold improvements,improvements. resulted inAdditionally, a $2.8$0.8 million increase in working capitalother
as of March 31, 2026. Additionally, an increase in other current assets, primarily due to an increase in deferred costs of goods sold,
which was offset by a $0.9 million decrease in depositsprepaid expenses
attributable to vendorshigher for the purchasesamortization of machineryprepaid andexpenses equipmentin for2026, the new manufacturing facility,
resulted in a $0.2$0.1 million increasedecrease in working capital as of MarchJune 31, 30,
2026. These increases in current assets were offset by $0.5 million
decrease in prepaid expenses, and a $23.3 million decrease in cash, cash equivalents and marketable securities which were used to support
our working capital and capital expenditure requirements.
Current liabilities, consisting primarily of accounts
payable, accrued liabilities, lease obligations, and interest payable, decreasedand current portion of notes payable increased by approximately $2.0 $38.0
million as of MarchJune 31, 2026, compared
to December 31, 2025. The decrease primarily resulted from a $1.3 million decrease in accounts payable, which was mainly due to the activity
related to construction of leasehold improvements at the new corporate headquarters, as well as the purchases of raw materials. Accrued
expenses decreased by approximately $0.6 million as of March 31,30, 2026, compared to December 31, 2025. The decreaseincrease primarily resulted from a $41.2 million increase in notes payable
fromwhich was reclassified into current liability, as it becomes due within the payoutnext oftwelve annualmonths. bonuses,This whichincrease was partially offset by
a an$3.1 increasemillion decrease in deferredaccounts revenuepayable fromand salesaccrued of our WiSE CRT System. Additionally,
operating lease liabilities decreased by approximately $0.1 million,expenses, which contributedwere mainly due to the overallactivity related to construction of leasehold
improvements at the new corporate headquarters and purchases of raw materials, and a $0.1 million decrease in currentoperating lease liabilities.
MarchJune 31,30, 2026, Compared to MarchJune 31,30, 2025
The following table summarizes our cash flows
for the threesix months ended MarchJune 31,30, 2026 and 2025:
Net cash used in operating activities during the
threesix months ended MarchJune 31,30, 2026, was $20.3$37.4 million, compared to $13.6$25.0 million during the threesix months ended MarchJune 31,30, 2025, representing an
an increase in use of $6.7$12.4 million. This increase is primarily attributed to an increase in net loss of $6.5$12.0 million,million aand decreasean increase in
use of cash
from changes in working capital of $0.8$1.4 million, which were partially offset by an increase in non-cash adjustments of $0.6 $1.0
million.
Net cash provided by investing activities during
the threesix months ended MarchJune 31,30, 2026, was $20.9$14.7 million, compared to $17.9$18.8 million during the threesix months ended MarchJune 31,30, 2025, representing
ana increasedecrease in cash provided of $3.0$4.1 million. The increasedecrease was attributable to a $6.2$12.8 million increase in cash from the maturities and
salespurchase of marketable securitiessecurities,
as during the three months ended March 31, 2026,well as compared to the three months ended March 31, 2025. This
change was partially offset by a $3.2$5.2 million increase in purchasepurchases of property and equipment during the threesix months ended MarchJune 31,30, 2026, as compared to the
six months ended June 30, 2026. These increases in cash used for investing activities were partially offset by a $13.9 million increase
in cash from the maturities and sales of marketable securities during the six months ended June 30, 2026, as compared to the threesix months
ended MarchJune 31,30, 2025.
Net cash provided by financing activities during
the threesix months ended MarchJune 31,30, 2026,2026 was $0.1$76.3 million, compared to $0.2$46.9 million during the threesix months ended MarchJune 31,30, 2025, representing
aan decreaseincrease of $29.4 million. This increase was primarily attributed to the $29.7 million increase in cashproceeds providedfrom a capital raise, net
of $0.1issuance million,cost, during the six months ended June 30, 2026, which was primarilypartially attributableoffset toby thea $0.3 million decrease in proceeds from exercise
of stock options.options during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.
NONE- insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 7,700,119 shares, about $20.8M) and open-market sales in 0 filings. Net open-market shares: 7,700,119 (purchases minus sales); net value about $20.8M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-21 | Host-Plus Pty Ltd As Trustee For The Hostplus Pooled Superannuation Trust |
Open-market purchase | 7,700,119 | $2.70 | $20.8M |
| 2026-06-29 | Evans Bronwyn |
Option exercise | 27,579 | $3.80 | $104.8K |
| 2026-06-15 | Evans Bronwyn |
Option exercise | 15,000 | $3.80 | $57.0K |
| 2026-06-15 | Evans Bronwyn |
Option exercise | 15,000 | $3.85 | $57.8K |
| 2026-06-15 | Evans Bronwyn |
Option exercise | 15,000 | $3.85 | $57.8K |
| 2026-06-15 | Evans Bronwyn |
Option exercise | 15,000 | $3.80 | $57.0K |
Well-known investors holding NONE- (13F)
None of the 59 investors we track reported a position in their latest 13F.