Greetings and welcome to the HeartBeam First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision of these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K and Form 10-Q for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A press release detailing these results crossed the wire this afternoon and is available in the Investor Relations section of our company's website, heartbeam.com. Your host today, Rob Eno, Chief Executive Officer; and Tim Cruickshank, Chief Financial Officer, will present results of operations for the first quarter ended March 31st, 2025. At this time, I will turn the call over to HeartBeam, Chief Executive Officer, Mr. Rob Eno.

Thank you, operator. The topics we'll cover on today's call are listed on the slide. We'll provide a brief reminder of the HeartBeam System and its status, followed by our progress to 2025 milestones. We'll then provide more details on the VALID-ECG data and the recently announced collaboration with AccurKardia. Next, we'll touch on our commercial readiness efforts and our long-term vision, followed by financial results before turning it over to Q&A. Before we dive into updates from the last quarter, I wanted to remind everyone about our initial product, the HeartBeam System. HeartBeam is developing the first-ever personal cable-free ECG that can synthesize a 12-lead ECG. Our unique IP-protected approach captures the heart's electrical signals in three dimensions or three non-coplanar directions; side-to-side, top-to-bottom, and into the body. We believe bringing this 12-lead capability directly into the hands of patients is extremely disruptive to how cardiac conditions are currently managed. The system is designed to be easy to carry and easy for patients to use wherever and whenever they have symptoms. We also believe this has the potential to be the highest resolution ambulatory ECG monitor and that adding artificial intelligence to these high-resolution signals acquired by patients longitudinally over time can result in unsurpassed algorithms, providing personalized cardiac insights. In December of last year, we received our foundational FDA 510(k) clearance. This is for the system as a whole for arrhythmia assessment, the credit card signal collection device, the patient application, a physician portal and signal quality algorithms. The system outputs three ECG waveforms representing the three non-coplanar directions captured by our technology. In January, we submitted our second FDA 510(k) application. This is for the software that synthesizes a 12-lead ECG from our 3D signals for arrhythmia assessment. This is important because it takes the high-resolution signals…

Thanks Rob. Great updates. Our focus on cash management is directly in line with these updates Rob gave. We've got strong financial discipline in place as we continue to de-risk the business and execute on near-term milestones. And we'll make proper lead-time investments into commercial readiness to be prepared to launch on the back of this upcoming FDA clearance, all the while managing to keep an eye out on the future and opportunities for strategic collaborations for our technology. Our Q1 cash flow is indicative of this approach. We had net cash used in operating activities of $4.5 million for the quarter, but let's dive into that number. Within that spend, $3.6 million related to the recurring baseline expenditure. This is predominantly our R&D spend for clinical, regulatory, and product development initiatives in G&A, directly aligned with our stated milestones. In addition to that, to the baseline spend, we invested $400,000 in the quarter into commercial readiness activities and manufacturing capabilities related to launch. Rob took you through a number of those initiatives on the previous slide, which included testing with concierge accounts and patients in the early access program as well as onboarding a contract manufacturer designed for scale. Initial feedback from concierge accounts remains extremely positive and our current anticipated throughput for manufacturing is in the thousands of devices per month with the ability to duplicate and stand up production lines at a reasonable cost. So, we're very confident in our investments, that they're well-timed and that they'll lead to tremendous gains for the company in time. Main expense of $500,000 was for one-off or annual payments associated with Q1 of each year. And included in that were employee expenses related to a handful of roles to be eliminated during the quarter. I mentioned this just to point…

Thanks Tim. So, in summary, we've made significant progress in the two months since our last call. On the clinical and regulatory front, the results of the VALID-ECG study were presented and the study successfully met the clinical endpoints for arrhythmia assessment. This study is the basis of the FDA submission on the 12-lead synthesis software. We're in positive and productive discussions with the FDA on the 12-lead synthesis software submission. We continue to anticipate clearance before the end of the year. We also began engaging with the FDA on expansion of our indication into ischemia, and we expect to start a pilot study later this year. We're making solid progress with our early access program and in setting up our internal systems and processes. We also signed a strategic collaboration with AccurKardia, which will provide an important enhancement for our commercial product. The main corporate priorities for 2025 remain unchanged, working with the FDA on our 12 lead synthesis submission and preparing for commercialization. We will continue to report on progress towards these two priorities. As Tim mentioned, we raised $11.5 million earlier this year and are managing spending closely as we approach commercialization. We will continue to strategically fund the company in line with our near-term milestones. I'm impressed with the amazing job our employees are doing and the team's dedication and success in hitting the milestones we previously described. I look forward to continuing to update you as we make additional progress in the coming quarters. We thank you all for attending and I would like to open it up to Q&A. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Bill Sutherland with The Benchmark Company. Please go ahead.

Thanks operator. Hey Rob and Tim, congrats on all the progress. I wanted to -- Rob, could you give us a little more color on kind of the -- what you learned in the early access program currently, I guess, and last quarter, just some of the information that's helping you understand kind of the commercial opportunity?

Sure. The first thing is actually getting the device into real patients' hands. So, we did extensive, what we call the alpha testing, which was employees and investors and friends and family but it's a whole other level when there's patients who don't know who we are and getting them engaged and training and onboarded and in looking at ongoing readings. So, that's been having to do onboardings in a real-world setting of a clinic, a cardiology clinic or a concierge clinic, and then having the patients be trained well enough to continue on their own has been really helpful. Then also the patients are providing great feedback from their perspective of features they like to add or how it's going. So, that's the main thing we've learned, I would say, from the efforts so far. And then in parallel, obviously, there's a lot of things we're doing of the supporting systems. So, we have some of the systems in place, building out, as I mentioned, the customer service and customer support. We'll start to learn from as we spin those up, learn to how those work and the details of those things in practice. So, Bill, hope that helps.

Are you -- is it too early to kind of think about how pricing may develop as you go commercial?

Yes, I think it's -- we've done a fair amount of market research, which is good on this, and it's resonating with what we've said before, which is we believe it's likely somewhere between, call it, $50 to $100 per month on a recurring revenue basis, if you include the device as well as the ongoing service. What we're also exploring lots of different things in terms of pricing levels. We think we might have tiers where a higher tier gets you things like more cardiologists reads per time period, et cetera. So, we're going to get a lot more detail as we get closer, but that's kind of the general direction. Tim, I don't know if you have anything else you want to add on that.

No, I think that's really helpful. The pricing will have optionality in terms of bundled versus upfront, but we're expecting most of it to be within the range of $50 to $100 that Rob gave from a bundled perspective based on the data we have so far.

Got it. Tim, while you're on, what -- how should we think about the timing of building out the commercial infrastructure as well as you can kind of view it at this point?

Yes. Great. Rob talks a lot about this. We've got two target markets, which we haven't officially announced, but we're going to start with two specific markets. They have about 45,000 patients between the two markets. We believe we can cover that with the sales -- two sales reps and two, I'll call them, clinical specialists in terms of onboarding of patients and training the trainers. And so the relatively modest cost of a few hundred thousand dollars between the -- each of those geographies to kind of get them onboarded on an annualized basis, covers about 45,000 patients in the early days. What we plan to do is continue to gain learnings from those two markets. And as we get data that tells us to invest, we'll start to look to additional markets in the U.S. as a second phase. And then the third part is there's a high number of concierge practices, the -- sorry, Rob, forgot the term, for the concierge practices that are more nationwide. And so the third wave will be going after that portion.

Change of shared practices, in other words.

So, the first stage could be, Tim -- the first stage, the two target markets could be as soon as what quarter?

On the back side of the FDA clearance, which at this point we have in the second half of the year in Q4, so we begin commercializing at the end of the year with really Q1 of 2026 being when you start to see it really come on.

Okay, great.

Yes. And Bill, let me just -- that's a great overview. I'll just add quickly that what we've been doing now is a lot of work on pre-commercialization. Our Head of Product, Richa, is amazing and does kind of covers area as well, and we have consultants, et cetera. The first thing we'll do with the appropriate time, timing it, as Tim said, to the expenditure is bringing on a person to lead the sales effort. And then that person will help us finalize the plan, including the initial sales folks to cover those two regions, which will kick-off once we, as I say, once we get the FDA clearance and finish our commercial readiness is when we start that commercialization in those two initial markets to prove the concept.

Right. Okay. Well, let me jump back in queue and let other people ask questions. Thanks guys.

Sure.

Thank you. [Operator Instructions] The next question comes from Leo Carpio with Joseph Gunnar.

Good afternoon gentlemen. I have two quick questions. First, have you been able to have any updates and conversation with the FDA in terms of where the process is going for the approval? And have you seen any disruption from the FDA in terms of giving the whole staff attrition they've had lately? And then I have a follow-up question.

Great. I'll take that. So, first, on the disruption, the good news is we haven't seen any. We haven't seen -- and just speaking, obviously, from our experience with our group and our team, we really haven't seen any disruption or any delays related to things that have happened with the FDA. They continue to be very engaged and very responsive to us and hitting all of the deadline. So, that's great. As far as the other question, all I can say is we continue to be engaged in productive discussions with them. I believe Debbie Castillo runs our regulatory effort. We've got great relationships with FDA and really trying to be as collaborative as possible with them. So, we're in what's called the substantive review phase. We're going back and forth in terms of questions, et cetera. I can't give any more clarity beyond what we've said, which is we believe things are still on track for what we've said, which is clearance by the end of the year. We'll obviously keep you posted as things are going, but we continue to be encouraged by all the interactions.

Okay. And then the second follow-up question is regarding your AccurKardia partnership. How does that bolster your competitive position against other potential competitors in terms of technologies and space? And does it make your proposition a bit more palatable toward the end markets that you're trying to address?

Yes, it definitely does. Like I mentioned in the -- earlier in the call, I think of it in terms of workflow. And I think one of our key elements of our workflow is that when patients have symptoms. So, in patients -- we expect the workflow will be patients will decide to use our device. There's a smartphone application. And the first thing they get asked is, are you having symptoms? Or is this a routine recording? When they're having symptoms, they will use one of their credits as they go to a cardiology reader service for them to interpret and get back to the patient. But we want to encourage the patients to take readings as often as they like to train and to build up their data. So, having this automated assessment is really important. Without that, we believe there's a bit of a hole in the product where either we'd have to have everything go to the reader service or they don't get a response back. So, we think it's a key part of the competitive offering to make sure that we can provide for these routine recordings an automated assessment of basic rhythms. And then actually, they get that every time they do it, whether it's asymptomatic or symptomatic, and then the symptomatic ones also get read by a cardiologist. So, in a sense, it completes or really fills out the product pipeline. And that, when combined with the reader service and the synthesized 12-lead, we think leads to a compelling package. And then as I mentioned, the collaboration is limited to that, but one of the exciting things about working with AccurKardia is they have a really exciting pipeline, including predictive algorithms. And so getting to know them and working with them, there's always the possibility the big things we can do to expand the partnership deeper in the future.

Perfect. Thank you.

[Operator Instructions] As we have no audio questions at the moment, I would like to turn the call over to Larry Holub for any web questions.

Our first webcast question asked, congratulations on the results of the pivotal study. You stated the study was the basis for your FDA submission. So, can you expand on your takeaways from this study and what it means for clearance?

Sure. Well, thank you, first of all. The goal of the study was to demonstrate that our synthesized 12-lead ECG that's similar to a standard 12-lead ECG, and we did that, as I mentioned, through simultaneously gathered ECGs. And as I said, the study met the clinical endpoints. And I think the key thing -- the reason why this is important is 12-lead ECGs are the standard, generally done in a health care setting with a health care practitioner placing the ECG. And our system is designed to be used by patients outside of a health care facility. So, whenever they're feeling arrhythmia symptoms, they can take the reading at home instead of having to go in and have it taken by a professional. So, we have the core system cleared and we're working with FDA on the 12-lead synthesis software clearance. And this study supports that application because it showed the similarity between the ECGs. So, the point is if we can demonstrate that our synthesized 12 leads are very similar to a standard 12-lead, we think that really bolsters the case for FDA and also for physicians in terms of acceptance of our product.

Our next and last webcast question asks, what are your manufacturing capabilities? And what is your exposure to tariffs?

Great. Happy to take that one, Rob. We mentioned on the call, we signed a contract manufacturer this quarter for scaling. And we're also excited that these questions are becoming more relevant to us as we become commercial ready as we get through this year. So, a bunch of updates on this front. In addition to mentioning the tariffs, I'll give an update on our manufacturing capabilities. So, our contract manufacturer is going to be manufacturing devices and doing final assembly at the U.S. facility -- at their U.S. facilities. It's a U.S.-based approach for this initial launch, which should help shield us from direct tariff impacts and keep our supply chain relatively stable. Most importantly, it's going to allow us to be intimately involved in the early manufacturing runs to ensure quality builds. Right now, U.S.-based components represent the majority of our parts with a portion sourced from Europe, Japan, Taiwan. Less than 1% right now of our parts are sourced from China at present. We're exploring opportunities to use automated manufacturing in the future as well, which we believe, at a minimum, should serve as a mitigation plan for unforeseen pricing impacts from tariffs and supplier costs as we start to scale. Other areas related to manufacturing we're actively monitoring, I'd say part shortages and long lead time components. Obviously, a very fluid environment, but our team and our contract manufacturer have a great handle on procurement. There's two components that we're aware of right now that we're strategizing on that we'll likely make advanced purchases on. But we're talking about a cost in the order of around $20,000 for those two parts to stay ahead of the issue. So, it continues to be very manageable at present, but we obviously keep an open eye on this. Our current anticipated throughput is in the thousands of devices per month, which I mentioned earlier, and we have the ability to duplicate and stand up production lines at a reasonable cost. So, as we stand today, we're in a really good position to ramp up on the manufacturing capability perspective, and we'll continue to monitor componentry lead times and availability as the time comes.

That concludes our webcast Q&A.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Rob Eno, Chief Executive Officer, for any closing remarks.

Thank you, operator. Just like to thank each of you for joining the earnings conference call today. We look forward to continuing to update you on our ongoing progress and growth. And if we weren't able to answer any of your questions today, please reach out to our IR firm, MZ Group, who would be more than happy to assist. Thanks.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.