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What changed in Hyperfine, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hyperfine, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+518 added−468 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-22)

Top changes in Hyperfine, Inc.'s 2024 10-K

518 paragraphs added · 468 removed · 380 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

153 edited+43 added−46 removed242 unchanged
Biggest changeParliament continues to consider the Data Protection and Digital Information Bill to harmonize the 2018 Data Protection Act, U.K. GDPR, and the Privacy and Electronic Communications Regulations under one legislative framework. International Regulation of Medical Devices International marketing and distribution of medical devices are subject to regulation by foreign governments, and such regulations may vary substantially from country to country.
Biggest changeInternational Regulation of Medical Devices International marketing and distribution of medical devices are subject to regulation by foreign governments, and such regulations may vary substantially from country to country. The time required to obtain marketing authorization in a foreign country may be longer or shorter than that required for FDA clearance or approval, and the requirements may differ.
Our advanced technology allows healthcare professionals to conduct an MRI scan at the patient’s bedside in the hospital or any clinical setting to begin early diagnosis, intervention, and ongoing treatment. According to a 2008 report from the World Health Organization, 90% of the world does not have access to MRI, primarily due to socioeconomic factors.
Our advanced technology allows healthcare professionals to conduct an MRI scan at the patient’s bedside in the hospital or any clinical setting to begin early diagnosis, intervention, and ongoing treatment. According to a 2008 report from the World Health Organization, 90% of the world does not have access to MRI technology, primarily due to socioeconomic factors.
Integration with Picture Archiving and Communication System (PACS) and Secure Image Upload to the Cloud Similar to other medical devices in hospitals, we designed our Swoop® system to seamlessly integrate with the hospital informational technology (“IT”) infrastructure, such that scans can be ordered easily and sent to PACS to be read by a radiologist.
Integration with Picture Archiving and Communication System and Secure Image Upload to the Cloud Similar to other medical devices in hospitals, we designed our Swoop® system to seamlessly integrate with the hospital informational technology (“IT”) infrastructure, such that scans can be ordered easily and sent to PACS to be read by a radiologist.
The CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data and expands the application of the CCPA to personal information of our California-based employees.
The CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data, and the CPRA expands the application of the CCPA to personal information of our California-based employees.
These general controls that must be met for all device classes include: • establishment registration and device listing; • the QSR, which requires manufacturers, including third-party manufacturers, to follow design, testing, control, storage, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures; • labeling regulations, which govern the mandatory elements of the device labels and packaging (including Unique Device Identifier markings for certain categories of products); • FDA’s prohibitions against the promotion of products for uncleared, unapproved or “off-label” uses and other requirements related to promotional activities; • the MDR regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • voluntary and mandatory device recalls to address problems when a device is defective and/or could be a risk to health; • correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and 25 • post-market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These general controls that must be met for all device classes include: • establishment registration and device listing; • the QSR, which requires manufacturers, including third-party manufacturers, to follow design, testing, control, storage, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures; • labeling regulations, which govern the mandatory elements of the device labels and packaging (including Unique Device Identifier markings for certain categories of products); • FDA’s prohibitions against the promotion of products for uncleared, unapproved or “off-label” uses and other requirements related to promotional activities; • the MDR regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • voluntary and mandatory device recalls to address problems when a device is defective and/or could be a risk to health; • correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and • post-market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Although the law includes limited exceptions, including for PHI maintained by a covered entity or business associate under HIPAA and medical information maintained by healthcare providers under the CMIA, it may regulate or impact our processing of personal information depending on the context. Further, the California Privacy Rights Act (CPRA) went into effect January 1, 2023, amending the CCPA.
Although the law includes limited exceptions, including for PHI maintained by a Covered Entity or Business Associate under HIPAA and medical information maintained by healthcare providers under the CMIA, it may still regulate or impact our processing of personal information depending on the context. Further, the California Privacy Rights Act (CPRA) went into effect January 1, 2023, amending the CCPA.
For applications 15 where access to such infrastructure is unavailable, we also offer a secure cloud based PACS where healthcare professionals, including teleradiology service providers, can view images from anywhere in the world. We believe the combination of portable MRI, where scans can be obtained outside the conventional MRI suite, and teleradiology can significantly improve patient care and increase access.
For applications where access to such infrastructure is unavailable, we also offer a secure cloud based PACS where healthcare professionals, including teleradiology service providers, can view images from anywhere in the world. We believe the combination of portable MRI, where scans can be obtained outside the conventional MRI suite, and teleradiology can significantly improve patient care and increase access.
Our board of directors adopted corporate governance principles applicable to us, including responsible oversight and management of the Company, effective controls and processes, compliance with SEC and Nasdaq Stock Market rules and regulations, maintaining an engaged board of directors and a board structure that recognizes the importance of compliance, diversity, appropriate compensation practices, and succession planning, among other matters.
Our board of directors adopted corporate governance principles applicable to us, including responsible oversight and management of the Company, effective controls and processes, compliance with SEC and Nasdaq Stock Market rules and regulations, maintaining an engaged board of directors and a board structure that recognizes the importance of compliance, appropriate compensation practices, and succession planning, among other matters.
The Swoop® system can be wheeled directly to a patient’s bedside and offers a prompt solution for those 8 patients who require an MRI scan but are too critically ill to be transported to a conventional MRI scanner and who may otherwise be forced to forego a scan, wait until a scanner is available, or wait until their condition stabilizes.
The Swoop® system can be wheeled directly to a patient’s bedside and offers a prompt solution for those patients who require an MRI scan but are too critically ill to be transported to a conventional MRI scanner and who may otherwise be forced to forego a scan, wait until a scanner is available, or wait until their condition stabilizes.
The MSA may also be terminated by either party by written notice upon the occurrence of (i) a breach by the other party under the agreement which is not cured within 30 days after written notice by the terminating party, (ii) the other party becomes 19 insolvent, dissolves, liquidates or ceases to conduct business or (iii) the occurrence of payment-related breaches.
The MSA may also be terminated by either party by written notice upon the occurrence of (i) a breach by the other party under the agreement which is not cured within 30 days after written notice by the terminating party, (ii) the other party becomes insolvent, dissolves, liquidates or ceases to conduct business or (iii) the occurrence of payment-related breaches.
We have taken a different approach by developing our Swoop® system to have an ultra-low-field magnet of 0.064T, which enables MRI to become portable because, unlike conventional MRI scanners, the field strength of the magnet in our system does not require a specialized room to house or use the MRI scanner safely.
We have 15 taken a different approach by developing our Swoop® system to have an ultra-low-field magnet of 0.064T, which enables MRI to become portable because, unlike conventional MRI scanners, the field strength of the magnet in our system does not require a specialized room to house or use the MRI scanner safely.
Professional growth of our employees leads to engagement, development and allows us to leverage opportunities so we can hire and promote key talent from within. Through 17 development planning, we strive for employees at all levels to focus on strengthening the skills required in their current role and potentially their next role.
Professional growth of our employees leads to engagement, development and allows us to leverage opportunities so we can hire and promote key talent from within. Through development planning, we strive for employees at all levels to focus on strengthening the skills required in their current role and potentially their next role.
The EU General Data Protection Regulation, (“GDPR”), which took effect in May 2018, applies across the European Union and European Economic Area (“EEA”) and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.
The EU General Data Protection Regulation, (“GDPR”), which took effect in May 2018, applies across the European Union and broader European Economic Area (“EEA”) and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.
Our portable Swoop® system also helps avoid the risk of patient injury during transport through the ability to bring the system to the patient. By performing scans for urgent and critically ill patients at the bedside, we can help prevent the adverse incidents that occur with approximately 26–79% of critically ill patients during transport.
Our portable Swoop® system also helps avoid the risk of patient injury during transport through the ability to bring the system to the patient. By performing scans for urgent and critically ill patients at the bedside, we can help prevent the adverse incidents that 10 occur with approximately 26–79% of critically ill patients during transport.
The FDA’s 510(k) clearance process generally takes from three to 12 months from the date the application is submitted, but it may take significantly longer if FDA has significant questions or needs more information about the new device or its manufacturing or quality controls.
The FDA’s 510(k) 23 clearance process generally takes from three to 12 months from the date the application is submitted, but it may take significantly longer if FDA has significant questions or needs more information about the new device or its manufacturing or quality controls.
In addition to being easy to use and the consequential acceleration of hospital workflows that can result, our system provides standardized images across all placement sites due to our uniform manufacturing specifications and a consistent set of sequences that individual operators do not customize.
In addition to being easy to use and the consequential acceleration of 16 hospital workflows that can result, our system provides standardized images across all placement sites due to our uniform manufacturing specifications and a consistent set of sequences that individual operators do not customize.
The laws and regulations govern, among other things, medical device design and development, nonclinical and clinical testing, pre-market clearance, authorization or approval, establishment registration and product listing, product manufacturing, product packaging and labeling, product storage, advertising and promotion, product distribution, recalls and field actions, servicing and post-market clinical surveillance.
The laws and regulations govern, among other things, medical device 22 design and development, nonclinical and clinical testing, pre-market clearance, authorization or approval, establishment registration and product listing, product manufacturing, product packaging and labeling, product storage, advertising and promotion, product distribution, recalls and field actions, servicing and post-market clinical surveillance.
Pre-market Approval Pathway Our point-of-care MRI systems have been classified and are regulated as Class II devices, although future products that we develop may be classified as Class III devices. Products classified by FDA as Class III generally require marketing approval via the PMA process.
Pre-market Approval Pathway 24 Our point-of-care MRI systems have been classified and are regulated as Class II devices, although future products that we develop may be classified as Class III devices. Products classified by FDA as Class III generally require marketing approval via the PMA process.
In order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness of a medical device, an investigator acting on behalf of the company must, among other things, apply for and obtain institutional review board (“IRB”) approval of the proposed investigation.
In order to conduct a clinical investigation involving human subjects for the purpose of 25 demonstrating the safety and effectiveness of a medical device, an investigator acting on behalf of the company must, among other things, apply for and obtain institutional review board (“IRB”) approval of the proposed investigation.
Government and private payors institute coverage criteria to ensure the appropriate utilization of 26 products and services and to control costs. Limited third-party payor coverage for a technology or procedure may limit adoption and commercial viability, while broader coverage supports optimal market uptake.
Government and private payors institute coverage criteria to ensure the appropriate utilization of products and services and to control costs. Limited third-party payor coverage for a technology or procedure may limit adoption and commercial viability, while broader coverage supports optimal market uptake.
The Swoop® system has the potential to address equity disparities as a portable and affordable brain imaging system that offers versatility for deployment. 12 • Complex site requirements and upgrades : Due to the use of strong (1.5−3.0T (Tesla)) magnetic fields in conventional MRI scanners, there are various requirements and restrictions on imaging facilities size, location, and ongoing maintenance, including the need to build a specialized radio frequency room to house the MRI scanner safely. • Scheduling delays : A high level of coordination is required between the MRI facility and patients scheduled for a conventional MRI scan.
The Swoop® system has the potential to address equity disparities as a portable and affordable brain imaging system that offers versatility for deployment. 13 • Complex site requirements and upgrades : Due to the use of strong (1.5−3.0T (Tesla)) magnetic fields in conventional MRI scanners, there are various requirements and restrictions on imaging facilities size, location, and ongoing maintenance, including the need to build a specialized radio frequency room to house the MRI scanner safely. • Scheduling delays : A high level of coordination is required between the MRI facility and patients scheduled for a conventional MRI scan.
Many commonly accepted commercial practices are illegal in the healthcare industry and violations of these laws are punishable by criminal and civil sanctions, including, in some instances, exclusion from participation in U.S. federal and state healthcare programs, including Medicare and Medicaid. Anti-kickback Laws.
Many commonly accepted commercial practices are illegal in the healthcare industry and violations of these laws are punishable by criminal and civil sanctions, including, in some instances, exclusion from participation in U.S. federal and state healthcare programs, including Medicare and Medicaid. 28 Anti-kickback Laws.
If the observations are sufficiently serious or the manufacturer fails to respond appropriately, the FDA may issue Warning Letters, which are notices of intended enforcement actions against the manufacturer. For less serious violations that may not rise to the level of regulatory significance, FDA may issue Untitled Letters.
If the observations are sufficiently serious or the manufacturer fails to respond appropriately, the FDA may issue Warning Letters, which are notices of intended enforcement actions against the manufacturer. For less serious violations that may not rise to the level of regulatory significance, the agency may issue Untitled Letters.
Sanctions for violations of the CMPL include exclusion from participation in government healthcare programs, substantial fines, and payment of up to three times the amount billed, depending upon the nature of the offense. State Analogs of Federal Fraud and Abuse Laws .
Sanctions for violations of the CMPL include exclusion from participation in government healthcare programs, substantial fines, and payment of up to three times the amount billed, depending upon the nature of the offense. 29 State Analogs of Federal Fraud and Abuse Laws .
Operating at 0.064T means using lower energy radiofrequency pulses and significantly reducing associated safety risks. 14 Motion Correction Portable MRI at the point of care can provide MRI insights to more patients than previously possible.
Operating at 0.064T means using lower energy radiofrequency pulses and significantly reducing associated safety risks. Motion Correction Portable MRI at the point of care can provide MRI insights to more patients than previously possible.
Information related to the product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is made public as part of the registration process. Sponsors are obligated to disclose the results of their clinical trials after completion.
Information related to the product, patient population, phase of investigation, trial sites and other aspects of the clinical trial is made public as part of the registration process. Sponsors are obligated to disclose the results of their clinical trials after completion.
FDA review of a PMA application is required to be completed within 180 days of the application’s filing date although the process generally takes between one and three years, but may take significantly longer.
FDA review of a PMA application is required to be completed within 180 days of the application’s filing date although the process generally takes between one and three years and may take significantly longer.
Our research activities in the EU currently implicate the GDPR and if we undertake commercial operations in the EU, offer products or services to individuals in the EEA or monitor the behavior of individuals within the EU, we will have additional compliance obligations.
Our research activities in the EEA currently implicate the GDPR and if we undertake commercial operations in the EEA, offer products or services to individuals in the EEA, or monitor the behavior of individuals within the EEA, we will have additional compliance obligations.
We have commercially launched our Swoop® system, a portable brain MRI device capable of producing diagnostic quality images at a lower magnetic field strength than conventional MRI scanners. Using an ultra-low-field magnetic force significantly reduces projectile safety concerns and, therefore, should reduce the length of pre-safety checks typically conducted by healthcare professionals.
We have commercially launched our Swoop® system, a portable AI-powered brain MRI device capable of producing diagnostic quality images at a lower magnetic field strength than conventional MRI scanners. Using an ultra-low-field magnetic force significantly reduces projectile safety concerns and, therefore, should reduce the length of pre-safety checks typically conducted by healthcare professionals.
The FDA evaluates compliance with the QSR through periodic pre-scheduled or unannounced inspections that may include registered manufacturing facilities of our manufacturer. Following such inspections, FDA may issue reports known as Forms FDA 483 or Notices of Inspectional Observations, which list instances where the FDA inspector believes the manufacturer has failed to comply with applicable regulations and/or procedures.
The FDA evaluates compliance with the QSR through periodic pre-scheduled or unannounced inspections that may include registered manufacturing facilities of our manufacturer. Following such inspections, the FDA may issue reports known as Forms FDA 483 or Notices of Inspectional Observations, which list instances where the FDA investigator believes the manufacturer has failed to comply with applicable regulations and/or procedures.
If the FDA’s evaluation of a PMA application or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter.
If the FDA’s evaluation of the PMA application or the applicable manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter.
FDA may take more significant administrative or legal action if a manufacturer continues to be in substantial noncompliance with applicable regulations.
The FDA may take more significant administrative or legal action if a manufacturer continues to be in substantial noncompliance with applicable regulations.
In addition, certain states have enacted laws modeled after the federal False Claims Act. Qui tam actions have increased significantly in recent years, causing greater numbers of healthcare companies to have to defend a false claim action, even before the validity of the claim is established and even if the government decides not to intervene in the lawsuit.
In addition, certain states have enacted laws modeled after the federal False Claims Act. Qui tam actions have increased significantly in recent years, causing greater numbers of healthcare companies to have to defend false claim actions, even before the validity of the claim is established and even if the government decides not to intervene in the lawsuit.
We may be subject to the GDPR if we undertake operations in the EEA, offer products or services to individuals in the EU or monitor the behavior of individuals within the EEA.
We may be subject to the GDPR if we undertake operations in the EEA, offer products or services to individuals in the EEA or monitor the behavior of individuals within the EEA.
HIPAA applies to health plans, healthcare clearing houses, and healthcare providers that conduct certain healthcare transactions electronically, which are referred to collectively as Covered Entities, as well as individuals or entities that perform services for Covered Entities involving the use, or disclosure of, individually identifiable health information or protected health information (“PHI”) under HIPAA.
HIPAA applies to health plans, healthcare clearing houses, and healthcare providers that conduct certain healthcare transactions electronically, which are referred to collectively as “Covered Entities”, as well as individuals or entities that perform services for Covered Entities involving the use, or disclosure of, individually identifiable health information or protected health information (“PHI”) under HIPAA.
In June 2021, the European Commission issued a decision, which will sunset on June 27, 2025 without further action, that the United Kingdom ensures an adequate level of protection for personal data transferred under the EU GDPR from the European Union to the United Kingdom. The U.K.
In June 2021, the European Commission issued a decision, which will sunset on June 27, 2025 without further action, that the United Kingdom ensures an adequate level of protection for personal data transferred under the EU GDPR from the European Union to the United Kingdom.
As a result, deep learning can enhance the image quality and, consequently, the diagnostic value of images generated at ULF. The algorithms are designed to improve ULF image quality, while reducing the impact of scan artifacts. The images created with these algorithms were validated by expert radiologists.
As a result, deep learning can enhance the image quality and, consequently, the diagnostic value of images generated with ULF imaging. The algorithms are designed to improve ULF image quality, while reducing the impact of scan artifacts. The images created with these algorithms were validated by expert radiologists.
Our mission is to provide accessible and affordable imaging and monitoring through MRI to revolutionize healthcare for people around the world.
Our mission is to provide accessible and affordable imaging through MRI to revolutionize healthcare for people around the world.
We expect that the existing market participants will remain key players in the future. As a general matter, we view competition on two levels: • Computed tomography (CT), particularly non-contrast computed tomography, both portable and/or at the point of care setting.
We expect that the existing market participants will remain key players in the future. As a general matter, we view competition on two levels: • Computed tomography (“CT”), particularly non-contrast computed tomography, both portable and/or at the point of care setting.
Some countries have adopted medical device regulatory regimes, such as the Classification Rules for Medical Devices published by the Hong Kong Department of Health, the Health Sciences Authority of Singapore regulation of medical devices under 31 the Health Products Act, and Health Canada’s risk classification system for invasive devices, among others.
Some countries have adopted medical device regulatory regimes, such as the Classification Rules for Medical Devices published by the Hong Kong Department of Health, the Health Sciences Authority of Singapore regulation of medical devices under 33 the Health Products Act, and Health Canada’s risk classification system for invasive devices, among others.
Our Strategies Our strategies include the following: • Focus our development and commercialization efforts on the Swoop® system. Our current focus is ULF brain MRI with the Swoop® system and the advancement of our brain MR technology and its proprietary AI-powered software for multiple clinical applications in different sites of care.
Our Strategies Our strategies include the following: • Focus our development and commercialization efforts on the Swoop® system. Our current focus is AI-powered portable brain MRI with the Swoop® system and the advancement of our brain MR technology and its proprietary AI-powered software for multiple clinical applications in different sites of care.
In the EEA, medical devices were previously required to comply with the Essential Requirements defined in Annex I to the EU Medical Devices Directive (“MDD”) (applicable in 30 the non-EU EEA Member States via the Agreement on the European Economic Area), a coordinated system for the authorization of medical devices.
In the EEA, medical devices were previously required to comply with the Essential Requirements defined in Annex I to the EU Medical Devices Directive (“MDD”) (applicable in 32 the non-EU EEA Member States via the Agreement on the European Economic Area), a coordinated system for the authorization of medical devices.
We could be subject to evolving European Union laws on data export, for transfers of data outside the EEA to themselves, group companies or third parties. The GDPR only permits exports of data outside the EEA to jurisdictions that ensure an adequate level of data protection.
We could be subject to evolving European Union laws on data export, for transfers of data outside the EEA to, for example, group companies or third parties. The GDPR only permits exports of data outside the EEA to jurisdictions that ensure an adequate level of data protection.
We have developed a new category of medical imaging, portable MRI, that is smaller, lighter weight, and lower cost than conventional MRI scanners yet maintains the soft tissue visualization capabilities critical for brain imaging.
We have developed a new category of medical imaging, AI-powered portable MRI, that is smaller, lighter weight, and lower cost than conventional MRI scanners yet maintains the soft tissue visualization capabilities critical for brain imaging.
In certain cases, the 10 Swoop® system is sold without an accompanying service and support agreement.
In certain cases, the Swoop® system is sold without an accompanying service and support agreement.
However, as we expand internationally subject to regulatory authorization in those countries, we may continue to leverage distributors to sell our product depending on the commercial strategy for each country assessed on a country-by-country basis.
However, as we expand internationally subject to regulatory authorization in those countries, we will continue to leverage distributors to sell our product depending on the commercial strategy for each country assessed on a country-by-country basis.
Our solution is designed to complement conventional MRI and seamlessly integrates into the hospital workflow, by processing orders from the Hospital Information Systems (HIS) and allowing users to upload images into their picture archiving and communication system (“PACS”), or directly onto our cloud PACS, which then makes images easily available for diagnostic purposes.
Our solution is designed to complement conventional MRI and seamlessly integrates into the hospital workflow, by processing orders from the Hospital Information Systems (“HIS”) 9 and allowing users to upload images into their picture archiving and communication system (“PACS”), or directly onto our cloud PACS, which then makes images easily available for diagnostic purposes.
Neuro42 announced receipt of FDA clearance of its portable MRI system in February 2024 with plans to commercialize later in 2024. In addition, there are several companies currently in the process of developing this technology, including, for example, DeepSpin and Multiwave. We view high-field MRI more as a complementary than a competitive technology.
Neuro42 announced receipt of FDA clearance of its portable MRI system in February 2024 with future plans to commercialize. In addition, there are several companies currently in the process of developing this technology, including, for example, DeepSpin and Multiwave. We view high-field MRI more as a complementary rather than a competitive technology.
Comradery and community are at the core of who we are as a company and are integral facets of our human capital management strategy. We are inspired by each other and the possibilities of what we can achieve together.
Comradery and community are at the core of who we are as a company and are integral components of our human capital management strategy. We are inspired by each other and the possibilities of what we can achieve together.
Compared to CT, MRI has a greater range of soft tissue contrast, depicts anatomy in greater detail, and is more sensitive and specific for abnormalities within the brain itself. The Swoop® system does not emit ionizing radiation and therefore does not have the increased risk of cancer that comes with CT imaging.
Compared to CT, MRI has a greater range of soft tissue contrast, depicts anatomy in greater detail, and is more sensitive and specific for abnormalities within the brain itself. The Swoop® system does not emit ionizing radiation and therefore reduces the risk of cancer that comes with CT imaging.
Services Our Swoop® system service and support program includes support and technical assistance with hardware and software issues. A combination of remote and onsite support in collaboration with onsite technical staff solves software issues. In addition, it also includes our Hyperfine Image Viewer, a cloud PACS that users can use to upload images for storage purposes.
Services Our Swoop® system service and support program includes support and technical assistance with hardware and software issues. A combination of remote and onsite support in collaboration with onsite technical staff can better solve software issues. In addition, it also includes our Hyperfine Image Viewer, a cloud PACS that users can use to upload images for storage purposes.
Our Swoop® system is designed to transform brain MR for the patient, the clinician and the provider, and to provide a highly differentiated experience for patients, timely imaging to clinicians, and favorable economics for hospital administrators.
Our Swoop® system is designed to transform brain MR for the patient, the clinician and the provider, enabling a highly differentiated experience for patients, timely imaging for clinicians, and favorable economics for hospital administrators.
We plan to continue developing our technology to expand into new imaging applications to enable us to reach the broader care continuum through diagnosis and treatment. 11 • Expand clinical validation data and publications.
We plan to continue developing our technology to expand into new imaging applications to enable us to reach the broader care continuum through diagnosis and treatment. 12 • Expand clinical validation data and publications.
Item 1. B USINESS Overview We are an innovative health technology business with a mission to revolutionize patient care globally through accessible, affordable, clinically relevant ultra-low-field (“ULF”) magnetic resonance (“MR”) brain imaging. Our Swoop® Portable MR Imaging® System (“Swoop® system”) produces high-quality images at a lower magnetic field strength than conventional magnetic resonance imaging (“MRI”) scanners.
Item 1. B USINESS Overview We are an innovative health technology business with a mission to revolutionize patient care globally through accessible, affordable, clinically relevant artificial intelligence (“AI”)-powered portable ultra-low-field (“ULF”) magnetic resonance (“MR”) brain imaging. Our Swoop® Portable MR Imaging® System (“Swoop® system”) produces high-quality images at a lower magnetic field strength than conventional magnetic resonance imaging (“MRI”) scanners.
The patient then proceeds to a waiting room where they undergo a lengthy safety questionnaire and are asked to remove all jewelry and clothes (to their underwear) and put on a hospital gown.
The patient then proceeds to a waiting room where they undergo a lengthy safety questionnaire and are asked to remove all jewelry and clothes and put on a hospital gown.
Over 104 conference presentations and peer reviewed journal articles, perspectives, case studies, and editorials on the Swoop® system have discussed the potential clinical benefits of portable, ULF MRI for patients with stroke, hydrocephalus, hematoma, multiple sclerosis and tumor resection.
Over 250 conference presentations and peer reviewed journal articles, perspectives, case studies, and editorials on the Swoop® system have discussed the potential 11 clinical benefits of portable, ULF MRI for patients with stroke, hydrocephalus, hematoma, multiple sclerosis and tumor resection.
If the FDA determines that the applicant’s device is substantially equivalent to the identified predicate device(s), the agency will issue a 510(k) clearance letter that authorizes commercial marketing of the device for one or more specific indications for use.
If after substantive review the FDA determines that the applicant’s device is substantially equivalent to the identified predicate device(s), the agency will issue a 510(k) clearance letter that authorizes commercial marketing of the device for one or more specific indications for use.
MRI is noninvasive, sometimes eliminates the need for surgical intervention or invasive procedures when used correctly, and offers superior soft tissue contrast resolution compared to other imaging modalities like CT. It is a more sensitive and potentially objective measure of brain tissue and injury. MRI is used to examine CNS, musculoskeletal, and other diseases.
MRI is noninvasive, sometimes eliminates the need for surgical intervention or invasive procedures when used correctly, and offers superior soft tissue contrast resolution compared to other imaging modalities like CT. It is a more sensitive and potentially objective measure of brain tissue and injury. MRI is used to examine central nervous system, musculoskeletal, and other diseases.
Information about certain clinical trials, including details of the protocol and eventually results, also must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on the ClinicalTrials.gov data registry.
Information about certain clinical trials, including details of the protocol and eventually results, also must be submitted within specific timeframes to the National Institutes of Health (“NIH”), for public dissemination on the ClinicalTrials.gov data registry.
Information contained in our website does not constitute a part of this report or our other filings with the SEC. 32
Information contained in our website does not constitute a part of this report or our other filings with the SEC. 34
The GDPR sets out a number of requirements that must be complied with when handling the personal data of such EEA-based data subjects including: providing expanded disclosures about how their personal data will be used; higher standards for organizations to demonstrate that they have obtained valid consent or have another legal basis in place to justify their data processing activities; the obligation to appoint data protection officers in certain circumstances; new rights for individuals to be “forgotten” and rights to data portability, as well as enhanced current rights (e.g. access requests); the principal of accountability and demonstrating compliance through policies, procedures, training and audits; and a mandatory data breach regime.
The GDPR sets out a number of requirements that must be complied with when handling the personal data of such EEA-based data subjects including: providing expanded disclosures about how their personal data will be used; higher standards for organizations to demonstrate that they have obtained valid consent or have another legal basis in place to justify their data processing activities; the obligation to appoint data protection officers in certain circumstances; rights for individuals to be “forgotten” and rights to data portability; rights to submit data access requests; the principal of accountability and demonstrating compliance through policies, procedures, training and audits; and a mandatory data breach regime.
Our initial focus is on patients in intensive care units and emergency departments, where timeliness of MRI is critical, as well as pediatric patients where minimizing exposure to ionizing radiation from CT is important. An MRI scan can be essential for diagnosis and urgent intervention.
Our initial focus has been on patients in intensive care units, where timeliness of MRI is critical, as well as pediatric patients where minimizing exposure to ionizing radiation from CT is important. An MRI scan can be essential for diagnosis and urgent intervention.
Critical to achieving our strategic goals is our ability to build and retain an exceptional team in which each member plays a unique and important role. We recognize that maintaining an engaged and top-notch workforce and a connection with the communities we serve are critical to our success.
Critical to achieving our strategic goals is our ability to build and retain an exceptional team in which each member plays a unique and important role. We recognize that maintaining an engaged and high performing workforce and a connection with the communities we serve are critical to our success.
As part of the 510(k) notification process for Class II devices that have an existing classification regulation available for purposes of the regulatory filing, the FDA may require the following: • Development of comprehensive product description and indications for use. • Completion of extensive nonclinical tests and/or animal studies, performed in accordance with the FDA’s good laboratory practice (“GLP”) regulations, as well as any performance standards or other testing requirements established by FDA through regulations or device-specific guidance. • Comprehensive review of one or more predicate devices and development of data supporting the new product’s substantial equivalence to such predicate devices.
As part of the 510(k) notification process for Class II devices that have an existing classification regulation available for purposes of the regulatory filing, the FDA typically requires the following: • Development of comprehensive product description and indications for use. • Completion of extensive nonclinical tests and/or animal studies, performed in accordance with the FDA’s good laboratory practice (“GLP”) regulations, as well as testing to demonstrate that the device meets applicable performance standards or other testing requirements established by FDA through regulations or device-specific guidance. • Comprehensive review of one or more predicate devices and development of data supporting the new product’s substantial equivalence to such predicate devices.
For medical devices placed on the UK market after this period, the UK Conformity Assessed (“UKCA”) marking will be mandatory. In contrast, UKCA marking and certificates issued by UK Notified Bodies will not be recognized on the EU market.
For medical devices placed on the UK market after this period, the UKCA marking will be mandatory. In contrast, UKCA marking and certificates issued by UK Notified Bodies will not be recognized on the EU market.
As of February 15, 2024, 127 of our employees were located in the United States and, internationally, four were located in the United Kingdom and Europe. None of our employees are represented by a labor union or are subject to a collective bargaining agreement. 16 Dr. Rothberg and our business have been recognized for leadership.
As of February 15, 2025, 107 of our employees were located in the United States and, internationally, four were located in the United Kingdom and Europe. None of our employees are represented by a labor union or are subject to a collective bargaining agreement. Dr. Rothberg and our business have been recognized for leadership.
The commencement or completion of any of our clinical trials may be delayed or halted, or be inadequate to support approval of a PMA application (or FDA’s grant of a De Novo classification request or clearance of a 510(k) notification, as applicable), for numerous reasons, including, but not limited to, the following: • the FDA, the IRB(s), or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold; • participants do not enroll in clinical trials at the expected rate; • participants do not comply with trial protocols; • participant follow-up is not at the expected rate; • patients experience adverse side effects; • participants die during a clinical trial, even though their death may not be related to the investigational products; • IRBs and third-party clinical investigators may delay or reject the sponsor’s trial protocol; 24 • third-party clinical investigators decline to participate in a trial or do not perform a trial on the sponsor’s anticipated schedule or consistent with the clinical trial protocol, GCPs or other FDA requirements; • the sponsor or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans; • third-party clinical investigators have significant financial interests related to the sponsor or the trial that the FDA deems to make the trial results unreliable, or the sponsor or investigators fail to disclose such interests; • unfavorable regulatory inspections of the sponsor’s clinical trial sites or manufacturing facilities, which may, among other things, require the sponsor to undertake corrective action or suspend or terminate the sponsor’s clinical trials; • changes in governmental regulations or administrative actions applicable to the sponsor’s trial protocols; • the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or effectiveness; and • the FDA concludes that the results from the sponsor’s trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.
The commencement or completion of any of our clinical trials may be delayed or halted, or be inadequate to support approval of a PMA application (or FDA’s grant of a De Novo classification request or clearance of a 510(k) notification, as applicable), for numerous reasons, including, but not limited to, the following: • the FDA, the IRB(s), or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold; • participants do not enroll in clinical trials at the expected rate; • participants do not comply with trial protocols; • participant follow-up is not at the expected rate; • patients experience adverse side effects; • participants die during a clinical trial, even though their death may not be related to the investigational products; • IRBs and third-party clinical investigators may delay or reject the sponsor’s trial protocol; • third-party clinical investigators decline to participate in a trial or do not perform a trial on the sponsor’s anticipated schedule or consistent with the clinical trial protocol, GCPs or other FDA requirements; • the sponsor or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans; • third-party clinical investigators have significant financial interests related to the sponsor or the trial that the FDA deems to make the trial results unreliable, or the sponsor or investigators fail to disclose such interests; • unfavorable regulatory inspections of the sponsor’s clinical trial sites or manufacturing facilities, which may, among other things, require the sponsor to undertake corrective action or suspend or terminate the sponsor’s clinical trials; • changes in governmental regulations or administrative actions applicable to the sponsor’s trial protocols; • the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or effectiveness; and • the FDA concludes that the results from the sponsor’s trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product. 26 In the Consolidated Appropriations Act for 2023, Congress amended the FDCA to require the sponsor of any pivotal clinical trial to support marketing authorization of a medical device to develop a diversity action plan for such trial, and if submission of an IDE application is required, to submit such diversity action plan to the FDA.
Hyperfine has a unique ultra-low-field portable MR brain imaging system that aims to improve brain health globally • Our innovative technology can potentially improve the quality of care for patients worldwide. We believe our portable, affordable, brain MRI scanner can broaden access to quality care, leading to better brain health.
Hyperfine has a unique ULF AI-powered portable MR brain imaging system that aims to improve brain health globally • Our innovative technology can potentially improve the quality of care for patients worldwide. We believe our portable, affordable, brain MRI scanner can broaden access to quality care, leading to better brain health.
We believe the Swoop® system can significantly streamline the care navigation and lower the burden for these patients and their clinicians and meaningfully increase the reach of Alzheimer’s diagnosis and treatment across patients of diverse demographics and income levels. • Expand sales in international markets.
We believe the Swoop® system can significantly streamline the care navigation and lower the burden for these patients and their clinicians and meaningfully increase the reach of Alzheimer’s diagnosis and treatment across patients of diverse demographics and income levels.
Food and Drug Administration (“FDA”)-cleared, portable, ULF, MR brain imaging system and is capable of providing imaging at multiple sites of care such as intensive care units, clinics, emergency departments or physicians’ offices, and can inform the timely detection, diagnosis, monitoring and treatment of acute and chronic conditions inside and outside the hospital.
The Swoop® system is the first FDA-cleared, portable, ULF, MR brain imaging system and is capable of providing imaging at multiple sites of care, such as intensive care units, clinics, emergency departments or physicians’ offices, and can inform the timely detection, diagnosis, monitoring, and treatment of acute and chronic conditions inside and outside the hospital.
The FDA classifies medical devices into three classes based on risk. Regulatory control increases from Class I (lowest risk) to Class III (highest risk). The FDA generally must clear or approve the commercial sale of most new medical devices that fall within product categories designated as Class II and III.
Regulatory control increases from Class I (lowest risk) to Class III (highest risk). The FDA generally must clear or approve the commercial sale of most new medical devices that fall within product categories designated as Class II and III.
The Swoop® system can eliminate the labor-intensive and high-risk process of transporting patients on ventilators or connected to other life-sustaining devices, which can be especially valuable in the staff shortage environment that many healthcare institutions continue to experience. 9 The Swoop® system is designed to increase global MRI capacity and to enable brain imaging anywhere • Our proprietary, disruptive, and revolutionary product is designed with healthcare professionals in mind.
The Swoop® system can eliminate the labor-intensive and high-risk process of transporting patients on ventilators or connected to other life-sustaining devices, which can be especially valuable in the staff shortage environment that many healthcare institutions continue to experience. • Our proprietary, disruptive, and revolutionary product is designed with healthcare professionals in mind.
We have also partnered with several institutions to initiate utility studies to evaluate the use of the Swoop® system in screening and monitoring Alzheimer’s patients on the novel Amyloid Targeted Therapies. Alzheimer’s disease represents a potential large incremental and growing global market opportunity for our technology.
We have also partnered with thought leaders to initiate the CARE PMR utility study to evaluate the use of the Swoop® system in screening and monitoring Alzheimer’s patients on the novel Amyloid Targeted Therapies. Alzheimer’s disease represents a potential large incremental and growing global market opportunity for our technology.
However, in the event it becomes necessary to utilize a different contract manufacturer for our Swoop® system products, we would experience additional costs, delays and difficulties in doing so, and our business could be harmed. Key Agreements Manufacture and Supply Agreement with Benchmark Electronics, Inc.
We believe that this manufacturing strategy is efficient and conserves capital. However, in the event it becomes necessary to utilize a different contract manufacturer for our Swoop® system products, we would experience additional costs, delays and difficulties in doing so, and our business could be harmed. Key Agreements Manufacture and Supply Agreement with Benchmark Electronics, Inc.
The Swoop® system is AI-powered and integrates deep learning, a form of AI, for the reconstruction and denoising of T1, T2, and fluid-attenuated inversion recovery (“FLAIR”) sequences. The Swoop® system also incorporates deep learning denoising in the diffusion-weighted imaging (“DWI”) sequences for image post-processing. The integration of deep learning does not require any additional steps from the user.
The Swoop® system is AI-powered and integrates deep learning, a form of AI in the reconstruction pipeline of T1, T2, diffusion-weighted imaging (“DWI”), and fluid-attenuated inversion recovery (“FLAIR”) sequences. The integration of deep learning does not require any additional steps from the user.
It is unknown at this time how the diversity action plan may affect device clinical trial planning and timing or what specific information FDA will expect in such plans, but if FDA objects to a sponsor’s diversity action plan and requires the sponsor to amend the plan or take other actions, it may delay trial initiation.
It is unknown at this time how the diversity action plan may affect device clinical trial planning and timing, but if FDA objects to a sponsor’s diversity action plan and requires the sponsor to amend the plan or take other actions, it may delay trial initiation.
Healthcare professionals can use the Swoop® system to make effective clinical diagnoses and decisions in various care settings where conventional MRI devices are inaccessible.
Healthcare professionals can use the Swoop® system to make effective clinical diagnoses and decisions in various care settings where conventional MRI devices are inaccessible or when they are not readily available.
We offer our customers payment term options that include, among others, either an upfront payment for the Swoop® system and annual payment for service and support or an annual payment option for the term of their agreement.
In certain cases, the Swoop® system is sold without an accompanying service and support agreement. We offer our customers payment term options that include, among others, either an upfront payment for the Swoop® system and annual payment for service and support or an annual payment option for the term of their agreement.
We principally target ICU, comprehensive and primary stroke accredited facilities. In the future, we plan to leverage this approach for both our Swoop® system and our future products that have similar end markets.
We principally target intensive care units, neurology offices, emergency departments and comprehensive and primary stroke accredited facilities. In the future, we plan to leverage this approach for both our Swoop® system and our future products that have similar end markets.
The learnings from this field experience have served to improve our software, AI, and denoising algorithms resulting in the image quality and performance boosts of our product over the eight software releases since our initial clearance.
The learnings from this market experience have served to improve our software, AI, and denoising algorithms resulting in the image quality and performance improvements of our product over the nine generations of software since our initial clearance.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile our Swoop® system is generally more affordable than traditional MRI systems, in some states healthcare facilities are required to complete such processes in connection with their potential acquisition of a Swoop® system, which can result in delays in or decisions not to complete the sale process, resulting in an adverse impact on our business. 52 Risks Related to our Intellectual Property If we are unable to obtain and maintain and enforce sufficient intellectual property protection for our products and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired.
Biggest changeWhile our Swoop® system is generally more affordable than traditional MRI systems, in some states healthcare facilities are required to complete such processes in connection with their potential acquisition of a Swoop® system, which can result in delays in or decisions not to complete the sale process, resulting in an adverse impact on our business.
The marketplace may not be receptive to our products and services over competing products, including conventional MRI systems used in hospitals, imaging centers and physicians’ offices, and we may be unable to compete effectively.
The marketplace may not be receptive to our products and services over competing products, including conventional MRI systems used in hospitals and imaging centers and physicians’ offices, and we may be unable to compete effectively.
Quality problems could lead to recalls or safety alerts and/or reputational harm and could have a material adverse effect on our business, results of operations, financial condition and cash flows. Quality of our products is very important to us and our customers due to the serious and costly consequences of product failure.
Quality problems could lead to recalls or safety alerts and/or reputational harm and could have a material adverse effect on our business, results of operations, financial condition and cash flows. The quality of our products is very important to us and our customers due to the serious and costly consequences of product failure.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in customer growth or engagement, or otherwise harm our business.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, declines in customer growth or engagement, or otherwise harm our business.
Our Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings and the federal district courts as the sole and exclusive forum for other types of actions and proceedings, in each case, that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with the Company or our directors, officers or other employees.
Our Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings and the federal district courts as the sole and exclusive forum for other types of actions and proceedings, in each case, that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with our company or our directors, officers or other employees.
Doing business internationally involves a number of risks, including: • Difficulties in staffing and managing our international operations; • Multiple, conflicting and changing laws and regulations such as tax laws, privacy laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • Reduced or varied protection for intellectual property rights in some countries; • Obtaining regulatory clearance where required for our products in various countries; • Requirements to maintain data and the processing of that data on servers located within such countries; • Limits on our ability to penetrate international markets if we are required to manufacture our products locally; • Financial risks, such as longer payment cycles, difficulty collecting accounts receivable, foreign tax laws and complexities of foreign value-added tax systems, the effect of local and regional financial pressures on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • Restrictions on the site-of-service for use of our products and the economics related thereto for physicians and other healthcare practitioners; • Natural disasters and economic instability, including outbreak of disease, boycotts, curtailment of trade and other market restrictions; 42 • Wars, terrorism and political unrest, such as the conflicts in Ukraine and the Middle East, which has resulted in instability in the global financial markets and export controls, and which could result in supply disruptions for us, including because one key custom-made component in our Swoop® system is the magnet, which is manufactured by a single source supplier in Europe, and which could also have a material adverse impact on our sales in affected markets; and • Regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the U.S.
Doing business internationally involves a number of risks, including: • difficulties in staffing and managing our international operations; • multiple, conflicting and changing laws and regulations such as tax laws, privacy laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • reduced or varied protection for intellectual property rights in some countries; • obtaining regulatory clearance where required for our products in various countries; • requirements to maintain data and the processing of that data on servers located within such countries; • limits on our ability to penetrate international markets if we are required to manufacture our products locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, foreign tax laws and complexities of foreign value-added tax systems, the effect of local and regional financial pressures on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • restrictions on the site-of-service for use of our products and the economics related thereto for physicians and other healthcare practitioners; • natural disasters and economic instability, including outbreak of disease, boycotts, curtailment of trade and other market restrictions; • wars, terrorism and political unrest, such as the conflicts in Ukraine and the Middle East, which has resulted in instability in the global financial markets and export controls, and which could result in supply disruptions for us, including because one key custom-made component in our Swoop® system is the magnet, which is manufactured by a single source supplier in Europe, and which could also have a material adverse impact on our sales in affected markets; and • regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the U.S.
For example: • others may be able to make products that are similar to products and technologies we may develop or utilize similar technology that are not covered by the claims of the patents that we own or license now or in the future; • we, or our licensor(s), might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or may own in the future; • we, or our licensor(s), might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our owned or licensed intellectual property rights; • it is possible that our pending licensed patent applications or those that we may own in the future will not lead to issued patents; • issued patents that we own, in-license, or otherwise hold rights to may be held invalid or unenforceable or have their scope narrowed, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file a patent application for certain trade secrets or know-how, and a third party may subsequently file a patent application covering such intellectual property.
For example: • others may be able to make products that are similar to products and technologies we may develop or utilize similar technology that are not covered by the claims of the patents that we own or license now or in the future; • we, or our licensor(s), might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or may own in the future; • we, or our licensor(s), might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our owned or licensed intellectual property rights; • it is possible that our pending licensed patent applications or those that we may own in the future will not lead to issued patents; 64 • issued patents that we own, in-license, or otherwise hold rights to may be held invalid or unenforceable or have their scope narrowed, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file a patent application for certain trade secrets or know-how, and a third party may subsequently file a patent application covering such intellectual property.
Our Charter provides that, unless we consent to the selection of an alternative forum, any (i) derivative action or proceeding brought on behalf of us; (ii) action asserting a claim of breach of a fiduciary duty owed by, or any other wrongdoing by, any current or former director, officer, other employee or stockholder of us; (iii) action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law ("DGCL") or our Charter or our bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery; (iv) action to interpret, apply, enforce, or determine the validity of any provisions in the certificate of incorporation of bylaws; or (v) action asserting a claim governed by the internal affairs doctrine, shall, to the fullest extent permitted 64 by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware.
Our Charter provides that, unless we consent to the selection of an alternative forum, any (i) derivative action or proceeding brought on behalf of us; (ii) action asserting a claim of breach of a fiduciary duty owed by, or any other wrongdoing by, any current or former director, officer, other employee or stockholder of us; (iii) action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law ("DGCL") or our Charter or our bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery; (iv) action to interpret, apply, enforce, or determine the validity of any provisions in the certificate of incorporation of bylaws; or (v) action asserting a claim governed by the internal affairs doctrine, shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware.
Unless otherwise agreed to by us and the other participant company, all rights, title and interest in and to any inventions, works-of-authorship, idea, data or know-how invented, made, created or developed by the personnel (employees, contractors or consultants) in the course of conducting services for a participant company (“Created IP”) will be owned by the participant company for which the work was performed, and 41 the recipient participant company grants to the party that had its personnel provide the services that resulted in the creation of the Created IP a royalty-free, perpetual, limited, worldwide, non-exclusive, sub-licensable (and with respect to software, sub-licensable in object code only) license to utilize the Created IP only in the core business field of the originating participant company, including a license to create and use derivative works based on the Created IP in the originating participant’s core business field, subject to any agreed upon restrictions.
Unless otherwise agreed to by us and the other participant company, all rights, title and interest in and to any inventions, works-of-authorship, idea, data or know-how invented, made, created or developed by the personnel (employees, contractors or consultants) in the course of conducting services for a participant company (“Created IP”) will be owned by the participant company for which the work was performed, and the recipient participant company grants to the party that had its personnel provide the services that resulted in the creation of the Created IP a royalty-free, perpetual, limited, worldwide, non-exclusive, sub-licensable (and with respect to software, sub-licensable in object code only) license to utilize the Created IP only in the core business field of the originating participant company, including a license to create and use derivative works based on the Created IP in the originating participant’s core business field, subject to any agreed upon restrictions.
Any number of factors could negatively affect customer retention, growth and engagement, including: • customers choosing competing products or choosing to use conventional MRI systems over our products; • failure to introduce new and improved products and services; • inability to continue to develop products that customers find effective and that achieve a high level of market acceptance; • changes in customer sentiment about the quality or usefulness of our products and services or concerns related to safety, security, privacy and data sharing or other factors; 36 • adverse changes in our products that are mandated by legislation or regulatory agencies, both in the United States and internationally; or • technical or other problems preventing us from delivering products or services in a rapid and reliable manner or otherwise affecting the user experience.
Any number of factors could negatively affect customer retention, growth and engagement, including: • customers choosing competing products or choosing to use conventional MRI systems over our products; • failure to introduce new and improved products and services; • inability to continue to develop products that customers find effective and that achieve a high level of market acceptance; • changes in customer sentiment about the quality or usefulness of our products and services or concerns related to safety, security, privacy and data sharing or other factors; • adverse changes in our products that are mandated by legislation or regulatory agencies, both in the United States and internationally; or • technical or other problems preventing us from delivering products or services in a rapid and reliable manner or otherwise affecting the user experience.
Moreover, disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • our financial or other obligations under the license agreement; • whether, and the extent to which, our products, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensor(s); and • the priority of invention of patented technology.
Moreover, disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: 62 • the scope of rights granted under the license agreement and other interpretation-related issues; • our financial or other obligations under the license agreement; • whether, and the extent to which, our products, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensor(s); and • the priority of invention of patented technology.
Because we currently also rely on Benchmark to manufacture, test and ship all of the Swoop® systems and on a limited number of suppliers to 39 supply our components, including Benchmark to purchase the magnet used in the scanner from a single source supplier, such pricing pressures from a third party such as Benchmark have and could increase our costs and could force us to increase the prices of our products if we are unable to enter into alternative arrangements with other suppliers or manufacturers, potentially leading to decreased customer demand.
Because we currently also rely on Benchmark to manufacture, test and ship all of the Swoop® systems and on a limited number of suppliers to supply our components, including Benchmark to purchase the magnet used in the scanner from a single source supplier, such pricing pressures from a third party such as Benchmark have and could increase our costs and could force us to increase the prices of our products if we are unable to enter into alternative arrangements with other suppliers or manufacturers, potentially leading to decreased customer demand.
Failure of us or our third-party manufacturers and component suppliers to adhere to QSR requirements or take adequate and timely corrective action in response to an adverse quality system inspection finding could delay production of our products and lead to fines, difficulties in obtaining marketing authorizations for our products, recalls, or enforcement actions, including but not limited to injunctive relief or consent decrees, or other consequences, which could have a material adverse effect on our business, financial condition or results of operations.
Failure by us or our third-party manufacturers or component suppliers to adhere to QSR requirements or take adequate and timely corrective action in response to an adverse quality system inspection finding could delay production of our products and lead to fines, difficulties in obtaining marketing authorizations for our products, recalls, or enforcement actions, including but not limited to injunctive relief or consent decrees, or other consequences, which could have a material adverse effect on our business, financial condition or results of operations.
Such agreements may not be enforceable or may not provide meaningful protection for 55 our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure, which could materially and adversely impact our ability to establish or maintain a competitive advantage in the market, and our business, financial condition, results of operations and prospects.
Such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure, which could materially and adversely impact our ability to establish or maintain a competitive advantage in the market, and our business, financial condition, results of operations and prospects.
(f/k/a Homodeus Inc.), Legacy Hyperfine and Liminal was signed in November 2020; a TSEA by and among Quantum-Si Incorporated, AI Therapeutics, Inc., 4Bionics LLC, identifeye Health Inc., Detect, Inc., Legacy Hyperfine and Liminal was signed in February 2021 (and which Protein Evolution, Inc. joined in August 2021); and a TSEA by and among Legacy Hyperfine, Liminal, AI Therapeutics, Inc., identifeye Health Inc. and Detect, Inc. was signed in July 2021 and became effective upon the closing of our December 2021 business combination.
(f/k/a Homodeus Inc.), Legacy Hyperfine and Liminal was signed in November 2020; a TSEA by and among Quantum-Si Incorporated, AI Therapeutics, Inc., 4Bionics LLC, identifeye Health Inc., Detect, Inc., Legacy Hyperfine and Liminal was signed in February 2021 (and which Protein Evolution, Inc. joined in August 2021); and a TSEA by and among Legacy Hyperfine, Liminal, OrphAI Therapeutics Inc., identifeye Health Inc. and Detect, Inc. was signed in July 2021 and became effective upon the closing of our December 2021 business combination.
We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different 69 application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
We received marketing authorization for brain imaging in several countries, including the European Union (CE), the United Kingdom (UKCA), Canada, Australia and New Zealand. This strategy may include establishing and maintaining physician outreach and education capabilities outside of the United States and expanding our relationships with international customers.
We received marketing authorization for brain imaging in several countries, including the European Union (CE Mark), the United Kingdom (UKCA Mark), Canada, Australia and New Zealand. This strategy may include establishing and maintaining physician outreach and education capabilities outside of the United States and expanding our relationships with international customers.
For these purposes, an ownership change generally 43 occurs where the equity ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year period (calculated on a rolling basis).
For these purposes, an ownership change generally occurs where the equity ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year period (calculated on a rolling basis).
Additionally, changes in laws and regulations could impact the usefulness of our products and could necessitate changes or modifications to our products to accommodate such changes. We invest substantial resources in researching and developing new products and enhancing existing products by incorporating additional features, improving functionality, and adding other improvements to meet customers’ evolving needs.
Additionally, changes in laws and regulations could impact the usefulness of our products and could necessitate changes or modifications to our products to accommodate such changes. We invest substantial resources in researching and developing new products and enhancing existing products by incorporating additional features, improving 42 functionality, and adding other improvements to meet customers’ evolving needs.
Foreign Corrupt Practices Act, and comparable laws and regulations in other countries. Any of these factors could significantly harm our future international expansion and operations and, consequently, have a material adverse effect on our business, financial condition and results of operations. Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Foreign Corrupt Practices Act, and comparable laws and regulations in other countries. 44 Any of these factors could significantly harm our future international expansion and operations and, consequently, have a material adverse effect on our business, financial condition and results of operations. Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Data localization laws in some countries generally mandate that certain types of data collected in a particular country be stored and/or processed within that country. We could be subject to audits in Europe and around the world, particularly in the areas of consumer and data protection, as we continue to grow and expand our operations.
Data localization laws in some countries generally mandate that certain types of data collected in a particular country be stored and/or 53 processed within that country. We could be subject to audits in Europe and around the world, particularly in the areas of consumer and data protection, as we continue to grow and expand our operations.
The America Invents Act and its 53 implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Various courts, including the U.S.
The America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Various courts, including the U.S.
Litigation proceedings may be necessary for us to enforce our patent and other intellectual property rights. In any such proceeding, a court may refuse to stop the other party from using the technology at issue on the grounds that our owned and in-licensed patents do not cover the technology in question.
Litigation proceedings may be necessary for us to enforce our patent and other intellectual property rights. In any such proceeding, a court may refuse to stop the other party from using the technology at issue on the grounds that our owned and in-licensed patents do 61 not cover the technology in question.
For example, in August 2021 the FDA issued a final rule revising the agency’s regulation governing the types of evidence relevant to determining the “intended use” of a drug or device under the FDCA, which has significant implications for when a manufacturer or distributor has engaged in off-label marketing.
For example, in August 2021 the FDA issued a final 51 rule revising the agency’s regulation governing the types of evidence relevant to determining the “intended use” of a drug or device under the FDCA, which has significant implications for when a manufacturer or distributor has engaged in off-label marketing.
There can be no assurance that we will not be subject to cybersecurity incidents that bypass our security measures, impact the integrity, availability or privacy of health information or other data subject to privacy laws, or disrupt our information systems, devices or business, including our ability to deliver services to our customers.
There can be no assurance that we will not be impacted cybersecurity incidents that bypass our security measures, impact the integrity, availability or privacy of health information or other data subject to privacy laws, or disrupt our information systems, devices or business, including our ability to deliver services to our customers.
There can be no assurance that current levels of reimbursement will not be decreased in the future, or that future legislation, regulation, or reimbursement policies of third parties will not adversely affect the demand for our products and services or our ability to sell products and provide services on a profitable basis.
Additionally, there can be no assurance that current levels of reimbursement will not be decreased in the future, or that future legislation, regulation, or reimbursement policies of third parties will not adversely affect the demand for our products and services or our ability to sell products and provide services on a profitable basis.
These laws include, among others, the federal Anti-Kickback Statute, the federal civil False Claims Act, other federal healthcare false statement and fraud statutes, the Open Payments program, the Civil Monetary Penalties Law, and analogous fraud and abuse and transparency laws in most states, as described in “ Item 49 1.
These laws include, among others, the federal Anti-Kickback Statute, the federal civil False Claims Act, other federal healthcare false statement and fraud statutes, the Open Payments program, the Civil Monetary Penalties Law, and analogous fraud and abuse and transparency laws in most states, as described in “ Item 1.
We could also be required to pay damages, which could be significant, including treble damages and attorneys’ fees if we are found to have 57 willfully infringed such patents. We could also be required to obtain a license to such patents in order to continue the development and commercialization of the infringing product or technology.
We could also be required to pay damages, which could be significant, including treble damages and attorneys’ fees if we are found to have willfully infringed such patents. We could also be required to obtain a license to such patents in order to continue the development and commercialization of the infringing product or technology.
If we fail to comply with these regulations, we could be subject to civil sanctions, including fines and penalties for noncompliance. 50 In addition, foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States.
If we fail to comply with these regulations, we could be subject to civil sanctions, including fines and penalties for noncompliance. In addition, foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States.
Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, 56 then we may not be able to compete effectively, and our business, financial condition, results of operations and prospects may be adversely affected.
Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our business, financial condition, results of operations and prospects may be adversely affected.
Created IP under the TSEA may be relevant to our business and created by our personnel but owned by the other participant companies. Furthermore, if the TSEA were to terminate, or if we were to lose access to the technologies and services available pursuant to the TSEA, our business could be adversely affected.
Created IP under the TSEA may be relevant to our 43 business and created by our personnel but owned by the other participant companies. Furthermore, if the TSEA were to terminate, or if we were to lose access to the technologies and services available pursuant to the TSEA, our business could be adversely affected.
To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our products could be delayed.
To the extent that any disruption or security breach were to result in a loss of or damage to our data, information systems, or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our products could be delayed.
Consequently, we and our licensors may not be able to prevent third parties from practicing our or our licensors’ inventions in some or all countries outside the United States, or from selling or importing products made using our or our licensors’ inventions in other jurisdictions.
Consequently, we and our licensors may not be able to prevent third parties from practicing our or our licensors’ inventions in some or all countries 57 outside the United States, or from selling or importing products made using our or our licensors’ inventions in other jurisdictions.
Because of the technical nature of 38 our products and the dynamic market in which we compete, any failure to attract, recruit, train, retain, motivate and integrate qualified personnel could materially harm our operating results and growth prospects.
Because of the technical nature of our products and the dynamic market in which we compete, any failure to attract, recruit, train, retain, motivate and integrate qualified personnel could materially harm our operating results and growth prospects.
If our assumptions regarding these risks and uncertainties, which we will use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition and results of operations could be adversely affected. 33 We may need to raise additional capital to fund commercialization plans for our products, including manufacturing, sales and marketing activities, expand our investments in research and development, develop clinical evidence, and commercialize new products and applications.
If our assumptions regarding these risks and uncertainties, which we will use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition and results of operations could be adversely affected. 35 We may need to raise additional capital to fund commercialization plans for our products, including manufacturing, sales and marketing activities, expand our investments in research and development, develop clinical evidence, and commercialize new products and applications.
These regulatory efforts could lead to new FDA requirements in the future or additional product liability or other litigation risks if any of our products is considered to be susceptible to third-party tampering.
These regulatory efforts could lead to new FDA requirements in the future or additional product liability or other litigation risks if any of our products is considered to be 48 susceptible to third-party tampering.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team. If we are not successful, we could lose access or exclusive access to valuable intellectual property.
Even if we are successful in defending against these claims, 60 litigation could result in substantial costs and be a distraction to our management team. If we are not successful, we could lose access or exclusive access to valuable intellectual property.
If our management is unable to effectively manage our growth, our expenses may increase more than expected. Our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy.
If our management is unable to effectively manage our growth, our expenses may increase more than expected. Our ability to generate and/or grow revenue could be 40 reduced and we may not be able to implement our business strategy.
In certain circumstances, we 58 rely on our licensors to pay these fees due to the U.S. and non-U.S. patent agencies and to take the necessary action to comply with these requirements with respect to our licensed intellectual property.
In certain circumstances, we rely on our licensors to pay these fees due to the U.S. and non-U.S. patent agencies and to take the necessary action to comply with these requirements with respect to our licensed intellectual property.
Failure to obtain regulatory authorization in other countries or any delay or setback in obtaining such authorization could have the same adverse effects described above regarding FDA clearance in the United States.
Failure to obtain regulatory authorization in other countries or any delay or setback in obtaining such authorization could have the same adverse effects described above regarding FDA clearance or approval in the United States.
If additional shares of our Class B common stock are issued, your shares of Class A common stock and your votes may be significantly diluted. 63 Potential conflicts of interest may arise among the holders of our Class B common stock and the holders of our Class A common stock. Dr.
If additional shares of our Class B common stock are issued, your shares of Class A common stock and your votes may be significantly diluted. Potential conflicts of interest may arise among the holders of our Class B common stock and the holders of our Class A common stock. Dr.
Furthermore, certain of our sponsored research agreements pursuant to which we provide certain research services for third parties do not assign to us all intellectual property developed under such agreements.
Furthermore, certain of our sponsored research agreements pursuant 59 to which we provide certain research services for third parties do not assign to us all intellectual property developed under such agreements.
We have recorded a full valuation allowance related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.
We have recorded a full valuation allowance 45 related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.
In November 2023, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we registered for sale up to $150 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine.
In November 2023, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we registered for sale up to $150 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine (the “Shelf Registration Statement”).
Regulatory authorization of a product in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory authorization in one country may negatively impact the regulatory process in others.
Regulatory authorization of a product in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory authorization in one country may negatively impact the 49 regulatory process in others.
Any such security breach or interruption, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in the loss, misappropriation, corruption or unauthorized access of data, enforcement actions by U.S. states, the U.S. federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, litigation, including potential class action litigation,, the incurrence of significant remediation costs, increases to insurance premiums, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to us and our brands’ reputation, any of which could harm or have an adverse effect on our financial position and results of our business and operations.
Any such security breach or interruption, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in the loss, misappropriation, corruption or unauthorized access of data, enforcement actions by U.S. states, the U.S. federal government or foreign governments, liability or sanctions under data privacy laws that protect personal data, regulatory penalties, litigation, including potential class action litigation, the incurrence of significant remediation costs, increases to insurance premiums, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to us and our brands’ reputation, any of which could harm or have an adverse effect on our financial position and results of our business and operations.
Over the next several years, we expect to continue to devote substantially all of our resources towards continuing development and commercialization of our products and research and development efforts for additional products. These efforts may prove more costly than we currently anticipate. We are generating product revenue but may never generate revenue sufficient to offset our expenses.
Over the next several years, we expect to continue to devote substantially all of our resources towards commercialization of our products and continuing development efforts for improved and additional products. These efforts may prove more costly than we currently anticipate. We are generating product revenue but may never generate revenue sufficient to offset our expenses.
Rothberg holds approximately 85% of the voting power of our capital stock and is able to control matters submitted to our stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions. Dr.
Rothberg holds approximately 83% of the voting power of our capital stock and is able to control matters submitted to our stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions. Dr.
These choice-of-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that he, she or it believes to be favorable for disputes with the Company or our directors, officers or other employees or stockholders, which may discourage such lawsuits.
These choice-of-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that he, she or it believes to be favorable for disputes with our company or our directors, 68 officers or other employees or stockholders, which may discourage such lawsuits.
Certain of our future owned and in-licensed patents may be, subject to a reservation of rights by one or more third parties, including government march-in rights, that may limit our ability to exclude third parties from commercializing products similar or identical to ours.
Certain of our future owned and in-licensed patents may be, subject to a reservation of rights by one or more third parties, including government march-in rights, that may limit our ability to exclude third parties from commercializing products similar or identical to ours. 63 In addition, our owned and in-licensed patents may be subject to a reservation of rights by one or more third parties.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Shareholder activism, which could take many forms or arise in a variety of situations, has been increasing recently.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently.
Our business and operations could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of our business and growth strategy and impact our stock price.
Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of our business and growth strategy and impact our stock price.
We have experienced and may continue to experience pricing pressures from contract suppliers or manufacturers on which we rely. Third-party suppliers utilized by our manufacturer such as Benchmark have and may continue to impose pricing pressures.
We have experienced and may continue to experience pricing pressures from contract suppliers or manufacturers on which we rely. Third-party suppliers utilized by our manufacturer, Benchmark have and may continue to impose pricing pressures.
In the ordinary course of our business, we collect and store sensitive data, personally identifiable information of individuals, and intellectual property and proprietary business information owned or controlled by us, our customers and other third parties. This data encompasses a wide variety of business-critical information, including research and development information, commercial information, and business and financial information.
In the ordinary course of our business, we collect and store sensitive data, personal data of individuals, and intellectual property and proprietary business information owned or controlled by us, our customers and other third parties. This data encompasses a wide variety of business-critical information, including research and development information, commercial information, and business and financial information.
If we do not build an efficient and effective marketing and sales force, our business and operating results will be adversely affected. We rely on a single contract manufacturer, Benchmark Electronics, Inc. (“Benchmark”), to test, assemble and supply our finished products.
If we do not build an efficient and effective marketing and sales force, our business and operating results will be adversely affected. We rely on a single contract manufacturer, Benchmark, to test, assemble and supply our finished products.
So long as more than 50% of the voting power for the election of our directors is held by an individual, a group or another company, we will qualify as a “controlled company” under the Nasdaq listing rules. As of February 15, 2024, Dr. Rothberg controls approximately 85% of the voting power of our outstanding capital stock.
So long as more than 50% of the voting power for the election of our directors is held by an individual, a group or another company, we will qualify as a “controlled company” under the Nasdaq listing rules. As of February 15, 2025, Dr. Rothberg controls approximately 83% of the voting power of our outstanding capital stock.
Dr. Rothberg and his permitted transferees hold all of the issued and outstanding shares of our Class B common stock, and as of February 15, 2024, Dr.
Dr. Rothberg and his permitted transferees hold all of the issued and outstanding shares of our Class B common stock, and as of February 15, 2025, Dr.
Department of Health and Human Services (“HHS-OIG”), Centers for Medicare & Medicaid Services (“CMS”), and the Department of Justice, or may be subject to whistleblower lawsuits under federal and state false claims laws. To ensure compliance with Medicare, Medicaid and other regulations, government agencies conduct periodic audits of the Company to ensure compliance with various supplier standards and billing requirements.
Department of Health and Human Services (“HHS-OIG”), CMS, and the Department of Justice, or may be subject to whistleblower lawsuits under federal and state false claims laws. To ensure compliance with Medicare, Medicaid and other regulations, government agencies conduct periodic audits of the Company to ensure compliance with various supplier standards and billing requirements.
We are subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters.
We are subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, artificial intelligence, and other matters.
Rothberg has the ability to influence our business and affairs through his ownership of the high vote shares of our common stock, his general ability to elect our board of directors, and provisions in our certificate of incorporation, as amended (the "Charter"), requiring his approval for certain corporate actions (in addition to approval by our board of directors).
Rothberg has the ability to influence our business and affairs through his ownership of the high vote shares of our common stock, his general ability to elect our board of directors, and provisions in our Charter, requiring his approval for certain corporate actions (in addition to approval by our board of directors).
We are an early-stage health technology company, and have incurred significant losses since Legacy Hyperfine and Liminal formed in 2014 and 2018, respectively, and expect to continue to incur losses in the future. We incurred net losses of $44.2 million and $73.2 million for the years ended December 31, 2023 and 2022, respectively.
We are an early-stage health technology company, and have incurred significant losses since Legacy Hyperfine and Liminal formed in 2014 and 2018, respectively, and expect to continue to incur losses in the future. We incurred net losses of $40.7 million and $44.2 million for the years ended December 31, 2024 and 2023, respectively.
Further, a prior ruling by the Court of Chancery in Delaware introduced uncertainty as to whether Section 242(b)(2) of the Delaware General Corporation Law (“DGCL”) required a separate vote in favor of at least a majority of the outstanding shares of Class A common stock, in addition to a vote in favor of at least a majority of the outstanding shares of Class A and Class B common stock, voting together as a single class, to properly authorize shares of Class A common stock.
Further, a prior ruling by the Court of Chancery in Delaware introduced uncertainty as to whether Section 242(b)(2) of the DGCL required a separate vote in favor of at least a majority of the outstanding shares of Class A common stock, in addition to a vote in favor of at least a majority of the outstanding shares of Class A and Class B common stock, voting together as a single class, to properly authorize shares of Class A common stock.
We cannot assure you that the initiatives we have taken to date, or any initiatives we may take in the future, will be sufficient to avoid potential future material weaknesses.
We cannot assure you that the measures we have taken to date, or any measures that may be taken in the future, will be sufficient to avoid potential future material weaknesses.
The primary regulatory environment in Europe is that of the European Economic Area (“EEA”), which is comprised of the Member States of the European Union, Iceland, Liechtenstein and Norway. In 2023, our Swoop® system received CE certification.
The primary regulatory environment in Europe is that of the European Economic Area (“EEA”), which is comprised of the Member States of the European Union, plus Iceland, Liechtenstein and Norway. In 2023, our Swoop® system received approval in the European Union (CE Mark).
The post-effective amendment to the registration statement filed on January 24, 2023 was declared effective by the SEC on January 30, 2023. 66 Further, pursuant to the Subscription Agreements entered into in connection with the Business Combination and the Letter Agreement entered into in connection with the Business Combination, we agreed (i) to file a registration statement with the SEC for the resale of the registrable securities under such agreements and to use commercially reasonable efforts to cause such registration statement to be declared effective and (ii) to maintain the effectiveness of such registration statement until the earlier of (a) five years from the date of effectiveness of the initial registration statement, (b) the date on which investors under the subscription agreements cease to hold the securities covered thereby, and (c) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act.
Further, pursuant to the Subscription Agreements entered into in connection with the Business Combination and the Letter Agreement entered into in connection with the Business Combination, we agreed (i) to file a registration statement with the SEC for the resale of the registrable securities under such agreements and to use commercially reasonable efforts to cause such registration statement to be declared effective and (ii) to maintain the effectiveness of such registration statement until the earlier of (a) five years from the date of effectiveness of the initial registration statement, (b) the date on which investors under the subscription agreements cease to hold the securities covered thereby, and (c) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act.
In December 2022, we received written notice from Nasdaq notifying us that, because the closing bid price for our Class A common stock has fallen below $1.00 per share for 30 consecutive business days, we no longer met the minimum bid price requirement for continued inclusion on The Nasdaq Global Market.
In May 2024, we received written notice from Nasdaq notifying us that, because the closing bid price for our Class A common stock had fallen below $1.00 per share for 30 consecutive business days, we no longer met the minimum bid price requirement for continued inclusion on The Nasdaq Global Market.
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
These fluctuations may occur due to a variety of factors, many of which are outside our control, including, but not limited to: • the timing and amount of expenditures that we may incur to develop, commercialize or acquire additional products and technologies or for other purposes, such as the expansion of our sales team and our facilities; • the budgets, budget cycles and approval processes of our customers and potential customers and any changes affecting such budgets, budget cycles and approval processes; • pricing actions, such as the pricing adjustments we made to our business model during the first quarters of 2022 and 2023 in which we increased the price of the device while lowering the price of the service and support annual charges; • seasonal spending patterns of our customers; • the timing of when we recognize any revenues; 34 • future accounting pronouncements or changes in our accounting policies; • the outcome of any future litigation or governmental investigations involving the Company, our industry or both; • higher than anticipated service, replacement and warranty costs; • the impact of political instability and military conflict, such as the conflicts in Ukraine and the Middle East, which has resulted in instability in the global financial markets and export controls, and which has contributed to the increased cost of the magnet that is a key custom-made component in our Swoop® system and is manufactured by a single source supplier in Europe, and could result in further supply impacts on our business and have a material adverse impact on our sales in affected markets; and • general industry, economic and market conditions and other factors, including factors unrelated to our operating performances or the operating performance of our competitors.
These fluctuations may occur due to a variety of factors, many of which are outside our control, including, but not limited to: • the timing and amount of expenditures that we may incur to develop, commercialize or acquire additional products and technologies or for other purposes, such as the expansion of our sales team and our facilities; • the budgets, budget cycles and approval processes of our customers and potential customers and any changes affecting such budgets, budget cycles and approval processes; • pricing actions, such as pricing adjustments we make to our business model; • seasonal spending patterns of our customers; • the timing of when we recognize any revenues; • future accounting pronouncements or changes in our accounting policies; • the outcome of any future litigation or governmental investigations involving the Company, our industry or both; • higher than anticipated service, replacement and warranty costs; • the impact of political instability and military conflict, such as the conflicts in Ukraine and the Middle East, which has resulted in instability in the global financial markets and export controls, and which has contributed to the increased cost of the magnet that is a key custom-made component in our Swoop® system and is manufactured by a single source supplier in Europe, and could result in further supply impacts on our business and have a material adverse impact on our sales in affected markets; and • general industry, economic and market conditions and other factors, including factors unrelated to our operating performances or the operating performance of our competitors. 36 The cumulative effects of the factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results.
Litigation could result in substantial costs and distract our management. If we do not prevail, we may be required to pay damages, including treble damages, attorneys’ fees or costs and expenses and royalties, which could adversely affect our ability to offer products or services, our ability to continue operations and our business, financial condition, results of operations and prospects.
If we do not prevail, we may be required to pay damages, including treble damages, attorneys’ fees or costs and expenses and royalties, which could adversely affect our ability to offer products or services, our ability to continue operations and our business, financial condition, results of operations and prospects.
There are a number of federal and state laws protecting the confidentiality of certain health information and restricting the use and disclosure of that protected information. In particular, the U.S. Department of Health and Human Services promulgated privacy rules and security standards and breach notification rules under the Health and Insurance Portability and Accountability Act (“HIPAA”).
There are a number of federal and state laws protecting the confidentiality of certain health information and restricting the use and disclosure of that protected information. In particular, the U.S. Department of Health and Human Services promulgated privacy rules and security standards and breach notification rules under HIPAA.
If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA, which may include any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • customer notification, or orders for repair, replacement or refunds; • voluntary or mandatory recall or seizure of our current or future products; • administrative detention by the FDA of medical devices believed to be adulterated or misbranded; • operating restrictions, suspension or shutdown of production; • refusal of our requests for 510(k) clearance or PMA of new products, new intended uses or modifications to existing products; 45 • rescission of 510(k) clearance or suspension or withdrawal of PMAs that have already been granted; and • criminal prosecution.
If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA, which may include any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • customer notification, or orders for repair, replacement or refunds; • voluntary or mandatory recall or seizure of our current or future products; • administrative detention by the FDA of medical devices believed to be adulterated or misbranded; • operating restrictions, suspension or shutdown of production; • refusal of our requests for 510(k) clearance or PMA of new products, new intended uses or modifications to existing products; • rescission of 510(k) clearance or suspension or withdrawal of PMAs that have already been granted; and • criminal prosecution. 47 The occurrence of any of these events may have a material adverse effect on our business, financial condition and results of operations.
The Medical Device Regulation became fully effective on May 26, 2021.The Medical Device Regulation includes elements intended to strengthen the conformity assessment procedures, assert greater control over notified bodies and their standards, increase overall system transparency, and impose more robust device vigilance requirements on manufacturers and distributors.
The Medical Device Regulation includes elements intended to strengthen the conformity assessment procedures, assert greater control over notified bodies and their standards, increase overall system transparency, and impose more robust device vigilance requirements on manufacturers and distributors.
We expect to generate an increasing portion of our revenue internationally in the future and may become subject to various additional risks relating to our international activities, which could adversely affect our business, operating results and financial condition. Revenue from non-U.S. countries was 40% of total revenue for the year ended December 31, 2023.
We expect to generate a substantial portion of our revenue internationally in the future and may become subject to various additional risks relating to our international activities, which could adversely affect our business, operating results and financial condition. Revenue from non-U.S. countries was 51% of total revenue for the year ended December 31, 2024.
Risks Related to Our Securities and to Being a Public Company If we experience material weaknesses in our internal control over financial reporting or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to report our financial condition or results of operations accurately or in a timely manner and we may be unable to maintain compliance with applicable stock exchange listing requirements, which may adversely affect investor confidence in us and, as a result, materially and adversely affect our business and the value of our Class A common stock.
Risks Related to Our Securities and to Being a Public Company We have in the past experienced material weaknesses in our internal control over financial reporting, and if we experience such material weaknesses in our internal control over financial reporting in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to report our financial condition, results of operations or cash flows accurately or in a timely manner and we may be unable to maintain compliance with applicable stock exchange listing requirements, which may adversely affect investor confidence in us and, as a result, materially and adversely affect our business and the value of our Class A common stock. 65 We have in the past experienced material weaknesses in our internal controls over financial reporting that have required us to expend substantial time and effort to remediate.
Claims may be made by patients, healthcare providers or others selling our products. The risk of product liability claims may also increase if our products are subject to a product recall or seizure.
Claims may be made by patients, healthcare providers or others selling our products. The risk of product liability claims may also increase if our products are subject to a product recall or seizure. Product liability claims may be brought by individuals or by groups seeking to represent a class.
We believe that a substantial percentage of our future revenue will come from international sources as we continue to commercialize our products and services, having received marketing authorization for brain imaging in several countries, including the European Union (CE), the United Kingdom (UKCA), Canada, Australia and New Zealand, and as we seek regulatory authorization for our products in additional jurisdictions, and we seek to expand our sales and marketing opportunities internationally.
We believe that a substantial percentage of our future revenue will come from international sources as we continue to commercialize our products and services, 38 having received marketing authorization for brain imaging in several countries, including the European Union (CE Mark), the United Kingdom (UKCA Mark), Canada, Australia and New Zealand.
As of December 31, 2023, we had an accumulated deficit of $253.7 million. These losses and accumulated deficit were primarily due to the substantial investments made to develop and improve our technology and products.
As of December 31, 2024, we had an accumulated deficit of $294.4 million. These losses and accumulated deficit were primarily due to the substantial investments made to develop and improve our technology and products.
As of December 31, 2023, we had federal net operating loss carryforwards (“NOLs”) to offset future taxable income of approximately $170 million, of which $12.1 million will begin to expire in 2034 if not utilized. As of December 31, 2023, Liminal had federal NOLs to offset future taxable income of approximately $14.7 million.
As of December 31, 2024, we had federal net operating loss carryforwards (“NOLs”) to offset future taxable income of approximately $195.1 million, of which $12.1 million will begin to expire in 2034 if not utilized. As of December 31, 2024, Liminal had federal NOLs to offset future taxable income of approximately $15.6 million.
Inflation could also adversely affect the ability of our customers to purchase our products. An economic downturn could result in a variety of risks to our business, including weakened demand for our products and our inability to raise additional capital when needed on acceptable terms, if at all.
An economic downturn could result in a variety of risks to our business, including weakened demand for our products and our inability to raise additional capital when needed on acceptable terms, if at all.
Furthermore, if these agreements were to terminate, or if we were to lose access to these technologies and services, our business could be adversely affected. We entered into Technology and Services Exchange Agreements (each, a “TSEA” and collectively, the “TSEA”) with other participant companies controlled by the Rothbergs.
Furthermore, if these agreements were to terminate, or if we were to lose access to these technologies and services, our business could be adversely affected. We entered into Technology and Services Exchange Agreements (each, a “TSEA” and collectively, the “TSEA”) with other participant companies controlled by the Rothberg family. A TSEA by and among Butterfly Network, Inc., OrphAI Therapeutics Inc.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo provide for the confidentiality, integrity, and availability of critical data and information systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and protect against and respond to cybersecurity incidents, we undertake the following internal security measures: • maintain a cybersecurity program through formally-defined documented policies, standards, processes, and procedures to ensure internal security measures are implemented to protect against cybersecurity threats, to assess emerging cybersecurity and data privacy laws, and to implement changes to our processes that are designed to comply with laws applicable to our organization; • implement policies and procedures to identity organizational assets, data and critical IT systems, assess (and periodically re-assess) those assets, data, and systems for cybersecurity risks, and to develop management plans for identifying and remediating identified risks; • through our policies, practices and contracts (as applicable), require employees, as well as third parties that provide services on our behalf, to handle confidential data and systems in a legally compliant and acceptable manner; • employ technical security tools that are designed to protect our critical data and information systems from cybersecurity threats, including network firewalls and access controls, vulnerability scanners, intrusion prevention and detection systems, anti-malware/endpoint protection systems, and identity and access management systems which are evaluated for effectiveness and improved through vulnerability assessments and cybersecurity threat intelligence; • provide quarterly, mandatory training for our employees regarding cybersecurity threats to equip them with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices; • implement administrative processes and procedures to define acceptable security parameters and baselines of IT assets and information systems, and utilize access controls to prevent unauthorized alterations to system parameters and to maintain oversight over configuration changes and modifications to those systems; • conduct third party security reviews of critical and high-risk third-party suppliers and vendors; • conduct quarterly phishing email simulations for all employees with access to our email systems to enhance awareness and responsiveness to possible threats; • conduct cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; • run annual tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; 68 • implement a formal Incident Response Plan, based upon NIST, HITRUST, and SOC2 frameworks, to help us identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident, which Incident Response Plan includes processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate damage to our business and reputation; and • carry information security risk insurance to insure against potential losses arising from a cybersecurity incident.
Biggest changeTo provide for the confidentiality, integrity, and availability of critical data and information systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and protect against and respond to cybersecurity incidents, we undertake the following internal security measures: • maintain a cybersecurity program through formally-defined documented policies, standards, processes, and procedures to ensure internal security measures are implemented to protect against cybersecurity threats, to assess emerging cybersecurity and data privacy laws, and to implement changes to our processes that are designed to comply with laws applicable to our organization; • implement policies and procedures to identity organizational assets, data and critical IT systems, assess (and periodically re-assess) those assets, data, and systems for cybersecurity risks, and to develop management plans for identifying and remediating identified risks; • through our policies, practices and contracts (as applicable), require employees, as well as third parties that provide services on our behalf, to handle confidential data and systems in a legally compliant and acceptable manner; • employ technical security tools that are designed to protect our critical data and information systems from cybersecurity threats, including network firewalls and access controls, vulnerability scanners, intrusion prevention and detection systems, anti-malware/endpoint protection systems, and identity and access management systems which are evaluated for effectiveness and improved through vulnerability assessments and cybersecurity threat intelligence; • provide quarterly, mandatory training for our employees regarding cybersecurity threats to equip them with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices; • implement administrative processes and procedures to define acceptable security parameters and baselines of IT assets and information systems, and utilize access controls to prevent unauthorized alterations to system parameters and to maintain oversight over configuration changes and modifications to those systems; • conduct third party security reviews of critical and high-risk third-party suppliers and vendors; • conduct quarterly phishing email simulations for all employees with access to our email systems to enhance awareness and responsiveness to possible threats; • conduct cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; • run annual tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • implement a formal Incident Response Plan, based upon NIST, HITRUST, and SOC2 frameworks, to help us identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident, which Incident Response Plan includes processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate damage to our business and reputation; and • carry information security risk insurance to insure against potential losses arising from a cybersecurity incident. 72 As part of the above processes, we regularly engage with consultants, auditors and other third parties, including annually having a third-party independent Risk Assessor review our cybersecurity program to help identify areas for continued focus, improvement, and compliance.
We employ a range of technical security tools and external security services, including regular network and endpoint monitoring, compliance audits, vulnerability assessments, penetration testing, threat modeling and tabletop exercises to inform our risk posture, remediation plans and cybersecurity investments. We consider risks from cybersecurity threats alongside other company risks as part of our overall risk assessment process.
We employ a range of technical security tools and external security services, including regular network and endpoint monitoring, compliance audits, vulnerability assessments, 71 penetration testing, threat modeling and tabletop exercises to inform our risk posture, remediation plans and cybersecurity investments. We consider risks from cybersecurity threats alongside other company risks as part of our overall risk assessment process.
We also identify our cybersecurity threat risks by comparing our processes to standards established by the HITRUST and SOC2 frameworks and any findings resulting from penetration testing and threat modeling conducted by third party service providers.
We also identify our cybersecurity threat risks by comparing our processes to standards established by HITRUST and SOC2 frameworks and any findings resulting from penetration testing and threat modeling conducted by third party service providers.
In the last two fiscal years, we have not experienced any material cybersecurity incidents and any expenses we have incurred from cybersecurity incidents were immaterial. This includes penalties and settlements, of which there were none. As needed, we will contract a professional cybersecurity investigation firm to conduct a full forensic analysis of any suspected material incident.
In the last three fiscal years, we have not experienced any material cybersecurity incidents and any expenses we have incurred from cybersecurity incidents were immaterial. This includes penalties and settlements, of which there were none. As needed, we will contract a professional cybersecurity investigation firm to conduct a full forensic analysis of any suspected material incident.
As discussed in more detail under “Cybersecurity Governance” below, our board of directors and our audit committee provide oversight of our cybersecurity risk management and strategy processes, which are led by our Chief Compliance Officer, Chief Administrative Officer, Chief Operating Officer, Security Officer, Data Protection Officer, Senior Director of Cybersecurity and IT, and Governance Risk and Compliance Manager.
As discussed in more detail under “Cybersecurity Governance; Management” below, our board of directors and our audit committee provide oversight of our cybersecurity risk management and strategy processes, which are led by our Chief Compliance Officer, Chief Administrative Officer, Chief Operating Officer, Security Officer, Data Protection Officer, Senior Director of Cybersecurity and IT, and Governance Risk and Compliance Manager.
Material cybersecurity threat risks are also considered during separate board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters. 69
Material cybersecurity threat risks are also considered during separate board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters. 73
Our audit committee also receives prompt and timely information regarding any material cybersecurity incident that meets reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed.
Our audit committee is also designated to receive prompt and timely information regarding any material cybersecurity incident that meets reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed .
Our board of directors is actively involved in oversight of our cybersecurity risk management activities, and cybersecurity represents an important element of our organization’s overall approach to risk management in the pursuit of its business goals and objectives. 67 Cybersecurity Risk Management and Strategy; Effect of Risk We face risks related to cybersecurity such as unauthorized access, cybersecurity attacks and other security incidents, including as perpetrated by hackers and unintentional damage or disruption to hardware and software systems, loss of data, and misappropriation of confidential information.
Cybersecurity Risk Management and Strategy; Effect of Risk We face risks related to cybersecurity such as unauthorized access, cybersecurity attacks and other security incidents, including as perpetrated by hackers and unintentional damage or disruption to hardware and software systems, loss of data, and misappropriation of confidential information.
The status of our cybersecurity program is regularly reported to our organization’s board of directors.
The status of our cybersecurity program is regularly reported to our organization’s board of directors. Our board of directors is actively involved in oversight of our cybersecurity risk management activities, and cybersecurity represents an important element of our organization’s overall approach to risk management in the pursuit of its business goals and objectives.
Removed
As part of the above processes, we regularly engage with consultants, auditors and other third parties, including annually having a third-party independent Risk Assessor review our cybersecurity program to help identify areas for continued focus, improvement, and compliance.
Added
Such individuals have collectively over 50 years of prior work experience in various roles involving managing information security, developing cybersecurity strategy, and implementing effective information and cybersecurity programs.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES We currently maintain our principal executive offices at 351 New Whitfield Street, Guilford, Connecticut 06437. We also occupy office and laboratory space in Palo Alto, California. We lease office space under operating leases. We consider our current office space adequate for our current operations.
Biggest changeItem 2. PROPERTIES We currently maintain our principal executive offices and a warehouse at 351 New Whitfield Street, Guilford, Connecticut 06437. We also occupy office space in Palo Alto, California. We lease office space under operating leases. We consider our current office space adequate for our current operations.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 70 PART II 71 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securitie s 71 Item 6. [Reserved] 71 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 72 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 81 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 74 PART II 75 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securitie s 75 Item 6. [Reserved] 75 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 76 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 85 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStockholders As of March 1, 2024, we had 56,895,145 outstanding shares of Class A common stock held by approximately 117 holders of record, 15,055,288 outstanding shares of Class B common stock held by approximately six holders of record, and no outstanding shares of preferred stock. Unregistered Sales of Securities Not applicable. Issuer Purchases of Equity Securities Not applicable.
Biggest changeStockholders As of March 3, 2025, we had 62,776,930 outstanding shares of Class A common stock held by approximately 98 holders of record, 15,055,288 outstanding shares of Class B common stock held by approximately six holders of record, and no outstanding shares of preferred stock. Unregistered Sales of Securities Not applicable. Issuer Purchases of Equity Securities Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeComparison of the Years Ended December 31, 2023 and 2022 ($ Amounts in thousands) Year Ended December 31, Change ($ Amounts in thousands) 2023 2022 % Sales Device $ 8,746 $ 5,246 66.7 % Service 2,286 1,568 45.8 % Total sales $ 11,032 $ 6,814 61.9 % Cost of Sales Device $ 4,463 $ 4,231 5.5 % Service 1,812 1,676 8.1 % Total cost of sales $ 6,275 $ 5,907 6.2 % Gross margin 4,757 907 424.5 % Operating expenses: Research and development $ 22,493 $ 28,156 (20.1 )% General and administrative 20,276 32,406 (37.4 )% Sales and marketing 10,103 14,219 (28.9 )% Total operating expenses 52,872 74,781 (29.3 )% Loss from operations $ (48,115 ) $ (73,874 ) (34.9 )% Interest income $ 3,842 $ 761 404.9 % Other expense, net 35 (51 ) (168.6 )% Loss before provision for income taxes $ (44,238 ) $ (73,164 ) (39.5 )% Provision for income taxes — — Net loss and comprehensive loss $ (44,238 ) $ (73,164 ) (39.5 )% Sales Year Ended December 31, Change 2023 2022 Amount % Device $ 8,746 $ 5,246 $ 3,500 66.7 % Service 2,286 1,568 718 45.8 % Total sales $ 11,032 $ 6,814 $ 4,218 61.9 % Device sales increased by $3.5 million, or 66.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Biggest changeComparison of the Years Ended December 31, 2024 and 2023 ($ Amounts in thousands) Year Ended December 31, Change ($ Amounts in thousands) 2024 2023 % Sales Device $ 10,450 $ 8,746 19.5 % Service 2,440 2,286 6.7 % Total sales $ 12,890 $ 11,032 16.8 % Cost of Sales Device $ 5,387 $ 4,463 20.7 % Service 1,612 1,812 (11.0 )% Total cost of sales $ 6,999 $ 6,275 11.5 % Gross margin 5,891 4,757 23.8 % Operating expenses: Research and development $ 22,499 $ 22,493 0.0 % General and administrative 17,494 20,276 (13.7 )% Sales and marketing 9,122 10,103 (9.7 )% Total operating expenses 49,115 52,872 (7.1 )% Loss from operations $ (43,224 ) $ (48,115 ) (10.2 )% Interest income $ 2,492 $ 3,842 (35.1 )% Other expense, net 12 35 (65.7 )% Loss before provision for income taxes $ (40,720 ) $ (44,238 ) (8.0 )% Provision for income taxes — — Net loss and comprehensive loss $ (40,720 ) $ (44,238 ) (8.0 )% 79 Sales Year Ended December 31, Change 2024 2023 Amount % Device $ 10,450 $ 8,746 $ 1,704 19.5 % Service 2,440 2,286 154 6.7 % Total sales $ 12,890 $ 11,032 $ 1,858 16.8 % Device sales increased by $1.7 million, or 19.5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We designed the Swoop® system to address the limitations of conventional imaging technologies and make MR brain imaging accessible nearly anytime and anywhere across professional healthcare settings. We believe the adoption of the Swoop® system by healthcare professionals has clinical and economic benefits throughout healthcare communities in both high and low resource settings.
We designed the Swoop® system to address the limitations of conventional imaging technologies and make brain MR imaging accessible nearly anytime and anywhere across professional healthcare settings. We believe the adoption of the Swoop® system by healthcare professionals has clinical and economic benefits throughout healthcare communities in both high and low resource settings.
We believe these learnings will enable us to further improve our product and develop new services and tools in the future. We are continuously improving our image quality and imaging capabilities. Building upon this foundation and our expertise in ULF brain imaging, we plan to develop new imaging applications, broadening the range of clinical uses for our technology.
We believe these learnings will enable us to further improve our product and develop new services and tools in the future. We are continuously improving our image quality and imaging capabilities. Building upon this foundation and our expertise in ULF brain imaging, we plan to develop new imaging applications, broadening the range of clinical uses for our proprietary technology.
We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.
We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may 81 experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HYPERFINE The following discussion and analysis of the financial condition and results of operations Hyperfine, Inc. and its subsidiaries (for purposes of this section, collectively referred as the “Company”, “we,” “us” and “our”) should be read together with the audited consolidated financial statements as of and for the years ended December 31, 2023 and 2022, together with the related notes thereto, included elsewhere in this Annual Report on Form 10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HYPERFINE The following discussion and analysis of the financial condition and results of operations Hyperfine, Inc. and its subsidiaries (for purposes of this section, collectively referred as the “Company”, “we,” “us” and “our”) should be read together with the audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023, together with the related notes thereto, included elsewhere in this Annual Report on Form 10-K.
Our revenue recognition policies are discussed in more detail under “ Summary of Significant Accounting Policies ” in Note 2 to our consolidated financial statements and notes thereto for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report on Form 10-K. Device: Device sales primarily consist of sales of our MRI devices.
Our revenue recognition policies are discussed in more detail under “ Summary of Significant Accounting Policies ” in Note 2 to our consolidated financial statements and notes thereto for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report on Form 10-K. Device: Device sales primarily consist of sales of our MRI devices.
While our significant accounting policies are described in more detail in Note 2 in our consolidated financial statements for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
While our significant accounting policies are described in more detail in Note 2 in our consolidated financial statements for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
A valuation allowance is established against net deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some or all of the net deferred tax assets will not be realized. We recorded a full valuation allowance as of December 31, 2023 and 2022.
A valuation allowance is established against net deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some or all of the net deferred tax assets will not be realized. We recorded a full valuation allowance as of December 31, 2024 and 2023.
As we continue to invest in research and development of our products and sales and marketing, we expect to continue to incur a significant cash burn and recurring net losses for the foreseeable future until such time that our product and services sales generate enough gross profit to cover our operating expenses.
As we continue to invest in research and development of our products and sales and marketing, we expect to continue to incur cash burn and recurring net losses for the foreseeable future until such time that our product and services sales generate enough gross profit to cover our operating expenses.
In May 2023, we were awarded an additional 3-year grant from the BMGF to continue to develop a scalable approach to measuring neurodevelopment via ULF brain imaging in neonates, infants, and young children in low-to-middle income countries.
In May 2023, we were awarded an additional three-year grant from the BMGF to continue to develop a scalable approach to measuring neurodevelopment via ULF brain imaging in neonates, infants, and young children in low-to-middle income countries.
In November 2023, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we registered for sale up to $150 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine.
In November 2023, we filed the Shelf Registration Statement with the SEC pursuant to which we registered for sale up to $150 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine.
Our Swoop® system is designed to transform brain MR for the patient, the clinician and the provider, and to provide a highly differentiated experience for patients, timely imaging to clinicians, and favorable economics for hospital administrators.
Our Swoop® system is designed to transform brain MR for the patient, the clinician and the provider, enabling a highly differentiated experience for patients, timely imaging for clinicians, and favorable economics for hospital administrators.
Overview We are an innovative health technology business with a mission to revolutionize patient care globally through accessible, affordable, clinically relevant ultra-low-field (“ULF”) magnetic resonance (“MR”) brain imaging. Our Swoop® Portable MR Imaging® System (“Swoop® system”) produces high-quality images at a lower magnetic field strength than conventional magnetic resonance imaging (“MRI”) scanners.
Overview We are an innovative health technology business with a mission to revolutionize patient care globally through accessible, affordable, clinically relevant artificial intelligence (“AI”)-powered portable ultra-low-field (“ULF”) magnetic resonance (“MR”) brain imaging. Our Swoop® Portable MR Imaging® System (“Swoop® system”) produces high-quality images at a lower magnetic field strength than conventional magnetic resonance imaging (“MRI”) scanners.
Moreover, our team is dedicated to clinical support programs designed to integrate the Swoop® system into an array of diverse healthcare environments and applications. We believe that, from our commercial and clinical experience, we are gaining invaluable insights into the Swoop® system’s feasibility.
Moreover, our team is dedicated to clinical support programs designed to integrate the Swoop® system into an array of diverse healthcare environments, workflow, and applications. We believe that, from our commercial and clinical experience, we are gaining invaluable insights into the Swoop® system’s clinical utility.
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements and notes thereto for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report on Form 10-K. 80
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements and notes thereto for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report on Form 10-K. 84
Refer to Note 13 in the notes to our consolidated financial statements for the years ended December 31, 2023, and 2022 included elsewhere in this Annual Report on Form 10-K for a discussion of the BMGF grants.
Refer to Note 13 in the notes to our consolidated financial statements for the years ended December 31, 2024, and 2023 included elsewhere in this Annual Report on Form 10-K for a further discussion of the BMGF grants.
Food and Drug Administration (“FDA”)-cleared, portable, ULF, MR brain imaging system and is capable of providing imaging at multiple sites of care, such as intensive care units, clinics, emergency departments or physicians’ offices, and can inform the timely detection, diagnosis, monitoring, and treatment of acute and chronic conditions inside and outside the hospital.
The Swoop® system is the first FDA-cleared, portable, ULF, MR brain imaging system and is capable of providing imaging at multiple sites of care, such as intensive care units, clinics, emergency departments or physicians’ offices, and can inform the timely detection, diagnosis, monitoring, and treatment of acute and chronic conditions inside and outside the hospital.
Net cash used for investing activities For the year ended December 31, 2023, net cash used in investing activities of $0.8 million was from fixed assets purchased. For the year ended December 31, 2022, net cash used in investing activities of $0.6 million was from fixed assets purchased.
Net cash used for investing activities For the year ended December 31, 2024, net cash used in investing activities of $0.4 million was from fixed assets purchased. For the year ended December 31, 2023, net cash used in investing activities of $0.8 million was from fixed assets purchased.
The Swoop® system is AI-powered and integrates deep learning, a form of AI, for the reconstruction and denoising of T1, T2, and fluid-attenuated inversion recovery (“FLAIR”) sequences. The Swoop® system also incorporates deep learning denoising in the diffusion-weighted imaging (“DWI”) sequences for image post-processing. The integration of deep learning does not require any additional steps from the user.
The Swoop® system is AI-powered and integrates deep learning, a form of AI in the reconstruction pipeline of T1, T2, diffusion-weighted Imaging (“DWI”), and fluid-attenuated inversion recovery (“FLAIR”) sequences. The integration of deep learning does not require any additional steps from the user.
This favorable increase in other income was driven primarily by an increase in net realized gain on foreign currencies of approximately $47 thousand and an increase in interest income from customer financing of approximately $38 thousand. Liquidity and Capital Resources We have funded our operations primarily with proceeds from the issuance of common and preferred stock.
This decrease in other income was driven primarily by a decrease in net realized gain on foreign currencies of approximately $67 thousand partially offset by an increase in interest income from customer financing and other of approximately $44 thousand. Liquidity and Capital Resources We have funded our operations primarily with proceeds from the issuance of common and preferred stock.
Healthcare professionals can use the Swoop® system to make effective clinical diagnoses and decisions in various care settings where conventional MRI devices are inaccessible.
Healthcare professionals can use the Swoop® system to make effective clinical diagnoses and decisions in various care settings where conventional MRI devices are inaccessible or when they are not readily available.
The preparation of our financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
GAAP requires us to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Changes in operating assets and liabilities were driven primarily by a decrease in accrued expenses and other current liabilities of $2.2 million, a decrease in due to related parties of $2.0 million, a decrease in deferred grant funding of $1.9 million, an increase in prepaid expenses and other current assets of $1.8 million, a decrease in accounts payable of $1.6 million, an increase in accounts receivables of $1.6 million, an increase in other long term assets of $0.6 million, an increase in unbilled receivables of $0.4 million, an increase in inventory of $0.3 million, and an increase in prepaid inventory of $0.3 million, partially offset by an increase in deferred revenue of $1.7 million.
Changes in operating assets and liabilities were driven primarily by an increase in accounts receivable and unbilled receivables of $4.2 million, a decrease in accrued expense and other current liabilities of $0.6 million, and a decrease in deferred grant funding of $0.6 million, partially offset by a decrease in inventory and prepaid inventory of $1.3 million, an increase in accounts payable of $0.4 million, and a decrease in other long term assets of $0.3 million.
Our shelf registration statement on Form S-3 also included a prospectus covering up to an aggregate of $50.0 million in shares of Class A common stock that we may issue and sell from time to time, through B. Riley Securities, Inc. (“B. Riley”) acting as our sales agent, pursuant to the sales agreement that we entered into with B.
Our shelf registration statement on Form S-3 also included a prospectus covering up to an aggregate of $50.0 million in shares of Class A common stock that we may issue and sell from time to time, through B. Riley acting as our sales agent, pursuant to the Sales Agreement, for our “at-the-market” equity program (“ATM”).
Furthermore, the Swoop® system is used clinically every day as the first mover in the field of portable ULF MRI, and with an install base that continues to expand.
The Swoop® system is used clinically every day as the first mover in the field of AI-powered portable MRI, and the install base continues to expand.
Cash flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (In thousands) 2023 2022 Net cash used in operating activities $ (41,809 ) $ (72,339 ) Net cash used in investing activities (804 ) (585 ) Net cash provided by financing activities 174 7 Net decrease in cash and cash equivalents and restricted cash $ (42,439 ) $ (72,917 ) Net cash used in operating activities For the year ended December 31, 2023, net cash used in operating activities of $41.8 million was due primarily to a net loss of $44.2 million, non-cash items of $6.0 million and changes in operating assets and liabilities of $3.6 million.
Cash flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (In thousands) 2024 2023 Net cash used in operating activities $ (38,767 ) $ (41,809 ) Net cash used in investing activities (383 ) (804 ) Net cash provided by financing activities 1,019 174 Net decrease in cash and cash equivalents and restricted cash $ (38,131 ) $ (42,439 ) Net cash used in operating activities For the year ended December 31, 2024, net cash used in operating activities of $38.8 million was due primarily to a net loss of $40.7 million, non-cash items of $5.6 million and changes in operating assets and liabilities of $3.6 million.
Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services. We had no other significant contractual obligations as of December 31, 2023.
Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services.
We are building a direct sales and field support organization in the United States and have recently made changes within our sales and clinical support teams who are working in strong collaboration to increase adoption, support successful implementations and support routine use at customer sites.
We have built a direct sales and field support organization in the United States who are working in strong collaboration to increase adoption, support successful implementations and support routine use at expanded customer sites.
The increase in device revenue is mainly due to an increase in unit average selling price as well as an increase in units sold. Service sales increased by $0.7 million, or 45.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase is mainly due to the increased unit install-base.
The increase in device revenue is mainly due an increase in units sold. Service sales increased by $0.2 million, or 6.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase is mainly due to the increased unit install-base.
Commercialization efforts of the Swoop® system While our results have included revenue from outside the United States, our primary commercial focus is on the United States. Legacy Hyperfine received initial 510(k) clearance from the FDA in 2020. We are focused on building relationships and executing contracts with U.S. hospital systems.
Commercialization efforts of the Swoop® system Our results have included revenue from the United States and outside the United States. Our Swoop® system received initial 510(k) clearance from the FDA in 2020. Initially, we have been focused on executing contracts with U.S. hospitals and hospital systems.
The learnings from this field experience has served to improve our software, AI, and denoising algorithms resulting in the image quality and performance boosts of our product over the eight software releases since our initial clearance.
The learnings from this market experience have served to improve our software, AI, and denoising algorithms resulting in the image quality and performance improvements of our product over the nine generations of software since our initial clearance.
We have incurred significant cash burn and recurring net losses, which includes a net loss of $44.2 million for the year ended December 31, 2023, and an accumulated deficit of $253.7 million as of December 31, 2023. As of December 31, 2023, we had cash and cash equivalents of $75.2 million.
We have incurred cash burn and recurring net losses, which includes a net loss of $40.7 million for the year ended December 31, 2024, and an accumulated deficit of $294.4 million as of December 31, 2024. As of December 31, 2024, we had cash and cash equivalents of $37.6 million.
General and administrative General and administrative expenses primarily consist of personnel costs and benefits, including stock-based compensation, patent and filing fees, office expenses, technology expenses and outside services. Outside services consist of professional services, legal and other professional fees. Other related costs include additional facilities expenses and general corporate overhead to support the employee base.
General and administrative General and administrative expenses primarily consist of personnel costs and benefits, including stock-based compensation, patent and filing fees, office expenses, technology expenses and outside services. Outside services consist of professional services, legal and other professional fees.
This increase was driven primarily by an increase in overhead and product costs of $0.1 million due to an increase of units sold, and an increase of $0.1 million in personnel and related costs. Cost of service sales increased by $0.1 million, or 8.2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This increase was driven primarily by increased units sold. Cost of service sales decreased by $0.2 million, or 11.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease is due to a decrease in personnel-related costs driven by lower headcount and increased efficiency.
Sales and marketing Year Ended December 31, Change 2023 2022 Amount % Sales and marketing $ 10,103 $ 14,219 $ (4,116 ) (28.9 )% Sales and marketing expenses decreased by $4.1 million, or 28.9%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Sales and marketing Year Ended December 31, Change 2024 2023 Amount % Sales and marketing $ 9,122 $ 10,103 $ (981 ) (9.7 )% Sales and marketing expenses decreased by $1.0 million, or 9.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Key inputs and assumptions include the expected term of the option, stock price volatility, risk free interest rate, dividend yield, stock price and exercise price. Many of the assumptions require significant judgment and changes in assumptions could have a significant impact in the determination of stock-based compensation expense.
Many of the assumptions require significant judgment and changes in assumptions could have a significant impact in the determination of stock-based compensation expense. Key assumptions include: • Risk free interest rate: The risk free interest rate for the expected term of the awards is based on the U.S.
We did not make any matching contributions to the 401(k) plan for the years ended December 31, 2023 and 2022. 78 During 2020 and 2021 we received multiple grants totaling $4.9 million from the BMGF for the provision and equipping of sites with our portable MR brain imaging system to enable the performance of a multi-site study focused on optimizing diagnostic image quality.
During 2020 and 2021, we were awarded multiple grants totaling $4.9 million from the BMGF for the provision and equipping of sites with our portable MR brain imaging system to enable the performance of a multi-site study focused on optimizing diagnostic image quality.
The determination of NRV involves numerous judgments including estimating selling prices, existing customer orders, and estimated costs of disposal and transportation. If actual market conditions differ from our estimates, future results of operations could be materially affected. 79 The valuation of inventory also requires us to estimate excess and obsolete inventory.
NRV is based upon an estimated average selling price reduced by the estimated costs of disposal and transportation. The determination of NRV involves numerous judgments including estimating selling prices, existing customer orders, and estimated costs of disposal and transportation. If actual market conditions differ from our estimates, future results of operations could be materially affected.
The demand for MR imaging has been increasing due to the aging population and the rising prevalence of neurological, neurodegenerative, and cardiovascular conditions, as well as the trends towards decentralized healthcare in mature as well as low- and middle-income countries. Healthcare professionals and insurers recognize imaging as an effective, non-invasive diagnostic tool for evaluation and ongoing monitoring.
The demand for MR imaging has been increasing due to the aging population and the rising prevalence of neurological, neurodegenerative, and cardiovascular conditions, recent approval of new Alzheimer’s medications, as well as the trends towards decentralized healthcare in mature, as well as low- and middle-income countries.
Non-cash items were primarily stock based compensation expense of $4.7 million and depreciation expense of $1.1 million.
Non-cash items were primarily stock based compensation expense of $4.4 million, depreciation expense of $1.0 million, and loss on disposal of property and equipment of $0.2 million.
Expand sales in international markets The countries in which we have begun commercializing our Swoop® system include Canada, Australia, and New Zealand. We obtained a Medical Device License issued by Health Canada, UKCA certification in the United Kingdom, CE certification in the EU and regulatory authorization in Australia and New Zealand.
We obtained a Medical Device License issued by Health Canada, UKCA Mark certification in the United Kingdom, CE Mark in the EU, and regulatory authorization in Australia and New Zealand.
Based on available evidence, we believe that it is more-likely-than-not that we will be unable to utilize all of our deferred tax assets in the future. 74 Results of Operations The following is a discussion of our results of operations for the periods shown below, and our accounting policies are described under "Summary of Significant Accounting Policies" in Note 2 in our consolidated financial statements for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report on Form 10-K.
Results of Operations The following is a discussion of our results of operations for the periods shown below, and our accounting policies are described under "Summary of Significant Accounting Policies" in Note 2 in our consolidated financial statements for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report on Form 10-K.
As we move forward, we are continuously investing in improving our AI-powered image quality and leveraging each imaging-focused software release to further improve the Swoop® system performance. Legacy Hyperfine received initial 510(k) clearance for brain imaging of patients of all ages from the FDA in 2020 and has now received eight subsequent clearances from the FDA after the initial clearance.
As we move forward, we are continuously investing in improving our AI-powered image quality and leveraging each imaging-focused software release to further improve the Swoop® system performance. Furthermore, as of February 15, 2025, we possess a portfolio of 185 issued patents worldwide and 150 patents pending. Our Swoop® system received initial 510(k) clearance for brain imaging from FDA in 2020.
Cost of sales Year Ended December 31, Change 2023 2022 Amount % Device $ 4,463 $ 4,231 $ 232 5.5 % Service 1,812 1,676 136 8.1 % Total cost of sales $ 6,275 $ 5,907 $ 368 6.2 % Percentage of revenue 56.9 % 86.7 % 75 Cost of device sales increased by $0.2 million, or 5.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Cost of sales Year Ended December 31, Change 2024 2023 Amount % Device $ 5,387 $ 4,463 $ 924 20.7 % Service 1,612 1,812 (200 ) (11.0 )% Total cost of sales $ 6,999 $ 6,275 $ 724 11.5 % Percentage of revenue 54.3 % 56.9 % Cost of device sales increased by $0.9 million, or 20.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We also may have to reduce marketing, customer support or other resources devoted to our products and services or cease operations. 77 Cash As of December 31, 2023, we had cash and cash equivalents of $75.2 million.
If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products. We also may have to reduce marketing, customer support or other resources devoted to our products and services or cease operations. Cash As of December 31, 2024, we had cash and cash equivalents of $37.6 million.
For the year ended December 31, 2022, net cash used in operating activities of $72.3 million was due primarily to a net loss of $73.2 million, non-cash items of $11.8 million and changes in operating assets and liabilities of $10.9 million.
For the year ended December 31, 2023, net cash used in operating activities of $41.8 million was due primarily to a net loss of $44.2 million, non-cash items of $6.0 million and changes in operating assets and liabilities of $3.6 million. Non-cash items were primarily stock based compensation expense of $4.7 million and depreciation expense of $1.1 million.
We periodically review the age, condition and turnover of our inventory to determine whether any inventory has become obsolete or has declined in value and incur a charge to operations for known and anticipated inventory obsolescence. We also consider how quickly customers will transition from older products to newer products, including whether older products can be re-manufactured into new products.
The valuation of inventory also requires us to estimate excess and obsolete inventory. We periodically review the age, condition and turnover of our inventory to determine whether any inventory has become obsolete or has declined in value and incur a charge to operations for known and anticipated inventory obsolescence.
Other income (expense), net Year Ended December 31, Change 2023 2022 Amount % Other income (expense), net $ 35 $ (51 ) $ 86 (168.6 )% 76 Other income (expense), net had a favorable increase in other income of $86 thousand for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Other income (expense), net Year Ended December 31, Change 2024 2023 Amount % Other income (expense), net $ 12 $ 35 $ (23 ) (65.7 )% Other income (expense), net had a decrease in other income of $23 thousand, or 65.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Inventories Inventories primarily consist of finished goods which are produced by our third-party contract manufacturer and raw materials ordered in advance by the third-party contract manufacturer due to long delivery-lead time and were billed to the Company. Inventories are stated at the lower of actual cost, determined using the average cost method, or net realizable value (“NRV”).
The bargain purchase option of the device at the end of the lease term is immaterial. 83 Inventories Inventories primarily consist of finished goods which are produced by our third-party contract manufacturer and raw materials ordered in advance by the third-party contract manufacturer due to long delivery-lead time and were billed to the Company.
The increase was driven primarily by a higher interest rates and higher cash balances in money market funds and demand deposit accounts during the year ended December 31, 2023 compared to the year ended December 31, 2022.
The decrease was driven primarily by a lower interest rates and lower cash balances in money market funds and demand deposit accounts.
These grants are designed to provide data to validate the use of our Swoop® system in measuring the impact of maternal anemia, malnutrition, infection and birth related injury. All of these grants are designed to support the deployment of a total of 25 Swoop® system devices and other services to investigators, which commenced in the spring of 2021.
These grants were designed to provide data to validate the use of the Swoop® system in measuring the impact of maternal anemia, malnutrition, infection and birth related injury.
Stock-based compensation Our stock-based compensation program includes restricted stock unit and stock option grants to our employees, directors and consultants. Stock options are granted at exercise prices not less than the estimated fair market value of our common stock at the dates of grant.
Stock options are granted at exercise prices not less than the estimated fair market value of our common stock at the dates of grant. For purposes of restricted stock unit grants, the grant date fair value is calculated as the fair market value of the stock on the date of grant.
General and administrative Year Ended December 31, Change 2023 2022 Amount % General and administrative $ 20,276 $ 32,406 $ (12,130 ) (37.4 )% General and administrative expenses decreased by $12.1 million, or 37.4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
General and administrative Year Ended December 31, Change 2024 2023 Amount % General and administrative $ 17,494 $ 20,276 $ (2,782 ) (13.7 )% General and administrative expenses decreased by $2.8 million, or 13.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Total revenues were $11.0 million for the year ended December 31, 2023, an increase of $4.2 million, or 61.9% from the year ended December 31, 2022, primarily driven by increases in Swoop® system average selling price, units sold and service revenues. See "Results of Operations - Sales" below for further information.
See "Results of Operations - Sales" below for further information. Total Swoop® system units sold were 48 units for the year ended December 31, 2024, an increase of 11 units, or 30%, from the year ended December 31, 2023.
Interest income Year Ended December 31, Change 2023 2022 Amount % Interest income $ 3,842 $ 761 $ 3,081 404.9 % Interest income increased by $3.1 million, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Interest income 80 Year Ended December 31, Change 2024 2023 Amount % Interest income $ 2,492 $ 3,842 $ (1,350 ) (35.1 )% Interest income decreased by $1.4 million, or 35.1% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
For information on contingencies, refer to Note 13 to our consolidated financial statements and notes thereto for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report on Form 10-K. Critical Accounting Estimates Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
We had no other significant contractual obligations as of December 31, 2024. For information on contingencies, refer to Note 13 to our consolidated financial statements and notes thereto for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report on Form 10-K.
We routinely evaluate quantities and value of our inventories in light of current market conditions and market trends and record a write-down against the cost of inventories for NRV below cost. NRV is based upon an estimated average selling price reduced by the estimated costs of disposal and transportation.
Inventories are stated at the lower of actual cost, determined using the average cost method, or net realizable value (“NRV”). We routinely evaluate quantities and value of our inventories in light of current market conditions and market trends and record a write-down against the cost of inventories for NRV below cost.
Also, in December 2022, we announced an organizational restructuring designed to decrease our operating costs and create a more streamlined organization to support our business. As a result, we terminated approximately 13% of our global workforce including, among others, the employees of our Liminal subsidiary.
Recent Developments On January 28, 2025, we implemented an organizational restructuring designed to decrease our costs and create a more streamlined organization to support our business priorities. As a result, we have terminated approximately 14% of our global workforce. The restructuring affects employees predominantly in technical positions.
This has resulted in higher device revenue per unit and lower service revenue per unit for sales under this business model. Cost of sales Cost of sales consists of product and service costs including personnel cost and benefits including stock-based compensation, product costs, production setup expenses, depreciation and amortization expenses, inventory excess and obsolescence expenses.
Service: Service sales primarily consist of sales service and support including annual maintenance and cloud hosting. Cost of sales Cost of sales consists of product and service costs including personnel cost and benefits including stock-based compensation, product costs, production setup expenses, depreciation and amortization expenses, inventory excess and obsolescence expenses.
The evaluation takes into consideration the effect that new products might have on the sale of existing products, product obsolescence, product merchantability and other factors. Market conditions are subject to change and if actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which would have a negative impact on gross margin.
Market conditions are subject to change and if actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which would have a negative impact on gross margin. Stock-based compensation Our stock-based compensation program includes restricted stock unit and stock option grants to our employees, directors and consultants.
Through our engagement with the BMGF, we have deployed and continue to deploy the Swoop® system in low-middle income settings without readily-accessible MRI technology. The multiple grants provided by our research partnership with the BMGF, which commenced funding in the spring of 2020, support the deployment of 25 Swoop® system and accessories to investigators.
Through our engagement with the BMGF, we have deployed the Swoop® system in low-middle income settings without readily-accessible MRI technology.
Interest income Interest income primarily consists of interest earned on our cash equivalents invested in money market securities. Other expense, net Other expense, net primarily relates to foreign exchange gain or loss. Provision for income taxes We utilize the asset and liability method of accounting for income taxes, as set forth in Accounting Standards Codification (“ASC”) 740, Income Taxes.
Provision for income taxes We utilize the asset and liability method of accounting for income taxes, as set forth in Accounting Standards Codification (“ASC”) 740, Income Taxes.
Contractual obligations We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary.
For the year ended December 31, 2023, net cash provided by financing activities of $0.2 million was proceeds from option exercises. 82 Contractual obligations We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary.
This decrease was driven primarily by a decrease in personnel related costs and stock-based compensation expenses of $6.8 million as a result of a lean executive team and decreased headcount, a decrease in accounting, auditing and SEC expenses of $1.7 million, a decrease in insurance expenses of $1.3 million, a decrease in restructuring expenses of $0.7 million which was completed in the first quarter of 2023, a decrease in legal expenses and patent fees of $0.7 million, and a decrease in recruitment expenses of $0.4 million.
This decrease was driven primarily by a decrease in personnel-related costs and stock-based compensation expenses of $1.5 million, a decrease in legal and patent expenses of $0.6 million, a decrease in insurance expenses of $0.4 million, a decrease in accounting, auditing and SEC expenses of $0.4 million, and a decrease in subscriptions of $0.2 million, partially offset by an increase in allowance for credit losses of $0.5 million.
Net cash provided by financing activities For the year ended December 31, 2023, net cash provided by financing activities of $0.2 million was proceeds from option exercises. For the year ended December 31, 2022, net cash provided by financing activities of $7 thousand was proceeds from option exercises.
Net cash provided by financing activities For the year ended December 31, 2024, net cash provided by financing activities of $1.0 million consisting primarily of proceeds from issuance of Class A common stock under the Sales Agreement of $0.8 million and proceeds from stock options exercises of $0.2 million.
Sales and marketing Sales and marketing costs primarily consist of personnel costs and benefits including stock-based compensation, advertising and promotional costs, as well as costs for conferences, meetings, and other events. We will seek to control sales and marketing expenses while continuing to promote our brand through marketing and advertising initiatives and expand our market presence and awareness.
Other related costs include additional facilities expenses and general corporate overhead to support the employee base. 78 Sales and marketing Sales and marketing costs primarily consist of personnel costs and benefits including stock-based compensation, advertising and promotional costs, as well as costs for conferences, meetings, and other events.
As of February 15, 2024, we completed the delivery and deployment of a total of 25 Swoop® system devices related to BMGF grants. 73 Description of Certain Components of Financial Data Sales We derive our sales from the following sources: device sales and service sales as described in more detail below.
During the year ended December 31, 2024, we completed and fulfilled grant deliverables and milestones amounting to $1.7 million and we received cash grant funding of $1.1 million. Description of Certain Components of Financial Data Sales We derive our sales from the following sources: device sales and service sales, as described in more detail below.
Riley in November 2023 (the “Sales Agreement”), for our “at-the-market” equity program. We are not obligated to make any sales of Class A common stock under the Sales Agreement. As of December 31, 2023, the Company had not sold any Class A common stock pursuant to the Sales Agreement.
We are not obligated to make any sales of Class A common stock under the Sales Agreement.
The Swoop® system is the next generation brain imaging device designed to increase access to MRI in a cost-effective manner and expand the current $35 billion imaging market. Despite its advantages, many healthcare institutions worldwide lack the facilities, specialized operators, and capital necessary to acquire and maintain expensive conventional MRI devices. The Swoop® system is the first U.S.
We estimate in the United States alone that our total addressable market for Swoop® system device placements is more than $16 billion. Despite their advantages, many healthcare institutions worldwide lack the facilities, specialized operators, and capital necessary to acquire, maintain, and staff expensive conventional MRI devices.
While we will maintain our commercial focus in the United States in 2024, our commitment to the vision of providing affordable and accessible imaging that enables earlier detection and timely management of health conditions worldwide is currently made possible by grant funding from the BMGF.
Further we are executing on a global expansion strategy, broadening access to MR brain imaging in regions with large populations, low penetration of MRI, and significant unmet healthcare needs. Our commitment to the vision of providing affordable and accessible imaging that enables earlier detection and timely management of health conditions worldwide is furthermore advanced by grant funding from the BMGF.
As of December 31, 2023, 22 Swoop® system units were provisioned and delivered to the BMGF and the majority of the milestones for service deliverables were also met. The ongoing investigation is designed to provide data to validate the potential use of the Swoop® system in measuring the impact of maternal anemia, malnutrition, infection, and birth-related injury.
The multiple grants provided by our research partnership with the BMGF, which commenced funding in the spring of 2020, support the deployment of 25 Swoop® system and accessories to investigators. The ongoing investigation is designed to provide data to validate the potential use of the Swoop® system in measuring the impact of maternal anemia, malnutrition, infection, and birth-related injury.
The Swoop® system has also received marketing authorization for brain imaging in several countries, including the European Union (CE), the United Kingdom (UKCA), Canada, Australia and New Zealand. 72 In December 2022, we suspended our Liminal program to develop a device to non-invasively measure key vital signs in the brain.
Outside of the United States, the Swoop® system has received marketing authorization for brain imaging in several countries, including the European Union (CE Mark), the United Kingdom (UK Conformity Assessment (“UKCA 76 Mark”)), Canada, Australia and New Zealand. In October 2024 and February 2025, we received CE Mark and UKCA Mark approval for the latest generation of software.
We received our most recent clearance from the FDA in October 2023 for the latest update of our Swoop® system AI-powered software. This updated software expanded the Swoop® system’s AI denoising capabilities by incorporating deep learning denoising in the DWI sequence for image post-processing.
In February and October 2023, we received 510(k) clearances from the FDA for our Swoop® system AI-powered software. The combination of these two software updates incorporated deep-learning based denoising in the post-processing of images for crisper images, and improved image quality for all Swoop® system sequences.
These measures are reviewed and analyzed to evaluate our business performance, identify trends affecting our business, allocate capital, and make strategic decisions.
These measures are reviewed and analyzed to evaluate our business performance, identify trends affecting our business, allocate capital, and make strategic decisions. Total revenues were $12.9 million for the year ended December 31, 2024, an increase of $1.9 million, or 17%, from the year ended December 31, 2023, primarily driven by increases in Swoop® system units sold and service revenues.
In connection with the restructuring, we incurred $1.0 million of costs consisting primarily of cash severance costs, other severance benefits, fixed asset impairment costs and other related restructuring costs. We completed the restructuring as of the first quarter of 2023. Key Performance Measures Management reviews and analyzes several key performance measures including Total revenues, and Total Swoop® system units sold.
In connection with the restructuring, we estimated that we will incur up to $0.4 million of costs, consisting primarily of cash severance costs, other severance benefits and other related restructuring costs. We expect to substantially complete the restructuring in the first quarter of 2025.
This increase is due to an increased install base. Research and development 2023 2022 Amount % Research and development $ 22,493 $ 28,156 $ (5,663 ) (20.1 )% Research and development expenses decreased by $5.7 million, or 20.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Research and development 2024 2023 Amount % Research and development $ 22,499 $ 22,493 $ 6 NM Research and development expenses in dollars remained flat for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Removed
Total Swoop® system units sold were 37 units for the year ended December 31, 2023, an increase of 2 units, or 5.7% from the year ended December 31, 2022.
Added
Healthcare professionals and insurers recognize imaging as an effective, non-invasive diagnostic tool for evaluation and ongoing monitoring. The Swoop® system is the next generation brain imaging device designed to increase access to MRI in a cost-effective manner. We believe our market opportunity is significant across the multiple sites of care where the Swoop® system brings clinical and economic value.
Removed
Service: Service sales primarily consist of sales service and support including annual maintenance and cloud hosting. During each of the first quarters of 2023 and 2022, we have taken pricing actions by increasing the price of the device while lowering the price of the annual service and support charges.
Added
In July 2024, we received 510(k) clearance from the FDA of the ninth-generation AI-powered Swoop® system software. This latest software update released to date significantly reduces scan times across multiple MR sequences without sacrificing image quality.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. Foreign Exchange Risk We operate our business primarily within the United States. With respect to our sales outside the U.S., the majority of our transactions are executed in U.S. dollars and, to a lesser extent, in foreign currency.
Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. Foreign Exchange Risk We operate our business primarily within the United States. With respect to our sales outside the United States, the majority of our transactions are executed in U.S. dollars and, to a lesser extent, in foreign currency.
Interest rate risk Our cash, cash equivalents and restricted cash as of December 31, 2023 consisted of $75.7 million in money market funds, demand deposit and savings accounts. Such interest-earning instruments carry a degree of interest rate risk. The goals of our investment policy are liquidity and capital preservation.
Interest rate risk Our cash, cash equivalents and restricted cash as of December 31, 2024 consisted of $37.7 million in money market funds, demand deposit and savings accounts. Such interest-earning instruments carry a degree of interest rate risk. The goals of our investment policy are liquidity and capital preservation.
Based on our balance sheet position at December 31, 2023, the annualized effect of a 0.5 percentage point decrease in interest rates would be to decrease earnings before income taxes by $0.4 million.
Based on our balance sheet position at December 31, 2024, the annualized effect of a 0.5 percentage point decrease in interest rates would be to decrease earnings before income taxes by $0.2 million.

Other HYPR 10-K year-over-year comparisons